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Black and Veatch Corp (BV) is an engineering company incorporated in Delaware. This appeal concerns the top layer of its professional liability insurance programme for the year from 1 November 2007. The first or primary layer was with Lexington Insurance Co (Lexington). There are then three successive excess layers (described as the PI tower) with the appellant, Teal Assurance Co Ltd (Teal), which is an associate or captive of BV based in the Cayman Islands. Teal reinsured the risks under these layers with various retrocessionaires (Swiss Re, Zurich, etc). Finally comes the top layer, a top and drop policy, again placed with Teal and reinsured by Teal with the respondents, WR Berkley Insurance (Europe) Ltd and Aspen Insurance UK Ltd for 50% each. Unlike the layers beneath it, which provided worldwide cover, the top and drop policy excludes any claims emanating from or brought in the USA and Canada. BV has received and notified to its insurers various claims, some emanating from or brought in the USA or Canada, others not. The ultimate issue on this appeal is whether BV and Teal or either of them is entitled to choose which claims to meet from the primary and/or lower excess layers, so as to ensure that those remaining are not US or Canadian claims, and can be met by Teal out of the top layer and passed on to the respondents. The courts below (Andrew Smith J, [2011] EWHC 91 (Comm), and the Court of Appeal, [2011] EWCA Civ 1570) have held that Teal cannot do this. They have held that the claims fall to be allocated to the successive layers, starting with Lexingtons primary layer, as and when BVs third party liability is ascertained by agreement, judgment or award in accordance with a general principle of liability insurance established in Post Office v Norwich Union Fire Insurance Society Ltd [1967] 2 QB 363 and Bradley v Eagle Star Insurance Co Ltd [1989] AC 957. Teal now appeals with the Courts permission. Teal submits that a party is entitled to exercise contractual rights as best suits it, here to maximise the insurance cover available to its associate BV. The primary and lower excess layers covered US and Canadian claims and BV and Teal were entitled to take full advantage of this. Further, Teal submits that the top and drop, and each of the lower excess layers, contains a clause (clause 1 of a set of clauses LSW055) making clear that no liability can arise under them unless and until underlying insurers shall have paid or have admitted liability or have been held liable to pay, the full amount of their indemnity inclusive of costs and expenses. Teals case is that liability thereunder necessarily depends upon the order in which underlying insurers, including Teal, choose (or are held liable) to settle insurance claims, rather than upon the order in which third party liability claims are ascertained by agreement, judgment or award as against BV. Teal submits that this scheme is complemented by clause IV.E of the Lexington policy, requiring BV to pay the deductible and self insured retention prior to Lexington indemnifying BV. Teals application for permission and written case also suggested that the case raises, or may raise, what Teal calls a legal fiction, that a claim under a liability insurance is for damages for the insurers failure to hold the insured harmless. It submits that a more appropriate analysis would be that insurers undertake to pay valid claims on the occurrence of particular events. This would have the potential effect that insurers could become liable in damages for non or late payment, contrary to the rule presently established by cases such as Ventouris v Mountain (The Italia Express) (No 2) [1992] 2 Lloyds Rep 281 and Sprung v Royal Insurance (UK) Ltd [1999] 1 Lloyds Rep IR 111. It would also enter upon an area presently under consideration by the English and Scottish Law Commissions: see their Issues Paper 6: Damages for Late Payment and the Insurers Duty of Good Faith (2010) and their subsequent formal consultation paper Insurance Contract Law: Post Contract Duties and Other Issues (2012). However, as the submissions developed, it became apparent that it could make no difference to the outcome of this appeal how an insurers liability to indemnify is formulated. In particular, whether the insurers liability is by way of damages or in debt does not answer the question whether such liability is exhausted as and when a claim, insured and notified under the policy, gives rise to ascertained third party liability or expenses on BVs part. The insurance programme With this introduction, I describe the insurance programme in greater detail: a. BV accepted a deductible of US$100,000 per claim (or US$250,000 for remedial work under an endorsement) and a self insured retention of US$10m per occurrence and US$20m in the aggregate (though it was permitted to insure part of this with Teal under a policy No 2007 006 not relevant to this appeal). b. BVs layer of cover with Lexington was for US$5m excess of the deductible of US$100,000 (or US$250,000) per claim and the self insured retention of US$10m per occurrence, with an aggregate limit of US$20m. c. Above that, the PI tower consisted of the three excess layers: i. Policy No 2007 009 for US$5m any one claim and in the aggregate excess of US$15m any one claim (i.e. excess of the Lexington cover); ii. Policy No 2007 010 for US$30m any one claim and in the aggregate excess of US$20m any one claim; and iii. Policy No 2007 011 for US$20m any one claim and in the aggregate excess of US$50m any one claim. d. The top and drop policy (number 2007 012) applied in excess of the Lexington policy and the PI tower, and had a limit of liability of 10m or equivalent excess of the underlying retention of US$10m any one claim and US$20m in the aggregate. The Lexington policy read: NOTICE: THIS IS A CLAIMS MADE POLICY. SUBJECT TO THE TERMS AND CONDITIONS OF THE POLICY, THIS INSURANCE APPLIES TO ONLY THOSE CLAIMS THAT ARE FIRST MADE AGAINST THE INSURED AND REPORTED TO THE COMPANY DURING THE POLICY PERIOD, OR THE OPTIONAL EXTENDED REPORTING PERIOD. THE COSTS OF DEFENSE UNDER THIS POLICY, INCLUDING ATTORNEY'S FEES, REDUCE THE LIMITS OF COVERAGE AND THE DEDUCTIBLE AND SELF INSURED RETENTION, STATED IN THE DECLARATIONS. THE COMPANY SHALL NOT BE OBLIGATED TO PAY ANY CLAIM OR CLAIM EXPENSES, OR UNDERTAKE TO CONTINUE DEFENSE OF ANY SUIT OR PROCEEDING AFTER THE LIMIT OF THE COMPANY'S LIABILITY HAS BEEN EXHAUSTED. Declarations Deductible and Self Insured Retention: a. $ 100,000 per Claim Deductible (including Claim Expenses) b. $10,000,000 per Claim Self Insured Retention (including Claim Expenses) c. $20,000,000 aggregate Self Insured Retention per Policy Period (including Claim Expenses) The Insured shall have the obligation to pay up to: 1. the Deductible amount stated in line a.; and 2. the per Claim Self lnsured Retention amount stated in line b. Payments made under the per Claim Self Insured Retention, line b. are subject to the maximum Aggregate Self Insured Retention amount in line c. THIS IS A CLAIMS MADE AND REPORTED POLICY. CLAIMS MUST FIRST BE MADE AGAINST THE INSURED AND REPORTED TO THE COMPANY DURING THE POLICY PERIOD UNLESS AN EXTENDED REPORTING PERIOD APPLIES. THE PAYMENT OF CLAIM EXPENSES REDUCES THE LIMITS OF INSURANCE. Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered. Refer to SECTION IV DEFINITIONS for the special meaning of other words and phrases that appear in bold face. In consideration of the premium charged, the undertaking of the Named Insured to pay the Deductible and/or Self Insured Retention and in reliance upon the statements in the application, and subject to the Limit of Liability of this Insurance as set forth in the Declarations, and the Exclusions, Conditions and other terms of this Policy, Lexington Insurance Company, hereafter referred to as the Company, agrees with the Named Insured as follows: PART A I. INSURING AGREEMENT COVERAGE The insurance afforded by this Policy applies to Claimswhich allege any negligent act, error or omission provided The Company will indemnify the Insured all sums up to the Limits stated in the Declarations, in excess of the Insureds Deductible and/or Self Insured Retention, which the Insured shall become legally obligated to pay as Damages if such legal liability arises out of the performance of professional services in the Insureds capacity as an architect or engineer and as stated in the Application provided IV. DEFINITIONS E. Deductible and/or Self Insured Retention means the amount stated in Item 5. of the Declarations that the Insured will pay, as set forth in the Declarations, for Claim Expenses and Damages with respect to every Claim made during the Policy Period. This amount must be paid prior to the Company indemnifying the Insured under the terms and conditions of this Policy. By Endorsement No 8 the Lexington policy further provided: In addition to the coverage granted under this Policy, but subject to the same Self Insured Retention and limits of liability, we agree to indemnify the Named Insured for the Named Insured's Actual and Necessary Costs and Expenses incurred in rectifying a Design Defect in any part of the construction works or engineering works for any project upon which you are providing design/build services provided: A) the Insured reports the Claim for such Actual and Necessary Costs and Expenses as soon as practicable after discovery of such Design Defect but in no event after any certificate of substantial completion has been issued; B) the Insured proves to us that its Claim for Actual and Necessary Costs and Expenses arises out of the Insureds rendering of professional services which resulted in a Design Defect for which a third party could otherwise make Claim against the Insured. Each of the PI tower policies provided cover to BV as the Assured as follows: To indemnify the Assured for claim or claims which may be made against the Assured during the period of insurance hereon up to this Policy's amount of liability (as hereinafter specified) in the aggregate, the excess of the Underlying Policy/ies limits (as hereinafter specified) in the aggregate, the latter amount being the subject of Indemnity Policy/ies (as hereinafter specified) or any Policy/ies issued in substitution or renewal thereof for the same amount effected by the Assured and hereinafter referred to as the Underlying Policy/ies. Each PI tower policy then went on to specify its limit, and the underlying policy number(s) and limit(s). Each then set out the following set of clauses, with the reference LSW055 indicating that they were in fact a standard excess wording (dating, as appears elsewhere, from August 1998): 1. Liability to pay under this Policy shall not attach unless and until the Underwriters of the Underlying Policy/ies shall have paid or have admitted liability or have been held liable to pay, the full amount of their indemnity inclusive of costs and expenses. 2. It is a condition of this Policy that the Underlying Policy/ies shall be maintained in full effect during the currency of this Policy except for any reduction of the aggregate limits contained therein solely by payment of claims or of legal costs and expenses incurred in defence or settlement of such claims. 3. If by reason of the payment of any claim or claims or legal costs and expenses by the Underwriters of the Underlying Policy(ies) during the period of this Insurance, the amount of indemnity provided by such Underlying Policy/ies is: (a) Partially reduced, then this Policy shall apply in excess of the reduced amount of the Underlying Policy/ies for the remainder of the period of insurance; (b) Totally exhausted, then this Policy shall continue in force as Underlying Policy until expiry hereof. 4. In the event of a claim arising to which the Underwriters hereon may be liable to contribute, no costs shall be incurred on their behalf without their consent being first obtained (such consent not to be unreasonably withheld). No settlement of a claim shall be effected by the Assured for such a sum as will involve this Policy without the consent of Underwriters hereon. 5. All recoveries or payments recovered or received subsequent to a loss settlement under this Policy shall be applied as if recovered or received prior to such settlement and all necessary adjustments shall then be made between the Assured and the Underwriters provided always that nothing in this Policy shall be construed to mean that loss settlements under this Policy are not payable until the Assured's ultimate net loss has been finally ascertained. 6. Except as otherwise provided herein this Policy is subject to the same terms, exclusions, conditions and definitions as the Policy of the Primary Insurers. No amendment to the Policy of the Primary Insurers during the period of this Policy in respect of which the Primary Insurers require an additional premium or a deductible shall be effective in extending the scope of this Policy until agreed in writing by the Insurers. 8. If the Assured shall prefer any claim knowing the same to be false or fraudulent, as regards amount or otherwise, this Policy shall become void and all claims hereunder shall be forfeited. The top and drop policy followed similar wording. It was: To indemnify the Insured for claim or claims first made against the Insured during the Period of Insurance hereon up to this Policy's amount of liability (as hereinafter specified) in the aggregate, the excess of the Underlying Policy(ies) limits (as hereinafter specified) in the aggregate, the latter amount being the subject of Indemnity Policy(ies) (as hereinafter specified) or any Policy(ies) issued in substitution or renewal thereof for the same amount effected by the Insured and hereinafter referred to as the Underlying Policy(ies). After stating its policy limits, and the underlying policy numbers and limits, it too set out the LSW055 clauses, but with the addition of the following clause (clauses 5 and 6 above being renumbered accordingly as clauses 6 and 7): 5. Any claim(s) made against the Insured or the discovery by the Insured of any loss(es) or any circumstances of which the Insured becomes aware during the subsistence hereof which are likely to give rise to such a claim or loss, shall, if it appears likely that such claim(s) plus costs and expenses incurred in the defence or settlement of such claim(s) or loss(es) may exceed the indemnity available under the Policy(ies) of the Primary and Underlying Excess Insurers, be notified immediately by the Insured in writing to the Insurers hereon. The reinsurance taken out by Teal in respect of the top and drop layer identified the reinsured interest as Architects and Engineers Professional Liability as more fully defined in the primary policy wording, in connection with the Original Insured's business activities as Architects and Engineers. It also identified the underlying layers and provided Excess Policy in any event no broader than any underlying form, and by Endorsement Seven it defined the basis and scope of indemnity as follows: A. REINSURING CLAUSE Except as otherwise agreed, the Reinsurers liability under this Agreement shall follow that of the Reinsured for losses under all terms, conditions, and limits to the Reinsured Original Policy or Policies specified therein (the Policy). Subject to treaty reinsurance only, the Reinsured warrants to retain for its own account the amount indicated as its Net Retention for the Agreement period. The Reinsured shall provide to the Reinsurer promptly after closing a copy of the Policy and any endorsements thereto affecting this Agreement, and shall make available for inspection and place at the disposal of the Reinsurer at the office of the Reinsured any of its records relating to this Agreement or to claims in connection therewith at all reasonable times during and after the Agreement period. B. SCOPE OF INDEMNITY The Reinsurer shall indemnify the Reinsured to the extent of the Reinsurer's written share for any loss, interest or Allocated Expenses (as defined below) paid by the Reinsured and covered by this Agreement. The claims made During the relevant insurance year, BV notified 27 claims, four of which have a value in excess of US$1m. Two of these four are US or Canadian claims, made against BV by American Electric Power (AEP) and known as (a) FRP Pipe and (b) Jet Bubble Reactors JBR Internals. BV puts the amount of the FRP Pipe claim at US$10,491,368, in respect of which BV has paid out its self insured retention of US$10m and bears an applicable deductible of US$250,000. BV puts the cost of repairs in respect of the JBR Internals at over US$200m, of which its own incurred costs and liability are said to represent the major part. The two non US/Canadian claims are known as (c) Ajman Sewage and (d) PPGPL Trinidad Design Issues. BV puts its incurred costs and liability in respect of the Ajman Sewage claim at over US$33.9m. The PPGPL Trinidad Design Issues represent in fact three separate design issues. After deductibles totalling US$750,000, BV puts the claim at US$8,169,487. In what order these claims may have been ascertained in the sense used in Post Office v Norwich Union and Bradley v Eagle Star, and what relevance this may have is in issue. Teals objective is to ensure that the Ajman Sewage and PPGPL Trinidad Design Issues claims are met from the top and drop policy, irrespective of the dates of their ascertainment against BV. But, if and so far as ascertainment as against BV is relevant, BV and Teal also intend to argue that all or some of BVs liability in respect of the Ajman Sewage claim was ascertained after the PI tower was exhausted by the ascertainment of the other claims, and so falls within the top and drop policy. The nature of third party liability insurance The nature of liability under a third party liability insurance cover was considered in the context of the Lloyds litigation of the 1990s in Cox v Bankside Members Agency Ltd [1995] 2 Lloyds Rep 437. The problem there was that some agents had policies against which there were likely to be various calls, either because several claims were being pursued against the same agents by different Lloyds Names, or because the policies were group policies covering several agents against each of which claims were being pursued, by different Lloyds Names. The essential issue was whether each claim ascertained as against an agent exhausted the agents insurance cover pro tanto, or whether all claims falling individually within a policys scope ranked or could be treated as ranking pari passu against the policy in whatever order they were ascertained against the insured agent or agents. Both Phillips J and the Court of Appeal held that the former was the correct answer. Phillips J said at p 442 (right) that No obligation on the part of the insurer arises until the liability of the assured to a third party is established and quantified by judgment, arbitration award or settlement. A little later, he added: Thereafter if further third party claims are established it does not seem to me that these can result in further liability on the part of the insurer. In between these two passages, he analysed insurers liability in the traditional terms which Teal criticises, that is as a liability for damages for breach of duty in failing to hold harmless or to provide the indemnity. But, whether that analysis is adopted has no bearing on the conclusion that an insurers liability under the policy arises on the ascertainment of the insureds third party liability, and that once it arises the policy indemnity is pro tanto used up. In Cox v Bankside itself, Phillips J held that the policy was called upon to respond in this way to a court order for interim payment; if this were not so, an insured adequately protected by E & O insurance, would nonetheless be liable to be rendered insolvent by his inability to call upon his E & O underwriters to indemnify him against his liability to comply with an interim payment order (p 453, left). In such circumstances, where the quantum of an insureds third party liability or insured expenses is ascertained in stages, its cause of action on its insurer is progressively enlarged, and the insurance limit is progressively used up. In the Court of Appeal Saville LJ expressed a similar conclusion to Phillips Js. He was speaking of the position after the statutory assignment to a claimant under the Third Parties (Rights against Insurers) Act 1930 of the potential right to recover under the insurance policy claims as yet unascertained against the insolvent insured. He said at p 467 (right) that in such a case: That right [the right to immediate payment under a liability policy] only arises when, in each case, the claim is established, just as that right, while owned by the insured, would also arise only when the particular claim in question was established. It is only when that right arises that the insurers come under the correlative obligation to make payment. To my mind it follows that as each claim is established (whether this occurs before or after the statutory assignment), the right to payment arises and thus the amount of the available insurance is in effect diminished, so that when it is exhausted later established claims have no right to an indemnity. I can find nothing in the Act which begins to suggest that somehow a claimant third party whose claim is established cannot recover that claim under the Act, or has to share that recovery with others who have no rights against the insurers because the limit of cover has been reached. General analysis Mr Christopher Butcher QC for Teal challenges the proposition that the ascertainment of a claim against the insured exhausts the insureds insurance policy cover pro tanto. He accepts that, under a claims made liability policy like the present, an insurers liability arises typically as and when loss within the scope of the policy is ascertained as against the insured. But he submits that it is only when the claim is met by the insurer that the policy cover is pro tanto exhausted; until then it is possible, if a second notified claim is made and ascertained against BV as insured, to speak of a second cause of action or claim existing under the policy; BV is free to claim and the insurer is liable to make payment of the later, rather than the earlier, ascertained claim. As regards expenses incurred by BV and covered under Endorsement No 8 to the Lexington policy, he submits that BV as insured can again choose which expenses are paid first and against which claim or claims it sets the self insured retention or deductible, and, after the retention and deductible are used up, in respect of which claim it claims payment of such expenses from its insurer; in the last situation, it is again only when insurers pay those, rather than any earlier ascertained, expenses, that the cover can be said to be exhausted. I cannot accept Mr Butchers case on these points. Where an insurance has a limit, it makes no sense to speak of the insured having causes of action or recoverable claims which together would exceed that limit. If the limit is US$10m and the insured incurs ascertained third party liability of US$10m in respect of each of two successive third party claims, it makes no sense to speak of the insured having two causes of action or two recoverable claims against its insurer totalling US$20m. Likewise, if its liability is ascertained at US$7.5m each claim, the insured will have two causes of action or claims against its insurer, but the second will only be for US$2.5m. The ascertainment, by agreement, judgment or award, of the insureds liability gives rise to the claim under the insurance, which exhausts the insurance either entirely or pro tanto. The claim against the insured must of course fall within the scope of the policy and the insured may have to fulfil procedural requirements regarding notification to the insurer as a condition of recovery (see e.g. Clarke, The Law of Insurance Contracts, paras 17 4D4 and 26 2G), but this appeal raises no issue regarding either of such points. Similar considerations govern the incurring of ascertained expenses where, as here under Endorsement No 8 to the Lexington policy, these fall potentially within the policy indemnity. As and when BV incurs quantified expenses, they fall to be set against the policy retention and deductible; over and above the retention and deductible, any further expenses incurred fall not within the retention and deductible, but within the insurance provided by Lexington (and thereafter, potentially within the successive excess layers). The policy thus serves the purpose of meeting each ascertained loss when and in the order in which it occurs. An insured can forbear from notifying, or can withdraw or abandon, a claim under an insurance in respect of expenses or third party liability. The insurance will not then be exhausted by that claim, and the next claim will be recoverable in the ordinary course under the insurance. But what is here proposed is not the withholding or withdrawal of a claim; it is its continued pursuit, coupled with adjustment of its priority as against the insurance or programme of insurances. Policy terms (a) Lexington On this basis, it is necessary to consider the terms of the insurances involved in the programme to see whether they are consistent with this analysis or lead to a different result. Starting with the Lexington policy, the Definition in Part A.IV.E, read together with the Declarations section and the insuring provisions, requires BV to have paid the amount of the deductible and self insured retention prior to the Company indemnifying the Insured under the terms and conditions of this Policy. Three points arise. First, this provision relates to the deductible and retention; it underlines that, before Lexington can be called upon, the deductible and retention must be used up in meeting expenses or liability to which the policy indemnity otherwise applies. It is not a clause which would be expected to affect, or give a choice as to, the nature or subject matter of the indemnity. Second, it is not certain that the word paid here means disbursed. As was held in Charter Reinsurance Co Ltd v Fagan [1997] AC 313, under a differently worded excess of loss reinsurance referring to the sum actually paid, so here the word paid should in my opinion probably be understood as being used only as a measure of liability incurred, rather than with the intention of insisting on monetary disbursement. Otherwise, the present liability insurance would not meet the aim of providing the insured with an indemnity to avoid the insolvency which third party claims might otherwise threaten a consideration emphasised in the context of reinsurance in Charter Re and in the context of liability insurance by Phillips J in Cox v Bankside. Third, even if the word paid here means disbursed, a requirement of disbursement as a pre condition to recovery from insurers says nothing about what has to be paid for a right to indemnity to arise under the insurance. It means only that, as and when expenses and third party liability are incurred and ascertained, they become recoverable under the insurance, provided that the insured first disburses an amount equivalent to the deductible and self insured retention. It does not mean that the insured, by delaying such disbursement and choosing to make a disbursement in respect of different, later ascertained expenses or liability, can alter the order in which or policy in the insurance programme to which the first ascertained expenses or liability attach. Nor does it give its insurer a right to say that it will only provide indemnity in respect of later ascertained expenses or liability, so promoting the claim in respect of such expenses or liability ahead of the claim in respect of the earlier ascertained expenses or liability. (b) The PI tower and the top and drop policy It follows that, as and when expenses or third party liability are incurred and ascertained, they are to be taken into account against the Lexington policy. First, the self insured retention and deductible must be used up, and then the policy will respond up to its limit. Once that limit is used up, the next layer is engaged, and so on up the PI tower of excess layer policies until the top and drop policy itself is engaged. Taking the set of clauses LSW055, this is what would be expected from in particular clause 6 of the PI tower policies (clause 7 of the top and drop policy), which provides that each excess layer policy, including the top and drop policy, is subject to the same terms, exclusions, conditions and definitions as the primary Lexington policy. It is also the more natural effect of clause 4 of the PI tower policies (clauses 4 and 5 of the top and drop policy), which postulate a degree of certainty from the outset about what claims are likely to impact, and what settlements in particular will impact, different layers of an excess insurance programme. However, Teal relies upon clauses 1, 2 and 3 as leading to a different conclusion. Under clause 1, liability only attaches to each excess layer once the underlying insurers, starting with Lexington and moving upwards, shall have paid or have admitted liability or have been held liable to pay, the full amount of their indemnity inclusive of costs and expenses. So, Teal submits, its liability to BV under the top and drop policy is conditioned by the order in which the underlying insurers pay, or admit or are held to have liability, meaning that Teal in its different capacity as underlying excess layer insurers can shape its own liability as top and drop insurer, in order best to suit the interests of itself or its associate BV. The basic difficulty with this submission is, once again, that it treats a clause intended to define when liability arises as affecting the claims in respect of which liability arises. Liability under an excess policy attaches only after all primary coverage has been exhausted: North River Ins Co v American Home Assurance Co (1989) 210 Cal App 3d 108, 112, quoted in Clarke, The Law of Insurance Contracts, para 28 9B. Clause 1 of LSW055 goes further in performing what Andrew Smith J (paras 36 37) and Tomlinson LJ in the Court of Appeal (para 22) described as the readily understandable function of making clear that the obligation to pay under each excess layer is deferred until the resolution of any uncertainty or dispute as to the liability of underlying insurers. But it cannot sensibly be read as intended to alter the identity of the claims which fall to be met under any underlying insurance or will in due course fall to be met under the excess layer insurances. The basic aim of a layered insurance programme like the present is indicated by clause 6 of the PI tower policies (clause 7 of the top and drop policy). Subject to their differences in threshold, limits, aggregates and premium and to specific exceptions like that in respect of US and Canadian claims in the top and drop policy, each layer operates on the same terms and conditions and attaches to the same risks, albeit under clause 1 at different times depending upon the settlement of claims under the underlying layers. Teals case also looks at the picture from the top down, instead of looking at claims as they in fact impact the programme, from the bottom up. At the bottom, as I have already indicated, Lexington becomes liable, up to its policy limit, for claims in the order in which BV incurs ascertained expenses or third party liability. There are no other claims which Lexington can pay or in respect of which it can admit or be held to have liability under its policy. These are the only claims which Lexington can pay under its policy. To the extent that Lexington has paid or admitted or been held liable to pay claims, there is no basis upon which Teal as an excess layer insurer can pay them either again or instead of Lexington. All that Teal can pay is any balance remaining of such claims or any later ascertained expenses or liability which BV may have incurred. Clause 1 of LSW055 cannot alter this. It merely provides that liability under the first excess layer only attaches as and when Lexington pays or admits or is held to have liability in respect of BVs ascertained expenses or third party liability. The position is confirmed by clause 3(b), providing that, upon payment by Lexington of the relevant ascertained expenses or claim exhausting the Lexington policy, the first excess layer policy drops down to continue in force as the underlying policy. The Lexington policy itself has no equivalent of clause 1. It pays, as explained above, by reference to BVs ascertained expenses or third party liability. In both clauses 2 and 3, the word payment may again be no more than shorthand (in the Charter Re sense of established or ascertained) for the comprehensively expressed test shall have paid or have admitted liability or have been held liable to pay, used in clause 1. But, if this is wrong, it makes no difference. Upon payment by Lexington, whatever that means, the first excess layer policy will have to drop down under clause 3 to become the underlying policy, i.e. on the same terms as the Lexington policy. Liability under the first excess layer, in its new role as underlying policy, will then necessarily be determined by the timing of the ascertainment of BVs third party liability and expenses. The same position will apply successively under each excess layer, including the top and drop, as each is exhausted in turn. It is true, that, if payment in clauses 2 and 3 means disbursement, there may, at least in some cases, be a difference between the time when liability attaches to the first excess layer under clause 1 (e.g. as a result of an admission or finding of liability) and a later moment in time when Lexington disburses payment. But that cannot allow Teal as first excess insurer in that gap period, if it can and does exist, to make payments other than or in a different order than those for which it will in due course become underlying insurer when its excess insurance drops down to become the underlying policy under clause 3(b). Commerciality What I have said corresponds, very substantially, with the reasoning of Longmore and Tomlinson LJJ, with both of whose judgments Sir Robin Jacob agreed, in the Court of Appeal. In reaching his conclusion, Longmore LJ also placed some weight on what he regarded (in his paras 13 and 16) as the commercial common sense of the top and drop policy, citing Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900, paras 21 to 30. Mr Butcher took issue with this, and maintained that, on the respondents case, there was scope both for haphazard results and for some degree of control by an insured or primary insurer in the timing of the ascertainment of BVs third party liabilities or expenses; the scheduling or difficulty of settlement discussions could mean that a later arising third party claim led to ascertained liability on BVs part sooner than an earlier claim; BV or its insurers, in so far as they took over the conduct of a third party claim, might take steps to ensure that either a third party claim or expenses were ascertained sooner than another. This is true. On the other hand, the degree of adjustment of the order of claims which Teal maintains it can achieve, for the benefit of its associate BV, is more remarkable, and only arises as a possibility because Teal is BVs insurance captive and is party to BVs programme of layered insurance coverage. It suits Teal in the present case to claim that BV or it itself can adjust the order in which claims impact the different programme layers, in order to assist Teals associate BV. This produces the unfamiliar phenomenon of an insurer seeking to maximise its own insurance liabilities. Teal can afford to try to do this on the back of its reinsurance in respect of the top and drop layer by the respondents. Had Teal been an independent rather than captive insurer and determined to avoid as much liability to BV as possible, BV would no doubt vigorously have objected to the legitimacy of Teal as its excess layer insurer under the PI tower policies adjusting the order of payment of claims ascertained as against BV, with the aim of ensuring that it was only US and Canadian claims that reached the top and drop policy. Its objection would in my view have been well founded. The freedom of choice which Mr Butcher advocates on behalf of Teal and in the interests of BV cannot in the present context readily be reconciled with the basic philosophy that insurance covers risks lying outside an insureds own deliberate control. I would myself therefore have no doubt about agreeing with Longmore LJs view of commerciality, as confirming and reinforcing the conclusion which he reached and I also reach. However, in my view it is also unnecessary to do so. This is a case where analysis of the terms and scheme of the relevant insurance policies provides the answer without more. Conclusion For these reasons, I would dismiss this appeal. |
In 2008 the appellant, Mr Mandalia, who was then aged 25, came from India to the UK in order to study. His visa, as extended, was due to expire on 9 February 2012. On 7 February 2012 he applied to the UK Border Agency (the agency) for a further extension of it in order to study accountancy. The rules referable to his type of application were that it had to be accompanied by a bank statement or statements showing that he had held at least 5,400 for a consecutive period of 28 days ending no earlier than a month prior to the date of his application. Mr Mandalia accompanied his application with a bank statement but it showed that he had held at least 5,400 for a consecutive period of only 22 days ending no earlier than a month prior to the date of his application. The statement which he provided did not cover six of the requisite 28 days. The extra coverage might have been either of the six days immediately following the period of 22 days covered by his statement or of the six days immediately preceding it; but in what follows it will be convenient to address the deficit in his coverage as being the latter. The agency refused Mr Mandalias application for a further extension. The question is: did it act unlawfully in refusing his application without having first invited him to supply a further bank statement or statements which showed that he had also held at least 5,400 throughout those six preceding days? On 20 January 2014 the Court of Appeal, by a judgment delivered by Davis LJ with which Pitchford LJ and Sir Stanley Burnton agreed, gave a negative answer to that question: [2014] EWCA Civ 2, [2014] Imm AR 588. Mr Mandalias appeal to this court requires us to consider, in particular, the agencys instructions to caseworkers which then applied to their processing of such applications. The Rules In March 2006 the Secretary of State presented to Parliament a White Paper entitled A Points Based System: Making Migration Work for Britain Cm 6741. In Australia the rules for controlling immigration for the purposes of work or study had been encompassed in a points based system and the White Paper heralded the introduction of an analogous system in the UK for the control of immigration for such purposes from outside the EU. According to the White Paper a key outcome of the system would be a more efficient, transparent and objective application process (paragraphs 3, 25). The system was introduced into the Immigration Rules (the rules) as Part 6A: POINTS BASED SYSTEM, which became operative in stages beginning in November 2008. Since becoming operative, the provisions of Part 6A, including the appendices to it, have been amended on numerous occasions. In Pokhriyal v Secretary of State for the Home Department [2013] EWCA Civ 1568, [2014] INLR 291, Jackson LJ observed at para 4 that they had now achieved a degree of complexity which even the Byzantine emperors would have envied. On any view, and contrary to a forecast in the White Paper, it is difficult for applicants, for many of whom English is not even their first language, to navigate their way around the requirements. It may be, however, that, as intended, the system is not difficult for caseworkers to administer. Certainly they have to a substantial extent been relieved of the obligation to consider whether to exercise discretions in their processing of applications. The sharp edges of the rules have cut out hard cases which have found their way to the courts and which have inevitably attracted at any rate the sympathy of the judges and sometimes I speak for myself nascent reservations about the suitability of the system which have not been easy to suppress. But suppressed they must be. For the management of this type of immigration, in principle highly valuable for the UK, is a profound social challenge, of which the complexities are beyond the understanding of the courts; and, by not exercising its right to disapprove Part 6A of the rules, Parliament has indorsed the Secretary of States considered opinion that a points based system is the optimum mechanism for achieving management of it. The points based system has five tiers. Into Tier 1 fall highly skilled workers, entrepreneurs and investors. Into Tier 2 fall ordinary skilled workers if sponsored by a UK employer. Tier 3, designated for certain low skilled migrants, has never been brought into operation. Into Tier 4 fall students if sponsored by educational establishments and they are subdivided into General students, broadly encompassing adults, and Child students, broadly encompassing minors. Into Tier 5 fall temporary workers. Mr Mandalias application was therefore for leave to remain in the UK as a Tier 4 (General) Student. Mr Mandalia wished to become a certified accountant by pursuing a two year course of study at the BPP University College of Professional Studies. The college furnished him with a document entitled Confirmation of Acceptance for Studies, by which he secured the points which satisfied requirement (c) of Rule 245ZX of the rules and paragraph 113 of Appendix A: Attributes. But requirement (d) of Rule 245ZX obliged Mr Mandalia also to secure points under Appendix C: Maintenance (Funds). An understanding of requirement (d) is achieved only by travel through seven stages. i. Paragraph 1A of Appendix C provided: (a) The applicant must have the funds specified in the relevant part of Appendix C at the date of the application. (b) (c) If the applicant is applying as a Tier 4 migrant, the applicant must have had the funds referred to in (a) above for a consecutive 28 day period of time. The relevant part of Appendix C was in paragraphs 10 to 14. ii. Paragraph 10 provided that, as a Tier 4 (General) Student, Mr Mandalia had to score ten points for funds. iii. Paragraph 11 provided that he would secure ten points only if the funds shown in tabulated form were available to him in the manner specified in paragraph 13. iv. The table in paragraph 11 required him to show not only funds with which to pay the fees for the first year of the course (being a requirement which Mr Mandalia satisfied) but also, and here I refer to the figures in the table as they stood on 7 February 2012, 600 per month for nine months (ie 5,400), as evidence of his ability to maintain himself while pursuing the course. vs Paragraph 13 provided that funds would be available to Mr Mandalia only where specified documents so demonstrated. vi. Rule 245A of the rules, as it stood on 7 February 2012, provided that specified documents meant documents specified by the Secretary of State in a publication entitled Tier 4 of the Points Based System Policy Guidance (the policy guidance). vii. The version of the policy guidance operative on 7 February 2012, namely the version dated July 2011, made clear, at para 182, that the consecutive 28 day period identified in para 1A(c) of Appendix C to the rules was a period ending no earlier than a month prior to the date of the application and, at para 188, that, of the five types of document which could demonstrate availability of the funds, one was Mr Mandalias bank statements. The rules therefore required Mr Mandalia to demonstrate, in particular by the provision of bank statements, that he had held at least 5,400 for a consecutive period of 28 days ending no earlier than 7 January 2012. Mr Mandalias Application Mr Mandalia completed the form appropriate to an application for leave to remain as a Tier 4 (General) Student. It ran to 43 pages. Section L of it was entitled Maintenance (Funds). Section L7 said: The student must have 600 for each calendar month of their course up to a maximum of nine months. Please state what this amount is: In the box Mr Mandalia wrote 5,400. Section L24 said: Please tick to confirm the documents submitted as supporting evidence to show the student has access to the required amount of money for maintenance and funds. Mr Mandalia ticked the first box, entitled Personal bank or building society statements. The bank statement which Mr Mandalia enclosed with his application form, submitted by post with the requisite fee on 6 February 2012 and received by the agency on the following day, was a statement relating to a current account held in his name with HSBC. It covered the period from 29 December 2011 to 19 January 2012, namely 22 days. Importantly the statement was numbered sheet 64 and the opening entry for 29 December 2011 was a credit balance brought forward of 11,090.60. The closing balance was a credit balance carried forward of 12,071.05. Transactions occurring between those dates amounted only to eight modest debits and two less modest credits. The balance was at its lowest on 6 January 2012: it was then 11,018.34. By letter to Mr Mandalia dated 8 February 2012, the agency acknowledged receipt of his application and said that it would be passed to a casework unit. The agency added: If there is any problem with the validity of the application, such as missing documentation or omissions on the form, a caseworker will write to you as soon as possible to advise you what action you need to take to rectify the problem. By letter to Mr Mandalia dated 21 April 2012, the agency, which had made no further contact with him following its letter dated 8 February 2012, informed him that his application had been refused in accordance with the rules and the policy guidance and that a decision had also been made for his removal from the UK pursuant to section 47 of the Immigration, Asylum and Nationality Act 2006 (the 2006 Act). The agency made clear that the ground for refusal of his application was that he had failed to demonstrate that he had held 5,400 for a full 28 day period and that he had therefore failed to secure the requisite ten points. It will already be apparent that nothing in the application form itself could have alerted Mr Mandalia to the requirement to enclose bank statements which demonstrated that his holding of at least 5,400 had endured for a consecutive period of 28 days (the 28 day requirement). It would have been easy for the agency to explain the 28 day requirement in its instruction in section L24. It is probable that, when he obtained the form, Mr Mandalia also obtained a leaflet entitled Help Text which, on the front of the form, the agency advised him to read prior to completing it. But, although not every page of the leaflet in its then current form is before the court, the agency accepts that, again, there was nothing in it to alert Mr Mandalia to the 28 day requirement. The Secretary of State relies, however, on the following advice set out at the beginning of section L of the form: Before filling in this section of the form, the student should refer to the Immigration Rules the help text leaflet available with the form and Policy Guidance The respective links to gaining access to the rules and to the policy guidance on the agencys website were duly set out within that sentence. So the Secretary of State is able to say that, were an applicant such as Mr Mandalia to follow the advice set out at the beginning of section L, he would, on arrival at Rule 245ZX of the rules and at para 1A of Appendix C, learn of the 28 day requirement; and that, on arrival at para 182 of the policy guidance, he would notice it again and would also learn that the 28 day period was required to end no earlier than a month prior to the date of the application. The Proceedings Mr Mandalia appealed to the First tier Tribunal (Immigration and Asylum Chamber) against the agencys refusal of his application. He represented himself at the hearing before the Tribunal Judge; a Home Office Presenting Officer represented the Secretary of State. On 2 July 2012 the tribunal dismissed Mr Mandalias appeal on the ground that his application had fallen foul of the 28 day requirement. He had enclosed with his notice of appeal statements numbered 62 and 63 relating to his account with HSBC. The statement numbered 63 was confined to transactions on 28 December 2011 and so Mr Mandalia had also enclosed statement numbered 62, which covered all preceding transactions from 29 November 2011 onwards. The statements demonstrated that, on the missing six days between 23 and 28 December 2011, Mr Mandalias credit balance had been 11,280.30 for the first five days and 11,127.98 for the sixth day. In May 2011 a controversial provision, inserted (by section 19(2) of the UK Borders Act 2007) into the Nationality, Immigration and Asylum Act 2002 as section 85A, had come into force. The effect of subsections (3) and (4) had been to disable the First tier Tribunal from considering evidence adduced by Mr Mandalia in the course of his appeal unless he had submitted it to the agency in support of his application. Strictly speaking, therefore, his bank statements numbered 62 and 63 were inadmissible before the tribunal. The judge probably took the view that reference to those statements would be impermissible only if they were to provide a basis for allowing the appeal; and that, in briefly setting out his reasons for dismissing it, it would be unrealistic for him not to explain that Mr Mandalias possession of the requisite 5,400 throughout the first six of the 28 days had by then become clear. At the end of his reasons the judge of the First tier Tribunal observed that, in the light of the fresh evidence, a further, more careful, application by Mr Mandalia for extension of his visa might well succeed. This court has received vigorous submissions on each side about the circumstances in which, on payment of a further fee, Mr Mandalia might have been able to make a further application. But in my view his ability to do so, to the extent that it existed, is irrelevant to the issue raised in the appeal. Mr Mandalia took specialist advice about the possibility of an appeal to the Upper Tribunal (Immigration and Asylum Chamber) and, with the help of the adviser, applied to the Upper Tribunal for permission to appeal. The adviser was aware of a document which had been issued by the agency to caseworkers on 17 June 2011 entitled PBS Process Instruction: Evidential Flexibility (the process instruction) and which had subsequently been published on the agencys website. The grounds of the proposed appeal were that, in refusing Mr Mandalias application without first having first drawn his attention to his failure to demonstrate that he had held the requisite 5,400 throughout the first six of the 28 days, the agency had unlawfully departed from its policy set out in the process instruction. Mr Mandalia also sought permission to appeal against the agencys decision to remove him from the UK on the ground that, in the light of the Upper Tribunals construction of the terms, as they then were, of section 47 of the 2006 Act in Ahmadi v Secretary of State for the Home Department (which was later to be upheld in the Court of Appeal [2013] EWCA Civ 512, [2014] 1 WLR 401), the decision had been premature. A judge of the Upper Tribunal duly granted to Mr Mandalia permission to appeal but he did so in somewhat ambiguous terms. Two other judges of the Upper Tribunal construed his permission as limited to the appeal against the removal decision; and on 12 December 2012, in the light of its decision in the Ahmadi case, the Upper Tribunal allowed Mr Mandalias appeal in that respect. The result was however that the Upper Tribunal never addressed his challenge, by reference to the process instruction, to the First tier Tribunals decision to dismiss his appeal against the refusal of his application. When in the Court of Appeal Mr Mandalia sought to renew his challenge to the refusal of his application, the Secretary of State responded to the effect that permission to make that challenge had been refused in the Upper Tribunal and that the Court of Appeal therefore had no jurisdiction to entertain an appeal in relation to it. Mr Mandalia countered by submitting that, on its proper construction, the Upper Tribunals grant of permission had included permission to make that challenge; that the two judges of the Upper Tribunal who had considered otherwise had been wrong; that the Upper Tribunal should accordingly be taken to have dismissed that part of his appeal; and that the Court of Appeal therefore had jurisdiction to entertain his appeal against the dismissal of it. This issue was not resolved until the start of the substantive hearing of Mr Mandalias appeal in the Court of Appeal, when it upheld his submissions in relation to it and turned to consider the merits of his appeal. It follows, however, that the Court of Appeal was handicapped by the lack of any analysis of the effect of the process instruction on the lawfulness of the agencys decision by either of the specialist tribunals below. It was unfortunate not only that the judges grant of permission to appeal to the Upper Tribunal was couched in ambiguous terms but also that other judges of the Upper Tribunal misconstrued it and so declined to address that part of Mr Mandalias appeal which was based on the process instruction. But it was still more unfortunate that no reference had been made to the process instruction before the First tier Tribunal. Mr Mandalia could not be expected to have been aware of it. But, irrespective of whether the specialist judge might reasonably be expected himself to have been aware of it, the Home Office Presenting Officer clearly failed to discharge his duty to draw it to the tribunals attention as policy of the agency which was at least arguably relevant to Mr Mandalias appeal: see AA (Afghanistan) v Secretary of State for the Home Department [2007] EWCA Civ 12 at para 13. The Court of Appeal determined Mr Mandalias appeal together with two other appeals in which the effect of the process instruction was also raised. In the first of the other appeals the Secretary of State was the appellant and Ms Rodriguez was the respondent. The agency had refused her application for extension of her student visa for failure to secure points under Appendix C. By reference to the process instruction, the Upper Tribunal had ordered that the agencys refusal be quashed. In the second of the other appeals Ms Patel was the appellant and the Secretary of State was the respondent. She was appealing against the order of the Upper Tribunal by which, in contrast, it had declined to quash the agencys refusal of her application for extension of her student visa for failure to secure points under Appendix C. In all three appeals the decision of the Court of Appeal went in favour of the Secretary of State. So it allowed her appeal in Ms Rodriguez case and dismissed the appeals of Mr Mandalia and Ms Patel. There was some difference which Davis LJ described as no real difference between the facts in Mr Mandalias case and those in the cases of Ms Rodriguez and Ms Patel. For they had both enclosed bank statements which did indeed cover the requisite 28 days but which showed that, on four of those days in the case of Ms Rodriguez and on one of them in the case of Ms Patel, their credit balances had fallen below the amount of which they were required to demonstrate possession. The Court of Appeal accepted that each of them would have been able to demonstrate possession of other funds which, had the agency drawn their attention to the deficit, would have repaired it; but it held that the agency had nevertheless been entitled to refuse their applications without having drawn it to their attention. The Process Instruction As its full title indicated, the process instruction was addressed to the agencys caseworkers who were processing applications for visas by reference to the points based system. The reference in the title to evidential flexibility was an indication in shorthand that the instruction was that caseworkers should show some, albeit limited, flexibility in relation to applications from which requisite information had been omitted and, in particular, which had not been accompanied by requisite evidence. The introduction to the process instruction was as follows: In response to significant feedback from the caseworking teams, as well as from our customers, from August 2009 a flexible process was adopted allowing PBS caseworkers to invite sponsors and applicants to correct minor errors or omissions in applications both main and dependant submitted under Tiers 1, 2, 4 and 5. The instruction enabled caseworkers to query details or request further information, such as a missing wage slip or bank statement from a sequence. Three working days [were] given to the customer to provide the requested information. This instruction only applied to cases which would be refused solely on the absence of a piece of evidence or information. Where the application would fall for refusal even if the missing evidence was submitted, a request to submit this further information would not be made. The introduction of this instruction resulted in a reduced refusal rate. However, those that fell for refusal where multiple pieces of information were missing were often successful on appeal. Following analysis of allowed appeals and feedback from the National Audit Office and Chief Inspector , the original Evidential Flexibility instruction has been reviewed to meet the recommendations put forward in these reports As such, there have been two significant changes to the original Evidential Flexibility instruction: 1) The time given to applicants to produce additional evidence has been increased to seven working days; and 2) There is now no limit on the amount of information that can be requested from the applicant. However, requests for information should not be speculative, we must have sufficient reason to believe that any evidence requested exists. The process instruction then identified 19 steps which the caseworker was to take when an application has missing evidence or there is a minor error. In step one the caseworker was to ask himself whether there was missing evidence. If his answer was yes, he was to proceed to step two. In step two he was to ask himself whether the application would fall to be refused even if the missing evidence was provided. If his answer was no, he was to proceed to step three. Step three was as follows: We will only go out for additional information in certain circumstances which would lead to the approval of the application. Before we go out to the applicant we must have established that evidence exists, or have sufficient reason to believe the information exists. Examples include (but are not limited to): 1) bank statements missing from a series; 2) 3) 4) The evidence listed in Annex A is not exhaustive, but provides caseworkers with guidance as to the circumstances when evidence can be requested. In Annex A it was reiterated that it might be appropriate to ask an applicant under Tier 4 to provide [m]issing bank statements from a series. Step four addressed the caseworker who was unsure whether the evidence existed. He was to discuss the issue with his line manager. Here the instruction was that [w]here there is uncertainty as to whether evidence exists, benefit should be given to the applicant and the evidence should be requested. So the question was whether the line manager was satisfied that the missing evidence existed or had reasonable grounds to believe that it existed. If the answer to the question was yes or even if the answer was unsure, the caseworker was to proceed to step five, which was to contact the applicant. The later steps are irrelevant to the appeal. In that Mr Mandalias application was made on 7 February 2012, it is agreed that the process instruction represented agency policy which in principle applied to it. It should be noted, however, that, in respect of all applications made on or after 6 September 2012, the process instruction was withdrawn and the facility for a caseworker to seek further information or evidence prior to determining an application was instead governed by a new rule, namely rule 245AA, inserted into the rules. The new rule, which was amended with effect from 13 December 2012 and re amended with effect from 1 October 2013, seems to give caseworkers substantially less flexibility than did the process instruction. But the encouragement to contact an applicant survives if [s]ome of the documents in a sequence have been omitted (for example, if one bank statement from a series is missing). The Legal Effect of Policy In 2001, in R (Saadi) v Secretary of State for the Home Department [2001] EWCA Civ 1512, [2002] 1 WLR 356, Lord Phillips of Worth Matravers MR, giving the judgment of the Court of Appeal, said in para 7: The lawful exercise of [statutory] powers can also be restricted, according to established principles of public law, by government policy and the legitimate expectation to which such a policy gives rise. Since 2001, however, there has been some departure from the ascription of the legal effect of policy to the doctrine of legitimate expectation. Invocation of the doctrine is strained in circumstances in which those who invoke it were, like Mr Mandalia, unaware of the policy until after the determination adverse to them was made; and also strained in circumstances in which reliance is placed on guidance issued by one public body to another, for example by the Department of the Environment to local planning authorities (see R (WL) (Congo) v Secretary of State for the Home Department [2010] EWCA Civ 111, [2010] 1 WLR 2168, para 58). So the applicants right to the determination of his application in accordance with policy is now generally taken to flow from a principle, no doubt related to the doctrine of legitimate expectation but free standing, which was best articulated by Laws LJ in R (Nadarajah) v Secretary of State for the Home Department [2005] EWCA Civ 1363, as follows: 68 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. Thus, in R (Lumba) v Secretary of State for the Home Department (JUSTICE intervening) [2011] UKSC 12, [2012] 1 AC 245 (in which this court reversed the decision of the Court of Appeal reported as R (WL) (Congo) but without doubting the observation in para 58 for which I have cited the decision in para 29 above), Lord Dyson said simply: 35. 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. There is no doubt that the implementation of the process instruction would have been a lawful exercise of the power conferred on the Secretary of State by section 4(1) of the Immigration Act 1971 to give or vary leave to remain in the UK. But, in his judgment in the Lumba case, Lord Dyson had articulated two qualifications. He had said: 21 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. But there was ample flexibility in the process instruction to save it from amounting to a fetter on the discretion of the caseworkers. Lord Dyson had also said: 26 a decision maker must follow his published policy unless there are good reasons for not doing so. But the Secretary of State does not argue that there were good reasons for not following the process instruction in the case of Mr Mandalia. Her argument is instead that, properly interpreted, the process instruction did not require the caseworker to alert Mr Mandalia to the deficit in his evidence before refusing his application. So the search is for the proper interpretation of the process instruction, no more and no less. Indeed in that regard it is now clear that its interpretation is a matter of law which the court must therefore decide for itself: R (SK (Zimbabwe)) v Secretary of State for the Home Department (Bail for Immigration Detainees intervening) [2011] UKSC 23, [2011] 1 WLR 1299, para 36, Lord Hope of Craighead). Previous suggestions that the courts should adopt the Secretary of States own interpretation of her immigration policies unless it is unreasonable, made for example in Gangadeen and Jurawan v Secretary of State for the Home Department [1998] Imm AR 106 at p 115, are therefore inaccurate. Interpretation of the Process Instruction In step three of the process instruction a specific example was given of a situation in which the caseworker should request the applicant to provide further evidence: it was where a bank statement was missing from a series. This court has received elaborate submissions about whether, in circumstances in which Mr Mandalia had submitted a bank statement numbered 64, his statements numbered 62 and 63 can be said to have been missing from a series. The conclusion of the Court of Appeal was that they were not missing from a series. Davis LJ said: 102 this was not a missing sequence case; and it would again have been complete speculation on the part of the Secretary of State as to whether bank statements if available at all for the preceding period or the succeeding period would have shown the availability of funds in the required amounts. The Secretary of State concedes that a bank statement numbered 64 clearly indicates that statements for the preceding period are available; but otherwise she commends the analysis of Davis LJ. Indeed in R (Gu) v Secretary of State for the Home Department [2014] EWHC 1634 (Admin), [2015] 1 All ER 363, Foskett J adopted it. The facts in the Gu case were almost identical to those in the present case but, by the date of Mr Gus application, the process instruction had been withdrawn and instead the court had to consider the references in the first version of rule 245AA to a document omitted from a sequence as well as to a bank statement missing from a series. In dismissing Mr Gus application for judicial review of the refusal of his application, Foskett J held: 24 something cannot be missing from a sequence until the sequence itself exists. To my mind that means that at least the start and the end of the sequence must be in evidence for the sequence to exist. Something missing from it can only, therefore, be from within those two limits. Thus emboldened by the analysis of two highly respected judges, the Secretary of State submits that it is only when the applicant has provided the caseworker with what she calls two pillars, namely the pillar which marks the start of a series and the pillar which marks its end, that the caseworker can properly conclude that something is missing from the series which he should invite the applicant to provide. Speaking for myself, I consider the Secretary of States submission to be misplaced even at the high level of pedantry on which it has been set. Mr Mandalias bank statements numbered 62, 63 and 64 formed a series. It must have been obvious to the caseworker, as he studied statement numbered 64, that it formed the last in a series and that the statement or statements which covered the preceding six days, and which turned out to be the statements numbered 62 and 63, were missing from the series. But in my view it was not the task of the unfortunate caseworker even to attempt to split such hairs. The process instruction rightly stressed the need for flexibility by telling him: a) b) c) in the introduction that there was now no limit on the amount of information that could be requested, provided that the request was not speculative; in step three that bank statements missing from a series represented only an example of the further evidence which should be requested; and in step four that, where there was uncertainty as to whether evidence existed, the applicant should be given the benefit of the doubt and it should be requested. Conferred, as he was, with that necessary degree of flexibility, how could the caseworker have followed the process instruction otherwise than by requesting Mr Mandalia to provide the statement or statements which covered the first six of the 28 days? Of course it would have seemed possible to the caseworker that, although Mr Mandalia had held more than double the requisite funds throughout the later 22 days, he had not held the requisite funds throughout the first six days. But why was that possibility more likely than that an applicant who had provided statements covering only the first and last of the 28 days had not held the requisite funds throughout the intervening 26 days? In one sense every request by a caseworker for further evidence would have been speculative but what was there in Mr Mandalias application to render a request to him more speculative than any other? Was there not, at the very least, doubt, the benefit of which should have been given to him? Answer I conclude that the answer to the question identified in para 1 above is yes: the agencys refusal of Mr Mandalias application was unlawful because, properly interpreted, the process instruction obliged it first to have invited him to repair the deficit in his evidence. I reach this conclusion without reference to the terms of the agencys letter to Mr Mandalia dated 8 February 2012, set out in para 10 above. The Secretary of State may well be correct to say that, however broad the apparent assurance that Mr Mandalia would be advised about deficits in his application, the intention of the letters author was to limit the assurance to deficits in what the Secretary of State describes as the initial validity of the application as opposed to deficits which might emerge on its substantive consideration. But this distinction carries a subtlety which would have been lost on Mr Mandalia. No doubt he would reasonably have understood the letter to make clear that, were there to have been a deficit in his evidence of having held the requisite funds, it would be drawn to his attention before his application was refused. It is, however, unnecessary to decide whether the letter conferred on Mr Mandalia a legal entitlement to that effect. The court should therefore allow this appeal; should overrule the decision in the Gu case; and should quash the refusal of Mr Mandalias application so that, no doubt following the provision of further, updated information made by him pursuant to request, it may lawfully be re determined. |
The Respondent, Haley Anne Preston (formerly Moore), a Minister in the Redruth Circuit of the Methodist Church until 2009, wishes to prosecute a claim against the Church in an employment tribunal for unfair dismissal. Under section 94 of the Employment Rights Act 1996, only an employee has the right not to be unfairly dismissed. Section 230 uncontroversially defines an employee as someone who has entered into or works under a contract of service or apprenticeship. The question at issue on this appeal is whether Ms Preston was an employee. The tribunal held that she was not. That decision was, however, reversed by the Employment Appeal Tribunal in a decision subsequently upheld by the Court of Appeal. The current state of the authorities Disputes about the employment status of ministers of religion have been coming before the courts ever since the introduction of national insurance in 1911 made it necessary to classify them for the first time. There is now a substantial body of authority on the point, much of it influenced by relatively inflexible tests borne of social instincts which came more readily to judges of an earlier generation than they do in the more secular and regulated context of today. Until recently, ministers of religion were generally held not to be employees. Two recurrent themes can be found in the case-law. The first is the distinction between an office and an employment. Broadly speaking, the difference is that an office is a position of a public nature, filled by successive incumbents, whose duties were defined not by agreement but by law or by the rules of the institution. A beneficed clergyman of the Church of England is, or was until recent measures modified the position, the paradigm case of a religious office-holder. But at an early stage curates in the Church of England were recognised as having the same status for this purpose: see In re Employment of Church of England Curates [1912] 2 Ch 563. The position of other ministers was taken to be analogous. In Scottish Insurance Commissioners v Church of Scotland (1914) SC 16, which concerned an assistant minister in the United Free Church of Scotland, Lord Kinnear said at 23 that the status of an assistant minister is not that of a person who undertakes work defined by contract but of a person who holds an ecclesiastical office, and who performs the duties of that office subject to the laws of the Church to which he belongs and not subject to the control and direction of any particular master. In Diocese of Southwark v Coker [1998] ICR 140, the Court of Appeal held that a stipendiary assistant curate was not an employee. They held that his duties were derived from his priestly status and not from any contract. Both Mummery LJ (at 147) and Staughton LJ (at 150) considered that there was a presumption that ministers of religion were office-holders who did not serve under a contract of employment. The second theme is a tendency to regard the spiritual nature of a minister of religions calling as making it unnecessary and inappropriate to characterise the relationship with the church as giving rise to legal relations at all. In Rogers v Booth [1937] 2 All ER 751, 754, Sir Wilfred Green MR, delivering the judgment of the Court of Appeal, held that membership of the Salvation Army gave rise to a relationship pre-eminently of a spiritual character which was not intended to give rise to legal relations. More recently, in Davies v Presbyterian Church of Wales [1986] 1 WLR 323, the House of Lords held that the mere fact that a relationship founded on the rules of a church was non-contractual did not mean that that there were no legally enforceable obligations at all. But they were inclined to find those obligations in the law of trusts, and adhered to the familiar distinction between an employment and a religious vocation. At p 329, Lord Templeman, with whom the rest of the committee agreed, said: My Lords, it is possible for a man to be employed as a servant or as an independent contractor to carry out duties which are exclusively spiritual. But in the present case the applicant cannot point to any contract between himself and the church. The book of rules does not contain terms of employment capable of being offered and accepted in the course of a religious ceremony. The duties owed by the pastor to the church are not contractual or enforceable. A pastor is called and accepts the call. He does not devote his working life but his whole life to the church and his religion. His duties are defined and his activities are dictated not by contract but by conscience. He is the servant of God. If his manner of serving God is not acceptable to the church, then his pastorate can be brought to an end by the church in accordance with the rules. The law will ensure that a pastor is not deprived of his salaried pastorate save in accordance with the provisions of the book of rules but an industrial tribunal cannot determine whether a reasonable church would sever the link between minister and congregation. The duties owed by the church to the pastor are not contractual. The law imposes on the church a duty not to deprive a pastor of his office which carries a stipend, save in accordance with the procedures set forth in the book of rules. President of the Methodist Conference v Parfitt [1984] QB 368 was a decision of the Court of Appeal on a claim for unfair dismissal by a Methodist minister. It is therefore directly in point on the present appeal. The Court held that the minister was not an employee, but the reasons of its members differed. Dillon LJ considered the spiritual character of the Methodist ministry to be fundamental to constitution and standing orders of the Methodist Church, but he reached the conclusion by an analysis of their terms. He does not appear to have been influenced by the distinction between an office and an employment, and regarded the earlier authorities as of no assistance. May LJ, on the other hand, adopted the analysis of the dissenting judgment of Waterhouse J in the Employment Appeal Tribunal, who had considered that the spiritual character was in itself inconsistent with the existence of a contractual relationship. Sir John Donaldson MR agreed with both judgments. The leading modern case in this area is the decision of the House of Lords in Percy v Board of National Mission of the Church of Scotland [2006] 2 AC 28. The Appellant was an associate minister in a parish of the Church of Scotland, who wished to bring a sex discrimination claim against the Church. It was accepted that she did not have a contract of service. But the statutory test of employment for the purposes of sex discrimination claims is broader than the test for unfair dismissal claims. Under the Sex Discrimination Act 1975, it extended to those who contract personally to execute any work or labour. Ms Percy claimed to come within that category. In spite of the difference between the tests for unfair dismissal and sex discrimination, the House took the opportunity to revisit both of the themes which had featured in the authorities to date on the question whether a minister was employed under a contract of service. The leading speech for the majority was delivered by Lord Nicholls, with whom Lord Scott and Baroness Hale agreed. Lord Nicholls regarded office- holding as an unsatisfactory criterion, at any rate on its own, for deciding whether a person was employed. The concept is clear enough but the boundaries are not, except in the case of holders of a small number of offices which have long been recognised as such by the common law, such as constables and beneficed clergymen of the Church of England. Moreover, offices and employments are not always mutually exclusive categories. A contract of employment is capable of subsisting side by side with many of the characteristics of an office. It followed that the classification of a ministers occupation as an office was no more than one factor in a judgment that depended on all the circumstances. Turning to the spiritual character of a ministers calling, Lord Nicholls recognised its relevance but pointed out that it could not be conclusive. At paras 23-25, he said: 23. There are indeed many arrangements or happenings in church matters where, viewed objectively on ordinary principles, the parties cannot be taken to have intended to enter into a legally-binding contract. The matters relied upon by Mr Parfitt in President of the Methodist Conference v Parfitt [1984] QB 368 are a good example of this. The nature of the lifelong relationship between the Methodist Church and a minister, the fact that he could not unilaterally resign from the ministry, the nature of his stipend, and so forth, all these matters made it impossible to suppose that any legally-binding contract came into being between a newly-ordained minister and the Methodist Church when he was received into full connection. Similarly with the Church's book of rules relied on by the Reverend Colin Davies in Davies v Presbyterian Church of Wales [1986] I WLR 323. Then the rebuttable presumption enunciated by the Lord President in the present case, following Mummery LJ's statements of principle in Diocese of Southwark v Coker [1998] ICR 140, 147, may have a place. Without more, the nature of the mutual obligations, their breadth and looseness, and the circumstances in which they were undertaken, point away from a legally-binding relationship. 24. But this principle should not be carried too far. It cannot be carried into arrangements which on their face are to be expected to give rise to legally-binding obligations. The offer and acceptance of a church post for a specific period, with specific provision for the appointee's duties and remuneration and travelling expenses and holidays and accommodation, seems to me to fall firmly within this latter category. 25. Further, in this regard there seems to be no cogent reason today to draw a distinction between a post whose duties are primarily religious and a post within the church where this is not so. In President of the Methodist Conference v Parfitt [1984] QB 368, 376, Dillon LJ noted that a binding contract of service can be made between a minister and his church. This was echoed by Lord Templeman in your Lordships' House in Davies v Presbyterian Church of Wales [1986] I WLR 323, 329. Lord Templeman said it is possible for a man to be employed as a servant or as an independent contractor to carry out duties which are exclusively spiritual. 26 The context in which these issues normally arise today is statutory protection for employees. Given this context, in my view it is time to recognise that employment arrangements between a church and its ministers should not lightly be taken as intended to have no legal effect and, in consequence, its ministers denied this protection. Applying these principles to Ms Percys case, Lord Nicholls had no difficulty in finding that she had contracted personally to execute any work or labour. This was because of the manner in which she had been engaged. The relevant committee of the Church of Scotland had invited applications, referring to the duties, the terms of service and the remuneration associated with the job. Ms Percy had responded, was offered the job and sent a full copy of the terms. She replied formally accepting it. These circumstances suggested a contractual relationship, and nothing in the terms was inconsistent with that. Lord Hope, in a concurring judgment, reached the same conclusion, pointing out that the manner of appointment of an associate minister was significantly different from the induction of a minister to a charge. He considered that if the relationship was contractual at all, the contract was one which engaged the anti-discrimination provisions of the statute. He accepted that Ms Percy was appointed to an office. But, like Lord Nicholls, he thought that there was no reason why the duties of that office should not be performed under a contract. The circumstances in which Ms Percy was engaged showed that this was what the parties had intended in her case. It is clear from the judgments of the majority in Percy that the question whether a minister of religion serves under a contract of employment can no longer be answered simply by classifying the ministers occupation by type: office or employment, spiritual or secular. Nor, in the generality of cases, can it be answered by reference to any presumption against the contractual character of the service of ministers of religion generally: see, in particular, Baroness Hale at para 151. The primary considerations are the manner in which the minister was engaged, and the character of the rules or terms governing his or her service. But, as with all exercises in contractual construction, these documents and any other admissible evidence on the parties intentions fall to be construed against their factual background. Part of that background is the fundamentally spiritual purpose of the functions of a minister of religion. The constitution and standing orders of the Methodist Church Methodist ministers have no written contract of employment. Their relationship with the Church is governed by its constitution, which is contained in the Deed of Union, by the standing orders of the Methodist Conference, and by such specific arrangements (if any) as may have been made with a particular minister. It is convenient to deal first with the position of the Methodist ministry generally, before examining any special arrangements with Ms Preston. Ms Rose QC, who appeared for the President of the Methodist Conference, invited us to approach these instruments on the footing that in the absence of anything in them amounting to an express contract of employment, it was necessary to imply one. For this purpose, she submitted, the test was one of necessity. If the essential features of the arrangements described in the Deed of Union and the standing orders were capable of being explained without reference to an employment relationship, then no such relationship should be held to exist. I reject this submission for three reasons. In the first place, in modern conditions, against the background of the broad schemes of statutory protection of employees, it should not readily be assumed that those who are engaged to perform work and receive remuneration intend to forgo the benefits of that protection, even where the work is of a spiritual character. Secondly, as Lord Hope pointed out in Percy, at para 107 the practical effect of the suggested approach is to reintroduce the presumption of non-contractual status in the case of ministers of religion, which he, along with the majority in that case rejected in principle. Third, whatever the legal classification of a Methodist ministers relationship with his Church, it is not sensible to regard it as implied. It is documented in great detail in the Deed of Union and the standing orders. The question is whether the incidents of the relationship described in those documents, properly analysed, are characteristic of a contract and, if so, whether it is a contract of employment. Necessity does not come into it. The Deed of Union, in its original form, was agreed in 1932 when the Wesleyan Methodist Church united with the Primitive Methodist Church and the United Methodist Church and other Methodist denominations to form the Methodist Church of Great Britain. The governing body of the Church is the Conference, which meets annually and transacts business in two sessions, the Representative Session and the Ministerial Session. The Representative Session comprises designated office-holders and representatives. The Ministerial Session comprises those members of the Representative Session who are ministers, together with certain other categories of ministers. The senior officer of the Church is the President of the Conference, who is designated as such by a vote of the previous Conference. Detailed provision is made for every aspect of the government of the Church by standing orders made by the Conference. For the purposes of its ministry, the Church is divided into geographical circuits, each of which is governed by its Circuit Meeting, Circuit Stewards, and committees appointed for special purposes. The Church adheres to the doctrine of the priesthood of all believers. Section 2, clause 4 of the Deed of Union records, Christs ministers in the church are stewards in the household of God and shepherds of his flock. Some are called and ordained to this sole occupation and have a principal and directing part in these great duties but they hold no priesthood differing in kind from that which is common to all the Lords people and they have no exclusive title to the preaching of the gospel or the care of souls. Section 7, clause 23(h) of the Deed of Union provides that to become a minister a candidate must first obtain the judgment of the Ministerial Session that he or she is fit to be admitted into full connexion and ordination. The Representative Session must then resolve that he or she is to be admitted and ordained. The candidate is then ordained by laying on of hands. Standing order 700(2) provides that [b]y receiving persons into full connexion as Methodist ministers the Conference enters into a covenant relationship with them in which they are held accountable by the Church in respect of their ministry and Christian discipleship, and are accounted for by the Church in respect of their deployment and the support they require for their ministry. Standing order 740(1)(a) provides that [i]n this relationship they accept a common discipline of stationing and collegially exercise pastoral responsibility for the Church. Stationing is a critical part of the management of the Church. It is the formal act by which a minister is assigned to particular duties. Section 20 of the Deed of Union requires the Conference annually to station ministers and probationers, although by section 29 they may be stationed between Conferences by the current President of the Conference. The standing orders make detailed provision for the process by which a minister is stationed. The first stage is an invitation from a Circuit, which is issued by the Circuit Invitation Committee, on the proposal of the Stewards: see standing order 540. The next stage is that current invitations issued by the Circuits are reported to the Stationing Committee of the Conference under standing order 782 once a year by an appointed date. This body then makes recommendations to the Representative Session of the next Conference. It is the Conference which makes the final decision: see standing order 322. Standing order 700(1) provides that [m]inisters are ordained to a life-long presbyteral ministry of word, sacrament and pastoral responsibility in the Church of God which they fulfil in various capacities and to a varying extent throughout their lives. It is clear that the life-long character of the ministry is more than just an aspiration. A minister can cease to be in full connexion only in limited circumstances, none of which is wholly dependent on his or her wishes. Under standing order 760, he or she may send a notice of resignation to the President of the Conference, but it is up to the President, advised by a special committee, to decide whether to accept it. Otherwise, a minister may cease to be in full connexion if a disciplinary charge is brought and a Disciplinary Committee exercises its power under standing order 1134 to decide that he or she shall cease to be a minister... in full connexion. It should be noted that the disciplinary scheme is the same for ministers and lay members, so far as the distinction is meaningful in a church in which the ministry is not a distinct order or class. Standing order 1100(3)(ii) provides that there should be no difference in principle between ordained and lay people in the way in which complaints against them are dealt with. For as long as a minister remains in full connexion he or she must be stationed, save in two cases. The first is that one of the exceptions in standing order 774 applies, i.e. the minister receives a discretionary exemption from the Ministerial Session of the Conference, or is required to be without appointment by the Stationing Committee on the ground that no appointment can be found. The second is that they are permitted by the Ministerial Session of the Conference to become supernumeraries (i.e. retire) under standing order 790 on account of their age, length of service or ill-health or on compassionate grounds. Retirement is, however, a relative term. Even supernumerary ministers are required under standing order 792 to continue to exercise their ministry as he or she is able. All ministers in full connexion who are not permitted to be without appointment under one of these provisions, are defined by section 1 of the Deed of Union as being in the active work. Section 80 of the standing orders provides for the support and maintenance of ministers. Under standing order 801, all ministers in active work and all stationed probationers are entitled to a stipend throughout their ministry, including periods of unlimited duration when they may be unable to perform their duties on account of illness or injury. In addition, they are entitled under standing order 803 to a manse to serve as a home and as a base for their ministry. Neither the stipend nor the manse are regarded by the Methodist Church as the consideration for the services of its ministers. They regard them as a method of providing the material support to the minister without which he or she could not serve God. In the Churchs view, the sale of a ministers services in a labour market would be objectionable, as being incompatible with the spiritual character of their ministry. If the arrangements governing the ministry described in the Deed of Union and the standing orders are a contract between the minister in that capacity and the Methodist Church, then it seems to me inevitable that they must be classified as a contract of employment. But that only increases the difficulty of regarding them as a contract at all. Three points seem to me to be cumulatively decisive. First, the manner in which a minister is engaged is incapable of being analysed in terms of contractual formation. Neither the admission of a minister to full connexion nor his or her ordination are themselves contracts. Thereafter, the ministers duties are not consensual. They depend on the unilateral decisions of the Conference. Secondly, the stipend and the manse are due to the minister by virtue only of his or her admission into full connexion and ordination. While he or she remains in full connexion and in the active life, these benefits continue even in the event of sickness or injury, unless he or she is given leave of absence or retires. In addition to the stipend and the manse, the minister has certain procedural rights derived from the disciplinary scheme of the Deed of Union and the standing orders, which determine the manner in which he or she may be suspended or removed from ministerial duties. But the disciplinary scheme is the same for all members of the Church whether they are ministers or ordinary lay members. Third, the relationship between the minister and the Church is not terminable except by the decision of the Conference or its Stationing Committee or a disciplinary committee. There is no unilateral right to resign, even on notice. I conclude that the ministry described in these instruments is a vocation, by which candidates submit themselves to the discipline of the Church for life. Unless some special arrangement is made with a particular minister, the rights and duties of ministers arise, as it seems to me, entirely from their status in the constitution of the Church and not from any contract. Ms Prestons ministry Conscious of the difficulties posed by the Deed of Union and the standing orders, Mr Bowers QC (who appeared for Ms Preston) founded his case mainly on the particular circumstances in which his client came to be stationed at the Redruth Circuit. These, he suggested, did amount to a special arrangement with his client, analogous to the one which was held to be contractual by the majority in Percy. The facts are that Ms Preston was initially stationed by the Conference as a probationer minister in Taunton Circuit in September 2001. She was admitted to full connexion by the 2003 Conference and thereupon ordained. She was then stationed as a full minister by the same Conference at the Taunton Circuit where she had been working as a probationer for the past two years. In November 2005, she was invited by the Invitation Committee of the Redruth Circuit to become a Superintendent Minister there. A Superintendent Minister is the senior minister of a circuit with a number of other ministers. The Redruth Circuit Steward wrote to her on 19 November 2005 confirming the invitation in the following terms: Following our telephone conversation last Monday, I can confirm the invitation made by the Redruth Methodist Circuit to offer you the position of Superintendent Minister commencing September 2006 for a period of five years. On 22 November, Ms Preston replied: Many thanks for your letter officially inviting me to serve as Superintendant Minister in the Redruth Circuit from September 2006. I write to confirm my acceptance of the invitation and express my thanks to the invitation committee. In other contexts, an exchange of letters like this one might well have given rise to a contract. The difficulty here is that the exchange occurred within the framework of the standing orders, from which it is clear that it was only part of a much longer procedure. Under the standing orders, the circuits have no power to make an appointment. The circuits invitation is no more than a proposal to the Conference Stationing Committee that they should recommend the candidate to the Conference for stationing in their circuit. While every effort is made to meet the preferences of both circuits and ministers, the decision is reserved to the Conference. It may be delegated only to the President of the Conference, and then only if the appointment has to be made between Conferences. The relevant relationship is between the minister and the Conference, which may move him or her from one circuit to another even before the end of the period for which the circuit invited the candidate to serve. There is no fresh relationship with each invitation or even with each appointment. It follows that Ms Preston was serving as a minister at Redruth not pursuant to the five-year relationship envisaged in the exchange of letters, but pursuant to the life-long relationship into which she had already entered two years before the exchange of letters, when she was ordained. The nature of that relationship was wholly dependent on the Deed of Union and standing orders under which she took that step. It makes no difference to this analysis that Ms Preston was appointed as a Superintendant Minister at Redruth. That was simply the role for which she was stationed by the Conference. The decisions of the Employment Appeal Tribunal and the Court of Appeal The Employment Appeal Tribunal and the Court of Appeal considered that Ms Preston was an employee, essentially because a Methodist minister served under arrangements of a kind which, in the words of Lord Nicholls in Percy, at para 24, on their face are to be expected to give rise to legally binding obligations. This was because they provided for the ministers duties, remuneration, accommodation, and the like. It is somewhat unclear at what stage and by virtue of what acts the parties entered into the contract of employment which they discerned. The Employment Appeal Tribunal appears to have thought that the contract was made by the offer and acceptance of a Church post for a specified period when Ms Preston was invited to serve in the Redruth Circuit: [2011] ICR 819. The Court of Appeal endorsed their conclusion generally, without giving specific attention to this aspect of the matter: [2012] QB 735. This conclusion gives rise to three principal difficulties. First, if it is correct, it would mean that almost any arrangements for the service of a minister of religion would be contractual unless the minister was a non-stipendiary volunteer. Secondly, the analysis which makes the circuits invitation and its acceptance into a contract is not consistent with the function of the invitation under the standing orders. The difficulty of identifying any acts by which the contract can be said to have been made is symptomatic of a broader problem of fitting the supposed contract within the scheme of the Churchs constitution, which the courts below have not really addressed. Third, and fundamentally, the conclusion of the courts below brought them up against the difficulty that Lord Nicholls, at para 23, apparently endorsed the decision in Parfitt, in which the facts were indistinguishable from those of the present case and the terms of the Deed of Union and standing orders were in all relevant respects the same. They surmounted this difficulty by subjecting the speeches to a minute analysis, what Maurice Kay LJ in the Court of Appeal called the fine toothcomb treatment. From this, they concluded that Lord Nicholls observations about Parfitt were inconsistent with his own test and with the speeches of those who agreed with him, and might therefore properly be disregarded. Underhill J, delivering the judgment of the Employment Appeal Tribunal, thought that he might have been describing only the historic position, but acknowledged that that is not what he appeared to be saying. In my view both courts below over-analysed the decision in Percy, and paid insufficient attention to the Deed of Union and the standing orders which were the foundation of Ms Prestons relationship with the Methodist Church. The question whether an arrangement is a legally binding contract depends on the intentions of the parties. The mere fact that the arrangement includes the payment of a stipend, the provision of accommodation and recognised duties to be performed by the minister, does not without more resolve the issue. The question is whether the parties intended these benefits and burdens of the ministry to be the subject of a legally binding agreement between them. The decision in Percy is authority for the proposition that the spiritual character of the ministry did not give rise to a presumption against the contractual intention. But the majority did not suggest that the spiritual character of the ministry was irrelevant. It was a significant part of the background against which the overt arrangements governing the service of ministers must be interpreted. Nor did they suggest that the only material which might be relevant for deciding whether the arrangements were contractual were the statements marking the ministers engagement, although it so happened that there was no other significant material in Ms Percys case. Part of the vice of the earlier authorities was that many of them proceeded by way of abstract categorisation of ministers of religion generally. The correct approach is to examine the rules and practices of the particular church and any special arrangements made with the particular minister. What Lord Nicholls was saying was that the arrangements, properly examined, might well prove to be inconsistent with contractual intention, even though there was no presumption to that effect. He cited the arrangements governing the service of Methodist ministers considered in Parfitt as an example of this, mainly for the reasons given in that case by Dillon LJ. These were, essentially, the lifelong commitment of the minister, the exclusion of any right of unilateral resignation and the characterisation of the stipend as maintenance and support. There is nothing inconsistent between his view on these points and the more general statements of principle appearing in his speech and in the speeches of those who agreed with him. Conclusion I would allow the appeal and restore the order of the Employment Tribunal dismissing Ms Prestons claim. Careful written arguments were presented to us on the question whether, and if so on what basis, a minister could enforce a claim to a stipend and to the occupation of a manse in the absence of a contract. I am inclined to think, with Lord Templeman in Davies v Presbyterian Church of Wales [1986] 1 WLR 328, that the answer to that question is that these benefits are enforceable as part of the trusts of the Churchs property, but I should prefer to leave that question to a case in which it arises and in which fuller material is available for resolving it. For the reasons given by Lord Sumption, I too would allow the appeal and restore the order of the Employment Tribunal. We were urged by the respondent to recognise the true nature of her relationship with the Church in the modern sense indicated by Lord Nicholls in Percy v Board of National Mission of the Church of Scotland [2006] 2 AC 28, paras 25 and 26. I have no difficulty with that proposition so far as it goes, or with the points that Lady Hale makes that we can approach the issue with an open mind and without the distractions of a presumption either one way or the other: see paras 35 and 45. Although section 2, clause 4 of the Deed of Union declares that Christs ministers in the Church are stewards in the household of God and shepherd of his flock and the standing orders build on that principle, this does not mean that they cannot be in the employment of those who decide how their ministry should be put to the service of the church: Baroness Hale of Richmond in Percy, para 146. But it does not solve the problem which the respondent faces in this case, due to the fact that she did not have the benefit of an express contract of employment with the Church, whether written or oral, and to the absence of clear grounds for holding that a contract of employment can be implied. Much of the argument in Percy was directed to the question whether the matters which Ms Percy wished to raise were matters spiritual within the meaning of section 3 and Article IV of the Declaratory Articles annexed to the Church of Scotland Act 1921. Section 3 provides that nothing in that Act shall affect or prejudice the jurisdiction of the civil courts in relation to a matter of a civil nature. But the effect of Article IV is that the civil authority has no right of interference in the proceedings and judgments of the Church in the sphere of its spiritual government and jurisdiction. So it was necessary for the appellate committee to satisfy itself that the exercise of the exclusive jurisdiction of the Church in spiritual matters did not extend to the question whether Ms Percys relationship with the Church was one of employment for the purposes of the Sex Discrimination Act 1975. The Church accepted the principle of equal treatment, but claimed exclusive jurisdiction to deal with Ms Percys claim that she had been wronged by the Churchs failure to apply that principle to her. Her claim failed in the Court of Session on the ground that her agreement with the Board was for her to perform duties which were, in their very essence, spiritual: 2001 SC 757, para 11, per Lord President Rodger. In para 14 he said that the formality of the documents did not disclose an intention to create relationships under the civil law. Rather, it reflected the serious way in which the Church regulated matters falling within the spiritual sphere. But, as Lord Nicholls explained, by any ordinary understanding of the expression matters spiritual, if the Church authorities enter into a contract of employment with one of its ministers, the exercise of statutory rights attached to the contract would not be regarded as a spiritual matter: [2006] 2 AC 28, para 40; see also paras 132, 133. So the exercise of the exclusive jurisdiction of the Church in spiritual matters did not extend to a claim by persons employed within the meaning of section 82(1) of the 1975 Act that they had been unlawfully discriminated against. The spiritual character of Ms Percys ministry was, therefore, part of the background to her case. But, once it had been decided that the question was a civil and not a spiritual matter, the question was simply whether the employment arrangements which plainly existed between Ms Percy and the Board were intended to have legal effect so that it could be held that a contract existed. The spiritual background had no part to play in that assessment. As Lord Nicholls said in para 25, there seemed to be no cogent reason for drawing a distinction between a post whose duties were primarily religious and a post within the church that was not so. In this case, however, the question is whether there were any arrangements of an employment nature at all. One cannot simply ignore the Churchs doctrinal reasons for regarding such arrangements as unnecessary. On the contrary, they provide an essential part of the factual background. They explain why the situation in which the respondent found herself was as it was. In finding that there was no contract, the court is not ignoring the modern approach to these matters. What it cannot ignore is the fact that, because of the way the Church organises its own affairs, the basis for the respondents rights and duties is to be found in the constitutional provisions of the Church and not in any arrangement of the kind that could be said to amount to a contract. The issue in this case concerns the essential character of the relationship between a Minister in full connexion with the Methodist Church who holds a particular appointment within the Church and the governing body of the Church. Is it a relationship which gives rise to legal rights and duties on both sides? If so, what are those rights and duties? And are they to be characterised as a contract of employment? If they are, it is not possible to contract out of the rights conferred by the Employment Rights Act 1996: section 203. Just as there is nothing in the relevant documentation which says that the relationship in this case was a contract of employment, there is nothing which says that it is not. We can approach the issue with an open mind. Until the decision of the House of Lords Percy v Board of National Mission of the Church of Scotland [2005] UKHL 73, [2006] 2 AC 28, such questions were clouded by two matters. The first was an assumption that because a minister is called upon to serve her God in a particular way, there cannot be a contract between the minister and her Church. But the relationship between a minister of religion and her Church, which is a temporal one, is not to be confused with the relationship between a minister of religion and her God, which is a spiritual one. As Ms Rose QC on behalf of the Methodist Church properly accepts, there is nothing intrinsic to religious ministry which is inconsistent with there being a contract between the minister and the Church. It is normal for rabbis to be employed by a particular synagogue, for example. Priests appointed in the Church of England are now engaged on terms which expressly provide that they have the right to complain of unfair dismissal to an employment tribunal (and existing holders of a benefice may opt in to the new arrangements should they so wish). Now that this assumption has been cleared out of the way, we can get down to the real task of analysing the relationship, although of course the spiritual nature of some (but by no means all) of the duties involved is an important part of the context. The other matter which has clouded the question is that many of the posts held by ministers of religion may be characterised as offices, in the sense that the post has a permanent existence irrespective of whether there is currently an incumbent. It was for a long time the law that people who held offices in the service of the Crown did not have contracts of employment. This still applies to police officers, but it no longer applies to the generality of civil servants. But outside the service of the Crown, it has always been possible for a person to be both an office holder and an employee. Managing directors are the most obvious example. Another is University teachers, who may hold the office of (say) Professor at the same time as having a contract of employment: see Thomas v University of Bradford [1987] AC 795. Universities have a good deal in common with organised religion, being charitable bodies with a written constitution, consisting of a foundational document, the Charter, together with the Ordinances, Statutes and Regulations made under it. These have typically given rights to both staff and students, rights which were traditionally superior to those given them by the common law. The constitutional documents of the Methodist Church bear a strong resemblance to such documents. The Methodist Church as we know it today was formed from the union of the Wesleyan Methodist Church, the Primitive Methodist Church and the United Methodist Church, under a deed of union (DU) executed on 20 September 1932 pursuant to the Methodist Church Union Act 1929, which was repealed and replaced by the Methodist Church Act 1976. The Constitutional Practice of the Church is governed by the 1976 Act and some other local Acts dealing with aspects of the administration of the Church, the Deed of Union as from time to time amended by the Methodist Conference, which is the governing body of the Church, and the Standing Orders (SO) made under clause 19 of the Deed of Union. It is these documents, coupled with any correspondence between individuals in pursuance of them, which tell us whether there is a contract between a Minister and the Church and if so, what sort of a contract it is. The Church holds the doctrine of the priesthood of all believers, so Ministers are not a class apart from any other member of the Church; rather, they are people who hold special qualifications for the discharge of special duties (DU, clause 4). Candidates who are chosen and trained for the Ministry are admitted to full connexion with the Church in the representative session of the Methodist Conference, provided that the ministerial session judges that they are fit for admission and ordination (DU, clause 23(h)). If not already ordained, they shall be ordained by the laying on of hands at a service held during the same meeting (SO, 728(6)). They are ordained to a life-long presbyteral ministry of word, sacrament and pastoral responsibility . . . which they fulfil in various capacities throughout their lives (SO, 700(1)). By receiving persons into full connexion as Methodist ministers the Conference enters into a covenant relationship with them in which they are held accountable by the Church in respect of their ministry and Christian discipleship, and are accounted for by the Church in respect of their deployment and the support they require for their ministry (SO, 700(2)). They accept a common discipline of stationing (SO, 740(1)), and most have a responsibility to engage in reflective learning and development (SO, 743), and in further study, training and professional development (SO, 745). Most ministers are in active work but some are not. Those who are not may be temporarily released to go abroad (SO, 700(4), or be supernumerary (basically, those retired from active work) or without appointment (basically, those for whom no suitable station can be found), but they are expected to continue to exercise their ministry as far as they are able (SO, 700(5)). By seeking permission to become a supernumerary, a minister thereby requests an alteration in the terms and conditions of his or her service (SO, 791). Ministers in active work exercise their ministry primarily where they are stationed (SO, 700(3)). Stationing is a crucial part of the relationship between the Church and those in active work. The Conference shall annually station as ministers, deacons and probationers such persons as it thinks fit (DU, clause 20). There are several different types of station, but the principal station is in a Circuit appointment in a home District (SO, 780(1)(i)). If a Circuit needs a minister, the Circuit authorities will follow the Guidance on how to go about issuing an invitation to a particular person (SO, 541), who may indicate her willingness to accept it (Guidance on the Stationing of Ministers and Deacons, D(4)). The initial invitation is for a period of five years (SO, 543). The invitation is then forwarded to the Stationing Committee of Conference. Nothing in the Standing Orders about Circuit invitations detracts from the ultimate authority of Conference over appointments annually (SO, 549). The Stationing Committee gathers the information about the ministers seeking a station and the Circuit or other bodies seeking to make appointments, matches them and prepares a draft list of proposed stations which is then submitted to Conference (SO, 782). There is scope for amendment, but eventually a list is adopted by Conference. Ministers who are moving to a new appointment are expected to move in the first week in August and to take up their duties on 1st September (SO, 785). Part 8 of the Standing Orders is headed Terms of Service. These deal with the right to a stipend (SO, 801), the right of a Circuit minister to be provided with a manse as a base for the work of ministry as well as a home (SO, 803), membership of the pension scheme (SO, 805), parenthood (SO, 806), including antenatal care, maternity, paternity, adoption and parental leave (SO, 807 to 807D). There is a Connexional Allowances Committee which annually recommends stipends to Conference. There is a standard stipend and allowances for extra responsibilities, including those of a superintendent minister. Part 11 of the Standing Orders deals with complaints and discipline. It does apply to all members of the Church but it also deals with a wide range of complaints, only some of which will involve charges. There is a special procedure for charges of serious breaches of Church discipline, which could result in the removal of a minister from full connexion (SO, section 113). The complaints team is expected to assess whether a complaint should be dealt with under a different process (SO, 1123(5)). This includes the process for Circuits to decide that the appointment of a minister should be curtailed, which is the more appropriate process where a Circuit and a minister are at odds with one another but there has been no serious breach of church discipline (SO, 544). It also includes requesting the President to inquire into a relevant Circuit (SO, 1123(6)), which is what seems to have happened in this case. Now that we are able to concentrate on the details of the relationship, without the distractions of a presumption against legal relations or the characteristics of an office, several things become clear. The first is that it would be very odd indeed if a minister who was not paid her stipend or was threatened with summary eviction from her manse could not rely upon the terms of her appointment either to enforce the payment or to resist a possession action. Some time was devoted at the hearing to discussing what legal redress would be available to her if she could not rely upon the terms of a contract. The suggestion was that she would be a beneficiary under the trusts upon which the Church holds its property. The trouble with this is that the Church holds property under any number of different trusts, whereas the stipend is paid centrally even if the funds with which to pay it are raised locally. The body which controls her and is responsible for her remuneration and accommodation is Conference. The second is that a distinction has to be drawn between being a minister being in full connexion with the Methodist Church - and having a particular station or appointment within it. That distinction was not as fully explored in the courts below as it was with us. But once it is, in my view the position becomes clear. Admission to full connexion brings with it a life-long commitment to the Church and its ministry. Quite apart from the individual covenant which every member makes with her Church and with her God, the Methodist Church is an evangelical Church (DU, clause 4). That is why retired ministers are still expected to do what they can to further the work of the Church and no person in full connexion can give up her commitment to do this without its permission.. But that can be contrasted with the particular posts to which a minister is assigned. There is a process of assignment which begins with the invitation and acceptance at Circuit level (and no doubt something similar for other stations), continues into the matching process at Stationing Committee level, and is confirmed by Conference (although nominally an annual process, this is clearly a rubber stamp during the expected five years of a particular Circuit appointment). The assignment is to a particular post, with a particular set of duties and expectations, a particular manse and a stipend which depends (at the very least) on the level of responsibility entailed, and for a defined period of time. In any other context, that would involve a contract of employment in that post. The spiritual nature of some of the duties entailed does not necessarily entail a different conclusion. There is a spiritual component on each side of this covenant relationship. The main factor which tells against there being a contract between the minister and the Church in relation to the particular station to which the minister is assigned is that the minister has no choice. She must go where Conference stations her. The reality is almost certainly completely different (although we do not have much evidence about this): ministers do have to go where they are put, but it would be a very foolish Stationing Committee which assigned a minister to a station where she was not willing to serve. The assignment would not be specifically enforceable. But I do not think that a prior commitment to go where you are sent negates a mutual contractual relationship when you are sent and agree to go to a particular place. Yet this is the main reason for denying a contractual relationship in this case. Everything about this arrangement looks contractual, as did everything about the relationship in the Percy case. It was a very specific arrangement for a particular post, at a particular time, with a particular manse and a particular stipend, and with a particular set of responsibilities. It was an arrangement negotiated at local level but made at national level. The Church may well have had good reasons to be troubled about the respondents performance. But the allegation is that, instead of addressing those directly, they reorganised the Circuits so as, in effect, to make any investigation of whether or not those complaints were justified unnecessary, thus depriving the respondent of her post by organising it out of existence, without any of the safeguards to which she would otherwise have been entitled. In my view, the EAT and the Court of Appeal reached the right result in this case and I would dismiss this appeal. |
This appeal concerns the interpretation of provisions of the Taxes Management Act 1970 (the TMA). The principal issue is whether the Commissioners of HM Revenue and Customs (HMRC) were entitled to open an enquiry into the claims for relief from income tax, which the appellants (Mr De Silva and Mr Dokelman or collectively the taxpayers) had made in their tax return forms to carry back losses to earlier tax years, and, as a result, amend their tax returns to deny the taxpayers the full relief which they claimed or had been given. The taxpayers argue that HMRC were entitled to inquire into their claims only under Schedule 1A and that, because the statutory time limit for such an enquiry had expired, their claims had become unchallengeable. Factual background The taxpayers were limited partners in various limited partnerships established under the Limited Partnerships Act 1907. The general partner of the partnerships was Investing in Enterprise Ltd (IEL). The taxpayers became partners in these partnerships in implementation of marketed tax avoidance schemes which were aimed at accruing trading losses through investment in films in order to set off those losses against income of the same or earlier years. The taxpayers invested in the partnerships in part by using their own money but principally by taking out non recourse or limited recourse loans. The schemes aimed to take advantage of tax incentives under section 42 of the Finance (No 2) Act 1992 (as amended) (the 1992 Act) to encourage investment in the production and acquisition of qualifying films. It is not necessary to give details of the tax incentives. In the early years of trading a limited partner could use the provisions of sections 380 and 381 of the Income and Corporation Taxes Act 1988 (ICTA) to set off his allocated share of trading losses of a partnership in a particular year against his general income for that year of assessment or any of the previous three years of assessment. The ability to carry back the losses in this way allowed the partner to choose to set off the losses against his taxable income in one or more of those years in a way which gave him the greatest advantage. The relevant film partnerships lodged tax returns, which IEL completed, for the tax years 1998/99, 1999/2000, 2000/01 and 2001/02, in which the partnerships claimed that they had suffered substantial trading losses, in relation to which they claimed relief for film expenditure under section 42 of the 1992 Act. HMRC did not accept those claims, but initiated inquiries into the partnerships tax returns under section 12AC(1) of the TMA. After extensive investigations, HMRC determined that the claims for losses should not be accepted and issued closure notices on the inquiries in about July 2003. In substance, HMRC disallowed the partnerships claims for expenditure funded by the non recourse or limited recourse loans to individual partners and also the expenditure paid as fees to the promoters of the schemes. The partnerships appealed to the Special Commissioners of Income Tax (the predecessors of the First tier Tribunal (Tax Chamber)) in August 2003. Those appeals and the partnerships claims for losses and relief were compromised by an agreement dated 22 August 2011 under section 54 of the TMA (the partnership settlement agreement) under which the partnerships losses were stated at much reduced levels. Mr De Silva in his self assessment tax return form for 1998/99 included a claim to set off his share of trading losses of certain partnerships in other years, including 1999/2000, against his general income in several tax years, including 1998/99, with the intention of reducing his payment in respect of tax due for 1998/99 by 16,800. He included that figure in box 18.9 on the return form against an entry, 1999 2000 tax you are reclaiming now. Under the heading additional information in his return he explained the detail of the carry back claims which he was making to give rise to that figure. The losses which supported his claim to reduce his tax payment by 16,800 were his share of partnership trading losses in the year 1999/2000, which it had already been estimated that the relevant partnership would incur in that tax year. In his self assessment tax return form for 1999/2000, Mr De Silva made amended carry back claims to set off his share of partnership losses in 1999/2000 against his general income in previous years so as to claim a repayment of tax for those years. Mr Dokelman also claimed tax relief in a similar manner. In his self assessment tax return form for 2000/01 he made a claim for the losses which he had incurred as a partner in some of the partnerships in the tax year 2000/01 against his general income in 1999/2000 and 1997/98. In each case the taxpayer claimed relief for his share of the partnership losses as those losses had been stated in the partnership tax returns before they were substantially reduced when HMRC amended the partnership tax returns after entering into the partner settlement agreement. HMRC had initially accepted Mr De Silvas claims for relief and credited him with 22,400 and 42,000. After the partnership claims were determined in the partnership settlement agreement, HMRC wrote to the taxpayers to intimate that their carry back claims in their personal tax returns would be amended in line with the lower figures for the partnership losses which had been agreed in the partnership settlement agreement. HMRC informed Mr De Silva that he had to pay additional tax of 17,176.80 and 32,400. HMRC informed Mr Dokelman, who had not been given credit for the partnership losses, that those losses available for a claim for 2000/01 were reduced to the levels agreed in the partnership settlement agreement. HMRCs letters to Mr De Silva were dated 16 September 2011 and 17 November 2011. Their letter to Mr Dokelman was dated 28 October 2011. The legal proceedings The taxpayers have challenged HMRCs decisions which were set out in those letters by a claim for judicial review. They assert that HMRC are obliged to give effect in full to their claims to carry back the partnership losses because HMRC did not open an enquiry into the claims under Schedule 1A to the TMA in order to challenge them and are now barred by the passage of time from doing so. They submit that their case is supported by a judgment of this court in Revenue and Customs Comrs v Cotter [2013] UKSC 69; [2013] 1 WLR 3514; [2013] STC 2480 (Cotter). The Upper Tribunal (Sales J) in a decision dated 15 April 2014 ([2014] UKUT 170 (TCC); [2014] STC 2088) rejected their claim. The Court of Appeal (Arden, Gloster and Simon LJJ) in a judgment dated 2 February 2016, in which Gloster LJ gave the leading judgment, dismissed the taxpayers appeal ([2016] EWCA Civ 40; [2016] STC 1333). The taxpayers challenge The taxpayers now appeal to this court. Their submission in summary is that their claims for relief by carrying back losses are not claims made in their self assessment tax returns under section 8 of the TMA but are to be regarded as stand alone claims for relief which are not made in tax returns and which HMRC could challenge only under Schedule 1A to the TMA. They renew their submission that HMRC had failed to operate those procedures to challenge their claims and are now out of time to do so. They submit that their claim for relief is not affected by the power of HMRC to amend the partnerships tax returns or their individual tax return forms to give effect to the partnership settlement agreement. Discussion The answer to this appeal lies in the provisions of the TMA (i) which deal with the making and processing of claims for relief and (ii) which specify what a taxpayer must include in his tax return. I will look first at those provisions before summarising what HMRC have done in these cases. When I refer to sections or Schedules below without specifying the Act, I refer to sections of and Schedules to the TMA. The provisions of the TMA in so far as they concern income tax are dealing with an annual tax and this court has held in Cotter that a tax return in the context of sections 8(1), 9, 9A and 42(11)(a) 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). I will return to section 8(1) when I address the provisions mentioned in (ii) in para 11 above. The making and processing of claims The provisions which deal with the making and processing of claims for relief are section 42 and Schedules 1A and 1B. Section 42(1) provides that, unless otherwise provided, section 42 shall have effect in relation to a claim for relief to be given. Subsection (2) provides that where an officer of HMRC has given a notice to a person, whether an individual (section 8), a trustee (section 8A) or the partner of a partnership (section 12AA), requiring him to make and deliver a tax return, a claim shall not at any time be made otherwise than by being included in a return under that section if it could, at that or any subsequent time, be made by being so included. This requirement that a claim be included in a tax return was an innovation in the Finance Act 1994, which amended the TMA extensively to provide for the introduction of self assessment. Section 42 as initially enacted had provided as a general rule that claims should be made to an inspector of taxes within time limits specified in section 43, also as initially enacted. Section 42(6) requires that in the case of a trade, profession or business carried on by persons in partnership a claim under the provisions specified in subsection (7), which include section 42 of the 1992 Act under which the claims have been made in this case, shall, where subsection (2) applies, be made by being included in a partnership return and in any other case, by such one of those persons as may be nominated by them for the purpose. Section 42(11) provides: Schedule 1A to this Act shall apply as respects any claim or election which (a) is made otherwise than by being included in a return under section 8, 8A or 12AA of this Act Section 42(11A) provides: Schedule 1B to this Act shall have effect as respects certain claims for relief involving two or more years of assessment. As a claim to carry back losses is a claim for relief involving two or more years of assessment and as the taxpayers claims are of that nature, I will examine Schedule 1B first. Schedule 1B is headed Claims for relief involving two or more years and paragraph 2 of the Schedule addresses loss relief, which is the subject of the claims in this case. Paragraph 2 provides so far as relevant: (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) 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). (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. (The aggregate amount given by section 59B(1)(b) is the aggregate of payments on account of income tax deducted at source in respect of that tax year.) Paragraph 2 of Schedule 1B thus is concerned with relief sought for a loss incurred in the later year (which I will call Year 2) by carrying it back to the earlier year (Year 1). Significantly, paragraph 2(3) makes it clear that the claim relates to Year 2. The quantification of the claim is governed by paragraph 2(4): the claim is the difference between amount A and amount B on the counterfactual assumption that effect could have been and was given to the claim in Year 1. That assumption is counterfactual because paragraph 2(3) and paragraph 2(6) relate the claim and the giving effect to the claim to Year 2. Paragraph 2(2) of Schedule 1B disapplies section 42(2) in relation to such a claim. That has the effect that a claim may be made under Schedule 1A, notwithstanding that an officer of HMRC has required the provision of a tax return, for example in Year 1 outside a tax return. But I agree with Sales J and the Court of Appeal that HMRC are correct in their submission that that disapplication does not mean that the taxpayer is released from making the claim in his tax return in Year 2. As I will seek to show (paras 23 29 below), section 8(1) imposes that requirement. Schedule 1A is headed Claims etc not included in returns. Paragraph 2 provides for a claim to be made to an officer of HMRC in such form as HMRC may determine, but HMRC have not specified any particular form of claim and accept claims made by letter. Paragraph 4(2) requires an officer of HMRC to give effect as soon as practicable after a partnership claim is made under section 42(6) by a nominated person to such a claim as respects each of the relevant partners by discharge or repayment of tax, unless HMRC inquire into the claim. Similar provision is made in paragraph 4(1) for the prompt processing of non partnership claims. Schedule 1A therefore requires HMRC to respond promptly to claims for relief and thus assist the cash flow of taxpayers who have relevant and valid claims. But HMRC are also empowered to challenge claims: paragraph 5 provides for inquiries into Schedule 1 claims and contains time limits for the opening of such inquiries. Such an enquiry postpones the obligation to give effect to the claim (paragraph 4(3)) and on completion of the inquiry HMRC may by closure notice amend the claim (paragraph 7(1)). It is, as I have said, the taxpayers assertion that their claims were stand alone claims which were governed only by Schedule 1A and that HMRC, by failing to open a paragraph 5 inquiry have allowed the claims to become unchallengeable. I am satisfied that that assertion is incorrect because of the provisions of the TMA which specify what a taxpayer must include in his return. The content of a tax return Section 8 sets out what a person must produce when given a notice to make and deliver a tax return. So far as relevant the section provides: (1) For the purpose of establishing the amounts in which a person is chargeable to income tax and capital gains tax for a year of assessment, and the amount payable by him by way of income tax for that year, he may be required by a notice given to him by an officer of the Board (a) to make and deliver to the officer a return containing such information as may reasonably be required in pursuance of the notice, and to deliver with the return such accounts, (b) statements and documents, relating to information contained in the return, as may reasonably be so required. (1AA) For the purposes of subsection (1) above (a) the amounts in which a person is chargeable to income tax and capital gains tax are net amounts, that is to say, amounts which take into account any relief or allowance a claim for which is included in the return; and (b) the amount payable by a person by way of income tax is the difference between the amount in which he is chargeable to income tax and the aggregate amount of any income tax deducted at source and any tax credits to which section 231 of the principal Act [ie ICTA] applies. (The tax credits to which section 231 of ICTA referred were tax credits for advance corporation tax which the recipient of qualifying distributions from a UK resident company could claim.) It is noteworthy that under subsection (1)(a) the information which is required is not simply the amounts in which the person is chargeable to income tax and the amounts payable by him for the year of assessment but information for the purpose of establishing those amounts. That information includes the persons share of partnership income or losses for the period which falls within the year of assessment as section 8 provides: (1B) In the case of a person who carries on a trade, profession, or business in partnership with one or more other persons, a return under this section shall include each amount which, in any relevant statement, is stated to be equal to his share of any income, loss, tax, credit or charge for the period in respect of which the statement is made. (1C) In subsection (1B) above relevant statement means a statement which, as respects the partnership, falls to be made under section 12AB of this Act for a period which includes, or includes any part of, the year of assessment or its basis period. A person must therefore include in the return for Year 2 his share of the losses of a partnership, of which he was a partner, which have been stated in a relevant statement relating to Year 2. Section 9 provides for self assessment. Unless the taxpayer makes and delivers his tax return within time limits specified in section 9(2) and subject to an exception in section 9(1A) which is not relevant, section 9(1) provides: every return under section 8 or 8A of this Act shall include a self assessment, that is to say (a) an assessment of the amounts in which, on the basis of the information contained in the return and taking into account any relief or allowance a claim for which is included in the return, the person making the return is chargeable to income tax and capital gains tax for the year of assessment Claims, reliefs and tax returns Whether a taxpayer submits his tax return for Year 2 within the time limits of section 9(2), so that HMRC assess the sums in which he is chargeable to income tax and the amount payable, or includes in the return the self assessment in terms of section 9(1)(a), he must provide information in his return for Year 2 to establish what proportion, if any, of his share of the partnership loss incurred in Year 2 is to be offset against his other income in Year 2. If a taxpayer wished to claim to offset all of his share of partnership losses in Year 2 against his other income in Year 2 by invoking section 380(1)(a) of ICTA, he would have to include that claim in his return for Year 2. Schedule 1B would not apply as the claim for relief would involve only one year of assessment. Section 8(1AA)(a) would allow him relief, for which he had included a claim in the return, giving rise to the net sum in which he would be chargeable to income tax for that year. If a taxpayer wished to carry back part of the losses incurred in Year 2 to set off against his income of Year 1 by invoking section 380(1)(b) of ICTA, he would also have to make the claim in his return for Year 2. This is the combined effect of section 8(1AA)(a) and Schedule 1B paragraphs 2(3) and (6). As shown in para 18 above, those paragraphs provide that the claim for relief relates to Year 2 and effect is to be given to that claim in relation to Year 2. If HMRC had already given effect to part of the claim under Schedule 1A in Year 1 by giving relief, for example by repayment, the return for Year 2 would still have to state the loss, the claim and the relief already given in order to establish the amounts in which the taxpayer is chargeable to income tax in Year 2. Similarly, if the taxpayer had already received full relief under Schedule 1A in Year 1, he would have to state the same information as to the loss, the claim and the relief already given. By so doing he enables the return to take into account, as section 8(1AA)(a) requires, both the relief which is claimed in the return and that which he has already received. In each case that information is a necessary part of his return for Year 2 as it is information required for the purpose of establishing the amounts in which the taxpayer is chargeable to income tax for that year of assessment: section 8(1). In summary, section 8(1AA)(a) defines the amounts in which a person is chargeable to income tax in a year of assessment as net amounts taking account of any relief, a claim for which has been included in the return. The claims to carry back losses relate to Year 2 and effect is given to them in relation to that year: Schedule 1B paragraph 2(3) and (6). It follows, therefore, that the taxpayer must make a claim in his tax return in respect of Year 2 and state the extent to which the relief claimed has already been given in order to establish the amounts in which he is chargeable to income tax for that year of assessment. If too much has already been given as relief, the self assessment can take that into account by adjusting the amount in which the taxpayer is chargeable to income tax for Year 2: section 9(1)(a). HMRC may inquire into a return under section 8 or 8A if an officer gives notice of his intention to do so (section 9A(1)) and that enquiry may extend to anything contained in the return, or required to be contained in the return, including any claim: section 9A(4). HMRC were therefore empowered under section 9A to inquire into the taxpayers carry back claims contained in their Year 2 tax returns. HMRC were not required to institute an enquiry under Schedule 1A in order to challenge the taxpayers claims. In a written intervention Cotter Solutions Ltd have argued that the interpretation of the relevant provisions of the TMA which Sales J and the Court of Appeal favoured, by contrast with the straightforward provisions of Schedule 1A, would not allow HMRC either to postpone giving effect to the claim or to recover any tax relief which was subsequently found, following enquiry, not to have been due. I do not agree for three reasons. First, in relation to a Schedule 1B claim, the obligation in paragraph 4 of Schedule 1A to give effect to the claim as soon as practicable after the claim is made applies to a claim to which effect is given in relation to Year 2 and in relation to which HMRC can institute an enquiry under section 9A. Schedules 1A and 1B operate in tandem in this context. A claim to carry back loss relief made early under Schedule 1A may need the Year 2 losses to be established before effect is given to the claim. The relevant time limit for enquiring into the claim in paragraph 5 of Schedule 1A operates from Year 2, to which the claim relates, and what is practicable in giving prompt effect to a claim must be assessed in that context. Secondly, the mechanisms in paragraph 2(6) of Schedule 1B for giving effect to a claim in Year 2 are not confined to repayment, set off and the increase in the aggregate of payments on account, none of which would alter the tax chargeable for Year 2. Paragraph 2(6) includes the words or otherwise, which open the door to an adjustment of the amount chargeable to income tax by virtue of both section 8(1AA)(a), which provides that the amounts in which a person is chargeable take into account any relief a claim for which is included in the return and section 9(1)(a) which makes similar provision for the self assessment. Where relief has already been given in error, it would in my view be open to HMRC, in completing an enquiry, to amend the return (for example, under section 28A(2) TMA) by altering the amount chargeable to income tax for Year 2 in order to recover the sums which were wrongly paid as relief. Thirdly, section 59B(5) provides for payment of income tax which is payable as a result of an amendment of a self assessment under section 28A on completion of an enquiry into a personal tax return. What HMRC did HMRC gave notice under section 12AC(1) of the opening of inquiries into the partnerships tax returns for the tax years 1998/99, 1999/2000, 2000/01 and 2001/02. By virtue of section 12AC(6)(a), the giving of notice opening an enquiry into a partnership return is deemed to include the giving of a notice of enquiry under section 9A(1) of this Act to each partner who at that time has made a return under section 8 or 8A of this Act or at any subsequent time makes such a return. There were therefore deemed inquiries into the partners personal tax returns in respect of what I have called Year 2. Following the closure of the inquiries under section 28B, the partnerships appealed under section 31 against the conclusions and amendments made by the closure notices. Their compromise of the appeals by agreements under section 54 had the same consequences as if the Special Commissioners (now the First tier Tribunal) had determined the appeal in the manner set out in the agreement: section 54(1). The agreement therefore operates as if it were a determination by the special commissioners under section 50(7). That deemed decision by the special commissioners empowered HMRC to alter the taxpayers personal tax returns because section 50(9) provides: 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 the partners return under section 8 of this Act (a) or (b) the partners company tax return, so as to give effect to the reductions or increases of those amounts. HMRCs letters, to which I referred in para 8 above and which are the subject of this judicial review challenge, amended the taxpayers tax returns in this way. Section 59B(5)(b) provides for the payment by the taxpayer of sums payable as a result of the amendment of a partners tax return under section 50(9) and Schedule 3ZA paragraph 11 specifies the time limit for that payment. HMRCs amendment of the taxpayers individual tax returns and the decisions in the letters under challenge were therefore lawful and the judicial review challenge fails. Cotter Cotter was concerned with a claim made by an amendment of a tax return form relating to Year 1 which intimated a claim for a loss that would occur in Year 2. That claim had, and could have, no bearing on the amount of tax chargeable and payable by Mr Cotter in respect of Year 1: paras 16 and 17 of Cotter. At that stage it was a stand alone claim to which Schedule 1A applied. The case did not address the possibility of a section 9A enquiry into the tax return in Year 2. HMRC commenced their Schedule 1A enquiry into the claim before the end of Year 2, thereby precluding any enquiry into the claim under section 9A if it were (as it ought to have been) contained in the Year 2 tax return at a later date: Schedule 1A, paragraph 5(3)(b). By contrast, in this case the taxpayers claims were made in their tax returns for Year 2 (paras 5 and 6 above). Cotter gives no support to the taxpayers in this appeal. Conclusion I would dismiss this appeal. |
This appeal raises a question of some importance on the law relating to occupational pension schemes. The agreed statement of facts and issues (SFI) sets out three issues, but they are all variations on the same general theme, that is the dividing line, for regulatory purposes, between defined benefit (normally earnings related) schemes and defined contribution (or money purchase) schemes. The general nature of the distinction between these two types of scheme is familiar, and it may be helpful to start with that (though counsel on both sides properly reminded us that we are concerned with a particular statutory definition, and not with the range of meanings in which imprecise expressions may be used). Under a defined benefit scheme (the commonest variety of which is a final salary scheme) the primary benefit to which a scheme member is prospectively entitled, on retirement at normal pension age, is a pension for life calculated (in a final salary scheme) by reference to the members pensionable salary at retirement. A typical formula for calculating the pension was N/60ths, where N is years of pensionable service, but today the formula is more often N/80ths. The member pays contributions (typically a fraction, such as 5%, of current pensionable salary) and the employer is under a general obligation to pay the balance needed to provide all the benefits under the scheme. Final salary schemes are therefore also referred to as balance of cost schemes. What the member pays makes an important contribution to the benefit, but the amount of the benefit is not calculated by reference to the amount of the members contributions, and the risk of a disappointing investment return on the pension fund is assumed by the employer. Under a defined contribution scheme, by contrast, the members benefit is calculated by reference to the contributions that the member makes, and those that the employer makes in respect of that particular member (for instance the member may pay 4% of his or her current pensionable salary, with the employer matching that with an equal contribution). These contributions, and the investment return on them, are the measure of the members benefits, and for that reason these schemes are also called money purchase schemes. The member, and not the employer, takes the risk of the investment return disappointing expectations. That is one of the main reasons why large numbers of employers have, since the last years of the 20th century, closed their final salary schemes (either completely or to new entrants) and introduced money purchase schemes. There is a variety of techniques by which, under a money purchase scheme, the amount of the contributions by or for a member, and the investment return on them, are mathematically transposed into quantifying the pension that is the primary benefit that the member expects to receive. Indeed the appellants case is that some of the techniques (and in particular, those applicable to the voluntary investment planning (VIP) and MoneyMatch benefits under the scheme that are the subject of this appeal) take the scheme outside the statutory definition of money purchase benefits in section 181 of the Pension Schemes Act 1993 (PSA 1993) as applied for the purposes of section 73 of the Pensions Act 1995 (PA 1995). Section 73 provides a statutory order of priority in the winding up of pension scheme but it does not apply to money purchase schemes, and it applies only in a limited way to hybrid schemes (under which some but not all of the benefits provided are money purchase benefits). These proceedings have taken an unusual course. They began as Part 8 proceedings commenced in 2006 by Bridge Trustees Ltd (the Trustee), the independent corporate trustee of the Imperial Home Dcor Pension Scheme (the Scheme). Three members of the Scheme, that is Mr John Yates (a pensioner in receipt of his pension), Mr Mark Houldsworth and Mr John Hunter (who are entitled to deferred pensions) were joined as representative defendants to represent different classes with different interests. By then the principal employer, The Imperial Home Dcor Group (UK) Ltd (the Company) was in administrative receivership and the Scheme was in course of being wound up. The claim form raised a number of questions of construction which were answered either by the deputy judge (Miss Sarah Asplin QC) or by the Court of Appeal (Mummery, Wilson and Rimer LJJ) and are not raised in this appeal. The issue which is before this Court was raised by a late amendment of the claim form which necessitated a postponement of the first instance hearing. The appellant, the Secretary of State for Work and Pensions, was not a party to the first instance proceedings, but regarded the decision as having serious policy implications. The Secretary of State was granted leave to intervene in an appeal (for which the deputy judge had given permission). The Secretary of State agreed to pay the costs of all parties in the Court of Appeal on the indemnity basis. Before the Court of Appeal he failed to overturn the deputy judges decision on the money purchase issue, and he now appeals to this Court on that issue as being of general public importance. It is also of great importance to the current and deferred pensioners interested under the Scheme, since if the Secretary of State is right part of the contributions paid by or in respect of members still in service or entitled to deferred pensions at the date of commencement of the winding up of the Scheme will be used, under the statutory order of priority in section 73 of PA 1995, to satisfy the rights of those already entitled to receipt of pensions at that date. The history and structure of the Scheme The Scheme was originally established as an exempt approved scheme by an interim trust deed dated 15 December 1971. It had three distinct periods in its history, summarised as follows in para 2.2 of the SFI (in which MP benefit means money purchase benefit within the meaning of the statute): (1) From its inception to 5 April 1983 it was a conventional final salary scheme under which the members received a pension based on 1/60 of their final pensionable salary for each year of service. Members contributed 5% of pensionable salary and the employer contributed the balance of cost. No question arises as to these final salary benefits: none of them is an MP benefit. (2) The Scheme was restructured with effect from 6 April 1983. It continued to provide final salary benefits, albeit on a less generous scale, the members contribution rate being reduced to 3% of pensionable salary and the accrual rate to 1/80 per year. This was known as the Core Plan. In addition members were able to pay further contributions and thereby accrue extra benefits. This part of the Scheme was known as Voluntary Investment Planning or VIP. Again no question arises as to the Core Plan benefits, which are not MP benefits; but whether the VIP benefits are MP benefits where they take the form of internal annuities (ie where a members pension comes into payment it is provided by the Scheme itself rather than by way of an annuity purchased for the member from an external provider, which would also have the effect of terminating the individuals membership of the Scheme) is part of the third issue on this appeal. (3) The Scheme was restructured again with effect from 6 April 1992, when a further benefit structure known as MoneyMatch was introduced. Some older and longer serving existing members (those whose age plus years of membership equalled at least 64) were given the option of continuing to accrue benefit under the existing benefit structure, namely the Core Plan and VIP. Those who were either not given the option, or chose to switch, thereafter accrued benefits on the MoneyMatch basis rather than a final salary basis, as did all new joiners. Those who switched to MoneyMatch benefits for future service could also convert their accrued final salary benefits into MoneyMatch benefits, and were given an incentive to do so. The questions whether MoneyMatch benefits are MP benefits in whole or in part are the first two issues on this appeal and (where they take the form of internal annuities) the other part of the third issue on this appeal. In para 12 of her judgment the deputy judge summarised the effect of these changes on the members of the Scheme: Therefore, after 1992 there were different categories of member: (a) Option 1 members were those who had elected to convert their accrued final salary benefits into MoneyMatch and to accrue future benefits under the MoneyMatch section; (b) Option 2 members were those who retained their accrued benefits in the final salary section but accrued future benefits under MoneyMatch; and (c) Option 3 members were those who both retained their accrued benefits in final salary form and continued to accrue future benefits in final salary form and therefore, did not participate in MoneyMatch at all. They could accrue VIP benefits, this option being open only to those continuing to accrue final salary benefits. In addition, new joiners after 22 April 1992 accrued benefits exclusively by reference to the MoneyMatch section of the Scheme. On 26 June 2003 two partners in Ernst & Young LLP, Mr Garry Wilson and Mr Simon Allport, were appointed as joint administrative receivers of the Company. This triggered a statutory obligation for the appointment of an independent trustee of the Scheme, and on 18 July 2003 the Trustee was appointed to act with the previous corporate trustee, Imperial Home Dcor Pension Trustees Ltd (which has since been wound up). The Company ceased to carry on business on 5 September 2003, when its remaining assets and undertaking were sold. On 22 September 2003 the Trustee resolved to continue the Scheme as a closed Scheme with effect from 5 September 2003. Having taken further legal advice the Trustee then resolved, on 15 October 2003 (the dissolution date) that the Scheme should be wound up. During the Schemes varied existence it was governed by a succession of amending and consolidating trust deeds, including a second definitive deed dated 13 September 1984, a third definitive deed dated 21 April 1994 and (following the Schemes amalgamation with the Borden Wallcoverings Pension Scheme) a consolidating trust deed and rules dated 3 October 1995. These were all in evidence before the deputy judge, but it has not been suggested that they are relevant to this appeal. The last definitive deed and rules were made on 12 March 1998 in the form of a deed (the 1998 deed) made between the Company (then named Borden Decorative Products Ltd) and the former corporate trustee (then named Borden (UK) Pension Trustees Ltd). The 1998 deed was amended in minor respects in 2000, 2002 and 2003, but again it is not suggested that any of these amendments is material to this appeal (the effect of the amendments has been noted in manuscript on the copy of the 1998 deed in evidence before us). The Scheme was contracted out of the State Earnings Related Pension Scheme (SERPS), and from 2002 out of the State Second Pension, on a Guaranteed Minimum Pension (GMP) basis. As explained in para 2.2 of SFI, no question arises as to the final salary benefits earned during the first and second phases of the Schemes history (except of course how far pensions already in payment at the dissolution date, on a final salary basis, take priority to some other benefits). The issues that arise are on VIP benefits earned during the second or third phase, and MoneyMatch benefits earned during the third phase. It is therefore necessary to describe these benefits in some detail. VIP benefits and methods of providing annuities Schedule Four to the 1998 deed contains the rules relating to the final salary benefits and (in paras 2.2, 3.2, 3.3 and 8) VIP benefits. A member could choose what VIP Contribution to pay, within various limits, and in respect of each contributing member the Company undertook to make payments called VIP Match. These started at 50% of VIP Contributions for a member with less than two years service, rising by stages to 100% (that is, a full match) after nine years service. The member could make a choice as to the investment of his VIP Contributions and VIP Match (together VIP total contributions). In practice, the choice was between investment in an account with the Yorkshire Building Society or one of two funds managed by Standard Life. At 5 April 2003 the total funds held in these two forms of investment was about 20.8m (part held as VIP total contributions, and part as MoneyMatch funds, as explained below). Para 8 of Schedule Four provided for benefits in respect of VIP total contributions. This paragraph seems to have been quite extensively amended after 1998 and the manuscript notes of the amendments are far from clear. But neither side based any submissions on para 8. It is common ground that the primary benefit to which VIP total contributions were applicable was a pension, which involved the conversion (one way or another) of VIP total contributions (measured by a sum of money) into a life annuity. Here it is necessary to make an excursus into the part that life assurance companies play in the provision of annuities for pensioners under occupational pension schemes. Life offices have for many years played a very important part in this field. Mr William Phillips (one of the first members of the bar to specialise in this field) referred in his Pension Scheme Precedents, published in 1957, to home schemes (what are now called self administered schemes) and office schemes (set up and managed by a life office). The committee chaired by Professor (now Sir) Roy Goode recorded in its influential report, Pension Law Reform (Cm 2342), published in 1993, that at that time over 97% of contracted out money purchase schemes were insured schemes. Many of them were quite small in terms of numbers and assets, and the cost of a self administered scheme would have been disproportionate. Counsel agreed that that 97% figure may well not hold good today, because of the general flight from final salary schemes in recent years, which has probably increased the average size (in membership and assets) of money purchase schemes. The respondents written case distinguishes between two types of annuity provision, internal and external annuitisation. Mr Christopher Nugee QC, for the Secretary of State, told the Court that there are in fact four different types, and Mr Simmonds QC (for the deferred pensioners) accepted that refinement. The four situations are as follows. (1) An annuity is internally provided in the full sense if the trustees of the pension fund, having taken advice from their actuary about current annuity rates, resolve to provide an annuity at a specified rate out of the resources of the pension fund. This necessarily involves some degree of risk of the resources of the fund proving insufficient to provide all the benefits due, if investment returns are disappointing or annuitants exceed their actuarial life expectations (or both). (2) The next three situations all involve obtaining annuities from life offices. The trustees may purchase an annuity from a life office and pass on instalments of the annuity, as they become due, to the pensioner. The trustees remain responsible for the annuity, but are free from any actuarial risk. (3) Alternatively the trustees may arrange with the life office for the purchase of an annuity in the pensioners own name. This is similar to situation (2) but the trustees are discharged from responsibility as soon as the annuity has been purchased. (4) Under a scheme set up and managed by a life office the trustees of the pension scheme regularly pay premiums to the life office in respect of all the scheme liabilities, which are met by the life office. Here the annuity is paid for throughout the members pensionable service rather than its amount depending on annuity rates current at his or her retirement. It will be apparent that in situation (2) there are two theoretical risks: that of misappropriation or miscarriage of pension instalments, and failure of the life office. In situations (3) and (4) the failure of the life office is the only risk. The way in which VIP total contributions were used in practice before the dissolution date is recorded in SFI para 2.4 (5): The Trustee had power, with the members consent, to purchase an annuity or insurance contract from an insurance company in order to secure his benefits: Schedule 2 rule 8.1. In practice however it appears that the Members VIP Interest was converted into pension using tables of factors periodically supplied by the Scheme actuaries and (as allowed for by article 8.1.5) paid direct from the Scheme; this is what is referred to as internal annuitisation and (together with the same feature in relation to MoneyMatch benefits) forms the subject matter of the third issue on this appeal. Since the Company went into receivership, however, arrangements have been made for the purchase of annuities from a life office. Mr Giles Orton, a director of the Trustee, has deposed that in December 2004 the Trustee transferred approximately 70m to Prudential Retirement Income Ltd in respect of pensioners in order to lock into the mortality rates and investment yields available at that time. MoneyMatch benefits The rules as to MoneyMatch benefits are set out in Schedule Three to the 1998 deed. Under rule 1 members prospectively entitled to these benefits (that is what the deputy judge called Option 1 and Option 2 members, together with new entrants after the 1992 reorganisation) paid contributions at the rate of 3% of contribution earnings. They could also opt to pay MoneyMatch Plus contributions and further supplementary contributions, within specified limits. Under rule 2 the Company made contributions (called MoneyMatch Credits and MoneyMatch Plus Credits) equal to each members MoneyMatch and MoneyMatch Plus (but not supplementary) contributions. There were some special transitional arrangements which it is unnecessary to go into. Rule 3 dealt with the investment of total contributions. The total contributions were to be credited to a Guaranteed Interest Fund (GIF) with the possible exception of (i) a members MoneyMatch Plus contributions (ii) a members supplementary contributions and (iii) the Companys MoneyMatch Plus contributions in excess of 2% of plan earnings (under the definitions in Schedule One plan earnings are defined in similar but not identical terms to contribution earnings; neither side took any point on this). These three items could be invested, at the Members option, in the investment funds mentioned in para 12 above. The GIF was defined in Schedule One as the notional investment fund established by the Trustee for the purpose of MoneyMatch. It was notional in the sense that it was not a separate appropriated fund. It was a part, ascertainable only as a matter of accounting, of the general fund held by the Trustee for the purposes of both Core (that is, final salary) benefits and MoneyMatch benefits. The investment funds mentioned in para 12 above were separate appropriated funds, held for the purposes of MoneyMatch Plus and supplementary contributions (together with VIP total contributions as already explained). Rule 3.1.1(a) and (b) specified which contributions were to be credited to the GIF. Rule 3.1.1(c) must be set out at length as it is crucial to the appellants case that MoneyMatch benefits were not money purchase benefits, because (it is argued) the investment return on MoneyMatch contributions is not directly related to those contributions. It provides as follows: (a) At the Commencement of each Plan Year, the Trustee shall declare a rate of interest on the Guaranteed Interest Fund which shall be applicable to the Plan Year stated. The rate of interest declared shall be 1% less than the rate of interest available from the building society nominated for this purpose by the Trustee on its additional voluntary contribution accounts under company sponsored approved arrangements for which the nominated building society is responsible for the maintenance of individual account balances. The rate of interest available is that rate at the 31 March immediately preceding the Plan Year to which the said rate is to apply. (b) At each Plan Year end commencing with the Plan Year ending on 5th April 1995 the Trustee shall make (or cause to be made) a comparison of: (i) the average rate of investment return on the Fund (but excluding for the purposes only of the present comparison such parts of the Fund as are attributable to the Investment Funds) applicable to the three preceding calendar years (ii) the average interest rate declared for the Guaranteed Interest Fund during the last of the three calendar years in (i) above calculated as one quarter of the interest rate that applied at the start of that calendar year and three quarters of the interest rate that applied at the end of the calendar year. (c) Where the comparison reveals a rate of return under (b)(i) above which is greater than the return under (b)(ii) above then the Trustee shall declare a bonus percentage. The bonus percentage shall be 50% of the excess of (i) over (ii) subject to such bonus not exceeding 4%. Rule 4 set out the benefits to be provided in respect of a members MoneyMatch interest on his or her retirement, early leaving, or death. Counsel did not make any submissions based on the details of these provisions, but it is worth noting that rule 4.1.3 referred to pension increases in accordance with Rule 5 in the general rules set out in Schedule Two. Rule 5.2.2 provided that Revaluation Requirements (defined in Schedule One by reference to the statutory code) should apply to deferred pensions in excess of GMP, and stated: In particular, any money purchase benefits (as defined in section 181((1) of [PA 1995]) shall be calculated in accordance with the investment yield and any bonuses arising from the relevant payments during the period [until state pensionable age], subject to the Revaluation Requirements. The general effect of the provisions in rule 3.1.1(c) is that the amount credited to a member in respect of his or her interest in the notional GIF would not necessarily, and indeed almost certainly would not in practice, precisely mirror the actual investment return on what was a mixed fund of fixed interest government securities, equities, and cash and derivatives. Instead the member would get an annual return determined year by year by the Trustee by reference to building society rates (in the last accounting period before the dissolution date it was 3.12%) together with the prospect of a bonus equal to half the excess (if any) of the unweighted average annual investment return for the last three calendar years over the weighted average interest rate determined at the beginning and end of the year in question (but not exceeding 4%). In practice, this formula could be expected to provide a smoother but rather lower rate of return than the actual investment return (which might in some years be negative), comparable to the smoothing effect achieved by life offices on their long term with profits funds. The statutory provisions The relevant definition of money purchase benefits is in section 181(1) of PSA 1993, applied for the purposes of section 73 of PA 1995 by section 124(5) of the latter Act: Money purchase benefits, in relation to a member of a personal or occupational pension scheme or the widow or widower of a member of such a scheme, means benefits the rate or amount of which is calculated by reference to a payment or payments made by the member or by any other person in respect of the member and which are not average salary benefits. Leaving aside the last seven words (to which it will be necessary to return) the reader sees that the essential feature of these benefits is that their rate (typically so much a year) or amount (typically a lump sum) is to be calculated by reference to contributions made by the member or someone else (typically the employer) in respect of that member. A money purchase scheme is defined (also in section 181(1)) as a pension scheme under which all the benefits that may be provided are money purchase benefits. The issue between the parties may ultimately turn on whether the statutory words calculated by reference to mean (as the Court of Appeal held in Aon Trust Corporation v KPMG [2005] EWCA Civ 1004, [2006] 1 WLR 97, para 171) calculated only by reference to, in the sense that the benefit in question must be the direct product of the contributions. The appellant contends that the need to refer to current annuity rates as well is fatal in the case of VIP benefits which may be provided by an internal annuity; and that the absence of a direct link with the actual investment return on MoneyMatch contributions is similarly fatal in the case of MoneyMatch benefits. In their submissions counsel (mainly, it must be said, in response to questions from the Court) made reference to the statutory origins and contexts of the definition which the Court has to construe. PSA 1993 is a consolidating statute and in Farrell v Alexander [1977] AC 59 the House of Lords gave a firm warning against going behind, or beneath, the text of a consolidating statute. Lord Wilberforces observations on that point (at p73) are too well known to need repetition. No doubt mindful of this, Mr Simmonds, in the deferred pensioners written case, went to the consolidating statute itself, the PSA 1993, to identify four contexts in which the definition of money purchase benefits (or that of a money purchase scheme) is relevant. He referred to the legislative history (in paras 55 to 59 of the case) only as a fallback position. The first context in PSA 1993 is the revaluation of deferred benefits. If a member changes jobs at the age of (say) 45, and does not receive a transfer payment to the new employers pension scheme, there is a danger of the real value of the members deferred benefits being severely eroded by inflation. Sections 83 to 86 of, and Schedule 3 to, PSA 1993 sought to remedy that problem by requiring a minimum level of revaluation of benefits. The permitted methods of revaluation are referred to in section 84(4) and are defined in Schedule 3 as the average salary method, the final salary method, the flat rate method and the money purchase method. Flat rate benefit is defined in section 84(4) as any benefit the rate or amount of which is calculated by reference solely to the members length of service. The definition of money purchase benefits is provided by section 181(1) as already mentioned. Schedule 3, paragraph 5(1) provides: Subject to sub paragraphs (2) and (3), the money purchase method is to apply the investment yield and any bonuses arising from payments made by or on behalf of a member towards providing any pension or other retirement benefit which is payable under the scheme to him or to any other person in respect of him in the manner in which they would have been applied if his pensionable service had not terminated. Sub paragraphs (2) and (3) provide for possible deductions of administrative expenses. It is the provisions of Schedule 3, para 5 that are referred to in rule 5.2.2 of Schedule Two of the 1998 deed. The second context is in connection with contracting out from SERPS. This complex topic is dealt with in Part III of PSA 1993. For present purposes the most material provisions are in section 8(1), under which contracted out employment is defined in terms of employment in a salary related contracted out scheme or a money purchase contracted out scheme. The statutory conditions include (section 9(3)) requirements as to protected rights. Section 28(2)(a) contemplates that effect may be given to protected rights by the provision by the scheme of a pension (complying with various requirements). The appellant accepts that this covers the provision of an internal annuity (in the sense indicated in para 15(1) above). The third context was provided by sections 102 to 108, under which money purchase benefits were excluded from provisions for revaluation of pensions in payment. Mr Simmonds did not develop this point, partly no doubt because the effect of sections 102 to 108 was reversed by PA 1995. But it is another context suggesting that an internal annuity is not incompatible with money purchase benefits. The fourth context is the employers statutory obligation, under section 144, to make good any deficiency of assets as against liabilities when a pension scheme is wound up, or the employer becomes insolvent (eventualities which frequently coincide). Mr Simmonds accepts that the context of this provision is unequivocally that of adequacy of funding. Money purchase schemes were excepted from the scope of section 144. Section 144 has now been repealed and replaced by section 75 of PA 1995, which also excludes money purchase schemes. This exclusion is a very important part of Mr Nugees case for the appellant. He has submitted that it is fundamental to the scheme of the legislation (and confirmed by the EU context, referred to below) that money purchase schemes are (more or less by definition) always fully funded, with no risk of the assets being insufficient to meet the liabilities, and for that reason alone they are excepted from the funding obligation in section 75 and also from the statutory order of priority now found in section 73 of PA 1995. Hybrid Schemes As just noted, the exception in section 73 of PA 1995 applied only to money purchase schemes that is schemes providing no benefit except money purchase benefits. But the Secretary of State had power to modify section 73 by regulations, and exercised this power by making the Occupational Pension Schemes (Winding Up) Regulations 1996 (SI 1996/3126) (the Winding Up Regulations). Regulation 13 (Hybrid schemes) provides as follows: (1) In relation to any scheme (a) which is not a money purchase scheme, but (b) where some of the benefits that may be provided are relevant money purchase benefits, section 73 applies as if (i) the liabilities of the scheme did not include liabilities in respect of those benefits, and (ii) the assets of the scheme did not include the assets by reference to which the rate or amount of those benefits is calculated. (2) In paragraph (1) relevant money purchase benefits means money purchase benefits other than (a) benefits derived from the payment by any member of voluntary contributions, or (b) underpin benefits. (3) In this regulation, underpin benefits means money purchase benefits which under the provisions of the scheme will only be provided in respect of a member if their value exceeds the value of other benefits in respect of him under the scheme which are not money purchase benefits. If (as has happened in this case, if Mr Simmonds is correct) both salary related benefits and money purchase benefits are to be provided out of a single global fund of investments, it is not immediately obvious what are the assets by reference to which the rate or amount of those benefits is calculated. The SFI states (para 4.7), without detailed reference to the facts of this particular case: The effect of the statutory provisions is that if a particular benefit is classified as a relevant MP benefit, regulation 13 takes both the liability and the corresponding assets out of the mandatory priority order in section 73. If it is not a relevant MP benefit, liability for the benefit has to take its place in the section 73 order, under which priority is given to pensioners over deferreds. But it is to be noted that under section 73(3)(a) liabilities derived from a members voluntary contributions have the highest priority. The EU dimension and national lifeboats There are two relevant EU Directives: Council Directive 80/987/EEC of 20 October 1980 (the Insolvency Directive) and Directive 2003/41/EC of the European Parliament and the Council of 3 June 2003 relating to the Activities and Supervision of Institutions for Occupational Retirement Provision (IORP). Article 8 of the Insolvency Directive provides as follows: Member States shall ensure that the necessary measures are taken to protect the interests of employees and of persons having already left the employers undertaking or business at the date of the onset of the employers insolvency in respect of rights conferring on them immediate or prospective entitlement to old age benefits, including survivors benefits, under supplementary company or inter company pension schemes outside the national statutory social security schemes. This provision was considered and applied by the Court of Justice in Robins v Secretary of State for Work and Pensions (Case C 278/05) [2007] 2 CMLR 269. That case was concerned with claims by members of an insolvent salary related pension scheme which was wound up in 2003, so that section 73 and 75 of PA 1995 applied. The Court of Justice held (paras 41 to 45) that Article 8 does not require Member States to provide a full guarantee of pension rights under private sector schemes, but (para 59) that a system such as that established by the UK legislation does not ensure the protection provided for by the Directive and does not constitute proper implementation of Article 8 thereof. It was for the national court (para 69 et seq) to decide, in accordance with well settled principles, whether a remedy in damages was appropriate. IORP is concerned, as its recitals indicate, with establishing a genuine internal market for financial services. Article 15(1) and (2) provide as follows: (1) The home Member State shall ensure that institutions operating occupational pension schemes establish at all times in respect of the total range of their pension schemes an adequate amount of liabilities corresponding to the financial commitments which arise out of their portfolio of existing pension contracts. (2) The home Member State shall ensure that institutions operating occupational pension schemes, where they provide cover against biometric risks and/or guarantee either an investment performance or a given level of benefits, establish sufficient technical provisions in respect of the total range of these schemes. These requirements are then elaborated in paras (3) to (6). Article 16(1) provides: The home Member State shall require every institution to have at all times sufficient and appropriate assets to cover the technical provisions in respect of the total range of pension schemes operated. This requirement is then elaborated in paras (2) and (3). In Robins the Court of Justice (paras 16 and 17) made a brief (and seemingly incomplete) reference to the statutory provisions for compensating members of insolvent schemes as they stood at that time. In this appeal the appellant Secretary of State has provided quite a full account of the far reaching changes in compensation and funding requirements made by the Pensions Act 2004 (PA 2004), which radically altered the regulation of pension schemes. Part 1 of PA 2004 set up the Pensions Regulator in place of the Occupational Pensions Regulatory Authority, and Part 2 set up the Pension Protection Fund (PPF) in place of the Pensions Compensation Board established by PA 1995 (which provided compensation only where there had been a loss caused by dishonesty). PPF is funded by a statutory levy and it has the function of assuming responsibility for the pension schemes of insolvent employers in cases where the scheme is wound up after 5 April 2005. It does not therefore apply to the Scheme. Compensation is not limited to cases of dishonest mismanagement or misappropriation. But its powers do not extend to money purchase schemes (PA 2004, section 126(1)). Part 6 of PA 2004 consists of a single section, section 286, which requires the Secretary of State to set up a financial assistance scheme (FAS) for making payments to qualifying members of qualifying pension schemes. Again, money purchase schemes are excluded from the latter definition (section 286(2)). The principal regulations are the Financial Assistance Scheme Regulations 2005 (SI 2005/1986) (as amended). It should also be noted that insured schemes have been comprehensively protected, throughout the whole relevant period, by the Policyholders Protection Act 1975 and regulations made under that statute. Part 3 of PA 2004 (Scheme funding) is intended to strengthen the regulation of scheme funding. Like Part 2 these provisions were at least in part intended as a response to the United Kingdoms obligations under the Insolvency Directive and IORP. The minimum funding requirement regime was replaced by a new statutory funding objective (set out in section 222(1)) which is generally referred to as scheme specific funding (SSF). These provisions do not apply to money purchase schemes (section 221(1)). The appellants printed case places some emphasis on the fact that money purchase schemes are excluded from the PPF regime, the FAS regime and the SSF regime. With the exception mentioned below, the parties written and oral submissions did not explain how those regimes apply to schemes which provide some money purchase benefits without being exclusively money purchase schemes. The exclusion of money purchase schemes is not, I think, directly relevant to the issues that the Court has to decide, but was mentioned as part of a general submission (which is, as already noted, an important part of Mr Nugees case) that money purchase schemes are by their nature always fully funded, and free from any risk of actuarial insolvency. It is also part of a more particular submission on the Marleasing principle (Marleasing SA v La Comercial International de Alminentacin SA (Case C 106/89) [1990] ECR I 4135) that this Court should prefer a construction which avoids infringement, or possible infringement, of EU obligations. This point was not raised before the deputy judge (when the Secretary of State was not an intervener). It was raised and rejected by the Court of Appeal (paras 95 and 96). The exception mentioned above is that the diligence of Mr Nugee and his junior, Mr Hilliard, produced on the second day of the hearing a note on the treatment of deferred scheme members setting out the appellants counsels view on the practical outcome of the competing cases on the first issue, in terms of what different classes of pensioners would receive from the combined resources of the Scheme and FAS. The rules of FAS as they apply to the Scheme do not at present cover all money purchase benefits that fall to be dealt with under section 73 of PA 1995 (though there is a consultation in progress about this). Although this note was produced in response to a request from the Court I think it better not to refer to it. This is partly because the note was not (I think) agreed by Mr Simmonds. But the more important reason is that this Court has to decide the issues of construction as a matter of principle, and without regard to the practical consequences, however much sympathy we may feel for all the pensioners, faced as they are with a long delay in the final determination of how the Schemes inadequate funds should be divided. The KPMG case: at first instance The decision of the Court of Appeal in Aon Trust Corpn v KPMG [2006] 1 WLR 97 (KPMG) is the only decision of that court which has any close bearing on the issues in this appeal. It has therefore received close attention at every stage in this litigation. The deputy judge, who was of course bound by the decision, distinguished it (primarily at paras 129 to 134 of her judgment). The Court of Appeal, which was also bound by the decision, also distinguished it, primarily at paras 143 to 145 (as regards MoneyMatch benefits) and paras 150 to 152 (as regards internal annuitisation). Mr Nugees position is that KPMG was rightly decided and that in this case the Court of Appeal was in error in distinguishing it. Mr Simmonds accepts that it may have been correctly decided on its facts, but criticises some important parts of its reasoning. On any view it is necessary to take a close look both at the first instance decision of Sir Andrew Morritt V C (who is very experienced in the pensions field) [2004] EWHC 1844 (Ch) [2005] 1 WLR 995, and at the judgment of the Court of Appeal (delivered by Jonathan Parker LJ, with whom Mummery and Chadwick LJJ agreed). The case related to a pension scheme which started life in 1949 as the staff pension scheme of Peat Marwick Mitchell & Co. Until 1999 periodic actuarial valuations showed that the scheme was in surplus, but in that year a small deficit was disclosed. In consequence the scheme was amended to split the pension fund into two, with effect from 31 March 2000. There was a pre 2000 fund which became a closed fund (that is, no new entrants were permitted) and a post 2000 fund which was described by the Vice Chancellor, in para 2, as a conventional money purchase scheme. The proceedings related to the pre 2000 fund (the closed fund). The principal issue in the Court of Appeal was whether the closed fund also was held in a money purchase scheme for the purposes of PSA 1993 and PA 1995 (it was common ground that if it was, the scheme was a relatively unusual type of money purchase scheme). This issue arose in Part 8 proceedings in which the corporate trustee (Aon) sought directions on several matters, including whether the employer, KPMG, was liable or potentially liable under PA 1995 to make good a deficit in the closed fund which had grown, by the time of the 2002 triennial actuarial valuation, to about 71m. The scheme affecting the closed fund was unusual in that it combined one of the salient features of a money purchase scheme defined contributions of equal amount made by both member and employer in respect of that members prospective benefits with actuarially determined formulae under which the amount of pension earned by any member was provisionally ascertainable year by year during a members service. This process was however provisional only because clauses 8.4 and 8.5 of the trust deed provided as follows: 8.4. If an actuarial valuation or interim review of the pre 2000 fund shows a surplus the trustees may with the consent of the principal employer and after taking the actuarys advice and after making any such amendments to the trust deed and/or rules as may be necessary, decrease the contributions of any member and/or increase (by declaration of bonuses or interim bonuses or otherwise) the benefits or future benefits of any member or other person entitled to receive any benefit from the pre 2000 fund. 8.5. If an actuarial valuation of the pre 2000 fund reveals a deficiency in the pre 2000 funds resources the trustees may with the consent of the principal employer make such adjustments and amendments to the benefits secured or thereafter accruing for and in respect of the members as are necessary in the opinion of the trustees after taking the actuarys advice to secure the continued solvency of the pre 2000 fund. It will be observed that these provisions are not strictly mandatory. They confer fiduciary powers, to the exercise of which KPMG had to consent. The alteration in contributions or benefits under clause 8.4 did not have to be carried out in any particular way (though no doubt a general duty of fairness was implicit), and clause 8.5 was similarly unspecific as to how continued solvency was to be maintained. Moreover (by clause 8.2 and 8.3) only the statutory triennial valuation was mandatory, and it was for the trustees to decide (with KPMGs consent) whether to obtain more frequent actuarial valuations or interim actuarial reviews. The operations of the provisions of clause 8.4 and 8.5 (the clause 8 powers) was therefore by no means automatic or rigidly linked to changes in investment returns (as opposed to life expectancy). simplified example: In para 14 of his judgment the Vice Chancellor gave what he called a . take a male aged 25 at his next birthday in the calendar year 1999. The factor is 0.960 for a pension payable unreduced at age 65. If in that year he earned 20,000 and the contribution rate for both him and the employer was 4% then the computation of benefit on retirement at age 65 would be 20,000 x 8% (ie 1,600) x 0.960 = 1,536 per annum. If in the same year there had been a bonus declaration of 5% under clause 8.4 then the pension in respect of that year of service would have increased to 1,612.80 (1,536 + (5% x 1,536)). On the other hand a deduction of the like percentage under clause 8.5 would give rise to a pension aged 65 of only 1,459.20. The formula is applied for each year of service to the contributions made in that year and the pension at retirement is the sum of the product of such computations for each year of service. The last sentence of this passage may be describing how the clause 8 powers were exercised in practice. I rather doubt whether that was the only permissible way of exercising the powers. But the general pattern was what was described in argument as building blocks: each years contributions produced a provisional component of the eventual pension, but the cumulative process could be either accelerated or retarded, at least once every three years, by the exercise of the clause 8 powers. The context in which the KPMG proceedings were brought was that the closed fund had an uncomfortably large deficit and the trustee, Aon, was no doubt considering a fairly drastic exercise of its clause 8.5 power. Three issues were raised at first instance: (i) whether the power could be used to reduce pensions already in payment; (ii) whether the power was a power of modification within the meaning of section 67 of PA 1995 (and so subject to statutory restrictions); and (iii) whether the scheme was a money purchase scheme, so that KPMG was not subject to statutory obligations to make payments under sections 60 and 75 of PA 1995. The Vice Chancellor answered questions (i) and (ii) in the affirmative (paras 18 to 33) and question (iii) in the negative (paras 34 to 58). The Vice Chancellor reached his conclusion on the third question on two alternative grounds, one particular and one general. The particular ground was the exclusion of average salary benefits from the statutory definition of money purchase benefits. The Vice Chancellor explained (paras 52 to 55) that average salary benefits, whatever particular mechanism is used to compute them, are likely to have elements of both defined contribution and defined benefit, and that the last seven words of the statutory definition are in the nature of a tie break (para 55): An average earnings related scheme is likely to have resort to both earnings and contributions/payments in the ascertainment or definition of the benefit. It is necessary to do so in order to take account of both the level of earnings going to make up the average and the time when they arose. This, in my view, is the explanation for the exclusion of average salary benefits at the conclusion of the definition of money purchase benefit. That explanation is illuminating but not directly relevant to this appeal. The more general ground of decision is undoubtedly relevant. The Vice Chancellor reviewed the contexts in which money purchase benefits and money purchase schemes appear in PSA 1993 and PA 1995 (most of these are noted at paras 25 to 28 above). He drew from them two general conclusions. One is in para 46: Nevertheless it appears to me to be obvious that Parliament recognised that in a money purchase scheme in all normal circumstances the benefits are matched by equivalent assets. This is to be contrasted with a defined benefit scheme, such as a final salary scheme, when assets and liabilities will not match each other unless the actuarial and other assumptions on which the level of contribution was fixed actually occur. The other general conclusion is set out, in very similar terms, in paras 42, 44 and 47; I quote from para 44: Thus the distinction recognised that a money purchase benefit had no guaranteed or defined benefit for it depended on the investment yield obtained or attributable to the fund derived actually or notionally from the contributions made by the member and his employer. In each of the three formulations the Vice Chancellor used the expression investment yield. I think it is clear that he was referring not simply to income yield, but to what is generally referred to in the financial services industry as investment return or total return that is income yield together with capital appreciation (if positive during the relevant period) or the difference between the two (if there is a fall in capital value during the relevant period). The Vice Chancellor also accepted KPMGs submission (para 54) that the statutory definition must be applied with regard to the substance of the calculation. He saw that approach as leading both to what I have called the particular ground of decision (para 56) and the more general ground (para 57), on which he considered that the contingent and discretionary effect on benefits of the clause 8 powers was inconsistent with their being money purchase benefits. The KPMG case: Court of Appeal All three issues were raised on the appeal, and on the issue of the reduction of pensions in course of payment the appeal was allowed. Very clear words would have been needed to authorise such a step, and the clause 8.5 power did not go that far. The appeal as to whether the clause 8 powers came within section 67 of PA 1995 was dismissed. We are concerned mainly with a decision on the money purchase issue, on which the Court of Appeal reached the same conclusion as the Vice Chancellor, but for reasons that were expressed in rather different terms. In discussing money purchase schemes in general, Jonathan Parker LJ observed (paras 31 and 32): Alternatively, an employer setting up an occupational pension scheme may decide to define the level of benefits by reference solely to the contributions made in respect of the member concerned, so that the benefit represents no more and no less than the product of the contributions. Such a scheme is commonly called a money purchase scheme (I will come to the statutory definition of that term later). Thus in a typical money purchase scheme there can, by definition, be no mismatch between assets and liabilities. Hence there is no need (indeed, no scope) for a balance of cost obligation on the employer, since the level of contribution dictates the level of benefit and no balance of cost can arise. Counsels arguments before the Court of Appeal were recorded at some length, the parts relevant to the money purchase issue being paras 106 to 117 (Mr Sumption QC for KPMG), paras 123 to 134 (Mr Green QC for the representative active member) and para 148 (Mr Ham QC largely adopting Mr Greens submissions). I will not try to analyse these in detail. There was a good deal of argument about the nature and significance of the clause 8 powers. The argument for KPMG was that they were an integral part of the process of calculating benefits by reference to contributions, and not a provision for reducing settled entitlements. Against this the members stressed what the Vice Chancellor had called the contingent and discretionary nature of these powers. In this appeal the nature and effect of the clause 8 powers have to be compared with the nature and effect of the provisions in rule 3.1.1(c) of Schedule Three of the 1998 deed. Jonathan Parker LJ discussed the rival arguments and set out his conclusions on this issue at paras 151 to 176. In summary (which cannot do justice to the detailed development of his reasoning) the steps were on the following lines. (1) The key to the problem is in the relationship between contributions and benefits, as that relationship emerges from a consideration of the scheme as a whole, properly construed (para 151). (2) The clause 8 powers were not automatic, but discretionary, in their operation (para 153). (3) The calculation of benefits was a three stage process, with the clause 8 powers as a distinct stage, involving actuarial factors, which were also involved in the formulae at the first stage (paras 155 to 166). (4) The scheme lacked the basic characteristics of a money purchase scheme: In the first place, the requisite direct relationship between contributions and benefits is broken by the introduction of actuarial factors. As Mr Ham succinctly put it at the conclusion of his submissions, in the case of a money purchase scheme you do not need an actuary. Secondly, by including the [clause 8 powers] the scheme not only recognises but positively caters for a continuing mismatch between assets and liabilities (para 167, some references omitted). (5) The inclusion at the first stage of actuarial factors made it impossible for the scheme to qualify as a money purchase scheme: the expression calculated by reference to means, in my judgment, calculated only by reference to, in the sense that the benefit in question must be the direct product of the contributions (para 171). (6) The Lord Justice also agreed with the Vice Chancellors alternative ground of decision, the exception for average salary benefit, while commenting that the true reason for it would have to remain a mystery (para 174). The judgments below The deputy judge had to decide several issues. On the money purchase issue she distinguished KPMG as a building block scheme in which actuarial factors were an integral part of the calculation process. She said in relation to the GIF mechanism (para 137): Despite the fact that the final rate of return to be applied to the Members Interest is arrived at by the addition of a bonus percentage to the initial conservatively declared rate, in my judgment, it is merely a rate of return nevertheless. The mechanism by which the rate is arrived at is just that. She considered that to distinguish between the internal and external provision of annuities would produce anomalies. The Court of Appeal rightly paid generous tribute to her judgment. The judgment of the Court of Appeal (delivered by Mummery LJ, but recording that all members of the Court had contributed to it) is, if I may respectfully say so, an admirable effort in explaining a very complex topic in language comprehensible to the members of the Scheme. But the judgment acknowledged the difficulties (paras 38 and 39): The Courts aim has been to produce, as far as possible, a judgment that Scheme members can themselves understand, if not the dense detail, at least the crucial conclusions and the reasons for them. This is particularly important in a case where the benefits of the members are significantly scaled back . Attempts to translate the legislation and the Scheme precisely into ordinary English for the benefit of a wider audience of non experts are probably doomed to failure. The complexity of the subject must be respected. Over simplification that does not do so could make matters even worse by causing confusion and misunderstanding through error and inaccuracy. The Court of Appeal identified seven issues as arising in the appeal. All but one of them were concerned with different aspects of the definition of money purchase benefits and money purchase schemes. The exception concerned the meaning of voluntary contributions in section 73(3)(a) of PA 1995, which is no longer in issue. The issues before the Supreme Court are the first two money purchase issues, designated and discussed in the judgment of the Court of Appeal as follows: (1) Are MoneyMatch benefits money purchase benefits despite the presence of the GIF? (paras 139 to 145) (2) Are pensions granted by way of internal annuities money purchase benefits? (paras 146 to 152). So although the judgment runs to 189 paragraphs the Courts discussion of the crucial issues, and its conclusions on them, can be found in fourteen closely reasoned paragraphs. This economy of expression was achieved partly because the judgment had already (paras 54 to 98) considered the KPMG case at length. The discussion of KPMG contains some very pertinent observations (paras 57 to 59) about the role of precedent in statutory construction. As the report is readily available it is unnecessary to repeat them. Their general tenor (with which I whole heartedly agree) is that judgments on statutory construction are not to be read as if they were themselves statutes, and that apparently wide propositions may have to be read in the context of the particular facts of the case to which they related. The Court of Appeal drew four conclusions (paras 85 to 90) as to the significance of KPMG for the present appeal. First, the scheme in that case was essentially a defined benefit scheme, although that feature was embodied (or concealed) in the actuarial formulae which provided the building blocks of the eventual pension. Second, KPMG contained no teaching about internal annuities or the presence of guaranteed notional returns provided by the GIF. Third, the relationship between contributions and benefits must be determined by looking at the scheme as a whole; the impossibility of a mismatch between assets and liabilities was not a necessary condition of a money purchase scheme, although it was a feature of a typical money purchase scheme. I will set out the fourth point in the Courts own words (para 90): we are also unable to accept that a benefit is precluded from being an MP benefit simply because an actuarial factor is applied at any stage of the calculation, or because the MP benefit pot is increased by reference to a guaranteed or notional return, as with a guaranteed interest fund. There is force in the comment that there would be no MP benefits at all if the introduction of an annuity rate to convert the capital value of the members MP pot into a pension income for the member prevented that benefit from qualifying as an MP benefit. In every case an annuity rate has to be applied, either by an insurance company in the case of the external provision of an annuity, or by the Trustee in the case of internal annuitisation. The important point in such cases is that the pension benefit is related to the size of the members interest or account in the relevant Scheme fund. The Court of Appeal concluded that the approach taken by counsel for the Secretary of State and the pensioner was over analytical and too literal in its treatment of KPMG. It considered (para 92): The question in each case is to ask whether, having regard to the combination of all the features of the scheme in question, the rate or amount of the benefit in question can be sensibly and reasonably said to be calculated by reference to the payments by or in respect of the members. That could not be said in the case of KPMG. As explained below, it can be said here in relation to the calculation of the Members Interest and the VIP Interest, notwithstanding the particular features on which the Department and the pensioner rely for their objections to the members benefits being MP benefits. The Court did not accept that the Marleasing principle was of any assistance in construing the statutory definition (paras 95 and 96). Following that approach, the Court of Appeal thought it wrong to read into the statutory definition a requirement that money purchase benefits (para 144): . must be the direct and actual products of the payments in order to be MP benefits. Those words are not in the definition. It is true that they were used in KPMG, but that was in the context of a very different scheme. In that case the liabilities to members turned on the application of tabulated multipliers to contributions. That calculation was a break in the link between the benefits and returns on invested contribution payments to that scheme. By contrast the use (in the GIF mechanism) of notional returns on the invested contributions did not break the link. The benefits were still calculated by reference to contributions (para 145). As to internal annuitisation, the Court recognised that it brought actuarial factors into play. But (para 152) this was only at the final stage of converting a sum of money into a retirement annuity. The benefits were still calculated by reference to the total contributions. Discussion: some preliminary points This Court has had the benefit of excellent written and oral submissions from counsel. It is unnecessary to summarise them at length. Mr Nugee has placed particular emphasis on the promise of future benefits as the hallmark of defined benefit schemes; on the equilibrium of assets and liabilities as the hallmark of money purchase schemes, and the reason why they are largely excepted from the operation of sections 73 and 75 of PA 1995; on the Court of Appeals insistence, in KPMG, that a money purchase members benefit should be the direct product of the contributions; and on Marleasing. Above all, Mr Nugee appealed for clarification and certainty in the law. Mr Simmonds submitted that Mr Nugee had started with a gloss on KPMG and worked backwards from that. He explored the four statutory contexts dealing with money purchase benefits (these are covered in paras 25 to 28 above). He relied on some particular linguistic points on the legislation (including the use of solely in the definition of flat rate benefit in section 84(4) of PSA 1993, and the exclusion from the definition of money purchase benefits of average salary benefits). He suggested that in considering the meaning of the words calculated by reference to it was helpful to look at the variables and the constants employed in calculations under different types of scheme. It may be best to start by dealing with three points which can to my mind be disposed of fairly quickly. First, KPMG was rightly decided. The use of the actuarial formulae and the width of the clause 8 powers (and the uncertainty as to those powers being exercised either at all, or in any particular way) produced what was on any view too wide a discontinuity between the quantum of a members total contributions (and the return on them), on the one hand, and the benefits to which the member would eventually become entitled, on the other hand. This conclusion is amply confirmed by (rather than being a consequence of) the deficit of over 70m which had appeared in the closed fund by 2002. Secondly, however, some of the reasoning in the Court of Appeals decision in KPMG (and in particular, para 171, quoted in para 55(5) above) is open to question: this is considered further below. I consider that the Vice Chancellor was correct in what he said (para 48 above) about the exception from the statutory definition of average salary benefits. Thirdly, the Marleasing principle is of no real assistance here. In relation to the United Kingdoms obligations under article 8 of the Insolvency Directive, Robins v Secretary of State for Work and Pensions (Case C 278/05) [2007] 2 CMLR 269 shows a very broad brush approach, with the outcome determined largely by the statistics quoted in paras 58 and 61 of the judgment of the Court of Justice. Since the vast majority of money purchase schemes are insured schemes, and since it is agreed that most self administered money purchase schemes have no risk of insolvency, it is hardly conceivable that any drafting error in the legislation could amount to a grave and manifest breach of Community law. Similarly with IORP; if there is an error in the changes made by Part 3 of PA 2004, it is for Parliament to correct it. For the Court to attempt correction by stretching or distorting the statutory language would be likely to lead to more anomalies and more confusion. Calculated by reference to . payments In the discussion of whether the critical words of the definition should be construed strictly (Jonathan Parker LJs approach, [2006] 1 WLR 97, para 172) or in terms of what can sensibly and reasonably be regarded as within the words (Mummery LJs approach, para 92) little attention has been paid to the question of the inclusion within the definition of the investment return (in the sense indicated in para 50 above) on a members total contributions. The only relevant statutory reference that I have found is in the context of revaluation of deferred benefits, where there is a reference to the investment yield and any bonuses arising from payments (PSA 1993, Schedule 3, para 5(1), set out in para 25 above). Section 87 of PA 1995 and regulations made under it require pension scheme trustees or managers to keep detailed records of contributions to money purchase schemes, but those requirements do not appear to cover the investment return on the contributions. No one suggests that the investment return on contributions is not properly included in the calculation of money purchase benefits. In KPMG the Vice Chancellor emphasised that they were included (see paras 49 and 50 above). Indeed, the statement in the House of Commons in 1986 by Mr John Major MP (quoted by Jonathan Parker LJ in para 112 of his judgment [2006] 1 WLR 97) suggests that the inclusion of investment return is of the essence of money purchase benefits. The fact is, however, that the statutory definition in section 181(1) of PSA 1993 makes no reference to investment return. Still less is there anything in the statutory definition requiring meticulous investigation as to the actual investment return earned over the years by every contribution made in respect of a member. A scheme which provided for a pot (to my mind an unhelpful term, since it suggests an appropriated mini fund) of a members total contributions together with annual interest thereon at (say) 3% compounded annually would be just as much calculated by reference to . payments as one which took account of the exact investment return on investments actually or notionally representing the payments. Arguably it would fit better with the statutory definition. It is also worth noting that a scheme which provided for annual interest at the rate of (say) 8% per annum compounded annually would be likely, in the first decade of this century, to have encountered grave solvency problems, although it would seem to fall squarely within the statutory definition. I do therefore respectfully differ from the key conclusion reached by Jonathan Parker LJ in para 171 of his judgment in KPMG [2006] 1 WLR 97, that calculated by reference to means . calculated only by reference to, in the sense that the benefit in question must be the direct product of the contributions. This interpretation involves reading in the word only, which Parliament did not use (whereas it did use solely in the definition of flat rate benefit set out in para 25 above). The altered phrase is then explained (in the sense that) by reference to the contributions direct product though the statutory definition makes no express reference to investment return. It follows that the deputy judge (see para 56 above) and the Court of Appeal (see para 63 above) were right, in my judgment, to conclude that the GIF mechanism did not unhitch a members eventual benefits from that members total contributions. They provided for a yield of guaranteed interest at a modest rate fixed by an objective test, together with the prospect of further bonuses at a modest rate, fixed, again, by an objective test under which the trustees had no discretion. All that is in striking contrast to the much looser terms of the clause 8 powers in KPMG. In the Court of Appeal in KPMG [2006] 1 WLR 97, Jonathan Parker LJ was impressed by the submission of counsel for the representative pensioner (para 148) that with a money purchase scheme there is no need for an actuary. That proposition is entirely correct in the sense that under Regulation 3(2) of the Occupational Pension Schemes (Scheme Administration) Regulations 1996 (SI 1996/1715), it is not obligatory to appoint a scheme actuary for a money purchase scheme. That provision (to which we were not, I think, referred) is consistent with the view that under a money purchase scheme (if not by definition) there should be no mismatch of payments and liabilities. But a statutory instrument made in 1996 cannot affect the construction of a definition in PSA 1993. Moreover, as I have just illustrated, the choice of an over optimistic fixed rate of return can lead to solvency problems, as Equitable Life discovered in another context (see Equitable Life Assurance Society v Hyman [2002] 1 AC 408). There is no evidence before the Supreme Court that the Schemes deficit is the result of the GIF mechanism. It seems more likely that it has arisen in respect of the final salary part of the Scheme, but the actuarial reports exhibited to Mr Ortons affidavit are not before the Court (with the exception of a report dated 20 March 2008 which is not, without explanation, of much assistance). This point may be relevant in connection with Regulation 13 of the Winding Up Regulations, discussed further below. Internal annuities In my judgment the deputy judge and the Court of Appeal were also correct in their conclusion that the provision of internal annuities (as opposed to the purchase of annuities from a life office) is not incompatible with money purchase benefits. As the deputy judge put it (para 135) the distinction would produce insupportable anomalies. As the Court of Appeal put it (para 152), annuity tables based on actuarial calculations are used only at the final stage, when the member retires and the amount earned by his or her defined contributions must be converted from a lump sum into an annuity. That is inescapable under either method of provision, in that actuarial tables will be used, on the advice of actuaries, either by the trustees or by the life office (with the latter building in a profit element). Regulation 13 The Court did not hear full submissions as to the effect of Regulation 13 of the Winding Up Regulations, but (as already noted in para 30) the reference in Regulation 13(1)(ii) to the assets by reference to which the rate or amount of those benefits is calculated is not easy to apply when the money purchase benefits are to be provided out of a single unappropriated fund which is insufficient to meet all its liabilities for defined benefits and money purchase benefits. This point is not expressly raised in the SFI, but it would be most unfortunate if it had to be referred back to a judge of the Chancery Division, with further costs and further delay. In these circumstances I think it right to say that in my view Regulation 13(1) must be interpreted on the basis that Parliament contemplated (as all sides agree) that money purchase benefits would normally be adequately funded but not over funded, and that the money or assets to be withdrawn from the unappropriated fund for the purposes of section 73 of PA 1995 should be of an amount or value equal to the money purchase benefits calculated by the GIF mechanism (less members MoneyMatch Plus contributions, employers MoneyMatch Plus credits in excess of 2% of Plan earnings and supplementary contributions which under Regulation 13(2)(a) are not relevant money purchase benefits, but take first priority under section 73). However if counsel for any party feels that this point has been insufficiently argued the Court would entertain further brief written submissions limited to this single point. Conclusion In his submissions for the Secretary of State, Mr Nugee (invoking, as it were, the prayer of Ajax: St Aubyn v Attorney General [1952] AC 15, 45) pleaded for clarity above all, even if he were to be unsuccessful in his arguments. I have considerable sympathy with that, and so will many others who have to grapple with the complexities of the primary and secondary legislation relating to occupational pension schemes. It is a striking fact that the Trustees report for the year to 5 April 2003 (signed off by the new independent trustee after the dissolution date, and no doubt very carefully considered by the Trustees directors, the auditors and the actuary) stated as a fact that the Scheme had a defined contribution section. None of these experienced professionals expressed any doubt about the point until the Secretary of States intervention. That is not to say that the Secretary of States intervention was unnecessary. Although this Court holds that equilibrium of assets and liabilities is not a requirement of the statutory definition of a money purchase scheme (and similarly for money purchase benefits), it is clear the Parliament has enacted primary legislation, and the Secretary of State has initiated secondary legislation, on that assumption. Nevertheless in all insured schemes, and in the great majority of self administered schemes, that assumption is in practice justified. To the special cases on which counsel agreed (insolvency of a life office, or misappropriation of trust funds) there may have to be added the case of an over optimistic guaranteed fixed rate of return on contributions, or the eventuality of unexpectedly high administration costs (the costs of all parties to litigation such as this are normally paid out of the trust fund, especially if the employer is insolvent, and can be a significant burden for a small scheme). The possibility of exceptional cases of that sort seems unlikely to amount to an infringement of Community obligations, or to necessitate primary legislation as a matter of urgency (although Regulation 13 of the winding up regulations may need clarification). But those are matters for the Secretary of State and for Parliament. For these reasons I would dismiss the Secretary of States appeal on the first and third issues. The second issue (apportionment of MoneyMatch benefits) does not arise. LORD MANCE I have found the resolution of this appeal more difficult than the majority. As Lord Walker points out, the Pensions Schemes Act 1993 (PSA 1993) is a consolidating statute, and we should look at it, rather than undertake historical archaeology. The critical question is what is comprised within the concept of benefits the rate or amount of which is calculated by reference to a payment or payments made by the member or any other person in respect of the member and which are not average salary benefits (PSA 1993, s.181(1)). Although the legislative history is not relevant, the factual background at the time of PSA 1993 may be. While it was only by the Pensions Act 1995 (PA 1995) (amending PSA 1993 and other prior legislation and introducing various new provisions) that Parliament addressed issues raised by the Report of the Pension Law Review Committee chaired by Professor Roy Goode issued in January 1993, that Report must reflect the general understanding of the nature of a money purchase scheme at the time when PSA 1993 was passed. The Report proceeds on the basis (see e.g. paras 2.2.20, 2.4.24 and 4.4.3) that, since under a money purchase scheme the scheme member bears the investment risk, there cannot in principle be a deficiency of assets, save in the case of loss of assets through fraud or misappropriation. The Report also confirms (App 4 Table 10, and see paras 2.4.20 to 2.4.31) that in 1993 most money purchase schemes were insured, and in particular (para 2.3.29) that over 97% of the 26,500 such schemes then contracted out (under what became Part III of PSA 1993) were insured. It is true that insurers can in theory become insolvent, in which case a scheme which had insured itself in respect of a money purchase benefit could suffer a shortfall, but in practice insurance industry solvency is tightly regulated, and there is also extensive statutory protection for beneficiaries in any insolvency. In the present case, the risk of underfunding due to the promised VIP and MoneyMatch benefits may or may not have been slight. But, if benefits of this kind do not undermine the essential nature of the scheme as a money purchase scheme, I find it difficult to see where the line is drawn. This is to my mind confirmed by what I understand to be Lord Walkers view in para 71 that a provision for annual interest on a members total contributions compounded at say 3% or even 8% per annum would still remain a money purchase benefit. It is true that s.181(1) does not itself expressly delimit what is meant by benefits the rate or amount of which is calculated by reference to a payment or payments. But the reason appears to me likely to have been that a direct relationship was implicit. I regard s.84, providing for the revaluation of deferred pensions (accrued at early retirement) to be made using the money purchase method described in Schedule 3, para 5, as pointing strongly in the same direction. Para 5 states that, with presently immaterial qualifications, the money purchase method is to apply the investment yield and any bonuses arising from payments made by or on behalf of a member towards providing any pension or other retirement benefit which is payable under the scheme to him or to any other person in respect of him in the manner in which they would have been applied if his pensionable service had not been terminated. The inference is that money purchase benefits are linked directly to an investment yield and/or (e.g. under with profits policies) to bonuses actually declared. A similar inference appears to me to arise from s.144 (which later became s.75(1) of PA 1995), whereby it is only in the case of an occupational pension scheme which is not a money purchase scheme that an employer is bound to make good to the scheme trustees an amount equal to an excess of the schemes liabilities over the value of its assets. It cannot therefore have been contemplated that there could be any real risk of liabilities exceeding assets in the case of a money purchase scheme. Under s.153(1) of PSA 1993 (s.89(2) of PA 1995) the Secretary of State was given power by regulations to make similar provision, subject to such modifications as he might specify, in respect of other cases. Section 125(2) of PA 1995 conferred a like power expressly in relation to schemes which are not money purchase schemes, but where some of the benefits that may be provided are money purchase benefits. In the event, however, and consistently with the Goode Report (para 83 above), the only possibility addressed by regulations was that of criminal reduction in the aggregate value of the allocated assets of any money purchase scheme: see regulation 7 of the Occupational Pension Schemes (Deficiency on Winding Up etc) Regulations 1996 (S.I. 1996 no. 3128) requiring the employer to make good any such loss. Again, this confirms that it was contemplated in 1993 (or one might add subsequently) that there could not be any other real risk of shortfall in respect of a money purchase scheme. Mr Simmonds QC in his excellent submissions for the scheme member respondents relied upon two other sets of provisions in PSA 1993: the first consists of s.10(1) read with s.28, according to which, in the context of contracting out, protected rights to money purchase benefits may be given effect by the provision by the scheme of a pension which complies with or satisfies certain requirements or conditions; and the second consists of ss.102 108, which require the provision by schemes of annual increases by reference to the RPI of any pension which commences or has commenced under the scheme, but does not include (a) a guaranteed minimum pension or any increase in such a pension under section 109; or (b) any money purchase benefit (section 102(3)). Both sets of provisions therefore contemplate that a money purchase benefit may be given effect by a pension granted by the scheme itself. However, as Mr Nugee QC in his equally excellent submissions pointed out, any pension would in practice have been achieved in 1993 by the means of a back to back insurance taken out by the scheme, either when the member entered the scheme or when he or she retired and sought an annuity. It would not have been achieved by an internal pension exposing the scheme alone. On that basis, these sections do not contemplate, even on retirement, a situation in which the scheme would or could be exposed to any mismatch of liabilities and assets. If and in the event that a pension was granted without matched asset backing in the form of an insurance, the appropriate analysis would be that the benefits conferred by the scheme had become defined benefits, rather then money purchase benefits. Weight was placed by Mr Simmonds on the presence at the end of the definition in s.181(1) of PSA 1993 of the words and which are not average salary benefits. A definition of average salary benefits appears in s.84, albeit in terms only for the purpose of that section, where it means benefit the rate or amount of which is calculated by reference to the average salary of a member over the period of service on which the benefit is based. The words and which are not average salary benefits must have been meant to make clear the need for an investment link which is, on any view, the key to a money purchase scheme or benefit. It does not follow that they were necessary, still less that the link can be partial rather than complete. There are other instances in the legislation where opposites are expressly excluded, e.g. in ss.73 and 125(1) of PA 1995, where a salary related scheme is expressly defined as a scheme which is not a money purchase scheme. I cannot attach significant weight to an addition to s.181(1) which can be read as simply making the antithesis clear. Lord Walker notes (para 79) that the present trustees presented the MoneyMatch section of their scheme as a defined contribution section in the scheme accounts for the year ended 5 April 2003, as they continue to do to this day. But to my mind a more telling indication of professional understanding is provided by the Actuarial Guidance Note GN27 issued by the Faculty & Institute of Actuaries, paragraphs 3.3 and 3.4 of which have been in the same form since version 1.5 effective from 1 December 2000 (and in almost identical form from the outset in version 1 effective from 6 April 1997). They read: 3.3 The value of the liabilities must not be limited to the value of the assets, even where the scheme rules may so provide. In particular, in the valuation of the liabilities in hybrid schemes which give a money purchase benefit subject to a defined benefit promise, the value of the defined benefit promise must not be limited to the value of the assets of the scheme, even if the rules of the scheme restrict the benefit promise where there are not sufficient assets in the scheme. 3.4 The liability in relation to money purchase benefits will, where contributions are accumulated, either in identifiable assets or otherwise, be the accumulated value at the MFR Effective Date, and, where contributions are used to provide minimum benefit rights payable as at a future date, be the value of those rights using the relevant assumptions specified in Appendix 2. Money purchase benefits which have been converted into defined pension rights on the retirement of the member must be valued in the same way as other benefits for pensioners. These paragraphs clearly contemplate that, where a money purchase benefit is used to provide a fixed annuity, not backed by a specific asset such as an insurance policy, the annuity constitutes a defined pension benefit. As Lord Walker also notes (para 80), it is clear that Parliament has enacted primary legislation, and the Secretary of State has initiated secondary legislation, on the assumption that a money purchase scheme (and a money purchase benefit) will not involve any shortfall of assets compared with liabilities. S.73 of PA 1995 provides for the assets of a salary related occupational scheme (i.e. not a money purchase scheme: see s.125(1)) to be applies towards satisfying the liabilities in respect of pensions and other benefits (including increases in pensions) in the order stated in subss. (2) to (4). Regulation 13 of the Occupational Pension Schemes (Winding Up) Regulations 1996 (S.I. 1996 no. 3126) provided that, in relation to a hybrid scheme, defined as one which was not a money purchase scheme, but under which some of the benefits which may be provided are money purchase benefits: s.73 applies as if (i) the liabilities of the scheme did not include liabilities in respect of those benefits, and (ii) the assets of the scheme did not include the assets by reference to which the rate or amount of those benefits is calculated. The assumption in this subsequent legislation is that the rate or amount of benefits can be and is calculated by reference to specific assets, which can be extracted accordingly from the hybrid scheme. On the case presented by Mr Simmonds and the trustee, it is wholly unclear how this exercise can or should be performed, when and if there is a shortfall in the assets required to meet all liabilities under s.73 and in the assets specifically identifiable to meet liabilities for money purchase benefits. It is in particular unclear why the latter should be entitled to take out of the former sufficient to ensure that the latter are fully met, and, if that is not the case or is impossible, it is unclear what order of priority should apply to any claims to money purchase benefits against such assets as may be attributed to money purchase benefits. While later legislators may have misunderstood the effect of earlier legislation, I repeat in relation to the inter relationship of PSA 1993 and PSA 1995 what I said recently in the context of different legislation when giving a judgment with which Lord Walker, Lady Hale and Lord Collins agreed in Bloomsbury International Ltd v Sea Fish Industry Authority [2011] UKSC 25: In the case of a statute which has . been the subject of amendment it is not lightly to be concluded that Parliament, when making the amendment, misunderstood the general scheme of the original legislation, with the effect of creating a palpable anomaly (see eg the principle that provisions in a later Act in pari materia with an earlier may be used to aid the construction of the former, discussed in Bennion on Statutory Interpretation, 5th ed (2008), section 234). Lord Phillips in his judgment went perhaps even further: see especially para 61. In the result, I am not persuaded that it is necessary or appropriate to read PSA 1993 (or subsequent legislation) as embracing within the concept of money purchase benefit, to some undefined and unclear extent, liabilities not matched with any specific asset held by the scheme. This applies as much to internal annuities granted by the scheme as to liabilities by way of guaranteed interest rates undertaken during the accrual of pension rights. Mr Nugee submitted that a distinction might if necessary, and in particular in the light of the points arising from ss.10(1), 28 and 102 108, be drawn between these two situations. I would be disinclined to draw such a distinction, when both involve exposure of the scheme to liabilities unmatched with any assets. My inclination would have been to allow the appeal on both questions identified in para 58 of Lord Walkers judgment. |
It is the aim of an award of damages in the law of tort, so far as possible, to place the person who has been harmed by the wrongful acts of another in the position in which he or she would have been had the harm not been done: full compensation, no more but certainly no less. Of course, there are some harms which no amount of money can properly redress, and these include the loss of a wife or husband. There are also harms which it is difficult to assess, especially those which will be suffered in the future, but the principle of full compensation is clear. The issue in this case is whether the current approach to assessing the financial losses suffered by the dependant of a person who is wrongfully killed properly reflects the fundamental principle of full compensation, and if it does not whether we should depart from previous decisions of the House of Lords. The facts The appellant is the widower of Mrs Knauer, who died from mesothelioma in August 2009 at the age of 46. It is now accepted that she contracted the disease as a result of exposure to asbestos during the course of her employment by the respondent as an administrative assistant at Her Majestys Prison, Guys Marsh. The respondent had initially denied such exposure but liability was eventually admitted in December 2013, when judgment was entered for the appellant with damages to be assessed. The damages hearing took place before Bean J in July 2014. Many items of damage were agreed and he resolved those which remained in issue. This included the annual figure for the value of the income and services lost as a result of her death (the multiplicand). There is no appeal against any of those findings. The issue is whether the number of years by which that figure is to be multiplied (the multiplier) is to be calculated from the date of death or from the date of trial. The parties are agreed that in this case the difference between the two approaches is 52,808. The trial judge held (as had Nelson J in White v ESAB Group (UK) Ltd [2002] PIQR Q6) that he was bound to follow the approach adopted by the House of Lords in Cookson v Knowles [1979] AC 556 and Graham v Dodds [1983] 1 WLR 808 and to calculate the multiplier from the date of death. Freed from that authority, however, he would have preferred the approach which had been recommended by the Law Commission, in their report on Claims for Wrongful Death (1999) (Law Com No 263), of calculating the multiplier from the date of trial. He granted a certificate under section 12 of the Administration of Justice Act 1969 to enable the case to come directly to this court, leapfrogging the Court of Appeal. The issue of principle which this court is asked to decide is whether the date of death or the date of trial is the proper approach. But if the answer to that question is the date of trial then the subsidiary issue is whether it is open to or proper for this court to depart from the approach laid down by Lord Diplock and Lord Fraser of Tullybelton in Cookson v Knowles and by Lord Bridge of Harwich in Graham v Dodds or whether the defect in the present law is one which should be left to Parliament to cure. The principle Mr Gerard McDermott QC, who appeared for the respondent, very properly conceded that the appellants case on the issue of principle was a good one. The normal approach is to calculate the losses up to the date of trial and award a lump sum in respect of those. Future losses are calculated on the multiplier/multiplicand approach. The multiplier reflects the normal life expectancy of the victim, based on actuarial tables which include a discount to take account of the risk of an earlier death (frequently referred to as the vicissitudes of life). But there is also a discount to reflect the value to the claimant of receiving a lump sum now to cater for future losses which would have been suffered over a number of years in the future. Without such a discount, there would be over compensation. The object is that, at the end of the period in question, the damages will have been exhausted in compensating the victim. The victim should not gain a profit from the compensation. That is the way in which damages for personal injury falling short of death are assessed. Calculating damages for loss of dependency upon the deceased from the date of death, rather than from the date of trial, means that the claimant is suffering a discount for early receipt of the money when in fact that money will not be received until after trial. The appellant accepts that the sum calculated to reflect the loss which has been suffered up to the date of trial should contain a discount to reflect the risk that, had there been no tort, the deceased might have died between her actual date of death and the date of trial. There may also be a risk that the support or services provided for a dependant might have stopped or reduced, for example because of the deceaseds accident, illness or loss of job or the dependency ceasing, for example because a child grows up. In most cases any discount would be a modest one, although of course there will be cases in which the risk was far from negligible and where a larger discount would be appropriate. But, as the figures in this case show, the effect of the discount for the non existent early receipt of the money is far from negligible. It results in under compensation in most cases. This has become clear now that the calculation of financial losses is based upon the actuarial tables produced by the Ogden Working Party. The current approach in fatal accident cases involves taking a multiplier as at the date of death and then deducting from it the time which has elapsed between the death and the trial. This is to mix up a calculation based on properly considered actuarial principles with an arbitrary arithmetical deduction. As Hooper LJ confessed in Fletcher v A Train and Sons Ltd [2008] EWCA Civ 413; [2008] 4 All ER 699, para 42, I do not understand why chronological years are deducted from the multiplier. The trial judge in that case had awarded interest on the whole sum, in order to make up for the under compensation, an approach which the Court of Appeal had to overturn. There have been other examples of courts seeking to get round the problem by adopting a distorted approach: see ATH v MS [2003] QB 965 and Corbett v Barking, Havering and Brentwood Health Authority [1991] 2 QB 408. The temptation to react to a rule which appears to produce an unjust result by adopting artificial or distorted approaches should be resisted: it is better to adopt a rule which produces a just result. The Law Commission, in their report on Claims for Wrongful Death, said this: 4.7 In the majority of cases it is the life expectancy of the deceased, and hence the period for which he or she would have continued to provide benefits to any dependants, which will govern the multiplier. It was in this context that the date of death rule was adopted, on the basis that everything that might have happened to the deceased after that date remains uncertain. 4.8 It is true that where the multiplier is controlled by the life expectancy of the deceased, the only information which will usually be relevant to that calculation is that which was known about the deceased at the time of death. On the other hand, it is possible to imagine facts on which matters emerging as certain after the deceaseds death do affect the period for which it is estimated that he or she would have continued to provide benefits. For example, the deceased might have suffered from a life shortening medical condition which could not be treated in his or her lifetime. If by the time of trial it is known that, within a year of his death, a treatment for the condition had been developed, this would inevitably affect the accuracy of any multiplier calculated at the date of death. Thus, even in cases where the deceaseds life expectancy controls the multiplier, we do not agree with Lord Frasers assertion that the multiplier should inevitably be selected once and for all as at the date of death. They recommended that, as in personal injury cases, actuarially calculated multipliers should be used for calculating future losses in fatal accident cases from the date of trial. For pre trial losses the only difference from non fatal cases would be that there would have to be a small deduction to take account of the possibility that the deceased might in any event have died or given up work before trial (para 4.17). They expressed this policy, not in the simple proposition that the multiplier should be calculated from trial, not death, but more precisely as a multiplier which has been discounted for the early receipt of the damages shall only be used in the calculation of post trial losses (para 4.18). They also recommended that the Ogden Working Party should consider, and explain more fully, how the existing tables should be used, or amended to produce accurate assessments of damages in fatal accident cases, based upon their preferred approach (para 4.23). If this is now so obvious, why did the House of Lords reach a different conclusion in Cookson v Knowles and Graham v Dodds? The short answer is that both cases were decided in a different era, when the calculation of damages for personal injury and death was nothing like as sophisticated as it now is. In particular, the courts discouraged the use of actuarial tables or actuarial evidence as the basis of assessment, on the ground that they would give a false appearance of accuracy and precision in a sphere where conjectural estimates have to play a large part. Hence [t]he experience of practitioners and judges in applying the normal method is the best primary basis for making assessments: Lord Pearson in Taylor v OConnor [1971] AC 115, 140. Rather like the assessment of the tariff in criminal cases, the answer lay in the intuition of the barristers and judges who appeared in these cases. This was wholly unscientific. Counsel in the current case were agreed that, when they started at the Bar, the conventional approach to deciding upon the multiplier was to halve the victims life expectancy and add one year, with a maximum of 16 to 18 years. This is an approach which depends upon being in the know rather than reality. In Cookson v Knowles the main issue was whether interest should have been awarded on the whole sum of damages awarded, as the trial judge had done. Both the Court of Appeal and the House of Lords held that it should not. The damages should be split into pre trial and post trial losses and interest (at half rate) should be awarded on the former but not on the latter. Lord Fraser also dealt with the date from which the multiplier should be calculated and held that, in a fatal accident case, it should be the date of death, whereas in a non fatal personal injury case, it was the date of trial. He justified the distinction on this basis at p 576: In a personal injury case, if the injured person has survived until the date of trial, that is a known fact and the multiplier appropriate to the length of his future working life has to be ascertained as at the date of trial. But in a fatal accident case the multiplier must be selected once and for all as at the date of death, because everything that might have happened to the deceased after that date remains uncertain. It seems clear that he was thinking of the multiplier in terms of taking account of the vicissitudes of life rather than in terms of accelerated receipt. The only other substantial speech was that of Lord Diplock, who did not question the propriety of assessing the multiplier as at the date of death (although for the purpose of awarding interest, it had to be divided into the pre and post trial periods). In Graham v Dodds, the majority of the Court of Appeal in Northern Ireland took the view that Lord Diplock and Lord Fraser had expressed opposite and irreconcilable opinions (p 814), Lord Diplock favouring the date of trial and Lord Fraser the date of death. The court preferred what they took to be Lord Diplocks view. In the House of Lords, Lord Bridge (with whom all the other members of the appellate committee, including Lord Diplock, agreed) held that Lord Fraser and Lord Diplock had not disagreed. Lord Bridge agreed with the reason given by Lord Fraser for distinguishing between fatal and non fatal cases and added that choosing the later date would lead to the highly undesirable anomaly that in fatal accident cases the longer the trial of the dependants claims could be delayed the more they would eventually recover (p 815). Once again, the emphasis was on the uncertainties of life, the difficulty of knowing what would have happened to the deceased between death and the date of trial, and not upon the question of accelerated payment. The Ogden Tables did not exist when these two cases were decided. The working party under the chairmanship of Sir Michael Ogden QC produced the first edition of Actuarial Tables with Explanatory Notes for use in Personal Injury and Fatal Accident Cases in 1984. Since then they have become a staple of personal injury and fatal accidents practice, the current edition being the 7th in 2011. Any doubts about using them in the courts were laid to rest in the landmark case of Wells v Wells [1999] 1 AC 345, where Lord Lloyd of Berwick said this at p 379F G: I do not suggest that the judge should be a slave to the tables. There may well be special factors in particular cases. But the tables should now be regarded as the starting point, rather than a check. A judge should be slow to depart from the relevant actuarial multiplier on impressionistic grounds, or by reference to a spread of multipliers in comparable cases especially when the multipliers were fixed before actuarial tables were widely used. Following publication of the Law Commissions report, the tables have included fatal accident calculations based on the Law Commissions recommended approach, although at present they cannot be used. Of the two reasons given by Lord Bridge for the present approach, it is now clear that there is a perfectly sensible way of addressing his uncertainty point, which would remove the current distinction between fatal and non fatal cases. The twin brothers mentioned in argument in Cookson v Knowles, one of whom was injured and the other of whom was killed in the same accident, would both be dealt with in the same way. If his first concern can thus be dealt with, his second concern, any incentive for claimants to delay the trial, is a little harder to understand. If it were valid, it would apply equally to non fatal personal injury claims. Further, if the present approach leads to under compensation, it could be said that it creates an incentive for defendants to delay the trial. The reality is that this is another respect in which the litigation landscape has been transformed since 1984. Under the Civil Procedure Rules 1998, the court is now in a position to set timetables and insist that parties keep to them. In any event, the proper use of the Ogden Tables makes the concern irrelevant. The dependants will get that which reflects their probable loss on an actuarial calculation based on the facts known at the date of trial. There is no injustice either way. Departing from previous House of Lords decisions The question for us is not simply the identification of the date as at which the multiplier should be assessed. Before we can decide that that date should be the date of trial rather than the date of death, we also have to be satisfied that we should depart from the established law as laid down by the House of Lords in Cookson v Knowles and Graham v Dodds. For the appellant, Mr Frank Burton QC contended that a determination that the appropriate date is the trial date would not involve a departure from those previous decisions, and therefore did not require the appellant to rely on the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234, whereby the House of Lords declared that it could depart from its previous decisions. This contention rested on the basis that we are merely being asked by the appellant to change a judicial guideline, rather than to depart from any earlier decision. We do not accept that contention, which appears to fly in the face of the reasons given by Lord Bridge for reaching the conclusion which he did in Graham v Dodds. He stated that the selection of the date of trial date would be clearly contrary to principle and would give rise to a highly undesirable anomaly (p 815). However much we may doubt those observations for the reasons already given, they demonstrate that he was deciding the issue as a matter of legal principle, and not merely giving non binding guidance. Furthermore, it is important not to undermine the role of precedent in the common law. Even though it appears clear that both the reasoning and conclusion on the point at issue in Cookson v Knowles and Graham v Dodds were flawed, at least in the light of current practice, it is important that litigants and their advisers know, as surely as possible, what the law is. Particularly at a time when the cost of litigating can be very substantial, certainty and consistency are very precious commodities in the law. If it is too easy for lower courts to depart from the reasoning of more senior courts, then certainty of outcome and consistency of treatment will be diminished, which would be detrimental to the rule of law. In our view, therefore, the issue is whether this is a case where this Court should apply the 1966 Practice Statement. In that connection, it is well established that this Court should not refuse to follow an earlier decision of this Court or the House of Lords merely because we would have decided it differently see per Lord Bingham of Cornhill in Horton v Sadler [2007] 1 AC 307, para 29. More than that is required, not least because of the desirability of certainty in the law, as just discussed. However, as Lord Bingham said in the same passage, while former decisions of the House are normally binding too rigid adherence to precedent may lead to injustice in a particular case and unduly restrict the development of the law. This Court should be very circumspect before accepting an invitation to invoke the 1966 Practice Statement. However, we have no hesitation in concluding that we ought to do so in the present case. At least in the current legal climate, the application of the reasoning in the two House of Lords decisions on the point at issue is illogical and their application also results in unfair outcomes. Further, this has encouraged courts to distinguish them on inadequate grounds (to quote Lord Hoffmann in A v Hoare [2008] AC 844, para 25), which means that certainty and consistency are being undermined. Above all, the fact that there has been a material change in the relevant legal landscape since the earlier decisions, namely the decision in Wells v Wells and the adoption of the Ogden Tables, when taken with the other factors just mentioned, gives rise to an overwhelming case for changing the law. As already noted, Mr McDermott very fairly acknowledged the strength of the appellants case for a change of approach. His only substantive answer to the contention that we should change the law was to point out that the system should be seen as a whole and that there are respects in which the current legislation requires that claimants be over compensated. One example is section 3(3) of the Fatal Accidents Act 1976, which requires the court to ignore, not only the prospect but the actual remarriage of the claimant, but another is section 4, which requires that benefits which will or may accrue to any person as a result of the death shall be disregarded. These are, of course, examples of over compensation. They result from legislative choices and not (unlike the principles with we are concerned in this case) from judicial decisions. The Law Commission recommended that they be modified by legislation. But none of this is an answer to the basic question under consideration here. The present claimant should not be deprived of the compensation to which on ordinary principles he would be entitled because some other claimants, as a result of understandable legislative choices made by Parliament, receive more than they would receive on those ordinary principles. It would be wrong to preserve what is now known to be a flawed practice affecting most claimants in order to counteract those choices. Because those matters are dealt with in the 1976 Act itself, the solutions must lie with Parliament. Finally, it was also suggested that, rather than this Court changing the law, we should leave it to the legislature to do so (as has happened in Scotland, where the Scottish Parliament has enacted section 7(1)(d) of the Damages (Scotland) Act 2011, following the recommendation of the Scottish Law Commission in their Report on Damages for Wrongful Death (2008) (Scot Law Com No 213), to the effect that the multiplier should be fixed as at the date of trial). We would reject that suggestion. The current law on the issue we are being asked to resolve was made by judges, and, if it is shown to suffer from the defects identified above, then, unless there is a good reason to the contrary, it should be corrected or brought up to date by judges. That is, after all, the primary principle which lies behind the 1966 Practice Statement. Of course, there may be cases where any proposed change in the law is so complex, or carries with it potential injustices or wider implications that the matter is better left to the legislature, but this is not such a case. Furthermore, in England and Wales, questions relating to the assessment of damages are and always have been very much for the courts, rather than for the legislature (although there are exceptions, to which we have already alluded). In relation to the point at issue on this appeal, that was recognised by the Law Commission in paras 4.19 4.22 of their 1999 report, where it is said that legislation is probably neither necessary nor appropriate to change the law on this point, on the ground that there was room for judicial manoeuvre without legislation. Conclusion For these reasons, we would allow this appeal, and refuse to follow Cookson v Knowles and Graham v Dodds, on the basis that the correct date as at which to assess the multiplier when fixing damages for future loss in claims under the Fatal Accidents Act 1976 should be the date of trial and not the date of death. |
This appeal concerns a child, S, who was born on 1 April 2000. His father is the appellant, and his mother is the first respondent. The second respondent is a solicitor who was appointed as curator ad litem to S in respect of these proceedings. The issue between the parties is whether the appellant should have contact with section The appellant and the first respondent began a relationship in 1997. It ended a few months after Ss birth. The first respondent subsequently married BG. She has a daughter, Z, by a prior relationship. She also has a son, A, by her marriage to BG. After the relationship between the appellant and the first respondent ended, the appellant had residential contact with both Z and S for some time. In October 2003 the appellant began proceedings in Alloa Sheriff Court in which he sought an order finding that he had parental rights and responsibilities in relation to both Z and section He also sought a residence order in respect of each of them, or alternatively an order for residential contact with each of them. On 20 January 2004 the sheriff found the appellant entitled to parental rights and responsibilities in respect of both children, made no order meantime regarding contact with Z, and found the appellant entitled to interim residential contact with section A diet of proof was fixed for July 2004. The proof did not however proceed: following negotiations, the appellant and the first respondent entered into a joint minute of agreement, to which the court gave effect in terms of an interlocutor dated 7 July 2004. That interlocutor granted the appellant parental rights and responsibilities in respect of S, made provision for the appellant to have residential and non residential contact with S, and provided that the appellant was to be consulted by the first respondent on matters of importance relating to Ss health, welfare, education and upbringing. The interlocutor failed however to specify when the contact was to begin. Disputes began almost immediately over the implementation of the interlocutor. Residential contact nevertheless continued to take place. In December 2004 the appellant lodged a minute seeking the variation of the interlocutor of 7 July 2004 so as to grant him a residence order in respect of section That minute initiated the proceedings with which this appeal is concerned. In response, the first respondent sought the recall of the interlocutor of 7 July 2004 and the withdrawal of all contact between the appellant and section The appellant also lodged a second minute, in which he sought to have the first respondent found in contempt of court by reason of her failure to comply with the interlocutor of 7 July 2004. Protracted procedure then took place, during the course of which the sheriff made a number of orders regulating contact ad interim. He also appointed the second respondent as curator ad litem to S, and directed him to investigate and report to the court on the arrangements for contact. The second respondent carried out investigations and reported. He also entered the process as a party. In doing so, he conducted his own case. Pleadings were prepared on behalf of all three parties. In their final form, they were extensive, and covered in detail the history of the parties dealings with each other in relation to S and Z. They contained a wide variety of allegations, including allegations relating to Z and A, which were said to cast light upon the characters and personalities of the appellant and the first respondent, and the suitability of the appellant to have contact with section Allegations were also made concerning BG. The pleadings on behalf of the second respondent set out the history of his dealings with the other parties and with S, and his position in relation to the matters averred on behalf of the other parties. Unsurprisingly, given their scope, the pleadings took a considerable time to prepare and underwent frequent adjustment and amendment as incidents occurred during the course of the proceedings on which the parties wished to found. In October 2005 the sheriff eventually ordered that an open record be made up and intimated to BG. Later in October 2005 the sheriff allowed BG to be sisted as a party to the proceedings, and suspended all contact between the appellant and section The sheriff also at that stage allowed a proof on both the minute for variation and the minute for contempt. A diet was fixed for January 2006 but was discharged in December 2005 on the joint motion of the parties. BG withdrew from the proceedings at that stage. The minute for contempt of court was subsequently dismissed on the appellants motion. On 2 February 2007, the sheriff allowed the parties a proof before answer on the pleadings as they then stood. No date was however fixed on which the proof was to proceed. Contact between the appellant and S continued from April 2006 until August 2007, since when it has not taken place. In January 2008 the proceedings were transferred to Stirling Sheriff Court. Eventually, following further amendment of the pleadings, on 5 June 2008 the sheriff allowed parties a proof of their averments. By that stage, more than three years had passed since the proceedings had begun. An eight day diet of proof was fixed to begin on 10 September 2008. In the event, the proof ran to 52 days of evidence and took more than a year to complete. The appellant gave evidence for seven days. The evidence of the first respondent lasted for eighteen days. Evidence was also given by a number of other witnesses, including several expert (or supposedly expert) witnesses. The proof was eventually concluded on 23 November 2009. The sheriff issued his decision on 22 January 2010, more than five years after the proceedings had begun. His judgment ran to 173 pages, of which 35 comprised his findings of fact (163 in number) and the remainder comprised his note. In his interlocutor of 22 January 2010, the sheriff recalled the interlocutor of 7 July 2004 and withdrew all contact between the appellant and section Following an appeal to the Court of Session, the Inner House varied the sheriffs interlocutor so as to restore the appellants parental rights and responsibilities (which the sheriff, by recalling rather than varying the interlocutor of 7 July 2004, had inadvertently withdrawn), but otherwise refused the appeal. In the opinion of the court (reported at 2011 SC 191, 2010 Fam LR 134), delivered by the Lord President, it was noted that the cost of the proceedings, excluding judicial costs, had been estimated at about 1 million, of which by far the larger proportion had been borne by the Scottish Legal Aid Board. The present appeal is brought against the decision of the Inner House. Discussion It is important to note at the outset the limited nature of the jurisdiction exercised by this court in an appeal of the present kind. Where an appeal is taken to the Court of Session from the judgment of a sheriff or sheriff principal proceeding on a proof, the judgment of the Court of Session on any such appeal is appealable to the Supreme Court only on matters of law: Court of Session Act 1988, section 32(5). Counsel for the appellant accordingly accepted on the appellants behalf the findings of fact which were made by the sheriff, and confined his submissions to three points. First, it was argued that the sheriff had failed to address his mind to the appropriate legal framework. In that regard, counsel founded upon the sheriffs failure to refer to the relevant statutory provision, namely section 11 of the Children (Scotland) Act 1995 as amended, or to the case law providing guidance as to its application. Secondly, it was argued that the sheriffs findings could not reasonably warrant the conclusion which he reached. In that regard, counsel submitted that most of the sheriffs findings, and most of his note, were concerned with matters whose relevance to the real issue was at best peripheral. Thirdly, it was argued that the sheriff had failed to act judicially, and that his decision should not therefore be allowed to stand. In that regard, counsel founded upon remarks made by the sheriff about the appellant and the counsel who represented him at the proof, which were said to betray a lack of objectivity and impartiality. Each of these arguments had been presented to the Inner House, which was said to have erred in law in rejecting them. In relation to the first argument, it is common ground that the test which the sheriff required to apply in the circumstances of this case is set out in section 11(7)(a) of the 1995 Act: in considering whether or not to make an order under subsection (1) above [viz an order in relation to parental responsibilities, parental rights, guardianship or the administration of a childs property] and what order to make, the court (a) shall regard the welfare of the child concerned as its paramount consideration and shall not make any such order unless it considers that it would be better for the child that the order be made than that none should be made at all As Lord President Rodger observed in White v White 2001 SC 689, para 14, this is merely the latest in a long line of similar provisions going back to the Guardianship of Infants Act 1925. In the present case, it is apparent that the sheriff had in mind the correct test. His findings in fact, after dealing at length with the entire range of issues about which evidence had been led, finally turn to the central issue in the case in findings 160 162: (160) If contact between S and pursuer were to occur, handovers would take place amid an atmosphere of hostility, assuming that S willingly attended for contact. Were a contact order to be made, S would be unwilling to attend. It is probable that he would refuse to attend. It would probably distress him and involve him again in the continuing conflict between the parties. There is no third party that would be prepared to take on the role of intermediary. It is not in Ss best interests that he is exposed to such conflict. (161) Having regard to Ss age, the history of these matters to date and the influences at work on S, he would not derive any benefit from contact in such circumstances. (162) Contact with his father is not consistent with Ss welfare or best interests. The sheriffs second finding in fact and law is as follows: (2) That it is in the best interests of S that he does not have contact with his father. It is plain from these findings that the sheriff treated the welfare of the child as the paramount consideration, and considered whether it was in the childs best interests that an order for contact should be made. In his note, the sheriff again considered at length the matters about which evidence had been led, before turning in para 338 to the question: So, what is in Ss best interests? In answering that question, he noted the intensity of hatred and bitterness between the parties, and the impossibility of their conducting themselves civilly towards one another in relation to contact. He also noted the absence of any realistic prospect of contact being facilitated by an intermediary. He continued: [344] If I made a contact order S would inevitably be exposed to a perpetuation of the conflict he has had to endure now for more than six years. He is only nine, so he has endured this conflict for two thirds of his life. Exposure to conflict is not in a childs best interests. There is the danger, of course, that if no contact order is made and S does not see his father now, there may be emotional consequences of a psychological nature as he reaches adolescence. He might resent his mother and consider her responsible for cutting his father out of his life [345] In considering what is in Ss best interests, it is a question of now balancing the disadvantages or risks against the benefits of contact. It is, in my view, almost certain and indeed may be inevitable, that if a contact order were to be made forcing S to see his father, not only would S be re exposed to the conflict between his parents; he would also be asked to do something that is against his present wishes. Contact simply would not work. It would, for S, deteriorate into nothing more than a focus of argument, contention and turmoil with his mother, father and step father. The defender and her husband would continually suspect, with good reason, that the pursuer would be undermining Ss relationship with his mother and step father and would again seek to have S live with him. It is not in Ss best interests that he should be exposed to that. [346] Since September 2007 when there has been no contact, he has not shown any sign of distress or that he has missed his father or wants to see him. He has thrived in his fathers absence and is a happy, well balanced boy who is performing satisfactorily at school. Two and a half years is a significantly lengthy period during which, if he were suffering from any internal emotional conflict because he did not see his father, signs might conceivably have been expected to have emerged. [349] In these circumstances, it is in the best interests of S that he should not have any contact with his father. It is again apparent from these passages that the sheriff treated the welfare of the child as the paramount consideration, and considered whether it was in the childs best interests that an order for contact should be made. In those circumstances, the sheriffs failure to make any explicit reference to section 11 of the 1995 Act, or to authorities such as the case of White, is of no consequence. It is indeed scarcely surprising: the test set out in section 11(7) (a) is applied daily by sheriffs, and is one with which any sheriff could be expected to be familiar. The second argument advanced on behalf of the appellant, namely that the sheriffs findings could not reasonably warrant the conclusion which he reached, must also be rejected. Given his findings that contact would involve the child in conflict between his parents, that he would be unwilling to take part in contact and would probably refuse to attend, that contact would probably distress him, and that he would not derive any benefit from contact in such circumstances, the sheriff plainly had a reasonable basis for his conclusion that contact would not be in the childs best interests. Indeed, in the light of the history set out in the sheriffs judgment, his conclusion appears to have been inevitable. All that said, there is force in counsels submission that the greater part of the sheriffs findings and note is concerned with matters which are by no means of central significance. The focus of most of the judgment is upon the adults rather than the child: their character, their attitudes and behaviour towards one another, and the truth or falsehood of the various allegations they have made against one another. This however reflects the evidence which was led on the basis of the pleadings, and the sheriffs obligation to make findings in relation to that evidence. In support of his third argument, counsel submitted that the sheriff had made critical remarks about the appellant and the counsel who represented him at the proof which were expressed in inappropriate and intemperate language. The appellants evidence in relation to certain aspects of the case, for example, was described variously as pathetic, weasel worded and abhorrent, reprehensible and spineless. The appellant himself was described as leech like. The criticisms of counsel were also expressed in trenchant terms. It is apparent from the sheriffs findings and note that in this case, as not infrequently occurs in the context of family law, the character, personalities and attitudes of the parties were relevant, to some extent at least, to determining whether the order sought would be in the best interests of the child. They were also the subject of a great deal of evidence. It was therefore appropriate for the sheriff to make findings in that regard. In such circumstances, however, a judge may have to strike a difficult balance between plain speaking and appropriate restraint. That balance may be particularly difficult to strike in the stressful circumstances of a tense, protracted and bitterly fought litigation. It is only exceptionally if, for example, the tone of the judgment gives rise to a reasonable concern as to the judges impartiality that the language used by a judge in such circumstances can give rise to an issue of law which might vitiate his decision; and, as I have explained, this courts jurisdiction in an appeal of this nature is confined by statute to matters of law. In the present case, I cannot detect any error of law in relation to this matter. I note in particular that the sheriff appears to have been even handed in his criticism, with aspects of the first respondents evidence, and her character, also being castigated in robust terms. So far as the criticisms of the counsel who appeared at the proof are concerned, this court was not invited to assess whether the criticisms were justified. The principal focus of counsels concern was that criticisms which were liable to damage counsels reputation and career should be made in a context which provided no opportunity for rebuttal or even for a hearing. If the sheriff had complained to the appropriate professional body, for example, then a fair procedure would have been followed before any adjudication was made as to whether the complaint was justified or not. If counsel had been provided with the judgment in draft, he could have requested an opportunity to address the court. Counsel however had no warning of the sheriffs intention to make such criticisms in his judgment. There is no doubt that a judge is entitled to comment in his judgment on the conduct of counsel appearing before him. Some judges will express such criticisms more forcefully than others. It could only be in exceptional circumstances that such criticisms could give rise to an issue of law falling within the jurisdiction exercised by this court under section 32(5) of the 1988 Act. In the present case, the concerns expressed about the fairness of the procedure followed do not raise such an issue. If, under current practice, counsel may have neither advance warning of such criticisms, nor any opportunity to respond, that is however a matter which any fair minded sheriff or judge will bear in mind. It should also be borne in mind by any third parties who read such criticisms; and, if they are minded to act upon them, they can consider whether they ought in fairness to give counsel an opportunity to respond. For these reasons, the appeal must be dismissed. Before parting with this deeply troubling case, however, there are a number of matters upon which it is appropriate to make some observations. The first matter is the length of the proceedings before the sheriff. I have explained that the proceedings for variation of the contact order began in December 2004, when S was four years of age, and ended in January 2010, when he was nine. The glacial pace of the proceedings was itself inimical to the best interests of the child. As I have explained, residential contact between the appellant and S was taking place when the proceedings began, and it continued during the first three years when the proceedings were before the court. It was only after that amount of time had elapsed that S refused to have further contact with the appellant. It is clear from the sheriffs judgment that the proceedings have overshadowed the life of this young child, perpetuating and deepening the conflict between his parents which has caused him such distress. There is no need for a dispute over contact to take so long to resolve. It did so in this case only because the court allowed the parties to determine the rate of progress. The duty to avoid undue delay in the determination of disputes of this nature, in order to comply with the obligations imposed by Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, has been made clear many times by the European Court of Human Rights. As the European Court has explained, undue delay in such proceedings may have irreversible effects upon the child (Bronda v Italy (1998) 33 EHRR 81, para 61), and may in any event bring about the de facto determination of the issue (H v United Kingdom (1987) 10 EHRR 95, paras 89 90). Parliament has recognised, in section 1(2) of the Children Act 1989, that in any proceedings in which any question with respect to the upbringing of a child arises any delay in determining the question is likely to prejudice the welfare of the child. There is no equivalent provision in the 1995 Act; but even in the absence of such a provision, the principle is obvious, and is amply demonstrated by the present case. The second matter is the cost of the proceedings, which is of course in large measure a consequence of their length. The cost of the proceedings before the sheriff, in particular, was wholly disproportionate to the complexity of the issues which had to be resolved. It is a cost which could only arise in proceedings of this kind where the parties were publicly funded: it is inconceivable that any reasonable person would expend resources on this scale on a dispute over contact if the money were coming out of his or her own pocket. These matters might be of lesser concern if this case were exceptional. But the Lord President records that, as the judges of the First Division were informed, in cases of this kind in the Sheriff Court such protracted proceedings are not uncommon. In the opinion delivered by the Lord President, emphasis was placed at para 23 upon the duty of counsel and other professional advisers to concentrate on the issue, namely the welfare of the child, rather than exploring every byway in the relationship between the parents. It was observed that, under current arrangements, sheriffs were not best placed to control the scope of proceedings, since the scope of a proof was determined by the pleadings, and the pleadings were largely in the hands of professional advisers. It was suggested that it might be that the liberty which professional advisers enjoyed in this field should be curtailed. Similar observations were made by the Inner House in B v Authority Reporter for Edinburgh 2011 SLT 1194, 2011 Fam LR 96, para 21, where it was also suggested that the Scottish Legal Aid Board might wish to review its rules for the payment of professional fees to solicitors and counsel in such cases, with a view to discouraging the prolongation of proofs. I would respectfully endorse those observations. A fundamental problem in the present case was that counsel, in the pleadings, made averments about everything which was arguably relevant to the question whether contact was in the childs best interests; and those pleadings were then treated as dictating the scope of the proof. It is not altogether surprising that counsel cast their net so widely, given the wide range of matters within the life of a child and his parents which can be said to have some relevance to a dispute over contact. Indeed, even if counsel for one of the parties had been prepared to focus upon the matters of the most immediate significance, the introduction by his opponent of allegations relating to less central matters might in practice have required him to respond in kind. Equally, there was little the sheriff could do to prevent counsel from pleading their case as fully as they chose, although the time allowed for the adjustment and amendment of the pleadings need not have been as generous as it was: as explained earlier, it was only three and a half years after the proceedings had begun that the pleadings were finally closed and the proof allowed. In the absence of any judicial control over the leading of evidence within the scope of the pleadings, it was inevitable that the proof would be of considerable length. In the context of adoption proceedings, rules providing for a degree of judicial case management were introduced in 2009. They have been supplemented by valuable guidance as to good practice in the form of Practice Notes. More general judicial case management of family proceedings in the Sheriff Court has been recommended in the Report of the Scottish Civil Courts Review (2009), chaired by Lord Gill. Following the observations made by the Inner House in the present case and in B v Authority Reporter for Edinburgh, a working group was established by the Sheriff Court Rules Council in August 2011 to consider and report to the Council what rules of procedure, if any, might usefully be put in place to expedite proceedings in cases involving the welfare of children. As we were informed, that work remains in progress. It appears therefore to be accepted that the system by which such disputes are dealt with in Scotland is in need of reform. This case exemplifies the reasons why reform is necessary. In the circumstances, I would make only three observations. First, I would question whether traditional pleadings are the best means of identifying the issues to be explored at a proof in such cases. As has become apparent in Scotland in other areas of practice, and as has been demonstrated in other jurisdictions in the context of family law, there are other possible means, which may be simpler, quicker and cheaper, of identifying the relevant issues and giving adequate notice of the matters about which evidence is to be led. This matter was considered in the Report of the Scottish Civil Courts Review, which recommended (in Recommendation 116) the introduction of an abbreviated form of pleadings, and of judicial control of any procedure for their adjustment or for the provision of further specification. Secondly, further consideration might be given to the structure of a sheriffs judgment proceeding on a proof. The form of judgments received some consideration in chapter 10 of the Report of the Scottish Civil Courts Review, but the focus of the review in that regard was primarily upon the scope for greater use of ex tempore judgments. The traditional form of written judgments in ordinary causes was not questioned. Nevertheless, the form of judgment which has been prescribed for the Sheriff Court (but not for the Court of Session) since at least 1851, divided into findings of fact and law, and a note in which the findings are explained, has certain disadvantages, which are of particular importance in a case of the present kind. There is in the first place a danger, which the present case illustrates, that the form of the judgment may distract the sheriff from what ought to be the principal focus of his attention. When the court is requested to exercise its discretion to make an order under section 11 of the 1995 Act, it is required, as I have explained, to regard the welfare of the child as its paramount consideration, and it must not make any order unless it considers that it would be better for the child that the order be made than that none should be made at all: section 11(7)(a). The central issue in such a case is therefore the effect of an order upon the welfare of the child. In carrying out the duties imposed by section 11(7)(a), the court is required to have regard to a number of specified matters, including the need to protect the child from any abuse (defined as including any conduct likely to give rise to distress), and the need for the childs parents to co operate with one another: section 11(7A) (7E). In addition to the matters specified in the Act, the court will also require to consider any other matters which bear directly upon the issues focused in section 11(7)(a), such as the childs needs and any harm which the child is at risk of suffering. The court is also required to have regard to the views of the child, so far as those may be ascertainable: section 11(7)(b). Against that background, a judgment will most clearly address the central issue in the case if it focuses directly upon the factors which are relevant to the courts exercise of its discretion, rather than concentrating primarily upon the myriad questions of fact which may be in dispute, many of which may be peripheral to that central issue. It is of course essential that the courts findings on any relevant matters of fact should be made clear, but that can be done within the ambit of a judgment whose primary focus is upon the central issue, and which in consequence demonstrates the nexus between that issue and the findings of fact. In addition, the traditional form of judgment can involve substantial duplication, as the present case demonstrates. In a case where a large amount of evidence has been led, that element of duplication is liable to add considerably to the work of the sheriff, and thus to the time necessary to produce the judgment. It is questionable whether it confers a corresponding benefit upon the parties or upon an appellate court. Generally, in relation to this matter, I respectfully agree with the judgment of Lord Hope. The third observation I would make is that it is easier to change rules of court than to change a prevailing culture. The introduction of procedural rules providing for judicial case management is no guarantee that proactive and effective case management will become a reality. In that regard, the court was referred to another dispute over contact which came on appeal before the Inner House during 2011, in which the proof had been even more protracted and expensive than that in the present case, although it had been preceded by numerous hearings before a specialist sheriff for the purpose of case management. As the Inner House indicated in B v Authority Reporter for Edinburgh, financial discipline may also have a role to play. In the meantime, there are measures which the courts themselves can take in order to set their house in order. One obvious step is for sheriffs to exercise their existing powers to ensure that proceedings are conducted with reasonable expedition. Those include powers in relation to time limits for the lodging and adjustment of pleadings, the allowance of amendments, the fixing of proofs and the leading of evidence. In particular, contrary to the impression conveyed by some of the submissions in the present case, the sheriffs role at a proof is not confined to ruling on objections and otherwise sitting impassively in silence. He possesses the power to intervene to discourage prolixity, repetition, the leading of evidence of unnecessary witnesses and the leading of evidence on matters which are unlikely to assist the court to reach a decision. Equally, he can encourage the use of affidavits and other documents (such as reports) in place of oral evidence, or as the equivalent of evidence in chief. These are only examples of measures which can be taken. The final matter upon which it is appropriate to comment is the role of the second respondent as curator ad litem. A curator ad litem is an officer of the court, appointed to safeguard the interests of the ward so far as they are affected by a particular litigation. In the present case, it appears from the relevant interlocutor that the appointment of the second respondent as curator was intended to enable the court to be provided with information by means of a report. The sheriff subsequently allowed the second respondent to become a party to the proceedings. The second respondent then lodged extensive pleadings covering all aspects of the case, and attended every day during the proof, cross examining witnesses and giving evidence himself. As this court was informed, this involved his questioning witnesses about events and conversations in which he had been personally involved, and later removing his gown and entering the witness box in order to give his own account of the same events and conversations. As this court was not fully addressed on the legal issues arising from the second respondents appointment and subsequent conduct, I shall confine myself to two brief observations. First, it is difficult to avoid the impression that there may have been a lack of clarity as to the role of the curator ad litem, in particular (but not only) at the proof. Secondly, it was inappropriate in the circumstances of this case for the second respondent to conduct the proof in person, given that it concerned matters in which he had been personally involved and in relation to which he might require to give evidence. I note that certain of the Ordinary Cause Rules concerned with curators ad litem, such as rules 33.16(9)(b) and 33A.16 (9)(b), are drafted on the basis that a curator who becomes party to proceedings will instruct representation. That reflects the fact that he is the dominus litis: he is not acting on behalf of a client, and he may himself require legal advice and assistance. The court was told that the reason for the second respondents personal conduct of the proceedings was that the Scottish Legal Aid Board would meet his professional charges only if he acted as a solicitor. This was taken to mean that he was compelled to conduct the proceedings as a party litigant. That explanation again suggests a lack of clarity as to the curators role. A curator ad litem is in principle entitled to be remunerated for professional services which he renders in the course of his duties as curator (Pirie v Collie (1851) 13 D 841), but that principle tells one nothing about what the scope of those duties may be in any particular case. If they do not include the professional conduct of proceedings in court, the fees which might be charged by a solicitor conducting such proceedings on behalf of a client do not fall within the ambit of his remuneration. The Report of the Scottish Civil Courts Review noted concerns about the appointment and remuneration of curators (and other persons appointed to safeguard a childs interests), their qualifications and training, the standards of their work, and a lack of clarity and consistency about what is expected of them. A number of recommendations were made in relation to these matters. The present case highlights the need for these matters to be addressed. LORD HOPE (WITH WHOM LADY HALE, LORD CLARKE AND LORD WILSON ALSO AGREE) I agree with Lord Reed, for all the reasons that he gives, that this appeal must be dismissed. Counsel for the appellant said all that could properly be said on the appellants behalf, given that the judgment of the Court of Session was appealable under section 32(5) of the Court of Session Act 1988 only on matters of law. But I do not think that it is possible to detect an error of law in the way the Court of Session disposed of this case. The argument that the sheriff failed to address his mind to the requirements of section 11(7)(a) of the Children (Scotland) Act 1995 did, at first sight, have something to commend it. It was not easy, in working through a judgment of such extraordinary length (see para 7, above), to detect the passages that could be relied upon to show that he did have regard to Ss welfare as the paramount consideration. Only three out of the 163 findings of fact in his interlocutor deal with this issue, and it is mentioned in only four paragraphs at the very end of his note. It is the duty of a judge in every case to set out clearly the grounds for his decision. The appellant was entitled to be told why the sheriff reached the decision that contact with him was not in Ss best interests, and the reasons ought to be plainly set out so that they can be easily found and readily understood by the ordinary reader. The imbalance between the sheriffs treatment of the other issues in the case and the one issue which, in the end of the day, was of crucial importance to his decision is as striking as it is unfortunate. But I am satisfied that there is enough in the passages which Lord Reed has set out in paras 11 and 12, above, to show that the sheriff did address his mind to that issue in the way the law requires. Like Lord Reed, however, I think that lessons must be learned from the way this case has been conducted. I would give my full support to all the points he makes, especially as it seems that proceedings of such length in cases of this kind are not uncommon. Much can, no doubt, be achieved by means of increased powers of case management and reforms to the system of pleading in family proceedings. But there is room for reform in the form and style of the written judgment too. I should like to say a little bit more about that aspect of the problem. The sheriff was obliged in this case to make findings of fact in relation to all the evidence that was led before him. Rule 12.2(3) of the Ordinary Cause Rules 1993 (SI 1993/1956) provides: In any cause, other than a family action within the meaning of rule 33.1(1) or a civil partnership action within the meaning of rule 33A.1(1) which has proceeded as undefended, where at any stage evidence has been led, the sheriff shall (a) in the interlocutor, make findings in fact and law; and (b) append to that interlocutor a note setting out the reasons for his decision. That rule, which replaced rule 89(1) of the Ordinary Cause Rules 1983 (SI 1983/747), can be traced back to rule 82 of the First Schedule to the Sheriff Courts (Scotland) Act 1907 (7 Edw 7, c 51), which provided: To all interlocutors, except those of a formal nature, the sheriff shall append a note setting forth the grounds upon which he has proceeded and in his final judgment on the merits he shall set forth his findings in fact and in law separately. That rule can its turn be traced back to an Act of Sederunt of 15 February 1851. Rule 82 did not state in terms that the findings in fact had to be set out in the interlocutor itself. But it had for a long time been understood that this was what was required. In Glasgow Gas Light Co v Working Mens Total Abstinence Society (1866) 4 M 1041 the sheriff pronounced an interlocutor which contained no findings of fact, although he appended a note to his interlocutor. There was an appeal to the Court of Session. The Inner House refused to proceed with appeal because the interlocutor did not contain any findings of fact as required by the Act of Sederunt. Dobie, Law and Practice of the Sheriff Courts in Scotland (1952), p 247 states: The findings in fact, as well as the findings in law, must be in the interlocutor itself, and not in the note, and it has been indicated that the findings in fact should include not only the bare facts upon which the judgment is based, but all the relevant facts material to the contentions of either of the parties. The indication referred to in the latter part of that sentence was in the speech of Lord Herschell in Little v Stevenson & Co (1896) 23 R (HL) 12, 15 where he said that it would be extremely desirable that all the facts material to the contentions of either of the parties, even though not material to the point on which the judgment proceeds, should be found in the interlocutor. Lord Herschell was commenting in Little on the fact that the interlocutor of the Court of Session against which the appeal to the House of Lords had been brought did not contain a finding of fact on the question which the appellant sought to raise. This was contrary to the provisions of section 40 of the Court of Session Act 1825 (6 Geo IV, c 120), which required the Court of Session in the case of appeals from the sheriff or magistrates courts to specify distinctly in its interlocutor the several facts material to the case which it found to be established by the proof: see Maclaren, Court of Session Practice (1916), p 986. That requirement has been preserved by section 32(4) of the Court of Session Act 1988, which provides with regard to appeals to the Court of Session from the judgment of the sheriff principal or sheriff: Where any such 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 practice the Court of Session finds it convenient to adopt the findings in the sheriffs interlocutor, with such alterations or modifications as it finds to be necessary in the light of the evidence. In Calderwood v Magistrates of Dundee 1944 SC 24 Lord Fleming said that it would be greatly to the convenience of the courts of appeal, and also of counsel, that the usual practice of numbering the findings in the interlocutor should be followed. An example of how this practice works its way through to the ultimate court of appeal is to be found in Robb v Salamis (M & D) Ltd [2006] UKHL 56, 2007 SC (HL) 71 where the appeal was directed to the sheriffs findings in fact and law in the light of his numbered findings of fact as set out in para 6. The House allowed the appeal and altered the Inner Houses interlocutor by substituting new findings in fact and law to give effect to its decision in the manner contemplated by the statute. It can be seen from this brief history that the practice which the sheriff was following in this case is of very long standing. But it was developed when the conditions under which cases were dealt with in the sheriff courts were very different from what they are today. Judicial training of the kind that now exists was unknown, and it seems unlikely that there was the same emphasis on merit as the basis for selection when appointments to the shrieval bench were being made many decades ago under the control of the Lord Advocate. The practice is a Rolls Royce system, which in the right hands and in the right circumstances will provide the appeal courts with a secure factual foundation on which to base their judgments. But it is a practice which is unique to the sheriff courts. Judges sitting in the Outer House of the Court of Session are not, and never have been, required to follow the same practice. Nor are tribunals, which have as important a fact finding function as sheriffs in the cases that fall within their jurisdiction. The form and presentation of judgments was one of the issues considered by the review of the provision of civil justice by the courts in Scotland that was conducted between 2007 and 2009 by the Rt Hon Lord Gill: Report of the Scottish Civil Courts Review (September 2009), Chapter 10. The current system for judgments in the sheriff court was summarised in paragraph 4 of that Chapter. Reference was made to rule 12.2(3) of the Ordinary Cause Rules 1993. The point was made that the function of the sheriffs note is to explain the findings of fact included in the interlocutor, and that the need for a sheriff to state the reasons for his decision is an important part of the sheriffs duty in every case. Reference was made to Lai Wee Lian v Singapore Bus Service (1978) Ltd [1984] AC 729, where Lord Fraser of Tullybelton said, at p 734, that the need for a judge to state the reasons for his decision is no mere technicality, nor does it depend mainly on the rules of court. It was not suggested that there were any grounds for unease, or that the practice ought to be changed or modified. It can, of course, be said that there is value in the discipline that following and applying the practice gives rise to. In cases of damages for personal injury, of which Robb v Salamis (M & D) Ltd provides an example, one can feel reasonably confident that it is not an obstruction to doing justice between the parties. In skilled hands the process of setting out succinct findings of fact, although time consuming, is unlikely to cause undue delay or to divert the sheriffs mind from the essential issues. But I question whether that can be said of the situation in which the sheriff found himself in this case. The inquiry that he allowed was far ranging and long drawn out. It went into great detail on matters that were really only of peripheral importance to what was in the best interests of the child. He cannot be criticised for finding it necessary to make findings on all these matters, although he ought to have done more to strike an appropriate balance between the facts which were key to his decision about the childs future and those which were not. I suggest, however, that the message which his treatment of the case conveys is that the practice which he was required to follow is ill suited to cases of this kind. The principle that is set out in section 11(7)(a) of the 1995 Act requires paramount consideration to be given to the welfare of the child. The proper application of that principle is at risk of being impeded if the sheriff has to devote so much time and effort to the content of the findings of fact in his interlocutor in the way Lord Herschells dictum in Little requires as well as to the detailed reasons which must be set out in the note attached to it. If the practice is to be changed thought will, of course, have to be given to the provisions of the 1988 Act regarding appeals as well as to the content of the Ordinary Cause Rules. These are matters which might usefully be considered by the working group which the Sheriff Court Rules Council has set up to consider how cases involving the welfare of children might be expedited. Consultation with the Court of Session Rules Council may also be necessary. I hope that the opportunity will be taken to do this as soon as possible. |
This appeal arises from the tragic murder of Joanna Michael by a former partner, which might have been prevented if the police had responded promptly to a 999 call made by Ms Michael. As I explain below, two police forces were involved, Gwent Police and South Wales Police, and there was a lack of effective liaison between them. The claimants in the action are Ms Michaels parents and her two young children. The defendants are the Chief Constables of Gwent Police and the South Wales Police. The claim is brought for damages for negligence at common law and under the provisions of the Fatal Accidents Act 1976 and Law Reform Miscellaneous Provisions Act 1934 (which I will refer to as the common law or negligence claim), and for damages under the Human Rights Act 1998 for breach of the defendants duties as public authorities to protect Ms Michaels right to life under article 2 of the European Convention on Human Rights (which I will refer to as the human rights or article 2 claim). Originally there was also a claim for misfeasance in public office. The police applied for the claims to be struck out or for summary judgment to be entered in their favour. At first instance His Honour Judge Jarman QC struck out by consent the claim for misfeasance in public office but in a carefully reasoned judgment he refused to strike out or give summary judgment on the negligence and article 2 claims. The Court of Appeal reversed Judge Jarmans decision in part. They held unanimously that there should be summary judgment in favour of the defendants on the negligence claim for reasons given by Longmore LJ, with which Richards and Davis LJJ agreed. The majority upheld Judge Jarmans decision that the article 2 claim should proceed to trial. Davis LJ dissented on that issue. He would have held that on the facts alleged by the claimants there was no possibility that the claim under article 2 could succeed. The claimants appeal against the decision of the Court of Appeal on the negligence claim. The police cross appeal against the decision of the majority of the Court of Appeal on the article 2 claim. Since the court is considering as a matter of law whether the claims have a real possibility of success, it must be assumed for present purposes that all factual allegations made by the claimants are capable of being established. In relation to the negligence claim, the sole question is whether the police owed any duty of care to Ms Michael on the facts as they are alleged. If so, questions about whether there was a breach of duty and its consequences would be matters for the trial. Ms Michael lived in Cardiff with her two children who were aged seven years and ten months at the date of her death. On 5 August 2009 at 2.29 am Ms Michael dialled 999 from her mobile phone. She lived in the area of the South Wales Police, but the call was picked up by a telephone mast in Gwent and was routed to the Gwent Police call centre. It was received by a civilian call handler. The conversation was recorded and it has been transcribed. Ms Michael said that her ex boyfriend was aggressive, had just turned up at her house in the middle of the night and had hit her. He had found her with another man. He had taken her car to drive the other man home and had said that when he came back he was going to hit her. She said that he was going to be back any minute literally. She was asked by the call handler if she could lock the doors to keep him out. She replied that she could lock the doors, but she did not know what he would do. She did not know if he had a key or how he got into her house. The next part of the transcript reads: he come back and he told the guy to get out of the room, and then he bit my ear really hard and its like all swollen and all bruised at the moment, and he just said Im going to drop him home and (inaudible) [fucking kill you]. There is no explanation on the face of the transcript why the last three words are preceded by (inaudible) and appear in square brackets; but according to the call handler, who later made a written statement after listening to the recording of the call, at several points there was interference and noise in the background. As to the words in question, she said: On listening to the recording I can hear the words fucking kill you being said by Joanna. My understanding is assisted by reading these words in the typed transcript. I had certainly heard and understood her previously when she had said he was going to return and hit her. For periods of time throughout the call I was very distracted. As I explained . all the details were going to have to be retaken by South Wales Police, the call graded and resources deployed from their end not ours At the time I was distracted and under pressure to redirect the call and my memory is that I did not hear kill you. I dont remember her saying this. I was more concerned at the time with the safety of the other man in the company of the assailant. The call ended with the call handler telling Ms Michael that her call had come through to Gwent Police and that she would pass the call on to the police in Cardiff. She added they will want to call you back so please keep your phone free. The call was graded by Gwent Police as a G1 call. This meant that it required an immediate response by police officers. Ms Michaels home was no more than five or six minutes drive from the nearest police station. The Gwent call handler immediately called South Wales Police and gave an abbreviated version of what Ms Michael had said. No mention was made of a threat to kill. South Wales Police graded the priority of the call as G2. This meant that officers assigned to the case should respond to the call within 60 minutes. At 2.43 am Ms Michael again called 999. The call was again received by Gwent Police. Ms Michael was heard to scream and the line went dead. South Wales Police were immediately informed. Police officers arrived at Ms Michaels address at 2.51 am. They found that she had been brutally attacked. She had been stabbed many times and was dead. Her attacker was soon found and arrested. He subsequently pleaded guilty to murder and was sentenced to life imprisonment. Data held by South Wales Police recorded a history of abuse or suspected domestic abuse towards Ms Michael by the same man. On four occasions between September 2007 and April 2009 incidents had been reported to the police and entries had been made on a public protection referral for domestic abuse form, but in two instances the risk indications section of the form was not completed. The consequences are stark and tragic. Ms Michael has lost her life in the most violent fashion. Her children have lost their mother and breadwinner. Her parents have lost their daughter and have taken on the responsibility and work of bringing up their grandchildren. An investigation by the Independent Police Complaints Commission led to a lengthy report. It contained serious criticisms of both police forces for individual and organisational failures. Issues The court received full written submissions from the appellants, the respondents and three interveners. Liberty and Refuge made joint written submissions. Separate but broadly similar written submissions were made by Cymorth i Ferched Cymru (Welsh Womens Aid). The Court heard oral submissions on behalf of the appellants from Nicholas Bowen QC, on behalf of Liberty and Refuge from Karon Monaghan QC and on behalf of the respondents from Lord Pannick QC. The arguments raised the following issues: (1) If the police are aware or ought reasonably to be aware of a threat to the life or physical safety of an identifiable person, or member of an identifiable small group, do the police owe to that person a duty under the law of negligence to take reasonable care for their safety? I will refer to this as the interveners liability principle, because it was advanced by Ms Monaghan. (2) Alternatively, if a member of the public (A) furnishes a police officer (B) with apparently credible evidence that a third party whose identity and whereabouts are known presents a specific and imminent threat to his life or physical safety, does B owe to A a duty to take reasonable steps to assess such threat and, if appropriate, take reasonable steps to prevent it being executed? I will refer to this for convenience as Lord Binghams liability principle, because that is how Lord Bingham of Cornhill described it in his dissenting judgment in Smith v Chief Constable of Sussex Police, heard jointly with Van Colle v Chief Constable of the Hertfordshire Police [2008] UKHL 50, [2009] 1 AC 225, at para 44. Mr Bowen argued in support of this proposition as an alternative to his principal proposition. (3) On the basis of what was said in the first 999 call, and the circumstances in which it was made, should the police be held to have assumed responsibility to take reasonable care for Ms Michaels safety and therefore owed her a duty of care in negligence? This was Mr Bowens main argument. (4) On the material before the Court, was there arguably a breach of article 2? Domestic violence In order to set their legal arguments in context, the interveners and the appellants referred to a substantial body of material about the deep rooted problem of domestic violence in our society, its prevalence and weaknesses which have been identified in the police response to it. According to official homicide statistics, since 2001 in the United Kingdom around 100 women have been killed every year by a current or former partner. A report published last year by Her Majestys Inspectorate of Constabulary made strong criticisms of the overall police response to victims of domestic abuse (Everyones Business: Improving the Police Response to Domestic Violence). It was not suggested by anyone in this case that the law of negligence should be developed in a way which is gender specific, but it was submitted that the need to combat the evil of domestic violence should influence the development of the common law in relation to potential victims of violence generally. Ms Monaghan also relied on the United Kingdoms international legal responsibilities. The United Kingdom signed the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) on 22 July 1981 and ratified it on 7 April 1986. Article 2 of CEDAW imposes an obligation on states, among other things, to establish legal protection of the rights of women on an equal basis with men and to ensure through competent national tribunals and other public institutions the effective protection of women against any act of discrimination. Discrimination is defined in article 1 as including any distinction, exclusion or restriction made on the basis of sex which has the effect of impairing the enjoyment by women of their human rights on a basis of equality of men and women. The Committee on the Elimination of Discrimination has issued a general recommendation on the subject of violence against women: General Recommendation No 19 (11th session, 1992). It states that gender based violence is a form of discrimination that seriously inhibits womens ability to enjoy rights and freedoms on a basis of equality with men. It recommends, among other things, that state parties should ensure that laws against family violence and abuse give adequate protection to all women; that effective complaints procedures and remedies, including compensation, should be provided; and that measures that are necessary to overcome family violence should include civil remedies and criminal penalties where necessary in cases of domestic violence. Civil remedies may of course take many forms. There is no specific recommendation that a victim of domestic violence should have a right to sue the police for damages in the case of domestic violence which could have been prevented by the police. Nor is the United Kingdom under an international legal obligation to provide a remedy in that form. The United Kingdom has signed, but not yet ratified, the Convention on Preventing and Combating Violence Against Women and Domestic Violence (Istanbul Convention), which came into force on 1 August 2014. It requires, by article 4(1), state parties to take the necessary legislative and other measures to promote and protect the right for everyone, particularly women, to live free from violence in both the public and the private sphere and by article 5(2) to take the necessary legislative and other measures to exercise due diligence to prevent, investigate, punish and provide reparation for acts of violence covered by the scope of this Convention that are perpetrated by non state actors. Aside from the fact that this Convention has not yet been adopted by the United Kingdom, it leaves it to states to decide what measures are necessary to promote these objectives. Ms Monaghan submitted that it is also highly arguable that gender equality has achieved the status of a peremptory norm (jus cogens) in international law within the meaning of article 53 of the Vienna Convention on the Law of Treaties (which defines a peremptory norm of general international law as a norm accepted and recognised 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). There was no detailed argument on this point because on the assumption for present purposes that there is now a rule of customary international law which obliges states to prevent and respond to acts of violence against women with due diligence (as the Special Rapporteur on Violence Against Women concluded in a report dated 20 January 2006 to the Commission on Human Rights of the United Nations Economic and Social Council), it is a matter for individual states how they do so. Ms Monaghans submission was more general. She submitted that the international documents added weight to the arguments in favour of adopting the interveners liability principle. Acceptance of that principle, it was submitted, would be an appropriate measure directed at preventing violence and remedying damage caused by the states failure adequately to address the problem. Case Law It has been long established that the police owe a duty for the preservation of the Queens peace. The phrase has an old fashioned sound but the principle remains true. Halsburys Laws of England, fifth ed (2013), Vol 84, para 40, states that the primary function of the constable remains, as in the 17th century, the preservation of the Queens peace. In Glasbrook Brothers Ltd v Glamorgan County Council [1925] AC 270 a colliery manager asked for police protection for his colliery during a strike. He wanted police officers to be billeted on the premises. The senior police officer for the area was willing to provide protection by a mobile force, but he refused to billet police officers at the colliery unless the manager agreed to pay for the additional service at a specified rate. The manager promised to do so, but when the police submitted their bill the company refused to pay it on the ground that it was the duty of the police to prove necessary police protection without payment. The police sued the colliery and won. The House of Lords held that the police were bound to provide such protection as was necessary to prevent violence and to protect the mines from criminal injury without payment, but that it was lawful for the police to charge the colliery for extra protection, and that the judge had been entitled to find on the facts that the case fell into that category. Viscount Cave LC stated the nature of the duty of the police at pp 277 278: No doubt there is an absolute and unconditional obligation binding the police authorities to take all steps which appear to them to be necessary for keeping the peace, for preventing crime, or for protecting property from criminal injury; and the public, who pay for this protection through the rates and taxes, cannot lawfully be called upon to make a further payment for that which is their right. This was laid down by Pickford LJ in the case of Glamorganshire Coal Co v Glamorganshire Standing Joint Committee [1916] 2 KB 206, 229 in the following terms: If one party to a dispute is threatened with violence by the other party he is entitled to protection from such violence whether his contention in the dispute be right or wrong, and to allow the police authority to deny him protection from that violence unless he pays all the expense in addition to the contribution which with other ratepayers he makes to the support of the police is only one degree less dangerous than to allow that authority to decide which party is right in the dispute and grant or withhold protection accordingly. There is a moral duty on each party to the dispute to do nothing to aggravate it and to take reasonable means of self protection, but the discharge of this duty by them is not a condition precedent to the discharge by the police authority of their own duty. With this statement of the law I entirely agree To similar effect Lord Parker CJ said in Rice v Connolly [1996] 2 QB 414, p 419, that it is the duty of a police constable to take all steps which appear to him necessary for keeping the peace, for preventing crime or for protecting property from criminal injury. The duty is one which any member of the public affected by a threat of breach of the peace, whether by violence to the person or violence to property, is entitled to call on the police to perform. In short, it is a duty owed to the public at large for the prevention of violence and disorder. Under section 83 of the Police Reform Act 2002 (substituting Schedule 4 of the Police Act 1996) every constable is required to make the following attestation: I do solemnly and sincerely declare and affirm that I will well and truly serve the Queen in the office of constable, with fairness, integrity, diligence and impartiality, upholding fundamental human rights and according equal respect to all people; and that I will, to the best of my power, cause the peace to be kept and preserved and prevent all offences against people and property 36. This reflects the common law duty of the police. In recent years the courts have considered on a number of occasions whether, and in what circumstances, the police may owe a private law duty to a member of the public at risk of violent crime in addition to their public law duty. In Hill v Chief Constable of West Yorkshire [1989] AC 53 the claimant was the mother of the last victim of a notorious murderer. Between 1975 and 1980 he murdered 13 young women in West Yorkshire. The statement of claim alleged that the police made a number of mistakes in their investigation which should not have been made by a competent police force exercising reasonable care and skill. For the purpose of deciding whether Mrs Hill had a valid claim against the police in negligence, the House of Lords assumed that the factual allegations were true, and that if the police had exercised reasonable care the murderer would have been arrested before he had an opportunity to murder her daughter. It was held that the police were under no liability in negligence. 37. The leading speech was given by Lord Keith of Kinkel. He recognised that the general law of tort applies as much to the police as to anyone else. Examples of police liability for negligence were Knightley v Johns [1982] 1 WLR 349 (where a police officer who attended the scene of a road accident carelessly created an unnecessary danger to the claimant) and Rigby v Chief Constable of Northamptonshire [1985] 1 WLR 1242 (where a police officer attending a break in to a gunsmiths shop carelessly caused severe damage to the premises by the firing of a canister into the building in the absence of fire fighting equipment). But he held that the general duty of the police to enforce the law did not carry with it a private law duty towards individual members of the public. 38. Counsel for Mrs Hill relied on Anns v Merton London Borough Council [1978] AC 728 as authority for the proposition that the police, having decided to investigate the Yorkshire murderers crimes, owed to his potential future victims a duty to do so with reasonable care. The foundation of the duty was said to be the foreseeability of harm to potential future victims if the murderer were not apprehended. This, it was submitted, was sufficient to give rise to a duty of care applying Lord Atkins statement of principle in Donoghue v Stevenson [1932] AC 562 and Lord Wilberforces two stage liability test in Anns. Lord Keith rejected the argument. He emphasised that foreseeability of harm was not itself a sufficient basis for a duty of care in negligence. Some further ingredient was needed to establish the requisite proximity of relationship between the claimant and the defendant, and all the circumstances of the case had to be considered and analysed in order to ascertain whether such an ingredient was present. 39. Lord Keith referred to the decision of the House of Lords in Dorset Yacht Co Ltd v Home Office [1970] AC 1004, where Lord Diplock said (at p 1058) that the development of the law of negligence proceeds by first identifying the relevant characteristics of the conduct and relationship between the parties involved in the particular case and the kinds of conduct and relationships which have been held in previous decisions to give rise to a duty of care. In that case it was held that an action in negligence could lie against prison officers who negligently allowed young offenders camping on an island under the prison officers supervision to escape from the island by stealing the plaintiffs yacht. The reason for imposing liability was that the prison officers were responsible for exercising proper control over the wrong doers, who were in their charge, and there was sufficient proximity between the prison officers and the owners of yachts in the close vicinity of the camp, because the use of their property as a means of escape was the very thing which the prison officers ought to have foreseen. By bringing the young offenders onto the island and leaving them unsupervised, the prison officers created a danger for the owners of the yachts which would not otherwise have existed. In contrast, Lord Diplock said (at p 1070) that the courts would be exceeding their function in developing the common law to meet changing conditions if they were to recognise a duty of care to prevent criminals escaping from custody owed to a wider category of members of the public than those whose property was exposed to an exceptional added risk by the adoption of a custodial system for young offenders which increased the likelihood of their escape unless due care was taken. 40. 41. Lord Keith said that if no general duty of care was owed to individual members of the public to prevent the escape of a known criminal, there could not reasonably be imposed on the police a duty of care to identify and apprehend an unknown one. Ms Hill could not be regarded as a person at special risk because she was young and female. She was one of a vast number of the female general public at risk from the murderers activities. He concluded that there was no ingredient or characteristic giving rise to the necessary proximity between the police and Ms Hill, and that the circumstances of the case were not capable of establishing a duty of care owed towards her by the police. If Lord Keith had stopped at that point, it is unlikely that the decision would have caused controversy. It is not suggested in the present case that the decision itself was wrong. If the interveners liability principle is correct, it would not have assisted Mrs Hill, because her daughter was not an identifiable victim or a member of an identifiable small group. 42. 43. However, having observed that what he had said was sufficient for the disposal of the appeal, Lord Keith went on to discuss the application of the second stage of Lord Wilberforces two stage test in Anns, if there had been potential liability under the first stage (at p 63). He concluded that it would be contrary to the public interest to impose liability on the police for mistakes made in relation to their operations in the investigation and suppression of crime. He said that the manner and conduct of such an investigation must necessarily involve a variety of decisions to be made on matters of policy and discretion, such as which particular line of inquiry is most advantageously to be pursued and what is the most advantageous way to deploy available resources. Many such decisions would not be appropriate to be called in question, but elaborate investigation of the facts might be necessary to ascertain whether or not this was so. A great deal of police time and expense might have to be put into the preparation of a defence to the action. The result would be a significant diversion of police manpower and attention from their most important function. He also said that the imposition of liability might lead to the exercise of the investigative function being carried out in a defensive frame of mind. He concluded that the Court of Appeal had been right to take the view that the police were immune from an action of this kind on grounds similar to those which in Rondel v Worsley [1969] 1 AC 191 were held to render a barrister immune from actions for negligence in his conduct of proceedings in court. 44. An immunity is generally understood to be an exemption based on a defendants status from a liability imposed by the law on others, as in the case of sovereign immunity. Lord Keiths use of the phrase was, with hindsight, not only unnecessary but unfortunate. It gave rise to misunderstanding, not least at Strasbourg. In Osman v United Kingdom (1998) 29 EHRR 245 the Strasbourg court held that the exclusion of liability in negligence in a case concerning acts or omissions of the police in the investigation and prevention of crime amounted to a restriction on access to the court in violation of article 45. 6. This perception caused consternation to English lawyers. In Z v United Kingdom (2001) 34 EHRR 97 the Grand Chamber accepted that its reasoning on this issue in Osman was based on a misunderstanding of the law of negligence; and it acknowledged that it is not incompatible with article 6 for a court to determine on a summary application that a duty of care under the substantive law of negligence does not arise on an assumed state of facts. In Brooks v Commissioner of Police of the Metropolis [2005] UKHL 24, [2005] 1 WLR 1495, the claimant and his friend Stephen Lawrence were set upon by a gang of white youths in a racist attack. Stephen Lawrence was murdered. The claimant was traumatised. He claimed that the police owed him a duty of care in negligence: (a) to take reasonable steps to assess whether he was a victim of crime and, if so, to accord him reasonably appropriate protection and support; (b) to take reasonable steps to afford him the protection, assistance and support commonly afforded to a key eye witness to a serious crime of violence; and (c) to afford reasonable weight to the account given by him and to act on the account accordingly. 46. The House of Lords held that the police owed him no such legal duty of care. All the judges endorsed the correctness of the decision in Hill but they expressed reservations about the width of some of the observations in Hill (per Lord Bingham at para 3, Lord Nicholls of Birkenhead at para 6 and Lord Steyn at para 28). It is clear that the part of Lord Keiths speech to which they were referring was the final part in which he addressed the second stage of Lord Wilberforces test in Anns. 47. Lord Steyn (with whom Lords Rodger of Earlsferry and Brown of Eaton under Heywood agreed) said that the principle in Hill should be reformulated in terms of the absence of a duty of care rather than a blanket immunity (para 27). He noted that it was conceded by the police that cases of assumption of responsibility under what he described as the extended Hedley Byrne doctrine (Hedley Byrne & Co Ltd v Heller & Partner Ltd [1964] AC 465) fall outside the principle in Hill (para 29). 48. However, he said that the core principle of Hill had remained unchallenged in domestic jurisprudence and European jurisprudence for many years, and that if a case such as Hill were to arise for fresh decision it would undoubtedly be decided in the same way. He reiterated that the prime function of the police is the preservation of the Queens peace. The police must concentrate on preventing the commission of crime; protecting life and property; and apprehending criminals and preserving evidence. He said that a retreat from the principle in Hill would have detrimental effects for law enforcement: By placing general duties of care on the police to victims and witnesses the polices ability to perform their public functions in the interests of the community, fearlessly and with despatch, would be impeded. (para 30) 49. By endorsing the principle in Hill in the terms that he did, Lord Steyn confirmed that the functions of the police which he identified were public law duties and did not give rise to private law duties of care (whether to victims, witnesses or suspects), although this did not exclude liability under Hedley Byrne. 51. 50. Lord Bingham and Lord Nicholls were also of the view that the public duties of the police would potentially be impeded by the imposition of the duties asserted by Mr Brooks. Lord Bingham said that the duties pleaded could not be imposed on police officers charged in the public interest with the investigation of a very serious crime without potentially undermining the officers performance of their functions, effective performance of which serves an important public interest (para 4). Lord Nicholls was of the same view that the three legal duties asserted by the claimant would cut across the freedom of action the police ought to have when investigating serious crime (para 5). In Brooks Lord Steyn referred to an argument that Hill should be distinguished on the basis that in that case the police negligence was the indirect cause of Ms Hills murder whereas in Brooks the behaviour of the police was a direct cause of harm to him. Lord Steyn observed that this did not do justice to the essential reasoning in Hill and he described the distinction as unmeritorious (para 32). In Van Colle v Chief Constable of the Hertfordshire Police and Smith v Chief Constable of Sussex Police [2009] AC 225 the House of Lords heard together two appeals involving in different ways the question formulated by Lord Bingham as follows: if the police are alerted to a threat that D may kill or inflict violence on V, and the police take no action to prevent that occurrence, and D does kill or inflict violence on V, may V or his relatives obtain civil redress against the police, and if so, how and in what circumstances? In Van Colle threats were made against a prosecution witness in the weeks leading to a trial. They included two telephone calls from the accused to the witness. The second call was aggressive and threatening but contained no explicit death threat. The witness reported the threats to the police. The matter was not treated with urgency. An arrangement was made for the police to 53. 52. take a witness statement, after which the police intended to arrest the accused, but in the interval the witness was shot dead by the accused. His parents brought a claim against the police under the Human Rights Act 1998 relying on articles 2 and 8 of the Convention. There was no claim under common law. The police were held liable at first instance and failed in an appeal to the Court of Appeal, but succeeded in an appeal to the House of Lords. 54. The House of Lords applied the test laid down by the Strasbourg court in Osman (para 116) for determining when national authorities have a positive obligation under article 2 to take preventative measures to protect an individual whose life is at risk from the criminal acts of another: it must be established to [the Courts] satisfaction that the authorities knew or ought to have known at the time of the existence of a real and immediate risk to the life of an identified individual or individuals from the criminal acts of a third party and that they failed to take measures within the scope of their powers which, judged reasonably, might have been expected to avoid that risk. 55. The critical question of fact was whether the police, making a reasonable and informed judgment at the time, should have appreciated that there was a real and immediate risk to the life of the victim. The House of Lords held that the test was not met. 56. Smith reached the House of Lords on an application to strike out. The question was whether the police owed a duty of care to the claimant on the assumed facts. The claimant was a victim of violence by a former partner. He had suffered violence at the hands of the other man during their relationship. After it ended, he received a stream of violent, abusive and threatening messages, including death threats. He reported these matters to the police and told a police inspector that he thought that his life was in danger. A week later the man attacked the victim at his home address with a claw hammer, causing him fractures of the skull and brain damage. The assailant was subsequently convicted of making threats to kill and causing grievous bodily harm with intent. The House of Lords held by a majority that the police owed the victim no duty of care in negligence. 57. Lord Bingham, dissenting, formulated his liability principle which I have set out. 58. Lord Binghams starting point was that the circumstances in which A will be held liable in negligence for unintended harm suffered by B depend on the relationship between them. He recognised that it is not usual for A to be liable to B where harm is caused to B by a third party C, but said that in some circumstances A might be liable for such harm if A should have prevented C. In some cases As liability had been found to depend on an assumption of responsibility by A towards B; and in other cases, notably Dorset Yacht, on the finding of a special relationship between A and C by virtue of which A was responsible for controlling C. Currently, he said, the most favoured test of liability was the three fold test laid down by the House of Lords in Caparo Industries Plc v Dickman [1990] 2 AC 605. 59. Lord Bingham did not consider that his liability principle conflicted with the ratio of either Hill or Brooks, or that it would distract the police from their primary function of suppressing crime and apprehending criminals. He observed that statements in Glasbrook Bros Ltd v Glamorgan County Council and Glamorgan Coal Co Ltd v Glamorganshire Standing Joint Committee [1916] 2 KB 206 (referring to protection of property) would support a broader liability principle, but he said that the law attached particular importance to the protection of life and physical safety, and he did not consider it necessary to analyse in detail the cases on property damage. 60. Lord Bingham did not consider that the policy reasons given by Lord Keith in Hill justified the width of what he said about police immunity. 61. Lord Hope of Craighead (with whom Lord Carswell and Lord Brown agreed) shared Lord Binghams view that the reasons given by Lord Keith in Hill for saying that an action for damages for negligence should not lie against the police on grounds of public policy did not all stand up to critical examination. He regarded Brooks as a more important authority. In disagreement with Lord Bingham, he considered that the risks identified in Brooks of imposing principles which would tend to inhibit a robust approach in addressing a person as a possible suspect or victim were relevant to cases of which Smith was an example. 62. Lord Hope recognised that Lord Binghams liability principle was confined to cases where a member of the public furnished apparently credible evidence to the police that a third party represented a specific and imminent threat to his life or physical safety, but he considered that this formulation would lead to uncertainty in its application and to the detrimental effects about which Lord Steyn had warned in Brooks. 63. Lord Phillips of Worth Matravers CJ identified the core principle in Hill as being that in the absence of special circumstances the police owe no common law duty of care to protect individuals against harm caused by criminals (para 97). The question was whether that core principle could stand with, or accommodate by way of exception, the liability principle formulated by Lord Bingham. As to that, he did not find it easy to identify the essential parameters of the principle. He asked rhetorically whether the principle would apply when the evidence emanates from a third person; or if the whereabouts but not the identity of the potential wrongdoer was known; or if the threat was specific, but not imminent; or if the threat was imminent but not specific. He also questioned why the principle should be restricted to a threat to life or physical safety, and not apply to a threat to property. He concluded (para 100) that the elements in Lord Binghams liability principle were facts which would make particularly egregious a breach of duty of care that could be more simply stated: where the police have reason to believe that an individual is threatened with criminal violence they owe a duty to that person to take such action as is in all circumstances reasonable to protect that person. But such a duty of care would be in direct conflict with Hill. He therefore found himself reluctantly unable to accept Lord Binghams liability principle. 64. Hill, Brooks and Van Colle and Smith are the most important decisions but some others deserve mention. In Calveley v Chief Constable of the Merseyside Police [1989] AC 1228 the House of Lords upheld a decision striking out claims in negligence for damages for lost overtime by police officers who had been suspended pending disciplinary proceedings which ended in their reinstatement. They alleged that they were owed a duty by the investigating officers to exercise proper care and expedition in the conduct of the investigation which had not been met. It was argued that a police officer investigating a suspected crime owes a duty of care to the suspect and that the same principle applied to the investigation of a disciplinary offence. The House of Lords rejected the argument, which Lord Bridge of Harwich described as startling (p 1238). He said that other considerations apart, it would be contrary to public policy to prejudice the fearless and efficient discharge by police officers of their vitally important public duty of investigating crime by requiring them to act under the shadow of a potential action for damages for negligence by the suspect. 65. 66. Similarly in Elguzouli Daf v Commissioner of Police of the Metropolis [1995] QB 335 the Court of Appeal upheld decisions striking out actions for negligence brought by claimants who had been arrested and held in custody during criminal investigations which were discontinued. Steyn LJ, in the leading judgment, added the qualification that there might be a case in which the Crown Prosecution Service assumed by its conduct a responsibility towards a particular defendant under the Hedley Byrne principle, as expounded by Lord Goff of Chieveley in Spring v Guardian Assurance Plc [1995] 2 AC 296. In that case Lord Goff said that Hedley Byrne was widely regarded as a case on liability in damages for negligent misstatement and liability in negligence for economic loss, which it was, but that it was important not to lose sight of the underlying wider principle. The underlying principle rested on an assumption of responsibility by the defendant towards the plaintiff, coupled with reliance by the plaintiff on the exercise by the defendant of due skill and care. The principle that a duty of care could arise in that way was not limited to a case concerned with the giving of information and advice (Hedley Byrne) but could include the performance of other services. 67. 68. Elguzuli Daf was cited with approval in Brooks and in Van Colle and Smith. 69. An Informer v A Chief Constable [2013] QB 579 provides an example of a duty of care arising from an assumption of responsibility coupled with reliance by the claimant. The claimant contacted the police regarding the activities of a business associate. He was introduced to two police contact handlers. He agreed to act as an informant under the police instructions and he later signed a set of instructions prepared by the police. At the outset they explained the steps which they would take to protect his identity and gave him assurances that they would treat his safety and that of his family as a priority. As the investigation developed the claimant himself became a suspect. A restraint order was obtained against him under the Proceeds of Crime Act 2002, prohibiting him from disposing of his assets, but the Crown Prosecution Service eventually decided not to prosecute him and the restraint order was discharged. He sued the police, alleging that they owed him a duty of care to protect his economic interests. The police conceded that they owed a duty of care to protect his physical well being, and that of his family. They had assured him that they would do so and he had acted on the faith of their assurances. But they had given him no assurances that they would protect his economic interests and the Court of Appeal upheld the judges decision that they owed him no such duty, which would potentially conflict with their responsibility to the public for the investigation of crime and the proceeds of crime. 70. There have been cases of a police force being held liable in negligence for failing to take proper care for the protection of a police officer against a criminal attack, but they were based on the duty of care owed to the claimants as employees whose employment exposed them to the risk of such an attack in the performance of their duty: Costello v Chief Constable of Northumbria [1999] ICR 752, Mullaney v Chief Constable of the West Midlands [2001] EWCA Civ 700. 72. 73. 71. Claims against other emergency services have been treated in a similar way to claims against the police (except in the case of the ambulance service, to which I refer below). In Capital & Counties Plc v Hampshire County Council [1997] QB 1004 the Court of Appeal considered claims in negligence against fire authorities arising out of three incidents in which the fire brigade responded to a 999 call. In the first case the fire brigade was called to a fire at office premises in Hampshire. The fire triggered the operation of a heat activated sprinkler system, but on arrival a fire brigade officer gave instructions for the sprinkler system to be shut down. This led to the fire rapidly spreading out of control and the premises were destroyed. If the sprinkler system had been left on and the fire brigade had otherwise acted as it did to combat the fire, the premises would not have been destroyed. In the second case the fire brigade was called to the scene of some fires on waste land near to the claimants industrial premises in London. When the fire brigade arrived the fires had already been extinguished. After checking that there was no evidence of any continuing danger the fire brigade left. Later a fire broke out at the claimants premises. They sued the fire authority alleging negligence in failing properly to inspect the wasteland and failing to ensure that all fires and risk of further fires in the area had been eliminated before leaving. In the third case the fire brigade was called to a fire at a chapel in Yorkshire. The water hydrants near the premises either failed to work or the officers were unable for a long time to locate them, and so water had to be fetched from a dam half a mile away. It should have been possible to contain the fire, but as a result of the water shortage the whole building was destroyed. Under the Fire Services Act 1947 fire authorities were under a statutory duty, among other things, to secure the services for their area of a fire brigade and equipment, such as necessary to meet efficiently all normal requirements, and to take all reasonable measures to ensure that an adequate supply of water was available for use in case of fire. The owners of the chapel sued the fire authority for negligence and breach of statutory duty. They alleged that there 74. ought to have been a proper system of inspection to ensure that hydrants were in working order and that the fire crew were at fault in failing to locate some of the hydrants sooner. 75. The Court of Appeal upheld decisions to allow the claim in the Hampshire case but to dismiss the claims in the London and Yorkshire cases. The difference was that in the Hampshire case the fire brigade aggravated the situation by causing the sprinkler system to be turned off, whereas in the other cases the failures of the fire brigade made things no worse than they were. In drawing that distinction the court applied the reasoning of the House of Lords in Geddis v Proprietors of Bann Reservoir (1878) 3 App Cas 430, 455 (per Lord Blackburn) and East Suffolk Rivers Catchment Board v Kent [1941] AC 74. In the Hampshire case the court also drew an analogy with Rigby v Chief Constable of Northamptonshire and Knightley v Johns, where the rescue service created additional danger. 76. There are two Scottish decisions at first instance in fire brigade cases in which the Lord Ordinary took a different direction: Duff v Highlands and Islands Fire Board 1995 SLT 1362 and Burnett v Grampian Fire and Rescue Services 2007 SLT 61. In Duff the fire service attended a house fire and apparently extinguished it. After they left, fire broke out again destroying the property and the house next door. Lord Macfadyen dismissed the claim for want of proof of negligence, but he said that he would have rejected the defenders argument that they could not be held liable for damage which would have occurred if they had done nothing. 77. Duff was followed by Lord Macphail in Burnett. That was a similar case in which a fire re ignited after the fire brigade had left. On a preliminary plea by the defenders to the relevancy of the pursuers averments, Lord Macphail declined to follow the reasoning of the Court of Appeal in Capital & Counties Plc v Hampshire County Council and ruled that the case should go to trial. He said that the law of Scotland does not draw a distinction between acts and omissions comparable to that which appeared to exist in the English law of tort, and that the decision in Capital & Counties Plc v Hampshire County Council did not represent the law of Scotland (paras 34 and 48). 78. Burnett was cited in Mitchell v Glasgow City Council [2009] AC 874, to which I refer below. Burnett was not mentioned in the judgments, but the distinction between acts or omissions was central to Lord Hopes reasoning, and he observed that the law of liability for negligence has developed on common lines both north and south of the Border (para 25). 79. 80. In OLL Ltd v Secretary of State for Transport [1997] 3 All ER 897 May J struck out claims against the Coastguard for negligence in responding to a 999 call. The Coastguard is a non statutory public authority with responsibility for organising and coordinating search and rescue missions on the coast and at sea. The claims arose from a tragic incident in which a party of children and teachers, under the supervision of instructors from an adventure centre, got into difficulties on a canoeing trip. The Coastguard was alerted but several hours passed before all the members of the party were rescued. Some of the children died and others suffered severe hypothermia. It was alleged that the Coastguard was negligent in that it was slow to launch a search and rescue operation and misdirected a lifeboat and a helicopter about where they should search. In striking out the claims the judge applied the reasoning in Capital & Counties Plc v Hampshire County Council. He rejected the argument that the misdirection of searchers was analogous to the fire brigade turning off the sprinkler system in the Hampshire case, because it did not positively increase the danger to the canoeists. It was similar to a fire brigade sending one of its fire engines to the wrong address. In Van Colle and Smith Lord Bingham reserved his opinion about the correctness of Capital & Counties Plc v Hampshire County Council and disapproved OLL Ltd v Secretary of State for Transport. But he was alone in criticising them, and he did so in the context of formulating his liability principle which the other members of the House of Lords rejected. 81. The position of the ambulance service was considered by the Court of Appeal in Kent v Griffiths [2001] QB 36. A doctor attended the home of a patient suffering from an asthma attack and called for an ambulance to take her immediately to hospital. The control replied Okay doctor. After 13 minutes the ambulance had not arrived and the patients husband made a further call. He was told that an ambulance was well on the way and should arrive in seven or eight minutes. For unexplained reasons it did not arrive until 40 minutes after the first call. The patient suffered a respiratory arrest which would have been prevented if the ambulance had arrived in a reasonable time. The patients doctor gave evidence that if she had been told that it would take the ambulance service 40 minutes to come, she would have advised the patients husband to drive her to hospital and would have gone with them. The Court of Appeal upheld the trial judges finding of liability against the ambulance service. It would have been sufficient to hold that the acceptance of the doctors request for an ambulance to come immediately gave rise to a duty of care but Lord Woolf MR (with whom the other members of the court agreed) went further. He held that the ambulance service, as part of the health service, should be regarded as providing services equivalent to those provided by hospitals, and not as providing services equivalent to those rendered by the police and fire services. Accordingly, the staff of the ambulance service owed a similar duty of care to that owed by doctors and nurses operating in the health service (para 45). 84. 82. Courts in other common law jurisdictions have taken various approaches. 83. In the USA the matter is governed by the tort law of individual states. In New York the Court of Appeal has held, by a majority, that the police do not owe a duty of care in negligence for the protection of members of the public, unless they undertake a duty to protect particular members of the public and expose them without adequate protection to risks which materialise: Riss v City of New York 22 NY 2d 579, 240 NE 2d 860 (1968), distinguishing Schuster v City of New York 5 NY 2d 75, 180 NYS 2d 265, 154 NE 2d 534 (1958). Similarly, in the case of emergency calls, the position generally appears to be that the police will owe a duty of care only if the call handler gives an explicit assurance on which the caller relies: Cuffy v City of New York 69 NY 2d 255 (1987), Noakes v City of Seattle 77 Wash App 694, 895 P2d 842, 845 (1995), Perkins v City of Rochester 641 F Supp 2d 168 (2009). In South Africa, the leading case is the decision of the Constitutional Court in Carmichele v Minister of Safety and Security (2001) 12 BHRC 60. The applicant was brutally attacked by a man awaiting trial for attempted rape. The police and prosecutor had recommended his release on bail despite a history of sexual violence. The applicant sued the ministers responsible for the police and prosecution service, alleging that they had negligently failed to see that the magistrate was properly informed about the risk he posed to women in the vicinity of his home, including the applicant. Her claim was dismissed by the High Court and its decision was upheld by the Supreme Court of Appeal, but she succeeded on appeal to the Constitutional Court, relying on a provision in section 39(2) of the constitution which required the courts when developing the common law to promote the spirit, purport and objects of the Bill of Rights. The Constitutional Court decided that it would not be appropriate for itself to determine whether the law of delict required to be developed so as to afford a right to the applicant to claim damages if the police or prosecutor were negligent. It said that it was by no means clear how the constitutional obligations on the state should translate into private law duties towards individuals, and that the court would be at a grave disadvantage in deciding the issue without a fully reasoned judgment of the High Court or Court of Appeal. It set aside the decisions of the lower courts and remitted the matter to the High Court. The discussion in the judgment is interesting, but the decision itself is of little help, not only because it left the matter undetermined but because it was based on the provisions of the South African constitution and Bill of Rights. 85. 86. 87. 88. In Hamilton v Minister of Safety and Security [2003] 4 All SA 117 the Supreme Court of Appeal held the police liable to the victim of a shooting for negligently issuing a firearm licence to the attacker, who had a history of psychosis, personality disorder and alcohol abuse. The agreed statement of facts did not suggest that the victim was at higher risk than any other member of the public. In Canada, the Divisional Court of the Ontario High Court refused an application to strike out a claim in negligence by the victim of a serial rapist against the police for their failure to warn potential victims living in the area about the risk which they faced: Jane Doe v Metropolitan Toronto (Municipality) Commissioners of Police 74 OR (2d) 225 (1990), 72 DLR (4th) 580. In a short judgment the court applied Lord Wilberforces two stage test in Anns and concluded that the facts pleaded were sufficient to establish a special relationship of proximity. The claimant later succeeded at the trial: (1998) 160 DLR (4th) 697. In Hill v Hamilton Wentworth Regional Services Board [2007] 3 SCR 129 a wrongly convicted defendant sued the police for negligent investigation of the case against him, alleging that he should never have been a suspect. The Supreme Court held, by a majority, that a duty of care existed between the police and a suspect in a criminal investigation. McLachlin CJ, giving the judgment of the majority, expressly limited the judgment to that relationship. She said that it might well be the case that the considerations informing the analysis of proximity and policy would be different in the case of the relationship between the police and a victim; and that if a new relationship was alleged to attract liability of the police in negligence in a future case, it would be necessary to engage in a fresh Anns analysis. She disclaimed reliance on Jane Doe v Metropolitan Toronto (Municipality) Commissioners of Police, describing it as of little help. She noted that it was a lower court decision and that debate continued over the content and scope of its ratio (para 27). In New Zealand the highest authority is the decision of the Supreme Court in Couch v Attorney General [2008] 3 NZLR 725. Victims and relatives of victims injured or killed in a robbery claimed damages in negligence for the alleged failure of the probation service to exercise reasonable care in the supervision of the offender, who was on licence after release from a prison sentence for aggravated robbery. The victims were employed at a club where the attacker had been allowed by the probation service to obtain work experience without the knowledge of the employer and his fellow employees about his background. The Supreme Court allowed an appeal by the claimant from the decision of the Court of Appeal that the claim should be struck out. Its decision was unanimous but there were differences as to the criteria for establishing a duty of care. 89. The reasoning of the majority (Blanchard, Tipping and McGrath JJ) was given by Tipping J. He took as his starting point the well known observation of Dixon J in Smith v Leurs (1945) 70 CLR 256, 262 that it is exceptional to find a duty in law to control anothers actions to prevent harm to strangers, but that special relations may be the source of a duty of this nature. Tipping J noted that the special relations to which Dixon J referred were between the defendant and the wrongdoer, but there had additionally to be a special relationship between the defendant and the claimant special in the sense that there was sufficient proximity between the parties to make it fair, just and reasonable, subject to matters of policy, to impose the duty of care in issue (para 85). 90. Tipping J concluded that the power of the probation board over the wrongdoers employment was arguably sufficient to establish the necessary relationship between the defendant and the wrongdoer, by analogy with the Dorset Yacht case. As to the relationship between the defendant and the claimant, the necessary proximity criterion would be satisfied if she could show (as was arguable on the facts) that she, as an individual or a member of an identifiable and sufficiently delineated class, was the subject of a distinct and special risk of suffering harm. The necessary risk must be distinct in the sense of being clearly apparent, and it must be special in the sense that the plaintiffs individual circumstances, or membership of the necessary class, rendered her particularly vulnerable (para 112). If the requisite proximity was established, Tipping J said that it would be necessary to address finally the question of policy, but that should be done when all the facts had been examined (para 130). 91. Elias CJ and Anderson J preferred a more expansive formulation based on 92. the application of Anns. In Australia, the High Court held in Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 that the proprietors of a shopping centre owed no duty of care towards visitors to protect them against the risk of attack in the car park by taking steps to see that it was properly lit. The proprietors were not responsible for controlling the behaviour of the attackers, unlike the prison officers in the Dorset Yacht case who were responsible for controlling the activities of the young offenders in their charge. 93. In Sullivan v Moody (2001) 207 CLR 562 the High Court held that medical professionals and social workers involved in the investigation of child sex abuse owed no duty of care towards the suspects. The court cited the decision of the House of Lords in Hill in support of the proposition that the conduct of a police investigation involves a variety of decisions on matters of policy and discretion, including decisions as to priorities, and that it is inappropriate to subject those decisions to a common law duty of care. 95. 94. The Irish courts have consistently followed Hill in holding that the police owe no private law duty of care in respect of their investigatory or prosecutorial functions: Lockwood v Ireland [2010] IEHC 403, LM v Commissioner of An Garda Siochana [2011] IEHC 14 and AG v JK, Minister for Justice Equality & Law Reform [2011] IEHC 65. In relation to the Convention, Ms Monaghan relied particularly on the decision of the Strasbourg court in Opuz v Turkey (2009) 50 EHRR 695. The applicant and her mother suffered repeated violence from the applicants partner, which they reported to the police. He was charged with offences including attempted murder and threatening to kill, but he was released on bail. While awaiting trial he murdered the applicants mother. He was released from prison pending an appeal, and the applicant complained that she was given inadequate protection. The court held that there were violations of articles 2 and 3 and gender based discrimination in violation of article 14 read in conjunction with articles 2 and 3. The court concluded that domestic violence towards women was in practice tolerated by the authorities, and that the remedies relied on by the government in its argument did not function effectively. 96. The claimants and the interveners also relied on the judgment of Green J in DSD v Commissioner of Police of the Metropolis [2014] EWHC 436 (QB). The claimants were victims of a serial rapist. They succeeded in claims brought against the police under the Human Rights Act and articles 3 and 8 of the Convention. There was no claim at common law. In his judgment Green J carried out a detailed analysis of the Strasbourg jurisprudence regarding the nature and scope of the investigative duty of the police under article 3. The claimants and interveners submitted that his analysis strengthens the case for a common law duty of the scope for which they respectively contend. Green Js judgment is under appeal. Issues 1 and 2: did the police owe a duty of care to Ms Michael on receiving her 999 call? 97. English law does not as a general rule impose liability on a defendant (D) for injury or damage to the person or property of a claimant (C) caused by the conduct of a third party (T): Smith v Littlewoods Organisation Ltd [1987] AC 241, 270 (a Scottish appeal in which a large number of English and Scottish cases were reviewed). The fundamental reason, as Lord Goff explained, is that the common law does not generally impose liability for pure omissions. It is one thing to require a person who embarks on action which may harm others to exercise care. It is another matter to hold a person liable in damages for failing to prevent harm caused by someone else. 98. The rule is not absolute. Apart from statutory exceptions, there are two well recognised types of situation in which the common law may impose liability for a careless omission. 99. The first is where D was in a position of control over T and should have foreseen the likelihood of T causing damage to somebody in close proximity if D failed to take reasonable care in the exercise of that control. Dorset Yacht is the classic example, and in that case Lord Diplock set close limits to the scope of the liability. As Tipping J explained in Couch v Attorney General, this type of case requires careful analysis of two special relationships, the relationship between D and T and the relationship between D and C. I would not wish to comment on Tipping Js formulation of the criteria for establishing the necessary special relationship between D and C without further argument. It is unnecessary to do so in this case, since Ms Michaels murderer was not under the control of the police, and therefore there is no question of liability under this exception. 100. The second general exception applies where D assumes a positive responsibility to safeguard C under the Hedley Byrne principle, as explained by Lord Goff in Spring v Guardian Assurance Plc. It is not a new principle. It embraces the relationships in which a duty to take positive action typically arises: contract, fiduciary relationships, employer and employee, school and pupil, health professional and patient. The list is not exhaustive. This principle is the basis for the claimants main submission, to which I will come (issue 3). There has sometimes been a tendency for courts to use the expression assumption of responsibility when in truth the responsibility has been imposed by the court rather than assumed by D. It should not be expanded artificially. 101. These general principles have been worked out for the most part in cases involving private litigants, but they are equally applicable where D is a public body. Mitchell v Glasgow City Council is a good example. The victim and T were secure tenants of D and were next door neighbours. On a number of occasions T directed abuse and threats to kill at the victim, which he reported to D. D summoned T to a meeting and threatened him with eviction, without informing the victim. Soon afterwards T attacked the victim, causing fatal injuries. The victims widow and daughter sued D, alleging negligence in failing to warn him of the meeting with T. The House of Lords held that D was not under a duty to do so, applying the principle in Smith v Littlewoods Organisation Ltd. It rejected the pursuers arguments that Ds relationship with its tenant T was analogous to the relationship of D and T in Dorset Yacht or that D assumed a responsibility to protect the victim from T. Mere foreseeability was not enough. 102. It is true that the categories of negligence are never closed (Heaven v Pender (1883) 11 QBD 503), and it would be open to the court to create a new exception to the general rule about omissions. The development of the law of negligence has been by an incremental process rather than giant steps. The established method of the court involves examining the decided cases to see how far the law has gone and where it has refrained from going. From that analysis it looks to see whether there is an argument by analogy for extending liability to a new situation, or whether an earlier limitation is no longer logically or socially justifiable. In doing so it pays regard to the need for overall coherence. Often there will be a mixture of policy considerations to take into account. 103. From time to time the courts have looked for some universal formula or yardstick, but the quest has been elusive. And from time to time a court has used an expression in explaining its reasons for reaching a particular decision which has then been squashed and squeezed in other cases where it does not fit so aptly. 104. Lord Wilberforces two stage formula in Anns appeared at first to usher in a new era of development in the law of negligence, in which prima facie liability at the first stage was drawn very widely but could be negated or cut down by policy considerations at the second stage. 105. The two stage formula was stated in terms of general application, but it had particular implications for public authorities, because they have a wide range of duties and responsibilities which would be likely to bring them within the first stage of Lord Wilberforces formula. 106. Doubts about the Anns formula were expressed by the High Court of Australia in Sutherland Shire Council v Heyman (1985) 60 ALR 1 and echoed in subsequent English decisions. In Caparo Plc v Dickman [1990] 2 AC 605 Lord Bridge (with whom Lords Roskill, Ackner and Oliver of Aylmerton agreed) emphasised the inability of any single general principle to provide a practical test which could be applied to every situation to determine whether a duty of care is owed and, if so, what is its scope. He said, at pp 617 618, that there must be not only foreseeability of damage, but there must also exist between the party owing the duty and the party to whom it is owed a relationship characterised by the law as one of proximity or neighbourhood, and the situation should be one in which the court considers it fair, just and reasonable that the court should impose a duty of a given scope on one party for the benefit of the other. He added that the concepts both of proximity and fairness were not susceptible of any definition which would make them useful as practical tests, but were little more than labels to attach to features of situations which the law recognised as giving rise to a duty of care. Paradoxically, this passage in Lord Bridges speech has sometimes come to be treated as a blueprint for deciding cases, despite the pains which the author took to make clear that it was not intended to be any such thing. 107. The Anns formula was finally disapproved in Murphy v Brentwood District Council [1991] AC 398. The particular question in that case was whether the owner of a house built with defective foundations was owed a duty of care by the local authority which passed the plans. The House of Lords held that he was not. The property was the plaintiffs home and it would have cost more than half of its value in good condition to repair the damage caused by the defective foundations. Lord Bridge observed that there might be cogent reasons of social policy for imposing liability on the authority, but that the shoulders of a public authority were only broad enough to bear the loss because they were financed by the public at large, and that it was pre eminently a matter for the legislature whether these policy reasons should be accepted as sufficient for imposing on the public the burden of providing compensation for the plaintiffs private loss. Similarly Lord Oliver said that it would not be right for the courts to create new principles in order to fulfil a social need in an area of consumer protection where there was legislation. 108. Similar considerations underlie decisions in cases not about economic loss: see Stovin v Wise [1996] AC 923 and Gorringe v Calderdale Metropolitan Borough Council [2004] 1 WLR 1057. Both were personal injury cases arising from road accidents. 109. In Stovin v Wise a highway authority knew that a road junction was dangerous and that the cause of the danger could be removed simply and at little expense. A bank of earth on the corner of the junction obstructed the view of motorists turning right from one road into the other. The highway authority did not own the land but had a statutory power to remove the bank. After there had been a number of accidents it decided to take action. It wrote to the landowner with a proposal to realign the junction but did nothing more and the matter went to sleep until another accident happened. A motorist collided with a motorcyclist whom she had not been able to see until it was too late. The motorist accepted liability to the motorcyclist but claimed a contribution from the highway authority for its negligence. At the trial the judge found the highway authority liable and ordered it to pay a contribution of 30%. On appeal the sole issue was whether the highway authority owed to the injured person a duty of care. The House of Lords by a majority held that it did not. 110. Lord Hoffmann (with whom Lords Goff and Jauncey of Tullichettle agreed) observed that it is one thing for a public authority to provide a service at the public expense, and quite another to require the public to pay compensation when a failure to provide the service has resulted in a loss. Apart from possible cases involving reliance on a representation by the authority, the same loss would have been suffered if the service had not been provided in the first place, and to require payment of compensation would impose an additional burden on public funds. There would, he said, have to be exceptional grounds for a court to hold that the policy of a statute required compensation to be paid because a power was not exercised. 111. In Gorringe v Calderdale Metropolitan Borough Council the House of Lords held that the general public law duty of a highway authority under the Road Traffic Act 1988 for the prevention of road accidents did not give rise to a private law duty of care to provide road warnings to alert motorists of hazards. Lord Hoffmann (with whom Lords Scott of Foscote, Rodger and Brown agreed) referred to the fact that in Stovin v Wise the majority left open the possibility that there might somewhere be a statutory power or public duty which generated a common law duty, but he went on to say that he found it difficult to imagine a case in which a common law duty could be founded simply upon the failure (however irrational) to provide some benefit which a public authority has a public law duty to provide (paras 31 to 32). He distinguished that situation from cases where a public authority did acts or entered into relationships or undertook responsibilities giving rise to a duty of care on an orthodox common law foundation (para 38). 112. In some areas, such as health care and education, public authorities provide services which involve relationships with individual members of the public giving rise to a recognised duty of care no different from that which would be owed by any other entity providing the same service. A hospital and its medical staff owe the same duty to a patient whether they are operating within the national health service or the private sector (Roe v Minister of Health [1954] 2 QB 66). A school and its teaching staff owe the same duty to a pupil whether it is a state maintained school or a private school (Woodland v Swimming Teachers Association [2013] UKSC 66; [2014] AC 537). Educational psychology is a professional service linked to education. An organisation which provides an educational psychology service, and its educational staff, owe the same duty to a pupil whether they are operating in the public or the private sector (X (Minors) v Bedfordshire County Council [1995] AC 633). 113. Besides the provision of such services, which are not peculiarly governmental in their nature, it is a feature of our system of government that many areas of life are subject to forms of state controlled licensing, regulation, inspection, intervention and assistance aimed at protecting the general public from physical or economic harm caused by the activities of other members of society (or sometimes from natural disasters). Licensing of firearms, regulation of financial services, inspections of restaurants, factories and childrens nurseries, and enforcement of building regulations are random examples. To compile a comprehensive list would be virtually impossible, because the systems designed to protect the public from harm of one kind or another are so extensive. 114. It does not follow from the setting up of a protective system from public resources that if it fails to achieve its purpose, through organisational defects or fault on the part of an individual, the public at large should bear the additional burden of compensating a victim for harm caused by the actions of a third party for whose behaviour the state is not responsible. To impose such a burden would be contrary to the ordinary principles of the common law. 115. The refusal of the courts to impose a private law duty on the police to exercise reasonable care to safeguard victims or potential victims of crime, except in cases where there has been a representation and reliance, does not involve giving special treatment to the police. It is consistent with the way in which the common law has been applied to other authorities vested with powers or duties as a matter of public law for the protection of the public. Examples at the highest level include Yuen Kun Yeu v Attorney General of Hong Kong [1988] AC 175 and Davis v Radcliffe [1990] 1 WLR 821 (no duty of care owed by financial regulators towards investors), Murphy v Brentwood District Council (no duty of care owed to the owner of a house with defective foundations by the local authority which passed the plans), Stovin v Wise and Gorringe v Calderdale Metropolitan Borough Council (no duty of care owed by a highway authority to take action to prevent accidents from known hazards). 116. The question is therefore not whether the police should have a special immunity, but whether an exception should be made to the ordinary application of common law principles which would cover the facts of the present case. 117. Ms Monaghan has advanced essentially two arguments in support of the interveners liability principle. The first is that the nature and scale of the problem of domestic violence is such that the courts ought to introduce such a principle to provide protection for victims and a spur to the police to respond to the problem more effectively. The second is that the common law should be extended in harmony with the obligations of the police under articles 2 and 3 of the Convention. 118. I recognise fully that the statistics about the incidence of domestic violence and the facts of individual cases such as the present are shocking. I recognise also that the court has been presented with fresh material on the subject. However, I am not persuaded that they should cause the court to create a new category of duty of care for several reasons. 119. If the foundation of a duty of care is the public law duty of the police for the preservation of the Queens peace, it is hard to see why the duty should be confined to potential victims of a particular kind of breach of the peace. Would a duty of care be owed to a person who reported a credible threat to burn down his house? Would it be owed to a company which reported a credible threat by animal rights extremists to its premises? If not, why not? 120. It is also hard to see why it should be limited to particular potential victims. If the police fail through lack of care to catch a criminal before he shoots and injures his intended victim and also a bystander (or if he misses his intended target and hits someone else), is it right that one should be entitled to compensation but not the other, when the duty of the police is a general duty for the preservation of the Queens peace? Similarly if the intelligence service fails to respond appropriately to intelligence that a terrorist group is intending to bring down an airliner, is it right that the service should be liable to the dependants of the victims on the plane but not the victims on the ground? Such a distinction would be understandable if the duty is founded on a representation to, and reliance by, a particular individual but that is not the basis of the interveners liability principle. These questions underline the fact that the duty of the police for the preservation of the peace is owed to members of the public at large, and does not involve the kind of close or special relationship (proximity or neighbourhood) necessary for the imposition of a private law duty of care. 121. As to the argument that imposition of the interveners liability principle should improve the performance of the police in dealing with cases of actual or threatened domestic violence, the court has no way of judging the likely operational consequences of changing the law of negligence in the way that is proposed. Mr Bowen and Ms Monaghan were critical of statements in Hill and other cases that the imposition of a duty of care would inevitably lead to an unduly defensive attitude by the police. Those criticisms have force. But the court would risk falling into equal error if it were to accept the proposition, on the basis of intuition, that a change in the civil law would lead to a reduction of domestic violence or an improvement in its investigation. Failures in the proper investigation of reports of violence or threatened violence can have disciplinary consequences (as there were in the present case), and it is speculative whether the addition of potential liability at common law would make a practical difference at an individual level to the conduct of police officers and support staff. At an institutional level, it is possible to imagine that it might lead to police forces changing their priorities by applying more resources to reports of violence or threatened violence, but if so, it is hard to see that it would be in the public interest for the determination of police priorities to be affected by the risk of being sued. 122. The only consequence of which one can be sure is that the imposition of liability on the police to compensate victims of violence on the basis that the police should have prevented it would have potentially significant financial implications. The payment of compensation and the costs of dealing with claims, whether successful or unsuccessful, would have to come either from the police budget, with a corresponding reduction of spending on other services, or from an increased burden on the public or from a combination of the two. 123. In support of the argument that the court should develop the common law to encompass the duties of the police under the Convention, Mr Bowen and Ms Monaghan submitted that consistency between the common law and the Convention should be encouraged and relied in particular on observations of the Court of Appeal in D v East Berkshire NHS Trust [2003] EWCA Civ 1151, [2004] QB 558, paras 79 85. 124. There are certainly areas where the Convention has had an influence on the common law. Possibly the most striking example is in the law of confidentiality, which the courts have developed to include a partial law of privacy in response to the requirements of article 8 (Campbell v MGN Ltd [2004] 2 AC 457). But two points should be noted about that. First, the common law had long been regarded as defective. It was heavily criticised by Bingham LJ in Kaye v Robertson [1991] FSR 62, but the Court of Appeal held with regret that only Parliament could cure it. The Human Rights Act 1998 provided the means for reform. In debates on the bill Lord Irvine of Lairg, LC made it clear that in his view the Act would open the way to the courts developing rights of privacy through article 8, and so it did. Secondly, development of the law was necessary to comply with article 8, as interpreted by the Strasbourg court. 125. The circumstances of the present case are different. The suggested development of the law of negligence is not necessary to comply with articles 2 and 3. On orthodox common law principles I cannot see a legal basis for fashioning a duty of care limited in scope to that of articles 2 and 3, or for gold plating the claimants Convention rights by providing compensation on a different basis from the claim under the Human Rights Act 1998. Nor do I see a principled legal basis for introducing a wider duty in negligence than would arise either under orthodox common law principles or under the Convention. 126. The same argument, that the common law should be developed in harmony with the obligations of public bodies including the police under the Human Rights Act 1998 and articles 2 and 3 of the Convention, was advanced in Smith as a ground for holding that the police owed a duty of care to the deceased after he reported receiving threats. Reliance was similarly placed on the approach of the Court of Appeal in D v East Berkshire NHS Trust (as noted by Lord Phillips MR, who had delivered the judgment of the Court of Appeal in that case). Counsel for Mr Smith relied particularly on the analysis of the effect of the Human Rights Act in D v East Bedfordshire NHS Trust at paras 55 to 87: see the reported argument at [2009] 1 AC 225, 240. The argument by analogy with that case which presently commends itself to Lady Hale is therefore not a new argument, but one which failed to persuade the majority in Smith. 127. The argument was rejected by the House of Lords for reasons given by Lord Hope (paras 81 82), Lord Phillips (paras 98 99) and most fully by Lord Brown (paras 136 139). Lord Brown did not consider that the possibility of a Human Rights Act claim was a good reason for creating a parallel common law claim, still less for creating a wider duty of care. He observed that Convention claims had different objectives from civil actions, as Lord Bingham pointed out in R (Greenfield) v Secretary of State for the Home Department [2005] 1 WLR 673. Whereas civil actions are designed essentially to compensate claimants for losses, Convention claims are intended to uphold minimum human rights standards and to vindicate those rights. The difference in purpose has led to different time limits and different approaches to damages and causation. Lord Brown recognised that the violation of a fundamental right is a very serious thing, but he saw no sound reason for matching the Convention claim with a common law claim. To do so would in his view neither add to the vindication of the right, nor be likely to deter the police from the action or inaction which risked violating it in the first place. 128. It is unnecessary for the purposes of this appeal to decide questions about the scope of article 3 and I would not wish to influence the Court of Appeals consideration of the judgment in DSD v Commissioner of Police of the Metropolis. It does not alter the essence of the argument which was considered and rejected by the House of Lords in Smith. I am not persuaded that it would be right for the court to depart from that decision, which itself was consistent with a line of previous authorities. 129. In support of the narrower liability principle proposed by Lord Bingham in Smith, Mr Bowen submitted that limitation of a duty of care to A to cases where A has provided the police with apparently credible evidence that she or he is under a specific and imminent threat to their life or personal safety from a person whose identity and whereabouts are known would satisfy the requirement of closeness or proximity. But the majority in Smith rejected Lord Binghams formula for reasons which remain cogent. It would be unsatisfactory to draw dividing lines according to whether the threat is reported by A or by someone else (for example, in the present case by the man driven home by Ms Michaels murderer before he returned and killed her); or whether the threat is credible and imminent or credible but not imminent; or whether the whereabouts of the person making the threat are known or unknown; or whether the threatened violence was to As person or property or both. As to the first of those distinctions (whether the threat was reported by A or someone else), Lord Binghams own position was ambiguous because his formula confined the duty to a case where the threat was reported by A, but he also disapproved the decision in OLL Ltd v Secretary of State for Transport, in which the concerns about the safety of the children and adults at sea were raised by other people. 130. More generally, I would reject the narrower liability principle advocated by the claimants for the same reasons as the broader liability principle advocated by the interveners. If it is thought that there should be public compensation for victims of certain types of crime, above that which is provided under the criminal injuries compensation scheme, in cases of pure omission by the police to perform their duty for the prevention of violence, it should be for Parliament to determine whether there should be such a scheme and, if so, what should be its scope as to the types of crime, types of loss and any financial limits. By introducing the Human Rights Act 1998 a cause of action has been created in the limited circumstances where the police have acted in breach of articles 2 and 3 (or article 8). There are good reasons why the positive obligations of the state under those articles are limited. The creation of such a statutory cause of action does not itself provide a sufficient reason for the common law to duplicate or extend it. 131. So far I have been addressing the appellants and the interveners arguments. Lord Kerr advances an alternative liability principle which he puts in a broader and a narrower form. He acknowledges (at para 144) that for a duty of care to arise it is necessary to identify a feature (or combination of features) which creates (or create) a sufficient proximity of relationship between the claimant and the defendant. The question Is there a sufficient proximity of relationship? is a shorthand way of putting the question posed by Lord Devlin in Hedley Byrne [1964] AC 465 at p 525 Is the relationship between the parties in this case such that it can be brought within a category giving rise to a special duty? As Lord Devlin observed, the first step in such an inquiry is to see how far the authorities have gone, for new categories in the law do not spring into existence overnight. In the earlier part of this judgment I have examined how far the authorities presently go and have considered whether there should be a new exception to the general principle about omissions to prevent harm being caused by a third party who is not under the defendants control. 132. Lord Kerrs broader proposal (at para 144) is that proximity of relationship in the present context should comprise these elements: (i) a closeness of association between the claimant and the defendant, which can but need not necessarily arise from information communicated to the defendant; (ii) the information should convey to the defendant that serious harm is likely to befall the intended victim if urgent action is not taken; (iii) the defendant is a person or agency who might reasonably be expected to provide protection in those circumstances; and (iv) he should be able to provide for the intended victims protection without unnecessary danger to himself. 133. Lord Kerr notes that this suggested principle might at first sight appear similar to Lord Binghams liability principle, but he observes that his principle, unlike Lord Binghams, has the ingredient of proximity built into it as part of what has to be established. This is in my respectful opinion a serious flaw. Whereas Lord Bingham identified the factors which he considered should give rise to duty of care in law, Lord Kerrs proposition requires it to be established that the relationship has sufficient closeness (proximity) to amount to proximity. In this respect it is circular. It leaves the question of closeness or proximity open ended. It amounts to saying that there is a relationship of proximity if the relationship is sufficiently close for there to be proximity. 134. Lord Kerr says (at para 163) that the nature of the interaction between the parties is critical to the question whether the necessary proximity exists. He goes on to say (at para 166) that this depends on the facts of the particular case and that for this reason his proposition at para 144 is loosely drawn (or, as I would say, circular). It provides no yardstick for answering the question which it poses. 135. Lord Kerr says that any narrower test would run the risk of producing anomalous results such as the example which he gives at para 165. In that paragraph he posits the case of a person who through the negligence of the police is given a false impression that an assurance of timeous assistance has been given, on which the person relies. If a person is negligently misled by the police into believing that help is at hand, and acts on what she has negligently been led falsely to believe, she would have a potential claim under the Hedley Byrne principle. Whether that was so in this case is the subject of issue 3. There is, however, nothing anomalous in the Hedley Byrne principle itself or in its limitation. The principle established by Hedley Byrne is that a careless misrepresentation may give rise to a relationship akin to contract under which there is a positive duty to act. Lord Devlin spoke of an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract and he said that wherever there is a relationship equivalent to contract, there is a duty of care (pp 529 530). To extend the principle to a case in which the core ingredients were absent would be to cut its moorings. 136. However, Lord Kerr goes on to advance a narrower liability principle (at para 168). His narrower proposition is that whether a relationship of proximity exists should depend on whether sufficient information has been conveyed or is available to the police to alert them to the urgent need to take action which it is within their power to take; the information must be specific; and the threat must be imminent. It is critical, he says, that the police know of an imminent threat to a particular individual, and the duty is personalised to the intended victim. 137. Lord Kerrs narrower liability principle closely resembles Lord Binghams liability principle, which was rejected by a majority of the House of Lords. It presents most of the problems to which I have referred, such as why a duty should be owed to the intended victim of a drive by shooting but not to an injured bystander; why the threat should have to be imminent; and why the victim of a threatened arson attack should be owed a duty of protection against consequential personal injury, but not the burning down of his home. Lord Kerr rightly says (at para 181) that the police have been empowered to protect the public from harm. They have indeed a duty to keep the peace and to protect property, which applies to all potential victims of crime. Lord Kerr does not subscribe to the interveners liability principle, and I cannot see a proper basis for holding there is a private law duty of care within the terms of Lord Kerrs narrower alternative. Issue 3: should the police be held to have assumed responsibility to take reasonable care for Ms Michaels safety? 138. Mr Bowen submitted that what was said by the Gwent call handler who received Ms Michaels 999 call was arguably sufficient to give rise to an assumption of responsibility on the Hedley Byrne principle as amplified in Spring v Guardian Assurance Plc. I agree with the Court of Appeal that the argument is not tenable. The only assurance which the call handler gave to Ms Michael was that she would pass on the call to the South Wales Police. She gave no promise how quickly they would respond. She told Ms Michael that they would want to call her back and asked her to keep her phone free, but this did not amount to advising or instructing her to remain in her house, as was suggested. Ms Michaels call was made on her mobile phone. Nor did the call handlers inquiry whether Ms Michael could lock the house amount to advising or instructing her to remain there. The case is very different from Kent v Griffiths where the call handler gave misleading assurances that an ambulance would be arriving shortly. Issue 4: was there arguably a breach of article 2? 139. Lord Pannick submitted that the majority of the Court of Appeal were wrong to uphold Judge Jarman QCs decision that the article 2 claim should be allowed to proceed to trial. It is a question of fact whether the Gwent call handler ought to have heard Ms Michael say that her former partner was threatening to return and kill her, and, if she could not hear clearly what Ms Michael was saying because of distractions, whether she should have asked Ms Michael to repeat what she was saying. Lord Pannick argued that even if she should have heard those words, it would not have been enough for a reasonable person to conclude that there was a real and immediate threat to her life. That is again a question of fact. It would be rare for this court to reverse concurrent findings of two lower courts on a question of fact and I do not consider that we should do so in this case. On the contrary, I agree with the majority of the Court of Appeal that the question what the call handler ought to have made of the 999 call in all the circumstances is properly a matter for investigation at a trial. It is not necessary to consider separately the position of the South Wales Police, because Lord Pannick helpfully said that if the cross appeal by Gwent Police failed he would not wish to argue for a different disposal at this stage in the case of the South Wales Police. Conclusion 140. I would dismiss the appeal and cross appeal. LORD KERR: Introduction 141. Three principal reasons have been given for the conclusion that liability should not attach to the police in this case. The first is that a well established line of authority dating back to (at least) Hill v Chief Constable of West Yorkshire [1989] AC 53 precluded such liability. The second is grounded on what are said to be general principles of common law. And the third depends on considerations of public policy. Authorities 142. In Hill Lord Keith held that at common law police officers owed the general public a duty to enforce the criminal law but there were no specific requirements as to the manner in which the obligation is to be discharged (p 59). On that account an intention to create a duty towards individual members of the public could not be readily inferred. But such a duty could, in appropriate circumstances, arise. It was not enough that police could or should have foreseen that harm to an individual would occur. A further ingredient was required. The nature of that necessary ingredient varied from case to case. In Dorset Yacht Co Ltd v Home Office [1970] AC 1004 the ingredient was the special relationship that existed between, on the one hand, prison officers and the borstal boys who carried out the damage to the boats and, on the other hand, between the prison officers and the owners of the yachts. The prison officers had brought the borstal boys into the locality where the yachts were moored. In that way they had created a potential situation of danger for the owners of the yacht. These circumstances supplied the necessary extra ingredient which allowed a finding of liability to be made. No such features were present in Hill per Lord Keith at 62C. As he pointed out, the perpetrator in Hill was not in police custody at any material time and the victim was one of a vast number of the female general public who was at no special distinctive risk unlike the owners of [the] yachts in the Dorset Yacht case. 143. Lord Keith went on to suggest that there was another reason, grounded in public policy, that an action for damages in negligence should not lie against the police. As Lord Toulson has pointed out, Lord Keith expressed that as a matter of immunity. I will consider the public policy arguments in a later section of this judgment and will mention in passing the dichotomy that has arisen as to whether police should not be held liable for the manner in which they discharge their duties because of an immunity or because an extra ingredient is required beyond foreseeability in order to establish negligence against them. In the meantime, it can be clearly stated that Lord Keiths formulation of the primary basis on which the plaintiff failed was that an extra ingredient such as was present in Dorset Yacht was missing in Hill. 144. This extra ingredient has been described as a feature which creates a sufficient proximity of relationship between the claimant and the defendant. What proximity of relationship connotes has, perhaps understandably, not been precisely defined. It appears to me that it should consist of these elements: (i) a closeness of association between the claimant and the defendant, which can be created by information communicated to the defendant but need not necessarily come into existence in that way; (ii) the information should convey to the defendant that serious harm is likely to befall the intended victim if urgent action is not taken; (iii) the defendant is a person or agency who might reasonably be expected to provide protection in those circumstances; and (iv) he should be able to provide for the intended victims protection without unnecessary danger to himself. This might, at first sight, appear to approximate to the liability principle articulated by Lord Bingham in Van Colle v Chief Constable of the Hertfordshire Police; Smith v Chief Constable of Sussex Police [2009] AC 225. For reasons that I will give later, I consider that there is a distinct difference between the two. 145. This test is criticised on the basis that it is circular. But this is true of any test of proximity and of many other bases of liability, as in, for instance, the test of proportionality something is disproportionate if it fails to strike a proportionate balance. The notion that any proximity standard inevitably involves an element of circularity is not new. In an article entitled, The vulnerable subject of negligence law Int JLC (2012) 8(3), 337 353, at 338 339, Carl Stychin commented: The second stage requirement of proximity continues to cause judicial and academic debate over whether proximity possesses some independent, discernible meaning against which facts in a novel category can be tested, or whether it represents simply a conclusion that the necessary relationship of neighbourhood exists between two parties. For critics, proximity has evolved, possibly unavoidably, into an ad hoc device, judicially micro refined by the particular facts of cases and the particular idiosyncrasies of the judges hearing them (Brown, 2005, p 146. There is therefore an inevitably pragmatic dimension (or circularity) involved in the proximity principle but this does not destroy its utility as a standard by which liability is to be judged. In a much cited passage, Deane J in Sutherland Shire Council v Heyman (1985) 60 ALR 1, at 55/6 said this about proximity: 162) and gives no practical or even theoretical guidance (p 164). For others, it provides a useful device by which legal reasoning can be structured. It is not a formulaic test, but a meaningful definitional element (Kramer, 2003, p 72), a conduit for the application of community standards about responsibility (p 72), and unequivocal as indicators of the presence or absence of a substantial ability on the part of the defendant to cause injury to the claimant (Witting, 2005, p 39). Furthermore, as a wrapper for a range of diverse factors, some argue that proximity has wrongly allowed policy concerns centring on distributive justice to infiltrate what should be an inquiry focused on the relationship between two parties (Beever, 2007). As a consequence, it is claimed that proximity has opened the door to the balancing of two incommensurable types of argument. But even for those sceptical of a clear cut distinction between issues of principle and policy, proximity can be dangerously misleading because it masks the inevitable exercise in judicial balancing (Stapleton, 1998, p 61). Criticism of proximity thus comes from all sides of the theoretical spectrum. It involves the notion of nearness or closeness and embraces physical proximity (in the sense of space and time) between the person or property of the plaintiff and the person or property of the defendant, circumstantial proximity such as an overriding relationship of a professional man and his client and what may (perhaps loosely) be referred to as causal proximity in the sense of the closeness or directness of the causal connection or relationship between the particular act or course of conduct and the loss or injury sustained. It may reflect an assumption by one party of a responsibility to take care to avoid or prevent injury, loss or damage to the person or property of another or reliance by one party upon such care being taken by the other in circumstances where the other party knew or ought to have known of that reliance. Both the identity and the relative importance of the factors which are determinative of an issue of proximity are likely to vary in different categories of case. 147. Proximity may in many cases add little to the concept of foreseeability but at root it reflects what Richardson J described in South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282, 306, as a balancing of the plaintiffs moral claim to compensation for avoidable harm and the defendants moral claim to be protected from an undue burden of legal responsibility which is exactly what has been the aim of the test for liability which I have proposed. For all, therefore, that the test of proximity may be described as circular, it still has a useful role to play. It is clear, for instance, that it was not present in the Hill case. There was, obviously, no proximity between the police and a member of the public killed by a criminal whose whereabouts were unknown and who, apparently, randomly picked out his victim from the female population. 148. In Brooks v Commissioner of Police of the Metropolis [2005] UKHL 24, [2005] 1 WLR 1495 Lord Steyn suggested that the principle in Hills case should be reformulated in terms of the absence of a duty of care rather than a blanket immunity (para 27) but he observed that what he described as the core principle in Hill had remained unchallenged for many years (para 30). The core principle is that there is, in general, no duty of care owed by police to individual members of the public. Significantly, Lord Steyn had recorded (at para 17) the agreement of counsel that the issues in Brooks should be resolved in the framework of the principles stated in Caparo Industries Plc v Dickman [1990] 2 AC 605 and quoted, apparently with approval, what Lord Bridge had said in that case, at pp 617 618: What emerges is that, in addition to the foreseeability of damage, necessary ingredients in any situation giving rise to a duty of care are that there should exist between the party owing the duty and the party to whom it is owed a relationship characterised by the law as one of proximity or neighbourhood and that the situation should be one in which the court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the one party for the benefit of the other. 149. Nothing that was said in Brooks, therefore, detracts from the proposition that, provided it is fair, just and reasonable that a duty should arise, police will be liable where they have failed to prevent foreseeable injury to an individual which they could have prevented, and there is a sufficient proximity of relationship between them and the injured person. 150. Lord Steyn set out a number of policy considerations which, he said, militated against converting the ethical value of police dealing respectfully with members of the public into general legal duties of care on the police towards victims and witnesses para 30. But I do not construe this passage as casting doubt on the suggestion that where there was a further ingredient, additional to foreseeability, and sufficient to create a relationship of proximity, liability could arise, provided that it is fair, just and reasonable that it should. By general legal duties I understand Lord Steyn to mean a wide ranging basis for liability. That is not the primary issue on this appeal, in my opinion. I consider that the question whether there is liability for negligence in this case should rest principally on the claim that its particular circumstances provided the extra ingredient required to create the necessary relationship of proximity between the police and the victim and that it is fair, just and reasonable to find that they are liable to the appellants. I shall discuss those circumstances later in this judgment. 151. The policy considerations which operated in Hill and Brooks were deployed for theoretically different purposes. In Hill Lord Keith set those out as a justification for an immunity for police against a suit for negligence by an individual member of the public. In Brooks Lord Steyns array of public policy arguments was designed to sustain the conclusion that there was no general duty of care owed by police to members of the public. But the policy considerations that have been rehearsed in both cases are relevant in deciding whether, in this particular case, a sufficiently proximate relationship existed between the victim and the police and whether it is fair, just and reasonable that they should be held liable. In the context of the present appeal, therefore, I do not consider it particularly relevant whether the police should not be held liable because actions in negligence against them require to go further than conventional negligence claims or because they are immune from liability by dint of their status. 152. In Van Colle and Smith Lord Bingham at para 42 said that the most favoured test of a defendants liability to a claimant for damage caused by a third party was still that which had been articulated in Caparo. This was described by Lord Bingham in this way: it must be shown that harm to [the claimant] was a reasonably foreseeable consequence of what [the defendant] did or failed to do, that the relationship of [the claimant and the defendant] was one of sufficient proximity, and that in all the circumstances it is fair, just and reasonable to impose a duty of care on [the defendant] towards [the claimant]. 153. Lord Bingham went on, of course, to articulate what he described as the liability principle. None of the other members of the Appellate Committee agreed with this as a basis for deciding whether there had been negligence on the part of the police. It is important to note the terms of this principle, however, in order to discuss the current state of the law in relation to liability of a defendant for the acts of a third party. This is how Lord Bingham described the liability principle, at para 44: if a member of the public (A) furnishes a police officer (B) with apparently credible evidence that a third party whose identity and whereabouts are known presents a specific and imminent threat to his life or physical safety, B owes A a duty to take reasonable steps to assess such threat and, if appropriate, take reasonable steps to prevent it being executed. 154. Expressed in this way, the liability principle either omits the proximity of relationship and the fair, just and reasonable components of the Caparo test or treats the relay of the information to the defendant as supplying those ingredients. If it is the first of these, one can see how it does not accord with the core principle of Hill, although, interestingly, Lord Bingham believed that his liability principle was not in any way inconsistent with the ratio in Hill and Brooks (para 45). If Lord Bingham considered that the provision of information of the nature described supplied the necessary dimension of proximity and the prerequisite that it be fair, just and reasonable to found liability, this raises interesting questions as to how those requirements might be satisfied. Before turning to those questions I must say something about the views of the other members of the House of Lords who disagreed with Lord Bingham. 155. Lords Hope, Phillips, Carswell and Brown gave various reasons for disagreeing with Lord Binghams liability principle. Lord Hope at para 77 suggested that its adoption would lead to uncertainty in its application. He asked who was to judge whether the evidence given to the police was credible and whether the threat was imminent. These were, he said, questions which the police have to deal with on the spot. If a judge was to review them it would be on an objective basis and this would lead to defensive policing focused on preventing or, at least, minimising the risk of civil claims. Lord Phillips raised what he considered to be practical difficulties in deciding when the principle would apply. Would it apply, for instance, if the evidence emanated, not from the member of the public under threat, but from some other source; and what if the threat was specific, but not imminent, or imminent but not specific? And why should the principle be restricted to a threat to life or physical safety, but not to a threat to property? Lord Carswell agreed with Lord Hope, whilst observing that he would not disagree with Lord Nicholls who, in Brooks, had said that there might be exceptional cases in which liability might be imposed. Lord Brown considered that it would be difficult to limit the liability principle in the way that Lord Bingham had sought to do; he also thought that defensive policing was inevitable; and that the police should be protected from proceedings that would involve a great deal of time, trouble and expense. 156. It will be seen that the reasons given by the majority in Van Colle and Smith partook, for the most part at least, of policy concerns. None of their speeches addressed directly the question why the relationship between Mr Smith and the police was not one of sufficient proximity. Of course, following Hill, it was still necessary, if proximity was established, to consider whether it was fair, just and reasonable to impose liability on the police. And it appears that it was this latter factor which underlay the dismissal of the appeal by the majority. But it seems to me that the question of whether it is fair, just and reasonable is better considered against the background of whether a sufficiently proximate relationship exists. Put simply, if there is proximity, this is likely to have a bearing on whether it is fair to impose liability. Conversely, if there is not proximity, the issue of fairness etc. is likely to be insignificant. Indeed, it has been suggested that it cannot ever be fair, just and reasonable to impose a duty on a defendant with respect to a given claimant if the other stages of the Caparo test are unsatisfied Peel and Goudkamp, Winfield and Jolowicz on Tort (2014) 19th ed para 5 036. 157. I believe that it is necessary to return to the true ratio of Hill and Caparo in order to answer the question whether liability for negligence should be imposed on the police in this case. The core principle of both cases is that liability should not attach to the police unless there is a relationship of proximity and it is fair, just and reasonable to impose it. What is meant by proximity; how can a sufficiently proximate relationship be created; and what circumstances make it fair, just and reasonable for liability to be imposed are all central to the resolution of the issue. Proximity and fairness 158. Not only does the answer to the question, is there a proximate relationship bear on the matter of what is fair etc., what is fair, just and reasonable tends to blend with the concept of proximity. In the New Zealand case of South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Collins [1992] 2 NZLR 282, 306 Richardson J held that the proximity assessment will, at root, reflect a balancing of the claimants moral claim to compensation for avoidable harm and the defendants moral claim to be protected from an undue burden of legal responsibility. This sounds remarkably like a weighing of what is fair and just as between the parties. And the authors of Clerk and Lindsell on Torts 21st ed (2014), comment at 8 16 that an assessment of proximity will inevitably overlap with considerations of justice between the parties. 159. As to what is fair, just and reasonable, Lord Browne Wilkinson in Barrett v Enfield London Borough Council [2001] 2 AC 550, 559 explained: In English law the decision as to whether it is fair, just and reasonable to impose a liability in negligence on a particular class of would be defendants depends on weighing in the balance the total detriment to the public interest in all cases from holding such class liable in negligence as against the total loss to all would be plaintiffs if they are not to have a cause of action in respect of the loss they have individually suffered. 160. This passage clearly contemplates that, in deciding what is fair, just and reasonable, courts are called on to make judgments that are informed by what they consider to be preponderant policy considerations. Some assessment has to be made of what a judge considers the public interest to be; what detriment would be caused to that interest if liability were held to exist; and what harm would be done to claimants if they are denied a remedy for the loss that they have suffered. These calculations are not conducted according to fixed principle. They will frequently, if not indeed usually, be made without empirical evidence. For the most part, they will be instinctual reactions to any given set of circumstances. 161. Similar value judgments are required for decisions on proximity. In Alcock v Chief Constable of South Yorkshire Police [1992] 1 AC 310, 411 Lord Oliver stated that the concept of proximity is an artificial one which depends more upon the courts perception of what is the reasonable area for the imposition of liability than upon any logical process of analogical deduction. Again these are value judgments, based essentially on what the court considers to be right for the particular circumstances of the case at the time that the appraisal is being made. It is, I believe, important to be alive to the true nature of these decisions, especially when one comes to consider the precedent value of earlier cases in which such judgments have been made. A decision based on what is considered to be correct legal principle cannot be lightly set aside in subsequent cases where the same legal principle is in play. By contrast, a decision which is not the product of, in the words of Lord Oliver, any logical process of analogical deduction holds less sway, particularly if it does not accord with what the subsequent decision maker considers to be the correct instinctive reaction to contemporaneous standards and conditions. Put bluntly, what one group of judges felt was the correct policy answer in 2009, should not bind another group of judges, even as little as five years later. How is a relationship of proximity created? 162. In light of the dearth of judicial pronouncement on how to approach, at a level of hypothesis, the question of how a relationship of proximity may be said to exist and in view of Lord Olivers statement that it is not susceptible of analogical deduction, one might be tempted to say that it all depends on the circumstances. But the law tends to prefer some theoretical rules for the incurring of liability and is wary about accepting that liability can arise unless the particular circumstances can be seen to conform to a preconceived set of principles. Having said that, the respondents have accepted, correctly in my view, that, although the rule that the police will not be liable to individual members of the public is a general one, it is not universal. And they have cited a number of examples where liability has been imposed, all of which, apart from the voluntary assumption of responsibility category, depend very much on their own facts. 163. Whether or not it is necessary to propound a set of principles which can be prayed in aid in order to determine if a particular case constitutes an exception to the general rule, it appears to me incontestable that a proximity of relationship can be created by interaction between parties such as potential victim and police. The nature of that interaction, when it has taken place, is critical to the question whether the necessary degree of proximity exists. 164. It has been recognised that proximity of relationship can exist where there is a voluntary assumption of responsibility by the police but in cases where this issue has arisen, rules have been applied to strictly restrict its ambit. Relying on those cases (Alexandrou v Oxford [1993] 4 All ER 328; Capital & Counties Plc v Hampshire County Council [1997] QB 1004; and Lord Browns observations in Van Colle and Smith at para 135) the respondents argue that unless there was an explicit promise by the police that they would attend immediately and that Ms Michael had expressly relied on this, the conditions for voluntary assumption of responsibility would not be in place. Reference is also made to decisions of the American courts (Noakes v City of Seattle 77 Wash App 694, 700; 895 P 2d 842, 845 (1995) and Perkins v City of Rochester 641 F Supp 2d 168 (2009) which, it is said, confirm the approach that there must be an explicit assurance by the police and express reliance on this by the victim. 165. One must, I believe, question the logic of this position. Should someone in a vulnerable state, fearing imminent attack, who believes that an assurance of timeous assistance has been made when, through negligence on the part of the police, that impression has been wrongly created, be treated differently from another who has in fact received an explicit assurance of immediate help, if both have relied on what they believed to be a clear promise that police would attend and avert the apprehended danger? The fact that an easily imagined example such as this can demonstrate the anomaly of the current state of the law in relation to voluntary assumption of responsibility indicates that a more expansive (or, at least, a more nuanced) approach is warranted. But it does more than that. It also illustrates the undesirability of creating a set of rules that may at first sight appear reasonable but which bring about incongruous results when applied to cases even slightly different from those in contemplation at the time of their conception. 166. One is driven therefore to the conclusion that the question whether there is a sufficient relationship of proximity must be primarily dependent on the particular facts of an individual case. It is for this reason that the test which I have suggested at para 144 above is loosely drawn. Any more closely defined test runs the risk of producing anomalous outcomes such as that instanced in the preceding paragraph. Unlike Lord Binghams liability principle, however, the ingredient of proximity is not omitted or assumed. It must still be established. And, of course, the question must also be addressed whether there are particular policy reasons militating against the imposition of liability in a specific case. 167. Proximity in this context means, as I have already said, a closeness of association. In the case of the police it must transcend the ordinary contact that a member of the public has with the police force in general. But the notion that it can only arise where there has been an express assumption of responsibility by unambiguous undertakings on the part of the police and explicit reliance on those by the claimant or victim is not only arbitrary, it fails to reflect the practical realities of life. When someone such as Ms Michael telephones the police she is in a highly vulnerable, agitated and frightened state. Is it to be supposed that there must pass between her and the police representative to whom she speaks a form of words which can be said to amount to an express assumption of responsibility before liability can arise? That the incidence of liability should depend on the happenstance of the telephonist uttering words that can be construed as conveying an unmistakable undertaking that the police will prevent the feared attack is surely unacceptable. 168. Whether a relationship of proximity can be said to exist should be determined by a close examination of all the circumstances with a view to discovering whether sufficient information has been conveyed to or is otherwise available to the police to alert them to the urgent need to take action which it is within their power to take. That the information be specific and the threat imminent are prerequisites of the proximity relationship. This answers at least some of Lord Phillips concerns in Van Colle and Smith. Imprecise information or indefinite timing as to the materialising of any threat cannot be enough to stimulate the police to urgent action and, as I see it, this is an essential dimension of the proximity relationship. In essence that relationship entails the engagement of the police to a response which is out of the ordinary and which is a direct reaction to the plight of the individual under threat. It does not matter if the information is received from a source other than the intended victim. What is critical is that the police know of an imminent threat to a particular individual and that they have the means of preventing that threat and protecting the individual concerned. This is personalised to the intended victim and arises because of the quality of the information which the police have and because they have the capacity to stop the attack. 169. It is suggested that this formulation is narrower than the test set out in para 144 above. I do not believe that it is. The test in para 144 involves the relay of information to the police sufficient to alert them to the need to take urgent action. The information must convey to the police the essential message that serious harm is likely to befall a particular victim. The duty is therefore personalised to that individual. Of necessity, to fulfil this requirement the information must be specific. The imminence of the threat is implicit in the requirement that there is a need for urgent action. But all of this is of minor importance. Of greater moment is the suggestion that this formulation gives rise to problems in the practical application of the test. 170. I will deal with these supposed difficulties in turn. The first is that the duty as formulated unwarrantably distinguishes between the intended victim of a drive by shooting [and] an injured bystander. I confess to some difficulty in understanding why these categories of person should be assimilated. In the case of an injured bystander the police have no notice of impending harm to that individual on which to act. No circumstances exist in which it might be said that proximity between the bystander and the police has been created. Such an individual is, of course, entitled to the protection that the police owe to members of the public generally but, without more, there could be no duty to protect him from stray bullets any more than there could be a duty on the part of firemen to protect passers by from dangers caused by a fire which they were tackling. 171. Any principle for liability of the police in their dealings with individual members of the public should seek to strike a measured and careful balance between the interests of the effective administration of policing and the need to protect vulnerable individuals from serious harm. This will inevitably involve drawing lines which can be portrayed as arbitrary. But the supposed arbitrariness of the operation of the principle in practice should not prevent the law from recognising that liability should attach to glaring omissions where grievous but avoidable consequences ensue. Limiting liability of the police to preventing imminent attack which they are able to thwart may be open to the charge of being arbitrary but it provides a workable basis on which they may properly be held responsible without imposing on them an impossible burden. 172. Likewise, the restriction of liability to personal injury is defensible on this basis. If it is right that persons such as Ms Michael should be owed a duty of care because of the particular circumstances of her plight, the law should not shirk from recognising that basis of liability simply because it can be posited that there is no logical distinction to be drawn between the need to protect property from the need to protect life. In fact, of course, there is ample reason to distinguish between the two situations. It is entirely right and principled that the law should accord a greater level of importance to the protection of the lives and physical well being of individuals than it does to their property. Was there a relationship of proximity in this case? 173. It is true that, unlike the Borstal boys in the Dorset Yacht case, the murderer of Ms Michael was not in police custody nor was he under police control at the time that the telephone call from Ms Michael was received. The murderer was clearly identified, however. Ms Michael was his only intended victim. She had sought the protection of the police from the man whom she feared would attack her again and who proved, in the dreadful event, to be her killer. He, as she told the police, had expressed a specific intention to attack her. The police had been also told that he had already bitten and injured her. It is not in dispute that he had made a specific threat to return to her home to attack her again. And she informed the police that his return was imminent. At this stage in the proceedings it must be assumed that if that information had been acted on promptly, police would have arrived at her home in time to prevent the murderous attack on her. If a proximity of relationship can be created where a victim tells police of a specific, imminent attack on her, it is difficult to imagine what more would be required to create such a relationship than these circumstances. In fact, however, on the appellants case, there is more. It is now clear that Ms Michael said to the police operator that her ex boyfriend had threatened to kill her. The operator claims that her memory is that she did not hear the word, kill. At this preliminary stage of the proceedings, the claimants are entitled to assert that the case should be dealt with on the basis that the operator either did hear or should have heard Ms Michael say that the threat had been to kill her. In my opinion, there was clearly a sufficient proximity of relationship. Liability for the acts of third parties and for omissions 174. As Lord Toulson states, English law has not generally imposed liability for the acts of a third party because of the traditional rule that the common law did not normally impose liability for pure omissions. A number of significant exceptions to that traditional rule have been recognised, however, as Lord Toulson has said. In particular, the assumption of a duty to take positive action is one such exception. As he has also pointed out, assumption of responsibility is in many instances a misnomer because this is in fact a duty imposed by the court. 175. In my view, the time has come to recognise the legal duty of the police force to take action to protect a particular individual whose life or safety is, to the knowledge of the police, threatened by someone whose actions the police are able to restrain. I am not convinced that this requires a development of the common law but, if it does, I am sanguine about that prospect. Certainly, I do not believe that rules relating to liability for omissions should inhibit the laws development to this point. 176. Tofaris and Steel in their article, Police Liability in negligence for failure to prevent crime: Time to Re think, (Legal Studies Research Paper Series 39/2014, July 2014) define what they describe as the omissions principle in the following way: A is not under a duty to take care to prevent harm occurring to B through a source of danger not created by A unless either (i) A has assumed a responsibility to protect B from that danger, (ii) A has a special level of control over that source of the danger, or (iii) As status creates an obligation to protect B from that danger. 177. In support of this principle, Lord Hoffmann in Stovin v Wise [1996] AC 923, 943 said that it is less of an invasion of an individuals freedom for the law to require him to consider the safety of others in his actions than to impose upon him a duty to rescue or protect. As Tofaris and Steel point out, it is at least questionable that it is particularly valuable to the freedom of a public authority that it should be permitted to negligently fail to assist an identified individual who is at serious risk of physical injury. Whereas it is arguable that a private individuals freedom has an intrinsic value in its contribution to an autonomous life, the value of the states freedom is instrumental and lies in the contribution that it makes to the fulfilment of its proper functions. 178. The common law has historically required professional persons carrying out a skill to do so with reasonable care and skill. As Tindal CJ put it in Lanphier v Phipos (1838) 8 C & P 475, 479: Every person who enters into a learned profession undertakes to bring to the exercise of it a reasonable degree of care and skill. He does not undertake, if he is an attorney, that at all events you shall gain your case, nor does a surgeon undertake that he will perform a cure, nor does he undertake to use the highest possible degree of care and skill. 179. In all manner of fields if the professional fails to act with due care and skill, he or she will be liable for any damage caused by their negligence. This is justified on a number of bases; it attributes loss to the person who caused it, it locates compensation in the private rather than the public sector and, arguably, the risk of litigation improves professional standards. The principle holds true even where professionals are acting in response to the acts of third parties. Other emergency services can be liable for their negligence, provided there is sufficient foreseeability and proximity (Kent v Griffiths [2001] QB 180. It is suggested that the police do not constitute an exception but rather that their exemption from liability is soundly based on the general rule that omissions to act (particularly in relation to actions of a third party) do not give rise to liability. I propose, however, that the cases on which this claim rests can be readily distinguished. In none of those cases was there a proximity of relationship such as exists in the present appeal. In Stovin v Wise, for instance, the failure to improve safety at a road junction affected all who used the particular stretch of road. Likewise in Gorringe v Calderdale Metropolitan Borough Council [2004] 1 WLR 1057. Long standing or pre existing dangers stemming from actions of third parties such as in Murphy v Brentwood District Council [1991] AC 398 or the geography of the local area which lay within the public authoritys power to mitigate are of a completely different character from cases where a specific, urgently communicated threat has been imparted to the public agency with the resources and capacity (as well as the public duty) to protect the individual against whom it has been made. 181. To find that no duty arises on the facts of the present case requires us to squarely confront the consequence of such a finding. If the police force had not negligently downgraded the urgency of Ms Michaels call, on the facts as they are known at present, it is probable that she would still be alive. While the police are not responsible for the actions of her murderer, if the allegations made against them are established, police played a direct, causative role in her death as a result of their negligence. If they were to be found liable for such negligence, would this be so different from the liability of the doctor of a patient who fails to provide life saving drugs to prevent an aggressive condition in the necessary time? The police have been empowered to protect the public from harm. They should not be exempted from liability on the general common law ground that members of the public are not required to protect others from third party harm; such protection of autonomy for individuals is not appropriate for members of a force whose duty it is to provide precisely the type of protection from the harm that befell Ms Michael. This is the essential and critical obligation of the police force. Any other professional would be liable for inaction with such grievous consequences. So also should be the police. Public policy 182. the courts in general ought to think very carefully before resorting to public policy considerations which will defeat a claim that ex hypothesi is a perfectly good cause of action. It has been said that public policy should be invoked only in clear cases in which the potential harm to the public is incontestable, that whether the anticipated harm to the public will be likely to occur must be determined on tangible grounds instead of on mere generalities and that the burden of proof lies on those who assert that the court should not enforce a liability which prima facie exists. These words of Lord Lowry in Spring v Guardian Assurance Plc [1995] 2 AC 296, 326 are entirely pertinent today. 183. Where police have been informed that a member of the public is about to be attacked and they have the capacity to prevent that, the proposition that they should not be held liable because of public policy considerations should be subject to the test which Lord Lowry articulated. Is the anticipated harm to the public incontestable? Is it based on tangible grounds rather than mere generalities? Has the burden of establishing the proposition been discharged? 184. I agree with Lord Toulson that it is difficult to predict with confidence what the operational consequences would be if liability for police negligence was recognised. But the difficulty in predicting whether problems may be encountered should not prompt a refusal to recognise a liability which, by all conventional norms, should be found to exist. A large part of that difficulty stems from the lack of empirical evidence to support any of the feared outcomes such as have been adumbrated in Hill, Brooks and Smith and Van Colle. The lack of empirical evidence led to the Canadian Supreme Courts distinguishing of Hill in Hill v Hamilton Wentworth Regional Police Services Board [2007] 3 SCR 129, 2007 SCC 41. And the absence of such evidence was also a key factor in the decision to remove the immunity of advocates in Arthur JS Hall & Co v Simons [2002] AC 615, Lord Steyn at 682D describing the claim that fear of unfounded claims might have a negative effect on the conduct of advocates as a most flimsy foundation, unsupported by empirical evidence. 185. The Law Commissions Scoping Report on Remedies against Public Bodies (2006) also commented on the lack of empirical evidence to support or contradict the claim that recognition of liability for police negligence would result in a diversion of manpower paras 3.52 53. At the very least, predictions of a worsening in standards as a result of the availability of judicial review were not borne out. In para 4.25 of its full report Administrative Redress: Public Bodies and The Citizen (2010) (Law Com No 322), the Law Commission referred to the study published by Professor Sunkin and others which suggested that judicial review litigation may act as a modest driver to improvements in the quality of local government services. 186. Set against the poverty or complete absence of evidence to support the claims of dire consequences should liability for police negligence be recognised is the fundamental principle that legal wrongs should be remedied. Sir Thomas Bingham MR in X (Minors) v Bedfordshire County Council [1995] 2 AC 633 said that the rule of public policy which has first claim on the loyalty of the law was that wrongs should be remedied. And as Lord Dyson said in Jones v Kaney [2011] 2 AC 398, at para 113: The general rule that where there is a wrong there should be a remedy is a cornerstone of any system of justice. To deny a remedy to the victim of a wrong should always be regarded as exceptional Conclusion 187. I do not consider that policy reasons sufficient to displace this general rule have been established. I would therefore allow the appeal. 188. I would dismiss the cross appeal for the reasons given by Lord Toulson. LADY HALE: 189. In what circumstances can the police owe a duty of care to protect an individual member of the public from harm caused by a third party? There are said to be two objections to imposing such a duty. The first is the core principle, recognised in Hill v Chief Constable of West Yorkshire [1989] AC 53 and refined in Brooks v Metropolitan Police Commissioner [2005] UKHL 24 [2005] 1 WLR 1495, that the police are not liable for negligence in the course of investigating or preventing crime. That principle is no longer regarded as an immunity, but as a situation in which, for policy reasons, no duty of care is imposed by the law. The second is the general principle in the law of negligence, referred to by S Tofaris and Steel, in their paper on Police Liability in Negligence for Failure to Prevent Crime: Time to Rethink (University of Cambridge Legal Studies Research Paper Series, Paper No 39/2014), as the omissions principle, which they describe (I believe accurately) thus, at p 5: A is not under a duty to take care to prevent harm occurring to B through a source of danger not created by A unless either (i) A has assumed a responsibility to protect B from that danger, (ii) A has a special level of control over that source of the danger, or (iii) As status creates an obligation to protect B from that danger. 190. The second objection is the more serious, for there would be little point in considering the strength and validity of the policy reasons which led the House of Lords to formulate the core principle in Hill, and to apply it, not only in Brooks, but also (by a majority) in Smith v Chief Constable of Sussex Police [2008] UKHL 50, [2009] AC 225, if the claim were in any event bound to fail under the ordinary principles of the law of negligence. Those principles, as we see, do not deny any liability for omissions, but impose it only in limited circumstances. Thus, for example, a parent may be liable for failing to feed, clothe, house or otherwise protect her child from harm: see Barrett v Enfield London Borough Council [2001] AC 550. This is because the status of parent imposes a positive duty, probably at common law but certainly under section 1 of the Children and Young Persons Act 1933, to care for ones children. 191. But what of public authorities? They certainly owe positive duties towards the public as a whole, or towards certain sections of the public, but do they ever owe a duty of care in negligence towards individuals who suffer harm if they fail to perform those duties? The answer given in cases such as Stovin v Wise [1996] AC 923 and Gorringe v Calderdale Metropolitan Borough Council [2004] UKHL 15, [2004] 1 WLR 1057, is that generally speaking they do not. However, there are exceptions, and one which I find particularly instructive in this case is that established by the Court of Appeal in D v East Berkshire NHS Trust [2003] EWCA Civ 1151, [2004] QB 558. 192. The House of Lords had held, in X (Minors) v Bedfordshire County Council [1995] 2 AC 633, that a local social services authority owed no duty of care towards an individual child whom it had failed to protect from abuse or neglect in her own home. This was despite the existence of a clear statutory duty to protect such children. However, following the enactment of the Human Rights Act 1998, a child who suffered serious harm as a result of such a failure might well have a claim for breach of her Convention rights: just as the state has a positive duty under article 2 to protect individuals from a real and immediate risk to life of which it knows or ought to know, it also has a positive duty under article 3 to protect individual children from a real and immediate risk of serious ill treatment or neglect of which it knows or ought to know: Z v United Kingdom 34 EHRR 97, E v United Kingdom (2002) 36 EHRR 519. Thus a court hearing such a claim would have to examine the same factual issues which it would have to examine in a negligence claim: In these circumstances, the reasons of policy that led the House of Lords to hold that no duty of care towards a child arises will largely cease to apply. Substantial damages will be available on proof of individual shortcomings ([2004] QB 558, para 81). 193. The court had earlier ([2004] QB 558, para 31) adopted the summary of those policy reasons given by May LJ in S v Gloucestershire County Council [2001] Fam 313, 329 330. These bear a remarkable resemblance to the reasons put forward for the core principle in Hill and the later cases. The first, that it would cut across the statutory scheme for child protection, which depended upon multi disciplinary co operation, does not apply to policing (and in any event was a dubious reason in child care cases, as the statutory responsibility lay clearly with the local authority). The next four, that the task of child protection is extraordinarily delicate, that there was a risk of a more cautious, defensive approach, that it would divert resources away from providing the social services themselves, and that there were other remedies for maladministration, all have their parallels in the police cases. The last, that the development of novel categories of negligence should proceed incrementally by analogy with existing categories, begs the very question at issue. 194. In the result, therefore, the Court of Appeal held that there was no longer any good reason to deny the existence of a duty of care in negligence towards a child harmed by the failure of a local authority to take appropriate protective action. There was no appeal to the House of Lords against that aspect of the decision (the appeal against the holding that no duty was owed to the parents of a child who was mistakenly taken into care was unsuccessful). 195. The parallels with this case are striking. There is no doubt that the police owe a positive duty in public law to protect members of the public from harm caused by third parties. In Glasbrook Brothers Ltd v Glamorgan County Council [1925] AC 270, the House of Lords held that the police have a duty to take all steps which appear necessary for keeping the peace, for preventing crime and for protecting from criminal injury. The House also approved a statement by Pickford LJ in Glamorgan Coal Co Ltd v Glamorganshire Standing Joint Committee [1916] 2 KB 206, 229, that a party threatened with violence from another is entitled to protection, whatever the rights and wrong of their dispute. That this is a duty recognised by the common law rather than imposed by statute should if anything strengthen rather than weaken the possibility that it may also give rise to duties towards individuals in negligence. 196. Equally, there is no doubt that the police may be liable under the Human Rights Act if they fail in their duties under articles 2 or 3 of the European Convention on Human Rights. This part of the claim is to be sent to trial. The issues under the Human Rights Act 1998 are not identical to the issues under the law of negligence, but the existence of a human rights claim means that the policy reasons advanced against the imposition of a duty in negligence claim have also largely ceased to apply in a case such as this, where it is alleged that a tragic death would have been averted had the police reacted appropriately to Ms Michaels emergency call. 197. It is for those reasons that I would support the analysis put forward by Lord Kerr: the necessary proximity is supplied if the police know or ought to know of an imminent threat of death or personal injury to a particular individual which they have the means to prevent. Once that proximity is established, it is fair, just and reasonable to expect them to take reasonable care to prevent the harm. This is very close to, though somewhat narrower than, the test proposed by Tofaris and Steel (para 189, above). But it is right to acknowledge the strength of the arguments which they so carefully develop, in particular the inter relationship between the special status and powers of the police to prevent crime and protect people from harm and the limits placed by the law on the ability of people to protect themselves: A person faced with the threat of violence is permitted by law to take reasonable measures of self protection, but beyond that her only option is to inform the police. In essence, other than reasonably protecting herself, the law obliges her to entrust her physical safety in the police. (Tofaris and Steel, p 18) 198. However, in developing the law it is wise to proceed on a case by case basis, and the formulation offered by Lord Kerr would be sufficient to enable this claim to go to trial at common law as well as under the Human Rights Act 1998. It is difficult indeed to see how recognising the possibility of such claims could make the task of policing any more difficult than it already is. It might conceivably, however, lead to some much needed improvements in their response to threats of serious domestic abuse. This continues to be a source of concern to Her Majestys Inspectorate of Constabulary: see Everyones Business: Improving the Police Response to Domestic Abuse (2014). I very much regret to say that some of the attitudes which have led to the inadequacies revealed in that report may also have crept into the policy considerations discussed in Smith (by Lord Carswell at para 107 and Lord Hope at para 76). If the imposition of liability in negligence can help to counter such attitudes, so much the better. But the principles suggested here should apply to all specific threats of imminent injury to individuals which the police are in a position to prevent, whatever their source. 199. I would therefore have allowed the appeal as well as dismissing the cross appeal. 36, Capital & Counties Plc v Hampshire County Council [1997] QB 1004). Why should the police be an exception? |
The appellant is the chair of the Chagos Refugees Group. The Group represents Chagossians whose removal from the British Indian Overseas Territory (the Chagos Islands BIOT) and resettlement elsewhere was procured by the United Kingdom government in the years 1971 to 1973. The circumstances have generated much national and now also international litigation. The sad history has been told on a number of occasions. It suffices to mention Chagos Islanders v The Attorney General [2003] EWHC 2222 (QB), R (Bancoult) Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61; [2009] AC 453 and most recently in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 4) [2016] UKSC 35; [2017] AC 300. Following the last two decisions, it remains prohibited, under the BIOT Constitution and Immigration Orders 2004, for Chagossians to return to BIOT. Since the last judgment, the United Kingdom government has on 16 November 2016 announced its decision to maintain the ban on resettlement, after a study carried out by KPMG published on 31 January 2015. That decision is itself the subject of further judicial review proceedings. The present appeal concerns the establishing for BIOT of a marine reserve to be known as the Marine Protected Area by Proclamation No 1 of 2010. The Proclamation was issued by Mr Colin Roberts, Commissioner for BIOT, acting in pursuance of instructions given by Her Majesty through a Secretary of State. The Marine Protected Area (MPA) was established in a 200 mile Environment (Protection and Preservation) Zone (EPPZ) which had existed since Proclamation No 1 of 2003 dated 17 September 2003. Proclamation No 1 of 2010 said (para 2) that, within the MPA: Her Majesty will exercise sovereign rights and jurisdiction enjoyed under international law, including the United Nations Convention on the Law of the Sea, with regard to the protection and preservation of the environment of the [MPA]. The detailed legislation and regulations governing the said [MPA] and the implications for fishing and other activities in the [MPA] and the Territory will be addressed in future legislation of the Territory. The creation of the MPA was accompanied by a statement issued by the respondent, stating that it will include a no take marine reserve where commercial fishing will be banned. No fresh legislation or regulations relating to fishing were in the event issued or necessary. Fishing was already controlled. From 1984 it was controlled within the three mile territorial waters and the contiguous zone which extended a further nine miles (to 12 miles from shore) under Proclamation No 8 of 1984 and the Fishery Limits Ordinance 1984. Control was subject to a power (exercised on 21 February 1985) to designate Mauritius for the purpose of enabling fishing traditionally carried on within those limits. Proclamation No 1 of 1991 and the Fisheries (Conservation and Management) Ordinance 1991 (the 1991 Ordinance) established a Fisheries Conservation and Management Zone extending 200 miles from shore, within which a fee carrying licence was required for any fishing. The Mauritian government was, however, informed that a limited number of licences would continue to be offered free of charge in view of the traditional fishing interests of Mauritius in the waters surrounding BIOT. Proclamation No 1 of 2003 establishing the EPPZ had no impact on fishing. The 1991 Ordinance was superseded by similarly entitled Ordinances in 1998 and then 2007, under which the licensing system was continued. The majority of fishing from Mauritius was inshore fishing carried out by the Talbot Fishing Company, owned by the Talbot brothers, one of whom was Chagossian. Their vessels were flagged to Mauritius until 2006 or 2007, when for economic reasons they were reflagged to Madagascar and the Comoros. A number of regular crew members on these boats were Chagossians. After the establishing of the MPA, and the accompanying announcement, the achievement of a no take reserve or zone was in practice accomplished by allowing existing licences to expire and by not issuing any fresh licences to the Talbot vessels or other vessels from outside BIOT for inshore or other fishing in the MPA. The present challenge has two limbs. One is that the decision to create the MPA had an improper ulterior motive, namely to make resettlement by the Chagossians impracticable. The other is that the consultation preceding the decision was flawed by a failure to disclose the arguable existence on the part of Mauritius of inshore fishing rights (ie within the 12 mile limit from shore). Both challenges are associated with the enforcement of a no take zone by the refusal since 2009 of fishing licences, since the impracticality of resettlement is said to derive from the loss by Chagossians of occupational skills and possibilities, now and at any future time when resettlement might be contemplated. At the core of the appellants case on improper purpose is a document published by The Guardian on 2 December 2010 and by The Telegraph on 4 February 2011, purporting to be a communication or cable sent on 15 May 2009 by the United States Embassy in London to departments of the US Federal Government in Washington, to elements in its military command structure and to its Embassy in Port Louis, Mauritius. The cable is recorded as having been passed to The Telegraph (and was presumably also passed to The Guardian) by Wikileaks. Its text purports to be a record, by a United States political counsellor, evidently a Mr Richard Mills, of conversation at a meeting on 12 May at the Foreign Office, London with Mr Roberts, Ms Joanne Yeadon, the Administrator for BIOT, and Mr Ashley Smith, the Ministry of Defences Assistant Head of International Policy and Planning. It also purports to refer to some previous meetings and a subsequent conversation involving Ms Yeadon. It starts with a one paragraph summary and ends with two paragraphs of comment, and contains 12 paragraphs of purported record in between. Reliance is placed on passages in it, which it is submitted show, or could be used to suggest, that Mr Roberts, Commissioner for BIOT, had and disclosed an improper motive in relation to the creation of the MPA. It is common ground that there was in fact a meeting between US officials and Mr Roberts and Ms Yeadon at the Foreign Office on 12 May 2009. The present proceedings took an unfortunate turn in this respect before the Administrative Court (Richards LJ and Mitting J). Burnton LJ had on 25 July 2012 given permission for Mr Roberts and Ms Yeadon to be cross examined on the purported cable, acknowledging that it must have been obtained unlawfully and in probability by committing an offence under US law, but saying: I do not see how the present claim can be fairly or justly determined without resolving the allegation made by the [appellant], based on the Wikileaks documents, as to what transpired at the meeting of 12 May 2009, and more widely whether at least one of the motives for the creation of the MPA was the desire to prevent resettlement. Before the Administrative Court, objections were made to the use of the cable in cross examination of Mr Roberts. One objection, which did not find favour with the Administrative Court (and which is not live before the Supreme Court), was that the Official Secrets Act and the UK governments policy of neither confirm nor deny (NCND) in relation to documents of this nature meant that Mr Roberts should not be required to answer questions relating to the purported cable. In relation to this objection, the Court ruled that Mr Roberts could be questioned on an assumption that the cable was what it purported to be, and that it would be open to the appellant at the end of the hearing to invite the Court to accept it as an accurate record of the meeting, and to rely on it evidentially. Various questions were put to Mr Roberts and answered on that basis, before Mr Kovats QC for the respondent asked for and obtained further time overnight to consider the position. The other objection was that use of the cable would be contrary to the principle of inviolability of the US missions diplomatic archive in breach of articles 24 and 27(2) of the Vienna Convention on Diplomatic Relations 1961, given effect in the United Kingdom by section 2(1) of the Diplomatic Privileges Act 1964. This further objection only occurred to the respondent during the second day. It was therefore only made the subject of submissions on the third day. This led to the first ruling being effectively over taken, by a further ruling that it would not be open to the appellant to invite the court to treat the cable as genuine or to find that it contained an accurate record of the meeting and that any further cross examination should proceed on that basis, without any suggestion that the purported cable was genuine. Mr Pleming applied for, but was refused immediate permission to appeal that ruling. In these circumstances, he indicated that he had no further cross examination of Mr Roberts, and on the next day conducted a cross examination of Ms Yeadon, limited as directed by the Courts ruling. By a judgment dated 11 June 2013, the Administrative Court rejected the appellants case both in so far as it was based on improper purpose and in so far as it was based on failure to disclose the arguable existence of Mauritian fishing rights. The Court of Appeal (the Master of the Rolls, Gloster and Vos LJJ) [2014] 1 WLR 2921 reached the same overall conclusions, but after taking a different view of the admissibility of the purported cable. It held that, since the cable had already been disclosed to the world by a third party, admitting it in evidence would not have violated the US London missions diplomatic archive. The Court of Appeal had therefore to consider whether the exclusion of the cable from use before the Administrative Court would or could have made any difference to that Courts decision on the issue of improper purpose. By a judgment given 23 May 2014, it decided against the appellant on both this issue and the issue relating to the omission of reference to arguable Mauritian fishing rights. The Supreme Court by order dated 7 July 2016 gave permission to appeal on the issue of improper purpose and directed that the application for permission to appeal on the issue relating to the omission of reference to arguable Mauritian fishing rights be listed for hearing with the appeal to follow if permission is granted. The respondent has in turn challenged the correctness of the Court of Appeals conclusion that use of the cable would not have contravened article 24 and/or 27(2) of the Vienna Convention. The admissibility of the cable I will take this issue first. In order to give some context to articles 24 and 27(2), the whole of articles 24, 25 and 27 of the Vienna Convention on Diplomatic Relations are set out: Article 24 The archives and documents of the mission shall be inviolable at any time and wherever they may be. Article 25 The receiving State shall accord full facilities for the performance of the functions of the mission. Article 27 1. The receiving State shall permit and protect free communication on the part of the mission for all official purposes. In communicating with the Government and the other missions and consulates of the sending State, wherever situated, the mission may employ all appropriate means, including diplomatic couriers and messages in code or cipher. However, the mission may install and use a wireless transmitter only with the consent of the receiving State. 2. The official correspondence of the mission shall be inviolable. Official correspondence means all correspondence relating to the mission and its functions. 3. The diplomatic bag shall not be opened or detained. 4. The packages constituting the diplomatic bag must bear visible external marks of their character and may contain only diplomatic documents or articles intended for official use. 5. The diplomatic courier, who shall be provided with an official document indicating his status and the number of packages constituting the diplomatic bag, shall be protected by the receiving State in the performance of his functions. He shall enjoy person inviolability and shall not be liable to any form of arrest or detention. 6. The sending State or the mission may designate diplomatic couriers ad hoc. In such cases the provisions of paragraph 5 of this article shall also apply, except that the immunities therein mentioned shall cease to apply when such a courier has delivered to the consignee the diplomatic bag in his charge. 7. A diplomatic bag may be entrusted to the captain of a commercial aircraft scheduled to land at an authorized port of entry. He shall be provided with an official document indicating the number of packages constituting the bag but he shall not be considered to be a diplomatic courier. The mission may send one of its members to take possession of the diplomatic bag directly and freely from the captain of the aircraft. The submissions on inviolability under these provisions range widely. They cover the nature of the archive, its location, the circumstances in which material originating from the archive may continue inviolable and the reach of the concept of inviolability itself. As to the nature of the archive, Professor Denza concludes in Diplomatic Law, Commentary on the Vienna Convention on Diplomatic Relations (4th ed) (2016), at p 161, that, instead of trying to list all modern methods of information storage, it is probably better simply to rely on the clear intention of article 24 to cover all physical items storing information. Writing jointly in Satows Diplomatic Practice (7th ed, edited by Sir Ivor Roberts) (2017), at p 238, para 13.31, Professor Denza and Joanne Foakes, former Legal Counsellor to the Foreign and Commonwealth Office, say, after noting that the term archives is not defined in the 1961 Vienna Convention: but it is normally understood to cover any form of storage of information or records in words or pictures and to include modern forms of storage such as tapes, sound recordings and films, or computer disks. That can be readily accepted, as can be the proposition that copies taken of documents which are part of the archive must necessarily also be inviolable. As to location, Mr Kovats on behalf of the respondent points to the words at any time and wherever they may be in article 24, and to commentaries by Professor Eileen Denza in her work, cited above, pp 158 159, and by Professor Rosalyn Higgins (as she then was) in Problems and Process: International Law and how we use it (OUP) (1995), pp 88 89. Professor Denza observes that the words quoted mean that archives not on the premises of the mission and not in the custody of a member of the mission are entitled to inviolability, and that: If archives fall into the hands of the receiving State after being lost or stolen they must therefore be returned forthwith and may not be used in legal proceedings or for any other purpose of the receiving State. Professor Higgins wrote: Article 24 stipulates that the archives and documents shall be inviolable at any time and wherever they may be. It is clear that this last phrase is meant to cover circumstances where a building other than embassy premises is used for storage of the archives; and also the circumstances in which an archived document has been, for example, taken there by a member of the Secretariat staff for overnight work or even inadvertently left by him on the train or in a restaurant. What would happen if the Secretariat member, or a diplomat, took an overseas trip, and mislaid the document while abroad? The English High Court [in the Tin Council case: International Law Reports Vol 77 (1988) pp 107 145 at pp 122 123] was disturbed by the idea that wherever located could, on the face of it, mean even in Australia or Japan. It is true that an English court is not likely to be in a position to enforce the inviolability of a document from the authorities of another country where that particular document happens to be located. But it is entirely another thing to say that, because a document happens to be outside the jurisdiction, an English court is thereby entitled to treat it, in matters that do fall within its own competence, as non archival and thus without benefit of such inviolability as it is in a position to bestow. Again, so long as the document can be said to constitute part of the archive, a point to which I shall return, these statements appear not only authoritative in their sources, but convincing. As will appear, they also receive support from Shearson Lehman Bros Inc v Maclaine, Watson and Co Ltd; International Tin Council (Intervener) (No 2) [1988] 1 WLR 16. That is the House of Lords judgment in the Tin Council case, to the first instance decision in which Professor Higgins referred. The House in that case on any view accepted that there were some circumstances in which a document which was part of an archive, but for some reason no longer physically within the archive, remains inviolable. This brings me to the circumstances in which material originating from the archive may continue inviolable and the reach of the concept of inviolability itself. The appellant, whose case on this aspect was presented by Professor Robert McCorquodale, submits that the word inviolable, read in the context of the Convention, does not embrace inadmissibility. In his submission, the concept is directed at some degree of interference, of a more or less forceful nature, and this limited sense is the only sense which applies in all the places where the concept is deployed. The submission corresponds with the approach taken by the Court of Appeal, which picked up the characteristically trenchant view of Dr F A Mann, that Inviolability, let it be stated once more, simply means freedom from official interferences. Official correspondence of the mission over the removal of which the receiving state has had no control can be freely used in judicial proceedings. See Inviolability and Other Problems of the Vienna Convention on Diplomatic Relations in Further Studies in International Law, (1990) pp 326 327 and also [1988] 104 LQR, p 178. But Professor McCorquodales submission does not allow for the fact that a concept may embrace different shades of meaning according to the particular context in which it is deployed. The meaning of inviolability in the context of use of archive material in evidence was in fact the very subject of the House of Lords judgment in the Tin Council case. The issue arose there under article 7(1) of the International Tin Council (Immunities and Privileges) Order 1972, whereby it was provided: The council shall have the like inviolability of official archives as in accordance with the 1961 Convention Articles is accorded in respect of the official archives of a diplomatic mission. The Tin Council intervened in civil proceedings between private parties, relying on article 7(1) as rendering inadmissible various documents that the parties were proposing to adduce in evidence. The House was in these circumstances asked to address the operation of article 7(1) on various Agreed Assumptions of Fact set out in a document so entitled. One such assumption was that a Tin Council document was supplied to a third party by an officer or other staff member of the Tin Council without any authority. Mr Kentridge QC submitted that article 24 of the Vienna Convention and article 7(1) of the 1972 Order only afforded protection against executive or judicial action by the host state, so that, even if a document was stolen, or otherwise obtained by improper means, from a diplomatic mission, inviolability could not be relied on to prevent the thief or other violator from putting it in evidence. Lord Bridge, giving the sole fully reasoned judgment in the House, rejected this submission, saying (p 27F) that: The underlying purpose of the inviolability conferred is to protect the privacy of diplomatic communications. If that privacy is violated by a citizen, it would be wholly inimical to the underlying purpose that the judicial authorities of the host state should countenance the violation by permitting the violator, or anyone who receives the document from the violator, to make use of the document in judicial proceedings. The House went on to limit this to circumstances in which the third party receiving the document was aware of the absence of any authority to pass it to him (p 29B C). To a limited extent therefore, the Tin Council succeeded in establishing that its documents would have inviolability, precluding their use in civil proceedings. This was part of the ratio of the House of Lords decision, as appears at p 31D E, even though Lord Bridge went on to add that In the event the rejection of that [Mr Kentridges] argument turns out to be of minimal significance in the context of the overall dispute. The Canadian case of Rex v Rose An Dig 1946, Case No 76, p 161 was cited to the House in the Tin Council case, but not referred to by Lord Bridge in his judgment. Rose was convicted of furnishing secret material to the Soviet Embassy in reliance on documents stolen from the Embassy archive by a defector. Roses claim that the stolen documents used against him were immune from use was rejected, on the grounds that such a claim could not be admitted where the recognition of such immunity was inconsistent with the fundamental right of self preservation belonging to a State or where the executive had impliedly refused to recognise such immunity. The absence of inviolability in cases where state security is involved has a pedigree going back to the extraordinary Cellamare conspiracy in 1718 by Antonio dei Giudice, Prince of Cellamare and Ambassador of Spain to France, to kidnap and depose Philippe dOrlans, Regent of France, and replace him as Regent by Philip V of Spain: see Martens, Causes clbres du droit des gens, I, p 149. Rex v Rose is nonetheless controversial, and, more importantly for present purposes, neither of the grounds on which it rests applies to this case. In his LQR article, cited above, Dr Mann was taking direct issue with the House of Lords rejection in the Tin Council case of Mr Kentridges submission. The Court of Appeal was in my opinion bound to reject Dr Manns analysis, and I see no reason for adopting it. I also consider that the Court of Appeal was incorrect to identify Dr Manns analysis as representing the weight of opinion (para 64). Professor Denza says, at p 189, that: As regards use of the correspondence as evidence, article 27.2 may be regarded as duplicating the protection under article 24 of the Convention which gives inviolability to the archives and documents of the mission wherever they may be. Professor Jean Salmon of The Free University, Brussels, describes F A Manns view as regards article 27(2), in Further Studies in international law (OUP) (1990), p 226, as une vue trop restrictive de linviolabilit: Manuel de Droit Diplomatique (1994), p 244. The quotation from Professor Higgins, set out in para 12 above does not fit well with Dr Manns approach. S E Nahlik, Development of Diplomatic Law, Selected Problems, 222(III) Recueil des Cours (1990), 291 292 and B S Murty, The International Law of Diplomacy: The Diplomatic Instrument and World Order (1989) at p 382 comment critically on Rex v Rose, while J Wouters, S Duquet & K Meuwissen, The Vienna Conventions on Diplomatic and Consular Relations (OUP, 2013) at para 28.4.5.1 state, citing Professor Salmon, that: The inviolability of diplomatic/consular archives and documents entails that they cannot be opened, searched, or requisitioned without consent, and cannot be used as evidence. In Fayed v Al Tajir [1988] QB 712 the de facto head, later Ambassador, of the Embassy of the United Arab Emirates in London was sued by Mr Fayed in respect of an Embassy communication addressed to an Embassy counsellor. For unclear reasons diplomatic immunity was waived, but the question remained whether the document could be used in court. The Court of Appeal held that the document enjoyed immunity from use, and the dispute was non justiciable. Kerr LJ noted at p 736C E that the judge in Rex v Rose had concluded that diplomatic documents generally enjoyed inviolability, so anticipating the use of that term in the Vienna Convention, and that he had expressed the concept of inviolability at p 646 in wide terms: International law creates a presumption of law that documents coming from an embassy have a diplomatic character and that every court of justice must refuse to acknowledge jurisdiction or competence with regard to them. Kerr LJ also noted that this conclusion was supported by Denza on Diplomatic Law (1976), p 110. At p 736F G, he distinguished the actual decision in Rex v Rose as having been reached on the basis that a citizen could not invoke immunity in litigation with his own government and on the basis of the principle said to derive from the Cellamare conspiracy, neither of which bases had any relevance in Fayed v Al Tajir. In principle, therefore, inviolability of documents which are part of the mission archive under articles 24 and 27(2) extends to make it impermissible to use such documents or copies in a domestic court of the host country, at any event absent extraordinary circumstances such as those of the Cellamare conspiracy or Rex v Rose and absent express waiver of the inviolability by the mission state. But the application of this principle to any particular document is subject to two qualifications. First, the document must constitute or remain part of the mission archive, and, second, its contents must not have become so widely disseminated in the public domain as to destroy any confidentiality or inviolability that could sensibly attach to it. These two qualifications may sometimes, but certainly not always, coincide. Taking the first, in the present case, there is no indication from where the Wikileaks document emanates, but there is no suggestion that it is likely to have emanated from the United States Embassy in London. It was sent both to the State Department in Washington and elsewhere. There is no indication that the United States Embassy in London attached any reservation to or placed any limitation on the use or distribution of the cable by the State Department or any other authority to whom the cable went. The cable was simply classified as Confidential. In these circumstances, once the document reached the State Department or any other addressee, it was, so far as appears and in the form in which it was there held, a document in the custody of the Federal Government of the United States or that other authority, and not part of the London Embassy archive. Bearing in mind the probability that the Wikileaks cable was extracted from the State Department or some other unknown foreign location to which it had been remitted for information and use there, it is not therefore established, even as a matter of probability that the cable remained part of the archive of the London mission, when it was so extracted. On that simple basis, the Wikileaks cable was available for use and admissible as evidence of its contents in the present proceedings. I therefore arrive as the same conclusion on this point as the Court of Appeal, albeit for different reasons. Taking, second, the possibility of loss of inviolability due to a document from the mission archive coming into the public domain, I have come to the conclusion that this must in principle be possible, even in circumstances where the document can be shown to have been wrongly extracted from the mission archive. Whether it has occurred in any particular case will however depend on the context as well as the extent and circumstances of the dissemination. That seems to me to follow by analogy with the reasoning concerning the protection afforded by the law to confidential material (as opposed to that afforded on grounds of privacy and/or human rights) in cases such as Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 and PJS v News Group Newspapers Ltd [2016] UKSC 26; [2016] AC 1081, see also Passmore on Privilege, paras 7 039 and 7 042. In the present case, the cable has been put into the public domain by the Wikileaks publication and the newspaper articles which followed, in circumstances for which the appellant has no responsibility. In my opinion, the cable has as a result lost its inviolability, for all purposes including its use in cross examination or evidence in the present proceedings. On that ground, I would therefore reach the same conclusion as the Court of Appeal expressed in para 64 of its judgment. The allegation of improper purpose On the above basis, the question arising is whether the Court of Appeal was right to conclude that the Administrative Courts ruling that the cable was not available for use or admissible had no material effect on the proceedings and was not a ground for allowing the appeal. The Court of Appeal, after reviewing all the material available, including the cable, the evidence given and the Administrative Courts findings, concluded (para 93) that even if the cable had been admitted in evidence, the court would have decided that the MPA was not actuated by the improper motive of intending to create an effective long term way to prevent Chagossians and their descendants from resettling in the BIOT. A little earlier in its judgment, in para 89, the Court said that it did not accept that there is a realistic possibility that the [Administrative Courts] assessment of the evidence of Mr Roberts and Ms Yeadon would have been affected if the cable had been formally admitted as an authentic document; that in reaching this conclusion, it had borne in mind the need to exercise caution in denying relief on the ground that the legally correct approach would have made no difference to the outcome; but that it was satisfied that the admission of the cable in evidence would have made no difference. Before the Supreme Court, criticism was directed at the Court of Appeal for formulating its conclusions in terms of what would, rather than could have made a difference. Reference was made to well known authorities on the test applicable in cases of breach of natural justice (or unfairness) by public authorities, including Malloch v Aberdeen Corpn [1971] 1 WLR 1578 and R (Cotton) v Chief Constable of the Thames Valley Police [1990] IRLR 344, paras 59 60, per Bingham LJ. Reference was also made to the discussion, without decision, on the test applicable on an application to the Supreme Court to set aside a prior judgment of its own in Bancoult (No 4), cited in para 1 of this judgment. The precise test must depend on the context, including, in particular, how well placed the court is to judge the effect of any unfairness. In the present case, the complaint is of lack of opportunity for full cross examination and for the trial court to weigh the evidence it heard in the light of the cable, treating the cable as admissible. In these circumstances, I am prepared for present purposes to accept that the appropriate question is whether the admission of the cable for use in these ways could have made a difference. However, I also consider that this is in substance how the Court of Appeal approached the issue. The conclusion it reached (see para 22 above) was that there was no realistic possibility that the [Administrative Courts] assessment of the evidence of Mr Roberts and Ms Yeadon would have been affected if the cable had been formally admitted in evidence as an authentic document. Its statement at the end of para 89 that the admission of the cable in evidence would have made no difference must be read, in context, as a shorthand resum of this conclusion. A conclusion that there was no realistic possibility that the assessment would have been affected amounts, in substance, to a conclusion that the admission of the cable could not realistically have made a difference. Nonetheless, it is incumbent upon the Supreme Court to consider for itself whether the Court of Appeal erred in reaching that conclusion. The Administrative Court undertook in paras 53 to 77 of its judgment a full and careful review of the genesis and development of and decision to announce the MPA and a no take zone, which the Court of Appeal accurately summarised as follows: to Professor Sheppard, 75. The catalyst for making the MPA was a proposal made in July 2007 by an American environmental group, Pew Environmental Group, the environmental adviser for the BIOT. On 5 May 2009, Mr Roberts submitted a briefing note to the Secretary of State which explained the benefits of the proposal. These included that, because of the absence of a settled population and the strict environmental regime already in force, the BIOT was one of the few places in which a large scale approach to conservation was possible; and it offered great scope for scientific and climate change research. The Secretary of States reaction was enthusiastic. His private secretary emailed Mr Roberts to say that the Secretary of State was fired up after the meeting and enthusiastic to press ahead with the proposal. 76. This was followed by a meeting to discuss the proposal with US Embassy officials on 12 May 2009. This is the crucial meeting the gist of which was purportedly summarised in the copy cable dated 15 May 2009. Both Mr Roberts and Ms Yeadon attended the meeting and were cross examined about it. Mr Roberts denied making any reference to Man Fridays. He said that he recognised that the declaration of an MPA, if entrenched, would create a serious obstacle to resettlement. Ms Yeadon also denied that Mr Roberts had used the words Man Fridays or that he had said that establishing a marine park would put paid to resettlement claims. The Divisional Court said (para 61) that it found Ms Yeadon to be an impressive and truthful witness. Having referred to an important note of a meeting held on 25 March 2009, the court said at para 63: as Ms Yeadon understood, at official level, HM Government regarded the resettlement issue as settled by the 2004 Order, subject only to the pending decision of the Strasbourg Court (this is a reference to the claimants application which was eventually dismissed by the ECtHR on 20 December 2012: see para 7 above). 77. By a note dated 29 October 2009, Ms Yeadon proposed to Mr Roberts and the Secretary of State that consultation on the proposal to declare an MPA be launched on 10 November. Under the heading Risks, she noted that the risk of an aggressive reaction from the Chagossians and their supporters was high and said: they may claim that we are establishing a Marine Protected Area in order to ensure that they can never return to BIOT. This is not the case . The court said (para 65) that it was satisfied that in this passage Ms Yeadon again stated what she genuinely believed: that the proposal to establish an MPA was not to ensure that the Chagossians could never return. 78. In a note dated 30 March 2010, Ms Yeadon proposed that the Secretary of State should publish the report on consultation and declare his belief that an MPA should be established, but only after further work had been done. There followed a flurry of emails between officials. The Secretary of State did not accept Ms Yeadons advice. On 1 April, he announced the creation of an MPA in the BIOT which included a no take Marine Reserve where commercial fishing would be banned. Mr Roberts duly made the proclamation on 1 April. 79. The Divisional Court expressed its conclusion on the improper motive point in these terms: 74. This material makes it clear that it was the personal decision of the Foreign Secretary to declare an MPA on 1 April 2010, against the advice of his officials. There is no evidence that, in doing so, he was motivated to any extent by an intention to create an effective long term way to prevent Chagossians and their descendants from resettling in the BIOT. His Private Secretary could hardly have written on 7 May 2009, the day after the presentation of the proposal by Professor Sheppard to him, that he was really fired up about this if the proposal was presented as a cynical ploy to frustrate Chagossian ambitions. It is obvious that he was responding to a proposal presented by a man, Professor Sheppard, who was keen to see it adopted and put into effect for scientific and conservation purposes only. Later, on 31 March 2010, when the Foreign Secretary made the decision to go ahead immediately, the decision had nothing to do with Chagossian ambitions. The decision to override official advice can best be understood in the political context: Parliament was about to be dissolved. The Foreign Secretary no doubt believed that the decision would redound to the credit of the Government and, perhaps, to his own credit. It would do so the more if a decision with immediate effect was taken. Officials thought that this would create difficulties but it was the Foreign Secretarys prerogative to override their reservations and make the decision which he did. There is simply no ground to suspect, let alone to believe or to find proved, that the Foreign Secretary was motivated by the improper purpose for which the claimant contends. 75. It is significant that the Foreign Secretarys announcement contained the caveat which always accompanied public and private statements by officials: that the decision was subject to the pending judgment of the Strasbourg Court. Unless there was some deep plot to frustrate an adverse judgment, of which there is no evidence at all, this fact alone demonstrates that no sensible official in the FCO could have believed that the establishment of an MPA would fulfil the improper purpose alleged. Nor could it have done. The proclamation made by Mr Roberts on 1 April 2010 stated that: legislation and regulations The detailed governing the said Marine Protected Area and the implications for fishing and other activities in the Marine Protected Area and the territory will be addressed in future legislation of the territory. The only step taken since then has been to allow fishing licences current at 1 April 2010 to expire and to issue no more. What prevents the return of Chagossians to the islands is the 2004 Order, not the MPA. If, at some future date, HM Government decided or was constrained by a judgment of a court to permit resettlement or the resumption of fishing by Chagossians, nothing in the measures so far taken would prevent it or even make it more difficult to achieve. 76. For the claimants case on improper purpose to be right a truly remarkable set of circumstances would have to have existed. Somewhere deep in government a long term decision would have to have been taken to frustrate Chagossian ambitions by promoting the MPA. Both the administrator of the territory in which it was to be declared, Ms Yeadon, and the person who made the decision, the Foreign Secretary, would have to have been kept in ignorance of the true purpose. Someone Mr Roberts? would have been the only relevant official to have known the truth. He, and whoever else was privy to the secret, must then have decided to promote a measure which could not achieve their purpose, for the reasons explained above, while explaining to all concerned that the MPA would have to be reconsidered in the light of an adverse judgment of the Strasbourg Court. Those circumstances would provide an unconvincing plot for a novel. They cannot found a finding for the claimant on this issue. 80. In order to test Mr Plemings submission that the effect of the Divisional Courts ruling was to deprive him of the opportunity of properly testing the evidence of the witnesses, it is necessary to see what cross examination he was able to undertake. During day 1 and day 2 of the hearing, Mr Pleming cross examined Mr Roberts extensively about the meeting of 12 May 2009 by reference to various documents, including the cable. Although Mr Roberts was not prepared to answer questions as to whether the contents of the cable were accurate (because of the NCND policy), nevertheless he answered questions as to what he might or might not have said at the meeting: see day 1 pp 155 to 169 and day 2 at pp 9 to 41. Mr Pleming confirmed to the court that his general purpose in cross examining on the cable, paragraph by paragraph, was to establish its general accuracy by reference to relatively uncontroversial passages in it. 81. Despite his repeated reliance on the NCND policy, Mr Roberts gave extensive evidence of what was discussed at the meeting on 12 May. For example, in relation to one passage from the cable, he said: I can confirm that the general content and sense of the issues that you have just read out is consistent with the discussion we were having with the United States at the time. In relation to another passage, he said: I dont recall what language I would have used at the time but it would have been consistent with the general position that we were trying to set out to the United States. 82. At p 36 on day 2, Mr Roberts accepted that he did say to the US officials that the establishment of an MPA would in effect put paid to the resettlement claims. He said that this was a recognition of a reality that, if the MPA was entrenched (ie a law which would be impossible or difficult to repeal), this would be a serious obstacle to resettlement. He denied that he had said anything about footprints or Man Fridays: that was not the nature of the conversation. Mr Pleming sought to persuade the court to give a ruling as to whether Mr Roberts should be required to answer questions about the accuracy of the contents of the cable. Mitting J asked whether it was necessary to have this debate, since Mr Roberts had accepted that a consequence of establishing an MPA would be that the hopes of the Chagossians to return would be thwarted. Richards LJ was not sure how much more Mr Roberts could say. He had indicated why he declined to answer the ultimate question; but he had answered all the intermediate questions. 83. The court did not make any final ruling at this stage and Mr Pleming continued with his cross examination of Mr Roberts by reference to the cable: see day 2 pp 78 to 80. He put it to Mr Roberts that his purpose was to use the MPA to prevent or kill off the claims for resettlement; and that this policy shines out of the record of that meeting and is not a policy you would want to put in written form so that it could ever be seen by the Chagossians or in any litigation. Mr Roberts replied: No, I reject that suggestion entirely. I do not believe it is possible to keep a policy of that significance quiet. It is worth underlining some points about the history which arise from this account. First, the whole idea of an MPA and a no take zone was generated by independent environmental activity. An American environmental group, Pew, made the initial proposal to Professor Charles Sheppard, BIOTs independent environmental adviser, in July 2007. This led on 22 April 2008 to discussions between Pew and Ms Yeadon about the creation of an MPA, in which there would be a no take zone. On the same day, the Chagos Conservation Network, whose founders included Pew and Professor Sheppard, held its inaugural meeting at the Linnean Society, and expressed the view that there should be a no take zone within BIOT waters. On February 2009, The Independent reported in an article that the Chagos Conservation Trust, the RSPB, the Zoological Society of London and Pew were launching a plan for an MPA, which would be compatible with defence interests and would offer a possibility that some Chagossians might return as environmental wardens; a marine biologist from York University was reported as describing the attitude of the British government towards the Chagos Islands up to that time as one of benign neglect; and the British government itself was reported as saying it would work with the international environmental and scientific community to develop further the preservation of the unique environment. (The Mauritian governments response to this article was that the Chagos Islands were under its sovereignty, so that its consent would be required.) Second, it is clear that, from the outset, the relevant decision maker was to be the Secretary of State for Foreign and Commonwealth Affairs, Mr David Miliband, in person, not the civil servants who were directly or indirectly reporting to or advising him. Mr Miliband was first briefed on the idea of an MPA by a six and a half page note from Mr Roberts dated 5 May 2009. This was in terms to which no objection is or could be taken, and was followed up by a meeting with Mr Roberts and Professor Sheppard. The note identified and examined the numerous benefits and wide range of potential beneficiaries of an MPA. The benefits fell under the heads of conservation, climate change, scientific [research], development, reputational/political and security (the last being explained by Mr Roberts in a witness statement dated 1 May 2012 as relating to control of illegal, unregulated and unreported fishing). The note went on to examine risks. In that connection, it identified Mauritian sovereignty claims and a side deal done at the time of excision which gave Mauritius the right to apply for fishing licences free of charge, the Chagossian movements and the US military. The US military were not thought likely to oppose, and the note expressed confidence that reassurances could be given that they would not experience any rise in the security risk, impediment to freedom of manoeuvres or significant increase in environmental regulation. In relation to the Chagossian movements, the note said: Their plans for resettlement are based on the establishment of an economy based on fishing and tourism. In the specific context of BIOT this would be incompatible with a marine reserve. They are therefore hostile to the proposal, unless the right of return comes with it. They have expressed unrealistic hopes that the reserve would create permanent resident employment based on the outer islands for Chagossians. Assuming we win in Strasbourg [as in the event occurred], we should be aiming to calm down the resettlement debate. Creating a reserve will not achieve this, but it could create a context for a raft of measures designed to weaken the movement. This could include: presenting new evidence about the precariousness of any settlement (climate change, rising sea levels, known coastal defences costs on Diego Garcia) activating the environmental lobby contributing to the establishment of community institutions in the UK and possibly elsewhere committing to an annual visit for representatives of the communities to the outer islands on All Saints Day inclusion of a Chagossian representative in the reserve government. [an irrelevant redaction] It is not suggested that this note was other than an objective assessment of the proposal, or that it contains or suggests any improper motivation. As the Administrative Court stated (para 77), the only collateral factor relating to Chagossian ambitions which it shows is that the proposal might, in various ways, permit the Government to calm down the resettlement debate and attract support for the Governments position from the environmental lobby. The Administrative Court went on: This could not have the effect of creating an effective long term way to prevent resettlement and Mr Pleming rightly conceded that it would not taint a decision genuinely to further environmental and scientific purposes. That remains the position before the Supreme Court. The note was followed up by a meeting between the Secretary of State, Mr Roberts and Professor Sheppard, which was on the evidence principally devoted to a slide show by Professor Sheppard showing the environmental benefits of an MPA. As a result of the note and meeting, Mr Miliband was fired up by the proposal and enthusiastic to press ahead. Thirdly, the meeting a week later between Mr Roberts, Ms Yeadon and representatives of the United States Embassy was aimed at briefing a United States counsellor (Mr Richard Mills) interested in knowing more about the Chagos Islands position, no doubt as it related to the United States concerns identified in the note dated 5 May 2009. In his initial summary in para 1 of the cable, its author recorded Mr Roberts as saying that the BIOTs former inhabitants would find it difficult, if not impossible to pursue their claim for resettlement on the islands if the entire Chagos Archipelago were a marine reserve. The ensuing paragraphs included the following: 7. Roberts stated that according to the HGMs [sic] current thinking on a reserve, there would be no human footprints or Man Fridays on the BIOTs uninhabited islands. He asserted that establishing a marine park would, in effect, put paid to resettlement claims of the archipelagos former residents The final paragraph of comment included this: 15. Establishing a marine reserve might indeed, as FCOs Roberts stated, be the most effective long term way to prevent any of the Chagos Islands former inhabitants or their descendants from resettling in the BIOT. Accepting the Wikileaks memorandum as a genuine record of the meeting, it must be seen in that context. What would have concerned the United States were the consequences of an MPA, not the motivation. Further, the opening and the final two paragraphs are evidently comment or attempted summary by Mr Mills, while it is the intermediate paragraphs that purport to record the actual course of the discussion. In the case of The Guardian report of the cable, the intermediate paragraphs have interposed what are evidently journalistic captions. I note at this point Lord Kerrs suggestion (paras 84 and 86) that US military needs provided no reason for Mr Roberts and Ms Yeadon to assure the Americans, or ask them to confirm their requirement, that no resettlement would occur elsewhere in the BIOT. The obvious question which Lord Kerr considers to arise in this regard was not raised before the Supreme Court. But the answer is clear. The original exchange of notes between the United States and United Kingdom in 1966 provided that all of the BIOT be set aside for defence purposes and that any significant change of the BIOTs status that could impact the BIOTs strategic use would require US consent. Hence also, Mr Roberts statement in this connection in his note dated 5 May 2009 that We expect we will have our work cut out to reassure the US military that creation of a reserve will not result in trouble for them. Trouble could be any rise in the security risk, any impediment to the freedom of manoeuvre, or any significant raising of the bar in terms of environmental regulation. Lord Kerr himself says in para 88 that the theme that the MPA would prevent any resettlement of the islands . certainly preoccupied the Americans in May 2009. In November 2009 a consultation was launched in respect of the proposal. The motivation for the proposal was explained as being environmental and scientific, and various options were presented for public consideration. The consultation process ended in early March. The proposal then returned to the political arena, where the same picture of independent decision making by the Secretary of State emerges as nearly a year before. This concluded with Mr Miliband instructing Mr Roberts as Commissioner for BIOT to issue Proclamation No 1 of 2010 (para 2 above), and with an FCO statement dated 1 April 2010 to the effect that This will include a no take marine reserve where commercial fishing will be banned. More specifically, the events leading to this decision were as follows. A submission dated 30 March 2010 from Ms Yeadon had discussed how best to progress the proposal. In it, Ms Yeadon pointed to likely opposition and possible international moves by the Mauritian government and advised that, rather than any immediate decision, more time should be taken to work through the various issues and a positive, but not definitive, announcement should be made. However, at 18.06 on the same day, Mr Milibands office informed Ms Yeadon that Mr Milibands inclination [was] to be bolder and actually to decide to go ahead. At 8.30 next morning, Mr John Murton, at that time, it appears, the British High Commissioner in Mauritius, commented that he had no idea whether Mr Miliband would follow the recommendations of the day before, but that, if he went for the MPA immediately, they would face problems. Shortly before 11.47 next day, Mr Milibands office informed Ms Yeadon by telephone that Mr Miliband was minded to ask Mr Roberts to declare an MPA and a full no take zone, that no final decision has yet been taken, and that he would like to find some way of mitigating the Mauritian reaction. An internal email reaction by Mr Roberts at 12.07 proposed to give Mr Miliband a clearer steer. This led to an immediate rejection by another civil servant, Mr Andrew Allen, who at 12.31 stated his view that this approach risks deciding (and being seen to decide) policy on the hoof for political time tabling reasons rather than on the basis of expert advice and public consultation and was a very different approach to the one recommended the day before, which Mr Miliband was still considering. The reference to political time tabling is a clear reference to the general election due not later than five years after 5 May 2005, and in fact announced on 6 April 2010 for 6 May 2010. Mr Allens view was endorsed by Mr John Murton at 12.45, with the additional comment that while Obviously the Foreign Secretary is free to make whatever decision he chooses to declare the MPA today could have very significant negative consequences for the bilateral relationship with Mauritius, where an announcement of general elections was also expected, that same day, where ministers were uncontactable as a result and where the prime minister would greatly resent our timing. Mr Murton thought that there might be a market for a proposal to work with Mauritius as a privileged partner on management issues etc prior to a final decision on an MPA. These exchanges led to the preparation of a further note from Ms Yeadon addressed to Mr Roberts, and, when finalised, evidently also forwarded to the Secretary of State. The note reported the views expressed and repeated the previous days recommendation against any rapid decision. Mr Miliband did not accept the advice tendered on 30 and 31 March 2010. He said he had carefully considered it and given serious thought to the different possible options. But his decision was to instruct Mr Roberts to declare the full MPA on 1 April 2010. In these circumstances, the present issue can be approached, as the courts below have done, at two different levels. The first involves considering whether there is any real likelihood or risk that the Administrative Courts assessment of Mr Roberts and/or Ms Yeadons motivation would have been different if the Administrative Court had permitted further cross examination on the Wikileaks memorandum and had accepted that memorandum as evidence of what its contents purport to record. The second is whether there is any real likelihood or risk that any improper motivation on the part of Mr Roberts and/or Ms Yeadon affected the ultimate decision maker (Mr Miliband) or his decision. As to the first level, the Administrative Court heard both Mr Roberts and Ms Yeadon being cross examined on the most important passages of the cable, particularly the summary in the first and last paragraphs and the purported recital of actual discussion in para 7. Mr Roberts accepted that he said words to the effect that it was governmental policy that there should be no human footprint on the Chagos Islands (other of course than Diego Garcia), embracing within that term absence of scientific or wardens offices, temporary workers as well as resettlement. He accepted that he had said that establishing an MPA would in effect put paid to resettlement claims, but explained that this was recognition of a reality that the Chagossians themselves had originally raised and that it only related to an MPA entrenched by law. He said that entrenchment was in the event never pursued, and that the proposal for an MPA was at the time always subject to the outcome of the proceedings in Strasbourg. Ms Yeadon on the other hand denied that Mr Roberts had said that establishing an MPA would in effect put paid to resettlement claims. Resettlement was, in her view, already precluded by the 2004 Order (subject only to the pending decision of the Strasbourg Court), a point on which the Administrative Court accepted her evidence, finding it to be supported in a note of a meeting of 25 March 2009 between Mr Roberts, Ms Yeadon and a Chagossian delegation including the appellant and their solicitor, Mr Gifford. Both Mr Roberts and Ms Yeadon were adamant that Mr Roberts had not used, and would never have used, the highly emotive words Man (or Men) Fridays. The first tier question in these circumstances is whether further cross examination might have led to more material favourable to the appellants case of improper motivation on the part of Mr Roberts and/or Ms Yeadon and whether admission of the cable in evidence to counterbalance the evidence of Mr Roberts and Ms Yeadon might have led the Administrative Court to accept that either or both was, when advancing the proposal for an MPA, improperly motivated by the desire to prevent resettlement. As to this question, the extensive evidence given by Mr Roberts about the meeting on 12 May and Ms Yeadons own evidence give a picture which is generally and substantially consistent with that presented by the cable. In my opinion, Lord Kerrs references to an account or statements inconsistent with, or directly contrary to or flatly contradict[ing] or in obvious conflict (paras 91, 92, 94 and 107) are not borne out by comparison of the evidence and the cable. That too was how the Court of Appeal evidently saw the position: see its paras 80 to 82 quoted in para 24 above; and see also para 37 above. When it came to considering whether the Foreign Office representatives had some ulterior motive in their proposal for an MPA, the Administrative Court was also impressed by the evidence of Mr Roberts and Ms Yeadon. It is true that it did not directly address the contradiction between their evidence on the question whether Mr Roberts had said that an MPA would put paid to resettlement. But it accepted that a wish to preclude resettlement was not part of Ms Yeadons motivation, because she regarded resettlement as off the table anyway as a result of the 2004 Order, and it must also have accepted Mr Roberts evidence that what he was explaining to the United States counsellor was the practical consequences of an MPA, which is what would have been of interest to Mr Mills, rather than its motivation. It is difficult to see what further cross examination by reference to Mr Mills memorandum could have achieved. It is also difficult to think that admission of the memorandum, without more, would have outweighed the impression which the Court obtained from the oral evidence it heard. The memorandum is at the very lowest ambiguous as to whether the references to resettlement were uttered in circumstances indicating that they had a role in motivating the proposal for an MPA. On the face of it, it seems very unlikely that a British civil servant would have disclosed an improper motivation of this nature, rather than have been outlining the practical consequences of an MPA which is what would have concerned the Americans. It is equally difficult to think that the Administrative Court could have concluded, by reference either to further cross examination or to the cable itself, that Mr Roberts in fact used the phrase Man Fridays, which he and Ms Yeadon adamantly denied that he would ever have used. The phrase had already had considerable currency, including in court judgments, and was well known known in British circles as infamous. Lord Kerr in para 97 notes the Court of Appeals reference in para 82 of its judgment to the fact that Mr Pleming QC was not permitted to put to Mr Roberts the ultimate question. This the Court of Appeal identified as being whether the cable was accurate, before continuing but Mr Roberts had answered all the intermediate questions. Lord Kerr treats the ultimate question as being whether [Mr Roberts] had an explanation for the fact that he was recorded as having made certain statements which he denied having uttered. However, as to this, Mr Roberts was not party to the cable, and had, by his answers to the intermediate questions, given the only explanation that he could be expected to give about any differences, namely that the cable was wrong. Even more importantly in this connection, it is difficult to see that the Administrative Court could have been assisted in its task on the central issue, even if it had concluded that the phrase Man Fridays was used. In these circumstances, I do not consider that it has been shown that the Court of Appeal erred in concluding that neither further cross examination on the cable nor the cable itself, if admitted as evidence, would have led to any different outcome before the Administrative Court. Assuming that the test should be whether this could realistically have led to any different outcome, the answer would still, in my opinion, be negative. Let me assume however that this is wrong, and that Mr Roberts and/or Ms Yeadon did have and voice to the United States Embassy officials an illegitimate motive for the proposal for an MPA. The second level question then arises whether there is or can be any conceivable basis for thinking that this affected the ultimate decision maker, Mr Miliband, or his decision. In my opinion, the answer to this is even more clearly in the negative. The Administrative Courts conclusion in para 74, summarised in para 91 of the Court of Appeals judgment was that it was clear that it was the personal decision of the Foreign Secretary to declare an MPA on 1 April 2010, against the advice of his officials. and that this can best be understood in the political context: Parliament was about to be dissolved. The Foreign Secretary no doubt believed that the decision would redound to the credit of the Government and, perhaps, to his own credit. It would do so the more if a decision with immediate effect was taken. The documentation and exchanges available all show that the proposal was put up by civil servants to the Secretary of State. Bearing in mind its nature and context, this was bound to occur. It was put up in appropriate terms without any suggestion of any improper motive, both initially in May 2009 and ultimately in March 2010. The documentation and exchanges also show that he made his decision of 31 March 2010 on that basis, against his civil servants recommendation to give the proposal further thought and attention. Any suggestion that further cross examination of Mr Roberts and/or Ms Yeadon or the admission of the cable as evidence of its contents might have led the Administrative Court to conclude that Mr Miliband was motivated in his enthusiasm, not by his assessment of the merits of the proposal as such, but by extraneous considerations relating to a desire to make return difficult for the Chagossians, finds no basis in the documentation or exchanges and has to my mind no plausibility at all. There is no basis whatever for impugning Mr Milibands motivation. There is in particular no basis for suggesting that he may have connived at or joined with Mr Roberts and/or Ms Yeadon in a collusive exercise of documenting an objective decision making process, while at the same time pursuing and concealing an illicit agenda. The final matter for consideration on this basis is whether any relevance could attach to improper motivation on the part of one or more civil servants, when there is no indication whatever that it shaped or in any way influenced ministerial thinking. The answer must in my opinion be negative. If the Secretary of State as the ultimate decision maker, the actual decision making process and the decision were unaffected by an improper motive held by a civil servant, on a proposal bound because of its significance to be put up to the Secretary of State, the decision can and should stand by itself. That would on all the evidence be the present position, even if one assumes that the cable discloses, or would if deployed have led to a conclusion, that there was, some improper motivation on the part of Mr Roberts and/or Ms Yeadon in (or after) May 2009. Mr Pleming QC submits that an opposite conclusion flows from a form of reconfiguration of the principle in Carltona Ltd v Commissioners of Works [1943] 2 All ER 560, and that the Secretary of State can be fixed with the knowledge, motives and considerations of civil servants when relying on them unless he proves otherwise. The problem with that submission is that, even if one or more civil servants had improper motives or considerations in mind, Mr Miliband did not rely on any decision or conduct of those civil servants to which such motives and considerations had any relevance. The relevant civil servants were, as stated, bound to put the matter before the Secretary of State. They did so in proper terms, ultimately counselling against any immediate decision to declare an MPA and no take zone. The Secretary of State rejected their recommendation, and made his own decision. Carltona does not have any bearing on this situation. It stands for the proposition that ministerial powers are commonly delegable and that, where this is the case and delegation occurs, the decision of an authorised official falls to be treated as the decision of the minister. Here, therefore, it may readily be accepted that, if a Minister were simply to rely on a civil servant, in effect to take a decision in the Ministers name, then it would be the knowledge, motives and considerations held by and influencing the civil servant that would be relevant. A ministerial decision may also be vulnerable to challenge if taken in ignorance of or on the basis of some mistake as to some material factor. Similarly, if a ministerial decision is arrived at by a collective decision making process involving a minister and his departmental civil servants, it may well be impossible to separate the ultimate ministerial decision from the knowledge and motives of civil servants involved in its preparation: see eg Bushell v Secretary of State for the Environment [1981] AC 75, 95 96, per Lord Diplock. But these are situations very far from the present case. In the present case, far from the relevant decision being taken by an official on behalf of the minister or being a collective decision, it is clear that the minister, Mr Miliband, took his own decision on the relevant matters. His civil servants put the matter up to him in terms to which no objection is taken as such, he formed his own strong views on the basis of the material put before him and he made the relevant decision. In these circumstances it is his state of mind that is critical, not that of his civil servants. I note here Lord Kerrs suggestion that the Secretary of States decision could be regarded as having been reached without regard to material factors or considerations if taken in ignorance of a concealed reason for the recommendation on which he acted (para 117) and/or without awareness of the view of the civil servants that the MPA would eliminate the chances of resettlement of the Chagos Islands, contrary to the advice on which he in fact acted (para 118). Neither of these points was part of the applicants case before the Supreme Court, which focused on the existence of an allegedly improper motive on the part of Mr Roberts and/or Ms Yeadon. Reliance on their suggested views as material information which should have been made available to the Secretary of State is a quite different matter. If this were sufficient to undermine a ministerial decision, then logically any irrelevant misconception possessed by any civil servant at any level in the civil service hierarchy in relation to any proposal ultimately reaching Cabinet level could undermine a Cabinet decision. There is in any event no basis for regarding any such views as material, since the appeal has been conducted on the basis that the creation of the MPA could not have the effect of creating an effective long term way to prevent resettlement: see para 28 above. The only suggested reason why an MPA or no take zone might preclude resettlement was that it would deprive Chagossians of an important source of food and livelihood. But this is not an objection deriving from the establishment of an MPA, but from a policy, reversible at any time, of refusing fishing licences. For these reasons, I would hold that no basis exists on which the Supreme Court would be justified in reaching a different conclusion to that reached in the Court of Appeal, upholding the Administrative Court, though for different reasons, on the point. Fishing rights The position in respect of this adjourned application for permission to appeal is unusual. I say at the outset that I consider that permission to appeal should be given. But permission to raise the issue of Mauritian fishing rights at all was only given by the Administrative Court on the limited basis that the appellant does not contend in these proceedings that the traditional or historical fishing rights relied on are legally enforceable, so that the question whether there are enforceable rights under international law would not arise for decision. The appellants case, as explained by Mr Pleming before the Administrative Court, was simply that there is credible evidence that HMG gave an undertaking to the Government of Mauritius which has subsequently been evidenced by preferential treatment for Mauritius registered vessels, and that this was an important part of the background yet was not put before consultees, who were in consequence misled. The Administrative Court held the appellant to that position, and Mr Pleming has not sought to resile from it before the Court of Appeal or Supreme Court. Further, he made clear that before the Supreme Court the only fishing rights relied on are Mauritian fishing rights. That means (and it is unnecessary to attempt any precise definition) fishing rights enjoyed by Mauritian registered and, quite probably, owned vessels, on which in practice Chagossians are often also found as crew. Yet, since the Court of Appeals judgment in May 2014, an arbitration between the Republic of Mauritius and the United Kingdom under Annex VII of the United Nations Convention on the Law of the Sea (UNCLOS) has concluded in an award dated 18 March 2015, finding, inter alia: that the United Kingdoms undertaking to ensure that fishing rights in the Chagos Archipelago would remain available to Mauritius as far as practicable is legally binding insofar as it relates to the territorial sea. During the course of the hearing before the Supreme Court, the Government put before the Court a statement that: HM Government is committed to implementing the Dispositif made in 2015 following Arbitration between the UK and Mauritius over the Marine Protected Zone (MPA) around the British Indian Overseas Territory (BIOT). In line with the Dispositif, the UK will continue to work with Mauritius to agree the best way to meet our obligation to ensure fishing rights in the territorial sea remain available to Mauritius, so far as practicable. The Arbitral Award did not require the termination of the MPA but the UK will continue to approach discussions with an open mind about the best way to ensure proper conservation management of this unique marine environment. It therefore appears that, at the international level, the fishing rights, the arguable existence of which the appellant claims should have been recognised in the consultation paper, have not only been held to exist, but are rights, to which so far as they have been held to exist, the United Kingdom is committed to giving effect. In these circumstances, it is possible to wonder what further purpose these proceedings might have, since it is on these rights that the appellants objections to the MPA and/or no take zone centre. Ostensibly, the appellants case is that, if there was improper motivation and/or a failure properly to consult about arguable fishing rights, the MPA and no take zone should be declared to have been invalidly declared. But Mr Pleming indicated at the outset of the hearing before the Supreme Court that, at any rate in relation to the latter failure if accepted, it would be possible for a court to limit any invalidity to the extent of the arguable fishing rights. A later draft declaration which Mr Pleming submitted showed that, if it were feasible to contemplate a declaration of limited invalidity, the identification of what was involved in Mauritian fishing rights could still be controversial. That is however, as already indicated, another matter. I would accept that, if there was a failure properly to consult about arguable fishing rights, that could lead to a declaration of limited validity. In parenthesis, I add that the case based on improper motivation can also be related to fishing rights, since the reason why it is suggested that an MPA or no take zone might preclude resettlement is that it would deprive Chagossians of an important source of food and livelihood. I would therefore also have been attracted by (but do not, in the light of my conclusion in para 49 above, need to consider further) the suggestion that improper motivation might also have led to a limited declaration. Further, in either case, I would be minded to accept the Secretary of States case that any declaration could be related and limited to the no take zone, rather than the MPA. Mr Pleming objected that this was a new point, only raised by the Secretary of State after the hearing. But it is a pure point of law and the Administrative Court itself pointed out in para 75 of its judgment that the restrictions on fishing did not derive from the MPA itself. On the contrary, the MPA stated that the implications for fishing would be addressed in future legislation, and the only actual step taken regarding fishing was to allow existing fishing licences to expire and to withhold further fishing licences. The appellants real complaint can therefore be identified as being to the current policy, in so far as it has been to refuse fishing licences giving effect to the Mauritian fishing rights now recognised by the UNCLOS tribunals award. That is essentially a limited complaint, which could, it seems to me, appropriately be addressed by a limited declaration as to the invalidity of such a policy of refusal. I must however revert to the case as it stands, however artificially, before the Supreme Court, on the basis that the appellants only complaint is that there was, at the time of the consultation, credible evidence that the United Kingdom had given an undertaking to the Government of Mauritius to permit Mauritian fishing in the territorial waters of the Chagos Islands (free of charge), that these arguable rights should have been mentioned, that the consultation process was defective accordingly and that the MPA, or (for reasons I have indicated) at least the no take zone, was invalid, at least to the extent that it excluded Mauritian fishing. The UNCLOS tribunal in its award found that the United Kingdom was in breach of its obligations under UNCLOS article 2(3) (sovereignty over the territorial sea is exercised subject to the Convention and to other rules of international law) and article 56(2), which reads, less ambiguously: In exercising its rights and performing its duties under this Convention in the exclusive economic zone, the coastal State shall have due regard to the rights and duties of other States and shall act in a manner compatible with the provisions of this Convention. The breaches so found concerned the relationship between the United Kingdom and Mauritius. It was the tribunals view that, after a second meeting between United Kingdom and Mauritian representatives on 21 July 2009, there remained outstanding a number of unanswered issues, as well as information that the United Kingdom promised to provide to Mauritius, but that, despite this, the United Kingdom had in March 2010 elected to press ahead with the final approval and proclamation of the MPA without providing any convincing explanation for the urgency with which it did this on 31 March and 1 April 2010. The issues of both law and fact before the tribunal were, therefore, very different from that now before the Supreme Court, which is narrowly focused on the adequacy of the public consultation. It is unnecessary to go back in detail over all the issues which were considered in the courts below. I can summarise the position as it emerges, in my opinion, from the evidence and documents as follows. First, the actual extent of inshore fishing by Mauritian vessels in territorial waters, after the Chagossians left and until the no take zone affected licensing, was always limited, but it was significant for those involved, including the owners and Chagossian crew members. The principal vessels involved were those of the Talbot brothers. Secondly, there was credible evidence in the United Kingdom Governments possession (though not all of it necessarily available to Mr Roberts or Ms Yeadon) as to the existence of Mauritian fishing rights dating back to undertakings given in 1965. However, thirdly, extensive legal advice (for which privilege has not been waived) was taken on this subject during the period January to November 2009, and, on the basis of that advice, both Mr Roberts and Ms Yeadon understood that Mauritius did not have legal rights to fish in BIOT territorial waters, which prevented the United Kingdom Government from establishing an MPA, including a complete no take zone. Fourthly, for that reason, after considering the position and receiving legal advice Mr Roberts and Ms Yeadon did not believe that Mauritius or the Chagossians had, or might have had, any such rights, and Ms Yeadon in particular saw the 1965 undertaking as being of a political, not legal, nature; and, as a result, no reference was made in the consultation document to any such rights. Fifthly, despite the appellants reliance on a paper prepared by Professor Brownlie for and read at a United Kingdom Mauritius meeting in January 2009, containing at most only a fleeting suggestion of such rights, Mauritius never really advanced such rights with any clarity at any time throughout 2009 to March 2010, referring instead constantly to its sovereignty claim and refusing on that basis to engage with any consultation. In particular, it made no suggestion of any such rights in the second United Kingdom Mauritius meeting in July 2009 or in a submission to the House of Lords in February 2010. The Administrative Court correctly so concluded (para 158). Sixthly, Mauritius had the opportunity of responding to the consultation and making the point that it had fishing rights, but did not avail itself of this. Chagossians and others also had the opportunity of responding, and some did: i) Mr Gifford and Chagossians resident in Crawley made representations against any no take ban in the territorial waters, on a basis summarised as follows: Very limited fishing anyway, so limited environmental benefit from a ban. Could have significant consequences for the Chagossians. What effect on the Chagossian community? Should not be possible to use MPA as a way of entrenching no right of abode. Inconsistent, as far as concerns fishing, with the law of the sea (UNCLOS). ii) The Diego Garcian Society also representing Chagossians wrote in favour of: 4th option, a no take marine reserve for the whole of the territorial waters and EPPZ/FCMZ with exceptions for certain types of pelagic fishery (eg tuna) and artisanal fishing by Diego Garcians and other Chagossian fishing projects only. iii) The members of the Chagos Refugees Group, led by the appellant and joined by Mr Gifford as their lawyer submitted that the consultation process was premature (and flawed) as putting the cart before the horse, inter alia, because it needed to be with the consent of the Chagossians, rather than pushed ahead unilaterally, because the sovereignty of Mauritius was also involved and because: [There] Are fishing rights which they need in their sea. and Need human rights first wrong to come before ECHR judgment. The Divisional Court observed (para 160): The potential impact of an MPA on commercial fishing was squarely raised and must have been obvious to all concerned. The responses from fishing interests show that the impact was clearly understood. If anyone wished to raise an argument that a ban on fishing would be incompatible with Mauritian fishing rights, they were free to do so. Against that background, the omission of express reference to the point in the consultation document itself is in our view a matter of no significance. It did not affect the fairness of the consultation or the validity of the MPA decision taken following that consultation. The Court of Appeal rejected the appeal on this ground, largely for the same reasons given by the Divisional Court (para 108), and specifically agreed with the last two sentences quoted above (para 111). The case open to the appellant is that there was credible evidence of Mauritian fishing rights, deriving from an undertaking given by the United Kingdom Government to the Government of Mauritius and subsequently evidenced by preferential treatment given to Mauritius registered or owned vessels. Approaching this case in the light of the matters which I have mentioned, I have no hesitation in agreeing with the assessment of both courts below that the absence of any mention of such evidence or of the arguable fishing rights to which it related does not undermine the consultation, make it unfair or justify setting it or any decision consequent upon it aside. It was obvious, as the Court of Appeal also said (para 112), that at least one of the options would affect inshore fishing, and threaten the livelihood of vessels which had previously been licensed to fish in territorial waters. It was open to Mauritius or anyone affected to raise this objection in response to the consultation. Mauritius notably did not respond at all. Others made various points about the option of a no take ban in territorial waters and/or the loss of alleged fishing rights. It would be wholly inappropriate to treat the consultation process as invalid, when the party to whom the alleged rights belonged (the Republic of Mauritius) had full opportunity of asserting them in response to the consultation, and when others indirectly involved actually took advantage of the opportunity of raising them. Finally, there is also no reason to believe that the ultimate decision would or could have been any different, if the consultation had specifically drawn attention to the possible existence of such fishing rights. Conclusion For these reasons, I would grant permission to appeal on the issue of fishing rights, but dismiss the appeal both on the issue of improper motivation and on the issue arising from the failure to mention the possible Mauritian inshore fishing rights in the consultation document before the decision to declare an MPA and a no take zone. I repeat that the latter issue has been before the Supreme Court solely on the basis that there was convincing evidence that such Mauritian fishing rights existed. The significance of the finding in the UNCLOS tribunals arbitration award dated 18 March 2015 that such fishing rights do actually exist is not before us. In particular, whether that finding is capable of having any and if so what effect in domestic law, as regards either the MPA or the no take zone is not before us. LORD SUMPTION: (with whom Lord Neuberger, Lord Clarke and Lord Reed agree) I agree with the disposal proposed by Lord Mance and with his reasons. I add a judgment of my own to address the status and use in evidence of information about the contents of diplomatic correspondence which has come into the hands of third parties. This question is the subject of the Secretary of States cross appeal, and raises points of some general importance. The leaking of governmental documents and their widespread distribution through the internet is a phenomenon of our time. The status of leaked documents in the public domain is an issue which is likely to recur. The basis in modern international law for the protection of the documents of a diplomatic mission is article 24 of the Vienna Convention on Diplomatic Relations (1961), which provides that the archives and documents of the diplomatic mission shall be inviolable at any time and wherever they may be. Article 27.2, which provides for the inviolability of the official correspondence of the mission, was added (as part of an article about freedom of communication) in order to deal with the problem of the interception en route of communications not made by diplomatic courier or diplomatic bag, which would not necessarily be part of the missions archives or documents at the time of interception: see ILC Yearbook 1958, i, 143, paras 34 35, and Denza, Diplomatic Law, 4th ed (2016), 189 190. These provisions have the force of law by statute in the United Kingdom, under the Diplomatic Privileges Act 1964. Any issue of this kind is likely to give rise to two fundamental questions. The first is how a document is to be identified as part of archives and documents of a diplomatic mission. The second is what it means to describe such a document as inviolate. Traditionally, the protection accorded to a missions documents was viewed as a particular aspect of the inviolability of its premises and the diplomatic bag, and of the immunities of diplomatic couriers. This was why, upon a cessation of diplomatic relations, when the premises of the mission would become entitled to a lesser degree of protection, the practice was to destroy the missions archives or entrust them to a protecting power as the diplomats left. As a general rule, the movable property of a mission was protected only so far as it was located on its premises, and indeed this is still the position today: see article 22.3 of the Convention. Before the Vienna Convention came into force in 1964, the status of a missions archives located outside diplomatic premises was therefore uncertain. To resolve that uncertainty, the words at any time and wherever they may be were added to article 24 at the United Nations Conference on Diplomatic Intercourse and Immunities which approved the final text of the Convention. The archives and documents of a mission were now to be protected as such and not only by virtue of their presence in a protected location or in protected hands. As the French delegate explained when introducing the amendment, the object was to establish clearly the absolute inviolability of the missions archives and documents as such, and not merely as part of the furniture of the mission: Official Records, i, (1962), 148 (para 2). A diplomatic mission is not a separate legal entity. Its archives and documents belong to the sending state. But the protection of article 24 is limited to the archives and documents of the mission. It does not extend to those of any other organ of the sending state. The latter may be protected by other rules of law: for example by the criminal law, the law of confidence or the law of copyright. But they are not protected by the Vienna Convention. Against that background, what is it that identifies a document as belonging to the archives or documents of the mission, as opposed to some other organ of the sending state? (I will return below to the particular problems raised by their unauthorised possession by third parties). The test is not their location, for they are protected wherever they may be. It must necessarily be whether they are under the control of the missions personnel, as opposed to other agents of the sending state. The draftsmen of article 24 were thinking in terms of physical documents. But retrievable electronic files are also documents and may be part of an archive. The same protection therefore applies to them, provided that access to them is under the control of the missions personnel, whether directly or by virtue of the terms on which the mission transmitted the document to another governmental entity. This appeal is not the occasion for determining the exact circumstances in which a mission will be treated as having control over a document by virtue of the terms on which it transmits it, because there is no suggestion that the US diplomatic cable was released on terms. The relevant point for present purposes is that because the designation of a document as that of the mission depends on control, its origin and content is in itself irrelevant. Thus the archives and documents of a mission may include original or copy documents which emanate from some other organ of the sending state or from a third party, in which case so far as they are under the control of the missions personnel they will enjoy the same protection as the missions internally generated documents. Correspondingly, copy documents or originals emanating from the mission may be found in the archives of another organ of the state (say, its foreign ministry) where they will not enjoy the protection of article 24. Inviolability is a term variously used in the Convention about diplomatic premises (articles 22, 30), documents (articles 24, 30), official correspondence (article 27), diplomatic personnel (articles 27, 29, 31, 38, 40) and personal property (article 30). But it is a protean word, whose meaning is necessarily sensitive to its context and purpose. It used to be thought that all diplomatic privileges and immunities reflected the extra territorial character of a foreign sovereign and, by extension, of its diplomatic representatives. But in the modern law, its justification is pragmatic and wholly functional. In the words of the fourth recital to the Convention, it is intended to ensure the efficient performance of the functions of diplomatic missions as representing States. It has been recognised ever since Vattel (Droit des Gens, Bk IV, 123), the first writer to deal with the question, that the basis of the rule of international law is that the confidentiality of diplomatic papers and correspondence is necessary to an ambassadors ability to perform his functions of communicating with the sovereign who sent him and reporting on conditions in the country to which he is posted. The purpose of article 24 in protecting a missions archives qua archives, and not as mere items of property, is to protect the confidentiality of the missions work, without which it is conceived that it cannot effectively represent the sending state. In particular, it is to protect the privacy of diplomatic communications: Shearson Lehman Bros Inc v Maclaine Watson & Co (International Tin Council intervener) (No 2) [1988] 1 WLR 16, 27G (Lord Bridge). The confidentiality of such documents does not depend on their particular contents or subject matter, which is not a matter which a domestic court could properly examine, but on their status as part of the archives and documents of a diplomatic mission protected by article 24 of the Convention. Dr F A Mann, a notable opponent of the larger claims of international law in the domestic legal world, was of the opinion that the inviolability of a missions archives and documents served only to protect them from interference by the receiving state, for example by seizing them or allowing them to be the subject of compulsory legal process: Inviolability and other Problems of the Vienna Convention on Diplomatic Relations, Further Studies in International Law (1990), 326 338. A rather similar view was put forward at the United Nations Conference preceding the adoption of the Convention, as a reason for rejecting the addition of the words wherever they may be, but it is clear that this objection did not find favour with the majority: see Official Records, i (1962), 149, 150 (paras 9, 22). The Court of Appeal, however, appear (paras 39 42, 58 61) to have adopted it in the present case. I agree with Lord Mance that so narrow an approach is not supported by the generality of commentators. It is also, in my view, inconsistent with the concept of inviolability. Whatever may be involved in that concept, it is clear that article 24 is not only concerned with the duties of the receiving state but describes the status of a missions archives and documents erga omnes. It is the obligation of the receiving state to give effect to that status. That obligation, extends beyond simply refraining from violating it itself. As the International Law Commission observed in its report of 1957 to the United Nations General Assembly, the receiving State is obliged to respect the inviolability itself and to prevent its infringement by other parties: ILC Yearbook 1957, ii, 137. It was on this basis that the International Court of Justice held in US Diplomatic and Consular Staff in Tehran (1980) ICJ Rep, 3, at paras 61 63, 66 67, 69, 77 that the failure of the government of Iran to intervene to prevent or terminate the occupation of the US embassy in Tehran by militants was a violation not only of articles 22 (premises) and 29 (diplomatic agents), which impose express obligations on the receiving state to protect against action by third parties, but also of article 24 (archives and documents), which contains no express provision of that kind. I make this point in order to correct what I regard as an error of the Court of Appeal. But it is not decisive of the present appeal, which is concerned with the legitimacy of a court receiving into evidence a document emanating from the archives and documents of a diplomatic mission. If this is a violation of article 24, the violation does not consist only in the receiving state failing to protect the archives and documents against third party action. The court is itself an organ of the receiving state, and the violation consists also in its receipt and use of the material. No one doubts that if the document has been communicated to a third party with the actual or ostensible authority of the responsible personnel of the mission, any immunity in respect of it is lost. In the form communicated, it is no longer the missions document: Shearson Lehman Bros Inc v Maclaine Watson & Co (International Tin Council intervener) (No 2) [1988] 1 WLR 16, 27 28. But what if the document, or more plausibly a copy of the document or information about it, has come into the hands of a third party without authority? Subject to an important reservation (see below) I think that in that case there is a violation if the courts of the receiving state receive it in evidence. This is not, as is sometimes suggested, because of the words wherever they may be. They have a different purpose, as I have explained. It is because of what is involved in the notion of inviolability, and in the receiving states obligation to give effect to it. The real objection is to the receiving state employing them for a purpose inconsistent with their confidential status. Article 25 of the Convention, which is not one of the articles scheduled to the Diplomatic Privileges Act but informs the interpretation of those that are, requires the receiving state to accord full facilities for the performance of the functions of the mission. As Professor Denza observes (Diplomatic Law, 4th ed (2016), 170), article 25 is not an additional source of rights but an ancillary provision intended to make effective those facilities which are assured by other provisions of the Convention. Thus it has been held that as a matter of public international law it prevents the courts of the receiving state from acting in such manner as to obstruct the mission in carrying out its functions, for example by permitting the judicial enforcement of judgments against embassy property: Alcom Ltd v Republic of Colombia [1984] AC 580, 599. A similar view was expressed by the German Constitutional Court in the Philippine Embassy Bank Account Case (1977) 46 BVerfGE 342, 395, 397 398 and by the United States District Court for the District of Columbia in Liberian Eastern Timber Corp v Government of the Republic of Liberia (1987) 89 ILR 360, 363. In my opinion, similar considerations apply to the reception in evidence by the courts of the receiving state of confidential documents obtained directly or indirectly through a violation of a missions archives and documents. Article 24 gives effect to the confidential status of these documents, which is necessary to the functioning of the mission. Their inviolability necessarily imports that the state will take reasonable steps to prevent the violation of that status and will not itself be party to its violation. In Rose v The King [1947] 3 DLR 618, a decision of the Appellate Division of the Supreme Court of Quebec, the appellant had been convicted on charges of conspiracy with (among others) members of the embassy of the Soviet Union in Ottawa to violate the provisions of the Official Secrets Act. The evidence against him had included documents abstracted by a defector without authority from the files of the Russian military attach and delivered to the Canadian government. The appeal was dismissed on the controversial ground that diplomatic immunity was subject to an exception for cases where embassy personnel had conspired against the security of the receiving state. But, subject to this supposed exception, Bissonnette J, in a judgment with which the rest of the court concurred, considered that as a matter of customary international law no court had jurisdiction or competence to take cognizance of documents emanating from a foreign embassy without the consent of the sending state. At p 646, he observed: International law creates a presumption of law that documents coming from an embassy have a diplomatic character and that every court of justice must refuse to acknowledge jurisdiction or competence in regard to them. Fayed v Al Tajir [1988] QB 712 was a decision of the Court of Appeal in England in a defamation action. The defendant, who was described as the de facto ambassador of the United Arab Emirates in London, had made the statements complained of in internal correspondence of the embassy, copied to the foreign minister. The relevant letter was subsequently communicated to the plaintiff by its recipient, a counsellor at the embassy, without authority. The issue was held to be non justiciable, and the letter subject to absolute privilege. But Kerr LJ (with whom Croom Johnson LJ agreed) considered that the letter was also protected by article 24 of the Vienna Convention. In Shearson Lehman Bros Inc v Maclaine Watson & Co (International Tin Council intervener) (No 2) [1988] 1 WLR 16, the House of Lords considered the deployment in evidence of copies of documents of the International Tin Council which had been obtained by third parties. By statute, the Councils official archives enjoyed the same protection as those of a diplomatic mission. The Appellate Committee held that the question depended on whether the third party had obtained them with the authority of the Council or in circumstances where he could reasonably assume authority. On the assumption that a document forming part of the Councils archives had been communicated to the third party without authority, Lord Bridge (with whom the rest of the Appellate Committee agreed) held at p 27G H that it would be wholly inimical to the underlying purpose that the judicial authorities of the host state should countenance the violation by permitting the violator, or any one who receives the document from the violator, to make use of the document in judicial proceedings. Cases in other jurisdictions are rare, but it may be noted that the German Federal Court has applied a similar principle to evidence derived from the monitoring of telephone lines contrary to the corresponding principle of the Vienna Convention on Consular Relations (1963): BGHSt 36, 396 (4.4.1990). There is, however, a reservation of some importance which follows from the nature of the protection accorded by article 24 of the Convention, as I have analysed it. It concerns documents which, although indirectly obtained without authority from the archives and documents of a mission, have entered the public domain. By that I mean that they have been disclosed not simply to a few people or in circumstances where it would take some significant effort on the part of others to discover their contents, but that they are freely available to any one who cares to know. This was not a question considered in any of the cases cited in the previous paragraph, and may not have arisen on the facts. In principle, as I have explained, article 24 protects documents under the control of the mission, but not documents which never were or are no longer under its control. The extension of the protection to documents under a missions control which (or the contents of which) have come into the hands of third parties without authority is necessary in order make article 24 effective by preserving the confidentiality of unlawfully communicated documents in accordance with the articles purpose. The English courts cannot, consistently with the privileges and immunities of a diplomatic mission, allow themselves to be made the instrument by which that confidentiality is destroyed. But once the documents have been published to the world, it has already been destroyed. There is nothing left to be preserved of the interest protected by article 24. It is arguable that where a document has been put into the public domain by the very person who has violated the archives and documents of the mission, he should not be allowed to rely on the fact, although the difficulties of the argument have often been pointed out, for example by Lord Goff in Attorney General v Guardian Newspapers (No 2) 1990] 1 AC 109, 286 287. But that is a refinement which does not arise on the facts in the present appeal, and I need not consider it further. The Secretary of States cross appeal faces, as it seems to me, two distinct and equally insuperable difficulties. The first is that, although the cable relied upon by Mr Bancoult must have emanated directly or indirectly from a US government source, the Secretary of State is unable to establish that it was obtained by Wikileaks, and through them by The Guardian and The Telegraph, from the archives of the US embassy in London as opposed to some other unprotected organ of the US government. He has not therefore established the essential factual foundation for reliance on article 24 of the Vienna Convention. Secondly, even if the cable had come from the archives of the US embassy, the document has entered the public domain. Mr Bancoult was not party to the leaking of the cable and has not put it in the public domain. He has merely made use of what is now the common knowledge of any one who cares to interest himself in these matters. In my opinion it cannot possibly be a violation of the US embassys archives or documents for Mr Bancoult to make use in litigation of the common knowledge of mankind simply because it was once confidential to the US embassy in London. Nor could it be a violation for the English courts to take cognizance of a document which has escaped from the control of the US embassy and whose confidential status long ago came to an end. It was suggested to us that even if there was no remaining confidence in the document or its contents, the missions archives and documents would be violated by making findings about its authenticity, since those findings would inevitably increase their interest and value. For the same reason it was suggested that to do this without the consent of the sending state would amount to the exercise of compulsion. I do not accept this. If the contents of the document are no longer protected from public scrutiny because they are in the public domain, I cannot see that any greater protection can attach to inferences drawn from those same contents, whether about its authenticity or anything else. albeit for reasons somewhat different from those of the Court of Appeal. In those circumstances, I would dismiss the Secretary of States cross appeal, LORD KERR: (dissenting) Improper motive (i) Background The only legitimate purpose for introducing a marine protected area (MPA) around the Chagos Islands was to protect marine life. If it could be demonstrated that this was not the reason that it was introduced, or that there was a collateral purpose for its introduction, the establishment of an MPA would be unlawful. It is a centrepiece of the appellants case that his counsel was denied the opportunity to pursue a line of cross examination that would have revealed an ulterior motive for the MPA. This claim prompts the need for a careful examination of the circumstances in which Mr Plemings cross examination of Mr Roberts and Ms Yeadon before the Divisional Court was curtailed. It is also necessary to look closely at how this matter was considered by the Court of Appeal. The appellant also argues, however, that the refusal to admit a critical item of evidence meant that the Divisional Court did not assess that evidence for its potential to undermine the case for the respondent. Before considering these arguments, one must be clear about the importance of that item of evidence, a cable which, the appellant claims, was sent on 15 May 2009 by the United States Embassy in London to departments of the US Federal Government in Washington. That cable, it is claimed, contained a record of what was said at a meeting on 12 May 2009 between a United States political counsellor, Mr Richard Mills, and Mr Colin Roberts, Head of Overseas Territories Directorate, Commissioner for British Indian Ocean Territory (BIOT) and Ms Joanne Yeadon, Administrator of BIOT and Mr Ashley Smith, the Ministry of Defences Assistant Head of International Policy and Planning. As the Court of Appeal said (at para 10 of its judgment), the cable is the only near contemporaneous record of the meeting. It purports to have been composed three days after the meeting took place. If it is authentic, or, perhaps more pertinently, if there is no reason to doubt its authenticity, it is, at least potentially, a significant source of evidence about the reasons for making the MPA. The first paragraph of the cable stated that a senior Foreign and Commonwealth Office official (Mr Roberts) had assured his American counterparts that the establishment of the MPA would in no way impinge on the US governments use of the British Indian Ocean Territory (BIOT). In that context, Mr Roberts is said to have asserted that the BIOTs former inhabitants [the Chagos Islanders] would find it difficult, if not impossible, to pursue their claim for resettlement on the islands if the entire Chagos Archipelago were a marine reserve. It is, of course, understandable that Mr Roberts would want to make it clear that the establishment of the MPA would not affect Americas use of BIOT as a military base. But, whether that also required the statement that the Chagos Islanders would find it difficult to resettle if the entire Chagos Archipelago became a marine reserve is more imponderable. After all, many of the islands in the archipelago were not required by the US for their military activities in the area. The obvious question arises, therefore, why it was necessary to state that the MPA would have the effect of preventing resettlement in any of the islands. It has been pointed out that this issue was not raised in argument in the Supreme Court. That, as it seems to me, is beside the point. The unalterable fact is that no evidence has been produced which established that the entire archipelago was required for American military activities. What was at stake here was the denial of the opportunity to the Chagos Islanders to return to their ancestral homeland and whether that denial was required in order to achieve the reasonable requirements of the USA. That circumstance should concern this court, whether or not it was raised in argument, when we are asked to consider the impact which the introduction of the cable in evidence might have had on the outcome of the proceedings before the Divisional Court. There was no evidence that the continuation of military activities required the depopulation of all the islands. In those circumstances, the reason that the civil servants advised the minister to make a MPA was highly relevant. It is therefore not only legitimate for, it is required of, a court examining the reasons for making the MPA to address the question whether the minister has been properly appraised of all material factors. If it was wholly unnecessary to keep uninhabited the islands other than Diego Garcia, the motives of the civil servants in recommending that course were directly relevant to the question of why they had advocated the establishment of the MPA. Was it to frustrate any further campaign to allow the Chagos Islanders to return to their homeland? To dismiss and treat as irrelevant this consideration simply because it did not feature in the appellants argument cannot be right. It has been pointed out that, in the original exchange of notes between the United States and United Kingdom in 1966 it was stipulated that all of the BIOT be set aside for defence purposes and that any significant change of the BIOTs status that could impact the BIOTs strategic use would require US consent. But what of that? Here we are examining the motivation for the recommendation of the establishment of an MPA. Was it for the purpose of protecting marine life? Or was it in order to ensure that the Chagossians campaign could go no further and that the Americans desire to have all the BIOT preserved for their use (assuming that that desire had persisted since 1966) would be fulfilled? It is no answer to the charge of improper motive as to the reasons for advocating the establishment of the MPA, that this chimed with the wishes of the USA. At para 7 of the cable, Mr Roberts is recorded as saying that a way had to be found to get through the various Chagossian lobbies. He is said to have admitted that the British government was under pressure from the Chagos Islanders to permit resettlement of the outer islands. Further, Mr Roberts is recorded as having observed that, according to the British governments current thinking, there would be no human footprints and no Man Fridays on BIOTs uninhabited islands. In the words of the cable, Mr Roberts asserted that establishing a marine park would, in effect, put paid to resettlement claims of the archipelagos former residents. When it was suggested by the Americans present at the meeting that the advocates of Chagossian resettlement continued vigorously to press their case, Mr Roberts replied that the UKs environmental lobby was far more powerful than the Chagossians. Comment by the author of the cable is littered with observations about the possible resettlement of the Chagos Islands. Reference is made to the possible appeal by the Chagossians to the European Court of Human Rights (ECtHR) and the British governments assurance that this would be firmly resisted. This is the pervasive theme of the meeting. And the cable also stated that after the meeting had ended, Ms Yeadon urged US embassy officials to affirm that the US government required the entire BIOT for defence purposes. She is recorded as having said that making this point would be the best rejoinder to the Chagossians assertion that partial settlement of the outer islands would have no impact on the use of Diego Garcia. This is important. There is no evidence that America did need the entire BIOT. Why, if she did, did Ms Yeadon urge the US government to make this claim, if not in order to thwart the Chagos Islanders aspiration to return to at least part of their homeland? The final two paragraphs of the cable contain significant observations in relation to the importance placed on the possibility of resettlement. These are the relevant passages from those paragraphs: Regardless of the outcome of the ECtHR case, however, the Chagossians and their advocates, including the All Party Parliamentary Group on Chagos Islands (APPG), will continue to press their case in the court of public opinion. Their strategy is to publicise what they characterise as the plight of the so called Chagossian diaspora, thereby galvanising public opinion and, in their best case scenario, causing the government to change course and allow a right of return. They would point to the governments recent retreat on the issue of Gurkha veterans right to settle in the UK as a model We do not doubt the current governments resolve to prevent the resettlement of the islands former inhabitants, although as FCO Parliamentary Under Secretary Gillian Merron noted in an April parliamentary debate, FCO will continue to organise and fund visits to the territory by the Chagossians. We are not as sanguine as the FCOs Yeadon, however, that the Conservatives would oppose a right of return. Indeed, MP Keith Simpson, the Conservatives Shadow Minister, Foreign Affairs, stated in the same April parliamentary debate in which Merron spoke, that HMG should take into account what I suspect is the all party view that the rights of the Chagossian people should be recognised, and that there should at the very least be a timetable for the return of those people at least to the outer islands, if not the inner islands. Establishing a marine reserve might, indeed, as the FCOs Roberts stated, be the most effective long term way to prevent any of the Chagos Islanders former inhabitants or their descendants from resettling in the BIOT. It is plain, as I have said, that a dominant theme of the meeting was that the establishment of the MPA would prevent any resettlement of the islands. It certainly preoccupied the Americans and it was a recurring refrain in the assurances that Mr Roberts and Ms Yeadon are said to have given. Viewed in isolation, the cable certainly creates a suspicion that this was a motivating factor in the decision to declare an MPA. The Divisional Court concluded that the cable was not admissible in evidence. It nevertheless permitted Mr Pleming to cross examine Mr Roberts and Ms Yeadon about its contents on the basis that its authenticity was assumed but not established. The Court of Appeal considered that the cable was admissible but held that, even if it had been admitted, it would have made no difference to the conclusion of the Divisional Court that improper motive had not been established. The arguments about admissibility have been fully canvassed in the judgments of Lord Mance and Lord Sumption and need not be repeated here. I agree with Lord Mance that it has not been established that the cable remained part of the archive of the London mission and, on that account, that the status of inviolability can no longer be claimed. I also agree with Lord Sumption that it cannot be a violation of the US embassys archives to use in litigation a document which has entered the public domain. One must keep in mind that the exclusion of the cable had two distinct effects. First, it restricted the cross examination of Mr Roberts and Ms Yeadon. It was not possible to challenge them on the basis that the document was genuine and was to be taken as having recorded their statements at the meeting and, in Ms Yeadons case, subsequently. Being able to confront a witness with statements that she or he previously made which are inconsistent with their testimony is one of the most important forensic tools in the cross examiners armoury. Technically, Mr Pleming was bound by the answers given by the witnesses to questions based on the cables contents. This would not have been the case if the cable had been admitted in evidence. It has been suggested that the evidence given by Mr Roberts about the meeting on 12 May and Ms Yeadons own evidence give a picture which is generally and substantially consistent with that presented by the cable. Much of the evidence that they gave coincides with the contents of the cable, it is true. But in crucial areas it is incontestably inconsistent. It is not in the least surprising that much of the evidence from the civil servants and the contents of the cable were found to coincide. Indeed, it was part of Mr Plemings admitted strategy to point to that coincidence in order to establish the cables authenticity. But to imply that there were not highly significant differences, differences which, moreover, touched on the very issue at stake in this case, is unrealistic. Mr Roberts denied using the expression, Man Fridays. Ms Yeadon denied that Mr Roberts had said that establishing an MPA would in effect put paid to resettlement claims. This is directly contrary to the contents of the cable. Indeed, it is directly contrary to the evidence of Mr Roberts himself, for he is recorded as having accepted that he did say to the US officials that the establishment of an MPA would in effect put paid to the resettlement claims. The opportunity to exploit these differences if the cable had been admitted in evidence, as it should have been, cannot be airily dismissed. The entire cursus of the cross examination (and consequently the conclusions that might have been reached on the critical issue) could have been radically different. The second consequence of excluding the cable from evidence was that it did not rank as independent material with the potential to act as a significant counterweight to the FCO witnesses testimony. If the Divisional Court had admitted the cable in evidence, it would have to be pitted as an item of evidence which was in many respects directly contrary to the testimony of Mr Roberts and Ms Yeadon. The court would have been required to assess the veracity and reliability of their claims against the contemporaneous evidence provided by the cable. As it was, the Divisional Court merely theorised about whether Mr Plemings cross examination would have been more effective if the cable had been admitted in evidence. It did not consider the cables contents for their capacity to discredit the testimony of the two FCO witnesses. (ii) The curtailing of cross examination Dealing with the impact of the exclusion of the cable from evidence, the Court of Appeal said at para 88: [Our] outline of the cross examination of both witnesses does not capture its full flavour. It was extensive and searching. In our judgment, Mr Pleming was not disadvantaged by not being able to put questions on the basis that the cable was authentic and a true record of what was said at the meeting of 12 May 2009. He tested the evidence of Mr Roberts and Ms Yeadon on the basis of the cable. It is true that he was not able to put questions like: have you any explanation for the fact that you are recorded as having said X when you deny having said it? But it is unrealistic to suppose that, if Mr Pleming had been able to put such questions, this would have materially affected the thrust or course of the cross examination or of the answers that were given. The Divisional Court was right to say that the dividing line between questions which its ruling permitted and those which it did not permit was fine. In our judgment, the inhibition on Mr Plemings questions can have had no material effect on the course or the outcome of the cross examination. Mr Pleming was able to, and did in fact, explore the accuracy of the contents of the cable with both witnesses. In particular, he probed the purpose of the MPA and whether what was purportedly recorded in the cable as having been said had in fact been said. It is true that there was extensive cross examination of Mr Roberts and Ms Yeadon based on the contents of the cable. The difference between probing witnesses accounts and confronting them with admissible evidence which flatly contradicts their accounts should not be underestimated, however. As the Court of Appeal observed (in para 80 of its judgment), Mr Roberts refused to answer questions as to whether the contents of the cable were accurate. This was in reliance on the governments policy of neither confirm nor deny (NCND) policy. It appears to have been accepted without demur by the Divisional Court and the Court of Appeal that NCND justified this stance. For my part, I would not be disposed to accept that this policy could be resorted to in order to avoid answering a relevant question with which the court was required to deal. Given that the Divisional Court had decided that the authenticity of the cable should be assumed, it appears to me that Mr Roberts should have been required to answer as to whether what was recorded in the cable faithfully recorded what had taken place. As it happens, of course, Mr Roberts did address the question whether some parts of the cable were accurate see para 81 of the Court of Appeals judgment. What is clear, in my view, is that Mr Roberts could not have relied on NCND if the cable had been admitted in evidence. Nor could he have refused to deal with what the Court of Appeal described in para 82 of its judgment as the ultimate question: whether he had an explanation for the fact that he was recorded as having made certain statements which he denied having uttered. In deciding whether being required to answer such a question could have made a difference to the outcome of the Divisional Court case, one must consider the range of possible responses that might have been given. (In this context, Lord Mance has accepted for the purposes of the appeal that the appropriate question is whether the admission of the cable could have made a difference see para 23 of his judgment. For reasons that I will give later in this judgment, I consider that this is indubitably the correct test in this instance.) If one imagines that Mr Roberts answer to the ultimate question was that he had no explanation, or even, when pressed, that the cable was indeed accurate and that he recanted his initial disavowal of what he was recorded as having said, it is not difficult to conclude that this could have made a significant difference to the courts assessment of him as a reliable witness. The Court of Appeal did not consider the range of possible responses that Mr Roberts might have given to this question. In my opinion, it should have done. And if it had done, it could not have reached the conclusion that it did. (iii) The capacity of the cable to counter the FCO evidence The Court of Appeal dealt cryptically with the second issue, namely, the status of the cable as independent material with the potential to act as a counterweight to the FCO witnesses testimony. At para 89, the court said, [w]e do not accept that there is a realistic possibility that the courts assessment of the evidence of Mr Roberts and Ms Yeadon would have been affected if the cable had been formally admitted in evidence as an authentic document. Case law emphasises the importance of documentary evidence in assessing the credibility of oral witnesses. In Onassis v Vergottis [1968] 2 Lloyds Rep 403 Lord Pearce, having reviewed the various reasons that a witnesss oral testimony might not be credible, stated, all these problems compendiously are entailed when a judge assesses the credibility of a witness; they are all part of one judicial process. And in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part. In Armagas Ltd v Mundogas SA (The Ocean Frost) [1985] 1 Lloyds Rep 1, 57 Robert Goff LJ made this observation: It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence reference to the objective facts and documents, to the witnesses motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth. That approach was approved by the Privy Council in Grace Shipping Inc v CF Sharp & Co (Malaya) Pte Ltd [1987] 1 Lloyds Rep 207 and applied in a number of subsequent cases. For example, in Goodman v Faber Prest Steel [2013] EWCA Civ 153, the Court of Appeal held that the trial judge had erred in accepting a personal injury claimants evidence of pain without dealing with contradictory documentary evidence and explaining why the claimants evidence was to be preferred. Moore Bick LJ applied the approach of Robert Goff LJ and stated that memory often plays tricks and even a confident witness who honestly believes in the accuracy of his recollection may be mistaken. That is why in such cases the court looks to other evidence to see to what extent it supports or undermines what the witness says and for that purpose contemporary documents often provide a valuable guide to the truth. He concluded that: [O]ne is left with the clear impression that [the judge] was swayed by Mr Goodmans performance in the witness box into disregarding the important documentary evidence bearing on what had become the central question in the case. It may have been open to her to prefer what he had said in the witness box, but if she was minded to do so it was incumbent on her to deal with the documentary evidence and explain why Mr Goodmans oral evidence was to be preferred. It is not to be suggested that the Divisional Court ignored or disregarded the important documentary evidence which the cable constituted. But if it had admitted the cable in evidence, as should have happened, the contrast between some of its contents and the evidence of Mr Roberts and Ms Yeadon would have been starker. The need to confront the discrepancy between the two could not have been avoided. Although said in relation to commercial litigation, I consider that the observations of Leggatt J in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), paras 15 22 have much to commend them. In particular, his statement at para 22 appears to me to be especially apt: the best approach for a judge to adopt is, in my view, to place little if any reliance at all on witnesses recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth. The intellectual exercise on which the Divisional Court was engaged in evaluating the evidence of Mr Roberts and Ms Yeadon, having refused to admit the cable in evidence, was quite different from that on which it would have had to embark if the evidence had been received. By refusing to admit the evidence, the court effectively had confined its role to an assessment of how well the witnesses had withstood cross examination. If the cable had been admitted, the discrepancies between the contents of the cable and their testimony would have had to be considered objectively, while keeping in mind all the adjurations as to the likelihood of contemporaneous documentary evidence being intrinsically more reliable. If the Divisional Court had admitted the cable in evidence, what were the possible consequences? If it had concluded, as well it might, that it was inherently unlikely that the cable would have recorded Mr Roberts as having said there would be no human footprints and no Man Fridays on BIOTs uninhabited islands, unless he had actually used those words, what impact would that have had on his believability? These were striking expressions. Indeed, Ms Yeadon said that, if they had been used, she would have been shocked. Could they have been fabricated by the author of the cable? Why should they have been? If the cable had been admitted and was therefore a freestanding item of evidence, it is at least possible that the Divisional Court would have decided that it was unlikely that the person who composed the cable would have fabricated those phrases and attributed them directly to Mr Roberts. And, if it was concluded that this was unlikely, what effect would that have on Mr Roberts credibility in light of his denial of having used them? When the Court of Appeal came to consider what difference the admission in evidence of the cable might have made, the question for them should have been whether a different outcome was possible, not whether that would have happened or even whether it was likely. (I will explain presently why I consider that the possibility of a different result was the correct test.) The Court of Appeal, however, seems to have considered various possible formulations at different points of its judgment. At para 89 it twice stated that it was unrealistic to suggest that the court would have reached a different conclusion, had the evidence been admitted. Later in the same paragraph the court said that it had borne in mind that a legally correct approach would have made no difference to the outcome: see, for example, R v Chief Constable of the Thames Valley Police, Ex p Cotton [1990] IRLR 344, per Bingham LJ at para 60. These statements suggest that the appeal court considered that, unless the admission of the cable would have made a difference, as opposed to whether it could have done so, a review of the Divisional Courts decision would not be appropriate. I do not consider that this is the correct test and I turn now to that issue. (iv) The correct test In Malloch v Aberdeen Corpn [1971] 1 WLR 1578, the appellant had been dismissed from his employment as a teacher by a motion passed by an education committee. He claimed that he had not been given a fair hearing and that, if he had been permitted to make representations, it was possible that some members of the committee would not have voted in favour of his dismissal. (The motion required to be carried by a two thirds majority). The House of Lords held that teachers in Scotland had in general a right to be heard before they were dismissed and, since, in view of the ambiguity of the regulations by reason of which the appellant had been dismissed, he might have had an arguable case before the committee and might have influenced sufficient members to vote against his dismissal. The committee was in breach of duty in denying him a hearing and the resolution and dismissal were accordingly unlawful. At 1582H Lord Reid dealt with an argument that affording the appellant a hearing would have made no difference. He said: it was argued that to have afforded a hearing to the appellant before dismissing him would have been a useless formality because whatever he might have said could have made no difference. If that could be clearly demonstrated it might be a good answer. But I need not decide that because there was here, I think, a substantial possibility that a sufficient number of the committee might have been persuaded not to vote for the appellants dismissal. The substantial possibility that the Divisional Court would have reached a different conclusion if Mr Roberts evidence had taken a different turn as a consequence of his having to address and answer the ultimate question cannot be dismissed, in my opinion. Moreover, if the court had been required to confront the obvious conflict between Mr Roberts and Ms Yeadons evidence and that contained in the cable, again there was a distinct possibility that it would have been concluded that the frustration of the campaign by the Chagossians to resettle the outlying islands was, at least, a collateral purpose in the civil servants recommendation to the minister that the MPA be established. Lord Mance has said that the test to be applied in deciding whether a different outcome could or would have eventuated must depend on the context, including, in particular, how well placed the court is to judge the effect of any unfairness para 23. Perhaps. I would observe, however, that if the court cannot with confidence judge the measure of unfairness to the affected individual, this should surely impel the adoption of the could rather than the would test. Unless one could be confident that unfairness would not accrue, I find it difficult to see how it could be otherwise. As noted at para 106 above, the Court of Appeal suggested that the proper manner of dealing with the question was to ask whether a legally correct approach would have made no difference to the outcome. In relation to this case, that means that one should ask the question, if the Divisional Court had admitted the cable in evidence and if it had permitted cross examination on the basis that it was in evidence, would this not have affected the outcome. On one view, this partakes of the application of a could test, and, in effect, this is how Lord Mance considers that the Court of Appeal dealt with the issue. For the reasons given earlier, I do not agree. Even if that had been the Court of Appeals approach, however, I could not agree with the conclusion that it reached. What might have happened, as opposed to what would have happened involves consideration of a different range of imponderables. Deciding what would have happened involves the decision maker in imposing, to some extent at least, his or her own view as to what ought to have happened. By contrast, deciding what might have happened requires the decision maker to envisage a range of possibilities and to decide whether any one of those might have been chosen by the original decider, if the position before him or her had been as it has now been found to obtain. The Court of Appeal did not review the range of possible outcomes that might have accrued if the cable had been admitted in evidence or if Mr Pleming had been permitted to press on with this cross examination to demand an explanation as to why the civil servants evidence differed from its contents. In my opinion, that was central to a proper examination of the issue. (v) The genesis and development of the MPA It is true, as Lord Mance points out in para 25 of his judgment, that the whole idea of an MPA and a no take zone came from Pew, an American environmental group. It is also true, again as stated by Lord Mance, that David Miliband, the then Secretary of State for Foreign and Commonwealth Affairs, was the relevant decision maker as to whether the MPA should be established. The circumstance that it was the minister, and not the civil servants who were advising him, who would ultimately decide whether the MPA would be made does not, of itself, dispose of the question whether there was a collateral motive in the advocacy of the scheme by Mr Roberts and Ms Yeadon. In his note of 5 May 2009 to Mr Miliband, Mr Roberts referred to the Chagos Islanders plans for resettlement. He was bound to do so because this was an obvious aspect to be taken into account, in the event that an MPA was declared. The note contains a significant passage on this question (quoted by Lord Mance at para 27): Assuming we win in Strasbourg, we should be aiming to calm down the resettlement debate. Creating a reserve will not achieve this, but it could create a context for a raft of measures designed to weaken the movement. This statement is to be contrasted with what Mr Roberts is quoted in para 7 of the cable as having said during the meeting with American officials some seven days later. At that meeting he is recorded as having claimed that British government thinking was that there would be no human footprints and no Man Fridays on BIOTs uninhabited islands. He is also recorded as having asserted that establishing a marine park would, in effect, put paid to resettlement claims of the archipelagos former residents. So, although he told the minister that the MPA would not calm down the resettlement debate, he was telling the Americans that the resettlement claims would be effectively extinguished. And, of course, in further contrast to what the minister was being led to believe would be the effect of the MPA on the Chagossians hopes of resettlement, Ms Yeadon was recorded in the cable as encouraging US embassy officials to affirm that the US government required the entire BIOT for defence purposes so as to nullify the Chagossians assertion that partial settlement of the outer islands would have no impact on the use of Diego Garcia. The circumstance that the decision to make the MPA rested with the minister does not immunise the process by which that decision was made from the possible taint of improper motive. If those who advised the minister were actuated by such a motive but tailored their advice to the minister so as to conceal it, the fact that the minister took the decision does not render the underlying collateral purpose of no consequence. The contrast between the advice given to the minister and the contents of the cable incidentally reinforces the need for an unrestrained cross examination of the witnesses, particularly because, as Lord Mance observed in para 40, the Divisional Court did not address the contradiction in the evidence of Mr Roberts and that of Ms Yeadon as to whether the former did in fact say that an MPA would put paid to resettlement. Lord Mance has suggested (in paras 41 43) that even if Mr Roberts and/or Ms Yeadon had an improper motive, there is no conceivable reason to conclude that this affected the ultimate decision maker. I am afraid that I cannot agree. True it is, as the Court of Appeal observed in para 91 of its judgment, that the decision was personal to the Foreign Secretary. True it may also be, as the Court of Appeal found, that the Foreign Secretary believed that the declaration of an MPA would redound to the credit of the government and, perhaps, to his own credit, although I am not at all clear as to the evidence on which the court drew to support that conclusion. But, if the minister had been aware that the civil servants were recommending the establishment of an MPA with the covert purpose of ensuring that the Chagos Islanders ambition to return to their homeland would never be fulfilled, can it be said that his decision would be immune from challenge? Surely not. It is not a question of reconfiguring the principle in Carltona Ltd v Commissioners of Works [1943] 2 All ER 560 so as to fix the Secretary of State with the knowledge, motives and considerations of civil servants. Rather it is whether a decision of the Secretary of State, taken in ignorance of a concealed reason for the recommendation on which he acted, can be regarded as lawful. In my judgment, a decision taken on a recommendation made to him without knowledge of the true reasons that it was made, cannot be upheld on the basis that it was a decision made without regard to material factors. On the premise that the advice to the Foreign Secretary was fashioned so as to withhold from him the true motivation for it, his decision is impeachable because he was deprived of the opportunity to consider all relevant circumstances and, on that account, it could not stand. Again, it is suggested that this was not argued on behalf of the appellant before this court. For the reasons given earlier, I do not accept that this is a basis on which the point may be ignored, if it has validity. Lord Mance has stated, however, that the withholding of such information, if it were deemed sufficient to undermine a ministerial decision, would lead logically to the conclusion that any irrelevant misconception possessed by any civil servant at any level in the civil service hierarchy in relation to any proposal ultimately reaching Cabinet level could undermine a Cabinet decision. para 48. With much regret, I must register my profound disagreement with this statement. In the first place, if the appellants case is made good, the purpose of Mr Roberts and Ms Yeadon was not the product of a misconception. It was the outworking of a strategy to promote the establishment of the MPA for an ulterior motive. A minister whose imprimatur was required to endorse the advice given would surely need to be aware of the true motive for recommending the course that he had been advised to follow, in order that his decision be immune from challenge. There is no logical connection between the withholding of vital, relevant information from a decision maker and his failure to be aware of a misconception on the part of those advising him. The fact that the Foreign Secretary rejected the proposal that he should consult on the proposal is nothing to the point, in my opinion. He decided to proceed with the MPA on the basis of advice that it would not, of itself, eliminate the chances of resettlement of the Chagos Islands. If, contrary to that advice, it was the view of the civil servants that the MPA would achieve precisely that aim, the minister should have been aware of it. Not being informed of it meant that he was not in a position to take all material considerations into account. I consider, therefore, that the Court of Appeal should have recognised that there was a substantial possibility that, not only would the Divisional Court have taken a different view of the evidence of Mr Roberts and Ms Yeadon, if they had admitted the cable and the case had proceeded to its conventional conclusion, but that there was an equally substantial possibility that it would have concluded that the Foreign Secretarys decision could be impugned because it was taken on a misapprehension of the true facts and circumstances. For these reasons, I would have allowed the appeal and ordered that the matter be remitted for hearing before a Divisional Court with the direction that it be reconsidered on the basis that the cable was admissible in evidence. Fishing rights I agree with Lord Mance on the issue of fishing rights. LADY HALE: This case is of huge importance to the Chagossians in their campaign to be permitted to re settle in their islands and to fish in the waters surrounding them. On the substance of the appeal, I agree with Lord Kerr that we cannot be confident that the findings of the Divisional Court would have been the same had the Wikileaks cable been admitted into evidence and counsel been permitted to cross examine the FCO officials upon it. The crucial legal issue in the case is therefore the admissibility of the cable, which is a matter of considerable importance both nationally and internationally. I agree with both Lord Mance and Lord Sumption that inviolable in articles 24 and 27(2) of the Vienna Convention on Diplomatic Relations in general means, among other things, that the archives and documents (article 24) and the official correspondence (article 27(2)) of the mission cannot generally be admitted in evidence, at least in the courts of the receiving state, because to do so would interfere in the privacy of the communications of the mission, both internally and with its sending government. The question, therefore, is when such inviolability is lost. In Lord Mances view, the cable did not remain part of the archive of the London mission once it had been remitted to the State Department or some other location for information and use there (para 20). It is indeed very probable that the leak did not take place from the mission but from elsewhere in the United States government. Nevertheless, as the main purpose of the inviolability rule is to allow the mission to communicate in confidence with the sending government, documents emanating from a mission must retain their confidentiality and consequent inviolability in some circumstances. Lord Sumption agrees with Lord Mance but bases this on the principle of control. Documents, he says, are inviolable if they are under the control of the missions personnel, as opposed to other agents of the sending state (para 68). I can agree with this only if it is understood that control includes the restrictions placed by the sending mission (and for that matter the sending state communicating with the mission) on the further transmission and use of the document. It is my understanding of civil service practice in this country that the initiator of a document decides upon the appropriate level of confidentiality and marks the document accordingly. Other persons within government who receive the document are bound to respect that marking. (Cabinet Office, Government Security Classifications, April 2014, eg para 28.) It is reasonable to assume that other countries have similar practices in their intra governmental communications. It cannot be the case that a diplomatic communication loses its inviolability once it has left the mission. The concept of control must include the restrictions placed by the sending mission on the dissemination of the communication, subject to the directions of their superiors in the sending state. In both versions of the Wikileaks cable which we have one published in the Guardian and one in the Daily Telegraph it was classified Confidential by Political Counsellor Richard Mills for reasons 1.4b and d (whatever they may be). That indicates a rather low level of control exercised over the document, which obviously found its way into many hands before it was acquired and put into the public domain by Wikileaks. Whatever may be the position in relation to other documents passing between a mission and their sending department, it seems clear in this case that whatever control there had initially been exercised over this document, it was lost even before it was put into the public domain. I therefore agree that it was no longer inviolable and should have been admitted in evidence in this case. As Lord Kerr has explained, its contents were such that they could have made a difference to the result. I would therefore have allowed this appeal. |
Part II of the Landlord and Tenant Act 1954 confers a qualified security of tenure on business tenants. A tenant in occupation of the premises under a tenancy for a term of years certain may stay over and request a new tenancy beginning upon its expiry, unless before the tenancy was granted the landlord had served a notice informing the tenant of his rights and the parties had then agreed to exclude the relevant provisions of the Act. The tenant may apply to the court under section 24(1) of the Act for an order granting one. The court is required to make that order unless the landlord makes out one of seven grounds of opposition specified in section 30(1), in which case it is required to refuse one. One of those grounds is that the landlord intends to demolish or reconstruct the premises. The question which arises on this appeal is whether it is open to the landlord to oppose the grant of a new tenancy if the works which he says that he intends to carry out have no purpose other than to get rid of the tenant and would not be undertaken if the tenant were to leave voluntarily. The directly relevant provisions of the Act are section 30(1)(f) and section 31A. Section 30(1)(f) provides that the landlord may oppose the grant of a new tenancy on the ground that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding . Section 31A (which was inserted by the Law of Property Act 1969, section 7(1)), provides: (1) Where the landlord opposes an application under section 24(1) of this Act on the ground specified in paragraph (f) of section 30(1) of this Act the court shall not hold that the landlord could not reasonably carry out the demolition, reconstruction or work of construction intended without obtaining possession of the holding if (a) the tenant agrees to the inclusion in the terms of the new tenancy of terms giving the landlord access and other facilities for carrying out the work intended and, given that access and those facilities, the landlord could reasonably carry out the work without obtaining possession of the holding and without interfering to a substantial extent or for a substantial time with the use of the holding for the purposes of the business carried on by the tenant; or the tenant is willing to accept a tenancy of an (b) economically separable part of the holding and either paragraph (a) of this section is satisfied with respect to that part or possession of the remainder of the holding would be reasonably sufficient to enable the landlord to carry out the intended work. Section 37 provides that where a court is precluded from ordering the grant of a new tenancy on certain grounds, including this one, the tenant is entitled to compensation. The premises in issue on this appeal comprise the ground floor and basement of 80, Jermyn Street in the St Jamess area of London. The freeholders of the building are the South London and Maudsley NHS Foundation Trust and the landlord is the head lessee. The tenant is a textile dealership and consultancy, specialising in antique tapestries and textiles. It occupies the ground floor and basement under an underlease for a term of 25 years from 2 January 1989, and uses them as a retail art gallery, showroom and archive. The rest of the building is occupied and managed by the landlord as a hotel. The local planning authority, Westminster City Council, has designated the St Jamess area as a special policy area, in which it seeks to protect and promote certain uses, namely private members clubs, art galleries and niche retail outlets. Pursuant to that policy, the premises occupied by the tenant are recognised as having a specific, sui generis, use for planning purposes, namely mixed use, comprising retail, depository, research centre, archive library, publishing and conservation for historic tapestries, textile art and carpets. Any material change of use would require planning consent. On 16 March 2015, the tenant served statutory notices requesting the grant of a new tenancy. On 15 May 2015, the landlord served a statutory counter notice opposing the grant of a new tenancy under section 30(1)(f) of the Act. On 8 June 2015, the tenant applied in the Central London County Court for an order. A preliminary issue was directed whether that ground of opposition was made out. The facts are unusually stark. In its defence, the landlord put forward several successive schemes said to represent the works which it intended to carry out. These works were designed (i) to be sufficiently substantial to qualify under ground (f); (ii) to be too substantial and disruptive to be carried out by exercising a right of entry while the tenant remained in possession; and (iii) to avoid the need for planning permission, which would have enabled the tenant to argue that its likely refusal would make the project ineffective. In the words of the judge (HHJ Saggerson), the proposed scheme of works was designed with the material intention of undertaking works that would lead to the eviction of the tenant regardless of the works commercial or practical utility and irrespective of the expense. The scheme went through three iterations. The first scheme involved incorporating the former bar of the hotel into the ground floor of the premises. This scheme was shortly abandoned and replaced by a new scheme which involved creating two new retail units incorporating the premises occupied by the tenant and part of the hotel, and carrying out certain associated external works including the installation of a new street door to allow access to one of the units. The planning officers of the local authority recommended this scheme for refusal, whereupon it was withdrawn and replaced by a third scheme, which was the one eventually relied upon at the trial of the preliminary issue. The third scheme was based on the second, with two significant differences. First, it omitted the external works, which would have required planning permission. For this reason, the internal wall dividing the two proposed retail units stopped two metres short of the shopfront at ground floor level; and there was no external door to one of the units, so that it could be accessed only through the other. Secondly, the new scheme added more extensive internal works, many of which were objectively useless. They included the artificial lowering of part of the basement floor slab, in a way which would achieve nothing other than the creation of an impractical stepped floor in one of the units; the repositioning of smoke vents for no reason; and the demolition of an internal wall at ground floor level followed by its immediate replacement with a similar wall in the same place. The cost of the scheme was estimated by the landlord at 776,707 excluding VAT, in addition to statutory compensation of 324,000 payable to the tenant. It is common ground that the proposed works had no practical utility. This was because, although the works themselves required no planning permission, it would be impossible to make any use of them at all without planning permission for change of use, which the landlord did not intend to seek. Planning permission would have been required because the scheme involved combining premises permitted for hotel use with premises permitted for sui generis use. In addition, one of the retail units was unusable without an entrance from the street. In accordance with a common practice in this field, the landlord supported its evidence of intention with a written undertaking to the court to carry out the works if a new tenancy was refused. The sole purpose of the works was to obtain vacant possession. The landlords evidence was that it was prepared to run the risk that the premises occupied by the tenant would be rendered unusable in order to secure its objective of undertaking [the third scheme] and thereby remove the claimant from the premises. The landlord submitted that the works are thoroughly intended because they are a way of obtaining possession. That is all there is to it. As the landlords principal witness put it, the third scheme was designed purely for the purpose of satisfying ground (f). The judge found that the landlord genuinely intended to carry out the works if they were necessary in order to get rid of the tenant, but that it did not intend to carry out the works if it were not necessary to do so for that purpose. It would not, for example, have been necessary to carry out the works if the tenant agreed to go voluntarily, or it were to be found possible to carry them out by exercising a right of entry without obtaining vacant possession. The landlord gave evidence that in the longer term, it was hoped that the departure of the tenant would facilitate a more ambitious plan of works to add 28 bedrooms to the hotel. It was proposed to review the desirability of proceeding with this plan in 2018. These further works were not, however, the works relied upon by the landlord for the purpose of satisfying ground (f). Schemes like this will not always be economically feasible. They depend on the value of vacant possession exceeding the cost of the useless works. But in locations such as the west end of London, where property values are high and/or rentals depressed by planning restrictions, they may make economic sense as a means of obtaining vacant possession. On that footing, Judge Saggerson found that the landlord genuinely intended to carry out the works and that ground (f) was made out. He therefore declined to order a new tenancy. On appeal to the High Court, Jay J agreed, but gave permission for a leap frog appeal to this court. The justification for the leap frog appeal was that the decision of the courts below was based on a line of authority in the Court of Appeal and the House of Lords to the effect that the operation of the section depended on a two part test. The landlord had to prove (i) that it had a genuine intention to carry out qualifying works; and (ii) that it would practically be able to do so. It was submitted on behalf of the landlord that the effect of these decisions was that nothing else mattered. In particular, the landlords motives, the reasonableness of its intentions, or the objective utility of the works, whether for its own purposes or in the public interest, were all alike irrelevant, except (as the landlord accepted) as material from which the court might infer that the intention to carry them out was not genuine. The origin of the two part test proposed by the landlord is the decision of the Court of Appeal in Cunliffe v Goodman [1950] 2 KB 237.This was an appeal in an action for damages for breach of a repairing covenant on the expiry of a lease. By section 18(1) of the Landlord and Tenant Act 1927, no such damages were recoverable if it is shown that the premises would at or shortly after the termination of the tenancy have been or be pulled down, or such structural alterations made therein as would render valueless the repairs covered by the covenant. The language, purpose and context of the statutory provision under consideration were therefore quite different from those of Part II of the Act of 1954. But it had been held in Marquess of Salisbury v Gilmore [1942] 2 KB 38 that the test for the application of section 18(1) depended on the intention of the landlord at the time when the tenancy came to an end, and the judgment of Asquith LJ in Cunliffe has been treated as a general definition of intention. He held, at p 253, that it connoted a state of affairs which he decides, so far as in him lies, to bring about, and which, in point of possibility, he has a reasonable prospect of being able to bring about, by his own act of volition. On the facts of that case, the landlord failed because it was found that he had no settled intention to carry out the works but was reserving his final decision until further information should become available. After the passage of the 1954 Act, a trio of cases addressed the question of intention in the context of ground (f). The background to all three cases was similar. The landlord wished to occupy the premises himself, but ground (g), which authorised the refusal of a new tenancy in that case, was available only if he had held his interest in the premises for at least five years before the end of the tenants term. Landlords who had acquired their interest within the five year period therefore proposed works to redevelop the premises before moving into occupation, in order to bring themselves within ground (f) instead. The argument was that the existence of ground (g) implied that ground (f) should not be available to a landlord who intended to occupy the premises himself but failed to satisfy the conditions on which ground (g) was available. In Atkinson v Bettison [1955] 1 WLR 1127, the Court of Appeal held that this kind of problem fell to be resolved by determining which was the primary reason for the landlords desire to obtain vacant possession. The judge had refused to order a new tenancy because he found that the landlords real purpose was to occupy the premises and that the proposed redevelopment was no more than an ancillary purpose directed to that end. The Court of Appeal affirmed his decision. Denning LJ (with whom Hodson and Morris LJJ agreed) held that, where there were two purposes, only the primary purpose was relevant. In Fisher v Taylors Furnishing Stores Ltd [1956] 2 QB 78 it was held that the landlords intention to demolish and reconstruct satisfied ground (f), notwithstanding that his purpose was to occupy the premises himself without being able to satisfy ground (g). Denning LJ, delivering the leading judgment in the Court of Appeal, reinterpreted his earlier judgment in Atkinson v Bettison and resiled from his statement that only the primary purpose was relevant. A landlord might have two purposes but, provided that the purpose of demolishing or reconstructing the premises was genuine, it would satisfy ground (f). Grounds (f) and (g) were distinct and each of them had to be considered on their own terms separately. The true view of the earlier decision, he said (p 84), was that the courts should ensure that landlords whose real purpose was to occupy the premises themselves but failed to satisfy ground (g), did not devise spurious schemes of works in order to obtain possession on ground (f): For this purpose the court must be satisfied that the intention to reconstruct is genuine and not colourable; that it is a firm and settled intention, not likely to be changed; that the reconstruction is of a substantial part of the premises, indeed so substantial that it cannot be thought to be a device to get possession; that the work is so extensive that it is necessary to get possession of the holding in order to do it; and that it is intended to do the work at once and not after a time. Unless the court were to insist strictly on these requirements, tenants might be deprived of the protection which Parliament intended them to have. It must be remembered that if the landlord, having got possession, honestly changes his mind and does not do any work of reconstruction, the tenant has no remedy. Hence the necessity for a firm and settled intention. Morris LJ, who had also sat in Atkinson v Bettison, said (p 89): Where, as in section 30(1)(f), proof of an intention is to be supplied, and of an intention related to a particular time, then the genuineness of a declared intention may have to be decided. Considerations as to what may be a landlords primary purpose, or his real intention, or his main purpose, or his secondary purpose, or his real reason (to quote phrases which have been used), are only of relevance and assistance in the course of deciding whether the landlord has proved that he genuinely has an intention of doing one of the things specified in section 30(1)(f), and of doing it on the termination of the current tenancy. The third case was the decision of the House of Lords in Bettys Cafs Ltd v Phillips Furnishing Stores Ltd [1959] AC 20. The decision is authority for two propositions: (i) that the relevant intention of the landlord was his intention at the date of the hearing; and (ii) that grounds (f) and (g) were distinct grounds of opposition, and that accordingly ground (f) should not be read as implicitly excluding cases where the landlord wished to occupy the premises himself. However, the tenant also sought to resurrect the argument rejected in Fisher v Taylors Furnishing Stores Ltd that redevelopment must be the landlords primary purpose, and two members of the Appellate Committee, Lord Denning and Lord Morton, commented on that attempt, obiter. Lord Denning (p 52) reaffirmed the view which he had expressed in Fisher. Lord Morton (pp 44 45) also rejected the tenants argument, but on the more limited ground that it wrongly assumed that grounds (f) and (g) were mutually exclusive categories. The speeches throw little light on the broader relevance (if any) of the landlords motives in seeking to redevelop the premises. But the House may fairly be said to have implicitly endorsed the approach taken in Fisher rather than that in Atkinson. The decision of the Court of Appeal in Housleys Ltd v Bloomer Holt Ltd [1966] 1 WLR 1244 turned on the identity of the relevant premises for the purposes of ground (f). Diplock LJ, however, took the opportunity to point out that Bettys Cafs must be regarded as having definitively laid to rest the concept of the primary purpose floated in Atkinson v Bettison. He observed (p 1251) that the fallacy in that case lay in the proposition that one had got to look and see what the primary intention or purpose or motive of the landlord was. The same point was subsequently made by the Court of Appeal in Turner v Wandsworth Borough Council [1994] 69 P & CR 433, where it was decisive. The facts of that case were that the landlord proposed to demolish the premises with a view to leasing them for a short period as a car park and selling them thereafter if market conditions were favourable. The judge found that the intention to demolish was genuine but that it was colourable because it was simply a device to be able to sell. The Court of Appeal allowed the appeal. Staughton LJ, delivering the only reasoned judgment, treated the above cases as authority for the proposition that in general, motive is irrelevant, provided there is a genuine intention to demolish or reconstruct (p 436). As Baroness Hale pointed out in Majorstake Ltd v Curtis [2008] AC 787, paras 34 35, it is clear that for the purposes of section 30(1)(f) of the Act of 1954 it is for the landlord to decide what works he wishes to carry out and where. It follows that if his intention is genuine, it cannot matter whether it is reasonable, or whether reasonable changes to the scheme would make it consistent with the tenants continued possession of the demised premises: see Decca Navigator Co Ltd v Greater London Council [1974] 1 WLR 748; Blackburn v Hussain [1988] 1 EGLR 77, 79 (Taylor LJ). Although the point must be regarded as res integra in this court, I accept the submission of Mr Fetherstonhaugh QC (who appeared for the landlord) that the touchstone of ground (f) is a firm and settled intention to carry out the works. The landlords purpose or motive are irrelevant save as material for testing whether such a firm and settled intention exists. This is implicit in the abundant case law generated by the Act since Atkinson v Bettison and it is the plain meaning of intention in both ground (f) and ground (g). Mr Fetherstonhaugh is also surely right in saying that as a statutory interference with the landlords proprietary rights, the protection conferred by the Act should be carried no further than the statutory language and purpose require. It confers no more than a qualified security on the tenant. Certain interests of the landlord override whatever security it was intended to confer on the tenant, and one of them is the right to demolish or reconstruct his property in whatever way he chooses at the expiry of the term. Nonetheless, I do not think that these considerations avail the landlord on the facts of the present case. This appeal does not, as it seems to me, turn on the landlords motive or purpose, nor on the objective reasonableness of its proposals. It turns on the nature or quality of the intention that ground (f) requires. The entire value of the works proposed by this landlord consists in getting rid of the tenant and not in any benefit to be derived from the reconstruction itself. The commercial reality is that the landlord is proposing to spend a sum of money to obtain vacant possession. Indeed, in many cases, apart from the statutory compensation, landlords with proposals like these will not even have to spend the money. They need only supply the tenant with a schedule of works substantial and disruptive enough to be inconsistent with his continued occupation. If the landlords argument is correct, the tenant will have no incentive to go to court just to get an undertaking to carry out the works, from which he could derive no possible benefit. He will recognise defeat and leave voluntarily. The landlord will then have no need to give an undertaking to the court and no reason to carry out the works. The result is that no overriding interest of the landlord will be served which section 30 can be thought to protect. The right to obtain vacant possession on the expiry of the existing term, which is all that the landlord is getting for his money, is not in itself an interest protected by section 30. On the contrary, in a case where the parties have not agreed to contract out of statutory protection, it is the very interest that Part II of the Act is designed to restrict. These considerations are relevant not so much in themselves as because in such a case one would usually infer what in this case the landlord has been honest enough to admit, ie that the landlords intention to carry out the works was conditional. It intended to carry them out only conditionally on their being necessary to get the tenant out, and not, for example, if he left voluntarily or if the judge was persuaded that the works could be done by exercising a right of entry. Does an intention of this kind engage ground (f)? The courts below thought that it was a sufficient answer to this question that the condition was satisfied at the time of the trial, because it was by then clear that the tenant would not in fact leave voluntarily and that the works could not be done by way of a right of entry while he remained in possession. A dictum of Neuberger J in Al Malik Carpets (Private) Ltd v London Buildings (Highgate) Ltd [1999] All ER (D) 971, Transcript p 11, suggests that he too would have regarded it as sufficient, although the point was not directly in issue in that case. I respectfully disagree. The problem is not the mere conditionality of the landlords intention, but the nature of the condition. Section 30(1)(f) of the Act assumes that the landlords intention to demolish or reconstruct the premises is being obstructed by the tenants occupation. Hence the requirement that the landlord could not reasonably do so without obtaining possession of the holding. Hence also the provision of section 31A that the court shall not hold this requirement to have been satisfied if the works can reasonably be carried out by exercising a right of entry and the tenant is willing to include a right of entry for that purpose in the terms of the new tenancy. These provisions show that the landlords intention to demolish or reconstruct the premises must exist independently of the tenants statutory claim to a new tenancy, so that the tenants right of occupation under a new lease would serve to obstruct it. The landlords intention to carry out the works cannot therefore be conditional on whether the tenant chooses to assert his claim to a new tenancy and to persist in that claim. The acid test is whether the landlord would intend to do the same works if the tenant left voluntarily. On the facts found by Judge Saggerson, the tenants possession of the premises did not obstruct the landlords intended works, for if the tenant gave up possession the landlord had no intention of carrying them out. Likewise, the landlord did not intend to carry them out if the tenant persuaded the court that the works could reasonably be carried out while it remained in possession. In my judgment, a conditional intention of this kind is not the fixed and settled intention that ground (f) requires. The answer would be the same if what the landlord proposed was a demolition, conditionally on its being necessary to obtain possession from the court. More complex issues would arise if the landlord intended to carry out some substantial part of the proposed works whether or not it was necessary to do so in order to obtain vacant possession from the court, and part of them only if it was necessary in order to gain possession. This might arise if, for example, the unconditional part of the landlords plan was insufficiently substantial or disruptive to warrant the refusal of a new tenancy, so that spurious additional works had to be added for the sole purpose of obtaining possession. In a situation like that, the answer is likely to depend on the precise facts. If, however, it is established that, at the time of the trial, were the tenant hypothetically to leave voluntarily, the landlord would not carry out the spurious additional works, then the tenants claim to a new tenancy would normally fall to be resolved by reference only to the works which the landlord unconditionally intended. Just as the landlords motive or purpose, although irrelevant in themselves, may be investigated at trial as evidence for the genuineness of his professed intention to carry out the works, so also they may be relevant as evidence of the conditional character of that intention. In both cases, the landlords motive and purpose are being examined only because inferences may be drawn from them about his real intentions. Likewise, although the statutory test does not depend on the objective utility of the works, a lack of utility may be evidence from which the conditional character of the landlords intention may be inferred. I am not persuaded by Mr Fetherstonhaughs submission that if the law is as I believe it to be, landlords will disguise their intentions more effectively than his clients did. It would be unworldly for this court to ignore that possibility. But we cannot decide an issue of statutory construction on the assumption that landlords will withhold the truth from the court on an application for a new tenancy. We have to proceed on the footing litigants are honest or, if they are not, that they will be found out by the experienced judges who hear these cases. This makes it unnecessary for me to deal with the tenants alternative submission that the landlords apparent intention should be disregarded for want of any commercial purpose, by analogy with the approach taken in W T Ramsay Ltd v Inland Revenue Comrs [1982] AC 300 to tax avoidance schemes. That submission is not only more radical in its implications but more difficult to reconcile with established authority on the Act of 1954. I would allow the appeal and declare that on the facts found the landlord does not intend, within the meaning of section 30(1)(f), to carry out the works specified in the scheme of works relied upon in opposition to the tenants application for a new tenancy. LORD BRIGGS: (with whom Lady Black and Lord Kitchin agree) I agree with Lord Sumptions conclusion that this appeal should be allowed, and with his reasons for that conclusion. I add a few words of my own out of respect for the concern persuasively expressed by the County Court judge, that the forensic assessment, as at the hearing date, of the question whether the landlord intended to do the proposed works if the tenant left voluntarily would be to travel not merely into the realm of the hypothetical, but into the positively counter factual. The reasonable expression of such a concern by a judge experienced in this type of litigation should not lightly be disregarded. In Bettys Cafs Ltd v Phillips Furnishing Stores Ltd [1959] AC 20 the House of Lords laid down, in unmistakable terms, a rule that the question whether the landlord had the requisite intention to enable the grant of a new tenancy to be resisted under section 30(1)(f) of the Landlord and Tenant Act 1954 had to be determined by reference to the landlords intention as at the time of the hearing, not at any earlier date. In that case the company landlord only proved its intention by reference to a board meeting held a week after the hearing started. Nothing in these judgments alters that rule in any way. But there are potential difficulties in addressing conditionality of intention at the hearing date, which Judge Saggerson regarded as fatal to the submission that this was what section 30(1)(f) should be interpreted as requiring. In the real world, as a business tenancy approaches its contractual termination date, a landlord may well be faced with alternative future scenarios: will the tenant leave voluntarily or seek a new tenancy? These alternatives may be discussed in negotiations, or at a mediation, before or even after the tenant begins proceedings for the grant of a new tenancy. The landlord may well form alternative intentions to meet both eventualities. If the tenant leaves voluntarily the landlord may just carry out a modest refurbishment before occupying the premises for its own business, or selling with vacant possession. If the tenant plans to fight for a new tenancy, the landlord may intend to do large scale works, or to demolish premises with significant development value, in order to be able (under the law as understood by the courts below) to oppose the tenants application successfully. If the landlord is a company, there may be board minutes in which these alternative intentions are recorded. But by the time of the hearing these alternative intentions about what if any works the landlord will do if the tenant leaves voluntarily will usually just be past history. The tenant will by then have committed substantial costs, and risked liability for the landlords costs, in pursuing its claim for a new tenancy to a hard fought hearing. The prospect of voluntary departure may have receded to a purely theoretical irrelevance, like a cloud the size of a mans hand. In such a case the landlord may no longer have any relevant intention in relation to that hypothetical and indeed counter factual possibility. In some cases the tenant may from the outset have manifested such a determination to seek a new tenancy at all costs that voluntary departure may never have been a sufficient possibility for the landlord to have given it a moments thought, still less formed an intention about it. To the question in cross examination: does your company now intend to carry out these works if the tenant goes voluntarily, the landlords witness might say, with complete honesty, as at the hearing date, that she and her fellow directors dont waste their valuable time discussing irrelevant hypothetical possibilities. It is to escape this forensic cul de sac that legitimate recourse may now have to be had to a forensic examination of the landlords purpose or motive, as Lord Sumption suggests. As he points out at the beginning of his judgment, the real issue of principle in this case is whether the landlord should be able to resist a new tenancy by reference to intended works of construction if its only purpose in doing them is to get rid of the tenant. Of course, as the cases reviewed by Lord Sumption show, a direct invocation of a purpose test is not permitted by the language of section 30(1)(f), because it speaks solely of intention. Parliament has chosen to define this ground of opposition by reference to intention, but cannot have intended thereby to enable a landlord to defeat a claim under the Act by asserting and proving an intention to do works purely for the purpose of getting rid of the tenant, such that the works (or the qualifying works) would not be done if the tenant left voluntarily. The courts have until now restricted the forensic examination of the landlords purpose or motive to a test of the genuineness of that intention. By genuineness I have no doubt that the court meant honesty. In practice, that examination has, for very many years, largely been overtaken by the common use of the undertaking to the court to carry out the works if a new tenancy is refused, as a reliable litmus test for genuine intention. But neither the undertaking to the court, nor the examination of the genuineness of the landlords intention, will reveal whether the landlords intention is of the disqualifying conditional kind, as this case demonstrates. This landlords intention, backed up by a proffered undertaking to the court, was perfectly genuine, and the fact that the avowed purpose of the otherwise useless works was only to get rid of the tenant said nothing at all to detract from its genuineness. But the frank admission as to the landlords underlying purpose said all that was necessary to reveal that the intention to do the works was only of that conditional kind, such that the works would not have been done if the tenant had agreed to go voluntarily. There is nothing hypothetical or counter factual about testing the type or quality of the landlords intention, as at the time of the hearing, by an analysis of the purpose or motive behind it. The disqualifying underlying purpose (just to get rid of the tenant) is a continuing aspect of the landlords then current intention, even if the direct question whether, in other circumstances (the tenant going voluntarily), the landlord would have intended to do the relevant works appears hypothetical and even counter factual. Recourse to an examination of motive or purpose does not mean that a desire to remove the tenant will always, or even usually, disqualify the landlord from resisting the grant of a new tenancy under section 30(1)(f). An intention to demolish and/or redevelop business premises is very frequently influenced by commercial considerations which include the departure of the tenant. The landlord may wish to redevelop the premises so as to be suitable for his own use, or for a sale or re letting to a different type of tenant who would pay a higher rent, and these considerations may transform what would otherwise be the excessive cost of the proposed works into something financially viable. The only legitimate purpose of the examination of purpose, beyond testing the genuineness of the landlords intention, will be to enable the court to decide whether the landlord would have done the relevant works if the tenant had left voluntarily. This is, as Lord Sumption explains, the acid test of the type or quality of intention under section 30(1)(f). I also agree with Lord Sumptions view that the same acid test will have to be applied where the landlord asserts an intention to carry out works which, as a whole, would require the tenant to vacate, but where it is alleged that the landlord would only carry out some lesser scheme, not justifying the refusal of a new tenancy, if the tenant were to leave voluntarily. Cases of that kind may be more likely than the stark facts of the present case, and they will probably give rise to factual questions of some nicety, incapable of resolution by the proffer of a simple undertaking to the court, as happens at present. This may introduce an element of complexity and expense into proceedings in the County Court which, for many years, have yielded to a simple technique for speedy resolution. But I can see no other way of giving effect to what seems to me always to have been the plain intention of Parliament, that a tenants statutory right to a new tenancy should not be circumvented by proposed works which, viewed as a whole, would not have been undertaken by the landlord if the tenant had left voluntarily. |
The Immigration Act 1971 is now more than forty years old, and it has not aged well. It is widely acknowledged to be ill adapted to the mounting scale and complexity of the problems associated with immigration control. The present appeals are a striking illustration of the difficulties. They concern the system for licensing educational institutions to sponsor students from outside the European Economic Area under Tier 4 of the current points based system of immigration control. The status of a licensed sponsor is central to the operation of the points based system for international students. It is also of great economic importance to the institutions which possess it. It enables them to market themselves to international students on the basis that their acceptance of a student will in the ordinary course enable them to enter the United Kingdom for the duration of their studies. For institutions with a high proportion of non EEA students, the status of licensed sponsor may be essential to enable them to operate as functioning businesses. New London College was a licensed Tier 4 (General) sponsor until 18 December 2009, when its licence was suspended by the Secretary of State on the ground that it was in breach of its duties as sponsor. On 5 July 2010, the Secretary of State, after considering the Colleges representations, revoked the licence with immediate effect. Officials of the UK Border Agency subsequently agreed to review that decision, but in light of the review the Secretary of State decided on 19 August 2010 to maintain the revocation. These decisions are challenged by the New London College by way of judicial review. The grounds of challenge with which this court is concerned succeeded in part before Wyn Williams J, but failed in the Court of Appeal. In April 2010, the Secretary of State introduced a new status for Tier 4 sponsoring institutions known as Highly Trusted Sponsor status. Highly Trusted Sponsors were allowed to offer a wider range of eligible courses, including some which comprised periods of work placements as well as study. They were also exempted from certain of the administrative requirements of the scheme. The importance of the new status was much increased after a review of the Tier 4 scheme in the summer of 2011 produced substantial evidence of abuse. As a result a number of changes were announced in March 2011. One of them was that Highly Trusted Sponsor status would become mandatory for all sponsoring educational institutions from April 2012. In the meantime there was to be a limit on the number of new students that sponsors could accept without Highly Trusted Sponsor status. The West London Vocational College fell foul of this requirement. It had become a licensed sponsor on 9 March 2011, initially with a B rating, which meant that it was a probationer licensee subject to an enhanced level of supervision. It acquired an A rating on 13 October 2011. On 26 March 2012, it applied for Highly Trusted Sponsor status, but its application was rejected on 23 August 2012. The effect, under the recent changes, was that it could not be a licensed sponsor at all. That rejection is challenged by way of judicial review in these proceedings. The challenge failed before the Divisional Court on the ground that the main question of law at issue had been decided against it by the Court of Appeal in the New London College case. The matter comes to the Supreme Court as a leap frog appeal under section 12 of the Administration of Justice Act 1969. Much the most significant question in both cases, and the only one for which the Appellants have permission to appeal to this court, is the lawfulness of the Tier 4 Sponsor Guidance issued by the Secretary State, which sets out the conditions for the grant and retention of a sponsor licence and of Highly Trusted Sponsor status. The Appellants contend that so far as the Sponsor Guidance contained mandatory requirements for sponsors, it had to be laid before Parliament under section 3(2) of the Immigration Act 1971. It was not. It follows, say the Appellants, that the Secretary of State acted unlawfully in making decisions affecting them by reference to it. It is no longer disputed that the Secretary of State was entitled to conclude that the New London College was in breach of the sponsorship duties set out in the Guidance. Nor is it disputed that the West London Vocational Training College failed to qualify for Highly Trusted Status in accordance with the criteria stated in the Guidance. The statutory framework Section 1(2) of the Immigration Act 1971 provides that those not having the right of abode in the United Kingdom may live, work and settle there only by permission and subject to such regulation and control of their entry into, stay in and departure from the United Kingdom as is imposed by this Act. Under section 1(4), The rules laid down by the Secretary of State as to the practice to be followed in the administration of this Act for regulating the entry into and stay in the United Kingdom of persons not having the right of abode shall include provision for admitting (in such cases and subject to such restrictions as may be provided by the rules, and subject or not to conditions as to length of stay or otherwise) persons coming for the purpose of taking employment, or for purposes of study, or as visitors, or as dependants of persons lawfully in or entering the United Kingdom. Section 3 provides for the regulation and control of immigration by the Secretary of State. Section 3(1) provides that a person who is not a British citizen shall not enter the United Kingdom unless given leave to do so in accordance with the provisions of or made under this Act. Leave to enter or remain may be given for a limited or indefinite period and subject to any or all of a number of specified conditions, including a condition restricting his studies in the United Kingdom. Under section 4(1), the power under the Act to give or refuse leave to enter the United Kingdom is exercisable by immigration officers, who at the relevant time were employees of the UK Border Agency, an executive agency of the Home Office. The power to give or to vary leave to remain for those who are already here is exercisable by the Secretary of State. At any one time, there is a substantial body of rules, discretions and practices laid down by the Secretary of State as the ultimate administrative authority responsible for the administration of the Act. Section 3(2) of the Act, provides: The Secretary of State shall from time to time (and as soon as may be) lay before Parliament statements of the rules, or of any changes in the rules, laid down by him as to the practice to be followed in the administration of this Act for regulating the entry into and stay in the United Kingdom of persons required by this Act to have leave to enter, including any rules as to the period for which leave is to be given and the conditions to be attached in different circumstances. They are then subject to approval under the negative resolution procedure. In principle, the rules in question are contained in the Immigration Rules, which in successive editions and with frequent variations have invariably been laid before Parliament. But section 3(2) is not confined to the Immigration Rules formally so called. It extends to any instrument, direction or practice laid down by the Secretary of State which (i) contains or constitutes a rule, and (ii) deals with the practice to be followed in the administration of the Act for regulating the entry into and stay in the United Kingdom of persons required by this Act to have leave to enter or the period or conditions attaching to them. In R (Munir) v Secretary of State for the Home Department [2012] 1 WLR 2192, this court held that the power of the Secretary of State to make or vary rules falling within this description was not an exercise of prerogative power but was wholly statutory. Under the Immigration Act, the Secretary of State has a power and duty to make them, and once made they may be the source of legal rights. It followed that no rule falling within the description in section 3(2) was lawful unless it was laid before Parliament. In R (Alvi) v Secretary of State for the Home Department [2012] 1 WLR 2208, which was heard with Munir and decided on the same day, this court considered in detail what constituted a rule dealing with the practice to be followed for regulating entry into and stay in the United Kingdom. The principal judgments were delivered by Lord Hope and Lord Dyson. They were agreed upon the basic requirement of section 3(2) and on the test for distinguishing a rule from something that was merely advisory or explanatory, although not on every aspect of its application to the facts of that case. Lord Walker of Gestinghorpe, Lord Clarke of Stone cum Ebony and Lord Wilson delivered concurring judgments agreeing with both of them on the points on which they were agreed. Lord Hope put the point in this way at para 41: The content of the rules is prescribed by sections 1(4) and 3(2) of the 1971 Act in a way that leaves matters other than those to which they refer to her discretion. The scope of the duty that then follows depends on the meaning that is to be given to the provisions of the statute. What section 3(2) requires is that there must be laid before Parliament statements of the rules, and of any changes to the rules, as to the practice to be followed in the administration of the Act for regulating the control of entry into and stay in the United Kingdom of persons who require leave to enter. The Secretary of State's duty is expressed in the broadest terms. A contrast may be drawn between the rules and the instructions (not inconsistent with the rules) which the Secretary may give to immigration officers under paragraph 1(3) of Schedule 2 to the 1971 Act. As Sedley LJ said in ZH (Bangladesh) v Secretary of State for the Home Department [2009] Imm AR 450, para 32, the instructions do not have, and cannot be treated as if they possessed, the force of law. The Act does not require those instructions or documents which give guidance of various kinds to caseworkers, of which there are very many, to be laid before Parliament. But the rules must be. So everything which is in the nature of a rule as to the practice to be followed in the administration of the Act is subject to this requirement. At para 94, Lord Dyson, in a conclusion expressly endorsed by Lord Hope, at para 57, said: a rule is any requirement which a migrant must satisfy as a condition of being given leave to enter or leave to remain, as well as any provision as to the period for which leave is to be given and the conditions to be attached in different circumstances (there can be no doubt about the latter since it is expressly provided for in section 3(2)). I would exclude from the definition any procedural requirements which do not have to be satisfied as a condition of the grant of leave to enter or remain. But it seems to me that any requirement which, if not satisfied by the migrant, will lead to an application for leave to enter or remain being refused is a rule within the meaning of section 3(2). That is what Parliament was interested in when it enacted section 3(2). It wanted to have a say in the rules which set out the basis on which these applications were to be determined. The points based system: Tier 4 sponsorship In its original form, the points based system of immigration control came into force in November 2008. It introduced a requirement that migrants intending to enter the United Kingdom should achieve a specified minimum number of points, broadly reflecting the migrants qualifications for admission in the relevant category (or Tier). Tier 4 (General), which comprised migrants aged over 16 coming to the United Kingdom for study, was implemented in March 2009. Before that, the Immigration Rules had provided that all migrants seeking to enter or remain in the United Kingdom for the purpose of study had to have been accepted for a course at an institution appearing on a Register of Education and Training Providers maintained by the Department of Education. The essential requirement of the new Tier 4 system was that the migrant should have been sponsored by an educational institution holding a sponsors licence. The scheme was described in two documents. The first was Part 6A of the Immigration Rules, which deals with the requirements to be satisfied by migrants applying for leave to enter or remain. The second was the Tier 4 Sponsor Guidance, which dealt with the requirements to be satisfied by educational institutions seeking to qualify for a sponsors licence. The former were laid before Parliament under section 3(2), but the latter were not. It is the absence of tacit Parliamentary approval for the Guidance which lies at the heart of these appeals. Part 6A of the Immigration Rules For present purposes the relevant versions of the Immigration Rules are those which came into force on 30 March 2009 and 5 July 2010, and applied at the time of the decisions which the Appellants challenge. They are in the same terms in every relevant respect. Paragraphs 245ZT to 245ZY relate to Tier 4 (General) migrants. Paragraph 245ZV of the Rules provides: To qualify for entry clearance as a Tier 4 (General) Student, an applicant must meet the requirements listed below. If the applicant meets these requirements, entry clearance will be granted. If the applicant does not meet these requirements, the application will be refused. Paragraph 245ZX contains corresponding provisions relating to applications for leave to remain by those who have already gained entry clearance. In each case, the requirements in question include at least 30 points under paragraphs 113 to 120 of Appendix A. These paragraphs provide that the 30 points are scored if (and only if) a visa letter or a Confirmation of Acceptance for Studies (or CAS) has been issued in respect of a course of study satisfying the academic requirements set out in paragraph 120. A visa letter was an unconditional offer letter from an educational institution for the relevant course of study. In the course of 2010, the visa letter was superseded by the CAS, which performed the same function on line. A CAS is not a physical document. It is an entry made by the sponsor in an electronic database to which the sponsor and the UK Border Agencys staff both have access. What the migrant receives is a unique reference number, which he supplies to the Border Agency on applying for leave to enter or remain in the United Kingdom, and which enables the agency to access the electronic file relating to him. Paragraphs 116 117 of the Appendix A lay down conditions for the validity of a CAS. They provide, so far as relevant, 116. A Confirmation of Acceptance for Studies will only be considered to be valid if: . (d) it was issued by an institution with a Tier 4 (General) Student Sponsor Licence, (e) the institution must still hold such a licence at the time the application for entry clearance or leave to remain is determined (f) it contains such information as is specified as mandatory in guidance published by the United Kingdom Border Agency. 117. A Confirmation of Acceptance for Studies reference number will only be considered to be valid if: (a) the number supplied links to a Confirmation of Acceptance for Studies Checking Service entry that names the applicant as the migrant and confirms that the Sponsor is sponsoring him in the Tier 4 category indicated by the migrant in his application for leave to remain (that is, as a Tier 4 (General) Student or a Tier 4 (Child) Student), and (b) that reference number must not have been cancelled by the Sponsor or by the United Kingdom Border Agency since it was assigned. It should be noted that the issue of a valid CAS and the scoring of the thirty points associated with it, are not the only requirement listed below which paragraphs 245ZV and 245ZX require to be satisfied. It is not, therefore, in itself a guarantee of entry. In the first place, the other requirements of Rule 245ZV include a requirement that the student should not fall for refusal under the general grounds of refusal. These grounds, which are set out at paragraph 320 of the Immigration Rules, include refusal on the ground of the applicants failure to produce specified documentation or information, or on the ground of the applicants past convictions or breaches of immigration law, or on the ground that for some other reasons the applicant has been or should be excluded for the public good or, more generally, on the ground (see para 320(1)) that entry is being sought for a purpose not covered by these Rules. All of these are matters for decision (subject to appeal) by an immigration officer. Secondly, Appendix A, paragraph 118 of the Immigration Rules, requires the applicant as a condition of being awarded his 30 points, to supply any documentary evidence of his or her previous qualifications which he used to obtain the offer of a place on a course offered by the sponsoring educational institution. Broadly summarised, the effect of these provisions is that a migrant with a CAS may still be required to satisfy an immigration officer upon applying to enter that he is genuinely entering for the purpose of study, that there was a proper basis for his application for a place from the sponsor, and that there are no character issues which require his exclusion. Certain of these requirements also apply under paragraph 322 to applications for leave to remain. The Tier 4 Sponsor Guidance The Sponsor Guidance is a large and detailed document issued on behalf of the Secretary of State, which may be amended at any time and has in fact been amended with bewildering frequency. The relevant editions of the Guidance are those applying from 5 October 2009, 3 March 2010, 6 April 2010 and 5 September 2010. They differ in detail, but not in their broad lines. In what follows, I shall refer (unless otherwise stated) to the paragraph numbers of the Guidance which came into force on 6 April 2010. Their tenor and purpose is conveyed by the opening paragraphs (in all three relevant editions): WHAT IS SPONSORSHIP? 1. Sponsorship is based on two fundamental principles: those who benefit most directly from migration (that is, the employers, education providers or other bodies who are bringing in migrants) should play their part in ensuring that the system is not abused; and we need to be sure that those applying to come to the United Kingdom to do a job or to study are eligible to do so and that a reputable employer or education provider genuinely wishes to take them on. 2. Before a migrant can apply to come to, or remain in the United Kingdom to study, he/she must have a sponsor. The sponsor will be an education provider in the United Kingdom that wishes to provide education to a migrant. Sponsorship plays two main roles in the application process: it provides evidence that the migrant will study for an approved qualification; and it involves a pledge from the sponsor that it will accept the duties of sponsoring the migrant. I need not set out the substantive provisions in detail. For present purposes it is enough to note that the Guidance lays down mandatory requirements governing (i) the criteria for the award of a sponsors licence, (ii) the obligations of those to whom a license has been awarded, (iii) the criteria to be applied by a licensed sponsor in issuing a CAS, and (iv) the procedure and criteria for suspending, downgrading or withdrawing a sponsors licence. In the first category, there are provisions relating to the academic standards of the sponsors courses, the qualifications to which they lead, the adequacy of its facilities and key staff, and its general efficiency. In the second category come provisions relating to the duties of sponsors, including their duties to monitor student attendance, report significant absences, and maintain proper records of these matters. Para 163 sets out a number of specific tests which must also be satisfied. In particular, it imposes a maximum acceptable proportion of enrolled migrant students who have abandoned their studies at specified stages of the course. In the third category come requirements to assess and report upon migrant students command of English, their ability to follow their chosen course, and their possession of sufficient resources to maintain themselves in the United Kingdom during their studies. In the fourth category, the provisions regarding the withdrawal of a licence distinguish between cases in which a sponsors licence will be withdrawn (paragraphs 344 345), cases in which it will normally be withdrawn (paragraphs 346 9), and cases in which it may be withdrawn (paragraphs 350 352). These corresponded to breaches of greater or lesser gravity of the institutions obligations as a sponsor or its failure to satisfy the licence criteria on a continuing basis. In 2011, after the announcement that Highly Trusted Status was to become mandatory, the criteria for granting it were tightened up. The new criteria were included in the edition of the Tier 4 Sponsor Guidance which came into force on 5 September 2011. One of the more significant changes was the introduction of an additional test, namely that where an institution had been licensed for twelve months, not more than 20 per cent of Tier 4 (General) migrants to whom it had given a CAS should have been refused leave to enter or remain when in due course they applied. The West London Colleges failure to satisfy this test was the ground on which it was refused Highly Trusted Status. Unlawful delegation The Appellants first argument is that paragraphs 245ZV and 245ZX of the Immigration Rules constituted an unlawful delegation to the sponsoring institutions of the Secretary of States powers to control entry into or stay the United Kingdom. It is correct that when the points based system was introduced for Tier 4 migrants, a number of matters on which students had previously been required to satisfy immigration officers or the Secretary of State, such as a bona fide intention to study, were now to be examined by the sponsoring institution as a condition of being entitled to issue a CAS. But the short answer to the suggestion that this involved an unlawful delegation is that leave to enter or remain continues to be the responsibility of immigration officers and the Secretary of State, who retain the last word in each individual case by virtue of the general grounds of refusal. These include a right to refuse on the ground that the Immigration Officer or the Secretary of State is not satisfied with the material used by the migrant to obtain his offer of a place on the sponsors course, or on the ground that notwithstanding the CAS the migrant is not seeking to enter or remain for a purpose (i.e. study at an appropriate institution) which is covered by the Rules. I have summarised the relevant provisions at paragraph 14 above. The evidence shows that a significant number of Tier 4 (General) migrants with a CAS are in fact refused leave to enter or remain on these grounds. The upshot is that the grant of a CAS by an educational institution is not tantamount to leave to enter or remain. It is strong but not conclusive evidence of some of the matters which are relevant upon the migrants application for leave to enter or remain. Absence of statutory power This, although placed second in the order of argument, was really the Appellants main point and was the focus of the decisions of the courts below. Under the points based system, the control of immigration under Tier 2 (skilled workers), Tier 4 (students) and Tier 5 (temporary workers) depends critically on the sponsorship of migrants by licensed sponsors. The requirement that a migrant in the relevant category should be sponsored by an institution with a sponsor licence is laid down in the Immigration Rules, in the case of Tier 4 (General) by Appendix A, paragraph 116 (d) and (e). A Sponsor Licence is defined in paragraph 6 of the Rules as a licence granted by the Secretary of State to a person who, by virtue of such a grant, is licensed as a Sponsor under Tiers 2, 4 or 5 of the Points Based System. But there are no provisions in the Rules dealing with the qualifications and obligations of a licensed sponsor. The system for licensing sponsors is wholly governed by the Guidance issued for the relevant tier on behalf of the Secretary of State. This includes, it is said, mandatory requirements for obtaining and retaining a sponsor licence which qualify as rules and determine whether the migrant will obtain leave to enter or remain in the United Kingdom. Therefore, they must be laid before Parliament under section 3(2) of the Act. In the absence of tacit Parliamentary approval, the Secretary of State is not entitled to have regard to them in making decisions about the status of sponsors. There is a conceptual difficulty for the Appellants in this argument. Their objective in this litigation is to recover the sponsor licence (in the case of the New London College) and to obtain Highly Trusted Status (in the case of the West London Vocational Training College). If the sponsor licensing scheme is unlawful for want of tacit Parliamentary approval, it must follow that the Secretary of State was not entitled to grant licences in accordance with it. On that footing, the Secretary of State cannot be bound to confer a licence under it on the West London Vocational Training College, or to allow the New London College to retain a licence once granted. Moreover, since under Part 6A of the Immigration Rules migrants in Tier 4 require a CAS from a licensed sponsor as a condition of obtaining leave to enter or remain, it must follow, if the system of sponsor licensing is unlawful, that leave to enter or remain in the United Kingdom cannot be granted to students whom they have accepted, except possibly on the footing of an administrative relaxation of the relevant parts of the Immigration Rules. The Appellants brought a fair amount of ingenuity to the task of escaping this dilemma. New London College argued that the grant of a sponsor license was lawful, whereas its withdrawal was not. Both Appellants argued that the sponsor licensing scheme could remain valid on the footing that the mandatory requirements for the grant or retention of sponsor licences or Highly Trusted Sponsor status were excised, leaving only those parts of the criteria which were discretionary or advisory. But none of this is realistic. The criteria under paragraphs 344 345 of the Guidance are mandatory in exactly the same way as the criteria for granting it is in the first place. The mandatory requirements, whether they relate to the grant or the withdrawal of a license or of Highly Trusted Sponsor status, cannot be severed from the rest of the licensing scheme, because they are fundamental to its whole operation. It follows that either the sponsor licensing scheme is wholly unlawful by reason of its inclusion of mandatory requirements for sponsors, or it is lawful notwithstanding those requirements. Neither alternative will result in these Appellants being licensed. There is no half way house. Mr Drabble QC, who appeared for the Interveners (the Migrants Rights Network and the Joint Council for the Welfare of Immigrants), was understandably concerned not with the position of these Appellants but with the state of English law and the general operation of the system of immigration control. So while recognising the Appellants problem, he had no reason to be inhibited by it, and put the case in its purest and most radical form. Mr Drabble submitted that the Sponsor Guidance does not fall within sections 1(4) or 3(2) of the Act, because it is not directed to regulating the grant of leave to enter or remain in the United Kingdom but to the licensing and regulation of the sponsoring institutions themselves. It did not therefore need to be laid before Parliament. But, he says, because the control of immigration is wholly statutory and there is no power to control it otherwise than by rules falling within section 3(2), there is no power to operate a system of sponsor licensing at all. Only on the footing that (contrary to this submission) the requirements for sponsors did fall within sections 1(4) and 3(2) of the Act, was he able by way of alternative to give at least partial support to the Appellants argument. Absence of statutory authority The first question is accordingly the scope of section 3(2) of the Act. It does not apply to all rules, but only to those which relate to the practice to be followed in the administration of this Act for regulating the entry into and stay in the United Kingdom of persons required by this Act to have leave to enter. Alvi is authority for the proposition that it extends only to requirements which if not satisfied by the migrant, will lead to an application for leave to enter or remain being refused: see para 94 (Lord Dyson). I would readily accept that the mandatory criteria for the award and retention of a sponsor licence are rules. But, subject to one reservation (considered below), they are not rules calling for compliance by the migrant as a condition of his obtaining leave to enter or remain. The Sponsor Guidance is wholly concerned with the position of the sponsor. The point may be illustrated by imagining an appeal by the migrant under section 84(1) of the Nationality, Immigration and Asylum Act 2002 on the statutory ground that his application to enter or remain was refused on a ground not in accordance with immigration rules. This provision is the main reason why the Rules have been treated as giving rise to legal rights, which in turn was a significant part of the analysis in Alvi: see paras 9, 38, 39, 42 (per Lord Hope); cf. MO (Nigeria) v Secretary of State for the Home Department [2009] 1 WLR 1230 at para 6 (per Lord Hoffmann). As far as the migrant is concerned, the only relevant rule is that to obtain leave to enter or remain he must have received a CAS from a licensed sponsor. That rule is contained in the Immigration Rules. If the issue on a hypothetical appeal under section 84(1) was whether the migrant had a CAS from a licensed sponsor, that would fall within the proper scope of the appeal, because the requirement to have a CAS from a licensed sponsor was laid down by the Rules. But if the issue was whether the course provider ought to have been licensed, it would plainly not fall within the proper scope of the appeal, for that was not a requirement falling to be satisfied by the migrant and could have formed no part of the ground of refusal. Compare the situation in Alvi, a Tier 2 case in which the applicant was refused leave to remain because his occupation was not included in a list of skilled occupations. Because the list of skilled occupations was liable to be changed by the Secretary of State and was not part of the Immigration Rules laid before Parliament, it was not lawful to make a decision by reference to it. An appeal under section 84(1) of the Act of 2002 would therefore have been competent. For this purpose, the critical feature of the list of skilled occupations was that it was part of the criteria for granting leave to enter or remain which the migrant had to satisfy and which determined the fate of his application. This is not true of the criteria for sponsor licensing. This is not a technical or adventitious distinction. It is logically coherent, entirely consistent with the purpose of the Immigration Rules and dictated by the language of section 3(2) of the Act. The reservation arises out of the cross references to the Sponsor Guidance in the Rules. Since the Guidance is liable to be changed without Parliamentary scrutiny at the discretion of the Secretary of State, the Rules cannot lawfully incorporate by reference from the Guidance anything which constitutes a rule that if not satisfied will lead to the migrant being refused leave to enter or remain: see Alvi, at para 39 (per Lord Hope). The relevant cross references are concerned with documentation. Appendix A, paragraph 116(f) of the Rules requires the CAS to contain, as a condition of its validity, such information as is specified as mandatory in guidance published by the United Kingdom Border Agency. This is a reference to the information specified at paragraphs 170 of the Guidance. Paragraph 170 provides that when assigning a CAS the sponsor must complete all of the relevant details within the sponsorship management system, for example the students personal details, course level and information about fees, etc. It goes on to draw attention to the importance of completing in detail the evidence provided section stating, for example, how it has assessed the students command of English and his ability to follow the course. Paragraph 245AA(a) of the Rules provides that where Appendix A requires specified documents to be provided, this means documents specified by the Secretary of State in the Sponsor Guidance. Paragraph 245AA(a) provided that if the specified documents are not provided, the applicant will not meet the requirement for which the specified documents are required as evidence. Paragraph 245AA(c) (in effect from 5 July 2010) provided that if the Sponsor or applicant does not satisfy the requirements set out in guidance and referred to in these Rules, the applicant will not meet the related requirement in these Rules. The effect of these provisions is simply to require the sponsor to enter on the migrants electronic file information which the migrant will himself have had to produce to obtain the offer of a place on the sponsors course. Appendix A, paragraph 118 of the Rules, requires the migrant to produce the same material in support of his application for leave to enter or remain. It follows that none of the sections of the Guidance incorporated by reference in the Rules raises the bar against migrants any higher than the Rules themselves do. For these reasons I accept Mr. Drabbles starting point, that the criteria for sponsor licensing contained in the Guidance did not fall within sections 1(4) or 3(2) and did not therefore fall to be laid before Parliament. This disposes of the Appellants argument. I turn therefore to Mr Drabbles principal submission, namely that on the footing that the criteria for sponsor licensing do not fall within sections 1(4) and 3(2), there is no power to have such a system at all. He submitted that this was implicit in the decisions of this court in Munir and Alvi. In particular, he relied on Lord Hopes observation in Alvi, at para 33, that the obligation under section 3(2) to lay statements of the rules and any changes in the rules before Parliament excludes the possibility of exercising prerogative powers to restrict or control immigration in ways that are not disclosed by the rules. I do not accept that Munir and Alvi go that far. The only mode of restricting or controlling immigration which was in issue in those cases was the regulation of entry into and stay in the United Kingdom. The decisions are authority for the proposition that the power of the Secretary of State to make rules relating to the practice to be followed for regulating the entry into and stay in the United Kingdom is implicit in the obligation imposed on her by section 3(2) to lay such rules before Parliament. It has no other legal basis. Section 3(2) is concerned only with rules of that description, and it was only with the control of immigration by the grant or refusal of leave to enter or remain that Lord Hope, like the rest of the court, was concerned. The court was not concerned with the existence or extent of any power that the Secretary of State might have to do something which was not within the scope of section 3(2). So in my opinion Mr. Drabbles submission is unsupported by authority. But is it right in principle? In my view it is not. It has long been recognised that the Crown possesses some general administrative powers to carry on the ordinary business of government which are not exercises of the royal prerogative and do not require statutory authority: see B.V. Harris, The Third Source of Authority for Government Action Revisited (2007) 123 LQR 225. The extent of these powers and their exact juridical basis are controversial. In R v Secretary of State for Health Ex p C [2000] 1 FLR 627 and Shrewsbury and Atcham Borough Council v Secretary of State for Communities and Local Government [2008] 3 All ER 548, the Court of Appeal held that the basis of the power was the Crowns status as a common law corporation sole, with all the capacities and powers of a natural person subject only to such particular limitations as were imposed by law. Although in R (Hooper) v Secretary of State for Work and Pensions [2005] 1 WLR 1681, para 47 Lord Hoffmann thought that there was a good deal of force in this analysis, it is open to question whether the analogy with a natural person is really apt in the case of public or governmental action, as opposed to purely managerial acts of a kind that any natural person could do, such as making contracts, acquiring or disposing of property, hiring and firing staff and the like. But the question does not need to be resolved on these appeals because the statutory power of the Secretary of State to administer the system of immigration control must necessarily extend to a range of ancillary and incidental administrative powers not expressly spelt out in the Act, including the vetting of sponsors. The Immigration Act does not prescribe the method of immigration control to be adopted. It leaves the Secretary of State to do that, subject to her laying before Parliament any rules that she prescribes as to the practice to be followed for regulating entry into and stay in the United Kingdom. Different methods of immigration control may call for more or less elaborate administrative infrastructure. It cannot have been Parliaments intention that the Secretary of State should be limited to those methods of immigration control which required no other administrative measures apart from the regulation of entry into or stay in the United Kingdom. If the Secretary of State is entitled (as she plainly is) to prescribe and lay before Parliament rules for the grant of leave to enter or remain in the United Kingdom which depend upon the migrant having a suitable sponsor, then she must be also be entitled to take administrative measures for identifying sponsors who are and remain suitable, even if these measures do not themselves fall within section 3(2) of the Act. This right is not of course unlimited. The Secretary of State cannot adopt measures for identifying suitable sponsors which are inconsistent with the Act or the Immigration Rules. Without specific statutory authority, she cannot adopt measures which are coercive; or which infringe the legal rights of others (including their rights under the Human Rights Convention); or which are irrational or unfair or otherwise conflict with the general constraints on administrative action imposed by public law. However, she has not transgressed any of these limitations by operating a system of approved Tier 4 sponsors. It is not coercive. There are substantial advantages for sponsors in participating, but they are not obliged to do so. The rules contained in the Tier 4 Guidance for determining whether applicants are suitable to be sponsoring institutions, are in reality conditions of participation, and sponsors seeking the advantages of a licence cannot complain if they are required to adhere to them. Brief submissions were addressed to us on the question whether the fee charged by the Border Agency required and if so whether it had specific statutory authority. Since the answer to that question cannot affect the lawfulness of the principles on which a sponsors licence is refused, downgraded or withdrawn, I say nothing about it one way or the other. Conclusion It follows, in my opinion, that both appeals should be dismissed. Under paragraph 323A(a) of the Immigration Rules, if a migrants sponsor ceases to hold a sponsors licence, his leave to enter or remain is not automatically annulled but may be curtailed. One would assume that the Secretary of State would respond with reasonable sensitivity to the difficulties faced by international students in a situation which is not necessarily of their own making. LORD CARNWATH In agreement with Lord Sumption, but for rather different reasons, I would reject Mr Drabbles extreme submission that the establishment of the sponsor licensing system is outside the scope of the 1971 Act altogether. It is clear (following R (Munir) v Secretary of State for the Home Department [2012] 1 WLR 2192) that the Secretary of States powers of immigration control are confined to those conferred expressly or impliedly by the 1971 Act. They may include both powers expressly conferred and powers reasonably incidental to them (see Wade and Forsyth, Administrative Law 10th Ed p 181; Bennion, Statutory Interpretation 5th Ed pp 494ff). The obvious source of such incidental powers in the present context, in my view, is to be found in section 1(4), which imposes on the Secretary of State the duty to establish arrangements which allow admissions for the purposes of study. Fairly incidental to that is the establishment of a system for vetting educational institutions who may be permitted to participate. A useful parallel can be found in R (Barry) v Liverpool Council [2001] EWCA Civ 384, where it was held that a scheme for registering and vetting door staff was incidental to the council's power for licensing places for public entertainment. I cannot accept Mr Swifts submission (if I understood it correctly) that there is some alternative, unidentified source of such powers, derived neither from the prerogative nor from any specific provision in the Act, but from the general responsibilities of the Secretary of State in this field. No authority was cited for that proposition and to my knowledge none exists. Mr Swift did not seek to rely on a possible third source of powers, by reference to the controversial line of authority mentioned by Lord Sumption (para 28). In my view he was wise not to do so (for the reasons given in my judgment for the majority in the Shrewsbury case [2008] 3 All ER 548, 562 4). (This sensitive issue has also been the subject of recent consideration by the House of Lords Select Committee on the Constitution: The pre emption of Parliament HL Paper 165 1 May 2013). Lord Sumption relies instead on a broader application of the incidental powers approach, which appears to be a variant of Mr Swifts main submission. The Secretary of States power to administer the system of immigration control must, it is said, extend to a range of ancillary and incidental powers, including administrative measures for identifying suitable sponsors, even if these measures do not themselves fall within section 3(2) of the Act. This formulation, as I understand it, treats the licensing process as linked not to the specific provisions for regulating entry under section 1(4), but to the general system of immigration control under the Act. It thus takes it outside the scope of the section 3(2) procedure altogether. I find this more difficult to accept. In Hazell v Hammersmith LBC [1992] 2 AC 1, considering the analogous principle in section 111 of the Local Government Act 1972, Lord Templeman extracted from the authorities, starting with Attorney General v Great Eastern Railway Co (1880) 5 App Cas 473 . the general proposition that when a power is claimed to be incidental, the provisions of the statute which confer and limit functions must be considered and construed. (p 31D) In that case the alleged power to enter into swap transactions had to be considered in the context of the specific provisions governing local authority borrowing. Similarly, in Barry the scheme for vetting door staff was incidental, not to the councils regulatory powers in general, but to the particular power for licensing places for public entertainment. In each case the source of the incidental power was found in a specific provision conferring specific functions. So in the present context, in my view the sponsorship licensing scheme is an adjunct, not of the immigration control system in general, but of the specific function of providing for entry for study under section 1(4). That is its only purpose within the statutory scheme. Section 1(4) states that such provision is to be in such cases and subject to such restrictions as may be provided by the rules. On its face that leads back to section 3(2) which prescribes the procedure for making the rules. That view appears also to accord with the approach of those responsible for drafting the relevant rules and regulations. They did not treat the licensing scheme as falling outside the scope of the rules altogether. On the contrary the concept of such a licence, as defined in the rules, is an essential feature of Appendix A to which Lord Sumption has referred. They must therefore be taken as authorising the Secretary of State to maintain arrangements for the grant of licences. They do not as such provide for her to withdraw licences once given. However, it is apparent from rule 323A that the grant of a licence is not permanent, so that a power to revoke for good reason may not be difficult to imply (see eg R v Hillingdon LBC Ex p LRT Times, 20.1.99, cited in Wade and Forsyth, op cit p 194). What are missing from the rules are the detailed arrangements for the grant or review of licences, or the criteria under which they are to be carried out. Consistently with this approach, the fees regulations, in their earlier form, defined sponsor licence as a licence granted by the Secretary of State under the immigration rules (Immigration and Nationality (Fees) Order 2011 SI 2011 No 445 art 2, emphasis added). It is true that the wording was not preserved in 2013 regulations (SI 2013 No 617), which refer simply to a licence granted to a person who, by virtue of such a grant, is licensed as sponsor; but this change may itself have been a response to the potential problems highlighted by Pankina v Secretary of State for the Home Department [2011] QB 376. The next question is whether, assuming that that the power to issue the guidance is derived from section 1(4), it falls outside the scope of the rules which are to be submitted to Parliament under section 3(2). It is not in dispute, as I understand it (para 24), that parts at least of the guidance are of the nature of rules in the ordinary meaning of that word. Lord Clarke said in Alvi: 120. It seems to me that, as a matter of ordinary language, there is a clear distinction between guidance and a rule. Guidance is advisory in character; it assists the decision maker but does not compel a particular outcome. By contrast a rule is mandatory in nature; it compels the decision maker to reach a particular result. By that test, there are parts of the guidance which are clearly mandatory in nature, and so described in the document. I did not understand Mr Swift to argue otherwise. However, I would not necessarily accept that such compulsion is an essential characteristic of rules in the ordinary use of that word. For example, rule 323A to which I have referred, providing for the circumstances in which leave to enter may be curtailed, is properly included in the body of rules, even though its effect is not to compel a particular result in any case, but rather to define the criteria governing the exercise of the discretion. The more difficult issue, to my mind, is whether, as Mr Swift has argued and the majority accept, the term rules in the present context is to be read in a more limited sense, defined by Lord Dyson in Alvi (para 94) confined to any requirement which, if not satisfied by the migrant, will lead to an application for leave to enter or remain being refused (my emphasis). Left to myself, I would have needed some convincing that Alvi was determinative of the present case, not least because the issue was different. The court was concerned with a group of provisions which were admittedly within the general scope of section 3(2), the only issue being the proper categorisation of individual provisions within that group. It was not concerned, as we are, with the categorisation of a complete and self contained regulatory code for sponsoring educational institutions. However, the other members of the court, including two members of the majority in Alvi, do not share my doubts on this point. Accordingly, I see no purpose in introducing a note of dissent on what should as far as possible be a clear cut test. Finally, I would offer a brief comment on what would have been the practical consequences of a successful appeal on this point. It was part of Mr Swifts case (echoed by Lord Sumption para 21) that the appellants arguments in effect proved too much for their own good. If the guidance is unlawful, then so must be the licence originally issued to NLC in reliance on it. Similarly, in the West London case, setting aside the present decision to refuse HT status cannot turn it into a positive decision in their favour; nor can they pick and choose between different parts of the guidance in support of a new application. In respect of West London College, I agree that success on the section 3(2) point would not have offered any obvious advantage. Setting aside the refusal of HTS status would not in itself result in a more favourable outcome. Although the concept of such status is in the rules, the criteria by which it is to be granted are in the guidance. If the existing guidance, or material parts of it, were held to be invalid, the Secretary of State would need the opportunity to validate it, with the assistance of Parliament if necessary. Until then, the status of the college may have to remain undetermined. In respect of New London College, in my view, the position is different. The relevant decision in that case was not one to confer a status which they did not have, but to revoke an existing licence. An order setting aside that decision, if it goes no further, would simply leave the existing licence in place. There is nothing unlawful in the concept of such a licence, as such, which as I have noted is created by the rules. Nor, as I understand, is there anything on the face of the licence (whether in paper or digital form) to undermine its validity. It may well be true, as Mr Swift submits, that the grant of that licence was influenced by criteria in the guidance. But that does not mean that the licence itself is now to be taken as invalid, in circumstances where no interested party has sought to challenge it, either at the time or since. Taken to its logical conclusion, Mr Swifts argument would extend not just to the present guidance, but to all the previous versions since the points based system was introduced, and indeed to all licences issued under them. Happily, however, that is not how public law remedies work. It is sufficient to refer to the valuable discussion in Wade and Forsyth, previous versions of which have themselves influenced the development of the case law in this area. The general principle which emerges is summarised as follows (under the heading Nullity and relativity): The truth is that the court will invalidate an order only if the right remedy is sought in the right proceedings and circumstances. The order may be a nullity and void but these terms have no absolute sense: their meaning is relative, depending upon the courts willingness to grant relief in any particular situation. If this principle of legal relativity is borne in mind, the law can be made to operate justly and reasonably in most cases through the exercise of remedial discretion (p 253) If the appellants had succeeded on the legal issue, the result would have been the setting aside of the Secretary of States decision revoking the licence. Neither NLC nor the Secretary of State (nor any other interested party) has sought to challenge the original licence. That in my view would have remained in effect unless and until the Secretary of State could put in place valid procedures for its revocation and exercise them accordingly. Until then, the College and its students would have been unaffected. |
The question in this case is whether the appellants BH (Mr H) and his wife KAS or H (Mrs H) should be extradited to the United States of America to face trial in Arizona. The United States has requested their extradition under the Extradition Act 2003 on charges of conspiracy and unlawful importation into the United States of chemicals used to manufacture methamphetamine, knowing or having reasonable cause to believe that they would be used for that purpose. If they were the only persons whose interests had to be taken into account, the answer to be given to this question would have been relatively straightforward. The crimes of which they are accused are very serious, and the public interest in the honouring of extradition arrangements for the prevention and punishment of crime is compelling: Norris v Government of the United States of America (No 2) [2010] UKSC 9, [2010] 2 AC 487. But the persons whose interests must be taken into account include the appellants children too. It is obvious that the childrens interests will be interfered with to at least some degree by the extradition of either parent. If both parents are to be extradited the effect on the family life of the children will be huge. The weight to be given to their best interests lies at the heart of the issue whether the extradition of both parents, or either of them, would be proportionate. The case comes before this court as an appeal against the determination of a devolution issue by the High Court of Justiciary. The appellants had argued both before Sheriff McColl in the Sheriff Court and in the High Court of Justiciary that it would be incompatible with their Convention rights within the meaning of the Human Rights Act 1998 for them to be extradited, as this would interfere with the exercise of their right to respect for their private and family life contrary to article 8 of the European Convention on Human Rights. Mrs H is the mother of six children, of whom the eldest is aged 14 years and the youngest is just one year old. Mr H is the father of the four younger children. In a judgment delivered on 3 April 2008 after a hearing which began on 16 November 2007 the sheriff held that the appellants extradition would be compatible with their Convention rights. So she sent the case of each appellant to the Scottish Ministers in terms of sections 87(3) and 141(1) of the 2003 Act for their decision whether either of the appellants was to be extradited. On 29 May 2008 the Scottish Ministers ordered the appellants to be extradited to the requesting territory. The appellants appealed to the High Court of Justiciary under section 103 read with section 216(9) of the 2003 Act. On 29 July 2011, after proceedings in that court which the court itself acknowledged had been exceptionally protracted, the High Court of Justiciary (Lord Osborne, Lord Reed and Lord Mackay of Drumadoon) held that neither of the appellants was entitled to be discharged under section 87 of the 2003 Act: [2011] HCJAC 77, para 101. There is no appeal to this court from a decision of the High Court of Justiciary under section 103 of the 2003 Act: sections 114(13) and 116. But the question whether the Scottish Ministers had no power in terms of section 57(2) of the Scotland Act 1998 to make an order for the appellants extradition because their extradition would be incompatible with their Convention rights is a devolution issue within the meaning of paragraph 1(d) of Schedule 6 to the Scotland Act. An appeal lies to this court under paragraph 13 of the Schedule against the determination of a devolution issue by a court of two or more judges of the High Court of Justiciary. On 11 August 2011 the High Court of Justiciary granted leave to the appellants to appeal to this court in respect of the devolution issues relating to article 8 that arose during the hearing of the appeal under the 2003 Act. The appellants submit that the public interest in giving effect to the extradition request is outweighed by the consequences that this would have for the best interests of their children. The proper conclusion, they say, is that the proposed interference fails to meet the test of proportionality required by article 8. So the Scottish Ministers had no power to order their extradition, as to extradite them would be incompatible with their rights and those of their children under article 8 of the Convention. The facts Mr H and Mrs H are both British citizens. They are aged 48 and 34 respectively. Mrs H is the mother of six children: A, who was born on 5 August 1997 and is 14; B, who was born on 16 March 1999 and is 13; C, who was born on 15 October 2002 and is nine; D, who was born on 16 February 2006 and is six; E, who was born on 5 May 2009 and is three; and F, who was born on 29 March 2011 and is one. Mr H is the father of C, D, E and F. The father of A never lived with Mrs H (Miss S, as she then was) and has never had contact with that child. The father of B lived in family with Miss S until they separated in 2001. Mr H who was then living in Middlesbrough and had three children by previous relationships, was Miss Ss employer at the time of the separation. He helped Miss S to find accommodation for herself and her children A and B in Middlesbrough. In about 2002 they formed a relationship. They were married in 2008. Mr H spent a period from about 1989 to 1994 or 1995 living in the United States. He and his then partner had a daughter J, who was born in about 1986. When she was aged 6 and they were living in Arkansas she made disclosures to a school teacher which indicated that she had been a victim of sexual abuse by Mr H. This led to a police investigation and she was taken into care. Mr H left Arkansas and moved to Oklahoma where he could not be prosecuted for offences said to have occurred in Arkansas. But he remained in contact with Js mother, with whom he devised a plan for J to be returned to live with them. She persuaded the authorities to return J to her sole care, and then took the child with her to Oklahoma so that she could resume her relationship with Mr H. Following their return to the United Kingdom that relationship came to an end. Mr H formed a relationship with someone else by whom he had a son. While he was living in that family he learned that J had again been taken into care. But he took no steps to offer her a home with him in this new relationship. After the birth of C, who was his first child with Mrs H, Js allegation that she had been sexually abused by Mr H when they were living in Arkansas came to the notice of the local authority in Middlesbrough. It brought proceedings against him under the Children Act 1989 in the Family Division of the High Court for his contact with Miss Ss children to be terminated. Mr H responded by mounting an attack on the local authoritys email system which led to the taking out of an injunction against him. In a judgment which was delivered on 30 January 2004 His Honour Judge Bryant, sitting as a judge of the High Court, found that Mr H had sexually abused J on a number of occasions in Arkansas and Texas in 1993 and 1994. He said that he was satisfied that Mr H remained a real and continuing danger to young girls, and continued the proceedings so that Miss Ss position in relation to his findings could be ascertained. She accepted Judge Bryants findings, and on 6 September 2004 he made an order against Mr H that he was to have no contact whatsoever with Miss Ss children A, B and C. Regrettably, his order was ignored entirely by both Mr H and Miss section On 23 March 2005 search warrants were granted by Teesside Magistrates Court under the Firearms Act 1968 in connection with an investigation into Mr H ordering a handgun through the internet. They were executed at a business address in Stockton-on-Tees and at residential addresses in Middlesbrough. Two handguns were recovered as well as documents, computers and bank records which contained information relating to the sale of chemicals through a website whose address was kno3.com. The chemicals included red phosphorus and iodine. The information showed that red phosphorus and iodine had been sold to customers around the world including about 400 customers in the United States and that the appellants were aware that it was illegal to sell these substances in that country. In April 2005 the appellants left Middlesbrough and moved with the three children to Scotland where they have remained ever since. Mrs H has relatives in the Bonnybridge area. On 21 June 2006 further search warrants were granted by Teesside Magistrates Court. On 23 June 2006 they were backed by a sheriff at Falkirk Sheriff Court. They were executed on the same day at a business address in Grangemouth and at a residential address nearby. A quantity of red phosphorus and iodine was recovered, as well as documents, computers and bank records indicating that the appellants were still trading in these substances. They were arrested but not at that stage detained in custody. Following a separate investigation which had been conducted by authorities in the United States over the same period, an indictment was filed in the United States District Court for the District of Arizona on 27 September 2006 charging the appellants with various offences relating to the importation into that country and the distribution there of red phosphorus and iodine. This led to the request that they be extradited to the United States so that they could face trial in that court. Warrants for the appellants arrest were issued in the United States on 28 September 2006. On 31 January 2007 the proceedings for the appellants extradition first came before the sheriff and the appellants were remanded in custody. They both were released on bail after seven months in custody on 31 August 2007. Mr Hs bail order was revoked on 21 April 2011 following his failure to attend a hearing of his appeal in the High Court of Justiciary. A warrant was issued for his arrest and he was returned to custody on 26 April 2011. Mrs H was again remanded in custody on 29 July 2011 when the High Court of Justiciary refused the appellants appeals. She was released on bail on 12 August 2011, but Mr H remains in custody. Initially, following her release, Mrs H visited Mr H in prison with all six children. The number of visits then diminished and only the four younger children regularly go to the prison with her. The two elder children are reluctant to take part in these visits. Within a few weeks of her release from custody Mrs H decided that she did not want her relationship with Mr H to continue, and their relationship has broken down. The children were placed on the child protection register in July 2009 as a result of allegations of sexual abuse against Mr H by the nine year old daughter of a neighbour. They were removed from the register after a case hearing on 13 December 2011. But this was on the basis that they would be restored to it if Mr H were to be released from custody and to resume contact with the family. The extradition request On 3 November 2006, by Diplomatic Note No 078, the United States requested the extradition of the appellants in accordance with article VIII of the Extradition Treaty between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America of 8 June 1972 (Cmnd 6723), as amended by the Supplementary Treaty of 25 June 1985. A new treaty, the Extradition Treaty of 2003 (Cm 5821) came into force on 26 April 2007. But as the extradition documents in this case were submitted before that date the new treaty does not apply to it. As is well known, the 1972 Treaty imposed mutual obligations on each party to extradite in respect of offences which carry a sentence of at least 12 months imprisonment in each jurisdiction. These obligations are however subject to specified exceptions. Among them is article V(2), which provides that extradition may be refused on any ground which is specified by the law of the requested party. It follows that the United Kingdom will not be in breach of its treaty obligations if, by reason of section 87 of the 2003 Act or section 57(2) of the Scotland Act 1998, extradition is refused on the ground that to extradite the person whose extradition is requested would be incompatible with any of the Convention rights. The documents submitted in support of the request included a copy of the indictment of the Grand Jury of the United States District Court for the District of Arizona dated 27 September 2006 and warrants for the arrest of the appellants. 82 counts are specified in the indictment. The first is a count of conspiracy in the following terms: Beginning on a date unknown to the Grand Jury but no later than August of 2004, continuing through at least September of 2006, in the District of Arizona, and elsewhere, defendants [the appellants] did knowingly and intentionally conspire and agree with each other and with others known and unknown to the Grand Jury, to commit offenses against the United States including the following: a. to knowingly and intentionally distribute a listed chemical, specifically Red Phosphorus, knowing and having reasonable cause to believe it will be used to manufacture a controlled substance, in violation of Title 21 United States Code, Sections 841(c) (2); b. to knowingly and intentionally import and distribute a chemical, specifically Red Phosphorus, which may be used to manufacture a controlled substance, knowing and having reasonable cause to believe that it will be used to manufacture a controlled substance in violation of the Controlled Substances Act and the Controlled Substances Import and Export Act, in violation of Title 21 United States Code, Sections 843(a)(7); and c. to knowingly and intentionally distribute a List I chemical, specifically Red Phosphorus, without the registration required by the Controlled Substances Act, in violation of Title 21 United States Code, Section 843(a)(9). The indictment then gives details of the manner and means of the conspiracy. It alleges that the appellants are the owners and founders of an internet business which operated under various names but is referred to in the indictment as KN03. At all relevant times they operated a website through which their business solicited customers around the world, including customers in the United States, who were seeking to purchase chemicals. Among the chemicals that they sold were red phosphorus and iodine. It is alleged that the appellants knew that these chemicals could be used to manufacture methamphetamine. This is a central nervous system stimulant drug which has a high potential for abuse. At the relevant time it was listed in the United Kingdom under the name methylamphetamine as a class B drug for the purposes of the Misuse of Drugs Act 1971. It was re-classified as a class A drug by the Misuse of Drugs Act 1971 (Amendment) Order 2006 (SI 2006/3331). The indictment states that the website advertised that it offered discreet delivery and that customers often asked for discreet packaging in the comments which they submitted along with their orders for chemicals. It also states that KN03 shipped orders to its customers with incorrect and misleading labelling as to the contents being sent. This included labelling on red phosphorus indicating that it was red metal for iron works and labelling on iodine indicating that it was for medical use. The indictment states that in addition to requests for discreet packaging KN03 received other emails alerting the appellants to the fact that the chemicals sold were being used to manufacture methamphetamine. A website giving a recipe for manufacturing methamphetamine from red phosphorus and iodine was found saved on a KN03 computer. Between August 2004 and August 2006 KN03 sold 296 kg of red phosphorus and 44 kg of iodine to customers in the United States, including customers in Arizona. Numerous examples are given of persons who manufactured methamphetamine in Arizona and ordered chemicals from KN03. At least 70 methamphetamine manufacturing locations are said to have been found in the United States which were supplied with chemicals by KN03. KN03 is said to have received approximately $132,922 between August 2004 and August 2006 from customers in the United States purchasing red phosphorus and iodine. Counts 2 to 17 allege the unlawful distribution by the appellants of red phosphorus knowing and having reasonable cause to believe that it would be used to manufacture a controlled substance in violation of specified provisions of the United States Code. Details are given of 16 specific supplies to customers in Arizona. Counts 18 to 33 allege the unlawful distribution and importation of red phosphorus knowing and having reasonable cause to believe that it would be used to manufacture a controlled substance in violation of another group of specified provisions of the United States Code, in relation to which details are given of the same 16 supplies. Counts 34 to 49 are counts of the distribution of red phosphorus without the required registration. Counts 50 to 65 allege the unlawful use of a communication facility, specifically the internet and United States mail, in committing the felony constituted by the unlawful distribution of red phosphorus to the same 16 customers in Arizona. Counts 66 to 81 are counts of importing red phosphorus into the United States without the required registration. Count 82 is a count of conspiracy to import red phosphorus into the United States without the required registration in violation of the relevant provisions of the United States Code. In an affidavit sworn on 30 October 2006 which was submitted in support of the extradition request Mary Beth Pfister, Assistant US Attorney for the District of Arizona, gave this explanation of the general nature of the evidence to be relied on by the prosecutor: The evidence the government will use to prove all of the allegations contained in the indictment against [Mr H] and [Mrs H] will include the incriminating computer records recovered from KN03 including emails, the admissions by [Mr H] and [Mrs H] regarding their involvement in the operation, the false and misleading statements made on packaging of KN03 products sent to the United States, the undercover sales made to the United States authorities, the fact that KN03 continued to sell red phosphorus to customers in the United States even after being advised that the sales were illegal and after being advised that the products were being used for the manufacture of methamphetamine, and the evidence that KN03 customers were operating clandestine methamphetamine laboratories. The sheriff held that all the counts in the indictment were extradition offences. The High Court of Justiciary held that the conduct alleged in relation to paragraph 12(c) of count 1 and counts 34 to 82 would not constitute an offence under the law of Scotland. It allowed the appellants appeal against the sheriffs decision to that extent, and in relation to these offences only ordered the appellants discharge and quashed the orders for their extradition with respect to them. The appeal against the remaining charges was refused. The number of counts listed in the indictment might suggest, at first sight, that the allegation is of a course of wrongful conduct on a grand scale. As the foregoing summary indicates, its length is attributable to the separate listing of each of the various provisions of the United States Code said to have been violated in relation to each of the specific transactions that have been identified. Nevertheless the allegation is of a sustained and deliberate course of unlawful conduct, during which the appellants are said have sold 296 kg of red phosphorus and 44 kg of iodine to about 400 customers in the United States between August 2004 and August 2006 in return for which they are said to have received approximately $132,922. The High Court of Justiciary noted in para 96 of its judgment that the conduct was said to have persisted even after the execution of the search warrants in England and an undertaking to desist. The appellants are said to have been well aware that these products were being used for the clandestine manufacture of methamphetamine and for this reason to have gone to some lengths to conceal the nature of their activities. The potential for harm to which their alleged conduct is said to have contributed is very great, due to the addictive nature of that drug and its potential for abuse. There is no doubt, even after the subtraction from the indictment of counts 12(c) and 34 to 82 by the High Court of Justiciary, that the offences that have been alleged against the appellants are very serious. All the offences are punishable in the United States, the lowest penalty being four years imprisonment and the maximum 20 years. Conduct of this kind would attract a term of imprisonment well in excess of the minimum period 12 months referred to in section 137(2)(b) of the 2003 Act were the appellants to be prosecuted in Scotland. Is the appeal competent? As has already been noted in para 4 above, there is no appeal to this court from a decision of the High Court of Justiciary under section 103 of the 2003 Act. Section 114(13) provides that the provisions of section 114 relating to appeals to this court from a decision of the High Court do not apply to Scotland. Section 116, read together with section 141(1), provides that a decision of the sheriff or the Scottish Ministers under Part 2 may be questioned in legal proceedings only by means of an appeal under that Part. Section 34 makes similar provision in relation to a decision of the sheriff under Part 1 of the 2003 Act. On the other hand, paragraph 13 of Schedule 6 to the Scotland Act 1998 provides a right of appeal to this court against the determination of a devolution issue by a court of two or more judges of the High Court of Justiciary, with the leave of the court from which the appeal lies or, failing such permission, with leave of the Supreme Court. This is a right of appeal which is separate and distinct from that provided by the 2003 Act. The question is whether the right of appeal to this court under paragraph 13 of Schedule 6 to the Scotland Act can survive the clear and unequivocal direction in section 116 of the 2003 Act that a decision of the sheriff may be questioned only by means of an appeal under Part 2 of that Act and the equivalent direction in section 34 with regard to proceedings under Part 1 which exclude appeals to the Supreme Court against decisions under those Parts of the Act by the High Court of Justiciary. Although no-one in these proceedings submits that it cannot and that the Supreme Court does not have jurisdiction to determine this appeal, the question whether it does have jurisdiction is obviously a matter of general public importance. We were invited to consider it as a preliminary issue in the light of written submissions provided by counsel for the Scottish Ministers and the Lord Advocate. Among the issues which the sheriff must consider in his capacity as a judge under Part 2 of the 2003 Act is whether the persons extradition would be compatible with the Convention rights within the meaning of the Human Rights Act 1998: section 87(1). The question whether for the Scottish Ministers to order the person to be extradited to the territory to which his extradition is requested under section 93 of the 2003 Act would be incompatible with his Convention rights for the purposes of the Scotland Act 1998 is just another way of putting the same question. Section 57(2) of the Scotland Act provides that a member of the Scottish Executive has no power to do any act so far as the act is incompatible with any of the Convention rights. That provision is of general application, irrespective of the source of the power that is being exercised. The functions which sections 93 and 141(1) of the 2003 Act confer on the Scottish Ministers are subject to the constraints of section 57(2) of the Scotland Act in just the same way as any other function which they may be called upon to exercise. There can be no doubt that the question whether an order for a persons extradition by the Scottish Ministers would be incompatible with any of the Convention rights falls within the definition of a devolution issue in paragraph 1(d) of Schedule 6 to the Scotland Act and that, as such, it is open to determination by the court under the provisions of that Schedule. But under the system that the 2003 Act lays down the question whether the persons extradition would be compatible with the Convention rights must be determined by the court before the question whether an order for the persons extradition should be made can come before the Scottish Ministers. There are two aspects of the system that Part 2 of the 2003 Act lays down that might be taken as suggesting that the right of appeal in relation to a devolution issue under the Scotland Act has been excluded. The first is to be found in section 118(2), which applies where the effect of the decision of the relevant court on an appeal is that the person is to be extradited to a category 2 territory. A similar provision relating to the system in Part 1 is to be found in section 35. Section 118(2) provides that the person must be extradited to the category 2 territory before the end of the required period, which is 28 days starting with the day on which the decision of the relevant court on the appeal becomes final, or the day on which the proceedings on the appeal are discontinued. The relevant court in the application of this provision to Scotland is the High Court of Justiciary: section 118(8)(a). The remaining provisions of this section, which make detailed provisions as to when the decision becomes final in the event of an appeal to the Supreme Court, do not apply to Scotland: section 118(8)(b). There is no provision which tells us when the 28 day period is to start should there be an appeal against the High Courts determination of a devolution issue under the Scotland Act. The problem could perhaps be cured if the Supreme Court were to remit the case to the High Court to pronounce a final order in the event that it decides that the appeal to it should be dismissed. This would involve reading the words becomes final in section 118(2)(a) as embracing this possibility. But this solution is not without difficulty. In contrast to the situation contemplated by the remaining provisions of section 118, no specific time limit is provided either by the Scotland Act or by an Act of Adjournal for applications for leave to appeal to this court under paragraph 13 of Schedule 6. The second aspect is to be found in section 115A(1)-(4), which was inserted by the Police and Justice Act 2006, section 42 and Schedule 13, paragraph 8(13). Its Part 1 equivalent is to be found in section 33A, inserted by paragraph 8(5) of that Schedule. Subsections (1)-(4) of section 115A make provision for a person to be remanded in custody where that persons discharge has been ordered on appeal but the court is informed immediately on behalf of the category 2 territory of an intention to appeal to the Supreme Court. Those provisions do not apply to Scotland: section 115A(5). There is no equivalent provision which enables the person to be detained in custody should the Lord Advocate wish to appeal to the Supreme Court on behalf of the category 2 territory against the determination of a devolution issue in that persons favour. This is a significant omission. It puts the Lord Advocate, should he wish to appeal in that event, at a significant disadvantage in comparison with the authorities in the other parts of the United Kingdom. It is reasonably clear that, when the 2003 Act and the Police and Justice Act 2006 which amended it were enacted, Parliament did not contemplate that decisions of the High Court of Justiciary in an appeal under section 87(1) against the sheriffs determination of the question whether the persons extradition would be compatible with the Convention rights would be appealable under the Scotland Act. But this does not lead inevitably to the conclusion that an appeal to the Supreme Court under that Act against the determination of a devolution issue by the High Court as part of an appeal under section 103 of the 2003 Act is incompetent. There are powerful considerations the other way. First, there is the fact that the effect of the Scotland Act is that the Scottish Ministers derive their existence only from that Act. As has been repeatedly pointed out by the court, they have no power to act other than in a way that is consistent with section 57(2) of that Act: see, eg, R v HM Advocate [2002] UKPC D3, 2003 SC (PC) 21, [2004] 1 AC 462, paras 46, 129; McGowan v B [2011] UKSC 54, 2011 SLT 37, [2011] 1 WLR 3121, para 6. The functions that the 2003 Act has conferred on the Scottish Ministers must be seen in that light. It would perhaps have been open to Parliament to override the provisions of section 57(2) so as to confer on them more ample powers than that subsection would permit in the exercise of their functions under the 2003 Act. But in my opinion only an express provision to that effect could be held to lead to such a result. This is because of the fundamental constitutional nature of the settlement that was achieved by the Scotland Act. This in itself must be held to render it incapable of being altered otherwise than by an express enactment. Its provisions cannot be regarded as vulnerable to alteration by implication from some other enactment in which an intention to alter the Scotland Act is not set forth expressly on the face of the statute. In any event, the courts presume that Parliament does not intend an implied repeal: Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd [2001] QB 388, per Arden LJ at p 405. In modern times, when standards of parliamentary draftsmanship are high, the presumption against implied repeal is strong: Nwogbe v Nwogbe [2000] 2 FLR 744, para 19, per Walker LJ. And it is even stronger the more weighty the enactment that is said to have been impliedly repealed: Bennion on Statutory Interpretation, 5th ed (2008), p 305. The provisions of Schedule 6 which enable devolution issues to be brought to the Supreme Court on appeal go hand in hand with the constraints which the Scotland Act imposes on the powers of the Scottish Ministers. They are as much part of the constitutional settlement as the constraints themselves. They were included in the Scotland Act as a means of ensuring that the rule of law and the protection afforded by the Convention rights is respected across the entire range of the activities of the Scottish Government. It permits of no exceptions, and the right of appeal to the Supreme Court under paragraph 13 of Schedule 6 is part of that mechanism. The fact that this right has not been expressly excluded by the 2003 Act is a powerful reason for holding that it is unaffected by sections 34 and 116. Then there is the fact that it has been held, in the context of proceedings under the 2003 Act in England and Wales, that sections 34 and 116 apply only to decisions in respect of which a right of appeal lies under the 2003 Act. As was pointed out in R (Hilali) v Governor of Whitemoor Prison [2008] UKHL 3, [2008] AC 805, para 21, one of the features of the provisions about appeals in the 2003 Act is that not every decision that the judge is required to take can be appealed under the statute: see R (Asliturk) v City of Westminster Magistrates Court [2010] EWHC 2148, [2010] 1 WLR 1139; R (Nikonovs) v Governor of Brixton Prison [2005] EWHC 2405 (Admin), [2006] 1 WLR 1518, para 18 where Scott Baker LJ said that it would require the strongest words in a provision such as section 34 to remove the ancient remedy of habeas corpus where the applicant was able to satisfy the court that he had not been brought before a judge as soon as practicable for the purposes of section 4(5), a decision under which is not appealable. This adds force to the point that, although sections 34 and 116 of the 2003 Act provide that a decision of a judge under the relevant Part of the Act may be questioned by means of an appeal under that Part, they have no application to the system for the determination of devolution issues that the Scotland Act lays down because they do not exclude resort to it expressly. The system under which the present appeal has been brought before this court lies outside the contemplation of those sections of the 2003 Act. The competency of devolution minutes in extradition proceedings was considered in Goatley v HM Advocate [2006] HCJAC 55, 2008 JC 1 and La Torre v HM Advocate [2006] HCJAC 56, 2008 JC 23. In both cases the Lord Advocate conceded that devolution minutes were competent in proceedings under the 2003 Act as the functions carried out by the Lord Advocate and the Scottish Ministers under Part 2 of the 2003 Act were acts that they were performing as members of the Scottish Executive within the meaning of section 57(2) of the Scotland Act. This concession was approved by the High Court: Goatley, paras 13 and 14; La Torre paras 46 and 47. It seems to me, with respect, that it was properly made and the High Court was right to give the concession its approval. If an extradition were to be incompatible with the Convention rights of the person to be extradited the Scottish Ministers would be carrying out an act which they had no power to do. A challenge to their proposed exercise of that function by means of a devolution minute is a parallel remedy to that afforded by section 87(1) of the 2003 Act. The issue which the sheriff and, in its turn the High Court, had to decide under that subsection was just as much a devolution issue as it was an issue arising under the 2003 Act. The effect of the statutes is that the appellants are entitled to exercise the right of appeal which paragraph 13 of Schedule 6 to the Scotland Act provides for, notwithstanding the fact that there is no appeal to this Court against the determination of the High Court under the 2003 Act. For these reasons I would hold that the appeal to this court against the determination of the devolution issue for which the High Court gave permission is not prohibited by section 116 of the 2003 Act and that it is competent. It is to be hoped that the difficulties that the operation of sections 115A and 118 and their equivalents in Part I of the 2003 Act may give rise to will be the subject of an early legislative solution by Parliament. The proceedings below On 15 January 2007 the Scottish Ministers issued a certificate under section 70 of the 2003 Act to the effect that the extradition request was valid. They sent it to the Sheriff Court, as they were required to do by subsection (9) of that section. On 16 January 2007 warrants were granted for the arrest of the appellants. They appeared before the sheriff on 31 January 2007 and were remanded in custody. They remained in custody until they were released on bail in August 2007. When they were on remand their four children (E and F had not yet been born) were looked after by Mrs Hs mother who had had regular contact with them up to that date. Other family members and friends of the family had individual children to stay with them from time to time. The extradition hearing before the sheriff began on 16 November 2007. The children were not separately represented. It was suggested in the written case for Mrs H that it would have been appropriate for submissions to have been entertained on their behalf. But Mr Hugo Keith QC, who appeared for the Official Solicitor in HH and PH v Deputy Prosecutor of the Italian Republic, Genoa [2012] UKSC 25 which was heard together with the cases of Mr and Mrs H in this court, accepted that cases where this is needed will be rare. The court was also shown the product of inquiries made by the Crown Offices International Co-operation Unit through the European Judicial Network as to whether children are separately represented in extradition proceedings before the national courts in other Contracting States. The responses that were received indicate that the practice in almost every state is for the children not to be separately represented, although in Malta the parents can ask for the child to be represented. It was not suggested before the sheriff or in the High Court of Justiciary that separate representation was necessary in this case. The court should nevertheless be alive to the information that is needed for it to have regard to the best interests of the child as a primary consideration: HH and PH, para 86, per Lady Hale. The sheriff took the necessary steps in this case. The hearing continued on dates in January and March, and the sheriff issued her judgment on 3 April 2008. In para 66 she said that she did not regard either of the appellants as credible or reliable witnesses. She rejected a submission by Mr Hs counsel that she should disregard the judgment of Judge Bryant in the High Court in Middlesbrough. In her view it was relevant to the appellants credibility and reliability and it was inconceivable that they were not aware of his injunction. In para 67 she said that she did not accept the picture that the appellants had sought to present of themselves and their children as totally united and alone without any support being available if the extradition request were to be granted. In para 68 she said that the bleak scenario of the four children of necessity being taken into care and housed separately and without being able to sustain their relationship with their parents to the extent that it would be extinguished or irreparably damaged was not made out. The sheriff provided her explanation for this assessment in the next two paragraphs. In para 69 she said that she accepted that Mrs Hs mother was at times overwhelmed with the care of the children, who were naturally upset by the removal of their parents. The mother said that she would not be able to cope with caring for them again. But she did not say that she was not prepared to play any part in the childrens care should the need arise, and in her past conduct she had shown great care and support for them. In para 70 the sheriff said that if Mrs Hs mother did not feel able to care for them the local authority might require to accommodate them. In that situation it would look to find accommodation in the first instance within the childrens wider family or close friends. If, as the evidence indicated, there were no friends or family willing or able to take care of the children the local authority would require to place the children in foster care. She accepted evidence from a social services resource team manager that it might prove difficult to find a placement for all the children in one family. But no permanent placement would be considered until the final outcome of any proceedings in the United States was known. She accepted the social workers evidence that however the children were to be placed everything possible would be done to foster their relationship with one another and their parents. In para 76 she said that it seemed to her highly unlikely that Mrs Hs mother would not participate in any efforts by the local authority to maintain those relationships. The sheriff was referred to declarations by two witnesses from the United States which indicated that the United States authorities are committed to encouraging family visits in appropriate circumstances, to allowing visits beyond the confines and security of the prison and to allow family groups to visit where those members had travelled a long distance. She was also referred to the Council of Europe Convention on the Transfer of Sentenced Prisoners of 21 March 1983, Council of Europe Treaty Series No 112, which entered into force in the United States on 1 July 1985 and in the United Kingdom on 1 August 1985. She was told that in evaluating a request that a sentenced person should serve a sentence of imprisonment in the home country the United States authorities include consideration of the presence of close family members in the home country, the strength of their family ties and the likelihood of family reunification. In para 76 she said that the mechanisms operated by the United States authorities to maintain and assist in the fostering of family bonds would assist the appellants to maintain their bond with the children and the children to maintain their bonds with them, even if any such arrangements could not be regarded as ideal. The sheriffs conclusion was, as she said in para 82 of her judgment, that the appellants extradition would be compatible with their Convention rights. She answered the question in section 87(1) of the 2003 Act in the affirmative and sent the case of each appellant to the Scottish Ministers for their decision under section 93 whether the appellants were to be extradited. On 29 May 2008 the Scottish Ministers ordered the appellants to be extradited to the requesting territory. Mr H appealed to the High Court of Justiciary under section 103 of the 2003 Act against the sheriffs decision and under section 108 against the order for his extradition by the Scottish Ministers. Mrs H appealed under section 103 against the sheriffs decision to send her case to the Scottish Ministers. The appeals were set down for hearing on 4 to 6 March 2009. On 4 March 2009 the court was informed that those instructed for Mrs H had withdrawn from acting, and the hearing of her appeal was adjourned to a later date. The hearing of Mr Hs appeal proceeded but it was not completed on 6 March so it was continued for hearing for four more days in May 2009. Mrs Hs appeal was set down for that date also, but it had to be adjourned again having regard to the imminent birth of E, who was born on 5 May 2009. Investigations then had to be made into Mrs Hs mental health. Following the completion of those investigations an application was made on Mrs Hs behalf for her to be discharged under section 91 of the 2003 Act. The Lord Advocate submitted that the court had no jurisdiction to consider that matter so the case had to be continued again for a hearing on jurisdiction. Having held that it did have jurisdiction, the court heard evidence about Mrs Hs mental condition and concluded that her contention that her mental condition was such that it would be unjust or oppressive for her to be extradited had not been established. After various other procedural hearings a further application was made on Mrs Hs behalf in June 2010 in which it was maintained that there had been a material deterioration in her health since the previous application had been considered. She had again become pregnant and had suffered a miscarriage in February 2010. This had been found to be a molar pregnancy which had required monitoring. A further hearing was fixed for 11 August 2010. The court was then informed that, despite advice that she should avoid pregnancy because of risks to her health, Mrs H had become pregnant again. The hearing fixed for that date was discharged. At a procedural hearing on 24 September 2010 the court was informed that Mr H had instructed new solicitors and counsel (his fourth set of representatives). On 7 December 2010 the court refused Mrs Hs second application under section 91. Mrs H then again changed her representatives for the fifth time. A continued hearing of the appeals proceeded on 10 January 2011. It had to be adjourned again on 14 January 2011 when Mr H told the court staff that Mrs H, who was by now seven months pregnant, had been taken to hospital. A further hearing was fixed for 19 April 2011, but it had to be adjourned to 21 April as the court was informed that Mr H had attempted suicide that morning by taking an overdose of paracetamol and had been taken to hospital. Mr H failed to attend court on that date. A letter was produced from a general practitioner saying that, for unspecified reasons, he was unfit to attend court. For this and other reasons the hearing was adjourned to 26 April 2011, when the court was provided with a discharge letter prepared by a consultant psychiatrist who had examined Mr H on 20 April 2011 in Stirling Royal Infirmary. He said that when he saw Mr H that day he had been quite explicit about the fact that he wished to attract a psychiatric diagnosis, as was his wife, to avoid extradition to America. Mr H denied having said any such thing, but the court heard evidence from the consultant psychiatrist whom it found to be an entirely convincing witness. In para 26 of its opinion of 29 July 2011 (see para 44, below) the court said that the evidence relating to this episode supported its conclusion that Mr H was a devious and manipulative individual whose behaviour can be unpredictable and irresponsible. The hearing of the appeals was concluded on 28 April 2011. Mr H, for whose arrest a warrant had been issued on 21 April 2011, was remanded in custody. The opinion of the court was delivered by Lord Reed on 29 July 2011: [2011] HCJAC 77. In para 99 he said that in the case of Mr H it appeared to it to be plain that his extradition could be justified under article 8(2). He was charged with very serious offences, and his case did not come close to meriting his discharge under section 87 of the 2003 Act. In para 101 he said that it had to be recognised that the family life of Mrs H and the children would inevitably be disrupted by her extradition. But he said that, applying the guidance in Norris v Government of the United States of America (No 2) [2010] 2 AC 487 and having regard to the seriousness of the offences charged, the court had come to the conclusion that Mrs H also was not entitled to be discharged under section 87. On 11 August 2011 the court gave leave to the appellants to appeal to the Supreme Court in respect of the devolution issues relating to article 8 that had arisen during its hearing of the appeal. The reasoning of the High Court of Justiciary As has just been noted, Lord Reed said in para 101 of his opinion that the court had applied the guidance in Norris in coming to its conclusion in the case of Mrs H: see paras 72-78. In para 79 he considered the decision in ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4, [2011] 2 AC 166. Having done so, Lord Reed set out his understanding of the approach to be adopted in paras 80-81. In para 81 he said that it was important to note that ZH was concerned not with extradition but with deportation, and that the approach adopted to article 8 rights in extradition cases must be radically different from that adopted in deportation or expulsion cases. He referred to the following passage in the admissibility decision in King v United Kingdom (Application No 9742/07) (unreported) given 26 January 2010, para 29 where the Strasbourg court said: Mindful of the importance of extradition arrangements between states in the fight against crime (and in particular crime with an international or cross-border dimension), the court considers that it will only be in exceptional circumstances than an applicants private or family life in a contracting state will outweigh the legitimate aim pursued by his or her extradition. Summing up on this point at the end of para 80 of his opinion, Lord Reed said: Since the factors which are generally of overriding importance in extradition cases are not present in deportation or expulsion cases, it follows that decisions on article 8 rights in cases of the latter kind are of no direct relevance in the context of extradition. In para 81 he referred to passages in paras 15 and 51 of the judgment in Norris, in which Lord Phillips indicated that the distinction between extradition and deportation was fundamental to its reasoning. He also said that it was necessary to bear in mind that Norris was not referred to in the judgments in ZH nor was it cited in argument. He summarised the courts approach to ZH in these words: Against that background, we are not persuaded that anything said in ZH was intended to modify or depart from what had been said in Norris, or indeed was said with extradition in mind. At the same time, in a case where it is necessary to determine whether the extradition of a person with dependent children is justified under article 8(2) of the Convention, the best interests of the children are naturally a primary consideration. As appears from King v United Kingdom, however, that consideration will be outweighed, in all but exceptional circumstances, by the public interest in the application of extradition arrangements. We in this court have the great advantage of being able to develop our own thinking on the issues raised by these two cases, and I would not wish to be too critical of the way the High Court of Justiciary sought to reconcile them. Their task was not made easier by the fact that the focus in Norris was on the state of health of Mr and Mrs Norris and not on Mr Norriss relationship with his two sons, who were grown up, or with his three grandchildren. It was acknowledged that the impact of extradition on family life did not fall to be considered simply from the viewpoint of the extraditee, that the family unit had to be considered as a whole and that each family member had to be regarded as a victim: para 64, per Lord Phillips. But, on the facts of that case, it was only Mr and Mrs Norris who were seen as the victims. The conclusions that can be drawn from Norris are set out by Lady Hale in HH and PH v Deputy Prosecutor of the Italian Republic, Genoa, para 8. ZH on the other hand was entirely different case on its own facts and, as it was concerned with immigration control and not extradition, nothing that was said in Norris was relevant to how it should be decided. So Norris was not referred to in the judgments, nor was it cited in argument. That does not mean, however, that nothing that was said in ZH is relevant to how issues about the rights of children should be dealt with in the context of extradition. On the contrary, the reasoning in that case can have a very real and important part to play in the extradition context too where those affected by a request for extradition include the children of the persons sought to be extradited. The error in the courts reasoning was to see these two cases as dealing with entirely different things. While that was true when the facts in ZHs case were being considered, it would not have been true if ZH had come first and the family unit to which it was necessary to have regard in Norris had included children, as it does in the present case. As I said in Norris, para 89, I do not think that there are any grounds for treating extradition cases as falling into a special category which diminishes the need to examine carefully the way the process will interfere with the individuals right to respect for his family life. The need to do this here is just as great as it was in ZH, although the conclusion that is likely to be reached may not be the same. I cannot agree therefore with the proposition that the approach adopted to article 8 rights in extradition cases must be radically different from that adopted in deportation or expulsion cases. The public interest in giving effect to a request for extradition is a constant factor in cases of that kind. Great weight will always have to be given to it, and the more serious the offence the greater will be that weight. The public interest in immigration control lacks the treaty base which is at the heart of the extradition process. But, the question, so far as the article 8 right is concerned, is the same in both cases. How is one to balance two powerful and competing interests? In Norris, para 91, I said that the question was whether the article 8 right carries enough weight to overcome the public interest in giving effect to the request or in maintaining a proper and efficient system of extradition. I agree with Lord Wilson that the significance of the way one puts the question may be more theoretical than practical: R (HH and PH) v Deputy Prosecutor of the Italian Republic, Genoa [2012] UKSC 25, para 152. But I think that it would be more accurate where the family life of children is involved, as the best interests of children are a primary consideration, to put the question the other way round as I did in ZH, para 44: is the article 8 right outweighed by the strength of any other considerations? The article 8 rights in this case As Ross D Parke and K Alison Clarke-Stewart declared in the opening sentence of their paper Effects of Parental Incarceration on Young Children (December 2001), for imprisoned mothers one of the greatest punishments that incarceration carries with it is separation from their children. The same point can be put the other way round. One of its greatest effects is to punish the children too. For those members of the family who were living together before the incarceration, their patterns of contact with each other will be severely disrupted. This may happen at a crucial stage of the childrens development, when the damage done to their well-being and development may be irreparable. These effects are likely to be even greater where the parent is to be extradited for trial and likely incarceration in another country. As Lady Hale said in ZH, paras 25-26, article 9 of the UNCRC draws a distinction between separation of children from their parents for reasons connected with their upbringing and separation of parents from their children for deportation, detention or imprisonment. But even in decisions of the latter kind, the best interests of the child must be a primary consideration. The intellectual exercise which this principle requires is not to be seen as dictated to in a mechanistic way without regard to the context. In ZH, para 44, I said that the starting point was to assess whether the childrens best interests were outweighed by the strength of any other considerations. But I agree with Lord Judge that this does not require the decision-taker always to examine the interests of the children at the very beginning of the exercise: R (HH and PH) v Deputy Prosecutor of the Italian Republic, Genoa [2012] UKSC 25, para 124. It does not, as Mr Gill QC pointed out in his helpful note for the Coram Childrens Legal Centre, impose a straitjacket. What it does do, by encouraging a temporal approach, of the kind described by Lady Hale in her judgment in that case at para 33, is ensure that the best interests principle will not be seen as having a reduced importance when there are other important compelling considerations which, on the particular facts of the case, must be respected. The place where the best interests and well-being of any children takes in the list of factors which the Strasbourg court set out in AA v United Kingdom (Application No 8000/08) (unreported) given 20 September 2011, para 56, supports this approach. As Lady Hale said in ZH, para 26, the strength of those other considerations may outweigh the best interests of the children, provided that those other considerations are not treated as inherently more significant than they are. So it is important to have a clear idea of their circumstances and of what is in their best interests before one asks oneself whether those interests are outweighed by the force of any other consideration. But to begin with the whole exercise must be placed into its proper context. The court was shown an affidavit by William Bryan III, an assistant United States Attorney for the District of Arizona, in which he stated that it is impossible to state with precision how long it would take to bring the appellants to trial following their extradition. While they are awaiting trial the appellants may be released on conditions, but a more realistic assessment is that they will be detained in custody until and throughout the trial. Mail and telephone calls would be permitted during this period, provided those imprisoned have sufficient funds for this. But direct face-to-face contact with visitors would not be possible. The trial itself can be expected to last about two to four weeks. In view of the dangers involved in the manufacture of methamphetamine and the harm that its use can give rise to, the appellants conviction would be likely to attract very long sentences. The effect of those sentences may be mitigated by the fact that arrangements exist under which the appellants might thereafter be permitted to serve part of their sentences in Scotland under the European Convention on the Transfer of Sentenced Prisoners of 21 March 1983: see para 39, above. But there is no certainty that permission would be given in this case, and is not possible to predict when any such arrangements would be likely to be made even if they are agreed to. The prospect has to be faced that the appellants are likely to be kept apart from their children, and their children apart from them and perhaps from each other, for a very long time. Where do the best interests of the children stand in relation to Mr H? He has been in custody since 26 April 2011. Contact has been maintained by means of prison visits, but the two elder children have made it clear that they no longer wish these visits to continue. Mrs H regards her relationship with Mr H as at an end, so the prospect of his ever living together with her and the children as a family seems remote. Although no regard was paid to it by either of them, one cannot ignore the fact that on 6 September 2004 Judge Bryant ordered that, in the light of his abuse of his daughter J, Mr H was to have no contact whatsoever with Mrs Hs three elder children who are all girls. D and E are also girls, and all six children were placed on the child protection register in July 2009 as a result of another allegation of sexual abuse by Mr H, this time of a neighbours daughter. They were removed from it on 13 December 2011, but they would all be placed on it again if Mr H were to resume contact with the family on his release from custody. The childrens family relationship with Mr H has effectively been brought to an end by these events, at least for the time being. The prospect of their ever resuming family life together is remote. The argument that it would be contrary to their best interests for him to be extradited is, at best, very weak. As against that, the offences of which he is accused are very serious and the treaty obligation that requires effect to be given to the request is compelling. Lord Reed said in para 99 that Mr Hs case did not come close to meriting his discharge under section 87(2). I agree with that assessment, and the devolution issue that Mr H has raised falls to be answered in the same way. I would refuse his appeal. Mrs Hs case is, as Lord Reed said in para 100 of his opinion, more difficult. But, as he explained in para 101, the court based its decision in her case exclusively upon the law as laid down in Norris. The guidance that was to be derived from ZH was ignored. For the reasons already given (see paras 47-49, above), I consider that this was a misdirection. As it was on this basis that the court reached a clear conclusion that, having regard to the seriousness of the offences charged, she was not entitled to be discharged under section 87 of the 2003 Act, it is necessary to look at her case more closely to see whether the equivalent conclusion with regard to the Scottish Ministers powers under the Scotland Act can be regarded as justified. There is no doubt where the childrens best interests lie. Their best interests must be to continue to live with their mother. They will be deprived of her care and guidance if she is taken away from them, and it seems likely that the long term effects of a prolonged separation of the magnitude that is in prospect in this case will be profound. She has, of course, been separated from them before. She has already spent two periods in remand in connection with this case, from 31 January 2007 to 31 August 2007 and from 29 July 2011 to 12 August 2011. On both occasions her mother, with the help of other family members and friends, was able to keep the family together. Whether this will be possible if Mrs H were to be extradited is quite uncertain. The sheriff does not seem to have been unduly troubled on this point: see paras 37-38, above. But there must be a risk that the children will be taken into care and, if that happens, that they will no longer be able to live together. Resuming family life together after a prolonged separation is likely to be very difficult. The gravity of the situation is compounded by the fact that the children are, for all practical purposes, now fatherless. On the other hand there is no escape from the fact that these are criminal proceedings and that the crimes alleged, which were persisted in over a substantial period, are very serious. The interests of justice must be given effect to. The treaty obligation requires that Mrs H be sent for trial in the United States, and it points to the conclusion that it is in that forum that her participation in the alleged crimes must be determined. It is well established that extradition may amount to a justified interference under article 8(2) if it is in accordance with the law, is pursuing the aims of the prevention of disorder and crime and is necessary in a democratic society: Launder v United Kingdom (1997) 25 EHRR CD67, para 3; Aronica v Germany (Application No 72032/01) (unreported) given 18 April 2002; King v United Kingdom, para 29. The treaty obligation points to the conclusion too that if there are grounds for leniency, or for mitigation of sentence on the grounds of her family circumstances, it is for the authorities in the United States, not for this court, to make that assessment. The Strasbourg court has repeatedly said that it will only be in exceptional circumstances that an applicants private or family life in a contracting state will outweigh the legitimate aim pursued by his or her extradition: King v United Kingdom, para 29; Babar Ahmad v United Kingdom (2010) 51 EHRR SE97, para 172. In Nunez v Norway (Application No 55597/09) (unreported) given 28 June 2011, the article 8 right was sufficient to tip the balance in a immigration case. But the fact that the court has not yet decided any extradition case in favour of the applicant, even where those to be extradited are the parents of young children, indicates how high the bar against refusing a request for extradition has been set. The best interests of the children do however suggest that the High Court of Justiciary was wrong to hold, as Lord Reed indicated in para 101 of his opinion, that it was unnecessary to consider the possibility of a prosecution in this country. It will not be necessary to do this in every case. But I would make an exception here. The extradition request extends to both parents, and there are six children, four of whom are under the age of ten. The best interests of the children suggest that we should be satisfied that the interests of justice cannot be served equally well by prosecuting the parents in this country. It is to that issue that I now turn. Prosecution in this country It was submitted for Mr H that, although there is no reported case where this argument has been successful, the logical conclusion is that, where a domestic prosecution is an option, it ought to be the preferred one and that where the best interests of children were involved the obligation to adopt the least onerous means of meeting the legitimate aim should be adhered to. The same points were made on behalf of Mrs H too. Reference was made to R (Bermingham) v Director of the Serious Fraud Office [2006] EWHC 200 (Admin), [2007] QB 727, para 121 where Laws LJ said that there might be an instance where such a possibility might tip the balance of judgment in favour of a conclusion that a persons extradition would amount to a disproportionate interference with his article 8 rights and that this had to be accepted if section 87 of the 2003 Act was to constitute effective protection of the Convention guarantees. In King v United Kingdom, para 29, the Strasbourg court observed that considerations as to whether prosecution exists as an alternative may have a bearing on whether the extradition would be in violation of one of the rights guaranteed by the Convention. But in Babar Ahmad v United Kingdom, para 175 the Court, recalling that there was no right in the Convention not to be extradited and that, by implication, there was no right to be prosecuted in a particular jurisdiction, said that it was not for the Court to adjudicate on the natural forum for prosecution. Its only task was to determine whether that extradition would be compatible with the applicants Convention rights. In Bermingham, para 126 Laws LJ said that he wished to underline the observations of Lord Hardie, sitting in the Outer House, in Wright v The Scottish Ministers 2004 SLT 823, para 28 where he said: Extradition does not and should not depend upon the ability or otherwise of the requested state to undertake its own investigations with a view to prosecuting the case within its own jurisdiction. Such an approach would involve unnecessary duplication of effort, would result in additional delays in the prosecution of suspected criminals and would have an adverse effect upon international relations and international co-operation in the prosecution of serious crime. When Wright reached the Inner House the extreme submission that extradition would be proportionate only in circumstances where it was demonstrated that a prosecution in the jurisdiction where the subject lay would be impossible was, not surprisingly, rejected: [2005] CSIH 40, 2005 1 SC 453. The Extra Division also said in para 67 that it found itself in complete agreement with the observations of the Lord Ordinary. In the Bermingham case the Divisional Court had little difficulty in rejecting the argument that the defendants should be tried in this country as the case against them had very substantial connections with the United States and was perfectly properly triable there: para 125. In King too the Strasbourg court was satisfied that the United Kingdom authorities had given convincing reasons as to why they regarded it as appropriate for any prosecution to take place in Australia, not the least that the applicants co-accused had all been tried there. In Norris v Government of the United States of America (No 2) [2010] 2 AC 487, para 67, having noted in para 66 that there had recently been a string of cases in which the extraditee had argued that he ought to be prosecuted in this jurisdiction of which Bermingham was one, Lord Phillips said: Extradition proceedings should not become the occasion for a debate about the most convenient forum for criminal proceedings. Rarely, if ever, on an issue of proportionality, could the possibility of bringing criminal proceedings in this jurisdiction be capable of tipping the scales against extradition in accordance with this countrys treaty obligations. Unless the judge reaches the conclusion that the scales are finely balanced he should not enter into an inquiry as to the possibility of prosecution in this country. In a postscript to his judgment which he wrote in the light of the admissibility decision in King he said that he remained of the view that rarely, if ever, was the possibility of prosecution as an alternative to extradition likely in practice to tilt the scales against extradition: para 86. These remarks had the unanimous support of all the other members of the court. On the other hand cases where both parents of young children are at risk of being extradited may be regarded as being of an exceptional character, so as to raise the need to consider the possibility of a prosecution in this country a bit higher than the bar which the observations in Norris have set for it. The issue remains one of proportionality. The more compelling the interests of the children the more important it will be for the alternatives to extradition, if there are any, to be carefully examined and brought into the balance to see if they carry any weight. This is not to diminish the importance to be given to this countrys treaty obligations. Rather it is to recognise that in cases involving the separation of parents from young children there is another powerful factor which is likely to make the scales more finely balanced than they would be if the children were not there. In its Review of the United Kingdoms Extradition Arrangements, 30 September 2011, para 6.17 the Review Panel chaired by Sir Scott Baker said, with regard to the forum bars in sections 19B and 83A inserted into Parts 1 and 2 of the 2003 Act by paragraphs 4(2) and 5(2) of Schedule 13 to the Police and Justice Act 2006 which has not yet been brought into force, that in its view their effect is that in any case where the forum was raised there would be no alternative to the judge conducting a detailed analysis of all relevant circumstances. There is no statutory requirement to go that far in this case, and Mr Wolffe QC for the Lord Advocate said that the case had not been investigated with a view to prosecution in Scotland. But we do not lack information about the view that was taken about the possibility of prosecution in England. Advice on the jurisdictional issues that had arisen in connection with the investigation of the appellants activities wasgiven by the Crown Prosecution Service in 2006 following their move to Scotland earlier that year. Section 20 of the Misuse of Drugs Act 1971 provides that a person commits an offence if in the United Kingdom he assists in or induces the commission in any place outside the United Kingdom of an offence punishable under the provisions of a corresponding law in force in that place. In a note dated 5 May 2006 the CPS advised that, where offending had taken place both in England and Scotland, it would be possible to charge the suspects either with a number offences under section 20 with respect the supply of red phosphorus to the United States or with an over-arching conspiracy covering the whole of the period of their operations. In a further note dated 4 April 2007 consideration was given to the possibility of prosecuting for these offences in England leaving it to the Scottish authorities to prosecute offences occurring within their jurisdiction themselves, of prosecuting all the offences in the English courts or of allowing the United States authorities to proceed with their application for extradition. It was pointed out that a large number of witnesses would have to attend from the United States if the complete scale of the appellants involvement in drug making activities there was to be placed before the court, whereas the number of witnesses who would need to travel for a trial in that country would be small. A court in the United States would be best placed to deal with the legal issues, and it was appropriate that the appellants should be dealt with in the jurisdiction where the effect of their crimes was felt. The advice was that the public interest was best served by the police assisting, in so far as it was proper and possible, in the extradition of the appellants to stand trial in the United States. There is no indication that the best interests of the children were taken into account in that assessment, although regard was had to the considerations mentioned in R (Bermingham) v Director of the Serious Fraud Office. I would however accept Mr Wolffes submission that the scales are not finely balanced in this case and that taking account of the best interests of the children does not change the analysis. He accepted, of course, that regard should be had to article 3.1 of the UNCRC, which provides that the best interests of the child shall be a primary consideration. But those interests must be assessed in the context of this countrys treaty obligations in the suppression of trade in narcotic drugs across international borders (UN Convention against Illicit Trading in Narcotic Drugs and Psychotropic Substances 1988). There are good reasons too for looking to the place of the mischief as the place where the prosecution should be brought: Office of the Kings Prosecutor, Brussels v Cando Armas [2005] UKHL 67, [2006] 2 AC 1, para 36-40; Clements v HM Advocate 1991 JC 62, p 71. The United States has a substantial interest in trying the appellants in its own courts and there are strong practical reasons for concluding that that country, where most of the witnesses reside and the degree of the criminality involved is best assessed, is the proper place for them to be tried. As Mr Wolffe points out, the very fact that the basis for a prosecution in this country would appear to be section 20 of the Misuse of Drugs Act 1971 emphasises that the crimes which the appellants are alleged to have committed are really US crimes. I would hold that, taking all these considerations into account, it would not be appropriate for the appellants to be tried here. Nor would it be acceptable for Mrs H not be prosecuted at all for the crimes with which she has been charged. It would not, of course, be sensible to prosecute Mrs H here while sending Mr H to the United States for prosecution in that country. So their cases must stand or fall together on this point. The proper forum in which the prosecution should be brought is in the United States of America. Conclusion As I have already said, I would refuse Mr Hs appeal. I am satisfied that the Scottish Ministers order that he must be extradited was not incompatible with his Convention rights. For obvious reasons the balance is not so easy to strike in the case of Mrs H. But I have come to the conclusion that the best interests of the children, even when weighed together with her own article 8 right to respect for her family life with them, are not strong enough to overcome the overwhelming public interest in giving effect to the request. I would hold that it was not incompatible with her Convention rights for the Scottish Ministers to order her extradition, and I would refuse her appeal also. I would add one further comment. There have been a number of recent cases, to which much publicity has been given, which have tended to shake public confidence in the current arrangements with the United States. I would not regard this case as falling into that category. Although the conduct that has been alleged against the appellants took place in this country, it is plain that it was in the United States that it had its effect. It cannot be said that the appellants have not had proper notice of the crimes with which they have been charged. Nor, in view of the steps that have been taken here to gather evidence with a view to a possible prosecution in England, does it appear that the allegations that have been made against them are entirely without substance. What is happening in this case is a tragedy, especially for the children. But this is not a ground on which the extradition arrangements which must now be put into effect can properly be criticised. I agree, for the reasons which Lord Hope has given, that this Court is competent to decide these appeals. I also agree, for the reasons given in his judgment and the judgments of Lord Judge and Lord Wilson in F-K v Polish Judicial Authority and R (HH and PH) v Deputy Prosecutor of the Italian Republic, Genoa [2012] UKSC 25 delivered today, that these appeals should be dismissed. Although it could have been desirable to have the point argued adversarially, I agree with Lord Hope for the reasons he gives that this appeal is competent. In the present case, and for the reasons given by Lord Hope in his paras 50 to 72, I also conclude that the article 8 rights of the children are on the facts of this case outweighed by the pressing public interest in giving effect to the extradition requests received from the United States of America in respect of both Mr and Mrs H. I have read the judgment of Lord Hope. I agree for the reasons that he has given that this Court is competent to decide these appeals, and for the reasons in his judgment and my own judgment in F-K v Polish Judicial Authority and R (HH and PH) v Deputy Prosecutor of the Italian Republic, Genoa delivered today that these appeals should be dismissed. I agree, for the reasons which Lord Hope has given, that this court is competent to decide these appeals. I also agree, for the reasons given in his judgment and in my own judgment in F-K v Polish Judicial Authority and R (HH and PH) v Deputy Prosecutor of the Italian Republic, Genoa delivered today, that these appeals should be dismissed. |
On 27 July 2016, following a hearing of this appeal, this court referred a number of questions of EU law to the Court of Justice for a preliminary ruling: Secretary of State for the Home Department v Vomero [2016] UKSC 49; [2017] 1 All ER 999. On 17 April 2018 the Court of Justice delivered its judgment: FV (Italy) v Secretary of State for the Home Department (Joined Cases C 424/16 and C 316/16) [2019] QB 126. In the light of that judgment, and the opinion of Advocate General Szpunar, this court held a further hearing of the appeal on 7 February 2019. It is now in a position to give its decision on the appeal. The facts The respondent, Franco Vomero, is an Italian national born on 18 December 1957. On 3 March 1985 he moved to the United Kingdom with his future wife, a UK national. They were married in the UK on 3 August 1985 and had five children here, for whom Mr Vomero cared, in addition to working occasionally, while his wife worked full time. Between 1987 and 2001 Mr Vomero received several convictions in the UK, two of which (in 1991 and 1992) resulted in short terms of imprisonment. In 1998 the marriage broke down. Mr Vomero left the family home and moved into accommodation with Mr Edward Mitchell. On 1 March 2001, Mr Vomero killed Mr Mitchell. Both men had been drinking, a fight ensued and Mr Vomero struck Mr Mitchell at least 20 times on the head with weapons including a hammer, and then strangled him with electrical flex from an iron. Mr Vomero was arrested on 2 March 2001 and remanded in custody until his trial. The jury reduced the charge of murder to manslaughter by reason of provocation. Mr Vomero was on 2 May 2002 sentenced to eight years imprisonment. He was released on licence on 3 July 2006 but re arrested a short time later as no hostel accommodation was available for him. He was subsequently detained under immigration powers. By decision made on 23 March 2007 and maintained on 17 May 2007, the appellant, the Secretary of State, determined to deport Mr Vomero under regulations 19(3)(b) and 21 of the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003). Regulation 19(3)(b) permits the Secretary of State to deport a national of the European Economic Area (EEA), or a family member of an EEA national, where the persons removal is justified on the grounds of public policy, public security or public health. Any such deportation must be in accordance with regulation 21. The latter regulation gives effect to articles 27 and 28 of Council Directive 2004/38/EC of 29 April 2004 (OJ 2004 L158, p 77) (the Directive), which are set out below. Mr Vomero challenged that decision before the Asylum and Immigration Tribunal. The decision of that tribunal was appealed to the Court of Appeal, whose decision ([2012] EWCA Civ 1199; [2013] 1 WLR 3339) has given rise to the present appeal. The proceedings were twice adjourned pending the determination of other cases, including latterly the references in Onuekwere v Secretary of State for the Home Department (Case C 378/12) [2014] 1 WLR 2420 and Secretary of State for the Home Department v MG (Portugal) (Case C 400/12) [2014] 1 WLR 2441. Mr Vomero was detained with a view to deportation until December 2007. He subsequently committed and was convicted of further offences, two of which resulted in custodial sentences. In January 2012 he was convicted of having a bladed article, battery and committing an offence while subject to a suspended sentence. He was sentenced to 16 weeks imprisonment. In July 2012 he was convicted of burglary and theft and was sentenced to a further 12 weeks imprisonment. In summary, therefore: (1) From 1985 to 2001 Mr Vomero lived in the UK, with convictions from time to time which resulted in short periods of imprisonment during 1991 and 1992. (2) From March 2001 to July 2006 he was in prison for manslaughter. (3) The decision to deport him was made in March 2007, less than nine months after his release from prison, by which time he had entered immigration detention. (4) Subsequently he was convicted again and served further short sentences during 2012. The court has no information before it as to Mr Vomeros circumstances since 2012. The Directive In Chapter III of the Directive, entitled Right of residence, articles 6 and 7 specify the conditions under which Union citizens and their family members have rights of residence in a member state other than that of which they are nationals. Under article 6, entitled Right of residence for up to three months, Union citizens have the right of residence on the territory of another member state for a period of up to three months without any conditions or formalities other than the requirement to hold a valid identity card or passport. Under article 7, entitled Right of residence for more than three months, Union citizens have the right of residence on the territory of another member state for a period of longer than three months if they meet one of the conditions set out in para 1, including if they (a) are workers or self employed persons in the host member state. In Chapter IV, entitled Right of permanent residence, article 16 states: 1. Union citizens who have resided legally for a continuous period of five years in the host member state shall have the right of permanent residence there. This right shall not be subject to the conditions provided for in Chapter III. 2. Paragraph 1 shall also apply to family members who are not nationals of a member state and have legally resided with the Union citizen in the host member state for a continuous period of five years. 3. Continuity of residence shall not be affected by temporary absences not exceeding a total of six months a year, or by absences of a longer duration for compulsory military service, or by one absence of a maximum of 12 consecutive months for important reasons such as pregnancy and childbirth, serious illness, study or vocational training, or a posting in another member state or a third country. 4. Once acquired, the right of permanent residence shall be lost only through absence from the host member state for a period exceeding two consecutive years. Legal residence is residence which satisfies the conditions laid down in the Directive, in particular those set out in article 7(1): Ziolkowski v Land Berlin (Joined Cases C 424/10 and C 425/10) [2014] All ER (EC) 314; [2011] ECR I 14035, para 46. In its application to periods of residence preceding the date for transposition of the Directive, the expression is construed as meaning residence in accordance with the earlier EU law instruments: Secretary of State for Work and Pensions v Lassal (Child Poverty Action Group intervening) (Case C 162/09) [2011] All ER (EC) 1169; [2010] ECR I 9217, para 40. Chapter VI of the Directive, entitled Restrictions on the right of entry and the right of residence on grounds of public policy, public security or public health contains articles 27 to 33. Article 27, entitled General principles, states in paras 1 and 2: 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. Article 28, entitled Protection against expulsion, provides: 1. Before taking an expulsion decision on grounds of public policy or public security, the host member state shall take account of considerations such as how long the individual concerned has resided on its territory, his/her age, state of health, family and economic situation, social and cultural integration into the host member state and the extent of his/her links with the country of origin. 2. The host member state may not take an expulsion decision against Union citizens or their family members, irrespective of nationality, who have the right of permanent residence on its territory, except on serious grounds of public policy or public security. 3. An expulsion decision may not be taken against Union citizens, except if the decision is based on imperative grounds of public security, as defined by member states, if they: (a) have resided in the host member state for the previous ten years; or (b) are a minor, except if the expulsion is necessary for the best interests of the child, as provided for in the United Nations Convention on the Rights of the Child of 20 November 1989. Under article 40, member states were required to transpose the Directive by 30 April 2006: that is to say, during the period when Mr Vomero was serving his sentence of imprisonment for manslaughter. The Directive did not contain any transitional provisions explaining whether the right of permanent residence could be acquired immediately on 30 April 2006 on the basis of earlier periods of legal residence, or, if so, which earlier periods would qualify, in particular if they had been interrupted or had ceased at some point prior to that date. Nor did the Directive contain any provisions explaining whether periods of imprisonment might be treated as legal residence, or whether imprisonment interrupted the continuity of residence. Those and other lacunae have been filled by numerous judgments of the Court of Justice. The previous judgment of this court At the previous hearing of the appeal, the Secretary of States case, put shortly, was that since Mr Vomero was in prison between 2001 and 2006, he had not acquired a right of permanent residence under article 16 by the time the deportation order was made in March 2007. It followed that, although he enjoyed the protection of articles 27(2) and 28(1) of the Directive, he did not benefit from the protection against expulsion conferred by article 28(2). In the Secretary of States submission it also followed, contrary to the conclusion of the Court of Appeal, that Mr Vomero was not entitled to enhanced protection against expulsion under article 28(3)(a). As presented to this court, the Secretary of States case did not involve investigating events prior to 2001, but rested on the undisputed fact of Mr Vomeros imprisonment from 2001 to 2006. Lord Mance, with whose judgment the other members of the court agreed, observed at para 8 of his judgment that no right of permanent residence under the Directive could in law be acquired before 30 April 2006, when the period for transposing the Directive expired. To acquire such a right, Mr Vomero therefore required, as at 30 April 2006 or at some later date, to have resided legally for a continuous period of five years in the UK, as stipulated by article 16(1) of the Directive: Lassal, para 38. As at the date when the deportation decision was taken, Mr Vomero had completed the custodial part of his sentence less than nine months earlier, and had entered immigration detention. Lord Mance also noted at para 9 that in Onuekwere the Court of Justice held that, under the terms of article 16(2) of the Directive, periods of imprisonment cannot be taken into consideration for the purposes of the acquisition of a right of permanent residence for the purposes of that provision (para 22), and that articles 16(2) and (3) must be interpreted as meaning that continuity of residence is interrupted by periods of imprisonment in the host member state (para 32). Lord Mance observed that the same must necessarily apply in respect of a Union citizen under article 16(1). Lord Mance went on to refer in para 10 to the judgment of the Court of Justice in Secretary of State for Work and Pensions v Dias (Case C 325/09) [2012] All ER (EC) 199; [2011] ECR I 6387, which concerned a Union citizen who had resided legally in the UK for over five years between January 1998 and April 2003 (not yet acquiring a right of permanent residence, since the period ended before 30 April 2006), and then remained in the UK between April 2003 and April 2004, during which time she did not work or satisfy any other condition entitling her to reside in the UK under EU law. She then worked in the UK between April 2004 and March 2007, at which point she asserted that she had acquired a right of permanent residence. Lord Mance observed: The Court of Justice held that the rule laid down in article 16(4) regarding absences [once acquired, the right of permanent residence shall be lost only through absence from the host member state for a period exceeding two consecutive years] must be applied by analogy in relation to the period when she had not been working. Since this was for less than two years, it did not affect her acquisition of a permanent right of residence as from 30 April 2006. The Supreme Court considers it clear that the Court of Justice was here identifying a bright line rule relating to the acquisition of a permanent right of residence. Lord Mance went on to observe at para 11 that, where a person had acquired a right of permanent residence, [b]y analogy with absence, it might seem logical if a period exceeding two years spent in prison were to lead to the loss of any right of permanent residence acquired on or after 30 April 2006. Lord Mance added however that the parties were not agreed on this, and that it was unnecessary to consider the point further on the present appeal. Lord Mance concluded at para 12: It follows from paras 8 and 9 above that, as the Secretary of State rightly submits, the respondent had not acquired any right of permanent residence before the date of the decision to deport him. The respondents case on this basis has to be that this is irrelevant, and that a Union citizen with no right of permanent residence may nevertheless acquire a right to enhanced protection under article 28(3)(a). In that regard, counsel for Mr Vomero submitted at the previous hearing that the requirement in article 28(3)(a) that the Union citizen have resided in the host member state for the previous ten years involved an overall assessment of the degree of integration at the date of the decision to deport, that there must in principle have been ten continuous years of residence, but that a period of imprisonment immediately preceding the decision to deport would not necessarily mean that prior integration was lost to a degree depriving the Union citizen of enhanced protection under article 28(3)(a). That submission had been accepted by the Court of Appeal, which noted that Mr Vomero had resided in the UK for more than ten years prior to his imprisonment in 2001, and considered that his integrative link with the UK remained intact in March 2007, when the deportation decision was taken. Against that background, this court referred the following questions to the Court of Justice: (1) Whether enhanced protection under article 28(3)(a) depends upon the possession of a right of permanent residence within article 16 and article 28(2). If the answer to question (1) is in the negative, the following questions are also referred: (2) Whether the period of residence for the previous ten years, to which article 28(3)(a) refers, is (a) a simple calendar period looking back from the relevant date (here that of the decision to deport), including in it any periods of absence or imprisonment, (b) a potentially non continuous period, derived by looking back from the relevant date and adding together period(s) when the relevant person was not absent or in prison, to arrive, if possible, at a total of ten years previous residence. (3) What the true relationship is between the ten year residence test to which article 28(3)(a) refers and the overall assessment of an integrative link. The judgment of the Court of Justice (1) The courts preliminary observations Before answering the first question referred by this court, the Court of Justice made the following preliminary observations: 40. By its first question, the Supreme Court of the United Kingdom asks, in essence, whether article 28(3)(a) of Directive 2004/38 must be interpreted as meaning that it is a prerequisite of eligibility for the protection against expulsion provided for in that provision that the person concerned must have a right of permanent residence, within the meaning of article 16 and article 28(2) of that Directive. 41. As a preliminary point, it should be noted that that question is based on the premise that Mr Vomero does not have such a right of permanent residence in the United Kingdom. 42. Since the court does not have all the information necessary in order to assess the merits of that premise, it must be assumed, for the purposes of the question, that it is well founded. It is also relevant to note the preliminary observations made by Advocate General Szpunar in his opinion: 32. [T]he national court has stated that Mr Vomero has not acquired any right of permanent residence, which is a matter for that court to determine before taking a final decision with due regard to EU law as interpreted by the court. According to the national court, that finding is based on the fact that Mr Vomero was in prison between 2001 and 2006, as well as the approach taken by the court in its case law, particularly in Secretary of State for Work and Pensions v Dias (Case C 325/09) [2011] ECR I 6387; [2012] All ER (EC) 199, para 57 and Onuekweres case [2014] 1 WLR 2420, para 26. 33. However, it must be noted that, in the case of citizens of third states who fulfil the condition of minimum presence on the employment market of a member state, namely citizens whose rights are based on Association Council Decision No 1/80 of 19 September 1980 on the Development of the Association between the European Economic Community and Turkey, the court has held that their right of residence, as the corollary of the right to have access to the employment market, is not affected by imprisonment: see Cetinkaya v Land Baden Wrttemberg (Case C 467/02) [2004] ECR I 10895, paras 38 and 39 and Aydinli v Land Baden Wrttemberg (Case C 373/03) [2005] ECR I 6181, para 32. (In the context of pre trial detention followed by a criminal sentence of suspended imprisonment, also see Nazli v Stadt Nrnberg (Case C 340/97) [2000] ECR I 957, paras 40 and 41.) In taking that approach, the court referred to the wording of the provisions of that Decision, which does not permit any limitation on the right of residence except in the event of absence or on grounds of public policy, public security or public health: Cetinkayas case, para 38 and Aydinlis case, para 28. However, in Diass case, para 64, the court held that a similar provision of Directive 2004/38, namely article 16(4), may be applied by analogy to periods prior to those covered by Directive 2004/38 which do not amount to legal residence for the purpose of article 16(1) of that Directive: Diass case, para 65. In Diass case the court sought above all to address a lacuna in Directive 2004/38 and a situation which could arise only prior to that Directive: see opinion of Advocate General Trstenjak in Diass case EU:C:2011:86; [2011] ECR I 6387, point 102. The case law cited above concerns the effect of imprisonment on the enjoyment of rights acquired after presence on the employment market for a number of years, while Onuekweres case, relates to the stage at which a right is acquired. Consequently, the main reason stated by the court in Onuekweres case, para 26, according to which the taking into consideration of periods of imprisonment for the purpose of acquiring a right of permanent residence would be contrary to the aim pursued by Directive 2004/38, cannot be applied to the case of forfeiture of that right because, in some cases, it may involve a Union citizen taking advantage not of periods of imprisonment directly, but of earlier periods of residence in the member state. It will be necessary to return to these observations and to consider their significance. (2) The courts answer to the first question The Court of Justice began its consideration of the first question referred to it by explaining that article 28 provides a graduated scheme of protection against expulsion, under which the degree of protection reflects the degree of integration of the Union citizen concerned in the host member state: 44. Directive 2004/38, as is apparent from recital (24) in the Preamble, establishes a system of protection against expulsion measures which is based on the degree of integration of those persons in the host member state, so that the greater the degree of integration of Union citizens and their family members in the host member state, the greater the guarantees against expulsion they enjoy. 45. In that context, first of all, article 28(1) of Directive 2004/38 provides generally that, before taking an expulsion decision on grounds of public policy or public security, the host member state must take account in particular of considerations such as how long the individual concerned has resided on its territory, his or her age, state of health, family and economic situation, social and cultural integration into the host member state and the extent of his or her links with the country of origin 46. Next, under article 28(2), Union citizens or their family members, irrespective of nationality, who have the right of permanent residence on the territory of the host member state pursuant to article 16 of the Directive cannot be the subject of an expulsion decision except on serious grounds of public policy or public security. 47. Lastly, in the case of Union citizens who have resided in the host member state for the previous ten years, article 28(3)(a) of Directive 2004/38 considerably strengthens their protection against expulsion by providing that such a measure may not be taken except where the decision is based on imperative grounds of public security, as defined by member states 48. It thus follows from the wording and the structure of article 28 of Directive 2004/38 that the protection against expulsion provided for in that provision gradually increases in proportion to the degree of integration of the Union citizen concerned in the host member state. 49. In those circumstances, and even though it is not specified in the wording of the provisions concerned, the enhanced protection provided for in article 28(3)(a) of Directive 2004/38 is available to a Union citizen only in so far as he first satisfies the eligibility condition for the protection referred to in article 28(2) of that Directive, namely having a right of permanent residence under article 16 of that Directive. (citations omitted) The Court of Justice accordingly concluded at para 61 that the answer to the first question was that article 28(3)(a) of Directive 2004/38 must be interpreted as meaning that it is a prerequisite of eligibility for the protection against expulsion provided for in that provision that the person concerned must have a right of permanent residence within the meaning of article 16 and article 28(2) of that Directive. It followed that the second and third questions referred by this court did not require to be examined. (3) B v Land Baden Wrttemberg The Court of Justice joined the reference made by this court with another reference made by a German court, in the case of B v Land Baden Wrttemberg (Case C 316/16), which raised related questions. It is relevant to note some passages in the courts judgment in which it considered the fourth question referred to it by the German court, which it described as being in essence, at what point in time compliance with the condition of having resided in the host member state for the previous ten years, within the meaning of article 28(3)(a) of Directive 2004/38, must be assessed: para 84. The answer to that question was that whether a person satisfied that condition must be assessed at the date on which the expulsion decision is initially adopted. However, the court added the following remarks: 89. It must be noted, however, that that conclusion is without prejudice to the separate issue of when it is necessary to assess whether there are actually grounds of public policy or public security within the meaning of article 28(1) of Directive 2004/38, serious grounds of public policy or public security within the meaning of article 28(2) of that Directive, or imperative grounds of public security within the meaning of article 28(3) of that Directive, on the basis of which expulsion may be justified. In that regard, it is indeed for the authority which 90. initially adopts the expulsion decision to make that assessment, at the time it adopts that decision, in accordance with the substantive rules laid down in articles 27 and 28 of Directive 2004/38. 91. However, that does not preclude the possibility that, where the actual enforcement of that decision is deferred for a certain period of time, it may be necessary to carry out a fresh, updated assessment of whether there are still grounds of public policy or public security, serious grounds of public policy or public security or imperative grounds of public security, as applicable. 92. It must be borne in mind, in particular, that under the second sub paragraph of article 27(2) of Directive 2004/38, the issue of any expulsion measure is, in general, conditional on the requirement that the conduct of the person concerned must represent a genuine, present threat affecting one of the fundamental interests of society or of the host member state 94. Furthermore, it follows, more generally, from the case law of the court that the national courts must take into consideration, in reviewing the lawfulness of an expulsion measure taken against a national of another member state, factual matters which occurred after the final decision of the competent authorities which may point to the cessation or the substantial diminution of the present threat which the conduct of the person concerned constitutes to the requirements of public policy or public security. That is so, above all, if a lengthy period has elapsed between the date of the expulsion order and that of the review of that decision by the competent court (citations omitted) The parties submissions In the light of the preliminary observations of the Court of Justice and the Advocate General, an issue has arisen between the parties as to whether it is open to Mr Vomero to argue that he had acquired a right of permanent residence in the UK by the date of the decision to deport him. In the submissions advanced on behalf of Mr Vomero, the argument is couched in terms of whether he retained a right of permanent residence which was notionally, though not formally acquired prior to 30 April 2006. It is argued on his behalf, under reference to cases concerned with actual, not notional, rights of permanent residence, that a period of more than two years imprisonment need not result in the loss of such a right. A similar argument was presented on behalf of Mr Vomero to the Court of Justice, but was not reflected in the approach which it adopted. As it seems to me, references to a notional right of permanent residence are liable to obscure the true question. There is no indication in the judgments of the Court of Justice that EU law recognises a right of permanent residence of a merely notional character. On the contrary, the judgments of the Court of Justice in the cases concerning the Directive have drawn a distinction between the acquisition of a right of permanent residence (as in Lassal, Dias and Onuekwere) and the subsequent loss of such a right (as provided for under article 16(4) of the Directive). Before any question can arise as to whether Mr Vomero retained a right of permanent residence, it is necessary first to determine whether he had acquired such a right, not notionally but in reality: something which, as the Court of Justice has made clear (for example, in Dias, paras 40 and 57), could only occur on or after 30 April 2006. As explained earlier, Lord Mance concluded in his judgment that Mr Vomero had not acquired a right of permanent residence in the UK by the date of the decision to deport him, notwithstanding his many years residence, because his imprisonment between 2001 and 2006 had the result that he had not, as at 30 April 2006 or some later date, resided legally in the UK for a continuous period of five years prior to the decision to deport him. It is argued on Mr Vomeros behalf that this reasoning cannot be correct, given the Court of Justices statement in para 42 of its judgment (cited at para 22 above) that it did not have all the information necessary in order to assess the merits of the premise of the first question referred, namely, as the court stated in para 41, that Mr Vomero does not have such a right of permanent residence in the United Kingdom. Since, it is argued, the court had Lord Mances judgment before it, it cannot have found in Lord Mances reasoning a sufficient basis for his conclusion. In response, the Secretary of State submits that the conclusion expressed in para 12 of Lord Mances judgment is correct. He concedes, however, that when the appeal is remitted to the Upper Tribunal to be reconsidered, it will be open to Mr Vomero to argue, if he can establish it on the evidence, that he has acquired a right of permanent residence since the date of the decision to deport him, and therefore now benefits from the protection given by article 28(2) of the Directive. The parties agree that that is because the tribunal is required under domestic law to consider the position as at the date of the hearing before it, rather than the date of the decision under challenge. This is agreed to follow from section 85(4) of the Nationality, Immigration and Asylum Act 2002, together with Schedule 2, paragraph 1 of the Immigration (European Economic Area) Regulations 2016 (SI 2016/1052). Given that that is a matter of agreement, this court need express no view as to whether it is legally correct. Discussion The preliminary observations made by the Court of Justice do not set out any criticism of the reasoning which led Lord Mance to the conclusion stated in para 12 of his judgment. The court properly confined itself to answering the question referred to it. It is notable that the premise which the court said that it was unable to assess was not the same as Lord Mances conclusion. That conclusion was that the respondent had not acquired any right of permanent residence before the date of the decision to deport him: that is to say, that he had not acquired such a right by 23 March 2007. The premise which the court assumed to underlie the reference was different: that Mr Vomero does not have such a right of permanent residence in the United Kingdom: that is to say, that he does not presently have such a right. This court expressed no view as to whether Mr Vomero presently has such a right. That question was not, and is not, before this court. As explained in para 32 above, the parties are in agreement that the question whether Mr Vomero has acquired a right of permanent residence since 23 March 2007 remains open for consideration by the tribunal when the case is remitted there. The Court of Justices observation that it did not have all the information necessary in order to assess whether Mr Vomero (presently) has a right of permanent residence does not, therefore, undermine Lord Mances conclusion to any extent. The preliminary observations of the Advocate General also began at point 32 (cited at para 23 above) by attributing to this court a statement that Mr Vomero has not acquired any right of permanent residence (emphasis supplied): a statement which, however, this court did not make. The Advocate Generals belief that this court had made such a statement may form the background to part of what he said in point 33. In that paragraph, the Advocate General began by referring to the approach adopted by the Court of Justice in the cases of Cetinkaya and Aydinli, which were not concerned with the Directive but with the effect of imprisonment on rights of residence acquired under Decision 1/80 of the EEC Turkey Association Council of 19 September 1980. The Advocate General contrasted that approach with the approach adopted in the case of Dias, concerned with the acquisition of the right of permanent residence under the Directive. He explained the latter approach as being designed to address a lacuna in the Directive. In this passage, the Advocate General appears to have intended to clarify the case law of the Court of Justice, or possibly to invite the court to do so. In the event, the Court of Justice did not comment on the matter: its judgment contains no mention of Cetinkaya or Aydinli, and mentioned Dias only to record that this court had referred to it. The Advocate General then went on in point 33 to contrast Cetinkaya and Aydinli, which as previously mentioned concerned the effect of imprisonment on the enjoyment of rights previously acquired, with the case of Onuekwere, which concerned the effect of imprisonment on the acquisition of a right of permanent residence. He expressed the view that the reasoning in Onuekwere could not be applied to cases concerned with the forfeiture of that right once acquired. That passage in his opinion is relevant to para 11 of Lord Mances judgment (cited at para 18 above), where Lord Mance observed, obiter, that it might seem logical if a period of more than two years imprisonment were to lead to the loss of a right of permanent residence once acquired. It does not, on the other hand, affect the reasoning which led Lord Mance to his conclusion in para 12. The preliminary observations of the Advocate General do not, therefore, place in question Lord Mances conclusion in para 12 of his judgment that Mr Vomero had not acquired a right of permanent residence in the UK by the date of the decision that he should be deported. That conclusion follows, as Lord Mance explained, from the principles laid down in the judgments of the Court of Justice in Dias and Onuekwere. The case of Dias, like the present case, concerned a situation where a Union citizen had been legally resident in the UK for a continuous period of more than five years prior to 30 April 2006: as explained earlier, she resided legally in the UK between January 1998 and April 2003. That period of continuous legal residence had, however, been followed by a period between April 2003 and April 2004 when she was not legally resident, since she did not work or satisfy any other condition entitling her to reside in the UK under the Directive, although she remained in possession of a residence permit issued under Council Directive 68/360/EEC. She then worked in the UK between April 2004 and March 2007, at which point she asserted that she had acquired a right of permanent residence. The Court of Justice held, following its judgment in the case of Lassal, that continuous periods of five years legal residence which were completed before 30 April 2006 counted towards the acquisition of the right of permanent residence, but that the right could not be acquired until that date. It then referred to article 16(4) of the Directive, under which the right of permanent residence, once acquired, is lost through absence from the host member state for a period exceeding two consecutive years. Although that provision is concerned with the loss of the right of permanent residence, rather than with its acquisition, and although it is concerned only with absence from the host member state, the Court of Justice held that the rule which it laid down had also to be applied by analogy, in the context of the acquisition of a right of permanent residence, to periods spent in the host member state during which the conditions governing entitlement to a right of residence were not satisfied, which occurred before 30 April 2006 and after a continuous period of five years legal residence completed prior to that date. In that regard, the court stated: 60. Next, the court has also held that that provision [article 16(4)] falls to be applied independently of whether the periods of residence in question were completed before or after 30 April 2006, for the reason that, since residence periods of five years completed before that date must be taken into account for the purpose of acquisition of the right of permanent residence provided for in article 16(1) of Directive 2004/38, non application of article 16(4) thereof to those periods would mean that the member states would be required to grant that right of permanent residence even in cases of prolonged absences which call into question the link between the person concerned and the host member state (see Lassals case (para 56)). 62. Such reasoning must also be applied by analogy to periods of residence completed on the basis solely of a residence permit validly issued pursuant to Directive 68/360, without the conditions governing entitlement to any right of residence having been satisfied, which occurred before 30 April 2006 but after a continuous period of five years legal residence completed prior to that date. 63. Even though article 16(4) of Directive 2004/38 refers only to absences from the host member state, the integration link between the person concerned and that member state is also called into question in the case of a citizen who, while having resided legally for a continuous period of five years, then decides to remain in that member state without having a right of residence. 64. In that regard, it should be noted, as the Advocate General has stated in points 106 and 107 of her opinion, that the integration objective which lies behind the acquisition of the right of permanent residence laid down in article 16(1) of Directive 2004/38 is based not only on territorial and time factors but also on qualitative elements, relating to the level of integration in the host member state. 65. As the situations are comparable, it follows that the rule laid down in article 16(4) of Directive 2004/38 must also be applied by analogy to periods in the host member state completed on the basis solely of a residence permit validly issued under Directive 68/360, without the conditions governing entitlement to a right of residence of any kind having been satisfied, which occurred before 30 April 2006 and after a continuous period of five years legal residence completed prior to that date. The case of Dias was concerned with a period, following a continuous period of five years legal residence completed prior to 30 April 2006, during which the conditions of legal residence were not satisfied because the Union citizen was out of work. The case of Lassal was concerned with a period, following a continuous period of five years legal residence completed prior to 30 April 2006, during which those conditions were not satisfied because the Union citizen was absent from the host member state. The present case is concerned with a period, following a continuous period of five years legal residence completed prior to 30 April 2006, during which the Union citizen was in prison. The leading authority on the significance of imprisonment in relation to the acquisition of a right of permanent residence is the case of Onuekwere. It concerned a Nigerian national who became the husband of a Union citizen exercising her right of residence in the UK. The question was whether he had acquired a right of permanent residence under article 16(2) of the Directive (see para 10 above). In order to do so, he had to have resided legally with his wife in the UK for a continuous period of five years. He resided with her legally between 2000 and 2004, but was then in prison between September 2004 and November 2005. He was imprisoned again between 2008 and 2009. He then asserted that he had acquired a right of permanent residence. The court held that the periods of imprisonment could not be taken into account for the purpose of calculating the length of the claimants residence in the UK. It stated at para 26: The imposition of a prison sentence by the national court is such as to show the non compliance by the person concerned with the values expressed by the society of the host member state in its criminal law, with the result that the taking into consideration of periods of imprisonment for the purposes of the acquisition by family members of a Union citizen who are not nationals of a member state of the right of permanent residence for the purposes of article 16(2) of Directive 2004/38 would clearly be contrary to the aim pursued by that directive in establishing that right of residence. (Emphasis supplied) The court went on to state at para 32 that article 16(2) and (3) must be interpreted as meaning that continuity of residence is interrupted by periods of imprisonment in the host member state of a third country national who is a family member of a Union citizen. The practical result was that Mr Onuekwere was unable to aggregate the periods of residence before and after his periods of imprisonment, so as to establish a period of five years continuous legal residence. Onuekwere differs from Lassal and Dias in that the decision was not based on the application by analogy of the rule in article 16(4) of the Directive, under which a right of permanent residence, once acquired, is lost where there has been a period of absence exceeding two consecutive years. Instead, it was based on the application of article 16(3), which concerns continuity of residence for the purpose of the acquisition of a right of permanent residence, and was interpreted as applying where there has been a period of imprisonment, as well as in the cases expressly set out in that provision. The reasoning in Onuekwere nevertheless resembles that in Lassal and Dias, in that it was based (as appears, for example, from paras 24 25 and 30) on the significance of imprisonment in relation to the integrative link between the offender and the host member state. As Lord Mance observed in para 9 of his judgment, the same reasoning as was applied in Onuekwere for the purposes of article 16(2) of the Directive (which applies article 16(1) to the family members of a Union citizen who are not themselves nationals of a member state) and article 16(3) (which applies for the purposes of both article 16(1) and article 16(2)) must also apply to Union citizens themselves for the purposes of article 16(1). The present case differs from Onuekwere, however, in that Mr Vomero had completed more than five years continuous legal residence in the UK before he was imprisoned in 2001. Considering whether Mr Vomero had acquired a right of permanent residence when the period for implementation of the Directive expired on 30 April 2006, the position is therefore analogous to those in Lassal and Dias: the rule in article 16(4) has to be applied by analogy. Treating imprisonment as weakening the integrative link between the person involved and the host member state in a similar way to the circumstances in Lassal and Dias, in accordance with the judgment in Onuekwere, it follows that the period of imprisonment for more than two years which Mr Vomero had undergone by 30 April 2006 prevented him from acquiring a right of permanent residence on that date, or at any subsequent time prior to 23 March 2007, when the decision to deport him was taken. The necessary period of five years continuous legal residence could not begin any earlier than 3 July 2006, when he completed the custodial part of his sentence, and would depend on his fulfilling the conditions for legal residence laid down in the Directive. If five years continuous legal residence had not been completed by the time of the periods of imprisonment in 2012, those periods would not count towards the five years required, and would interrupt the continuity of residence, in accordance with Onuekwere. Lord Mances conclusion that Mr Vomero had not acquired a right of permanent residence by the date of the decision to deport him was therefore correct. On the other hand, a question is raised by the Advocate Generals comments in the last two sentences of point 33 of his opinion in the present case in relation to the tentative suggestion made by Lord Mance in the penultimate sentence of para 11 of his judgment. As explained earlier, Lord Mance observed, obiter, that it might seem logical if a period of more than two years imprisonment were to lead to the loss of a right of permanent residence once acquired. The Advocate General, however, expressed the view that the reasoning in Onuekwere could not be applied to cases concerned with the forfeiture of that right once acquired. In the light of those comments, it would be wise for this court to refrain from expressing any view in the present case as to whether there may be a distinction between the effect of imprisonment on the acquisition of a right of permanent residence, with which Onuekwere was concerned, and its effect on the retention of such a right once obtained. Finally, as the Court of Justice made clear in paras 89 94 of its judgment in the case of B v Land Baden Wrttemberg, cited at para 28 above, it will be necessary for the tribunal, when this case is remitted to it, to consider not only whether Mr Vomero has acquired a right of permanent residence since the date of the decision to deport him, in accordance with the agreement of the parties (see para 32 above), and if so the implications of his having done so, but in any event whether there are still grounds of public policy or public security within the meaning of article 28(1) of the Directive on the basis of which his expulsion may be justified. Conclusion For the foregoing reasons, the court should in my view allow the appeal, grant a declaration that neither article 28(2) nor article 28(3) of Directive 2004/38/EC applied to Mr Vomero as at the date of the Secretary of States decision to deport him on 23 March 2007, and remit the respondents appeal against that decision to the Upper Tribunal to be reconsidered in accordance with this judgment. |
On 29 January 1981 Mr Jivraj and Mr Hashwani entered into a joint venture agreement (the JVA), containing an arbitration clause which provided that, in the event of a dispute between them which they were unable to resolve, that dispute should be resolved by arbitration before three arbitrators, each of whom should be a respected member of the Ismaili community, of which they were both members. The principal question in this appeal is whether that arbitration agreement became void with effect from 2 December 2003 under the Employment Equality (Religion or Belief) Regulations 2003 (SI 2003/1660) (the Regulations) on the ground that it constituted an unlawful arrangement to discriminate on grounds of religion when choosing between persons offering personal services. The JVA The JVA was established to make investments in real estate around the world. By article 9 it is expressly governed by English law. Article 8 provides, so far as material, as follows: (1) If any dispute difference or question shall at any time hereafter arise between the investors with respect to the construction of this agreement or concerning anything herein contained or arising out of this agreement or as to the rights liabilities or duties of the investors or either of them or arising out of (without limitation) any of the businesses or activities of the joint venture herein agreed the same (subject to sub-clause 8(5) below) shall be referred to three arbitrators (acting by a majority) one to be appointed by each party and the third arbitrator to be the President of the HH Aga Khan National Council for the United Kingdom for the time being. All arbitrators shall be respected members of the Ismaili community and holders of high office within the community. (2) The arbitration shall take place in London and the arbitrators' award shall be final and binding on both parties. The Ismaili community comprises Shia Imami Ismaili Muslims. It is led by the Aga Khan, whose title is the hereditary title of the Imam of the Ismaili community. The disputes During the 1980s the joint venture came to comprise substantial business interests, first in Canada and later in the United States, Pakistan and the United Kingdom, with investments in properties, hotels and the oil industry. By late 1988 Mr Jivraj and Mr Hashwani had agreed to part company. On 30 October 1988 they entered into an agreement under which they appointed a three man conciliation panel (the panel) for the purpose of the division of the joint venture assets. Each member of the panel was a respected member of the Ismaili community. The panel operated between October 1988 and February 1990 and many of the assets were divided between the parties in accordance with its directions. It was however unable to resolve all the issues between the parties. The parties then agreed to submit the remaining issues to arbitration or conciliation by a single member of the Ismaili community, namely Mr Zaher Ahamed. He issued a determination in December 1993, whereafter he had further exchanges with the parties until 1995, when he declared himself defeated. The principal matters which remained in dispute were, on the one hand, a claim by Mr Hashwani that there remained a balance due to him and, on the other hand, a claim by Mr Jivraj that Mr Hashwani had failed to declare certain tax liabilities which left Mr Jivraj with a potential for secondary liability. These matters remained in dispute for some years. Then, on 31 July 2008, Messrs Zaiwalla & Co, acting on behalf of Mr Hashwani, wrote to Mr Jivraj asserting a claim for US$1,412,494, together with interest, compounded quarterly from 1994, making a total of US$4,403,817. The letter gave notice that Mr Hashwani had appointed Sir Anthony Colman as an arbitrator under article 8 of the JVA and that, if Mr Jivraj failed to appoint an arbitrator within seven days, steps would be taken to appoint Sir Anthony as sole arbitrator. The letter added that Mr Hashwani did not regard himself as bound by the provision that the arbitrators should be members of the Ismaili community because such a requirement would now amount to religious discrimination which would violate the Human Rights Act 1998 and therefore must be regarded as void. It is common ground, on the one hand, that Sir Anthony Colman is not a member of the Ismaili community and, on the other hand, that he is a retired judge of the Commercial Court with substantial experience of the resolution of commercial disputes, both as a judge and as an arbitrator. Mr Jivraj's response to the letter was to start proceedings in the Commercial Court seeking a declaration that the appointment of Sir Anthony was invalid because he is not a member of the Ismaili community. Mr Hashwani subsequently issued an arbitration claim form seeking an order that Sir Anthony be appointed sole arbitrator pursuant to section 18(2) of the Arbitration Act 1996 (the 1996 Act). The application was made on the basis that the requirement that the arbitrators be members of the Ismaili community, although lawful when the agreement was made, had been rendered unlawful and was void because it contravened the Regulations. The Regulations The Regulations were made in the exercise of powers conferred by the European Communities Act 1972 following the making of the Council Framework Directive 2000/78/EC of 27 November 2000 (OJ 2000 L303, p 16) (the Directive) which, by article 1, was itself made for the purpose of establishing: a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the member states the principle of equal treatment. The Regulations (as amended by section 77(2) of the Equality Act 2006) provide, so far as material, as follows: Interpretation 2 (3) In these Regulations references to employer, in their application to a person at any time seeking to employ another, include a person who has no employees at that time; employment means employment under a contract of service or of apprenticeship or a contract personally to do any work, and related expressions shall be construed accordingly ; 3 Discrimination on grounds of religion or belief (1) For the purposes of these Regulations, a person (A) discriminates against another person (B) if on the grounds of the religion or belief of B or of any (a) other person except A (whether or not it is also As religion or belief), A treats B less favourably than he treats or would treat other persons; Applicants and employees 6 (1) It is unlawful for an employer, in relation to employment by him at an establishment in Great Britain, to discriminate against a person in the arrangements he makes for the purpose of (a) determining to whom he should offer employment; in the terms on which he offers that person (b) employment; or (c) by refusing to offer, or deliberately not offering, him employment. Exception for genuine occupational requirement 7 In relation to discrimination falling within regulation 3 (1) (discrimination on grounds of religion or belief) (a) regulation 6(1)(a) or (c) does not apply to any employment where paragraph (2) or (3) applies. (2) This paragraph applies where, having regard to the nature of the employment or the context in which it is carried out - (a) being of a particular religion or belief is a genuine and determining occupational requirement; (b) it is proportionate to apply that requirement in the particular case; and (c) either (i) the person to whom that requirement is applied does not meet it, or (ii) the employer is not satisfied, and in all the circumstances it is reasonable for him not to be satisfied, that that person meets it, and this paragraph applies whether or not the employer has an ethos based on religion or belief. (3) This paragraph applies where an employer has an ethos based on religion or belief and, having regard to that ethos and to the nature of the employment or the context in which it is carried out - (a) being of a particular religion or belief is a genuine occupational requirement for the job; (b) it is proportionate to apply that requirement in the particular case; and (c) either (i) the person to whom that requirement is applied does not meet it, or (ii) the employer is not satisfied, and in all the circumstances it is reasonable for him not to be satisfied, that that person meets it." The Directive It is common ground that the Regulations must, so far as possible, be construed to give effect to the objective of the Directive which they were designed to implement: see eg Marleasing SA v La Comercial Internacional de Alimentacion SA (Case C-106/89) [1990] ECR I-4135 and Litster v Forth Dry Dock & Engineering Co Ltd [1990] 1 AC 546. It is also common ground that, although the arbitration agreement was on any view lawful when it was made, it became subject to the provisions of the Regulations, insofar as they applied to it. The Directive provides, so far as material, as follows: Article 1 Purpose The purpose of this Directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the member states the principle of equal treatment. Article 2 Concept of discrimination (1) For the purposes of this Directive, the 'principle of equal treatment' shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in article 1. Article 3 Scope (1) Within the limits of the areas of competence conferred on the Community, this Directive shall apply to all persons, as regards both the public and private sectors, including public bodies, in relation to- (a) conditions for access to employment, to self-employment or to occupation, including selection criteria and recruitment conditions, whatever the branch of activity and at all levels of the professional hierarchy, including promotion; (b) access to all types and to all levels of vocational guidance, vocational training, advanced vocational training and retraining, including practical work experience; (c) employment and working conditions, including dismissals and pay; (d) membership of, and involvement in, an organisation of workers or employers, or any organisation whose members carry on a particular profession, including the benefits provided for by such organisations. As Moore-Bick LJ, giving the judgment of the Court of Appeal, observed at para 8, the Directive is concerned with discrimination on the grounds of religion or belief, disability, age and sexual orientation. It is therefore much wider in its scope than the Regulations, which are concerned only with discrimination on the grounds of religion or belief. The explanation lies in the fact that the United Kingdom had already introduced legislation dealing with discrimination on most of the other grounds covered by the Directive in connection with employment and occupation. Discrimination on the grounds of sex was rendered unlawful by the Sex Discrimination Act 1975 (the SDA 1975), discrimination on the grounds of race by the Race Relations Acts 1968 and 1976, discrimination on the grounds of disability by the Disability Discrimination Act 1995. Legislation dealing with discrimination on the grounds of age, sexual orientation and religion or belief was still required to ensure compliance with the Directive. The Regulations deal with discrimination on the grounds of religion or belief. The Employment Equality (Sexual Orientation) Regulations 2003 (SI 2003/1661) provided for discrimination on the grounds of sexual orientation, and discrimination on the grounds of age was subsequently covered by the Employment Equality (Age) Regulations 2006. Again as observed by the Court of Appeal (at para 9), the form of the Regulations follows closely that of the earlier legislation, in particular in defining "employment" as including a contract personally to do work of any kind. Moreover, the language of regulation 6 is identical to, or differs in no significant respect from, that used in the other legislation dealing with discrimination. It follows that the Regulations must be understood as complementing all the other legislation prohibiting discrimination. This uniformity of the law relating to the areas in which discrimination is forbidden has now been reinforced by the Equality Act 2010 (the EA), which applies to all of the cases protected by the earlier legislation. The EA is, among other things, an Act to reform and harmonise equality law and restate the greater part of the enactments relating to discrimination. The Regulations were amongst those enactments restated by the EA. They were revoked by section 211 and Schedule 27, Part 2. The revocation took effect on 1 October 2010. The current law is therefore as stated in the Act rather than the Regulations. It was not however suggested in the course of the argument that any of the issues in this appeal is affected by the revocation of the Regulations. First instance Both parties applications were determined by David Steel J (the judge) on 26 June 2009: see [2009] EWHC 1364 (Comm), [2010] 1 All ER 302. In the meantime on 11 March 2009, which was before the applications were heard, the solicitors for Mr Jivraj wrote an open letter to the solicitors for Mr Hashwani offering him the option of pursuing his claim in the High Court on the basis that Mr Jivraj would not seek a stay on the basis of the arbitration clause. Mr Hashwani did not accept the offer. It was submitted before the judge on behalf of Mr Hashwani that the term requiring arbitrators to be members of the Ismaili community was invalid by reason of one or more of the following: the Regulations, the Human Rights Act 1998 (the HRA), or public policy at common law. The judge held (i) that the term did not constitute unlawful discrimination on any of those bases and, specifically, that arbitrators were not employed within the meaning of the Regulations; (ii) that if, nonetheless, appointment of arbitrators fell within the scope of the Regulations, it was demonstrated that one of the more significant characteristics of the Ismaili sect was an enthusiasm for dispute resolution within the Ismaili community, that this was an ethos based on religion within the meaning of the Regulations and that the requirement for the arbitrators to be members of the Ismaili community constituted a genuine occupational requirement which it was proportionate to apply within regulation 7(3); and (iii) that, if that was also wrong, the requirement was not severable from the arbitration provision as a whole, so that the whole arbitration clause would be void. The judge ordered Mr Hashwani to pay Mr Jivrajs costs and refused Mr Hashwanis application for permission to appeal. ii) The Court of Appeal On 7 October 2009 Sir Richard Buxton granted permission to appeal limited to the issues on the Regulations and on severance. Permission was refused on the HRA and public policy issues. The issues in the Court of Appeal were therefore these: i) Are arbitrators persons who are under a contract to do work so as to fall within the Regulations and, if so, do parties who make an arbitration agreement specifying religious qualifications for eligible arbitrators thereby make an arrangement for the purpose of determining to whom they should offer employment or do they agree to offer, or deliberately not to offer, employment within the meaning of the Regulations? If so, in the circumstances, did the requirement for all the arbitrators to be members of the Ismaili community constitute a genuine occupational requirement (GOR) which it was proportionate to apply within regulation 7(3)? iii) If not, did the whole arbitration agreement fail or was only the discriminatory provision void? The unanimous judgment of the Court of Appeal, which comprised Moore- Bick and Aikens LJJ and Sir Richard Buxton, was handed down on 22 June 2010: see [2010] EWCA Civ 712, [2010] ICR 1435. The Court of Appeal reached a different conclusion from the judge on the principal points. It held that the appointment of an arbitrator involved a contract for the provision of services which constituted a contract personally to do any work, and therefore satisfied the definition of employment in regulation 2(3). It followed that the appointor was an employer within the meaning of regulation 6(1) and that the restriction of eligibility for appointment as an arbitrator to members of the Ismaili community constituted unlawful discrimination on religious grounds, both in making arrangements for the purpose of determining to whom he should offer employment contrary to regulation 6(1)(a), and by refusing to offer, or deliberately not offering employment contrary to regulation 6(1)(c). The Court of Appeal further held that being a member of the Ismaili community was not a genuine occupational requirement for the job within the meaning of the exception in regulation 7(3). It is submitted on behalf of Mr Jivraj that both those conclusions were wrong. Finally the Court of Appeal held that, although there would be no difficulty in operating the agreement if the offending requirement was struck out, so doing would render the agreement substantially different from that originally intended, the term was void in its entirety under paragraph 1(1) of Schedule 4 to the Regulations and Mr Hashwanis nomination of an arbitrator was invalid. It is submitted on behalf of Mr Hashwani that both the judge and the Court of Appeal were wrong on this point, which I will call the severance issue. A further point arises out of the Court of Appeals order on costs if its judgment is upheld on each of the above points. Employment The reasoning of the Court of Appeal was straightforward: see paras 15-17. In short the Court of Appeal drew attention to the wide terms of articles 1 and 3 of the Directive. In particular it noted at para 15 that the recitals to the Directive and the structure and language of article 3(1) as a whole indicate that it is concerned with discrimination affecting access to the means of economic activity, whether through employment, self-employment or some other basis of occupation, access to vocational guidance and training (which can be expected to provide a means of access to economic activity), conditions of employment (which affect those who have gained access to a means of economic activity) and membership of bodies whose purpose is to affect conditions of recruitment or employment or to regulate access to a particular form of economic activity, such as professional bodies that directly or indirectly control access to the profession or a significant means of obtaining work. The Court of Appeal then said at para 16: The paradigm case of appointing an arbitrator involves obtaining the services of a particular person to determine a dispute in accordance with the agreement between the parties and the rules of law, including those to be found in the legislation governing arbitration. In that respect it is no different from instructing a solicitor to deal with a particular piece of legal business, such as drafting a will, or consulting a doctor about a particular ailment or an accountant about a tax return. Since an arbitrator (or any professional person) contracts to do work personally, the provision of his services falls within the definition of employment, and it follows that his appointor must be an employer within the meaning of regulation 6(1) In paras 16 and 17 it placed reliance on three cases. It relied upon von Hoffmann v Finanzamt Trier (Case C-145/96) [1997] All ER (EC) 852 as showing that arbitrators had been treated as providing services for VAT purposes. It also referred to domestic regulations relating to goods and services. It further derived support from Kelly v Northern Ireland Housing Executive [1999] 1 AC 428 and from Percy v Board of National Mission of the Church of Scotland [2005] UKHL 73, [2006] 2 AC 28. It recognised that those cases were addressing slightly different points but concluded that they illustrate the width of the expression a contract personally to do any work in the various discrimination statutes. It concluded thus in para 17: They confirm our view that the expression is apt to encompass the position of a person who provides services as an arbitrator, and why we think the judge was wrong to hold that the nature of the arbitrator's function takes his appointment outside the scope of the 2003 Regulations. Moreover, a contract of that kind, once made, is a contract of employment within the meaning of the 2003 Regulations. It follows, therefore, that for the purposes of the 2003 Regulations a person who has entered into a contract under which he is to obtain such services is an employer and the person engaged to provide them is an employee. The critical question under this head is whether the Court of Appeal was correct to form a different view from the judge on this point. In my opinion it was not. As the Court of Appeal correctly observed at para 15, the meaning of article 3 of the Directive has not been considered by the Court of Justice, and is to be interpreted in the light of the recitals and given its natural meaning consistent with the EC Treaty and the existing case law of the court. It is common ground, at any rate in this class of case, that there is a contract between the parties and the arbitrator or arbitrators appointed under a contract and that his or their services are rendered pursuant to that contract. It is not suggested that such a contract provides for employment under a contract of service or of apprenticeship. The question is whether it provides for employment under a contract personally to do any work. There is in my opinion some significance in the fact that the definition does not simply refer to a contract to do work but to employment under such a contract. I would answer the question in the negative on the ground that the role of an arbitrator is not naturally described as employment under a contract personally to do work. That is because his role is not naturally described as one of employment at all. I appreciate that there is an element of circularity in that approach but the definition is of employment and this approach is consistent with the decided cases. Given the provenance of the Regulations, it is appropriate to consider first the decisions of the Court of Justice. The most important of these is perhaps Allonby v Accrington and Rossendale College (Case C-256/01) [2004] ICR 1328, where the Court of Justice followed the principles laid down in Lawrie-Blum v Land Baden-Wurttemberg (Case C-66/85) [1987] ICR 483 and in Kurz v Land Baden-Wurttemberg (Case C-188/00) [2002] ECR I-10691. In Lawrie-Blum, which was concerned with the free movement of workers under what was then article 48 of the Treaty, Advocate General Lenz said at para III 2(b) of his opinion that the term worker covers any employed person who is not self-employed. The court said at para 17: That concept [ie of worker] must be defined with objective criteria which distinguish the employment relationship by reference to the rights and duties of the persons concerned. The essential feature of an employment relationship, however, is that for a certain period of time a person performs services for and under the direction of another person in return for which he receives remuneration. In Kurz the court said at para 32 that it was settled case law that the concept of worker has a specific Community meaning and must not be interpreted narrowly. The court then repeated the essential feature of the relationship identified in the above passage from Lawrie-Blum. In Allonby the court addressed an equal pay claim by a college lecturer who had been dismissed by the college and then re-engaged, ostensibly as a self- employed sub-contractor supplied by an agency. For the purposes of article 141(1) of the EC Treaty, the court drew a clear distinction between workers and independent suppliers of services. It discussed the concept of worker within the meaning of article 141(1) between paras 62 and 72, which included the following: 62. The criterion on which article 141(1) EC is based is the comparability of the work done by workers of each sex: see, to that effect, Defrenne v Sabena (No 2) (Case 149/77) [1978] ECR 1365, 1377, para 22. Accordingly, for the purpose of the comparison provided for by article 141(1) EC, only women and men who are workers within the meaning of that article can be taken into consideration. 63. In that connection, it must be pointed out that there is no single definition of worker in Community law: it varies according to the area in which the definition is to be applied: Martinez Sala v Freistaat Bayern (Case C-85/96) [1998] ECRI-2691, 2719, para 31. 64. The term worker' within the meaning of article 141(1) EC is not expressly defined in the EC Treaty. It is therefore necessary, in order to determine its meaning, to apply the generally recognised principles of interpretation, having regard to its context and to the objectives of the Treaty. 65. According to article 2 EC, the Community is to have as its task to promote, among other things, equality between men and women. Article 141(1) EC constitutes a specific expression of the principle of equality for men and women, which forms part of the fundamental principles protected by the Community legal order: see, to that effect, Deutsche Post AG v Sievers (Cases C-270 and 271/97) [2000] ECR I-929, 952, para 57. As the court held in Defrenne v Sabena (Case 43/75) [1976] ICR 547, 566, para 12, the principle of equal pay forms part of the foundations of the Community. 66. Accordingly, the term worker used in article 141(1) EC cannot be defined by reference to the legislation of the member states but has a Community meaning. Moreover, it cannot be interpreted restrictively. 67. For the purposes of that provision, there must be considered as a worker a person who, for a certain period of time, performs services for and under the direction of another person in return for which he receives remuneration see, in relation to free movement of workers, in particular Lawrie-Blum para 17, and Martinez Sala, para 32. 68. Pursuant to the first paragraph of article 141(2) EC, for the purpose of that article, pay means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment, from his employer. It is clear from that definition that the authors of the Treaty did not intend that the term worker, within the meaning of article 141(1) EC, should include independent providers of services who are not in a relationship of subordination with the person who receives the services (see also, in the context of free movement of workers, Meeusen v Hoofddirectie van de Informatie Beheer Groep (Case C-337/97) [1999] ECR I-3289, 3311, para 15). 69. The question whether such a relationship exists must be answered in each particular case having regard to all the factors and circumstances by which the relationship between the parties is characterised. 70. Provided that a person is a worker within the meaning of article 141(1) EC, the nature of his legal relationship with the other party to the employment relationship is of no consequence in regard to the application of that article: ... 71. The formal classification of a self-employed person under national law does not exclude the possibility that a person must be classified as a worker within the meaning of article 141(1) EC if his independence is merely notional, thereby disguising an employment relationship within the meaning of that article. On the basis of those materials I would accept Mr Davies submission that the Court of Justice draws a clear distinction between those who are, in substance, employed and those who are independent providers of services who are not in a relationship of subordination with the person who receives the services. I see no reason why the same distinction should not be drawn for the purposes of the Regulations between those who are employed and those who are not notionally but genuinely self-employed. In the light of Allonby, there can be no doubt that that would be the correct approach to the near identical definition in section 1(6) of the Equal Pay Act 1970 and must remain the correct approach to the definition of employment in section 83(2) of the EA, which provides, so far as relevant: Employment means (a) employment under a contract of employment, a contract of apprenticeship or a contract personally to do work; That definition is almost identical to the definition in regulation 2(3) of the Regulations and, since it applies to equal pay issues by virtue of sections 83(4), 80(2) and 64 of the EA, it must equally apply to the Regulations. In my opinion there is nothing in the domestic authorities which requires the court to come to any different conclusion. The problem with some of them is that they do not refer to the jurisprudence of the Court of Justice. However, the most recent decision of the House of Lords does. In Percy v Board of National Mission of the Church of Scotland [2006] 2 AC 28 the House of Lords considered a sex discrimination claim brought by a woman who was a minister of the Church of Scotland. The issue was whether she was employed within the meaning of section 82(1) of the SDA 1975. The House held that she was. Lord Hoffmann dissented on the basis that she was the holder of an office but had no doubt (at para 66) that, if the arrangement had been contractual, it would plainly have been a contract of service. Lord Hoffmann said at para 73 that the term workers is a term of art in Community law which was defined by the Court of Justice in the passage from para 17 of Lawrie-Blum quoted at para 24 above. Lord Hope of Craighead said much the same at para 126, where he also noted that the same approach was taken in Allonby. Baroness Hale of Richmond referred at para 141 to para A[4] of Harvey on Industrial Relations and Employment Law, which stated that: the distinction is between those who work for themselves and those who work for others, regardless of the nature of the contract under which they are employed. She then referred at para 143 to the decision of the Court of Appeal in Northern Ireland in Perceval-Price v Department of Economic Development [2000] IRLR 380, where it was held that three full-time judicial office holders, namely a full- time chairman of industrial tribunals, a full-time chairman of social security appeal tribunals and a social security commissioner were workers for the purposes of almost identical provisions. In para 145, after quoting the definition of an employment relationship in Lawrie-Blum, Baroness Hale noted that, in giving the judgment of the court in Perceval-Price, Sir Robert Carswell LCJ said that the objective of the relevant EC legislation was to give protection against inequality and discrimination to those who might be vulnerable to exploitation. He also said that the concept of a worker should be construed purposively by reference to this objective. Baroness Hale then quoted this extract from the judgment of Sir Robert Carswell: All judges, at whatever level, share certain common characteristics. They all must enjoy independence of decision without direction from any source, which the respondents quite rightly defended as an essential part of their work. They all need some organisation of their sittings, whether it be prescribed by the president of the industrial tribunals or the court service, or more loosely arranged in collegiate fashion between the judges of a particular court. They are all expected to work during defined times and periods, whether they be rigidly laid down or managed by the judges themselves with a greater degree of flexibility. They are not free agents to work as and when they choose, as are self-employed persons. Their office accordingly partakes of some of the characteristics of employment . . . At para 146 Baroness Hale continued: I have quoted those words at length because they illustrate how the essential distinction is, as Harvey says, between the employed and the self-employed. The fact that the worker has very considerable freedom and independence in how she performs the duties of her office does not take her outside the definition. Judges are servants of the law, in the sense that the law governs all that they do and decide, just as clergy are servants of God, in the sense that God's word, as interpreted in the doctrines of their faith, governs all that they practise, preach and teach. This does not mean that they cannot be workers or in the employment of those who decide how their ministry should be put to the service of the Church. Some consideration was recently given to the position of part-time judges by this court in OBrien v Ministry of Justice (Note) [2010] UKSC 34, [2010] 4 All ER 62 where the court considered Percy in some detail in a judgment of the court given by Lord Walker. At para 25 it referred to the same passage in Lawrie-Blum as having laid down the relevant principle and at para 26 it referred to the speech of Baroness Hale and approved the passage quoted above from the judgment of Sir Robert Carswell in Perceval-Price. As I read Percy, it sought to apply the principles identified by the Court of Justice, as indeed did this court in OBrien [2010] 4 All ER 62. The essential questions in each case are therefore those identified in paras 67 and 68 of Allonby [2004] ICR 1328, namely whether, on the one hand, the person concerned performs services for and under the direction of another person in return for which he or she receives remuneration or, on the other hand, he or she is an independent provider of services who is not in a relationship of subordination with the person who receives the services. Those are broad questions which depend upon the circumstances of the particular case. They depend upon a detailed consideration of the relationship between the parties. As I see it, that is what Baroness Hale meant when she said that the essential difference is between the employed and the self- employed. The answer will depend upon an analysis of the substance of the matter having regard to all the circumstances of the case. I would not accept the Court of Appeals analysis (at para 21) of Baroness Hales speech in this regard. There have been a number of domestic cases which say that the question is whether the dominant purpose of the contract is the execution of personal work or labour: see eg Quinnen v Hovells [1984] ICR 525, Mirror Group Newspapers Ltd v Gunning [1986] 1 WLR 546, especially per Oliver LJ at 551H and Balcombe LJ at 556H; Kelly v Northern Ireland Housing Executive [1999] 1 AC 428 and Percy [2006] 2 AC 28 per Lord Hope at para 113, where he referred to two other cases in the Court of Appeal, namely Patterson v Legal Services Commission [2004] ICR 312 and Mingeley v Pennock (trading as Amber Cars) [2004] ICR 727. Mr Michael Brindle QC also referred on behalf of the respondent to two earlier cases which focus on the question whether a contract is one personally to execute any work or labour: see Tanna v Post Office [1981] ICR 374 and Hugh-Jones v St Johns College, Cambridge [1979] ICR 848. However, none of these cases considered the approach in the decisions of the Court of Justice referred to above. In particular, the cases did not focus on the fact that the employment must be employment under a contract of employment, a contract of apprenticeship or a contract personally to do work. (My emphasis). Given the importance of the EC perspective in construing the legislation, including the Regulations, the cases must now be read in the light of those decisions. They show that it is not sufficient to ask simply whether the contract was a contract personally to do work. They also show that dominant purpose is not the test, or at any rate not the sole test. That is not to say that the question of purpose is irrelevant but the focus is on the contract and relationship between the parties rather than exclusively on purpose. Elias J, sitting as President of the Employment Appeal Tribunal, recognised some of the difficulties in James v Redcats (Brands) Ltd [2007] ICR 1006. He discussed the relevance of dominant purpose in this context by reference to the cases at paras 53 to 68. At para 59, after quoting from the judgment of Balcombe LJ in Gunning [1986] 1 WLR 546, he said that the dominant purpose test is really an attempt to identify the essential nature of the contract. In the context of the case he was considering he posed the question whether it was in essence to be located in the field of dependent work relationships or whether it was in essence a contract between two independent business undertakings. At paras 67 and 68, after referring to a number of cases and observing at para 65 that the description of the test as one of identifying the dominant purpose was perhaps not an altogether happy one, he said this: 67. An alternative way of putting it may be to say that the courts are seeking to discover whether the obligation for personal service is the dominant feature of the contractual arrangement or not. If it is, then the contract lies in the employment field; if it is not - if, for example, the dominant feature of the contract is a particular outcome or objective - and the obligation to provide personal service is an incidental or secondary consideration, it will lie in the business field. 68. This is not to suggest that a tribunal will be in error in failing specifically to apply the dominant purpose or indeed any other test. The appropriate classification will in every case depend upon a careful analysis of all the elements of the relationship, as Mr Recorder Underhill QC pointed out in Byrne Bros (Formwork) Ltd v Baird [2002] ICR 667. It is a fact sensitive issue, and there is no shortcut to a considered assessment of all relevant factors. However, in some cases the application of the dominant purpose test may help tribunals to decide which side of the boundary a particular case lies. It is noteworthy that the European cases were not cited in many of the cases, including that before Elias J. In the light of the European cases, dominant purpose cannot be the sole test, although it may well be relevant in arriving at the correct conclusion on the facts of a particular case. After all, if the dominant purpose of the contract is the execution of personal work, it seems likely that the relationship will be, in the words of Allonby [2004] ICR 1328, para 67, a case in which the person concerned performs services for and under the direction of the other party to the contract in return for remuneration as opposed to an independent provider of services who is not in a relationship of subordination with him or it. This may not be so however because, although the dominant purpose of the contract may be personal work, it may not be personal work under the direction of the other party to the contract. All will depend upon the applications of the principles in Allonby to the circumstances of the particular case. If the approach in Allonby is applied to a contract between the parties to an arbitration and the arbitrator (or arbitrators), it is in my opinion plain that the arbitrators role is not one of employment under a contract personally to do work. Although an arbitrator may be providing services for the purposes of VAT and he of course receives fees for his work, and although he renders personal services which he cannot delegate, he does not perform those services or earn his fees for and under the direction of the parties as contemplated in para 67 of Allonby. He is rather in the category of an independent provider of services who is not in a relationship of subordination with the parties who receive his services, as described in para 68. The arbitrator is in critical respects independent of the parties. His functions and duties require him to rise above the partisan interests of the parties and not to act in, or so as to further, the particular interests of either party. As the International Chamber of Commerce (the ICC) puts it, he must determine how to resolve their competing interests. He is in no sense in a position of subordination to the parties; rather the contrary. He is in effect a quasi-judicial adjudicator: K/S Norjarl A/S v Hyundai Heavy Industries Co Ltd [1992] QB 863, 885. In England his role is spelled out in the 1996 Act. By section 33, he has a duty to act fairly and impartially as between the parties and to adopt procedures suitable to the circumstances of the particular case so as to provide a fair means of determination of the issues between the parties. Section 34 provides that, subject to the right of the parties to agree any matter, it is for the arbitrator to decide all procedural matters. Examples of the width of those powers can be seen in the particular examples in section 34(2). Section 40 provides that the parties shall do all things necessary for the proper and expeditious conduct of the arbitration, which includes complying with any order of the arbitrator, whether procedural or otherwise. Once an arbitrator has been appointed, at any rate in the absence of agreement between them, the parties effectively have no control over him. Unless the parties agree, an arbitrator may only be removed in exceptional circumstances: see sections 23 and 24. The court was referred to many other statutory provisions in other parts of the world and indeed many other international codes, including the UNCITRAL (United Nations Commission on International Trade Law) Model Law on International Commercial Arbitration 1985, the ICC Rules and the London Court of International Arbitration (the LCIA) Rules to similar effect. The Regulations themselves include provisions which would be wholly inappropriate as between the parties and the arbitrator or arbitrators. For example, regulation 22(1) provides: Anything done by a person in the course of his employment shall be treated for the purposes of these Regulations as done by his employer as well as by him, whether or not it was done with the employers knowledge or approval. It is evident that such a provision could not apply to an arbitrator. In this regard an arbitrator is in a very different position from a judge. The precise status of a judge was left open by this court in OBrien [2010] 4 All ER 62, in which the court referred particular questions to the Court of Justice: see para 41. However, as Sir Robert Carswell said in Perceval-Price [2000] IRLR 380 and Lord Walker said in OBrien (at para 27), judges, including both recorders and all judges at every level are subject to terms of service of various kinds. As Sir Robert put it, although judges must enjoy independence of decision without direction from any source, they are in other respects not free agents to work as and when they choose, as are self-employed persons. In both those cases the court was considering the relationship between the relevant department of state and the judges concerned. It was not considering the relationship between the judges and the litigants who appear before them. Here, by contrast, the court is considering the relationship between the parties to the arbitration on the one hand and the arbitrator or arbitrators on the other. As I see it, there is no basis upon which it could properly be held that the arbitrators agreed to work under the direction of the parties as contemplated in para 67 of Allonby [2004] ICR 1328. Further, in so far as dominant purpose is relevant, I would hold that the dominant purpose of appointing an arbitrator or arbitrators is the impartial resolution of the dispute between the parties in accordance with the terms of the agreement and, although the contract between the parties and the arbitrators would be a contract for the provision of personal services, they were not personal services under the direction of the parties. In reaching this conclusion it is not necessary to speculate upon what the position might be in other factual contexts. It was submitted that the effect of the decision of the Court of Appeal is that a customer who engages a person on a one- off contract as, say, a plumber, would be subject to the whole gamut of discrimination legislation. It would indeed be surprising if that were the case, especially given the fact that the travaux prparatoires contained no such suggestion: see the impact assessment in the Commissions Proposal for the Directive 1999/0225 (CNS), Brussels 1999, which was concerned solely with the position of enterprises of various types. There was no consideration of the effect on individual choice by customers. See also a memorandum from the Commissions Director General for Employment and Social Affairs to the EU Committee of the House of Lords dated 9 February 2000 to much the same effect. This is not to say that the Regulations may not apply in the case of the plumber, solicitor, accountant or doctor referred to by the Court of Appeal in para 16. As already stated, all will depend upon the application of the principles in Allonby to the particular case. As I see it, the problem with the approach adopted by the Court of Appeal is that it focuses only on the question whether there is a contract to do work personally, whereas it is necessary to ask the more nuanced questions identified in Allonby. In para 19 the Court of Appeal relied in support of its more general approach upon the opinion of Advocate General Maduro in Centrum voor Gelijkheid van Kansen en voor Racismebestrijding v Firma Feryn NV (Case C- 54/07) [2008] ICR 1390. It said this in paras 19 and 20: 19. That the choice of a solicitor, plumber or arbitrator, whether on religious, racial or any other grounds, should fall foul of regulation 6(1) of the 2003 Regulations, even if made entirely privately, may strike some people as surprising. However, in [the Firma Feryn case] Advocate General Maduro expressed the opinion, at para 14, that the Directive must be understood in the framework of a wider policy to foster conditions for a socially inclusive labour market and to ensure the development of democratic and tolerant societies which allow the participation of all persons irrespective of racial or ethnic origin. That case arose out of a statement by a company that supplied and fitted up-and-over garage doors that it would not employ immigrants as fitters because its customers were unwilling to have them in their homes. One can well see why a public statement of that kind might be regarded as discriminatory: it was liable to deter potential applicants for employment and thereby militate against a socially inclusive labour market. The court itself did not expressly adopt the Advocate General's expression of opinion; rather it confined itself to holding, at para 25, that a general statement of the kind under consideration constituted direct discrimination because it was likely to deter some potential applicants and thus hinder their access to the labour market. None the less, the Advocate General's view of the broad policy objective of the Directive is in our opinion supported by the recitals. It is also one which is essentially incompatible with an acceptance of the right to discriminate between any providers of services on the basis of race, sex, religion or any of the other grounds covered by the Directive. 20. Mr. Davies sought to meet that broad analysis by saying that the primary concern of the Directive is access to employment and economic activity, not private choices by consumers between those who have already gained access to the market. The language of article 3 could be construed in that more limited way, but the expression access to employment, to self-employment or to occupation is capable of a broader interpretation consistent with the policy objectives we have described. In any event, we are concerned with the language of domestic legislation, which is not restricted by the scope of the Directive and which is underpinned by broadly the same policy considerations as those identified by Advocate General Maduro in the Firma Feryn case, whether it was introduced before or after the publication of the Directive. I would not accept that analysis. The Firma Feryn case was not relied upon in the course of the oral argument in the Court of Appeal. It was referred to in answer to a letter from the Court of Appeal asking questions on the assumption that an engagement to provide services gave rise to an employment relationship under the Regulations. The case concerned conventional employment relationships and did not discuss at all the extension of discrimination law to one-off contracts for services. The Court of Justice held that a racially discriminatory statement by an employer as to its recruitment policy could constitute direct discrimination even if there was no actual victim. There was no actual victim because there was no evidence that anyone who might have lost out as a result of the policy had actually applied, or would have applied, for a position with that employer. The Advocate General thus expressed his opinion in a case which was squarely concerned with employment and not with the boundary between employment and self-employment and in which no reference was made to Lawrie-Blum [1987] ICR 483, Kurz [2002] ECR I-10691 or Allonby [2004] ICR 1328. Some reliance was placed upon the reference to the conditions for access to employment, to self-employment or to occupation, including selection criteria and recruitment conditions in article 3(1)(a) of the Directive. In para 20 the Court of Appeal gave a wide construction to that provision, rejecting the submission made by Mr Davies that it related to barriers to entry to trades, professions and occupations. It did so on the same footing as before, namely that a wide meaning should be given to the terms of the Directive and, in any event, to the Regulations. However, I would accept Mr Davies submission that the expression access to self-employment or to occupation means what it says and is concerned with preventing discrimination from qualifying or setting up as a solicitor, plumber, greengrocer or arbitrator. It is not concerned with discrimination by a customer who prefers to contract with one of their competitors once they have set up in business. That would not be denying them access to self-employment or to occupation. I see no reason to give a different meaning to the Regulations from that given to the Directive. For these reasons I prefer the conclusion of the judge to that of the Court of Appeal. I agree with the judge that the Regulations are not applicable to the selection, engagement or appointment of arbitrators. It follows that I would hold that no part of clause 8 of the JVA is invalid by reason of the Regulations and would allow the appeal on this ground. Genuine occupational requirement If the above conclusion is correct, this point does not arise but it was fully argued and I will briefly consider it. The question considered by the judge was whether, if regulation 6(1)(a) or (c) would otherwise apply, it is prevented from applying by regulation 7(1) and (3). It will be recalled that, by regulation 7(1), regulations 6(1)(a) and (c) do not apply where regulation 7(3) applies and that regulation 7(3) provides: This paragraph applies where an employer has an ethos based on religion or belief and, having regard to that ethos and to the nature of the employment or the context in which it is carried out (a) being of a particular religion or belief is a genuine occupational requirement for the job; (b) it is proportionate to apply that requirement in the particular case; and (c) either (i) the person to whom that requirement is applied does not meet it, or (ii) the employer is not satisfied, and in all the circumstances it is reasonable for him not to be satisfied, that that person meets it. Those provisions were made in accordance with the exceptions in relation to occupational requirements made by article 4 of the Directive, which provides: 1. Notwithstanding article 2(1) and (2), member states may provide that a difference of treatment which is based on a characteristic related to any of the grounds referred to in article 1 shall not constitute discrimination where, by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out, such a characteristic constitutes a genuine and determining occupational requirement, provided that the objective is legitimate and the requirement is proportionate. 2. Member states may maintain national legislation in force at the date of adoption of this Directive or provide for future legislation incorporating national practices existing at the date of adoption of this Directive pursuant to which, in the case of occupational activities within churches and other public or private organisations the ethos of which is based on religion or belief, a difference of treatment based on a persons religion or belief shall not constitute discrimination where, by reason of the nature of these activities or of the context in which they are carried out, a persons religion or belief constitute a genuine, legitimate and justified occupational requirement, having regard to the organisations ethos. This difference of treatment shall be implemented taking account of members states constitutional provisions and principles, as well as the general principles of Community law, and should not justify discrimination on another ground. . It is common ground that, as the judge said at para 40, a rigorous and strict approach must be adopted to the question whether the particular exception applies: Stadt Halle Thermische Restabfall-und Energieverwertungsanlage TREA Leuna (Case C-26/03) [2005] ECR I-1 and Marleasing [1990] ECR I-4135. v Arbeitgemeinschaft Although some reliance was placed in the course of argument on regulation 7(2), I shall focus first on paragraph (3). Since 1 October 2010 the provisions of regulation 7 have been replaced by those of Schedule 9 of the EA. Regulation 7(3) has been replaced by paragraph (3) of that Schedule, which provides: A person (A) with an ethos based on religion or belief does not contravene a provision mentioned in paragraph 1(2) by applying in relation to work a requirement to be of a particular religion or belief if A shows that, having regard to that ethos and the nature or context of the work (a) it is an occupational requirement, (b) the application of the requirement is a proportionate means of achieving a legitimate aim, and the person to whom A applies the requirement does not meet it (or A has reasonable grounds for not being satisfied that the person meets it). It was not suggested that there is any significant difference between that paragraph and regulation 7(3). There are four relevant requirements under regulation 7(3). The issue between the parties centres upon whether the second requirement is satisfied. The requirements are (1) that the employer should have an ethos based on religion or belief; (2) that, having regard to that ethos and to the nature of the employment or the context in which it is carried out, being of a particular religion or belief is a genuine requirement for the job; (3) that, having regard to that ethos and to the nature of the employment or the context in which it is carried out, it is proportionate to apply that requirement on the facts; and (4) that the person to whom the requirement is applied, who here must be Sir Anthony Colman, does not meet the requirement. As to (1) it is not (and could not be) suggested here that Mr Jivraj and Mr Hashwani did not have such an ethos. As to (3), it is not in dispute that, if requirement (2) is satisfied, so that being an Ismaili is a genuine occupational requirement, it is or would be proportionate to apply it. As to (4), it is plain that Sir Anthony Colman does not meet the requirement in the JVA that the arbitrators should be members of the Ismaili community. The essential issue between the parties is whether requirement (2) is satisfied. The question is therefore whether, having regard to the Ismaili ethos and to the nature of the employment or the context in which it is carried out, being of the Ismaili religion or belief is a genuine requirement for the job. The judge held that this requirement was satisfied whereas the Court of Appeal held that it was not. Our attention was drawn on behalf of Mr Jivraj to what is said to be an important difference between paragraphs (2) and (3) of regulation 7. Paragraph (2) is concerned with the case where the employer does not have a particular ethos based on religion or belief but wishes to recruit a worker who does have such an ethos. In that event, for the exception to apply, being of the particular ethos or belief must be a genuine and determining occupational requirement. By contrast, where (as here) the employer has an ethos based on religion or belief, it is sufficient under paragraph (3) that being of a particular religion or belief is a genuine occupational requirement for the job. Mr Davies submits that the difference between the two cases is this. In the first case the question is whether being of a particular religion or belief is a genuine and determining occupational requirement. That is to say it must be an essential requirement for the job. Whether it is or not is an objective question which the court can readily decide. In the second case, on the other hand, the question for the court is subjective, namely whether it is a genuine requirement for the job in the eyes of the employer or employers. This, Mr Davies suggests, reflects the sensible principle that it is not for the court to sit in judgment over matters of religion or belief. By contrast, Mr Brindle disputes the idea that the test is entirely subjective. Regulation 7(3) requires that being of a particular religion or belief is not only genuine but also, as paragraph 2 of article 4 of the Directive shows, legitimate and justified. It follows that it is not sufficient that the employer has a genuine belief that the particular religion or belief is required. The requirement must also be legitimate and justified. It would be remarkable, in his submission, if the justification could be found in the personal opinions of the prima facie discriminator. I agree with Mr Davies that it is not for the court to sit in judgment on matters of religion or belief. However, I also agree with Mr Brindle that the test for justifying prima facie discrimination cannot be entirely subjective. This is because the Regulations must be construed consistently with the Directive. It seems to me to be reasonably clear that paragraph 1 of article 4 of the Directive is the source of paragraph (2) of regulation 7 because they both refer to a genuine and determining occupational requirement. In these circumstances paragraph 2 must be the source of paragraph (3) of the regulation, with the result that the expression genuine occupational requirement must (either alone or together with proportionality in requirement (3)) have been intended to reflect the expression genuine, legitimate and justified occupational requirement in paragraph 2 of article 4 of the Directive. If the legitimacy or justification of a requirement were assessed purely by reference to the subjective view of the employer, they would add nothing to the stipulation that a requirement be genuine. In my view, whether or not a particular religion or belief is a legitimate and justified requirement of an occupation is an objective question for the court. This is not however as strict a test as that applied under regulation 7(2), namely that a particular religion or belief is an essential requirement for the job. As I see it, the question is simply whether in all the circumstances of the case the requirement that the arbitrators should be respected members of the Ismaili community was, not only genuine, but legitimate and justified. I do not agree with Mr Brindle that the requirement that arbitrators be Ismailis cannot be objectively justified. His submission that an English law dispute in London under English curial law does not require an Ismaili arbitrator takes a very narrow view of the function of arbitration proceedings. This characterisation reduces arbitration to no more than the application of a given national law to a dispute. One of the distinguishing features of arbitration that sets it apart from proceedings in national courts is the breadth of discretion left to the parties and the arbitrator to structure the process for resolution of the dispute. This is reflected in section 1 of the 1996 Act which provides that: the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest. The stipulation that an arbitrator be of a particular religion or belief can be relevant to this aspect of arbitration. As the ICC puts in its written argument: The raison dtre of arbitration is that it provides for final and binding dispute resolution by a tribunal with a procedure that is acceptable to all parties, in circumstances where other fora (in particular national courts) are deemed inappropriate (eg because neither party will submit to the courts or their counterpart; or because the available courts are considered insufficiently expert for the particular dispute, or insufficiently sensitive to the parties positions, culture, or perspectives). Under section 34 of the 1996 Act (referred to above) the arbitrators have complete power over all procedural and evidential matters, including how far the proceedings should be oral or in writing, whether or not to apply the strict rules of evidence, whether the proceedings should be wholly or partly adversarial or whether and to what extent they should make their own inquiries. They are the sole judges of the evidence, including the assessment of the probabilities and resolving issues of credibility. In paras 41 to 44 of his judgment [2010] 1 All ER 302 the judge made detailed findings which seem to me to be relevant to this question. I refer to only some of them. In para 41 he described the history and development of the Ismaili Community. He noted from the summary on the website of the Aga Khan Development Network that in the early part of the 20th century Aga Khan III introduced a range of organisational forms that gave Ismaili communities the means to structure and regulate their own affairs. He added that those forms were established against the background of "the Muslim tradition of a communitarian ethic on the one hand, and responsible individual conscience with freedom to negotiate one's own moral commitment and destiny on the other". At para 42 the judge quoted extensively from the same summary which included this: Spiritual allegiance to the Imam and adherence to the Shia Imami Ismaili tariqah (persuasion) of Islam according to the guidance of the Imam of the time, have engendered in the Ismaili community an ethos of self-reliance, unity, and a common identity. He noted that in 1986 the present Aga Khan: promulgated a Constitution that, for the first time, brought the social governance of the world-wide Ismaili community into a single structure with built-in flexibility to account for diverse circumstances of different regions. Served by volunteers appointed by and accountable to the Imam, the Constitution functions as an enabler to harness the best in individual creativity in an ethos of group responsibility to promote the common well-being. Like its predecessors, the present constitution is founded on each Ismaili's spiritual allegiance to the Imam of the time, which is separate from the secular allegiance that all Ismailis owe as citizens to their national entities. The guidance of the present Imam and his predecessor emphasised the Ismaili's allegiance to his or her country as a fundamental obligation. These obligations discharged not by passive affirmation but through responsible engagement and active commitment to uphold national integrity and contribute to peaceful development. In para 43 the judge quoted from a paper presented to the Council of Europe in March 2009 by the Director of International Training with the secretariat of the Aga Khan which included the following: Under the Constitution, the Imam has also established National and International Conciliation and Arbitration Boards to encourage amicable resolution of conflicts through impartial conciliation, mediation and arbitration, a service which is being increasingly used, in some countries, even by non-Ismailis. In fulfilling the mandate to sustain social, economic, cultural and civil society development, the Imamat collaborates with national governments, regional and international institutions as well as civil society organisations. This paper highlights the work of the Conciliation and Arbitration Boards established under the Ismaili Constitution and more particularly the training programmes that have been conducted for them over the last decade, indicating some of the best practices. Over the centuries, Ismaili communities in various parts of the world, have been conducting their own ADR processes based on the ethics of the faith as guided by the Imams of the Time. [The Aga Khan] was concerned about the massive costs of litigation faced by members of the Ismaili community in various parts of the world. Not only were the legal costs very high, but the legal procedures, in many countries, were particularly lengthy and did not always result in outcomes that conformed with the principles of natural justice. The Aga Khan was concerned about compliance with the ethics of the faith which promote a non-adversarial approach to dispute resolution in keeping with the principles of negotiated settlement (sulh) enshrined in the Holy Qur'an. The study indicated that a majority of the cases were in the field of family disputes and that the national courts in the countries, where the disputants were settled, were not always able to comprehend the inter-generational attitudinal issues involved, let alone being able to resolve them. This syndrome is very much in keeping with the notion of the "limited remedial imagination" that Menkel-Meadow attributes to the adversarial system which focuses on a zero-sum numbers game where the "winner takes all". It was therefore decided by the Imam, in consultation with the leaders of the various Ismaili communities worldwide, to build on the community's existing tradition of settling disputes amicably within the ethics of Islam and to establish Conciliation and Arbitration Boards at various levels of social governance in the Ismaili communities throughout the world. It was also felt that the system should be such that the first submission of an issue to an arbitrational or mediational body should ensure the highest degree of proficiency, probity and fairness so that the number of cases which go for appeal would be minimal and that the process would be seen as being equitable, fair and cost effective. The Aga Khan's advice was that such a system should endeavour to resolve disputes within the community without the disputants having to resort to unnecessary litigation which is time consuming, expensive and destructive. The Aga Khan saw the amicable resolution of disputes, without resorting to a court of law and within the ethics of the faith, as an important aspect of the improvement of the quality of life of the Ismailis globally. Consequently, the Ismaili Constitution of 1986 made provision for the establishment of the Conciliation and Arbitration Boards. The judge then in para 44 set out part of article XIII of the Constitution which set up a National Conciliation and Arbitration Board for all types of dispute, which provided by article 13.5: Each National Conciliation and Arbitration Board shall upon the application of any Ismaili assist him to settle any differences or disputes with another party residing in the area of jurisdiction of the National Conciliation and Arbitration Board in relation to any of the matters mentioned in article 13.1(a). Article 13.1(a) provided that the Board was: to assist in the conciliation process between parties in differences or disputes arising from commercial, business and other civil liability matters, domestic and family matters, including those relating to matrimony, children of a marriage, matrimonial property, and testate and intestate succession; In these circumstances the judge held that the provision in the JVA which provided that the arbitrators should be respected members of the Ismaili community and holders of high office within the community was a GOR within regulation 7(3). He did so on the basis that the material set out above showed that, as he put it at para 45, one of the more significant and characteristic spirits of the Ismaili sect was an enthusiasm for dispute resolution contained within the Ismaili community. He said that he had no difficulty in determining this spirit to be an "ethos based on religion". He also relied upon the terms of the arbitration clause itself and the engagement by both sides of members of the Ismaili community to perform mediation and conciliation services from 1988 until 1994. In my opinion the judge was justified in concluding that the requirement of an Ismaili arbitrator can be regarded as a genuine occupational requirement on the basis that it was not only genuine but both legitimate and justified, so that requirement (2) was satisfied. As to requirement (3), the judge said at para 46 that, had proportionality been a live issue, having regard to the parties freedom in section 1 of the 1996 Act (quoted above) he would have held that article 8 of the JVA was proportionate. The reasoning of the Court of Appeal [2010] ICR 1435 is set out in their para 29 as follows: The judge's findings about the nature and ethos of the Ismaili community were not challenged, but in our view he failed to pay sufficient regard to the other requirements of regulation 7(3), in particular, to whether, having regard to the ethos of that community and the nature of the arbitrator's function, being an Ismaili was a genuine occupational requirement for its proper discharge. If the arbitration clause had empowered the tribunal to act ex aequo et bono it might have been possible to show that only an Ismaili could be expected to apply the moral principles and understanding of justice and fairness that are generally recognised within that community as applicable between its members, but the arbitrators' function under clause 8 of the joint venture agreement is to determine the dispute between the parties in accordance with the principles of English law. That requires some knowledge of the law itself, including the provisions of the Arbitration Act 1996, and an ability to conduct the proceedings fairly in accordance with the rules of natural justice, but it does not call for any particular ethos. Membership of the Ismaili community is clearly not necessary for the discharge of the arbitrator's functions under an agreement of this kind and we are unable to accept, therefore, that the exception provided in regulation 7 of the 2003 Regulations can be invoked in this case. I prefer the approach of the judge. For the reasons given earlier, I am not persuaded that the test is one of necessity. The question is whether, in all the circumstances the provision that all the arbitrators should be respected members of the Ismaili community was legitimate and justified. In my opinion it was. The approach of the Court of Appeal seems to me to be too legalistic and technical. The parties could properly regard arbitration before three Ismailis as likely to involve a procedure in which the parties could have confidence and as likely to lead to conclusions of fact in which they could have particular confidence. For these reasons I would, if necessary, have allowed the appeal on the basis that article 8 was a GOR within regulation 7(3). This conclusion makes it unnecessary to consider whether it also satisfied regulation 7(2). Severance and costs In these circumstances, neither the severance issue raised by Mr Hashwani nor the appeal on costs advanced by Mr Jivraj arises and I say nothing about them. Reference to the Court of Justice I would not refer any of the questions which arise in this appeal to the Court of Justice. On the first question, the only questions of EC law which arise relate to the true construction of the Directive. The Court of Justice has resolved those issues in a number of cases, notably Allonby [2004] ICR 1328. To my mind the principles are now acte clair. On the second question, the principal issue between the parties relates to the application of the relevant principles to the facts. As to the correct construction of regulation 7(3), I have accepted Mr Brindles submission that it does not involve a wholly subjective question on the ground that the relevant provision must be not only genuine, but also legitimate and justifiable. In these circumstances, I see no basis for a reference in relation to GOR, which was in any event not determinative of the appeal. CONCLUSION I would allow the appeal. The first point I have read and agree entirely with the judgment of Lord Clarke on the first point: that is, whether the arbitrators contemplated by article 8 of the Joint Venture Agreement are persons who would be engaged in employment under a contract personally to do work within the meaning of regulation 2 of the Employment Equality (Religion or Belief) Regulations 2003, interpreted in the light of Council Directive 2000/78/EC to which the Regulations aim to give effect. The conclusion that they would not be is, I think, unsurprising for all the reasons that Lord Clarke gives. I note that as long ago as 1904 (RGZ 59, 247), the German Reichsgericht identified the particular nature of an arbitral contract, in terms which I think have a relevance to arbitration generally, when it said (in translation), that: It does not seem permissible to treat the arbitrator as equivalent to a representative or an employee or an entrepreneur. His office has . an entirely special character, which distinguishes him from other persons handling the affairs of third parties. He has to decide a legal dispute in the same way as and instead of a judge, identifying the law by matching the relevant facts to the relevant legal provisions. The performance expected from him is the award, which constitutes the goal and outcome of his activity. It is true that the extent of his powers depends on the arbitration agreement, which can to a greater or lesser extent prescribe the way to that goal for him. But, apart from this restriction, his position is entirely free, freer than that of an ordinary judge. A more modern source, Gary B Borns authoritative work on International Commercial Arbitration (2009), convincingly discusses the general international legal understanding of the nature of an arbitrators engagement in the following passage (Vol I, pp 1607-1609): There is also debate about how to characterize the arbitrators contract, particularly in civil law jurisdictions where the characterization of contracts is often essential to determining their effects. Some commentators consider the arbitrators contract to be an agency agreement, where the arbitrator serves as the parties agent. Other authorities have suggested treating the arbitrators contract as an agreement for the provision of services. A third approach has been to regard the arbitrators contract as a sui generis or hybrid form of agreement, not being categorizable in conventional terms and instead giving rise to a unique set of right and duties. The proper analysis is to treat the arbitrators contract as a sui generis agreement. That is in part because this characterization accords with the specialized and distinct nature of the arbitrators mandate: as noted above, that mandate differs in fundamental ways from the provision of many other services and consists in the performance of a relatively sui generis adjudicatory function. It is therefore appropriate, and in fact necessary, that the arbitrators contract be regarded as sui generis. At the same time, there are no other satisfactory characterizations of an arbitrators contract. It makes no sense to treat the arbitrators contract as an agency agreement. Under most legal systems, that characterization would require the arbitrator to follow the parties directions and to provide the parties with information and an accounting all of which can only with difficulty, if at all, be assimilated to the adjudicative role of an arbitrator. Moreover, the role of an agent is inconsistent with the arbitrators adjudicative function which is precisely to be independent of the parties. This was underscored by a French appellate decision, which held that an agreement for the parties representatives to resolve their dispute could not be an arbitration agreement: A stipulation of that kind is incompatible with the actual concept of arbitration, since the arbitrators, though appointed by the parties, can under no circumstances become their representatives. That would imply, in particular, that they represent the parties and account for their functions. Such a role, and the obligations it entails, are alien to the functions of an arbitrator, which are judicial in nature. Equally, regarding the arbitrator as a service provider, like an accountant, investment banker, lawyer, or other professional, ignores the essential adjudicative character of his or her mandate. Arbitrators do not merely provide the parties with a service, but also serve a public, adjudicatory function that cannot be entirely equated with the provision of service in a commercial relationship. The proper analysis is therefore to regard the arbitrators contract as a sui generis agreement specifying the terms on which this adjudicative function is to be exercised vis--vis particular parties and on particular terms. Both these citations catch and support the essence of Lord Clarkes distinction between persons under the direction of another and arbitrators who perform an independent role, free of such control. The second point As Lord Clarke notes at para 51, the second point does not in these circumstances arise, since the whole situation falls outside the scope of regulation 2. To ask how the exception permitted by regulation 7(3) and article 4(2) of the Directive might apply, when by definition it cannot, may risk giving a slightly false impression about the scope of the exception in situations to which it is potentially applicable. The reasons which can, as Lord Clarke demonstrates, be given for concluding that the exception would not apply to a considerable extent duplicate those given for concluding that regulation 2 does not apply. They are in particular that the arbitrators would not be under the direction of the parties: see paras 61 et seq. Accordingly, it may be appropriate to say a few words about the application of the exception in a situation in which the regulation would apply. If one takes a situation which is within regulation 2, say the engagement by the Ismaili community, or by any other organisation whose ethos is based on religion or belief, of an employed lawyer to undertake English law work, I would expect it to be much more difficult to maintain as valid a restriction to members of the Ismaili community or of the other religious or faith-based organisation. Many English as well as other lawyers believe in, are trained in and are familiar with techniques for the amicable resolution of disputes, including conciliation, mediation and arbitration. The value of alternative dispute resolution, particularly mediation, is also recognised at the European legal level (see eg Directive 2008/52/EC of 21 May 2008 on certain aspects of mediation in civil and commercial matters and Council of Europe Recommendation No R(2002)10 on civil mediation). A religious or faith-based communitys or organisations power first to select and then to direct its own employed lawyers would be a secure means of ensuring that its employed lawyers valued, understood and prioritised the handling of English law work so far as possible on a non-confrontational basis, using alternative dispute resolution procedures wherever possible. A refusal to employ anyone other than a member of the particular religion or faith would in that context seem unlikely to be justified or proportionate. |
Widowed parents allowance is a contributory social security benefit payable to men and women who are widowed with dependent children. It is non-means- tested, so it is particularly valuable to parents who are in work, although it is taxable. The widowed parents entitlement depends upon the contribution record of the deceased partner. Currently, the widowed parent can only claim the allowance if he or she was married to, or the civil partner of, the deceased. The issue in this case is whether this requirement unjustifiably discriminates against the survivor and/or the children on the basis of their marital or birth status, contrary to article 14 of the European Convention on Human Rights (ECHR) when read with either article 8 of the Convention or Article 1 of the First Protocol to the Convention (A1P1). The facts Ms McLaughlin and her partner, John Adams, lived together (apart from two short periods of separation) for 23 years until he died on 28 January 2014. They did not marry because Mr Adams had promised his first wife that he would never remarry. They had four children, aged 19 years, 17 years, 13 years and 11 years when their father died. He had made sufficient National Insurance contributions for Ms McLaughlin to be able to claim a bereavement payment and widowed parents allowance had she been married to him. Ms McLaughlins claims for both bereavement payment and widowed parents allowance were refused by the Northern Ireland Department for Communities. She applied for judicial review of that decision on the ground that the relevant legislation was incompatible with the ECHR. That claim succeeded in part before Treacy J in the High Court: In the matter of an application by Siobhan McLaughlin for Judicial Review: [2016] NIQB 11. He made a declaration of incompatibility under section 4(2) of the Human Rights Act 1998, that section 39A(1) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 is incompatible with article 8 of the ECHR in conjunction with article 14 insofar as it restricts eligibility for Widowed Parents Allowance by reference to the marital status of the applicant and the deceased. He rejected the claim in relation to the bereavement payment. The Court of Appeal unanimously held that the legislation was not incompatible with article 14, read either with article 8 or with A1P1: [2016] NICA 53. Ms McLaughlin now appeals to this Court. The Evolution of Bereavement Benefits National Insurance pensions for widows were first introduced under the Widows, Orphans and Old Age Contributory Pensions Act 1925. They provided a pension for all widows whose husbands fulfilled the contribution conditions, at a very modest flat rate with extra allowances for children. It was part of the piece- meal development of a National Insurance scheme, whereby people in work would pay into a National Insurance fund which would provide benefits if they were deprived of earnings through the ordinary vicissitudes of life: old age, invalidity, unemployment and, in the social conditions of the time, widowhood. The assumption - and at least among the middle classes the reality - was that women would not work after marriage, so that for them the loss of a breadwinning husband was the equivalent of the loss of a job through old age, invalidity or unemployment for people in work. The National Insurance scheme was quite separate from the relief of the destitute under the old Poor Law and its later replacements, beginning with the National Assistance Act 1948. Those were strictly means-tested benefits, whereas National Insurance benefits, having been paid for by contributions, were not. The National Insurance scheme was systematised and rationalised as a result of the Beveridge Report on Social Insurance and Allied Services (Cmd 6404, 1942). Beveridge proposed the replacement of unconditional inadequate widows pensions by a short-term widows benefit, payable for 13 weeks, to allow time for readjustment and a longer term guardian benefit for those with dependent children. Childless widows should be expected to work (para 153). However, the Report acknowledged the difficulties of women who were widowed, or whose children grew up, when they had reached an age at which it would be difficult to find work (para 156). This concern was reflected in the eventual legislation, the National Insurance Act 1946, which introduced three benefits: a widows allowance, a widowed mothers allowance and a widows pension where the claimant was widowed over 50 or over 40 when widowed mothers allowance ceased. In 1954, the United Kingdom ratified the ILO Social Security (Minimum Standards) Convention 1952 (No 102), which provided that The contingency covered shall include the loss of support suffered by the widow or child as the result of the death of the breadwinner (article 60). This structure remained broadly unchanged until the Social Security Act 1986, which replaced the short-term widows allowance with a one-off lump sum widows payment. It also increased the age threshold for full widows pension to 55 (a reduced rate pension was payable to those widowed, or whose widowed mothers allowance had ended, between 45 and 54). But the numbers of recipients had fallen, from an average of almost 600,000 in the 1960s to an average of around 500,000 in the 1970s. Social trends, including falling marriage rates, rising divorce rates and increased male life expectancy, reduced the numbers of widows under pensionable age, from over 600,000 in 1951 to under 300,000 in 1995 (ONS/OPCS Marriage and Divorce Statistics, FM2, nos 16, 23). By then, of course, there had been many other profound social changes. Women were no longer required or expected to give up work on marriage. Married womens participation in the labour force had grown dramatically, although their working patterns were not identical to those of men, with many more leaving the workforce or working part time, especially while children were young. Thus it is not surprising that by the next wave of reform, most widows eligible for the benefits were in work, although those with young children were far less likely than married or cohabiting women to be working at all and less likely than other types of lone mother to be working full-time (ONS, Living in Britain: Results from the General Household Survey 1996, tables 5.23, 5.24). The availability of a non-means-tested benefit may have played a part in this; but so may the greatly increased prevalence of survivors benefits in occupational pension schemes in both the public and private sectors. The next wave of reform came about as part of a general package of welfare and pension reforms introduced by the 1997 Labour Government. But a major spur to their changes to bereavement benefits was that it had become inevitable that widows benefits would be successfully challenged for discriminating against men. Mr Willis had already begun his case in the European Court of Human Rights; although judgment was not given until 2002, it was a reasonable prediction that he would succeed in challenging his non-entitlement to both widows payment and widowed mothers allowance as incompatible with article 14 taken with A1P1: see Willis v United Kingdom (2002) 35 EHRR 21 (he failed in relation to widows pension because he did not then and might not ever meet the eligibility requirements). One solution might have been to abolish widows benefits altogether, save perhaps for the one-off payment, as being based on anachronistic assumptions about the major vicissitudes in life, but to do so was seen as removing help for many people in real need. Instead, there was a major re-focus, based on the defects identified in the governments green paper, A new contract for welfare: Support in Bereavement (Cm 4104, November 1998): the then scheme did not give enough help at the point of bereavement; gave most help to people who did not need widows benefits because they were earning a decent living or had large occupational pensions or life insurance; gave least help to the poorest widows on income support, who saw nothing of their widows benefits; and discriminated against men (para 4). The essential features of the new scheme were: first, it would apply equally to widows and widowers; second, the one-off bereavement payment would be increased from 1,000 to 2,000; third, there would be a widowed parents allowance equivalent to the current widowed mothers allowance; and fourth, there would no longer be a widows pension, but a short-term bereavement allowance for six months, for widows and widowers aged 45 or over with no dependent children. A disregard of 10 of the widowed parents allowance would be introduced into means-tested benefits. That was the scheme inserted into the Social Security Contributions and Benefits Act 1992 for Great Britain by the Welfare Reform and Pensions Act 1999. It was also the scheme inserted by statutory instrument (1999/3147 (NI 11)) into the Social Security Contributions and Benefits (Northern Ireland) Act 1992, with which this case is concerned. It was amended to take account of civil partnerships by the Civil Partnerships Act 2004. Since then, the scheme has been radically changed yet again, by the Pensions Act 2014 and the Pensions Act (Northern Ireland) 2015, in respect of deaths taking place after their implementation in March 2017. Bereavement payment and widowed parents allowance have been abolished and replaced with a single bereavement support payment available to all bereaved spouses and civil partners irrespective of age. This is paid as an initial lump sum followed by monthly instalments for up to 18 months. The rates are higher if the bereaved person is pregnant or entitled to child benefit. The object is to focus support on the period immediately after bereavement, it being very common for bereavement to have a large short-term impact on the finances of the surviving partner (Government Response to the public consultation: Bereavement Benefit for the 21st Century, Cm 8371, July 2012, p 16). As before, entitlement depends on the (simplified) contribution record of the deceased and is not means-tested. Longer term impacts are left to means-tested benefits with some transitional cushioning. In essence, therefore, what began as a long-term replacement of a wifes and childrens loss of a breadwinning husbands income, moved to a long-term replacement of a breadwinners income while children were growing up, and is now a transitional compensation for the immediate financial loss suffered by the survivor and children on bereavement. The contribution conditions are now less onerous. In none of these waves of reform was consideration given to extending the scheme to unmarried partners. The Beveridge Report did briefly discuss Unmarried person living as a Wife, pointing out that treatment of the problem was complicated by the possibility that either or both parties might have a legal spouse. It recommended that Widows and guardian benefits should not be paid except to a woman who was the legal wife of the dead man. Retirement pension should not be paid in respect of contributions other than the womans own contributions, except to the legal wife of the retired man (para 348(ii)). That principle has not been officially questioned since. The most recent government publication, on Bereavement Benefit for the 21st Century (above), simply reports that some consultation respondents took the opportunity to raise wider issues outside the scope of the consultation, including the extension of bereavement benefit entitlement to cohabitees (p 15). The legislation in question We need only consider section 39A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, in the version in force when Mr Adams died: Widowed parents allowance. (1) This section applies where - a person whose spouse or civil partner dies on or (a) after the appointed day is under pensionable age at the time of the spouses or civil partners death, or (b) - a man whose wife died before the appointed day (i) (ii) has not remarried before that day, and is under pensionable age on that day. (2) The surviving spouse or civil partner shall be entitled to a widowed parents allowance at the rate determined in accordance with section 39C below if the deceased spouse or civil partner satisfied the contribution conditions for a widowed parents allowance specified in Schedule 3, Part I, paragraph 5 and - (a) the surviving spouse or civil partner is entitled to child benefit in respect of a child or qualifying young person falling within subsection (3) below; or (b) the surviving spouse is a woman who either - is pregnant by her late husband, or (i) (ii) if she and he were residing together immediately before the time of his death, is (c) pregnant in circumstances falling within section 37(1)(c) above; or the surviving civil partner is a woman who - (i) was residing together with the deceased civil partner immediately before the time of the death, and (ii) is pregnant as the result of being artificially inseminated before that time with the semen of some person, or as a result of the placing in her before that time of an embryo, of an egg in the process of fertilisation, or of sperm and eggs. (3) A child or qualifying young person falls within this subsection if the child or qualifying young person is either - (a) a son or daughter of the surviving spouse or civil partner and the deceased spouse or civil partner; or (b) a child or qualifying young person in respect of whom the deceased spouse or civil partner was immediately before his or her death entitled to child benefit; or (c) if the surviving spouse or civil partner and the deceased spouse or civil partner were residing together immediately before his or her death, a child or qualifying young person in respect of whom the surviving spouse or civil partner was then entitled to child benefit. (4) The surviving spouse shall not be entitled to the allowance for any period after she or he remarries or forms a civil partnership, but, subject to that, the surviving spouse shall continue to be entitled to it for any period throughout which she or he - satisfies the requirements of subsection (2)(a) or (a) (b) above; and (b) is under pensionable age. (4A) The surviving civil partner shall not be entitled to the allowance for any period after she or he forms a subsequent civil partnership or marries, but, subject to that, the surviving civil partner shall continue to be entitled to it for any period throughout which she or he - satisfies the requirements of subsection (2)(a) or (b) (a) above; and (b) is under pensionable age. (5) A widowed parents allowance shall not be payable - (a) for any period falling before the day on which the surviving spouses or civil partners entitlement is to be regarded as commencing by virtue of section 5(1)(1) of the Administration Act; or (b) for any period during which the surviving spouse or civil partner and a person of the opposite sex to whom she or he is not married are living together as husband and wife; or (c) for any period during which the surviving spouse or civil partner and a person of the same sex who is not his or her civil partner are living together as if they were civil partners. Thus the key features are: the claimant must be under pensionable age at the date of death and the allowance ceases once he or she reaches that age; the deceased spouse or civil partner must have satisfied the prescribed contribution conditions (the details need not concern us); the surviving spouse or civil partner must either be pregnant (in the prescribed circumstances) or be entitled to child benefit in respect of at least one child or qualifying young person who is either (a) the son or daughter of them both, or (b) a child or qualifying young person in respect of whom the deceased was entitled to child benefit immediately before his or her death, or (c) a child or qualifying young person in respect of whom the survivor was entitled to child benefit, provided that the deceased and the survivor were living together immediately before the death; and entitlement is lost if the survivor marries, forms a civil partnership or when he or she cohabits as if married or in a civil partnership. The ECHR Article 14 of the ECHR provides that: 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. As is now well-known, this raises four questions, although these are not rigidly compartmentalised: (1) Do the circumstances fall within the ambit of one or more of the Convention rights? (2) Has there been a difference of treatment between two persons who are in an analogous situation? (3) characteristics listed or other status? (4) Is that difference of treatment on the ground of one of the Is there an objective justification for that difference in treatment? Within the ambit? Article 14 does not presuppose that there has been a breach of one of the substantive Convention rights, for otherwise it would add nothing to their protection, but it is necessary that the facts fall within the ambit of one or more of those: see eg Inze v Austria (1987) 10 EHRR 394, para 36. In this case, it is clear that the denial of a contributory social security benefit falls within the ambit of the protection of property in A1P1: see Willis v United Kingdom (2002) 35 EHRR 21, in relation to the denial of widows payment and widowed mothers allowance to widowers. The Court did not there find it necessary to consider whether the facts also fell within the ambit of the right to respect for family life protected by article 8 of the Convention. But this could matter, in relation both to whether the claimant and her children are in an analogous situation to a surviving spouse or civil partner and their children and to the justification for the difference in treatment between them. Another way of putting the relationship between article 14 and the substantive Convention rights is that article 14 comes into play whenever the subject matter of the disadvantage constitutes one of the modalities of the exercise of the right guaranteed: see eg Petrovic v Austria (1998) 33 EHRR 307, para 28. In that case a father complained that a non-contributory parental leave allowance was only available to mothers and not to fathers. At that date, it had not yet been decided that non-contributory state benefits were covered by A1P1, so the question was whether the allowance fell within the ambit of article 8. There was no violation of article 8, because the state is under no obligation to provide such an allowance. But this allowance paid by the state is intended to promote family life and necessarily affects the way in which the latter is organised as, in conjunction with parental leave, it enables one of the parents to stay at home to look after the children (para 27). By granting such an allowance states are able to demonstrate their respect for family life within the meaning of article 8 (para 29). Thus article 14 was applicable (although not violated in that case). It could be said that the connection between the organisation of family life and the parental leave allowance was closer in Petrovic than the connection between the organisation of family life and the widowed parents allowance. However, to the same effect is Okpisz v Germany (2005) 42 EHRR 32, where the refusal of child benefit to certain migrants was held to violate article 14 taken with article 8: By granting child benefit, states are able to demonstrate their respect for family life within the meaning of article 8; the benefits therefore come within the scope of that provision. (para 32). Most recently, in Aldeguer Toms v Spain (2017) 65 EHRR 24, the court considered a claim for survivors benefits, brought by an unmarried same sex partner before the introduction of same sex marriage in Spain, under article 14 read with both article 8 and A1P1: it reiterated that the notion of family life not only includes dimensions of a purely social, moral or cultural nature but also encompasses material interests (para 72). Judge Keller, the Swiss Judge, considered that the claim should only have been considered under A1P1, because financial support from the state primarily falls within A1P1; only some additional element, such as a clear legislative intent to provide an incentive for the organisation of family life, could bring it within article 8 (para O-I2). In this case, as in Petrovic and Okpisz, such an element clearly exists. In M v Secretary of State for Work and Pensions [2006] 2 AC 91, Lord Nicholls of Birkenhead accepted that the Child Support Act 1991 was one of the ways the United Kingdom evinces respect for children and the life of the family of which the child is part (para 17). Widowed parents allowance is only payable if there are children or young people for whose care and support either the deceased or the survivor or both were responsible: it is conditional on the survivor receiving child benefit and thus being a primary carer for such a child. It is, as Lord Bingham put it, one of the ways in which the state evinces respect for children and the life of the family of which they are part. Indeed, it is a stronger case than child support, which is simply a mechanism for enforcing the parents obligation to maintain ones children (and interestingly, when M got to Strasbourg, the court found a violation of article 14 read with A1P1 and did not find it necessary to consider article 8: JM v United Kingdom [2011] 1 FLR 491). It is fair to say that the English courts have made rather heavy weather of the ambit point, particularly in connection with article 8, because of its broad and ill- defined scope. In M v Secretary of State for Work and Pensions, Lord Bingham also said this (para 4): It is not difficult, when considering any provision of the Convention, including article 8 and article 1 of the First Protocol (article 1P1), to identify the core values which the provision is intended to protect. But the further a situation is removed from one infringing those core values, the weaker the connection becomes, until a point is reached when there is no meaningful connection at all. At the inner extremity a situation may properly be said to be within the ambit or scope of the right, nebulous though those expressions necessarily are. At the outer extremity, it may not. This is a difficult passage, because it is accepted that there is no need for the substantive article to be infringed in order for article 14 to be engaged. But it does suggest that the closer the facts come to the protection of the core values of the substantive article, the more likely it is that they fall within its ambit. Our attention was drawn to a number of other English authorities in which the connection of article 14 with article 8 is discussed, but most of those are under appeal and so it would be unwise to comment upon them. In Smith v Lancashire Teaching Hospitals NHS Foundation Trust [2017] EWCA Civ 1916; [2018] 2 WLR 1063, Sir Terence Etherton MR agreed with counsel that the only sure common thread running through the various descriptions of the ambit test, for the purposes of article 14, in the several speeches in M [2006] 2 AC 91 is that the connection or link between the facts and the provisions of the Convention conferring substantive rights must be more than merely tenuous (para 48). Having quoted the relevant paragraphs from Petrovic and reviewed the domestic authorities, including M, he summarised the position thus (para 55): The claim is capable of falling within article 14 even though there has been no infringement of article 8. If the state has brought into existence a positive measure which, even though not required by article 8, is a modality of the exercise of the rights guaranteed by article 8, the state will be in breach of article 14 if the measure has more than a tenuous connection with the core values protected by article 8 and is discriminatory and not justified. It is not necessary that the measure has any adverse impact on the complainant in a positive modality case other than the fact that the complainant is not entitled to the benefit of the positive measure in question. It may turn out that this is too restrictive a test: for example, core values is a concept derived from the domestic rather than the Strasbourg jurisprudence. But there is no problem applying it to the facts of this case. Widowed parents allowance is a positive measure which, though not required by article 8, is a modality of the exercise of the rights guaranteed by article 8. It has a more than tenuous connection with the core values protected by article 8: securing the life of children within their families is among the principal values contained in respect for family life. There is no need for any adverse impact other than the denial of the benefit in question. The fact that it also falls within the ambit of A1P1 is not a problem. The two articles are safeguarding different rights - respect for family life and respect for property. There is no reason to regard the latter as a lex specialis excluding the former in those cases, such as this, where it applies. I therefore conclude that the facts fall within the ambit, not only of A1P1, but also of article 8. Analogous situation? Unlike domestic anti-discrimination law, article 14 does not require the identification of an exact comparator, real or hypothetical, with whom the complainant has been treated less favourably. Instead it requires a difference in treatment between two persons in an analogous situation. However, as Lord Nicholls explained in R (Carson) v Secretary of State for Work and Pensions [2005] UKHL 37; [2006] AC 173, the essential question for the court is whether the alleged discrimination, that is, the difference in treatment of which complaint is made, can withstand scrutiny. Sometimes the answer to this question will be plain. There may be such an obvious, relevant difference between the claimant and those with whom he seeks to compare himself that their situations cannot be regarded as analogous. Sometimes, where the position is not so clear, a different approach is called for. Then the courts scrutiny may best be directed at considering whether the differentiation has a legitimate aim and whether the means chosen to achieve the aim is appropriate and not disproportionate in its adverse impact. (para 3) As was pointed out in AL (Serbia) v Secretary of State for the Home Department [2008] UKHL 42; [2008] 1 WLR 1434, there are few Strasbourg cases which have been decided on the basis that the situations are not analogous, rather than on the basis that the difference was justifiable. Often the two cannot be disentangled. However, in Shackell v United Kingdom (Application No 45851/99, decision of 27 April 2000), the European Court of Human Rights declared inadmissible a complaint that denying widows benefits to unmarried surviving partners discriminated against the survivor and her children on the ground of her unmarried status and the childrens illegitimacy. The court accepted that this fell within the ambit of A1P1, so found it unnecessary to consider whether it also fell within the ambit of article 8. However, relying on the Commissions view in Lindsay v United Kingdom (1987) 9 EHRR CD 555, that marriage is different from cohabitation, it held that the applicants situation was not comparable to that of a widow, although it also went on to hold that in any event the difference in treatment was justified, and hence by a majority that the application was inadmissible. In Burden v United Kingdom (2008) 47 EHRR 38 the Grand Chamber agreed with Shackell that marriage conferred a special status, but that was for the purpose of holding that sisters who had lived together all their adult lives were not in an analogous situation to married couples or civil partners for the purpose of inheritance tax relief (paras 62, 63). It is always necessary to look at the question of comparability in the context of the measure in question and its purpose, in order to ask whether there is such an obvious difference between the two persons that they are not in an analogous situation. The factors linking the claim to article 8 are also relevant to this question. It was for this reason that Treacy J was able to distinguish between Ms McLaughlins claim for the bereavement payment and her claim for widowed parents allowance. In the case of the former, he held that the lack of a public contract between Ms McLaughlin and Mr Adams meant that her situation was not comparable with that of a widow and her claim must fail (paras 66, 67). That decision has not been appealed. In the case of the latter, he held that the relevant facet of the relationship was not their public commitment but the co-raising of children. For that purpose marriage and cohabitation were analogous (para 68). In my view, that analysis is correct. Widowed parents allowance is only paid because the survivor is responsible for the care of children who were at the date of death the responsibility of one or both of them. Its purpose must be to benefit the children. The situation of the children is thus an essential part of the comparison. And that situation is the same whether or not the couple were married to one another. It makes no difference to the children. But had the couple been married, their treatment would be very different: their household would have significantly more to live on while their carer is in work. I cannot regard Shackell as conclusively against the conclusion that for this purpose the situations are analogous. Unlike Treacy J, the court did not examine the purpose of each benefit separately and ask whether they should be distinguished when it came to the justification for excluding unmarried parents and their children. It is also worth noting that in Sahin v Germany [2003] 2 FLR 671, the Grand Chamber concluded that, because children of married and unmarried parents should not be treated differently, neither should the unmarried parents - in that case an unmarried father for the purpose of contact with his children. It is also instructive that in Yiit v Turkey (2011) 53 EHRR 25, the Grand Chamber was faced with a difference in treatment for the purpose of survivors benefits between people who had only religious marriages and people who had civil marriages. The court began its discussion by pointing out that According to the courts settled case law, discrimination means treating differently, without an objective and reasonable justification, persons in relevantly similar situations (para 67, citing DH v Czech Republic (2007) 47 EHRR 3, para 175). It noted the Governments argument that civil and religious marriages were not similar for this purpose (para 75). But it did not answer this question directly. Rather, it considered whether religious marriage was a status within the meaning of article 14 and concluded that it was (paras 79, 80). It then went straight on to consider whether the difference in treatment was justified, thus implying that the situations were relevantly similar, and held that it was (paras 82, 87). Notably, Yiit involved only the mother. It did not involve any of her children, who were entitled to bereavement benefits in their own right. As shown by the helpful intervention of the National Childrens Bureau, which hosts the Childhood Bereavement Network, in the great majority of Council of Europe states children of the deceased are directly eligible for bereavement benefits up to a certain age. The United Kingdom is unusual in channelling benefits for children through their parents. Other status? It is well established both in Strasbourg and domestically that not being married can be a status just as being married can be. In Yiit v Turkey, for example, the Grand Chamber held that the absence of a marriage tie between two parents is one of the aspects of personal status which may be a source of discrimination prohibited by article 14 (para 79). In In re G (Adoption: Unmarried Couple) [2008] UKHL 38; [2009] 1 AC 173, the House of Lords held that being unmarried was a status for the purpose of deciding whether their inability to adopt was unjustified discrimination under article 14. Justification? It follows, therefore, that the situation in this case is sufficiently comparable to that of a widow or widower with children for the difference in treatment based on the lack of a marriage tie to require justification. This in turn depends upon whether it pursues a legitimate aim and whether there is a reasonable relationship of proportionality between the means employed and the aim sought to be realised: see, eg, Yiit v Turkey, para 67, citing Larkos v Cyprus (1999) 30 EHRR 597, para 29). Further, to quote Yiit again, at para 70: The contracting states enjoy a certain margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment in law. The margin of appreciation is the latitude which the Strasbourg court will allow to member states, which is wider in some contexts and narrower in others. As the Grand Chamber explained, in a much-quoted passage in Stec v United Kingdom (2006) 43 EHRR 47, 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. In Willis v United Kingdom, although it concerned social security benefits where normally a wide measure would be allowed, the court held, at para 39, that very weighty reasons were required to justify a difference of treatment based exclusively on the ground of sex, and no such reasons existed. On the other hand, in Stec, which also concerned the benefits system, although the difference in treatment was based on sex, it was inextricably linked to the difference in retirement ages between men and women, which had historically been justified. It was a matter for member states to determine when and how to phase that out. Strictly speaking, the margin of appreciation has no application in domestic law. Nevertheless, when considering whether a measure does fall within the margin, it is necessary to consider what test would be applied in Strasbourg - that is why the manifestly without reasonable foundation test has generally been applied domestically in benefit cases. In cases which do fall within the margin which Strasbourg will allow to member states, the domestic courts will then have to consider which among the domestic institutions is most competent and appropriate to strike the necessary balance between the individual and the public interest. In a discrimination case such as In re G, it may be the courts. In other cases, it may be the Government or Parliament. The appellant, supported by the Child Poverty Action Group, argues that the difference in treatment is based, or largely based, on the birth status of the children, which is a suspect ground, requiring particularly careful scrutiny. Thus, it is argued, the marriage condition has the effect that all, or almost all, the children adversely affected are illegitimate - ie born to parents who are not married to each other - and all, or almost all, the children positively affected will be legitimate - ie born to parents who are married to one another. In fact, this will be so in a situation like this case, when the parents cohabited for a long period and all the children who fall within section 39A(3) are the children of both the deceased and the survivor. It may very well not be so in other situations, where there are children of either the deceased or the survivor from other relationships, marital or non-marital. It is therefore only the situation covered by section 39A(3)(a) which deserves particularly careful scrutiny. The legitimate aim put forward by the respondent is to promote the institutions of marriage and civil partnership by conferring eligibility to claim only on the spouse or civil partner of the person who made the contributions. There is no doubt that the promotion of marriage, and now civil partnership, is a legitimate aim: this was the reason why the denial of widows benefits to an unmarried partner was held justified in Shackell; and why the preference given to civil over religious marriage was held justified in Yiit. The mere existence of a legitimate aim is not enough: there has to be a rational connection between the aim pursued and the means employed. Although this is not spelled out in the Strasbourg case law, it follows from the fact that the measure must pursue a legitimate aim. Whether there is a rational connection between the aim in this case and the measure in question is more debateable. It seems doubtful in the extreme that any couple is prompted to marry - save perhaps when death is very near - by the prospect of bereavement benefits. But they are part of a (small) package of social security measures in which it pays to be married rather than to cohabit. Ms McLaughlin, like many cohabitants, complains that the social security system is happy to recognise their relationship for some purposes but not for this one. We have not gone into the detail of this. But the general picture is that unmarried cohabitants are treated as a couple for the purpose of means-tested benefits: they will get the benefits applicable to a couple rather than the benefits applicable to two single people. This may sometimes be to their advantage: the benefit cap is higher for couples and lone parents than it is for single adult households. But it is often to their disadvantage, as the system assumes that two can live together more cheaply than can two single households. The fact remains that the social security system does privilege marriage and civil partnership in a few ways: principally by permitting one partner to benefit from the contributions made by the other, not only for bereavement but also for retirement pension purposes. This, as it seems to me, is the nub of the matter. Where means-tested benefits are concerned, it is difficult indeed to see the justification for denying people and their children benefits, or paying them a lower rate of benefit, simply because the adults are not married to one another. Their needs, and more importantly their childrens needs, are the same. But we are concerned here with a non-means-tested benefit earned by way of the deceaseds contributions. And the allowance is a valuable addition to the household income if the survivor is in work. Is it a proportionate means of achieving the legitimate aim of privileging marriage to deny Ms McLaughlin and her children the benefit of Mr Adams contributions because they were not married to one another? In my view, the answer to that question is manifestly no, at least on the facts of this case. The allowance exists because of the responsibilities of the deceased and the survivor towards their children. Those responsibilities are the same whether or not they are married to or in a civil partnership with one another. The purpose of the allowance is to diminish the financial loss caused to families with children by the death of a parent. That loss is the same whether or not the parents are married to or in a civil partnership with one another. That view is reinforced by the international obligations to which the United Kingdom is party and which inform the interpretation of the guarantees contained in the ECHR even though they have not been directly incorporated into United Kingdom law: see eg ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4; [2011] 2 AC 166. Principal amongst these is article 3 of the United Nations Convention on the Rights of the Child (UNCRC), which states that in all actions concerning children the best interests of the child shall be a primary consideration. Given the direct link with children, there cannot be much doubt that the provision of widowed parents allowance is an action concerning children. Article 26 requires State parties to recognise for every child the right to benefit from social security, including social insurance . Article 2 of the UNCRC requires state parties to respect and ensure the rights set forth in the present Convention to each child within their jurisdiction without discrimination of any kind, irrespective of the childs or his or her parents birth or other status. To like effect is article 10 of the International Covenant on Economic Social and Cultural Rights 1966. Denying children the benefit of social insurance simply because their parents were not married to one another is inconsistent with that obligation. It is also noteworthy that the great majority of member states of the Council of Europe provide survivors pensions directly to the children irrespective of birth status and in every other member state for which evidence is available, apart from Malta, where a pension is not paid directly to the child a pension can be paid to the surviving parent whether or not they were married to the deceased parent. This is evidence of a European consensus which is always relevant to the width of the margin of appreciation which Strasbourg will allow. This is not a difficult conclusion to reach on the facts of this case, where the couple lived together for many years, were recognised as doing so for other purposes by the Department for Communities and were parents of all the children involved. Their children should not suffer this disadvantage because their parents chose not to marry - as it happens for a commendable reason, but it might not always be so. This unjustified discrimination in the enjoyment of a Convention right is enough to ground a declaration of incompatibility under section 4(2) of the Human Rights Act. It does not follow that the operation of the exclusion of all unmarried couples will always be incompatible. It is not easy to imagine all the possible permutations of parentage which might result in an entitlement to widowed parents allowance. The recent introduction into the household of a child for whom only the surviving spouse is responsible is one example. Whether it would be disproportionate to deny that child the benefit of the deceaseds contributions would be a fact specific question. But the test is not that the legislation must operate incompatibly in all or even nearly all cases. It is enough that it will inevitably operate incompatibly in a legally significant number of cases: see Christian Institute v Lord Advocate [2016] UKSC 51; 2016 SLT 805, para 88. A declaration of incompatibility does not change the law: it is then for the relevant legislature to decide whether or how it should be changed. It also does not follow that the new law is incompatible. Although we have been advised of its existence, we have not heard argument about it, and the argument would no doubt be very different from the argument we have heard in this case. But I do not see the fact that the law has now changed as a reason for not making a declaration of incompatibility: the old law will remain relevant for deaths taking place before March 2017 for a very long time. I would therefore allow the appeal and make a declaration that section 39A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 is incompatible with article 14 of the ECHR, read with article 8, insofar as it precludes any entitlement to widowed parents allowance by a surviving unmarried partner of the deceased. LORD MANCE: (with whom Lady Hale, Lord Kerr and Lady Black agree) This appeal had led to disagreement between a majority view contained in the judgment prepared by Lady Hale and a minority view expressed by Lord Hodge. While I come down in favour of the former view, I recognise the force of a number of points made by Lord Hodge. The majority view faces the difficulty that the European Court of Human Rights declared inadmissible all aspects of the complaint made by Joanna Shackell in Shackell v United Kingdom (Application No 45851/99). That complaint included as one element the refusal to an unmarried mother of a widowed mothers allowance following the death of her partner in 1995. The Welfare Reform and Pensions Act 1999 replaced that allowance with widowed parents allowance, to cater for the death of either member of a married couple, but nothing in that change affects the reasoning in Shackell. Equally, I do not think that it is possible to treat Shackell as a case where the court failed to distinguish between the benefits there claimed or to ask whether they should be treated separately or to focus on the children. Ms Shackell, represented by a welfare rights worker, made a distinct claim that her children were discriminated against by reason of their illegitimate status, arguing that the refusal to pay her widows benefits in respect of her children had a direct financial consequence on her family life: violation of article 8 taken in conjunction with article 14 of the Convention. The court dealt with this specifically as a complaint about non-payment of widowed mothers allowance, to which it gave a distinct response as follows: whilst it is true that the applicant does not receive Widowed Mothers Allowance, the reason for her not being eligible is that she and her late partner were not married. It is not related to the status of the children The court added that it followed that the applicants ineligibility for widowed mothers allowance was compatible with the Convention for the same reasons as those which it had already set out in rejecting the claim so far as it related to widows benefits simpliciter. We are therefore squarely confronted with a need to consider whether the Courts approach in Shackell, set out in para 48 above, should now be regarded as wrong or should not be followed, at least domestically. In my opinion, that is indeed the position. The existence of marriage was of course a condition of eligibility for widowed mothers allowance in Shackell; that was the very basis of complaint there - just as the requirement of marriage or a civil partnership is on this appeal the basis of complaint in relation to widowed parents allowance. But the reasoning in Shackell fails to address what I regard as the clear purpose of this allowance, namely to continue to cater, however broadly, for the interests of any relevant child. Refusal of the allowance to the survivor of a couple who are neither married nor civil partners cannot simply be regarded as a detriment to the survivor of the couple. Refusal would inevitably operate in a significant number of cases to the detriment of the child. There is common ground between the majority and the minority that the widowed parents allowance falls within the ambit of article 8 (see Lord Hodge, para 70). In my opinion, its refusal was and is prima facie a violation of article 14 read with article 8, as well as of article 14 read with A1P1. Bearing in mind that the main purpose of widowed parent allowance is to secure the continuing well-being of any child of a survivor, there seems in this context to be no tenable distinction, and indeed manifest incongruity in the difference in treatment, between a child of a couple who are married or civil partners and the child of a couple who are not. In a large number of cases the effect would also be to discriminate against a child who was illegitimate. Indirect discrimination does not depend on the reason for or purpose of the conduct complained of, but on its effect. The European Court of Human Rights does not appear to have addressed this aspect in its brief reasoning set out in para 48 above. And legitimacy or illegitimacy is a status. As Lady Hale points out in paras 42-43, we do not need to consider other situations on this appeal. A policy in favour of marriage or civil partnership may constitute justification for differential treatment, when children are not involved. But it cannot do so in relation to a benefit targeted at the needs and well-being of children. The fact that the widowed parents allowance may cease or be suspended in some situations is no answer to this. The underlying thinking is no doubt that adequate support will be or is likely to be derived from another source in such situations. The provisions for cessation or suspension may not be entirely logical or reflect entirely accurately the circumstances in which adequate alternative support may be expected. But, if so, that does not appear to me to affect the analysis that widowed parents allowance is fundamentally aimed at securing the needs and well-being of children. I take the points made by Lord Hodge (paras 85-87) that it is not always easy to judge how different benefits interact and how easy they may be to administer. But the position of couples who are neither married nor civil partners is already catered for in other situations known to the law. The starting point is surely that, where children are for relevant purposes in a similar situation, the law would be expected to deal with them in the same way. I am not persuaded that any substantial grounds exist for thinking that this was not and is not feasible, as well as just, in the present context. For these reasons, and for the additional reasoning on further points mentioned in Lady Hales judgment, I join with the majority in allowing this appeal relating to widowed parents allowance. LORD HODGE: (dissenting) I regret that I find myself in disagreement with the majority on this appeal. In my view the widowed parents allowance (the WPA) is not incompatible with article 14 of the European Convention on Human Rights (the ECHR) when taken with either article 8 of the ECHR or article 1 of the First Protocol to the ECHR (A1P1). I am very grateful to Lady Hale for setting out the facts, the evolution of bereavement benefits and the legislation, which I do not have to repeat. In explaining my disagreement, I will draw attention to certain features of the legislation which are to my mind of greater importance than the majority acknowledges. We are concerned with the version of section 39A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (the 1992 Act) which was in force when Mr Adams died on 28 January 2014 and which Lady Hale has set out in para 13 of her judgment. The discrimination which the majority sees as incompatible with the ECHR is the exclusion of the survivor of a couple who were not married or in a civil partnership from the benefit of the WPA because, it is reasoned, the discrimination, which that exclusion entails, has not been justified and so is contrary to article 14 when read with article 8 of the ECHR. The legislation There are a number of features of the WPA which are material to my analysis. First, the WPA is a contributory benefit. The deceased spouse or civil partner (the Deceased) must have satisfied the prescribed contribution conditions (section 39A(2) and Schedule 3 Part I, paragraph 5). The benefit which becomes available to the surviving spouse or civil partner (the Survivor) is thus the result of the Deceaseds contributions. Secondly, the WPA is not means-tested but is payable even if the Survivor earns a substantial income through work, and it is subject to income tax as part of the Survivors income (formerly under section 617 of the Income and Corporation Taxes Act 1988 (ICTA) and now under Part 9, chapter 5 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)). As discussed below, the WPA is treated as pension income of the Survivor. Thirdly, the WPA is payable not only when the Survivor has a responsibility for children (section 39A(3)) but also if the Survivor is a woman and is pregnant in specified circumstances (section 39A(2)(b) & (c)). Fourthly, the WPA ceases to be payable (a) when the Survivor reaches pensionable age (section 39A(4A)(ii)) and (b) if the Survivor marries or enters into a civil partnership (section 39A(4) and (4A)), and is not payable so long as the Survivor cohabits with a person of the opposite sex as if they were married or with a person of the same sex as if they were civil partners (section 39A(5)(b) & (c)). The first and second features - that the Survivors entitlement is dependent on the Deceaseds contributions and is not means-tested - point to the importance of the nexus between the Survivor and the Deceased. It is the nature of that relationship which gives the Survivor the right to benefit from the deceaseds contributions. The WPA is payable not only if there is a child of the Deceased and the Survivor or a child in respect of whom the Deceased had been entitled to child benefit immediately before his or her death (section 39A(3)(a) & (b)) but also if the Deceased and the Survivor had been living together immediately before the death and there was a child in respect of whom the Survivor was then entitled to child benefit (section 39A(3)(c)). Thus, the WPA is made available to the Survivor if he or she is responsible for a child for whom the Deceased was not responsible. The third and fourth features - the availability of the WPA to a pregnant woman and especially the circumstances in which WPA ceases to be payable or is suspended, point to the focus of the benefit on the provision of assistance to the bereaved Survivor: WPA, by replacing income earned by the Deceased, gives the Survivor the options of not working or of working for less hours after bereavement, notwithstanding his or her current or future financial responsibility for children. That replacement income is ended or suspended when the Survivor enters into a relationship with another which may be expected to yield alternative financial support. In the public consultation document, Bereavement Benefit for the 21st century, (Cm 8221) which the Secretary of State for Work and Pensions presented to Parliament in December 2011, it was recognised that the bereavement benefits were not affected by paid employment and that the majority of people who applied for those benefits were likely to be in work. In that document the WPA was described as providing support towards the additional costs of raising children (p 14) and the function of it and other bereavement benefits was described in these terms: a key function of bereavement benefits is to provide some financial security in the period immediately after spousal bereavement to allow people to take time away from work should they need this. (p 16) This latter description is not wholly accurate as the WPA, unlike the short-term bereavement allowance, is not confined to the 52 weeks immediately after the bereavement. But the focus on the financial security of the Survivor applies to each of the bereavement benefits. This focus on the position and welfare of the Survivor is consistent with the evolution of bereavement benefits which Lady Hale has summarised in paras 4 to 12 of her judgment. The initial aim of bereavement benefits was to relieve the plight of the widow under pensionable age who lost the support of a bread-winning husband at a time when many married women did not work. Social change, including the increase in the number of married women and widows who engage in paid work, led to the demise of the widows pension, which was payable to a widow aged over 45 when widowed and continued to be paid until she drew her retirement pension, and its replacement with a bereavement allowance for up to 52 weeks, while the WPA provided longer-term income substitution to the Survivor, in recognition of her responsibility for children. The WPA, as a contributory benefit, stands in contrast to means-tested benefits for the support of children such a child tax credit, which now is being replaced by universal credit. Such means-tested benefits do not require a nexus between a deceased contributor and a surviving claimant but are payable because of the need to provide for the welfare of children. The WPA counts as income in relation to means-tested benefits but 10 of the WPA is disregarded when calculating entitlement to means-tested benefits: Regulation 104 of and paragraph 16 of Schedule 8 to the Employment and Support Allowance Regulations (Northern Ireland) 2008 (SI 2008/280). Accordingly, a person in receipt of means tested benefits will often obtain only limited assistance from an entitlement to WPA. Securing ECHR rights without discrimination Lady Hale has set out article 14 of the ECHR and the four questions which it raises in para 15 of her judgment. In relation to the first question (do the circumstances fall within the ambit of one or more of the Convention rights?), it has been established in Willis v United Kingdom (2002) 35 EHRR 21 that the denial of a contributory social security benefit falls within the ambit of the A1P1 right. I therefore postpone my consideration of the concept of the ambit of a Convention right until I consider article 14 taken with article 8 below. In Willis the challenge to the denial of a widows payment and a widowed mothers allowance (the precursor of the WPA) to widowers succeeded under article 14 taken in conjunction with A1P1 and the Strasbourg court (the ECtHR) did not have to consider the complaint under article 14 in conjunction with article 8. A similar challenge under article 14 taken in conjunction with A1P1 was made by an unmarried mother of three children who had had a long-term relationship with a man who was the childrens father in the case of Shackell v United Kingdom (Application No 45851/99) decision of 27 April 2000. She complained that the United Kingdoms social security legislation discriminated against her because she was an unmarried surviving partner by denying her a right to the widows benefits available to married women (including the widowed mothers allowance). The ECtHR treated the right to widows benefits as a pecuniary right for the purposes of A1P1 and saw no need to determine whether the facts also fell within the ambit of article 8. The court by majority declared the application inadmissible because it was manifestly ill-founded within the meaning of article 35 of the ECHR. In reaching that conclusion the ECtHR considered not only the applicants claim to widows benefits generally but also the childrens claim that they were discriminated against in relation to widowed mothers allowance. The ECtHR referred to the decision of the European Commission of Human Rights in Lindsay v United Kingdom (1987) 9 EHRR CD 555 in which the Commission rejected a comparison between unmarried cohabitees and a married couple in relation to the incidence of income tax on the basis that they were not in analogous situations. The Commission stated: Though in some fields the de facto relationship of cohabitees is now recognised, there still exist differences between married and unmarried couples, in particular, differences in legal status and legal effects. Marriage continues to be characterised by a corpus of rights and obligations which differentiate it markedly from the situation of a man and woman who cohabit. The court, while recognising that since 1986 there had been increased social acceptance of stable personal relationships outside marriage, stated: However, marriage remains an institution which is widely accepted as conferring a particular status on those who enter into it. The situation of the applicant is therefore not comparable to that of a widow. Recognising that the ECHR gives States a certain margin of appreciation in the assessment of the extent to which differences in otherwise similar situations justify a different treatment in law, the court held that the promotion of marriage, by conferring limited benefits for surviving spouses, could not be said to exceed the margin of appreciation afforded to the UK Government. Shackell was decided in 2000; and in 2008 the Grand Chamber of the ECtHR confirmed that approach in Burden v United Kingdom (2008) 47 EHRR 38. In that case two unmarried sisters, who had lived together all their lives and who for 31 years had jointly owned the house in which they lived, complained under article 14 taken with A1P1 that it was unjustified discrimination for the UK tax system to deny them the exemption from inheritance tax which was available to property passing between spouses or civil partners. In holding that there was no discrimination and therefore no violation of article 14 taken with A1P1, the Grand Chamber stated (para 63): Moreover, the Grand Chamber notes that it has already held that marriage confers a special status on those who enter into it. The exercise of the right to marry is protected by article 12 of the Convention and gives rise to social, personal and legal consequences. In Shackell, the court found that the situations of married and unmarried heterosexual cohabiting couples were not analogous for the purposes of survivors benefits, since marriage remains an institution which is widely accepted as conferring a particular status on those who enter it. The Grand Chamber considers that this view still holds true. (Emphasis added) The Grand Chamber went on to state (para 65) that what set marriage and civil partnership apart from other forms of cohabitation was the express public undertaking of a body of rights and obligations of a contractual nature. The legally binding agreement which marriage or civil partnership entailed rendered those relationships fundamentally different from the relationship of cohabitation, regardless of its long duration. See also, more recently albeit in the different context of testimonial privilege, Van der Heijden v Netherlands (2012) 57 EHRR 13, paras 69 and 84. Thus in Yiit v Turkey (2011) 53 EHRR 25, the Grand Chamber expressed the view (in para 72) that marriage is characterised by a corpus of rights and obligations that differentiated it materially from other situations of a man and a woman who cohabit and stated: States have a certain margin of appreciation to treat differently married and unmarried couples, particularly in matters falling within the realm of social and fiscal policy such as taxation, pensions and social security. I am not persuaded that this court has grounds for departing from this consistent line of authority from the ECtHR which the Grand Chamber has recently endorsed in Burden and Yiit. It provides a clear answer to a complaint based on article 14 taken with A1P1. There is no suggestion that Strasbourg jurisprudence is evolving on this issue in the context with which this appeal is concerned, namely the entitlement of a surviving partner to state benefits arising out of the deceaseds contributions. Further, the ECtHR has not suggested that an analysis of those complaints in the context of article 14 taken with article 8 would have caused it to have reached a different decision in Shackell. In my view, the ECtHRs treatment of marriage and civil partnership as conferring a status which distinguishes them from cohabitation, while not binding on this court, is a very important component of any analysis of a challenge under article 14 taken together with article 8, to which I will turn. But it is necessary to consider first whether the present case falls within the ambit of article 8. The ambit of article 8 It has long been established in the jurisprudence of the ECtHR that article 14, which seeks to secure without discrimination the enjoyment of the rights and freedoms contained in the substantive provisions of the ECHR and its protocols, does not require any breach of those substantive provisions. It is sufficient for article 14 to apply that the facts of the case fall within the ambit of one or more of those substantive provisions: Abdulaziz Cabales and Balkandali v United Kingdom (1985) 7 EHRR 471, para 71; Inze v Austria (1987) 10 EHRR 394, para 36; Petrovic v Austria (1998) 33 EHRR 357, para 22; and, more recently, Aldeguer Toms v Spain (2017) 65 EHRR 24, para 74. In the latter case (para 74) the ECtHR continued: The prohibition of discrimination enshrined in article 14 applies to those additional rights, falling within the general scope of any Convention article, for which the state has voluntarily decided to provide. While article 8 does not require the state to provide financial support to a family in the form of state benefits, such support as the state choses to provide must be provided without discrimination. For the ECtHR has held that family life in article 8 includes not only dimensions of a purely social, moral or cultural nature but also encompasses material interests: Merger v France (2004) 43 EHRR 51, para 46; Aldeguer Toms (above) para 72. Thus, for example, the provision of child benefits to the parents of a child has been characterised as a way by which states are able to demonstrate their respect for family life: Okpisz v Germany (2005) 42 EHRR 32, para 32. Article 8 confers a right that the state will show respect for private and family life. The provision of financial support is one of the modalities of the exercise of a right guaranteed: Petrovic (above), para 28. I interpret modality as a particular mode in which something is done or expressed; in relation to article 8, it is a way in which the state expresses its support for family life. position thus: In our domestic jurisprudence, Lord Nicholls of Birkenhead summarised the Article 14 is engaged whenever the subject matter of the disadvantage comprises one of the ways a state gives effect to a Convention right (one of the modalities of the exercise of a right guaranteed). For instance, article 8 does not require a state to grant a parental leave allowance. But if a state chooses to grant a parental leave allowance it thereby demonstrates its respect for family life. The allowance is intended to promote family life. Accordingly the allowance comes within the scope of article 8, and article 14 read with article 8 is engaged: Petrovic v Austria (2001) 33 EHRR 307, paras 27-30. (M v Secretary of State for Work and Pensions [2006] 2 AC 91, para 16) More recently, in R (Steinfield) v Secretary of State for International Development [2018] UKSC 32; [2018] 3 WLR 415, in which the appellants successfully challenged as discriminatory the Civil Partnership Act 2004 because it did not make civil partnerships available to different-sex couples, Lord Kerr of Tonaghmore said this (para 18): Before Andrews J and the Court of Appeal it had been submitted that an adverse effect in relation to article 8 had to be demonstrated in order for an avowed infringement to come within its scope or ambit. Counsel for the respondent did not seek so to argue before this court. They were right not to do so. Recent case law from the European Court of Human Rights (ECtHR) makes it clear that no detrimental effect need be established. In particular, in Vallianatos [v Greece (2013) 59 EHRR 12] ECtHR found that the introduction of registered partnerships only for different sex couples, to exist alongside marriage which was also only open to different sex couples, constituted a breach of article 14 read with article 8 of the Convention: paras 80-92. As a result, in order to avoid a finding of an infringement of article 14, the Secretary of State had to show the unequal treatment of different sex couples was justified. Like Lady Hale, I see no basis for the assertion that A1P1 is a lex specialis which excludes consideration of article 8. When the ECtHR has decided cases under article 14 taken with A1P1 and found it unnecessary to consider a claim relating to the same facts under article 14 taken with article 8, it has not suggested that A1P1 has excluded consideration of article 8. When the ECtHR has dismissed a challenge under article 14 taken with A1P1 and has then declined to consider article 14 taken with article 8 (as it did in Shackell), one may readily infer that the ECtHR does not see a different result arising from the latter assessment. Indeed, it is questionable whether one can avoid such an inference. But I see no justification for inferring more than that. In my view A1P1 is a more natural home for social security benefits such as the WPA than article 8 because it is a benefit which is directed to assist the bereaved widow/widower or civil partner who has lost the financial support of the deceased. But it is payable if and only if the Survivor has responsibility for children and it thereby can be seen as a means, albeit indirectly, by which the state shows respect for family life. I agree therefore that the WPA falls within the ambit of article 8. It is the positive act of providing the WPA, which provides assistance to the Survivor who is responsible for children and thereby promotes family life, that brings the benefit within the ambit of article 8. The remaining questions As a result, it is necessary to consider the other three questions which Lady Hale has set out in para 15 of her judgment. They are: Is that difference of treatment on the ground of one of the (1) Has there been a difference of treatment between two persons who are in an analogous situation? (2) characteristics listed or other status? (3) Is there an objective justification for that difference in treatment? I agree with Lady Hale that not being married can be a status: Yiit v Turkey (2011) 53 EHRR 25, paras 79-80; In re G (Adoption: Unmarried Couple) [2008] UKHL 38; [2009] AC 173, paras 8 (Lord Hoffmann), 107 (Lady Hale) and 132-133 (Lord Mance). Different treatment in the field of state benefits based on a person not being married would not however be a suspect ground which requires the court to exercise closer scrutiny: see, by analogy, Swift v Secretary of State for Justice [2013] EWCA Civ 193; [2014] QB 373, Lord Dyson MR at paras 24-25. Where I differ from the majority is on the first and third questions above, to which I now turn. Those questions are not rigidly compartmentalised. The ECtHR often addresses the third question without conducting a separate analysis of the first question. This is unsurprising because there is a considerable overlap between the two questions in the assessment as to whether there has been unjustifiable discrimination. Was there unjustifiable discrimination? The first question is whether an unmarried bereaved cohabitee is in an analogous situation to a bereaved survivor who had been married to or in a civil partnership with the deceased. In my view he or she is not. As the appellant is a woman, I will refer to the survivor as she in the discussion which follows. The majority suggests that they are in an analogous situation because it accepts Treacy Js analysis that the relevant facet of the relationship between the deceased and the survivor was the co-raising of children (emphasis added). It is stated that the WPA is payable only if the survivor is responsible for the care of children who were at the date of death the responsibility of one or both of them (para 27). That statement is correct. But it does not follow, as the majority asserts, that the purpose of the WPA is to benefit the children. There are a number of important characteristics of the WPA which show that it is a benefit to assist the bereaved Survivor rather than a benefit for bereaved children, although I recognise that it would benefit the children by providing additional income to the family unit. First, as I have said, the WPA is a benefit which replaces the lost income of the deceased and thereby gives the Survivor the opportunity not to work or to work reduced hours while she is responsible for children. Unlike benefits which are paid to meet a specific need of the claimant, the WPA, as an income replacing benefit, is taxable as pensions income in the hands of the Survivor: see formerly section 617 of ICTA and now sections 565, 566 and 577 of ITEPA. Secondly, the WPA ceases to be payable while the Survivor remains responsible for relevant children in several circumstances which are the personal circumstances of the Survivor. If she reaches retirement age, if she remarries or enters into a civil partnership, so long as she cohabits with a partner of either gender, or if she dies, the WPA ceases to be payable. It is to my mind striking that the WPA ceases to be paid as soon as the Survivor enters into one of the specified relationships, regardless of whether the Survivors new partner undertakes any responsibility for the children. If the WPA were properly characterised as a benefit for the bereaved children, it might be difficult to defend the rationality of these rules. Thirdly, the WPA is a contributory benefit. In most circumstances it is payable only if the Deceased has made sufficient National Insurance contributions. The Survivors benefits, which are treated in UK tax law as a pension, are the product of the Deceaseds contributions. Thus the nature of the nexus between the Deceased and the Survivor takes on a particular importance. Fourthly, the sums payable to the Survivor are not related to the childrens needs or increased by reference to the number of children for whom she is responsible. Instead, the rate of the WPA is calculated in a way similar to that of a Category A retirement pension. The Survivor receives a basic pension at a weekly rate and an additional pension calculated by reference to a surplus created by the Deceaseds earnings or deemed earnings during his working life: the 1992 Act sections 39C, 44-45A and 46(2) and Schedule 4A. It is unsurprising that the rules governing the WPA focus on the nature of the relationship between the Deceased and the Survivor in determining the Survivors entitlement to this contributory pension. When one pays due regard to these characteristics of the WPA, the reasoning of the ECtHR in Shackell, which recognises the importance of the status of the Survivor, is directly relevant and strongly supports the conclusion that the cohabiting survivor is not analogous to the Survivor who was married to or in a civil partnership with the Deceased. I see no basis for reaching a different view in relation to article 14 taken with article 8 than that which the ECtHR has reached in relation to article 14 taken with A1P1. On a strict analysis the question whether discrimination is objectively justified does not need to be addressed if one concludes, as I have, that the persons are not in an analogous situation. Nonetheless, in view of my disagreement with my colleagues, it is appropriate to address this question. In so doing, I observe that considerations which point against the persons being in an analogous situation also have a bearing on the justification of their being treated differently by the state. It is usual, when addressing justification, to ask whether the difference in treatment pursues a legitimate aim and whether, in relation to the difference in treatment, there is a reasonable relationship of proportionality between the means employed and the aim sought to be realised: see for example Yiit v Turkey (above) para 67, Stec v United Kingdom (2006) 43 EHRR 47, para 51. The contracting states are given a certain margin of appreciation in their assessment of whether differences in otherwise similar situations justify a different treatment in law. In Stec at para 52, which Lady Hale quotes more fully at para 33, the Grand Chamber stated: The scope of this margin will vary according to the circumstances, the subject matter and the background. It is not disputed that the promotion of marriage or civil partnerships, by means of which parties undertake binding legal obligations which may tend to support the long-term stability of their relationships, is a legitimate aim for the state to pursue. In the United Kingdom there are a range of measures in the fields of taxation and social security benefits which promote such legal relationships. These include the marriage allowance in the context of income tax, the ability of a couple to transfer assets between each other without a charge to tax in order to take advantage of income tax and capital gains tax allowances, and the ability of spouses and civil partners to transfer assets to each other free of inheritance tax and the entitlement of the surviving spouse or civil partner to inherit the deceased partners inheritance tax allowance if it has not been used. In the field of social security benefits, entitlement to a survivors retirement pension and entitlement to the WPA depend on the existence of a marriage or a civil partnership. There is thus a range of rules which confer financial benefits on persons who are or were married or in a civil partnership. In this context it is of no real significance that the average informed citizen may not have been aware of the WPA when entering into the legal obligations which marriage or civil partnership entails. Such a person is likely to have been aware that there were fiscal and other benefits to such relationships even if unaware of their details. I am unpersuaded that any ignorance of the WPA calls into question the rational connection between the measure in question and the undisputed legitimate aim or the proportionality of the difference of treatment. In this appeal the majority has referred to the test which the ECtHR applies in social security benefit cases and asked whether the difference in treatment is manifestly without reasonable foundation. I agree that that is the test which should be applied: R (MA) v Secretary of State for Work and Pensions [2016] UKSC 58; [2016] 1 WLR 4550. The majority concludes that the difference in treatment is manifestly disproportionate. I cannot agree. In considering, as did the Grand Chamber in Stec, the circumstances, the subject matter and background, the matters which I have discussed in paras 65-70 above demonstrate that the target of the contributory benefit, which is the WPA, is the Survivor, if she has responsibility for children, and if she has not obtained access to an alternative source of income by marriage, civil partnership or cohabitation, or by means of a retirement pension. The children benefit only indirectly from the WPA which may terminate while the Survivor remains responsible for them. The appellant and the Child Poverty Action Group seek to shift the focus from the Survivor onto the children and argue that the difference in treatment is largely based on the birth status of the children. This is not so: the WPA is the Survivors benefit. It is of note that the ECtHR rejected a similar argument in Shackell (in para 2), in which the applicant had argued that her lack of an entitlement to the WPA discriminated against children because of their illegitimate status. While there may be good policy reasons for a benefit which is directed at bereaved children, as the Child Poverty Group submits and commentators in the press have argued when this appeal was heard, that is not the nature of the WPA. Such questions of social and economic policy fall within the remit of the democratically elected legislature and are beyond the remit of the courts. The references to the international obligations of the United Kingdom in relation to children (para 40 of the majority judgment) lose their force when attention is paid to the characteristics of the WPA. In my opinion there is no disproportionality in treating a cohabitee survivor differently from a surviving spouse or civil partner. The WPA falls clearly within the ambit of A1P1. It falls within the ambit of article 8 only indirectly: by giving the Survivor a pension, to which the Deceased and not she has contributed, it enables her not to work or to work fewer hours than she might otherwise have to. The WPA should not be equated with means-tested benefits which are directed to peoples needs and are not entitlements resulting from contributions. It does not address hardship. If the Survivor is in work, the WPA gives her additional income, albeit subject to taxation. If she is in receipt of means-tested benefits, the payment of the WPA provides only limited extra income. It will be set against her entitlement to such benefits, except for the disregard of 10 to which I referred in para 51 above. The provision of the WPA should be seen in the wider context of the United Kingdom social security system which gives benefits, which, unlike the WPA, are directed at children. Should the children be in need, there are benefits to support them. Thus, if the survivor died, the person who took responsibility for the child would be entitled to child benefit, guardians allowance and, depending on his or her means, child tax credit. The respondent also founds on the difficulty of administering the WPA if the officials charged with its administration had to investigate whether or not the deceased and the survivor had been cohabiting. This, it was suggested, could also involve intrusive questioning of a survivor shortly after a bereavement. By contrast marriage or civil partnership can readily be established by certificates from a public register. Problems in the administration of the WPA may also arise if a parent, who has made the necessary contributions, dies leaving children in the care of more than one former partner. Such difficulty in administration as there may be is a relevant consideration which can be placed in the balance when the court assesses proportionality. But the respondent does not need to rely on this additional consideration as I am satisfied that without it the difference in treatment about which the appellant complains is proportionate and thus objectively justified. Conclusion |
The appellants await trial in the Crown Court at Southwark on three counts of an indictment. Count two charges them with making funds available to Iraq, contrary to articles 3(a) and 11(4) of the Iraq (United Nations Sanctions) Order 2000 and section 1 of the United Nations Act 1946. The particulars of offence allege that the appellants being directors of Mabey & Johnson Ltd, between 1 May 2001 and 1 November 2002, consented to, or connived in, the making of 422,264 available to the government of the Republic of Iraq, or a person resident in the Republic of Iraq, by Mabey & Johnson, without the authority of a licence granted by the Treasury. Mabey & Johnson Ltd were in the business of exporting pre fabricated bridges to developing countries and the essential allegation against the appellants is that they consented to the companys entering into an arrangement which facilitated the Iraqi Governments avoidance of international sanctions by allowing it indirectly to access funds held in a United Nations controlled account. The appellants have pleaded not guilty both to that count and to the other two counts, each of false accounting. The appellants have sought to have count two quashed on the basis that the Iraq (United Nations Sanctions) Order 2000 (SI 2000/3241) was ultra vires section 1 of the United Nations Act 1946. In essence they say that such an Order cannot be made under the 1946 Act unless made at or about the same time as the Security Council Resolution which it is implementing is itself made. This Order was made 10 years after the relevant Resolution. The argument failed before Judge Rivlin QC, the Recorder of Westminster, at a preparatory hearing at Southwark on 18 June 2010 (conducted pursuant to section 7 of the Criminal Justice Act 1987). It failed again on an interlocutory appeal (brought by leave of the Recorder pursuant to section 9(11) of the 1987 Act) to the Court of Appeal (Criminal Division), (Hooper LJ, Owen and Roderick Evans JJ) on 22 October 2010: [2010] EWCA Crim 2437. The Court of Appeal refused leave to appeal but certified two points of law of general public importance: (i) May the power to create criminal offences granted to Her Majesty in Council by section 1 of the United Nations Act 1946 only lawfully be exercised at or about the time of the relevant Security Council Resolution? (ii) If yes, are articles 3(a) and 11(4) of the Iraq (United Nations Sanctions) Order 2000 to the extent to which they create a criminal offence, ultra vires section 1 of the United Nations Act 1946 given that the relevant Security Council Resolution was adopted in 1990? The matter came before this court on 6 December 2010 when, at the outset of the hearing, the appellants were granted permission to appeal; at the conclusion of the hearing the appeal was dismissed for reasons to be given later. These reasons now follow. It is convenient at once to set out the most material parts of the three instruments here calling for particular consideration, beginning with the Security Council Resolution (SCR) referred to in the two certified questions. (1) SCR 661 (1990) (SCR 661) was adopted by the Security Council under Chapter VII of the UN Charter on 6 August 1990 (four days after Iraq invaded Kuwait, an invasion condemned that same day by SCR 660 (1990)). The Council reaffirmed SCR 660; by article 2 they decided to take measures to secure Iraqs compliance with it; by article 3 they imposed an embargo on trade with Iraq and Kuwait; and by article 4 the Council: decides that all states shall not make available to the government of Iraq, or to any commercial, industrial or public utility undertaking in Iraq or Kuwait, any funds or any other financial or economic resources and shall prevent their nationals and any persons within their territories from removing from their territories or otherwise making available to that government or to any such undertaking any such funds or resources and from remitting any other funds to persons or bodies within Iraq or Kuwait, except payments exclusively for strictly medical or humanitarian purposes and, in humanitarian circumstances, foodstuffs. (2) The United Nations Act 1946 (the 1946 Act) provides by section 1(1): If, under article 41 [in Chapter VII] 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. (3) The Iraq (United Nations Sanctions) Order 2000, made on 13 December 2000 and coming into force on 14 December 2000 (the 2000 Order), recites: Whereas under article 41 of the Charter of the United Nations the Security Council of the United Nations have, by a resolution adopted on 6 August 1990, called upon Her Majestys Government in the United Kingdom and all other states to apply certain measures to give effect to a decision of that Council in relation to Iraq: Now, therefore, Her Majesty, in exercise of the powers conferred on Her by section 1 of the United Nations Act 1946, is pleased, by and with the advice of Her Privy Council to order, and it is hereby ordered, as follows. Articles 3 and 11 (the two articles referred to in count 2 and in the second certified question) provide: 3. Any person who, except under the authority of a licence granted by the Treasury under article 5 (a) makes any funds available to the Government of the Republic of Iraq or any person who is resident in the Republic of Iraq, or, (b) otherwise remits or removes any funds from the United Kingdom to a destination in the Republic of Iraq, is guilty of an offence. 11. (1) Any person guilty of an offence under article 3 . shall be liable (a) on conviction on indictment to imprisonment for a term not exceeding seven years, or a fine, or both . (4) Where a body corporate is guilty of an offence under this Order, and that offence is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate or any person who was purporting to act in any such capacity, he, as well as the body corporate, shall be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Essentially the appellants argument comes to this. The 1946 Act was enacted, and the government was thereby permitted to introduce by executive order highly restrictive measures including new criminal offences and sanctions without a parliamentary majority or even parliamentary scrutiny, specifically so as to enable urgent (prompt, hasty, speedy and immediate were other words used by the appellants in the course of argument) action to be taken to implement article 41 UN Resolutions. Urgency alone justifies such wide executive power and the bypassing of the ordinary parliamentary processes and safeguards. The power, therefore, must be construed as subject to there being a need for its immediate exercise and limited, therefore, to its being exercised within a very short time scale. If not exercised at or about the same time as the Resolution being implemented, runs the argument, the power is lost by the effluxion of time. The appellants candidly acknowledge that they can find no example of any other power once given expiring by the effluxion of time (absent, obviously, legislation containing express sunset clauses). They submit, however, that, novel as their argument may be, there is support for it to be found in a number of the speeches made during the parliamentary debates leading to the passage of the 1946 Act and some support too in the judgments of this court in A v HM Treasury [2010] 2 AC 534. Principal amongst the passages from Hansard relied upon are these: (i) Subsection (4) provides that Orders in Council shall be laid forthwith before Parliament, but it excludes the application of a provision in the Rules Publication Act requiring the publication in the London Gazette of notice of the proposal to make the Order in Council for 40 days before the Order is made, it being obvious that the urgency with which decisions of the Security Council must be carried out renders any such notice quite impracticable. (Lord Jowitt LC, introducing the Bill at its second reading in the House of Lords: Hansard (HL Debates), 12 February 1946, col 376. (ii) [The Lord Chancellor] is fortunate in being able to bring forward a Bill to enable this Government to do things by Order in Council which will, I believe, have the complete, unanimous, and enthusiastic support of everybody in this House. If this organisation fails, all fails. If it is to succeed, it must be able to take effective action, and that action must be prompt and immediate. All the world must know that when it takes a decision, all the member states will be prompt and loyal in giving effect to such a decision. For the reasons the noble and learned Lord Chancellor has given, this method of Orders in Council is the only effective way by which we can do that. (Viscount Swinton, supporting the Bill at its second reading: Hansard (HL Debates), 12 February 1946, col 377. (iii) Subsection (4) provides that Orders in Council shall be forthwith laid before Parliament, but it excludes the application of a provision in the Rules Publication Act requiring publication in the London Gazette of notice of the proposal to make the Order in Council for 40 days before the Order is made. It is evident that that must be so, because, if we are to take action at all in pursuance of a decision by the Security Council, it must be taken with the least possible delay. Therefore, any such notice of 40 days would be really out of the question. (Mr Philip Noel Baker, Minister of State, introducing the Bills second reading before the House of Commons: Hansard (HC Debates, 5 April 1946, col 1516. (iv) The procedure by way of Order in Council under this Bill when it becomes an Act possesses the necessary combination of speed and authority to enable instant effect to be given to these international obligations to which we are pledged. (Mr W S Morrison, supporting the Bills second reading in the House of Commons. Hansard (HC Debates, 5 April 1946, col 1517). The terms of these debates, submit the appellants, demonstrate Parliaments clear intention that the powers granted under section 1(1) of the 1946 Act must be used with haste after the passing of the relevant United Nations Resolution requiring implementation. It was for that reason alone, they contend, that Parliament consented to the summary procedure for which the Act provides. The power must therefore be exercised speedily or not at all. As for the recent decision of this court in A v HM Treasury [2010] 2 AC 534, the appellants fix in particular upon passages in the judgments which recognise as had earlier judgments in the House of Lords, most notably in R v Secretary of State for the Home Department, Ex p Pierson [1998] AC 539 and R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115 that a power conferred by Parliament in general terms is not to be taken to authorise the overriding of fundamental human rights or basic legal principles unless unambiguously conferred with that intention. They rely, for example, upon Lord Hopes judgment at p 626, para 47: 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. As, however, the appellants rightly recognise, A was concerned with a very different aspect of the scope of the power under the 1946 Act than is under consideration here. Whereas A was concerned with the proper limits of the content of Orders that can be made under the Act, the present appeal seeks to impose limits upon the time within which the power is properly exercisable. It is not suggested that an Order precisely in the terms of the 2000 Order could not properly have been made at around the time SCR 661 was adopted on 6 August 1990. What is contended is rather that, by 13 December 2000, the 1946 Act had long since ceased to be an available legislative route by which to implement the 1990 Resolution; the appellants argue that the new offences created by the 2000 Order could at that stage only have been introduced by ordinary parliamentary legislation. By the same token that A demonstrates the Order making power under the 1946 Act not to be unrestricted as to content, so too, the appellants submit, this court should now hold it not to be unrestricted as to the time of implementation either. And certainly, if the urgency of the need to give effect to a United Nations Resolution were indeed a precondition of the right to exercise the power, the strength of the appellants case would be obvious: ten years elapsed before the 2000 Order gave effect to (part of) the measures required by article 4 of SCR 661. Is, then, the suggested analogy between the situation facing the court in A and that arising here a true one? In our judgment it is not. The critical feature of the Orders in Council under consideration in A was that they plainly overrode the fundamental rights of those affected. Orders of that kind, the court held, were impermissible: the 1946 Act had neither expressly nor by necessary implication conferred so extreme a power. The essential reason why the court in A was prepared, indeed anxious, to examine the parliamentary material surrounding the passage of the 1946 Act was to make sure that there had in fact been nothing said by those introducing the Bill to suggest that the executive power being conferred was intended to permit fundamental human rights to be overridden. In short, Hansard was being examined to confirm the absence of a clear statement of such intention, the argument there being that a power of the width contended for by the Minister needed to have been conferred unambiguously. In the present case, by contrast, we can see no good reason to look behind the enactment of the 1946 Act, and a real risk of breaching parliamentary privilege if one does. As already stated, it is not suggested here that the 2000 Order overrides anyones fundamental human rights or is otherwise ultra vires the order making power conferred by the 1946 Act (save as to the delay in the Order being made). Obviously it was envisaged that the order making power would ordinarily need to be exercised speedily. But that is a far cry from saying that it was Parliaments clear intention to confine it to urgent use. Had that been the intention, one would have expected it to be clearly provided for in the Act. And inevitably, if it had been, some identifiable limit of time would have been formulated: how otherwise is the Minister, or the court in the event of legal challenge, to determine what precisely is the legal limit of the power? So far from anything of this kind being found in the legislation, it is entirely silent on the question, there being no hint of any such restriction in the language of the section. Indeed, it goes somewhat further even than this: section 1(3) of the 1946 Act provides: Any Order in Council made under this section may be varied or revoked by a subsequent Order in Council. The appellants necessarily, therefore, recognise that some variations may be made to existing Orders by subsequent Orders made perhaps years later. They are thus constrained to argue rather that this power of variation cannot be invoked to create serious criminal offences. Once the initial urgency has passed, they must submit, such offences can only be created through the normal legislative process. Again, however, had Parliament intended to place such limitations upon this power of variation, one would have expected it to say so rather than leave the position entirely uncertain. We have considered the issue thus far purely as one of principle and on the barest of facts, by reference simply to the long passage of time between the United Nations Resolution requiring measures to be taken and the Order giving effect to it. The Crown, indeed, have been anxious that we should do so, concerned no doubt lest otherwise anyone wishing to contest the vires of an apparently delayed 1946 Act Order will be able to require an explanation as to how the delay came about. As will now be apparent, moreover, even on this somewhat blinkered approach, it is our clear conclusion that the appellants argument must fail. We think it right, however, briefly to sketch in something of the broader context in which the 2000 Order in fact came to be made, partly to show that the case is not simply one of inexplicable tardiness on the part of a negligent government (indeed, succession of governments), but in part also to demonstrate that there may be perfectly good reason to act as the government did here which, of course, assuming that is so, makes it yet more unlikely that Parliament on conferring the power had been intent upon tightly circumscribing the time within which it could lawfully be exercised. As already indicated, SCR 661 was adopted on 6 August 1990, four days after Iraq invaded Kuwait. In the meantime, on 4 August, the Treasury had already given directions in exercise of powers conferred by section 2 of the Emergency Laws (Re enactments and Repeals) Act 1964 forbidding (save with Treasury permission) the carrying out of orders by the Government of, or any resident in, Iraq requiring any person to make any payment or to part with any gold or securities or requiring any change to be made in the persons to whose credit any sum is to stand or to whose order any gold or securities are to be held. To an extent, therefore, these directions anticipated the requirements of SCR 661. Shortly afterwards, namely two days after SCR 661 and in substantial implementation of the measures required by it, the Government on 8 August made the Iraq and Kuwait (United Nations Sanctions) Order 1990 (SI 1990/1651) pursuant to the 1946 Act power, imposing restrictions (as the Explanatory Note put it) on the exportation of goods from Iraq and Kuwait and on supply of goods to Iraq and Kuwait as well as certain related activities and dealings, including the carriage of such goods in British ships or aircraft. This Order thus gave effect to the entirety of SCR 661 save just a part of article 4. It was then amended on 29 August to add a new article 4A so as to ban the payment of any bond given in respect of a contract whose performance was prohibited under any other article: article 4 of the Iraq and Kuwait (United Nations Sanctions) (Amendment) Order 1990 (SI 1990/1768). There followed a succession of SCRs dealing with the Iraqi situation as it continued to develop over the next ten years. Putting it very shortly, on 15 August 1991 SCR 706 (1991) authorised the setting up of an oil for food programme, a programme, however, which was then rejected by Iraq on the grounds that it interfered with their sovereignty. On 14 April 1995 SCR 986 (1995) again authorised such a programme and this finally began to operate at the end of 1996. Thereafter the programme was extended on a six monthly basis by further Resolutions, each of which re affirmed the terms of SCR 661. With the passage of time, however, the scale and complexity of the humanitarian programme grew, and oil prices increased, to the point where there was ever greater scope for the manipulation of the programme by the Iraqi government. By September 2000 there were consistent reports of Iraq demanding a surcharge on all oil sales and on the purchase of all humanitarian goods, to be paid directly or indirectly to the Government of Iraq. In December 2000 the United Nations 661 Committee agreed that the payment of all such surcharges was illegal and in breach of the UN sanctions imposed on Iraq. On 5 December 2000 SCR 1330 (2000) was adopted inter alia allow[ing] the Council to take further action with regard to the prohibitions referred to in Resolution 661 . It was in the context of this ever changing diplomatic and international landscape that on 13 December 2000 the 2000 Order came to be made. If this brief history establishes nothing else, it demonstrates surely that Security Council Resolutions are not simply one off measures requiring immediate implementation by member states and then receding into history, and that situations can develop in the course of their subsequent enforcement which call for further measures to be taken, sometimes with considerable urgency, to meet emerging problems. It would be not merely inappropriate as a matter of construction but regrettable as a matter of fact were this court now to stultify the power conferred under the 1946 Act by confining its exercise within an artificially restricted time frame. For the sake of completeness we record that, since the above judgment was written, the appellants have now been convicted on count 2, the sanctions count. We have in the result lifted the anonymity order which was earlier imposed in these proceedings. |
An employer which proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less has an obligation to consult the appropriate representatives, usually a recognised trade union, of any of the employees who may be affected: section 188(1), Trade Union and Labour Relations (Consolidation) Act 1992 (the 1992 Act). The question in this case is whether those employees include people employed on limited term contracts (LTCs) whose contracts will come to an end without renewal during the relevant period. This in turn depends upon two questions, one straightforward and one not so straightforward. The first is whether the expiry and non renewal of an LTC amount to a dismissal for this purpose: it does (see para 15 below). The second is whether such a dismissal is for a reason not related to the individual concerned, which is the statutory definition of a dismissal as redundant in this context: section 195(1), 1992 Act. That is the issue. These proceedings In the year 2009 to 2010, the University of Stirling had a projected deficit of some 4.4m. It proposed, therefore, to make up to 140 of its permanent staff redundant. It notified the Department of Business, Innovation and Skills to this effect. On 15 July 2009, it began collective consultation with the relevant trade unions, including the University and College Union. It also launched a voluntary severance scheme and accepted 134 applications from members of staff to take part. In October 2009, therefore, the University concluded that there was no need for compulsory redundancies and the collective consultation process was concluded. However, the University did not consider that it needed to include in the collective consultation process employees who were employed under LTCs which were to come to an end during the consultation period. The Union, on the other hand, considered that they should have been included and brought complaints that the University had failed to comply with its legal obligations. It was decided that the Employment Tribunal should consider whether such employees were dismissed as redundant by reference to four test cases. Dr Harris was employed as a post doctoral research assistant. Her contract was due to expire on 16 August 2009 and the University resolved not to renew it. Dr Doyle was employed to co ordinate and deliver three undergraduate modules in English Studies in the spring semester of 2009. Her contract was not renewed when the semester ended on 29 May 2009. Ms Fife was employed to provide maternity cover, initially until 2 May 2009, extended until 4 September 2009, and again until 9 October 2009. Between 10 October 2009 and 10 September 2010 she was employed on a casual basis. Ms Kelly was originally employed to provide sick leave cover for one month in July 2007, and then from 1 October 2007 to 31 March 2008. Her employment was then extended until 30 September 2008 and then to 30 September 2009, partly because she was a named researcher on a number of projects and partly to cover for a colleague who was working reduced hours after returning from maternity leave. It is, as the Employment Tribunal found, common practice for this University (and indeed other universities) to obtain external funding for specific research projects. Those funds will allow for the employment of research assistants to work on the particular research project under the supervision of a permanent member of the academic staff. It is common for the researchers contract of employment to be limited either in time or by the specific task to be carried out. When that happens the researcher will not be re employed unless funding for the project has been extended or funding is obtained for a new project for which he or she is suitable. Some researchers therefore move from institution to institution, according to the research projects which become available. This is considered beneficial to their own career development as well as to the institutions involved. The Employment Tribunal held that Dr Harris, Dr Doyle and Ms Kelly had all been dismissed as redundant for the purpose of the consultation requirement; it was not satisfied that Ms Fife had been dismissed at all. The Employment Appeal Tribunal held that all four of the test case employees had been dismissed, but that none of them had been dismissed as redundant: [2012] ICR 803. The Inner House agreed with the Employment Appeal Tribunal: [2014] CSIH 5, 2014 SLT 352. The Union appeals to this court. The law The provisions with which we are concerned were first enacted in Part IV of the Employment Protection Act 1975 (the 1975 Act). This was designed to implement in UK law the requirements of European Union law contained in Council Directive 75/129/EEC on the approximation of the laws of the member states relating to collective redundancies. Part IV of the 1975 Act was consolidated as Part IV, Chapter II, of the 1992 Act. In its turn, Council Directive 75/129/EEC was consolidated in Council Directive 98/59/EC of the same name (the Directive). For the purpose of the Directive collective redundancies means dismissals effected by an employer for one or more reasons not related to the individual workers concerned (article 1.1(a)). This definition was also contained in the earlier Directive. However, the Directive does not apply to collective redundancies effected under contracts of employment concluded for limited periods of time or for specific tasks except where such redundancies take place prior to the date of expiry or the completion of such contracts (article 1.2(a)). Thus, the United Kingdom does not have to include workers employed under such LTCs in its provision for consultation about collective redundancies, and in fact, with effect from 6 April 2013, they have been excluded. But that was after these proceedings were begun. Before then, UK law gave such workers greater protection than is required by EU law (see the Opinion of Advocate General Wahl in Andrs Rabal Caas v Nexea Gestin Documental SA, Fondo de Garanta Salarial (Case C 392/13), 5 February 2015, paras 72 75). The evolution of the relevant UK law, as contained in the Trade Union and Labour Relations (Consolidation) Act 1992, is relevant. The duty to consult is contained in section 188(1) (formerly section 99(1) of the 1975 Act). As originally enacted, this required an employer who proposed to dismiss as redundant a single employee to consult the recognised trade union. This obligation did not apply to employment under a contract for a fixed term of three months or less or for a specific task which was not expected to last for more than three months where the employee had not been continuously employed for more than three months (section 282(1)); but it did apply to anyone else employed under a contract limited to a term or a task whom the employer proposed to dismiss as redundant. The definition of being redundant, in section 195(1) of the 1992 Act (and formerly in section 126(6) of the 1975 Act), originally adopted the classic definition which dates back to the Redundancy Payments Act 1965, and survives to this day in the definition of redundancy for the purpose of the right to a redundancy payment, in section 139(1) of the Employment Rights Act 1996. That is, references to being redundant were references to (a) the fact that the employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee is or was employed by him, or has ceased, or intends to cease, to carry on that business in the place where the employee is or was so employed; or (b) the fact that the requirements of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where he is or was so employed, have ceased or diminished or are expected to cease or diminish. In Association of University Teachers v University of Newcastle upon Tyne [1987] ICR 317, the Employment Appeal Tribunal held that this definition covered the lack of further funding for the post of a lecturer employed under an LTC and so the consultation duty should have been observed when the contract was not renewed. The same reasoning would probably apply to the contracts of employees such as Dr Harris, whose research project came to an end, and Dr Doyle, whose undergraduate course came to an end. There might be more room for argument where the need for the work remained the same but there was no longer a need to replace the employee who normally did it. No doubt the United Kingdom thought that this definition would be adequate to cover the same ground as the definition in the Directive. However, the Commission of the European Communities brought enforcement action against the UK on the ground that it was not wide enough. In particular, it did not cover cases where workers have been dismissed as a result of new working arrangements within an undertaking unconnected with its volume of business: Commission of the European Communities v United Kingdom (Case C 383/92), [1994] ECR I 2479, para. 32; [1994] ICR 664 at 724. The UK conceded that this was so even before the case got to court. The definition in section 195 (but not elsewhere in the law) was amended in August 1993, to take its present form: (1) In this Chapter references to dismissal as redundant are references to dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related. (2) For the purposes of any proceedings under this Chapter, where an employee is or is proposed to be dismissed it shall be presumed, unless the contrary is proved, that he is or is proposed to be dismissed as redundant. (Emphasis supplied) On 26 October 1995, the consultation duty in section 188(1) was amended so that the duty now only arises where the employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less (the option which is provided for in article 1.1(a)(ii) of the Directive). Finally, on 6 April 2013, section 282 was amended so as to exclude, inter alia, employment under an LTC unless the dismissal takes place before the expiry of the term or the completion of the task. Thus both elements of gold plating provided in UK law have now come to an end. As we are dealing with a definition which is for the particular purpose of the duty to consult about proposed collective redundancies, the statutory purpose and content of that duty are of some relevance. Under section 188(2), the consultation has to include consultation about ways of avoiding the dismissals, reducing the numbers of employees to be dismissed, and mitigating the consequences of the dismissals. Under section 188(4), the employer has to disclose the reasons for his proposals, the numbers and description of employees whom it is proposed to dismiss as redundant, the total number of employees of any such description employed by the employer at the establishment in question, the proposed method of selecting the employees who may be dismissed, the proposed method of carrying out the dismissals, and the proposed method of calculating any redundancy payments to be made. For completeness, if an employer fails to comply with section 188(1), the trade union may present a complaint to an Employment Tribunal (section 189(1)). If the tribunal finds the complaint well founded it must make a declaration to that effect and also has power to make a protective award (section 189(2)). This is an award of remuneration for the protected period to those employees who have been dismissed as redundant, in respect of whose dismissal or proposed dismissal the employer failed to comply with section 188 (section 189(3)). The protected period is also within the discretion of the tribunal but cannot be for more than 90 days (section 189(4)). The employer also has a duty to give advance notice of proposed collective redundancies to the Secretary of State (section 193) and failure to do so is a criminal offence (section 194). Finally, by virtue of section 298 of the 1992 Act, dismiss and dismissal are to be construed in accordance with Part X of the Employment Rights Act 1996. Section 95(1)(b) of that Act provides that an employee is dismissed if he is employed under a limited term contract and that contract terminates by virtue of the limiting event without being renewed under the same contract. It is common ground, therefore, that these employees were dismissed. The only question is whether they were dismissed as redundant within the meaning of section 195(1) of the 1992 Act. This in turn depends upon whether the reasons for the dismissal were not related to the individual concerned. Discussion The Employment Tribunal held that the required relationship between the individual and the reason for dismissal must be a close and direct one with a reason personal to the individual, such as the employees conduct or capability, rather than the employees job or the employers need to have work done being identified (para 51). The Employment Appeal Tribunal, on the other hand, held that A reason relates to the individual if it is something to do with him such as something he is or something he has done. It is to be distinguished from a reason relating to the employer, such as his (or in the case of insolvency, his creditors) need to effect business change in some respect (para 73). In these cases, at least one of the reasons for all four dismissals was that the employee had agreed to [an LTC], accepting that it would come to an end at a particular date or on the occurrence of a particular event. This was a reason relating to the individuals concerned (para 74). The Inner House agreed: the reason for the dismissal was the fact that the employee had entered into an LTC. That was a reason related to the employee (para 72). Mr Caspar Glyn QC, for the Union, understandably complains that that is not how the University had first put its case before the Employment Tribunal. It had explained that the contracts had come to an end because the funding for a post had ended, or a project had been completed, or another employee had returned from maternity leave or a fixed term contract had expired. It had argued that fixed term contracts were, as a class, excluded from the consultation requirement. But their witness, Professor Simpson, had stated that the fact that a person had entered into a fixed term contract would be a consideration in deciding not to renew their employment. Only before the Employment Appeal Tribunal did the Universitys position become that at least one of the Universitys reasons in each of the test cases was that the employee had agreed to accept that his or her contract would come to an end at a particular time or on the occurrence of a particular event. This was a question of fact and the Employment Appeal Tribunals jurisdiction is confined to questions of law. However, the more serious complaint about the approach of both the Employment Appeal Tribunal and the Inner House is that it is difficult to imagine that any employer, when considering whether to offer another contract to an employee whose LTC has just come to an end, does not have in mind the very reason why that decision falls to be made, namely that the employee had agreed to an LTC in the first place. The reality is that this approach would exclude all LTCs from the scope of the duty. The Inner House was particularly clear about this, when saying that the reason for the dismissal was the fact that the employee had entered into an LTC. This cannot be right, for two reasons: first, if Parliament had intended to exclude all LTCs, as it was entitled to do, it would have said so; and second, by expressly excluding some, and now (almost) all, of them, Parliament must have accepted that, without the exclusion, at least some LTCs would fall within the scope of the duty. However, it is easier to say what is wrong with the approach of the Employment Appeal Tribunal and the Inner House than it is to discern the true meaning of the phrase. Mr Glyn argues that many, if not all, non renewals of LTCs would have fallen within the original definition of a redundancy. When changing the definition in 1993, Parliament was intending to broaden the scope of the protection offered by the 1992 Act. It cannot have been intended that, in relation to LTCs, it should have been narrowed almost to extinction. However, as the Employment Appeal Tribunal pointed out, not all failures to renew an LTC automatically fell within the former definition of a redundancy: it would depend upon the circumstances. Moreover, Parliament was changing the definition in response to how the Commission and the Court of Justice considered that the Directive should apply to employees generally. They will not have had its application to LTCs in mind, as these do not fall within the scope of the Directive at all. The question for us is how those words for a reason relating to the individual apply to an LTC. It is, however, important to bear in mind that Parliament will certainly not have intended to narrow the scope of the consultation duty from the classic redundancy situations covered under the earlier law: the cessation or reduction in business. Furthermore, it intended to add to those situations the reorganisation of the business: classically, where employees are dismissed and offered new contracts so that their terms and conditions of employment can be changed. This lends powerful support to Mr Glyns contention that the terms and conditions of the employees contracts of employment cannot be a reason related to the individual, because if they were, such business rearrangements, although the very reason why the definition was changed, would not be covered. The context and content of the duty to consult all suggest that it is concerned with the needs of the business or undertaking as a whole. The employer has to explain why he wishes to make a substantial number of employees redundant, which descriptions of employee he proposes to make redundant, and how he proposes to choose among the employees within those descriptions. Employees on LTCs might be a description of employees for this purpose, and being on an LTC might be a criterion for selecting for dismissal, but it is a collective description rather than a reason relating to the individual concerned. Where an LTC comes to an end, the dismissal in question is the non renewal of the LTC or rather the failure to offer a new contract, the LTC having come to an end. The fact that it was an LTC, or even that the employee agreed to it, cannot by itself be a reason for the non renewal. Many LTCs are in fact renewed or new contracts offered. The question is whether the reasons for the failure to offer a new contract relate to the individual or to the needs of the business. Sometimes, no doubt, it will relate to the individual. The employer may still need to have the work done, but for one reason or another considers that this employee is not suitable to do it. That would not be a dismissal for redundancy. But the ending of a research project or the ending of a particular undergraduate course would not be a reason related to the individual employee but a reason related to the employers business. The business no longer has a need for someone to do the research or someone to teach the course. The same would usually be true of the ending of maternity or sickness cover. The need for the job would not have ended but the need for the job to be done by someone other than the person who usually does it would have ended. That too is not a reason related to the individual employee but a reason related to the employers business. In short, the Employment Appeal Tribunal stated an admirable test: A reason relates to the individual if it is something to do with him such as something he is or something he has done. It is to be distinguished from a reason relating to the employer, such as his (or in the case of insolvency, his creditors) need to effect business change in some respect. The error was to place the coming to an end of an LTC into the first rather than the second category. I would allow this appeal and remit the case to the Employment Tribunal for consideration of the remaining issues. |
Payment Protection Insurance (or PPI) is sold to borrowers to cover the repayment of specified borrowings upon the occurrence of an insured event, generally sickness, accidental injury, or unemployment. In its report, Market Investigation into Payment Protection Insurance (29 January 2009), the Competition Commission recorded that PPI was commonly sold as part of a package with the loan itself, and in those cases usually provided for a single premium to be paid upfront at the time of the transaction and added to the amount borrowed. Commissions payable to intermediaries were high, typically between 50 and 80 per cent of gross written premium for policies sold in connection with a personal loan. These levels of commission were much higher than those payable for introducing the loan itself, which meant that a large proportion of the profits of loan brokers was derived from selling PPI policies. The Commission found that the market for PPI sold as a package with loans was characterised by limited competition and low levels of substitutability, and that these factors resulted in high premiums relative to what would be expected in a well functioning market. They made a number of recommendations, including a prohibition of selling PPI in a package with the loan and a prohibition on single premium policies. These recommendations have since been adopted. Sections 140A to 140D of the Consumer Credit Act 1974 confer wide powers on the court to reopen unfair credit transactions. This appeal is about the application of those provisions to a PPI policy issued in 2006 to Mrs Susan Plevin. 3. Mrs Plevin was then a widowed college lecturer of fifty nine living in her own house, with a mortgage and various unsecured personal debts. She responded to an unsolicited leaflet put through her letter box by an independent credit broker called LLP Processing (UK) Ltd, which has since gone into liquidation. They offered to arrange the refinancing of her existing liabilities at a competitive rate of interest over a long term, secured on her home. She telephoned LLP and told them that she was interested in borrowing money to pay off her existing debts and fund some home improvements. During the call, LLP completed an internal form called a Demands and Needs Statement on the basis of information provided by her. They then proposed that she should borrow 34,000 from Paragon Personal Finance Ltd, repayable in instalments over ten years, and take out PPI for five years with Norwich Union. The PPI premium was 5,780, which was payable at the outset and added to the amount of the loan making a total borrowing of 39,780. Paragon was one of eleven lenders with whom LLP had arrangements to introduce clients. These arrangements allowed them to input details of the proposed loan into a Paragon computer system and obtain a preliminary indication of whether the transaction was likely to be acceptable. Each lender had an arrangement with a designated insurer who underwrote PPI policies associated with its loans. Norwich Union was the insurer designated by Paragon. 5. 4. After the telephone conversation, LLP sent Mrs Plevin a letter recording their proposal, and quoting a premium for PPI cover at 5,780. It enclosed a Key Facts document describing the insurance cover, a Borrower Information Guide produced by the Finance Industry Standards Association (FISA) and an application form. The application form, which Mrs Plevin completed and dated 6 March 2006, recorded brief details of her income and outgoings, including her current mortgage, and that she wished to borrow 34,000 and buy a PPI policy. The form was returned to LLP. Subsequently, she was telephoned by an employee of Paragon. This call was made in accordance with a standard internal procedure and was known as a speak with. It resulted in the generation within Paragon of a computerised form headed Money Laundering Details. The body of the form confirms what the title would lead one to expect, namely that it is concerned with satisfying Paragons obligations under the money laundering legislation and regulations. It established Mrs Plevins identity, that she had applied for the loan in the amount stated in the application form, the purpose for which she required it and the amount and date of the first payment. It also confirmed that no upfront application fee had been charged by LLP, which would have been contrary to the FISA code of practice. The speak with was not intended to appraise the suitability of the transaction for Mrs Plevins purposes. On 21 March 2006, Paragon sent her a copy of the credit agreement, the PPI certificate and four cheques, three of which were payable to her designated creditors and the fourth to her personally. These were the only instances of direct contact between Mrs Plevin and Paragon. 6. Of the 5,780 premium, 71.8% was taken in commissions from the premium before it was remitted by Paragon to Norwich Union. LLP received 1,870 and Paragon retained 2,280. The net sum of 1,630 was then remitted by Paragon to Norwich Union. The FISA borrowers guide told Mrs Plevin that commission is paid by the lending company. But neither the amount of the commission nor the identity of the recipients was disclosed. Sections 140A to 140C: General considerations 7. These provisions were added to the Consumer Credit Act 1974 by sections 19 22 of the Consumer Credit Act 2006. They replaced provisions which had conferred a limited power to reopen extortionate credit bargains (sections 137 140 of the 1974 Act) but set too high a bar to debtors and sureties wishing to challenge the terms of their agreements. The new provisions came into force on 6 April 2007, after the agreement with Mrs Plevin was made, but they apply by virtue of the transitional provisions of Schedule 3 of the Act. Section 140A provides, so far as relevant, as follows: 8. 140A Unfair relationships between creditors and debtors (1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following (a) any of the terms of the agreement or of any related agreement; (b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement; (c) any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement). (2) In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor). (3) For the purposes of this section the court shall (except to the extent that it is not appropriate to do so) treat anything done (or not done) by, or on behalf of, or in relation to, an associate 9. or a former associate of the creditor as if done (or not done) by, or on behalf of, or in relation to, the creditor. Section 140B(9) provides that where the debtor (or a surety) alleges that the relationship is unfair, it is for the creditor to prove that it is not. Section 140B lists the orders which a court may make if it finds the debtor creditor relationship to be unfair including, under subsection (1)(a) an order requiring the creditor to repay (in whole or in part) any sum paid by the debtor . by virtue of the agreement or any related agreement. 10. Section 140A is deliberately framed in wide terms with very little in the way of guidance about the criteria for its application, such as is to be found in other provisions of the Act conferring discretionary powers on the courts. It is not possible to state a precise or universal test for its application, which must depend on the courts judgment of all the relevant facts. Some general points may, however, be made. First, what must be unfair is the relationship between the debtor and the creditor. In a case like the present one, where the terms themselves are not intrinsically unfair, this will often be because the relationship is so one sided as substantially to limit the debtors ability to choose. Secondly, although the court is concerned with hardship to the debtor, subsection 140A(2) envisages that matters relating to the creditor or the debtor may also be relevant. There may be features of the transaction which operate harshly against the debtor but it does not necessarily follow that the relationship is unfair. These features may be required in order to protect what the court regards as a legitimate interest of the creditor. Thirdly, the alleged unfairness must arise from one of the three categories of cause listed at sub paras (a) to (c). Fourthly, the great majority of relationships between commercial lenders and private borrowers are probably characterised by large differences of financial knowledge and expertise. It is an inherently unequal relationship. But it cannot have been Parliaments intention that the generality of such relationships should be liable to be reopened for that reason alone. The proceedings 11. In January 2009, Mrs Plevin brought proceedings against LLP and Paragon. As against LLP, she claimed damages or equitable compensation on the basis that they were in breach of their duties as her fiduciary agents. Nothing more needs to be said about that. The claim against LLP was settled in 2010 for 3,000, which was ultimately paid from the Financial Services Compensation Scheme. As against Paragon, the pleaded case was described by Recorder Yip QC as grossly over complicated (para 11), but the issues were narrowed in the course of the trial and some of them fell away in the light of the Recorders findings of fact. The main point taken on Mrs Plevins behalf, and the only one still in issue, is that so far as it related to the PPI policy Mrs Plevins relationship with Paragon was unfair within the meaning of section 140A(1)(c) of the Consumer Credit Act, because of something done (or not done) by, or on behalf of, the creditor. The unfairness was said to arise from (i) the non disclosure of the amount of the commissions, (ii) the failure of any of those involved to assess and advise upon the suitability of the PPI for her needs, given that it covered only half the term of the loan, that she had no dependents, that she already had life insurance and that her terms of employment included generous sickness and redundancy benefits. So far as these two matters represented defaults on the part of LLP, Mrs Plevins case was that LLP committed the defaults on behalf of Paragon. The regulatory framework 12. The sale and administration of general insurance and non investment life business is now a heavily regulated field. The conduct of insurance intermediaries is governed by a statutory scheme which implements the Directive 2002/92/EC on Insurance Mediation. The relevant parts of the scheme were at the time of this transaction contained in the Insurance Conduct of Business Rules (ICOB) made by the Financial Services Authority under powers conferred by the Financial Services and Markets Act 2000. These rules created duties owed directly by the provider of the service to the insured, actionable under what was then section 150 of the Act. I shall refer to them in the form in which they stood at the time of Mrs Plevins transaction. 13. For the purpose of the rules an insurance intermediary means any natural or legal person who, for remuneration, takes up or pursues insurance mediation. Insurance mediation includes the activities of introducing, proposing or carrying out other work preparatory to the conclusion of contracts of insurance, or of concluding such contracts (article 2 of the Directive). In this case, both LLP and Paragon acted as insurance intermediaries, LLP because it proposed the PPI policy to Mrs Plevin and carried out work preparatory to its conclusion, and Paragon because it arranged the contract with Norwich Union pursuant to its existing arrangements with them. However, the rules do not necessarily apply to all insurance intermediaries involved in a particular transaction. ICOB 1.2.3(2) provides: Where there is a chain of insurance intermediaries between the insurer and the customer, ICOB applies only to the insurance intermediary in contact with the customer. The question who is in contact with the customer may admit of more than one answer, depending on what the relevant ICOB obligation is and who performed the corresponding function. For most purposes, the intermediary in contact with Mrs Plevin in this case was LLP. The only direct contact that she had with Paragon before the contract was concluded consisted in the speak with. 15. Non disclosure of the commission arrangements 14. Article 12 of the Insurance Mediation Directive requires the disclosure by an insurance intermediary of certain minimum categories of information, which do not include commissions. The disclosure requirements under the ICOB rules are more extensive. ICOB 4.6.1 requires the disclosure by an insurance intermediary which is not itself an insurer of commissions receivable by it or its associates, but only to commercial customers and then only if the customer asks for the information. The ICOB rules do not require an insurance intermediary to volunteer the amount or even the existence of commissions, or to disclose this information even on request to a non commercial customer. The only disclosure obligations owed to non commercial customers are those arising under the general law. ICOB 4.6.2 points out that where the insurance intermediary is the agent of the insured, he may have an obligation under the general law to tell a customer of whatever description about commissions if asked, but it imposes no corresponding statutory obligation. It is clear that the absence of a statutory obligation to disclose commissions to a non commercial customer resulted from a considered policy of the Financial Services Authority. The Authoritys Consultation Paper No 160, published in December 2002, at para 11.7 gave two reasons why it thought that commission disclosure may not be necessary. The first was that the purchase of insurance was different from the purchase of investments, because when the customer is laying out money for investment he needs to know how much of his money is being invested, whereas when he is buying an insurance contract he knows what he is getting because the premium and the cover are disclosed. In effect, the Authority was saying that commissions in an insurance transaction are simply a marketing cost of the supplier, like the cost of advertising or employing a sales force, and are no more relevant than any other part of its costs. The Authoritys second reason was that customers tend to shop around for insurance and can compare policies and spot poor value products. Where (as in this case) insurance was sold as part of a package with other services, the scope for shopping around is diminished, but consumers would be sufficiently protected by requiring the premium to be separately disclosed. It added that commissions were not always straightforward to calculate, especially when there was a number of intermediaries involved, and that their disclosure might cause confusion or information overload. In its Consultation Paper No 187 (June 2003) reporting on the outcome of the consultation, the Authority maintained its position. 16. The current leading case on the relationship between section 140A and the ICOB rules is the decision of the Court of Appeal in Harrison v Black Horse Ltd [2012] Lloyds Rep IR 521. The Court of Appeal considered an application by a borrower under section 140A to recover the single premium paid on a PPI policy sold with a loan. There was no credit broker involved. The borrower dealt directly with the lender, who acted as an intermediary with the insurer. The commission taken by the lender was 87%. Tomlinson LJ, delivering the only reasoned judgment, described this level of commission as quite startling, adding that there would be many who would regard it as unacceptable conduct on the part of lending institutions to have profited in this way. But he declined to find that the relationship was thereby rendered unfair, because the lender had committed no breach of the ICOB rules either in charging the commission or in failing to disclose it. At para 58, he said: the touchstone must in my view be the standard imposed by the regulatory authorities pursuant to their statutory duties, not resort to a visceral instinct that the relevant conduct is beyond the Pale, In that regard it is clear that the ICOB regime, after due consultation and consideration, does not require the disclosure of the receipt of commission. It would be an anomalous result if a lender was obliged to disclose receipt of a commission in order to escape a finding of unfairness under section 140A of the Act but yet not obliged to disclose it pursuant to the statutorily imposed regulatory framework under which it operates. The result of this decision was that in the present case both the Recorder and the Court of Appeal were bound to dismiss Mrs Plevins claim so far as it was based on non disclosure of the commission. The Court of Appeal expressed dismay at this outcome. In my opinion, the dismay was justified. I think that Harrison was wrongly decided. 17. The view which a court takes of the fairness or unfairness of a debtor creditor relationship may legitimately be influenced by the standard of commercial conduct reasonably to be expected of the creditor. The ICOB rules are some evidence of what that standard is. But they cannot be determinative of the question posed by section 140A, because they are doing different things. The fundamental difference is that the ICOB rules impose obligations on insurers 18. and insurance intermediaries. Section 140A, by comparison, does not impose any obligation and is not concerned with the question whether the creditor or anyone else is in breach of a duty. It is concerned with the question whether the creditors relationship with the debtor was unfair. It may be unfair for a variety of reasons, which do not have to involve a breach of duty. There are other differences, which flow from this. The ICOB rules impose a minimum standard of conduct applicable in a wide range of situations, enforceable by action and sounding in damages. Section 140A introduces a broader test of fairness applied to the particular debtor creditor relationship, which may lead to the transaction being reopened as a matter of judicial discretion. The standard of conduct required of practitioners by the ICOB rules is laid down in advance by the Financial Services Authority (now the Financial Conduct Authority), whereas the standard of fairness in a debtor creditor relationship is a matter for the court, on which it must make its own assessment. Most of the ICOB rules, including those relating to the disclosure of commission, impose hard edged requirements, whereas the question of fairness involves a large element of forensic judgment. It follows that the question whether the debtor creditor relationship is fair cannot be the same as the question whether the creditor has complied with the ICOB rules, and the facts which may be relevant to answer it are manifestly different. An altogether wider range of considerations may be relevant to the fairness of the relationship, most of which would not be relevant to the application of the rules. They include the characteristics of the borrower, her sophistication or vulnerability, the facts which she could reasonably be expected to know or assume, the range of choices available to her, and the degree to which the creditor was or should have been aware of these matters. I turn therefore to the question whether the non disclosure of the commissions payable out of Mrs Plevins PPI premium made her relationship with Paragon unfair. In my opinion, it did. A sufficiently extreme inequality of knowledge and understanding is a classic source of unfairness in any relationship between a creditor and a non commercial debtor. It is a question of degree. Mrs Plevin must be taken to have known that some commission would be payable to intermediaries out of the premium before it reached the insurer. The fact was stated in the FISA borrowers guide and, given that she was not paying LLP for their services, there was no other way that they could have been remunerated. But at some point commissions may become so large that the relationship cannot be regarded as fair if the customer is kept in ignorance. At what point is difficult to say, but wherever the tipping point may lie the commissions paid in this case are a long way beyond it. Mrs Plevins evidence, as recorded by the Recorder, was that if she had known that 71.8% of the premium would be paid out in commissions, she would have certainly questioned this. I do not find that evidence surprising. The information was of critical relevance. Of course, had she shopped around, she would not necessarily have got better terms. As the Competition Commissions report suggests, this was not a competitive market. But Mrs Plevin did not have to take PPI at all. Any reasonable person in her position who was told that more than two thirds of the premium was going to intermediaries, would be bound to question whether the insurance represented value for money, and whether it was a sensible transaction to enter into. The fact that she was left in ignorance in my opinion made the relationship unfair. 19. The next question is whether that state of affairs arose from something done or not done by or on behalf of Paragon. For this purpose it is enough to consider the acts or omissions of Paragon itself, without exploring the conduct of others acting on its behalf. Paragon owed no legal duty to Mrs Plevin under the ICOB rules to disclose the commissions and, not being her agent or adviser, they owed no such duty under the general law either. However, as I have already pointed out, the question which arises under section 140A(1)(c) is not whether there was a legal duty to disclose the commissions. It is whether the unfairness arising from their non disclosure was due to something done or not done by Paragon. Where the creditor has done a positive act which makes the relationship unfair, this gives rise to no particular conceptual difficulty. But the concept of causing a relationship to be unfair by not doing something is more problematical. It necessarily implies that the Act treats the creditor as being responsible for the unfairness which results from his inaction, even if that responsibility falls short of a legal duty. What is it that engages that responsibility? Bearing in mind the breadth of section 140A and the incidence of the burden of proof according to section 140B(9), the creditor must normally be regarded as responsible for an omission making his relationship with the debtor unfair if he fails to take such steps as (i) it would be reasonable to expect the creditor or someone acting on his behalf to take in the interests of fairness, and (ii) would have removed the source of that unfairness or mitigated its consequences so that the relationship as a whole can no longer be regarded as unfair. 20. On that footing, I think it clear that the unfairness which arose from the non disclosure of the amount of the commissions was the responsibility of Paragon. Paragon were the only party who must necessarily have known the size of both commissions. They could have disclosed them to Mrs Plevin. Given its significance for her decision, I consider that in the interests of fairness it would have been reasonable to expect them to do so. Had they done so this particular source of unfairness would have been removed because Mrs Plevin would then have been able to make a properly informed judgment about the value of the PPI policy. This is sufficiently demonstrated by her evidence that she would have questioned the commissions if she had known about them, even if the evidence does not establish what decision she would ultimately have made. Failure to assess the suitability of PPI for Mrs Plevins needs 21. ICOB 4.3.1 provides: Requirements for suitability (1) An insurance intermediary must take reasonable steps to ensure that, if in the course of insurance mediation activities it makes any personal recommendation to a customer to buy or sell a non investment insurance contract, the personal recommendation is suitable for the customer's demands and needs at the time the personal recommendation is made. (2) The personal recommendation in (1) must be based on the scope of the service disclosed in accordance with ICOB 4.2.8 R(6). (3) An insurance intermediary may make a personal recommendation of a non investment insurance contract that does not meet all of the customer's demands and needs, provided that: there is no non investment insurance contract within the insurance intermediary's scope, as determined by ICOB 4.2.8 R(6), that meets all of the customer's demands and needs; and the insurance intermediary identifies to the customer, at the point at which the personal recommendation is made, the demands and needs that are not met by the contract that it personally recommends. 22. ICOB 4.3.2 provides: Information about the customers demands and needs In assessing the customer's demands and needs, the insurance intermediary must: (1) seek such information about the customer's circumstances and objectives as might reasonably be expected to be relevant in enabling the insurance intermediary to identify the customer's requirements. This must include any facts that would affect the type of insurance recommended, such as any relevant existing insurance; (2) have regard to any relevant details about the customer that are readily available and accessible to the insurance intermediary, for example, in respect of other contracts of insurance on which the insurance intermediary has provided advice or information; and (3) explain to the customer his duty to disclose all circumstances material to the insurance and the consequences of any failure to make such a disclosure, both before the non investment insurance contract commences and throughout the duration of the contract; and take account of the information that the customer discloses. 23. The obligation under ICOB 4.3.1 and 4.3.2 arises where a personal recommendation to buy an insurance contract is made by an insurance intermediary. For that purpose, the relevant intermediary in Mrs Plevins case was LLP, which was the only party that made a personal recommendation to her. Moreover, LLP was the only intermediary in the chain in contact with her for this purpose. It follows that ICOB 4.3.1 applied in this transaction only to LLP. It did not apply to Paragon. Nor did Paragon owe any other legal duty to assess Mrs Plevins needs and advise her on the suitability of PPI for her. 24. The Recorder thought that that was the end of the matter and dismissed this part of Mrs Plevins claim along with the rest of it. I think that that was an error. Two further questions arose. The first was whether it was reasonable in the interests of fairness to expect Paragon to assess Mrs Plevins needs themselves, notwithstanding the absence of any legal obligation to do so. Neither the Recorder nor the Court of Appeal addressed that question because they were bound by Harrison to treat the absence of a regulatory duty as conclusive. The second question, which arose whether or not Harrison was rightly decided, was whether in the relevant respects LLP, who undoubtedly did have a regulatory duty to assess Mrs Plevins needs, were acting on behalf of Paragon for the purpose of section 140A(1)(c). 25. I approach both questions on the footing that beyond a point, inequality of financial expertise as between the debtor and the creditor is capable of making their relationship unfair. The provision to a financially unsophisticated debtor of bad advice or no advice about the suitability of a relatively complex product like PPI will commonly result in a one sided relationship substantially limiting the debtors ability to choose. I shall assume for present purposes that that was true of Mrs Plevins case, although the Recorder made no findings of fact about it. 26. Even on that assumption, however, I consider that Paragon could not reasonably have been expected in the interests of fairness to conduct their own needs assessment and give Mrs Plevin advice about it. Although the absence of a regulatory duty is not conclusive, in this particular context it is highly relevant. In relation to the disclosure of commissions, the ICOB rules impose no duty on any one. By comparison it does impose a duty to assess and advise upon the suitability of the product, but assigns that duty to LLP as the party dealing directly with the customer. I do not think that Paragon could reasonably have been expected to perform a function which the relevant statutory code of regulation expressly assigned to someone else. 27. The real question is therefore the second one, namely whether the acts or omissions of LLP were done (or not done) on behalf of Paragon. The Court of Appeal [2014] Bus LR 553 considered that they were. Briggs LJ, in a judgment with which Moses and Beatson LJJ agreed, accepted an argument advanced on behalf of Mrs Plevin which he summarised as follows: 48. For Mrs Plevin, Mr. Strachan submitted that the phrase on behalf of was designed to bring within the purview of the court's consideration any relevant act or omission by a person who, in a non technical sense, would be viewed by the man on the Clapham omnibus as having played some part in the bringing about of the credit agreement for the creditor. Thus it typically applied to any intermediary paid a commission for introducing the customer to the creditor, or (which may be the same thing) procuring the business represented by the credit agreement (and any related agreement) for the creditor. Thus it applied to the acts and omissions of any intermediary, whether acting as agent for the creditor or as a mere broker without an agency relationship with either party to the credit agreement, at least where the broker received commission from (or via) the creditor. 49. Put shortly, the difference between the rival submissions is that Mr Elliott submitted that on behalf of is designed only to capture conduct (including omissions) for which the creditor can be said to bear or share some responsibility, whereas Mr Strachan submits that it captures all conduct beneficial to the creditor, in the sense that it played some material part in the bringing about of the transaction giving rise to the allegedly unfair relationship. Proof that the person whose conduct is prayed in aid received a commission from, or via, the creditor brings on board the whole of that person's conduct, within section 140A(1)(c) 28. Briggs LJs reason for preferring Mr Strachans argument was, in summary, that any limitation of section 140A(1)(c) to acts or omissions for which the creditor was personally or vicariously responsible would imply that the subsection extended only to breaches of duty under the ICOB rules or the general law. Since the creditor would be legally liable for those anyway, even without section 140A, Mr Elliotts argument would give section 140A very little additional effect. Briggs LJ considered that unfairness did not have to arise from a breach of duty. He therefore rejected what he called the narrower view of the words by or behalf of the creditor advanced on behalf of Paragon. I am afraid that I do not understand this. What limited section 140A(1)(c) to cases of breach of duty was not Mr Elliotts argument, but the decision of the Court of Appeal in Harrison that the ICOB rules were the touchstone of unfairness. It will be apparent from what I have already said that I agree with Briggs LJ that unfairness in section 140A does not have to involve a breach of duty. But I do not follow why it should be thought inconsistent with that to limit section 140A(1)(c) to cases where the relevant act or omission engages the responsibility of the creditor. If the section is limited in that way, the creditor is still responsible for acts or omissions making the relationship unfair, whether or not it is also a breach of duty. envisage a relationship between the creditor and the person whose acts or omissions have made the relationship unfair. If it had been intended to extend the sub paragraph to any conduct beneficial to the creditor or contributing to bringing about the transaction, irrespective of that persons relationship with the creditor, it would have been easy enough to say so, and very strange to use the language which the legislator actually employed. In their ordinary and natural meaning the words on behalf of import agency, which is how the courts have ordinarily construed them: see Gaspet Ltd v Elliss (Inspector of Taxes) [1985] 1 WLR 1214, 1220 (Peter Gibson J); Clixby v Pountney (Inspector of Taxes) [1968] Ch 719, at paras 728 729 (Cross J). I would accept that a special statutory or contractual context may require the phrase on behalf of to be read more widely as meaning in the place of, or for the benefit of or in the interests of: see R (Cherwell District Council) v First Secretary of State [2005] 1 WLR 1128 at para. 56 (Chadwick LJ); R(S) v Social Security Commissioner [2010] PTSR 1785, at paras 27 28; Rochdale Metropolitan Borough Council v Dixon [2012] PTSR 1336, at paras 49 50 (Rix J). But there is nothing in the present statutory context to suggest any of these wider meanings, and much that is inconsistent with them. In the first place, the full phrase is by or on behalf of the creditor. In other words, acts or omissions on behalf of the creditor are treated as equivalent to acts or omissions by the creditor. They refer to things done or not done either by the creditor itself, or by someone else whose acts or omissions engaged the creditors responsibility as if the creditor had done or not done it itself. They indicate as clearly as language can do that sub paragraph (c) applies only where the thing is done or not done by someone whose acts or omissions engage the responsibility of the creditor. They are used in the same sense throughout the Consumer Credit Act whenever it refers to some act such as the execution of a document or the receipt of a notice or the occurrence of any other act which the legislator intends to engage the responsibility of the creditor. 31. Secondly, the Consumer Credit Act makes extensive use of the technique of imputing responsibility to the creditor for the acts or omissions of other parties who are not (or not necessarily) the creditors agents. But when it does this it invariably does it in express and clear terms. A notable example appears in section 140A itself. Subsection (3) is ancillary to subsection (1)(c). It provides that things done or not done by an associate or former associate of the creditor are to be treated as if they were done or not done by, or on behalf of, or in relation to, the creditor. An associate includes certain categories of relative or, in relation to a body corporate, its controller or another body corporate under common control: see section 184. This provision is pointless except on the footing that otherwise subsection (1)(c) would have been confined to the acts of the creditor or his agents. More generally, section 56 provides that where antecedent negotiations for a debtor creditor supplier agreement are conducted by a credit broker or the supplier, the negotiations are deemed to be conducted by the negotiator in the capacity of agent of the creditor as well as in his actual capacity. The result is that the debtors statutory rights of withdrawal from prospective agreements, cancellation and rescission may arise on account of the conduct of the negotiator whether or not he was the creditors agent: see sections 57, 67, 69, 73 and 102. Sections 56 and 140A(3) provide for a deemed agency, even in a case where there is no actual one. Section 75 does not provide for a deemed agency, but it imposes liability under a debtor creditor supplier agreement for the misrepresentations and breaches of contract of the supplier. These provisions are there because without them the creditors responsibility would be engaged only by its own acts or omissions or those of its agents. None of them is applicable to the present case. Sections 56 and 75 apply only to debtor creditor supplier agreements, and not to agreements for unrestricted use credit like the one that Mrs Plevin entered into. Nor has any remotely comparable legislative technique been adopted in section 140A, except for the acts or omissions of associates or agents of associates, a category which does not include LLP. 32. Finally, if the simple words by, or on behalf of, the creditor in section 140A(1)(c) extend beyond agency relationships and deemed agency relationships, there are no coherent criteria, statutory or otherwise, by which to determine what if any connection is required between the creditor and acts or omissions causing the unfairness. This may be illustrated by the difficulty which Briggs LJ had in formulating his test. At paragraph 49 of his judgment, he appears to say that no connection is required between the creditor and the person whose acts or omission cause the unfairness, provided that the latters conduct played some material part in bringing about of the transaction. At paragraph 48 it is suggested that that person must have played some part in bringing about the transaction for the creditor. If that is the test, it is quite unclear what relationship short of agency constitutes doing or not doing something for him. In both paragraphs, it is suggested that this would be established by the intermediarys receipt of a commission from, or via, the creditor. If it is enough that the intermediary must have contributed to the conclusion of the transaction for the creditor, it is unclear what relationship with the creditor short of agency that implies. 33. The difficulty of applying these formulae can be seen when Briggs LJ comes to explain why his test is satisfied in the present case. He appears to have regarded LLP as having become closely involved in the transaction on the creditors side (para 59). This is not correct. LLP was not only not the agent of Paragon. It was the agent of Mrs Plevin, as her pleadings correctly assert. LLP was not on the creditors side and could not have been consistently 34. with its status as the debtors agent. LLPs only relationship with Paragon consisted in the facility that they must have arranged with Paragon (and ten other lenders) to introduce its principals to them. No doubt it was in Paragons interest to do more business, but even in a non technical sense that does not amount to acting for Paragon or becoming involved on Paragons side. It is, moreover, important not to lose sight of the particular function of LLP which is relevant for present purposes, namely assessing Mrs Plevins needs and advising on the suitability of the product. That was what was said to have been done on behalf of of Paragon for the purpose of the section. But it was not even in the loosest sense a function that they performed for or for the benefit of Paragon. It was a function which they performed, however defectively, for the sole benefit of Mrs Plevin. The only basis on which the contrary is asserted by Briggs LJ is that LLP received a commission from (or via) the creditor. But even that is not correct. LLP received their commission on the PPI policy from Norwich Union, arguably at the expense of Mrs Plevin if one assumes that it increased the premium. Paragon merely accounted for the commission out of Mrs Plevins loan moneys before remitting the net sum to Norwich Union. The practice by which the agent of a consumer of financial services is remunerated by the supplier of those services has often been criticised. It is, however, an almost universal feature of the business, and it is of the utmost legal and commercial importance to maintain the principle that the source of the commission has no bearing on the identity of the person for whom the intermediary is acting or the nature of his functions. I conclude that the Court of Appeal was wrong to say that the acts or omissions of LLP were capable of making Mrs Plevins relationship with Paragon unfair. Nor do I accept that this conclusion frustrates the purpose of section 140A, even in part. The fact that section 140A is intended to protect the debtor does not dispense the court from considering what degree of protection was intended; nor does it mean that the legislator cannot have intended to protect the interests of the creditor in a situation for which he was not responsible. Once the decision in Harrison is discarded, the section can be seen to give extensive protection to the debtor extending beyond the right to enforce the creditors legal duties, in any situation where the creditor or his associates (or their agents) have made the relationship unfair. The voluntary codes 35. I should, finally, refer to two voluntary codes of conduct which assumed some importance in the judgment of the Court of Appeal. Paragon and LLP were both members of FISA, and Paragon was also a member of the Finance & Leasing Association (FLA). Both associations publish voluntary codes. They are the FLA Lending Code (2004) and the FISA Codes and Disciplinary Procedures (as at March 2006). The Court of Appeal considered that the effect of these codes was to create a shared responsibility for assessing Mrs Plevins needs and the suitability of the PPI policy, and remitted the case to the County Court for a trial of the question whether that responsibility was engaged. 36. The FLA and FISA codes are lending codes. They are primarily concerned with responsible lending standards, i.e. with ensuring that borrowers do not borrow beyond their means, with avoiding high pressure salesmanship and with the provision of proper documentation, and so on, although they also contain provisions relating to the sale of associated insurance products, to which I shall return. The main significance of the codes in the present context is that they envisage some responsibility on the part of the creditor for the conduct of at least some intermediaries. Section 5.3 of the FLA code provides that the creditor will monitor the activities of any credit broker that it deals with and that in particular it will require them to follow either the FLA Code or the FISA code and refuse to deal with any who fail do so or are dishonest or incompetent. This focuses attention on the FISA code, which was the one to which LLP subscribed. Unfortunately the FISA code is at critical points rather obscure. It defines intermediaries in the widest terms as including any person or firm involved in the procurement of business. But the substantive provisions of the FISA code refer not to intermediaries tout court, but to supporting or subordinate intermediaries, or Members and their Intermediaries, without defining what makes an intermediary a Members intermediary or a supporting or subordinate intermediary. It is therefore far from clear whether these provisions extend to the conduct of an intermediary such as LLP which was not the agent of the creditor or in some way tied to the creditor. I will assume, without deciding, that they do. On that footing, the relevant provisions of the FISA code are sections 2 and 19. Section 2 provides that where a member accepts business from a supporting or subordinate Intermediary it will ensure that the intermediary complies with the code. The particular obligations spelled out in the following sections are generally imposed on Members and their Intermediaries. These include section 19, which provides: 37. Members and their Intermediaries will not use sales techniques relating to optional insurance products such as payment protection policies which might encourage consumers to take out such cover in inappropriate circumstances. In complying with this requirement, Members and their Intermediaries shall have regard to the consumers circumstances and have particular regard to restrictions or exclusions contained within the relevant insurance policy. 39. 38. The difficulty about the Court of Appeals approach to the codes is that they were proceeding on the footing of a broad construction of the words by or on behalf of the creditor, which required little if any connection between the creditor and the source of the unfairness. But it follows from the construction of section 140A which I have proposed in the preceding parts of this judgment that the codes are relevant to the operation of that section only if their effect is to make an intermediary in the position of LLP the agent of the creditor. That is plainly not their effect. In the first place, the codes have no legal status except as between the associations and their members. They have no statutory force. They formed no part of the contractual distribution of responsibilities. In its covering letter of 21 March 2006 to Mrs Plevin, Paragon informed her that they were members of FLA and FISA and followed their lending codes, but the codes themselves were not communicated to Mrs Plevin and there is no evidence that she was aware of their contents. The most that can be said about them is that they may be some evidence of what constitutes reasonable standards of commercial conduct in this field. This was in fact the sole purpose for which Mrs Plevins counsel relied upon them before the Recorder. Secondly, the terms of the codes do not in my view justify the Court of Appeals conclusion that they envisaged a shared responsibility for dealings with the customer. Not all lending transactions governed by the codes are introduced by intermediaries. In many cases the lender deals directly with the debtor. Where the FISA code imposes an obligation on Members and their Intermediaries, it is not requiring both of them to comply in every case thereby duplicating every function covered in the code. A more natural reading, more consonant with the regulatory background (in particular ICOB 1.2.3) is that the obligation is imposed on whichever of them performs the relevant function. In the case of the obligation under section 19 of the FISA code to tailor the sales technique used to sell optional insurance products to the customers circumstances, the relevant function was performed by LLP as the intermediary who was dealing directly with Mrs Plevin at the relevant stage of the transaction. Where it is the intermediary who performs the relevant function, the creditors obligation under the FISA code is to satisfy itself that the intermediary complies with the code. This does not mean that the creditor has to verify compliance in each individual transaction. It means, as is clear from section 5 of the FLA code, that the creditor will satisfy itself about the general standard to which the intermediary conducts its business. Any related agreement 40. I record for completeness that Mrs Plevin did not rely on the reference to any related agreement in section 140A(1)(c) either in the courts below or (after some initial hesitation) before us. We have not therefore heard argument on whether the PPI policy was a related agreement for the purpose of sections 19 and 140C(4), or in what if any respects its terms were themselves the cause of unfairness. Conclusion 41. My conclusion that the non disclosure of the amount of the commissions made Paragons relationship with Mrs Plevin unfair is enough to justify the reopening of the transaction under section 140A. It is, however, the only basis on which the transaction can be reopened. It follows that the appeal must be dismissed, although for reasons different from those given by the Court of Appeal, but that the case must be remitted to the Manchester County Court to decide what if any relief under section 140B should be ordered unless that can be agreed. Paragraph 2 of the Court of Appeals order of 17 March 2014, which remitted the case for rehearing generally, will be varied accordingly. 29. This particular misconception on the part of the Court of Appeal seems to me to have distracted them from the language of the section and its place in the broader scheme of the Act. These seem to me to be very clear. Section 140A was undoubtedly intended to introduce a broad definition of unfairness, in place of the narrowly framed provisions which had previously governed extortionate credit bargains. That much is clear from section 140A(1)(c), whose effect is to extend the concept of unfairness beyond cases where the terms or the way that the creditor applied them makes the relationship unfair. Under that subsection, it extends to any case whatever in which human action (or inaction) produces unfairness. The only limitation on the extreme breadth of sub paragraph (c) is that the action or inaction in question must be by or on behalf of the creditor. Putting the matter at its very lowest, those words 30. |
Very substantial judgments have been prepared in this case by Lord Walker, Lord Reed and Lord Sumption, to each of which I pay tribute. I wish in this short introduction to do two things. First, I shall say a bit about the background, to assist the reader in understanding at the outset what the issues are and to provide a guide to the passages in those judgments where they are dealt with. Second, I shall indicate briefly what my opinion is on each of them. I will however have to say a bit more about the one issue on which the court is divided: the DMG remedy/section 320 issue: see para 11, below. As it raises a question of EU law and the division of opinion shows that the answer to it is not acte clair, it is plain that it will need to be the subject of a reference to the Court of Justice for a preliminary ruling under article 267 TFEU. The proceedings As Henderson J explained at the outset of his judgment [2008] EWHC 2893 (Ch), [2009] STC 254, para 1, the Franked Investment Income (FII) Group Litigation with which these proceedings are concerned was established by a group litigation order on 8 October 2003. The test claimants are all companies which belong to groups which have UK resident parents and also have foreign subsidiaries, both in the European Union and elsewhere. In the broadest terms, the purpose of the litigation was to determine various questions of law arising from the tax treatment of dividends received by UK resident companies from non resident subsidiaries, as compared with the treatment of dividends paid and received within wholly UK resident groups of companies. The provisions giving rise to these questions related to the system of advance corporation tax (ACT) and to the taxation of dividend income from non resident sources under section 18 (Schedule D, Case V) of the Income and Corporation Taxes Act 1988 (the ICTA) (the DV provisions). The relevant provisions of the ICTA have since been amended, ACT was abolished for distributions made on or after 5 April 1999 and the DV provisions were repealed for dividend income received on or after 1 April 2009. But the problems created by their existence in the past have not gone away. The test claimants case is that the differences between their tax treatment and that of wholly UK resident groups of companies breached article 43 (freedom of establishment) and article 56 (free movement of capital) of the EC Treaty (now articles 49 and 63 of the Treaty on the Functioning of the European Union) and their predecessor articles, and that these breaches have caused them loss dating back, at least in some cases, to the accession of the UK to the European Economic Community signed at Brussels on 22 January 1972 and the introduction of ACT in April 1973. Their arguments are directed in part to issues of domestic law. But they are also directed to the extensive case law resulting from the application by the Court of Justice of the European Communities and, since the coming into force of the Lisbon Treaty, the Court of Justice of the European Union of principles of Community law to domestic tax systems, including an earlier reference in this case: Test Claimants in the FII Group Litigation v Inland Revenue Comrs (Case C 446/04) [2007] STC 326. They raise difficult issues, and very large amounts of money are at stake. Henderson J was told that the maximum amount of the claims advanced in the FII Group Litigation was of the order of 5 billion. The issues with which Henderson J had to deal were grouped by him under four headings: see [2009] STC 254, para 7. These were (1) the lawfulness of the UK rules imposing corporation tax on dividends received by UK parent companies from subsidiaries resident in other EU member states and, in some contexts, from subsidiaries in third countries, (2) the lawfulness of UK rules charging ACT on the onward distribution by UK resident companies of dividend income received from such subsidiaries, (3) the lawfulness of rules applicable to dividends payable out of distributable foreign profits which permitted an election to be made to treat such income as foreign income dividends (FIDs) and (4) a number of fundamental questions relating to remedies. He held that it followed from the judgment of the ECJ under the earlier reference that the UK rules on corporation tax on overseas dividends were not compatible with Community law as regards dividends from subsidiaries resident in other member states, and that the UK legislative scheme as regards FIDs also breached Community law. A further reference was however required in relation to two of the issues relating to liability: paras 138, 197. As for the issues relating to remedies, it was common ground that two types of restitutionary remedies are available in domestic law: a claim for restitution of tax unlawfully demanded under the principle established in Woolwich Equitable Building Society v Inland Revenue Comrs [1993] AC 70 (Woolwich), and the claim for tax wrongly paid under a mistake which was recognised in Deutsche Morgan Grenfell Group plc v Inland Revenue Comrs [2006] UKHL 49, [2007] 1 AC 558 (DMG). Henderson J held that, under the principle laid down in Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case 199/82) [1983] ECR 3595 (San Giorgio), EU law required there to be an effective remedy for monies paid in respect of the tax that was unlawfully charged. The test claims were properly to be classified in English law as claims in restitution based on a mistake of law. The Woolwich cause of action (which is now time barred), for which mistake was not a necessary ingredient, was likely to play a subsidiary role in such cases: para 260. It was not open to the Revenue to rely on section 320 of the Finance Act 2004 (Section 320 FA 2004) or section 107 of the Finance Act 2007 (Section 107 FA 2007) to exclude DMG mistake claims, as these provisions purported to curtail the extended limitation period under section 32(1)(c) of the Limitation Act 1980 without notice and without providing any transitional arrangements to protect the right under Community law. But the test claimants had failed to establish any sufficiently serious breach to entitle them to damages. The case then proceeded to the Court of Appeal (Arden, Stanley Burnton and Etherton LJJ): [2010] EWCA Civ 103, [2010] STC 1251. The various issues were made the subject of an agreed list which the court amended and to which it gave numbers. They were identified in an index at the beginning of the judgment, to which reference may be made. Issues 1 to 10 related to liability. Issues 11 to 23 were concerned with remedy. The Court of Appeal was divided as to the meaning of para 54 of the judgment of the ECJ with respect to one of the test claimants submissions on liability, so it held that a reference should be made on that issue. On all but one of the other issues relating to liability it agreed with the judge. On four issues relating to remedy the appeal by the Revenue was allowed. Differing from the judge, it held that the Woolwich restitution remedy was a sufficient remedy as EU law does not require that there must also be a remedy based on mistake (issue 12); that the Woolwich restitution remedy met the requirements of EU law and was not affected by sections 320 FA 2004 and 107 FA 2007 (issues 20 and 21); and that section 33(2A) of the Taxes Management Act 1970 (TMA) (issue 23), which excludes relief under that section where Case V corporation tax has been paid under a mistake, applied to an assessment based on a provision that infringed Community law as a conforming interpretation could be given to it. Issue 22, as to whether section 32(1)(c) of the Limitation Act 1980 applied to a Woolwich claim, was not argued before the judge. But it was argued before the Court of Appeal, which held that it could not be given that wider meaning. Applications for permission to appeal to the Supreme Court were lodged by both parties. On 8 November 2010 the panel refused permission on the issue as to which the Court of Appeal decided that there should be a reference, and it remitted another issue relating to liability to the management judge to frame a reference on that point also. The time limit for making an application for permission on a number of other issues, including issue 22, was extended until the references had been determined by the ECJ and its rulings applied by the Court of Appeal. But permission to appeal was given on four issues relating to remedy: issues 12, 20, 21 and 23. Shortly before the hearing of the appeal permission was given to the claimants for issue 22 to be argued also. The issues The parties are agreed that the issues in the appeal are best expressed as follows: (1) Could Parliament lawfully curtail without notice the extended limitation period under section 32(1)(c) of the Limitation Act 1980 for the mistake cause of action (section 320 FA 2004) and cancel claims made using that cause of action for the extended period (section 107 FA 2007)? In particular: (a) Would a Woolwich restitution remedy be a sufficient remedy for the repayment claims brought on the basis of EU law (Court of Appeal issue 12)? (b) Whether or not a Woolwich restitution remedy would be a sufficient remedy, does EU law protect the claims which were made in mistake; and, specifically, did the curtailment without notice of the extended limitation period for mistake claims (section 320 FA 2004) and the cancellation of such claims in respect of the extended period (section 107 FA 2007) infringe the EU law principles of effectiveness, legal certainty, legitimate expectations and rule of law (Court of Appeal issues 20 and 21)? (2) Are the restitution and damages remedies sought by the test claimants in respect of corporation tax paid under section 18 (Schedule D, Case V) of the ICTA 1988 excluded by virtue of the statutory provisions for recovery of overpaid tax in section 33 of the Taxes Management Act 1970 (Court of Appeal issue 23)? To that there must be added the following: (3) Does section 32(1)(c) of the Limitation Act 1980 apply to a claim for a Woolwich restitution remedy (Court of Appeal issue 22)? As Lord Walker explains in para 35 below, a further issue became apparent as the parties submissions on issues 12, 20 and 21 have developed which can be expressed as follows: (4) Does the Woolwich restitution remedy apply only to tax that is demanded by the Revenue, and not to tax such as ACT which is payable on a return; and, if so, what amounts to a demand? In the judgments that follow: a. Issue (4), above, the question whether a Woolwich claim arises only where a demand has been made by the Revenue, is dealt with by Lord Walker in paras 64 83 and by Lord Sumption in paras 171 174. b. Issue (3), above (Court of Appeal issue 22), as to whether section 32(1)(c) of the Limitation Act 1980 should be widely construed so as to give a Woolwich restitution remedy the benefit of the extended limitation period, is dealt with by Lord Walker in paras 42 63 and by Lord Sumption in paras 177 185. c. Issue (2), above (Court of Appeal issue 23), as to whether section 33 of the TMA is incompatible with EU law because it excludes the test claimants right of action at common law, is dealt with by Lord Walker in paras 116 119 and by Lord Sumption in paras 204 205. I agree, for all the reasons they give, that each of these three distinct issues should be answered in the negative. I would uphold the judgment of the Court of Appeal on issues (3) and (4) and, because it should not be read as excluding rights of action for the recovery of tax charged contrary to EU law, I would allow the appeal on issue (2) as to the meaning of section 33 of the TMA. The DMG remedy/section 320 issue The remaining issue (issue (1), above) is an issue of EU law. The background is provided by the ruling of the Grand Chamber that it is for the domestic legal systems of each member state to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive from Community law, and that the national courts and tribunals before which claims are brought are obliged to ensure that individuals should have an effective legal remedy enabling them to obtain reimbursement of the tax unlawfully levied by a member state or withheld by it directly against that tax: Test Claimants in the FII Group Litigation v Inland Revenue Comrs (Case C 446/04) [2007] STC 326, paras 202 203. It follows from the answers given to issues (3) and (4) that this issue must be approached on the basis that a Woolwich claim would have been available had it been brought in time. But it has been excluded by the expiry of the limitation period. The test claimants are left therefore with their DMG mistake claim. It has the benefit of the extended limitation period, but the Revenue say that it has been excluded by section 320 FA 2004 and section 107 FA 2007. As Lord Walker explains in para 38, the question is whether EU law requires only that the member state must make available an adequate remedy which meets the principles of effectiveness and equivalence, or whether it requires every remedy recognised in domestic law to be available so that the taxpayer may obtain the benefit of any special advantages that this may offer on the question of limitation. The position in domestic law is not now in doubt. In DMG it was held that the taxpayer was entitled to take advantage of the remedy which was most advantageous to him. The fact that a Woolwich claim was not available because it was subject to a shorter limitation period did not prevent him from pursuing his mistake claim if his interests were best suited by doing so. This issue can be broken down into three questions: (1) would Woolwich on its own provide a remedy for the test claimants San Giorgio claims which satisfies the requirements of the EU principles of effectiveness and equivalence? (2) were those principles, and the principle which protects legitimate expectations, infringed by section 320 FA 2004, which curtailed without notice the extended limitation period for mistake claims? (3) were these principles infringed by the retrospective cancellation of such claims by section 107 FA 2007 in respect of the extended period? Lord Walker and Lord Sumption are agreed that section 107 FA 2007 was contrary to EU law, although they do not reach that conclusion by the same route. This is because they disagree on the primary issue as to whether Woolwich on its own was sufficient to meet the requirements of effectiveness and equivalence. Having reached the view that it was not, Lord Walker holds that section 320 FA 2004 was not compatible with EU law as it infringed those principles and maybe that it infringed the principle of legitimate expectations too: para 114 115. Lord Sumption disagrees. He holds that the Woolwich remedy on its own with a normal limitation period was an effective way of asserting the test claimants EU right, that there was no obligation on the UK to maintain a concurrent right and that, for this reason and because the test claimants could not have had a legitimate expectation that they would have the benefit of the extended limitation period, section 320 FA 2004 was lawful: paras 198 202. But, because the circumstances had changed and they had acquired a legitimate expectation by 2006, it was contrary to that principle for that expectation to be defeated by section 107 FA 2007. Like Lord Walker (see para 115), I agree with Lord Sumptions reasoning in para 203 as to section 107 FA 2007. On the primary issue however, like Lord Reed, I agree with Lord Walker. I would take as my starting point the fact that in domestic law two types of restitutionary remedies are available and that the taxpayer is entitled to take advantage of the remedy that is most advantageous to him: a claim for restitution of tax unlawfully demanded under the principle established in Woolwich, and the claim for tax paid under a mistake of law which was recognised in DMG. It is, of course, true that DMG had not yet reached the House of Lords when section 320 FA 2004 was enacted. But the common law rule that money which had been paid under a mistake of law was not recoverable had already been rejected. It was rejected in Scotland in Morgan Guaranty Trust Co of New York v Lothian Regional Council 1995 SC 151, for reasons that were special to Scots law, and in South Africa in Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue 1992 (4) SA 202. But it had also been rejected by the common law in Canada: see the dissenting opinion of Dickson J, with which Laskin CJ agreed, in Hydro Electric Commission of Township of Nepean v Ontario Hydro [1982] 1 SCR 347, 357 370. Dickson Js opinion was adopted by La Forest J, with whom Lamer, Wilson and LHeureux Dub agreed on this point, in Air Canada v British Columbia [1989] SCR 1161. The same result was reached in Australia in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353. Then in Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 the House of Lords held that the rule could no longer be maintained, and that it should be recognised that there was a general right to recover money paid under a mistake, whether of fact or law. It was contended for the Inland Revenue Commissioners in DMG that the general right of recovery did not apply in the case of payments made under a mistake of law to the revenue. But this topic had already been the subject of comment by one of the most distinguished and influential scholars on the law of restitution, the late Professor Peter Birks. He declared that, unless displaced by statute, causes of action good against private citizens are no less good against public bodies: see his essay (in the volume Essays on Restitution (1990), edited by Professor P D Finn) entitled Restitution from the Executive: a Tercentenary Footnote to the Bill of Rights, at p 174. He also made the point that, if in Woolwich the building society had made a mistake of fact, it would undoubtedly have entitled the society to restitution of the money it paid to the revenue in consequence of its mistake, just as it plainly would have been had the transaction been with a private citizen. The decision of Park J at first instance in DMG [2003] 4 All ER 645, [2003] STC 1017, in which he upheld the taxpayers claim for repayment of tax wrongly paid under a mistake of law with an extended limitation period, should be seen against this background. As Henderson J observed in para 406 of his judgment, it was not possible to predict with any confidence what the outcome would be of the appeals in DMG that were to follow. But I think that it would be going too far to say that Park Js judgment was bound ultimately to be set aside. The fact that on 8 September 2003, less than two months after Park Js judgment was delivered on 18 July 2003, the Paymaster General announced the introduction of what was to become section 320 FA 2004, and said that it was to affect proceedings issued on or after that date, suggests that the revenue had at least some expectation that it would not be successful in achieving that result. Like Lord Walker (see para 108), I think that the suggestion that the Court of Appeals decision was just a bump in the road understates the strength of the arguments in support of its appeal. But I cannot agree with Lord Sumption (see paras 200 201) that it was unrealistic for there to have been a reasonable expectation by that date that the right of recovery on the ground of mistake with an extended limitation period would be upheld. My own view lies between these two extremes. I share Lord Walkers view that it would have been helpful to have had the view of the judge on this issue: para 112. But I also think that in para 243 Lord Reed has identified the right way to look at it, which does not require anything more than we already know. One must ask oneself what the test claimants were entitled to expect when they made their claims based on mistake. There was no certainty at that time when section 320 FA 2004 was enacted that their claims based on mistake would succeed. But those claims were undoubtedly arguable, as the subsequent ruling by the House of Lords in DMG [2007] 1 AC 558 made clear. They were entitled to expect that the question whether their claims based on mistake were well founded would be decided by the courts, as there was a real issue to be tried. They were also entitled to expect, according to the principle of legal certainty, that this entitlement would not be removed from them by the state by the introduction without notice of a limitation period that was not fixed in advance: see ACF Chemiefarma v Commission of the European Communities (Case 41/69) [1970] ECR 661, para 19; Marks & Spencer plc v Customs and Excise Comrs (Case C 62/00) [2003] QB 866, para 39. The crucial question, however, is whether the retrospective application of that limitation period to claims based on mistake was in conformity with the principles of equivalence and effectiveness, as explained by the Grand Chamber in its judgment in these proceedings: Case C 446/04 [2007] STC 404, para 203. I accept, of course, that the Woolwich remedy on its own was an effective way of vindicating the San Giorgio right. But what about the principle of equivalence which, as Lord Reed points out in para 218, is a complementary requirement? The Woolwich remedy was not the only remedy in domestic law, as it was held in DMG that a taxpayer who wrongly paid tax under a mistake of law is entitled to a restitutionary remedy against the revenue. The theory is that judicial decisions must be taken to declare the law that applies to the case with retrospective effect, whenever the events that gave rise to the claim occurred. So, in the events that have happened, the DMG remedy must be taken to have been always available. It is not just a mirror image of the remedy that is afforded under Woolwich. Both remedies lead to the same result. But they are different remedies founded upon different principles and they are subject to different limitation periods. There may be other differences, depending on the facts and circumstances of each case. There is no obvious way of deciding which of these two remedies must be adopted if only one can be allowed. Is it to be held the claimant is under an obligation, if both are available, to select the remedy which best suits his opponent? This would be an odd result, as I said in DMG [2007] 1 AC 558, para 51. For the reasons which I gave in that paragraph, I think that domestic law must reject this idea because it has no basis in principle. In fairness, the claimant ought to be free to choose the remedy that best suits his case. The principle of equivalence requires that the rules regulating the right to recover taxes levied in breach of EU law must be no less favourable than those governing similar domestic actions. So it seems to me that it must follow, if the means of recovering of taxes levied contrary to EU law are to match those in domestic law, that both remedies should be available. Conclusion For these reasons, and those given more fully by Lord Reed, I agree with Lord Walkers analysis. I would hold that Parliament could not lawfully curtail without notice the extended limitation period under section 32(1)(c) of the Limitation Act 1980 for the mistake cause of action by section 320 FA 2004. I agree with both Lord Walker and Lord Sumption that it could not cancel claims made using that cause of action for the extended period by section 107 FA 2007. The question whether there was a legitimate expectation of bringing an action of the kind that was excluded by that section does not raise any issue of EU law. So I do not think that there are grounds for seeking a reference on that point. I recognise however that, as there is a division of opinion among us as to whether EU law requires that both remedies should be available to the test claimants so that they can choose the remedy that best suits their case for reimbursement, the answer to that question cannot be regarded as acte clair. I would therefore invite the parties to prepare in draft the question or questions on which they suggest a preliminary ruling should be sought from the CJEU, and a brief note of the submissions that each party would wish to be included in the reference. I would also invite their views as to whether this reference should be combined with the references that are to be made on the other issues, or whether it should be submitted separately. LORD WALKER Introduction This appeal is a further stage, but by no means the last stage, in complex and protracted group litigation, designated as Test Claimants in the FII [franked investment income] group litigation. In this group litigation, and other parallel group litigation proceedings, numerous issues have been raised as to whether features of the UK corporation tax regime infringe EU law, and as to the remedies available to companies which claim to have been financially disadvantaged in various ways by such infringements. These proceedings have already resulted in two references to the Court of Justice. Since the Court of Justices judgment on the first reference ((Case C 446/04) [2007] STC 326), all the issues as to infringement have been considered by Henderson J [2008] EWHC 2893 (Ch), [2009] STC 254 and by the Court of Appeal [2010] EWCA Civ 103, [2010] STC 1251. Some have been decided and are no longer in dispute. In particular, it is now common ground that corporation tax measures relating to advance corporation tax (ACT) and foreign income dividends (FIDs) infringed former article 43 (freedom of establishment) and former article 56 (free movement of capital) of the EC Treaty, now articles 49 and 63 of the Treaty on the Functioning of the European Union. Other points have been made the subject of a second reference to the Court of Justice. On yet further points this court has extended time for an application for permission to appeal. One of these is the concurrent finding of the courts below that the infringements which have been established did not amount to grave and manifest breaches of EU law so as to give rise to a claim for damages on the principles in Brasserie du Pecheur SA v Federal Republic of Germany (Joined Cases C 46/93 and C 48/93) [1996] QB 404. It is now clear that, apart from any possible claim for damages, the claims to be met by HM Revenue and Customs (HMRC, so as to include its predecessors) are restitutionary in nature. Some are straightforward claims for recovery of tax which the claimants paid when it was not due. Other claims are for less direct losses which the claimants say they sustained in consequence of the non compliance of the corporation tax system with EU law. In relation to restitutionary relief for both the direct and the indirect losses there are important differences between the parties as to the characterisation of the remedies available to the claimants as a matter of English law. There are also important differences as to how far EU law requires the full range of domestic remedies to be made available for the recovery of unduly paid tax, despite parliamentary intervention (in the form of section 320 of the Finance Act 2004 and section 107 of the Finance Act 2007) to curtail those remedies drastically and with retroactive effect. Those two provisions (the statutory cut off provisions) are challenged as infringing EU law. That is a brief sketchy overview of the significance of this appeal in the context of the larger campaign of the FII group litigation. Except in relation to the statutory cut off provisions the Supreme Court does not on this appeal have to revisit any issue as to infringement of EU law. But it is appropriate to give a brief explanation of the ACT system, now abolished, that gave rise to the substantive infringements. A much fuller explanation can be found in the first instance judgment of Henderson J [2009] STC 254, paras 12 to 28. This draws on the first order for reference to the Court of Justice made by Park J on 13 October 1994. Since his retirement Sir Andrew Park has himself given an objective account of the progress of several of the associated sets of group litigation in A Judges Tale: Corporation Tax and Community Law [2006] BTR 322. The ACT system Corporation tax was introduced in the UK in 1965. At first the system was a classical system, with full double taxation of company profits and non corporate shareholders dividends. In 1973 the system changed to one of partial imputation. When a UK resident company paid a dividend it was required (by way of self assessment) to pay an amount of ACT equal to the mainstream corporation tax (MCT) payable on the part of its profits distributed as dividend. A non corporate shareholder became entitled to a tax credit equal to the ACT paid in respect of his dividend. A UK resident corporate shareholder receiving a dividend from another UK resident company received it as franked investment income (FII), and if it both received and paid dividends, ACT was payable only on the excess of its outgoing franked payments over its FII. The position was different if a UK resident company received a dividend from a non resident company in which it was a shareholder. That was so whether or not the two companies were part of a group, but this group litigation, and the parallel ACT group litigation, have both been concerned with groups of companies. Most of the test claimants in this litigation are members of the British American Tobacco (BAT) group. In para 2 of his judgment Henderson J gave a concise explanation of this group litigation as compared with the ACT group litigation: Whereas the focus of the ACT Group Litigation was on the UK domestic legislation which prevented UK resident subsidiaries of foreign parents from making group income elections, thereby obliging them to pay ACT when paying dividends to their foreign parents, the focus of the FII Group Litigation has been on UK parented groups with foreign subsidiaries, and on the tax treatment of dividends coming into the UK from abroad. At the simplest level, therefore, the present litigation is concerned with factual situations which are the opposite of those which gave rise to the questions considered in Hoechst [Metallgesellschaft Ltd v Inland Revenue Comrs, (Joined Cases C 397/98 and C 410/98) [2001] Ch 620] and the ACT Group Litigation. Since 1973 the BAT group has gone through various structural changes (summarised in paras 1.8 to 1.21 of an agreed statement of facts set out in para 29 of the judges judgment) but it has always had as its ultimate holding company a UK resident company whose shares are listed and whose thousands of shareholders expect to receive regular dividends. After 1973 the BAT group (in common with many large multinational groups) faced a difficulty in that when it received dividends from overseas subsidiaries it did not receive a tax credit that could be used to eliminate or reduce ACT payable in respect of its dividends to its shareholders. The overseas dividends were not FII. Although the UK resident company was entitled to double taxation relief against MCT (in the form of a credit against foreign taxes paid by the subsidiary), it still had to pay ACT. If relatively little MCT was payable (because of double taxation relief) the ACT became surplus and of little or no utility to the holding company. A UK resident company with overseas subsidiaries (whether resident within or outside the EU) was therefore at a disadvantage, and articles 43 and 56 of the Treaty were infringed. The other test claimants are members of the Aegis group, another multinational group whose holding company is based in the UK. These claimants have been included because they are (and claimants in the BAT group are not) affected by section 320 of the Finance Act 2004. The ACT regime was in force from 1973 to 1999. Its disadvantages for multinational groups were to some extent mitigated by provisions as to foreign income dividends (FIDs) which were in force from 1994 to 1999. A UK resident company receiving dividends from non resident companies could elect that dividends paid to its shareholders should be treated as FIDs. The effect was that ACT was still payable, but would in some circumstances be repaid after an interval, normally of a duration of between eight and a half months and seventeen and a half months. There is a fuller explanation of the law in paras 23 to 25 of the judges judgment, and of the facts as to FID enhancements in paras 277 to 302. The principal statutory provision giving a tax credit on qualifying distributions between UK resident companies was section 231 of the Income and Corporation Taxes Act 1988 (TA 1988). Issue 6 before the Court of Appeal was whether section 231 could be interpreted, under the Marleasing principle (Marleasing SA v La Comercial Internacional de Alimentacin SA (Case C 106/89) [1990] ECR I 4135) so as to be compatible with EU law. The Court of Appeal held that it could be interpreted in that way. That is however an issue on which this court has deferred a decision on permitting a further appeal. The uncertainty as to section 231 is a further complication in clarifying the issues that are before the court on this appeal. The issues The Supreme Court gave permission to appeal on four of the 23 issues identified by the Court of Appeal (and set out in the index to its judgment, [2010] STC 1251). This permission was later extended to cover a fifth issue, numbered 22 in the Court of Appeals judgment, that is the correct construction and scope of section 32(1)(c) of the Limitation Act 1980. The other four issues covered by the formal order granting permission to appeal are wholly or largely questions of EU law, and the impact of EU law on domestic rights and remedies: that is (issue 12) remedies in English law; (issues 20 and 21) the compatibility with EU law of the statutory cut off provisions; and (issue 23) whether section 33 of the Taxes Management Act 1970 (as amended) provides an exclusive code for recovery of tax mistakenly paid under an assessment, and the impact on that section of EU law. However, as the parties written and oral submissions have developed it has become apparent that there is another wholly domestic issue of central importance to the appeal. The Court of Appeal differed from Henderson J as to whether the principle in Woolwich Equitable Building Society v Inland Revenue Comrs [1993] AC 70 (Woolwich) applies only to tax that is demanded by revenue authorities (and if so, what amounts to a demand). For the appellants Mr Aaronson QC took the lead in making submissions on issues of EU law, followed by Mr Rabinowitz QC on issues of English law. This sequence of argument may have been unavoidable, but it produced the result that the court heard submissions about the attitude of EU law towards national procedures and remedieswhich is an important part of this appealbefore hearing submissions about the English remedies themselves. It is more helpful to start with the issues of English law, and then assess the impact that EU law has on them. So this judgment proceeds to consider (i) the scope of section 32(1)(c) of the Limitation Act 1980 and (ii) the scope of the decision in Woolwich, before addressing the effect of EU law. It may not be immediately apparent why these two domestic issues have assumed such significance, so a brief explanation is called for. The reason is certainly not the disinterested and scholarly interest of the parties, or either of them, in the development and clarification of English private law. That is apparent from another of the group litigation proceedings, NEC Semi Conductors Ltd and Other Test Claimants v Inland Revenue Comrs [2006] EWCA Civ 25, [2006] STC 606 (NEC), in which (at paras 140 to 147) the claimant companies and HMRC (through counsel, most of whom have appeared on this appeal) made submissions on the Woolwich issue to the contrary effect, in each case, to those they have made on this appeal. These tactical shifts have occurred because, naturally enough, each side wants to win, by any proper line of argument, because of the very large sums of money at stake. The main issue of EU law to be decided can be put, in a very simplified (but not, it is to be hoped, tendentious) form, as follows. When in any member state tax has been paid which was not due because the national taxing measure infringed the Treaty, must the member state make available to its aggrieved taxpayer (i) an adequate remedy which meets the principles of effectiveness and equivalence; or (ii) every available national remedy, including any that offers the taxpayer special advantages as regards limitation of actions? At first glance the Woolwich principle provides an adequate remedy, subject to a six year limitation period unaffected by the statutory cut off provisions. Similarly at first glance mistake of law, following the decision of the House of Lords in Deutsche Morgan Grenfell Group Plc v Inland Revenue Comrs [2007] 1 AC 558 (DMG), provides a specially advantageous basis of claim because of the possibility of an extended limitation period under section 32(1)(c) of the Limitation Act 1980, but subject to the statutory cut off provisions (if and so far as valid under EU law). But if the test claimants have no Woolwich claim, because as a matter of law such a claim requires an unlawful demand, and there was no such demand, mistake of law would be promoted, as it were, to being the only remedy available under national law, and so to being more surely entitled to protection under EU law. So it is expedient for the test claimants in this appeal to reverse the stance taken by the test claimants in NEC and argue that the Woolwich principle does not extend to self assessed taxes, for which there is no official demand. The issue on section 32(1)(c) of the Limitation Act 1980 is part of an alternative line of argument by which the test claimants seek to promote the mistake of law claim and so ensure its protection under EU law. They submit that section 32(1)(c) should be widely construed, contrary to the authority of Phillips Higgins v Harper [1954] 1 QB 411, a first instance decision which has however stood and been followed for over half a century. They submit that section 32(1)(c) is applicable, regardless of the cause of action, wherever there is a causally relevant mistake. In the words of Mr Rabinowitz (day 2, page 80), The mistake element does not have to be a necessary part of the cause of action, so long as the mistake is materially causal or causally material in producing the circumstances from which relief is sought. So this is an alternative method by which the test claimants seek to saw off the apparent support of the Woolwich branch in order to rely on mistake of law alone. It seems very doubtful, even if their argument on section 32(1)(c) is sound, whether the claimants aim would be achieved. In other, more mainstream parts of their argument they rely heavily on the principle (reasserted in this context by the House of Lords in DMG [2007] 1 AC 558) that English law permits litigants to choose, as between concurrent causes of action, the cause or causes of action most advantageous to their interests. The test claimants have done so. In the amended particulars of claim of the BAT group, paras 15 and 15A, they have clearly and distinctly relied on two separate causes of action in unjust enrichment, that is (para 15) payment of tax unduly levied and (para 15A) payment under a mistake. Section 32(1)(c) is relied on in relation to mistake claims only (paras 18, 18A and 18B). The position is the same on the Aegis groups pleadings. The statutory cut off provisions (the essential text of which is set out at paras 107 and 109 below) do contain (in section 320(6) and section 107(2)) wide language extending the scope of the sections to actions not expressed to be brought on the grounds of mistake. So the apparently self inflicted injury which the test claimants invite would seem to require an amendment to the pleadings, and even then (if the section 32(1)(c) argument succeeds) the Woolwich claim would remain with a six year limitation period, which is what it has always been assumed to have. Nevertheless, the section 32(1)(c) point is an important point of law that has been fully argued, and so it should be addressed. Section 32(1)(c) Section 32(1) of the Limitation Act 1980 provides: Subject to [provisions not now material], where in the case of any action for which a period of limitation is prescribed by this Act, either (a) the action is based upon the fraud of the defendant; or (b) any fact relevant to the plaintiffs right of action has been deliberately concealed from him by the defendant; or the action is for relief from the consequences of a mistake; (c) the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it. References in this subsection to the defendant include references to the defendants agent and to any person through whom the defendant claims and his agent. It replaces (with a minor amendment to section 32(1)(b)) provisions first enacted in section 26 of the Limitation Act 1939, in which section 26(c) was in the same terms as section 32(1)(c). The change in the law made in 1939 was recommended by the Law Review Committee (chaired by Lord Wright MR) in its Fifth Interim Report, (Statutes of Limitation) (1936) (Cmd 5334). Indeed the expression relief from the consequences of a mistake appears three times in para 23 of the report, dealing with this topic. The recommendation was that in such cases the equitable rule (that time should run only from when the mistake was, or could with reasonable diligence have been, discovered) should apply to claims which were formerly within the exclusive jurisdiction of common law courts (as opposed to being within equitable or concurrent jurisdiction). The previous state of the law was established by the decision of Hamilton J (later Lord Sumner) in Baker v Courage & Co [1910] 1 KB 56. The facts were that the plaintiff was the former owner of a public house who had in 1896 been mistakenly overpaid by 1,000 on the sale of his leasehold public house to the defendants, who were brewers. The plaintiff then deposited 9,000 at interest with the defendants. In 1909 he wished to withdraw the last of the deposit (standing, as it happens, at 1,000) but the defendants, on reviewing the position, discovered their mistake and refused to return the money. When sued they pleaded set off and made a counterclaim, both of which were opposed as statute barred. Hamilton J referred (at p 62) to the purely equitable claim made in Brooksbank v Smith (1836) 2 Y & C Ex 58, a decision of Alderson B sitting in the equity side of the Court of Exchequer. Hamilton J said that Brooksbank v Smith was a case to which the Statute of Limitations did not apply; and the rule which was there laid down was one which in my opinion cannot be transferred to cases like the present, to which the statute does directly apply. In dealing with the latter class of cases, Courts of Equity were just as much bound by the statute as were Courts of Common Law. In any event, he went on, the brewers had had the means of knowing the truth throughout, if they had chosen to look at the sale contract and examine their books of account. He also rejected a second contention that time did not start to run until notice of the mistake (that is, the overpayment of 1,000 in 1896) had been given to the plaintiff and a demand had been made. It is common ground that section 26(c) of the Limitation Act 1939 was intended to reverse the first point of principle (though not, on the facts, the result) in Baker v Courage & Co. The issue is how much further the change in the law was meant to go. The leading case on that point is the decision of Pearson J in Phillips Higgins v Harper [1954] 1 QB 411. It was fully argued, and the argument is fully reported. Professor Andrew Burrows has noted that there was an unsuccessful appeal on the facts by the defendant, briefly reported at p 420, but no cross appeal on the limitation point. The decision of Pearson J has been followed by the Court of Appeal, apparently with little or no oral argument on the point, in Malkin v Birmingham City Council (unreported) 12 January 2000, a claim for breach of statutory duty. The judgment of the Court of Appeal in this case recorded [2010] STC 1251, para 242 that Mr Ewart (for HMRC) very generously did not submit that the Court of Appeal was bound by Malkin. In any event the Court of Appeal, after full argument, accepted Phillips Higgins and Malkin as correct. It did so after considering the history and language of section 32(1)(c), and the reasoning in the judgment of Pearson J (a long passage from which is set out at para 240). But for the general importance of the point, it might be sufficient to say that the Court of Appeal was right, and for the right reasons. Phillips Higgins v Harper was an action by a woman solicitor who had been employed as an assistant by a sole practitioner, Mr Harper, between 1938 and 1950, when she became a salaried partner. Her employment was, on her case, at a basic salary supplemented by an annual sum to bring her total remuneration up to one third of the net profits of Mr Harpers practice. Mr Harper contended that (until 1948) the bargain was to supplement her remuneration to one quarter of the net profits as determined by his accountant, and he pleaded the Limitation Act 1939. The judgment is reported verbatim only on this point, but it is recorded (at p 413) that Pearson J found: (1) that the original fraction of the relevant profit figure to which the plaintiff was entitled was one third, and that that fraction had been reduced to one quarter by the defendant by private instructions to his accountant and that the plaintiff did not know and did not consent to the reduction; (2) that the plaintiffs contention as to the relevant profit figure was correct; and (3) that there had been no intention on the part of the plaintiff to agree the accounts over the material period and that therefore they had not been agreed and settled. Mr Harpers position was therefore deeply unattractive. But the plaintiff was not mistaken about the bargain; her mistake was in believing that Mr Harper and his accountant were giving proper effect to it. As the judge hinted at p 418, the plaintiff might possibly have done better to rely on section 26(b), since although at that time it required fraudulent concealment, that expression was interpreted fairly broadly. For present purposes the crucial passage is earlier on p 418. It is part of the passage quoted by the Court of Appeal, but it bears repetition: What, then, is the meaning of provision (c)? The right of action is for relief from the consequences of a mistake. It seems to me that this wording is carefully chosen to indicate a class of actions where a mistake has been made which has had certain consequences and the plaintiff seeks to be relieved from those consequences. Familiar examples are, first, money paid in consequence of a mistake: in such a case the mistake is made, in consequence of the mistake the money is paid, and the action is to recover that money back. Secondly, there may be a contract entered into in consequence of a mistake, and the action is to obtain the rescission or, in some cases, the rectification of such a contract. Thirdly, there may be an account settled in consequence of mistakes; if the mistakes are sufficiently serious there can be a reopening of the account. All these are examples of relief which removes or mitigates the adverse consequences to the claimant of the mistake, while respecting the position of the defendant where justice so requires (for instance by the defence of change of position where money has been paid under a mistake, or the requirement for restitutio in integrum where rescission is granted). It is an important but still relatively narrow category of causes of action, and much narrower than that for which Mr Rabinowitz has contended. Mr Rabinowitz was critical of the decision of the Court of Appeal as having paid insufficient attention to the statutory language and the traditional equitable rules, and too much attention to the report of the Law Revision Committee. In his reply (day 5, page 136) he invited the court to read the first sentence of para 23 of the report as if it had contained a parenthesis, saying: Where mistake is not an essential part of the claim because we know thats what the equitable rule is. In support of this he relied on Brooksbank v Smith (1836) 2 Y & C Ex 58 and Denys v Shuckburgh (1840) 4 Y & C Ex 42, another decision of Alderson B sitting in the equity side of the Court of Exchequer. As to the statutory language, the criticism is in my view misplaced. The Court of Appeal cited and agreed with Pearson Js view that the wording is carefully chosen to indicate a category of actions with particular characteristics. As to the report of the Law Revision Committee, it showed (as would be expected of its distinguished membership) a full awareness of the historical background. The parenthesis suggested as a gloss by Mr Rabinowitz is not borne out by the example that comes at the end of the first sentence of para 23, that is money or property transferred under a mistake, where the mistake is an essential part of the claim, and would have to be pleaded with some particularity. The authorities cited by Mr Rabinowitz do not support the wide equitable jurisdiction for which he contended. Brooksbank v Smith 2 Y & C Ex 58 was about a will trust. The testatrix died in 1818 leaving a fund in trust, subject to a life interest, for her children in equal shares, with substitutional gifts if any child predeceased her leaving issue. Her daughter Elizabeth did predecease her by two months, but on the death of the life tenant in 1827 the trustees were given incorrect information about the date of Elizabeths death and her share (1,000 nominal of stock) was transferred to her widower instead of to her children. When the mistake was discovered in 1833 the trustees claimed 100 stock (which was all that remained unsold) from Elizabeths widower. The bill was issued within six years of discovery of the mistake. Alderson B held that the claim was not statute barred. He treated it as a proprietary claim based on a mistake of fact. Denys v Shuckburgh 4 Y & C Ex 42 was similar, though the facts were more complicated. Under a marriage settlement made in 1793 Earl Pomfret settled two quarter shares in some lead mines in Yorkshire on trusts under which he had both an immediate life interest and an ultimate reversion (with intermediate trusts that in due course failed). In 1813 the Earl (whose marriage was childless and ended in judicial separation) sub settled (but only during his own lifetime) one quarter share on his sister, Lady Caroline, and another on her son William. Lady Caroline owned another quarter share of the mines in her own right. In 1826 the Earl assigned the whole of his reversionary interest to William. On the Earls death in 1830 no one adverted to the fact that the 1813 sub settlement then came to an end, and the right to income from one quarter share of the mines passed from Lady Caroline to her son William. He went abroad in 1832 and Lady Caroline died in 1835. The mistake was not discovered until 1839, when William brought a bill against his mothers estate to recover arrears of income. Alderson B stated the principle at, p 53: The plaintiff contends, that he has established that this receipt has been by mistake of fact, and that this is on the same footing as fraud, and prevents the operation, if made out, of the Statute of Limitations; which in equity is adopted as a guide, but is not at law binding on the court. I agree in that conclusion, if the circumstances of the case warrant it. But here, it seems to me, that the plaintiff had the means, with proper diligence, of removing the misapprehension of fact under which I think he did labour. He had in his power the deed on which the question turns; and, although it is perhaps rather obscurely worded, still I think he has allowed too much time to elapse not to be fairly considered as guilty of some negligence; and a Court of Equity, unless the mistake be clear, and the party be without blame or neglect in not having discovered it earlier, ought, in the exercise of a sound discretion, to adopt the rule given by the statute law as its guide. He also referred, during counsels argument, to the position at common law. As it happened part of the misapplied income was represented by identifiable lead ore stored at Richmond. When counsel for the plaintiff argued that Lady Caroline became liable to an action for money had and received only when she sold the lead, Alderson B commented, at p 48: If she sold the lead and received the produce, you might have waived the tort, and brought an action for money had and received. But then the Statute of Limitations runs from the conversion, and not from the time of receiving the money. These authorities were cited to Warrington J in In Re Robinson [1911] 1 Ch 502. There the mistake was on a fairly arcane point of law, that an entail created by royal grant as a reward for services cannot be barred: Robinson v Giffard [1903] 1 Ch 865. That decision showed that deeds executed over 40 years before and intended to bar an annuity granted in tail by King Charles II were ineffective. The claim was to recover arrears of the annuity. Warrington J identified, at p 513 three types of case where there is no time bar for recovery of mistaken payments by trustees: (1) when an estate is being administered by the court; (2) proprietary claims to recover identifiable trust assets or their traceable proceeds; and (3) claims against third parties in knowing receipt of trust property. By contrast the claim before him: is in substance a mere money demand to which a Court of Equity, acting by analogy to the statute, would apply the same period of limitation. I think, therefore, that the plaintiffs claim is barred by the statute, and that the action fails. The analysis in In Re Robinson was followed by Romer J in In Re Mason [1928] Ch 385 and approved by the Court of Appeal on appeal in that case [1929] 1 Ch 1. That was a claim, brought after a very long lapse of time, to recover an estate that had been taken by the Crown as bona vacantia. In the Court of Appeal Lord Hanworth MR distinguished, at p 9, between the discovery of a mistake which was a cause of action and discovery of the evidence needed to prove the cause of action. He said: It is suggested by Miss Mason that it is only when she found proof of the marriage of Maria LEpines parents that she was entitled to bring this claim. A confusion seems to have arisen between the power to prove a claim and the right to bring it. The cause of action on which this claim is founded arose so far back as one of the three dates I have mentioned, 1798, 1801 or 1831, and the last of these dates is nearly 100 years ago. The fact that the useful evidence did not turn up until 1921 does not affect the date when the cause of action arose. In re Blake [1932] 1 Ch 54 was another bona vacantia case, though the interest had been assigned by the Crown to third parties. Maugham J stated, p 60: An action in the Chancery Division brought by the next of kin against a person to whom the administrator had wrongly paid part of the personal estate of the intestate under a mistake of fact (not joining the administrator and seeking administration) would be in the nature of a common law action for money had and received, and the Court acting on the analogy of the Statute of James I (21 Jac 1, c 16) would hold the claim to be barred after the lapse of six years from the date of payment: see In Re Robinson [1911] 1 Ch 502, where the law is elaborately explained by Warrington J, and In Re Mason [1928] Ch 385; [1929] 1 Ch 1. A common law action of the same character, assuming that such an action would lie, would also be barred by the same statute after the expiration of six years from the date of payment: Baker v Courage & Co [1910] 1 KB 56, 63. On the other hand there is no doubt that in a proper case the next of kin might bring an action in the Chancery Division to follow the trust property if the defendant to whom the administrator had paid it were still in possession of it. The last relevant authority is an obiter passage in the monumental judgment of the Court of Appeal in In Re Diplock [1948] Ch 465. It was concerned with both personal and proprietary claims against numerous charities. The claims arose in consequence of the executors calamitous distribution of the testators valuable residuary estate in the mistaken belief that it was held on a valid charitable trust. The executors had by then compromised claims against them personally. In relation to a point which was not determinative Lord Greene MR, delivering the judgment of the court, observed at pp 515 516: If [the respondent charities] seek to bring the case, for the purposes of the defence of limitation, within section 2 of the [Limitation Act 1939] and to rely upon the reasoning in In Re Blake [1932] 1 Ch 54, they must do so by averring that the cause of action is analogous to the common law action for money had and received. And if they assert the analogy, they must take it with its attributes and consequences. Beyond doubt, it would appear that in the case of an action at common law to recover money paid under a mistake of fact, section 26 would now operate to postpone the running of time. It is true that no such action would lie where the mistake is one of law: but for reasons which we have already given we do not accept the respondents contention that the analogous claim in equity will also lie only where the mistake was one of fact. In our judgment, therefore, assuming the analogy (as it must be assumed if section 2 is to apply at all) the action is one for the recovery of money paid away by mistake albeit by the mistake of other persons and by a mistake of law and in our judgment, on this assumption, is an action for relief from the consequences of mistake no less than would be an action at common law to recover money paid away under a mistake of fact. The analogy with the common law action for money paid under a mistake is a recurring feature of these authorities. Indeed, the analogy goes right back to the great case of Moses v Macferlan (1760) 2 Burr 1005, the fountain head of the English law of unjust enrichment. This has been explained in a recent article by the Hon Justice W M C Gummow of the High Court of Australia, Moses v Macferlan 250 Years On (2010) 84 Austl LJ 756, (2011) 68 Washington and Lee Law Review 881, 882 888, citing Moses v Macferlan at 97 E R 676, 679 680 and Clark v Shee and Johnson (1774) 1 Cowp 197, 199 200 for the proposition that the action for money had and received was a liberal action in the nature of a bill in equity. In the old authorities the matter is sometimes treated simply as a case of mistake, without further analysis. But in the cases where the period was or might have been extended the mistake seems to have been an essential ingredient in the cause of action. Dr James Edelman, in Limitation Periods and the Theory of Unjust Enrichment (2005) 68 MLR 848, reads Denys v Shuckburgh differently. In this he follows Franks, whose monograph on Limitation of Actions (1959) suggests, at p 206 that the decision in Phillips Higgins v Harper was too narrow: In particular it seems clear that a beneficiary under a will or trust who claims directly against a person to whom trust property has been wrongfully transferred can rely upon the mistake of the personal representative or trustee to postpone the running of time; although his cause of action rests upon his own title and the defendants lack of title to the property and the action would be just the same if the property had been transferred purposely, ie, with knowledge that the recipient was not entitled. But Franks goes on to comment that if Pearson Js view is rejected the scope of section 26 might be dangerously expanded. that mistake is not an essential allegation and adds: In a footnote to the passage about title to trust property Franks comments Indeed it may be doubted whether even in a common law action to recover money paid by mistake (ie money had and received to the use of the plaintiff) the mistake is an essential allegation though it would of course in practice be pleaded: see Bullen & Leake, 3rd ed, 45, 50; 10th ed, 227 228. This footnote may be thought to anticipate modern controversies about absence of basis in unjust enrichment. In a case like Denys v Shuckburgh 4 Y & C Ex 42 the claimants cause of action rests both on his antecedent title and on his mistake. If Lady Carolines son had known the true position throughout, but had expressly or impliedly authorised the mine manager to continue paying income to his mother, he would have had difficulty recovering the payments even within the limitation period. Doubts about Phillips Higgins v Harper have been expressed not only by Franks and Edelman but also (in a rather more muted way) in Chitty on Contracts, 30th ed (2008) para 28 088; Goff and Jones, The Law of Restitution, 7th ed (2007) paras 43 004 to 43 006, and (renamed The Law of Unjust Enrichment) 8th ed (2011) paras 31 33 to 33 36; H M McLean, Limitation of Actions in Restitution [1989] CLJ 472, 493 495. Professor Burrows in a note on DMG in the Court of Appeal is generally supportive of Phillips Higgins v Harper: (2005) 121 LQR 540, 544. In DMG in the House of Lords Lord Hoffmann and I expressed some doubts, but Lord Scott of Foscote supported Phillips Higgins v Harper: [2007] 1 AC 558, paras 22, 91, 147. Lord Hoffmann observed (para 22): The Kleinwort Benson case [1999] 2 AC 349 is recent authority for the proposition that an action for restitution of money paid under a void contract can fall within this description [for relief from the consequences of a mistake]. That does not seem to me inconsistent with the existence of the mistake not being essential to the cause of action but merely one example of a case which falls within a more general principle, just as one could have (say, for the purposes of limitation) a category called clinical negligence without implying that it is a cause of action different in nature from other kinds of negligence. That is a reminder (and in view of current debates about absence of basis a timely reminder) that cause of action can bear different meanings, depending on the context. Having considered the matter with the benefit of much fuller argument than in DMG I have reached the clear conclusion that Phillips Higgins v Harper was rightly decided, and that we should not seek to develop the law by broadening the interpretation of an action for relief from the consequences of a mistake. My reasons are essentially the same as the Court of Appeals. In summary, as to the statutory language, I agree with Pearson Js view that the words have been carefully chosen, and are more precise than some formula such as based or founded on a mistake. That is an imprecise formula, and legal scholars seem to take different views as to whether it would provide a wider or a narrower test than the words of the statute. As to history, the authorities are rather short on clear exposition of the relevant principles of equity, but on the whole they provide little support for Mr Rabinowitzs thesis. Their clearest message is the close analogy between the equitable jurisdiction and the common law action to recover money paid under a mistake. As to policy, departure from Pearson Js relatively narrow interpretation would bring a real risk (as Franks put it, at pp 206 207) that the scope of [section 32(1)(c)] might be expanded dangerously close to the basic rule of common law limitation that ignorance of the existence of a cause of action does not prevent time from running. It would be difficult to find any principled stopping place for the expansion. The leading case of Cartledge v E Jopling & Sons Ltd [1963] AC 758 (in which this point was not even faintly argued) would be seen to have missed the point. The limits (and indeed the rationale) of sections 11 and 14A of the Limitation Act 1980 would have to be revisited. Further complications would be introduced into claims for pure economic loss for breaches of professional duties of care. Any such developments are a matter for the Law Commission and for Parliament, not for this court. Must there be a demand? At first instance, Henderson J referred to the Woolwich principle in para 245 of his judgment and directed himself in these terms: Conversely, a Woolwich claim must involve, at least in some sense, the making of a demand by the Revenue, whereas there is no need for a demand in cases of [payment under a mistake]. Later in his discussion of the point he referred to the decision of the Court of Appeal in NEC [2006] STC 606, which was decided in the period between the decisions of the Court of Appeal and the House of Lords in DMG. In NEC the Court of Appeal held that since the companies in question had not made a group income election, ACT was lawfully payable, and there had been no unlawful demand (see especially the judgment of Mummery LJ at paras 152 to 162). In the present case the Court of Appeal addressed this issue at paras 152 to 174 of the judgment of the court delivered by Arden LJ. The court differed from Henderson J. It accorded great respect to the judgment of Mummery LJ in NEC but did not accept that it was a binding precedent. It also pointed out, at para 169, that Mummery LJs conclusion (in para 162 of his judgment) tended to elide two distinct issues, that is whether ACT was lawfully due and whether it was demanded. The Court of Appeal went on to reach a different conclusion. The heart of its reasoning is at paras 157 and 158: In our judgment, the judge was wrong to reject the Revenues submission that Woolwich alone provides a sufficient United Kingdom remedy for the San Giorgio claims of the claimants [Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case 199/82) [1983] ECR 3595 San Giorgio]. He did so because he considered that he was bound by authority to hold that it is an essential ingredient of the Woolwich cause of action that the tax was paid pursuant to a demand. We consider that authority does not require a demand, and that it is sufficient that the state has exacted tax, which was not lawfully due, by voluntary compliance by the taxpayer with the legislative imposition of the tax. 158. As a matter of principle, we do not see why a demand should be a requirement of a Woolwich claim. The underlying principle is that the Revenue should repay tax that has been exacted without legal justification. We can see no reason why the cause of action should be confined to those taxes that are payable on demand as against those, such as VAT, that are payable without a demand. Moreover, it is impossible to see why the citizen who duly accounts for and pays, by way of example, VAT, without waiting for a demand, on the assumption that the applicable legislation is valid, should be disadvantaged as against the taxpayer who refuses to account or to pay until a peremptory demand is received. Mr Rabinowitz criticised the Court of Appeals reasoning and conclusion on the following grounds (in very brief summary): first, that it was contrary to binding authority, that is the decisions of the House of Lords in Woolwich and DMG; second, that it was contrary to what he described as the conventional understanding of Woolwich; third, that it would create uncertainty, both as to the boundaries of any extended Woolwich principle and in the general development of the law of unjust enrichment. Mr Rabinowitz also had a further, separate argument based on the Court of Appeals conforming interpretation of section 231 of TA 1988 (mentioned in para 33 above). This summary does not do justice to Mr Rabinowitzs powerful written and oral submissions but it indicates their general scope. As the matter is now before the Supreme Court, sitting in a constitution of seven, it is unnecessary to embark on a lengthy consideration of the question of precedent. It is clear from paras 108 to 112 of his judgment in NEC [2006] STC 606 that Mummery LJ carefully considered whether it was appropriate for him to express opinions on issues of law that were not necessary to the decision. He reached the conclusion that, in the exceptional circumstances of the group litigation, he should take a course which he would not normally have taken, even though it resulted in judgment being reserved for a longer period. Mummery LJs views (with which Sedley and Lloyd LJJ agreed) do not bind this court, but they are entitled to great respect. Mr Rabinowitzs strongest point is the frequent and consistent use of the expression demand, not only in the speech of Lord Goff in Woolwich, but in the speeches of the other members of the House of Lords majority in that case, and in the speeches of the House of Lords in DMG. Occasional variant uses of exaction carry no weight, since the two words have much the same meaning (indeed, arguably exaction sounds rather more coercive). Mr Rabinowitz is also right in submitting that most legal scholars have understood Woolwich and DMG as laying down that an official demand is an essential prerequisite for the principle to apply. However legal scholars have also been unanimous, or almost unanimous, in expressing the view that an official demand ought not to be a prerequisite for the application of the principle. The Law Commission in its report, Restitution: Mistakes of Law and Ultra Vires Public Authority Receipts and Payments (1994) (Law Com No 227) took the view that a demand was not necessary (paras 6.41 to 6.42): Lord Goffs reasons for the new restitutionary right, described above, also sustain these inferences, as they are based on the special position of the state and other public bodies. They do not focus on the particular requirements of a demand or a tax; but on the manifest injustice of allowing monies unlawfully extracted from the subject by a public authority to be retained by it. 6.42. Therefore, we believe that the principle may well be held to apply to all taxes, levies, assessments, tolls or charges, whether for the provision of services or not, collected by any person or body under a statutory provision which is the sole source of the authority to charge. We do not think that the Woolwich right is limited to payment of tax or to governmental or quasi governmental exactions, or to payments made in accordance with a demand. We believe the crucial element is that the payment is collected by any person or body which is operating outside its statutory authority, that is, it is acting ultra vires. The editors of Goff and Jones, The Law of Unjust Enrichment 8th ed [2011], para 22 15 comment, after referring to the Court of Appeals judgment in NEC: However, provided that a claimants money has been paid as tax ie to discharge a supposed tax liability it should make no difference in principle whether HMRC demanded the payment. After all, the Woolwich case itself was expressly fought and decided on the basis that the building societys payment was not made in response to illegitimate pressure exerted by the Revenue, and as Bastarache J has observed in the Supreme Court of Canada The right of [a claimant] to obtain restitution for taxes paid under ultra vires legislation does not depend on the behaviour of each party but on the objective consideration of whether the tax was exacted without proper legal authority. [Kingstreet Investments Ltd v New Brunswick (Finance) [2007] 1 SCR 3, para 53]. Professor Jack Beatson (as he then was) expressed similar views in an article (written after the Law Commissions Consultation Paper No 120 on Restitution of payments Made Under a Mistake of Law (1991), para 3.90 3.91 but before its Report), Restitution of Taxes, Levies and other Imposts: Defining the Extent of the Woolwich Principle (1993) 109 LQR 401, 405: So, the formulation of the principle indicates that only two of the four features present in the Woolwich case the demand and its ultra vires nature may be necessary prerequisites. In the case of the demand even this is questionable in view of Lord Goff and Lord Slynns view that a payment of tax made under a mistake of law would be recoverable. The Law Commissions Consultation Paper provisionally recommended that nothing should turn on the existence or otherwise of an actual demand for payment. Quite apart from the difficulties of distinguishing payments made in response to an implied demand or an expectation of payment generated by the authority (including its literature), which were mentioned, this requirement is wholly inappropriate and may pose difficulties in the context of a system based on self assessment of tax (and other levies) such as that under consideration by the Revenue at present. Similar views have been expressed by Professor Charles Mitchell (English Private Law, ed Burrows, 2nd ed (2007) para 18 157); Rebecca Williams, Unjust Enrichment in Public Law (2010) pp 40 41; and Professor Burrows, The Law of Restitution 3rd ed (2011) pp 507 508. This is a formidable volume of distinguished academic opinion. One of the main themes in the reasoning is the high constitutional importance of the principle that there should be no taxation without Parliament. As Professor Mitchell put it (English Private Law, 2nd ed para 18.156): One policy justification for the Woolwich entitlement mentioned by Lord Goff is that a general right to recover payments of tax levied without the authority of Parliament is needed to give full effect to the constitutional principle enshrined in article 4 of the Bill of Rights 1689, that the Crown and its ministers may not impose direct or indirect taxes without Parliamentary sanction. Another, latent in their Lordships speeches, is the related but wider public law principle of legality, that bodies invested with power by the state must respect the rule of law, and adhere to the limits of the jurisdictions conferred upon them. An earlier footnote refers to two influential articles on the same theme: Professor W R Cornish, Colour of Office: Restitutionary Redress Against Public Authority (1987) 14 J Mal & Comp L 41, and Professor Peter Birks, Restitution from the Executive: a Tercentenary Footnote to the Bill of Rights in Finn (ed), Essays on Restitution (1990) 164. These were referred to by Lord Goff in Woolwich [1993] AC 70, 166. These high principles should not depend on the details of the procedure adopted for the levying and payment of any particular tax, especially in an age when (for reasons of economy and efficiency) the trend is towards self assessment of as many taxes as possible. ACT was self assessed, as already noted, and so was the tax which HMRC sought to charge under the ultra vires Income Tax (Building Societies) Regulations 1986 in Woolwich. It is helpful to see how the arguments developed as Woolwich proceeded through the courts. The building society was successful in judicial review proceedings decided by Nolan J on 31 July 1987. The building society had anticipated that decision by issuing a writ on 15 July 1987. Nolan J gave judgment in the action on 12 July 1988, [1989] 1 WLR 137. He felt bound by authority to dismiss the action so far as it claimed interest, holding that there was an implied agreement for repayment of any ultra vires exaction, but without interest. In his judgment Nolan J made detailed findings of fact (at pp 141 142), concluding that the requirements of the Regulations as amplified in communications from the revenue amounted on their face to lawful demands from the Crown. The Court of Appeal [1993] AC 70, 76 142 allowed the building societys appeal by a majority. The majority (Glidewell and Butler Sloss LJJ) based their decision on an ultra vires demand and a payment which was not intended to close the transaction. Ralph Gibson LJ, dissenting, held that the payment should be classified as voluntary, with an implied agreement for repayment (without interest) if tax was not due. All three members of the Court of Appeal seem to have accepted, without much discussion, Nolan Js finding that there had been a demand. The differences between them turned on whether the building societys response to the demand should be regarded as a voluntary payment. The matter came before the House of Lords, therefore, on the unchallenged factual basis that there had been a demand. The House was split three two, with Lord Keith of Kinkel and Lord Jauncey of Tullichettle basing their dissents on the absence of any improper pressure or duress: [1993] AC 70, 160 161, 192 194. There was no difference between the majority and the minority as to the significance of a demand. In these circumstances it is in my view open to this court (whether or not it was strictly open to the Court of Appeal) to state clearly that where tax is purportedly charged without lawful parliamentary authority, a claim for repayment arises regardless of any official demand (unless the payment was, on the facts, made in order to close the transaction). The same effect would be produced by saying that the statutory text is itself a sufficient demand, but the simpler and more direct course is to put the matter in terms of a perceived obligation to pay, rather than an implicit demand. That is how it was put by Wilson J in her well known dissent in Air Canada v British Columbia (1989) 59 DLR (4th) 161, 169: It is, however, my view that payments made under unconstitutional legislation are not voluntary in a sense which should prejudice the taxpayer. The taxpayer, assuming the validity of the statute as I believe it is entitled to do, considers itself obligated to pay. Citizens are expected to be law abiding. They are expected to pay their taxes. Pay first and object later is the general rule. The payments are made pursuant to a perceived obligation to pay which results from the combined presumption of constitutional validity of duly enacted legislation and the holding out of such validity by the legislature. In such circumstances I consider it quite unrealistic to expect the taxpayer to make its payments under protest. Any taxpayer paying taxes exigible under a statute which it has no reason to believe or suspect is other than valid should be viewed as having paid pursuant to the statutory obligation to do so. Lord Goff stated in Woolwich that he found this reasoning most attractive. The Supreme Court of Canada has in recent years, in a judgment of the Court delivered by Bastarache J, unanimously approved this passage from her dissenting speech: Kingstreet Investments Ltd v New Brunswick (Finance) [2007] 1 SCR 3, para 55. In my view English law should follow the same course. We should restate the Woolwich principle so as to cover all sums paid to a public authority in response to (and sufficiently causally connected with) an apparent statutory requirement to pay tax which (in fact and in law) is not lawfully due. Mr Rabinowitz argued that to follow that course would introduce uncertainty as to what amounts to a tax. The expression should in my view be generously construed, but there are bound to be borderline cases (the Foreign and Commonwealth Office is said to be engaged in a constant dialogue with foreign embassies in London as to whether the congestion charge is a tax). Borderline cases of that sort will arise whether or not a demand is needed. They would be likely to cause very much less difficulty than deciding, across the whole range of taxes of different sorts, what amounts to an official demand. Mr Rabinowitz suggested that there would also be uncertainty in the general development of the English law of unjust enrichment. There is vigorous debate among legal scholars on this topic at present, and uncertainty as to the outcome. But to decide that an official demand is not a prerequisite to a claim for the recovery of tax paid when not due ought not to add appreciably to the uncertainty. It would not be a decisive step towards a general absence of basis principle in place of the unjust factors approach that has prevailed in the past. It would merely be creating, in Mr Rabinowitzs metaphor, a rather larger island of recovery in respect of undue tax. Finally, under this head, there is the argument based on the Court of Appeals conforming interpretation of section 231 of TA 1998. This was the Court of Appeals issue 6, addressed at paras 97 to 109 of its judgment. The test claimants argument is that section 231, on the interpretation adopted by the Court of Appeal, resulted in dividends from non resident subsidiaries of a UK resident company being treated as FII, so that a credit was available in the same way as for dividends received from UK resident subsidiaries. Therefore, the argument goes, ACT was not unlawfully levied. The appropriate claim was a mistake claim, not a Woolwich claim. This is an ingenious variation on the approach described at para 39 above. The argument looks like another bit of self inflicted harm for the test claimants, but they seek to turn it to their advantage. The tactical argument is ingenious but (even if the Court of Appeal was right in its conforming interpretation, a point which may still be revisited if permission is given for a further appeal to this court) it is in my view unsound. It seeks to rewrite history. HMRC stoutly defended its position before the Court of Justice until the judgment of the Grand Chamber at the end of 2006. Until then it consistently contended that there was nothing unlawful about the ACT/FII/FIDs regime, and it performed its statutory functions on that basis. Any suggestion that section 231 of TA 1988 did not mean what it plainly appeared to mean would have been met with incomprehension and disbelief. In short, it did not administer the taxation of UK resident companies in accordance with any conforming interpretation. The unlawful levying of tax may depend either on the text of the statute (which was on its face discriminatory and contrary to EU law) or on how the tax is administered in practice. In this case HMRC were at fault on at least one, and possibly both of these counts. The central issues revisited For the reasons given in paras 42 to 82 above I consider that the Court of Appeal was correct in its conclusions (i) on section 32(1)(c) of the Limitation Act 1980 and (ii) on an official demand for tax not being a prerequisite of a Woolwich claim. The last 40 paragraphs can therefore be seen as no more than a laborious detour which ultimately leads back to the central issues in the appeal, outlined in paras 38 and 39 above: is a Woolwich claim (on its own) an adequate remedy meeting the principles of effectiveness and equivalence? Or are the test claimants also entitled to regard a claim based on mistake as one which EU law will protect against summary removal by national legislation (with the consequence that the statutory cut off provisions infringe EU law)? The Court of Appeal answered the first of these questions in the affirmative, and the second in the negative. The relevant part of the judgment is paras 217 to 229. The courts reasoning is quite compressed, the heart of it being in para 225: We have held, in respect of issues 11 and 12, that a demand is not an essential ingredient of the Woolwich cause of action, and that that cause of action provides an effective remedy for all the Claimants San Giorgio claims. Thus the cause of action for repayment of monies paid under a mistake is not a cause of action required by Community law. The cause of action for repayment of monies paid under a mistake is a domestic remedy of wide application, which Community law does not require the member states to provide, attended by a limitation period (ie section 32(1)(c) of the Limitation Act 1980) that goes beyond the requirements of Community law: see Marks & Spencer at paragraph [2003] QB 866, para 35, in which the court considered a three year limitation period to be reasonable. Community law restricts the effectiveness of domestic legislation curtailing a limitation period applicable to a domestic cause of action that protects the Community right. That domestic cause of action is the Woolwich claim, and it is unaffected by sections 320 and 107. Mr Aaronson has criticised this reasoning as seriously flawed. The test claimants written case sets out an elaborate framework of five reasons, the first and second of which have been the subject of the detour at paras 42 to 82 above. The third, fourth and fifth reasons are considered in the following sections of this judgment. Reemtsma Mr Aaronson relied on the decision of the Court of Justice in Reemtsma Cigarettenfabriken Gmbh v Ministero delle Finanze (Case 35/05) [2007] ECR I 2425 as authority for the general proposition that EU law requires repayment of tax paid under a mistake (and not unlawfully exacted). In that case an Italian advertising agency had supplied services to a German client and the services were to be treated as supplied in Germany. The Italian supplier erroneously invoiced the client and paid VAT to the Italian tax authorities. Having failed to obtain a refund from the supplier, the German company brought proceedings against the Italian tax authorities. The Court of Justice held that it was not reimbursable under the provisions of the Eighth Directive and should normally be claimed from the supplier. However, (para 42) where reimbursement of the VAT would become impossible or excessively difficult, the member states must provide for the instruments necessary to enable that recipient [of the relevant services] to recover the unduly invoiced tax in order to respect the principle of effectiveness. Mr Aaronson submitted that this principle was of general application, and not limited to VAT (as a specifically EU tax). He submitted that this was a mistaken payment which was within the wide San Giorgio principle but not within the Woolwich principle, however much it might be extended. In support of his submission that it was not limited to VAT Mr Aaronson referred to Danfoss AS v Skattministeriet (Case C 94/10), 20 October 2011. Denmark imposed an indirect tax on lubricants and hydraulic oils which failed to give effect to exemptions required by article 8 of Council Directive 92/81 EEC. Danfoss purchased these products in large quantities and the suppliers passed on to Danfoss the amount of unlawfully exacted tax which they had paid. Following the judgment of the Court of Justice in Braathens Sverige AB v Riksskatteverket (Case C 346/97) [1999] ECR I 3419 Danfoss claimed reimbursement direct from the Danish authorities. The Court of Justice referred to the general San Giorgio principle by which a member state is in principle required to pay charges levied in breach of EU law. This is subject to an exception if the wrongly levied charge has been passed on. Where the tax has been passed on the ultimate consumer should normally be able to recover from his supplier, but if that is impossible or unduly difficult there must be a remedy in the form of a direct claim against the tax authorities. Reemtsma was referred to as an authority for this proposition. Lord Sumption regards this principle as limited to harmonised EU taxes, and I am inclined to agree with that. But in any event it applies to a different and relatively unusual situation, in which it is a third party, and not the original taxpayer, who is seeking to recover tax from the authorities. It does not assist the test claimants in this appeal. EU laws requirements as to national remedies (especially limitation periods) There is no doubt as to the general principles regulating what EU law requires of national remedies for infringements of EU law. The principles were stated by the Grand Chamber in its judgment on the first reference in these proceedings, Case C 446/04, paras 201 to 203, in terms identical, or almost identical, to those which have been stated many times before by the Court of Justice: It must be stated that it is not for the court to assign a legal classification to the actions brought before the national court by the claimants in the main proceedings. In the circumstances, it is for the latter to specify the nature and basis of their actions (whether they are actions for repayment or actions for compensation for damage), subject the national court (see [Metallgesellschaft (Joined Cases C 397/98 and C 410/98) [2001] ECR I 1727], para 18. the supervision of to 202. However, the fact remains that, according to established case law, the right to a refund of charges levied in a member state in breach of rules of Community law is the consequence and complement of the rights conferred on individuals by Community provisions as interpreted by the court (see, inter alia San Giorgio (Case C 199/82) [1983] ECR 3595, para 12, and Metallgesellschaft, para 84). The member state is therefore required in principle to repay charges levied in breach of Community law Comateb (Joined Cases C 192/95 to C 218/95) [1997] ECR I 165, para 20, and Metallgesellschaft, para 84). 203. In the absence of Community rules on the refund of national charges levied though not due, it is for the domestic legal system of each member state to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive from Community law, provided, first, that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and, secondly, that they do not render virtually impossible or excessively difficult the exercise of rights conferred by Community law (principle of effectiveness) (see, inter alia, Rewe (Case C 33/76) [1976] ECR 1989, para 5, and Comet (Case C 45/76) [1976] ECR 2043, paras 13 and 16; and, more recently, Edis (Case C 231/96) [1998] ECR I 4951, paras 19 and 34; Dilexport (Case C 343/96) [1999] ECR I 579, para 25; and Metallgesellschaft, para 85). This brings us to the fourth and fifth reasons in the test claimants written case, which go to the heart of this appeal. They contend that in using the mistake cause of action to vindicate their EU rights they were unquestionably entitled to the protection of EU law. They criticise the Court of Appeal for having asked the wrong question: that is for having asked which domestic remedies give effect to the San Giorgio principle, rather than considering, as they should have done, all national remedies as available for the purpose. It is not necessary to multiply references to the general principles, which are not in dispute. It is however necessary to look more closely at the attitude of EU law towards limitation of actions under the legal systems of different member states, and towards legislative measures taken by member states to curtail limitation periods, so far as they affect national remedies for breaches of EU law. It is well established that EU law has no general objection to limitation periods being provided for in the legal systems of member states. On the contrary, limitation periods are one manifestation of the principle of legal certainty. As long ago as Rewe I (Rewe Zentralfinanz eG v Landwirtschaftskammer fur das Saarland (Case C 33/76) [1976] ECR 1989, para 5, the Court of Justice (after referring to the general principle of national courts acting in accordance with national rules) observed: The position would be different only if the conditions and time limits made it impossible in practice to exercise the rights which the national courts are obliged to protect. This is not the case where reasonable periods of limitation of actions are fixed. The laying down of such time limits with regard to actions of a fiscal nature is an application of the fundamental principle of legal certainty protecting both the taxpayer and the administration concerned. There is a similar statement, again expressly linked to fiscal proceedings, in Comet BV v Produktschap voor Siergewassen (Case C 45/76) [1967] ECR 2043, para 18. Limitation periods must be reasonable, but the Court of Justice recognises that national systems vary a good deal, and accepts different approaches so long as there is no infringement of the principles of effectiveness and equivalence, and no disappointment of legitimate expectations. This is made clear in Amministrazione delle Finanze dello Stato v Sas MIRECO (Case C 826/79) [1980] ECR 2559, paras 11 to 13, and other cases of the same vintage involving the Italian tax authorities, including Amministrazione delle Finanze dello Stato v Denkavit Italiana Srl (Case C 61/79) [1980] ECR 1205, paras 23 and 24, and Amministrazione delle Finanze dello Stato v Ariete SpA (Case C 811/79) [1980] ECR 2545, paras 10 and 11. In line with that approach, in Haahr Petroleum v Abenr Havn (Case C 90/94) [1997] ECR I 4085, a five year period was accepted as reasonable for reimbursement of an unlawful goods duty. Emmott v Minister for Social Welfare (Case C 208/90) [1993] ICR 8 was distinguished ([1997] ECR I 4085, para 52) because in that case the relevant directive had not been properly transposed, and until its proper transposition time was not to start to run. In Edilizia Industriale Siderurgica Srl v Ministero delle Finanze (Case C 23/1996) [1998] ECR I 4951 a three year period was accepted for recovery of company registration charges levied in breach of article 10 of Council Directive 69/335/EEC despite the fact that the normal limitation period for restitution, under article 2946 of the Italian Civil Code, was ten years. The principles of effectiveness, equivalence and legitimate expectation also apply if a national legislature enacts a measure to curtail an existing limitation period, especially if the measure appears to be directed at a particular ruling of the Court of Justice. The leading authority is the first judgment of the Court of Justice in Marks & Spencer Plc v Customs and Excise Comrs (Case C 62/00) [2003] QB 866 (M&S). That litigation was complicated and protracted, involving as it did two distinct claims for repayment of VAT (one concerning gift vouchers, and the other concerning chocolate covered marshmallow teacakes) which were linked together as a matter of case management. There were two references to the Court of Justice, the first of which attracted criticism from the court because of its restricted scope. The final chapter in the saga is reported at [2009] UKHL 8, [2009] STC 452. For present purposes, however, it is sufficient to note that section 47 of the Finance Act 1997 curtailed the period for a claim for repayment of VAT from six to three years, with retrospective effect, and without any period of grace. Some of the claimants claims for VAT on teacakes (which were properly treated as zero rated) went back to 1973. The Advocate General (Geelhoed) referred to a summary ([2003] QB 866, para 54) of the EU jurisprudence in Roquette Frres SA v Direction des Services Fiscaux du Pas de Calais (Case C 88/99) [2000] ECR I 10465, para 20. He also cited at para 57, Dilexport (Case C 343/96) [1999] ECR I 579, para 43: Community law does not preclude the adoption by a Member State, following judgments of the Court declaring duties or charges to be contrary to Community law, of provisions which render the conditions for repayment applicable to those duties and charges less favourable than those which would otherwise have been applied, provided that the duties and charges in question are not specifically targeted by that amendment and the new provisions do not make it impossible or excessively difficult to exercise the right to repayment. The Advocate General pointed out (para 58) that the retrospective alterations to the Value Added Tax Act 1994 affected not only taxable persons who expected under the existing rules to have ample time to make their claims but even taxable persons who before the date on which the announcement of a change in the law was made (18 July 1996) or prior to the date on which it was enacted (19 March 1997) had made claims for repayment of unduly levied tax. The issue of specific targeting was raised at first instance, but in view of the conclusions which he had already reached Henderson J preferred to express no view on it ([2009] STC 254, paras 428 to 431). His reasons included the difficulty of the constitutional issues which would arise in inquiring into the legislative intention behind the amending legislation. The point was not raised in the Court of Appeal or in this court. The Court of Justice reached conclusions similar to those of the Advocate General [2003] QB 866, paras 36 to 38: Moreover, it is clear from Aprile [2001] 1 WLR 126, para 28 and Dilexport [1999] ECR I 579 paras 41 and 42 that national legislation curtailing the period within which recovery may be sought of sums charged in breach of Community law is, subject to certain conditions, compatible with Community law. First, it must not be intended specifically to limit the consequences of a judgment of the Court to the effect that national legislation concerning a specific tax is incompatible with Community law. Secondly, the time set for its application must be sufficient to ensure that the right to repayment is effective. In that connection, the court has held that legislation which is not in fact retrospective in scope complies with that condition. 37. It is plain, however, that that condition is not satisfied by national legislation such as that at issue in the main proceedings which reduces from six to three years the period within which repayment may be sought of VAT wrongly paid, by providing that the new time limit is to apply immediately to all claims made after the date of enactment of that legislation and to claims made between that date and an earlier date, being that of the entry into force of the legislation, as well as to claims for repayment made before the date of entry into force which are still pending on that date. 38. Whilst national legislation reducing the period within which repayment of sums collected in breach of Community law may be sought is not incompatible with the principle of effectiveness, it is subject to the condition not only that the new limitation period is reasonable but also that the new legislation includes transitional arrangements allowing an adequate period after the enactment of the legislation for lodging the claims for repayment which persons were entitled to submit under the original legislation. Such transitional arrangements are necessary where the immediate application to those claims of a limitation period shorter than that which was previously in force would have the effect of retroactively depriving some individuals of their right to repayment, or of allowing them too short a period for asserting that right. The Court of Justice held the amending legislation incompatible with the principle of effectiveness. It also (paras 45 and 46) held that it was precluded by the principle of the protection of legitimate expectations. Legitimate expectations The principle of protection of legitimate expectations is closely linked to the principle of legality. But in the opinion of the Advocate General (Cosmas) in Duff v Minister for Agriculture and Food, Ireland and Attorney General (Case C 63/93) [1996] ECR I 569, para 23, the two are not interchangeable. The Advocate Generals opinion contains (at paras 24 and 25) a passage about timing which is of particular interest (his emphasis): 24. Particularly for the individual the principle of legality would in many ways lose its significance as a guarantee of a sphere of freedom, if the temporal succession of legal provisions concerning him was not governed by an elementary consistency and coherence sufficient to enable him to discern the consequences (legal and financial) of his activities. 25. Thus the principle of legal certainty calls for clarity and accuracy in framing the rules of law, and the individual provisions giving effect to them, which at a given moment in time constitute the legal framework within which the competences of the institutions are exercised and the activities of individuals are carried on. The principle of the protection of legitimate expectations requires the Community legislature and the other Community organs (or the national authorities operating under provisions of Community law) to exercise their powers over a period of time in such a way that situations and relationships lawfully created under Community law are not affected in a manner which could not have been foreseen by a diligent person. This approach was not in terms adopted by the Court of Justice, but para 20 of its judgment appears to be in line with it. I have quoted this passage at some length because it seems to me to touch on what is, if I may respectfully say so, one of the crucial points in Lord Sumptions judgment. Lord Sumption ultimately bases his conclusions, on the central issue, on the principle of protection of legitimate expectations (paras 198 to 202). He observes (para 196) that the right of the test claimants to choose from a range of causes of action is a right derived solely from English procedural law and (echoing the Court of Appeal, para 226) that it exists only to the extent that English law so provides. I have considerable difficulty in reconciling that with the principles stated by the Advocate General and the Court of Justice in M&S [2003] QB 866. But before addressing that difficulty I should recapitulate the sequence of events in which the statutory cut off provisions were announced and enacted. The enactment of the statutory cut off provisions Mr Aaronson provided a useful summary of the key dates. The first two are the decisions of the House of Lords in Woolwich (20 July 1992) and Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 (29 October 1998). After 1998 English lawyers knew that the recovery of money paid under a mistake of law (perhaps including a mistake of tax law, subject to arguments on exclusive remedies) had become a real possibility, although it was by no means a firmly established cause of action. But until the decision of the Court of Justice in Metallgesellschaft (Joined Cases C 397/98 and C 410/98) [2001] Ch 620 on 8 March 2001 there was no general appreciation that the UK corporation tax regime was seriously open to challenge as infringing the Treaty. Henderson J did not make any detailed findings about this, since the principle of legitimate expectations does not seem to have been argued as a separate issue before him. But he did (para 267) make a general finding of fact about mistake: The unlawful payments of ACT made from 1973 to 1999, and the unlawful payments of ACT made under the FID regime from 1994 to 1999, were in my view plainly made under a mistake about the lawfulness of the tax regimes under which they were paid. I am satisfied from the evidence, both written and oral, that this was not obvious to anybody within the BAT group at the time, since everybody proceeded on the footing that the tax in question was lawfully due and payable. After 8 March 2001 a well advised multinational group based in the UK would have had good grounds for supposing that it had a valid claim to recover ACT levied contrary to EU law, with at least a reasonable prospect that the running of time could be postponed until then (but not subsequently) by the operation of section 32(1)(c) of the Limitation Act 1980. During 2002 the opinion of the Advocate General and the judgment of the Court of Justice in M&S, while possibly not adding much to the earlier jurisprudence, spelled out very clearly, for UK companies and lawyers, both the capacity and the limits of national legislation in curtailing limitation periods in proceedings for recovery of tax levied in breach of EU law. The next important date was 18 July 2003, when Park J gave his first instance judgment in DMG. This was the first judicial decision which positively upheld a claim for repayment of unduly levied tax with an extended limitation period under section 32(1)(c). But appeals to the Court of Appeal and the House of Lords were to follow and (as Henderson J observed, para 406), the outcome of those appeals was, at the time, impossible to predict with any confidence. The BAT group started its proceedings on 18 June 2003, a month before Park Js judgment in DMG. On 8 September 2003 the Paymaster General announced the introduction of retrospective legislation affecting proceedings to recover tax on the ground of mistake if the proceedings were issued on or after that day (the scope of the proposed legislation was later extended to include amendment of existing proceedings). The Aegis group issued its proceedings on that very day, 8 September 2003, and so was one of the very first claimants to be affected by the legislation. Section 320 of the Finance Act 2004 was enacted on 24 June 2004. Its essential provisions were set out by Henderson J (para 408): Exclusion of extended limitation period in England, Wales and Northern Ireland (1) Section 32(1)(c) of the Limitation Act 1980 . (extended period for bringing an action in case of mistake) does not apply in relation to a mistake of law relating to a taxation matter under the care and management of the Commissioners of Inland Revenue. This subsection has effect in relation to actions brought on or after 8 September 2003. (2) For the purposes of (a) section 35(5)(a) of the Limitation Act 1980 . (circumstances in which time barred claim may be brought in course of existing action), and (b) rules of court . having effect for the purposes of those provisions, as they apply to claims in respect of mistakes of the kind mentioned in subsection (1), a new claim shall not be regarded as arising out of the same facts, or substantially the same facts, if it is brought in respect of a different payment, transaction period or other matter. This subsection has effect in relation to claims made on or after 20 November 2003. (6) The provisions of this section apply to any action or claim for relief from the consequences of a mistake of law, whether expressed to be brought on the ground of mistake or on some other ground (such as unlawful demand or ultra vires act). (7) This section shall be construed as one with the Limitation Act 1980 . The Court of Appeal gave judgment in DMG, reversing Park J, on 4 February 2005: [2006] Ch 243. Mr Aaronson described the Court of Appeals decision as a bump in the road, suggesting that it was unforeseen and soon forgotten, but that seems an inappropriate description, even with hindsight. Reference to the judgments (running to nearly 300 paragraphs in all) shows that numerous issues were fiercely contested, including the date of the mistakes discovery (which occurred, on HMRCs argument, in 1995). The Court of Appeals decision was reversed by the House of Lords on 25 October 2006: [2007] 1 AC 558. Shortly afterwards the UK government applied to the Court of Justice for the reopening of the hearing of the first reference in these proceedings so that the United Kingdom could argue for a temporal restriction to the judgment of the Court of Justice. That application was rejected on 6 December 2006, and on the same day HMRC announced the introduction of further retrospective legislation. This was enacted on 19 July 2007 as section 107 of the Finance Act 2007. The essential terms of the section were set out by Henderson J (para 412): Limitation period in old actions for mistake of law relating to direct tax (1) Section 32(1)(c) of the Limitation Act 1980 . (extended period for bringing action in case of mistake) does not apply in relation to any action brought before 8 September 2003 for relief from the consequences of a mistake of law relating to a taxation matter under the care and management of the Commissioners of Inland Revenue. (2) Subsection (1) has effect regardless of how the grounds on which the action was brought were expressed and of whether it was also brought otherwise than for such relief. (3) But subsection (1) does not have effect in relation to an action, or so much of an action as relates to a cause of action, if (a) the action, or cause of action, has been the subject of a judgment of the House of Lords given before 6 December 2006 as to the application of section 32(1)(c) in relation to such relief, or (b) the parties to the action are, in accordance with a group litigation order, bound in relation to the action, or cause of action, by a judgment of the House of Lords in another action given before that date as to the application of section 32(1)(c) in relation to such relief. (4) If the judgment of any court was given on or after 6 December 2006 but before the day on which this Act is passed the judgment is to be taken to have been what it would have been had subsections (1) to (3) been in force at all times since the action was brought (and any defence of limitation which would have been available had been raised). (6) In this section group litigation order means an order of a court providing for the case management of actions which give rise to common or related issues of fact or law . On 30 September 2010 the European Commission announced that it had made a formal request to the UK to change section 107 of the Finance Act 2007. On 26 January 2012 there was a further announcement that the European Commission has referred the UK to the Court of Justice because of the absence of proper transitional rules in section 107. Discussion of the statutory cut off provisions These provisions were challenged in the lower courts primarily on the ground that they infringed the principle of effectiveness. There was little discussion of legitimate expectations. Lord Sumption holds (para 199) that reasonable persons in the position of the test claimants would not, until Park Js judgment in DMG on 18 July 2003, have counted on being able to recover tax on the ground of mistake of law; and that even after that decision the existence of such a claim was being challenged on serious grounds. He concludes from that proposition that no one in the position of the test claimants could have had a reasonable and realistic expectation of recovering tax on the ground of mistake. I cannot disagree with that conclusion. The issue of legitimate expectations was not raised before the judge, and he made no findings on it. The issue of reasonable expectations must of course be decided objectively, but it would have been helpful to have had the view of the judge who very carefully considered the whole case. But in any case I do have great difficulty in applying the same reasoning to upholding the validity of section 320 against attack under the principle of effectiveness, in the light of M&S. The judgment of the Court of Justice in that case lays down a clear requirement for transitional provisions, and that requirement is derived at least as much from the principle of effectiveness and the principle of legality as from the more limited principle of protection of legitimate expectations (as Advocate General Cosmas said in Duff (Case C 63/93) [1996] ECR I 569, para 23, they are not interchangeable). If one asks what the test claimants were entitled to, and what they could expect to continue to be entitled to, in the way of national remedies to recover tax levied and paid contrary to EU law, the answer is plainly not that they were entitled to the indefinite continuation of a range of alternative remedies. The passage from Rewe II on which the test claimants rely (Rewe Handelsgellschaft Nord mbH v Haupzollamt Kiel (Case C 158/80) [1981] ECR 1805, para 44) is, as Lord Sumption demonstrates, an example of the operation of the principle of equivalence. It is not applicable in this case because both of the statutory cut off provisions applied to all claims for repayment of direct tax, whether or not the repayment was claimed because of an infringement of EU law. Nor were the test claimants entitled to a remedy arrived at by some precise formula furnished by EU law. That would be contrary to the basic principles laid down in Rewe I (Case C 33/76) [1976] ECR 1989, and repeated in countless cases since then. What they were entitled to was that national law should provide an effective remedy which met the requirements of EU principles of effectiveness and equivalence; and that any curtailment of any relevant limitation period should comply with those principles, as well as with the principle of legitimate expectations. The fact that they could not have complained, in another parallel universe in which section 32 (1)(c) had never existed, is not decisive on the issue of effectiveness. I would therefore hold that section 320 was contrary to EU law as infringing the principle of effectiveness as explained in M&S, and that section 107 was contrary to EU law both on that ground and (in agreement with Lord Sumption) under the principle of protecting legitimate expectations. Examples can be tendentious, but the drastic way in which section 320 could operate can be illustrated by the example of a UK resident holding company, part of a multinational group, which paid ACT from 1973 to 1996, building up an ever increasing surplus of unused ACT, and then (three years before the repeal of ACT) decided that enough was enough, and disposed of its overseas subsidiaries. In 2001 it would have learned of the possibility of a claim for repayment of tax, and taken advice as to the wisdom of incurring costs by making a claim, which was still doubtful, at some time during the next six years. In 2002 M & S (Case C 62/00) [2003] QB 866 seemed to confirm that the law would not be changed retrospectively and without reasonable notice. But if the company did not act before 8 September 2003 it would have been deprived, retrospectively and without any notice, of the entirety of its claims for over 20 years tax. Section 33 of the Taxes Management Act 1970 The last substantive point to be considered is section 33 of the Taxes Management Act 1970, which provided a statutory right to repayment of tax paid by mistake, subject to a number of restrictive conditions. It replaced provisions originally introduced by the Finance Act 1923. It has since been replaced by two different sets of provisions, one applicable to individuals and the other to companies. In the form in which it was in force at the relevant time the conditions were (1) it applied only to excessive tax charged by an assessment (which meant, Lord Goff stated in Woolwich [1993] AC 70, 169, a valid assessment) as a result of an error or mistake in a return; (2) there was a six year time limit; (3) there was to be no repayment if the erroneous or mistaken return was in accordance with practice generally prevailing at the time; and (4) the repayment was to be such as the Board of Inland Revenue (subject to a possible appeal to the Special Commissioners) considered reasonable and just. The flexibility of the last condition was explained by Mr Ewart by the example of a taxpayer who had paid too much tax six years before, but who ought to have paid more tax on the same income seven or more years before. The issue on section 33 is whether it is an obstacle to the test claimants and if so, whether it can be given a conforming interpretation under the Marleasing principle ((Case C 106/89) [1990] ECR I 4135). In terms of the amount of tax at stake, this issue is relatively minor in the context of the litigation as a whole, as it extends only to tax charged under Schedule D, Case V, pursuant to section 18 of TA 1988. But it is still a point of some general importance. Before Henderson J HMRC argued, but only it seems quite briefly, that the decision of the Court of Appeal in Monro v Revenue and Customs Comrs [2009] Ch 69 established that section 33 was an exclusive remedy which left no room for any common law claim in unjust enrichment. The judge [2009] STC 254, paras 438 439 rejected that on two grounds: first that section 33 did not extend to tax levied otherwise than by an assessment; secondly that in any event the national legislation must, in a San Giorgio claim, yield to the principle of effectiveness. It now seems to be common ground that the first of these reasons does not hold good for tax under Schedule D Case V. The Court of Appeal took a different approach. It concluded ([2010] STC 1251, paras 261 and 264) that a conforming interpretation was possible, and did sufficiently go with the grain of the legislation (the expression used in relation to section 3(1) of the Human Rights Act 1998 by Lord Rodger of Earlsferry in Ghaidan v Godin Mendoza [2004] 2 AC 557, para 121, also adopted by Lord Nicholls of Birkenhead at para 33). The conforming interpretation adopted was (para 261) that the restrictive condition about prevailing practice in section 33(2A) is to be read as subject to the limitation that it applies only if and to the extent that the United Kingdom can consistently with its Treaty obligations impose such a restriction. I have grave doubts as to whether that interpretation does not go against the grain of the legislation, since the practice generally prevailing condition is of long standing and has always been regarded as an important safeguard for the public revenue. I am inclined to think that Mr Aaronson was right (Day 2, pp 25 26) to call it a cardinal feature of the legislation. In my view the Marleasing principle can be applied in a simpler and more natural way by not construing section 33 as impliedly setting itself up as an exclusive provision (which it did not do expressly, unlike section 80 of the Value Added Tax Act 1994). The test claimants submit that the application of Marleasing cannot rework section 33 in a way that serves any relevant purpose. But to read it as non exclusive does not go against its grain. It would merely exclude an implication which is itself no more than a process of statutory construction. In practical terms the effect is the same as that which Henderson J reached by the second limb of his reasoning. I would therefore allow the appeal on this point (although it may not, in the end, make much practical difference). In summary, therefore, my provisional view is that we should (1) uphold the Court of Appeal as to (i) the scope of section 32(1)(c) of the Limitation Act 1980 and (ii) the scope of the Woolwich principle; (2) (3) allow the appeal on section 320 and section 107; and allow the appeal on section 33 of the Taxes Management Act 1970. But in view of the difference of opinion in the court I consider (in common with Lord Hope, Lord Dyson and Lord Reed) that it is necessary for the court to make a further reference to the Court of Justice of the European Union in accordance with directions in para 23 of Lord Hopes judgment. LORD BROWN I have had the great advantage of reading in draft the judgments of Lord Walker and Lord Sumption and am in full agreement with them both on the several issues upon which they each agree. What, then, of the single issue upon which they disagree: was section 320 of the Finance Act 2004 contrary to EU law as infringing the principle of effectiveness as explained by the Court of Justice in Marks & Spencer Plc v Customs & Excise Comrs (Case C 62/00) [2003] QB 866? During the hearing I confess to having found difficulty in recognising any principled basis for distinguishing between on the one hand section 47(1) of the Finance Act 1997 which (with effect from when government had earlier announced its intention so to legislate: section 47(2)), besides reducing the basic limitation period for tax repayment claims from six to three years, in addition eliminated the special advantage for claims in mistake previously introduced by section 24(5) of the Finance Act 1989, delaying the commencement of the limitation period for such claims until the claimants had actually or constructively discovered the mistake this being the provision held ineffective by the Court of Justice in Marks & Spencer; and, on the other hand, section 320 with which this court is now concerned which (similarly with effect from when government first announced its intention so to legislate) similarly eliminates with regard to tax repayment claims based on a mistake of law the similar special provision enlarging the limitation period to be found in section 32(1)(c) of the Limitation Act 1980. Now, however, I am inclined to accept Lord Sumptions view that, by the same token that, on the facts of this case, the appellants can establish no legitimate expectation at any time prior to 8 September 2003 (when government announced its intention to introduce section 320) that the limitation period for mistake of law tax repayment claims would not be attenuated by legislation, nor can they make good their argument that section 320 infringes the EU principle of effectiveness. The self same considerations essentially of fairness and legal certainty which underlie the doctrine of legitimate expectation (both domestically and under EU law) to my mind also inform the principle of effectiveness. If, as seems to me plainly to be so, the situation even after Park Js first instance decision in Deutsche Morgan Grenfell Group Plc v Inland Revenue Comrs [2003] 4 All ER 645 (DMG) was one of complete uncertainty as to whether tax could be re claimed on the basis of a mistake of law there being at least as much room for a mistake of law as to this as for the mistake of law which the majority of the House of Lords in DMG [2007] 1 AC 558 held the taxpayers to remain under until the Court of Justices final authoritative decision in the Hoechst case (Metallgesellschaft Ltd v Inland Revenue Comrs (Joined Cases C 397/98 and C 410/98) [2001] Ch 620) there was to my mind neither unfairness nor any denial of a legitimate expectation from Parliament stepping in to legislate with immediate effect to clarify the situation (albeit to the taxpayers obvious disadvantage given that the common law was finally to be developed in their favour). In short, whereas the position as to limitation with regard to tax recovery claims was crystal clear under section 24 of the 1989 Act and could not therefore fairly and legitimately be altered without due notice and appropriate transitional provisions it was entirely unclear under the developing common law when Parliament chose to intervene by the enactment of section 320. And it is that which provides the principled basis for distinguishing this case from Marks & Spencer. Section 107, by contrast, is not merely overtly retrospective (eliminating pre existing claims explicitly preserved by section 320), but was introduced after the House of Lords decision in DMG finally resolved the uncertainty in the law and proclaimed (albeit subject always to lawful legislative change) that mistake of law claims with their extended limitation periods were indeed available to those seeking recoupment of overpaid (or prematurely paid) tax. Small wonder that it is section 107 that the Commission selected for attack. LORD CLARKE In para 9 above Lord Hope has conveniently identified four issues for determination in this appeal. Issues (3) and (4), which raise a question of construction of section 32(1)(c) of the Limitation Act 1980 and the ingredients of the common law Woolwich claim respectively, raise no issue of EC law. I agree with the other members of the court that, for the reasons they give, the decisions of the Court of Appeal on both questions should be upheld and that both questions should be answered no. At the end of the argument I was inclined to the view that section 32(1)(c) should be given the wider meaning contended for by the Test Claimants, but I have been persuaded by the reasoning of Lord Walker and Lord Sumption that it should not. I also agree with the other members of the court that the restitution and damages remedies sought by the Test Claimants are not excluded by section 33 of the Taxes Management Act 1970 and that it follows that question (2) must be answered no and that the Test Claimants appeal on this issue must succeed. This seems to me to be essentially a matter of construction of section 33. In so far as it involves an issue of EU law, I would hold that it is acte clair, and would not refer it to the Court of Justice. By contrast, the questions posed by issue (1) raise difficult questions of EU law. This is evident from the differences of opinion between members of the court. A comparison between the judgments in this case shows that the members of the court are divided, not only as to the question whether EU law protects the mistake claims and, in particular, whether section 320 of the Finance Act 2004 infringes the EU law principles of effectiveness, legal certainty and legitimate expectation, but also as to the correct reasoning for the conclusions reached. I too would refer the section 320 issues to the Court of Justice. If there is to be a reference, any further analysis of the position by me will be largely, if not entirely, redundant, since all will depend upon the conclusions ultimately reached by the Court of Justice. I will therefore only add this. I agree that section 107 infringes EC law for the reasons given by Lord Sumption. As to section 320, in agreement with Lord Hope, Lord Walker, Lord Dyson, and Lord Reed my provisional view is that the appeal should be allowed. The problem (or potential problem) facing the Test Claimants is that English law provides two remedies for their claim that tax has been exacted from them contrary to EU law. If the only available remedy were the mistake claim, the position would be clear. It would fall within the principle in Marks & Spencer Plc v Customs and Excise Comrs (Case C 62/00) [2003] QB 866 (M&S), which is discussed in some detail by Lord Walker at paras 96 to 99. The principle is summarised both by the Advocate General and by the Court of Justice at paras 36 to 38 (quoted at para 99 above). It applies in respect of national legislation curtailing the period within which recovery may be sought of sums charged in breach of EU law and may be summarised as follows: (1) such legislation must not be intended specifically to limit the consequences of a judgment of the Court of Justice to the effect that national legislation concerning a specific tax is incompatible with EU law; (2) the time set for its application must be sufficient to ensure that the right to repayment is effective; and (3) where a new limitation period limits the previously permitted period, the new period must be reasonable and the new legislation must include transitional arrangements allowing an adequate period for lodging claims which were available under the previous legislation. As Lord Walker explains at para 104, after 8 March 2001, when the Court of Justice decided Metallgesellschaft Ltd v Inland Revenue Comrs (Joined Cases C 397/98 and C 410/98) [2001] Ch 620, the Test Claimants would have had good grounds for supposing that they had a good claim to recover ACT levied contrary to EU law, with at least a reasonable prospect that the running of time could be postponed until then by section 32(1)(c) of the Limitation Act 1980. In so far as proceedings had not been issued, their claims were therefore in time as at 8 September 2003 when HMRC announced the introduction of what became section 320 of the Finance Act 2004. The effect of section 320, which is set out at para 107 above and was enacted on 24 June 2004, was to deprive those Test Claimants of rights which were available to them by reason of section 32(1)(c) without any transitional provisions to allow them to issue proceedings within a reasonable time. But for the availability of the Woolwich claim, section 320 would therefore be contrary to the principles clearly set out in M&S. It made it impossible for those Test Claimants to proceed with their mistake claim because of the absence of the introduction of a reasonable period of limitation as from then and because of the complete absence of transitional provisions. The facts are very similar to those relating to the chocolate covered marshmallow teacakes in M&S. Does the existence of the Woolwich remedy make all the difference? I agree with Lord Hope, Lord Walker, Lord Reed and Lord Dyson that it does not. To my mind it would be remarkable if it did. In this regard, I agree in particular with the reasoning of Lord Hope at paras 16 to 19 above. As Lord Hope shows, the Test Claimants had every prospect of success. It is plain from the fact that section 320 was enacted that HMRC shared that view, since (at any rate as it seems to me) the whole point of the section was to ensure that such a claim would not succeed. In any event, in the period before section 320 came into force the Test Claimants were entitled to have their mistake claim adjudicated upon by the English courts. In my opinion they had a legitimate expectation that, as Lord Hope puts it at para 19 and Lord Reed puts it at para 243, that entitlement would not be removed from them by the introduction without notice of a limitation period that was not fixed in advance. Before the decision in Deutsche Morgan Grenfell Group Plc v Inland Revenue Comrs [2007] 1 AC 558 (DMG) the Test Claimants knew that there was a reasonable prospect that they had a good mistake of law claim against the Revenue. I agree with Lord Sumption (at para 201) that it must be relevant to ask on what basis the Test Claimants must be taken to have made their plans and that the issue is whether there is an assumption reasonably to be attributed to them about how long they had to bring their claims, which was then retrospectively falsified by Parliament. It seems to me that they can reasonably be taken to have made their plans on the basis of an expectation that the State would not remove their rights without warning or transitional provisions. That expectation was then retrospectively falsified by section 320. In all these circumstances, I prefer the reasoning of Lord Hope and Lord Reed to that of Lord Sumption. It follows that in my opinion section 320 infringes their rights under EC law on the ground that it infringes the principle of legitimate expectation. In addition I agree with Lord Hope, Lord Walker, Lord Dyson and Lord Reed that an application of the principle of effectiveness also leads to the conclusion that section 320 infringes their rights under EC law. This part of the case has been analysed in some detail by Lord Hope, Lord Walker and Lord Reed. In particular, Lord Reeds analysis is considerably more extensive than that of Lord Walker. As I read Lord Reeds judgment, a critical part of his reasoning is his reliance upon his view of the principles of equivalence, which he then deploys in reaching his conclusion that section 320 infringes the principle of effectiveness. His reasoning is to my mind convincing and, for the reasons he gives, I too would so hold. I have a slight concern that so to hold is to determine the issue on a basis which was not advanced in argument on behalf of the Test Claimants, which (to put it no higher) is surprising given the many years they have been considering these issues. However, if the Court of Justice were to prefer the approach to equivalence adopted by Lord Sumption to that adopted by Lord Reed, I would nevertheless hold that section 320 infringes the principle of effectiveness. Although there is, so far as I am aware, no decision of the Court of Justice which directly addresses the point, this conclusion seems to me to receive some support from the opinion of Advocate General Sharpston in Unibet (London) Ltd v Justitiekanslern (Case C 432/05) [2008] All ER (EC) 453, where she said this at para 32 of her opinion: The starting point to my mind must be the principle, first laid down in Rewe I [(Case 33/76) [1976] ECR 1989, para 5], that it is for the domestic legal system of each member state to determine the procedural conditions governing actions at law intended to ensure the protection of Community law rights, provided that those conditions are not less favourable than those relating to similar actions of a domestic nature (principle of equivalence) and do not make it impossible in practice to exercise those rights (principle of effectiveness). That approach was confirmed in Rewe II [(Case 158/80] [1981] ECR 1805, para 44], where the court stated that the Treaty was not intended to create new remedies in the national courts to ensure the observance of Community law other than those already laid down by national law and that the system of legal protection established by the Treaty implies that it must be possible for every type of action provided for by national law to be available for the purpose of ensuring observance of Community provisions having direct effect. (Original emphasis) I recognise that, as Lord Sumption observes at para 194, Rewe Handelsgellschaft Nord mbH v Haupzollamt Kiel [1981] ECR 1805 was an equivalence case and that the Court of Justice did not expressly comment upon this passage, but it nevertheless seems to me that in her para 32 the Advocate General was putting the point more generally in the context of effectiveness and that, in that context it provides some support for the Test Claimants case. I appreciate that the views that I (and others) have expressed on the section 320 point can only be provisional and that it will ultimately be resolved in the light of the answers to the questions referred to the Court of Justice. I nevertheless hope that these views will be of some assistance in the formulation of those questions. LORD DYSON I too agree with the judgments of Lord Walker and Lord Sumption on all the issues on which they agree. Like Lord Hope and Lord Reed, I agree with Lord Walker on the DMG/section 320 issue. Nevertheless, I acknowledge the force of Lord Sumptions reasoning on this issue. For that reason I have concluded that the question cannot be regarded as acte clair and that a reference to the European Court of Justice is necessary. LORD SUMPTION Introduction It is not in dispute that under EU Law, the United Kingdom is bound to provide an effective means under its national law of recovering tax charged contrary to the EU Treaty. It is common ground that it is open to member states to impose reasonable periods of limitation, even on actions to enforce directly effective EU law rights. It is also common ground that six years is a reasonable period of limitation for an action to recover tax charged contrary to EU law, and that if English law had always provided for the period to run from the date of payment in cases of mistake, then that too would have been reasonable. Broadly stated, the issue on this appeal is whether the United Kingdom was entitled to change the law relating to the running of the limitation period, without notice or transitional provisions for actions which were pending or in the pipeline. The commissioners say that the change related only to actions to recover tax paid under a mistake of law and that there are other causes of action unaffected by the change which satisfy the United Kingdoms obligation to provide an effective means of recovering the tax. The Test Claimants say, in bald summary, (i) that every cause of action available to them for common law restitution is, on analysis, an action for relief against the consequences of a mistake and therefore affected by the change, (ii) that so far as there are other causes of action available to them which are not affected by the change, they are subject to legal limitations which make it impossible to regard them as an effective means of recovery, and (iii) that irrespective of the fate of points (i) and (ii) the United Kingdom was not entitled to curtail, without notice or transitional provisions, the availability of any cause of action which might serve their purpose. In my judgment, the Test Claimants and other companies in their position have an effective means of recovering the overpaid tax under the principle stated by the House of Lords in the landmark decision in Woolwich Equitable Building Society v Inland Revenue Commrs [1993] AC 70. The availability of that cause of action entirely satisfies the obligations of the United Kingdom under the EU Treaty, notwithstanding that it is subject to a limitation period which runs from the date of payment. Neither section 320 of the Finance Act 2004 nor section 107 of the Finance Act 2007 had any impact on a claim made on that basis, because both enactments were concerned only with actions for the recovery of tax paid under a mistake of law. Mistake of law is a more limited cause of action, which is neither necessary nor sufficient to satisfy the obligations of the United Kingdom under the EU Treaty. In those circumstances, I consider that the validity of those enactments depends entirely on whether they defeated the legitimate expectations of taxpayers as that concept is understood in EU law. I do not think that section 320 of the Finance Act 2004 can be criticised on that ground. Its effect was that the limitation period for an action to recover tax paid under a mistake of law was to run from the date of payment in the same way as the limitation period for an action to recover tax on any other ground. It was announced almost as soon as the existence of a right to recover tax paid under a mistake of law had been judicially recognised. It follows that taxpayers in the position of these claimants cannot at the relevant time have had any reasonable expectation that a cause of action to recover tax paid under a mistake of law would be available to them. For that reason, I think that they would suffer no injustice if section 320 of the 2004 Act were to be given effect according to its terms, whereas a significant injustice would be suffered by the general body of taxpayers if it were not. Different considerations apply to section 107 of the 2007 Act, which was retrospective in an altogether more radical and objectionable sense. It does not surprise me that the European Commission has referred the enactment of 2007 to the European Court of Justice, but has taken no comparable step in the case of the enactment of 2004. I propose in this judgment to deal first with the general principles of EU law which are relevant, and on which I believe that there is substantial agreement among the members of the court. I shall then address the argument that a claim to recover overpaid corporation tax on the principle in Woolwich Equitable is not enough to satisfy those principles. I shall then, finally, return to EU law to consider the main question which has divided this court, namely whether, even if English law did not need to make available a right to recover the tax on the footing of mistake, having done so it could lawfully curtail the limitation period for that right retrospectively and without warning or transitional provisions. EU law Unlike Value Added Tax and certain other taxes and duties which are required and directly regulated by EU law, corporation tax is a creature of the domestic law of the United Kingdom. Apart from the limited requirements of Directive 90/435/EEC relating to withholding tax and double taxation relief, it is not subject to any EU scheme of harmonisation. Like other national tax systems, however, corporation tax is affected by EU law because it must be assessed and collected on a basis consistent with the Treaty. In particular, it must comply with the requirements of the single market, including the freedom of establishment and the free movement of capital guaranteed by what are now articles 49 and 63 of the Treaty: Commission v France (Case C 270/83) [1986] ECR 273; Staatssecretaris van Financien v Verkooijen (Case C 35/98) [2000] ECR I 7321. The internal market is a domain in which competence is shared between the institutions of the EU and those of member states under article 4 of the Treaty. It follows that even in cases where EU law confers direct rights on private parties, it is for national courts applying national law to determine what rights of action are available against member states to vindicate those rights, and subject to what v eG conditions. procedural or other Landwirtschaftskammer fur das Saarland Case 33/76 [1976] ECR 1989 (Rewe I), the principle was stated at para. 5 in terms which have been repeated or paraphrased in many cases decided since: In Rewe Zentralfinanz it is the national courts which are entrusted with ensuring the legal protection which citizens derive from the direct effect of the provisions of Community law. Accordingly, in the absence of Community rules on this subject, it is for the domestic legal system of each member state to designate the courts having jurisdiction and to determine the procedural conditions governing actions at law intended to ensure the protection of the rights which citizens have from the direct effect of Community law, it being understood that such conditions cannot be less favourable than those relating to similar actions of a domestic nature. Where necessary, articles 100 to 102 and 235 of the Treaty enable appropriate measures to be taken to remedy differences between the provisions laid down by law, regulation or administrative action in member states if they are likely to distort or harm the functioning of the Common Market. In the absence of such measures of harmonization the right conferred by Community law must be exercised before the national courts in accordance with the conditions laid down by national rules. The position would be different only if the conditions and time limits made it impossible in practice to exercise the rights which the national courts are obliged to protect. One consequence of this, as the court pointed out in Metallgesellschaft Ltd v Inland Revenue Comrs (Joined Cases C397/98 and C410/98) [2001] Ch 620, para 81, is that the nature, basis and legal classification of rights of action available for this purpose in the national court is a matter for national courts: It must be stressed that it is not for the court to assign a legal classification to the actions brought by the plaintiffs before the national court. In the circumstances, it is for the claimants [Metallgesellschaft Ltd. and others and Hoechst AG] to specify the nature and basis of their actions (whether they are actions for restitution or actions for compensation for damage), subject to the supervision of the national court. This is, however, subject to the overriding requirement derived from the Treaty and referred to in the passage which I have quoted from Rewe I, that national legal systems should provide a minimum standard of protection for EU law rights. In the case law of the Court of Justice, the standard of protection required is embodied in two principles which are restated in almost every decision on the point. First, the substantive and procedural provisions of national law must be effective to protect EU law rights (the principle of effectiveness). Their enforcement in national law must not be subject to onerous collateral conditions or disproportionate procedural requirements. They must not render virtually impossible or excessively difficult the exercise of rights conferred by EU law. Secondly, the relevant provisions of national law must not discriminate between the rules and procedures applying to the enforcement of EU law rights, and those applying to the enforcement of comparable national law rights (the principle of equivalence). There is a third principle which features less prominently in the case law on this subject but is of considerable importance because it informs the approach of the Court of Justice to the first two. This is the principle of legal certainty, which lies at the heart of the EU legal order and entails (among other things) that those subject to EU law should be able clearly to ascertain their rights and obligations. One aspect of that principle is that within limits EU law will protect within its own domain legitimate expectations adversely affected by a change in the law. The leading case on the principle of effectiveness is Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case 199/82) [1983] ECR 3595. This concerned charges levied for frontier health inspections of imported animals or animal products under Italian legislation but contrary to EU law. Italian law provided for the recovery of the charges on conditions that were in themselves perfectly acceptable, but which were in practice almost impossible to satisfy because of the exacting rules of evidence applicable to such claims. The court held (para 12): In that connection it must be pointed out in the first place that entitlement to the repayment of charges levied by a member state contrary to the rules of Community law is a consequence of, and an adjunct to, the rights conferred on individuals by the Community provisions prohibiting charges having an effect equivalent to customs duties or, as the case may be, the discriminatory application of internal taxes. Whilst it is true that repayment may be sought only within the framework of the conditions as to both substance and form, laid down by the various national laws applicable thereto, the fact nevertheless remains, as the court has consistently held, that those conditions may not be less favourable than those relating to similar claims regarding national charges and they may not be so framed as to render virtually impossible the exercise of rights conferred by Community law. These principles were restated in the judgments of the European Court of Justice in Metallgesellschaft [2001] Ch 620, paras 84 86 and in the first reference in this litigation: FII Group Litigation v Inland Revenue Comrs (Case C 446/04) [2007] STC 326, paras 201 208. It follows that a member state is in principle required to repay charges levied in breach of Community law: Socit Comateb v Directeur Gnral des Douanes et Droits Indirects (Joined Cases C 192/95 to 218/95) [1997] ECR I165, para 20. Subsequent case law has emphasized the absolute character of this obligation. The only exception which has been recognized to date is the case where the charge has been passed on by the party who paid it, with the result that he would be unjustly enriched were he to recover it for his own benefit: see Webers Wine World Handels GmbH v Abgabenberufenskommission Wien (Case C 147/01) [2003] ECR I 11365, para 94. So, although national courts and legislatures are the masters of their own law and procedure, in so far as the legal system of a member state fails to give adequate effect to directly effective EU law rights, it is incumbent on national courts to give effect to those rights by filling the gap between existing causes of action or if necessary to create a new one: see Unibet (London) Ltd v Justitiekanslern (Case C432/05) [2008] All ER (EC) 453, paras 40 1. The combined effect of (i) the requirement of EU law that there must be an effective right of recovery of tax charged contrary to that law and (ii) the primacy of national law as the source of that right, is that EU law does not, indeed cannot, require that national law should recognise or create any particular cause of action or any particular remedy. It simply requires that whatever causes of action or remedies exist in national law must, taken as a whole, be effective and non discriminatory. The implications of these principles for the operation of rules of limitation in national systems of law is the subject of a considerable body of case law in the Court of Justice. Not only is limitation a feature of every national legal system of the EU, but the recognition of national rules of limitation as both necessary and desirable is treated as part of the principle of legal certainty in EU law. In Rewe I [1976] ECR 1989, one of the first cases to come before the Court of Justice about the application of limitation periods to claims to enforce directly effective rights in the area of tax, the court observed (para 5) that the laying down of such time limits with regard to actions of a fiscal nature is an application of the fundamental principle of legal certainty protecting both the tax payer and the administration concerned. This is so, notwithstanding that the effect of that rule is to prevent in whole or in part the repayment of those charges: Haahr Petroleum Ltd v benr Havn (Case C 90/94) [1997] ECR I 4085, para 45. Subject to the overriding principles of effectiveness and equivalence, EU law recognizes the public interest in orderly national budgeting and equity between generations of taxpayers, which will generally require rules for establishing clear limits beyond which tax accounts may not be reopened. In the present appeals it has not been argued that section 320 of the Finance Act 2004 or section 107 of the Finance Act 2007 are inconsistent with the principle of equivalence. I do not find that surprising. The two enactments with which we are concerned apply in precisely the same way to claims to recover taxes charged contrary to domestic and EU law. So far as they create practical limitations on a claimants choice of legal route to recovery, they have precisely the same effect whether the charging of the tax was contrary to EU or domestic law. It is not suggested in these appeals that either enactment offended against the principle in Deville v Administration des Impts (Case 240/87) [1988] ECR 3513 on the ground that they were specifically targeted at the assertion of rights under EU law. We are therefore concerned on these appeals only with the principle of effectiveness and the principle of the protection of legitimate expectations. The fundamental requirement of the principle of effectiveness is that limitation periods should be reasonable, ie not so short as to make recovery by action impossible or excessively difficult: see Rewe I, [1976] ECR 1989, and Comet v Produktschap voor Siergewassen (Case 45/76) [1976] ECR 2043, paras 16 18. But the assessment of what is reasonable allows for considerable variation between different national systems. There is abundant case law concerning limitation periods much shorter than six years, which have been held to be reasonable. Moreover, it is not inconsistent with the principle of effectiveness that under national law the limitation period for the recovery of unlawful charges should run from the time of payment: see Edilizia Industriale Siderurgica Srl (Edis) v Ministero delle Finanze (Case C 231/96) [1998] ECR I 4951, para 35, Ministero delle Finanze v SPAC (Case C 260/96) [1998] ECR I 4997, para 32. Nor is there any rule of EU law requiring the running of a limitation period to be deferred until the existence of a right to recover the payment has been judicially established. It is not uncommon for a claim to repayment to have become time barred in national law while proceedings are still in progress to determine whether the member state was in breach of EU law. This was, for example, the position in Rewe I. It was also the position in many of the decisions about the retrospective curtailment of limitation periods, which I shall consider next. The curtailment of an existing limitation period gives rise to special considerations. There are two objections that might in principle be taken to it. First, even if the change applies only to future claims, it is likely to operate retrospectively to some extent. It will usually extinguish the possibility of enforcing existing rights to recover sums which have already been paid and could in due course have been reclaimed and recovered under the previous law, but are time barred under the new one. This necessarily engages the principle of effectiveness. Of course, the legislation may also be retrospective in the more radical sense of abrogating claims that have already been properly made under the old law. The second potential objection is that to the extent that the change is retrospective, it may offend against the principle of legal certainty. People must be taken to appreciate that the law may be changed. But until it is, they are entitled to organise their affairs on the basis of the law as it stands and to assume a sufficient measure of predictability in its future development to enable them to exercise their EU law rights. This means that if they have already paid money which is in principle recoverable, they are entitled to be guided by the existing law when deciding how long they have left in which to claim. This objection is commonly analysed as depending on the principle of the protection of legitimate expectations. But this is not really a distinct principle. It has been described as the corollary of the principle of legal certainty, which requires that legal rules be clear and precise, and aims to ensure that situations and legal relationships governed by Community law remain foreseeable: Duff v Minister of Agriculture, Ireland (Case C 63/93) [1996] ECR I 569, para 20. It is one manifestation of the broader principle that those subject to the law should be able to ascertain their rights and obligations at the time that they are called on to decide what to do about them. EU law might have taken an absolute line on national legislation retrospectively extinguishing the possibility of enforcing existing rights to recover money charged contrary to EU law. In fact, it has taken a more flexible and nuanced position. It follows from the liberty given to member states to devise their own domestic law means of giving effect to EU rights, that national legislatures are in principle entitled to change their laws. Because they are not obliged to provide more than the minimum level of protection for EU rights necessary to make them effective, the changes may adversely affect claims to assert EU rights, provided that the new law still provides an effective means of doing so. The compromise which EU law has adopted between these conflicting considerations is to allow the retrospective curtailment of limitation periods within limits set by the principle of the protection of legitimate expectations. Legislation curtailing limitation periods is in principle consistent with the principle of effectiveness provided that a period of grace, which may be quite short, is allowed, either by giving sufficient advance notice of the change or by including transitional provisions in the legislation. These propositions are derived from the four leading decisions of the Court of Justice on this question, namely Aprile Srl v Amministrazione delle Finanze dello Stato (Case C 228/96) [2000] 1 WLR 126 (Aprile II), Dilexport Srl v Amministrazione delle Finanze dello Stato (Case C 343/96) [1999] ECR I 579, [2000] All ER (EC) 600, Grundig Italiana SpA v Ministero delle Finanze (Case C 255/00) [2003] All ER (EC) 176, and Marks & Spencer v Customs & Excise Comrs (Case C 62/00) [2003] QB 866. The first two cases had a similar legal background. Italy had unlawfully levied charges equivalent to customs duties, which the claimant sought to recover under Italian law. Italian law conferred a general right to recover payments made without legal basis (pagamento non dovuto) under article 2033 of the Civil Code, which was subject to the general limitation period of ten years provided for by the article 2946 of the Code. In addition, there was a specific right to a refund under the Consolidated Customs Code in cases of calculation errors in the assessment or the application of a duty other than that laid down in the tariff, which was subject to its own limitation period of five years. The latter right had no application to a claim for a refund of tax charged contrary to Community law. These provisions were amended by legislation so that the limitation period in the Customs Code applied to actions under article 2033 whenever the claim was for a refund of sums paid in connection with customs operations. In other words, the limitation period for the only relevant right of recovery, under article 2033, was reduced from ten years to five. It is clear that the decisive considerations which led the Court of Justice to conclude that the amendment was consistent with the EU law were (i) that the reduced limitation period was still long enough to satisfy the principle of effectiveness and (ii) that the Italian courts had treated the amending legislation as allowing claimants a period of grace of three years from the time the amending legislation came into force, which meant that the legislation cannot be regarded as having retrospective effect; see Aprile II, para 28 and Dilexport, para 42. This was not enough to help the claimants, for the period of grace had already expired by the time that they succeeded in obtaining a judicial decision that the charges were unlawful. But it was held to be enough to satisfy the principle of effectiveness. In Grundig Italiana [2003] All ER (EC) 176, the Court of Justice had to consider the minimum transitional period which would enable a retrospective curtailment of the limitation period to satisfy EU law. The case concerned the same amending legislation which had featured in Aprile II and Dilexport, but a different aspect of it, namely the reduction of the special limitation period from five years to three, which took effect ninety days after the legislation came into force. This transitional period was held to be too short. The court considered that a period of grace must be sufficient to allow taxpayers who initially thought that the old period for bringing proceedings was available to them a reasonable period of time to assert their right of recovery in the event that under the new rules they would already be out of time (para 38). In the context of an original limitation period of five years, six months was the least that should have been allowed (para 42). It is accordingly clear that a reasonable period of grace may be considerably shorter than the amount by which the limitation period has been abridged. It is a period long enough to allow potential claimants to consider their position, not a period long enough to save every existing right of recovery. In none of the Italian cases was separate consideration given by the Court of Justice to the principle of the protection of legitimate expectations. But that principle must necessarily have informed the courts analysis of what was required by the principle of effectiveness. The point was made in terms by Advocate General Ruiz Jarabo in his opinion in Grundig Italiana, where he observed that a retrospective reduction in the limitation period without a period of grace would be contrary to the principle of effectiveness on the grounds that the reduction is unexpected and contrary to the principle of the protection of legitimate expectations and to the principle of legal certainty (para 30). The court must have agreed with that. It was critical to its view that legislation retrospectively curtailing an existing limitation period so as to bar some existing rights, would nevertheless be consistent with the principle of effectiveness if it allowed a sufficient period of grace for taxpayers to adjust their plans to the new order of things. In Marks & Spencer [2003] QB 866, the facts were more complex. It was a reference from the Court of Appeal in England about a claim to recover VAT unlawfully charged by the Commissioners of Customs and Excise. By statute, the only right to obtain a refund from the Commissioners was by way of a claim under section 24 of the Finance Act 1989 (subsequently section 80 of the Value Added Tax Act 1994). Subsections (4) and (5) of section 24 provided for a six year limitation period, which was to run from the date of payment save in cases of mistake, when it was to run from the time when the mistake was or could with reasonable diligence have been discovered. On 18 July 1996, the government announced its intention of introducing what later became section 47(1) of the Finance Act 1997. The effect of this enactment was to reduce the limitation period for the statutory claim from six years to three, and to provide that it was to run in all cases from the time of payment. Section 47(2) provided that subsection (1) should be deemed to have come into effect on 18 July 1996 and should apply to all claims unsatisfied at that date whether made before or afterwards. There were no relevant transitional provisions. The reference was concerned with a claim to recover VAT overpaid on sales of gift vouchers. This claim was affected by the reduction of the limitation period to three years. It was not affected by the removal of the extended period of limitation in cases of mistake, because the relevant payments had all occurred within six years before the claim was made. But the facts are complicated by the existence of another claim, to recover VAT paid in respect of sales of teacakes going back to 1973, which was significantly affected by the removal of the extended limitation period. The teacakes claim was not part of the reference: see the Advocate General at para 27. But before us a submission was based on it by Mr Aaronson QC (for the Test Claimants) because of the analogy with the removal of the extended period of limitation in the present case. It is therefore right to point out that it arose only in the context of a preliminary observation of the Advocate General about the way in which the Court of Appeal had framed the reference. The Court of Appeal had limited it to (i) the gift vouchers claim, (ii) the reduction of the limitation period from six years to three, and (iii) the period before August 1996 when the Sixth VAT Directive 77/388/EEC had been in force but not properly transposed into the law of the United Kingdom. The Advocate General, while acknowledging that the court was bound by the terms of the reference, pointed out that it had been framed on the assumption that the Directive had no further relevance as a source of rights once it had been properly transposed into English law in August 1996. This assumption was in his opinion wrong: paras 32 34. He thought that the Court of Appeals error about the period in which the Directive was relevant had led it to treat the whole of the teacakes claim and the later part of the gift vouchers claim as depending only on national law: see paras 30 and 44, and his citations from the judgments of the High Court and the Court of Appeal at para 32. None of this had anything to do with the compatibility of section 47 of the Finance Act 1997 with EU law. The Court of Justice, in its judgment, agreed that the Court of Appeals assumption about the Directive was mistaken (paras 22 28), but dealt only with the application of the 1997 Act to the gift vouchers claim: see para 13. The Court of Justice had no difficulty in concluding that section 47 was contrary to the principle of effectiveness. There was only one means allowed by English law of recovering overpaid VAT, and the effect of the amendment was to extinguish without notice any possibility of using that method to recover overpayments between three and six years old. Indeed, it extinguished it even when there was already a pending claim at the date of the announcement. The court took the opportunity to restate the effect of previous case law in the following terms: 35. As regards the latter principle, the court has held that in the interests of legal certainty, which protects both the taxpayer and the administration, it is compatible with Community law to lay down reasonable time limits for bringing proceedings: Aprile, paragraph 19, and the case law cited therein). Such time limits are not liable to render virtually impossible or excessively difficult the exercise of the rights conferred by Community law. In that context, a national limitation period of three years which runs from the date of the contested payment appears to be reasonable (see, in particular, Aprile, paragraph 19, and Dilexport, paragraph 26). 36. Moreover, it is clear from the judgments in Aprile [2000] 1 WLR 126, para 28, and Dilexport [1999] ECR I 579, paras 41 and 42, that national legislation curtailing the period within which recovery may be sought of sums charged in breach of Community law is, subject to certain conditions, compatible with Community law. First, it must not be intended specifically to limit the consequences of a judgment of the court to the effect that national legislation concerning a specific tax is incompatible with Community law. Secondly, the time set for its application must be sufficient to ensure that the right to repayment is effective. In that connection, the court has held that legislation which is not in fact retrospective in scope complies with that condition. 37. It is plain, however, that that condition is not satisfied by national legislation such as that at issue in the main proceedings which reduces from six to three years the period within which repayment may be sought of VAT wrongly paid, by providing that the new time limit is to apply immediately to all claims made after the date of enactment of that legislation and to claims made between that date and an earlier date, being that of the entry into force of the legislation, as well as to claims for repayment made before the date of entry into force which are still pending on that date. 38. Whilst national legislation reducing the period within which repayment of sums collected in breach of Community law may be sought is not incompatible with the principle of effectiveness, it is subject to the condition not only that the new limitation period is reasonable but also that the new legislation includes transitional arrangements allowing an adequate period after the enactment of the legislation for lodging the claims for repayment which persons were entitled to submit under the original legislation. Such transitional arrangements are necessary where the immediate application to those claims of a limitation period shorter than that which was previously in force would have the effect of retroactively depriving some individuals of their right to repayment, or of allowing them too short a period for asserting that right. The decision is also notable as being the one case in this area in which the court has given separate and explicit consideration to the principle of the protection of legitimate expectations. It did so because it was expressly invited to deal with both effectiveness and legitimate expectations by the terms of the Court of Appeals reference. But it dealt with the point under both heads. In dealing with the principle of effectiveness, it observed (para 38) that the principle of effectiveness required that potential claimants should be given time to assert existing rights under the old law. This was because (para 39) the right of member states to impose reasonable limitation periods was an exception to the rule that member states must repay taxes charged in breach of Community law, and that exception was founded on the principle of legal certainty. However, in order to serve their purpose in ensuring legal certainty, limitation periods must be fixed in advance. In other words, the curtailment of limitation periods is consistent with the principle of effectiveness if it is subject to provisions protecting legitimate expectations. As the Advocate General had pointed out in his opinion (para 68), the principle of protecting legitimate expectations is based on the need for legal certainty. Addressing the same point, the court held: 44. In that connection, the court has consistently held that the principle of the protection of legitimate expectations forms part of the Community legal order and must be observed by the member states when they exercise the powers conferred on them by Community directives: see, to that effect, Krcken (Case 316/86) [1988] ECR 2213, para 22, Alois Lageder SpA v Amministrazione delle Finanze dello Stato (Joined Cases C 31 to C 44/91) [1993] ECR I 1761, para 33, Belgocodex v Belgian State (Case C 381/97) [1998] ECR I 8153, para 26, and Grundstckgemeinschaft Schlossstrasse GbR v Finanzamt Paderborn (Case C 396/98) [2000] ECR I 4279, para 44). 45. The court has held, in particular, that a legislative amendment retroactively depriving a taxable person of a right to deduction he has derived from the Sixth Directive is incompatible with the principle of the protection of legitimate expectations (Schlossstrasse, cited above, paragraph 47). 46. Likewise, in a situation such as that in the main proceedings, the principle of the protection of legitimate expectations applies so as to preclude a national legislative amendment which retroactively deprives a taxable person of the right enjoyed prior to that amendment to obtain repayment of taxes collected in breach of provisions of the Sixth Directive with direct effect. Whether it is put on the basis of the principle of effectiveness or the protection of legitimate expectations or on a combination of the two, the rule of EU law which requires a reasonable period of grace before a retrospective curtailment of the limitation period can be lawful, assumes that claimants generally can legitimately count on having the whole of the old limitation period in which to bring whatever claims may be available to them as a matter of domestic law, unless they have a reasonable warning that the position is about to change. Thus far, I do not think that there is any fundamental difference in principle between my views and those of other members of the court. The assumption that a claimant can legitimately count on having the whole of the old limitation period in which to bring whatever claims are available to him is one which would normally be made as a matter of course. But this is not an ordinary case. The position is complicated by the highly unusual way in which the right to recover unlawfully charged tax has developed in England over the last two decades. It is a problem which could only have arisen in a common law country such as England, where the law of restitution has been the piecemeal creation of judges while limitation is exclusively the creature of statute. To these peculiarly English developments, I now turn. Rights of recovery in English law Until surprisingly recently, English law afforded only very limited possibilities of recovering overpaid tax. As Lord Goff of Chieveley observed in Woolwich Equitable Building Society v Inland Revenue Comrs [1993] AC 70, 172, English law had not recognised a condictio indebiti allowing an action for the recovery of payments on the simple ground that they were not due. It has still not done so. It is necessary, as the law presently stands, to bring the facts within one of the categories of case in which the law recognises that the recipients retention of the money would be unjust. The relevant categories as they had stood for a considerable time up to 1992 were described by Lord Goff in his speech in Woolwich Equitable at pp 164 166. Money was recoverable if it was paid under a mistake of fact, but not if it was paid under a mistake of law (as it generally would be if taxes were paid which were not duly authorised by law). It was recoverable if it was exacted by actual or threatened duress to the person or to the persons goods, but not on a mere threat to assert a claim by a method provided for by law (for example, by legal proceedings). It was recoverable if it was demanded by a public official or a person charged with a statutory duty as a condition of his performing his duty. None of these situations was likely to cover the case where a taxpayer paid money which was not in fact due under the relevant legislation, because it had been misconstrued or was contrary to EU law, or because (being secondary legislation) it was ultra vires the enabling Act. A limited statutory right to claim repayment from the Commissioners had been introduced in 1923 by section 24 of the Finance Act of that year. Substantially the same provision has remained in force in successive statutory iterations ever since. It is currently to be found in section 33 of the Taxes Management Act 1970. In that form, its effect is that overpaid tax may be reclaimed if (i) it was charged by an assessment, (ii) the assessment was excessive because of a mistake in the taxpayers return, (iii) in the case of a mistake about the basis on which the taxpayers liability should be computed, the return was not in the relevant respect made in accordance with the practice generally prevailing at the time, and (iv) having examined all the relevant circumstances of the case, the Board of Inland Revenue or the Special Commissioners on appeal from them considered that repayment would be reasonable and just. It will be apparent that if tax was paid under invalid or unlawful legislation the claim will almost inevitably fail on the ground that the return having been made in accordance with the statute it accorded with the practice generally prevailing at the time. Even if the taxpayer can demonstrate that his return was not in accordance with that practice, the fate of his claim will depend on the exercise of a discretion by the Commissioners. His only right is to have his claim fairly considered in the light of all relevant circumstances. As Lord Goff pointed out in Woolwich Equitable (at p 170B), historically this provision presupposed that there was no right of recovery at common law. The first major change in this state of affairs occurred with the judgment of the House of Lords in the Woolwich Equitable case, which was delivered on 20 July 1992. The Woolwich Equitable Building Society paid the composite rate tax charged on building societies under statutory regulations which it considered to be ultra vires the enabling primary legislation, and which it then successfully challenged in proceedings for judicial review. It took this course because it was concerned about the reputational damage that it might suffer if it was seen to withhold tax which other building societies were paying, at a time when there had been no definitive decision on the status of the regulations. The Commissioners, having failed to justify the charge in the judicial review proceedings, repaid the tax, but declined to recognise that they were bound to do so and therefore felt entitled to reject a claim to interest. The question at issue was whether the Commissioners had been bound to repay the principal and were therefore amenable to an order for the payment of interest as well. Woolwich was unable to bring itself within any of the established categories of restitution. In particular, it could not claim repayment on the ground of mistake, because it had not been mistaken. It had always believed that the regulations were void. Nor could it claim under section 33 of the Taxes Management Act 1970, because there had been no assessment. It had pre empted an assessment by paying. It followed that under the law as it had previously stood, the claim for interest was bound to fail. The question, as Lord Goff put it at p 171, was whether the House in its judicial capacity should reformulate the law so as to establish that the subject who makes a payment in response to an unlawful demand of tax acquires forthwith a prima facie right in restitution to the repayment of the money. The claim failed in the High Court, but it succeeded, by a majority, first in the Court of Appeal and then, on somewhat different grounds, in the House of Lords. In summary, the House of Lords fashioned a cause of action which was (i) acknowledged to be new, (ii) specific to the case of money charged by a public authority in the absence of a valid statutory power to do so, and (iii) available irrespective of whether the payer was mistaken or whether, if he was mistaken, his mistake was one of fact or law. It was not necessary in Woolwich Equitable to consider the rule that money paid under a mistake of law was irrecoverable. That question came before the House of Lords in 1998 in Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, one of the last cases to be decided in the great tide of litigation arising out of ultra vires interest rate swap agreements with local authorities. Kleinwort Benson had made net payments to the local authorities under the terms of these agreements, which they claimed had been made under a mistake of law, namely that they were valid. In the High Court, Langley J dismissed the claims on the ground that the law did not recognise a right to recover in these circumstances. The case was leapfrogged to the House of Lords on the ground that the Court of Appeal would be bound by authority to reach the same conclusion. In the House of Lords, the bank acknowledged that the existing law did not allow the recovery of money paid under a mistake of law. For their part, the local authorities made no attempt to defend that state of the law in principle, in the face of sustained criticism by academic writers and the Law Commission, its total or partial abandonment in many common law jurisdictions, and the recognition of a wider basis of recovery, independent of mistake, in major civil law systems, notably those of Germany, France and Italy. The fundamental issue before the appellate committee was whether the law should be changed by judicial decision, or the task left to Parliament. The House allowed the appeal and recognised a right in principle to recover money paid under a mistake of law, while acknowledging that this represented a departure, even a major departure, from what has previously been considered to be established principle: see Lord Goff at p 378. For a number of years it remained uncertain whether the new cause of action to recover money paid under a mistake of law extended to mistaken payments of tax. Kleinwort Benson was a case about private law transactions. In his speech Lord Goff (with whom on this point the rest of the appellate committee agreed) expressed the view at pp 381 382 that there was a distinction between claims to recover payments made in private law transactions and claims to recover payments of taxes and other charges levied by public authorities. In the latter category, payments were recoverable as of right under the principle laid down in Woolwich Equitable without the need to invoke a mistake of law, or under section 33 of the Taxes Management Act in cases of mistake to which that provision applied. Lord Goff continued at p. 382: Two observations may be made about the present situation The first observation is that, in our law of restitution, we now find two separate and distinct regimes in respect of the repayment of money paid under a mistake of law. These are (1) cases concerned with repayment of taxes and other similar charges which, when exacted ultra vires, are recoverable as of right at common law on the principle in Woolwich, and otherwise are the subject of statutory regimes regulating recovery; and (2) other cases, which may broadly be described as concerned with repayment of money paid under private transactions, and which are governed by the common law. The second observation is that in cases concerned with overpaid taxes, a case can be made in favour of a principle that payments made in accordance with a prevailing practice, or indeed under a settled understanding of the law, should be irrecoverable. If such a situation should arise with regard to overpayment of tax, it is possible that a large number of taxpayers may be affected; there is an element of public interest which may militate against repayment of tax paid in such circumstances; and, since ex hypothesi all citizens will have been treated alike, exclusion of recovery on public policy grounds may be more readily justifiable. The Commissioners, relying mainly on this passage, subsequently contended that tax was subject to a special legal regime, and that the only cause of action at common law for the recovery of overpaid tax was a cause of action on the principle stated in Woolwich Equitable. The recognition of this basis of claim, it was said, impliedly excluded all other bases of claim apart from the statutory procedure under section 33 of the Taxes Management Act 1970. This proposition was tested in Deutsche Morgan Grenfell Group Plc v Inland Revenue Comrs [2007] 1 AC 558. The case foreshadowed some of the issues on the present appeals, and was the genesis of section 320 of the Finance Act 2004. It concerned claims for the recovery of interest on corporation tax which the European Court of Justice had held to have been prematurely charged in Hoechst/Metallgesellschaft. The taxpayer company wanted to claim interest for the period when it was out of pocket, on the footing that the tax itself had been paid under a mistake of law. It took this course because a claim on that basis would benefit from the extended limitation period under section 32(1)(c) of the Limitation Act 1980, whereas claims based on Woolwich Equitable or section 33 of the Taxes Management Act ran from the time of payment and would have been time barred. There were three main issues: (i) whether, in a case covered by the principle in Woolwich Equitable, a common law claim based on mistake was also available to the taxpayer; (ii) if so, what was the mistake, bearing in mind that the tax had been paid in accordance with the correct construction of the taxing Acts, which was only later shown to be inconsistent with EU law by the decision of the Court of Justice in Metallgesellschaft Ltd v Inland Revenue Comrs (Joined Cases C 397/98 and 410/98) [2001] Ch 620; and (iii) at what stage, for the purpose of section 32(1)(c) of the Limitation Act 1980, could it be said that the taxpayer discovered or could with reasonable diligence have discovered that mistake, so as to start the limitation period running. Park J gave judgment on 18 July 2003. He decided all three questions in favour of the taxpayer, and held that accordingly a claim on the basis of mistake was available to it. In February 2005, the Court of Appeal unanimously overruled him and held that it was not. The House of Lords restored the judgment of Park J on 25 October 2006. On the first issue, the House held that the claimant could choose between concurrent causes of action on the principle in Woolwich Equitable and on the basis of mistake of law. On the second issue, there were some differences of reasoning within the majority of the appellate committee, but all of them agreed that by virtue of the theory that judicial decisions are deemed to declare the existing law, the taxpayer company had made a retrospective or deemed mistake. The mistake consisted in its failing to appreciate that it was entitled to make a group income election and defer the payment of tax, notwithstanding that the statute said that it did not have this right. On the third issue, the House of Lords held that under section 32(1)(c) of the Limitation Act 1980 the limitation period for a claim in respect of that mistake did not start to run simply because the claimant was aware of a worthwhile claim or of doubts about the lawfulness of the legislation. It started to run only when the Court of Justice definitively held that the relevant features of the United Kingdom corporation tax regime were contrary to EU law. The combined effect of the decisions on these three points was in one respect extremely remarkable. If tax was overpaid under a mistake of law, then provided that a claim to recover it was brought before six years had elapsed from the judgment establishing the correct legal position, there was no limit upon how far back the claim could go. In the present cases, it goes back to the accession of the United Kingdom to the Common Market in 1973. If it had arisen from a mistake of purely domestic law, it might have gone back to the inception of corporation tax in 1965. In other cases where the unlawfulness of the charge depended wholly on English law, it could in principle go back indefinitely. It has been suggested in argument before us that once the House of Lords in Kleinwort Benson [1999] 2 AC 349 had accepted the right to recover money paid under a mistake of law, the Commissioners case in Deutsche Morgan Grenfell was never likely to be accepted. Its acceptance by the Court of Appeal was an aberration, a bump in the road to borrow Mr Aaronsons arresting phrase. Such arguments often sound plausible in hindsight, after the highest court has laid down the law, and ultimately of course the Commissioners argument was not accepted. But it was nevertheless a formidable argument, to which the observations of Lord Goff appeared to lend substantial support. In Kingstreet Investments v New Brunswick (Finance) [2007] 1 SCR 3, considerations rather similar to those raised by Lord Goff had led the Supreme Court of Canada to treat claims to recover unlawfully charged tax as governed by a distinct body of constitutional principle relating to tax charged without legislative authority, and not by the general law of unjust enrichment. At least part of the Canadian courts reasoning was that the concurrent availability of both causes of action was liable to have unacceptable collateral consequences: see paras 32 42 (Bastarache J). Indeed, the decision of the House of Lords in Deutsche Morgan Grenfell is even now not beyond academic controversy. The decision on issue (ii) is criticised by the current editors of Goff & Jones, The Law of Unjust Enrichment, 8th ed (2011), paras 22.29 22.31 on grounds closely related to the observations which I have quoted from Lord Goff in Kleinwort Benson. I do not intend by making these points to reopen a debate which has been settled for more than five years. My point is more straightforward: no reasonable and well advised person could have counted on the decision in Deutsche Morgan Grenfell going the way it did on all three points, until the House of Lords delivered its judgment. Section 320 of the Finance Act 2004 was a direct response to the decision of Park J in Deutsche Morgan Grenfell. It altered not the limitation period itself but the statutory rule postponing its commencement in cases of mistake until the taxpayer had discovered or could with reasonable diligence have discovered the mistake. It had the effect of barring older claims for repayment of tax paid under a mistake which might otherwise have succeeded. But the mischief to which section 320 was addressed was not the existence of a right to repayment, whether arising from EU or domestic law, but the problem created by Park Js decision that section 32(1)(c) of the Limitation Act 1980 might now enable past tax accounts to be reopened without limit of time. Is the right to bring a claim based on Woolwich Equitable an effective remedy? Logically, the first question to be decided is whether a cause of action based on the Woolwich Equitable principle is an effective means of asserting the right to repayment required by EU law. The Test Claimants say that it is not. Therefore, the argument runs, their only effective means of recovery was by way of an action to recover on the ground of mistake, and their right to bring such an action has been unlawfully curtailed by section 320 of the Finance Act 2004. They make three points. First, they say that a claim based on Woolwich Equitable requires an unlawful demand by a public authority and is not therefore available to recover taxes such as advance corporation tax which are paid with the return, not upon an assessment or other demand by the Commissioners. Second, the Court of Appeal has held, applying the principle in Marleasing SA v La Comercial Internacional de Alimentacin SA (Case C106/89) [1990] ECR I 4135 that section 231 of the Income and Corporation Taxes Act 1988 (which provides for a tax credit in respect of distributions paid by UK resident companies) can be given a construction which, however strained, applies it to distributions by companies resident anywhere in the EU. It follows, they say, that there is nothing unlawful about section 231 which can engage the principle in Woolwich Equitable. If either of these points is right, then a claim based on Woolwich Equitable is not an effective remedy in this case. Third, the Test Claimants submit that section 320 of the Finance Act 2004 and section 107 of the Finance Act 2007 curtail the limitation period for a claim based on Woolwich Equitable, because although such a claim does not legally depend on mistake, they were in fact mistaken. Their action is therefore an action for relief from the consequences of a mistake for the purposes of section 32(1)(c) of the Limitation Act 1980. If this point is right, then Parliament has without warning curtailed the limitation period for all available methods of obtaining restitution, apart from a claim under section 33 of the Taxes Management Act for a small part of the overpayment and a somewhat problematical claim for damages founded on the principle of state liability stated by the European Court of Justice in Francovich v Italian Republic (Joined Cases C 6/90 and 9/90) [1999] ICR 722, [1991] ECR I 5357. The Test Claimants need only be right on one of these three points, but in my view they are wrong on all of them. The demand point In spite of the importance attached to this point in argument, it can I think be dealt with quite shortly. The speeches of the majority in Woolwich Equitable [1993] AC 70 are full of expressions which, read literally and out of their analytical context, might support the suggestion that the cause of action recognised in that case was dependent on the making of an unlawful demand: see Lord Goff at 171F G, 172B C, 174C D, 177F, Lord Browne Wilkinson at 196G H, 197C H, 198B C, G H, and Lord Slynn of Hadley at 199B D, 200B C, 201D E, 202G 203A, 204F H, 205A B. None of the majority in Woolwich Equitable discusses what they meant by a demand. But both the facts of the case and the reasoning of the majority show that they cannot have had in mind a formal demand by the Inland Revenue triggering a payment or an apparent obligation to pay. The facts, which are succinctly set out by Ralph Gibson LJ in the Court of Appeal (pp 104 105) show that Woolwich Equitable did not pay the composite rate tax in response to a formal demand. The inspector had simply invited it to agree figures and the collector had sent it a return form. The society sent in a return computed according to the Regulations, under cover of a letter informing them that they proposed to challenge their validity in legal proceedings. They then paid without prejudice to the outcome. As Lord Goff pointed out (at p 169) no assessment was ever made, because Woolwich pre empted it by paying. It is fair to look for the reasoning of the House of Lords mainly in the classic analysis of Lord Goff, although similar points were made by Lord Browne Wilkinson, who agreed with Lord Goff in terms and by Lord Slynn, who agreed with him in substance. It is apparent that the mischief which justified in Lord Goffs eyes a special rule for unlawful charges by public authorities was (i) that no tax should be collected without Parliamentary authority, and (ii) that citizens did not deal on equal terms with the state, and could not be expected to withhold payment when faced with the coercive powers of the Revenue, whether those powers were actually exercised or merely held in reserve: see pp. 172. At pp. 175 176, Lord Goff adopted the dissenting judgment of Wilson J in the Supreme Court of Canada in Air Canada v British Columbia (1989) 59 DLR (4th) 161. In her judgment, Wilson J had expressed the view that there was a general right to recover money paid under unconstitutional legislation, and deprecated any suggestion that it must have been paid under protest. The reason, as she pointed out at p 169, was that the legislature holds out its legislation as valid and that any loss resulting from payment under it should not fall on the totally innocent taxpayer whose only fault is that it paid what the legislature improperly said was due. The emphasis in this reasoning was on the unlawful character of the legislation, with which in practice the citizen was bound to comply even if it might subsequently be shown to be void. This approach has subsequently been adopted by the Supreme Court of Canada in Kingstreet Investments Ltd v New Brunswick (Finance) [2007] 1 SCR 3, to which I have already referred in another context. Lord Goff not only found the reasoning of Wilson J most attractive (p 176D), but expressed his own conclusions in very similar terms. In the end, he said (p 173), logic appears to demand that the right of recovery should require neither mistake nor compulsion, and that the simple fact that the tax was exacted unlawfully should prima facie be enough to require its repayment. The exaction of which he is speaking here is not confined to demands by any particular administrative agency of the state. It includes exaction by the state by enacting void legislation, which taxpayers are likely to pay because they know that the state will act on the footing that it is valid. It is not a condition of the taxpayers right of recovery that it should have put the matter to the test by waiting until the Inland Revenue insisted. In a passage at p 177 which strikingly foreshadows some of the issues in the present appeals, Lord Goff assimilated the rule of English law as he had formulated it to the absolute right of recovery recognized by the European Court of Justice in San Giorgio (Case 199/82) [1983] ECR 3595 in cases where tax was charged contrary to EU law. Although the majority of the appellate committee stopped well short of adopting a concept of absence of legal basis as a general ground of recovery even in cases of taxation without lawful authority, Lord Browne Wilkinsons analysis of the legal basis of recovery in such cases was also very similar to that of the case law of the Court of Justice. Money unlawfully demanded was recoverable because it was paid for no consideration: see p 198. The word demand as it was used in the speeches in Woolwich Equitable referred in my view simply to a situation in which payment was being required of the taxpayer without lawful authority. Nothing in the principle underlying the decision turned on the mechanism by which that requirement was communicated to the taxpayer. It is therefore a matter of supreme indifference whether it was communicated by assessment, or by some other formal mode of demand, or by proceedings for enforcement, or by the terms of the legislation itself coupled with the knowledge that the Inland Revenue would be likely to enforce it in accordance with those terms. The Marleasing point The Court of Appeal [2010] STC 1251, para 107 held that on the principle of conforming construction stated in Marleasing, section 231 of the Income and Corporation Taxes Act 1988 should be construed so as to remove the discriminatory features of the United Kingdoms advance corporation tax regime. For present purposes we must assume that they were right about this. An appeal on that issue is not before us. The right to apply for permission to appeal on it has been deferred pending the outcome of the second reference to the Court of Justice and its application by the courts below. The argument of the Test Claimants is that on the assumption that the Court of Appeals construction is correct the legislation conformed to EU law. Therefore, it is said, the principle in Woolwich Equitable is not engaged. Marleasing (Case C 106/89) [1990] ECR I 4135, at any rate as it has been applied in England, is authority for a highly muscular approach to the construction of national legislation so as to bring it into conformity with the directly effective Treaty obligations of the United Kingdom. It is no doubt correct that, however strained a conforming construction may be, and however unlikely it is to have occurred to a reasonable person reading the statute at the time, a later judicial decision to adopt a conforming construction will be deemed to declare the law retrospectively in the same way as any other judicial decision. But it does not follow that there was not, at the time, an unlawful requirement to pay the tax. It simply means that the unlawfulness consists in the exaction of the tax by the Inland Revenue, in accordance with a non conforming interpretation of what must (on this hypothesis) be deemed to be a conforming statute. This is so, notwithstanding that the tax may have been paid without anything in the nature of a formal demand by the Inland Revenue. The rule as the House of Lords formulated it in Woolwich Equitable is in large measure a response to realities of the relationship between the state and the citizen in the area of tax. The fact that as a matter of strict legal doctrine a statute turns out always to have meant something different from what it appeared to say is irrelevant to the realities of power if it was plain at the relevant time that the tax authorities would enforce the law as it then appeared to be. Strictly speaking, in Woolwich Equitable itself there were no unlawful regulations, because, being ultra vires the enabling Act, they were and always had been a nullity. But that did not stop the Woolwich from recovering. The section 32(1)(c) point Section 32(1) is (so far as relevant) in the following terms: Postponement of limitation period in case of fraud, concealment or mistake (1) where in the case of any action for which a period of limitation is prescribed by this Act, either (a) the action is based upon the fraud of the defendant; or (b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant; or (c) the action is for relief from the consequences of a mistake; the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it. The argument for the Test Claimants on these appeals is that in section 32(1)(c) actions for relief from the consequences of a mistake are not confined to actions where the mistake is part of the legal foundation of the claim. They extend to at least some actions where it was merely part of the history. Mr Rabinowitz QC (who argued this point for the Test Claimants) accepted some limitations of the range of relevant mistakes. He said that there had to be a sufficient causal nexus between the mistake and the claim, in the sense that the facts constituting the cause of action have come to pass because of the mistake. It followed that although the Woolwich Equitable cause of action was available to claimants in the position of his clients regardless of whether they were mistaken or not, those who were in fact mistaken in some historically relevant respect would have benefitted from the extended limitation period until the law was changed by section 320 of the Finance Act 2004. They have been deprived without notice of that right. Section 320(6) removes any doubt about this by providing that it applies to any action or c1aim for relief from the consequences of a mistake of law, whether expressed to be brought on the ground of mistake or on some other ground (such as unlawful demand or ultra vires act). Section 32(1) of the Limitation Act 1980 substantially re enacts section 26 of the Limitation Act 1939, with one minor change to paragraph (b) (from concealment by fraud to deliberate concealment). The Act of 1939 was a notable monument of law reform, replacing an incoherent series of statutes and equitable rules by a coherent statutory scheme. It was enacted on the recommendation of the Law Revision Committee in its Fifth Interim Report (Cmd 5334), which was prepared in 1936 under the auspices of Lord Wright, then Master of the Rolls. Section 26 substantially followed the language of the report. It is clear from paragraphs 22 and 23 of the Committees report that the intention was to replicate certain features of the rules applied by courts of equity in the absence of any statutory limitation period. The equitable rules on this subject had originally been developed in the context of cases involving fraud. The doctrine of laches was applied by analogy with statutory limitation at law, save that in cases of fraud time ran from the point when the fraud was discovered or could with reasonable diligence have been discovered, and not from the accrual of the right as it did at law. It is clear that fraud was relevant in equity in two circumstances, (i) that the right to equitable relief was itself based on fraud, in the sense that fraud was a legally essential element of it, and (ii) that whether or not the right to relief was based on fraud, its existence had been concealed from the plaintiff by the fraud of the defendant. The Law Revision Committee summarised the position at paragraph 22 of their report as follows: Either the cause of action may spring from the fraud of the defendant or else the existence of a cause of action untainted in its origin by fraud may have been concealed from the plaintiff by the fraudulent conduct of the defendant. In 1936, when the Committee was considering these matters, there was inconsistent authority on the question whether since the fusion of law and equity the equitable rule about the running of time in cases of fraud applied to causes of action at law. They recommended that it should. The result was section 26(a) and (b) of the 1939 Act, corresponding to section 32(1)(a) and (b) of the 1980 Act. These two paragraphs dealt with the two circumstances in which fraud was relevant to postpone the running of time in equity, as summarised in the Committees report. As applied to fraud neither paragraph admits of the construction now proposed by the Test Claimants. Paragraph (a) is concerned with cases where the action is based upon fraud, ie where it is part of the legal foundation of the claim. Paragraph (b) is concerned with cases where fraud by the defendant is not necessarily part of the legal basis of the claim, but it has concealed the relevant facts from the claimant and thereby delayed his taking action to enforce his right. The fact that fraud, although no part of the legal basis of the claim, may have brought about the factual situation which is the legal basis of the claim, does not engage either paragraph. The reason for enacting section 26(c) of the Limitation Act 1939 (now section 32(1)(c) of the Act of 1980) was that courts of equity had previously applied the equitable rule relating to fraud by analogy to cases of mistake. As Baron Alderson put it in Brooksbank v Smith (1836) 2 Y & C Ex 58, mistake is within the same rule as fraud. The Law Revision Committee considered that in this respect the rule for mistake should be the same at law, and at paragraph 23 of their report they recommended the statutory reversal of the decision in Baker v Courage [1910] 1 KB 56, which had held that it was not. Section 26(c) of the 1939 Act was the result. On the face of it, therefore, the intention behind paragraph (c) was to replicate the rule of equity by providing that mistake should give rise to an extended limitation period in the same circumstances in which fraud had that effect under paragraph (a), namely where it was the legal basis of the claim. The use of a different phraseology in (a) and (c) (an action for relief from. instead of based upon) simply reflects the phraseology used in the Committees discussion, which was lifted verbatim from the report by the Parliamentary draftsman. There is no indication in the report itself that the difference was thought to be significant. It is fair to say that there are cases decided in equity before the Limitation Act 1939 where the court does not seem to have asked itself whether the mistake was the foundation of the cause of action. Brooksbank v Smith itself was one of them. Denys v Shuckburgh (1840) 4 Y& CEx 42, also decided by Baron Alderson, was another. In both cases, the reason for this appears to have been that Baron Alderson was trying to apply the equitable rule about fraudulent concealment (corresponding to section 31(1)(b)) by analogy to cases of mistake, by holding that a mistake on the part of the plaintiff which concealed from him his right was equivalent to the dishonest or deliberate concealment of his right by the defendant. If so, the idea was still born. Lord Wrights committee may well have had these cases in mind when it went out of its way in paragraph 23 of its report to say that they desire[d] to make it clear, however, that the mere fact that a plaintiff is ignorant of his rights is not to be a ground for the extension of time. Our recommendation only extends to cases when there is a right to relief from the consequences, of a mistake. This reservation was adopted by the draftsman of section 26 of the Limitation Act 1939 and the corresponding provision of the 1980 Act, both of which exclude from the ambit of paragraph (b) cases where the claimant was mistaken about the existence of his right. There are clearly obscurities about how the old rule in equity operated before statute intervened, attributable at least in part to the absence of analysis in the few reported cases. But there is, as it seems to me, no difficulty in ascertaining what rule the Law Revision Committee thought that it was proposing to Parliament. Nor, in my view, is there any real difficulty in understanding what Parliament must have intended by accepting that proposal when it enacted section 26(c) of the 1939 Act. The point has been directly considered only once, by Pearson J in Phillips Higgins v Harper [1954] 1 QB 411. That was an action by an assistant solicitor to enforce a term of her contract of employment which entitled her to a share of the profits of the firm for which she worked. She claimed to have been underpaid under the profits agreement for the whole 13 years of her employment. In response to a plea of limitation in respect of the early years, she contended that she had been mistaken in failing to realise that she was being underpaid, and relied on section 26(c) of the Limitation Act 1939. Pearson J rejected her argument. In his view the wording of the provision was carefully chosen to indicate a class of actions where a mistake has been made which has had certain consequences, and the plaintiff seeks to be relieved from those consequences (p 418). He gave as examples an action for the restitution of money paid in consequence of a mistake; or for the rescission or rectification of a contract on the grounds of mistake; or an action to reopen accounts settled in consequence of a mistake. Mrs. Phillips Higginss alleged mistake had no consequences relevant to her cause of action. Its only consequence was that because she was unaware that she had a cause of action she missed the limitation period. But that is not sufficient, said Pearson J; Probably provision (c) applies only where the mistake is an essential ingredient of the cause of action, so that the statement of claim sets out, or should set out the mistake and its consequences and pray for relief from those consequences (p 419). It is fair to say about this reasoning that Mrs. Phillips Higgins would have failed even on Mr Rabinowitzs construction of the Act, because the mistake that she alleged was not the cause of the factual situation which she relied on for her claim. It only explained why she had allowed so long to pass before bringing her action. But what matters for present purposes is that her argument failed because her action was an action for relief from a breach of contract, to which the fact that she was mistaken was legally irrelevant. As Pearson J went on to point out, No doubt it was intended to be a narrow provision, because any wider provision would have opened too wide a door of escape from the general principle of limitation. I think that it is difficult to fault Pearson Js succinct and principled analysis of the point. Section 32(1)(c) refers to a type of action and a type of relief. They are assumed to be organically related to the relevant mistake. But if the Test Claimants are right, there is no organic connection, but only an adventitious one. The result would be a state of the law that would operate quite arbitrarily. Some Woolwich Equitable claims would benefit from the extended limitation period while others would not, depending on whether the underlying facts arose from a mistake. I can see no principled ground for making such a distinction in a context where the mistake has no bearing on the nature of the action or the relief claimed. It has been suggested by academic commentators that this result may be anomalous, in that the extended period of limitation applies to a claim to recover a mistaken overpayment of a debt but not to a claim to recover a mistaken underpayment. Pearson J himself drew attention to this in his judgment in Phillips Higgins at p 419. But for my part, I do not see the anomaly. The difference simply arises from the fact that if the claimant is underpaid and sues for the balance, he is enforcing the obligation that gave rise to the debt, whereas if he is overpaid then that obligation will have been discharged, so that he needs some other legal basis for getting it back. By comparison, there are far graver anomalies associated with the wider construction proposed by the Test Claimants. Once one departs from a construction of the subsection which requires the cause of action to be founded on the mistake, it is difficult to discern any principled limit to the reach of this provision. Mr Rabinovitz distinguishes between cases where the mistake, albeit legally irrelevant, was an effective cause of the facts giving rise to the claim and cases where it was merely a background fact. I find this distinction conceptually difficult to grasp and almost impossible to apply. Questions of causation are notoriously difficult and highly sensitive to the legal context in which they fall to be answered. Where parties have fallen out, there is very likely to be mistake on the part of the claimant somewhere in the chain of events that led to his losing money or property. If at some stage he could have done something to save himself from loss, in what circumstances is that to be a sufficient causal nexus between the legally irrelevant mistake and the legally relevant facts which give rise to the claim? The question will often be incapable of a clear answer. Moreover, if the test is not to depend on whether the claimant is asserting one of the established grounds of relief from the consequences of his mistake, and depends on the mere fact that a mistake has brought about the situation in which he has a claim, then there is nothing in the language or purpose of the provision which would limit it to his own mistakes. It could be the defendants mistake against whose consequences the plaintiff is seeking to be relieved, for example by an action for damages. This would mean that section 26(c) of the Limitation Act 1939 unwittingly covered at least part of the ground which Parliament later covered by providing an extended limitation period for actions for damages for negligence or in respect of personal injuries and certain categories of property damage: see sections 11 to 14B of the Limitation Act 1980. Mr Rabinowitz disclaimed any suggestion that the extended limitation period would apply to a claim for damages, with the possible exception of damages for misrepresentation or negligent mis statement. This was no doubt tactically wise. But it is hard to see how such a restriction can be justified if his basic submission is accepted. The difficulties associated with the claimants construction of section 32(1)(c) persuade me that Lord Wright is unlikely to have proposed such an indefinite rule without any discussion of these problems, and that Parliament is unlikely to have intended to enact it. In an ideal world, all rules of law would be clear, but there are few areas where clarity is as important as it is in the law of limitation, whose whole object is to foreclose argument on what ought to be well defined categories of ancient dispute. Mistake It follows that the principle in Woolwich Equitable applies generally in all cases where tax has been charged unlawfully, whether by the legislature or by the tax authorities, whether by overt threats or demands or simply by the taxpayers appreciation of the consequences of not paying, and whether the taxpayer was mistaken or not. By comparison, an action for restitution on the ground of mistake is a more limited remedy, for the obvious reason that it is necessary to prove the mistake. That will not always be easy, as the facts of Woolwich Equitable itself demonstrate. On the face of it, the only case where the Woolwich Equitable cause of action is probably not available and where a claimant may therefore need a right of restitution for mistake, is the case where there is no unlawful exaction of tax but the taxpayer has simply paid in error: e.g. he has miscalculated his liability under a self assessed tax or accidentally paid twice. But that has no bearing on the position of the present claimants. Does this mean that that the existence of the Woolwich Equitable cause of action in English law is enough to satisfy the obligations of the United Kingdom in EU law? The Test Claimants submit that it does not. Their case is that notwithstanding the sufficiency of a Woolwich Equitable claim as a means of recovering unlawfully charged tax, at least in the circumstances of the present case, EU law requires that English law should also maintain a fully effective cause of action to recover tax paid by mistake. Two quite different arguments are advanced in support of this proposition. The first is that EU law specifically requires that national legal systems should provide for the recovery of overpaid taxes in all cases where they were not due, including the one case where the principle in Woolwich Equitable probably has no application, viz where there is no breach of EU law by the state but the taxpayer has simply overpaid by mistake. I shall call this the absence of basis point. The second argument is that even if EU law does not specifically require national law to confer a right to recover taxes overpaid on the ground of mistake, if national law allows a choice between two causes of action to recover the tax, each of them must be independently effective. I shall call this the choice of remedies point. The absence of basis point The Test Claimants argument is that the obligation of a member state to provide an effective means of recovering overpaid taxes is not limited to cases where the state was in breach of EU law. It also applies in cases where the national law entirely conformed with EU law but the claimant paid more than the law required of him. This, they submitted, reflected the principle of restitution applied in EU law and in most civil law jurisdictions (but not England) that a payment is recoverable merely on account of the absence of a legal basis for making it: see Masdar (UK) Ltd v Commission of the European Communities (Case C 47/07) [2008] ECR I 9761, paras 44 46, 49. In Reemtsma Cigarettenfabriken GmbH v Ministero delle Finanze (Case C35/05) [2007] ECR I 2425 a German company purchased services from an Italian advertising agency and paid VAT to them which was not due. There was nothing wrong with the relevant provisions of Italian law for charging and collecting the tax, which in the relevant respects entirely conformed with the Directives. The Italian tax authorities had charged no tax unlawfully. All that happened was that the German purchaser received an invoice from the Italian supplier for the VAT and paid it, not appreciating that the relevant services were by law deemed to have been supplied in Germany. The supplier then accounted for the tax to the Italian tax administration. There was no provision of the two relevant VAT Directives requiring a refund to be made in these circumstances, but it was held that the principle of effectiveness required Italy to make available an effective means of recovering sums paid but not due, either from the Italian supplier or from the state. Mr Aaronson QC argued that the juridical basis for the obligation to repay overpaid tax in these circumstances was the mere absence of a legal basis for the original payment. I think that he may well be right about that. But the reason for the decision was that VAT is an EU tax whose incidence and administration is governed by mandatory requirements of EU law. The purpose of the VAT Directives is to produce a harmonized system operating according to uniform rules across the EU. The payment of VAT otherwise than in accordance with that scheme distorts its uniform operation. The point was made in Danfoss AS and Sauer Danfoss ApS v Skatteministeriet (Case C 94/10), 20 October 2011, where a similar result was arrived at in the context of the common EU scheme for taxing mineral oils. In its judgment in that case, the court observed (para 23) that the purpose of a right of recovery in a harmonized tax scheme is not only compensatory but economic. The right to the recovery of sums unduly paid helps to offset the consequences of the duty's incompatibility with EU law by neutralising the economic burden which that duty has unduly imposed on the operator who, in the final analysis, has actually borne it. In those circumstances, a right of action to recover money paid but not due is required so that the economic burden of the duty unduly paid can be neutralised (para 25). If this issue were to arise in England in the context of an EU tax, the case would be classified in English law as one of mistake and recovery could probably be had on no other basis. But where the relevant tax is wholly a creature of national law, and no tax has been charged in breach of EU law, EU law is not engaged at all. The choice of remedies point This point is at the heart of the division of opinion within this court. The Test Claimants argue, and the majority agrees, that the principle of effectiveness in EU law requires that all remedies which are available to recover the tax should be independently effective for that purpose. Therefore, so the argument goes, it was not open to the United Kingdom to compromise the effectiveness of the right to recover on the ground of mistake by curtailing the limitation period for that right without a period of grace. In argument, this point was founded mainly on the decision of the European Court of Justice in Rewe Handelsgesellschaft Nord mbH v Hauptzollamt Kiel (Case 158/80) [1982] 1 CMLR 449 (Rewe II). This was another case about VAT and excise duty chargeable under the terms of a Directive. It concerned not an unlawful charging of tax, but an unlawful exemption from tax. The claimants were companies operating supermarkets in German coastal towns, who were adversely affected by tax free sales made in international waters during shopping cruises in the Baltic which began and ended in Germany. Under the terms of the Directives, a limited exemption was allowed for goods coming from member states in the personal luggage of travellers, but German law allowed an exemption of its own which was in some respects wider. The Court of Justice held that the exemption in the Directive was not available for sales made on shopping cruises beginning and ending in the same member state, that the tax ought to have been charged, that the incidence of VAT and excise duty was an occupied field governed exclusively by Community law, and that Germany had accordingly had no power to grant further exemptions of its own. The relevant question for present purposes concerned the remedies available to rival traders against the cruise operators. German law allowed a right of action to those adversely affected by breaches of national laws regulating economic activity. At para 40 of its judgment, the Court of Justice referred to this German right of action and then summarised the question at issue as follows: Placed in that context, the questions raised by the national court are intended in substance to establish whether that right of action may be exercised in similar conditions within the framework of the Community legal system in particular in the sense that if the economic interests of a person to whom Community law applies are adversely affected by the non application of a Community provision to a third party, either through the action of a member state or of the Community authorities, that person may institute proceedings before the courts of a member state in order to compel the national authorities to apply the provisions in question or to refrain from infringing them. The courts answer to that question appears at para 44 of the judgment: it must be remarked first of all that, although the Treaty has made it possible in a number of instances for private persons to bring a direct action, where appropriate, before the Court of Justice, it was not intended to create new remedies in the national courts to ensure the observance of Community law other than those already laid down by national law. On the other hand, the system of legal protection established by the Treaty, as set out in article 177 in particular, implies that it must be possible for every type of action provided for by national law to be available for the purpose of ensuring observance of Community provisions having direct effect, on the same conditions concerning the admissibility and procedure as would apply were it a question of ensuring observance of national law. In their printed case (paragraph 67) the Test Claimants rely on this statement of principle, and in particular the passage which I have italicised, as authority for the proposition that EU law requires a right to choose from the range of national remedies. Of course the Test Claimants do have a right to choose either or both of a Woolwich Equitable claim or a claim based on mistake. Neither of the Acts of 2004 and 2007 took it away from them. Their real complaint is not that the right to claim on the basis of mistake of law has been withdrawn, but that the law has been changed to make it subject to a period of limitation running from the date of payment in the same way as the limitation period for a Woolwich Equitable claim. The argument, as it was developed at the hearing, was that even on the footing that a Woolwich Equitable cause of action was enough and that the United Kingdom was not obliged to confer an additional right to recover tax paid by mistake subject to an extended limitation period, since it has chosen to do so, the principle of effectiveness requires that that right with its extended limitation period should remain available for the purpose of recovering tax charged contrary to EU law. This submission is accepted by the majority on the present appeal. I regret that I am unable to accept it for three reasons. First, the argument is not supported by either the decision or the reasoning in Rewe II, nor by the many subsequent cases in which the relevant statement has been cited. Rewe II was concerned with the principle of equivalence, as the language and the legal context show. The issue was whether Germany was bound to make a right of action derived from economic regulation under its national law available to litigants who wanted to enforce comparable rights derived from economic regulation under Community law. What the court was saying was that any cause of action available to enforce a national law right must be equally available to enforce a corresponding Community law right. Provided that there remains an effective remedy, it does not follow from this that national law is bound to maintain that cause of action subject to unchanged incidents or conditions. Nothing was said in Rewe II about protecting the choice of litigants between concurrent national law rights or remedies. The question did not arise because the Court of Justice was considering the only German law remedy which appeared to exist. Second, the Test Claimants submission is inconsistent with the established case law of the Court of Justice. In Edilizia Industriale Siderurgica Srl v Ministero delle Finanze (Case C 231/96) [1998] ECR I 4951 and Ministero delle Finanze v SPAC (Case C 260/96) [1998] ECR I 4997, para 32, the facts were that in breach of a Directive which prohibited taxes on the raising of capital, Italy had charged fees for registering companies. The general limitation period under the Civil Code was ten years, but the decree law authorizing the registration fees provided (and always had provided) for their repayment within three years if they had been wrongly charged. The Italian courts had held that as a matter of domestic law, the effect of the creation of a specific right to repayment within three years under the decree law was to displace the general right conferred by the Civil Code to claim restitution on the ground of absence of basis within ten years. One of the questions referred was whether Italy was bound to make available the cause of action with the more generous limitation period for the purpose of giving effect to EU law rights. The court held that it was not. Provided that the right of action carrying the more restrictive limitation period was effective and applied without discrimination whether the claim to repayment was based on EU or national law, there was no obligation to provide in addition a right of action under the Civil Code with a more generous limitation period. In Edilizia Industriale Siderurgica Srl v Ministero delle Finanze, the court said: 36. Observance of the principle of equivalence implies, for its part, that the procedural rule at issue applies without distinction to actions alleging infringements of Community law and to those alleging infringements of national law, with respect to the same kind of charges or dues (see, to that effect, Amministrazione delle Finanze dello Stato v Salumi (Joined Cases 66/79, 127/79 and 128/79) [1980] ECR 1237, para 21. That principle cannot, however, be interpreted as obliging a member state to extend its most favourable rules governing recovery under national law to all actions for repayment of charges or dues levied in breach of Community law. 37. Thus, Community law does not preclude the legislation of a member state from laying down, alongside a limitation period applicable under the ordinary law to actions between private individuals for the recovery of sums paid but not due, special detailed rules, which are less favourable, governing claims and legal proceedings to challenge the imposition of charges and other levies. The position would be different only if those detailed rules applied solely to actions based on Community law for the repayment of such charges or levies. The same observations were made in Ministero delle Finanze v SPAC SpA, at paras 20 and 21. They were later repeated and applied in Aprile II and Dilexport, where the facts were very similar (see paras 151 152 above) but the question arose from a change in the law. Third, the Test Claimants argument is contrary to principle. The starting point for any analysis of the law in this area is that, subject to the principles of effectiveness and equivalence, it is for national law to determine what remedies are available to enforce a directly effective EU right and on what procedural or other conditions. I have made this point already: see paragraph 145 above. The right of the claimants to choose from the range of causes of action recognised by English law is a right derived solely from English procedural law and it exists only to the extent that English law so provides. So long as the principles of effectiveness and equivalence are respected, a choice between concurrent national law remedies need not exist, and in some member states does not exist, at any rate to the same extent. Thus English law allows a claimant to choose between concurrent rights of action in contract and tort, a principle which was applied by analogy in Deutsche Morgan Grenfell [2007] 1 AC 558 to allow a choice between concurrent rights to recover under the Woolwich Equitable principle and on the ground of mistake. French law, by comparison, is more prescriptive. The principle of non cumul des responsabilits, which excludes delictual claims which fall naturally within the scope of a contract is generally thought to reflect a more general juristic preference for keeping legal categories distinct and allowing claims to be brought in the category to which their subject matter is appropriate. The same approach appears to lie behind the restriction of claims under the general doctrine of unjust enrichment (enrichissmement sans cause lgitime) to cases where no other action is available: Flour, Aubert et Savaux, Droit civil, Les obligations, 2 Le fait juridique, 11th ed. (2011), 57 64. I can see no principled reason why EU law should wish to control these divergent features of national legal systems, provided that the choice which the relevant law mandates and the conditions on which it does so are non discriminatory and effective to vindicate EU rights. The protection of legitimate expectations: Finance Act 2004, section 320 I have already analysed the case law of the Court of Justice on the retrospective curtailment of limitation periods for the exercise of directly effective EU law rights. It establishes, first, that the retrospective curtailment of a limitation period is not necessarily inconsistent with the principle of effectiveness; and, secondly, that the combined effect of the principle of effectiveness and the principle of the protection of legitimate expectations is to preclude national legislatures from retrospectively curtailing the limitation period applicable to the recovery of overcharged tax, unless there is a sufficient period of grace to enable actual and potential claimants to safeguard their existing rights. However, it is important to note that in every case in which these principles have been considered by the Court of Justice, the amending legislation curtailed the limitation period for the only right available in national law for recovering the tax. In none of them was there an effective right of recovery on another legal basis, unaffected by the amendment. The observations of the Advocate General and the court, especially those made in Marks & Spencer must be read in that light. The primary case put forward on behalf of the Commissioners is that because (i) English law would be compatible with EU law if the only means of recovering the overpaid tax was a claim on a Woolwich Equitable basis, and (ii) the Finance Act 2004 did not affect a claim on that basis, it follows that the principles of effectiveness and the protection of legitimate expectations are not engaged at all. In common with every other member of the court, I reject that submission. The reason is that if, as I have sought to demonstrate (i) a right to claim on the principle in Woolwich Equitable with a normal limitation period is an effective means of asserting the Test Claimants EU law right, and (ii) there is no obligation on the United Kingdom in EU law to maintain a concurrent right to claim on the basis of mistake with an extended limitation period, then logically there still remains one complaint that might arguably be made about section 320 of the Finance Act 2004. That complaint is that before the intention to legislate was announced potential claimants were entitled to make their plans on the assumption that they could recover the overpaid tax on the ground of mistake with the benefit of an extended limitation period, but their right to do so was then curtailed without notice or transitional provisions. I think that this complaint depends on the principle of the protection of legitimate expectations, whereas Lord Walker and Lord Reed consider that it can be justified on the basis of the principle of effectiveness alone. I doubt whether this difference matters. In either case, the force of the complaint depends entirely on the proposition that reasonable persons in their position could have made their plans on that assumption. Could they? I think not. If English law had never recognised a right to recover tax on the ground of mistake of law, but only on the basis of the principle in Woolwich Equitable, it is not disputed that that state of affairs would have satisfied the requirements of EU law. If Parliament had retrospectively created a concurrent right to recover tax on the ground of mistake of law, but in the same enactment made it subject it to a limitation period of six years to run from the time of payment, it is not disputed that that state of affairs would also have satisfied the requirements of EU law. The question whether the right to recover money paid under a mistake of law extended to mistaken payments of tax was a difficult question. There were powerful voices raised in favour, such as that of Professor Birks, but also strong and principled arguments against. I have dealt with this matter at paragraphs 166 168 above. Before Park J gave judgment in Deutsche Morgan Grenfell [2003] 4 All ER 645 on 18 July 2003, no one could reasonably have counted on being able to recover tax on the ground of mistake of law. They might have thought that there were strong arguments to that effect, but I do not believe that they could reasonably have assumed when deciding how long they had in which to bring their claims that those arguments would prevail. Even after Park Js judgment, the right to recover tax on the ground of mistake of law was being challenged on appeal on serious grounds. The existence of such a right was rejected by the Court of Appeal [2006] Ch 243 and was not definitively established until the judgment of the House of Lords [2007] 1 AC 558 on 25 October 2006. In a common law system, it is open to the courts to create new causes of action, but limitation is necessarily a matter for the legislature. On 8 September 2003, just seven weeks after the decision of Park J, the government announced its intention to introduce what became section 320 of the Finance Act 2004, with its provision that the limitation period for the newly recognised claim to recover tax on the ground of mistake of law should run from the date of payment and not from the date of discovery. I find it impossible to regard that sequence of events as any different in substance from the situation that would have existed if Parliament had simultaneously created a right to recover tax for mistake of law and subjected it to a limitation period running from the date of payment. If potential claimants in the position of the present appellants claim to have been entitled to count on being able to recover on the ground of mistake of law with an extended limitation period, then the highest that they can put their case is that they were entitled to do so in the seven week interval between 18 July and 8 September 2003. Bearing in mind the brevity of the interval, the virtual certainty of an appeal and the uncertainty about its outcome, the argument that they had a legitimate expectation of the kind suggested seems to me to be unrealistic. In my judgment, section 320 of the Finance Act 2004 was not inconsistent with the protection of legitimate expectations. All that Parliament did was to provide for the limitation period applicable to a cause of action which English law had only just recognised. This was a lawful exercise by Parliament of the discretion allowed to member states as to the conditions regarding limitation on which any national law right is be available. The contrary view of the majority depends on the declaratory theory of judgments. It proceeds upon the basis that when Park J and then the House of Lords held in Deutsche Morgan Grenfell that there was a right to recover tax on the basis of mistake, they were declaring the law as it had always been. At a purely formal level, this proposition is undoubtedly correct. Judgments of the courts about the common law are deemed to be declaratory and not legislative. But we are, I think, in danger of allowing the form to overlay the substance. In Deutsche Morgan Grenfell, at p 570, Lord Hoffmann distinguished between two questions raised by the declaratory theory of judgments: One is whether judges change the law or merely declare what it has always been. The answer to this question is clear enough. To say that they never change the law is a fiction and to base any practical decision upon such a fiction would indeed be abstract juridical correctitude. But the other question is whether a judicial decision changes the law retrospectively and here the answer is equally clear. It does. It has the immediate practical consequence that the unsuccessful party loses, notwithstanding that, in the nature of things, the relevant events occurred before the court had changed the law: see In re Spectrum Plus Ltd [2005] 2 AC 680. There is nothing abstract about this rule. In my judgment, it is the first of Lord Hoffmanns propositions which is relevant for present purposes. The question is not whether the law must be treated as always having been as Park J and the House of Lords declared it to be. It is whether before those judgments were delivered a litigant could reasonably count on being able to recover the overpaid tax on the ground of mistake (with an extended period of limitation), as opposed to being limited to the already established remedy under the Woolwich Equitable principle (with a normal period of limitation). The question must in my judgment be put in this way, because the issue is whether there is an assumption reasonably to be imputed to litigants about how long they had in which to bring their claim, which was then retrospectively falsified by Parliament. The answer to the question cannot depend on any legal fiction. It must depend on the position as it appeared to stand, before those judgments were given. This must in particular be true when one is seeking to apply to the relevant English law principles of EU law which have always depended on substance rather than form. The reality is that the Test Claimants never were in a position to make their plans on the footing that they had a right of action for mistake until at the very earliest the judgment of Park J, but more realistically until the matter was definitively settled by the House of Lords in 2006. It is right to point out that this is substantially the same principle as that on which the Test Claimants themselves rely when they say (with the support of the House of Lords in Deutsche Morgan Grenfell) that they cannot be taken to have discovered their mistake about the lawfulness of the United Kingdoms corporation tax regime until the European Court of Justice definitively decided the point. By the same token, the Test Claimants cannot be taken to have assumed that they had a right to recover the tax on the ground of mistake at a stage when they had arguments and hopes but no definitive decision. The protection of legitimate expectations: Finance Act 2007, section 107 As I have already indicated, I regard this provision as more problematic. It was announced on 6 December 2006, more than three years after the announcement which preceded section 320 of the Act of 2004. It went a great deal further than the earlier enactment, since it applied retrospectively without limit of time to any action brought before the first announcement had been made on 8 September 2003. It might be said that the announcement of 2006 was a response to the decision of the House of Lords in Deutsche Morgan Grenfell and that the interval between judgment and announcement was no greater than it had been in 2003. But the circumstances were different. Companies in the position of the British American Tobacco group who had already brought their actions before the announcement of 8 September 2003 had been expressly excluded from the operation of the legislation proposed on that date. That exclusion was duly contained in section 320 of the Finance Act 2004. The British American Tobacco group and other companies in the same position had been pursuing their claims through the English courts and the Court of Justice on that basis since 2003, when their right to the fruits of those proceedings was removed in 2006. In my view, while they had had no legitimate expectation of being able to bring an action to recover on the ground of mistake of law in 2003, they had acquired such an expectation by 2006, not least as a result of the terms of the announcement of September 2003 and the 2004 Act. It was therefore contrary to the principle of the protection of legitimate expectations, for that expectation to be defeated without notice of transitional provisions. Section 33 of the Taxes Management Act 1970 This provision applies only to assessed taxes, and therefore only to a very small part of the present claims. It confers a right subject to highly restrictive conditions to invoke what is essentially a discretionary power of the Commissioners to grant a refund of overpaid tax. No one suggests on this appeal that such a limited remedy could possibly be enough in itself to satisfy the virtually unqualified obligation of the United Kingdom to provide an effective means of recovering tax overcharged contrary to EU law. This does not of course matter if it is an additional remedy as opposed to an exclusive one. There is certainly nothing in the provision which expressly excludes the availability of other causes of action at common law. If that is its effect, it must be by implication. In the ordinary way, such an exclusion might be implied, on the ground that where Parliament confers a restricted right of recovery, that must impliedly displace a corresponding right at common law which would be unrestricted. However, it is axiomatic that the courts cannot imply an exclusion of unrestricted rights of action at common law where that would be inconsistent with an overriding rule of EU law that an unrestricted right must be available. Section 33 cannot therefore be an exclusive right to recover tax overcharged contrary to EU law. Whether it is an exclusive right in other circumstances, is not a point which needs to be considered on this appeal. The Court of Appeal held that section 33 did impliedly exclude a right of action at common law, even in relation to claims for tax overcharged contrary to EU law. They then dealt with the resulting inconsistency with EU law by reinterpreting the section so as remove the offending restrictions and the element of discretion. I think that this was wrong in principle. I very much doubt whether such radical surgery can be justified even under the extended principles of construction authorised in Marleasing. Its effect would be fundamentally to alter the scheme of the provision. But, however that may be, it seems, with respect, eccentric to imply an ambit for section 33 which is inconsistent with EU law and then to torture the express provisions so as to deal with anomalies that but for the implication would never have arisen. The damages claims In addition to their claims in restitution, the claimants have claims against the Commissioners in damages on the principle of state liability adopted by the European Court of Justice in Francovich v Italian Republic (Cases C 6 and 9/90) [1995] ICR 722. This cause of action is subject to a number of conditions, one of which is that the breach should be sufficiently serious, ie should involve a grave and manifest disregard of the limits of the member states discretion: see Brasserie du Pecheur SA v Federal Republic of Germany (Joined Cases C 46/93 and C 48/93) [1996] QB 404. Both courts below have dismissed the claim for damages on the ground that that condition is not satisfied. That may explain why, although the issues before us were formulated so as to cover their implications for the damages claim also, the argument focused exclusively on the claim for restitution. In fact, the damages claims do not call for separate consideration because neither section 320 of the Finance Act 2004 nor section 107 of the Finance Act 2007 applied to those claims unless they fall within section 32(1)(c) of the Limitation Act 1980. It follows from the construction that I would give to that provision that they do not fall within it. It is not suggested that section 33 of the Taxes Management Act 1970 has any bearing on a claim for damages on the principle of state liability. Conclusion In the result, I would (1) affirm the decision of the Court of Appeal on the requirements of the cause of action based on Woolwich Equitable and the absence of any requirement for an additional remedy in mistake (Issue 12 in their numbering); (2) affirm their decision on the effect of section 32(1)(c) of the Limitation Act 1980) (Issue 22); (3) allow the appeal on section 107 of the Finance Act 2007 (Issues 20 (4) allow the appeal on section 33 of the Taxes Management Act 1970 and 21); and (Issue 23). The question whether section 320 of the Finance Act 2004 is compatible with EU law cannot be decided without a reference to the Court of Justice. It is plain from the novelty of the circumstances in which it arises, and from the differences of opinion within the court that it is not acte clair. I would, however, limit the reference to section 320 of the 2004 Act. LORD REED Lord Walker and Lord Sumption have expressed different views about the way in which EU law applies to the grounds of action available to the test claimants for the recovery of taxes which were levied contrary to EU law, and in particular about the way in which EU law applies to legislation which shortened, retroactively and without transitional provisions, the limitation period applicable to one of those grounds of action. In my opinion, Lord Walkers analysis of the compatibility of section 320 of the Finance Act 2004 and section 107 of the Finance Act 2007 with the principle of effectiveness, and of the compatibility of the latter provision with the principle of the protection of legitimate expectations, is consistent with the relevant case law of the Court of Justice of the European Union. I agree with his reasoning and conclusions in relation to those issues, as well as in relation to the issues of domestic law before the court. For my part, in agreement with Lord Hope and Lord Clarke, I am inclined to the view that section 320 of the 2004 Act also infringes the principle of the protection of legitimate expectations. I add some observations of my own in relation to the issues of EU law only because of the importance of those issues and the division of opinion in the court. It is perhaps unusual to discuss EU law in such detail when the matter is to be referred to the Court of Justice, but in the present case the issues of EU law and domestic law are closely inter related. The difficulties in this case arise partly from the fact that the relevant principles of English law have been in the course of development during much of the relevant period of time. The principal milestones along the road are three decisions of the House of Lords. First, in 1992 the House of Lords held that a taxpayer was entitled to recover taxes paid in response to an unlawful demand: Woolwich Equitable Building Society v Inland Revenue Comrs [1993] AC 70. Secondly, in 1998 the House of Lords held that money paid under a mistake of law was recoverable: Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349. Thirdly, in 2006 the House of Lords held that the latter principle applied to taxes paid under a mistake of law, including taxes paid in ignorance of the fact that the legislation under which they were levied was incompatible with EU law: Deutsche Morgan Grenfell Group plc v Inland Revenue Comrs [2007] 1 AC 558 (DMG). Two other important matters were also decided in that case. The first concerned the limitation period applicable to the claim. In terms of section 32(1)(c) of the Limitation Act 1980, that period would not begin to run until the mistake was discovered, or could with reasonable diligence have been discovered. The House of Lords held that, in the circumstances of the case, the mistake could not be discovered until the incompatibility of the tax with EU law had been established by a judgment of the Court of Justice. The second matter was that the fact that the taxpayer might have a concurrent ground of action under the Woolwich principle, which was subject to a limitation period running from the date of the payment, did not prevent it from pursuing its claim on the ground of mistake if the extended limitation period best suited its interests. Finally, in its present decision this court has held that a taxpayer who pays taxes in compliance with legislation which is incompatible with EU law has a ground of action under the Woolwich principle, in addition to any ground of action which may be available on the basis of mistake. The legislative provisions with which we are now concerned alter the limitation period applicable to claims for the repayment of taxes on the ground of mistake, so that it runs from the date when the payment was made, rather than the date when the mistake was discovered or could reasonably have been discovered. The first provision with which we are concerned, section 320 of the Finance Act 2004, applies to claims which were made on or after 8 September 2003. The second provision, section 107 of the Finance Act 2007, applies to claims made before that date. The claims with which we are concerned were made on 18 June 2003, in the case of the BAT group claimants, and on 8 September 2003, in the case of the Aegis group claimants. They were based on both grounds of action. The principal issue we have to determine is whether the application of the legislation to the claims is compatible with EU law. In considering that issue, there appear to me to be three central questions, which can at this stage be broadly stated as follows. The first is whether the ground of action enabling taxes levied in breach of EU law to be recovered on the basis of mistake falls within the ambit of the EU principle of effectiveness. It is argued that it does not, since the ground of action based on an unlawful demand in itself fully satisfies the requirement of EU law that there should be an effective remedy. Since no additional remedy is required by the principle of effectiveness, it follows, so the argument runs, that the additional ground of action which English law provides, based on mistake, falls outside the scope of that principle. I disagree. As I shall explain, it appears to me that the EU principle of equivalence, which is the complement of the principle of effectiveness, applies to the grounds of action available for the recovery of taxes in domestic law. Where an action for the recovery of taxes under domestic law can be based either on the ground of mistake or on the ground of unlawful demand (or, as in the present case, on both grounds), it follows from the principle of equivalence that both grounds of action should also be available in similar circumstances to enforce an analogous right under EU law. So long as they must both be available, they must also both be effective. The principle of effectiveness therefore applies to both grounds of action. The second question, which arises only if the first question is answered in the affirmative, is whether the application of section 320 of the 2004 Act to the Aegis claims, and of section 107 of the 2007 Act to the BAT claims, is compatible with the principle of effectiveness. As I shall explain, I consider that it is not compatible in either case, since the retroactive curtailment of the limitation period and the absence of any transitional provisions rendered impossible in practice the exercise of rights derived from EU law. If that is correct, it follows that the legislation cannot be relied upon against the claimants, whatever the answer to the third question may be. The third question is whether the application of the legislation to these claims is compatible with the EU principle of the protection of legitimate expectations. That is a question which arises even if the first question is answered in the negative, since the procedural rules laid down by domestic law for the enforcement of rights derived from EU law must be in conformity with the general principles of EU law, including the general principle requiring the protection of legitimate expectations. The answer to the third question is however of no practical significance if the first two questions are answered as I would answer them. In the event, we are all agreed that the application of section 107 of the 2007 Act to the BAT claims is incompatible with the protection of the BAT claimants legitimate expectations. In agreement with Lord Hope and Lord Clarke, I have also reached the same provisional conclusion in respect of the application of section 320 of the 2004 Act to the Aegis claims, for reasons which I shall explain. It might be argued that a fourth question also arises on the facts of these cases: namely, whether the application of the legislation in issue to these claims would be compatible with the rights recognised in the Charter of Fundamental Rights of the European Union (OJ 2000 C 364, p 1) (notably in article 47), to which effect is given by article 6(1) of the Treaty on European Union (TEU), or with the fundamental rights recognised by article 6(3) TEU, including in particular the right of access to a court, guaranteed by article 6(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms, and the right to the peaceful enjoyment of possessions, guaranteed by Article 1 of the First Protocol to the Convention. That question however goes beyond the ambit of the dispute as defined by the parties, and it raises issues on which the court has not been addressed. In those circumstances it would not be appropriate for the court to consider that question of its own motion. My answers to the first three questions in any event produce a result which is not incompatible with the fundamental rights just mentioned. I turn now to consider in greater detail the three questions which I have identified. The mistake ground of action and the principles of equivalence and effectiveness Under the principle of cooperation laid down in article 4(3) TEU, it is for the member states to ensure the effective judicial protection of an individuals rights under EU law: see, for example, Unibet (London) Ltd v Justitiekanslern (Case C 432/05) [2008] All ER (EC) 453, paras 37 44. In particular, in the absence of EU rules governing the matter, it is for the domestic legal system of each member state to lay down the procedural rules governing actions for safeguarding rights which individuals derive from EU law. In a case such as the present, it may seem idiosyncratic to describe the grounds of action available under domestic law as procedural rules, but that description reflects the distinction drawn in the case law of the Court of Justice between the right derived from EU law and the national law by means of which effect is given to that right, which may govern such matters as the procedure to be followed, the period within which claims must be made, and the proof of such claims. That general approach applies to the right to recover the taxes in issue in the present case, to the extent that they were levied in breach of EU law: see the judgment of the Grand Chamber on the first reference in these proceedings, Test Claimants in the FII Group Litigation v Inland Revenue Comrs (Case C 446/04) [2006] ECR I 11814, para 203. As the Grand Chamber stated, the procedural rules laid down by domestic law must comply with two conditions. First, they must not be less favourable than those governing similar domestic actions. That is the principle of equivalence. Secondly, they must not render virtually impossible or excessively difficult the exercise of rights conferred by EU law. That is the principle of effectiveness. Equivalence and effectiveness are complementary requirements. For the purpose of applying the principle of equivalence, a claim for the recovery of taxes levied by a member state in breach of EU law is similar to a claim for the restitution of taxes unlawfully levied under domestic law. In England and Wales, the rules laid down by domestic law governing such claims are in large part rules of common law. The procedure laid down by section 33 of the Taxes Management Act 1970 is an exception. For the reasons given by Lord Walker and Lord Sumption, however, that statutory procedure is not applicable in the circumstances of this case. The relevant rules of common law include those laid down by the House of Lords in the three cases which I have mentioned Woolwich, Kleinwort Benson and DMG and by this court in the present case. In particular, as I have explained, it was held in the DMG case that a person who had mistakenly paid taxes which had been levied in breach of EU law had a ground of action based upon the fact that the payment had been made under a mistake: that is to say, the ground of action whose general nature was established in Kleinwort Benson. The present decision holds that such a person also has a ground of action based upon the fact that the payment was made in compliance with legislation which was incompatible with EU law: that is to say, the ground of action whose general nature was established in Woolwich. The two grounds of action are in some respects subject to different rules, and in consequence one or the other may be more suitable to a claimant, depending upon the circumstances. For example, apart from the legislation in issue in the present case, the two grounds of action are subject to different limitation periods. There may be other differences. In the present case, as I have explained, the claims are based upon both the mistake ground of action and the unlawful demand ground of action. Where both these grounds of action are available for the recovery of taxes which have been levied in breach of domestic law, and a person seeking to recover such taxes can choose to base his claim upon whichever ground of action best suits his interests, it follows from the principle of equivalence that the same grounds of action, and the same freedom of choice, must equally be available in analogous circumstances to a person seeking to recover taxes which have been levied in breach of EU law: otherwise, claims based on EU law would be less favourably treated than similar claims based on domestic law. As the Court of Justice stated in Rewe Handelsgesellschaft Nord mbH v Hauptzollamt Kiel (Case 158/80) [1981] ECR 1805, para 44, the system of legal protection established by the Treaties implies that it must be possible for every type of action provided for by national law to be available for the purpose of ensuring observance of Community provisions having direct effect (emphasis added). It might however be argued that a complication arises from the fact that it had not been definitively decided at the time when the claims were made, or at the time when the legislation was enacted, that those grounds of action were available for the bringing of claims such as those with which the present proceedings are concerned. Does that make a difference to the way in which the principle of equivalence applies? In my view it does not. The decision of the House of Lords in DMG, confirming the soundness of a claim to the repayment of unlawfully levied tax on the basis of a mistake in law, was in no sense prospective only. The decision of this court in the present case, confirming that claims to the repayment of unlawfully levied tax can be made on the basis of the Woolwich principle even in the absence of a formal demand, has similarly determined what the law was at the time when the claims were made. Although each of those decisions determined a question of law which was previously contestable, and can therefore be said to have involved a development of the law, they cannot be equiparated to legislation: such decisions actually, and not merely formally, declare the law that is applicable to the case before the court and all other comparable cases. As Lord Goff of Chieveley explained in Kleinwort Benson at pp 378 379, the declaratory theory of judicial decision is not an aberration of the common law, but reflects the nature of judicial decision making (an aspect which is also reflected in the temporal effects of the judgment of the Grand Chamber on the first reference in these proceedings). It follows that these claims, although made in proceedings which commenced prior to the decisions of the House of Lords in DMG and of this court in the present case, are based on grounds of action which were available under English law at the time when the claims were made, as a means of recovering taxes which had been unlawfully levied, even if that could not have been known with certainty until the matter had been finally determined by the highest courts. It accordingly appears to me that the grounds of action based on mistake and on an unlawful demand were both available at all material times, in the circumstances laid down in the relevant case law, for the recovery of taxes which had been levied contrary to domestic law. It follows from the principle of equivalence that both grounds of action must also have been available in analogous circumstances for the recovery of taxes levied contrary to EU law. That is not, of course, to say that English law was bound to maintain both grounds of action subject to unchanged incidents or conditions; but any changes would have to comply with the requirements of EU law, including the requirement of effective judicial protection. That conclusion is challenged on the basis that the mistake ground of action is neither necessary nor sufficient to meet the requirements of EU law, as laid down in such cases as Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case 199/82) [1983] ECR 3595: it is not necessary, since the unlawful demand ground of action is in itself adequate; and it is not sufficient, since it requires the presence of an additional element besides the levying of the taxes in breach of EU law, namely that they must have been paid under a mistake as to the lawfulness of the domestic legislation. The first of these contentions appears to me to be off the point. The fact that the ground of action based on an unlawful demand satisfies the San Giorgio principle does not exclude the possibility that the ground of action based on mistake also satisfies that principle. Indeed, the ground of action based on mistake is of considerable practical importance as a means of enforcing rights to repayment derived from EU law, as the present case demonstrates, since it enables claims relating to taxes levied in breach of EU law to be brought outside the six year limitation period, reckoned from the date of the payment, which applies to claims based upon the Woolwich principle: a period which may have expired before the mistake as to the validity of the tax legislation is discovered. Admittedly, if English law had evolved differently, and the ground of action based on mistake had not been available, then the ground of action based on an unlawful demand might well have met the requirements of EU law. The fact of the matter, however, is that English law provides two grounds of action which are capable of satisfying the San Giorgio principle, and the principle of equivalence therefore requires that both grounds of action should be available for the enforcement of rights derived from EU law. The second contention also appears to me to be mistaken. The two grounds of action are not identical: in particular, subject to the legislation at issue in the present case, they are subject to different limitation periods. The mistake ground of action admittedly includes an additional element, namely that the taxes were paid under a mistake; but it is the presence of that additional element which enables the claimant to benefit from an extended limitation period which begins when the mistake is discovered or could with reasonable diligence have been discovered, rather than beginning when the payment was made. The mistake ground of action is therefore a valuable remedy for the recovery of taxes levied contrary to EU law. If it were not available for that purpose, then the person who had paid taxes levied contrary to EU law would be in a less favourable position than the person who had a similar claim under domestic law. The principle of equivalence does not of course oblige a member state to extend its most favourable rules governing recovery under national law to all actions for repayment of charges or dues levied contrary to EU law (Edilizia Industriale Siderurgica Srl v Ministero delle Finanze (Case C 231/96) [1998] ECR I 4951, para 36 (Edis)). It was therefore open to the United Kingdom to curtail the limitation period applicable to the ground of action based on mistake without offending against the principle of equivalence, so long as it did so not only for claims based on a breach of EU law but also for similar claims based on a breach of domestic law. That had not however been done by the time the present actions were commenced. Whether the retroactive manner in which the limitation period was subsequently curtailed was compatible with EU law raises issues not in relation to the principle of equivalence but in relation to the principle of effectiveness. If, then, the principle of equivalence required that the mistake ground of action should be available to the claimants at the time when they made their claims, then it follows under EU law that the principle of effectiveness also applied to that ground of action, and continues to apply until the claims are determined. The question which arises, and to which I turn next, is whether the application of section 320 of the 2004 Act to the Aegis claims, and of section 107 of the 2007 Act to the BAT claims, would be compatible with that principle. The application of the principle of effectiveness The principle of effectiveness requires that the national procedural rules required by the principle of equivalence must provide effective judicial protection in conformity with EU law. Taken in conjunction with the principle of equivalence, it is a principle which has far reaching implications for domestic law. The principle of effectiveness may in particular impinge upon domestic laws relating to limitation periods. There is of course no objection in principle to limitation periods under EU law: on the contrary, it is recognised that reasonable periods of limitation are necessary in the interests of legal certainty (Rewe Zentralfinanz eG v Landwirtschaftskammer fr das Saarland (Case 33/76) [1976] ECR 1989, para 5 and Comet BV v Produktschap voor Siergewassen (Case 45/76) [1976] ECR 2043, paras 17 18). Equally, there is no requirement that rights derived from EU law should be subject to the most favourable limitation period available under domestic law, provided the principle of equivalence is respected (Edis). National legislation curtailing the period within which recovery may be sought of sums which have been levied in breach of EU law is not in principle incompatible with EU law. The Court of Justice has however laid down certain requirements with which such legislation must comply. It must for example not be intended specifically to limit the consequences of a judgment of the Court of Justice (see eg Deville v Administration des Impts (Case 240/87) [1988] ECR 3513). In that regard, I note that the Government announced its intention to introduce the provision which became section 107 of the Finance Act 2007 on 6 December 2006, which was the day on which the Court of Justice had rejected the Governments application to re open the hearing in the first reference in this case so as to allow it to seek a temporal restriction to the effect of the judgment. The effect of section 107 is not however confined to the taxes with which the courts judgment was concerned, and it is not contended that the provision offended against the Deville requirement. In the circumstances, I proceed on that basis. A further requirement of legislation curtailing a limitation period is that the arrangements for its entry into force must be consistent with effective judicial protection of the rights derived from EU law. In particular, such legislation must ensure that it remains possible in practice to enforce the right to repayment derived from EU law. In order to understand how that principle applies in the present case, it is helpful to consider some of the judgments of the Court of Justice. First, Aprile v Amministrazione delle Finanze dello Stato (No 2) (Case C 228/96) [2000] 1 WLR 126 concerned a claim for repayment of charges wrongfully levied in 1990, when such claims were subject to the general limitation period of ten years. On 27 January 1991 legislation was enacted which brought such claims within the scope of a shorter limitation period prescribed by customs legislation, which was then a period of five years, and in addition reduced that limitation period to three years as from 27 April 1991. The action was begun on 30 March 1994. It was accepted by the national authorities that the legislation could not be applied to claims which had been lodged prior to 27 April 1991. In that regard, the Advocate General observed at para 41 of his opinion that the legislation would be clearly incompatible with Community law if it applied to claims which had been lodged before that date: the Community principle of legal certainty did not allow such claims to be affected by a later provision not existing at the time of lodgement which detracted from the legal situation of the claimants. The issue concerned claims lodged after 27 April 1991 in respect of payments which had been made at a time when the longer limitation period applied. As the Court of Justice noted, the national courts interpreted the legislation as not having any retroactive effect: it was construed as meaning that persons whose claims had arisen before the date when the legislation came into force had three years from that date within which to commence proceedings: a period which was sufficient to guarantee the effectiveness of the right to reimbursement (para 28). On that basis, the legislation was compatible with Community law. The same conclusion was also reached, on similar facts, in Dilexport Srl v Amministrazione delle Finanze dello Stato (Case C 343/96) [2000] All ER (EC) 600. Secondly, Marks & Spencer plc v Customs and Excise Comrs (Case C 62/00) [2003] QB 866 concerned a claim for repayment of VAT unduly paid between May 1991 and August 1996, when the relevant limitation period was six years. On 19 March 1997 legislation was enacted which reduced the limitation period to three years. The legislation was deemed to have come into force on 18 July 1996. The action was begun on 15 April 1997. The Court of Justice considered the legislation both in relation to the principle of effectiveness and in relation to the principle of the protection of legitimate expectations. I shall consider the second of those aspects below. In relation to the principle of effectiveness, the court derived from its judgments in Aprile and Dilexport the proposition that, in order for national legislation curtailing the period within which recovery may be sought of sums charged in breach of Community law to be compatible with Community law, the time set for its application must be sufficient to ensure that the right to repayment is effective (para 36). The Court continued: 37. It is plain, however, that that condition is not satisfied by national legislation such as that at issue in the main proceedings which reduces from six to three years the period within which repayment may be sought of VAT wrongly paid, by providing that the new time limit is to apply immediately to all claims made after the date of enactment of that legislation and to claims made between that date and an earlier date, being that of the entry into force of the legislation, as well as to claims for repayment made before the date of entry into force which are still pending on that date. 38. Whilst national legislation reducing the period within which repayment of sums collected in breach of Community law may be sought is not incompatible with the principle of effectiveness, it is subject to the condition not only that the new limitation period is reasonable but also that the new legislation includes transitional arrangements allowing an adequate period after the enactment of the legislation for lodging the claims for repayment which persons were entitled to submit under the original legislation. Such transitional arrangements are necessary where the immediate application to those claims of a limitation period shorter than that which was previously in force would have the effect of retroactively depriving some individuals of their right to repayment, or of allowing them too short a period for asserting that right. 39. In that connection it should be noted that member states are required as a matter of principle to repay taxes collected in breach of Community law (Socit Comateb v Directeur Gnral des Douanes et Droits Indirects (Joined Cases C 192 to 218/95) [1997] ECR I 165, para 20, and Dilexport [1999] ECR I 579, 610 611, para 23), and whilst the court has acknowledged that, by way of exception to that principle, fixing a reasonable period for claiming repayment is compatible with Community law, that is in the interests of legal certainty, as was noted in paragraph 35 hereof. However, in order to serve their purpose of ensuring legal certainty limitation periods must be fixed in advance (ACF Chemiefarma v Commission of the European Communities (Case 41/69) [1970] ECR 661, para 19). As the court made clear at para 38, the legislation in issue in Marks & Spencer was objectionable not only because it applied retroactively to persons who had already made claims for repayment which were within the limitation period then in force, but also because it precluded claims by persons who could otherwise have made claims within that period, without any transitional provisions to protect the rights of such persons. A similar conclusion was also reached in Grundig Italiana SpA v Ministero delle Finanze (Case C 255/00) [2003] All ER (EC) 176, where a limitation period of five years was replaced by one of three years, and a transitional period of 90 days was held to be insufficient to ensure that the right of recovery was not rendered excessively difficult. It follows from cases such as Aprile, Dilexport, Marks & Spencer and Grundig that a taxpayer who has paid taxes levied contrary to EU law is not vested with a right to repayment in accordance with the domestic provisions which were in force at the time when the payment was made. It is permissible to alter the applicable rules of domestic law, including rules as to limitation, provided the legislation effecting the alteration does not in practice deprive the persons affected of their right to seek reimbursement. In order for that proviso to be met, however, the legislation must not apply the new limitation period retroactively so as to bar claims which were made timeously according to the law then in force, and the arrangements for its entry into force must also allow persons who have not yet made claims an adequate period of time to ensure that their right to repayment remains effective. In the present case, the claims are for the repayment of taxes unduly paid between 1973 and 1999, when the relevant limitation period was six years. That period generally ran from the date of the payment, but in an action for relief from the consequences of a mistake the period was extended: it did not begin to run until the claimant discovered the mistake or could with reasonable diligence have discovered it (section 32(1)(c) of the Limitation Act 1980, re enacting a provision previously contained in section 12 of the Limitation Act 1939). As Lord Walker has explained at paras 103 104, it has been established in this case that the payments were made under a mistake about the lawfulness of the tax regimes under which they were paid; and it was only after the Court of Justice issued its judgment in Metallgesellschaft Ltd v Inland Revenue Comrs (Joined Cases C 397/98 and C 410/98) [2001] Ch 620 that it was generally appreciated that the UK corporation tax regime was open to challenge as infringing Community law. A well advised company in the position of the claimants would then have had grounds for considering that it was entitled to the repayment of tax which had been levied contrary to Community law, and that there was at least a reasonable prospect that it could rely upon the extended limitation period provided by section 32(1)(c) of the 1980 Act in order to recover any taxes paid more than six years before the proceedings were begun. In order to do so, it would of course have to base its claim upon the mistake ground of action. The BAT action was begun in June 2003, and the Aegis action on 8 September 2003. In each action, the claim was based upon the mistake ground of action (as well as the unlawful demand ground of action), and reliance was placed on section 32(1)(c). Section 320 of the 2004 Act, enacted in July 2004, excluded the application of section 32(1)(c) of the 1980 Act in relation to taxation matters where the action was brought on or after 8 September 2003. Section 107 of the 2007 Act, enacted in July 2007, excluded the application of section 32(1)(c) where the action was brought prior to 8 September 2003. It is apparent from that summary that the claims, so far as they relate to payments made more than six years before the proceedings were commenced, have always been dependent on the application of section 32(1)(c) of the 1980 Act. The effect of the legislation of 2004 and 2007 is thus to deprive the claimants, retrospectively, of the ability to pursue their claims so far as they relate to those payments. Since the legislation was retroactive in its effect, there was nothing the claimants could do to avoid its operation: that, of course, was the point of making the legislation retroactive. Since the legislation retroactively restricts the possibility of repayment to claimants who brought an action within six years of the date of the payment, rather than six years of the date when their mistake was discovered or could with reasonable diligence have been discovered, it deprives persons who do not satisfy that condition of any possibility of exercising the right to repayment derived from EU law, which they previously enjoyed. In the circumstances of this case, it retroactively renders the taxes unduly paid by the BAT group prior to June 1997, and by the Aegis group prior to September 1997, irrecoverable: taxes whose reimbursement had been timeously sought under the law then in force. It therefore renders impossible in practice the exercise of rights derived from the EU treaties which national courts are bound to protect. That is the first reason why I have reached the provisional conclusion that it is contrary to EU law and cannot be relied on in these proceedings. That conclusion does not appear to me to be affected by the argument that the legislation serves the legitimate purpose of avoiding the disruption of public finances which the present claims, and other similar claims, would otherwise cause. As the Court of Justice observed in its Marks & Spencer judgment at para 39, member states are required as a matter of principle to repay taxes collected in breach of EU law. Legal certainty, which protects both taxpayers and the administration, can justify fixing reasonable limitation periods for bringing claims for repayment, but it cannot in my view justify applying them in such a way that the rights conferred by EU law are no longer safeguarded. Nor in my view can the present case be distinguished from such cases as Marks & Spencer on the ground that those cases concerned situations where there was only one basis on which repayment could be sought, whereas the present case concerns a situation where two grounds of action exist, with differently calculated limitation periods, and the effect of the legislation in issue is merely to apply the same method of calculating the limitation period to both grounds of action. I accept that the present case differs in that respect from the cases which have come before the Court of Justice, but the difference is in my view of no consequence. Since both grounds of action are available as means of enforcing EU rights in accordance with the principle of equivalence, it follows that the principle of effectiveness must also be respected in relation to both. The vice of the legislation in issue is not that it seeks to apply a common limitation period to the two grounds of action, but that it does so retroactively and without transitional provisions, and so fails to conform to the principle of effective judicial protection. The principle of the protection of legitimate expectations A further reason for my provisional conclusion that the legislation is incompatible with EU law is that it is in my view incompatible with the principle of the protection of legitimate expectations. As a general principle of EU law, this principle binds member states when implementing EU law at national level. In particular, it applies to national rules governing the protection of EU rights in national courts. The point is illustrated by Marks & Spencer (Case C 62/00) [2003] QB 866, where the Court of Justice rejected the Governments contention that the procedural rules governing the recovery of overpayments of VAT were entirely a matter of domestic law, subject only to the Community principles of equivalence and effectiveness. As the Court held (para 44), the principle of the protection of legitimate expectations forms part of the Community legal order; and, on the facts of that case, legislation retroactively curtailing the period within which repayment might be sought of taxes collected in breach of Community law was incompatible with that principle. It is in my opinion an even clearer breach of that principle for legislation which has the effect of reducing the limitation period applicable to actions for the enforcement of rights derived from EU law to be applied to actions which were already pending before the courts when the legislation was enacted. Although persons cannot legitimately expect that the legal rules applicable to them will not be altered, they may legitimately expect that rights which they possess will not be retroactively abridged. They are therefore entitled to expect that a claim which was not time barred when it was made will not subsequently become time barred as a result of retroactive legislation. My conclusion on this point does not depend on an assumption that the claimants knew, at the time when they commenced proceedings, that their claims could validly be based upon the mistake ground of action, and could therefore benefit from the extended limitation period provided by section 32(1)(c) of the 1980 Act. Although the validity of claims to the repayment of unlawfully levied tax on the basis of mistake was strongly arguable at that time, and was of course ultimately established, I accept that it was only some years later that the point was definitively resolved by the decision of the House of Lords in DMG [2007] 1 AC 558. Although there was therefore an arguable question in 2003 as to whether the claims which they had submitted to the court were time barred, the claimants could legitimately expect that that question would be decided by the court in accordance with a proper understanding of the law in force at the time when the claims were made. They could legitimately expect that the courts decision of that question would not be pre empted by retroactive legislation subsequently enacted by Parliament. Nor does it appear to me to be material that the legislation in issue left untouched the limitation period which applied to the ground of action based on an unlawful demand. The claimants had based their claims upon both grounds of action, as they were entitled to do. The fact that their claims in respect of payments made during the six years prior to the commencement of the proceedings, so far as based on the unlawful demand ground of action, were not affected by the legislation in issue does not diminish the significance of the fact that their right to pursue claims in respect of earlier periods, on the basis of mistake, was taken away from them after proceedings relying upon that right had been commenced. The protection of legitimate expectations is not of course an absolute principle, and even retroactive measures interfering with the administration of justice may sometimes be justified by compelling considerations relating to the public interest; and, in any assessment of whether such a justification existed, a lack of certainty as to the law at the material time might be a relevant consideration. In the present case, however, for the reasons explained in para 239, there appear to me to be no other considerations capable of outweighing the breach of legitimate expectations which resulted from the legislation in issue. Conclusion In view of the division of opinion on the court in relation to the compatibility of section 320 of the 2004 Act with EU law, I agree that that issue will require to be the subject of a reference to the Court of Justice in accordance with the directions proposed by Lord Hope. The other issues should in my view be dealt with as proposed by Lord Walker. |
The wedding of the Duke and Duchess of Cambridge on 29 April 2011 attracted vast public interest nationally and internationally. Managing the crowds presented the Metropolitan Police with a big challenge. In giving the judgment of the Administrative Court, [2012] EWHC 1947 (Admin), Richards LJ explained the nature of the policing operation, its command structure and planning, in considerable detail. This was necessary because at the heart of the claims made against the police in these proceedings was a broad challenge that the planning and execution of the policing operation did not make proper allowance for the democratic rights of anti monarchist protestors to express their views in a peaceable way. For present purposes, the background and circumstances giving rise to the claims may be outlined more shortly. The police were aware that on the day of the wedding a large number of members of the Royal Family, foreign royalty and other heads of state would be moving around London and that thousands of citizens including children were expected to converge on central London to take part in the days celebrations. One month earlier, on 26 March 2011, a day of action organised by the TUC had been marred by the actions of outsiders who used the occasion to commit various offences of violence. There had been similar violent disruption of student protests in November and December 2010, including an attack on the Prince of Waless car. In the build up to the royal wedding, the police had intelligence that activities aimed at disrupting the celebrations were being planned through social websites. The threat level from international terrorism at the time was assessed as severe, meaning that an attempted attack was thought to be highly likely. Thousands of police officers were deployed across the metropolis. The strategic aims, as set out in briefing materials prepared by the Gold commander with overall responsibility for the safe policing of the event, included to provide a lawful and proportionate policing response to protest, balancing the needs and rights of protesters with those impacted by the protest and to maintain public order. The same aims were reflected in tactical operational plans prepared by subordinate commanders. The four appellants were part of a larger group of claimants, but it was agreed before the Court of Appeal that their cases should be treated as test cases. They were arrested in separate incidents at various places in central London on the grounds that their arrest was reasonably believed by the arresting officers to be necessary to prevent an imminent breach of the peace. They were taken to four different police stations and later released without charge, once the wedding was over and the police considered that the risk of a breach of the peace had passed. Their periods of custody ranged from about 2 hours to 5 hours. The power of the police, or any other citizen, to carry out an arrest to prevent an imminent breach of the peace is ancient, but it remains as relevant today as in times past. The leading domestic authorities on the subject are the decisions of the House of Lords in Albert v Lavin [1982] AC 546 and R (Laporte) v Chief Constable of Gloucestershire Constabulary [2007] 2 AC 105. There are important safeguards for the citizen, in order to prevent breach of the peace powers from becoming a recipe for officious and unjustified intervention in other peoples affairs (in Lord Rodgers words in Laporte, at para 62). The essence of a breach of the peace is violence. The power to arrest to prevent a breach of the peace which has not yet occurred is confined to a situation in which the person making the arrest reasonably believes that a breach of the peace is likely to occur in the near future (quoting again from Lord Rodger in Laporte, at para 62). And even where that is so, there may be other ways of preventing its occurrence than by making an arrest; there is only a power of arrest if it is a necessary and proportionate response to the risk. The Administrative Court rejected the broad complaint that the police adopted an unlawful policy for the policing of the royal wedding. After close examination of the facts of the individual arrests, it also held that the arresting officers had good grounds to believe that the arrests were necessary in order to prevent the likelihood of an imminent breach of the peace. It dismissed as unrealistic the argument that lesser measures would have been adequate to meet the degree of risk. Continuous police supervision was not a feasible option, given the many demands on police resources. The claims that the police acted unlawfully as a matter of domestic law therefore failed. Article 5 The appellants also alleged that their detention violated their rights under article 5 of the European Convention on Human Rights, and on this issue alone they were given permission to appeal to the Court of Appeal and subsequently to this court. The material parts of article 5 for present purposes are the following: 1. 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: the lawful arrest or detention of a person for non (b) compliance with the lawful order of a court or in order to secure the fulfilment of any obligation prescribed by law; (c) the lawful arrest or detention of a person effected for the purpose of bringing him before the competent legal authority on reasonable suspicion of having committed an offence or when it is reasonably considered necessary to prevent his committing an offence or fleeing after having done so; 3. 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. 4. 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. 5. Everyone who has been the victim of arrest or detention in contravention of the provisions of this Article shall have an enforceable right to compensation. Decision of the Administrative Court The Administrative Court interpreted the phrase effected for the purpose of bringing him before the competent legal authority in article 5.1(c) as limited in its application to the words immediately following it, that is, for the purpose of bringing the person concerned before the court on reasonable suspicion of having committed an offence, and not applying where the purpose of the arrest was to prevent the commission of an offence. The court considered that this was the more natural reading of the wording, and that the Strasbourg case law on the point was inconclusive. For the purposes of the Convention a breach of the peace counts as an offence, despite it not being classified as an offence under English law: Steel v United Kingdom (1998) 28 EHRR 603, paras 46 to 49. The Administrative Court therefore concluded that the arrests conformed with article 5.1(c). The police also relied on the wording of article 5.1(b). Richards LJ commented that that the wording seemed ill suited on its face to cover arrest and detention for the purpose of preventing a future, albeit imminent, breach of the peace, but that it was unnecessary for the court to decide the point and better not to do so: para 187. Decision of the Court of Appeal The Court of Appeal agreed with the decision of the Administrative Court in a judgment given by Maurice Kay LJ, [2014] 1 WLR 2152, but not with its reasoning. The Court of Appeal was strongly influenced by the judgment of the Strasbourg court in Ostendorf v Germany (2013) 34 BHRC 738, which post dated the decision of the Administrative Court. The Court of Appeal held that it was well established in the Strasbourg jurisprudence that the words for the purpose of bringing him before the competent legal authority govern all the limbs of article 5.1(c) and that English courts should accept that interpretation. However, it declined to follow the majority view in Ostendorf that article 5.1(c) was incapable of authorising purely preventive detention, notwithstanding the existence of good grounds to believe an offence to be imminent, and that the person concerned must be suspected of having already committed a criminal offence. On the facts, the Court of Appeal concluded that it was an irresistible inference that the officers who arrested and detained the [appellants] appreciated that, if only by reference to domestic law, the [appellants] could not be lawfully detained beyond the point at which it was reasonably practicable to take them before the magistrates court: para 85. The court also inferred that as things were in central London on the day of the royal wedding it would not have been practicable to take the appellants before a magistrates court before they were released, but that they would have been taken to court if the situation had deteriorated to the extent that it was necessary to continue their detention to a point in time when it would have been practicable to do so. The court therefore concluded that that the appellants were arrested and detained for the purpose of bringing [them] before the competent legal authority, if that were to become necessary, so as to prolong their detention on a lawful basis: para 86. As to article 5.1(b), the Court of Appeal observed that the decision of the majority in Ostendorf had strengthened the argument advanced by the police (para 90), but considered it unnecessary to reach a conclusion on that issue. The appellants argue that the Court of Appeal was wrong not to follow the interpretation of article 5.1(c) by the Strasbourg court in Ostendorf, and that the process of reasoning by which the Court of Appeal arrived at its finding that the appellants were detained for the purpose of bringing them before the court was artificial and contrived. They submit that it was plain from the evidence as a whole that the purpose of the appellants arrest and detention was purely preventive. They also submit that article 5.1(b) was not applicable even on the approach taken by the court in Ostendorf. The police argue that the Court of Appeal was right to hold that there was a contingent purpose to bring the appellants before the court sufficient to satisfy the requirements of article 5.1(c) and that the appellants detention was also justified under article 5.1(b). Strasbourg case law Lawless v Ireland (No 3) (1961) 1 EHRR 15 concerned the internment without trial of IRA members by the Irish government. The applicant was detained for five months, without being brought before a judge, under legislation which gave to ministers special powers of detention without trial, whenever the government published a proclamation that the powers were necessary to secure the preservation of peace and order. The government argued that such detention was permitted by the second limb of article 5.1(c), which was not qualified by the words for the purpose of bringing him before the competent legal authority and therefore was also not within article 5.3. The court rejected this argument, noting that in the French text there is a comma after the passage up to for the purpose of bringing him before the competent legal authority (en vue dtre conduit devant lautorit judiciaire comptente), meaning that this passage qualifies all the categories after the comma. The court also said (at para 14) that the governments interpretation would permit the arrest and detention of a person suspected of an intent to commit an offence for an unlimited period on the strength merely of an executive decision, and that this, with its implications of arbitrary power, would lead to conclusions repugnant to the fundamental principles of the Convention. I interpose that two linked points are important to note: the reference to the potential for unlimited detention without judicial oversight and the fundamental objectionableness of arbitrary detention. The court held that the expression effected for the purpose of bringing him before the competent legal authority qualified every category of arrest or detention referred to in article 5.1(c), and the clause therefore permitted deprivation of liberty only when such deprivation is effected for the purpose of bringing the person arrested or detained before the competent judicial authority, irrespective of whether such person is a person who is reasonably suspected of having committed an offence, or a person whom it is reasonably considered necessary to restrain from committing an offence, or a person whom it is reasonably considered necessary to restrain from absconding after having committed an offence. The court further held that the purpose of bringing the person before the court might, depending on the circumstances, be either for the purpose of examining the question of deprivation of liberty or for the purpose of deciding on the merits (para 14). In Brogan v United Kingdom (1988) 11 EHRR 117, the four applicants were arrested and detained under prevention of terrorism legislation on suspicion of being concerned in the commission, preparation or instigation of acts of terrorism. They were released without charge after periods between four and six days and without having been brought before a magistrate. The court held that in each case there had been a violation of article 5.3 but not article 5.1. The court accepted that there was an intention to bring them before a court if sufficient and usable evidence had been obtained during the police investigation following their arrest, and that this was sufficient to satisfy the requirement in article 5.1(c) that the detention was for the purpose of bringing them before the court. There was no reason to believe that the police investigation was not in good faith or that their detention was for any other reason than to further the investigation by confirming or dispelling the suspicions which grounded their arrest. In other words, the police were not required to intend to take the applicants to court in the event of there being insufficient evidence after investigation to proceed against them. In Jecius v Lithuania (2000) 35 EHRR 16, the applicant complained of violation of his article 5 rights in successive periods of detention. The first period of five weeks was under a broad provision of the criminal code which permitted preventive detention in connection with banditry, criminal association or terrorising a person. During that period no investigation was carried out and no charge was made. In holding that preventive detention of the kind found in that case was not permitted by article 5.1(c), the court stated that a person may be detained under that clause only in the context of criminal proceedings for the purpose of bringing him before the competent legal authority on suspicion of his having committed an offence (para 50). However, as the Court of Appeal observed in this case (para 61), that was plainly not a complete statement of article 5.1(c). Nicol and Selvanayagam v United Kingdom, (Application No 32213/96) 11 January 2001, provides an example of a case where the court recognised that article 5.1(c) embraces different sets of circumstances. The applicants took part in an anti fishing protest at an angling match on 28 May 1994. Their aim was to sabotage the match by throwing twigs in the water close to the anglers hooks so as to disturb the surface, while other protestors sounded horns to frighten the fish. When they refused to stop, they were arrested. The custody record gave the reason for their initial detention as to allow a period of calming, and to determine method of processing. They were later kept in custody in order to take them before the magistrates for the purpose of being bound over to keep the peace. The court found that their complaint under article 5.1 was manifestly unfounded. It said that their initial detention was to prevent them from committing an offence and their continued detention was for the purpose of bringing them before the court on suspicion of having committed an offence. Both the initial arrest and their subsequent detention were therefore compatible with article 5.1(c). Most recently, Ostendorf raised parallel issues to those in the present case. The applicant was known to the police as a suspected football hooligan and gang leader. He travelled by train from Bremen to Frankfurt to attend a match with 30 to 40 other fans, most of whom were known to the police and considered to be hooligans prepared to use violence. The group went under police surveillance to a pub. They were told that they would be escorted to the football ground and that any member leaving the group would be arrested. At the pub the applicant was seen talking to a member of a rival hooligan group. He remained in the pub when the rest of his group left and was discovered by the police hidden in a locked cubicle in the ladies bathroom. He gave no plausible explanation why he was there. The police reasonably concluded that he was trying to evade police surveillance and that he was planning violence. He was arrested under public security legislation which permitted the police to take a person into custody if necessary to prevent the imminent commission of a criminal or regulatory offence of considerable importance to the general public. He was taken to a police station and released one hour after the game finished, when it was considered that the risk of violence had passed. He complained that his arrest and detention violated his rights under article 5. The Strasbourg court (Fifth Section) unanimously rejected his complaint. The following paragraph in the leading judgment merits citation in full, not only because it states a central principle but also because it has a direct resonance in the present case: 88. The court is aware of the importance, in the German legal system, of preventive police custody in order to avert dangers to the life and limb of potential victims or significant material damage, in particular, in situations involving the policing of large groups of people during mass events It reiterates that article 5 cannot be interpreted in such a way as to make it impracticable for the police to fulfil their duties of maintaining order and protecting the public provided that they comply with the underlying principle of article 5, which is to protect the individual from arbitrariness (see Austin v UK (2012) 32 BHRC 618 at para 56). The court was divided on how to implement that principle. The majority held that the applicants detention was permitted under article 5.1(b) but not under article 5.1(c). Conversely, the minority were for holding that it was permitted under article 5.1(c) but not under article 5.1(b). As to article 5.1(c), the majority held (at paras 82 to 86) that the second part (when it is reasonably considered necessary to prevent his committing an offence) only covers pre trial detention, and not custody for preventive purposes without the person concerned being suspected of having already committed an offence. Moreover, it held that the purpose of bringing the person before a court must be for the purpose of trial, and not just for the purpose of determining the legality of his preventive detention. The majority sought to answer the governments argument that on this analysis the second part would add nothing to the first, saying that it was not superfluous since it could cover the detention of a person who had already committed preparatory acts which were themselves punishable in order to prevent him from going on to commit the full offence. However, that does not fully meet the point, for in the hypothetical case postulated by the majority the applicant would already be suspected of having committed an offence, for which he could be detained under the first part of article 5.1(c). The minority (Judges Lemmens and Jaderblom) considered that the case law to the effect that preventive detention under article 5.1(c) was permissible only in the context of criminal proceedings, for the purpose of bringing [a person] before the competent legal authority on suspicion of his having committed an offence (Jecius v Lithuania at para 50), derogated without any specific explanation from what the court stated in Lawless, and that it went too far. In Lawless the court recognised that article 5.1(c) covered three different types of situation. The judgment in Lawless stated (para 14) that the clause had to be construed in conjunction with article 5.3, with which it formed a whole; and that the obligation to bring a person arrested or detained in any of the circumstances contemplated by article 5.1(c) was for the purpose of examining the question of deprivation of liberty or for the purpose of deciding on the merits. The minority in Ostendorf said that later case law had unduly restricted the purpose of bringing the detainee before the court to deciding on the merits and had done away with the possible purpose of examining the question of deprivation of liberty. They favoured returning to Lawless, which did more justice to prevention as a possible justification for a deprivation of liberty than the interpretation followed by the majority. They said at para 5 of their judgment: An early, prompt release, without any appearance before a judge or judicial officer, may occur frequently in cases of administrative detention for preventive purposes. Even so, in such a situation it will be enough for the purpose of guaranteeing the rights inherent in article 5 of the convention if the lawfulness of the detention can subsequently be challenged and decided by a court. Applying that approach to the facts, the minority said that the applicant was detained in order to prevent a brawl in connection with a football match. They were of the opinion that the police, faced with the situation of a large football event with the assembly of many aggressive supporters in which the applicant appeared and, as assessed by the authorities, planned to instigate fights, could reasonably consider it necessary to arrest and detain him. He was detained for approximately four hours. It did not appear that this period exceeded what was required in order to prevent the applicant from fulfilling his intentions. For those reasons they concluded that his arrest and detention were justifiable under article 5.1(c). As to article 5.1(b), it is well established in the Strasbourg case law that an obligation prescribed by law within the meaning of the paragraph must be concrete and specific and that a general obligation to comply with the criminal law will not suffice: see, for example, Schwabe v Germany (2011) 59 EHRR 28, paras 70 and 73. The majority found that the requirement of specificity was satisfied on the facts because the obligation whose fulfilment was secured by the applicants detention was not to arrange a brawl between Bremen and Frankfurt hooligans in the hours before, during and after the football match in the vicinity of Frankfurt. In the case of a negative obligation, it was necessary and sufficient to show that the applicant had taken clear and positive steps which indicated that he would not fulfil the obligation. For this purpose it was necessary that the person concerned was made aware of the specific act which he or she was to refrain from committing, and that the person showed himself or herself not willing to refrain from doing so (as the applicant had done by ignoring a police warning). They added that in the case of a duty not to commit a specific offence at a certain time and place, the obligation must be considered as having been fulfilled for the purposes of article 5.1(b) at the latest at the time when it ceased to exist by lapse of the time at which the offence at issue was to take place. Judges Lemmens and Jaderblom disagreed, because the legislation under which the applicant was arrested did not specify any obligation which he failed to fulfil. Although the police specifically ordered him to stay with his group of fans, the statutory obligation not to commit criminal or regulatory offences was in the view of the minority too general for the purpose of article 5.1(b). The cases on the subject all concerned obligations to perform specific acts. Things might have been different if the applicant had been the subject of a specific banning order, but that was not the case. His only legal obligation was the general obligation not to commit certain crimes or regulatory offences. That general obligation did not become specific and concrete merely because he was reminded of it in the context of a specific football match. Analysis The fundamental principle underlying article 5 is the need to protect the individual from arbitrary detention, and an essential part of that protection is timely judicial control, but at the same time article 5 must not be interpreted in such a way as would make it impracticable for the police to perform their duty to maintain public order and protect the lives and property of others. These twin requirements are not contradictory but complementary, and this is reflected in the statement in Ostendorf cited at para 22 above. In balancing these twin considerations it is necessary to keep a grasp of reality and the practical implications. Indeed, this is central to the principle of proportionality, which is not only embedded in article 5 but is part of the common law relating to arrest for breach of the peace. In Austin v Commissioner of Police of the Metropolis [2009] 1 AC 564 Lord Hope made the point at para 34: I would hold that there is room, even in the case of fundamental rights as to whose application no restriction or limitation is permitted by the Convention, for a pragmatic approach to be taken which takes full account of all the circumstances. No reference is made in article 5 to the interests of public safety or the protection of public order as one of the cases in which a person may be deprived of his liberty But the importance that must be attached in the context of article 5 to measures taken in the interests of public safety is indicated by article 2 of the Convention, as the lives of persons affected by mob violence may be at risk if measures of crowd control cannot be adopted by the police. This is a situation where a search for a fair balance is necessary if these competing fundamental rights are to be reconciled with each other. The ambit that is given to article 5 as to measures of crowd control must, of course, take account of the rights of the individual as well as the interests of the community. So any steps that are taken must be resorted to in good faith and must be proportionate to the situation which has made the measures necessary. In this case there was nothing arbitrary about the decisions to arrest, detain and release the appellants. They were taken in good faith and were proportionate to the situation. If the police cannot lawfully arrest and detain a person for a relatively short time (too short for it to be practical to take the person before a court) in circumstances where this is reasonably considered to be necessary for the purpose of preventing imminent violence, the practical consequence would be to hamper severely their ability to carry out the difficult task of maintaining public order and safety at mass public events. This would run counter to the fundamental principles previously identified. There is, however, a difficult question of law as to how such preventive power can be accommodated within article 5. The Strasbourg case law on the point is not clear and settled, as is evident from the division of opinions within the Fifth Section in Ostendorf. Moreover, while this court must take into account the Strasbourg case law, in the final analysis it has a judicial choice to make. The view of the minority in Ostendorf, that article 5.1(c) is capable of applying in a case of detention for preventive purposes followed by early release (that is, before the person could practicably be brought before a court), is in my opinion correct for a number of reasons. In the first place I agree with the Administrative Court that the situation fits more naturally within the language of article 5.1(c) than 5.1(b). On its plain wording article 5.1(c) covers three types of case, the second being when the arrest or detention of a person is reasonably considered necessary to prevent his committing an offence. There is force in the argument that the interpretation adopted by the majority in Ostendorf collapses the second into the first (reasonable suspicion of having committed an offence) and is inconsistent with Lawless. It is accepted by the police that English courts should treat Lawless as authoritative, but in that case the court was not concerned with a situation in which the police had every reason to anticipate that the risk necessitating the persons arrest would pass in a relatively short time and there was every likelihood of it ending before the person could as a matter of practicality be brought before a court. It would be perverse if it were the law that in such circumstances, in order to be lawfully able to detain the person so as to prevent their imminently committing an offence, the police must harbour a purpose of continuing the detention, after the risk had passed, until such time as the person could be brought before a court with a view to being bound over to keep the peace in future. This would lengthen the period of detention and place an unnecessary burden on court time and police resources. Some analogy may be drawn with Brogan, in which the court rejected the argument that at the time of the arrest the police must intend to take the arrested person before the court willy nilly, regardless of whether on investigation there was cause to do so. In order to make coherent sense and achieve the fundamental purpose of article 5, I would read the qualification on the power of arrest or detention under article 5.1(c), contained in the words for the purpose of bringing him before the competent legal authority, as implicitly dependent on the cause for detention continuing long enough for the person to be brought before the court. I agree therefore with Judges Lemmens and Jederblom in para 5 of their judgment in Ostendorf (cited at para 25 above) that in the case of an early release from detention for preventive purposes, it is enough for guaranteeing the rights inherent in article 5 if the lawfulness of the detention can subsequently be challenged and decided by a court. I prefer to put the matter that way, rather than as the Court of Appeal did by inferring the existence of a conditional purpose ab initio to take the appellants before the court, although it makes no difference to the result. I have no disagreement with the Court of Appeal that the appellants would have been brought before a court to determine the legality of their continued detention, if it had been considered necessary to detain them long enough for this to happen. The case would then have been materially similar to Nicol and Selvanayagam, where the applicants initial detention was preventive and they were later kept in custody and brought before the court to be bound over. It would be contrary to the spirit and underlying objective of article 5 if the appellants early release placed them in a stronger position to complain of a breach of article 5 than if it had been decided to detain them for longer in order to take them before magistrates to be bound over. As to article 5.1(b), I am inclined to the same view as the minority in Ostendorf that the obligation has to be much more specific than a general obligation not to commit a criminal offence (or, in this case, a breach of the peace), and that such a general obligation does not acquire the necessary degree of specificity by focusing narrowly on the particular facts or by the person concerned being given a reminder of it in specific circumstances. There are also practical considerations. The police may find it necessary to take action to prevent an imminent breach of the peace in circumstances where there is not sufficient time to give a warning. An example might be a football match where two unruly groups collide and the police see no alternative but to detain them, or the ringleaders on both sides, immediately for what may be quite a short time. In summary, I would be concerned that in stretching article 5.1(b) beyond its previously recognised ambit the majority found it necessary to impose limitations which in another case might leave the police effectively powerless to step in for the protection of the public. Conclusion I would uphold the decision of the lower courts that the appellants arrests and detention were lawful under article 5.1(c) and dismiss the appeals. |
A crucial issue in many asylum appeals is whether the claimants account of his or her provenance is truthful. So in the present cases it was central to each of the respondents claims that they came from a particular region of Somalia, where they were at risk of persecution. In each case, in dismissing those claims, the Secretary of State relied on linguistic analysis to the effect that their mode of speaking was linked to Kenya not Somalia. That evidence came in the form of linguistic analysis reports provided by a Swedish commercial organisation called Sprakab (more fully, Skandinavisk Sprkanalys AB). Those decisions were upheld on appeal to the Upper Tribunal, but reversed by the Inner House which made a number of criticisms of the form of the reports and the reliance placed on them by the tribunal. In February 2010, following the original tribunal hearings in the present cases but before the appeals, a special three judge panel of the Upper Tribunal (presided over by Judge Ockelton, Vice President) heard another case raising similar issues, and gave guidance on the use of such reports in the future. Their judgment, dated 15 September 2010 ([2010] UKUT 329 (IAC)), reviewed detailed evidence on Sprakabs operations and methodology, including oral evidence from their manager, Ms Fernquist. In the light of that consideration, they endorsed the use of the Sprakab reports, subject to certain safeguards. Their approach was generally supported by the Court of Appeal (RB (Somalia) v Secretary of State for Home Department [2012] EWCA Civ 277 (RB)). Those decisions, at both levels, were in turn considered by the Inner House in the present case. Accordingly, although we are directly concerned only with the two appeals before us, it is appropriate for us to look at them also in the context of the wider discussion of the issues in RB. Sprakabs operation For a general indication of Sprakabs operation and methods of work it is convenient to quote the description given by Moses LJ (who gave the only substantive judgment) in RB, which takes account of the more detailed evidence given before the Upper Tribunal in that case and their findings on it: 5. Sprakab's work is linguistic analysis. It works for the immigration services of a number of governments including Canada, Sweden, Australia, the Netherlands and the United Kingdom. Since 2000 it has conducted over 40,000 linguistic analyses. The Upper Tribunal was given only one example of an individual seeking analysis from Sprakab. The company employs linguists with university qualifications and members of the relevant international association. They are subject to regular evaluation. It also employs a pool of analysts who, generally, speak the language they are asked to analyse and are taught to think critically and analytically. 6. Linguistic analysis at Sprakab is a two stage process. First, the analyst listens to a recorded specimen of speech, typically an interview. The analyst notes features of the speech which appear to be of interest. Second, the analyst discusses those features with a linguist. The analyst and linguist decide whether the features are diagnostic of the speaker's origin and produce a report with four grades of likelihood: certainty (one way or the other), most likely, likely and possibly. The rationale for identification of the degree of certainty or otherwise is usually explained in the report. The analysts are given extensive training by the linguists so as to look for certain distinctive features of any particular language or dialect. The manager, Ms Fernqvist, agreed that linguistic analysis could not determine a nationality, although it is of assistance. Interviews would usually last some 20 to 30 minutes and the recording would be discussed by analyst and linguist before a draft report was produced. 7. Sprakab carry out around 4,000 analyses per year and Ms Fernqvist was of the opinion that it supported applicants in about 60% of the cases in which they were involved. Certainly, it supported applicants more often than it rejected their claims. Sprakab has developed a database of recordings which, though not available for peer review, was, she believed, accurate. 8. Sprakab's policy is not to make the names or personal details of its analysts or linguists public. It fears that their safety may be endangered if it is known that they are producing analyses for governmental authorities. But each member of staff is given a unique identifier and the language background training and other relevant experience associated with that identifier. Thus the qualifications and background of a particular analyst [or] linguist are disclosed and it is also possible to see whether the same or different analysts were involved. Those who reported in the instant case were identified only by letter and number. The tribunal was provided with the names of the witnesses but they were not disclosed to the appellant or her legal team. The number of those involved in the analysis in the instant case was disclosed and Ms Fernqvist was able to give evidence as to their qualifications. 9. The Upper Tribunal made the following findings and conclusion. It accepted that Sprakab was a bona fide organisation which has devised and refined a system for analysing language requiring interaction between several employees. That process minimises the opportunities for the incompetence of one to lead to a false result. The tribunal accepted that anonymity could theoretically have an adverse impact on reliability. But the fact that no one person's opinion is decisive and that those opinions are reasoned, explained, and can be checked and criticised, reduces the risk of an incompetent or corrupt employee. The tribunal rejected the suggestion that Sprakab was not independent. The Upper Tribunal noted that Sprakab did not claim to be infallible. The present appeals Procedural changes To understand the course of the present appeals, it is necessary to be aware of the changes which took place in February 2010 in the arrangements for hearing asylum appeals. At the time of the original appeals in both cases, the relevant appellate body was the Asylum and Immigration Tribunal (the AIT). This was a single tier appellate body, albeit with provision for reconsideration to be ordered where a possible error of law was identified by a senior tribunal judge or the relevant court. Procedure was governed by the Asylum and Immigration Tribunal (Procedure) Rules 2005 (SI 2005/230) (the AIT rules). Although a new tribunal system (including a First tier and Upper Tribunal) had been brought into operation in November 2008 under the Tribunals, Courts and Enforcement Act 2007 (the 2007 Act), the AIT continued for the time being unchanged as a separate body. As from 15 February 2010, the first instance jurisdiction of the AIT was transferred to the new Immigration and Asylum Chamber of the First tier Tribunal (the FTTIAC). At the same time there was established a right of appeal, with permission, to the Immigration Appeal Chamber of the Upper Tribunal (the UTIAC). There were transitional provisions to deal with pending cases. In the FTTIAC, the AIT rules continued to have effect subject to appropriate amendments to take account of the new two tier system. In the UTIAC, procedure was governed by the Tribunal Procedure (Upper Tribunal) Rules 2008 (SI 2008/2698) (the Upper Tribunal rules), which applied generally across the various chambers at that level, but subject again to appropriate amendments to take account of the new jurisdiction. At the same time a new set of Practice Directions, applying to the new immigration and asylum chambers at both levels, was issued in the name of the Senior President. They followed without material alteration (for present purposes, at least) the form of Practice Directions issued by the President of the former AIT. It is worth adding that, although the present appeals were heard in Glasgow, and found their way on appeal in due course to the Court of Session, the jurisdictions of the former AIT and the new IAC Chambers were and are UK wide. It is accepted that there is and should be no material difference between the principles applicable on either side of the border. MNs appeal The first appellant, MN, entered the United Kingdom on 16 August 2009 and claimed asylum. His claim was rejected by the Secretary of State and, on 5 February 2010, by the AIT (IJ McGavin). The appellant said that he was a national of Somalia and that he was born in Mogadishu and belonged ethnically to a minority clan in Somalia, namely "clan Benadiri, sub clan Reer Hamar, and sub sub clan Shanshi" (AIT decision para 13). In rejecting the claim to asylum, the immigration judge, like the Secretary of State, relied on a Sprakab report, which identified his speech as being from Kenya rather than Somalia. He appealed to the UTIAC, on grounds which included criticisms of the Sprakab reports. The appeal was heard in December 2010 (SIJ Macleman), following the promulgation of the decision and guidance in RB. Permission to appeal to the Court of Session was given by the court itself, which on 12 July 2013 by a majority of the Extra Division (Lords Eassie and Menzies, Lord Marnoch dissenting) allowed the appeal and remitted the case to the Upper Tribunal for reconsideration. KYs appeal The second appellant, KY, arrived in the United Kingdom on 30 November 2008 and claimed asylum. She claimed to be a citizen of Somalia, born in February 1988 in Mogadishu, and ethnically of the Benadiri clan (also known as the Reer Hamaar) sub clan Sharif Omar. It was and is common ground that if she made good that contention she would be entitled to asylum. Her claim was refused by the Secretary of State, and on 20 February 2009 by the AIT (IJ MacDonald), both relying on a Sprakab report, which identified her speech as being from Kenya rather than Somalia. She applied successfully to the Court of Session under the procedure then applicable (section 103A(1) of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act), as inserted by section 26(6) of the Asylum and Immigration (Treatment of Claimants, etc) Act 2004 (the 2004 Act)) for an order for reconsideration of the decision. In a note attached to his order (dated 22 July 2009) the Lord Ordinary, Lord Macphail, made a number of criticisms of the Sprakab report (relying in particular on a 2004 report by an international group of linguists), and directed that reconsideration be undertaken without reference to the Sprakab report. The reconsideration not having taken place before 15 February 2010, the order fell to be treated under transitional provisions (paragraph 3 of Schedule 4 to the 2002 Act) as a grant of permission to appeal to the Upper Tribunal under the 2007 Act. The decision of the Upper Tribunal (in this case also, SIJ Macleman) was given on 22 October 2010, dismissing the appeal. Permission to appeal having been given by the Court of Session, the appeal was allowed by the same constitution as in MN. In this case, since there was agreed to be no other material supporting the refusal of her claim, the appeal was allowed without further remission. The Sprakab reports in more detail To understand the criticisms made by the Court of Session, and by the respondents before us, it is necessary to give a little more information about the form and content of the Sprakab reports. Since they are examined in detail in the judgment of Lord Eassie (paras [5] ff), to which reference can be made, I will focus on the principal points. I follow him also by concentrating on the first case in time (that is KYs case), the other being in similar form. The report, which is entitled linguistic analysis report, is not in narrative form, but consists of a series of boxes with a number of headings to be completed by the language analyst. An attachment indicates that the analysis in this case was conducted by analyst EA20; the results of analysis confirmed by analyst EA17; and the analysis reviewed and approved by Linguist 04. None of the three is named, but their experience and qualifications are summarised. For example, in respect of analyst EA20 the following appears: ANALYST EA20 The analyst was born 12 October 1968 in Mogadishu, Somalia and came to Sweden 1990 The analyst last visited Somalia in 1990 The analyst analyses the Somali language and the Somali dialects May May and Bravanese The analyst has performed 476 language analyses The analyst interprets for the Swedish authorities EMPLOYMENT HISTORY 2006 to present Analyst at Sprakab 1990 to present Interpreter in Somali EDUCATIONAL QUALIFICATIONS Bachelors Degree in Law, Somalia Sociological studies in Law, Stockholm University, Sweden Returning to the report itself, the first box gives the conclusion: The person speaks a variety of Somali found [x] with certainty not in: Somalia. [x] with certainty in: Kenya. The following boxes indicate that the basis is a tape recording of a telephone conversation lasting 18 minutes, that the language used was Somali, and that the type of analysis included both linguistic analysis and knowledge assessment, the latter involving examination of the persons knowledge and experiences of culture and geography of his/her stated country/region of origin. The next section, headed Analysis begins with the following General comments: The person, who is a woman, speaks Somali on the recording. She speaks the language to the level of a mother tongue speaker. First she says she was born and raised in Mahaddaay in the Shabeellada Dhexe province and that she also has lived in Jowhar in the same province. Later she states that she was born in Mogadishu in southern Somalia. The person does not speak a variety of Somali found in Somalia. She speaks a variety of Somali found with certainty in Kenya. The person is asked about what dialect she speaks on the recording. She says that she speaks the Reer Hamar dialect. However, it can be ascertained that she does not speak the Reer Hamar dialect. The person has deficient knowledge and deficient local knowledge of the area she says she is from. Her knowledge sounds rehearsed for the occasion since she does not give any detailed descriptions of the area she says she is from. There then follow under the heading Specific findings more detailed observations relating to phonological characteristics, morphology, syntax and lexicon and colloquialisms". A separate box headed Knowledge of 'country and culture' of the person includes the following: The person first says that she was born and raised in Mahaddaay in the Shabeellada Dhexe province, in southern Somalia. After a while she changes her mind and says that she was born in Mogadishu. She also says that she moved to Jowhar in the Shabeellada Dhexe province. The person has deficient knowledge and deficient local knowledge of the area she says she is from. Her knowledge sounds rehearsed for the occasion since she does not give any detailed descriptions of the area she says she is from. She often hesitates and gives short answers on the questions she is asked. This section ends with a summary of findings supporting the conclusion In summary, it can be ascertained that the person speaks Somali to the level of a mother tongue speaker. The person does not speak a variety of Somali found in Somalia. She speaks a variety of Somali with certainty found in Kenya. She does not speak the Reer Hamar dialect. The person has deficient knowledge and deficient local knowledge of the area she says she is from. Her knowledge sounds rehearsed for the occasion since she does not give any detailed descriptions of the area she says she is from. She often hesitates and give short answers on the questions she is asked. Although there is space for a signature, it appears that this was not completed, the identity of the author instead being indicated by codes given in the attachment to which I have already referred. The Upper Tribunals decision and guidance in RB I have already referred to the findings made by the Upper Tribunal and the Court of Appeal in RB about the nature of the Sprakab operations. Although this is not an appeal from that decision, it is right to set their guidance in the context of the facts of the case and the material before the tribunal. The factual issue was in one respect similar to the present, in that the appellant claimed to be from Somalia, and was ultimately disbelieved on the basis partly of Sprakab reports which linked her to Kenya. However, of more particular importance was her claim to be from the Bajuni clan, and to be proficient in Kibajuni the mother tongue of that clan (paras 49 53). The tribunal accepted that if that link were established her appeal should succeed (para 143). It was in that context that a critical issue was how well she understands Kibajuni, and the way she speaks it herself (para 151). It was on that issue that the tribunal ultimately rejected her evidence, and in doing so placed considerable weight on the deficiencies in her knowledge of that language, disclosed not only by the Sprakab reports but also by her own answers in cross examination (para 152). It is not entirely clear from the judgment of the Upper Tribunal how the case came to be selected as a guidance case on the use of Sprakab reports, or what steps were taken to ensure that the tribunal had before it all the material and assistance necessary to reach an authoritative view. It seems surprising that (as far as appears from the judgment) the tribunal does not appear to have been referred to the criticisms of the Sprakab reports made by the Lord Ordinary in earlier cases, but they had before them the 2004 report on which he relied (see below). The evidence ultimately before the tribunal was substantial and was carefully considered and analysed by them. They were assisted by experienced counsel on both sides. Apart from the evidence of the appellant herself, it included: i) Four Sprakab reports, the last being particularly detailed. They were supported by written and oral evidence by their manager, Ms Fernqvist, who was subject to cross examination (paras 10 20). In accordance with Sprakabs practice, the authors of the reports were not identified by name. The tribunal noted that that no reasoned objection was taken by counsel for the appellant to this course (para 25). The tribunal heard oral evidence from three of the individuals directly responsible for the reports, analyst E19 and linguists 01 and 04, who also were subject to cross examination. ii) Two reports by an independent expert, Ms Margaret Kumbuka, instructed for the appellant (described as a lector in Swahili in the African Department of SOAS para 100); and a response by Sprakab to those reports (para 11 19). Ms Kumbuka had been expected to give oral evidence, but unfortunately she died shortly before the hearing (para 99). iii) Documentary evidence (para 120ff), including a) A 2004 report by an international group of linguists (the Language and National Origin Group) on the use of language analysis in refugee cases; b) Information on the Bajuni people from the UNHCR website (complied in 2005 by the Immigration and Refugee Board of Canada); c) A report on the Bajuni people published in 2010 by the Country of Origin Information Centre in Norway (Landinfo). iv) The tribunal referred also to three reports dated February 2010 by a Professor D Nurse (an emeritus professor of linguistics at St Johnss University Canada and said to be a specialist in Swahili dialectology). These included a critique of some 50 Sprakab reports between 2004 and 2010, a review of some 20 recordings of interviews, and a report of a fact finding mission to Nairobi in September 2000. These had come to the attention of the tribunal after the hearing through a monthly mailing of the Immigration Law Practitioners Association. The tribunal summarised Professor Nurses comments on the fluidity of [the] Bajuni language and society amid the upheavals of recent years and his criticisms of the Sprakab interview methods, leading to his view that it would be unwise to use a Sprakab report as a basis for any legal decision on whether an applicant is or is not a Somali Bajuni (para 137). Although the tribunal received submissions on these reports and made some comments on them (paras 165 166), they indicated that they could not treat Professor Nurse as an expert witness in this appeal, because of numerous points of factual dispute which would need to be addressed by way of live evidence and cross examination (para 141). Having given their reasons for dismissing RBs appeal on its own facts, the tribunal concluded by setting out the following, by way of General guidance on linguistic analysis evidence: 170. We close this determination with three matters of general guidance in relation to appeals based on linguistic analysis in general and Sprakab reports in particular. 171. First, we note that it is said that the decision as to a person's background or origin should not be based solely on linguistic analysis. We have heard and seen nothing enabling us either to endorse or doubt that advice. But where there is clear, detailed and reasoned linguistic analysis leading to an opinion expressed in terms of certainty or near certainty it seems to us that little more will be required to justify a conclusion on whether an applicant or appellant has the history claimed. 172. Secondly, the conclusions we have reached about Sprakab's reports do not, of course, mean that Sprakab or any other linguistic analyst is infallible. A decision maker or judge must be alive to the possibility of error, whether or not the particular level of certainty expressed by the report leads one to expect it. Where there is linguistic evidence in a particular case it is important that all parties have a proper opportunity to submit it for expert assessment and it is equally important that all the evidence be taken into account in deciding the questions in issue according to the appropriate standard of proof. 173. The parties must have an opportunity to challenge any linguistic assessment opposing them. That means a sound recording of any interview of or discussion with an appellant that forms the basis of such analysis must be made available to the other party in good time before any substantive appeal hearingWe would expect for the future that where linguistic analysis is in issue, no party should seek to rely on an analysis based on examples of the appellant's speech that all parties have not had the opportunity to analyse. 174. Thirdly, we have given our reasons above for acceding to Sprakab's request for anonymity for its linguists and analysts, subject to details being given of their background and qualifications. These reasons are of general applicabilityunless there was some very good reason for departing from this practice. The issues The issues agreed between the parties for consideration by this court are (in summary): In what circumstances should witnesses providing evidence in such i) Whether the immigration judges were entitled to attribute any weight to the Sprakab reports; ii) appeals be granted anonymity; iii) Whether there are any particular rules governing expert evidence tendered in the name of an organisation rather than an individual; iv) To what extent can such evidence be accepted in a form not prescribed by the Practice Directions; v) To what extent, and with what effect, can the Upper Tribunal give guidance as to the weight to be given to such reports, or the conclusions to be drawn from them. General approach Before looking at these issues in more detail, it may be helpful to make some general comments about the context in which they are to be considered. We are concerned with specialist tribunals, now forming part of the new system established by Parliament under the 2007 Act following the report of Sir Andrew Leggatt, Tribunals for Users, One System, One Service (2001). As Senior President of Tribunals, I discussed the background to those reforms and some of their practical implications in an article: Tribunal Justice a New Start [2009] PL 48 (cited by me also in Jones v First tier Tribunal (Social Entitlement Chamber) [2013] UKSC 19; [2013] 2 AC 48, para 46). I referred for example to Lady Hales description of the essential features of tribunals, as compared to courts, in Gillies v Secretary of State for Work and Pensions [2006] 1 WLR 781, paras 36ff, including accessibility, freedom from technicality, and expertise. These special qualities, including emphasis on the development of innovative methods of resolving disputes that are of a type that may be brought before tribunals, are given statutory force in the duties of the Senior President under section 2 of the 2007 Act. They are also embodied in the overriding objective in the rules now applying across the new tribunal system, under which the objective of dealing with cases fairly and justly is defined as including avoiding unnecessary formality and seeking flexibility in the proceedings and using any special expertise of the [tribunal] effectively (see eg rule 2 of the Upper Tribunal Rules). Although, as already noted, the FTTIAC rules still follow the old AIT format, with amendments, the overriding objective there stated (rule 4) does not differ in substance. In particular, it imposes on the members of the tribunal the responsibility for ensuring that proceedings are handled as fairly, quickly and efficiently as possible. In the same spirit, rule 51(1) provides that the tribunal may receive oral, documentary or other evidence of any relevant fact, notwithstanding that it would be inadmissible in a court of law (see, to like effect, rule 15(2) of the Upper Tribunal rules). Generally, therefore, the area of legitimate debate is about relevance and weight, not admissibility. Secondly, there is no presumption that the procedure will necessarily follow the adversarial model which (for the time being at least) is the hallmark of civil court procedures. In a specialist tribunal, particularly where parties are not represented, there is more scope, and often more need, for the judges to adopt an inquisitorial approach. This has long been accepted in respect of social security benefits (see Kerr v Department for Social Development [2004] 1WLR 1372, paras 61 63, where Lady Hale spoke of the process of benefits adjudication as inquisitorial rather than adversarial a co operative process of investigation in which both the claimant and the department play their part). However, there is no single approach suitable for all tribunals. For example, in a major case in the tax or lands tribunals, the sums may be as great, and the issues as complex, as in any case in the High Court, and the procedure will be modelled accordingly. Thirdly, an important objective of the reforms, including the establishment of the Upper Tribunal, was to promote consistency across the tribunal system. An accepted means of so doing, established in previous case law, is the provision of guidance through judgments in suitable cases. (See the discussion in R (Iran) v Secretary of State for the Home Department [2005] Imm AR 535, paras 21ff per Brooke LJ; and by myself in Jones v First tier Tribunal [2013] 2 AC 48, paras 42 43). Such guidance need not be confined to points of law, to which rules of precedent may apply in the tribunals as in the courts, but may extend to issues of principle relating to factual, procedural or other matters of common application in a particular specialist field. An example from a very different area of specialisation was the guidance given by the Lands Tribunal on discount rates in the context of leasehold enfranchisement (see my comments in Earl Cadogan v Sportelli [2008] 1 WLR 2142, paras 91ff; on this aspect not questioned by the House of Lords at [2010] 1 AC 226). Except so far as statute otherwise provides, statements on such issues by the Upper Tribunal are not binding on the FTTIAC judges, who retain their duty to decide their cases on the evidence before them. As Brooke LJ explained at para 26 of R (Iran), (adopting comments of Ouseley J as President of the IAT in NM (Lone women Ashraf) Somalia CG [2005] UKIAT 00076), such statements are to be taken into account as part of the material considerations to which the judges are required to have regard, but are not to treated as factual precedents. Similarly, in Januzi v Secretary of State for Home Department [2006] 2 AC 426 [50], Lord Hope observed that, while it was desirable in the interests of fairness and consistency that country guidance should be followed: in the end of the day each case, whether or not such guidance is available, must depend on an objective and fair assessment of its own facts. It is to be noted that, in the context of immigration appeals under the 2002 Act, the position has since 2005 been formalised to some extent by statutory provision. Under section 107(3) as added by section 48(3) of, and paragraph 22(1)(c) of Schedule 2 to, the 2004 Act, practice directions may require tribunals to treat a specified decision of the [Upper Tribunal] as authoritative in respect of a particular matter. Paragraph 12 of the 2010 Practice Directions contains such provision for what are known as starred and country guidance determinations; subject to certain qualifications, decisions so designated are to be treated as authoritative in subsequent appeals. (The development and effect of those provisions are discussed in detail Macdonalds Immigration Law and Practice 8th ed (2010), para 19.105.) A recent guidance note issued by Blake J as Chamber President (Guidance Note 2011 No 2: Reporting decisions of the Upper Tribunal Immigration and Asylum Chamber) explains the current practice. Having referred to the specific provisions in relation to Country Guidance cases, the note refers to the criteria for reporting other cases where the factual findings may be of some general interest, noting that such decisions are of persuasive value only on the facts (para 13). It is not suggested that the guidance in the present case falls within any special category within the practice direction, or that it is thereby entitled to be treated as other than merely persuasive. There is another important aspect to cases such as the present. The higher courts have emphasised the special responsibility carried by the tribunals in the context of asylum appeals. It is customary in this context to speak of the need for anxious scrutiny (following R v Secretary of State for the Home Department, Ex p Bugdaycay [1987] AC 514, 531 per Lord Bridge of Harwich). As a concept this is not without its difficulties, but I repeat what I said in R (YH) v Secretary of State for the Home Department [2010] 4 All ER 448, para 24: the expression [anxious scrutiny] in itself is uninformative. Read literally, the words are descriptive not of a legal principle but of a state of mind: indeed, one which might be thought an axiomatic part of any judicial process, whether or not involving asylum or human rights. However, it has by usage acquired special significance as underlining the very special human context in which such cases are brought, and the need for decisions to show by their reasoning that every factor which might tell in favour of an applicant has been properly taken into account. I would add, however, echoing Lord Hope [in R (BA Nigeria) v Secretary of State for the Home Department [2010] 1 AC 444, para 32], that there is a balance to be struck. Anxious scrutiny may work both ways. The cause of genuine asylum seekers will not be helped by undue credulity towards those advancing stories which are manifestly contrived or riddled with inconsistencies. Similar considerations in my view impose a special responsibility on the Secretary of State and those representing her to ensure that the evidence presented to the tribunal is adequately supported. So in this case Lord Eassie rejected the suggestion that it was enough for the Secretary of State to provide the interview tapes to the appellants, leaving them to obtain their own expert advice. He said, at para 66: as a matter of principle, it is the Secretary of State who invokes the purported expert evidence for her purposes in order to impugn the honesty of the appellant. In accordance with all normal rules of procedure it must therefore be for her to establish, by active demonstration of the appropriate expert qualification, the worth of the evidence upon which she relies to counter the testimony of the appellant. For the Secretary of State Mr Lindsay QC, as I understood him, did not challenge this statement of principle. In my view, he was right not to do so. The agreed issues The issues (para 21 above) fall into two categories: first, relating to the admissibility in principle of the Sprakab reports (issues (i) (iv)); secondly, as to the nature and extent of the guidance which it is appropriate for the Upper Tribunal to give (issue (v)). It is convenient first to consider these issues in general terms by reference to the decision and guidance given in RB, before turning to the implications of those points for the cases before us. In principle, as I think counsel for the respondents accept, there was nothing wrong in the Upper Tribunal seeking to give guidance on a matter of general concern to the First tier, such as the use of Sprakab reports. The practice directions contain valuable guidance on the general principles applying to expert evidence. To a large extent they follow the principles applicable in civil courts, designed (inter alia) to ensure that the expert provides truly independent assistance to the tribunal, does not assume the role of advocate, and sets out the facts and other material on which an opinion is based. However, the absence of any specific provision in the practice directions for evidence in the form of the Sprakab reports was not in itself a bar to their admission. On the contrary, where the tribunals were faced with a new form of evidence, of potential value in resolving issues of common occurrence, it was entirely appropriate for the Upper Tribunal to select a suitable case with a view to giving general guidance. As Lord Eassie acknowledged, the practice directions did not have to be rigidly applied. In the civil courts, flexibility on such matters is routinely accepted under modern practice. For example, in Rogers v Hoyle (Secretary of State for Transport and International Air Transport Association intervening) [2014] EWCA Civ 257, the Court of Appeal confirmed the admission of a report by a body known as Air Accident Investigation Branch, one objection having been that it failed to comply with mandatory rules (CPR Pt 35) relating to expert evidence. In support of a flexible approach to the rules, Christopher Clarke LJ cited (inter alia) Sunley v White (Surveyors & Estate Agents) Ltd [2003] EWCA Civ 240, in which: this court regarded as admissible a draft soil report issued by a company although the report was unsigned, provisional and did not carry the name or qualifications of the author. These were matters which Clarke LJ, with whom Longmore LJ agreed, treated as essentially going to weight (para 44). Such considerations apply with equal or greater force before tribunals. Thus the Court of Appeal has warned tribunals against rejecting expert evidence merely because a witness is not available for cross examination. In Singh (Tarlochan) v Secretary of State for the Home Department [2000] Imm AR 36 Buxton LJ said, at para 43: In the way in which this sort of inquiry is necessarily conducted in front of a Tribunal, it is only rarely going to be the case that evidence is given by persons actually appearing in front of a Tribunal rather than by reference to the reports of persons of greater or lesser weight Amnesty International, the United Nations Commission on Refugees and the Canadian body used in this case So here, it is inappropriate for general questions relating to Sprakab, its methodology and the presentation of its reports to be re litigated constantly in separate FTT hearings, with inevitable inconsistency of outcome. The Upper Tribunal were right in RB to address those issues. Subject to appropriate safeguards, they were entitled in my view to find no objection of principle to the admission of the Sprakab reports, whether because they were in the name of an organisation rather than an individual, or in general for failure in other respects to comply with the practice directions. This discussion makes it unnecessary to consider in more detail issues (i), (iii), (iv); the short answer is that none of them points to any overriding objection to evidence in this form. As Lord Eassie said, in a passage to which Mr Lindsay took no objection: in the end one naturally has to consider whether, in substance, the tribunal in question has been provided in the case before it with expert evidence which the tribunal can be satisfied is based upon an appropriate and adequate expert knowledge, given with the neutrality required of the expert, unencumbered by views falling outwith his field of expertise. (para [57]) It is necessary to deal in a little more detail with issue (ii) (anonymity of witnesses), which proved more contentious. Anonymity In RB the Secretary of State asked for anonymity for the individual analysts and linguists (other than by reference to an identifier code) on the grounds that their independence might otherwise be compromised and their personal safety might be at risk. It was said that it was not Sprakabs policy to disclose the identity of its analysts because of threats which have been directed at analysts in the past by disgruntled claimants. One analyst was said to have stopped working for Sprakab because of such threats (Upper Tribunal decision, para 22). The tribunal accepted this submission. They accepted that it was exceptional for witnesses to give evidence anonymously, but thought that course appropriate and proportionate in view of the potential of threats to Sprakab personnel, and in the absence of any reasoned objection from counsel for the appellant. They said: . Given the information that is associated with the identifier, it seems to us to be virtually inconceivable that anybody is disadvantaged by not knowing the name or address of the individual concerned. It might perhaps be that in some particular case there will be a proper reason for inquiring whether a named individual had been involved in the analysis of a sample. If it was necessary to ask that question, it could be directed to Sprakab, and a Tribunal might in due course have to decide how to deal with whatever answer was given. But in the general case the reports are available on the authority of Sprakab itself, with full information about the qualifications of those who have contributed to them. That is sufficient. (paras 24 27) That approach was endorsed by the Court of Appeal. Moses LJ said: There will be expert evidence which requires identification of who among a number of experts discussing the conclusion reached a particular view. But Ms Fernqvist's evidence was such that it was perfectly fair, provided the process was patent, to give a collective conclusion (para 14) In view of his other reasons for allowing the appeal, Lord Eassie found it unnecessary to reach a final view on this issue, but expressed serious reservations as to the approach of the Upper Tribunal, which departed from the principle that a person is entitled to know the identity of the witness against him in judicial proceedings unless anonymity is justified by special and exceptional reasons (para 77). That approach has been supported by the respondents in their submissions in this court. They rely on statements of high authority referring to the fundamental principle of judicial process that, other than in exceptional circumstances, witnesses are identified whether in criminal or civil proceedings (see R v Davis [2008] AC 1128, para 40 per Lord Rodger; Al Rawi v Security Service (Justice intervening) [2012] 1 AC 531). There is no doubt about the power of the tribunal to make such a direction. Rule 45 of the AIT rules, which gives the tribunal power to give directions relating to the conduct of appeals, includes an unqualified power in such directions to make provision to secure the anonymity of a party or a witness (r 45(4)(i)). That was not the power in terms relied on by the Upper Tribunal. They referred instead (para 25) to rule 14 (Use of documents and information), which gives the Upper Tribunal power to make orders prohibiting disclosure of information (1) likely to lead to identification of any person whom the Upper Tribunal considers should not be identified, or (2) likely to cause serious harm to the person to whom it is disclosed or some other person. Since the Upper Tribunal were retaking the decision of the First tier Tribunal on both fact and law (see section 12(4) of the 2007 Act), it would have seemed more appropriate for them to rely on the power in the AIT rules, directed specifically to anonymity of witnesses, rather than rule 14 which is concerned with disclosure of information more generally. On the other hand, rule 14 is helpful as emphasising that, in the tribunals as in the courts, openness is the norm, and that there needs to be special reason for departing from it, risk of serious personal harm being an obvious example. Although the AITs power is expressed in unqualified terms, I agree that in respect of an individual expert witness its exercise requires special justification. Sprakabs policy of anonymity clearly would not absolve the tribunal of its duty to examine of itself the evidence said to justify a departure from the normal rule. However, in my view there were valid reasons for taking a less strict view in the present context. This was not anonymous evidence in the ordinary sense. The evidence was advanced, and the expertise claimed, on behalf of an organisation, based on the collaborative work of individuals with different skills within it. There was no doubt about the identity of the organisation, its working methods or the qualifications and experience of those involved in preparing its report. The names of the individuals were available to the tribunal, and could have been made known to the parties if it became necessary to do so, for example to pursue a particular line of cross examination. Subject to appropriate safeguards, and to satisfying themselves that in the circumstances of the particular case no prejudice was caused, the Upper Tribunal were entitled to determine that there was no objection in principle to the course adopted. The guidance As has been seen, the Upper Tribunal ended its judgment by giving general guidance on the use of evidence of this kind. For the most part this was helpful and appropriate. In particular it was right to emphasise that Sprakab were not infallible, that tribunal judges must be alive to the possibility of error, and that parties must be provided with the opportunity and materials necessary to enable them to challenge their evidence (paras 172 173). However, with respect to this experienced tribunal, I have concerns that on two aspects the guidance appears unduly prescriptive and potentially misleading. The first is as to the weight to be given to such evidence in future cases. Tribunals are advised that, where there is a clear, detailed and reasoned linguistic analysis leading to an opinion expressed in terms of certainty or near certainty, then little more is required to support a conclusion. This seems to me to underplay the importance in any case of the tribunal itself examining such a report critically in the light of all the evidence, and of the reasoning supporting its conclusion (not necessarily limited by the scope of any criticisms or evidence that may be presented by the appellant). The language of the guidance gives rise to a real risk of being interpreted as prejudging issues which are for the individual tribunal to determine. As will be seen, the present appeals are illustrative of that risk. Also problematic to my mind is the special weight given to reports expressed in terms of certainty or near certainty. As has been seen, it is a feature of the Sprakab reports in the present case that the conclusions are so expressed, both positively and negatively. In RB itself, two of the Sprakab reports were expressed in similar terms but not it seems the final most detailed report (paras 13 15). The reasons for the discrepancy were not further discussed. It is unfortunate that, through circumstances beyond their control, the Upper Tribunal did not have the benefit of oral evidence from experts critical of Sprakabs methods. That was another reason for caution. In any event, as one would expect, the Upper Tribunals subsequent discussion and conclusion did not turn on the degree of certainty or near certainty expressed by Sprakab, but on an evaluation of all the evidence of which theirs was one part. That would be the duty of any future tribunal, regardless of the certainty of Sprakabs own views. What matters is not the confidence with which they are expressed, but the strength of the reasoning and expertise used to support them. The other concern is similar, relating to the guidance on anonymity (para 174). The Upper Tribunal were entitled on the evidence they had heard to indicate, as they did, that were no objections in principle to the form of the Sprakab reports, to the methodology used to produce them, or in general to the contributors not being identified by name in the reports. However, they went further, describing their reasons on this aspect as of general applicability and requiring some very good reason for a departure (para 174). Again that seems with respect unduly prescriptive on an issue which must depend on the circumstances of each case. As already noted, in RB itself, counsel for the appellant had made no reasoned objection in the circumstances of [that] case (para 25). This no doubt was because he was satisfied that the procedure adopted (including cross examination) and the information available to him enabled him properly to present his clients case. That concession could not be regarded as transferable to other cases. It was important in any guidance to emphasise that it would remain the duty of the tribunal in any future case to determine what justice requires, in the light of the evidence and submissions made to them. That could not be predetermined by general guidance given by the Upper Tribunal. More generally, there is a case for updating the guidance, which is now more than four years old. As I have explained, the Upper Tribunal in 2010 had limited direct evidence from those critical of the methodology. The conclusion of the present appeals provides an opportunity to review the guidance, in the light of this judgment and of experience in the cases, and any other relevant evidence both for and against Sprakabs methodology. It will be for the President of UTIAC to determine what form that review should take. While it is not for this court to take over that role, some pointers may be helpful: i) On the basis of the material we have seen, I see no reason in principle why Sprakab should not be able to report on both (a) language as evidence of place of origin and (b) familiarity with claimed place of origin provided, in both cases, their expertise is properly demonstrated and their reasoning adequately explained. (As will be seen below, the problem in relation to (b) was not the nature of the evidence, but the lack of demonstrated expertise.) ii) As to (a), language: a) The findings (on evidence) in RB are to my mind sufficient to demonstrate acceptable expertise and method, which can properly be accepted unless the evidence in a particular case shows otherwise; b) The Upper Tribunal ought to give further consideration to how the basis for the geographical attribution of particular dialects or usages can be better explained and not (as it often currently seems to be) left implicit. The tribunal needs to be able to satisfy itself as to the data by reference to which analysts make judgements on the geographical range of a particular dialect or usage. c) The RB safeguard requiring the Secretary of State to make the recording available to any expert instructed for the claimant is not only sensible, but essential. iii) As to (b), familiarity: a) The report needs to explain the source and nature of the knowledge of the analyst on which the comments are based, and identify the error or lack of expected knowledge found in the interview material; b) Sprakab reporters should limit themselves to identifying such lack of knowledge, rather than offering opinions on the general question of whether the claimant speaks convincingly. (It is not the function of an expert in language use to offer an opinion on general credibility.) iv) On the issue of anonymity, since the approach in RB was a departure from the norm, it would be appropriate for the tribunal to satisfy itself both that the departure remains justified in the interests of security of Sprakab personnel or otherwise, and, if it does, as to the safeguards necessary to ensure that the evidence is reliable and that no prejudice arises in individual cases. Consideration for example could be given to requiring assurances that the identifying numbers remain with an individual throughout his work with Sprakab, and requiring disclosure of other work done in any related field by the individual (eg advice to Governments, interpretation, translation), and of any occasion on which his conclusions have been rejected by courts or tribunals. The present appeals I turn to the application of these principles to the present cases. Regardless of the general discussion, there are in my view clear reasons for dismissing the present appeals on their own facts. They relate, first, to the use made by the AIT in each case of the Sprakab evidence relating to knowledge of country and culture; secondly the use by the Upper Tribunal of the guidance in RB in response to criticisms of the Sprakab reports. Knowledge of country and culture As noted by Lord Eassie, this is an issue on which there is a degree of common ground. It was not in dispute before them that the comments in the reports on the claimants knowledge of country and culture were inadequately supported by any demonstrated expertise of the authors. Of this Lord Eassie said, at para 53): This criticism may, I think, be treated relatively briefly since counsel for the Advocate General accepted that in what purported to be expert evidence of a linguistic analysis the author was stepping outside his proper field of expertise in expressing such views and comments. I consider that counsel was right to make that concession. What is being done appears to be nothing more than an expression of a view on credibility, which is outwith any expert witness' function. He added that in neither case was there anything to indicate the extent (if any) of the particular areas from which the interviewees were said to come, and that in any event it was doubtful to what extent such issues could be properly explored in a telephone conversation lasting only 18 minutes and dealing also with other matters. Before us, Mr Lindsay QCdid not seek to withdraw the concession that this aspect of the Sprakab evidence was unsupported by demonstrated expertise in the relevant field. However, he submitted that Lord Eassie erred in treating this as a defect which deprived the linguistic analyses of any validity, or undermined the conclusions of the respective immigration judges. In this submission he gained support from the dissenting judgment of Lord Marnoch (para 97). I am unable to accept those submissions. Not only do I agree that the concession was rightly made, but I also agree with Lord Eassies criticism that in some respects the evidence went beyond the proper role of a witness. Indeed, the observation that KYs knowledge sounds rehearsed for the occasion reads as that of an advocate rather than an independent expert witness, and was wholly inappropriate even if the relevant expertise had been established. Expert witnesses should never act or appear to act as advocates. Furthermore, on a fair reading of the careful judgments of the immigration judges in each case, I find it impossible to treat this aspect of their reasoning as severable from the remainder. In the first place this aspect formed an intrinsic part of Sprakabs overall assessment in each case, on which the judges relied. In KY the judge refers in terms to the two experts comment on her knowledge of country and culture, and in the absence of any contradictor in terms of the expert views given adopts them as part of the conclusions, without distinguishing the different aspects (paras 39 49). The position in MN is perhaps less clear, in that the judge undertook her own commendably detailed examination of the evidence relating to the claimants knowledge of his area, but I am unable to say that the supposedly expert views on this aspect expressed in the Sprakab report played no significant part in the overall reasoning. In my view, this point on its own is sufficient to undermine the decisions of the AIT in each case, and to this extent at least to require us to uphold the decision of the Court of Session. [I should add that, as Lord Eassie noted, it was not an issue which had arisen in in RB. We were told that this aspect of the Sprakab forms had been altered or deleted in later versions. The current form states (in capitals) that knowledge assessment is separate and forms no part of the language analysis.] Use of Guidance in RB In each appeal an important part of the appellants case, both before the first tribunal and in their grounds of appeal to the Upper Tribunal, was an attack on the use by the Secretary of State of the Sprakab reports. In each case the tribunal judge made a detailed analysis of the reports and the criticisms made of them, before accepting them. In KY as already noted Lord Macphail, when directing reconsideration under the old procedure, had made strong criticism of the Sprakab report in that case, partly by reference to the guidelines in the 2004 Language and National Origin Report, and had gone as far as to direct that reconsideration should take place without reference to it. (Whether he had power to do that is not now material.) Similarly, in MN SIJ Storey, when granting permission to appeal under the new procedure, noted the challenge to the reliance placed on the Sprakab report again by reference to the 2004 guidelines. By the time of the hearings in each case, in October and December 2010 respectively (as it happened, before the same Senior Immigration Judge), the decision and guidance in RB had become available. It is clear from the language used in each judgment, that the judge regarded that as effectively precluding further argument on the Sprakab reports. In KY he fairly criticised other advocates for treating Lord Macphails note as equivalent to a decision of the Court of Session; but made no other reference to his specific criticisms, other than to record the lack of suggestion of any possible error indicated in the Lord Ordinarys note that RB leaves unresolved. He treated RB as establishing that a linguistic analysis in terms of certainty or near certainty was such that little more would be required to justify a conclusion on whether the appellant had the history claimed, observing that this appellant is caught by that judgment. Similarly in MN he concluded that the appellants criticisms of the Sprakab report did not raise any point which has not been dealt with in principle in RB which is binding for present purposes (emphasis added in each case). In my view he was clearly wrong to take that approach. I have some sympathy for his position in dealing with these cases so soon after the judgment in RB. As I have explained, he was entitled to regard the guidance in RB as persuasive on the procedural matters covered by it (subject to the reservations expressed above). However, it was no substitute for a critical analysis of the particular reports relied on in the instant cases, and of the reasoning of the First tier tribunal on them. It may be said that such an error by the Upper Tribunal is not in itself a reason for refusing the appeal if the first tribunals decision is otherwise supportable. However, this would be to give no weight to the special appellate role of the Upper Tribunal in the new system, which is not fully replicated by onward appeal on law to the higher courts. Also, there were significant differences between the facts of the present cases, and those considered in RB. For example, the particular dialect in issue in each case (that of the Reer Hamar clan) was not the same as in RB. Further, as Lord Eassie points out (paras 59 60), there were serious questions about the basis on which the Sprakab analysts felt able to establish with such certainty the geographical allocation of the appellants modes of speech. These were issues which, having been properly raised in their grounds of appeal, the appellants were entitled to have considered and answered at the appeal level. Conclusions For the reasons given above, I would dismiss the present appeals. In the result, the case of MN will be remitted to the Upper Tribunal as ordered by the Inner House. In the case of KY, before the Inner House, (para 81) it was accepted for the Secretary of State that if the appeal succeeded it should be allowed simpliciter and no remission would be necessary. I did not understand Mr Lindsay to depart from that position in this court. Accordingly I would uphold that order. |
This judgment deals with the first, and major, limb of this appeal. At the end I shall explain the position in relation to the second limb. On 2 June 2006 the appellant (TNL) published an article (the Article) which defamed the respondent, (Sergeant Flood), who is a Detective Sergeant in the Extradition Unit of the Metropolitan Police Service (MPS). The Article stated that allegations had been made against Sergeant Flood that had led Scotland Yard to investigate whether he was guilty of corruption. The police investigation subsequently ended with a finding that there was no evidence that Sergeant Flood had acted corruptly and the trial judge, Tugendhat J accepted Sergeant Floods evidence that he was not guilty of corruption. That finding has not been challenged. The issue before the Court is whether TNL are protected from liability to Sergeant Flood in defamation under the doctrine known as Reynolds privilege. Put shortly Reynolds privilege protects publication of defamatory matter to the world at large where (i) it was in the public interest that the information should be published and (ii) the publisher has acted responsibly in publishing the information, a test usually referred to as responsible journalism although Reynolds privilege is not limited to publications by the media see Reynolds v Times Newspapers Ltd [2001] 2 AC 127. Tugendhat J held that TNL are protected by Reynolds privilege [2009] EWHC 2375 (QB) [2010] EMLR 169, but his decision was reversed by the Court of Appeal, Lord Neuberger MR, Moore Bick and Moses LJJ, [2010] EWCA Civ 804 [2011] 1WLR 153. The major reason for the Court of Appeals decision was their view that the journalists responsible for the Article had failed to act responsibly in that they had failed adequately to verify the allegations of fact that it contained. The Article The Article had the following heading, the first sentence of which was in large bold letters: Detective accused of taking bribes from Russian exiles. Police investigating the alleged sale to a security company of intelligence on the Kremlin's attempts to extradite opponents of President Putin, Michael Gillard reports. The relevant part of the text of the Article was helpfully numbered by the judge for purposes of reference. I shall follow the example of the Court of Appeal in adopting that numbering. 1. Allegations that a British security company with wealthy Russian clients paid a police officer in the extradition unit for sensitive information are being investigated by Scotland Yard. 2. The officer, who has been moved temporarily from his post, is alleged to have provided Home Office and police intelligence concerning moves by Moscow to extradite a number of Russia's wealthiest and most wanted men living in Britain. 3. Anti corruption detectives are examining documents detailing the client accounts of ISC Global (UK), a London based security firm at the centre of the investigation. The financial dossier, seen by The Times, shows that ISC was paid more than 6m from off shore companies linked to the most vocal opponents of President Putin of Russia. 4. Between 2001 and 2005, ISC provided a variety of specialist security services including monitoring the Kremlin's attempts to extradite key clients to Moscow, where they face fraud and tax evasion charges. A former ISC insider passed the dossier to the intelligence arm of the anti corruption squad in February. The informant directed handlers to a series of ISC payments, totalling 20,000, made to a recipient codenamed Noah. Detectives from Scotland Yard professional standards directorate were told that Noah could be a reference to an officer in the extradition unit who was friendly with one of ISC's bosses. The officer under investigation has been identified as Detective Sergeant Gary Flood. His home and office were raided last month. A spokesman for the Metropolitan Police said yesterday: 'We are conducting an investigation into allegations that a serving officer made unauthorised disclosures of information to another individual in exchange for money.' Anti corruption detectives are examining the relationship between Sergeant Flood and a former Scotland Yard detective, one of the original partners in ISC. The men admit to being close friends for more than 25 years but deny any impropriety and are willing to co operate with the inquiry. Sergeant Flood has not been suspended. His lawyer said: 'All allegations of impropriety in whatsoever form are categorically and unequivocally denied.' ISC Global was set up in October 2000 by Stephen Curtis, a lawyer. He was already acting for a group of billionaire Russians led by Mikhail Khodorkovsky and Leonid Nevzlin, who controlled Yukos Russia's privatised energy giant 15. The dossier also reveals Boris Berezovsky was a client of ISC. 16. Two companies linked to Mr Berezovsky Bowyer Consultants Ltd and Tower Management Ltd appear to have made payments totalling 600,000 to ISC. 19. ISC stopped trading last year after Curtis, the chairman, died in a helicopter crash. Subsequently, two former Scotland Yard officers, Keith Hunter and Nigel Brown, whom Curtis recruited to set up ISC, fell out and Mr Hunter bought the company and renamed it RISC. 20. A spokesman for Mr Hunter said: 'Neither my client nor his associated companies have ever made illegal payments to a Scotland Yard officer.' 21. Mr Brown, who lives in Israel said: 'Scotland Yard recently contacted me as a result of receiving certain information. I have been asked not to discuss this matter.' 5. Moore Bick LJ stated at para 88 of his judgment, that since the Article repeated allegations made by others the starting point was the repetition rule. Under that rule a defendant who repeats a defamatory allegation made by another is treated as if he had made the allegation himself, even if he attempts to distance himself from the allegation see Stern v Piper [1997] QB 123, 128; Gatley on Libel and Slander 11th ed (2008) para 11.4; Carter Ruck on Libel and Privacy, 6th ed (2010) paras 9.34 37. 6. Sergeant Floods claim is not founded simply on the repetition rule. The Article reports a variety of matters only some of which repeat, without adopting, allegations made by others. A central feature of the Article is the statement that the police are investigating the conduct of Sergeant Flood and the defamatory meaning alleged is derived in part from that fact. The identification of the issues arising in this case is not easy and calls for some precision in the analysis of the Article. 7. The heading, the first sentence, para 1 and para 7 of the Article report that allegations have been made to the police that an officer, identified elsewhere in the Article as Sergeant Flood, has corruptly taken bribes in exchange for the provision of sensitive information to a security company, identified elsewhere in the Article as ISC. I shall describe these allegations as the Flood is guilty accusation. Para 5 of the Article alleges that a former ISC insider (the ISC Insider) has stated that ISC made payments to Noah who could be an officer who was friendly with one of ISCs bosses. The Article makes it plain that the officer in question is Sergeant Flood. I shall describe this allegation as the Flood could be guilty accusation. Most of the rest of the Article consists of allegations of fact, some of these derived from the dossier provided to the police and to TNL by the ISC Insider. Of these Lord Neuberger, at para 25, identified paras 5, 8, 15, and 16, to which he later added paras 10 and 19 as containing what he called the Allegations. Moses LJ preferred to describe these as the details of the foundation of the allegations against Sergeant Flood. I shall call these the supporting facts. 8. What is the defamatory meaning, or sting, to be derived from the Article when read as a whole? In Chase v News Group Newspapers Ltd [2002] EWCA Civ 1772; [2003] EMLR 218 Brooke LJ identified three possible defamatory meanings that might be derived from a publication alleging police investigations into the conduct of a claimant. These have been adopted as useful shorthand in subsequent cases. The Chase level 1 meaning is that the claimant was guilty. The Chase level 2 meaning is that there were reasonable grounds to suspect that the claimant was guilty. The Chase level 3 meaning is that there were grounds for investigating whether the claimant was guilty. 9. The respondent has not alleged that the Article conveys a Chase level 1 meaning. Rather he has pleaded what are in effect alternative Chase level 2 meanings, namely: The words complained of meant that there were strong grounds to believe, or alternatively that there were reasonable grounds to suspect, that he had abused his position as a police officer with the MPS extradition unit by corruptly accepting 20,000 in bribes. 10. The meaning alleged by TNL, for the purposes of a plea of justification, is a Chase level 3 meaning. This was: [DS Flood] was the subject of an internal police investigation and that there were grounds which objectively justified a police investigation into whether the claimant received payments in return for passing confidential information about Russia's possible plans to extradite Russian oligarchs. The relevant facts Tugendhat J made detailed findings of fact see [2009] EWHC 2375 (QB) at paras 15 to 121. Those findings have not been challenged. The Master of the Rolls made a brief summary of these at the beginning of his judgment. This is not entirely accurate, so I shall adapt it into my own summary. The Article was the result of a lengthy investigation by journalists, Michael Gillard, his father, Gillard senior, and Jonathan Calvert, the editor of "Insight" at The Sunday Times, under whose auspices the investigation had been carried out. Following its decision not to publish, Michael Gillard took the story to The Times, with more success. Michael Gillard was first told in December 2005 of alleged bribes for information from the Extradition Unit by one of his sources (A), who identified the police officer in question as Sergeant Flood or his brother (a police officer not in the Extradition Unit). The information related to the extradition and asylum of Mr Berezovsky and another Russian. Michael Gillard decided to investigate this matter. He sought the assistance of his father in doing so. Over the next three months Michael Gillard had meetings with A and two other sources, one of whom, B, was working with A together with the ISC Insider. Michael Gillard concluded that A and B did not have direct knowledge about the alleged bribery of a police officer, but derived their information from the ISC Insider. He learned that in February 2006 A and B had arranged for the ISC Insider to meet with the Intelligence Development Group (IDG) of the Directorate of Professional Standards (DPS) of the MPS. On 13 March A provided Michael Gillard with a copy of a Note that he had arranged to be given to the IDG when arranging this meeting. It read as follows: One of Hunter's clients is Boris Berezovsky The Russians regularly up date information on the warrants and details of the emendations are transmitted to all the extradition desks around the world. Hunter has a long term detective friend called Flood (possibly Gary ) who either works at, or has contacts at the extradition department. Flood provides Hunter with the information as it arrives. Hunter pays Flood in cash. Flood apparently uses, or has used the money in the past for [the sensitive information]It is not clear whether Berezovsky is aware of how Hunter obtains the information If President Putin discovers this information it is likely to cause a Diplomatic incident Meanwhile Mr Gillard Senior managed to have a series of meetings and telephone conversations with the ISC Insider. He told Mr Gillard Senior about his visit to the IDG and expressed frustration that they did not appear to be taking any action in relation to the information that he had provided. He provided Mr Gillard Senior with a copy of a CD Rom that he had provided to the IDG. This contained details of ISCs internal accounts. These showed a series of payments, totalling 20,000 to Noah. The ISC Insider told Mr Gillard Senior that he believed that Noah was Sergeant Flood, although he did not know that this was the case. He believed that Sergeant Flood had a corrupt relationship with Mr Hunter of ISC. Mr Gillard Senior prepared a memorandum for Mr Michael Gillard setting out what he had been told by the ISC Insider. This ran to 8 pages and included: [ ] aware of payment to Flood ISC management accounts Evidence of payments to 'Noah' for 2002 2003. Believes but does not know 'Noah' codename for Flood. Atkinson codename for Boris Berezovsky in ISC accounts.' Noah' payments related to 'Atkinson' 'Noah' payments made out of KH's [Mr Hunter's] suspense account. Suspense account used to park items not immediately assignable to particular client or expense KH used to brag about my man at the Yard. Talked about how my man would be in court and would agree to bail. Described as in charge of all Russian cases. Said to have been at Home Office meeting and taking notes regarding Berezovsky asylum/extradition. KH also mentioned other possible contacts. Could have been deliberate exaggeration. At a long liquid lunch in Champers Wine Bar in Kingly Street KH talked openly about paying brown envelopes to my man at the Yard. Problem arose when BB barrister spoke directly to Flood in court on one occasion and asked how to handle some legal issue. KH very upset that BB lawyers had contacted my man. An unsuccessful attempt by Michael Gillard and Mr Calvert to approach Sergeant Flood at his home on 26 April was reported to Mr Hunter, who in turn told Sergeant Flood. He put matters in the hands of his superiors the following day. They informed the MPS press office ("the Press Office"), who then made contact with Michael Gillard and Mr Calvert. On 27 April, Mr Calvert provided to the Press Office, to be passed on to Sergeant Flood, details of allegations that Mr Calvert said that he understood had been passed to Scotland Yard earlier in the year. These included the following: My understanding is that Scotland Yard received information early this year alleging that Mr Hunter paid you for information that you are privy to as a member of the Yard's Extradition Unit. This information would be of particular use to certain Russian individuals, some of whom were clients of ISC Global (UK) We understand that Scotland Yard has been given financial accounts detailing how money was transferred from Berezovsky companies to ISC Global accounts here and in Gibraltar. In addition Mr Hunter's 'suspense account' is said to have made a series of payments of at least 20,000 to 'Noah' We understand that you have been identified to the police as 'Noah'. These events caused DPS to initiate a police investigation by its Investigation Command, with DCI Crump as the Senior Investigating Officer. It seems that DCI Crump was unaware of the information that had been provided to the IDG by the ISC Insider in February. The DPS obtained and executed search warrants in respect of Sergeant Flood's home and office. On the same day the Press Office issued the statement quoted in para 7 of the Article, and a few days later, Sergeant Flood was moved from the Extradition Unit owing to the ongoing investigation. Meanwhile the DPS officers, including DCI Crump, who were investigating the matter, had meetings with Michael Gillard and Mr Calvert, who were anxious to discover precisely why it was that the police had taken action. I shall deal with the details of these meetings later in my judgment. On 2 June 2006, The Times published the Article as a newspaper report and on its website. On 2 December 2006 the DPS made their report ("the DPS Report"), in which the DPS concluded that they had been unable to find any evidence to show that [Sergeant Flood] has divulged any confidential information for monies or otherwise. Consequently there are no recommendations made as to criminal or discipline proceedings in relation to that matter. The respondent gave evidence in the course of which he denied that he had been guilty of any impropriety. That evidence was not challenged and was accepted by the judge. The issues This appeal raises a number of issues of principle in relation to Reynolds privilege. The parties were agreed, and the judge accepted, that the rival meanings set out in paras 9 and 10 above were so close that, for the purpose of resolving the issue of Reynolds privilege, it was not necessary to choose between them. It will none the less be necessary to consider how the court should approach the meaning of a publication when considering a claim to Reynolds privilege. This is the meaning issue. Mr Price QC for Sergeant Flood has argued that, as a matter of principle, Reynolds privilege should not normally protect publication of accusations of criminal conduct on the part of a named individual made to the police, at least if they are accompanied by details of matters alleged to support those allegations. This raises the public interest issue. The public interest issue is whether, and in what circumstances, it is in the public interest to refer to the fact that accusations have been made, and in particular that accusations have been made to the police, that a named person has committed a criminal offence. This issue embraces the question of whether, if it is in the public interest to report the fact of the accusation, it is also in the public interest to report the details of the accusation. The third issue of principle raised by this appeal is the verification issue. As I shall show when I come to examine Reynolds in detail, one relevant element in the approach of a responsible journalist was held to be the steps taken to verify the information. Where the publication alleges that accusations have been made of misconduct on the part of the claimant, or alternatively that there are grounds to suspect him of misconduct, the question arises of what, if any, verification is required on the part of the responsible journalist? In particular, is the journalist required to take steps to check whether the accusations that have been made are well founded, or is his duty to do no more than verify that the accusations reported were in fact made? Reynolds privilege I propose at this point to consider the defence of Reynolds privilege. In Reynolds at p 205 Lord Nicholls of Birkenhead recorded that, over time, a valuable corpus of case law would be built up in respect of that defence. I shall examine how far that has occurred over the past decade, with particular attention to the questions of public interest and verification. The publication in Reynolds involved an allegation that the claimant, who was the Taoiseach, or prime minister, had lied to the Dil and to his cabinet colleagues. The defendants sought to establish a generic head of qualified privilege at common law in relation to political information, on the basis that this would protect them in the absence of malice. The House of Lords rejected this attempt, but identified the defence that has since been termed Reynolds privilege, albeit that the term privilege is misleading. It is more accurately described as a public interest defence. The leading speech was delivered by Lord Nicholls, who having set out the elements of Reynolds privilege, held that it could not arise on the facts of the case. Lord Cooke of Thorndon and Lord Hobhouse of Woodborough expressed full agreement with the speech of Lord Nicholls. Lord Steyn and Lord Hope of Craighead differed in the result, but their speeches accorded with Lord Nicholls conclusion that qualified privilege could protect publication of defamatory matter to the world at large where the public interest justified the publication. The passage in which Lord Nicholls set out his conclusions [2001] 2 AC 127, 204 205 has been cited in both the judgment of Lord Neuberger MR and that of Tugendhat J, but, as it is the foundation of Reynolds privilege, I shall set it out again: The elasticity of the common law principle enables interference with freedom of speech to be confined to what is necessary in the circumstances of the case. This elasticity enables the court to give appropriate weight, in today's conditions, to the importance of freedom of expression by the media on all matters of public concern. Depending on the circumstances, the matters to be taken into account include the following. The comments are illustrative only. 1. The seriousness of the allegation. The more serious the charge, the more the public is misinformed and the individual harmed, if the allegation is not true. 2. The nature of the information, and the extent to which the subject matter is a matter of public concern. 3. The source of the information. Some informants have no direct knowledge of the events. Some have their own axes to grind, or are being paid for their stories. 4. The steps taken to verify the information. 5. The status of the information. The allegation may have already been the subject of an investigation which commands respect. 6. The urgency of the matter. News is often a perishable commodity. 7. Whether comment was sought from the plaintiff. He may have information others do not possess or have not disclosed. An approach to the plaintiff will not always be necessary. 8. Whether the article contained the gist of the plaintiff's side of the story. 9. The tone of the article. A newspaper can raise queries or call for an investigation. It need not adopt allegations as statements of fact. 10. The circumstances of the publication, including the timing. This passage is largely, but not entirely, concerned with responsible journalism. The starting point is, however, that the publication should be in respect of a matter of public concern. This is not a black and white test, for, as Lord Nicholls observed, it is necessary to consider the extent to which the subject matter is a matter of public concern (Emphasis added). As he made plain, responsible journalism requires the striking of the right balance between the public interest in the subject matter of the publication on the one hand and the harm to the claimant, should the publication prove to be untrue on the other. Lord Hobhouse of Woodborough observed at p 239: The publisher must show that the publication was in the public interest and he does not do this merely by showing that the subject matter was of public interest. He went on to commend the test of what it is in the public interest that the public should know and what the publisher could properly consider that he was under a public duty to tell the public. This echoed the observation made by Lord Steyn at p 213 and Lord Cooke at p 224 that it was appropriate to adopt the conventional test applied when considering qualified privilege in relation to publication to a limited class. That is to ask whether the recipients had an interest in receiving the information and the publisher a duty to publish it. Lord Nicholls had earlier, at p 197, said that he preferred to ask: in a simpler and more direct way, whether the public was entitled to know the particular information. He referred to this as the right to know test. While Lord Hobhouse was correct to observe that it will not always be in the public interest to publish matters which are of public interest, the starting point in considering whether publication was in the public interest must be to ask whether the subject matter of the publication was a matter of public interest. Lord Bingham of Cornhill CJ, when giving judgment in the Court of Appeal in Reynolds attempted at p 176 the difficult task of defining a matter of public interest: By that we mean matters relating to the public life of the community and those who take part in it, including within the expression public life activities such as the conduct of government and political life, elections (subject to Section 10 of the Act 1952, so long as it remains in force) and public administration, but we use the expression more widely than that, to embrace matters such as (for instance) the governance of public bodies, institutions and companies which give rise to a public interest in disclosure, but excluding matters which are personal and private, such that there is no public interest in their disclosure. So far as verification is concerned, Lord Nicholls included in his list of relevant factors the steps taken to verify the information. He was, however, dealing with a case where the relevant allegations were made, or at least adopted, by the publisher. The publication was not simply reporting allegations made by another. In Al Fagih v HH Saudi Research and Marketing (UK) Ltd [2001] EWCA Civ 1634 [2002] EMLR 215 the Court of Appeal, by a majority, found that Reynolds privilege was made out in respect of a report in a newspaper of defamatory allegations made in the course of an ongoing political debate, notwithstanding that the publishers had made no attempt to verify the allegations. The newspaper had not adopted or endorsed these allegations. Giving the leading judgment Simon Brown LJ at p 236 identified circumstances where both sides to a political dispute were being reported fully, fairly and disinterestedly and where the public was entitled to be informed of the dispute. In such circumstances there was no need for the newspaper to concern itself with whether the allegations reported were true or false. The public interest that justified publication was in knowing that the allegations had been made, it did not turn on the content or the truth of those allegations. A publication that attracts Reynolds privilege in such circumstances has been described as reportage. In a case of reportage qualified privilege enables the defendant to avoid the consequences of the repetition rule. The nature of reportage was extensively analysed by Ward LJ in Roberts v Gable [2007] EWCA Civ 721; [2008] QB 502. At para 60 he correctly identified it as a special example of Reynolds privilege, a special kind of responsible journalism but with distinctive features of its own. There is a danger in putting reportage in a special box of its own. It is an example of circumstances in which the public interest justifies publication of facts that carry defamatory inferences without imposing on the journalist any obligation to attempt to verify the truth of those inferences. Those circumstances may include the fact that the police are investigating the conduct of an individual, or that he has been arrested, or that he has been charged with an offence. In the present case Mr Rampton QC, for TNL, has not expressly sought to rely on the principle of reportage as absolving TNL from any duty of verification in respect of the matters alleged in the article. He has, however, relied upon the decision of the House of Lords in Jameel (Mohammed) v Wall Street Journal Europe Sprl [2006] UKHL 44; [2007] 1 AC 359 as demonstrating that TNLs duty of verification did not extend to verifying that the allegations made against Sergeant Flood were well founded. When I come to consider Jameel I shall suggest that, on analysis, an approach similar to reportage was applied. It will be necessary to examine whether such an approach can properly be applied in a case such as the present. The next occasion on which the Court of Appeal considered Reynolds privilege was Loutchansky v Times Newspapers Ltd (Nos 2 5) [2001] EWCA Civ 1805, [2002] QB 783. I shall refer to the defendant as the Times, to avoid any confusion with the present case. The publication in that case reported in detail allegations made against the claimant of criminal activities including money laundering on a vast scale. The Times invoked Reynolds privilege. The judgment of the Court of Appeal set out in a short passage at para 10 the matters that the Times relied upon to demonstrate the exercise of responsible journalism. In essence these were that the published allegations were based on reports from reliable, responsible and authoritative sources. At para 23 the Court held: At the end of the day the court has to ask itself the single question whether in all the circumstances the duty interest test or the right to know test has been satisfied so that qualified privilege attaches. The judgment went on to explore the nature of this test. At paras 32 35 the court explained why Reynolds privilege was in reality sui generis, a different jurisprudential creature from the traditional form of privilege from which it sprang. This was not accepted by all members of the House of Lords in Jameel, but I have no doubt that it was correct. Reynolds privilege arises not simply because of the circumstances in which the publication is made, although these can bear on the test of responsible journalism. Reynolds privilege arises because of the subject matter of the publication itself. Furthermore, it arises only where the test of responsible journalism is satisfied, and this requirement leaves little or no room for separate consideration of malice. The court went on at para 36 to say this about the interest/duty test: The interest is that of the public in a modern democracy in free expression and, more particularly, in the promotion of a free and vigorous press to keep the public informed. The vital importance of this interest has been identified and emphasised time and again in recent cases and needs no restatement here. The corresponding duty on the journalist (and equally his editor) is to play his proper role in discharging that function. His task is to behave as a responsible journalist. He can have no duty to publish unless he is acting responsibly any more than the public has an interest in reading whatever may be published irresponsibly. That is why in this class of case the question whether the publisher has behaved responsibly is necessarily and intimately bound up with the question whether the defence of qualified privilege arises. Unless the publisher is acting responsibly privilege cannot arise. This passage did not attempt to define the criteria governing whether it is in the public interest that a particular matter should be published to the world at large, so that the journalist has a duty to publish it. The CA rejected, however, the test applied by the judge of whether the publisher would be open to legitimate criticism if he failed to publish the information in question, holding that such a test was too stringent see paras 46 49. I come now to the case of Jameel [2007] 1 AC 359, in which the House of Lords subjected Reynolds privilege to a searching analysis. The defendant (the Journal) published an article that asserted that at the request of the United States the central bank of Saudi Arabia was monitoring certain bank accounts to prevent them from being used, wittingly or unwittingly, for channelling funds to terrorist organisations. The article included a number of names that were alleged to be on the list, which I shall call the black list, including that of the claimants trading group. The claimants succeeded at first instance. The jury found that the article defamed the claimants, presumably concluding that the article suggested that there were some grounds for suspecting that the claimants might be involved in funnelling funds to terrorists. The Journals claim to Reynolds privilege was rejected by both the trial judge and the Court of Appeal. The House of Lords reversed those decisions. The reasons why the House considered that reporting not only the existence of the black list but the names on it was in the public interest appears most clearly from the speeches of Lord Hoffmann at para 49, Lord Scott of Foscote at para 142 and Baroness Hale of Richmond at para 148. The main thrust of the story was that Saudi Arabia was co operating with the United States in the fight against terrorism. This was evidenced by the existence of the black list. This was a matter of high public interest. Publication of the names on the black list was justified because this gave credibility to the story, per Lord Scott, or because without the names the impact of the story would have been much reduced, per Lady Hale. Lord Bingham at paras 34 35 seems to have viewed the publication of the names as peripheral to the thrust of the article, which was of great public interest. Lord Hoffmann at paras 51 52 held that the article as a whole was in the public interest and the inclusion of the names was an important part of the story as it showed that Saudi cooperation extended to the heartland of the Saudi business world. Lord Hope held at para 111 that the question of whether the publication was privileged had to be judged in the context of the article read as a whole. As to the formulation of the test of public interest, different opinions were expressed. Lord Bingham at para 30 referred, with approval, to the adoption by Lord Nicholls in Reynolds of the duty interest test or the simpler test of whether the public was entitled to know the particular information. Lord Hoffmann at para 50 said that he did not find it helpful to apply the classic test of whether there was a duty to communicate the information and an interest in receiving it. These requirements should be taken as read where the publication was in the public interest. Lord Hope at para 107 commented that the duty interest test, based on the publics right to know, which lies at the heart of the matter, maintains the essential element of objectivity. Lord Scott at paras 130 and 135, like Lord Bingham, endorsed Lord Nicholls adaption of the duty/interest test. Lady Hale at para 146 observed that the Reynolds defence sprang from the general obligation of the press, media and other publishers to communicate important information upon matters of general public interest and the general right of the public to receive such information. She added at para 147 that there must be some real public interest in having this information in the public domain. I doubt if this formulation could be bettered. I turn now to consider how the House of Lords dealt with the question of verification. The article contained two material assertions. The first was one of fact that the claimants name was on the black list. The second was the implied assertion that, because of this, there were grounds for suspecting that the claimants might be wittingly or unwittingly involved in funnelling funds to terrorists. That latter assertion was on the basis that the United States authorities must have told the central bank of Saudi Arabia that there were such grounds. The House of Lords considered it relevant to the test of responsible journalism that the journalists should have sought to verify the first, factual, assertion see Lord Bingham at para 35, Lord Hoffmann, at great length, at paras 59 to 78, Lord Hope at para 110, Lord Scott at para 139 and Lady Hale at para 149. It is significant that no one considered that the Journal was under any duty to attempt to check the truth of the implied, defamatory, assertion, namely that there were grounds for suspecting that the claimants might be involved in funnelling funds to terrorists. Thus, on analysis, the Reynolds privilege in Jameel had strong similarities with reportage. The article reported facts that had defamatory implications. Privilege protected the publishers from being responsible for those implications and they were under no duty to seek to verify whether the implications were true. The balancing act and human rights Reynolds privilege is not reserved for the media, but it is the media who are most likely to take advantage of it, for it is usually the media that publish to the world at large. The privilege has enlarged the protection enjoyed by the media against liability in defamation. The decisions to which I have referred contain frequent emphasis on the importance of freedom of speech and, in particular, the freedom of the press. That importance has been repeatedly emphasised by the European Court of Human Rights when considering article 10 of the Convention. There is, however, a conflict between article 10 and article 8, and the Strasbourg Court has recently recognised that reputation falls within the ambit of the protection afforded by article 8 see Cumpana and Mazare v Romania (2004) 41 EHRR 200 (GC) at para 91 and Pfeifer v Austria (2007) 48 EHRR 175 at paras 33 and 35. In Reynolds Lord Nicholls at p 205 described adjudicating on a claim to Reynolds privilege as a balancing operation. It is indeed. The importance of the public interest in receiving the relevant information has to be weighed against the public interest in preventing the dissemination of defamatory allegations, with the injury that this causes to the reputation of the person defamed. There is a danger in making an exact comparison between this balancing exercise and other situations where article 8 rights have to be balanced against article 10 rights. Before the development of Reynolds privilege, the law of defamation, as developed by Parliament and the courts, already sought to strike a balance between freedom of expression and the protection of reputation. Thus a fair and accurate report of court proceedings is absolutely privileged. Publication is permitted even though this may involve publishing allegations that are clearly defamatory. The balance in respect of the reporting of such proceedings is heavily weighted in favour of freedom of speech. The public interest in favour of publication is firmly established. The judge has, however, jurisdiction to make an anonymity order, thereby tilting the balance back. Decisions in relation to the exercise of this power cannot be automatically applied to a situation where the publication of defamatory allegations has no statutory protection. In the former case one starts with a presumption in favour of protected publication; in the latter one starts with a presumption against it. There is thus a need for care when applying to the law of defamation decisions on the tension between article 8 and article 10 in other contexts. The fact remains, however, that the creation of Reynolds privilege reflected a recognition on the part of the House of Lords that the existing law of defamation did not cater adequately for the importance of the article 10 right of freedom of expression. Their Lordships had well in mind the fact that Convention rights were about to be introduced into our domestic law as a consequence of the Human Rights Act 1998. In developing the common law the courts as public authorities are obliged to have regard to the requirements of the Convention. Article 10.2 provides that the right of freedom of expression may be subject to restrictions for the protection of the reputation or rights of others and the Strasbourg Court has had to address the tension between articles 8 and 10 in the context of the publication of statements by the press that prove to be defamatory. The Court has been provided with a certified translation of the recent decision of the Strasbourg Court in Polanco Torres and Movilla Polanco v Spain (Application No 34147/06), Ruling of 21 September 2010, in which this tension arose. The Spanish Newspaper El Mundo had published an article defamatory of the petitioners that was largely founded on computer disks of company accounts that had been authenticated by an accountant who had been dismissed by the company. The Spanish Constitutional Court had applied a relevant principle of Spanish law described as due diligence, namely that if such publication is to be protected the journalist responsible for it must have taken effective steps to verify the published information. The Strasbourg Court at para 43 identified as relevant matters when considering restrictions on freedom of expression under article 10 necessary to protect the reputation of others the degree of defamation involved and the question of knowing at what point the media might reasonably consider sources as credible for the allegations. The latter had to be considered from the viewpoint of the journalists at the time and not with the benefit of hindsight. The Strasbourg Court upheld the finding of the Spanish Constitutional Court that the requirement of due diligence had been satisfied. The meaning issue Reynolds privilege exists where the public interest justifies publication notwithstanding that this carries the risk of defaming an individual who will have no remedy. This requires a balance to be struck between the desirability that the public should receive the information in question and the potential harm that may be caused if the individual is defamed. In Reynolds at pp 200 201 Lord Nicholls dwelt at some length both on the importance of freedom of expression and on the importance of the protection of reputation. As to the latter, he rightly observed that it is not simply the individual but also society that has an interest in ensuring that a reputation, and particularly the reputation of a public figure, is not falsely besmirched. Lord Nicholls at p 205 commented that the more serious the charge, the more the public is misinformed and the individual harmed, if the allegation is not true. But, turning the coin over, the more serious the allegation the greater is likely to be the public interest in the fact that it may be true. Either way, it may be a critical matter in striking the right balance. It is commonplace, and sensible, for a claim to Reynolds privilege to be determined as a preliminary issue. This can, however, raise a practical problem. In order to perform the balancing act to which I have just referred it is necessary to determine the meaning of the article that has been published. Furthermore, it is not possible to consider steps taken by way of verification without first deciding what it was that needed to be verified. This also can raise a question as to the meaning of the publication. Where there is an issue as to meaning, this is normally a matter for the jury, and in theory there is only one true meaning see Gatley at para 3.15. How then is the judge to approach the meaning of an article when considering a claim to Reynolds privilege as a preliminary issue? It seems to me that the sensible way of avoiding this difficulty where there is a serious issue of Reynolds privilege will usually be for the parties to agree to trial by judge alone. It will then be open to the judge to resolve for himself any issue that arises in relation to the meaning of the words published. That course was not adopted in this case but the parties have, by their pleadings, effectively agreed that the meaning of the article lies on the spectrum that spans, at one extreme, that there were strong grounds for believing that Sergeant Flood had abused his position as a police officer by taking bribes and, at the other extreme, that there were grounds which objectively justified a police investigation into whether Sergeant Flood had acted in this way. Where there is a range of meanings that a publication is capable of bearing, what approach should be adopted when considering whether the journalist acted responsibly in relation to it? In Bonnick v Morris [2002] UKPC 31; [2003] 1 AC 300, Lord Nicholls, when giving the advice of the Judicial Committee of the Privy Council on an appeal from Jamaica, held that the single meaning rule should not be applied when considering a claim to Reynolds privilege. He continued at para 25 to say this: Where questions of defamation may arise ambiguity is best avoided as much as possible. It should not be a screen behind which a journalist is willing to wound, and yet afraid to strike. In the normal course a responsible journalist can be expected to perceive the meaning an ordinary, reasonable reader is likely to give to his article. Moreover, even if the words are highly susceptible of another meaning, a responsible journalist will not disregard a defamatory meaning which is obviously one possible meaning of the article in question. Questions of degree arise here. The more obvious the defamatory meaning, and the more serious the defamation, the less weight will a court attach to other possible meanings when considering the conduct to be expected of a responsible journalist in the circumstances. In Bonnick the Privy Council held the publishers to be protected by Reynolds privilege in circumstances where the journalist responsible for the publication had given evidence that he had not appreciated that the article that he had published bore the defamatory meaning found by the jury. The Board held that a responsible journalist might well not have appreciated that the article bore that defamatory meaning. While I find the result reached in Bonnick surprising, the approach to the test of responsible journalism adopted by the Board makes sound sense. When deciding whether to publish, and when attempting to verify the content of the publication, the responsible journalist should have regard to the full range of meanings that a reasonable reader might attribute to the publication. I do not know whether this was the reason why counsel agreed that it was unnecessary to choose between the meaning pleaded by Sergeant Flood and that pleaded by TNL, but it is one reason why I believe that their agreement was correct. It is for the judge to rule on a claim to Reynolds privilege, just as it is for the judge to rule on the range of meanings that a publication is capable of bearing. The judges conclusions as to the latter will inform his judgment as to whether the defendant acted responsibly in publishing the article. TNL have not, in this case, sought to argue that the Article is not capable of bearing one or other of the Chase level 2 meanings that I have quoted in para 9. A responsible journalist would have appreciated that the article might be read, by some readers at least, as indicating that there were strong grounds for suspecting that Sergeant Flood had been guilty of corruptly selling sensitive information to the ISC. Others might read it as alleging no more than the meaning asserted by TNL. The claim to Reynolds privilege must be assessed having regard to this range of meanings. The public interest issue Both Tugendhat J and the Court of Appeal considered that the subject matter of the article was of sufficient public interest to render publication of it justified in the public interest provided that the test of responsible journalism was satisfied. This was in the context of a concession by Mr Price that the report of the statement of the Metropolitan Police reported at para 7 of the Article was subject to statutory qualified privilege pursuant to section 15(1) of the Defamation Act 1996 and that Sergeant Flood could not have complained had TNL simply reported that he was the officer under investigation. That latter concession Mr Price withdrew, without objection from Mr Rampton. Mr Prices primary grounds for complaint were not, however, that TNL had named Sergeant Flood as the person who was the subject of the police investigation, but that they had published the details of the supporting facts that had been placed before the police in support of the accusation that the police were investigating. It follows that two matters have to be considered in relation to public interest. (i) Was it in the public interest that the details of the supporting facts should be published and (ii) was it in the public interest that Sergeant Flood should be named? Was it in the public interest that the supporting facts should be published? Mr Price submitted that, as a matter of principle, publication in the mass media of complaints, charges or denunciations, made under cover of anonymity to the police, and of the allegedly supporting evidence, before the subject of them had had an opportunity of answering the charges and before the investigation had taken place, would in many cases be contrary to the public interest and oppressive to the subject. He observed that accusations are often made to the police maliciously or misguidedly. The police may, none the less, be under a duty to investigate them. It cannot normally be in the public interest that, if the informant then informs the press of the allegations made to the police, the press should publish the allegations. Publication would be likely, in such circumstances, to be unfairly prejudicial to the subject of the allegations. Even if given the chance to respond to them, it would not be reasonable to expect him to do so. The protections normally afforded to a person charged with a criminal offence would be by passed. Mr Price conceded that there could be public interest in publishing reports of misconduct against a person that had been sufficiently verified by the press, but contended that they had not been in this case. This argument exemplified the overlap between the test of public interest in publication and the test of responsible journalism. Mr Price sought to support his submission that privilege should not attach to reports of allegations of misconduct by reference to two authorities of some antiquity. The first was Purcell v Sowler (1877) 2 CPD 215. In that case the defendant newspaper unsuccessfully claimed privilege for reporting charges of neglect made against the plaintiff, the medical officer of a union workhouse, which were made at a public meeting of the board of guardians for a local poor law union. The plaintiff was not present, so had no opportunity to respond to the charges. Mellish LJ, giving the leading judgment, plainly considered this significant. He observed at p 221: there is no reason why the charges should be made public before the person charged has been told of the charges, and has had the opportunity of meeting themSuch a communication as the present ought to be confined in the first instance to those whose duty it is to investigate the charges. The other case relied on by Mr Price was De Buse v McCarthy [1942] 1KB 156. There the publication was of an agenda of a town council committee which was posted in a number of public places. The agenda included a report that inferred that the four plaintiffs, who were council employees, had been involved in thefts of petrol. The defendants argued that the publication was privileged because they had a duty to communicate the matters in the report to the ratepayers and the ratepayers had an interest in receiving the communication. The defence failed because the Court of Appeal did not accept either proposition. Tugendhat J discounted these decisions in part on the ground that they had been overtaken by Reynolds and Jameel. The Master of the Rolls at para 38 remarked that Purcell was a decision on its facts. He went on at para 40 to remark that it was rather dangerous to rely on cases of such antiquity when dealing with fundamental issues of freedom of speech and respect for private life, the more so as in Reynolds the House of Lords had set out to redress the balance between the two in favour of greater freedom to publish matters of genuine public interest. I agree with those comments, and indeed Mr Price accepted that the law had moved on since those case were decided. He submitted, however, that they remained of value inasmuch as they contained statements that privilege should not be accorded to publication of allegations that had not been investigated or tried. Tugendhat J observed at para 131 that there was no dispute that the conduct of police officers in general, and police corruption in particular, was a matter of interest to the community. At para 215 he expressed the view that the real issue was whether the journalism was responsible in the sense of whether the publication was fair to the respondent. Was it a proportionate interference with his right to reputation given the legitimate aim in pursuit of which the publication was made? The legitimate aim was primarily the publication of a story that was of high public interest. At para 183 Tugendhat J dismissed the suggestion that there was a general rule that it was against the public interest for the media to engage in investigative journalism on a matter which was, or which, in the view of the media, should be the subject of police investigation. The law provided its own sanctions for publications that interfered with the course of justice. So far as concerned Mr Prices submission that it was not in the public interest to publish allegations that had not been verified, Tugendhat J considered that this contention could not stand with the decision in Jameel, where no attempt had been made to verify the existence of grounds for suspecting that the claimants had been a conduit for terrorist funds see paras 135, 153 and 181 of his judgment. I shall revert to this matter when I come to deal with verification. Lord Neuberger held at paras 37 and 39 that there was no reason to exclude allegations made to the police from the ambit of potential Reynolds privilege. Whether the allegations were made to the police, to a third party or directly to the journalist, and even if they amounted to allegations of criminal conduct, Reynolds privilege could, in principle, attach to them. Lord Nicholls in Reynolds had made it clear that publication of allegations of wrongdoing might or might not attract privilege, depending on all the circumstances of the particular case. So far as the publication of the supporting facts was concerned, Lord Neuberger at paras 57 to 59 accepted the following submission made by Mr Price: While allegations of police corruption are of public interest, the mere fact that particular allegations are being investigated by the police themselves should not enable the media to publish details of the allegations, without fear of being liable for defamation, unless (a) the publication of the allegations is in the public interest, and (b) the journalist responsible took reasonable steps to check on their accuracy. Dealing with those two criteria, Lord Neuberger at paras 68 and 69 accepted that the details of the allegations were of considerable public concern. He went on, however, to find that reasonable steps had not been taken to check on their accuracy. It was essentially on that basis that he reversed the decision of Tugendhat J. I shall consider his reasoning when I deal with verification. Moore Bick LJ at para 100 remarked that as the subject matter of the article was police corruption, there could be no doubt that it was a matter of public interest. He went on to consider whether this applied to the details of the allegations and the naming of DS Flood, and concluded that it did. He held that the allegations were the whole story. If the inclusion of the defamatory material was justifiable, so was the story, and vice versa. At para 102 he observed that there was no public interest in knowing the mere fact that an ISC insider had made allegations against a member of the Metropolitan Police, but there was a public interest in knowing the facts, insofar as the allegations were true. For this reason it was necessary to consider, in particular, what was the source of the journalists information and what steps were taken to verify it. At the end of his judgment he expressed agreement with the Master of the Rolls that the judge had reached the wrong conclusion because he failed to have sufficient regard to the serious nature of the allegations against Sergeant Flood and the journalists failure to take any significant steps to verify their accuracy, and because he misunderstood the effect of Jameel. Once again, failure to verify was at the heart of the refusal to accord TNL the protection of Reynolds privilege. But it is right that I should quote in full para 104 of the Lord Justices judgment, which endorsed the submissions of Mr Price that I have summarised at para 56 above: In my view responsible journalism requires a recognition of the importance of ensuring that persons against whom serious allegations of crime or professional misconduct are made are not forced to respond to them before an investigation has been properly carried out and charges have been made. It is very easy for allegations of impropriety or criminal conduct to be made, to the police, professional bodies and others who may have a duty to investigate their truth, out of malice, an excess of zeal or simple misunderstanding. If the details of such allegations are made public, they are capable of causing a great deal of harm to the individual concerned, since many people are inclined to assume that there is no smoke without fire. Moreover, there is a serious risk that once the allegations have been published the person against whom they are made will feel obliged to respond to them publicly, thereby depriving himself of the safeguard of the ordinary process and risking a measure of trial by press. I am not dealing here with the publication of the simple fact that a complaint has been made against a person, without any details being given, or with the publication of the fact that a person has been charged with a criminal offence. Such information is likely to be a matter of public interest. It is routinely made public in statements issued by the police and when that occurs a report of the statement is protected under section 15 of the Defamation Act 1996. However, it is unnecessary and inappropriate for such reports to set out the details of the allegations made against the person charged; the description of the charge itself is sufficient to inform the public of what it has an interest in knowing. The alternative is trial by press without proper safeguards, which is clearly not in the public interest. Moses LJ held that it was in the public interest that the public should learn that the police were pursuing an investigation of corruption against a fellow police officer. This was because it was important that public trust in the police should be upheld. He went on to hold, however, that there was not the same public interest in publication of the supporting facts on which the allegation against the respondent was based. This was because they merely added credence to the grounds on which the investigation was pursued. They invited the reader to think that there might be something in them notwithstanding that they had not been investigated let alone substantiated para 116. Once again, emphasis was placed on failure to verify, for at para 118 the Lord Justice summarised his conclusions by saying: I agree that publication without investigation of the details on which the allegation was based was not in the public interest. (My emphasis) Conclusions on publication of the details of the accusation I have set out in full para 104 of the judgment of Moore Bick LJ because he identifies matters that will often weigh conclusively against publication of details that appear to support an accusation that has been made against an individual of criminal conduct that is being investigated by the police. It may be that the details are, if true, of some public interest, but, the responsible journalist must weigh that fact against the prejudice that may be caused to the suspect that Moore Bick LJ has identified. At the end of the day, however, each case will turn on its own facts and the overriding test is that of responsible journalism. I have reached the conclusion that, subject to the issue of verification, it was in the public interest that both the accusation and most of the facts that supported it should be published. The story, if true, was of high public interest. That interest lay not merely in the fact of police corruption, but in the nature of that corruption. The object of the Extradition Unit of the Metropolitan Police was to assist in the due process of extradition. The accusation was that there were grounds for suspecting the respondent of selling sensitive information about extradition for the benefit of Russian oligarchs who might be subject to it. What was suggested was not merely a corrupt breach of confidentiality, but the betrayal of the very object of his employment by the police. The story told was a story of high public interest and, as Moore Bick LJ remarked, the allegations were the whole story. Tugendhat J accepted evidence given by Michael Gillard to the effect that he had doubts as to whether the police were exercising due diligence in investigating the information provided to them by the ISC Insider. He explained that one motive in publishing the Article was to ensure that the police investigation was carried out promptly. This finding has not been directly challenged, albeit that some of Mr Prices oral submissions verged upon such a challenge and Moore Bick LJ at para 106 said that he was unable to accept this. The judges finding was based upon his assessment of the oral evidence given by Michael Gillard see para 38 and there is no valid basis for challenging it. Lord Neuberger observed at para 54 that the journalists motives for publishing were of little relevance. In this instance I do not agree. Tugendhat J considered that Michael Gillards motive was relevant both because it constituted a legitimate aim of publishing para 200, and because it was in the public interest to ensure that the investigation was carried out promptly para 216. I consider that there is force in these points. Michael Gillard had good reason to doubt whether the investigation was being pursued with diligence. In fact, there is no evidence that there had been any investigation before the police reacted to TNLs intervention on 26 April. Michael Gillards concern, coupled with the high public interest in the story, justified its publication. There was, in the words of Lady Hale in Jameel at para 147, real public interest in having this information in the public domain. I have said that it was in the public interest that most of the facts that supported the story should be published because I have yet to deal with the publication of the Sergeant Floods name, coupled with the codeword Noah, which identified for readers of the Article the officer suspected of corruption. I now turn to the question of whether the publication of that matter also was in the public interest. Was it in the public interest that the respondents name should be published? Michael Gillard, who wrote the Article, gave the following reasons for naming the respondent: a. The Met had confirmed that he was under investigation; b. Other possible witnesses might not have come forward with information had I not named him; c. I suspected that the DPS was not properly investigating the matter and believed that if the matter was brought into the open it might help to ensure that they did so; d. The claimant was part of a reasonably small squad and if he was not named it would leave the newspaper open to complaints from others in the squad that the article referred to them; e. The claimant was already aware of the investigation, so was his family and colleagues in the extradition squad. Tugendhat J at para 218 held that the naming of Sergeant Flood was within the range of judgments open to TNL, partly because it gave the story the interest referred to by Lord Steyn in In re S (A Child) (Identification: Restrictions on Publication) [2004] UKHL 47; [2005] 1 AC 593, para 34, but more importantly because not naming the claimant would not have saved his reputation entirely. Rather it would have spread the damage to reputation to all the officers in the extradition unit. The issue in In re S was whether reporting restrictions should be imposed in respect of the name of a defendant in a murder trial in order to protect the privacy of her son. In para 46 above I have warned of the danger of applying directly to defamatory publications cases dealing with restrictions on publication in other contexts. Mr Rampton argued that naming the respondent was responsible journalism because, had he not been named, the Article would have lacked interest. Had it been possible to conceal Sergeant Floods identity by removing his name from the Article, together with the reference to Noah, but leaving it otherwise intact, I would not have accepted this argument. Sergeant Flood was not a public figure. Publication of his name can have meant nothing to most readers, and any interest that it added to the article would not have outweighed the damage that it caused to his reputation. Furthermore, adding interest to the Article was not a reason advanced by Mr Michael Gillard for naming the respondent. On the facts of this case, however, it was impossible to publish the details of the Article without disclosing to those close to the respondent that he was the officer to whom it related. He would be identified as such by the other members of the Extradition Unit and anyone else who knew that he had been removed from that unit. There is also force in the point that, if he were not named, other members of the Extradition Unit might come under suspicion. Having regard to these matters, I have concluded that naming the respondent was not, of itself, in conflict with the test of responsible journalism or with the public interest. The verification issue: the law Not all the items in Lord Nicholls list in Reynolds were intended to be requirements of responsible journalism in every case. The first question is whether, on the facts of this case, the requirements of responsible journalism included a duty of verification and, if so, the nature of that duty. I should insert a word of warning at the outset. Each case turns on its own facts. I use the phrase duty of verification as shorthand for a requirement to verify in the circumstances of this case. My comments should not be treated as laying down principles to be applied in cases of different facts. Mr Price alleged that TNL should have verified the accusation against Sergeant Flood reported in the Article. Tugendhat J concluded that Jameel was incompatible with such an obligation. He considered that Jameel showed that if it was in the public interest to publish the fact of an accusation, there was no obligation to verify the grounds of the allegation. Moore Bick LJ commented at para 95 that, if the judge were right, there was very little distinction to be drawn between the defence of reportage and the defence of responsible journalism in relation to the reporting of statements made by third parties. The judge was not right. Reportage is a special, and relatively rare, form of Reynolds privilege. It arises where it is not the content of a reported allegation that is of public interest, but the fact that the allegation has been made. It protects the publisher if he has taken proper steps to verify the making of the allegation and provided that he does not adopt it. Jameel was analogous to reportage because it was the fact that there were names of substantial Saudi Arabian companies on the black list that was of public interest, rather than the possibility that there might be good reason for the particular names to be listed. Just as in the case of reportage, the publishers did not need to verify the aspect of the publication that was defamatory. The position is quite different where the public interest in the allegation that is reported lies in its content. In such a case the public interest in learning of the allegation lies in the fact that it is, or may be, true. It is in this situation that the responsible journalist must give consideration to the likelihood that the allegation is true. Reynolds privilege absolves the publisher from the need to justify his defamatory publication, but the privilege will normally only be earned where the publisher has taken reasonable steps to satisfy himself that the allegation is true before he publishes it. Lord Hoffmann put his finger on this distinction in Jameel at para 62, when he said In most cases the Reynolds defence will not get off the ground unless the journalist honestly and reasonably believed that the statement was true, but there are cases (reportage) in which the public interest lies simply in the fact that the statement was made, when it may be clear that the publisher does not subscribe to any belief in its truth. Thus verification involves both a subjective and an objective element. The responsible journalist must satisfy himself that the allegation that he publishes is true. And his belief in its truth must be the result of a reasonable investigation and must be a reasonable belief to hold. What then does the responsible journalist have to verify in a case such as this, and what does he have to do to discharge that obligation? If this were a Chase level 1 case he would have to satisfy himself, on reasonable grounds, that the respondent had in fact been guilty of corruption. His defence would not get off the ground unless he reasonably believed in the respondents guilt. This is not, however, a Chase level 1 case, see my discussion of the meaning of the Article at paras 48 to 50 above. What did the duty of verification involve? There is authority at the level of the Court of Appeal that to justify a Chase level 2 allegation a defendant has to adduce evidence of primary facts that constituted reasonable grounds for the suspicion alleged. These will normally relate to the conduct of the claimant. Allegations made by others cannot be relied upon. The same may be true of a Chase level 3 allegation. The discussion in Gatley at para 11.6 and the three cases there cited support these principles. No such hard and fast principles can be applied when considering verification for the purpose of Reynolds privilege. They would impose too strict a fetter on freedom of expression. Where a journalist alleges that there are grounds for suspecting that a person has been guilty of misconduct, the responsible journalist should satisfy himself that such grounds exist, but this does not necessarily require that he should know what those grounds are. Their existence can be based on information from reliable sources, or inferred from the fact of a police investigation in circumstances where such inference is reasonable. I derive support for this conclusion from the fact that in Jameel the House of Lords accepted that appropriate steps had been taken to verify the fact that the claimants were named on the black list where there had been reliance upon reliable sources, even though the defendants were not prepared to name them. The present case has the following particular features. The Article did not simply consist of the Flood could be guilty accusation. It combined this with the Flood is guilty accusation and the supporting facts. Although the latter, when taken on their own, did not amount to strong grounds for suspecting Sergeant Flood of corruption, their incorporation into the Article both provided detail of the nature of the corruption of which Sergeant Flood was suspected and, as Moses LJ observed, added credence to the case being investigated. It was these features that made the Article capable of bearing the first of the two Chase level 2 meanings alleged by Sergeant Flood. Before publishing this Article responsible journalism required that the journalists should be reasonably satisfied both that the supporting facts were true and that there was a serious possibility that Sergeant Flood had been guilty of the corruption of which he was suspected. The latter requirement reflects the range of meanings that the Article was capable of conveying to its readers. The verification issue: the facts When considering the evidence, the trial judge made findings that were not challenged and that were highly relevant to the question of verification. The challenge made by Mr Rampton to the decision of the Court of Appeal is founded on an assertion that the Court of Appeal made an erroneous assessment of the relevant facts and failed to have regard to some of the findings of the trial judge. I propose first to summarise the relevant observations of the Court of Appeal before considering, in the light of these, the relevant findings of Tugendhat J. When dealing with verification, Lord Neuberger focussed on what he described as the Allegations. These he had, in para 25, identified as the matters alleged in paras 5, 8, 15 and 16 of the Article, but to these he subsequently added paras 10 and 19. The relevant parts of his judgment appear in the following paragraphs: 68. The Allegations were serious: accusing a fairly senior police officer of what was not inaccurately described in DS Flood 's pleaded case as an appalling breach of duty and betrayal of trust and . a very serious criminal offence is self evidently a very grave charge. Being identified as the officer the subject of the investigation described in paragraph [7] of the article in The Times may, on its own, have been pretty damaging to DS Flood (although I have doubts as to whether The Times would have published on that limited basis). However, by going further and publishing the allegations being made against him, with the details given in para [5], coupled with the references to Mr Berezovsky and others in paras [10], [15], [16] and [19], the journalists must have realised would be very likely to result in the article constituting a story with a far greater impact, and far greater effect on DS Flood 's reputation. As Lord Nicholls said [2001] 2 AC 127, 205 the more serious the charge, the more the public is misinformed and the individual harmed. 69. The nature of the information contained in the Allegations is of considerable public concern in that it involves police corruption, but the weight to be given to that point is very severely reduced by the fact that the information is contained in the Allegations, which, as the journalists knew, were largely unchecked and unsupported. That factor is particularly important once one appreciates that the main content of the Article was the Allegations, coupled with the identification of DS Flood, and the link with named Russian migrs. 73. When one turns to the steps taken to verify the information, the journalists do not seem to have done much to satisfy themselves that the Allegations were true. When they were published in the article, they were, as the passages just quoted from the judgment show, and as the journalists must have appreciated, no more than unsubstantiated unchecked accusations, from an unknown source, coupled with speculation. The only written evidence available to the journalists did not identify any police officer, let alone DS Flood, as the recipient of money from ISC at all, let alone for providing confidential information. Moore Bick LJ agreed. He accepted Mr Prices submission that the journalists had taken few, if any, steps to verify the truth of the allegations themselves. Moreover the status of the information was no more than that of an uninvestigated and unsubstantiated allegation. The dossier, which the journalists had seen, did not identify the respondent as Noah nor did it specifically support the allegation that any officer had been the recipient of payments from ISC. As I explained at para 68, Moses LJ also attached importance to the failure to verify what, at para 115, he had described as the details of the foundation of the allegation. At para 116 he commented that these exposed the respondent to the suggestion that unchecked and unsubstantiated allegations from an unknown source might be well founded. Mr Rampton submitted that the reference by both Lord Neuberger and Moses LJ to allegations from an unknown source demonstrated a failure to appreciate the important fact that the ISC Insider was known to the journalists. I do not believe that Lord Neuberger or Moses LJ had failed to appreciate this fact. In para 11 of his judgment Lord Neuberger had recorded meetings between the ISC Insider and both Mr Gillard Senior and the Metropolitan Police. Unknown should, I think, probably be read as undisclosed. I have drawn attention to the importance that all three members of the Court of Appeal attached to the fact that the supporting details of the allegations made against Sergeant Flood were unverified. I consider that importance to have been misplaced. The supporting details were true. Nor, so far as I can see, did Mr Price contend that the journalists were at fault for failing to verify them. Tugendhat J held at para 204 that the fact that payments in cash were made to Noah was soundly based on the documents. He added that it had not been suggested that the journalists ought to have doubted the authenticity of these. It does not seem to have been any part of Sergeant Floods case that the journalists were at fault for failing to verify the supporting details. The case that Mr Price has consistently advanced in relation to verification is very different. In para 18 of his written case he submitted that no attempt worthy of the name had been made to verify what he described as the accusation. By the accusation I understood him to mean the accusation that Sergeant Flood had corruptly received bribes in exchange for confidential information. If so, he put his case too high. For the reasons set out in para 82 above responsible journalism required that the journalists should be reasonably satisfied that there was a serious possibility that Sergeant Flood had been guilty of corruption. The submissions in relation to the facts made by Mr Price were, however, equally applicable to this requirement. I turn to consider whether, contrary to the submission of Mr Price, that requirement was satisfied. Mr Prices complaint was that the journalists made no attempt to investigate the truth of the allegations made to the police by the ISC Insider. This complaint focussed not on the contents of the dossier provided by the ISC Insider to the police but upon the ISC Insiders statement that he believed that the payments recorded as having been made to Noah had been made to Sergeant Flood. Mr Prices submission was that responsible journalists would have discovered that this expressed belief had no foundation. Sergeant Flood gave evidence, which was unchallenged, that he had had no information that would have been of any value to ISC. In particular he had no information in relation to the attempt to extradite Mr Berezovsky or his application for asylum that was of value. The journalists shortcoming, according to Mr Price, was in failing to inquire whether there was any confidential information available to Sergeant Flood that he could have sold to ISC. Such inquiry would have disclosed that there was none and thus that the ISC Insiders expressed belief that Sergeant Flood was Noah was wholly without foundation. Instead, the journalists had based their Article on allegations made by the ISC Insider, notwithstanding, as they had acknowledged, that he had his own axe to grind. In answer to this submission, Mr Rampton relied on the implications that could reasonably be drawn from the actions of the police themselves. The police, he argued, were best placed to form a view as to whether there was any substance in the allegations made against Sergeant Flood. Their actions in not merely investigating the allegations but in obtaining and executing a search warrant were a basis upon which the journalists could properly conclude that the allegations made against Sergeant Flood were allegations of substance. The inferences that could properly be drawn from the police activity constituted one of the central issues at the trial. It was Sergeant Floods case that it was the journalists own intervention on 26 April that had resulted in the police activity, so that they could not treat this as adding weight to the allegations that they had made. With hindsight it is apparent that this was factually correct. It was Michael Gillards evidence, however, that he had believed that the police action was a response to the information that had been provided by the ISC Insider in February. I turn to examine this part of the story in a little more detail. On 28 April Mr Calvert and Michael Gillard had invited Mr Hunter to comment on the fact that the police were investigating allegations that he had made corrupt payments to Sergeant Flood. Solicitors for Mr Hunter, in an e mail on 2 May followed by a letter on 3 May to Mr Calvert, alleged that the only reason for the police investigation had been TNLs own enquiries on 26 April. This led Mr Calvert to contact the MPS Press Office to ask whether the police began their investigation following allegations received from TNL or whether the investigation was already ongoing. The Press Office replied that they could not expand on their press statement of 28 April (which was that reported in para 7 of the Article) and so were unable to answer this question. It now seems clear that, both when drafting the initial press notice and in replying to Mr Calvert on 3 May, the MPS Press Office was anxious not to disclose the fact that the police investigation had only just been commenced. No doubt the Press Office were apprehensive, with good reason, that the police might be exposed to press allegations of dragging their feet. Michael Gillard and Mr Calvert met with DCI Crump and two other officers concerned in the police investigation on 9 May. DCI Crump then confirmed that the police had received intelligence before the journalists communications with the Press Office, but that those communications had probably forced their hand. Having heard Michael Gillard give evidence, the judge made the following findings. By mid April Michael Gillard had formed the impression that the police were not investigating at all the information that they had received from the ISC Insider. After 27 April, however, he changed his mind. The MPS press notice of 28 April led him to believe that there was an ongoing investigation, which had started, or ought to have started in February. He did not believe the suggestion made by Mr Hunters solicitors that the investigation had been started by TNLs own inquiries. Those findings by the judge have not been challenged. The judge considered that the fact of the police investigation augmented the ground for suspicion that arose from the supporting facts published in the Article. He commented at para 191 that the police do not automatically investigate every allegation that is made to them. They decide what to investigate and what not to investigate. At para 203 he commented that while the basis for the allegations was weak, in that there was no evidence that the claimant was Noah or that any confidential information had been received by ISC, nevertheless as early as 9 May and up to the time of publication on 2 June the police had confirmed that they had sufficient evidence to obtain a search warrant and to carry out an investigation. I have considered whether it was reasonable for Michael Gillard to conclude that the police activity at the end of April and the beginning of May owed at least something to the information that had been provided to them by the ISC Insider. I have concluded that it was. It is remarkable that the DPS should have obtained and executed a search warrant in respect of Sergeant Floods home and office, and removed him from the Extradition Unit, on the strength only of the inquiries made by the journalists on 26 April. It was not unreasonable for the journalist to have assumed that this action was, at least in part, a response to information provided by the ISC Insider in February. The natural inference was that the DPS had concluded that the accusation made against Sergeant Flood might be well founded. The information provided by the ISC Insider, including that set out in the dossier, amounted to quite a strong circumstantial case against Sergeant Flood. Michael Gillard stated that he regarded it as significant that the dossier showed in the same period payments by Mr Berezovsky to ISC and payments by ISC to Noah and that during that period Mr Flood was working at the Extradition Unit. It was of course during that period that Russia was attempting to extradite Mr Berezovsky. The statements attributed to Mr Hunter, as recorded in Mr Gillard Seniors memorandum, while gossipy in character, none the less lent support to the possibility that a police officer who fitted the description of Sergeant Flood was in the pay of Mr Hunter. The known friendship between Sergeant Flood and Mr Hunter made this more credible. It is true that Michael Gillard accepted that the ISC Insider might have had an axe to grind in making his allegations, but they were not allegations that were lightly made. The ISC Insider went to considerable lengths to place his information before the police. I am not greatly impressed by Mr Prices submission that inquiries should have been made which would have showed that Sergeant Flood had no confidential information to sell. Mr Gillard Senior gave evidence that, in his experience the Russians were happy to corrupt government officials and that of his own experience and knowledge the Extradition Unit would have had information that would have been of interest. Michael Gillard gave evidence that from his knowledge of the specialist squads of the MPS Sergeant Flood was likely to have confidential information at his fingertips. He added that if there was no information that Sergeant Flood could have passed on to Mr Hunter he would have expected the police to dismiss the allegations as ill founded rather than remove Sergeant Flood from his post. Having regard to all these matters I consider that the journalists could reasonably conclude that Sergeant Flood was in a position to provide information that Mr Berezovsky would consider justified payments to him. Conclusion Michael Gillard does not seem to have been asked in terms whether he believed that there was a serious possibility that Sergeant Flood had been guilty of corruption. Tugendhat Js judgment, when read as a whole, leaves me in no doubt that had he been asked, he would have given an affirmative answer to this question. Indeed the inference that I draw from that judgment is that Michael Gillard considered that Sergeant Flood had probably been guilty of corruption. The case against the respondent was circumstantial, but I consider that the journalists, together with Mr Gillard senior, were justified in concluding that it was a strong circumstantial case. They accepted that it was probable that the sources had interests of their own but Mr Gillard had had to seek out the ISC insider, and had had difficulty in persuading him to divulge the relevant information. I find far fetched the suggestion that he might have deliberately set out to deceive the police and Mr Gillard. Although the judge considered, on the basis of Jameel, that responsible journalism did not require verification of the accusation made by the Article, his careful analysis of the evidence involved consideration of the evidential base of the allegations made in the Article. The judge concluded that the case against Sergeant Flood was not strong on the facts known to the journalists, but found it significant that the police appeared to have sufficient evidence to justify obtaining a search warrant and the other action that they took. There is a danger of using hindsight in a case such as this. My initial reaction on reading the facts of this case was that the journalists had been reasonably satisfied, on the basis both of the supporting facts and of the action of the police that there was a serious possibility that Sergeant Flood had been guilty of corruption. After a detailed analysis of the case I remain of that view. Contrary to the decision of the Court of Appeal, I consider that the requirements of responsible journalism were satisfied. I would allow this limb of the appeal. Post Script: The approach to the decision of the trial judge Before concluding this judgment I wish to comment on one matter of general importance raised by the Court of Appeal. Before that court TNL invoked the following statement of principle by Sir Anthony Clarke MR when giving the judgment of the Court of Appeal in Galloway v Telegraph Group Ltd [2006] EWCA Civ 17, [2006] EMLR 221, para 68 another case involving Reynolds privilege: The right to publish must however be balanced against the rights of the individual. That balance is a matter for the judge. It is not a matter for an appellate court. This court will not interfere with the judges conclusion after weighing all the circumstances in the balance unless he has erred in principle or reached a conclusion which is plainly wrong. The Court of Appeal had no need to comment on this statement, for the court concluded that Tugendhat J had erred in principle in misunderstanding the effect of Jameel and paying no heed to the question of verification. However, Lord Neuberger MR and Moore Bick LJ suggested that the statement in Galloway wrongly treated the balancing exercise required by a judge in a case such as this as being akin to the exercise of a discretion. Lord Neuberger, at para 46 drew a distinction between the exercise of a discretion and the value judgment or balancing exercise that was necessary on the basis of the facts found in a case such as this. He described the latter as raising an issue of law, as to which there was only one right answer. He went on, however, (in para 48) to comment on a statement of Lord Bingham in Jameel [2007] 1 AC 359 para 36: 48. I note that, at the end of his opinion in Jameels case, Lord Bingham referred to the fact that the House of Lords had not, like the judge and the jury, heard the witnesses and seen the case develop day after day, and the fact that the House had read no more than a small sample of the evidence. Accordingly, he described it as a large step for the House to decide for itself whether Reynolds privilege could be invoked in that case. It could be said to be an even larger step for an appellate court, which has not (and should not have) been taken through all the evidence, and which has not seen the witnesses and the development of the case over four days, to disagree with the trial judge's assessment, unless he has misunderstood the evidence, taken into account a factor he ought not to have taken into account, failed to take into account a factor he ought to have taken into account, or reached a conclusion no reasonable judge could have reached. 49. In my view, a decision in a case such as this does not involve the exercise of a discretion and cannot therefore be approached as the court suggested in Galloways case. Where a first instance court carries out a balancing exercise, the appeal process requires the appellate court to decide whether the judge was right or wrong, but it should bear in mind the advantage that the trial judge had in the ways described in Jameels case. Where the determination is a matter of balance and proportionality, it is, generally speaking, difficult for an appellant to establish that the judge has gone wrong. Save in the first sentence of para 49, in this passage Lord Neuberger did no more than recognise the advantage that the trial judge has over the Court of Appeal where a decision turns, in part, on evidence heard by the trial judge. The extent to which the trial judge is at an advantage over the Court of Appeal will depend on the circumstances of the particular case. The greater the advantage of the trial judge, the greater the weight to be attached to his decision and the more cogent must be the basis for finding that his decision was wrong. The passage cited from Galloway went further. It applied in the context of Reynolds privilege the same test that an appeal court should apply when considering an appeal against an exercise of discretion by a judge of first instance. A decision on Reynolds privilege does not involve the exercise of discretion. There are, none the less, a number of cases in other contexts, some at the highest level, where appellate courts have applied or endorsed a similar approach to that stated in the fourth sentence of the quotation from Galloway set out above, principally in cases where there is room for a legitimate difference of judicial opinion as to what the answer should be and where it will be impossible to say that one view is demonstrably wrong and the other demonstrably right: see eg George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] AC 803, 815H per Lord Bridge, Designers Guild Ltd v Russell Williams (Textiles) Ltd [2001] FSR 113, 122 per Lord Hoffmann approving words of Buxton LJ in Novowzian v Arks (No 2) [2000] FSR 363, 370 and Pro Sieben Media AG v Carlton UK Television Ltd [1999] 1 WLR 605, 612 3 per Walker LJ; see also British Fame v MacGregor (The MacGregor) [1945] AC 197 and Datec Electronics Holdings Ltd v United Parcels Service Ltd [2007] UKHL 23, [[2007] 1 WLR 1325, para 46. Context is all important. There is a spectrum, well identified in In re Grayan Building Services Ltd [1995] Ch 241, 254, where Hoffmann LJ stated that generally speaking, the vaguer a standard and the greater the number of factors which the court has to weigh up in deciding whether or not the standards [i.e. the relevant legal standards or test] have been met, the more reluctant an appellate court will be to interfere with the trial judges decision. How, and in particular whether within or outside this spectrum, an issue of Reynolds privilege should be addressed is a matter on which I would wish to hear oral argument in a context where it mattered before reaching any conclusion. We have heard no oral argument on such points. In these circumstances I do not consider that this Court should lay down any general principle as to the approach to be adopted by an appellate court to an issue of Reynolds privilege. The second limb of the appeal. The DPS report clearing Sergeant Flood was made, internally, on 2 December 2006. Its result was not communicated to TNL until 5 September 2007. On that date the Article still remained on the TNL website, and TNL neither removed it nor qualified it. In these circumstances, Tugendhat J held that the protection of Reynolds privilege did not extend beyond 5 September 2007. Before the Court of Appeal TNL appealed without success against that finding. They have appealed against it before this Court. Time did not permit us to hear argument in relation to this limb of TNLs appeal, and it was agreed that it should be adjourned, to be pursued, if appropriate, after judgment had been given in respect of the first limb of the appeal. The Court is prepared to hear submissions on the second limb if so requested. LORD BROWN The critical issue for decision in this appeal is whether Reynolds priviledge attaches to TNLs publication of the article set out at para 4 of Lord Phillips judgment. The undisputed background to the publication was that the Metropolitan Police were at the time carrying out an investigation into allegations that Sergeant Flood had abused his position as a police officer with the Extradition Unit by corruptly accepting substantial bribes in return for passing confidential information about possible plans to extradite certain Russian oligarchs. The defamatory meanings contended for in respect of the article range from there were strong grounds to believe that Sergeant Flood was guilty of such corruption, through an intermediate meaning that there were reasonable grounds to suspect such guilt (these being Sergeant Floods alternative contended for meanings), to there were grounds which objectively justified such a police investigation (TNLs contended for meaning). It follows that this case has little to do with the repetition rule. It is not suggested that the article repeated as such an allegation that Sergeant Flood was guilty of corruption (Lord Phillips Chase level 1meaning see para 8). Rather it asserted one or other of the above range of lesser allegations. Accordingly, to attract Reynolds privilege, it is these lesser allegations that TNL must establish they were justified in publishing a different task, of course, from that which, were the Reynolds defence to fail, TNL would have a trial, namely to justify whichever meaning the jury then decided the Article in fact bore. I agree with Lord Phillips view (para 51) that the responsible journalist should have regard to the full range of meanings that a reasonable reader might attribute to the publication. As is now well established, Reynolds privilege attaches to a defamatory publication which may properly be regarded as being in the public interest notwithstanding that it may be incapable of being justified as true and may therefore leave the defamed individual with no opportunity to vindicate his reputation and no compensation for its destruction. It has been exhaustively considered in a series of authoritative judgments, most helpfully perhaps in Reynolds itself Reynolds v Times Newspapers Ltd [2001] 2 AC 127 , Loutchansky v Times Newspapers Ltd (Nos 2 5) [2002] QB 783, Bonnick v Morris [2003] 1 AC 300 and Jameel (Mohammed) v Wall Street Journal Europe Sprl [2007] 1 AC 359. In deciding whether Reynolds privilege attaches (whether the Reynolds public interest defence lies) the judge, on true analysis, is deciding but a single question: could whoever published the defamation, given whatever they knew (and did not know) and whatever they had done (and had not done) to guard so far as possible against the publication of untrue defamatory material, properly have considered the publication in question to be in the public interest? In deciding this single question, of course, a host of different considerations are in play. One starts with the (expressly non exhaustive) list of ten factors identified by Lord Nicholls in Reynolds itself. As the present case well illustrates, however, depending on the particular publication in question, there are likely to be other relevant considerations too. Amongst the additional relevant considerations arising here are, for example, the journalists view (accepted by the judge) that the publication of the article would not merely inform the public of the particular allegation of corruption being investigated but would also tend to encourage its speedy and thorough investigation. Further, with regard to the naming of Sergeant Flood, the consideration was, first, that his identity would in any event be known to all who knew that he had been removed from the Extradition Unit and, secondly, that, if he were not named, other members of that Unit might come under suspicion besides, of course, the consideration that names lend interest and impact to a publication, particularly where, as here, there is an obvious connection between Sergeant Floods name and Noah (referred to in paragraph 5 of the article). To my mind the critical question in this appeal indeed the only real point of principle calling for decision is whether it can ever properly be said to be in the public interest to publish, as here, the detailed allegations underlying a criminal investigation to publish, in effect, a summary of the case against the suspect, reliant in part on anonymous sources, before even the police have investigated the allegations, let alone charged the suspect. I confess that I was at one time very doubtful whether Reynolds privilege could ever attach to such a publication. This is not, after all, a case of pure reportage a case in which the public interest lies simply in the fact that the statement was made, when it may be clear that the publisher does not subscribe to any belief in its truth (Lord Hoffmann in Jameel at para 62) a case like Al Fagih v H H Saudi Research and Marketing (UK) Ltd [2002] EMLR 215 where the disinterested publication of the respective allegations and responses by both sides to a political dispute was held to attract Reynolds privilege, the mere fact of such allegations being made being a matter of public interest. Nor, indeed, is it a case like Jameel itself, helpfully described by Lord Phillips (para 78) as being analogous to reportage, where the real public interest in the publication lay in its demonstration of the fact that Saudi Arabia was cooperating with the United States in the fight against terrorism, the inclusion of the defamed companys name in the blacklist of those who might wittingly or unwittingly funnelled funds to terrorist organisations showing that this cooperation extended to companies which were by any test within the heartland of the Saudi business world (Lord Hoffmann at para 52). Rather the justification for the publication of the article here must lie in it being in the public interest that the public should know, in advance of the outcome of the investigation, that such an allegation has been made and is being duly investigated. TNL must establish that this public interest would not be sufficiently served by a report merely of the Metropolitan Police press release set out at para 7 of the statement (privileged as this is under section 15 of, and para 9(1) (b) of Schedule 1 to, the Defamation Act 1996) but rather required, or at least could properly be considered by TNL to require, an altogether fuller account of the nature of the alleged corruption and the case supporting it. None of this has seemed to me by any means self evident and, indeed, a strong case against such a publication being in the public interest can be made, founded upon authorities such as Purcell v Sowler (1877) 2 CPD 215 and De Buse v McCarthy [1942] KB 156 and upon the consideration that there may be more to lose than to gain by ventilating in public an anonymous accusation such as that made here before even it is investigated by the police. At the end of the day, however, I am persuaded that there is no principle of law which precludes TNL from invoking Reynolds privilege in a case such as this. As the Court of Appeal themselves noted, authorities like Purcell and De Buse pre dated the Human Rights Act 1998 and, indeed, the development of the Reynolds public interest defence itself. Reynolds, itself anticipating the 1998 Act and the impact of article 10 of the Convention, was intended, as Lord Hoffmann observed in Jameel (at para 38), to promote greater freedom for the press to publish stories of genuine public interest. Lord Phillips (para 47) and Lord Mance (at para 142) have both cited examples of recent Strasbourg jurisprudence plainly supporting the view that the press should enjoy such greater freedom. Of course not every anonymous denunciation to the police will attract Reynolds privilege. Far from it. That, as Mr Price QC for Sergeant Flood was at pains to point out, would indeed be a charter for malice. But where, as here, the denunciation is of a public officer, relates to a matter of obvious public importance and interest, and may justifiably appear to the journalists to be supported by a strong circumstantial case, it seems to me properly open to the trial judge to find the defence made out. I too, therefore, would allow the appeal and restore Tugendhat Js judgment on the first limb of the appeal. LORD MANCE Introduction The appellants (TNL) published in The Times on 2 June 2006 and also on their website an article in defamatory terms about Detective Sergeant Flood. TNL advance two defences, qualified justification and public interest privilege. The present appeal concerns only the latter, which was tried as a preliminary issue. Further, it concerns only the first limb of that issue: the existence of a public interest defence up to 5 September 2007, the date on which TNL learned of the internal police report clearing DS Flood but failed to remove or qualify the article on their website. The public interest defence The contours of a defence of public interest privilege have been considered in a line of recent cases including Reynolds v Times Newspapers Ltd [2001] 2 AC 127, Bonnick v Morris [2002] 1 AC 300 (PC) and Jameel Mohammed v Wall Street Journal Europe Sprl [2006] UKHL 44; [2007] 1 AC 359. Its basic elements are the public interest of the material and the conduct of the journalists at the time. Whether the material is true is a neutral circumstance. In contrast, whether at the time the relevant journalists believed it to be true is (other than in cases of purely neutral reportage of allegations) highly material when considering their conduct. See, on these points, Jameel, para 62, per Lord Hoffmann. Although the words I have cited from Jameel treat the conduct of the journalists as a separate element of the test, an alternative approach subsumes the second element within the first. It will not be, or is unlikely to be, in the public interest to publish material which has not been the subject of responsible journalistic enquiry and consideration. The alternative approach appears in Lord Nichollss speech in Reynolds, listing a series of matters as being of potential relevance to an overall decision whether publication was in the public interest. He said, at p 205A: Depending on the circumstances, the matters to be taken into account include the following. The comments are illustrative only. 1. The seriousness of the allegation. The more serious the charge, the more the public is misinformed and the individual harmed, if the allegation is not true. 2. The nature of the information, and the extent to which the subject matter is a matter of public concern. 3. The source of the information. Some informants have no direct knowledge of the events. Some have their own axes to grind, or are being paid for their stories. 4. The steps taken to verify the information. 5. The status of the information. The allegation may have already been the subject of an investigation which commands respect. 6. The urgency of the matter. News is often a perishable commodity. 7. Whether comment was sought from the plaintiff. He may have information others do not possess or have not disclosed. An approach to the plaintiff will not always be necessary. 8. Whether the article contained the gist of the plaintiff's side of the story. 9. The tone of the article. A newspaper can raise queries or call for an investigation. It need not adopt allegations as statements of fact. 10. The circumstances of the publication, including the timing. This list is not exhaustive. The weight to be given to these and any other relevant factors will vary from case to case. Lord Nicholls did not regard any of these factors as a pre condition which must always be satisfied. In particular, he viewed the steps taken to verify the information as one factor among all others. The same approach appears in the opinion which he gave in the Privy Council in Bonnick v Morris [2003] 1 AC 300. In determining the public interest of material, the court considers both its subject matter and content and the appropriateness of publishing it as and when it was (or is to be) published. The speeches in Jameel [2007] 1 AC 359 discuss the extent to which it remains helpful to view the privilege in terms of the test (traditionally applied in cases of qualified privilege) of a reciprocal duty on the part of the press to publish and an interest on the part of the public to know. It is a truism that what engages the interest of the public may not be material which engages the public interest: para 31 per Lord Bingham. Lord Bingham, with whom Lord Hope agreed, thought that a duty/interest test still underpinned public interest privilege: paras 31, 92 and 105 106. But Lord Hoffmann thought at para 50 that it should be regarded as a proposition of law that, where there is a public interest in publishing, the duty and interest are taken to exist. Lady Hale said at para 147 that there must be a real public interest in communicating and receiving the information and in having [it] in the public domain, but that was less than a test of what the public need to know, which would be far too limited. Lord Scott engaged in a detailed discussion at paras 128 138, concluding that the duty was the presss professional duty to publish information of real and unmistakeable public interest to the public, and the interest was the publics in free expression, both of which only existed provided that the press satisfied the test of responsible journalism. In so far as there was any difference between the speeches of the members of the House, he agreed with Lord Hoffmanns. Like Lord Phillips at para 44, I find Lady Hales formulation helpful. It also seems consistent with both Lord Hoffmanns succinct and Lord Scotts more detailed discussion of the point. It is for the court to determine whether any publication was in the public interest. But the court gives weight to the ordinary standards of responsible journalism. It does so in a broad and practical way, and in contexts going beyond the steps taken to check material. This can be illustrated, first, by reference to Bonnick v Morris [2002] 1 AC 300. In that case, a newspaper article had recorded in a restrained and even handed way a difference between an authoritative source and Mr Bonnick, former managing director of the company concerned, as to the legitimacy and propriety of two contracts. But it had continued Mr Bonnicks services as managing director were terminated shortly after the second contract was agreed. The article did not record Mr Bonnicks explanation that he had made [the company] fire him, because, based on the advice he had received, this would enable him to obtain more compensation. Without this explanation, the natural and ordinary meaning of the article, to an ordinary reader, was that he had been dismissed because the company was dissatisfied with his handling of the contracts. Nonetheless, the Privy Council held the public interest defence made out. Two points arise. First, the Privy Council held that the objective standard of responsible journalism was to be applied in a practical and flexible manner and not exclusively by reference to the single meaning which the law attributed to the particular words, para 24. A journalist should not be penalised for making a wrong decision on a question of meaning on which different people might reasonably take different views, para 24, although questions of degree arose and the more obvious the defamatory meaning, and the more serious the defamation, the less weight will a court attach to other possible meanings when considering the conduct to be expected of a responsible journalist in the circumstances, para 25. The report in Bonnick v Morris records, para 19, that the journalist (Mrs Morris) seems to have thought that she was not making any such statement as set out in the pre penultimate sentence of para 127 above, but the Privy Council said that rather more relevantly and importantly one of the judges in the Court of Appeal took the same view, in other words that the article was open to different readings in the eyes of reasonable persons. The principle endorsed by the Privy Council in Bonnick v Morris appears to be, therefore, that a responsible journalist would have had in mind the less damaging of the possible meanings that reasonable persons might attach to the article, and would have been entitled to focus in that direction when checking and reporting the relevant subject matter. In the present case, the possible meanings suggested by the opposing parties see para 154 below are so close that any such principle appears irrelevant. At all events, the parties have not suggested that significance attaches for present purposes to the differences between such meanings. I can therefore leave this aspect of Bonnick v Morris on one side, without attempting to analyse it or its implications further. The second, presently relevant, aspect of Bonnick v Morris is that, in forming its overall judgment as to the availability of the defence of public interest on the facts, the Privy Council was prepared to overlook some respects in which the journalists conduct could legitimately be criticised. The activities of the company and the competence of its management were matters of considerable public interest. The journalist had fallen short of the standards to be expected of a responsible journalist by not making further enquiries of the anonymous source about the reasons for Mr Bonnicks dismissal and not including his explanation (so that the case was near the borderline). But, despite this, the publication was held overall to be covered by public interest privilege: para 27. The need to look at the position in the round was also identified by Lord Bingham in Jameel, para 34, when he disclaimed too close a focus on particular ingredients which have (or have not) been included in a composite story. He said: This may, in some instances, be a valid point. But consideration should be given to the thrust of the article which the publisher has published. If the thrust of the article is true, and the public interest condition is satisfied, the inclusion of an inaccurate fact may not have the same appearance of irresponsibility as it might if the whole thrust of the article is untrue. A similar latitude has been recognised with regard to the content and presentation of news items of general public interest, particularly with regard to the naming of persons whose reputations might be adversely affected. In Jameel, the general public interest in the article was that it showed whether and how far the Saudi Arabian authorities were cooperating with United States authorities in cutting off funds to terrorist organisations. The potential libel was that the article meant that there were reasonable grounds to suspect, or alternatively to investigate, the involvement of Mr Jameel and his trading company in the witting or unwitting channelling of funds to terrorist organisations. Was it appropriate for the article to name Mr Jameel and his company? As to this, Lord Hoffmann said at paras 51 52: (b) Inclusion of the defamatory statement If the article as a whole concerned a matter of public interest, the next question is whether the inclusion of the defamatory statement was justifiable. The fact that the material was of public interest does not allow the newspaper to drag in damaging allegations which serve no public purpose. They must be part of the story. And the more serious the allegation, the more important it is that it should make a real contribution to the public interest element in the article. But whereas the question of whether the story as a whole was a matter of public interest must be decided by the judge without regard to what the editor's view may have been, the question of whether the defamatory statement should have been included is often a matter of how the story should have been presented. And on that question, allowance must be made for editorial judgment. If the article as a whole is in the public interest, opinions may reasonably differ over which details are needed to convey the general message. The fact that the judge, with the advantage of leisure and hindsight, might have made a different editorial decision should not destroy the defence. That would make the publication of articles which are, ex hypothesi, in the public interest, too risky and would discourage investigative reporting. In the present case, the inclusion of the names of large and respectable Saudi businesses was an important part of the story. It showed that co operation with the United States Treasury's requests was not confined to a few companies on the fringe of Saudi society but extended to companies which were by any test within the heartland of the Saudi business world. To convey this message, inclusion of the names was necessary. Generalisations such as "prominent Saudi companies", which can mean anything or nothing, would not have served the same purpose. Weight was therefore given to the newspapers editorial judgment as to what details (by way of naming) were necessary to convey the essential message, which was that US Saudi co operation went to the heart of the Saudi business world. This might simply have been asserted, without names, but the press was entitled to lend it credence by giving names. Subsequent authority underlines the point with regard to the inclusion of names. In re British Broadcasting Corpn; In re Attorney Generals Reference (No 3 of 1999) [2009] UKHL 34; [2010] 1 AC 145, the issue was whether an anonymity order should be discharged, to enable the BBC to identify a defendant who had been acquitted of rape on the basis of the trial judges decision (subsequently been held to be wrong in law) to exclude certain DNA evidence. The BBCs aim was to undermine his acquittal and campaign for a retrial pursuant to Part 10 of the Criminal Justice Act 2003. Lord Hope dealt with the issue of naming as follows: 25. Lord Pannick suggested it would be open to the BBC to raise the issue of general interest without mentioning D's name or in any other way disclosing his identity. But I think that Mr Millar was right when he said that the BBC should not be required to restrict the scope of their programme in this way. The freedom of the press to exercise its own judgment in the presentation of journalistic material has been emphasised by the Strasbourg court. In Jersild v Denmark (1994) 19 EHRR 1, para 31, the court said that it was not for it, nor for the national courts for that matter, to substitute their own views for those of the press as to what technique of reporting should be adopted by journalists. It recalled that article 10 protects not only the substance of the ideas and the information expressed but also the form in which they are conveyed. In essence article 10 leaves it for journalists to decide what details it is necessary to reproduce to ensure credibility: see Fressoz v France (1999) 31 EHRR 28, para 54. So the BBC are entitled to say that the question whether D's identity needs to be disclosed to give weight to the message that the programme is intended to convey is for them to judge. As Lord Hoffmann said in Campbell v MGN Ltd [2004] 2 AC 457, para 59, judges are not newspaper editors. They are not broadcasting editors either. The issue as to where the balance is to be struck between the competing rights must be approached on this basis. 26. Will the revealing of D's identity in connection with the proposed programme pursue a legitimate aim? I would answer that question in the affirmative. In Jersild v Denmark, at para 31 it was recognised that there is a duty to impart information and ideas of public interest which the public has a right to receive. The programme that the BBC wish to broadcast has been inspired by the removal of the double jeopardy rule. What this means in practice for our system of criminal justice is a matter of legitimate public interest. [T]he arguments that the programme wishes to present will lose much of their force unless they can be directed to the facts and circumstances of actual cases. The point about D's name is that the producers of the programme believe that its disclosure will give added credibility to the account which they wish to present. This is a view which they are entitled to adopt and, given the content of the programme as a whole, it is an aim which can properly be regarded as legitimate. Lord Hope went on to deal with the question of proportionality, balancing the public's right to receive information against D's right to be protected against publication of details of his private life, in the light of the fact that the statute now enabled application to be made to retry him for the offence of rape, of which he had been previously convicted; the conclusion reached was that, although the interference with D's article 8 right would be significant, it would be proportionate when account was taken of the weight to be given to the competing right to freedom of expression that the BBC wished to assert. Lord Brown put the matter tersely: 65. What weight, then, should be attached to the BBC's article 10 right to free expression? Whilst Lord Pannick naturally recognises the high value ordinarily attaching to the freedom of the media to report on court proceedings and to discuss matters of obvious public interest such as arise here, he nevertheless suggests that very little weight should be given to that right in this case. Why, he asks rhetorically, cannot the BBC broadcast their programme simply referring to D as D without actually identifying him? 66. The short answer to that submission is in my opinion to be found in paragraph 34 of Lord Steyn's speech in In re S (A Child) [2005] 1 AC 593 . : such a programme would indeed be very much disembodied and have a substantially lesser impact upon its audience. In a yet more recent case, re Guardian News and Media Ltd [2010] UKSC 1; [2010] 2 AC 697, para 63, Lord Rodger summarised the position characteristically: 63. Whats in a name? A lot, the press would answer. This is because stories about particular individuals are simply much more attractive to readers than stories about unidentified people. It is just human nature. Writing stories which capture the attention of readers is a matter of reporting technique, and the European Court holds that article 10 protects not only the substance of ideas and information but also the form in which they are conveyed: News Verlags GmbH & Co KG v Austria (2000) 31 EHRR 246, 256, para 39, quoted at para 35 above. More succinctly, Lord Hoffmann observed in Campbell v MGN Ltd, para 59, judges are not newspaper editors. See also Lord Hope of Craighead in In re British Broadcasting Corpn [2010] 1 AC 145, para 25. This is not just a matter of deference to editorial independence. The judges are recognising that editors know best how to present material in a way that will interest the readers of their particular publication and so help them to absorb the information. A requirement to report it in some austere, abstract form, devoid of much of its human interest, could well mean that the report would not be read and the information would not be passed on. Ultimately, such an approach could threaten the viability of newspapers and magazines, which can only inform the public if they attract enough readers and make enough money to survive. The courts therefore give weight to the judgment of journalists and editors not merely as to the nature and degree of the steps to be taken before publishing material, but also as to the content of the material to be published in the public interest. The courts must have the last word in setting the boundaries of what can properly be regarded as acceptable journalism, but within those boundaries the judgment of responsible journalists and editors merits respect. This is, in my view, of importance in the present case. The European Convention on Human Rights British courts have developed the defence of public interest privilege under the influence of principles laid down in the European Court of Human Rights. The case law of that Court is cited in passages from the judgments of Lord Hope and Lord Rodger, cited above. It emphasises the importance of the role of the press (and some other individuals or bodies, eg bodies protecting environmental interests) as public or social watchdogs (or chiens de garde): see eg Jersild v Denmark (1994) 19 EHRR 1, para 35, Goodwin v United Kingdom (1996) 22 EHRR 123, para 39, Affaire Vides Aizsardzbas Klubs v Lettonie (Application No 57829/00), para 42, Trsasg A Szabadsgjogokrt v Hungary (Application No 37374/05), paras 27, 36 and 38, Riolo v Italy (Application No 42211/07), para 55 and 62, Flux (No 7) v Moldova (Application No 25367/05), para 40, cited below in para 142, Axel Springer AG v Germany (Application No 39954/08) paras 79 and 91, Von Hannover v Germany (Applications Nos 40660/08 and 60641/08), paras 102 and 110. In that context, the court has been ready to tolerate a degree of exaggeration or even provocation in the way the press expresses itself: see eg Prager v Oberschlick (1995) 21 EHRR 1, para 38, Standard Verlagsgesellschaft mbH (no 2) v Austria (Application No 37464/02), para 40, Riolo v Italy, para 68 and Axel Springer AG v Germany, para 81, and has confirmed that it is not for the Court, any more than it is for the national courts, to substitute its own views for those of the press as to what techniques of reporting should be adopted in a particular case: Axel Springer AG v Germany para 81 and Von Hannover v Germany, para 102. It has also recognised that the bounds of press criticism admissible in respect of politicians and also, though not necessarily to the same extent, officials are larger than they are in relation to private individuals: see eg Affaire Vides, para 40c) and Flux (No 7) v Moldova, para 38, cited in para 142 below. The conduct of the judiciary, above all in exercising their functions, but also in other contexts, is likewise a legitimate subject of press scrutiny: Affaire Polanco Torres and Movilla Polcanco v Spain (Application No 34147/06), para 42. In relation to private individuals, the court stated in Pedersen and Baadsgaard v Denmark (No 2) (2006) 42 EHRR 486, para 78 that: special grounds are required before the media can be dispensed from their ordinary obligation to verify factual statements that are defamatory of private individuals. Whether such grounds exist depends in particular on the nature and degree of defamation in question and the extent to which the media can reasonably regard their sources as reliable with respect to the allegations (see, among other authorities, McVicar v the United Kingdom, no 46311/99, 84, ECHR 2002 III, and Bladet Troms and Stensaas, cited above, 66). This statement was effectively repeated in Riolo v Italy, para 61 and Standard Verlagsgesellschaft, para 38. But in Affaire Polanco Torres, above, allegations of reported irregularity in corporate affairs by the spouses of two court presidents and a chief prosecutor were seen as matters of public interest, because they were directed to the spouses as such, as well as because one of the spouses had in her reported denial pointed at the president of the region of Cantabria, the most senior regional politician, as probably responsible for a manoeuvre implicating her. The case did not therefore involve reporting on purely private aspects of a persons life: para 46. The extent to which the press may reproduce information derived from sources which it cannot itself prove has been considered by that Court in several cases which merit some examination. In White v Sweden (2006) 46 EHRR 23, two Swedish newspapers had published articles, which mainly contained reports of allegations made by others, in particular Dirk Coetzee, a former senior official of the South African security police. The articles contained strong statements which designated the applicant as a serious criminal including a statement by an unnamed source that He kills without a seconds hesitation and as having a reprehensible life style, involving smuggling and poaching in southern Africa, although it did not appear that he had been convicted of any crime. Among the criminal offences ascribed to him was the murder of Olof Palme, the Swedish Prime Minister (under a heading He is pointed out as PALMES MURDERER), although the articles also contained statements of other individuals which rejected the allegations made against the applicant and, in one case, a denial by the applicant himself. The journalists had gathered much information from conservation groups to support what was said about smuggling and poaching, but, although they had had high ambition to find the degree of truth of Coetzees statements regarding murder and Coetzee appeared credible, the truth of such statements was not shown. The Swedish Court of Appeal concluded in the light of the evidence about smuggling and poaching that Mr White was not an ordinary private person in respect of whom there was a particular need of protection (2006) 46 EHRR 23, para 28. The Court of Human Rights said in this light that: 29. The Court of Appeal balanced the applicants interests against the public interest in the relevant matters, namely the unsolved murder of the former Swedish Prime Minister Olof Palme and, especially, the so called South Africa trail, in the criminal investigation. Undoubtedly, both the murder of Mr Palme and that particular avenue of investigation were matters of serious public interest and concern. As such, there was little scope for restricting the communication of information on these subjects. The Court of Human Rights found that the Swedish courts had balanced the opposing interests appropriately, and were justified in finding that the public interest in publishing the information in question outweighed the applicants right to the protection of his reputation. The case involves unusual facts, but smuggling and poaching are not the same as murder, and the case indicates that there are circumstances in which the press may legitimately keep the public informed of matters of real public importance, even though they are under active criminal investigation, where the person affected is not an ordinary private person. The later case of Flux (No 7) v Moldova (Application No 25367/05) involved media reports of stories about politicians emanating from a source other than the applicant. The article complained of was published under the headline: Four more communists have obtained housing on our money, and it stated: According to certain sources in Parliament, who have asked to remain anonymous, the future owners of the relevant apartments include V.S., the president of the communist faction in Parliament, C.G., head of the Parliament apparatus, and M.R., the president of Floreti county. V.S. issued proceedings. The Court of Human Rights said that: 38. The plaintiff in the domestic proceedings was a politician and president of the Communist faction in Parliament at the time of the events. As such, he inevitably and knowingly lays himself open to close scrutiny of his every word and deed by both journalists and the public at large, and he must consequently display a greater degree of tolerance (see Lingens v Austria, 8 July 1986, 42, Series A no. 103). The domestic courts would have had to find a particularly pressing social need to sanction the newspaper in such circumstances. The Court observes that the article in question was aimed at criticising Parliament for alleged lack of transparency, rather than at disparaging V.S. specifically. The latter's name appeared twice in the entire article. While not focusing on any particular person, the article mentioned the names of all the alleged beneficiaries of the four apartments and described the attempts to verify the information with some of them, including V.S. 39. The Court also notes that the article published by the applicant newspaper dealt with the issue of whether the Parliament leadership had spent public money in a non transparent manner. This was therefore a matter of genuine public interest, which is also to be given additional protection under article 10 of the Convention. 40. [The Court] also reiterates that, as part of their role of public watchdog, the media's reporting on 'stories' or 'rumours' emanating from persons other than the applicant or 'public opinion' is to be protected where they are not completely without foundation (see Thorgeir Thorgeirson v Iceland, 25 June 1992, 65, Series A no. 239, and Timpul Info Magazin and Anghel, no. 42864/05 (27/11/2007), 36). 41. In situations such as this, where on the one hand a statement of fact is made and insufficient evidence is adduced to prove it, and on the other the journalist is discussing an issue of genuine public interest, verifying whether the journalist acted professionally and in good faith becomes paramount (see Flux v Moldova (no. 6), no. 22824/04 (29/07/2008), 26 et seq.). Flux (No 7) v Moldova is therefore an illustration of the more relaxed approach to press reporting on a matter of real public interest concerning an important public figure. These cases may be compared with the Strasbourg Courts decision in A v Norway (Application No 28070/06), in which reference was made to White v Sweden as a case in which the Court has recognised reputation. A v Norway was a case about a private individual, who had in 1988 been convicted of murder, attempted murder and assault using a knife and who now lived near and visited a recreation area known as Baneheira, in the city of Kristiansand. In May 2000 two young girls aged 8 and 10 were raped and stabbed to death in Baneheira. A newspaper then focused on two successive days on the applicant. He was repeatedly described as a convicted murderer, with sub titles relating to his convictions such as Beserk with a knife and Victims at random. In relation to the current rapes and killings, his assertions of innocence were recorded, but the place where the rapes and killings occurred was stated to be his nearest neighbour, and he was described as probably the most interesting of several criminally convicted persons whose movements are now being checked by the police. In answer to the question whether the police had got the murderer in the papers?, the chief constable was quoted as saying that the police have received so much information of substance that they have the answer in their documents to the question who had murdered the two young girls. Disagreeing with the majority judges in the Norwegian Supreme Court, the Strasbourg Court held at para 72 that the disputed press coverage was conducted in a manner which directly affected the applicants enjoyment of his right to respect for private life. It noted in this connection that, as observed by the minority in the Norwegian Supreme Court, the applicant was persecuted by journalists against whom he found it difficult to protect himself at a time when he was in a phase of rehabilitation and social integration ., had a fixed abode and pursued gainful employment, whereas [a]fter the publications he found himself unable to pursue his job and he had to leave his home and was driven into social exclusion para 72. There had been a particularly grievous prejudice to the applicants honour and reputation that was especially harmful to his moral and psychological integrity and to his private life para 73, and the majority in the Norwegian Supreme Court had failed to maintain a reasonable relationship of proportionality between the interests of the newspapers freedom of expression and those of the applicant in having his honour, reputation and privacy protected para 74. The decision in A v Norway is in my view unsurprising, bearing in mind that it concerned newspaper conduct which the Strasbourg Court found to have persecuted a private individual, caused him to be unable to work and to have to leave his home, driven him into social exclusion and so been especially harmful to his moral and psychological integrity and private life. The European Court of Human Rights in Affaire Polanco Torres (Application No 34147/06) affirmed the legitimacy under article 10 of the press reporting allegations of irregularity in corporate affairs based upon computer disks which El Mundo had received anonymously, in circumstances where (a) the companys former accountant (dismissed after the disappearance of its accounting disks) had verified to the newspaper as genuine in a meeting, and (b) the paper had contacted one of the spouses implicated and had published with its report her denial and her riposte pointing at the president of the region of Cantabria. The European Court regarded these as important steps showing responsible journalism (para 50) and it noted the relevance of having regard to the nature and degree of the defamation involved; it also noted the need to consider the reasonableness of a journalists reliance on his sources as the situation appeared to the journalist at the time, and not with hindsight: para 43. Most recently, in its judgment in Axel Springer AG v Germany (Application No 39954/08), delivered after the oral hearing in the present appeal, the Court stated, at para 82, that: special grounds are required before the media can be dispensed from their ordinary obligation to verify factual statements that are defamatory of private individuals. Whether such grounds exist depends in particular on the nature and degree of the defamation in question and the extent to which the media can reasonably regard their sources as reliable. In that case, the first article in issue involved the publication in the Bild Zeitung of a report that a well known actor who played the part of a police superintendent in a popular television series has been caught in possession of cocaine at the Munich Oktoberbierfest. The article was based on information provided by the press officer at the Munich public prosecutors office, and the Court said, citing previous authority, that Consequently . it had a sufficient factual basis para 105. The fact that the truth of the information was not in dispute in the subsequent proceedings in Germany and Strasbourg was mentioned by the Court as a separate point (para 105). The Court went on to conclude that there was nothing to suggest that the newspaper had not undertaken the appropriate exercise of balancing its interest in publishing against the actors right to respect for his private life, and, disagreeing with the German courts, that there was no reason to disagree with the newspapers decision to publish. The Court referred to both A v Norway and White v Sweden: see paras 61, 74, 83 and 90. It also drew a broad distinction between private individuals and persons acting in a public context (para 91), which it reiterated in identical terms in its parallel judgment in Von Hannover v Germany, para 110. German authority It is of interest also to note in passing jurisprudence in the highest German courts, regarding the responsibility of the press in relation to the publication of allegations of the commission of criminal offences. Of particular interest are decisions of the Federal Constitutional Court in 1 BvR 765/97, reported at NJW 1997, 2589 and 1 BvR 152/01 and 1 BvR 160/04, reported at BVerfGK 9, 317, and a decision of the Federal Supreme Court VI ZR 51/99, reported in BGHZ 143, 199 and referred to in the latter Constitutional Court case. In short, these decisions recognise as permissible in principle under German law the reporting of matters giving rise to the suspicion of commission of criminal offences, including those already under criminal investigation. Provided that the report is the product of appropriately careful journalism, identifying an appropriate minimum of facts speaking for its truth, so making it worthy of publication, and is fairly expressed without distortion or undue sensationalism, it is not incumbent on the press to be able to prove the truth of the reported suspicions. The press will however have to consider, inter alia, whether it is appropriate to disclose the name of the suspect. It usually will be with suspected criminality of a serious kind. But, where the suspicion relates to misconduct in public office, a particular public interest exists, which can, even in a case of lesser criminality, justify the publication of both the subject matter and the name of the public servant involved. Where a published article can be read as having a range of meanings, German law appears, from the Federal Supreme Courts decision (p 206), to take the meaning least detrimental to the suspect, and so most favourable to the press. As further developments occur (eg an outcome of criminal proceedings favourable to the accused), the press may have to permit publication of a corresponding report. The present case Against this background I return to the circumstances of the present appeal. It was common ground in the Court of Appeal that the publication of the polices press statement that that they were conducting an investigation into allegations that a serving officer made unauthorised disclosures of information to another individual in exchange for money was privileged under the express terms of section 15 of the Defamation Act 1996. In the Court of Appeal, Mr Price QC for Mr Flood was prepared to accept, in the light of this privilege and the significance attached to names in cases such as re British Broadcasting Corpn [2010] 1 AC 145 and In re Guardian News and Media Ltd [2010] 2 AC 697, that TNL was entitled to identify Mr Flood as the officer the subject of investigation. The Court of Appeal was prepared to proceed on that basis, although Lord Neuberger doubted whether TNL would have thought it worthwhile to publish an article which confined itself to doing this: para 68. Before the Supreme Court, Mr Price took a different line. He noted that Mr Flood would not have sued if all that had been done was report the police press statement and Mr Floods name. But he submitted, if necessary, that naming Mr Flood was not covered by any privilege and he relied on A v Norway. However, his principal submission was, that, whatever might be the position in that respect, the article went too far in the detail it gave of allegations made against Mr Flood. In particular, he submitted, and the Court of Appeal accepted, that the police informants allegations in paragraphs 5. 8, 15 and 16 of the article were prejudicial details which added inappropriate credence to the grounds on which the investigation was being pursued, and that their publication was not in the public interest. Tugendhat J held that the article as a whole was on a matter of public interest because the conduct of police officers in general, and police corruption in particular, is a matter of interest to the community: para 123 and 131. A police investigation into an allegation of police corruption was a story of high public interest and the purpose of publishing the story was to ensure that that investigation was carried out promptly which was also a matter of public interest: para 216. The journalism was responsible in the sense that the publication on 2 June 2006 was a proportionate interference with [the Claimants] right to reputation, given the legitimate aim in pursuit of which the publication was made: paras 215 216. He went on, that That is not to say that the judgment of [Times Newspapers] was a good judgment in the circumstances, but only that it was within the range of permissible editorial judgments which the court is required to respect: para 217. The Court of Appeal drew a distinction between the publication of detailed allegations of corruption where the corruption is proven, or reasonable steps have been take to verify its occurrence, and their publication in situations in which corruption is simply alleged and under investigation, paras 59, 63 and 68 per Lord Neuberger MR, paras 102 104 per Moore Bick LJ and paras 110 118 per Moses LJ. Lord Neuberger noted that the presss editorial judgment could not dispense with the requirements of Reynolds privilege, from which he concluded that the publication of the allegations could not be privileged, unless it can be said to have been responsible journalism, ie to have been in the public interest with the journalists having taken reasonable steps to verify the truth of the allegations: paras 64 66. Moore Bick LJ was unable to accept the judges conclusion that part of the public interest lay in prompting the police to pursue the investigation; had it been, the article would, he thought, have been written differently, para 106; Moses LJ also thought that the suggested subjective motives of the journalists to ensure that the investigation was vigorously pursued does [sic] not assist in identifying whether or not the publication was in the public interest and that the article was not drawn in a way which suggested such a purpose: para 114; he thought that the publication of an article simply recording that the police were pursuing an investigation of corruption against a fellow police officer would have been of public interest, as underlining the significance of alleged corruption, as providing some assurance to the public and also as providing some impetus to pursuing the investigation to conclusion: para 114, but that publication of the details on which the investigation was founded was not in the public interest, para 115 118. The newspaper must be left to justify any imputation, as yet undetermined, without protection of qualified privilege: para 118. In concluding that it was not in the public interest to publish the alleged details, the Court of Appeal was influenced by their largely unchecked and unsupported nature: para 69 per Lord Neuberger, para 90 per Moore Bick LJ and para 118 per Moses LJ. Lord Neuberger also said that When they were published in the article, they were . , as the journalists must have appreciated, no more than unsubstantiated unchecked accusations, from an unknown source, coupled with speculation: para 73; and Moses LJ said that their publication exposed DS Flood to the suggestion that unchecked and unsubstantiated allegations, from an unknown source, might be well founded: para 116. Analysis There is no suggestion that the article contained mere reportage. Equally, however, it did not contain out and out allegations that the details were true. Rather, it reported alleged details from which the nature and to some extent basis of the investigation could be ascertained. The libel alleged by DS Flood is that the article meant that there were strong grounds to believe, or alternatively reasonable grounds to suspect, that DS Flood had abused his position by corruptly accepting bribes from some of Russias most wanted suspected criminals in return for selling highly confidential Home Office and police intelligence about attempts to extradite them to Russia, to which TNLs response is that it meant that DS Flood was the subject of an internal police investigation and that there were grounds objectively justifying such an investigation into whether he had received payments in return for such information. The judge considered that these alternative meanings were not so far apart as to require any decision on meaning for present purposes. That conclusion has not been challenged. The suggestion of possible corruption of a very serious nature on the part of DS Flood was clearly very injurious to his reputation and feelings. On the other hand, the conduct under investigation was not only serious, but also of great public interest, involving the possibility of police corruption at the instance of Russian oligarchs in the context of proceedings for their extradition from the United Kingdom to Russia. None of the possible meanings amounts to a suggestion that DS Flood was guilty of the conduct under investigation. It was said only that Noah could be a reference to him. It was made clear that the whole investigation was based on information emanating from an unnamed source not an unknown source, the phrase used twice in the Court of Appeal: paras 73 and 116. It was also made clear that all parties concerned had been approached and offered the opportunity to comment, and that the conduct was categorically denied on all sides by DS Flood, by Mr Berezovsky and by Mr Hunter of ISC. The article was moderate in its tone and phrasing. It cannot be compared in content or in tone or in consequences with the persecution inflicted on the applicant in A v Norway. DS Flood was temporarily removed from the police extradition unit, but remained in service until restored to that unit. The judge was satisfied that the journalists had taken appropriate steps to verify the information. They had obtained as many documents as they could. They had not simply relied upon intermediaries, but had insisted on meeting the ISC insider, and had taken into account the possibility that he had an axe to grind in making the suggestions of corruption that he did. The judge regarded Jameel as indicating that what was required was verification of the making of an accusation by a source, not verification of the information which led to the accusation: para 135. The Court of Appeal concluded that this was insufficient, and, in passages from which I have quoted extracts in para 151 above, it concluded that what was required was that the journalists should verify, or at least take reasonable steps to verify, the truth of the details of the suggested corruption upon which they reported: paras 66, 103 and 118. This reasoning has a number of inter related aspects. One is that the article reported allegations made to the police and deriving from a source behind or beyond whom TNL had not gone. But in Reynolds Lord Nicholls expressly contemplated that the source of information might be informants with no direct knowledge of the events (para 123 above). In Jameel the reporter had relied upon a prominent Saudi businessman (source A) for information that the Saudi authorities were, at the request of US authorities, monitoring bank accounts to prevent them being used wittingly or unwittingly for the funnelling of funds to terrorist organisations: paras 4 and 8; but neither this information, nor so far as appears the alleged inference that there were reasonable grounds to suspect or investigate the involvement of Mr Jameel and his trading company in such funnelling, were or could be further investigated: paras 5 and 42. Further, as the Strasbourg authority of Flux (No 7) v Moldova illustrates, it is part of [the presss] role of public watchdog to report on stories or rumours emanating from persons other than the claimant: paras 138 and 142 above. The stories were in that case about politicians, but, as I have indicated in para 139 above, the European Court of Human Rights also recognises that stories which are in the public interest about officials also merit particular protection. I agree in this connection with what I understand to be Lord Phillips view that the defence of public interest privilege involves a spectrum. At one end is pure reportage, where the mere fact of a statement is itself of, and is reported as being of, public interest. Higher up is a case like the present, where a greater or lesser degree of suspicion is reported and the press cannot disclaim all responsibility for checking their sources as far as practicable, but, provided the report is of real and unmistakeably public interest and is fairly presented, need not be in a position to produce primary evidence of the information given by such sources. A second aspect of the Court of Appeals reasoning is that the source was unknown, or, better said, unnamed: para 73 per Lord Neuberger and para 116 per Moses LJ. But the media is entitled to protect the anonymity of sources, as recognised in Jameel, para 59 per Lord Hoffmann as well as in the European Court of Human Rights in Flux (No 7) v Moldova. It was in the present case (as in Flux (No 7) and presumably also Jameel) the wish of the sources to remain anonymous. A third, associated aspect of the Court of Appeals reasoning is that the detailed allegations contained in the report related to corruption which was simply alleged and under investigation and were themselves largely unchecked and unsupported and coupled with speculation: para 153 above. In para 73 Lord Neuberger went on to note that the only written evidence available to the journalists did not identify any police officer, let alone DS Flood, as the recipient of money from ISC at all, let alone for providing confidential information. These passages in my view both overstate the requirements of responsible journalism in the present context, and undervalue the nature and significance of the steps which TNLs journalists actually took. These steps are extensively summarised in Tugendhat Js judgment, paras 17 to 81. I can further abbreviate my treatment of them by adopting the summary contained in Lord Phillips judgment at paras 12 to 20 above. I note only a few specific points. First, Mr Gillard juniors journalistic interest in the possibility of corruption involving ISC and DS Flood went back to December 2005 and pre dated any involvement of any arm of the police service. By early January 2006 he had ascertained various matters which he concluded would suggest vulnerability on the part of DS Flood to a corrupt approach. Only on 30 January 2006 was he informed by source A that source B, who had access to the Intelligence Development Group (IDG) of the Directorate of Professional Standards (DPS) of the Metropolitan Police Service (MPS), had been in touch with the IDG at source As request and on behalf of an ISC insider. Mr Gillard junior spoke with and met source B, who told him that the police had been given a typed note of the allegations being made by the ISC insider, but that the DPSs attitude had been as if not interested. If this had remained the position and no subsequent investigation had followed, but Mr Gillards own enquiries had elicited the other information used in the article of 2 June 2006 and had been published both to inform and to stimulate an investigation, any argument that he should have awaited the outcome of an investigation would have disappeared. The second point relates to the claimants submission that it was pure speculation that Noah was DS Flood, the ISC having done no more than say that he believed Noah to be DS Flood. But DS Flood worked in the police extradition unit (unlike his brother), and the ISC insider also recounted that Mr Hunter used to refer to paying brown envelopes to my man at the Yard, and that a problem had once arisen in court when Mr Beresovskys lawyer spoke directly to DS Flood in court on one occasion, and Mr Hunter became very upset at this contact with my man. All this was recorded in the notes of the discussions with the ISC insider as well as in a long internal memorandum which Mr Gillard senior prepared. It is the case, as the judge noted, that none of this specific information about my man at the Yard was put to DS Flood through the Metropolitan press office, but that is a minor point in the overall picture, and there could have been no real doubt but that DS Flood would simply have denied it, as he did the other matters which were put to him. Third, Mr Gillard was aware (and so had in mind as a reason for caution) that the ISC insider had issues with Mr Hunter, or what might be called an axe to grind, but, as he said in evidence, sources often do have. On 13 March 2006 source A also sent to Mr Michael Gillard a copy of the note which had been given to the police in January 2006. The note was consistent with the conversations which Mr Gillard senior had had with the ISC, except that, rather than stating belief but not knowledge that NOAH was DS Flood, it was categorical in stating that DS Flood provided information for cash. Bearing in mind the circumstantial information, which was also given as set out in the previous paragraph, the difference appears less stark than it might otherwise have done. Fourth, in late April 2006 TNL approached the DPS asking the DPS to address a list of questions about their knowledge and position; and it was this, Tugendhat J found, that in fact led to the opening, for the first time, on 28 April 2006 of a police investigation by the police Investigations Unit. However, the MPS statement issued to TNL on the same day said that the The . Investigations Unit is currently conducting an investigation into allegations that a serving MPS officer made unauthorised disclosures of information to another individual in exchange for money, and the judge also found that this led Mr Gillard junior to think that the investigations related to what had been said to the police in February. At a meeting on 9 May 2006 between Mr Gillard junior and DCI Crump and others, DCI Crump accepted that intelligence had been received by the IDG in February 2006, but said that he did not know what the IDG had done with it when received, and asserted that it was TNLs inquiries at the MPS press office that had probably forced their [the polices] hands and led to the Investigation Unit being involved. Tugendhat J had in these circumstances to consider Mr Gillard juniors motivation in publishing the article of 2 June 2006. He accepted Mr Gillards evidence that he was sceptical about DCI Crumps explanations and concerned about the MPSs failure to follow up the intelligence provided in February 2006 and that the article was published as a means of keeping up pressure on MPS to investigate properly (para 41) and to ensure that that investigation was carried out promptly, to which the judge added That too was a matter of public interest para 216. Although the article did not itself focus on police dilatoriness or mention this motive, there was no appeal against these findings. The Court of Appeal was not in my view justified in departing from them, as Moore Bick LJ and Moses LJ did in passages which I have set out in para 152 above. Fifth, TNL also made attempts in late April 2006 to elicit their accounts from DS Flood, Mr Hunter and Mr Beresovsky. DS Flood through solicitors denied all allegations of impropriety. Mr Hunter through solicitors initially denied any knowledge of, but in a later letter gave an explanation, of operation Noah in a way which Mr Gillard junior thought suggested that he had something to hide. He also made suggestions about the ISC insiders motivation which Mr Gillard junior discounted. Mr Gillard junior also concluded that he could discount suggestions made by Mr Beresovskys solicitors that the police extradition unit would have no information of value to Mr Beresovsky. Mr Gillard believed that, if so, the MPS would have dismissed the allegations outright. The judge accepted his evidence on this point also: paras 164 and 199. Tugendhat Js conclusion was that no criticism could be made of what the journalists did by way of steps taken to verify the information received from the informants, including the ISC insider. In the light of what I have said in paras 158 to 166 above and the judges more detailed findings of fact, I do not consider that this conclusion can be faulted. The Court of Appeal was in my view in error in so far as it based its decision on apparent conclusions, firstly, that more was required as a matter of principle and, secondly (and largely, if not entirely, as a result), that TNLs journalists conduct and reporting could not, on the facts found by the judge, be regarded as meeting the standards of responsible journalism. The previous paragraphs lead back to the critical issues, which represent the fourth and fifth aspects of the Court of Appeals reasoning. They are whether it was in the public interest for TNL to publish an article naming DS Flood and to publish an article with the detail which this article had, when the allegations which it recorded were only at the stage of investigation. It is material here that the publication had the purpose of ensuring an effective investigation. As noted in para 164 above, TNL started its own investigation well before anyone supplied any intelligence to the police. It was of obvious public interest that the investigation should be pursued and the journalists were, not unreasonably, concerned that intelligence given to the MPS might not have been or be being handled as promptly or properly as would have been expected. Taking first the naming of DS Flood (about which no issue was raised in the Court of Appeal: para 148 above), his identification did not underline a central aspect of the articles message in quite the same way as the naming of Mr Jameel and his company in Jameel. But the naming was still in my judgment central to any publication. Without names, there would have been little to publish at all. Any article would have been very much disembodied: see para 135 above. The allegations of corruption made by the ISC insider touched Mr Beresovsky, ISC and Mr Hunter as much as DS Flood. To avoid the risk of identification of all or any of them, all would have had to have been anonymised. An article excluding all names, and consisting of a general and anonymised report of investigation into possible corruption in the extradition unit at the instance of unidentified foreigners at risk of extradition, would have been unlikely to be readable or publishable. It would also have been unlikely to fulfil the purpose of stimulating and ensuring diligent pursuit by the police of their investigation, which the judge found that Mr Gillard junior intended. Further, as Mr Gillard junior also noted in his evidence, a generalised report of investigation into corruption involving the MPS extradition unit could have cast a shadow over all officers in that fairly small unit. The authorities cited in para 127 136 above indicate that these are all material considerations. As to the detail of the allegations, TNL could have reproduced the police statement of 28 April 2006, together with a bare statement identifying DS Flood as the officer under investigation. But, as the Master of the Rolls acknowledged (Court of Appeal, para 68), it is doubtful how publishable any article would then have been. Again, it is also doubtful whether it would have achieved the purpose which the journalists had in mind. Here too, journalistic judgment and editorial freedom are entitled to weight: paras 132 137 above. These considerations do not however themselves determine the question whether it was in the public interest to publish an article with the names and detail in fact included, or whether, if without such names and detail there was no publishable article, TNL should not simply have awaited the outcome of the police investigation before contemplating any publication. Mr Price relied before the Supreme Court, as before the Court of Appeal, upon Purcell v Sowler (1877) 2 CPD 215 and De Buse v McCarthy [1942] 1 KB 156. I agree with what Lord Phillips says about these cases in his judgment at paras 58 to 60 above. Their significance needs to be reviewed in the light of more recent developments of legal principle, although they remain valuable for their emphasis on the significance of personal reputation in the face of unproven allegations of misconduct. But it is worth underlining that they are, even on their own terms, decisions reached on facts very different from the present. In Purcell v Sowler, no privilege was held to attach to the newspaper publication of a report of proceedings at a meeting of poor law guardians, at which ex parte charges of misconduct against the medical officer of the union were made, of neglect in not attending to the pauper patients when sent for. The conduct of such a medical officer was accepted to be of the greatest importance in the district and so to concern the public in general. But, although the meeting was a privileged occasion so far as the speaker was concerned, publication in the press was not: Reynolds, p 196A, per Lord Nicholls. The reasons of the four judges involved in Purcell v Sowler do however not coincide. Despite speaking earlier of the importance of the medical officers conduct, Cockburn CJ said that the court was concerned with a body with very limited jurisdiction, as to which it cannot be asserted that publicity is essentially necessary or usual, and he accepted that the proceedings of different bodies to whom part of the administration of the country is committed such as the Corporation of London might be matter of general discussion and publication. Baggallay JA was unready to extend the privilege granted to bodies such as Parliament, because of the advantage of publicity, to bodies such as the poor law guardians. In a case like the present, concerned with the possibility of police corruption in relation to extradition of Russian oligarchs, analogies with bodies with very limited jurisdiction or distinctions between the conduct of the MPS and the proceedings of bodies like the Corporation of London are unconvincing. Mellish and Bramwell JJA adopted different reasoning. First, they emphasised that there was no reason to make the charges public before the person charged had been told of them and had had an opportunity of meeting them. Second, they distinguished situations where the facts had been ascertained or were not in controversy. On the present appeal, DS Flood was told of and had the opportunity to respond to the allegations, though Mr Price points out that the facts have not been ascertained and are in controversy. Mr Price also submits that it would be unfair to have expected DS Flood to respond in detail, beyond a full denial, when the police investigation was under way. I am not, however, persuaded that this can have caused any unfairness on the facts of this case. Assuming his innocence, DS Floods response can only ever have been that he knew nothing of Noah or of any attempts to obtain information about extradition proceedings involving any Russian oligarch, because he was not Noah. In other words, the blanket denial which appeared in paragraph 11 of the article was essentially all that he would have said, however much detail about the allegations was put to him. In De Buse a town clerk circulated to council members and, as was the practice, to all local public libraries, an agenda attached to which was a report on loss of petrol from a council depot. The report recounted the conviction of two council employees for stealing the petrol, together with allegations of involvement on the part of other employees made by the convicted employees at their trial and repeated before the committee. The committee report recounted that the other employees had denied any such involvement, contained in terms no statement that the committee found the charges proved, but recommended the removal and transfer to other positions of the other employees. The Court of Appeal held that no privilege attached to the publication in public libraries. Even the ratepayers had no proper interest in a matter which was going to be examined internally, before it emerged in the shape of some practical action or practical resolution: p 166 per Lord Greene. Lord Greene went on to contrast Hunt v Great Northern Railway Co [1891] 2 QB 189, where a railway company, after dismissing a guard for gross neglect of duty, published the fact with details of the grounds in a circular to employees. Lord Greene thought such a publication to be obviously privileged, because it was clearly to the interest of railway company to bring home to its employees the type of action which was regarded by it as a proper subject for punishment by dismissal, and it was also to the interest of the employees to know that: p 167. De Buse therefore concerned a town clerks disclosure to the random cross section of society visiting public libraries of an agenda and report for a forthcoming meeting of the local authority. The meeting itself would shortly determine the consequences of the reported allegations. Several points arise. First, the case did not concern the press or its role as social watchdog in disclosing to the public information of real public interest. Tugendhat J pointed out (para 189), that the freedom of any public authority, including the police, to disclose information to the public body would now fall to be considered, not under the head of Reynolds public interest privilege, but under the Human Rights Act 1998 and article 8 of the Convention or the Data Protection Act 1998. Second, the public interest, even at a local level, of the allegations in De Buse does not compare with the public interest, at a national and international level, of the allegations of corruption in the MPS relating to the extradition of Russian oligarchs in the present case. Third, there was nothing in De Buse comparable to the feature of the present case, that the press had itself been investigating the matter, and was concerned that the police were not taking it as seriously as it appeared to merit. More fundamental though is the point noted by Lord Phillips, that the House of Lords in Reynolds and later also in Jameel has reconsidered the weight to be attached to protection of reputation and freedom of the press, and reached decisions of which the effect is to liberalise and to redress the balance in favour of greater freedom to publish matters of genuine public interest: Jameel, para 35, per Lord Bingham and para 38, per Lord Hoffmann. The Master of the Rolls took up these points and noted that the introduction of the Convention rights into domestic law potentially justified a different approach in relation to the circumstances of Purcell. The analysis of Convention authority which I have included in paras 138 146 above in my view bears this out. However, the Master of the Rolls was right to observe that both Purcell and De Buse remain as salutary reminders that publicising allegations of serious wrongdoing made by third parties, whether relayed to the police or not, can cause serious distress and reputational harm to the victim, and, if they turn out to be wrong, there should be a good reason before the victim is left without redress: para 43. Only the last part of this statement may be open to criticism, since the existence or otherwise of Reynolds privilege must be judged on the facts as they reasonably appeared to the journalist at the time. But any journalist who publishes allegations must consider carefully the public interest in doing so and the terms in which he does so, at a time when the allegations have not been investigated or their accuracy determined, and weigh these against the risk of unjustified damage to the reputations of those affected. The Master of the Rolls also noted in this connection Lord Nicholls warning in Reynolds, at p 201, that Protection of reputation is conducive to public good. It is in the public interest that the reputation of public figures should not be debased falsely. On the other hand, public officers with a role as important as that of the police must expect that their conduct will be open to close scrutiny by the press, as the European Court of Human Rights has made clear in cases such as Flux (No 7) v Moldova, paras 19 and 22, and Axel Springer AG v Germany, paras 91 and 99, where the Court indicated that the fact that the actor was known for his role as a police superintendent, whose mission was law enforcement and crime protection, itself bore on the public interest in being informed about his arrest for a criminal offence. Conclusion It follows from the analysis in paragraphs 154 to 178 above that in my view the Court of Appeal erred in its approach and in the reasons it gave for reaching conclusions differing from the judge. Balancing the competing interests in this case, the judge was in my view justified in the present case in regarding the article concerning DS Flood as covered by the public interest defence recognised in Reynolds and Jameel. The starting point is that the investigation into possible police corruption in the area of extradition of a Russian oligarch to Russia informed the public on a matter of great public interest and sensitivity. TNL journalists were motivated by a concern to ensure that the investigation was being or would be properly pursued. They had themselves investigated the sources and nature of the allegations exhaustively over a substantial period as far as they could. The article would have been unlikely to be publishable at all without details of the names and transactions involved in the alleged corruption. The facts regarding such transactions were accurately stated. The article, although undoubtedly damaging to DS Floods immediate reputation, was balanced in content and tone (certainly much more so, I add in parenthesis, than the articles in issue in White v Sweden: paras 140 141 above). It did not assert the truth of the reported allegations of impropriety made by the ISC insider, but it identified them as the basis of an investigation in progress to establish whether there had been any impropriety. DS Flood and all others implicated in the allegations of impropriety were given the opportunity of commenting, and their denials in that regard were in each case recorded. Such omissions as there may have been in the reporting were in the overall context minor. The judgment of the journalists and editors of TNL as to the nature and content of the article merits respect: paras 127 137 above. All these and other relevant factors fell and fall to be weighed in the balance. On this basis, there was, in my judgment, no good reason for the Court of Appeal to depart from the judges overall assessment that publication of the article was in the public interest, despite its immediate adverse effect on DS Floods reputation. On the contrary, I agree with the judges assessment. The proper appellate approach I agree with Lord Phillips that this is not the case in which to consider the proper appellate approach to the issue or issues involved in a decision on Reynolds privilege. It is unnecessary to do so. For the reasons given in paragraphs 121 181, I would allow the appeal and restore the judgment of Tugendhat J on the first limb of the appeal. LORD CLARKE Introduction I agree that the first limb of this appeal should be allowed for the reasons given by Lord Mance and Lord Dyson. I agree with Lord Brown that, for the reasons he gives, there is no principle of law that precludes TNL from invoking Reynolds privilege in a case such as this. I further agree with him that, as he puts it at para 113, in such a case the judge is deciding but a single question, namely whether those who published the defamation, given what they knew and did not know and whatever they had done or had not done to guard so far as possible against the publication of untrue defamatory material, could properly have considered the publication in principle to be in the public interest. I further agree with Lord Brown that, in deciding that question, a host of different considerations are in play. Lord Brown has identified some of them in para 113 above. Finally, I agree with his conclusion at para 119 that, where, as here, the denunciation is of a public officer, relates to a matter of obvious public importance and interest, and may justifiably appear to the journalists to be supported by a strong circumstantial case, it is properly open to the trial judge to find the defence made out. The question thus arises what is the correct approach of an appellate court to the determination of the question whether it was properly open to the trial judge to find the defence made out. I agree with the other members of the court that the answer to that question is not critical to the determination of the appeal because, as I read their judgments, they all agree that the appeal should be allowed, whatever the correct test. I had intended to express some views on this question. However, given that the question what is the correct test in a Reynolds privilege case was not the subject of oral argument, I agree with Lord Phillips, for the reasons he gives, that this is not the case in which this court should lay down any general principle in this class of case. LORD DYSON The general principles of Reynolds privilege are now well established: see Reynolds v Times Newpapers Ltd [2001] 2 AC 127, Bonnick v Morris [2002] 1 AC 300 and Jameel (Mohammed) v Wall Street Journal Europe Sprl [2007] 1 AC 359. These principles are not hard edged and, as is illustrated by the present case, their application in particular circumstances can give rise to real difficulty. As Lord Nicholls said in Reynolds at p 205D, the weight to be given to relevant factors will vary from case to case. Over time, a valuable corpus of case law will be built up. In Loutchansky v Times Newspapers Ltd [2002] QB 783, para 23, the Court of Appeal said that at the end of the day the court has to ask itself the single question whether in all the circumstances the duty interest test, or the right to know test has been satisfied so that qualified privilege attaches. Although this may be the ultimate question, the answer to it will usually depend on a number of specific considerations, which may include some or all of those identified by Lord Nicholls in his celebrated speech which is quoted by Lord Phillips at para 29 above. Thus necessary conditions for a Reynolds privilege defence will include that (i) there is a real public interest in communicating and receiving the information (the public interest issue); and (ii) the journalist must have taken the care that a responsible journalist would take to verify the information published (the verification issue): see, for example, per Baroness Hale at paras 147 to 149 of Jameel. But even if both of these conditions are fulfilled, it does not necessarily follow that the Reynolds privilege defence will be made out. As Lord Nicholls said in Reynolds, the existence of the defence will depend on whether there has been responsible journalism in all the circumstances. In the present case, the debate has focused on both the public interest and verification issues. They are factually distinct, although the rationale for Reynolds privilege tends to conflate them. Thus, it has been said that there is no duty to publish and the public has no interest to read material which the publisher has not taken reasonable steps to verify: see, for example, per Lord Bingham in Jameel at para 32. Lord Phillips and Lord Mance have explained in detail first why they consider that there was a public interest in the publication of most, if not all, of the facts that supported the story and in the naming of DS Flood; and secondly why they would hold that the journalists had taken reasonable steps to verify that there was a serious possibility that DS Flood had been guilty of corruption. I agree that the appeal should be allowed for the reasons given by Lord Mance and, subject to the qualifications that appear below, also for the reasons given by Lord Phillips. I propose to say nothing about the verification issue. But I wish to say something on three topics. The first arises from para 69 above, where Lord Phillips comments on para 104 of the judgment of Moore Bick LJ (quoted at para 67 above). The second is whether there was a public interest in naming DS Flood in the article. The third is whether the motives of the journalists were relevant to the public interest issue. Paragraph 104 of Moore Bick LJs judgment At para 104 of his judgment, Moore Bick LJ seems to set out a general principle as to when it will be in the public interest to publish details that appear to support an accusation that has been made against an individual of criminal conduct that is being investigated by the police. He appears to state in uncompromising terms as a general proposition that it is unnecessary and inappropriate (and therefore not in the public interest) for reports of serious allegations of crime or professional misconduct to set out the details of the allegations. The journalist should go no further than to describe the charge itself. That is sufficient to inform the public of what it has an interest in knowing. The alternative is trial by press without proper safeguards, which is clearly not in the public interest. In other words, regardless of the other circumstances of the case, it is not in the public interest to publish details that appear to support an accusation against an individual of criminal conduct that is being investigated by the police. This general principle would appear to deny a Reynolds defence even where, for example, the journalist has taken all reasonable steps to verify the truth of the details of the accusation, his sources are apparently reliable, the individual has been invited to comment on the accusations and his response is fairly reported and the tone of the article is measured. I can see no basis for a general rule in these uncompromising terms. So far as I am aware, there is no support for it in the authorities. I would reject it for three reasons. First, such a rule is not consonant with the statement by Lord Nicholls in Reynolds that all the circumstances of the case should be taken into account, which may include (but are not limited to) the ten factors listed by him. Secondly, Lord Nicholls emphasised the need to confine the interference with freedom of speech to what is necessary in the circumstances of the case. This is a point which is emphasised in many of the cases. It has particular importance in the light of the Human Rights Act 1998 and article 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. In this respect, I agree with what Lord Mance says at paras 138 to 146 above. If (as para 104 would appear to suggest) it is unlawful to publish the details of an accusation of criminal conduct regardless of the public interest in the subject matter of the article and the other circumstances of the case, this is bound to have a chilling effect on investigative journalism of this type. This is undesirable in a democratic society. Thirdly, such a general rule is inconsistent with another important principle which is that, although the question of whether the story as a whole was a matter of public interest must be determined by the court, the question of whether defamatory details should have been included is often a matter of how the story should have been presented. On that issue, allowance must be made for editorial judgment: see per Lord Hoffmann in Jameel at para 51 quoted by Lord Mance at para 132 above. Moore Bick LJ recognised the importance of this point at para 100 of his judgment. He said: It has been recognised that a considerable degree of deference should be paid to editorial judgment when deciding whether the inclusion of the defamatory material was justified and undoubtedly setting out the allegations and naming DS Flood added force and credibility to the story. The paragraphs about various Russian oligarchs, their business affairs and their relationship with the Kremlin, were no doubt included essentially for colour and presentational purposes. Lord Phillips accepts that there is no general rule that it is not in the public interest to publish details that appear to support an accusation of criminal conduct that is being investigated by the police. But he says that the matters identified by Moore Bick LJ at para 104 will often weigh conclusively against publication of the details. In other words, the danger of trial by press without proper safeguards will often of itself determine that it is not in the public interest to publish the details. In my view, it is necessary to distinguish between allegations made against ordinary individuals and allegations made against persons who perform public functions (especially where they are about the alleged performance of those functions). I would accept that the danger of trial by press without proper safeguards will often weigh heavily against the publication of the details of an accusation against an ordinary individual. But where the accusation is of crime or professional misconduct by a person in his performance of a public function, I do not think that the danger of trial by press without proper safeguards weighs heavily, still less conclusively, against publication. As Lord Phillips says at para 69 above, subject to the issue of verification in this case, it was in the public interest to publish most of the facts that supported the accusation against DS Flood. The details of the accusation were likely to excite particular public interest since it concerned allegations of selling sensitive information about extradition for the benefit of Russian oligarchs. But I do not consider that the public interest in the publication of the details lay only in the particularly eye catching nature of the allegations of corruption in this case. It is generally likely to be in the public interest to publish the details of allegations of police corruption, whatever the nature of the alleged corruption, provided that the test of responsible journalism is met. It seems to me that the Reynolds privilege jurisprudence provides sufficient protection from the unjustified inclusion of the details of allegations of crime or professional misconduct. Thus not only must the story as a whole be in the public interest, but there must also be a public interest in the publication of the details of the allegations. The need for verification provides real protection for the individual concerned. More generally, Reynolds privilege is not available where there is some indication that the professional judgment of the editor or journalist was made in a casual, cavalier, slipshod or careless manner: per Lord Bingham in Jameel at para 33. And then there are other factors relevant to responsible journalism such as those identified by Lord Nicholls in Reynolds, including whether comment has been sought from the claimant, whether the article contains the gist of his side of the story and the tone of the article. I accept that, where the details of allegations which are being investigated by the police are published, the individual concerned may feel compelled to say something in response which he would be wiser not to say. But where he is asked by a journalist to comment on an allegation, he can seek legal advice. He can always deny the allegation (as DS Flood did in this case). Further, as Tugendhat J said at para 183 of his judgment, the law provides sanctions for interference with the course of justice or contempt of court. I would, therefore, hold that for all the reasons summarised by Lord Mance at paras 179 to 181 above, there was a public interest in the publication of the details of the allegations or the supporting facts in the article. Subject to what I have said at para 195 above, I also agree with what Lord Phillips says about this. The naming of DS Flood Lord Phillips deals with this at paras 73 to 75 and Lord Mance at paras 132 to 137 and 169. There is a difference of emphasis between them. The authorities referred to by Lord Mance at paras 132 to 137 show that weight should be given to a newspapers editorial judgment as to what details are necessary to convey the essential message. These include whether an individual should be named. Lord Phillips places little or no weight on the editorial judgment point but holds that, on the facts of this case, it was impossible to publish the details of the article without disclosing to those close to DS Flood that he was the officer to whom it related. I agree that this particular aspect of the case would support the conclusion that naming the officer was responsible journalism. But I would also reach this conclusion on the wider basis that the court should be slow to interfere with an exercise of editorial judgment and would hold on that ground too that the naming of the individual was justified in this case. The motive question The judge held that it was a matter of public interest that the police may not have been investigating allegations of police corruption in a timely fashion and that it was in pursuit of a legitimate aim (and therefore in the public interest) that TNL published the article with a view to attempting to ensure that an investigation took place, or took place in a timely fashion (paras 200 and 216). The Court of Appeal disagreed: [2011] 1 WLR 153. Lord Neuberger MR (para 54) said that the subjective motives of the journalist were irrelevant to whether the publication was in the public interest. Moore Bick LJ (para 106) did not accept that part of the public interest in publishing the story lay in prompting the investigation. He said that, if the purpose of the article had been to prompt the police to pursue an investigation, the article would have been written in a way that would have placed greater emphasis on the existence of the allegations and the failure of the police to pursue an investigation. Moses LJ (para 114) agreed with both. It is important to distinguish between the objective aim of a publication and the subjective motives of the journalist or publisher who publishes it. I agree that the subjective motives are usually irrelevant to the question whether the publication is in the public interest. That question should be determined objectively. I think that this is what Lord Neuberger was saying. The mere fact that an article is published because the journalist or publisher wants to hurt the subject of the article is not material to whether the publication is in the public interest. A story that a police officer is being investigated for corruption is prima facie in the public interest even if the story is published in furtherance of a personal vendetta by the journalist or publisher against the officer. If an investigation into allegations of police corruption is not being properly conducted, there is a public interest in the publication of a story about that failure. Quite apart from the public interest in the subject matter of the story, the objective aim of its publication might legitimately be to draw attention to the failure and to encourage the proper conduct of the investigation. It was in the public interest for the allegations against DS Flood to be investigated promptly, and that was relevant to whether it was in the public interest to publish a story about the investigation. Lord Nicholls said in terms in Reynolds at p 205C: A newspaper can raise queries or call for an investigation. By the same token, it can publish a story about an existing investigation and expressly or by implication criticise the manner in which the investigation is being conducted. Moore Bick LJ seems implicitly to have accepted this, but concluded that, if that had been the purpose of the Article, it would have been expressed differently. Like Lord Phillips (para 70) and Lord Mance (para 160), I am of the opinion that the Court of Appeal should not have interfered with the finding of the judge on this point (which in any event did not form a central part of his reasoning). Like Lord Clarke, I had intended to express an opinion as to the circumstances in which an appellate court should interfere with the assessment of the lower court on an issue such as whether a publication should be protected by Reynolds privilege. But I have been persuaded that, for the reasons given by Lord Phillips at paras 100 to 106 above, it would not be right to do so in the present case. |
What is the impact of fraud upon a financial settlement which is agreed between a divorcing husband and wife, especially where, as will almost always be the case, that agreement is embodied in a court order? Does fraud unravel all, as is normally the case when agreements are embodied in court orders, or is there some special magic about orders made in matrimonial proceedings, which means that they are different? This case happens to concern a husband and wife in divorce proceedings, but the same questions would also arise in judicial separation proceedings, and between same sex partners who are either married or in a civil partnership in divorce, dissolution or separation proceedings. They entail consideration, in particular, of the leading case on non disclosure in matrimonial financial proceedings, Livesey (formerly Jenkins) v Jenkins [1985] AC 424 (Livesey). The facts The husband and wife (who are not yet divorced) were married in 1993 and separated 17 years later, in 2010, having had three children together. When their financial proceedings were heard, in July 2012, the children were aged 17, 15 and 12. The wife has been the childrens primary carer throughout the marriage and she anticipates that she will remain responsible for the care of their elder son, who has severe autism, for the rest of her life. Sadly, the parties also cannot agree about matters relating to the future care of their son and so there are also proceedings in the Court of Protection about him. The husband is a computer software entrepreneur. He has developed a very successful software business, AppSense Holdings Ltd, in which he holds a substantial shareholding. The value and manner of distribution between them of this shareholding was the principal matter in dispute between the parties. It was not in dispute that, in addition to that shareholding, there were liquid assets of some 17m, of which around 13.8m was in cash, 2m in the parties three homes, and the balance in other assets and investments. It is only necessary to give a brief outline of the dispute about the value of AppSense and the husbands shareholding in it. In early 2011, Goldman Sachs had paid US$70m for a 33.5% share in the company. The wife contended that this valued the company as a whole at around US$255m and the husband's remaining shares at around US$132m. The husband contended that the development of the company was not going according to plan and it was worth far less. Each party instructed a valuation expert. Both valuers approached their task on the basis that there were no plans for an Initial Public Offering (IPO). The wifes valuer concluded that the company as a whole was worth 88.3m (making the post tax valuation of the husbands shareholding something between 22.24m and 31.9m). The husbands valuer concluded that the company was worth 60m (valuing the husbands shareholding at something between 6.674m and 8.085m). The case came on for trial before Sir Hugh Bennett in July 2012. The wifes case was that all the assets should be divided equally. She should receive 50% of the liquid assets and 50% of the net proceeds of any sale of the AppSense shares, whenever that took place. The husbands case was that the assets should be divided equally, but that the wife should receive the whole of her share from the liquid assets, leaving him with the unencumbered AppSense shares. He also argued that, if his valuers view of the value of those shares was not accepted, his special contribution would justify a departure from the principle of equality. However, under cross examination, he abandoned this second argument, at least in relation to assets acquired during the marriage. Much of the husbands evidence was about when the value of his shares might be realised. His written evidence was that an exit, although theoretically possible at any time, was unlikely before three, five or seven years after July 2012. He also gave the impression that various exit strategies were being contemplated but only when the time was right. In oral evidence he said that there might be an exit in between three and seven years time, but that [o]ne thing is for sure that theres nothing on the cards today. After the parties had given their evidence, but before the valuers had given theirs, the parties reached an agreement. The wife would receive over 10m in cash and property, and 30% of the net proceeds of sale of the AppSense shares (in the shape of a deferred lump sum), whenever that might take place. They would also set up a trust for their elder son, into which each would pay 1m immediately and the husband would pay 4m from the proceeds of sale of his AppSense shares. The husband would also pay child support for each of the children. On 13 July 2012, this agreement was explained to the judge, who approved it. A draft consent order was drawn up. Before it was sealed, however, reports appeared in the press indicating that AppSense was being actively prepared for an IPO, which was expected to value the company at between US$750m and US$1000m. The wife immediately invited the judge not to seal the order and applied for the hearing to be resumed. The husband argued that the judge was functus officio, but the judge rejected that and ordered the husband to file an affidavit responding to the wifes allegation of material non disclosure. He directed a further hearing, which was listed for 15 April 2013. At that hearing he had before him the wifes application for the hearing to be resumed and the husbands application that the wife show cause why the order reflecting the agreement should not be sealed. He gave judgment on 29 April 2013: [2013] EWHC 991 (Fam), [2013] 2 FLR 1598. The husbands affidavit, filed in January 2013, continued to deny that there was any imminent prospect of an IPO of AppSense or that he had misled the court in his evidence. The press reports were mere public relations fluff put out by one or more investment banks. However, the documents which he exhibited to that affidavit told a very different story. As the judge put it, planning for an IPO in early 2013 had been in full swing from January to August 2012 (para 29); by early July 2012 the company had sent out invitations to various banks inviting them to pitch for the role of bankers to the IPO; and the husband had been due to and did meet potential bankers the week after the hearing. The husband had knowingly misled both of the expert valuers and his evidence at the hearing had been false. It was absolutely plain that the husbands evidence about AppSense had been seriously misleading (para 29). [W]hen placed against the documents which he has now disclosed, his evidence can only be categorised as dishonest. The documents exhibited to his affidavit had not previously been disclosed because he did not want the wife or the court to know the true facts. He thus gave dishonest evidence, no doubt in the hope that this would lessen his exposure to the courts discretionary powers (para 31). Had the judge known the true facts, it was inconceivable that he would not have regarded them as relevant to the exercise of his discretion. This was not some relatively trivial minor matter, in the words of Lord Brandon in Livesey. Why would the husband lay a false trail if what was sought to be suppressed was immaterial (para 33)? The decisions of the High Court and Court of Appeal The judge having reached that conclusion, it might have been expected that he would direct that the draft consent order agreed in July 2012 not be sealed and give directions for the case to be heard again. Instead, however, he acceded to the husbands application that the order be perfected. His grounds for doing so were, in summary, that had he known the truth about the plans for an IPO in 2012, he would have asked himself what is the likelihood of an IPO actually happening? (para 37); he would have progressed the hearing as far as he could and then adjourned to see whether an IPO did take place, on what terms, at what value and at what price (para 38); as in fact no IPO had taken place (para 40) and the husbands evidence that no IPO was now contemplated had not been challenged, he was compelled to accept that none was now in prospect (para 41); under the draft order, the wife had by far the greater share of the liquid assets; she was to make a smaller contribution to the sons trust; and she was to get 30% of the net value of the husbands shares whenever they were realised, although it was strongly arguable that the value of the shares would become less and less of a matrimonial asset in the future; she took the risk that crystallisation of her entitlement might occur sooner than three years by agreeing to a flat rate of 30% (para 42); and so the order he was now being asked by the husband to make was not substantially different from the order which he would have made had there been full disclosure at the outset; hence the non disclosure was not now material (para 43). The Court of Appeal, by a majority, dismissed the wifes appeal: [2014] EWCA Civ 95, [2014] 2 FLR 89. The leading judgment was given by Moore Bick LJ. In summary, it was clear from Livesey v Jenkins and other cases that the authority of an order made in matrimonial financial remedy proceedings derives from the courts own exercise of its statutory powers under the Matrimonial Causes Act 1973 and not from the consent of the parties. Hence misrepresentation that would normally entitle a wife to rescind a contract (and have a consent order in civil proceedings set aside) did not necessarily entitle her to renounce the agreement and resume the proceedings. It was necessary for the wife to satisfy the judge that he should set the order aside (para 18). In Livesey, Lord Brandon had said that it would only be in cases where the absence of full and frank disclosure had led to the court making an order substantially different from the order which it would have made if such disclosure had taken place that a case for setting aside the order could be made good (para 19). So the judge had asked himself the right question (para 21). The sooner the husband was likely to dispose of his shares, the stronger would be the wifes claim to an equal share and the stronger her argument for resuming the hearing. Any challenge to the husbands evidence about his plans for the company ought to have been made at the hearing (para 23). Although Livesey had not been a case of fraud, [i]t would be surprising if Lord Brandon had confined his analysis to the relatively uncommon cases of inadvertent non disclosure (para 20). In her concurring judgment, Macur LJ placed particular emphasis on the wifes failure to cross examine the husband on his affidavit (paras 53, 54). In a vigorous dissenting judgment, Briggs LJ explained that the husbands fraud was material to the agreement and the consent order for two reasons. First, it undermined the basis on which his shareholding had been valued and therefore the ability of the wife to address the proportionality of agreeing a discount below her claimed 50% against the receipt of a larger share of the other family assets. Secondly, it created a false basis for the wife to assume that a delayed realisation of the husbands shareholding might justify a tapered reduction in her share of the proceeds (para 30). Once the judge had decided that the husbands fraud had undermined the parties agreement and the consent order, that should have been the end of the matter. There were three inter related reasons for this (para 34). First, the general principle that fraud unravels all is no less applicable to court orders than to contracts (para 35). Second, Lord Brandons obiter dictum in Livesey had been misinterpreted. He was drawing a distinction between triviality and materiality as at the date of the order, not at some later date (para 40). The husband should not be allowed to hold onto an order tainted by material fraud on his part by rearranging his affairs so as to bring them broadly into line, but after the event, with the false picture originally portrayed by him (para 37). Third, the wife had been deprived of a full hearing of her claim. The purpose of the hearing in April 2013 was not to determine her claim but only to decide whether the order should be set aside and a rehearing ordered. Cross examination of the husband was unnecessary (para 42). The wife should not have to prove at that stage that she would have obtained a substantially different order, merely that the non disclosure had deprived her of a real prospect of doing better at a full hearing (para 46). The wife now appeals to this court. Settling matrimonial claims It is in everyones interests that matrimonial claims should be settled by agreement rather than by an adversarial battle in court. The financial resources of the family are not whittled away by the often substantial legal costs involved. The emotional resources of the family are not concentrated on conflict. The future relationship between the adult parties is not soured, or further soured, by that conflict. This is not only good for them but also for their children, whatever their ages, and for the wider family. It is for these reasons that there are processes, both within the procedures of the family court and independent of them, for helping the parties to reach agreement on the practical consequences of the breakdown of their relationship. It has long been possible for a married couple to make a binding agreement about the financial consequences of their present separation. However, it is not possible for such an agreement to oust the jurisdiction of the court to make orders about their financial arrangements. This was a rule of public policy, because of the public interest in ensuring that proper provision is made for dependent family members: see Hyman v Hyman [1929] AC 601. Any doubt about whether this meant that there was no consideration for the paying partys promise to pay was laid to rest by what is now section 34(1) of the Matrimonial Causes Act 1973. This provides that any provision in a maintenance agreement purporting to restrict any right to apply to a court for an order containing financial arrangements shall be void but that any other financial arrangements contained in the agreement shall not thereby be rendered void or unenforceable and shall, unless they are void or unenforceable for any other reason , be binding on the parties to the agreement. This has since been held to apply to post nuptial agreements for the consequences of a future separation between the parties and (albeit obiter) to ante nuptial agreements: see MacLeod v MacLeod [2008] UKPC 64, [2010] 1 AC 298 and Granatino v Radmacher (formerly Granatino) [2010] UKSC 42, [2011] 1 AC 534. Thus it is impossible for the parties to oust the jurisdiction of the court, but the court also possesses powers to achieve finality (a clean break) in the parties financial arrangements which the parties cannot achieve for themselves. For those reasons, it is now much more common for separating or divorcing spouses to negotiate with a view to embodying their agreed arrangements in a court order than to make a formal separation agreement. If they do this, the fundamental principle is that an agreement to compromise an ancillary relief application does not give rise to a contract enforceable in law. Furthermore, the court does not either automatically or invariably grant the application to give the bargain [the] force of an order. The court conducts an independent assessment to enable it to discharge its statutory function to make such orders as reflect the criteria listed in section 25 of the Matrimonial Causes Act 1973 as amended: see Xydhias v Xydhias [1999] 2 All ER 386, per Thorpe LJ at 394. Although the court still has to exercise its statutory role, it will, of course, be heavily influenced by what the parties themselves have agreed. Section 33A of the Matrimonial Causes Act 1973 as inserted by section 7 of the Matrimonial and Family Proceedings Act 1984 provides that, notwithstanding the preceding provisions of Part II of the Act (which deal with the courts powers and duties in relation to financial provision and property adjustment), on an application for a consent order, the court may, unless it has reason to think that there are other circumstances into which it ought to inquire, make an order in the terms agreed on the basis only of the prescribed information furnished with the application (and see Family Procedure Rules 2010, rule 9.26). This permits the court to make the order in the terms agreed, but does not in any way inhibit its power to make further inquiries or to suggest amendments to the parties. Allied to the courts responsibility to safeguard both the parties and the public interest is the parties duty to make full and frank disclosure of all relevant information to one another and to the court. In Livesey, the House of Lords decided two questions. The first was whether the parties duty of full and frank disclosure continued after they had reached agreement on their financial arrangements. The facts were that on or about 12 August 1982, the parties, who were by then divorced, reached agreement that, in return for the husband transferring to the wife his half share in the jointly owned matrimonial home, the wife would surrender all claims for financial provision for herself. On 18 August, the wife became engaged to marry another man, but did not mention this either to her solicitor or to her former husband. On 19 August, the solicitors issued a joint application for a consent order in the terms agreed and on 2 September the judge made the order. On 22 September, the husband conveyed his half share in the home to the wife. On 24 September, the wife re married. When he learned of this, the husband applied for leave to appeal out of time against the consent order and for the order to be set aside. Lord Brandon of Oakbrook emphasised that unless a court is provided with correct, complete and up to date information on the matters to which, under section 25(1), it is required to have regard, it cannot lawfully or properly exercise its discretion in the manner ordained by that subsection. Hence each party owes a duty to the court to make full and frank disclosure of all material facts to the other party and the court (pp 437 438). This principle applied just as much to the exchanges of information leading up to a consent order as it did to contested hearings. Hence the wife was under a duty to disclose her engagement before the agreement made was put into effect. The second question was whether, in the light of that, the consent order should be set aside. Lord Brandon quoted (at p 442) with approval the judgment of Templeman LJ in Robinson v Robinson (Practice Note) [1982] 1 WLR 786, who said that In the Family Division, as has been said many times, this power to set aside final orders is not limited to cases where fraud or mistake can be alleged. It extends, and has always extended, to cases of material non disclosure. [T]he power to set aside arises when there has been fraud, mistake or material non disclosure as to the facts at the time the order was made (at pp 786 787). Lord Brandon concluded that since the fact which was not disclosed undermined, as it were, the whole basis on which the consent order was agreed, that order should be set aside and the proceedings remitted to the Family Division of the High Court for rehearing (at p 443). Having reached that conclusion, Lord Brandon ended (at pp 445 446) with an emphatic word of warning which has been much quoted in this case: It is not every failure of frank and full disclosure which would justify a court in setting aside an order of the kind concerned in this appeal. On the contrary, it will only be in cases where the absence of full and frank disclosure has led to the court making, either in contested proceedings or by consent, an order which is substantially different from the order which it would have made if such disclosure had taken place that a case for setting aside can possibly be made good. Parties who apply to set aside orders on the ground of failure to disclose some relatively minor matter or matters, the disclosure of which would not have made any substantial difference to the order which the court would have made or approved, are likely to find their applications being summarily dismissed . Lord Keith and Lord Bridge simply agreed with Lord Brandon. Lord Scarman, however, expressed his firm support for the emphatic word of warning: orders were not to be set aside on the ground of non disclosure if the disclosure would not have made any substantial difference to the order which the court would have made (p 430). Lord Hailsham, too, underscored the warning. Consent orders leading to a clean break were much to be encouraged, and were therefore not lightly to be overthrown (p 430). It must be emphasised, however, that Livesey was not a case of fraud. Lord Brandon rejected the suggestion that the wife had made any misrepresentation to the husband or his solicitors, which had induced him to agree to the order (p 434). Lord Hailsham was also understanding of the wifes position: I do not think she was fully aware (though she should have been) of the vital nature of the information she was withholding (p 430). It is also worth bearing in mind that, until the case reached the House of Lords, there was authority for the proposition that the duty to make full and frank disclosure did not apply where the parties were bargaining at arms length with the help of their solicitors: see Wales v Wadham [1977] 1 WLR 199 and Tommey v Tommey [1983] Fam 15, both disapproved on this point by the House of Lords. This was, therefore, what may now be an unusual case, where there was neither a misrepresentation nor deliberate non disclosure. Family proceedings are different from ordinary civil proceedings in two respects. First, in family proceedings it has been clear, at least since the House of Lords decision in de Lasala v de Lasala [1980] AC 546, that a consent order derives its authority from the court and not from the consent of the parties, whereas in ordinary civil proceedings, a consent order derives its authority from the contract made between the parties: see, eg, Purcell v FC Trigell Ltd [1971] 1 QB 358, CA. Second, in family proceedings there is always a duty of full and frank disclosure, whereas in civil proceedings this is not universal. However, the case of Dietz v Lennig Chemicals Ltd [1969] 1 AC 170 is an interesting example of a civil case which has some of the characteristics of a family case. This was a claim brought against her deceased husbands employers by the widow, on behalf of her husbands estate and on behalf of herself and their child under the Fatal Accidents Acts. It was settled for a global sum of 10,000 but, as the child was an infant, the settlement had to be approved by the court. Between the summons for the courts approval and the courts approval, the widow remarried. Thus she was no longer a widow as she was described in the title to the action and in the trust deed giving effect to the settlement. The House of Lords held that the settlement agreement was not binding without the approval of the court and that the employers were entitled to have the consent order set aside as their consent had been induced by an innocent misrepresentation that the claimant was a widow at the date of the order. Analysis It follows that the majority in the Court of Appeal in this case were correct to say that matrimonial cases were different from ordinary civil cases in that the binding effect of a settlement embodied in a consent order stems from the courts order and not from the prior agreement of the parties. It does not, however, follow that the parties agreement is not a sine qua non of a consent order. Quite the reverse: the court cannot make a consent order without the valid consent of the parties. If there is a reason which vitiates a partys consent, then there may also be good reason to set aside the consent order. The only question is whether the court has any choice in the matter. This may well depend upon the nature of the vitiating factor. We know from Dietz that innocent misrepresentation as to a material fact is a vitiating factor. The court set aside the order because the misrepresentation had induced the defendants to agree to the settlement. We know from Livesey that in matrimonial cases innocent non disclosure of a material fact is a vitiating factor. The court set aside the order because the undisclosed fact undermined the whole basis on which the order was made. Although not strictly applicable in matrimonial cases, the analogy of the remedies for misrepresentation and non disclosure in contract may be instructive. At common law, the general effect of any misrepresentation, whether fraudulent, negligent or innocent, or of non disclosure where there was a duty to disclose, was to render a contract voidable at the instance of a party who had thereby been induced to enter into it. This has now been modified by the Misrepresentation Act 1967, which empowers the court to impose an award of damages in lieu of rescission for negligent or innocent misrepresentation. This does not, however, apply in cases of fraudulent misrepresentation, where there is no power to impose an award of damages in lieu. The victim always has the right to rescind unless one of the general bars to rescission has arisen. There is no need for us to decide in this case whether the greater flexibility which the court now has in cases of innocent or negligent misrepresentation in contract should also apply to innocent or negligent misrepresentation or non disclosure in consent orders whether in civil or in family cases. It is clear from Dietz and Livesey that the misrepresentation or non disclosure must be material to the decision that the court made at the time. But this is a case of fraud. It would be extraordinary if the victim of a fraudulent misrepresentation, which had led her to compromise her claim to financial remedies in a matrimonial case, were in a worse position than the victim of a fraudulent misrepresentation in an ordinary contract case, including a contract to settle a civil claim. As was held in Smith v Kay (1859) VII HLC 749, a party who has practised deception with a view to a particular end, which has been attained by it, cannot be allowed to deny its materiality. Furthermore, the court is in no position to protect the victim from the deception, or to conduct its statutory duties properly, because the court too has been deceived. In my view, Briggs LJ was correct in the first of the three reasons he gave for setting aside the order. The only exception is where the court is satisfied that, at the time when it made the consent order, the fraud would not have influenced a reasonable person to agree to it, nor, had it known then what it knows now, would the court have made a significantly different order, whether or not the parties had agreed to it. But in my view, the burden of satisfying the court of that must lie with the perpetrator of the fraud. It was wrong in this case to place upon the victim the burden of showing that it would have made a difference. In my view, the second and third reasons given by Briggs LJ for setting aside the order flowed from the first. Sir Hugh Bennett had been clear that the misrepresentation and non disclosure as to the husbands plans for the company was highly material to the decision made in July 2012. Indeed, it could not have been anything else. It had coloured both valuers approach to the valuation of the husbands shareholding. That in turn had coloured the wifes approach to the proportionality of the balance struck between her present share in the liquid assets and her future share in the value of the husbands shareholding. Sir Hugh may have been right to say, with the benefit of hindsight, that had he known the truth then he would have waited to see what transpired. But in doing so, he would have had to bear in mind the husbands ability to manipulate the timing and manner of any offer to the public in a way which suited him best. Be that as it may, it is enough that Sir Hugh would not have made the order he did when he did had the truth been known. It being clear that the order should have been set aside, it is also clear that Sir Hugh should not have gone on to re make the decision then and there on the basis of the evidence then before him. The wife was entitled to re open the case, when she might seek to negotiate a new settlement or a rehearing of her claims when all the relevant facts were known. Thus, in my view, Briggs LJ was also correct in the third reason that he gave for allowing the appeal. The wife had been deprived of a full and fair hearing of her claims. That matter was not before the judge in April 2013. The application and cross application before him related to whether or not the order made on 19 July 2012 should be perfected. There was no need for the wifes counsel to cross examine the husband, as the documents he had now disclosed revealed that he had deceived the court. It follows that, in my view, this appeal should be allowed; the consent order made on 19 July should not be perfected; and the matter should return to the Family Division of the High Court for further directions. Procedural issues The fact that this order had not yet been perfected makes no difference. The principles applicable in this sort of case are the same whether or not the order agreed upon by the parties and the court has been sealed. However, the fact that the order had not been sealed means that in this particular case the procedural problem about how such challenges to the final order of a court in family proceedings can be brought does not arise. The trial judge was able to revisit his order: see In re L and another (Children) (Preliminary Finding: Power to Reverse) [2013] UKSC 8; [2013] 1 WLR 634. This and other procedural issues do, however, arise in the case of Gohil v Gohil [2015] UKSC 61, which was heard at the same time as this case. In L v L [2006] EWHC 956 (Fam), Munby J described this problem as a procedural quagmire. There are three possible routes: (i) a fresh action to set aside the order; (ii) an appeal against the order; or (iii) an application to a judge at first instance in the matrimonial proceedings. The difference is that permission is required for an appeal, and it may be required long after the time limit for appealing has expired, whereas the other two routes do not require permission. A further difference is that an appeal is not the most suitable vehicle for hearing evidence and resolving the factual issues which will often, although not invariably, arise on an application to set aside. In Livesey, the matter was dealt with by way of permission to appeal out of time. But that was a simple case where the facts were clear. A fresh action would be the normal route in ordinary civil proceedings to challenge a final judgment on account of fraud: see Jonesco v Beard [1930] AC 298. This route is also available in matrimonial proceedings: see de Lasala v de Lasala [1980] AC 546. Indeed, in that case, the Judicial Committee of the Privy Council held that, there being no power to vary the matrimonial financial order which had been made by consent, [w]here a party to an action seeks to challenge, on the ground that it was obtained by fraud or mistake, a judgment or order that finally disposes of the issues raised between the parties, the only ways of doing it that are open to him are by appeal from the judgment or order to a higher court or by bringing a fresh action to set it aside (at 561). However, it has not been clear whether in matrimonial proceedings such a fresh action can be brought by making an application in the matrimonial proceedings themselves or whether an entirely separate application has to be brought. In Gohil v Gohil (No 2) [2014] EWCA Civ 274, [2015] Fam 89, the wife had issued a summons in the matrimonial proceedings rather than a separate application, but the Court of Appeal approached the case as if Moylan J had been hearing a fresh application to set aside for material non disclosure (para 61). In my view there is jurisdiction to entertain such an application within the matrimonial proceedings. Unlike ordinary civil proceedings, it has always been the case that the divorce court retains jurisdiction over a marriage even after it has been dissolved. While it is now possible for the court to achieve a clean break between the parties, the issue raised by an application to set aside for fraud, mistake or material non disclosure is whether it was consistent with the courts statutory duties so to do. The most recent survey of the extensive jurisprudence in this field is by Munby P in CS v ACS and BH [2015] EWHC 1005 (Fam). In that case, the issue was whether an appeal was the only route to set aside a consent order made in matrimonial proceedings. He refers to the recent steps to remedy matters, in section 31F of the Matrimonial and Family Proceedings Act 1984, inserted by the Crime and Courts Act 2013, when setting up the family court. Section 31F(3) provides that Every judgment or order of the family court is, except as provided by this or any other Act or by rules of court, final and conclusive between the parties (this provision is derived from the County Courts Act 1984, section 70). But section 31F(6) gives the family court power to vary, suspend, rescind or revive any order made by it. Rule 4.1(6) of the Family Procedure Rules provides that A power of the court under these rules to make an order includes a power to vary or revoke the order. On the face of it, as the learned editors of The Family Court Practice 2015 point out (p 1299), this is a very wide power which could cut across some other provisions, for example those prohibiting variation of lump sum and property adjustment orders. Clearly, as Munby P observed, the power, although general is not unbounded (para 11). However, it does give the family court power to entertain an application to set aside a final order in financial remedy proceedings on the well established principles with which we are concerned in this case. In CS v ACS and BH, Munby J held that the statement in Practice Direction 30A, which supplements the provisions for appeals in Part 30 the Family Procedure Rules 2010, at para 14.1 that An appeal is the only way in which a consent order can be challenged is ultra vires. The Practice Direction could not purport to forbid a litigant to have recourse to a form of remedy long recognised by the common law, let alone to a remedy expressly conferred by both statute (section 31F(6) of the 1984 Act) and rule (FPR 4.1(6)) (para 36). It is clear, therefore, that an application of this sort can be made either by way of an appeal or by way of an application to a first instance judge. There remain difficult issues as to how such an application should be made, whether within or without the original proceedings, and whether it would be appropriate for the rules or a practice direction to specify criteria for choosing between an appeal and an application at first instance. A Working Party of the Family Procedure Rule Committee is currently considering the whole issue. In that connection I whole heartedly endorse the observations of Lord Wilson in para 18 of his judgment in Gohil v Gohil [2015] UKSC 61. Finally, however, it should be emphasised that the fact that there has been misrepresentation or non disclosure justifying the setting aside of an order does not mean that the renewed financial remedy proceedings must necessarily start from scratch. Much may remain uncontentious. It may be possible to isolate the issues to which the misrepresentation or non disclosure relates and deal only with those. A good example of this is Kingdon v Kingdon [2010] EWCA Civ 1251, [2011] 1 FLR 1409, where all the disclosed assets had been divided equally between the parties but the husband had concealed some shares which he had later sold at a considerable profit. The court left the rest of the order undisturbed but ordered a further lump sum to reflect the extent of the wifes claim to that profit. This court recently emphasised in Vince v Wyatt (Nos 1 and 2) [2015] UKSC 14, [2015] 1 WLR 1228 the need for active case management of financial remedy proceedings, which includes promptly identifying the issues, isolating those which need full investigation and tailoring future procedure accordingly (para 29). In other words, there is enormous flexibility to enable the procedure to fit the case. This applies just as much to cases of this sort as it does to any other. For completeness, I should add that we have heard no argument about the correctness of the judges view that a tapering award might be appropriate where what had been a matrimonial asset remained in the hands of one of the parties where it would become less and less of a matrimonial asset. There is obviously room for more than one view on this and so it would be inappropriate to comment further. |
The three appellants in these two appeals were each convicted of murder. Each had his conviction quashed pursuant to a reference to the Court of Appeal by the Criminal Cases Review Commission (CCRC) in the exercise of its powers under Part II of the Criminal Appeal Act 1995 (the 1995 Act). In each case no order was made for a retrial. Each claimed compensation from the Secretary of State pursuant to section 133 of the Criminal Justice Act 1988 (section 133). That section applies to England and Wales, to Northern Ireland and to Scotland. I shall not refer to provisions which cater for differences of procedure in Scotland. The most material part of that section provides: (1)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 In each case the claim for compensation was refused by the Secretary of State, whose decisions were upheld on judicial review both at first instance and on appeal. The common issue that arises in relation to each appeal is the meaning of miscarriage of justice in section 133. In the case of Adams there is a second issue, which is the meaning of a new or newly discovered fact. Lord Hope has set out the background to the statutory right to compensation provided by section 133 and I need not repeat his summary. Lord Kerr has set out in detail the relevant facts in the appeals of Mr MacDermott and Mr McCartney and I gratefully adopt his account of these. It remains for me to summarise the facts relevant to the appeal of Mr Adams. They can be shortly stated. A more detailed summary can be found in the extract of the judgment of Simon J at first instance, annexed to the judgment of the Court of Appeal [2009] EWCA Civ 1291; [2010] QB 460. The facts in Mr Adams appeal On 18 May 1993 Mr Adams was convicted in the Crown Court at Newcastle of the murder of a man called Jack Royal and sentenced to life imprisonment. He appealed to the Court of Appeal and on 16 January 1998 his appeal was dismissed. Some nine years later his case was referred to the Court of Appeal by the CCRC on three grounds. The first, and only material ground, was that incompetent defence representation had deprived him of a fair trial. On 12 January 2007 the Court of Appeal allowed his appeal on this ground. The relevant shortcomings in the conduct of Mr Adams defence were, in large measure, the result of a late change of his counsel. This was made when those originally instructed to represent him had to withdraw from the case because of a conflict of interest. Those instructed to replace them were hard pressed to prepare for the trial and failed to consider relevant unused material. Some of this had been disclosed by the prosecution. Some was available on a computer database known as the Holmes database. The case against Mr Adams was essentially based on the evidence of a single witness, Mr Kevin Thompson. His evidence was supported by that of two police officers. It was the defence case that Mr Thompson was lying, that he had entered into a deal with the police to give evidence against Mr Adams, and that he had been fed with information about Mr Royals murder by the police. The evidence which had been overlooked by defence counsel would have provided valuable assistance in cross examining Mr Thompson and the two police officers. The Court of Appeal concluded that, had it been available and deployed, the jury might not have been satisfied of Mr Adams guilt. Accordingly the court quashed the conviction, but in doing so stated expressly that they were not to be taken as finding that, if the failings on the part of the defence lawyers had not occurred, Mr Adams would inevitably have been acquitted: [2007] 1 Cr App R 449 at para 157. Miscarriage of Justice Section 133(1) reproduces, in almost identical wording, the following provision in article 14(6) of the International Covenant on Civil and Political Rights 1966, which this country ratified in May 1976 (article 14(6) of the ICCPR). I shall emphasise the material differences: 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 The reference to a final decision is accommodated by a provision in section 133(5) which defines reversed as referring to a conviction which has been quashed on an appeal out of time or on a reference under the 1995 Act. The possible meanings of miscarriage of justice The meaning of miscarriage of justice in section 133 received consideration by the House of Lords in R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18; [2005] 1 AC 1, when rejecting a claim for compensation by Mr Mullen. He had been convicted of terrorist offences. His conviction had been quashed by an appeal out of time. This was not because there was any doubt that he had committed the offences of which he was convicted. His conviction was quashed because he had been seized and brought to this country from Zimbabwe in circumstances that had involved a flagrant abuse of power. It was not suggested that there was any defect in the trial process itself. The House held that in these circumstances Mr Mullens conviction had not been quashed on the ground of a miscarriage of justice within the meaning of section 133. Lord Steyn expressed the view that this phrase only extended to the conviction of someone subsequently shown to be innocent. Lord Bingham of Cornhill expressed doubt as to whether this was correct. Both were agreed that section 133 was enacted to give effect to article 14(6) and that the meaning of the latter should govern the interpretation of the section. They were not, however, agreed as to the meaning of article 14(6). Lord Rodger of Earlsferry accepted the interpretation reached by Lord Steyn. Lord Walker of Gestingthorpe considered that Lord Steyn had given powerful reasons for his conclusion, but preferred not to go beyond the limited common ground for allowing the appeal. Lord Scott expressed no view on the difference between Lord Bingham and Lord Steyn. Miscarriage of justice is a phrase that is capable of having a number of different meanings. In giving the judgment of the Court of Appeal in relation to Adams case Dyson LJ divided the circumstances in which convictions may be quashed on the basis of the discovery of fresh evidence into four categories, which I shall summarise in my own words. (1) Where the fresh evidence shows clearly that the defendant is innocent of the crime of which he has been convicted. (2) Where the fresh evidence is such that, had it been available at the time of the trial, no reasonable jury could properly have convicted the defendant. (3) 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. (4) 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. These four categories have provided a useful framework for discussion. There are relatively few domestic authorities that bear on the meaning of miscarriage of justice in section 133 and none which provides a definitive answer. In these circumstances, before considering those authorities, I propose to consider extrinsic sources that might be expected to assist with the interpretation of this phrase. Parliamentary material Mr Bailin QC, appearing for JUSTICE as intervener, submits that a statement made by Earl Ferrers, the Minister of State at the Home Office, throws light on the meaning of miscarriage of justice. The statement was made in the course of debate on the clause that was to become section 133: see Hansard (HL Debates), 22 July 1988, cols 1630 1632. At the outset Earl Ferrers explained that the object of the clause was to give statutory effect to the United Kingdoms obligations under article 14. Lord Hutchinson of Lullington then asked the very question that lies at the heart of these appeals. He contrasted a new fact which resulted in the quashing of a conviction because it raised a lurking doubt in the mind of the Court of Appeal about the safety of the conviction and a new fact which caused the Secretary of State to advise that a defendant should be pardoned because he had been shown to be innocent. Which, he asked, amounted to a miscarriage of justice under the clause? This, he stated, was a crucial point. If it is not contempt of Parliament to observe that Lord Bingham, in his judicial capacity, was uncertain of the answer to this question, after giving it detailed consideration in Mullen, it is not, I hope, contempt of Parliament to suggest that Earl Ferrers, when faced with the question ex improviso in the course of debate, may have had to seek assistance from an official before giving the answer. At all events the answer that he gave was: The normal course is to refer cases to the Court of Appeal and to regard its view as binding. Mr Bailin submits that, in accordance with Lord Hopes observations on the use that can be made of parliamentary material in R v A (No 2) [2002] 1 AC 45 at para 81, this statement binds the Secretary of State to accept that the question of whether there has been a miscarriage of justice must be determined from the judgment of the Court of Appeal in the particular case and that, as the Court of Appeal does not and cannot rule on whether the defendant is innocent, that cannot be the test of whether there has been a miscarriage of justice. I do not accept this submission. The reply given by Earl Ferrers did not answer the question posed by Lord Hutchinson. To be blunt it made no sense. It affords no guidance on the meaning in section 133 of miscarriage of justice. The relevant part of the debate clearly indicates that the intention of Parliament in enacting section 133 was to give effect to the obligation imposed by article 14(6). It does not suggest that Parliament intended that the meaning of section 133 should differ in any way from the meaning of article 14(6). This reinforces the rule of statutory interpretation that raises a presumption that, where a statute is passed in order to give effect to the obligations of the United Kingdom under an international convention, the statute should be given a meaning that conforms to that of the convention: see Salomon v Customs and Excise Commissioners [1967] 2 QB 116, 141 and Bennion on Statutory Interpretation, 5th ed (2008), section 221.6. What then is the meaning of miscarriage of justice in article 14(6)? In answering this question the provisions of the Vienna Convention on the Law of Treaties should be applied: see Fothergill v Monarch Airlines Ltd [1981] AC 251, 283, per Lord Diplock. The interpretation of Article 14(6) As the wording of the English text of article 14(6) is virtually identical to that of section 133, the former throws no light on the meaning of the latter. Article 33 of the Vienna Convention permits reference to the text of a convention in an alternative authenticated language. In Mullen Lord Steyn at para 47 derived assistance from the French text of article 14(6). This uses the phrase une erreur judiciare for miscarriage of justice. Lord Steyn stated that this was a technical expression indicating a miscarriage of justice in the sense of the conviction of someone who was innocent. He did not explain the basis for this assertion and Lord Bingham did not agree with it. He expressed the view at para 9 that erreur judiciare could be understood as equivalent to miscarriage of justice in its broad sense. Lord Binghams interpretation of the French text is to be preferred to that of Lord Steyn. The difference between them received detailed consideration by Girvan LJ in In re Boyles Application [2008] NICA 35 at paras 11 13. He concluded that the French term was as elastic as the English miscarriage of justice. In his written case at para 4.32 Mr Tam QC for the Secretary of State invited the Court to reject Girvan LJs analysis of the French law. In these circumstances the Court allowed Mr Owen to adduce a witness statement from Dr Cristina Mauro, who teaches Criminal Procedure as an Assistant Professor at Universit Panthon Assas at Paris. She confirmed that Girvan LJs interpretation of erreur judiciare was correct, and Mr Tam accepted this to be the case. Had the French text given a more precise meaning to article 14(6) than the English this would have been a legitimate aid to the interpretation of the latter. As it is the French text leaves us no further forward. Article 31(3)(b) of the Vienna Convention also permits one to take into account any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation. Lord Steyn, Girvan LJ and Dr Mauro, in progressively greater detail, have examined articles 622 to 626 of the French Code de Procdure Pnale, which give effect to article 14(6). Once again the analysis of the latter two is to be preferred to that of Lord Steyn. This indicates that in France a conviction will be reviewed where a new element gives rise to serious doubts about guilt and that the reviewing court can then either quash the conviction on the ground that the new element proves that the defendant is not guilty or direct a retrial. Compensation will be recoverable in the former event or, if there is a retrial, if this results in an acquittal. This practice on the part of only one of the many signatories to the ICCPR does not provide a guide to the meaning of article 14(6) but it does demonstrate that proof of innocence has not been universally adopted as the test of entitlement to compensation. It has not been suggested that there is any consistency of practice on the part of the signatories that assists in determining the meaning of article 14(6). If it is not possible to deduce the meaning of article 14(6) from subsequent practice in its application, what of the travaux prparatoires? Article 32 of the Vienna Convention permits recourse to these where necessary to determine the meaning to be attributed to the term of a treaty in the light of its object and purpose see article 31. The Court has been provided with relevant comments on the travaux in The Right to a Fair Trial under the Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights by D Weissbrodt (2001) and Guide to the Travaux Prparatoires of the International Covenant on Civil and Political Rights by M Bossuyt (1987). So far as the precise meaning of miscarriage of justice is concerned the travaux are inconclusive. They disclose that Mrs Roosevelt was opposed to the inclusion of article 14(6) on the ground that its implementation would cause significant technical difficulties because of the diversity of national legislation. They show concern by some, including the British delegate, that the provision should not create an obligation to pay compensation when a conviction was reversed on appeal. Of most significance is the rejection by 22 votes to 11 with 40 abstentions of an amended provision initially proposed by Israel, with input from France and Afghanistan. This reads: The judicial recognition of the innocence of a convicted person shall confer on him the right to request the award of compensation in accordance with the law in respect of any damage caused him by the conviction. While this provides no positive indication of precisely what the state parties intended miscarriage of justice to mean, it makes it difficult to argue that they intended it to mean conviction of the innocent. Lord Bingham suggested at para 9 in Mullen that the phrase miscarriage of justice may have commended itself to the parties because of the latitude of interpretation that it offered and it seems to me that this may well be the case. It is, I believe, possible to make some more positive conclusions about what it was that the states who were involved in the drafting of article 14(6) were trying to achieve. They were concerned with the emergence of a new fact after the completion of the trial process, including review on appeal. Article 14(5) provides that everyone convicted of a crime shall have the right to have his conviction and sentence reviewed by a higher tribunal according to law. Article 14(6) applies to the discovery of a new fact after that final decision. Compensation was only payable where the new fact demonstrated conclusively that there had been a miscarriage of justice. Thus miscarriage of justice had to be the kind of event that one could sensibly require to be proved conclusively. Article 14 is, in general, concerned with the right to a fair trial. Most of its provisions relate to procedure. One might have expected article 14(6) similarly to have been concerned with the consequences of shortcomings in procedure. The travaux do not suggest that this was the primary concern of the delegates. It is perhaps significant that Mrs Roosevelt and Ms Bowie did not consider that the provision belonged in the Covenant and suggested deleting it. What the delegates appear to have been primarily concerned about was not errors of procedure, but the emergence of fresh facts that were inconsistent with the conviction of the defendant. Thus, at the outset, the Philippines suggested that the circumstances in which the provision should apply should be spelt out and that these should be where the true offender had confessed and there were no reasonable grounds to doubt his confession or where the fact or event which was the basis of the conviction was shown beyond reasonable doubt never to have taken place. A comment by Mrs Roosevelt that compensation should be denied to someone who deliberately concealed facts which would have exonerated him if discovered (my emphasis) is a further example of this approach, as is the proposed amendment to which I have referred at para 19 above. The fact remains, however, that this amendment was not carried and that the travaux show concern on the part of some delegates that the provision under discussion would allow compensation to persons who were clearly guilty but whose conviction had been annulled for reasons of form or procedure while others appear to have considered that the provision should provide a guarantee for lawful process. The travaux clearly demonstrate that the parties intended article 14(6) to cover the situation where a newly discovered fact demonstrated conclusively that the defendant was innocent of the crime of which he had been convicted. They were not, however, prepared to agree an interpretation which restricted the ambit of article 14(6) to this situation. In the 14th and final session it is recorded that most of the Committee agreed that only adequate legislation could solve the technical difficulties involved in the problem of compensation for a miscarriage of justice. Thus, while the principle was agreed that there should be compensation for the consequences of a conviction reversed on the ground of conclusive proof of a miscarriage of justice as a result of the discovery of new evidence after the conclusion of the criminal process, and that this would cover the case of a convicted man who was shown to be innocent, it seems to have been left to the individual parties by domestic legislation to identify the precise parameters of the miscarriage of justice that would give rise to a right to compensation. The words according to law were added to the article by a late amendment. It would have been possible for the contracting parties to have agreed that any person whose conviction was reversed by reason of a newly discovered fact should be given compensation for the consequences of the conviction. This could have been justified on the basis that the reversal of the conviction raised a presumption of innocence and that compensation should be paid on the basis of that presumption. The parties did not take that course. The fact that they did not do so, and the requirement that the miscarriage of justice should be established conclusively, indicates so it seems to me, an anxiety not to agree to an entitlement to compensation that would result in compensation being paid to those who had in fact committed the crimes of which they were convicted, at least on a substantial scale. In these circumstances the fact that section 133 is intended to give effect to the obligation imposed by article 14(6) is of limited assistance in interpreting that section. It would not be right, however, when interpreting section 133 to lose sight of the fact that it is giving effect to a convention agreed by parties with varying systems of criminal justice. Article 14(6) is applicable to criminal trials in jurisdictions that have jury trials and jurisdictions that do not, to civil and to common law jurisdictions. The meaning given to miscarriage of justice should be one that is capable of application to the systems of criminal justice of the other parties to the covenant. I have not found any other extrinsic material to be of assistance. In Mullen Lord Bingham at para 9(3) considered the jurisprudence of the United Nations Human Rights Committee and concluded that this did not assist. He reached the same conclusion in relation to the explanatory report of the Steering Committee for Human Rights in relation to article 3 of the Seventh Protocol to the European Convention on Human Rights. I agree with Lord Bingham for the reasons which he gave. Mullen I now turn to consider the decision of the House of Lords in Mullen. This task has been undertaken in a little detail by Lord Hope, which shortens the comments that I wish to make on this decision. The reason why the appeal in Mullen did not succeed was that the House of Lords were unanimous in holding that the abuse of power that had led to the quashing of Mr Mullens conviction did not fall within the definition of miscarriage of justice, whatever the meaning of that phrase. At para 8 Lord Bingham said: It is for failures of the trial process that the Secretary of State is bound, by section 133 and article 14(6), to pay compensation. On that limited ground I would hold that he is not bound to pay compensation under section 133. It was this statement that led Mr Owen to advance, initially, an argument that section 133 was directed at some failure in the trial process. This led him to submit that if, after an impeccably conducted trial, the discovery of DNA evidence demonstrated conclusively that the convicted defendant was innocent, no claim for compensation would lie under section 133. He was right subsequently to acknowledge that this could not be correct, but that acknowledgement raised a question as to the validity of Lord Binghams observation that section 133 applied to failures of the trial process. I also question that statement. It is not the failure of the trial process that constitutes a miscarriage of justice, but the wrongful conviction that may be caused by it. A wrongful conviction is capable of amounting to a miscarriage of justice whether or not it has been caused by a failure of the trial process. I do not believe that Lord Bingham can have intended to exclude from the ambit of section 133 convictions quashed as the result of the discovery of new facts in circumstances where there has been no failure of the trial process. That, I believe, is the situation with which section 133 is, at least primarily, concerned. There is a question as to the assistance that is to be derived from the following earlier comments in para 4 of Lord Binghams judgment: The expression wrongful convictions is not a legal term of art and it has no settled meaning. Plainly the expression includes the conviction of those who are innocent of the crime of which they have been convicted. But in ordinary parlance the expression would, I think, be extended to those who, whether guilty or not, should clearly not have been convicted at their trials. It is impossible and unnecessary to identify the manifold reasons why a defendant may be convicted when he should not have been. It may be because the evidence against him was fabricated or perjured. It may be because flawed expert evidence was relied on to secure conviction. It may be because evidence helpful to the defence was concealed or withheld. It may be because the jury was the subject of malicious interference. It may be because of judicial unfairness or misdirection. In cases of this kind, it may, or more often may not, be possible to say that a defendant is innocent, but it is possible to say that he has been wrongly convicted. The common factor in such cases is that 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. In R (Clibery) v Secretary of State for the Home Department [2007] EWHC 1855 (Admin) at para 25 I stated that in this passage Lord Bingham was identifying the types of miscarriage of justice that would fall within section 133. On reflection I believe that I was wrong. As Lord Hope has pointed out in para 90 Lord Bingham was discussing the meaning of wrongful conviction in the context of the previous ex gratia scheme. There is a further point to be made in relation to para 4 of Lord Binghams speech. He has included in the catalogue of cases resulting in the conviction of someone who should not have been convicted the case of a judicial misdirection. A judicial misdirection could not be a new or newly discovered fact, but if it were it would fall into Dyson LJs third category. So might a conviction based on flawed expert evidence: see R (Allen) (formerly Harris)) v Secretary of State for Justice [2008] EWCA Civ 808; [2009] 2 All ER 1. Thus para 4 would appear to embrace all four of Dyson LJs categories. In para 9 Lord Bingham observed, when considering section 133, that, while miscarriage of justice can be used to describe the conviction of the demonstrably innocent, it can be and has been used to describe cases in which defendants, guilty or not, certainly should not have been convicted. This also has been treated by some as expressing Lord Binghams view of the scope of section 133, but I do not think that it is clear that this was so. In these circumstances, I agree with Lord Hope that Lord Binghams speech does not provide significant positive assistance in interpreting miscarriage of justice in section 133. It is of assistance in respect of his comments on Lord Steyns answer to that question. Lord Steyns conclusion in Mullen that miscarriage of justice was restricted to the conviction of an innocent person was largely founded on his misreading of the French text of article 14(6) and of the position in France. Shorn of that support, his speech does not provide compelling justification for his conclusion. For all these reasons I do not believe that Mullen helps very much in determining the meaning of miscarriage of justice in section 133. The cases that have followed Mullen, including those before this Court, have proceeded on the basis that Lord Bingham had laid down an alternative test to that of Lord Steyn, and concluded, in each case, that neither test was satisfied. In the circumstances there is nothing to be gained by considering those decisions. I agree with Lord Hope that a fresh approach is required. I propose to adopt the four categories identified by Dyson LJ as the framework for discussion. The nature of the exercise The wording of section 133, following that of article 14(6), might suggest that the terms of the judgment of the court that reverses the conviction will establish whether the entitlement to compensation has been made out. It speaks of a conviction being reversed on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice (emphasis added). That is not, however, the test for quashing a conviction in this jurisdiction. The words on the ground that must, if they are to make sense, be read as in circumstances where. Section 133(1) provides that the compensation will be paid by the Secretary of State, and section 133(2) provides for a two year time limit for application for compensation to the Secretary of State. Thus it is for the Secretary of State to decide whether the requirements of section 133 are satisfied, an exercise which is, of course, subject to judicial review. The Secretary of State first has to consider whether a new or newly discovered fact has led to the quashing of a conviction. If it has, he then has to consider whether that fact shows beyond reasonable doubt that there has been a miscarriage of justice, applying the true meaning of that phrase. The Secretary of State will plainly have regard to the terms of the judgment that quashes the conviction, but ultimately he has to form his own conclusion on whether section 133 is satisfied. The object of the exercise I think that the primary object of section 133, as of article 14(6), is clear. It is to provide entitlement to compensation to a person who has been convicted and punished for a crime that he did not commit. But there is a subsidiary object of the section. This is that compensation should not be paid to a person who has been convicted and punished for a crime that he did commit. The problem with achieving both objects is that the quashing of a conviction does not of itself prove that the person whose conviction has been quashed did not commit the crime of which he was convicted. Thus it is not satisfactory to make the mere quashing of a conviction the trigger for the payment of compensation. It was this problem which led to the adoption of the imprecise language of article 14(6), which has been reproduced in section 133. In interpreting section 133 it is right to have in mind the two conflicting objectives. It is necessary to consider whether the wording of the section permits a balance to be struck between these two objectives and, if so, how and where that balance should be struck. I turn to consider Dyson LJs four categories having in mind these considerations. I shall deviate from the order in which he set them out. Category 4: 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 This category is derived from Lord Binghams speech in Mullen. As I have explained, I do not believe that he put it forward as falling within the scope of section 133. As I understand it, the category embraces an abuse of process so egregious that it calls for the quashing of a conviction, even if it does not put in doubt the guilt of the convicted person. I would not interpret miscarriage of justice in section 133 as embracing such a situation. It has no bearing on what I have identified as the primary purpose of the section, which is the compensation of those who have been convicted of a crime which they did not commit. If it were treated as falling within section 133 this would also be likely to defeat the subsidiary object of section 133, for it would result in the payment of compensation to criminals whose guilt was not in doubt. Category 3: Fresh evidence rendering the conviction unsafe Dyson LJ propounded this test as requiring consideration of whether a fair minded jury could properly convict if there were to be a trial which included the fresh evidence. This raises the question, which I shall consider further when I come to category 2, of whether section 133 requires the Secretary of State to consider the reaction to fresh evidence of a fair minded jury. Put another way, the situation under consideration is one where the fresh evidence reduces the strength of the case that led to the claimants conviction, but does not diminish it to the point where there is no longer a significant case against him. I would not place this category within the scope of section 133 for two reasons. The first is that it gives no sensible meaning to the requirement that the miscarriage of justice must be shown beyond reasonable doubt, or conclusively in the wording of article 14(6). It makes no sense to require that the new evidence must show conclusively that the case against the claimant is less compelling. It is tantamount to requiring the Secretary of State to be certain that he is uncertain of the claimants guilt. My second reason is that, if category 3 were adopted as the right definition of miscarriage of justice, it would not strike a fair balance between the two objectives of section 133. The category of those who are convicted on evidence which appears to establish guilt beyond reasonable doubt, but who have their convictions quashed because of fresh evidence that throws into question the safety of their convictions, will include a significant number who in fact committed the offences of which they were convicted. This is the inevitable consequence of a system which requires guilt to be proved beyond reasonable doubt. When these two factors are considered together they lead to the conclusion that section 133 does not, on its true interpretation, apply to category 3. Category 1: Fresh evidence that shows clearly that the defendant is innocent of the crime of which he was convicted Having considered the categories which were at one extremity of Dyson LJs list, I now turn to the category at the other. Plainly section 133 will embrace this category, but does it provide the exclusive definition of miscarriage of justice in that section? There are a number of points to be made in favour of this suggestion. The first is that it gives section 133 a perfectly natural and logical meaning, indeed it is the meaning that the man in the street would be likely to accord to the wording of section 133. More particularly, if miscarriage of justice is read as meaning the conviction of someone who is innocent, it makes perfect sense of the requirement that the new fact should prove this beyond reasonable doubt. Next it gives section 133 a meaning which is eminently practicable. Objection has been made to category 1 on the ground that it is not the role of the Court of Appeal, when reviewing a conviction, to rule whether the defendant is innocent of the crime of which he was convicted. In R v McIlkenny (1991) 93 Cr App R 287, 311 Lloyd LJ observed that the Court of Appeal was neither obliged nor entitled to state that an appellant was innocent. Its task was simply to decide whether the verdict of the jury could stand. He described this as a point of great constitutional importance. I think that he was right. The point was well put by the Court of Appeal for Ontario in R v Mullins Johnson 2007 ONCA 720; 87 OR (3d) 425. The appellant had been convicted of murder of his 4 year old niece and served 12 years in prison. His conviction was based on expert evidence that the autopsy indicated that the young girl had been sexually abused and suffocated. Subsequent medical evidence totally discredited the evidence given at the trial, so that it became clear that there was no reliable pathological evidence either of sexual abuse or of homicidal asphyxia of the child. The case was referred to the Court of Appeal on terms that it should treat it as an appeal on fresh evidence. In a passage which merits citation in full, the Court explained why it would not be proper for it in these circumstances to make a declaration that the appellant was in fact innocent: 22 The fresh evidence shows that the appellants conviction was the result of a rush to judgment based on flawed scientific opinion. With the entering of an acquittal, the appellants legal innocence has been re established. The fresh evidence is compelling in demonstrating that no crime was committed against Valin Johnson and that the appellant did not commit any crime. For that reason an acquittal is the proper result. 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, pp. 342: [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. 25 In addition to the jurisdictional issue, there are important policy reasons for not, in effect, recognizing 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 (p 39). To recognize 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. But the decision whether there has been a miscarriage of justice within section 133 is not for the court but for the Secretary of State. He should have no difficulty in deciding whether new evidence that has led to the quashing of a conviction shows beyond reasonable doubt that the defendant was innocent of the crime of which he was convicted. Where the prosecution has satisfied the jury beyond reasonable doubt that a defendant is guilty, evidence that demonstrates beyond reasonable doubt that he was in fact innocent will not be equivocal. Even though it is not for the Court of Appeal, when quashing the conviction, to express its opinion that the defendant is innocent, the reasons given for quashing the conviction are unlikely to leave any doubt of this, just as was the position in Mullins Johnson. The other obvious point in favour of category 1 is that it precludes all possibility of a defendant who in fact committed the crime of which he was convicted receiving compensation for the consequences of his conviction. If this is to be treated as being of paramount importance, then category 1 is the only satisfactory interpretation of section 133. The Law Commission of New Zealand in its 1998 Report No 49 on Compensating the Wrongly Convicted advised at para 127 A requirement to prove innocence is, however, necessary to prevent the guilty claimant, acquitted on a technicality, from profiting from the crime. It recognises that it is a persons innocence which provides the justification for compensation in the first place. This brings me to the last point that is advanced in favour of category 1. It is argued that it is not in practice possible to draw a line between category 2 and category 3. Unless category 1 is adopted as the correct interpretation of section 133, defendants whose convictions are quashed on technicalities will profit from compensation. I shall consider this argument when I deal with category 2. The first argument against restricting the ambit of section 133 to category 1 is that the parties to article 14(6) voted against an amendment which would have done this. The second is that this will deprive some defendants who are in fact innocent and who succeed in having their convictions quashed on the grounds of fresh evidence from obtaining compensation. It will exclude from entitlement to compensation those who no longer seem likely to be guilty, but whose innocence is not established beyond reasonable doubt. This is a heavy price to pay for ensuring that no guilty person is ever the recipient of compensation. Does category 2, or some similar formulation of miscarriage of justice, provide a more satisfactory approach to the desire to provide compensation to the innocent without rewarding the guilty that both accords with the language of the section and is workable in practice? Category 2: Fresh evidence such that, had it been available at the trial no reasonable jury could convict the defendant This category applies to the evidence, including the fresh evidence, the test that a judge has to apply when considering an application at the end of the prosecution case for dismissal of a charge on the ground that the defendant has no case to answer. It focuses on the evidence before the jury. If the fresh evidence were always evidence of primary fact, or new expert evidence, the test might be satisfactory. The position is not, however, as simple as that. The new evidence that leads to the quashing of a conviction is very often not primary evidence that bears directly on whether the defendant committed the crime of which he was convicted, but evidence that bears on the credibility of those who provided the primary evidence on which he was convicted. Both of the appeals before the Court fall into this category. So does the example of category 2 given by Dyson LJ: fresh evidence which undermines the creditworthiness of the sole witness for the prosecution. Here one can run into a problem that is peculiar to the criminal procedures that apply in common law jurisdictions. Under common law procedures the evidence that is permitted to be placed before the jury is screened by a number of rules that are designed to avoid the risk that the jury will be unfairly prejudiced and to ensure that the trial is fair. Thus section 78 of the Police and Criminal Evidence Act 1984 gives the judge a general jurisdiction to exclude evidence on the grounds of fairness and section 76A of the same Act contains a little code governing the admissibility of a confession. So does section 8(2) of the Northern Ireland (Emergency Provisions) Act 1978, which was applicable to the critical evidence adduced against the defendants in the second appeal. Often it will be appropriate for the judge to hold a voir dire in order to decide whether or not evidence can be admitted. The question of whether there is evidence upon which a jury can properly convict is taken after the judge has screened from the jury evidence which, under the relevant procedural code, he has ruled to be inadmissible. That is often a difficult judicial task. I do not believe that section 133 should be so interpreted as to impose on the Secretary of Sate the task of deciding whether the fresh evidence would have rendered inadmissible the primary evidence to which it related, in order to answer the question whether there would have been a case upon which a reasonable jury could convict. There is a further difficulty with category 2. The question of whether a reasonable jury could properly convict falls to be answered having regard to the fact that a jury must be satisfied of guilt beyond reasonable doubt. Section 133 requires the Secretary of State to be satisfied beyond reasonable doubt that a miscarriage of justice has occurred. Category 2 thus operates as follows: compensation will be payable where the Secretary of State is satisfied beyond reasonable doubt that no reasonable jury could have been satisfied beyond reasonable doubt that the defendant was guilty. This does not seem a very sensible test. The final point to make about category 2 is that it applies a test the result of which depends critically on common law procedural rules. As the test is derived from article 14(6), it would be preferable if it were one more readily applicable in other jurisdictions. For these reasons I do not consider the second category, as formulated by Dyson LJ, provides a satisfactory definition of miscarriage of justice. I would replace it with a more robust test of miscarriage of justice. A new fact will show that a miscarriage of justice has occurred when it so undermines the evidence against the defendant that no conviction could possibly be based upon it. This is a matter to which the test of satisfaction beyond reasonable doubt can readily be applied. This test will not guarantee that all those who are entitled to compensation are in fact innocent. It will, however, ensure that when innocent defendants are convicted on evidence which is subsequently discredited, they are not precluded from obtaining compensation because they cannot prove their innocence beyond reasonable doubt. I find this a more satisfactory outcome than that produced by category 1. I believe that it is a test that is workable in practice and which will readily distinguish those to whom it applies from those in category 3. It is also an interpretation of miscarriage of justice which is capable of universal application. Retrial The provisions in relation to retrial introduced into section 133 in the circumstances described by Lord Hope at paras 103 and 104 of his judgment raise a problem. A retrial will only be ordered where, although it quashes the defendants conviction on the grounds of fresh evidence, the Court of Appeal considers that there remains a case against him that is fit for trial. Assuming that they are correct in that view, the fresh evidence could never fall within the scope of section 133 if it is right to interpret that section as being limited to either category 1 or category 2, as formulated by Dyson LJ or as I have reformulated it. The introduction into the section of the provisions in relation to retrial would make more sense if section 133 embraced category 3. In that case, however, one might have expected compensation to be payable automatically if the retrial ended in an acquittal, but the amended section 133 does not so provide. It does not follow, however, that category 1 or category 2 cannot stand with section 133, as amended. Entitlement to compensation does not turn on the view that the Court of Appeal takes of the new evidence. The defendant may contend, even where a retrial is ordered, that the fresh evidence proves his innocence. Although the Court of Appeal is not persuaded of this, it may become apparent in the course of the retrial that the defendant is correct. Thus the provisions in relation to retrial make sense, even if category 1 or category 2 represents the correct interpretation of miscarriage of justice. Article 6(2) of the European Convention on Human Rights The Strasbourg Court has stated that one of the functions of article 6(2) is to protect an acquitted persons reputation from statements or acts that follow an acquittal which would seem to undermine it see Taliadorou and Stylianou v Cyprus (Application Nos 39627/05 and 39631/05) (unreported) 16 October 2008, at para 26. The Courts expansion of what would seem to be a rule intended to be part of the guarantee of a fair trial into something coming close to a principle of the law of defamation is one of the more remarkable examples of the fact that the Convention is a living instrument. Mr Owen QC for Mr Adams referred the Court to a series of decisions of the Strasbourg Court in which it was held to be a violation of article 6(2) for a state to refuse compensation to which an applicant who had been held in preventative detention was normally entitled on acquittal at the end of a criminal trial on the ground that his acquittal did not establish his innocence. Lord Hope has summarised the details and effect of those authorities. Mr Owen argued that their effect was that, once Mr Adams conviction had been quashed, he was entitled to be treated as innocent in the context of his claim for compensation. A rather different argument based on article 6(2) was rejected by Lord Steyn in Mullen at para 44. Mr Owen first advanced the present argument when appearing for the claimant in R(Allen) (formerly Harris)) v Secretary of State for Justice [2009] 2 All ER 1. In that case the claimants claim for compensation under section 133 was rejected on the grounds that his case satisfied neither Lord Steyns test in Mullen nor the test that Lord Bingham had been thought to advance in that case. Giving the only reasoned judgment, Hughes LJ comprehensively rejected Mr Owens argument based on article 6(2) for a series of ten reasons. On the present appeals Lord Hope has held that reliance on article 6(2) is misplaced for reasons that have much in common with those of Hughes LJ. I agree with both of them. I would add this. The appellants claims are for compensation pursuant to the provisions of section 133. On no view does that section make the right to compensation conditional on proof of innocence by a claimant. The right to compensation depends upon a new or newly discovered fact showing beyond reasonable doubt that a miscarriage of justice has occurred. Whatever the precise meaning of miscarriage of justice the issue in the individual case will be whether it was conclusively demonstrated by the new fact. The issue will not be whether or not the claimant was in fact innocent. The presumption of innocence will not be infringed. Newly discovered fact Mr Adams appeal raises a second issue. Were the facts that led to the quashing of his conviction newly discovered despite the fact that they were contained in documents disclosed to his legal representatives before his trial or available on the Holmes database? The phrase newly discovered raises a further difficult problem of interpretation, for it does not indicate to whom the discovery must be new. Procedure Act 1993. Section 9(6) of that Act provides: Ireland has given effect to article 14(6) by section 9 of the Criminal newly discovered fact means ( a ) where a conviction was quashed by the Court on an application under section 2 or a convicted person was pardoned as a result of a petition under section 7, or has been acquitted in any re trial, a fact which was discovered by him or came to his notice after the relevant appeal proceedings had been finally determined or a fact the significance of which was not appreciated by the convicted person or his advisers during the trial or appeal proceedings. I would adopt this generous interpretation of newly discovered fact. Section 133(1), following the almost identical wording of article 14(6), ends with the proviso : unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted. This proviso is significant in more than one way. First, the use of the word non disclosure would seem to equate the new discovery with disclosure. The latter word has a broad ambit and, in context, suggests to me the bringing of a fact into the public domain and, in particular, the disclosure of that fact to the court. Secondly, I read the provision as excluding a right to compensation where the person convicted has deliberately prevented the disclosure of the relevant fact, or where the non discovery of that fact is otherwise attributable to his own fault. We are envisaging a situation where a claimant has been convicted, and may well have served a lengthy term of imprisonment, in circumstances where it has now been discovered that a fact existed which either demonstrates that he was innocent or, at least, undermines the case that the prosecution brought against him. If he was aware of this fact but did not draw it to the attention of his lawyers, and he did not deliberately conceal it (which would bring the fact within the proviso), this will either be because the significance of the fact was not reasonably apparent or because it was not apparent to him. Many who are brought before the criminal courts are illiterate, ill educated, suffering from one or another form of mental illness or of limited intellectual ability. A person who has been wrongly convicted should not be penalised should this be attributable to any of these matters. It is for those reasons that I would adopt the same interpretation of newly discovered fact as the Irish legislature. Conclusions It has always been common ground that Mr Adams case falls into category 3. The newly discovered facts (as I would hold them to be) in his case do not show that a miscarriage of justice has occurred within the meaning that I would give to that phrase in section 133. Accordingly, I would dismiss his appeal. The newly discovered facts in the case of Mr McCartney and Mr MacDermott, as described by Lord Kerr, so undermine the evidence against them that no conviction could possibly be based upon it. There can be no reasonable doubt of this. Accordingly I would allow their appeal and hold that they are entitled to compensation pursuant to the provisions of section 133. LORD HOPE I accept with gratitude Lord Phillips description of the facts in the case of Andrew Adams and Lord Kerrs description of the facts in the cases of Eamonn MacDermott and Raymond McCartney. With that advantage I can go straight to the issues of principle that these cases have raised. Mention should also be made of Barry George, who was granted permission to intervene in this appeal. On 2 July 2001 he was convicted of the murder on 26 April 1999 of the television presenter Jill Dando, who was killed by a single shot to the head as she was about to enter her home in Fulham. His appeal against conviction was dismissed on 29 July 2002: [2002] EWCA Crim 1923. A major part of the Crowns case against him was that a single particle of firearms discharge, which matched particles found in the cartridge case of the bullet which killed Miss Dando, in her coat and in samples of her hair, had been found nearly 12 months later in the pocket of a coat owned and worn by Mr George. Following a review of his case, the Criminal Cases Review Commission decided to refer his conviction to the Court of Appeal under section 9 of the Criminal Appeal Act 1995 on the ground that new evidence called into question the evidence at the trial about the firearms discharge and the significance that had apparently been attached to that evidence. New reports obtained from the Forensic Science Service had shown that it had no evidential value in the case against Mr George. On 15 November 2007 the Court of Appeal quashed the conviction and ordered a retrial: [2007] EWCA Crim 2722. The evidence of the firearms discharge was not admitted at the trial. On 1 August 2008 the jury by a unanimous verdict found Mr George not guilty. On the day of the acquittal the Crown Prosecution Service issued a press statement in which it was stated that Mr George now had the right to be regarded as an innocent man. On 7 October 2009 Mr George applied for compensation under section 133 of the Criminal Justice Act 1988. By letter dated 15 January 2010 the Secretary of State for Justice told Mr George that he was not prepared to authorise an award of compensation as the new forensic evidence did not prove beyond reasonable doubt that he was innocent. He referred to the fact that in its judgment of 15 November 2007 the Court of Appeal stated that in the absence of the evidence of the firearms discharge there was circumstantial evidence capable of implicating Mr George, and that it had ordered a retrial which defence counsel conceded should take place. Mr George applied for judicial review of that decision on 14 April 2010. On 25 August 2010 Collins J granted permission. But he stayed the proceedings pending the decision of this Court as to the meaning of miscarriage of justice in section 133 of the 1988 Act. Mr Glen QC for Mr George submitted that it was sufficient to entitle a person to an award of compensation under that section that his conviction had been reversed on the ground of a new or newly discovered fact and that, in the event of his being subjected to a retrial, he had been acquitted of the offence. As that was what had happened in his case it should be made clear by this Court in its judgment that, where a person had suffered punishment in such circumstances, compensation should be paid to him under the scheme that had been set up by the statute. With that introduction I can go straight to the issues of principle that these cases have raised. Background The background to the introduction of a statutory right to compensation for miscarriages of justice by section 133 of the Criminal Justice Act 1988 was described in In re McFarland [2004] UKHL 17, [2004] 1 WLR 1289, paras 6 9 by Lord Bingham of Cornhill and R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18, [2005] 1 AC 1, paras 25 28 by Lord Steyn. Lord Bingham drew attention in McFarland, para 6, to the underlying principles. In any liberal democratic state there will be those who are accused of crime and are acquitted at trial, or whose convictions are reversed following an appeal. Those affected will have suffered the stigma of being accused and the trauma of standing trial and of imprisonment before the process is brought to an end. In principle it might seem that the state, which initiated the unsuccessful prosecution, should compensate those who have been acquitted, or at least some of them. How this was to be done and in what circumstances was much debated before the current system was adopted: see David Harris, The Right to a Fair Trial in Criminal Proceedings as a Human Right (1967) 16 ICLQ 352, 372 375. It was, as Lord Steyn said in Mullen, para 52, a process of evolution. First, there was the adoption on 16 December 1966 of the International Covenant on Civil and Political Rights (the ICCPR), article 14(6) of which made provision for what it described as compensation according to law to a person whose conviction had been reversed or had been pardoned in the circumstances to which it referred and who had suffered punishment as a result of such a conviction. The ICCPR was ratified by the United Kingdom on 20 May 1976. On 29 July 1976 the Home Secretary (Mr Roy Jenkins) set out in a written answer the procedure which was being adopted for the making of ex gratia payments in recognition of the hardship caused by what he referred to as a wrongful conviction: Hansard (HC Debates), WA cols 328 330. Three weeks later, on 20 August 1976, the ICCPR entered into force. Thereafter the United Kingdom continued to fulfil its international obligations under article 14(6) under the ex gratia scheme. The scheme was put onto a more formal basis on 29 November 1985: see Hansard (HC Debates), WA cols 689 690. The then Home Secretary (Mr Douglas Hurd) said that he would be prepared to pay compensation where this was required by the international obligations, and that he remained prepared to pay compensation to people who did not fall within the terms of article 14(6) but who had spent a period in custody following a wrongful conviction or charge, where he was satisfied that it had resulted from serious default on the part of a member of a police force or of some other public authority. He said that the Secretary of State for Northern Ireland intended to follow a similar practice. A similar scheme was already in operation in Scotland. There was however international pressure on the United Kingdom to put its obligations under article 14(6) on a statutory footing: see R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18, [2005] 1 AC 1, para 28 by Lord Steyn. The response to it was section 133 of the Criminal Justice Act 1988. The new statutory right superseded in part the existing scheme for ex gratia payments, which remained in being until April 2006, when it was terminated both in England and Wales and Northern Ireland. This has had the inevitable, but unfortunate, consequence that claimants in those jurisdictions are now dependent solely upon the scheme provided by the statute. The ex gratia scheme which has been operated in Scotland by the Scottish Ministers still remains in force there, alongside the system for the payment of compensation in respect of all reversals of convictions that fall within section 133 of the 1988 Act. This enables those against whom criminal proceedings were taken which can properly be regarded with hindsight as wrongful to be compensated even though their cases cannot be brought within the terms of the statute. The way the scheme is currently operated in England and Wales was set out by the Minister of State (Lord McNally) in a written answer which was published on 1 March 2011 (Hansard (HL Debates), WA col 318), in which he said: Compensation is paid under [section 133] where a conviction is quashed following an out of time appeal or following a reference by the Criminal Cases Review Commission to the relevant appeal court on the basis that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice. Section 133 fully meets our international obligations. The Government do not operate a compensation scheme for those who have convictions quashed at in time appeals or those who are acquitted at trial. Figures disclosed by the Ministry of Justice about the number of applications received and the number of applications approved in England and Wales show that there has been a very substantial drop in the number of applications approved since the abolition of the ex gratia scheme in 2006. The system prior to that date was that all applications were considered first under section 133 and then, if not approved, were considered under the ex gratia scheme. The following table shows all applications for compensation received since May 2004 and those which were approved under section 133 : Year 2004 05 2005 06 2006 07 2007 08 2008 09 2009 10 The statutory scheme Article 14(6) of the ICCPR provides: Total Applications Received 88 74 39 40 38 37 Applications Approved Under s 133 39 21 23 7 7 1 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. The wording of section 133(1) of the 1988 Act follows that of article 14(6). It 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 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. Subsection (2) provides that no payment of compensation is to be made unless an application for compensation is made to the Secretary of State, for which a time limit of two years beginning with the date when the persons conviction is reversed or he is pardoned was introduced in relation to England and Wales and Northern Ireland by section 61(3) of the Criminal Justice and Immigration Act 2008. Section 133(5) of the 1988 Act, as amended by paragraph 16(4) of Schedule 2 to the Criminal Appeal Act 1995, provides: In this section reversed shall be construed as referring to a conviction having been quashed or set aside (a) on an appeal out of time; or (b) on a reference (i) (ii) under section 194B of the Criminal Procedure (Scotland) Act under the Criminal Appeal Act 1995; or 1995. Subsection (5A), which was inserted in relation to England and Wales and Northern Ireland by section 61(5) of the Criminal Justice and Immigration Act 2008, provides: (5A) But in a case where (a) a persons conviction for an offence is quashed on an appeal out of time, and (b) the person is to be subject to a retrial, the conviction is not to be treated for the purposes of this section as reversed unless and until the person is acquitted of all offences at the retrial or the prosecution indicates that it has decided not to proceed with the retrial. To be entitled to compensation under section 133(1) the claimant must show that he has been convicted of a criminal offence and that subsequently his conviction has been reversed on an appeal out of time or on a reference by the CCRC, 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 words that I have quoted from the subsection differ from the equivalent part of article 14(6) of the ICCPR in one respect only. The statute uses the phrase beyond reasonable doubt where article 14(6) uses the word conclusively. One might have thought at first sight that, when applications for compensation were made to the Secretary of State, such simple wording could be applied to each case without much difficulty. But that has proved not to be the case, as can be seen from the speeches in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1, where the meaning of the words miscarriage of justice was under scrutiny. Lord Bingham said that he would hesitate to accept the submission of the Secretary of State that section 133 obliged him to pay compensation only when a defendant, finally acquitted in the circumstances satisfying the statutory conditions, is shown beyond reasonable doubt to be innocent of the crime of which he had been convicted: para 9. Lord Steyn, on the other hand, said that the words miscarriage of justice extend only to cases where the person concerned is acknowledged to be clearly innocent: para 56. Then there are the words new or newly discovered fact. What is a fact for this purpose? And to whom does it have to be new or by whom does it have to be newly discovered? The meaning of those words is in issue in the appeal by Adams, whose conviction was reversed because of a failure by his representatives to make themselves aware of and make use of three pieces of important material at his trial which had been made available to them by the prosecution but of which Adams himself was not aware. The issue as to what is meant by the words miscarriage of justice is common to his appeal and the appeals of MacDermott and McCartney. It will be convenient to examine this issue first. Miscarriage of justice Attempts have been made in subsequent cases to reconcile the differing views as to the meaning of miscarriage of justice that were expressed in Mullen: see R (Murphy) v Secretary of State for the Home Department [2005] EWHC 140 (Admin), [2005] 1 WLR 3516; R (Clibery) v Secretary of State for the Home Department [2007] EWHC 1855 (Admin); In re Boyles Application [2008] NICA 35; R (Allen) (formerly Harris) v Secretary of State for Justice [2008] EWCA Civ 808, [2009] 2 All ER 1; R (Siddall) v Secretary of State for Justice [2009] EWHC 482 (Admin). In the Court of Appeal in Adamss case Dyson LJ said that, like Lord Phillips of Worth Matravers CJ in Cliberys case and Richards J in Murphy, he did not propose to express a view as to whether Lord Binghams interpretation was to be preferred to that of Lord Steyn: R (Adams) v Secretary of State for the Home Department [2009] EWCA Civ 1291, [2010] QB 460, para 42. The assumption has been that Lord Binghams reference in para 4 of his speech in Mullen to something having gone seriously wrong in the investigation of the offence or the conduct of the trial could be taken as a test of whether the right to compensation under section 133 was available that could sit alongside that preferred by Lord Steyn. In Allen, para 26 Hughes LJ said that this was made the plainer by Lord Binghams references to a defendant who should clearly not have been convicted in para 4 and who certainly should not have been convicted in para 9(1). Dyson LJ set the scene for a discussion of this issue in these appeals in para 19 of his judgment in R (Adams) v Secretary of State for the Home Department [2009] EWCA Civ 1291, [2010] QB 460, when he said: The question what is meant by miscarriage of justice has not been resolved by the courts. As Toulson LJ said when giving permission to appeal in the present case, there are at least three classes of case where the Court of Appeal allows an appeal against conviction on the basis of fresh evidence. I shall call them category 1, category 2 and category 3 cases. A category 1 case is where the court is sure that the defendant is innocent of the crime of which he has been convicted. An obvious example is where DNA evidence, not obtainable at the trial, shows beyond reasonable doubt that the defendant was not guilty of the offence. A category 2 case is where the fresh evidence shows that he was wrongly convicted in the sense that, had the fresh evidence been available, no reasonable jury could properly have convicted. An example is where the prosecution case rested entirely on the evidence of a witness who was put forward as a witness of truth and fresh evidence undermines the creditworthiness of that witness, so that no fair minded jury could properly have convicted on the evidence of that witness. It does not follow in a category 2 case that the defendant was innocent. A category 3 case is where the fresh evidence is such that the conviction cannot be regarded as safe, but the court cannot say that no fair minded jury could properly convict if there were to be a trial which included the fresh evidence. The court concludes that a fair minded jury might convict or it might acquit. There is a fourth category of case to which Lord Bingham referred in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1. This is where a conviction is quashed because 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. This list of the different types of case where appeals are allowed according to the practice of the Court of Appeal (Criminal Division) was used in argument to focus the positions adopted by either side in these appeals. It was assisted later in the judgment by an acknowledgment that there were two limbs to Lord Binghams interpretation as set out in his speech in Mullen, para 4: [2010] QB 460, para 43. The first limb was where the person was innocent of the crime of which he had been convicted: category 1 according to Toulson LJs analysis. The second limb was where something had gone seriously wrong in the investigation or the conduct of the trial and the person should clearly not have been convicted. For the Secretaries of State it was submitted that only cases falling within category 1 would satisfy the requirements of section 133(1). For Adams Mr Owen QC submitted that it was not possible to draw a clear line between categories 2 and 3, so it was sufficient for him to bring his case within category 3. In any event, he submitted that Lord Binghams interpretation of the phrase in his second limb in Mullen was to be preferred, that proof of innocence was not required and that his case came within category 4. Counsel for the appellants McCartney and MacDermott submitted that Lord Binghams interpretation was to be preferred, and that their cases too fell within his second limb and category 4. It would be wrong to regard the way these categories were identified and described by the Court of Appeal as a substitute for looking at the language of section 133(1) itself and reaching our own view as to its effect. Lord Bingham said in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1, para 2 that he would allow the Secretary of States appeal on a narrow ground which made it unnecessary for him to reach a concluded view as to whether the right to compensation under the statute was available only to those who were innocent of the crime of which they had been convicted. We do not have that luxury in the cases that are before us in these appeals. A choice has to be made. It is time to take a fresh look at the arguments. Our task is made less onerous, although no less difficult, by the fact that the materials that were said to be relevant were discussed so fully by Lord Bingham and Lord Steyn in Mullen. It is striking how little assistance they were able to derive from the materials that were before the House. On many points both Lord Steyn and Lord Bingham were in agreement. They were agreed that the wording of section 133(1) was intended, as Lord Bingham put it in para 9, to reflect article 14(6). In para 5 he said that the parties were rightly agreed that the key to interpretation of section 133 was a correct understanding of article 14(6). They were also agreed that, as Lord Bingham said in para 9(1), the expression miscarriage of justice is not a legal term of article Taken on its own and out of context, it has no settled meaning. Lord Steyn said that the expression had to be looked at in the relevant international context, and that the only relevant context here was the international meaning of the words in article 14(6) on which section 133 is based: para 36. The question then was, what did the materials reveal as to its international meaning? The travaux prparatoires disclosed no consensus of opinion on the meaning to be given to it. Lord Steyn said that they were neutral and did not assist in any way on the proper construction of article 14(6): para 54. Lord Bingham seems to have seen this as a possible pointer towards a more generous interpretation. He said that the expression miscarriage of justice may have commended itself because of the latitude of interpretation that it offered: para 9(2). But this was no more than a straw in the wind. The jurisprudence of the United Nations Human Rights Committee was of little assistance either indeed, Lord Steyn does not mention it at all. And there was no consensus of academic opinion on the issue. In this situation Lord Steyn resorted first to an examination of article 14(6) on its own terms: para 45. Lord Bingham did not undertake this exercise. Instead he took as his starting point the statements that Mr Jenkins and Mr Hurd made when they were explaining the ex gratia scheme to Parliament: para 4. As he said at the outset of this paragraph, they were addressing the subject of wrongful convictions and charges. He observed that, like the expression miscarriage of justice, the expression wrongful convictions is not a legal term of art and it has no settled meaning. He then set out to describe in some detail the situations to which in ordinary parlance, as he put it, the expression would be taken to extend. Here we find the first and second limbs, as Dyson LJ in the Court of Appeal described them at [2010] QB 460, para 43, set out. The first is the conviction of those who are innocent of the crime of which they were convicted. The second embraces cases where those who, whether guilty or not, should not have been convicted. The manifold reasons where this might happen were impossible and unnecessary to identify. The common factor however was that something had gone seriously wrong in the investigation of the offence or the conduct of the trial. It is important not to lose sight of the fact that Lord Bingham was not seeking in para 4 to describe what, in the context of article 14(6), was meant by the expression miscarriage of justice. He was concentrating here on the expression wrongful conviction in the statements about the ex gratia scheme. He did not refer to the fact that it is a precondition of the right to compensation under article 14(6), and in its turn section 133, that the conviction was reversed because of a new or newly discovered fact. The descriptions of the ex gratia scheme did not mention this as a prerequisite. Quite what part this discussion had to play in the interpretation of article 14(6), to which he turned in para 5, is unclear. He took account of the fact that in the course of his statement Mr Hurd recited the terms of, and undertook to observe, article 14(6): para 5. There is an indication in that paragraph that he saw the only difference between that part of Mr Hurds statement and the enactment of section 133 as being that the right to be compensated should more obviously be, as article 14(6) requires, according to law. But, as he said at the end of that paragraph, the task of the House was to interpret section 133. He did not say and it would have been surprising if he had done that the key to this was to be found in Mr Hurds description of the cases where he was willing to pay compensation for a wrongful conviction under the ex gratia scheme. When he said at the end of para 8 that it is for failures of the trial process that the Secretary of State is bound by section 133 and article 14(6) to pay compensation, he was not offering a considered view as to what those provisions actually mean. He was explaining why, because there was no failure in the trial process, he could decide the case against Mullen on that limited ground without forming a concluded view as to what the convicted person had to show to be entitled to compensation. In R (Clibery) v Secretary of State for the Home Department [2007] EWHC 1855 (Admin), para 25, Lord Phillips of Worth Matravers CJ said that in para 4 of his speech in Mullen Lord Bingham considered two different situations, each of which he (that is, Lord Bingham) considered fell within the description of miscarriage of justice in section 133 of the 1988 Act. It is true, as Lord Phillips went on to point out, that in para 6 of his speech Lord Bingham referred to the core right with which article 14(6) is concerned as the right to a fair trial. But I think, with respect, that Lord Phillips was wrong to say that in para 4 of his speech Lord Bingham was considering what was meant by miscarriage of justice in section 133, as he himself has accepted: see para 30, above. Hughes LJ drew attention to this point in R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 2 All ER 1, para 25. He said that it must be remembered that in Mullen both the statutory and the ex gratia schemes were under consideration. In my opinion the value of Lord Binghams speech in Mullen lies not in any attempt on his part to subject section 133 to textual analysis, for he did not do this. It is to be found in the reasons he gave for hesitating to accept the argument for the Secretary of State that section 133 was satisfied only when the defendant was shown beyond reasonable doubt to have been innocent of the crime of which he had been convicted, and in particular in the three points on which he disagreed with Lord Steyn. Lord Steyns textual analysis of article 14(6) begins with a warning that there was no overarching purpose of compensating all who are wrongly convicted. For the reasons he gives in para 45, the fundamental right under article 14(6) is narrowly circumscribed. There was no intention to compensate all those whose convictions were quashed within the ordinary time limits, only those whose convictions were quashed on appeal out of time. And this was only where a new or newly discovered fact showed conclusively that there had been a miscarriage of justice. Having made this point, he then concentrated in para 46 on the requirement that the new or newly discovered fact must show conclusively (or beyond reasonable doubt in the language of section 133) that there has been a miscarriage of justice. He said that this filtered out cases of two kinds, (1) where there may have been a wrongful conviction and (2) where it is only probable that there may have been a wrongful conviction. He concluded that the only relevant context pointed to a narrow interpretation, that is to say the case where innocence is demonstrated. This approach leans very heavily on the use of the word conclusively. That word certainly points towards a narrow interpretation. But it does not point inevitably to the demonstration of innocence as the only case that could qualify for compensation under the article. The fact that a person who has been pardoned is brought within the scheme does not have that effect either. It would plainly have been wrong to exclude those who are pardoned from the scheme when those whose convictions have been reversed are given the benefit of it. But the reversal of a conviction and a pardon are processes which are distinct from each other. It does not follow from the mere fact that they are both covered by the same scheme that the only reversals of convictions that can be contemplated are those which would otherwise have deserved a pardon. Lord Steyn might have examined these points more fully, had he not been persuaded by two considerations to which he then turned that he had found the right answer. The first was the use of the words une erreur judiciaire in the French text of the ICCPR. In para 47 of his speech in Mullen Lord Steyn said that this was a technical expression indicating a miscarriage of justice in the sense of the conviction of the innocent. In para 9(4) of his speech Lord Bingham expressed some unease about this, as he contrasted these words with the reference to un condamn reconnu innocent in article 626 of the French Code de Procdure Pnale. He said that the expression une erreur judiciaire could be understood as equivalent to miscarriage of justice in its broad sense, and that it was not obviously apt to denote proof of innocence. In In re Boyles Application [2008] NICA 35, para 11 Girvan LJ said that he considered that Lord Binghams hesitation in not accepting Lord Steyns stringent requirement of proof of innocence was justified. In para 12 he pointed out that the term erreur judiciaire is defined by Grard Cornu in his Vocabulaire Juridique, 7th ed (1998), as une erreur de fait commise par une juridiction de jugement dans son appreciation de la culpabilit dune personne poursuivie. In para 13 he enlarged on Lord Binghams reference to article 626 of the Code de Procdure Pnale, pointing out that it did not require proof of innocence but rather that, where a defendants conviction is quashed and he is subsequently acquitted, he is reconnu innocent in consequence in other words, the annulment of the conviction itself leads to the establishment of his innocence. Although Mr Tam QC for the Secretary of State sought to defend Lord Steyns interpretation in his written case, he accepted in the course of Mr Owens oral argument that it was probably incorrect. For my part, I think that Girvan LJs researches have shown that Lord Steyns understanding of the words une erreur judiciaire in the French text of article 14(6), for which he gave no authority, was mistaken. The second consideration on which Lord Steyn relied was an observation in para 25 of an explanatory report by the Steering Committee for Human Rights appointed by the Council of Europe which accompanied the Seventh Protocol of the European Convention when it was published in November 1984: Mullen, para 48. It said of article 3, which follows the wording of article 14(6) of the ICCPR, that the intention was that states would be obliged to compensate persons only in clear cases of miscarriage of justice, in the sense that there would be an acknowledgment that the person concerned was clearly innocent. Having noted that in the introduction to the report it was stated that participation in the Protocol would not affect the application of provisions containing obligations under any other international instrument, Lord Steyn said that the explanatory report nevertheless had great persuasive value in the process of interpretation. In para 9(4), on the other hand, Lord Bingham set out five reasons for thinking that this passage does not bear the weight that Lord Steyn attached to it. Among those reasons are two which seem to me to be particularly significant. First, many more states are parties to the ICCPR than to the European Convention or the Seventh Protocol, which the United Kingdom has not signed or ratified. Second, para 25 does not appear to be altogether consistent with para 23, which suggests that a miscarriage of justice occurs where there is a serious failure in the judicial process involving grave prejudice to the convicted person. Furthermore, as Lord Bingham noted in para 9(5), van Dijk and van Hoof, Theory and Practice of the European Convention on Human Rights, 3rd ed (1998), p 689 take a different view, suggesting that the explanatory reports interpretation is too strict and that reversal of the conviction on the ground that new facts have been discovered which introduce a reasonable doubt as to the guilt of the accused is enough. Lord Steyn said in para 48 that the explanatory report had great persuasive value. I think that, for the reasons Lord Bingham gives, this overstates the position. The better view is that it lends some support the Secretary of States argument, but that it must be for the court to work out for itself what the words mean. There was one further difficulty about Lord Steyns interpretation to which Lord Bingham drew attention in para 9(6). This is that courts of appeal, although well used to deciding whether convictions are safe or whether reasonable doubts exist about their safety, are not called upon to decide whether a defendant is innocent and in practice rarely do so. In R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 2 All ER 1, para 40(iii) Hughes LJ said that cases where the innocence of the convicted defendant is genuinely demonstrated beyond reasonable doubt by the new or newly discovered fact will be identifiable in that court and the judgment will, in virtually every case, make this plain. I do not think that this entirely meets Lord Binghams point. I have no doubt that there will be cases of the kind that Hughes LJ describes. But it remains true that courts of appeal are not called upon to say whether or not a defendant was innocent, and it is at least questionable whether restricting the right to compensation to cases where the establishment of innocence is apparent from the courts judgment imposes too severe a test for the entitlement to compensation. A fresh analysis If one accepts, as I would do, Lord Binghams reasons for doubting whether Lord Steyn was right to find support for his reading of article 14(6) in the French text and in para 25 of the explanatory committees report on article 3 of the Seventh Protocol, one is driven back to the language of the article itself as to what the words miscarriage of justice mean. Taken by itself this phrase can have a wide meaning. It is the sole ground on which convictions can be brought under review of the High Court of Justiciary in Scotland: Criminal Procedure (Scotland) Act 1995, section 106(3). But the fact that these words are linked to what is shown conclusively by a new or newly discovered fact clearly excludes cases where there may have been a wrongful conviction and the court is persuaded on this ground only that it is unsafe. It clearly includes cases where the innocence of the defendant is clearly demonstrated. But the article does not state in terms that the only criterion is innocence. Indeed, the test of innocence had appeared in previous drafts but it was not adopted. I would hold, in agreement with Lord Phillips (see para 55 above) that it includes also cases where the new or newly discovered fact shows that the evidence against the defendant has been so undermined that no conviction could possibly be based upon it. In that situation it will have been shown conclusively that the defendant had no case to answer, so the prosecution should not have been brought in the first place. There is an important difference between these two categories. It is one thing to be able to assert that the defendant is clearly innocent. Cases of that kind have become more common and much more easily recognised since the introduction into the criminal courts, long after article 14(6) of the ICCPR was ratified in 1976, of DNA evidence. It seems unlikely that the possibility of demonstrating innocence in this way was contemplated when the test in article 14(6) was being formulated. Watson and Crick published their discovery of the double helix in 1951, but DNA profiling was not developed until 1984 and it was not until 1988 that it was used to convict Colin Pitchfork and to clear the prime suspect in the Enderby Murders case. The state should not, of course, subject those who are clearly innocent to punishment and it is clearly right that they should be compensated if it does so. But it is just as clear that it should not subject to the criminal process those against whom a prosecution would be bound to fail because the evidence was so undermined that no conviction could possibly be based upon it. If the new or newly discovered fact shows conclusively that the case was of that kind, it would seem right in principle that compensation should be payable even though it is not possible to say that the defendant was clearly innocent. I do not think that the wording of article 14(6) excludes this, and it seems to me that its narrowly circumscribed language permits it. The range of cases that will fall into the category that I have just described is limited by the requirement that directs attention only to the evidence which was the basis for the conviction and asks whether the new or newly discovered fact has completely undermined that evidence. It is limited also by the fact that the new or newly discovered fact must be the reason for reversing the conviction. This suggests that it must be the sole reason, but I do not see the fact that the appellate court may have given several reasons for reversing the conviction as presenting a difficulty. All the other reasons that it has given will have to be disregarded. The question will be whether the new or newly discovered fact, taken by itself, was enough to show conclusively that there was a miscarriage of justice because no conviction could possibly have been based on the evidence which was used to obtain it. For these reasons it is plain that category 1 in Dyson LJs list (see para 83, above) falls within the scope of section 133. I think that it is equally plain that category 4 (Lord Binghams second limb) does not, as it is taken from para 4 of Lord Binghams speech in Mullen where he was discussing what was included within the phrase wrongful convictions, not what was meant by section 133. This leaves category 2, where the fresh evidence shows that the defendant was wrongly convicted in the sense that, had the fresh evidence been available, no reasonable jury could properly have convicted; and category 3, where the fresh evidence is such that the conviction cannot be regarded as safe, but the court cannot say that no fair minded jury could properly convict if there were to be a trial which included the fresh evidence. Bearing in mind that we must form our own view as to what section 133 means, can the wording of that section on a correct understanding of article 14(6) include either or both of these categories? I have put the words fresh evidence, which of course echo the wording of section 23 of the Criminal Appeal Act 1968 (see also section 106(3) of the Criminal Procedure (Scotland) Act 1995), into inverted commas because they depart from the words of section 133. The statute, like article 14(6), refers to a new, or newly discovered fact, not to fresh evidence. And it must be a fact which shows beyond reasonable doubt, or conclusively, that there was a miscarriage of justice. Fresh evidence does not attain that status until the matter to which it relates has been proved or has been admitted to be true. Fresh evidence that justifies the conclusion referred to in category 3 will usually not be, and certainly need not be, of that character. If it shows that the conviction is merely unsafe, the court may order a retrial. Under our system of trial by jury there will be no way of knowing, beyond reasonable doubt, whether it was a new or newly discovered fact that led to the acquittal. For these reasons I would exclude category 3 from the scope of section 133. This leaves category 2. As Hughes LJ indicates in R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 2 All ER 1, para 40(iii), we are dealing here with a new or newly discovered fact that is identifiable as such by the Court of Appeal. Category 2, as described in Dyson LJs list, is of course accurate as a description of what happens according to the Court of Appeals practice. But it is too broadly framed for use as a reliable guide to what falls within the scope of section 133 read with article 14(6). It lacks the limiting factors indicated by the words new or newly discovered fact and shows conclusively. It may not be easy in practice to distinguish cases that fall within it from those that fall within category 3. So in my opinion a more precise, and more exacting, formula must be found. I am uneasy too about requiring the Secretary of State, whose function it is to administer the scheme under the statute, to apply a test which refers to what a reasonable jury would do. This is a judgment that is best left to the courts. While he will be guided by what the appellate court said when it reversed the conviction, he is entitled to look at the new or newly discovered fact for himself and draw his own conclusions as to its consequences so long as they are not in conflict with what the court has said in its judgment. This brings me back to what I said in para 94 above. For the reasons I give there I would rephrase category 2, so that it fits with the narrowly circumscribed language of article 14(6) and section 133. I would limit it to cases where the new or newly discovered fact shows conclusively that there was a miscarriage of justice because the evidence that was used to obtain the conviction was so undermined by the new or newly discovered fact that no conviction could possibly be based upon it. This would include cases where the prosecution depended on a confession statement which was later shown by a new or newly discovered fact to have been inadmissible because, as the defendant had maintained all along, it was extracted from him by improper means. It may be quite impossible to say in such a case that he was, beyond reasonable doubt, innocent. But, as the evidence against him has been completely undermined, it can be said that it has been shown beyond reasonable doubt, or conclusively, that there has been a miscarriage of justice in his case which was as great as it would have been if he had in fact been innocent, because in neither case should he have been prosecuted at all. Retrial Section 133(5A), which was inserted by section 61 of the Criminal Justice and Immigration Act 2008, changed the timetable as to when a persons conviction was to be taken to have been reversed in a case where a retrial is ordered. This amendment has to be read with the amendment which was made at the same time to section 133(2) by inserting a time limit for making an application for compensation under section 133. This is a period of two years beginning with the date when the conviction is reversed. Section 133(5A) provides that where the person is to be subject to a new trial the conviction is not to be treated as reversed unless and until the person is acquitted of all offences at the retrial or the prosecution indicates that it has decided not to proceed with the retrial. This provision introduces a feature of the statutory scheme which was not before the House in Mullen. But I do not think that it affects Lord Steyns interpretation of section 133, or the qualification which I would make to it to include cases where the prosecution should never have been brought. It is not to be taken as suggesting that compensation is payable in every case where the appellate court has ordered a new trial because it is satisfied that the conviction was unsafe in the light of fresh evidence. What it does, as it seems to me, is to allow for the possibility that something may emerge either before or during the retrial which would require compensation to be paid. Nor is it to be taken as suggesting that compensation is payable in every case, such as that of Mr George, where the person was acquitted at his retrial. The tests laid down in section 133(1) must still be applied. It is only where a new fact or a newly discovered fact shows conclusively that the person was innocent or that the prosecution should never have been brought that there will be a right to compensation. This will not be the case where a retrial has been ordered, and it may not be apparent from the jurys verdict at the retrial. The fact that it returned a verdict of not guilty will not be enough. But if new facts emerge during the retrial process that have the effect of showing conclusively that the person was innocent or that the prosecution should never have been brought they can be taken into account, even though they emerged after the date when the conviction was reversed by the Court of Appeal. New or newly discovered fact A question that is raised in Adamss case is to whom these words are addressed. His appeal was allowed by the Court of Appeal on the basis that, owing to inadequacies in the conduct of his case by his then legal team, there had been a failure by them to discover and make use at the trial of three pieces of important material which had been made available to them by the prosecution but of which Adams himself was not aware: [2007] 1 Cr App R 449, para 155. In other words, this was material that was available at the trial but not used. Could it be said that these were new or newly discovered facts? His case is that all he needed to show was that he himself was unaware of them. They were new to him because they were not revealed to him by his legal team. They did not have to be new, as the Secretary of State maintains, to everyone involved in the trial. The Divisional Court (Maurice Kay LJ and Simon J) held that the Secretary of State was right to reject Adamss claim for compensation on the ground that his conviction was not quashed because of a new or newly discovered fact: [2009] EWHC 156 (Admin). The Court of Appeal (Waller, Dyson and Lloyd LJJ) disagreed, for three reasons: [2010] QB 460, paras 14 16. First, it was difficult to accept that those who drafted the article intended to deny compensation to a person whose conviction was reversed on the basis of material which was available to his legal team and would have shown that he was innocent. Second, there was no need to interpret the phrase in a way that yielded such an extreme result. Third, the focus of the language was on the convicted person. There was no mention of his legal representatives in the article. So compensation was not to be denied to him if facts emerged that were new to him, although they were known to his legal representatives. I do not think that the language of article 14(6) bears this interpretation. It seems to me that the focus of attention is on what was known or not known to the trial court, not to the convicted person. The assumption is that the trial court did not take the fact into account because it was not known or had not been discovered at the time of the trial. If this was attributable wholly or in part to the convicted person because he deliberately chose not to reveal what he knew to his defence team compensation must be denied to him, as the coda to article 14(6) makes clear. But, leaving that point out of account, the only relevant questions are whether it was not available to the trial court because it was not known then at all or whether, although knowable, it had not been discovered by the time of the trial. Material that has been disclosed to the defence by the time of the trial cannot be said to be new or to have been newly discovered when it is taken into account at the stage of the out of time appeal. To focus on the state of mind of the convicted person goes too far. It ignores the fact that in practice the defendants legal representatives are unlikely to have discussed with him every piece of information that they come across in the course of their preparation for and conduct of the trial. I agree with Lord Judge that a fact is not new or newly discovered for the purposes of section 133 just because the defendant himself, who was previously unaware of that fact, ceases to be ignorant of it. Does denial of compensation infringe the presumption of innocence? Mr Owen submitted that a narrow interpretation of article 14(6) would conflict with the presumption of innocence in article 6(2) of the European Convention. He relied on a series of decisions by the European Court of Human Rights which show that the presumption of innocence may be violated in particular circumstances where, following an acquittal, a court or other authority expresses an opinion of continuing suspicion which amounts in substance to a determination of guilt of the person concerned: Sekanina v Austria (1993) 17 EHRR 221; Leutscher v The Netherlands (1996) 24 EHRR 181; Rushiti v Austria (2000) 33 EHRR 1331; Weixelbraun v Austria (2001) 36 EHRR 799; Orr v Norway (Application No 31283/04) (unreported) 15 May 2008; and Hammern v Norway (Application No 30287/96) (unreported) 11 February 2003. These cases, other than Orr v Norway, were examined in Mullen by Lord Bingham in para 10 and by Lord Steyn in paras 41 44. Mr Owen said that the reasons that Lord Steyn gave for finding these cases of no assistance on the question as to whether article 6(2) requires an expansive interpretation of article 3 of the Seventh Protocol or of article 14(6) of the ICCPR were correct but irrelevant. Lord Bingham on the other hand said in para 10 that they were of no assistance, since Mullens acquittal was based on matters entirely unrelated to the merits of the accusation against him. So it was open to this court to take a fresh look at the issue. As Mr Tam for the Secretary of State pointed out, article 6(2) applies according to its own terms to the criminal process. 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. In Sekanina v Austria (1993) 17 EHRR 221, para 30, for example, the court said that the voicing of suspicions regarding a persons innocence is conceivable as long as the conclusion of criminal proceedings has not resulted in a decision on the merits but that it was no longer admissible to rely on such suspicions once an acquittal has become final. That was a case where the applicant had been charged with murder and remanded in custody but was subsequently acquitted at his trial. His claim for compensation was dismissed on the ground that there were still strong suspicions regarding his guilt. The problem was that Austrian legislation and practice linked 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 seen to be regarded as a consequence and, to some extent, the concomitant of the decision on the former: para 22. The court was careful to point out in para 25, however, that the situation in that case was not comparable to that governed by article 3 of the Seventh Protocol. This distinction shows that a person might properly be refused compensation under that article, and thus under article 14(6) of the ICCPR which marches together with article 3 of the Seventh Protocol, without violating the presumption of innocence under article 6(2). The same approach was taken in Hammern v Norway (Application No 30287/96) 11 February 2003 where the conditions for obtaining compensation were linked to the issue of criminal responsibility in such a manner, by the same court sitting largely in the same formation, so as to bring the proceedings within the scope of article 6(2): para 46. A further example of this line of reasoning is provided by Y v Norway (2003) 41 EHRR 87, where the applicant was acquitted by the High Court which then went on to refuse his claim for compensation the next day on the ground that it was clearly probable that he had committed the offences with which he had been charged. So too in Orr v Norway (Application No 31283/04) 15 May 2008, where the High Court dealt with the acquittal and the payment of compensation to the complainant in two clearly distinct parts of its judgment, but in several places highlighted that the standard of proof for civil liability to pay compensation was less strict than for criminal liability: para 52. This was held in para 53 to cast doubt on the correctness of the acquittal. The principle that is applied is that it is not open to the state to undermine the effect of the acquittal. What article 14(6) does not do is forbid comments on the underlying facts of the case in subsequent proceedings of a different kind, such as a civil claim of damages, when it is necessary to find out what happened. The system that article 14(6) of the ICCPR provides does not cross the forbidden boundary. 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. As Lord Steyn pointed out in Mullen, paras 41 43, in none of the cases from Austria or Norway, nor in Leutscher v The Netherlands 24 EHRR 181, was the court called upon to consider the interaction between article 6(2) and article 3 of the Seventh Protocol. On the contrary, 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. A refusal of compensation under section 133 on the basis that the innocence of the convicted person has not been clearly demonstrated, or that it has not been shown that the proceedings should not have been brought at all, does not have the effect of undermining the acquittal. Conclusions I would dismiss the appeal by Adams on the ground that the phrase new or newly discovered fact does not encompass the material that was available to but not used at the trial by the convicted persons legal representatives. But I would add that the second limb of the test that has been attributed to Lord Bingham because of what he said in para 4 of his speech in Mullen, on which Mr Owen relied, does not meet the requirements of article 14(6). So, even if the material in question could be said to have been newly discovered, his case would not have entitled him to compensation under the statute. I would allow the appeals by McCartney and MacDermott, for the reasons given by Lord Kerr. It is not possible to say in their cases that the newly discovered facts show conclusively that they were innocent of the crimes of which they were convicted. But it is possible to say, in the light of the newly discovered facts, that these were proceedings that ought not to have been brought because the evidence against them has been so completely undermined that no conviction could possibly be based upon it. I would hold that their cases fall within the narrowly circumscribed language of article 14(6) and section 133 of the 1988 Act, and they are entitled to be compensated. LADY HALE I agree that a miscarriage of justice in section 133 of the Criminal Justice Act 1988 (see para 1 above) should be interpreted as proposed by Lord Phillips in para 55 of his judgment. The phrase is clearly capable of bearing a wider meaning than conclusive proof of innocence. Both the inspiration for section 133, in article 14(6) of the ICCPR (see para 6 above) and the meaning of miscarriage of justice in domestic law in 1988 support a wider meaning. The drafters of article 14(6) rejected all attempts to confine it to proof of innocence. In 1988, the Criminal Appeal Act 1968 permitted the Court of Appeal to dismiss an appeal if they considered that no miscarriage of justice has actually occurred (section 2(1) before its amendment by the Criminal Appeal Act 1995). This points strongly to the meaning of miscarriage of justice as the conviction of someone who ought not to have been convicted. The addition in section 133 of the requirement that this be shown beyond reasonable doubt (in substitution for conclusively in article 14(6)) indicates that this refers to someone who definitely should not have been convicted rather than to someone who might or might not have been convicted had we known then what we know now. As I understand it, Lord Phillips formulation, with which both Lord Hope and Lord Kerr agree, would limit the concept to a person who should not have been convicted because the evidence against him has been completely undermined. Unlike Lord Clarke, therefore, he would not include a person who should not have been convicted because the prosecution was an abuse of process. I agree with Lord Phillips that the object of this particular exercise is to compensate people who cannot be shown to be guilty rather than to provide some wider redress for shortcomings in the system. I do sympathise with Lord Browns palpable sense of outrage that Lord Phillips test may result in a few people who are in fact guilty receiving compensation. His approach would of course result in a few people who are in fact innocent receiving no compensation. I say a few because the numbers seeking compensation are in any event very small. But Lord Phillips approach is the more consistent with the fundamental principles upon which our criminal law has been based for centuries. 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. This is, as Viscount Sankey LC so famously put it in Woolmington v Director of Public Prosecutions [1935] AC 462, at p 481, the golden thread which is always to be seen throughout the web of the English criminal law. Only then is the state entitled to punish him. Otherwise he is not guilty, irrespective of whether he is in fact innocent. If it can be conclusively shown that the state was not entitled to punish a person, it seems to me that he should be entitled to compensation for having been punished. He does not have to prove his innocence at his trial and it seems wrong in principle that he should be required to prove his innocence now. Of course, it is not enough that the evidence supporting his conviction has been fatally undermined. This has to be because of a new or newly discovered fact. On this point, I also agree with Lord Phillips, who adopts the definition contained in section 9(6) of the Criminal Procedure Act 1993 in Ireland (see para 60). This means that the person convicted either did not know or did not appreciate the significance of the information in question. It seems difficult to make sense of the proviso to section 133(1) unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted in any other way. For these reasons, in agreement with Lord Phillips, I would dismiss Mr Adams appeal but allow the appeals of Mr MacDermott and Mr McCartney. The evidence against Mr Adams has not been so undermined that no conviction could possibly be based upon it, whereas Lord Kerr has demonstrated that this is indeed the case with Mr MacDermott and Mr McCartney. LORD KERR The appeals of Eamonn MacDermott and Raymond McCartney Introduction On 12 January 1979, after a trial by a judge, sitting without a jury at Belfast City Commission, Raymond Pius McCartney was convicted of two offences of murder and one of membership of the Irish Republican Army. The two murder victims were Geoffrey Agate and Detective Constable Liam Patrick McNulty. Mr McCartney was sentenced to life imprisonment on each of the murder counts and to five years imprisonment for the offence of membership of a proscribed organisation. On the same date and at the same court Eamonn MacDermott was convicted of various offences including the murder of Detective Constable McNulty. He was sentenced to life imprisonment for that offence and to various terms of imprisonment for the other offences. The sole evidence on which Mr McCartney and Mr MacDermott were convicted consisted of written and verbal admissions that they were said to have made during interviews by police. Both contested the admissibility of the statements, alleging that they had either been the product of ill treatment by interviewing police officers or that they had been concocted. The admissibility of the statements was considered by the trial judge after a long voire dire hearing. He rejected the allegations of the appellants and stated that he was satisfied that neither had been ill treated. The judge also considered whether to exercise his residual discretion to exclude the statements from evidence if he considered it proper to do so. He concluded that it would not be proper to do so and the statements were duly admitted. An appeal by Mr MacDermott and Mr McCartney against their convictions was dismissed by the Court of Appeal in Northern Ireland (Jones LJ, Gibson LJ and Kelly J) on 29 September 1982. Both spent several years in prison. On 18 January 2006 the Criminal Cases Review Commission referred the convictions of Mr MacDermott and Mr McCartney to the Court of Appeal. On 15 February 2007 their convictions were quashed, the Court of Appeal declaring that they had a distinct feeling of unease about their safety. Following the quashing of their convictions by the Court of Appeal, Mr McCartney and Mr MacDermott applied to the Secretary of State for Northern Ireland for compensation under section 133 of the Criminal Justice Act 1988 on the basis that they had been victims of a miscarriage of justice. The applications were refused. They then sought judicial review of that decision. The application for judicial review was rejected by Weatherup J on 25 June 2009. An appeal against that decision was dismissed by the Court of Appeal in Northern Ireland (Morgan LCJ, Girvan LJ and Coghlin LJ) on 8 February 2010. The appellants trials Mr McCartney Mr McCartneys case on trial had been that he did not make any verbal admissions and that the two written statements attributed to him had been fabricated by police officers. He claimed that he had been ill treated before each statement had been written out. He had refused to sign them but he had initialled the caution that appeared at the head of the first statement and had drawn a line and had written the words "end of statement" at the concluding part of the second statement. Mr McCartney claimed that his ill treatment began during the second of a series of interviews that took place in Castlereagh Police Office between 3 and 7 February 1977. The ill treatment continued during a number (although not all) of the succeeding interviews. Two police officers in particular were identified by him as having been the most persistent and determined perpetrators. He gave evidence that he had been told that they had been specially chosen in order to extract confessions from him. The suggestion was made by Mr McCartneys counsel that proper supervision of interviews had broken down and that a concerted campaign of abuse had been conducted in order to obtain confessions that would lead to convictions. The interviewing police officers denied that they had been guilty of any form of ill treatment. Superior officers rejected the suggestion that there had been any lack of supervision or that particular officers were chosen in order to extract confessions. It was accepted, however, that a new team of detectives had been selected to continue interviews with Mr McCartney on the second day of interviewing. This new team was chosen, according to one of the senior officers in charge of interviews, because Mr McCartney, despite having shown signs of co operation on the first evening of interviews, had evinced a less co operative attitude the following day. The detectives thus selected were those identified by Mr McCartney as his principal abusers. During the course of Mr McCartneys trial, an application was made on his behalf for leave to call three witnesses who had been arrested at the same time as he and who had been interviewed at Castlereagh Police Office during the same period. In the event, two of the witnesses gave evidence. One of these was a man called John Thomas Pius Donnelly. He had been arrested at the same time as Mr McCartney. He was interviewed about and subsequently charged with one of the murders of which Mr McCartney was later convicted. He was also charged with having caused an explosion. For reasons that will appear presently, the charges against Mr Donnelly were not proceeded with and he did not stand trial. During the trial of Mr McCartney and Mr MacDermott, Mr Donnelly gave evidence that he had been subjected to serious assaults during his interviews and had sustained significant injuries in consequence. Although the detectives who, according to Mr Donnelly, had assaulted him, Detective Constable French and Detective Constable Newell, were not those who were alleged to have ill treated Mr McCartney, they were members of the group of officers who had been conducting interviews into the murders of Mr Agate and Detective Constable McNulty. Detective Constable French had interviewed Mr MacDermott and had recorded the most significant statement of admission from him. Mr MacDermott alleged that he had been assaulted by Detective Constable French and by the officer who accompanied him, Detective Constable Dalton. This second detective had also interviewed Mr McCartney and Mr McCartney claimed to have been assaulted by him also. On 6 February 1977, after he had been interviewed for several days, two doctors carried out a joint examination of Mr Donnelly. One of them was a forensic medical officer, retained by the police. No fewer than ten areas of injury on Mr Donnellys body were recorded. Substantial bruising, particularly in the abdominal area was found. The trial judge observed that both doctors were shocked and horrified by what they found on examination. How Mr Donnellys injuries had been caused was the subject of acute controversy on trial. It was trenchantly put to him by counsel for the prosecution that some had been sustained during a series of struggles while he was being taken to and from interview rooms and that the remaining injuries were self inflicted. This was a highly significant cross examination when seen in the light of the subsequently discovered reasons that the charges against Mr Donnelly had not been proceeded with. The decision not to proceed with the prosecution of Mr Donnelly was itself highly significant for he was alleged to have made verbal and written admissions of murder and causing an explosion. The second witness, Hugh Brady, also gave evidence of having been assaulted during interviews which took place during the same period as those of Mr McCartney and Mr Donnelly. One of the detectives identified by Mr Brady as having assaulted him (Detective Constable Dalton) had also interviewed Mr McCartney and, as noted at para 126 above, Mr McCartney claimed that he too had been assaulted by this officer. Mr Brady was also found on medical examination to have multiple injuries, most notably bruising of the abdomen and a burn to his hand which he claimed had been caused by the hand being forcibly held against a hot radiator. One of the doctors who examined him, Dr Hendron, who had been retained by Mr Bradys solicitors, concluded his medical report by saying that he had no doubt that Mr Brady had been assaulted, although he conceded during cross examination at the trial of Mr McCartney and Mr MacDermott that Mr Brady may have exaggerated. Other doctors who examined Mr Brady believed that he had exaggerated and gave evidence to that effect. Mr Brady did not make admissions and was not charged with any offences. Under cross examination at the trial of Mr McCartney and Mr MacDermott it was also suggested to him that his injuries had been self inflicted. The trial judge, MacDermott J, did not find him an impressive witness for reasons that I will turn to presently. Mr McCartney was examined by two doctors, Dr Henderson, the Force medical officer and Dr Hendron, who attended at the request of Mr McCartneys solicitors. The medical examination took place shortly after the tenth interview which had ended at 5.20 pm on 6 February 1977. A linear abrasion, 1 1/4 inches long was observed in the centre of McCartney's forehead, with two further small abrasions above and below it. Dr Hendron noted that Mr McCartneys right cheek was red and puffy. Dr Henderson had no note of this but on the form used to record the findings on examination he wrote "claimed struck on face no evidence of any bruises". The mark on Mr McCartney's forehead was superficial; it was considered to have been present for a couple of days and was of a type that could be caused by a finger nail. When asked for his conclusions on the evidence, Dr Hendron stated that he had no doubt that Mr McCartney had been assaulted. Mr MacDermott Mr MacDermott had been arrested on 31 January 1977 and his interviews took place in Strand Road Police Station in Derry between the date of his arrest and 2 February. He claimed that he had been beaten before making admissions and had been abused and threatened on his way to the interview room. He also gave evidence that the principal statement of admission had been prepared by a detective officer while he, MacDermott, lay on a bed. It was claimed that his mental resolve had been so eroded by the assaults and threats that by the time the statement was being recorded, he did not care what it contained. Mr MacDermott was examined by a number of doctors, including his own father who was a general medical practitioner. No significant signs of physical injury were found. He was observed to have tenderness of the jaw and ears which, he claimed, had been areas of assault. He also exhibited signs of anxiety tension. Towards the end of the trial, the judge asked counsel for the prosecution about the charges against Donnelly. He said, Am I right in saying that the position is that he was charged and then what happened? The court was informed that no evidence was being offered? Counsel for the prosecution replied, He was never returned for trial. The charges were not proceeded with. In a lengthy judgment the trial judge found that neither Mr McCartney nor Mr MacDermott had been ill treated as they had alleged. Indeed, in relation to Mr McCartney, the judge declared that his certain conclusion [was] that the Crown has satisfied me beyond reasonable doubt that McCartney was not ill treated and in relation to Mr MacDermott that he was absolutely satisfied that he had not been ill treated in any way or threatened. The judge fully accepted the evidence of the police officers denying ill treatment at all times. In relation to Mr Donnelly, the judge said that he was satisfied that the police had not assaulted or ill treated him. Mr Brady was condemned as a dishonest and unreliable witness whose evidence the judge found did not assist in deciding whether Mr McCartney had been ill treated. Dr Hendron had expressed the strong opinion that Mr McCartney, Mr Donnelly and Mr Brady had been assaulted by police officers. MacDermott J said this about the doctors evidence: There is no doubt in my mind that Dr. Hendron believes, I am sure genuinely, that McCartney, Brady, Donnelly and others have been ill treated at Castlereagh, and such a conclusion could be reached by anyone who is prepared to form a conclusion after hearing only what might be described as one side of the case. To my mind, Dr. Hendron's evidence throughout was coloured by this belief and lacked the professional objectivity displayed later by other doctors Robert Barclay On 2 January 1977 Robert Barclay was arrested and taken to Omagh Police Station where he was interviewed over a number of days by Detective Constables French and Newell (the same officers who had interviewed Mr Donnelly approximately one month later). Mr Barclay was said to have made admissions during these interviews. He also complained of ill treatment at the hands of both detective officers. He alleged that they assaulted him by slapping him and punching him and that they had threatened him. On 2 December 1977, after a trial in which he gave evidence that he had been assaulted by the officers, Mr Barclay was convicted on foot of the admissions that he had made during interview. He appealed his convictions. A solicitor had given evidence on his trial that when he saw Mr Barclay in court on 4 January he had a black eye. Two doctors who had examined him while he was at Omagh Police Station found signs of injury. On 12 April 1978, the then Lord Chief Justice of Northern Ireland, Lord Lowry, delivering the judgment of the Court of Appeal, quashed the convictions. Although no written judgment appears to have been given, Lord Lowry was recorded as having said: It is not possible to exclude the conclusion that the injuries found on the accused were inflicted at Omagh Police Station and this renders inadmissible any statement made by him. Subsequently, Mr Barclay brought a private prosecution against Detective Constable French and Detective Constable Newell. In his judgment, which was delivered on 25 April 1979, the trial judge in that case accepted that there was a strong prima facie case that Mr Barclay had been assaulted. He said that Mr Barclay had undoubtedly sustained injuries in Omagh Police Station. He referred, however, to Mr Barclays admission that, on other occasions quite unconnected with the proceedings against the police officers, he had been dishonest. Also, on certain matters relating to his interviews by the detectives (such as, for instance, which of them had taken the notes of the interview) Mr Barclay was found by the judge to have been inaccurate. But the medical evidence that was called on the prosecution of the police officers was found to be consistent with Mr Barclays allegations. The judge said, however, that he could not be certain that the injuries had occurred at the time that Mr Barclay alleged they had been inflicted. The effect of the evidence made it unlikely that they were self inflicted but this was a possibility in the estimation of the judge. Therefore, on the basis that there was a reasonable doubt as to their guilt, he considered that he was left with no alternative but to acquit the officers. Although the private prosecution of Detective Constables French and Newell took place after the trial of Mr McCartney and Mr MacDermott, Mr Barclays appeal against his convictions had succeeded before their trial began. Their trial commenced on 18 September 1978. Of course, no reference to Mr Barclays successful appeal was made during the trial of Mr McCartney and Mr MacDermott. There is no reason to believe that anything was known of that by those involved in their trial. On the contrary, the fact that such a relevant circumstance was not referred to is a clear indication that nothing was known about it. The reasons that the prosecution of John Donnelly did not proceed In a memorandum of 29 June 1977, Mr Roy Junkin, then an assistant director in the Department of the Director of Public Prosecutions, considered the prospects of success for the prosecution of Mr Donnelly. He concluded that a court would not accept that the statement of admission made by Mr Donnelly was voluntary. He therefore recommended that the prosecution should not proceed. That recommendation was accepted by Mr Junkins superior, Mr George McLaughlin, to whom the memorandum had been addressed and a direction of no prosecution was duly issued. Mr Donnelly was interviewed about his complaint of ill treatment after being informed that the prosecution against him was not to proceed. Following the interview, Mr Junkin considered the papers again. In a further memorandum to Mr McLaughlin dated 6 October 1977, Mr Junkin reviewed all the evidence including that obtained from Mr Donnelly during the interview about his complaint. He stated that he had no doubt that Donnelly was assaulted whilst in police custody at Castlereagh. The only detective identified by Mr Donnelly was Detective Constable Newell. He had claimed that this was the only police officer who had disclosed his name. Since this police officer had interviewed Mr Donnelly with Detective Constable French and since Mr Donnelly had said that both Detective Constable Newell and the other officer present had assaulted him, Mr Junkin recommended that both be prosecuted for assault. In his response to Mr Junkins recommendation, Mr McLaughlin, in a memorandum dated 10 March 1978 (6 months before the trial of Mr McCartney and Mr MacDermott began), agreed that there was no doubt that Mr Donnelly had been assaulted while in custody at Castlereagh. But Mr McLaughlin concluded that not all of Mr Donnellys complaints were supported by findings on medical examination. He also considered that because 8 or 9 other police officers had interviewed Mr Donnelly the prosecution would not be able to establish that any particular injury had been inflicted by Detective Constables Newell and French. He therefore declined to accept Mr Junkins recommendation that the officers be prosecuted. The quashing of the appellants convictions On the hearing before the Court of Appeal of the reference by CCRC, Ms McDermott QC, appearing on behalf of Mr McCartney, submitted that if counsel for the prosecution had known the reason that the prosecution of Donnelly had been discontinued, he would not have put to him in cross examination that his injuries were self inflicted. This submission does not appear to have been countered by counsel who appeared for the Crown on the hearing of the reference and it does not feature in the conclusions expressed by the Court of Appeal in its judgment on the reference. At the same hearing, counsel for the appellant Mr MacDermott drew attention to what he suggested was a striking similarity between the manner in which, on Mr Donnellys account, a statement was taken from him by Detective Constable French and the way in which, according to Mr MacDermott, the most important statement of admission had been recorded from him by the same police officer. Generally, it was submitted that if the trial judge had been aware of the reasons that Mr Donnelly had not been prosecuted (viz that an assistant director in the office of the DPP and a senior assistant director considered that he had certainly been assaulted by police officers) he would not have admitted the confession statements. It was suggested that the judge would have formed a more favourable view of the evidence of Mr Donnelly and Mr Brady and would have considered that the police officers credibility was wholly undermined. The Court of Appeal gave its decision on these arguments in the final paragraph of its judgment as follows: We cannot rule out the possibility that the evidence of the police officers may have been discredited by evidence that is now available. The admission in evidence of MacDermott's confessions depended upon the acceptance by the judge of the evidence of DC French. If the judge had known of the finding of a prima facie case in the prosecution brought by Mr Barclay against DC French he may well have reached a different conclusion. To this is to be added the striking similarity between the description given by Donnelly and MacDermott as to the manner in which their admissions were recorded. If the allegations by Donnelly had been supported and strengthened by the new evidence this could have served also to discredit the evidence given by the police officers in McCartney's case. In both cases we are left with a distinct feeling of unease about the safety of their convictions based as they were on admissions and the convictions must therefore be quashed. The challenge to the refusal of compensation On 7 November 2007 a letter in the following terms was sent to Mr McCartneys solicitors in response to the application that they had made on his behalf for compensation under section 133 of the 1988 Act: The Secretary of State has not yet reached a decision about the application; before he does so I would like to give you the opportunity to comment in writing on the views set out below. Under section 133 compensation is payable to an applicant where 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. Mr McCartneys convictions were, we believe, reversed within the meaning of section 133, by the decision of the Court of Appeal on 15 February 2007. We also tend to the view that this reversal was based on a new or newly discovered fact. However, in light of the available case law on these matters, we believe that your client has so far failed to establish that a new or newly discovered fact has shown beyond reasonable doubt that there has been a miscarriage of justice either on the basis that your client is demonstrably innocent or on the basis of a failure of the trial process. Further representations were made on behalf of Mr McCartney. Rejecting these, a letter dated 16 May 2008 sent on behalf of the Secretary of State, communicated his decision that Mr McCartney was not eligible under section 133. It contained the following passage: The reasons for that decision are those as previously set out in my letter of 7 November. In your further representations you made two main points. Firstly, you suggest that there was a comprehensive failure to disclose material critical to Mr McCartney's defence. The Secretary of State does not consider that anything went wrong with the investigation of the offence or in the conduct of the trial so as to result in a failure of the trial process. Secondly, you suggest that the tape of the appeal should be listened to. It is the written judgment of the CoA that sets out the basis for the decision that a conviction was unsafe and therefore the basis on which the Secretary of State decides if the conditions for statutory compensation are fulfilled. Similar letters were sent to solicitors acting for Mr MacDermott. These solicitors also made further representations and on 17 November 2008 a final responding letter was sent in which the following appeared: We have now considered the other points you put to us on 1 August in relation to the Boyle case [In re Boyles Application [2008] NICA 35]. The majority of the Court of Appeal in that case posed the test of whether the claimant should not have been convicted. We do not believe that the terms of the Court of Appeal's judgment in your client's appeal mean that he should not have been convicted. Therefore, the Boyle case does not alter the Secretary of State's decision that your client is not entitled to compensation. Both appellants sought judicial review of the Secretary of States decision. These applications were dismissed by Weatherup J, although it is clear that he felt that they might have succeeded if he had felt able to apply the test which, he considered, had been propounded by Lord Bingham in R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18, [2005] 1 AC 1. Weatherup J considered that there were two types of new or newly discovered fact (necessary as a prerequisite for eligibility under section 133, as explained by Lord Hope in paras 79 and 81 of his judgment). The first was the evidence that it had been accepted by the assistant director and the senior assistant director in the DPPs office that Mr Donnelly had been assaulted and that this would have tended to throw doubt on the credibility of the police witnesses. The second type was described by the judge in paras 23 and 24 of his judgment: 23another part of the new evidence relating to the prosecution of Donnelly concerned the manner in which his evidence was dealt with at the trial. When Donnelly was called as a defence witness, counsel for the DPP, rather than proceeding on the position of the DPP officials dealing with the prosecution of Donnelly, adopted and put to Donnelly in cross examination the police approach rejected by those officials, namely that Donnelly had received injuries after an attack on police officers and that some injuries were also self inflicted. Further, when the trial judge was considering the evidence of Donnelly, he asked counsel for the DPP about the absence of a prosecution of Donnelly and a complete reply was not furnished. It is important to note that this was a non jury Diplock trial. It is apparent that the tria1 Judge was inviting counsel to disclose, as delicately as the situation demanded, whether there was a reason for the decision not to prosecute that related to matters other than the alleged ill treatment of Donnelly, in respect of which the answer of counsel implied that there was. The trial judge was not told that the DPP had concluded that Donnelly had been ill treated, that his confession was not to be considered as being voluntary and there was no other evidence against him. There is no suggestion that counsel in the applicants trial had been made aware of the DPP position relating to the prosecution of Donnelly. Had counsel for the DPP been aware of the DPPs approach to the prosecution of Donnelly two aspects of the trial would have been different. First of all, the cross examination of Donnelly would have taken a different course and counsel would not have put to Donnelly that his injuries had been occasioned by defensive action by the police and by his own hand. Secondly, the submission of counsel for the DPP in relation to the prosecution of Donnelly would not have rested on the bald assertion that the prosecution was not proceeded with but should have indicated the basis of the DPP decision. 24 Thus the issue of the treatment of the Donnelly evidence is not directly a matter about the credibility of the evidence given by the police officers, nor is it directly a matter about withholding disclosure from the defence. Rather it is a matter about the conduct of the prosecution in relation to the evidence of a witness who was central to the defence challenge to the voluntariness of the admissions on which the applicants were convicted. In light of the above discussion of the Donnelly evidence there is a basis for concluding that something had gone seriously wrong with the conduct of the trial. This is a matter that is capable of satisfying the wider interpretation of miscarriage of justice expounded by Lord Bingham. It is evident from these passages that Weatherup J considered that it would have been quite wrong for prosecuting counsel, had he known of the reasons that Mr Donnelly had not been prosecuted, to pursue the line of questioning that he did. On the hearing of the appeal before this court Mr Maguire QC, who appeared on behalf of the Secretary of State for Northern Ireland, was unable to confirm that Crown counsel was unaware of the reasons that the prosecution of Mr Donnelly was not pursued but I share Weatherup Js view that this is the only possible explanation for his having cross examined Mr Donnelly as he did. Mr Junkin and Mr McLaughlin had concluded that Mr Donnelly had been assaulted by police officers. If that view (which was the product of extensive consideration of all the relevant material) had been communicated to prosecuting counsel, it would have been improper for him to advance a case which was quite at odds with the conclusion that had been reached by two experienced officers in the department of the Director of Public Prosecutions. At a more fundamental level, however, it was not open to the prosecuting authority to adopt a different stance in relation to Mr Donnellys evidence according to the context in which it was being considered or, as Lord Rodger so pertinently put it during argument, to face both ways. The decision not to prosecute Mr Donnelly on a charge of murder and one of causing an explosion when, according to police evidence, he had voluntarily admitted to both was a momentous one. It is unsurprising that Mr Junkin and Mr McLaughlin only felt able to take that course because they were convinced that he had been assaulted by police officers. It is simply incompatible with the prosecutions duty of fairness for a different position to be taken thereafter as to the manner in which Mr Donnellys injuries were caused unless there was fresh evidence that warranted a different view. In this instance there was no such evidence. Weatherup J was therefore perfectly right when he said that something had gone seriously wrong with the conduct of the trial. Crown counsel ought to have been aware of the DPPs position on this and, if he had been, cross examination of Mr Donnelly challenging his account of how he sustained his injuries would not have taken place. Although Weatherup J concluded that the circumstances of the reversal of the appellants convictions were capable of satisfying the test that Lord Bingham had propounded for eligibility for compensation under section 133, he felt bound to follow more recent authority in England and Wales, particularly R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 1 Cr App R 36 which had expressed a clear preference for the test advocated by Lord Steyn in Mullen. The appellants appeal against the decision of Weatherup J was dismissed by the Court of Appeal. That court did not share Weatherup Js view that the circumstances revealed by the judgment which had quashed the appellants convictions were sufficient to satisfy Lord Binghams formulation of the correct test. The conclusions of the court are contained in para 15 of the judgment of the Lord Chief Justice: In the second category of cases it is necessary to demonstrate that something has gone seriously wrong in the conduct of the trial resulting in the conviction of someone who should not have been convicted. In this case the new facts upon which the appellants rely raise issues about the credibility of one police officer and one other witness. It is not possible to come to any conclusion as to whether the new facts would have led to a different outcome in respect of the assessment of either witness. The new evidence was sufficient to give rise to unease about the safety of the conviction but this is a case in which at its height it can only be said that the appellants might not have been convicted. Such a case lies outside either of the categories identified by Lord Bingham. That is also the reasoning of the decision in Boyles Application [2008] NICA 35 by which we are bound. Should the appellants have been acquitted? In re Boyles Application [2008] NICA 35 was an appeal in which the appellant claimed entitlement to compensation under section 133 and the ex gratia scheme which was then still extant. Some years after the appellants conviction a note taken of one of a series of interviews had been shown by electrostatic detection apparatus (ESDA) testing techniques to have been made at a time other than that claimed by police officers. Another version of the note for that single interview existed, contrary to the denials of the interviewing police officers. The differences were not substantial and nothing which was inculpatory of the appellant had been written in to the version of the notes that had been presented to the court and which the police officers claimed was the only note of the interview. Nevertheless, because the police officers had firmly denied that a different version had been prepared and because that had been shown to be incorrect, it was considered that doubt had been thrown on their credibility and the appellants conviction could not be regarded as safe. In dismissing Mr Boyles appeal against the finding that he was not eligible to apply for compensation under section 133, the Court of Appeal said at para 22: it is impossible for the appellant to assert that he should not have been convicted. One can certainly say that the police officers should not have given the evidence that they did. One may even say with confidence that the trial judge is bound to have taken an entirely different view of their credibility from the extremely favourable impression that he appears to have formed. But it is impossible to conclude that the appellant would not have been found guilty (much less that he should have been acquitted) if evidence of the other version of the interview notes had been given. The circumstances in the Boyle case were obviously and markedly different from those that arise in the present appeals of Mr McCartney and Mr MacDermott. The most that could be said in Boyle was that the newly discovered fact (that there was a different version of the notes of a single interview) cast doubt on the credibility of the police officers who asserted to the contrary. By contrast, although the Court of Appeal which quashed Mr McCartneys and Mr MacDermotts convictions expressed itself in a restrained fashion, there is simply no doubt that these appellants ought not to have been convicted. For the reasons that I have given, it was not open to prosecuting counsel to challenge Mr Donnellys account that he had been assaulted by police officers. I am satisfied that he would not have done so if he had been aware of the true circumstances in which the decision not to continue with the prosecution of Mr Donnelly had been taken. Mr Donnellys evidence that he had been assaulted would therefore have been received without challenge. That evidence, if uncontradicted, is bound to have changed the entire course of the trial. It could not have done less than establish the reasonable possibility that Detective Constable French had assaulted Mr Donnelly and that he had recorded a statement purporting to come from him but which was not given at Mr Donnellys dictation. When those inevitable findings were brought to bear on Mr MacDermotts case they could not have done other than create a doubt as to the voluntariness of his admissions. Section 8(2) of the Northern Ireland (Emergency Provisions) Act 1978 was in force at the date of the trial. It provided: If, in any such proceedings [ie criminal proceedings for a scheduled offence] where the prosecution proposes to give in evidence a statement made by the accused, prima facie evidence is adduced that the accused was subjected to torture or to inhuman or degrading treatment in order to induce him to make the statement, the court shall, unless the prosecution satisfies it that the statement was not so obtained (a) exclude the statement, or (b) if the statement has been received in evidence, either (i) continue the trial disregarding the statement; or (ii) direct that the trial shall be restarted before a differently constituted court (before which the statement in question shall be inadmissible). The trial judge had reminded himself of this provision at the beginning of his judgment. He said that the appellants had raised a prima facie case as required by the section and that, in those circumstances, the burden passes to the Crown to satisfy me beyond reasonable doubt that the statement, whose admissibility is challenged, was not obtained by ill treatment. In other words, a prima facie case of ill treatment having been established the burden rests squarely on the Crown of satisfying me (and by that I mean satisfying me beyond reasonable doubt) that the accused was not ill treated. In making these observations the trial judge was reflecting the well known statement of the law in this area provided by Lowry LCJ in R v Hetherington [1975] NI 164, 168 where he said: It is not for the defence to prove but for the prosecution to disprove beyond reasonable doubt in relation to each accused that he was not subject even to any degrading treatment in order to induce him to make a statement on which the Crown rely, the decision under section 6(2) [the precursor of section 8(2) of the 1978 Act] must be based solely on how the statement is proved to have been obtained and not on whether it was true. The prosecution would therefore have had to prove beyond reasonable doubt that the statements made by Mr McCartney and Mr MacDermott had not been obtained by any degrading treatment whatever. It can now be seen that this would have been an impossible task had the full facts and circumstances come to light. A person detained at the same time as Mr McCartney had been assaulted while in Castlereagh Police Office during the same period; the police officers who carried out the assaults on Mr Donnelly were part of the group of officers who were investigating the murders with which Mr McCartney was charged; one of the officers who had assaulted Mr Donnelly had been accused by Mr MacDermott of assaulting him; and the other officer who, according to Mr MacDermott, had assaulted him, had also interviewed Mr McCartney and had been accused of assault by him. Quite apart from these considerations, two further factors of substantial importance must be taken into account. Firstly, by the time that Mr McCartney and Mr MacDermott stood trial, Mr Barclays conviction, based on statements of admission allegedly obtained by Detective Constable French and Detective Constable Newell on interview, had been quashed. If the trial judge had been aware that this conviction had been quashed because the possibility that Mr Barclay had been assaulted by these two officers could not be excluded (which was the necessary implication from the finding of the Court of Appeal) he could not have concluded with the same firmness that he did that Detective Constable French had not engaged in ill treatment of Mr MacDermott. Secondly, once it was established, even as a reasonable possibility, that Mr Donnelly had been assaulted, the judges view of Dr Hendrons evidence could not have remained as he had expressed it in his judgment. Dr Hendron had stated unequivocally that he was convinced that Mr McCartney, Mr Donnelly and Mr Brady had been assaulted. The judge found that this opinion was sincerely held but that Dr Hendrons evidence was coloured by his conviction that the men had been attacked and on that account his testimony lacked professional objectivity. If it had become known that the doctors view about Mr Donnelly was shared by an assistant director and a senior assistant director in the department of the Director of Public Prosecutions, it is not likely that his opinion would have been dismissed in the manner that it was by the trial judge. The combined effect of all these factors makes it inevitable, in my opinion, that, had the judge been fully acquainted with all the material information about the reasons for the decision not to continue the prosecution of Mr Donnelly and the circumstances of the quashing of Mr Barclays convictions, he would not have convicted the appellants. Should the appellants have been prosecuted? Not only should the appellants have been acquitted, in my opinion they should not have been put to their trial. If prosecuting counsel had become aware of the shadow that necessarily fell on Detective Constable Frenchs evidence by the decision not to proceed with the prosecution of Mr Donnelly and by the quashing of Mr Barclays conviction, it is, in my view, inevitable that he could not have proffered this officer as a witness of truth on the issue of whether Mr MacDermott had been ill treated. Moreover, the conclusion of Mr Junkin and Mr McLaughlin that Mr Donnelly had been assaulted cast significant doubt on the evidence of the entire interviewing team. Although Mr McLaughlin considered that there was insufficient evidence to charge Detective Constables French and Newell, he was of the clear view that Mr Donnelly had been physically attacked by some police officers. It was therefore the case that the office of the Director of Public Prosecutions had determined that some officers within the team that conducted interviews of Mr Donnelly, Mr Brady and Mr McCartney had been guilty of assault on Mr Donnelly. Mr Brady alleged that he had been assaulted in much the same manner as Mr Donnelly had been. Despite this, he had not made admissions. He had no personal advantage to gain by fabricating his account of the attacks on him. The trial judge found, however, that he was prepared to do so in order to help a friend (Mr McCartney) and because of his animus towards the police. I cannot believe that the judge would have reached that view if he had known that the DPP had concluded that Mr Donnelly had been assaulted and that Mr Barclays conviction had been quashed because of the reasonable possibility that two members of the same interviewing team had also assaulted him. Likewise, I cannot believe that if experienced Crown counsel had been aware of these matters he would have done other than advise that the prosecution of Mr McCartney and Mr MacDermott should not proceed. That prosecution was only viable if there was a realistic prospect of the Crown establishing beyond reasonable doubt that Mr McCartney and Mr MacDermott had not been ill treated. Any objective assessment of all the circumstances as they are now known was bound to have resulted in the conclusion that there was no such prospect. In reaching this view I intend no criticism whatever of counsel who, for the reasons that I have given, must have been wholly unaware of why it had been decided not to prosecute Mr Donnelly. He must also have been ignorant of the fact that Mr Barclays conviction had been quashed and of the circumstances in which that had occurred. A fortiori, no criticism of the trial judge is warranted. On the contrary, he made what in retrospect was an astute and pertinent inquiry as to why Mr Donnelly had not been prosecuted and was not given the information which, if it had been provided, would certainly have led to a completely different outcome. While it might be said that the assistant director and the senior assistant director in the department of the Director of Public Prosecutions ought to have been alive to the impact that their conclusion about the assaults on Mr Donnelly was bound to have on the propriety of proceeding with the prosecution of Mr McCartney and Mr MacDermott, there is no reason to suppose that they were aware of the quashing of Mr Barclays convictions or of the evidence of Mr Brady. Neither is discussed in the exchange of memoranda between Mr Junkin and Mr McLaughlin. These are matters which have played a significant part in leading me to the conclusion that the prosecution of Mr McCartney and Mr MacDermott ought not to have taken place. In deciding that the appellants ought not to have been convicted and, indeed, ought not to have been required to stand trial, I have gone beyond the findings of the Court of Appeal which quashed their convictions. On one reading, the letter of 16 May 2008 sent on behalf of the Secretary of State suggests that the judgment of the Court of Appeal provides the exclusive basis on which the Secretary of State decides if the conditions for statutory compensation are fulfilled. And much was made in the course of argument of an answer given by Earl Ferrers in the course of the passage through the House of Lords of the Bill which ultimately became the 1988 Act. Earl Ferrers answer was to the effect that the Secretary of State would regard the Court of Appeals view as to whether there had been a miscarriage of justice as binding. In my opinion, the decision as to whether the statutory conditions have been fulfilled is one for the Secretary of State to make and he may not relinquish that decision to the Court of Appeal. True, of course, it is that the material on which the decision is taken will derive in most cases from the judgment of the Court of Appeal. True it also is that it would not be appropriate for the Secretary of State to depart from the reasoning that underlies that judgment unless for good reason it is shown to be erroneous but the Secretary of State must make his own decision based on all relevant information touching on the question whether there has been a miscarriage of justice. In the present appeals, Weatherup J considered that it was open to him to examine the question whether there had been a miscarriage of justice not merely by reference to what the Court of Appeal had said but by taking into account the circumstances revealed by its judgment. At para 20 of his judgment he said: Counsel for the respondent contends that there is nothing in the judgment of the Court of Appeal indicating that the applicants should not have been convicted. It should not be expected that a Court of Appeal will state in terms that an appellant should not have been convicted. The approach of the Court of Appeal on an appeal against conviction is concerned with whether that conviction is unsafe. In taking the cue from the Court of Appeal in determining a successful appellants entitlement to compensation it is necessary to have regard to the circumstances set out in the judgment of the Court of Appeal as well as the wording adopted in the judgment in relation to the position of the appellant. I agree with these observations and they appear, implicitly at least, to have been approved by the Court of Appeal. As Weatherup J stated, the task of the Court of Appeal is not to decide whether the appellant should have been convicted, much less to determine whether the appellant is innocent. It is to decide whether the conviction is safe. The decision whether there has been a miscarriage of justice (whatever meaning is to be given to that phrase) of necessity takes place on a different basis and on foot of consideration of issues beyond those which sound only on whether the conviction is safe. Section 133 As Lord Hope has said, it has been possible until now for courts to avoid a final resolution of the question of what is required in order to establish entitlement to compensation under section 133 of the 1988 Act. Must a person whose conviction has been reversed as the result of a new or newly discovered fact show that he was innocent (Lord Steyns view in Mullen) or can eligibility arise in somewhat wider circumstances (Lord Binghams provisional opinion)? These appeals require this court to confront that debate and to resolve that conflict. For the reasons given by Lord Hope and Lord Clarke, with which I agree, the analysis of Lord Bingham in Mullen as to the possible scope of section 133 is to be preferred to that of Lord Steyn. I cannot accept that the section imposes a requirement to prove innocence. In the first place, not only does such a requirement involve an exercise that is alien to our system of criminal justice, that system of justice does not provide a forum in which assertion of innocence may be advanced. An appeal against conviction heard by the Court of Appeal Criminal Division is statutorily required to focus on the question whether the conviction under challenge is safe. In a number of cases, evidence may emerge which conclusively demonstrates that the appellant was wholly innocent of the crime of which he or she was convicted but that will inevitably be incidental to the primary purpose of the appeal. The Court of Appeal has no function or power to make a pronouncement of innocence. It may observe that the effect of the material considered in the course of the appeal is demonstrative of innocence but it has no statutory function to make a finding to that effect: R v McIlkenny (1991) 93 Cr App R 287. It is therefore not surprising that in New Zealand when the Law Commission proposed that a prerequisite of establishing entitlement to compensation for a wrongful conviction was proof of innocence, it was careful to recommend that a tribunal be set up in which that issue could be frankly addressed and confidently determined: see New Zealand Law Commission Report No 49 (1988) Compensating the Wrongly Convicted paras 124 127 and 136 137. In Canada in 1988 Federal/Provincial Guidelines on Compensation for Wrongly Convicted and Imprisoned Persons likewise required that there be proof of innocence in order to qualify under the ex gratia scheme operated there. In the case of Dumont v Canada (Communication 1467/2006, 21 May 2010) the UN Human Rights Committee held that the failure of the state authorities to establish a procedure for conducting an investigation to examine whether the applicant was innocent and to possibly identify the real perpetrator constituted a breach of article 2(3) of ICCPR read in conjunction with article 14(6). Article 2(3)(a) requires that state authorities provide an effective remedy in the form of access to a procedure in which adequate compensation can be claimed. The respondents in this case rely on the experience in New Zealand and Canada in support of their argument that a miscarriage of justice within the meaning of article 14(6) of the Covenant occurs only when the convicted person is in fact innocent of the offence with which he is charged. The Human Rights Committee in Dumont, while recording the states submission to that effect, reached its decision without adjudicating on it. The New Zealand Law Commissions report does not suggest that article 14(6) must be given that meaning. On the contrary para 71 of the report states that article 14(6) while an important normative statement by the international community and a reference point for domestic compensation schemes was not relied on as a model for the Commissions recommended scheme. There was no unanimity as to the meaning to be given to miscarriage of justice among the delegates who were involved in the negotiations which led to the adoption of ICCPR: see para 9(2) of Lord Binghams speech in Mullen. As he observed, it is possible that the expression commended itself because of the latitude in interpretation which it offered. Or, as the New Zealand Law Commission put it, it is a normative statement which provides a general template for domestic provisions in the subscribing states which can vary as to content. Certainly, while the travaux prparatoires may be regarded as neutral on the meaning of the expression, it is unquestionably clear from these that every proposal that its ambit should be confined to compensating those whose innocence was established was roundly defeated. Against that background, it would be a surprising conclusion that article 14(6) had the very effect that a majority of delegates clearly did not intend. The twin theses on which Lord Steyn relied to support his conclusion that proof of innocence was required in order to establish entitlement to compensation under section 133 have been subject to scrupulous examination in paras 93 and 94 of Lord Hopes judgment. For the reasons that appear there, with which I fully agree, these arguments can no longer be regarded as sound. I also agree with Lord Clarkes reasons for rejecting Lord Steyns formulation of the test. As Lord Clarke has pointed out, if Parliament had intended that a proof of innocence test was to be preferred, that could surely have been easily prescribed. The debate as to whether such a test was appropriate had been extensively referred to in the travaux prparatoires and it is to be presumed that Parliament was aware of this when it came to enact section 133. Confining the application of the section to those who could show that they were innocent was, in any event, a perfectly obvious option. The failure to articulate that test in the legislation can only be explained on the basis that Parliament decided not to choose that option. This conclusion is fortified by the consideration that the expression miscarriage of justice, although its meaning may vary according to context, is a very familiar one in our system of law. In no other context has it been used to connote proof of innocence. I am therefore satisfied that proof of innocence cannot be the criterion on which entitlement to compensation under section 133 is to be determined. Rejection of this hypothesis brings with it the need to determine how miscarriage of justice is to be interpreted. As Lord Hope has said, a fresh analysis is required and for the reasons that he gives the answer is not necessarily provided by the speech of Lord Bingham in Mullen. The use of the word conclusively in article 14(6) of ICCPR and the expression beyond reasonable doubt lends support to the view that the section does not contemplate that all whose convictions have been quashed and who satisfy the other requirements of the section will be entitled to compensation. On this there is no dispute between the parties to these appeals. Lord Hope has proposed that the section should be interpreted as targeting those cases where, as a consequence of the state of affairs revealed by the new or newly discovered fact, it can be concluded that no prosecution ought to have taken place. Lord Clarke prefers to define the category of eligibility as extending to those cases where the new or newly discovered fact leads inexorably to the conclusion that no jury, properly directed, would have convicted. As a matter of practical experience, there may be little difference as to which of these tests should be applied. But it is important that, if possible, clear guidance be given by this court as to the circumstances in which the section should be held to apply. Lord Hope has pointed out that requiring the Secretary of State to apply a test which refers to what a reasonable jury would do is not appropriate since this is a matter best left to the courts. Lord Clarke, on the other hand, suggests that a test which requires the Secretary of State to focus on whether the claimant should never have been prosecuted runs the risk of the inquiry wrongly focusing on the propriety of the decision to prosecute by reference to the circumstances that obtained when the decision was taken. There is substance in both concerns. I believe that a simple test can cater for these concerns and will also faithfully reflect the intention of article 14 (6) and section 133 that only truly deserving applicants should be included in the compensatory scheme. The test which I would have proposed was: whether, on the facts as they now stand revealed, it can be concluded beyond reasonable doubt that the applicant should not have been convicted. Lord Phillips has suggested that the test should be worded in the following way: the new fact shows that a miscarriage of justice has occurred when it so undermines the evidence against the defendant that no conviction could possibly be based upon it. This appears to me to achieve the same result as the test which I would have proposed and I am therefore quite content to subscribe to his formulation. The proper application of either test ties entitlement to compensation firmly to the true factual situation. Procedural deficiencies that led to irregularities in the trial or errors in the investigation of offences will not suffice to establish entitlement to compensation. A claimant for compensation will not need to prove that he was innocent of the crime but he will have to show that, on the basis of the facts as they are now known, he should not have been convicted or that conviction could not possibly be based on those facts. Of course, if innocence can be proved, the test, on either formulation, will be amply satisfied. The adoption of a single, simple test dispenses with the need to consider possible categories of entitlement which, I believe, tends more to confuse than to enlighten. As it happens, although it is possible to construct from Lord Binghams observations a fourth category of case beyond the three that were identified by Toulson LJ in giving permission to appeal in the Adams case, I do not believe that Lord Bingham intended that this be considered a freestanding category. New or newly discovered fact I find myself in complete agreement with the reasoning of Dyson LJ on this issue in the judgment of the Court of Appeal in Adams [2010] QB 460, paras 14 16 and with what Lord Phillips has had to say on the matter in paras 59 63 of his judgment. The newly discovered limb of the requirement clearly, to my mind, connotes discovery by the party who prays it in aid to demonstrate that he should not have been convicted. It would be wholly anomalous, as Dyson LJ has pointed out, that a person whose innocence can be conclusively proved, should be deprived of compensation simply because his lawyers failed to communicate the vital information or failed to grasp its significance. Does denial of compensation infringe the presumption of innocence? Lord Hope has dealt comprehensively with the arguments made by the appellants on this issue in paras 108 to 111 of his judgment. I agree with his reasons for rejecting the arguments. There is nothing further that I could usefully say on the topic. Conclusions I would allow the appeals of Mr McCartney and Mr MacDermott. For the reasons that I have given, I am satisfied that, on the facts as they are now known, they should not have been convicted. As it happens, I am also satisfied that they ought not to have been prosecuted and their cases therefore fulfil the requirement that Lord Hope has formulated. Clearly they also satisfy the test preferred by Lord Clarke of being cases in which no reasonable jury, properly directed, could convict. Like Lord Phillips and Lord Hope I consider that both are entitled to be compensated under section 133. Although I would hold that the material on which Mr Adams relied constituted a newly discovered fact, I do not consider that he has demonstrated that, on the facts as they now stand revealed, it can be concluded beyond reasonable doubt that he should not have been convicted. I would dismiss his appeal. LORD CLARKE Introduction I gratefully adopt Lord Hopes description of the background to the introduction of the statutory right to compensation for miscarriages for justice in section 133 of the Criminal Justice Act 1988 in the light of article 14(6) of the ICCPR. He has set out the relevant provisions of section 133 and article 14(6). I shall not therefore repeat them. The principal issues for decision in this appeal are the meaning of the expressions miscarriage of justice and new or newly discovered fact in those provisions. Miscarriage of justice The meaning of this expression has been considered in a number of cases as described by Lord Hope. I agree with him that it is helpful to consider its meaning in the present context by reference to the categories identified by Toulson LJ when giving permission to appeal to the Court of Appeal in the Adams appeal which are described by Dyson LJ [2010] QB 460, at para 19 of his judgment which is quoted in full by Lord Hope. Dyson LJ described the categories of case thus: A category 1 case is where the court is sure that the defendant is innocent of the crime of which he has been convicted. An obvious example is where DNA evidence, not obtainable at the time of trial, shows beyond doubt that the defendant was not guilty of the offence. A category 2 case is where the fresh evidence shows that he was wrongly convicted in the sense that, had the fresh evidence been available at the trial, no reasonable jury could properly have convicted. An example is where the prosecution case rested entirely on the evidence of a witness who was put forward as a witness of truth and fresh evidence undermines the creditworthiness of that witness, so that no fair minded jury could properly have convicted on the evidence of that witness. It does not follow in a category 2 case that the defendant was innocent. A category 3 case is where the fresh evidence is such that the conviction cannot be regarded as safe, but the court cannot say that no fair minded jury could properly convict if there were to be a trial which included the fresh evidence. The court concludes that a fair minded jury might convict or it might acquit. There is a fourth category of case to which Lord Bingham referred in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1. This is where a conviction is quashed because 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. The respondents say that there is only a miscarriage of justice within the meaning of article 14(6) and section 133 in a category 1 case. They say that the provision that the new or newly discovered fact must show conclusively (in article 14(6)) or beyond reasonable doubt (in section 133(1)) that there has been a miscarriage of justice points to the conclusion that it is only where the claimant can prove his innocence that there has been a miscarriage of justice. The appellants say, by contrast, that the words conclusively and beyond reasonable doubt do not inform the meaning of miscarriage of justice but only indicate the standard of proving the miscarriage of justice, once its meaning has been established. They say that if the Court of Appeal allows an appeal in any of the three categories of case there will have been a miscarriage of justice, unless the claimant is convicted at a retrial. Another possibility is, of course, that section 133 applies in a category 1 and a category 2 case, but not to a category 3 case. Category 1 proof of innocence I turn first to the question whether the expression miscarriage of justice is confined to the case where the claimant can prove beyond reasonable doubt that he was innocent. This was of course the view espoused by Lord Steyn in Mullen. Lord Bingham expressed a different view in that case, albeit without reaching a firm conclusion, and Lord Hope has taken a different view in this case. I agree with him. To my mind there is nothing in either the language or the context to limit the meaning of miscarriage of justice to the case where the claimant can prove that he was innocent. If that is so, it is not for the court to limit the meaning because its own view is that it would be desirable to do so as a matter of policy. Such matters of policy are for Parliament and not for the courts. It is common ground that the expression is capable of a broader meaning than that espoused by Lord Steyn. For reasons which I explain below, to my mind the natural meaning is broader, but I will begin with the context because I appreciate that, as has famously been said, context is everything. The context of section 133 is of course article 14(6). Both Lord Steyn and Lord Bingham considered the travaux prparatoires in Mullen. In para 9(2) of his speech Lord Bingham said this: The House was referred to the travaux prparatoires of the negotiations which culminated in adoption of the ICCPR. It is plain that some delegates contended that compensation should not be paid save to those who were shown to be innocent, and such delegates found no difficulty in expressing this very simple principle. But it is equally plain, as Mr Pleming submitted, that every proposal to that effect was voted down. The travaux disclose no consensus of opinion on the meaning to be given to this expression. It may be that the expression commended itself because of the latitude in interpretation which it offered. It is common ground that the expression miscarriage of justice in article 14(6) and therefore section 133(1) should if possible be given an autonomous meaning. Although the travaux are far from conclusive, they do seem to me to point the way because, as Lord Bingham put it, every proposal that innocence should be the test was turned down. So, if the expression is to be given an autonomous meaning, it cannot be limited to cases where innocence can be shown. It follows that I do not agree with Lord Steyns view that the travaux do not assist in any way. On the contrary, they assist on the first question in this appeal, namely whether proof of innocence should be the test. I agree with Lord Steyn (at para 35) that there is no foundation in the language of article 14(6) and section 133, or by reference to any relevant external aids to construction, for the suggestion that Parliament intended to use the words miscarriage of justice in any wider sense than it bears in article 14(6) and that Parliament intended to give effect to the United Kingdoms international obligations in article 14(6) and no more. I would add and no less. Parliament used the same or almost the same language, so that there is to my mind no warrant for holding that it intended to confer narrower rights to compensation than those afforded by article 14(6). As Lord Hope observes at para 91, Lord Steyn correctly said at para 45 that both article 14(6) and section 133 show that there was no overarching purpose of compensating all who are wrongly convicted. This is demonstrated by the fact that compensation only arises at all in the case of appeals out of time and by the indispensable pre condition that a new or newly discovered fact shows conclusively (or beyond reasonable doubt) that there has been a miscarriage of justice. So, for example, in the case of a recognition that an earlier dismissal of an appeal was wrong, the case falls outside article 14(6). That is so, however palpable the error in the first appellate decision may have been, and however severe the punishment that the victim suffered unjustly. As Lord Steyn put it, those considerations demonstrate that the fundamental right under article 14(6) was unquestionably narrowly circumscribed. Para 46 is the only paragraph in which Lord Steyn focuses on the relevant language. In it, as Lord Hope explains at paras 91 and 92, Lord Steyn focused on the language of article 14(6) and section 133, and in particular on the use of conclusively and beyond reasonable doubt respectively. He said that that language filters out cases where it is only established that there may have been a wrongful conviction and cases where it is only probable that there has been a wrongful conviction. He observed that those two categories would include the vast majority of cases where an appeal is allowed out of time. He concluded that those considerations militated against an expansive interpretation of miscarriage of justice and ultimately held that: While accepting that in other contexts a miscarriage of justice is capable of bearing a narrower or wider meaning, the only relevant context points to a narrow interpretation, viz, the case where innocence is demonstrated. I accept that the language points to a narrow construction but not that it is restricted to the case where innocence is demonstrated. Indeed, to my mind Lord Steyn did not point to any reason why the right to compensation should be so confined. There is nothing in the language or the context to lead to the conclusion that cases in category 2 should be excluded. Yet the expression miscarriage of justice naturally includes such a case. Indeed it seems to me to be the paradigm case. A criminal trial is concerned (and concerned only) with the question whether the prosecution has proved beyond reasonable doubt to the satisfaction of the jury that the defendant is guilty of the offence charged. If the new or newly discovered fact shows that, in the light of it, no reasonable jury, properly directed, could have convicted the accused, to my mind his conviction would, in ordinary language, be a miscarriage of justice. I see no reason why such a case should not be a miscarriage of justice within the meaning of article 14(6) or section 133(1). None of Lord Steyns reasoning leads to the conclusion that it is not. He himself did not address this possibility. In paras 91 to 95 Lord Hope has given his reasons for disagreeing with Lord Steyn that innocence must be proved. I agree with them. I would very briefly summarise my own reasons (in addition to those already given) in this way. (a) (b) If Parliament had intended to limit miscarriages of justice to cases where the claimant could prove innocence, it would have been easy to say so. As Lord Bingham put it in Mullen at para 9(2) quoted above, those delegates who wished to limit compensation in that way found no difficulty in expressing this very simple principle. In para 9(1) Lord Bingham noted that when what was to become section 133 was debated in the House of Lords, the minister, Earl Ferrers, was pressed by Lord Hutchinson QC to say whether a miscarriage of justice connoted the innocence of a defendant or the raising of a doubt about his guilt, but the minister said nothing to suggest that compensation would be payable only to the innocent: Hansard (HL Debates), 22 July 1988, cols 1631 1634. (c) Lord Steyns reliance upon the words une erreur judiciaire in the French text of article 14(6) was unsound for the reasons given by Lord Hope at para 93. (d) The five reasons given by Lord Bingham in para 9(4) of Mullen for thinking that reliance upon para 25 of the explanatory report prepared by a committee of experts on human rights with reference to article 3 of the Seventh Protocol was not of the persuasive value which Lord Steyn identified are convincing: see Lord Hope at para 94. (e) Little assistance is to be gained from either the jurisprudence of the United Nations Human Rights Committee or academic opinion. (f) Courts of appeal are not called upon to decide whether defendants are innocent: see Lord Bingham at para 9(6) and Lord Hope at para 95. If, as I believe is the case, Lord Steyns test is too narrow, the question arises what is the correct construction of the expression miscarriage of justice in this context. I will consider the possibilities in turn. Category 2 no reasonable jury properly directed could convict Category 2 would of course include category 1, but not vice versa. Mr Owen QC submitted that cases in this category would involve a miscarriage of justice, although he also sought to include category 3, to which I will return. I have already expressed my view that there is nothing in the language or context of article 14(6) or section 133 to exclude category 2 and that the expression naturally includes it. Absent any clear indication in the language or context, it is to my mind permissible to have regard to the approach to it within the United Kingdom. In 1988 the Court of Appeal in England and Wales determined criminal appeals by reference to the unamended section 2(1) of the Criminal Appeal Act 1968. The proviso to that subsection provided that, notwithstanding that the Court of Appeal were of the opinion that the point raised in the appeal might be decided in favour of the appellant, they may dismiss the appeal if they consider that no miscarriage of justice has actually occurred. In R v Secretary of State for the Home Department, Ex p Bateman (1994) 7 Admin LR 175 the Court of Appeal (Sir Thomas Bingham MR, Farquharson and Simon Brown LJJ) dismissed an appeal from an order of the Divisional Court refusing judicial review of a decision refusing the appellant compensation under section 133. He had been convicted of several counts of receiving stolen goods and sentenced to six years imprisonment. He had appealed to the Court of Appeal on the ground that he had been convicted on the basis of evidence in statement form given by witnesses from New Zealand. His appeal failed. Some time later his case was referred back to the Court of Appeal under section 17 of the Criminal Appeal Act 1968. This time his appeal succeeded on what was essentially the same ground as that which had failed before and his convictions were quashed. In the Court of Appeal he argued inter alia that the second Court of Appeal must have regarded his conviction as a miscarriage of justice because they would otherwise have applied the proviso. Sir Thomas Bingham (with whom the other members of the court agreed) said this: Therefore, it follows, he says, that he is a victim of a miscarriage of justice and from that it follows that he is entitled to compensation. To deny him compensation is, he argues, to undermine his acquittal and the presumption of innocence which flows from the fact that his convictions have been quashed. I am, for my part, unable to accept that argument, although I hasten to assure Mr Bateman that in doing so I have no intention whatever to undermine the effect of the quashing of his convictions. He is entitled to be treated, for all purposes, as if he had never been convicted. Nor do I wish to suggest that Mr Bateman is not the victim of what the man in the street would regard as a miscarriage of justice. He has been imprisoned for three and a half years when he should not have been convicted or imprisoned at all on the second decision of the Court of Appeal (Criminal Division). The man in the street would regard that as a miscarriage of justice and so would I. But that is not, in my judgment, the question. The question is whether the miscarriage of justice from which Mr Bateman has suffered is one that has the characteristics which the Act lays down as a pre condition of the statutory right to demand compensation. That, therefore, is the question to which I now turn. The Master of the Rolls then held that there was no new or newly discovered fact, so that Mr Bateman could not satisfy the relevant criteria under section 133. The relevance of the statement quoted above is that it supports the conclusion that the Master of the Rolls accepted that there had been a miscarriage of justice within the meaning of section 133, which in turn supports the conclusion that that expression is not limited to cases in which the claimant can prove his innocence. It is perhaps the forerunner of Lord Binghams approach in Mullen. A similar conclusion can be drawn from the terms of section 106, of the Criminal Procedure (Scotland) Act 1995, which sets out the test for criminal appeals in Scotland. By subsection (3) it provides: By an appeal under subsection (1) above a person may bring under review of the High Court any alleged miscarriage of justice, which may include such a miscarriage based on (a) subject to subsections 3A to 3D below, the existence and significance of evidence which was not heard at the original proceedings; and (b) the jurys having returned a verdict which no reasonable jury, properly directed, could have returned. It can thus be seen that a miscarriage of justice for the purposes of a fresh evidence appeal in Scotland includes the case where the jurys verdict is one which no reasonable jury, properly directed, could have returned. That is of course a category 2 case. Section 106(3) is thus an example of the expression miscarriage of justice being used in a very similar context to that with which we are concerned. It has been suggested that to include category 2 within the test of miscarriage of justice in section 133 would cause difficulties of application. For my part, I would not accept that suggestion. It is a test used at the end of the prosecution case in countless criminal trials in England and Wales. Moreover, it is used in the Court of Appeal in England and Wales. While it is not the question for decision in an English appeal because the question is now simply whether the conviction is safe, it is plainly relevant when a retrial is sought. The Court of Appeal would not make an order for a retrial if it formed the view that the effect of the new or newly discovered evidence led to the conclusion that no reasonable jury, properly directed, could convict. Moreover, so far as I am aware, this test has caused no difficulty in criminal appeals in Scotland. It is a test which is familiar to the criminal trial and appeal process, which the proposed test of innocence is not. As Lord Hope has observed at para 95, in R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 2 All ER 1 at para 40(iii) Hughes LJ said that cases where the innocence of the convicted defendant is genuinely demonstrated beyond reasonable doubt by the new or newly discovered fact the Court of Appeal will, in virtually every case, make that plain. However, that may not be the case and, as Lord Hope says, the Court of Appeal is not bound to say whether or not a defendant is innocent. In this regard there is authority for the proposition that the Court of Appeal is neither obliged nor entitled to say whether an appellant is innocent: see R v McIlkenny (1991) 93 Cr App R 287 at 310 311. Whether that is correct or not, I agree with Lord Hope that, to put it no higher, it is at least questionable whether it can be right to restrict the entitlement to compensation to cases where the establishment of innocence is apparent from the Court of Appeals judgment. It is of interest in the context of this debate to note that it is common ground that it was only after the decision in Mullen that Secretaries of State have applied an innocence test and that they do not do so in Scotland even now. It was suggested in argument that it is not appropriate for the Secretary of State, and not a court, to make judgments of this kind. However, section 133(3) expressly provides that the question whether there is a right to compensation shall be determined by the Secretary of State. Nobody has suggested that it is not appropriate for the Secretary of State to decide whether the claimant has proved that the new or newly discovered fact shows that he is innocent. It does not seem to me to be any less appropriate for the Secretary of State to decide whether he has proved that it shows that no reasonable jury could have convicted him. In reaching his or her conclusion the Secretary of State is of course bound to have regard to what the Court of Appeal which reverses the conviction has said. In In re McFarland [2004] UKHL 17, [2004] 1 WLR 1289 Lord Bingham said at para 16, albeit in the context of a claim under the ex gratia scheme, that the Secretary of State must properly be guided by the judgment of the Court of Appeal. However, it seems to me that it is for the Secretary of State to have regard to all relevant material when deciding whether the claimant has established beyond reasonable doubt that, in the light of the new or newly discovered fact, no reasonable jury, properly directed, could have convicted him. I see no reason why the Secretary of State could not decide that question, whether on the grounds of innocence or otherwise. As I see it, the matter has to be tested as at the date of the reversal, having regard both to the evidence that was available at the trial and to the new or newly discovered facts. I would include in the evidence available at the trial, all such evidence, not just that adduced on behalf of the prosecution, but also that adduced during the defence case. I would therefore include admissions made by the defendant in cross examination in a case in which the new evidence showed that the case should have been stopped. The question is whether, on that material, he had a case to answer or, put another way, whether a reasonable jury properly directed could have convicted him. If he proves beyond reasonable doubt that the answer to those questions is no, he is in my opinion entitled to compensation under section 133 on the basis that there has been a miscarriage of justice. I entirely accept that the cases in which compensation can be claimed are limited by the necessity to satisfy the criteria in the section and by the need to show beyond reasonable doubt that the new or newly discovered fact demonstrates, in the light of the other material before the court that no reasonable jury, properly directed, could have convicted him. The Secretary of State would of course have to be satisfied that the alleged fact was indeed a fact. I should add by way of postscript that, as I see it, category 2 potentially includes a case where the new or newly discovered fact is such that, if it had been known at the trial, the trial judge would have stopped the trial on the ground of abuse of process. If the Court of Appeal concluded that a new trial could not properly be ordered on the basis that it was not possible to cure the abuse, so that no reasonable jury, properly directed, could convict, there would, in my opinion have been a miscarriage of justice within section 133. It seems to me that this must be within the kind of miscarriage of justice which Lord Bingham had in mind in Mullen, namely where a conviction is quashed because something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who certainly should not have been convicted. Since Mullen, some doubt has been expressed as to whether the basis upon which it was decided is correct. See, for example, R (Siddall) v Secretary of State for Justice [2009] EWHC 482 (Admin) per Leveson LJ at paras 47 48. The basis on which it was decided by the majority, comprising Lord Bingham, Lord Scott, Lord Rodger and Lord Walker was that Mr Mullens conviction had been reversed by the Court of Appeal on the ground that there had been an abuse of executive power and not any failure in the trial process: see per Lord Bingham at para 8, Lord Scott at para 65, Lord Rodger at para 69 and Lord Walker at para 70. In particular, Lord Bingham said that it was for failures in the trial process that the Secretary of State is bound by article 14(6) and section 133 to pay compensation. He distinguished those from abuse of executive power. He did so by reference to R v Horseferry Road Magistrates Court, Ex p Bennett [1994] 1 AC 42 per Lord Griffiths at pp 61 62 and R v Looseley [2001] 1 WLR 2060 at para 40. Lord Scott said that the Court of Appeal had not reversed the conviction because there had been any failure in the trial process but because, prior to the commencement of the trial process, there had been serious abuse of executive power which had led to the removal of the claimant from Zimbabwe to this country and thus enabled the trial to take place. Although Leveson LJ observed that this distinction has its difficulties and noted that Lord Steyn said at para 57 that, if that abuse had been disclosed the trial would have been stopped, and in its written submissions Justice suggested that Mullen might now be decided differently on its facts. There is I think scope for argument in the future as to whether there is a class of cases in which the section would not apply, of which Mullen is an example. They are cases in which it has been held that the trial should not be permitted to proceed, not because of anything related to the case against the defendant, but because to permit it would offend against the rule of law or would seriously affect the integrity of the administration of justice. In quashing Mullens conviction Rose LJ, giving the judgment of the Court of Appeal, said at [2000] QB 520, 535 536: This court recognises the immense degree of public revulsion which has, quite properly, attached to the activities of those who have assisted and furthered the violent operations of the IRA and other terrorist organisations. In the discretionary exercise, great weight must therefore be attached to the nature of the offence involved in this case. Against that, however, the conduct of the security services and police in procuring the unlawful deportation of the defendant in the manner which has been described represents, in the view of this court, a blatant and extremely serious failure to adhere to the rule of law with regard to the production of a defendant for prosecution in the English courts. The need to discourage such conduct on the part of those who are responsible for criminal prosecutions is a matter of public policy to which, as appears from R v Horseferry Road Magistrates' Court, Ex p Bennett [1994] 1 AC 42 and R v Latif [1996] 1 WLR 104, very considerable weight must be attached. It appears to me to be at least arguable that such a case would not fall within section 133. None of the cases before the Court in these appeals is such a case. I recognise that Lord Phillips rejects category 2 as a test and that he has suggested an alternative test. However, section 133 inevitably requires the Secretary of State to consider the effect of the new or newly discovered fact upon the other evidence before the court and thus on the validity of the conviction. This involves the evaluation of the evidence in its legal context. It also expressly requires the Secretary of State to decide whether in the light of all the evidence the claimant has shown beyond reasonable doubt that there has been a miscarriage of justice. In considering all these questions, the Secretary of State can of course always take such advice as is appropriate. I remain of the view that category 2 is an appropriate formulation of the test and that the position is or should be as stated above. Compensation is only payable where, in the light of the new or newly discovered fact, no reasonable jury, properly directed, could have convicted or, subject perhaps to the point made in para 215 above, where the new or newly discovered fact would have led the judge to stop the case on the ground of abuse in the trial process. However, I recognise that Lord Phillips suggests replacing the category 2 test with a more robust test. It is that a new fact will show that a miscarriage of justice has occurred when it so undermines the evidence against the defendant that no conviction could possibly be based upon it. I have assumed that the second it means the evidence against the defendant. To my mind that test is consistent with the category 2 test identified above because, in such a case, no reasonable jury properly directed, could convict the defendant. For that reason and on that basis, I would accept the proposed test, with which Lord Hope, Baroness Hale and Lord Kerr agree. Category 3 unsafe conviction Section 2(1) of the Criminal Appeal Act 1968, as substituted by section 2(1) of the Criminal Appeal Act 1995, provides that the Court of Appeal shall allow an appeal if they think the conviction is unsafe. The proviso in the previous section 2(1) was repealed. Mr Owen submitted that where a qualifying appeal is allowed on the basis that the claimant has shown beyond reasonable doubt that the conviction was unsafe because of a new or newly discovered fact, it follows that there was a miscarriage of justice within the meaning of section 133. It is certainly possible to construe the expression miscarriage of justice as wide enough to include such a case. I do not however think that Parliament can have intended the expression to have such a wide meaning in section 133(1) because it would have been easy for the section to have been drafted in such a way as to include every case where the relevant appeal was allowed on the basis of a new or newly discovered fact. Moreover none of the courts which have considered section 133 have suggested that it might have such a wide meaning: see the cases referred to by Lord Hope at para 82. In particular, the formulation of the test by Lord Bingham in Mullen does not encompass every case where the conviction was held to be unsafe on the basis of new evidence. His formulation was that there is a miscarriage of justice where a conviction is quashed because something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who certainly should not have been convicted. It is not possible to say that, merely because a conviction has been quashed because it was unsafe, the appellant should not have been convicted. A conviction may be unsafe because the Court of Appeal concludes that, but for the successful ground of appeal, the jury might not have convicted. Indeed, this is by far the most common case in which an appeal is allowed. It is a category 3 case in which, as Dyson LJ put it in the passage quoted above, a fair minded jury might convict or might acquit. In such a case I do not think that one can say as a matter of course that the defendant should not have been convicted. It seems to me that it is only in a category 2 case (which of course includes a category 1 case) that it can be said that a person should not have been convicted. It can be so held in such a case because it follows from the conclusion that no reasonable jury, properly directed, could have convicted the defendant that he should not have been convicted. Any lesser test is to my mind too uncertain and would not satisfy the statutory test that, in order to be entitled to compensation, the claimant must prove beyond reasonable doubt that there has been a miscarriage of justice. If he might have been convicted by a jury on all the evidence including the new or newly discovered fact, he cannot show for sure that there has been a miscarriage of justice within section 133(1). Retrial Section 133(5A) was not part of section 133 when Mullen was decided. It makes it clear that, where the claimant succeeds on appeal but is convicted at a retrial, he is not entitled to compensation because his conviction has not been reversed. If his appeal succeeds and the Court of Appeal orders a retrial, but the prosecution decides not to proceed with the retrial, the conviction is treated a reversed when it so indicates. In these circumstances, the position is as described above. If a retrial takes place and the claimant is acquitted of all offences at a retrial, there is scope for debate as to the position. By subsection (5A) the conviction is treated as reversed when he is so acquitted. It is not necessary to decide this question in this appeal but it is my provisional view that the same approach as described above would apply. Thus, in order to be entitled to compensation, he would have to prove beyond reasonable doubt that on the basis of the new or newly discovered fact no reasonable jury would have convicted him. New or newly discovered fact The question is what is meant by a new or newly discovered fact. In particular the question is what is meant by a newly discovered fact. Mr Tam QC submitted that a fact which was known to the prosecution and knowable to the defence because it was available to them, but which they did not know because they did not take the steps they should have taken to examine the evidence was not a newly discovered fact. I would not accept that submission. If the fact was not in fact discovered at or before the trial or at an in time appeal but was discovered thereafter, it follows that it was a newly discovered fact. The question is whether it was discovered earlier, not whether it was discoverable earlier. In my opinion the fact that it was discovered by the prosecution before the appeal is irrelevant. In neither of the appeals before the Supreme Court were the relevant facts discovered by the defendants or their lawyers at or before the trial or the in time appeal. It follows that they were newly discovered facts. The fact that in the Adams case they were discoverable by the defendants lawyers is irrelevant. As I see it, therefore, on the facts of these appeals this part of the test is satisfied. However, there was much debate as to whether it is possible for a fact to be a newly discovered fact if it was known to the defendants lawyers. In my opinion it is. Section 133(1) is subject to the proviso unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted. The proviso does not apply if the non disclosure of the fact was attributable to his lawyers. It could have done so. As Dyson LJ explained at paras 14 16 of his judgment, there is no mention of the convicted persons legal advisers in article 14(6) or section 133, whereas article 14(3) does refer to legal advisers. Moreover, there is no suggestion that the person convicted in section 133(1) includes his lawyers. In my opinion the Court of Appeal correctly held that knowledge of the fact by the defendants lawyers would not prevent it being a newly discovered fact. I note in this regard that in a case where the fact was known to the defendants lawyers and not used at the trial, the failure to use it would be very relevant to the question whether the evidence of the fact would be admissible under section 23 of the Criminal Appeal Act 1968. It might well be held that in the light of the fact that the lawyers failed to deploy it, it was not necessary or expedient in the interests of justice to admit it on an appeal. In that event the appeal would not be allowed or the conviction reversed on the basis of it. The remaining question is whether it is possible for a fact to be a newly discovered fact if it was known to the defendant himself at trial or at an in time appeal. The Court of Appeal held that it was, for the reasons given by Dyson LJ at paras 14 to 18. I agree. Section 133(1) contains the proviso unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted. This proviso would not be necessary if the question whether evidence was new or newly discovered were tested by reference to the knowledge of the convicted person himself. The proviso seems to me to assume that a fact may be newly discovered even though it is known to the defendant at the relevant time. Otherwise it would have very little effect because it would only apply where the defendant did not know the fact but its non disclosure was attributable to him. Such a situation is perhaps theoretically possible but the natural meaning of the proviso is that it covers the case where the defendant is aware of the fact at the relevant time but does not deploy it either personally or through his lawyers. So understood, the proviso seems to me to point to the conclusion that a fact may be a newly discovered fact even if it was known to the defendant himself at trial or at an in time appeal. For these reasons I agree with Lord Hopes conclusion at para 107 and Lord Phillips conclusion at para 62 that the relevant knowledge is that of the trial court, but do not agree with Lord Hopes conclusion, also at para 107, that material disclosed to the defence by the time of the trial cannot be said to have been newly discovered when it is taken into account at the stage of the out of time appeal. For the reasons given earlier, it is my view that material that was not discovered either by the defendant or his lawyers but was discovered only after the in time appeal was newly discovered on the simple basis that, whether or not it ought to have been discovered, it was not in fact discovered. That was the position in both the Adams appeal and the Northern Irish appeals. Article 6(2) of the European Convention of Human Rights Other members of the Court have considered the issues under this head in some detail. The European Court of Human Rights (ECtHR) has applied article 6(2) in cases which are not covered by its language. For my part, I do not think that this is a case in which it is necessary or would be appropriate to analyse that jurisprudence in detail. I will only say that I am not at present persuaded that article 14(6) and section 133 are a form of lex specialis to which article 6(2) can never be relevant. For present purposes I shall simply assume that it is in principle possible for article 6(2) to apply to proceedings under section 133. I can see that it is inappropriate, to put it no higher, to impute criminal liability to a person who has been acquitted. In each of the cases in which a claim for compensation arises under section 133(1) the claimants conviction has been reversed by the Court of Appeal in an out of time appeal. Section 2(3) of the Criminal Appeal Act 1968 (as substituted in 1995) provides: (3) An order of the Court of Appeal quashing a conviction shall, except when under section 7 below the appellant is ordered to be retried, operate as a direction to the court of trial to enter, instead of the record of conviction, a judgment and verdict of acquittal. Thus the effect of the reversal of the conviction by the order of the Court of Appeal quashing it, is that the person concerned is formally acquitted. In these circumstances the court hearing and determining a claim for compensation under section 133(1) must not say or do anything inconsistent with the claimants acquittal. If the analysis set out above is adopted, there is no risk of its doing so. The question in each case is whether the claimant has proved beyond reasonable doubt that the new or newly discovered fact has demonstrated that there was a miscarriage of justice on the basis that no reasonable jury, properly directed, could convict him. The trial of that question does not in any way affect or impugn the acquittal of the claimant as provided by section 2(3) of the Criminal Appeal Act 1968 quoted above. The question at such a trial is different and so is the burden of proof. The position is not unlike a civil process where a claimant seeks damages from a defendant who has been acquitted of, say, causing grievous bodily harm to A at a criminal trial. Under English law it is permissible for A to seek damages from the defendant on the ground that he was unlawfully injured by him, alleging all the same facts as had been relied upon at the criminal trial. The critical difference between the two processes is that at the criminal trial the prosecution has to prove guilt beyond reasonable doubt, whereas at the civil trial A only has to prove liability on the balance of probabilities. The ECtHR has expressly recognised that civil proceedings of that kind do not infringe article 6(2) of the Convention: see eg Y v Norway (2003) 41 EHRR 87, where the court expressly said at para 41 that, while the acquittal from criminal liability ought to be maintained in 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. It did add in para 42 that, 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. See also Bok v The Netherlands, (Application No 45482/06), 18 January 2011. Similarly, here, where, at any rate on the analysis set out above, there is no question of anything said or done in the section 133 proceedings impugning the acquittal in the criminal proceedings, I see nothing in article 6(2) which is in any way inconsistent with the conclusions I have reached. Disposal I agree with Lord Phillips, Lord Hope, Baroness Hale and Lord Kerr that the appeal in the Adams case must be dismissed. Lord Phillips has set out the relevant facts. As Dyson LJ observed at para 59, the Court of Appeal allowed the appeal because the undeployed material was important and might have led the jury to acquit. The decision to quash the conviction was founded on the potential that the undeployed material had for affecting the jurys verdict. It was thus a category 3 case and, for the reasons given earlier, section 133(1) does not cover such a case. I also agree that the appeals in the Northern Irish cases should be allowed. Lord Kerr has set out the facts in some detail. They show, at any rate to my mind, that, in the light of the newly discovered facts, no reasonable jury, properly directed, could have convicted them. DISSENTING JUDGMENTS LORD JUDGE The legislation Section 133(1) of the Criminal Justice Act 1988 (section 133) provides: 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. Reversed refers to a conviction which is quashed on an appeal out of time or following a reference by the Criminal Cases Review Commission (section 133(5)). By section 133(2) compensation is not payable unless the application for compensation has been made: Before the end of the period of 2 years beginning with the date on which the convictionis reversed or he is pardoned. This limitation was inserted by sections 61(1) (3) and (9) of the Criminal Justice and Immigration Act 2008 and came into force on 1 December 2008. Simultaneously, in accordance with section 61(1), (2), (5) and (9) of the 2008 Act, provision was made for the cases where the conviction is quashed on an appeal out of time, and a retrial ordered, so that: The conviction is not to be treatedas reversed unless and until the person is acquitted of all offences at the retrial or the prosecution indicates that it has decided not to proceed with the retrial. (Section 133(5A)) The determination whether there is an entitlement to compensation is vested exclusively in the Secretary of State, (section 133(3)) who in exceptional circumstances may extend the time for making an application. (section 133(2A)) When section 133 was enacted an ex gratia system operated in tandem with it. In England and Wales and Northern Ireland, but not in Scotland, the ex gratia scheme was abolished in 2006. In his article Compensation for Wrongful Imprisonment [2010] Crim LR 805, Professor John Spencer QC convincingly criticised the narrowness of and consequent anomalies which arise from the limitations of the statutory scheme. No alternative remedy is provided unless, perhaps, and subject to limitation periods, where malpractice in the investigative process is established, the victim may pursue a remedy in tort, or when the individual suffered a wrongful conviction as a consequence of negligence by his legal advisors, a claim in damages may be available. In short, the statutory scheme does not preclude any relevant action which may, in theory, be available in tort, but it is in any event unsupported by the ex gratia scheme. Nevertheless we must analyse section 133 and the ambit of the scheme for the payment of compensation without reference to its anomalies and disadvantages. When it was examined by the House of Lords in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1 the meaning and effect of section 133 produced contradictory opinions with no authoritative decision. Lord Steyn concluded that the statutory scheme was confined to cases where the person concerned was clearly innocent. Lord Bingham of Cornhill, while agreeing with the result, for carefully explained reasons, hesitated to accept this restriction on the ambit of the statutory scheme. The differences between their respective approaches to the problem have been considered and examined in a number of subsequent decisions, of which the most recent is R (Allen (formerly Harris) v Secretary of State for Justice [2009] 1 Cr App R 36. They must finally be resolved now. As we are not agreed, without embarking on what would be a repetitious discourse of much of the voluminous material drawn to our attention, I shall briefly explain the reasons why I agree with Lord Steyn. In Mullen the parties were agreed that the interpretation of section 133 required what was described as a correct understanding of article 14(6) of the International Covenant on Civil and Political Rights, dated 16 December 1966. (ICCPR) That view was adopted by the House of Lords and it is unchallenged in the present proceedings. Article 14(6) 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 grounds 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. In short, the enactment of section 133 in virtually identical terms represented the response of the United Kingdom to a Treaty obligation. One further Treaty provision needs immediate attention. In November 1984 article 3 of Protocol 7 to the Convention of Human Rights also made what was effectively an identical provision to article 14(6) of the ICCPR. 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 the law or the practice of the State concerned, unless it is proved that the non disclosure of the unknown fact in time is wholly or partly attributable to him. Article 3, Protocol 7 will become relevant when the jurisprudence of the European Court of Human Rights falls to be considered. In the context of a statutory provision reflecting the international obligations undertaken by the United Kingdom, it would be productive of confusion for the phrase miscarriage of justice to be analysed by reference to the many different ways in which, looking at our own statutes which enable convictions to be quashed, and the language used, sometimes loosely, in the course of numerous judgments bearing on these questions. The phrase reflects an autonomous concept, in which the words miscarriage of justice reflect the international obligations of the United Kingdom under article 14(6). Like article 14(6), section 133 distinguishes the reversal of the conviction (or a pardon) and a miscarriage of justice. Within the section itself, as with article 14(6), these concepts are distinct. Even if the remaining pre conditions to the payment of compensation are established, the reversal of the conviction is an essential prerequisite to but is not conclusive of the entitlement to compensation. In short, for the purposes of section 133 the reversal of the conviction and the consequent revival of the legal presumption of innocence is not synonymous with a miscarriage of justice. Therefore before compensation is payable under the statutory scheme more than the reversal of the conviction is required. The requirement is that a miscarriage of justice must be demonstrated beyond reasonable doubt. In my view the use of this phrase was deliberate and significant. The phrase is not relevant to the evidential question whether the conviction has been reversed and it is not directed to any individual feature or aspect of the investigation or trial processes. If the reversal of the conviction alone were sufficient, that fact would be proved beyond reasonable doubt by the court record, and if any specific feature of the investigation or trial processes were relevant, appropriate provision could readily have been made in section 133 itself. Instead the phrase describes the characteristics or attributes of the miscarriage of justice which must be established. The word conclusively in article 14(6) was not repeated. Rather the familiar description of the standard of proof in criminal cases and, significantly in the context of a claim for the payment of compensation (normally a civil claim), the standard normally applied to the prosecution in the criminal justice process was imposed on the defendant. For this purpose the balance of probabilities was expressly ignored. Accordingly, for section 133 to apply, following a conviction of an offence which was proved beyond reasonable doubt, the emergence of a new or newly discovered fact should demonstrate not only that the conviction was unsafe, or that the investigative or trial processes were defective, but that justice had surely miscarried. In the present context, the ultimate and sure miscarriage of justice is the conviction and incarceration of the truly innocent. This leads me to the conclusion that as a matter of construction the operation of the compensation scheme under section 133 is confined to miscarriages of justice in which the defendant was convicted of an offence of which he was truly innocent. In my judgment nothing less will do, and no alternative or half way house or compromise solution consistent with this clear statutory provision is available. I must therefore address some of the contentions which suggest that this construction is over restrictive. The unsafe conviction Mr Tim Owen QC highlighted the absence of word innocent from section 133. The omission reflects not only the autonomous concept of miscarriage of justice, but more significantly, the absence of an innocent verdict in the criminal justice process. The defendant is either proved to be guilty of the crime alleged, or he is entitled to a not guilty verdict and acquittal. A verdict of innocent is unknown. On acquittal, or the reversal of a conviction, the presumption of innocence revives. It applies when the jury considers that there is a high probability that the defendant is guilty, and indeed to cases like Mullen, whose conviction was quashed notwithstanding the assessment of the court that he was undoubtedly guilty. Just because it is a concept to which the criminal justice process is not directed, the word innocent could have no place in section 133. The only ground for quashing a conviction in the Court of Appeal Criminal Division (the Court) is that it is unsafe. There are however occasions when a new or newly discovered fact may well demonstrate the factual innocence of the appellant. And if it does, the judgment of the court may say so. I respectfully disagree with the observation in R v McIlkenny (1991) 93 Cr App R 287 that the court is not entitled to state that an appellant is innocent. The processes of the Court of Appeal do not allow for a formal declaration of factual innocence, any more than the trial process recognises a verdict of innocent. However there can surely be no stronger case for doubting the safety of a conviction than evidence which unmistakenably demonstrates that the appellant is in truth an innocent man or woman. (See R v Fergus (1994) 98 Cr App R 313: R v Hodgson [2009] EWCA Crim 490.) Although the conviction is quashed not on the ground that the defendant is innocent, but because his conviction is unsafe, the terms of the judgment should conscientiously reflect the true reasons for its decision that the conviction should indeed be quashed as unsafe. At the risk of stating the obvious, the decision whether to quash a conviction is for the Court: so are all features of the trial process, and indeed any order for retrial. If the end of the judicial process is that the conviction is quashed, or if following a retrial, the defendant is acquitted, the administrative decision whether compensation is payable for a miscarriage of justice is vested exclusively in the Secretary of State. The determination is not limited to some kind of administrative assessment of the circumstances in which the judicial process has come to an end. Therefore while the Secretary of State should pay the closest possible attention to the terms of the judgment of the Court, whatever the terms in which the judgment is expressed, when making the decision whether a miscarriage of justice has occurred, he is not confined to the judgment of the Court. Retrial The circumstances in which a retrial will be ordered following the quashing of a conviction vary enormously. The single question is whether in a fact specific context the interests of justice should lead to such an order. Dealing with it generally it is most unusual for an order for retrial to be made many years after conviction, or when the sentence imposed at the original trial has been or is close to being completed. On the other hand, again dealing with it generally, where a conviction is recent, and the sentence substantial, and the evidence relied on the prosecution is likely to be available at the retrial, then a retrial may well be ordered. Exceptions can be found both ways. At the risk of repetition, the decision is fact specific. It can however be confidently stated that it would be inconceivable for the Crown to seek or the Court to order a new trial if it were made clear in the terms of the judgment that the conviction was being quashed on the basis that the fresh evidence demonstrated that the defendant was innocent. This reinforces my view that if that conclusion is justified, the court is entitled to say so in its judgment. These considerations bring me to section 133(5A). This subsection addresses the newly introduced statutory time limit in which an application for compensation may be made in the context of an order for retrial. If for any reason (including the conclusion of the Court that the defendant is truly innocent) no order for retrial is made, time runs from the date when the conviction is quashed. If however (again, for whatever reason) the order quashing the conviction is accompanied by an order for retrial, notwithstanding the presumption of innocence, for the purposes of the scheme for the payment of compensation the conviction is not reversed or quashed and the time for making an application is accordingly postponed until the retrial process is completed. This enables first, the defendant to concentrate his attention on the forthcoming retrial. Second, it is conclusive of the question (adversely to the defendant) if he is convicted, when his position is exactly the same as it would have been if the original conviction had not been quashed. Third, if he is acquitted, the process may provide the Secretary of State with further material on which to base his determination. In my judgment section 133(5A) has no bearing on the proper construction of the words beyond reasonable doubt that there has been a miscarriage of justice, and the entitlement to compensation under the statutory scheme was not expanded with effect from 1 December 2008 when section 133(5A) came into force. That was not the purpose of this new inserted provision which was directed to the consequences of the introduction of the new timetable within which applications should be made. It was procedural only. European Court of Human Rights In my judgment the jurisprudence of the European Court of Human Rights drawn to our attention by Mr Owen does not bear on the issues which arise in this litigation. As already indicated once a conviction has been reversed the presumption of innocence applies. Subject only to the provisions of sections 76 83 of the Criminal Justice Act 2003 the rule against double jeopardy applies and the defendant cannot be prosecuted a second time for an offence of which he has been acquitted, or when his conviction has been reversed and for the purposes of the administration of criminal justice the prosecution process is at an end. Nevertheless the acquittal, or the successful appeal against conviction, does not operate as an absolute bar to litigation. It remains open to any individual to assert that notwithstanding the acquittal or quashing of the conviction, the defendant was guilty. That is what Lord Steyn said about Mullen in his judgment in that case. A defendant who has been acquitted of rape may face proceedings for damages by the complainant and she may successfully establish on the balance of probabilities that he did indeed rape her and is liable in damages. In proceedings for defamation on the basis that the defendants innocence is questioned, the acquittal does not create an irrebuttable presumption that the assertion cannot be justified and must be unjustifiable. Article 3, Protocol 7 forms part of the Convention. It must be read together with the Convention. The jurisprudence of the European Court of Human Rights relied on by Mr Owen was not directed to and did not address the provisions of article 3, Protocol 7. If the decisions he relied on apply in the present case it will in effect mean that the reversal of the conviction carries with it an obligation to pay compensation in accordance with section 133, although such a conclusion would be inconsistent with the wording of article 3, Protocol 7 itself. Bok v The Netherlands (Application No 45482/06) (unreported) 18 January 2011 confirms that it does not. Section 133 therefore provides an individual whose conviction has been reversed with the opportunity (but no obligation) to make a claim for compensation based on a statutory test which is effectively identical to the provisions of the European Convention. The Secretary of State must allow or reject the application in accordance with that test. Conviction Impossible This heading is used to encompass some of the alternative ways of approaching the concept of miscarriage of justice adopted in the majority judgments which have reached the conclusion that the phrase has a rather broader ambit than I do. A newly discovered fact which demonstrates that the prosecution against the defendant is shredded to the extent that no conviction could have been based on it, or that no evidence would properly have been offered or, if there had been a trial, there would have been no case to answer at the close of the prosecution case, is likely to provide powerful material which may lead the Secretary of State to conclude that the defendant is indeed innocent. However that conclusion does not automatically follow, and unless it does, section 133 does not apply. In short, these considerations are of evidential significance, maybe of crucial evidential significance, but not determinative. There are a variety of different circumstances in which the Court may make a decision on appeal in relation to decisions at trial that what appeared to be powerful evidence for the Crown should have been excluded. For example, in the light of some newly discovered fact the Court may conclude that the decision of the trial judge to allow crucial prosecution eye witnesses to give their evidence anonymously was wrong, or no longer tenable: without that evidence there would be no case against the defendant. The Court may order a retrial, but without the protection of an anonymity order, the crucial witnesses may then refuse to give evidence at all. Accordingly no further evidence would be offered against the defendant. In my judgment it should not, and it would not, follow that the defendant would be entitled to compensation. Similar considerations would arise if, on the basis of fresh evidence, the Court concluded that the judge had wrongly admitted crucial hearsay evidence without which there would have been no prosecution. Taking the matter further, R v Smith [1999] 2 Cr App R 238 illustrates the difficulty of equating the no case to answer situation with the concept of miscarriage of justice within section 133. The judge rejected a submission that there was no case to answer. The Court concluded that he was wrong and went on to examine the question, what if a submission is wrongly rejected but the defendant is cross examined into admitting his guilt? It concluded that the conviction would still be unsafe because the defendant was entitled to be acquitted at the close of the prosecution case. It would be surprising if notwithstanding his own sworn admission of guilt, the discovery of a new fact which demonstrated that the decision that there was a case to answer was wrong, should be followed by the payment of compensation. Again, where fresh evidence is advanced on behalf of the appellant which undermines the safety of the conviction, and indeed puts into question a substantial part of the prosecutions case, the prosecution may seek to adduce fresh evidence demonstrative of guilt. The jurisdiction to permit the Crown to do so is available (for example, see R v Hanratty [2002] EWCA Crim 1141; [2002] 3 All ER 534). In the interests of justice the Court may order a new trial to enable all the issues to be resolved by a jury notwithstanding that, standing on its own, the original evidence advanced by the Crown was no longer sufficient to found a case for the appellant to answer. Finally, I must return to Mullen itself, which at [1999] 2 Cr App R 143 sets out the reasons why the conviction was quashed. The matters which constituted the abuse of process occurred before Mullen was returned from Zimbabwe to this jurisdiction. The British authorities procured his deportation by unlawful means, in breach of public international law. The prosecution itself was held to be unlawful. Mullen therefore should not have been charged, let alone prosecuted to trial. Yet the House of Lords was agreed that he was not entitled to compensation, and I wholeheartedly agree. Considerations like these underline some of the practical difficulties with any approach to the construction of section 133 which goes beyond the limits suggested by Lord Steyn in his judgment in Mullen, that compensation within the statutory scheme is payable only when the defendant was convicted of an offence of which he was truly innocent, and therefore beyond reasonable doubt the victim of a miscarriage of justice. In my judgment the principle is that section 133 is concerned with the fact rather than the presumption of innocence in the context of the administrative decision to be made by the Secretary of State. It is not related to different (and if so which?) aspects of the trial processes, or the likely or possible impact which the new or newly discovered fact would have had on the decision to prosecute or on the forensic processes which culminated in conviction. Their practical effect is demonstrated in the case of MacDermott and McCartney. The confessions on which the prosecution relied would have been inadmissible if they had been made not as a result of violence, but rather of inducements. Assuming for present purposes that the newly discovered material demonstrated that Donnelly had been offered identical inducements to those which MacDermott and McCartney had asserted at their trials, their convictions would have been no less liable to be quashed than they were in the light of the fresh evidence relating to police violence. As there was no evidence beyond their inadmissible confession there would have been no basis for any prosecution. And there would, if they were prosecuted, have been no case for either to answer. Yet, in the context of an inducement or inducements, there might, if the confessions were sufficiently detailed, be no reason to doubt that the confessions were true, even if inadmissible. In my judgment their cases would not qualify for compensation. We are here dealing not with inducements which cast doubt on the voluntariliness of the confessions, but with violence. The newly discovered material would have borne on the decision of the trial judge whether the defendants confessions were voluntary or not. The fresh evidence led the Court of Appeal in Northern Ireland to conclude that if it had been available at trial there was a realistic possibility that the evidence of the police officers (who asserted that there had been no intimidation of the defendants, and no grounds for doubting that the confession statements were voluntary) may have been discredited. If so the statements would have been excluded from consideration, and there would then have been no prosecution and no case for either of them to answer. In principle, however, the impact on the admissibility of their confessions would have been the same, whether they responded to inducements to confess or succumbed to violence. Although I share the distinct unease of the Court of Appeal in Northern Ireland about the circumstances in which the confessions were made by the appellants, it does not follow that the Secretary of State was obliged to conclude that they were innocent for the purposes and within the ambit of section 133. New or newly discovered fact In the discussion about the meaning of new or newly discovered fact the rival contentions went too far. It would be unrealistic, and removed from the realities of the conduct of the defence at trial that his legal advisers should inform the defendant personally of each and every fact and matter to which their attention is drawn by the prosecution. When all is said and done, the defence advocate is not a mouthpiece or echo chamber for his client. The responsibility for giving advice and assisting the defendant to make whatever decisions which he must make for himself is one aspect of the responsibilities: the deployment of evidence and argument on his behalf is another. Sometimes the lines overlap, but often they do not. It therefore follows that merely because the defendant himself is personally ignorant of a particular fact, it is not new or newly discovered when the defendant personally ceases to be ignorant of it. On the other hand, when the prosecution has complied with all its obligations in relation to disclosure of material to the defence lawyers, and they, for whatever reason, do not then deploy material which appears to be adverse to the prosecution or which would assist the defendant, that material should not automatically be excluded from the ambit of the section on the basis of prosecutorial compliance with its disclosure obligations. Rather the approach should coincide with the circumstances in which fresh evidence is sought to be deployed before the Court in accordance with section 23 of the Criminal Appeal Act 1968. This normally predicates that there should be a reasonable explanation for the earlier failure to adduce the evidence at the trial. In the present case, it is clear from the judgment of the Court in Adams that the conviction was quashed on the basis of fresh evidence in circumstances in which, notwithstanding that the prosecution had fully performed its responsibilities in relation to disclosure, Adamss legal team had failed adequately to respond and fulfil theirs. In my judgment that failure or omission was a new or newly discovered fact within the ambit of section 133. Conclusion In my judgment the appeal of Adams should be dismissed: as to the appeals of MacDermott and McCartney, I should have agreed with Lord Browns proposal that they should be remitted to the Secretary of State for further consideration. LORD BROWN (with whom Lord Rodger agrees) I have had the advantage of reading in draft the judgment of Lord Judge, the Lord Chief Justice, and, agreeing with it as I do, I shall try not to repeat the bulk of its reasoning. So troubled am I, however, that apparently ours is the minority view on these appeals that I wish to add some additional thoughts of my own. That section 133 of the Criminal Justice Act 1988 was intended to give effect to the United Kingdoms international obligation under article 14(6) of the International Covenant on Civil and Political Rights 1966 is, of course, plain and obvious. Section 133(1) omits the phrase in article 14(6) by a final decision reflecting it instead in the definition of reversal in section 133(5) by referring there to an appeal out of time or on a reference and substitutes for the word conclusively in article 14(6) the hallowed expression beyond reasonable doubt. Otherwise the language of the two provisions is virtually identical. It is clear, therefore, that the right to compensation arises only when each of four conditions is satisfied: (i) the conviction is quashed on an appeal out of time or a reference (not, therefore, when a timeous appeal succeeds, nor, of course, on an acquittal at trial); (ii) the appeal succeeds on the ground of a new or newly discovered fact; (iii) the appellant was in no way responsible for the previous non disclosure of that fact; and (iv) that fact shows beyond reasonable doubt that there has been a miscarriage of justice. The critical question for decision here, of course, is what precisely is meant in this context by a miscarriage of justice. As to this, whilst recognising that the expression has an autonomous meaning, I share the view expressed in several of the judgments that there is no real assistance to be derived here from any of the extrinsic material, for example, the travaux or other states practices. Rather, as Lord Bingham suggested in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1, 27, para 9(2): It may be that the expression [miscarriage of justice] commended itself because of the latitude in interpretation which it offered. That being so, it was perfectly open to the UK to introduce legislation intended to compensate only those shown to be clearly innocent of the crime of which they had been convicted and in this connection I see no reason to ignore the explanatory report relating to article 3 of Protocol 7 to the European Convention on Human Rights (an article almost precisely reproducing the language of article 14(6)) which, at para 25, states: 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 acknowledgment that the person concerned was clearly innocent. True, the UK never ratified Protocol 7 and I am far from suggesting that the explanatory report shows plainly that section 133(1) is to be construed in the way para 25 suggests. But it does surely show that this is both a permissible view to take of the extent of the article 14(6) obligation undertaken by the UK and a perfectly possible construction of section 133(1) itself. Before turning more particularly to whether it is the right construction, it is I think worth pointing out too that the provision whereby those benefiting from article 14(6) are entitled to be compensated according to law similarly accords to individual states a wide discretion as to how such compensation is to be assessed. As to this the UKs approach seems to me notably generous. In reaching his assessment, the Secretary of States assessor is directed to apply principles analogous to those governing the assessment of damages for civil wrongs including, therefore, claims for wrongful imprisonment although a deduction may be made on account of the claimants criminal record. An illustration of the size of the awards liable to be made in these cases is provided by R (OBrien) v Independent Assessor [2007] UKHL 10; [2007] 2 AC 312 concerning compensation claims arising out of the wrongful conviction of the Hickey brothers and others for the murder of Carl Bridgewater at Yew Tree Farm. The first instance decision in that case [2003] EWHC 855 (Admin) shows net final compensation assessments there of 990,000 for Michael Hickey and 506,220 for Vincent Hickey (wrongfully detained in prison respectively for just under thirteen years and something under fourteen years see para 8 of Lord Binghams judgment in the House of Lords). What, then, is the correct interpretation of a miscarriage of justice in section 133(1)? More particularly, is it: (i) the conviction of an innocent defendant, or (ii) the conviction of a defendant who, by a new fact, so undermines the evidence against him as to show that, on the undermined evidence, he could not possibly have been convicted essentially Lord Phillips (category 2) formulation (at para 55), apparently now subscribed to by the majority of the court. I mention only those two possible constructions since no member of the court appears to favour any yet wider construction of section 133 so as to embrace also 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 (Lord Phillips category 3 at para 9). Strikingly, and to my mind significantly, it was this wider construction that not just the appellants but also Mr Alex Bailin QC for the Intervener, JUSTICE, were urging upon the court; indeed, both Mr Owen QC for Mr Adams and Mr Bailin expressly submitted that there was no logical or principled dividing line between categories 2 and 3. And to my mind they were right to do so. Of course, innocence as such (factual as opposed to presumptive) is not a concept known to the criminal law. But nor too, in the context of criminal appeals, is the notion of a prosecution case so undermined that no jury could possibly convict. The criminal court deals only in the safety of convictions. On a fresh evidence appeal the sole question the court asks itself is whether the conviction is unsafe (essentially the lurking doubt test). If the case is a difficult one it sometimes finds it helpful to test its view by asking whether the evidence, if given at the trial, might reasonably have affected the decision of the trial jury to convict R v Pendleton [2001] UKHL 66; [2002] 1 WLR 72, 83, para 19. The ultimate and only question, however, is for the court: is the verdict unsafe? The question raised by section 133, by contrast, is not one for the criminal court but rather one entirely for the Secretary of State. Similarly, no member of the court appears to suggest that Mullen itself was wrongly decided. Lord Steyn, of course, reached his decision there (to allow the Secretary of States appeal and reinstate the decision of the Divisional Court) on the ground that section 133 compensates only those who are clearly innocent whereas Lord Bingham reached his on the altogether narrower ground that: It is for failures of the trial process that the Secretary of State is bound . to pay compensation (para 8). Mr Mullens conviction was, of course, quashed not because of anything that had gone wrong in the trial process but because he would not have been on trial at all but for having been unlawfully returned to this country. Certainly Lord Bingham disagreed with Lord Steyns approach. But it cannot be pretended that Lord Binghams own approach supports the particular formulation suggested by the majority in the present case. My own reasoning in the Divisional Court in Mullen [2002] 1 WLR 1857, 1864 was essentially that later to be adopted by Lord Steyn: 25 What was shown beyond reasonable doubt here was that there had been an abuse of process in bringing the claimant to trial. That was the newly discovered fact. But that fact did not itself show beyond reasonable doubt that there had been a miscarriage of justice. All that it showed was that the court needed to conduct a discretionary exercise to decide in effect which of two important public interests should prevail: the public interest in trying, convicting and punishing the guilty or that in discouraging breaches of the rule of law and preserving the integrity of the criminal justice system. It preferred the latter. True, it had no doubt that the balance came down decisively in the defendants favour. But that was by no means to find that he was innocent, still less that he was plainly so. Rather it was a judgment that the lawful administration of justice would be affronted by his remaining convicted and imprisoned. 26 In short, a miscarriage of justice in the context of section 133 means, in my judgment, the wrongful conviction of an innocent accused. Compensation goes only to those ultimately proved innocent, not to all those whose convictions are adjudged unsafe. The quashing of the claimants conviction in this case was a vindication of the rule of law, not the righting of a mistaken verdict. As I shall come to suggest, the quashing of the conviction in many cases which would fall within the majoritys formulation for compensation here is more properly to be characterised as a vindication of the rule of law than as the righting of a mistaken verdict. Par excellence, indeed, this seems to me to be so in cases where confession statements, even though perhaps demonstrably true (by referring, say, to facts known only to the perpetrator of the crime) are excluded because of intimidation or inducement see particularly in this regard paras 264 and 265 of Lord Judges judgment. My reasons for remaining precisely of the view I expressed in the Divisional Court in Mullen are essentially a combination of the considerations in favour of the category 1 test (that of innocence) and the considerations weighing against the category 2 test (that of critical evidence undermined). As for the factors favouring the test of innocence, it is difficult to improve upon those listed by Lord Phillips at paras 43 48 of his judgment. As Lord Phillips there points out, this construction gives section 133 a perfectly natural and logical meaning, indeed it is the meaning that the man in the street would be likely to accord to the wording of section 133 (para 43); it makes perfect sense of the requirement that the new facts should prove this beyond reasonable doubt (para 44); and it gives section 133 a meaning which is eminently practicable (para 45). It seems to me unnecessary to decide whether Lloyd LJ was right to say in R v McIlkenny (1991) 93 Cr App R 287, 311 that the Court of Appeal is not entitled to state that an appellant is innocent a point on which Lord Phillips (at para 45) and Lord Judge (at para 251) disagree. The all important consideration in this respect is, as Lord Phillips says, that it is for the Secretary of State, not the Court of Appeal, to decide whether there has in fact been a miscarriage of justice (and, therefore, on the innocence test, whether the fresh evidence shows beyond reasonable doubt that the defendant was innocent) and the reasons given for quashing the conviction are unlikely to leave any doubt of this (para 46). As, moreover, Lord Phillips observes (at para 47) the innocence test will ensure that a guilty defendant is not compensated for the consequences of his conviction. If I may revert to the man in the street, he would, I think, be appalled at a construction which, on the contrary, would not infrequently result in the compensation of the guilty, sometimes, as already indicated, to the extent of hundreds of thousands of pounds. As for the factors weighing against the category 2 test, prominent amongst these is undoubtedly the converse of the point just made, the fact that it would result in very substantial compensation for many defendants who are in truth guilty. I have already instanced (para 275 above and paras 264 and 265 of Lord Judges judgment) those whose confession statements (even if true) come to be undermined. Equally this is so in cases where it comes to be seen that anonymous or hearsay evidence should not have been allowed (see particularly in this regard para 260 of Lord Judges judgment). This point, indeed, can be illustrated by the facts of R v Secretary of State for the Home Department, Ex p Bateman (1994) 7 Admin LR 175 (where, as Lord Clarke notes at para 199, I was sitting in the Court of Appeal with Sir Thomas Bingham MR and Farquharson LJ). Mr Batemans appeal for compensation failed in the event because the success of his second criminal appeal owed nothing to a new or newly discovered fact. Obiter, however, the Master of the Rolls suggested that he had suffered a miscarriage of justice. On an appeal out of time his conviction had been quashed because certain statements had been wrongly admitted in evidence at trial. These were statements from important New Zealand witnesses whom he had wanted called and cross examined. But why, I am now inclined to ask, should a successful appellant be compensated in those circumstances? The case against him might well have become more, rather than less, damning had the witnesses indeed been called and given their evidence orally (as was held should have happened). One other case I want to mention which to my mind strikingly illustrates the dangers of adopting the category 2 construction is a recent decision of this court. The case concerned the conviction of each of two brothers (A and B) for murder and two robberies following, as later investigations and a reference by the Criminal Cases Review Commission were to show, police misconduct of the gravest kind (most notably by colluding with the main prosecution witness). On a second appeal some twelve years after conviction there was accordingly no dispute but that As and Bs convictions had to be quashed. The only issue for the Court of Appeal had been whether A should be retried, this time not on the basis of the irredeemably tainted evidence given at his original trial but rather based on a series of admissions of guilt he had made following his conviction and the failure of his first appeal. Because the decision upheld by the majority in this court was to order a retrial, the reporting of the detailed judgments both of the Court of Appeal and of this court has had to be delayed. As, however, these judgments make plain, although B could not be retried (he having made no confession of guilt), the guilt of both was in reality plain. True, the most critical evidence in the case against them had been that of a supergrass (without whose evidence, indeed, it was agreed that there could have been no prosecution at all), upon whose evidence the Crown could no longer rely because of the polices misconduct in conferring upon him a whole host of benefits to secure his continuing cooperation in the brothers prosecution at trial. But his evidence had been supported by a jigsaw of other pieces of evidence. That said, however, in the language of the majoritys category 2 test, no conviction could possibly be based upon it. Is it then to be said that B must be compensated for the twelve years or so he spent in prison before being released at his second appeal? And, indeed, that A too would have had to be compensated had the Court of Appeal not decided to order his retrial? Will the Court of Appeal in future, when deciding at the conclusion of an out of time appeal whether the interests of justice require a retrial, have to factor in the consideration that, unless a retrial is ordered, the successful appellant will or may be found entitled to compensation under the majoritys approach to section 133? The other centrally important consideration militating against a category 2 construction of section 133 is the difficulty indeed, to my mind, impossibility of reconciling this with the language of the section as a whole, and most especially with its requirement that the new facts establish a miscarriage of justice beyond reasonable doubt. It seems to me nonsensical to suggest that the category 2 test is one that can sensibly be satisfied (or not) beyond reasonable doubt. For good measure although, I accept, less conclusively the alternative basis of entitlement to compensation provided for by the section, namely a pardon, naturally connotes innocence rather than some less exacting test. Even the language of a new or newly discovered fact (rather than fresh evidence) to my mind tends to suggest the revelation of something clear and certain namely innocence, rather than merely the undermining of the prosecutions overall case. I entirely accept, of course, that a new fact which does so undermine this case as to show that the appellant could not properly have been convicted on the evidence in fact adduced against him may well in many cases suggest actual innocence and duly persuade the Secretary of State of this. Lord Judge expressly recognises this at para 259 of his judgment. But what if, say, as a result of inadmissible intercept evidence or other reliable intelligence the Secretary of State reasonably believes (perhaps, indeed, is convinced) that the appellant is in fact guilty. Must he nevertheless compensate him? I would hope and respectfully maintain not. Naturally I recognise that the application of the innocence test will exclude from compensation a few who are in fact innocent. Even on the majoritys test, of course, some who are innocent will be excluded. That, however, seems to me preferable to compensating a considerable number (although mercifully not so many as would be compensated on the category 3 approach) who are guilty. After all, this whole compensation scheme operates by creating only a narrow and exceptional class who qualify. The claimant qualifies only by producing a new or newly discovered fact. And only if his conviction is quashed on a reference or an appeal out of time. (It will, indeed, often be a matter of chance whether an appeal is out of time the lawyers may simply have missed the time limit.) Why should the state not have a scheme which compensates only the comparatively few who plainly can demonstrate their innocence and, as I have shown, compensate them generously rather than a larger number who may or may not be innocent? That, at all events, is the scheme which in my opinion Parliament enacted here. On certain of the questions raised there is nothing I wish to add to what Lord Judge has said. I agree with him (at para 252) about the material to be considered by the Secretary of State (indeed, as to this, I agree too with what Lord Phillips says at para 36 of his judgment, subject only to applying the correct test). I agree with all that Lord Judge says (at para 254) as to the relevance here of section 133(5A). I agree with him too (at paras 255 and 256) about the relevance of the Strasbourg jurisprudence in this context. (It hardly needs pointing out that, were the Strasbourg cases to present a problem, they would do so no less for the majority than for the minority view.) And I agree with Lord Judges approach (at paras 266 and 267) to a new or newly discovered fact. In common, as I understand it, with every other member of the Court, I too would dismiss Mr Adamss appeal. Had Lord Judges and my view as to the meaning of section 133 prevailed, I would have been inclined to remit Mr MacDermotts and Mr McCartneys compensation claims to the Secretary of State for his further consideration in the light of our judgments and more particularly of Lord Kerrs masterly analysis of the facts of those two cases. LORD WALKER I agree with the judgments of Lord Judge and Lord Brown. |
The Secretary of State for the Home Department cannot make an order which deprives a person of his British citizenship on the ground that it is conducive to the public good if she is satisfied that the order would make him stateless. This appeal seeks to raise the question: if at the date of the Secretary of States order it were open to the person to apply for citizenship of another state and if that application would necessarily be granted, is it her order which would make him stateless or is it his failure to make the application which would do so? The Secretary of State appeals against an order of the Court of Appeal (Richards, Stanley Burnton and Gross LJJ) dated 29 March 2012, by which it quashed her order dated 14 December 2007 which purported to deprive Mr Al Jedda (the respondent) of his British citizenship. The Secretary of State made her order pursuant to section 40(2) of the British Nationality Act 1981 (the Act). In its current form, which reflects substitutions made by section 4 of the Nationality, Immigration and Asylum Act 2002 and by section 56(1) of the Immigration, Asylum and Nationality Act 2006, section 40 of the Act provides as follows: 40. Deprivation of citizenship (1) . (2) The Secretary of State may by order deprive a person of a citizenship status if the Secretary of State is satisfied that deprivation is conducive to the public good. (3) The Secretary of State may by order deprive a person of a citizenship status which results from his registration or naturalisation if the Secretary of State is satisfied that the registration or naturalisation was obtained by means of fraud, false representation, or (a) (b) (c) concealment of a material fact. (4) The Secretary of State may not make an order under subsection (2) if he is satisfied that the order would make a person stateless. (5) Before making an order under this section in respect of a person the Secretary of State must give the person written notice specifying (a) (b) (c) that the Secretary of State has decided to make an order, the reasons for the order, and the persons right of appeal under section 40A(1) or under section 2B of the Special Appeals Immigration Commission Act 1997 (c 68). (6) . So the issue is whether the Secretary of States order in respect of the respondent was invalidated by subsection (4) above. B: HISTORY The respondent was born in Iraq in 1957 and inherited Iraqi nationality. In 1992 he and his first wife came to the UK and sought asylum. In 1998 they and their four children were granted indefinite leave to remain in the UK and on 15 June 2000 they were granted British nationality. The effect of his acquisition of British nationality was that the respondent automatically lost his Iraqi nationality pursuant to article 11 of the Iraqi Nationality Law No 43 of 1963. In 2002, following divorce from his first wife and while he was temporarily abroad, the respondent married a second wife, by whom he had a child; and there he also entered into a polygamous marriage with a third wife, by whom he had three children. In 2008 he was divorced from his second wife. He is currently living in Turkey with his third wife and all eight of his children. In September 2004 the respondent travelled from the UK to Iraq. In October 2004 US forces in Iraq arrested him and transferred him into the custody of British forces. For more than three years, namely until 30 December 2007, British forces detained him in Iraq, without charge, on grounds of his suspected membership of a terrorist group. Following his release he remained in Iraq until 3 February 2008, when he travelled to Turkey. In proceedings for judicial review which he had issued in 2005 the respondent contended that his internment violated his rights under article 5(1) of the European Convention on Human Rights. His contention was rejected both by the Divisional Court of the Queens Bench Division and on his appeal to the Court of Appeal and also, by order dated 12 December 2007, on his further appeal to the House of Lords (R (Al Jedda) v Secretary of State for Defence (JUSTICE intervening) [2007] UKHL 58, [2008] AC 332). Much later, however, namely on 7 July 2011, the Grand Chamber of the European Court of Human Rights held that his internment had violated his rights under article 5(1): Al Jedda v United Kingdom (2011) 53 EHRR 789. In 2006 the respondent had brought a separate claim for habeas corpus in which he asserted that his internment had become unconstitutional under Iraqi law. Following his release from detention he re pleaded his claim as one for damages. In due course the claim was dismissed and the Court of Appeal upheld the dismissal (Al Jedda v Secretary of State for Defence [2010] EWCA Civ 758, [2011] QB 773). The order by which the Secretary of State deprived the respondent of British citizenship was therefore made shortly prior to his release from internment. As required by section 40(5) of the Act, her order was preceded by a letter, dated 12 December 2007, by which she notified him that she had decided to make the order on the ground that, for four reasons which she specified, she was satisfied that it would be conducive to the public good. Pursuant to section 40A(2) of the Act, she certified in the letter that the decision was taken wholly or partly in reliance on information which in her opinion should not be made public, with the result that, under section 2B of the Special Immigration Appeals Commission Act 1997, his right of appeal lay to that Commission (the Commission) rather than to the First Tier Tribunal (the Tribunal). In the domestic proceedings which, as described above, ended in the House of Lords on 12 December 2007, it was recorded as a fact that the respondent had dual British and Iraqi nationality (Lord Bingham of Cornhill, para 1). Apparently it was not then understood that, upon acquiring British nationality, the respondent had lost his Iraqi nationality. When, however, on 11 January 2008 he issued his notice of appeal to the Commission against the Secretary of States order dated 14 December 2007, one of his grounds of appeal was that the order had made him stateless and was therefore void. The Commission resolved to treat this ground as a preliminary issue and, having refused the respondents application for an adjournment, it determined it on 23 May 2008. The Commission found that, upon acquiring British nationality, the respondent had indeed lost his Iraqi nationality; and that fact then became no longer in issue. The Commission, however, proceeded to conclude (or, more strictly, to hold that the respondent had not established otherwise on the balance of probabilities) that he had regained Iraqi nationality under article 11(c) of the Law of Administration for the State of Iraq for the Transitional Period (the TAL) which had been in force between June 2004 and May 2006. The Commission therefore rejected the respondents contention that the Secretary of States order had made him stateless. By further judgments, open and closed, dated 7 April 2009, the Commission rejected the respondents remaining grounds of appeal against the order; and the dismissal of the appeal enabled the respondent to appeal to the Court of Appeal against the rejection of his contention that the order had made him stateless. On 12 March 2010 the Court of Appeal upheld his submission that the Commission had been wrong to refuse his application for an adjournment of the hearing in May 2008 and the court directed it to rehear the issue ([2010] EWCA Civ 212). On 26 November 2010 the Commission, differently constituted, again concluded that the respondent had regained Iraqi nationality prior to the date of the Secretary of States order, which had therefore not made him stateless. It found that he had regained it automatically either under article 11(c) of the TAL or under article 10(1) of the Iraqi Law of Nationality 2006 which had in effect replaced the TAL. In the light of its conclusion the Commission observed that it had no need to address the Secretary of States alternative contention, raised before it for the first time, that, if on 14 December 2007 the respondent had not been an Iraqi national, it had been open to him to regain it by application and that it had been his failure to make the application, rather than her order, which had made him stateless. By its order under current appeal, the Court of Appeal set aside, as erroneous in law, the Commissions conclusion that prior to 14 December 2007 the respondent had automatically regained Iraqi nationality, whether under article 11(c) or under article 10(1). This court has not permitted the Secretary of State to challenge the Court of Appeals disposal of that issue. But the effect of its disposal was to require that court to address the Secretary of States alternative contention, which she had preserved by a respondents notice. In a judgment with which Stanley Burnton and Gross LJJ agreed, Richards LJ rejected the alternative contention in the following terms: 120. I am prepared to assume that if an application were made for the restoration of the appellants Iraqi nationality it would be bound to succeed, though the point is by no means free from doubt. I also put to one side the objections raised by Mr Hermer as to the practicality of the appellant making an application at all: he submitted that an application would have to be made by the appellant in person, and for that purpose the appellant would have to enter Iraq legally and would therefore require a visa, which would lie in the discretion of the State and could be refused on national security grounds. 121. I would reject the Secretary of States argument for the straightforward reason that section 40(4) requires the Secretary of State (and, on appeal, the court) to consider the effect of the order made under section 40(2): would the order make the person stateless? If Iraqi nationality was not restored to the appellant automatically under the Iraqi legislation considered above, he was not an Iraqi national at the time of the order: his only nationality at that time was British nationality. The effect of the order would therefore be to make him stateless. That would be the effect of the order irrespective of whether he could previously have acquired another nationality had he chosen to do so, or whether he could do so in the future. It is against this determination that the appeal is brought. C: STATELESSNESS The evil of statelessness became better understood following the re drawing of national boundaries at the end of the two world wars of the twentieth century and following, for example, the Reich Citizenship Law dated 15 September 1935 which provided that all Jewish people should be stripped of their citizenship of the German Reich. The Universal Declaration of Human Rights, adopted by the United Nations on 10 December 1948, provides in article 15: (1) Everyone has the right to a nationality. (2) No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality. The European Convention on Human Rights 1950 does not identify a right to a nationality but the European Court of Human Rights recognises that the arbitrary denial of citizenship may violate the right to respect for private life under Article 8 of the Convention (Karassev v Finland, Application No 31414/96, 12 January 1999). In his dissenting judgment in Perez v Brownell, 356 US 44, 64 (1958), Warren CJ described a right to nationality as mans basic right for it is nothing less than the right to have rights. Although the international growth of human rights during the past fifty years has to some extent succeeded in establishing that a persons right to have rights stems, instead, from his existence as a human being, worldwide legal disabilities with terrible practical consequences still flow from lack of nationality: see the illuminating article by Weissbrodt and Collins entitled The Human Rights of Stateless Persons, Human Rights Quarterly, 28 (2006) 245. On 1 May 2013 the Home Office issued guidance on Applications for leave to remain as a stateless person referable to changes in Immigration Rules which had recently come into effect. It states, at para 2(1): Statelessness occurs for a variety of reasons, including discrimination against minority groups in nationality legislation, failure to include all residents in the body of citizens when a state becomes independent (state succession) and conflicts of laws between states. The dissolution of the Soviet Union and the Yugoslav Federation in the early 1990s, for example, caused internal and external migration that is reported to have left hundreds of thousands stateless throughout Eastern Europe and Central Asia. In some countries, citizenship is lost automatically after prolonged residence in another country. The absence of proof of birth, origins or legal identity can also increase the risk of statelessness. Statelessness has been estimated to affect up to 12 million people worldwide. Possession of nationality is essential for full participation in society and a prerequisite for the enjoyment of the full range of human rights. Those who are stateless may, for example, be denied the right to own land or exercise the right to vote. They are often unable to obtain identity documents; they may be detained because they are stateless; and they can be denied access to education and health services or blocked from obtaining employment. Until 1964 the ability of the Secretary of State in limited circumstances to deprive a person of British citizenship acquired by naturalisation or registration was not qualified by any obligation not thereby to make that person stateless. A power to deprive had been introduced by section 7(1) of the British Nationality and Status of Aliens Act 1914, which had enabled the Secretary of State to revoke a certificate of naturalisation on the ground that it had been obtained by misrepresentation or fraud. Section 1 of the British Nationality and Status of Aliens Act 1918 had converted the power into a duty and had extended it to grounds of public interest: it was to apply to acts of disloyalty to the Crown and, provided that the Secretary of State was satisfied that the continuance of the certificate was not conducive to the public good, to any of five further facts. In turn these provisions were replaced by section 20 of the British Nationality Act 1948, which converted the Secretary of States duty back into a power and which specified grounds for its exercise which loosely reflected those which had been identified in 1914 and 1918. Shortly after 1948, however, came two important United Nations conventions in relation to statelessness. The first was the Convention relating to the Status of Stateless Persons adopted on 28 September 1954 (the 1954 Convention). The UK signed it on that day and ratified it on 16 April 1959; and it came into force on 6 June 1960. It recited the profound concern of the United Nations for stateless persons and the desirability of regulating and improving their status. By article 1(1), it defined a stateless person in terms which have become internationally authoritative, namely, as a person who is not considered as a national by any State under the operation of its law. By the articles which followed, it identified a minimum level of treatment in specified respects which contracting states were required to afford to stateless persons within their territories. But it did not address the deprivation of citizenship when such was to cause statelessness. The second was the Convention on the Reduction of Statelessness adopted on 30 August 1961 (the 1961 Convention). The UK signed it on that day and ratified it on 29 March 1966; and it came into force on 13 December 1975. Concerned, as its title suggests, with the reduction of statelessness rather than with the rights of stateless persons, the 1961 Convention obliged states to grant nationality to certain persons who would otherwise be stateless. But it also addressed the deprivation of citizenship when such was to cause statelessness. Article 8(1) prohibited a state from depriving a person of his nationality if such was to cause him to be stateless. Para 2 of the article specified two exceptions to the prohibition, of which the second was the situation in which the nationality had been obtained by misrepresentation or fraud. Para (3)(a) of the article provided the opportunity for a state to escape more widely from the prohibition if (i) at the time of its ratification of the Convention, its law were to provide for deprivation on, in effect, the ground of conduct seriously prejudicial to the vital interests of the state and (ii) at the time of ratification the state declared its retention of the right to deprive a person of citizenship on that ground. By 1964 the UK had resolved to ratify the 1961 Convention. Parliament passed the British Nationality (No 2) Act 1964 in order (as was noted in Halsburys Statutes, Second Edition, Vol 44, p 80) to enable the government to ratify it. The Act implemented the obligation cast by the 1961 Convention to grant nationality to certain persons who would otherwise be stateless. In relation to the deprivation of citizenship the government proposed that, when ratifying the Convention, it should make the declaration permitted by article 8(3)(a). It realised however that, notwithstanding the proposed declaration, three of the grounds for deprivation set by the 1948 Act would fall outside the exemptions permitted by the 1961 Convention and could therefore not form the basis of an order if its effect would be to make the person stateless. By section 4(2) of the 1964 Act two such grounds for deprivation were abolished altogether. Parliament resolved to maintain the third ground (namely that, within five years of naturalisation, the person had been sentenced to imprisonment for not less than a year: section 20(3)(c) of the 1948 Act); so, by section 4(1) of the 1964 Act, it provided that the Secretary of State could not make an order for deprivation on that ground if it appears to him that that person would thereupon become stateless. Thus was the link between deprivation and statelessness first forged in domestic law. Upon ratification of the 1961 Convention on 29 March 1966, the UK Government duly made the declaration permitted by article 8(3)(a) of it. The provisions for deprivation of citizenship in section 20 of the 1948 Act and section 4 of the 1964 Act were in effect consolidated in the original version of section 40 of the Act. On 6 November 1997 the Council of Europe promulgated the European Convention on Nationality. Article 7(1) provided that a contracting state could not deprive a person of its nationality save on seven specified grounds, of which the second was that the person had obtained nationality by misrepresentation or fraud and the fourth was that his conduct had been seriously prejudicial to the vital interests of the state. But, save in relation to the second ground, para 3 of article 7 prohibited deprivation if such was to cause statelessness. Thus no escape from the prohibition was permitted in relation, for example, to the fourth ground, which reflected the public interest ground on which, in accordance with the 1961 Convention, the UK had retained its right to deprive even when such was to cause statelessness. The UK has not ratified nor even signed the European Convention on Nationality. But, as Lord Falconer of Thoroton informed a Committee of the House of Lords on 8 July 2002 (Hansard, HL Debs, vol 637, col 537), the government then hoped to ratify it. He was promoting the bill which became the Nationality, Immigration and Asylum Act 2002. The aspiration to ratify the European Convention explains the Acts dramatic expansion of the prohibition against orders for deprivation when such were to cause statelessness. By section 4(1), fresh sections 40 and 40A were substituted for the original version of section 40 of the Act. The grounds for making an order for deprivation were reduced to two. The first remained misrepresentation or fraud in obtaining citizenship and, as before, the prohibition against orders which caused statelessness did not extend to orders on this ground: section 40(3) and (4), set out at para 3 above. The second, namely the public interest ground, echoed the terms of the European Convention in referring to acts seriously prejudicial to the vital interests of the UK (section 40(2)(a)). By section 56 of the Immigration, Asylum and Nationality Act 2006, however, this second ground was recast into its current form, namely that deprivation is conducive to the public good: section 40(2), set out at para 3 above. For present purposes, however, the crucial change wrought by the 2002 Act was the fresh subsection (4), set out at para 3 above, which prohibited an order on the second ground if the Secretary of State was satisfied that it would make a person stateless. It is clear therefore, that, in enacting the subsection, Parliament went further than was necessary in order to honour the UKs existing international obligations. D: PREMISE The Secretary of State invites the court to determine the appeal on a premise. It is that on 14 December 2007 the respondent could have applied to the Iraqi authorities for restoration of his Iraqi nationality; that under Iraqi law he then had a right to have it restored to him; and that its restoration would have been effected immediately. Pressed by the court to explain whether her argument extended to a persons right to obtain a nationality never previously held such as, perhaps, a Jewish persons right to obtain Israeli nationality or a wifes right to obtain the nationality of her husband Mr Swift QC, on behalf of the Secretary of State, explained that the argument did not extend beyond the restoration of a former nationality. Pressed further to explain whether the argument extended to a person who, prior to her order, had had a right to secure the restoration of his former nationality but who, by the date of the order, had lost that right, Mr Swift explained that the focus was upon what the person could achieve in response to the order and thus that the argument did not extend that far. It was Mr Swifts submission at the hearing (which the Secretary of State has subsequently withdrawn: see para 27 below) that if, on the suggested premise, it were to allow the appeal, this court should remit the respondents appeal against the order for deprivation back to the Commission for it to consider whether the premise is valid as a matter of Iraqi law. Mr Swift stressed that the Commissions two previous lengthy hearings were concerned with whether on 14 December 2007 the respondent had Iraqi nationality, not with whether he then had a right to secure its restoration. An appellate court has no need to address argument founded on a premise which it considers unrealistic and, in the absence of any other ground for the appeal, can dismiss it without doing more than to explain why it considers the premise to be unrealistic. In my view, at least on the findings made below, the present appeal comes close to deserving that unusual treatment. In rejecting the Secretary of States contention that the respondent had regained Iraqi nationality automatically under article 10(1) of the Iraqi Law of Nationality 2006, which was in force on 14 December 2007, Richards LJ said: 117. In my judgment, the relevant factors come down strongly in favour of the view that the Iraqi courts would find the appellants situation to be covered by Article 10(3), not by Article 10(1), and that the restoration of his Iraqi nationality depends on his meeting the conditions of Article 10(3), including the making of an application for its restoration. Article 10(3) provides: An Iraqi who renounces his Iraqi nationality may regain it, if he legally returns to Iraq and stays there for at least one year. The Minister may, on expiry thereof, consider him to have acquired Iraqi nationality from the date of his return if he submits an application to regain Iraqi nationality before the end of the aforementioned period. It is clear, therefore, that paragraph (3) of the article would have required the respondent (a) to return to Iraq legally, (b) to stay there for at least one year, as well as (c) to apply in the course of the year for restoration of his Iraqi nationality. In the event that the respondent fulfilled these requirements, the Minister may restore Iraqi nationality to him, with retrospective effect to the date of his return; and, although the Court of Appeal made no finding in this regard, Mr Swift has not taken issue with the contention of Mr Hermer QC, on behalf of the respondent, that in the end all the experts who gave evidence at the second hearing before the Commission were agreed that, as one would expect, the word may connotes that the Minister nevertheless retains a discretion to refuse the application. It seems to me, therefore, that there was an element of indulgence on the part of the Court of Appeal towards the Secretary of State in its accession to her invitation to proceed on the suggested premise; and that, were it to proceed likewise, this court would be extending an analogous indulgence. On balance, however, and in the light of the time, effort and expense which has now been devoted to the substantive argument, I consider that this court should adopt the suggested premise and proceed to determine the clean point, namely whether an order for deprivation made against a person who, at its date, can immediately, by means only of formal application, regain his other, former, nationality is invalid under section 40(4) of the Act. I add, as a postscript to this section of the judgment, that following the hearing in this court the Secretary of State has drawn to its attention what she contends to be important further information recently provided to her by the Iraqi authorities. It is that on 20 January 2008, namely three weeks after his release, the respondent applied in Baghdad for an Iraqi passport; that his application form, a photocopy of which the Secretary of State has produced to the court, shows that it was accompanied by a certificate of his Iraqi nationality purportedly issued on the same date in Kirkuk; that on 28 January 2008 the Iraqi authorities issued a passport, number G1739575, to the respondent; and that the passport is genuine and betokens a valid grant of nationality to the respondent. The information has emboldened the Secretary of State to withdraw Mr Swifts submission that if, on the suggested premise, it were to allow the appeal, the court should remit the respondents appeal to the Commission. For she suggests that the new information incontrovertibly demonstrates the validity of the premise. When asked by the court to comment on these allegations, the respondent, by his solicitors, has said: (a) (b) (c) from an early stage of the protracted proceedings referable to his appeal against the Secretary of States order, he had averred that, in order to travel from Iraq to Turkey on 3 February 2008, he had used a fake Iraqi passport: see, for example, his witness statement dated 10 October 2008 which was placed before the Commission; in 2008 he had also filed a report by a Turkish lawyer who stated that she had reviewed a scanned copy of what purported to be an Iraqi passport referable to him issued in Baghdad on 28 January 2008 and stamped with a Turkish entry visa dated 3 February 2008; in the course of cross examination of him at a hearing before the Commission in January 2009 Mr Swift had never sought to challenge (d) his assertion that the Iraqi passport by which he had travelled to Turkey was fake; in January 2008, in Kirkuk, he had in fact acquired two fake passports, one in his name and one in another name, on the black market by payment of about US$750 which he borrowed from his family; (e) he had provided his payee with details about himself and photographs of himself but not with a certificate of Iraqi nationality because he did not have one; the fake passport in his own name, which the payee provided to him, was indeed numbered G1739575 and it stated that it had been issued on 28 January 2008; this was the passport which he had elected to use for his travel to Turkey on 3 February 2008; (f) (g) he is unaware of the documents which his payee may have completed or caused to be completed in the course of procuring the passports; (i) (h) he, the respondent, never completed the application form a copy of which the Secretary of State has produced to the court and he has never previously seen it; the passport G1739575 is therefore fake, by which he appears to mean that it was forged, or, more probably, that it was fraudulently obtained; and since 2000 he has never held Iraqi nationality and in the above circumstances the passport is no evidence to the contrary. (j) It is not the function of this court to resolve an issue whether an Iraqi passport was regularly obtained and therefore betokens a valid grant of nationality under Iraqi law. In my view it should set the issue to one side and, not that it matters, should therefore resist concluding that the Secretary of States new allegations add significantly to the validity of the suggested premise upon which the argument is founded. Were this appeal to be dismissed, the Secretary of State might perhaps make a further deprivation order on the basis that, in the light of the passport, no such order would now make the respondent stateless. He would evidently dispute that conclusion and it appears that he might also contend that the Secretary of State is estopped from alleging the validity of the passport at so late a stage. This court should make no comment on any of these possibilities. E: ARGUMENT The Secretary of State places great weight on the word satisfied within the terms of the prohibition in section 40(4) of the Act against making an order for deprivation if [she] is satisfied that the order would make a person stateless. In providing for her satisfaction in this regard, the subsection replicates the requirement in subsections (2) and (3) that she be satisfied of the existence of one or other of the two grounds for making the order. The word satisfied in the subsections should, if possible, be given some value. I confess, however, that I do not find it easy to identify what that value should be. Parliament has provided a right of appeal against her conclusion that one or other of the grounds exist and/or against her refusal to conclude that the order would make the person stateless; and it has been held and is common ground that such is an appeal in which it is for the appellate body to determine for itself whether the ground exists and/or whether the order would make the person stateless (albeit that in those respects it may choose to give some weight to the views of the Secretary of State) and not simply to determine whether she had reason to be satisfied of those matters (B2 v Secretary of State for the Home Department [2013] EWCA Civ 616, Jackson LJ, para 96). Mr Hermer suggests that the word satisfied means only that the Secretary of State must bring her judgement to bear on the matters raised by the subsections. His suggestion may afford some slight significance to the word in subsections (2) and (3). But does it work in relation to subsection (4)? If an order would make a person stateless but the Secretary of State has failed even to bring her judgement to bear on the possibility of that consequence, the order can hardly escape invalidity on the basis that the Secretary of State was never satisfied that the order would have that effect. Irrespective, however, of whether the word satisfied in subsection (4) can sensibly be afforded any significance at all, I am clear that it cannot bear the weight which Mr Swift seeks to ascribe to it. He contends that it confers latitude upon the Secretary of State and, in the event of an appeal, upon the Tribunal or the Commission to look beyond the ostensible effect of the order to the active cause of any statelessness and, in particular, to the facility of the person to secure restoration of his previous nationality. But a requirement that I should be satisfied of a fact does not enlarge or otherwise alter the nature of the fact of which I should be satisfied. Whether the requirement is that the fact should exist or that I should be satisfied of it, the nature of the fact remains the same; it is only the treatment of the fact in my mind which, subject to the context, is governed by the word satisfied. Although the word satisfied therefore adds nothing to it, the Secretary of States argument still remains that section 40(4) requires the active or real cause of any statelessness to be identified. The word in the subsection is make and the argument is that, although no doubt a number of factors contributed to making the respondent stateless on 14 December 2007 (including, presumably, even his initial loss of Iraqi nationality by acquisition of British nationality in 2000), the subsection requires identification of the factor which actively or really made him stateless, namely (if such it was) his failure to secure immediate restoration of his Iraqi nationality. The argument is said to reflect a properly purposive construction of the subsection: where a ground for making a deprivation order exists, why disable the Secretary of State from making it in circumstances in which it remains open to the person so easily and so immediately to avoid becoming stateless? Does the law (asks Mr Swift) allow him to complain of a state of affairs of his own making? I reject this argument. Section 40(4) does not permit, still less require, analysis of the relative potency of causative factors. In principle, at any rate, the inquiry is a straightforward exercise both for the Secretary of State and on appeal: it is whether the person holds another nationality at the date of the order. Even that inquiry may prove complex, as the history of these proceedings demonstrates. But a facility for the Secretary of State to make an alternative assertion that, albeit not holding another nationality at the date of the order, the person could, with whatever degree of ease and speed, re acquire another nationality would mire the application of the subsection in deeper complexity. In order to make his argument less unpalatable to its audience, Mr Swift, as already noted, limited it to the re acquisition of a former nationality, as opposed to the acquisition of a fresh nationality. But, with respect, the limitation is illogical; if valid, his argument would need to extend to the acquisition of a fresh nationality. Yet a person might have good reason for not wishing to acquire a nationality available to him (or possibly even to re acquire a nationality previously held by him). In section 12 of the Act Parliament provided for the renunciation of British citizenship by declaration and for the declaration to be registered. Article 7 of the 1961 Convention had required a renunciation to be ineffective unless the person possesses or acquires another nationality and, by section 12(3), Parliament implemented that requirement in the following terms: A declaration made by a person in pursuance of this section shall not be registered unless the Secretary of State is satisfied that the person who made it will after the registration have or acquire some citizenship or nationality other than British citizenship; and if that person does not have any such citizenship or nationality on the date of registration and does not acquire some such citizenship or nationality within six months from that date, he shall be, and be deemed to have remained, a British citizen notwithstanding the registration. For present purposes the significance of the subsection is that, as an addition to the person who will have another nationality on the date of registration, Parliament, reflecting the terms of the 1961 Convention, there refers to the person who will acquire another nationality. Parliament would have been capable of making an analogous addition to section 40(4). After the words would make a person stateless, it could have added the words in circumstances in which he has no right immediately to acquire the nationality of another state. But it did not do so; and the Secretary of State therefore invites the court to place a gloss, as substantial as it is unwarranted, upon the words of the subsection. An individuals nationality is to be assessed as at the time 3.4 of determination of eligibility under the 1954 Convention. It is neither a historic nor a predictive exercise. The question to be answered is whether, at the point of making an Article 1(1) determination, an individual is a national of the country or countries in question. Therefore, if an individual is partway through a process for acquiring nationality but those procedures have not been completed, he or she cannot be considered as a national for the purposes of Article 1(1) of the 1954 Convention. Similarly, where requirements or procedures for loss, deprivation or renunciation of nationality have not been completed, the individual is still a national for the purposes of the stateless person definition. The Secretary of States own guidance eloquently exposes the fallacy behind her appeal. On 20 February 2012 the United Nations High Commissioner for Refugees issued Guidelines on Statelessness No 1, HCR/GS/12/01, in which he addressed some of the effects of the authoritative definition of a stateless person in article 1(1) of the 1954 Convention. Para 43 of his guidelines, entitled Temporal Issues, has been incorporated, word for word, into the Home Office guidance on Applications for leave to remain as a stateless person dated 1 May 2013, referred to at para 13 above. The guidance provides: |
This appeal concerns the type of investments which those who administer the local government pension scheme are permitted to make or to continue to hold. More particularly, it concerns the breadth of the ethical investments which they are permitted to make or to continue to hold. By an ethical investment, I mean an investment made not, or not entirely, for commercial reasons but in the belief that social, environmental, political or moral considerations make it, or also make it, appropriate. Parliament has conferred on the respondent, the Secretary of State for Housing, Communities and Local Government (the Secretary of State), the power to issue guidance in relation to some of the functions of the administrators of the scheme, in accordance with which they are required to act. The issue arises out of two passages in the guidance which he has issued to them in relation to their making or continuing to hold ethical investments. By the second passage, which, as I will show, covers the ground covered by the first and indeed goes further, the Secretary of State provides that they [s]hould not pursue policies that are contrary to UK foreign policy or UK defence policy. The claim is that the issue of that guidance was unlawful. It was lawful only if it fell within the power conferred by Parliament on the Secretary of State. The issue therefore requires the court to analyse the scope of the power. Pursuant to the decision of the House of Lords in Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997, the court must analyse the power by construing the words by which it was conferred on him in their context. From the words in their context Parliaments purpose in conferring the power can be identified; and the purpose will illumine its scope. The Proceedings The claim for judicial review of the two passages in the guidance was launched by, and in this appeal continues to be pursued by, two claimants. The first is Palestine Solidarity Campaign Ltd. This company is dedicated to campaigning both in support of the rights of the Palestinian people, in particular by challenging Israels occupation of the disputed territories, and in opposition to racism in all its forms, including antisemitism as well as islamophobia. The second is Ms Jacqueline Lewis, who is not only a member of the companys executive committee but also an employee of a local authority and a member of its pension scheme. The claim raised issues in relation to the guidance other than the issue identified above; they were determined, adversely to the claimants, in the lower courts and can now be ignored. On 22 June 2017 Sir Ross Cranston, sitting as a judge of the Administrative Court of the High Court of England and Wales, upheld the claim by reference to the issue identified above and declared the two passages in the guidance under challenge to be unlawful: [2017] EWHC 1502 (Admin), [2017] 1 WLR 4611. But on 6 June 2018 the Court of Appeal, by a judgment delivered by Sir Stephen Richards with which Davis and Hickinbottom LJJ agreed, upheld the Secretary of States appeal; set aside the declaration made by Sir Ross; and dismissed the claim: [2018] EWCA Civ 1284, [2019] 1 WLR 376. It is worthwhile to record that, in support of the application of the claimants for permission to appeal to our court, submissions were filed by the Religious Society of Friends in Britain, known as the Quakers, and by the organisation known as Campaign Against Arms Trade. The Local Government Pension Scheme The existing local government pension scheme (the scheme) is a statutory occupational pension scheme established by regulations made under section 7 of the Superannuation Act 1972 (the 1972 Act) and having effect as if made under the Public Service Pensions Act 2013 (the 2013 Act). Pursuant to the scheme, authorities in England and Wales, which can conveniently (albeit not entirely accurately) be taken to be local authorities, administer some 89 distinct funds, which are kept separate from other local authority resources. In its capacity as an employer, a local authority makes contributions into the pension fund referable to its employees, as do its employees themselves. The scheme provides statutorily defined pension benefits for about 5m past and present employees, referable in particular to their age, their pensionable earnings and their years of service. Therefore their benefits do not vary in accordance with the changing value of the fund in relation to them. A local authority is required to set contributions at a level appropriate to ensure its funds solvency; and, were the fund to prove insufficient to meet its obligations to pay pensions to its employees, a local authority might be required to make increased contributions into it. The scheme is thus structurally different from other public sector pension schemes under which payment is unfunded, in other words made not out of ring fenced funds but out of the overall resources of central government. If we consider first the 2013 Act and then the regulations relevant to this appeal which were made under it, we will be able to drill down into the guidance issued pursuant to them which is under challenge. The 2013 Act, which came mainly into force on 1 April 2014, provides by section 1(1) that regulations may establish schemes for the payment of pensions and other benefits to persons specified in subsection (2), which at (c) identifies local government workers for England, Wales and Scotland. By section 2(1) and paragraph (3)(a) of Schedule 2, these so called scheme regulations may, insofar as they relate to local government workers in England and Wales, be made by the Secretary of State as the so called responsible authority. It follows that this appeal does not relate to such regulations as establish the scheme referable to local government workers in Scotland, nor for that matter to those in Northern Ireland, in relation to whom nothing akin to the guidance under challenge seems to apply. Section 3 of the 2013 Act provides as follows: (1) Scheme regulations may, subject to this Act, make such provision in relation to a scheme under section 1 as the responsible authority considers appropriate. (2) That includes in particular (a) provision as to any of the matters specified in Schedule 3; (b) consequential, supplementary, incidental or transitional provision in relation to the scheme Section 3(2)(a) therefore sends us to the matters specified in Schedule 3, in which there is reference in paragraph 1 to eligibility and admission to membership; in paragraph 2 to the benefits which must or may be paid under the scheme; in paragraph 3 to the persons to whom benefits under the scheme are payable; in paragraph 9 to contributions; in paragraph 11 to funds; and in paragraph 12 to the following: The administration and management of the scheme, including the giving of guidance or directions by the (a) responsible authority to the scheme manager On 1 April 2014, when the 2013 Act came mainly into force, the regulations also came into force which established the existing scheme and which, as already explained, had effect as if made under that Act. They were entitled the Local Government Pension Scheme Regulations 2013 (SI 2013/2356). They made provision for the functioning of the scheme in numerous respects. Prior to 1 November 2016, however, the management and investment of funds within the scheme continued to be subject to regulations which had been made in 2009. It was only on that day that the latter were replaced by the regulations relevant to this appeal, namely the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 (SI 2016/946) (the 2016 Regulations), which were duly made pursuant to sections 1 and 3 of, and to Schedule 3 to, the 2013 Act, as set out above. The guidance partly under challenge, to which I will later turn, took effect on that same day, 1 November 2016. I refer to the guidance at this stage only in order to quote from part 1 of it an interesting passage as follows, which illumines one of the aims of the 2016 Regulations themselves: One of the main aims of the [2016] regulations is to transfer investment decisions and their consideration more fully to administering authorities within a new prudential framework. Administering authorities will therefore be responsible for setting their policy on asset allocation, risk and diversity, amongst other things. In relaxing the regulatory framework for scheme investments, administering authorities will be expected to make their investment decisions within a prudential framework with less central prescription. Regulation 7 of the 2016 Regulations, entitled Investment strategy statement, provides: (1) An authority must, after taking proper advice, formulate an investment strategy which must be in accordance with guidance issued from time to time by the Secretary of State. (2) The authoritys investment strategy must include a requirement to invest fund money in a wide the authoritys assessment of the suitability of (a) variety of investments; (b) particular investments and types of investments; (c) the authoritys approach to risk, including the ways in which risks are to be assessed and managed; (d) the authoritys approach to pooling investments, including the use of collective investment vehicles and shared services; the authoritys policy on how social, (e) environmental and corporate governance considerations are taken into account in the selection, non selection, retention and realisation of investments; and (f) the authoritys policy on the exercise of the rights (including voting rights) attaching to investments. By this stage, therefore, we have noticed, at para 7 above, that the 2013 Act enables the making of regulations which provide for the administration and management of schemes, including for the issue of guidance in that regard; and, at para 9 above, that the 2016 Regulations, clearly falling within that enabling power, require an administering authority within the local government scheme to formulate an investment strategy which accords with what they describe as guidance but which is in fact mandatory. The guidance The guidance, entitled Local Government Pension Scheme: Guidance on Preparing and Maintaining an Investment Strategy Statement, was issued by the Secretary of State on 15 September 2016. It was issued pursuant to regulation 7(1) of the 2016 Regulations, and it was thus to take effect when the regulations did so, namely on 1 November 2016. The express focus of the guidance was the formulation, publication and maintenance by administering authorities of their investment strategy statement. On 30 June 2014, some two years prior to the issue of the guidance, the Law Commission of England and Wales had, following consultation, published a report entitled Fiduciary Duties of Investment Intermediaries (2014) (Law Com No 350). The government had generally accepted the Commissions recommendations; and, as will become clear, the report, which in places specifically addressed the local government scheme, clearly influenced the drafting of part of the guidance. It is therefore worthwhile to keep in mind the following statements in the report: (a) at para 4.3(3), that the local government scheme was not technically a trust but that at a practical level the duties of those managing its assets were similar to those of trustees; (b) at para 4.79, that in practice administering authorities under the scheme considered themselves to be quasi trustees, acting in the best interests of their members, and that, insofar as they might consider whether to take account of wider or non financial factors in relation to investment, the rules applicable to pension fund trustees should also apply to them; and (c) at para 6.34, in relation to investment decisions by trustees, that In general, non financial factors may only be taken into account if two tests are met: trustees should have good reason to think that (1) scheme members would share the concern; and (2) significant financial detriment to the fund. the decision should not involve a risk of The Secretary of States guidance individually addresses each of the six topics which regulation 7(2) of the 2016 Regulations requires to be included in an authoritys investment strategy. The appeal concerns its address of the fifth topic, set out at (e) of para (2), which for convenience I set out again: the authoritys policy on how social, environmental and corporate governance considerations are taken into account in the selection, non selection, retention and realisation of investments; The reference to corporate governance considerations appears to relate to assessing investment in a company by reference to the quality or otherwise of the manner in which it is governed and operated, including no doubt its treatment of its workforce. The guidance in relation to the fifth topic comprises text, which is followed by a Summary of requirements. It is convenient to divide the relevant part of the text into three sections. This is the first section of the relevant part of the text: Although administering authorities are not subject to trust law, those responsible for making investment decisions must comply with general legal principles governing the administration of scheme investments [S]chemes should consider any factors that are financially material to the performance of including social, environmental and corporate governance factors, and over the long term, dependent on the time horizon over which their liabilities arise. investments, This is the second section of the relevant part of the text: However, the Government has made clear that using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are inappropriate, other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government. This part of the guidance, which I present in bold, is the first of the two passages in it under challenge. It begins by stating that the Government has made clear that . At the hearing of the appeal we asked where and in what circumstances the government had made [it] clear. In answer we were referred to a Procurement Policy Note, Information Note 01/16, issued by the Crown Commercial Service on 17 February 2016. It is entitled Ensuring compliance with wider international obligations when letting public contracts. It suffices to set out para 1: This [Note] sets out contracting authorities international obligations when letting public contracts. It makes clear that boycotts in public procurement are inappropriate, outside where formal legal sanctions, embargoes and restrictions have been put in place by the UK Government. The subject matter of the note is therefore the entry by public authorities into contracts and, as its title indicates and its text proceeds to explain, the policy there identified has been substantially informed by international obligations. It has no relevance to investment decisions made by trustees or by those in an analogous position. This is the third section of the relevant part of the text: Although schemes should make the pursuit of a financial return their predominant concern, they may also take purely non financial considerations into account provided that doing so would not involve significant risk of financial detriment to the scheme and where they have good reason to think that scheme members would support their decision. It will be seen that this part of the guidance is an adoption, almost word for word, of the two tests identified by the Law Commission for investment by reference to non financial considerations in para 6.34 of its report. This is the Summary of requirements: In formulating and maintaining their policy on social, environmental and corporate governance factors, an administering authority: Must take proper advice Should explain the extent to which the views of interested parties will be taken into account when making an investment decision based on non financial factors Must explain the extent to which non financial factors will be taken into account in the selection, retention and realisation of investments Should not pursue policies that are contrary to UK foreign policy or UK defence policy Should explain their approach investments. to social As indicated in para 1 above, the fourth bullet point, which I present in bold, is the second of the two passages in the guidance under challenge. It is clear that the two passages in the guidance under challenge had been the subject of careful consideration by the Secretary of State. In November 2015 he had issued a consultation paper in relation to his proposal to replace the regulations made in 2009 with what became the 2016 Regulations; and in para 3.8 of the paper he had advertised his intention to issue guidance under the proposed regulations which would in particular relate to the extent to which administering authorities should take non financial considerations into account in making investment decisions. He had there spelt out the proposed guidance in almost the same terms as those ultimately adopted. In September 2016 he had published a paper by way of response to the consultation, in which, under Part C, he had written: The majority of respondents also expressed concern about the way in which the policy on compliance with UK foreign policy is to be taken forward in the guidance to be published under draft regulation 7(1). However, the Government remains committed to the policy set out in Novembers consultation paper that administering authorities should not pursue investment policies against foreign nations and UK defence industries, other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government. The Legal Principles The Padfield case, cited in para 1 above, arose out of the statutory requirement in England and Wales that producers of milk should sell it only to the Milk Marketing Board. Producers in the south east of England complained to the minister about the price paid to them by the board. Statute provided that, if the Minister so directs, a committee had to consider their complaint. The minister declined to direct the committee to do so. The House of Lords upheld the claim of the producers that he had acted unlawfully in declining to give the direction. Of the four judges in the majority, one (Lord Hodson) applied long recognised principles of judicial review. But Lord Reid, supported by Lord Pearce at p 1053 and Lord Upjohn at p 1060, reached his decision by reference to a different principle which he explained as follows at p 1030: Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act [which] must be determined by construing the Act as a whole [I]f the Minister so uses his discretion as to thwart or run counter to the policy and objects of the Act, then our law would be very defective if persons aggrieved were not entitled to the protection of the court. In R v Secretary of State for the Environment, Transport and the Regions, Ex p Spath Holme Ltd [2001] 2 AC 349 the House of Lords applied the principle identified in the Padfield case, albeit in reaching a conclusion that the Secretary of States order was not unlawful. His order, under challenge by a landlord, capped otherwise justifiable increases in the rent which had been registered as payable under regulated tenancies. The order was made pursuant to a power conferred in wide terms by section 31 of the Landlord and Tenant Act 1985. The landlord argued that Parliaments object in granting the power was that it should be used only in order to counter inflation but the appellate committee held that it had wider objects which extended to the purpose behind the capping order. Lord Bingham of Cornhill said at p 381: no statute confers an unfettered discretion on any minister. Such a discretion must be exercised so as to promote and not to defeat or frustrate the object of the legislation in question The object is to ascertain the statutory purpose or object which the draftsman had in mind when conferring on ministers the powers set out in section 31. Lord Nicholls of Birkenhead said at p 396: The present appeal raises a point of statutory interpretation: what is the ambit of the power conferred on the minister by section 31(1) ? No statutory power is of unlimited scope Powers are conferred by Parliament for a purpose, and they may be lawfully exercised only in furtherance of that purpose The purpose for which a power is conferred, and hence its ambit, may be stated expressly in the statute. Or it may be implicit. Then the purpose has to be inferred from the language used, read in its statutory context and having regard to any aid to interpretation which assists in the particular case. In either event the exercise is one of statutory interpretation. In R (Ben Hoare Bell Solicitors) v Lord Chancellor [2015] EWHC 523 (Admin), [2015] 1 WLR 4175, the Divisional Court of the Queens Bench Division upheld a challenge by solicitors to the lawfulness of a regulation which withheld remuneration under the Civil Legal Aid scheme for work done on behalf of applicants for judicial review unless their applications eventually met with a specified result. The court chose to divide the challenge into two sections. It rejected the first, which it entitled Strict ultra vires, and upheld the second, which it entitled The Padfield / statutory purpose ground. With respect, it is not obvious that such was a helpful division of an inquiry into whether the impugned provision exceeded the scope of the statutory power under which it was claimed to have been made. For those who continue to insist on Latin, an inquiry by reference to the principle in the Padfield case is an inquiry into whether the provision is ultra vires: De Smiths Judicial Review, 8th ed (2018), para 5 018. The Application of the Principles So we must start with the terms of the 2013 Act. Section 3(1) provides that the scheme regulations permitted by section 1(1) may make such provision as the Secretary of State considers appropriate. But the power cannot be as broad as that. No statutory discretion is unfettered. When we read further into section 3, we at once find a helpful signpost. For subsection (2)(a) states that the permitted provision includes, in particular, provision as to any of the matters specified in Schedule 3. It is only a signpost because the words in particular mean that the matters specified in Schedule 3 are not the only matters which can be the subject of provision in the regulations. But it valuably identifies the matters which, in particular, Parliament had in mind. And, when we turn to Schedule 3, we find the relevant matter, in relation to which the Secretary of State can not only make regulations but also give guidance, described as the administration and management of the scheme. Next we turn to the terms of the 2016 Regulations. The content of any unchallenged regulations can be a guide to the interpretation of their enabling Act even when they are not made contemporaneously with the Act: Hales v Bolton Leathers Ltd [1951] AC 531, at 541, 544, 548 and 553. In this case the 2016 Regulations are, in themselves, unchallenged. By regulation 7, clearly made pursuant to the power to provide for the administration and management of the scheme, the Secretary of State mandates the formulation of an investment strategy, to include, at (e), the authoritys policy on how non financial considerations are taken into account in relation to its investments. Finally we address some of the unchallenged parts of the guidance. Its subject matter, as identified in its title, is Preparing and Maintaining an Investment Strategy Statement. And in its text it adopts the two tests commended by the Law Commission for the taking into account of non financial considerations: does the proposed step involve significant risk of financial detriment to the scheme and is there good reason to think that members would support taking it? From these three instruments we therefore collect the following words: (a) (b) administration; management; (c) (d) (e) (f) (g) policy; how considerations are taken into account; preparing; maintaining; and strategy. Yes, all these words must be considered in their context. But in my view, when so considered, they all point in the same direction: that the policy of the Act, recognised in the case of the scheme by the regulations and indeed by most of the guidance, is to identify procedures and indeed the strategy which administrators of schemes should adopt in the discharge of their functions. In the two passages under challenge, however, the Secretary of State has insinuated into the guidance something entirely different. It is an attempt to enforce the governments foreign and defence policies; and it purports to provide that, even when the tests commended by the Law Commission for reaching a potential investment decision by reference to non financial considerations have both been met, an administrator is prohibited from taking the decision if it runs counter to such policies. Presumably it follows that, when the policy changes, the prohibition changes. How does the Secretary of State seek to justify the prohibition? In a witness statement one of his senior officers states as follows: UK foreign and defence policy are matters which are properly reserved for the UK government and do not fall within the competence of local government. It was therefore right to put safeguards in place to ensure that decisions made by the UK government on foreign and defence policy in the interests of the UK as a whole would not be undermined by local boycotts on purely non pension grounds. The implied suggestion that the investment decisions in issue were a function of local government was adopted and developed by Sir Stephen Richards in para 20 of his judgment in the Court of Appeal, as follows: The public service pension schemes to be established under the 2013 Act include central as well as local government schemes. It must be possible to have regard to the wider public interest when formulating the investment strategy for central government schemes; and it would be very surprising if it could not also be taken into account in the giving of guidance to local government authorities, themselves part of the machinery of the state, in relation to the formulation of the investment strategy for schemes administered by them. As it happens, central government pension schemes are unfunded so the concept of an investment strategy does not apply to them. But of greater significance is Sir Stephens description of scheme administrators as part of the machinery of the state. It is a description which Mr Milford, on behalf of the Secretary of State, commends to us as apt to the present context. Indeed he goes further. Pension contributions to the [scheme], he writes, are ultimately funded by the taxpayer. Its public money, so he said to us at the hearing. In my view there has been a misconception on the part of the Secretary of State which probably emboldened him to exceed his powers in issuing guidance which included the two passages under challenge. The misconception relates both to the functions of scheme administrators in relation to investment decisions and, linked to their functions, to the identity of those to whom the funds should properly be regarded as belonging. As the Law Commission observed, administrators of local government schemes have duties which, at a practical level, are similar to those of trustees and they consider themselves to be quasi trustees who should act in the best interests of their members. The view, superficial at best, that the administrators are part of the machinery of the state, and are discharging conventional local government functions, fails to recognise that crucial dimension of their role. And it is equally misleading to claim that pension contributions to the scheme are ultimately funded by the taxpayer. As Sir Nicolas Browne Wilkinson VC said in Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 1 WLR 589, 597: Pension benefits are part of the consideration which an employee receives in return for the rendering of his services. In many cases membership of the pension scheme is a requirement of employment. In contributory schemes the employee is himself bound to pay his or her contributions. Beneficiaries of the scheme, the members, far from being volunteers have given valuable consideration. The company employer is not conferring a bounty. The contributions of the employees into the scheme are deducted from their income. The contributions of the employers are made in consideration of the work done by their employees and so represent another element of their overall remuneration. The fund represents their money. With respect to Mr Milford, it is not public money. Irrespective of whether the misconception to which I have referred played a part in leading the Secretary of State to include in the guidance the two passages under challenge, I conclude that his inclusion of them went beyond his powers. HOW does not include WHAT. Power to direct HOW administrators should approach the making of investment decisions by reference to non financial considerations does not include power to direct (in this case for entirely extraneous reasons) WHAT investments they should not make. The Result LORD CARNWATH: In agreement with Lord Wilson I also would allow the appeal. I agree generally with his reasoning. However. since the court is split, and we are differing from the Court of Appeal, it may be helpful therefore for me to express my reasons in my own words. The issue is as to the legality of two parts of the guidance: I would allow the appeal and restore the order made by Sir Ross. the Government has made clear that using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are inappropriate, other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government In formulating and maintaining their policy on social, environmental and corporate governance factors, an administering authority: Should not pursue policies that are contrary to UK foreign policy or UK defence policy Lady Arden and Lord Sales (para 52) criticise Lord Wilson for overstating the effect of the second paragraph: 52. Lord Wilson considers that the statement in the summary of requirements goes further than the statement in the body of the guidance that they should not pursue policies that are contrary to UK foreign policy or UK defence policy. However, the Secretary of State considers that the summary went no further than the body of the guidance. The appellants have not challenged that, and we proceed on that basis. The critical passage is therefore the statement in the body of the document. Even if that were a fair categorisation of the appellants position, I am unable to accept that approach. The guidance is a public document with significance far beyond the parties to this litigation. It must be considered in its own terms. We cannot be constrained by the way in which these particular claimants may have chosen to present their case. In any event, it is part of the appellants complaint that the guidance in this respect is intrinsically unclear in Mr Lannings words (witness statement for the first appellants). I share their difficulty. Even if one directs attention only to the first paragraph, it is far from evident what exactly is its scope. It begins by referring to an earlier, unidentified policy statement (the Government has made clear ). As Lord Wilson explains (para 16), this appears from the evidence to be a reference to a Procurement Policy Note issued in 2016, relating to boycotts in international trade. Like Lord Wilson I find it difficult to see the relevance of this to public sector pensions, which are governed by an entirely different statutory scheme. In what follows the objection in terms is limited to boycotts, divestment and sanctions against foreign nations and UK defence industries. Lady Arden and Lord Sales say there is no issue about the meaning of these concepts. That may be true as between the present parties, but again the meaning should be clear from the document itself. From the governments evidence (in the statement of Mr Megainey, quoted at length by Lady Arden and Lord Sales paras 53ff) it appears that the words were not intended to be read in the abstract, but reflected concerns about the possible impact of the Boycott, Divestment and Sanctions movement. Those terms are in turn explained by Mr Lanning, in a passage again quoted by Lady Arden and Lord Sales (para 51), as describing particular types of campaign conducted by his organisation and others, directed principally against the State of Israel and Israeli companies and their investors. If the reference to these specific concepts is intended to mean no more than that administering authorities should not actively participate in political campaigns of that kind, the advice is unremarkable and clearly right. What however is not clear, even from that paragraph, is whether it would also to apply, for example, to an independent decision by an authority on ethical grounds, supported by its members but not directly linked to any campaign, not to invest in defence companies. I doubt if that would be naturally described as boycott, disinvestment or sanction. But it might more readily be said to involve the pursuit of policies contrary to UK defence policy, contrary to the second paragraph. As I understand Mr Megaineys evidence, the guidance was intended to be read in the wider sense. He distinguishes (paras 22 23 in passages quoted by Lady Arden and Lord Sales) other investment policies which (authorities) may legitimately adopt. He refers for example to investment in companies making products harmful to health (eg tobacco, sugar and alcohol), or harmful to the environment (eg water or air pollution caused by oil or gas companies). He notes that administering authorities have responsibilities for public health and the environment in their areas, and distinguishes such policies from those carrying general risks to UK trade, security or communities, which are said to be matters properly reserved for the UK government. Thus the objection appears to be directed to investment policy generally, whether or not fairly described as boycott, disinvestment or sanctions. The difficulty with that line of reasoning, to my mind, is that there is nothing in the Act or the regulations which limits relevant social factors under regulation 7(1)(e) to matters for which the authority otherwise has statutory responsibility. The judge (Sir Ross Cranston) also understood the guidance in the wider sense. He expressed his objection as follows: But the flaw in the Secretary of States approach is that the guidance has singled out certain types of non financial factors, concerned with foreign/defence and the other matters to which reference has been made, and stated that administering authorities cannot base investment decisions upon them. In doing this I cannot see how the Secretary of State has acted for a pensions purpose. Under the guidance, these factors cannot be taken into account even if there is no significant risk of causing financial detriment to the scheme and there is no good reason to think that scheme members would object. Yet the same decision would be permissible if the non financial factors taken into account concerned other matters, for example, public health, the environment, or treatment of the workforce. In my judgment the Secretary of State has not justified the distinction drawn between these and other non financial cases by reference to a pensions purpose (para 32) Although I am doubtful of the value of his reference to pensions purposes (a term of somewhat uncertain scope), I agree with his identification of the logical flaw in the guidance. I agree with Lady Arden and Lord Sales (para 86) that the scope of the guidance (under Schedule 3, paragraph 12 and regulation 7(1)) cannot be necessarily confined to purely procedural or operational matters, but I do not understand that to be the intended effect of Lord Wilsons words. In particular there is no reason why the guidance should not extend to guidance on the formulation of the investment strategy, including the social and other matters appropriate to be taken into account under regulation 7(e). However, I cannot agree that this opens the door, as they seem to suggest, to the delineation of the functions of central government in relation to the fund, if by that they imply the broadening of the role of central government to include the imposition of its own policy preferences. In my view it is unhelpful to observe, as they do (paras 78, 87), that such a pension scheme is liable to be identified with the British state or that the administering authority is part of the machinery of the state. The fact that the authority may for certain purposes be seen as a state agency tells one nothing about the legal powers and constraints under which it operates. Nor does it give the Secretary of State any decision making role beyond that express or implicit in the relevant statutory framework. Any guidance must respect the primary responsibility of the statutory authorities as quasi trustees of the fund, as Lord Wilson puts it (para 12, echoing the words of the Law Commission). That the primary responsibility rests with the authorities is emphasised by the guidance itself. As it says in the Foreword: One of the main aims of the new investment regulations is to transfer investment decisions and their consideration more fully to administering authorities within new prudential framework The Secretary of States power of intervention does not interfere with the duty of elected members under general public law principles to make investment decisions in the best long term interest of scheme beneficiaries and taxpayers. Responsibility for investment decisions thus rests with the administering authorities. The same must be true of policy choices made under regulation 7(e). As Lord Wilson says (para 17) the guidance in that respect follows the approach of the Law Commissions report (Law Com No 350). That report in turn may be seen as having settled a long running debate as to the extent to which pension trustees could take account of non financial factors, dating back to cases such as Cowan v Scargill [1985] Ch 270 (see for example Lord Nicholls Trustees and their Broader Community: where Duty. Morality and Ethics Converge (1996) Australian Law Journal Vol 70, p 206). There appears now to be general acceptance that the criteria proposed by the Law Commission are lawful and appropriate. I agree. Thus administering authorities may take non financial considerations into account provided that doing so would not involve significant risk of financial detriment to the scheme and where they have good reason to think that scheme members would support their decision. These are judgements to be made by the administering authority, not the Secretary of State. The attempt of the Secretary of State to impose policy choices was objectionable, not so much because they were not pensions purposes (in the judges words see above), but because they were choices to be made by the authorities, not by central government. appellants: In this respect I agree with the submissions of Mr Giffin QC for the What the Secretary of State sought to do in the guidance was to promote the governments own wider political approach, by insisting that, in two particular contexts related to foreign affairs and to defence, administering authorities could not refrain from making particular investments on non financial grounds, regardless of the views held by the scheme members. The analogy drawn by the Court of Appeal between the basis upon which the administering authority may properly act, and the purpose for which the Secretary of State may properly issue guidance, was therefore founded upon a misconception of the administering authoritys position in law. Whilst the Secretary of State was entitled to give guidance to authorities about how to formulate investment policies consistently with their wider fiduciary duties, he was not entitled to use the guidance giving power, conferred by the Investment Regulations, to make authorities give effect to the Secretary of States own policies in preference to those which they themselves thought it right to adopt in fulfilment of their fiduciary duties. For these reasons I also would allow the appeal and restore the order of the judge. LADY ARDEN AND LORD SALES: (dissenting) Padfield v Minister for Agriculture, Fisheries and Food [1968] AC 997 (Padfield) was a ground breaking decision of the House of Lords in which the exercise of a power by a minister for improper purposes was set aside. The House held that an unfettered statutory power could only be exercised to promote the policy and objects of the Act. We will call that holding the Padfield principle. The only issue on this appeal is whether it is outside the broad discretion given to the Secretary of State under the Public Service Pensions Act 2013 (the 2013 Act) to give guidance which prohibits the use of pension policies to pursue boycotts and similar activities against foreign nations against whom the UK has not imposed sanctions or taken similar steps. It is said that this exercise of the power contravenes the Padfield principle, in effect that this too was the exercise of a power for improper purposes rather than for the purposes of promoting the policy and objects of the Act. We shall explain the powers, the guidance and the Padfield principle in more detail below. In summary, we conclude that the objects of the 2013 Act are not simply to set up public service pension schemes such as the Local Government Pension Scheme (LGPS) but also to ensure that the public interest is reflected in the arrangements for the management of those schemes. The 2013 Act was part of a package of measures to reform public service pensions which were intended to take due account of both the public interest and that of the beneficiaries of the pension funds. The powers to give guidance can, therefore, within appropriate limits, extend to matters which reflect the role of the Secretary of State or central government in relation to the funds, which is the essence of the challenged guidance. The wide discretion The 2013 Act was framework legislation setting out broad powers to enable the transition to new public service pension schemes to be achieved. The powers to make regulations under sections 1(1) and 3(1) were both broad. The regulations with which this appeal is concerned were made under both those powers. Although the powers are broad, they are not limitless. The powers in respect of the pension schemes are in circumstances such as those arising in this case at least subject to an obligation to ensure that the administering authorities of the schemes remain able to perform their primary duties in relation to the schemes, to promote the financial well being of scheme members. There may be other limitations. In this judgment, we focus on section 3(1). The power to make regulations conferred by section 3(1) is to make provision as to certain matters and those matters are not limited to the provision of the matters listed in Schedule 3. However, paragraph 12 of Schedule 3 lists as one of those matters as to which regulations may make provision the administration or management of the scheme. The scheme in this case is the LGPS. The management of a scheme includes the delineation of the roles of those who have a relationship to the scheme. Pursuant to his statutory powers under sections 1(1) and 3(1) of the 2013 Act, the Secretary of State made the Local Government Pension Scheme Regulations 2013 (SI 2013/2356). These contained regulation 7, which Lord Wilson sets out in para 9 above. This regulation empowered the Secretary of State to give guidance about the formulation of the administering authoritys investment strategy statement. The guidance in issue The guidance in issue is contained in a document dated September 2016 issued by the Department for Communities and Local Government (DCLG) entitled Local Government Pension Scheme Guidance on Preparing and Maintaining an Investment Strategy Statement (the guidance). As the title to the document states, the general purpose of the guidance is to assist administering authorities in formulating and maintaining their investment strategy statement. The relevant parts of the guidance are marked in bold in the following passage: The law is generally clear that schemes should consider any factors that are financially material to the performance of their investments, including social, environmental and corporate governance factors, and over the long term, dependent on the time horizon over which their liabilities arise. However, the Government has made clear that using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are inappropriate, other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government. Although schemes should make the pursuit of a financial return their predominant concern, they may also take purely non financial considerations into account provided that doing so would not involve significant risk of financial detriment to the scheme and where they have good reason to think that scheme members would support their decision. [] Summary of requirements In formulating and maintaining their policy on social, environmental and corporate governance factors, an administering authority: Must explain the extent to which non financial factors will be taken into account in the selection, retention and realisation of investments Should not pursue policies that are contrary to UK foreign policy or UK defence policy By way of brief explanation, boycotts involve withdrawing support for Israel, and Israeli and international companies, that are involved in the violation of Palestinian human rights. Divestment campaigns urge banks, local councils, churches, pension funds and universities to withdraw investments from all Israeli companies and from international companies complicit in violations of Palestinian rights actions by organisations that have funds under their control, by which they dispose of or do not acquire holdings in certain types of investment. Sanctions campaigns pressure governments to fulfil their legal obligation to hold Israel to account, including There is no issue about the meaning of the concepts used in the guidance so we will set out the meanings given to them by the appellants in the context of the issues with which they are concerned: by ending military trade and through free trade agreements. (First witness statement of Hugh Lanning, para 30) Lord Wilson considers that the statement in the summary of requirements goes further than the statement in the body of the guidance that they should not pursue policies that are contrary to UK foreign policy or UK defence policy. However, the Secretary of State considers that the summary went no further than the body of the guidance. The appellants have not challenged that, and we proceed on that basis. The critical passage is therefore the statement in the body of the document. Mr Chris Megainey, an official of the DCLG, deals with the provenance of the guidance in his evidence on this application. He explains how the guidance, which had not previously been necessary, had come to be issued: 12. It was clear to us that the new guidance on the new Investment Strategy Statement which replaced the [Statement of Investment Principles] under the 2016 Regulations would also need to cover what would be appropriate non financial factors to take into account and the extent to which non financial factors should or should not be taken into account. It was also clear that the power to give such guidance was provided by the 2013 Pensions Act (Schedule 3, paragraph 12) and that such guidance was consistent with the overall purpose of the Pensions Act. 13. However, there were factors which led us to consider whether the content and the status of the guidance on the 2016 Regulations should be strengthened in relation to local boycotts. Firstly, there were concerns about the possible impact of the Boycott, Divestment and Sanctions movement which sought to give practical force to criticism of the policies of certain foreign nations and exports of certain types of arms to certain countries. The Governments fear was that this might undermine UK foreign policy and legitimate UK trade which was in accordance with international law, if adopted by a part of the UK state, in the form of administering authorities. There were also concerns about whether such campaigns might be perceived as legitimising anti Semitic or racist attitudes and attacks. I am aware from subsequent discussions with colleagues that although anti Israel and pro Palestinian campaigning in itself is not anti Semitic, there is a pattern of anti Semitic behaviour in connection with campaigns promoting a boycott of Israel. For example, protests outside an Israeli owned shop in central Manchester in summer 2014 led to some Jewish people using the shop being racially abused by protestors, including shoppers being called Child killer, comments such as You Jews are scum and the whole world hates you, and Nazi salutes being made at Jewish shoppers using the Israeli owned store. On social media, hashtags such as #BDS, #BoycottIsrael and #FreePalestine are regularly used by people posting anti Semitic tweets and comments. Secondly, a Procurement Policy Note had been issued by the Cabinet Office in February 2016 restating the existing policy on procurement, that authorities should comply with international law and that boycotts are inappropriate, except where sanctions, embargoes and restrictions have been put in place by the UK Government. To my knowledge the question of whether investment boycotts could legitimately be put in place had not previously arisen in relation to the LGPS. The overriding duty of authorities to maximise investment returns and act in the interests of scheme members and taxpayers was clear, as was the risk of legal challenge if authorities did not comply with that duty. However, the existing guidance did not specifically address the question of investment boycotts. 14. Given the serious nature of the concerns and the potential impacts across the UK set out above, we concluded that statutory guidance including a specific requirement to reflect UK foreign policy was justified and would fall within the powers in the 2013 Pensions Act. The protection of beneficiaries and taxpayers from the possibility that investment decisions might be taken by authorities purely on the basis of non pensions considerations is in my view a pensions purpose. Mr Megainey then explained that there was a public consultation on the statutory guidance which attracted over 23,000 responses, including responses from supporters of charities in the field of famine relief, education, development and similar fields drawing attention to the problems that a ban on boycotts would have on the selection of investments based on non financial considerations. After careful consideration the guidance was issued limited to boycotts which would undermine UK foreign and defence policy and which constitutionally were outside the competence of local government. Mr Megainey confirmed that the pursuit of boycotts against foreign states was considered to be beyond the competence of local authorities, and that the circumstances with which the guidance was concerned would arise rarely: 22. However, we were clear that UK foreign and defence policy are matters which are properly reserved for the UK government and do not fall within the competence of local government. It was therefore right to put safeguards in place to ensure that decisions made by the UK government on foreign and defence policy in the interests of the UK as a whole would not be undermined by local boycotts on purely non pension grounds. We expected these circumstances to arise very rarely but it seemed right to take these steps in view of the nature and scale of the potential risks. The Secretary of State thus took the view that boycotts were not a matter for the administering authority but for central government. There is no challenge to the rationality of his decision. The decision was clearly one of policy as to what was in the public interest. Mr Giffin submits in reply that the guidance is a recipe for politicisation of pension schemes. We do not agree: if anything the purpose is to preclude their politicisation in limited respects. Mr Giffin further submits that the Secretary of State is seeking to cut back on the legitimate choices of the administering authority: but this is within the statutory power as we read it. Nor do we agree that it is any part of the guidance to tell those who invest what investments to make (cf para 31 of the judgment of Lord Wilson). The guidance deals only with the situation where those who invest funds have no active duty to promote the best interests of the members of the pension fund in financial terms because the considerations are non financial and there is no material financial consequence attached to the decision. If it were otherwise, the guidance could be said to invite administering authorities or scheme managers to breach the primary duties to safeguard the financial well being of scheme members which the guidance accepts that they have. The passage in the guidance quoted in para 53 above is concerned to regulate the extent to which scheme managers may make decisions based on factors which are not financial, in circumstances which, as explained in the next paragraph of the guidance can only arise where the financial interests of scheme members are not materially affected. In doing so, it recognises that framing investment decisions by reference to such factors may serve to communicate or express views of a political, social or ideological character. In our view, it is clear that the state (representing the interest of the general public) and scheme members may both have an interest in how this expressive function is exercised. The LGPS is liable to be identified with the British state. This is because of the impression produced by the combined effect of the nature of the persons who are members of the scheme, its designation as a public sector scheme, the identity of the scheme managers (which include county councils and London boroughs, which are part of the machinery of the state), the funding which the state provides for the scheme, and the degree of state regulation to which it is subject pursuant to the 2013 Act. The precise niceties of how investment decisions are taken are not likely to be recognised or understood. So, for instance, if the managers of funds within the LGPS decided to boycott Israel, that could readily be portrayed as the British state (in the guise of one of its major public sector pension funds) deciding to boycott Israel. Moreover, such a perception could well fuel difficult and sensitive tensions in society, as Mr Megainey explains. For the proper discharge of the governments role in the conduct of international affairs and in promoting harmonious relationships in society, it is important that it should be able to exercise control over the generation of perceptions about the attitude of the British state. Any suggestion that these are not appropriate concerns for government would be unsustainable. No suggestion is made that the position taken in para 22 of Mr Megaineys witness statement was wrong in law, unreasonable or constitutionally incorrect. As explained, the only question on this appeal is whether the 2013 Act enables the Secretary of State to give the guidance in issue. Mr Megainey makes the important point that the part of the guidance in issue related only to the use in limited circumstances of non financial considerations to make investment decisions: 23. The relevant section in the guidance was therefore carefully drafted in the light of the arguments in consultation responses and made in Parliament. It set out the very restricted range of investment policies which could go beyond the competence of an administering authority and potentially undermine policies of the UK government. But it left a very wide range of discretion for authorities on other investment policies which they may legitimately adopt and which are consistent with their wider responsibilities. One example might be local policies against investment in companies responsible for particular products which may be harmful to health (eg tobacco, sugar and alcohol) or which have operations or activities which cause environmental harm (eg water or air pollution caused by oil or gas companies). Administering authorities have responsibilities for public health and the environment in their areas. The guidance makes clear that they may legitimately take into account the potential for harm by refusing to invest in tobacco manufacturers, fossil fuel companies or high sugar products: such policies do not carry general risks to UK trade, security or communities. Mr Megainey made the further important point that the guidance in issue did not interfere with the performance by the administering authority of their legal duties with respect to investment: 24. The guidance did not therefore affect the ability of authorities to comply with their duty to act in the best interests of beneficiaries, nor did it prevent them from taking ethical considerations into account when making investment decisions except in a very narrow range of circumstances. It is common ground that regulation 7(2)(e) of the Regulations (set out in para 54 above) is within the regulation making power in section 3(1) of the 2013 Act. Regulation 7(2)(e) contemplates that guidance issued by the Secretary of State may cover the administering authoritys policy on how social, environmental and corporate governance considerations (ie matters which include non financial factors) are taken into account in the selection, non selection, retention and realisation of investments. That is to say, the Regulations and the 2013 Act envisage that guidance may be issued as regards how non financial factors may (or may not) be taken into account as substantive considerations when the administering authority makes investment decisions. We can see nothing in the wording or context of section 3(1) of the 2013 Act to indicate that its coverage in respect of the giving of guidance in relation to non financial factors to be taken into account, or not, when making investment decisions is limited as the appellant contends. On the contrary, we consider that both the wording and the context of that provision indicate that it is not so limited. As Sir Stephen Richards put it in his judgment in the Court of Appeal (with which Davis and Hickinbottom LJJ agreed), [s]ince the Secretary of State is empowered to give guidance as to an authoritys investment strategy, it seems to be equally plainly within the scope of the legislation for the guidance to cover the extent to which such non financial considerations may be taken into account by an authority (para 20). We agree. The Padfield principle This is an important principle of statutory construction, which for present purposes is encapsulated in the following passage from the speech of Lord Reid in Padfield [1968] AC 997, 1030: Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act; the policy and objects of the Act must be determined by construing the Act as a whole and construction is always a matter of law for the court. In a matter of this kind it is not possible to draw a hard and fast line, but if the Minister, by reason of his having misconstrued the Act or for any other reason, so, uses his discretion as to thwart or run counter to the policy and objects of the Act, then our law would be very defective if persons aggrieved were not entitled to the protection of the court. So it is necessary first to construe the Act. We would make a number of observations. First, it is not the practice of Parliament to insert purpose clauses into legislation, and indeed the policies or objects of particular legislation may be quite complex. They may be deduced from the context, including the constitutional position. The relevant constitutional background which sets the context in which the 2013 Act falls to be construed includes the constitutional responsibility of central government for the conduct of the UKs international affairs, for promoting the countrys economy and for seeking to preserve internal good order and harmonious relations between different parts of society. In R v Secretary of State for the Environment, Transport and the Regions, Ex p Spath Holme Ltd [2001] 2 AC 349 (Spath Holme), the House of Lords gave important guidance regarding the operation of the Padfield principle. Lord Bingham, referring to observations by Lord Simon of Glaisdale and Lord Diplock in Maunsell v Olins [1975] AC 373, 393, emphasised at [2001] 2 AC 349, 385E G and 391A B that a statute may well have more than one statutory objective. As Lord Simon (speaking for himself and Lord Diplock) said in Maunsell v Olins, in the passage relied on by Lord Bingham: For a court of construction to constrain statutory language which has a primary natural meaning appropriate in 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. Once a mischief has been drawn to the attention of the draftsman he will consider whether any concomitant mischiefs should be dealt with as a necessary corollary. The Bill leading to the 2013 Act laid down a common framework for pension provision within the public service so that the framework could be adapted to each sector as circumstances required. So, it was clear that the detail had to be filled in by secondary legislation and it is not surprising to find that the powers to make secondary legislation were given in broad terms. One of the purposes of the legislation, as one might expect, was to establish sound governance arrangements for the new schemes. The second point is that it is not good enough if the minister misconstrues the legislation in good faith. This is because the courts are the authoritative organ for the interpretation of a statutory power. We do not have any equivalent of the Chevron doctrine in the United States (Chevron v Natural Resources Defence Council (1984) 467 US 837), where it was held that where a statute directed to a government agency was ambiguous, the court will follow any permissible reading adopted by the agency. Thirdly, as Lord Nicholls explained in Spath Holme, at [2001] 2 AC 349, 396D G, the Padfield principle depends upon the proper interpretation of the relevant statutory provision; and an appropriate starting point is that language is to be taken to bear its ordinary meaning in the general context of the statute (p 397B). [T]he overriding aim of the court must always be to give effect to the intention of Parliament as expressed in the words used: Spath Holme [2001] 2 AC 349, 388D, per Lord Bingham. Here, the language of section 3(1), according to its ordinary meaning, especially when it is read in context and alongside section 3(2) of and Schedule 3 to the 2013 Act, is apt to confer a very wide discretion upon the Secretary of State (as the responsible authority) to promulgate regulations which make such provision in relation to a [public service pension scheme] as the Secretary of State considers appropriate. We do not think that the limitation for which the appellant contends can be read into section 3(1). Again, we agree with Sir Stephen Richards, who said (para 21), I find it helpful to put the question in terms of whether the legislation permits wider considerations of public interest to be taken into account when formulating guidance to administering authorities as to their investment strategy; and given the framework nature of the statute and the broad discretion it gives to the Secretary of State as to the making of regulations and the giving of guidance, I can see no reason why it should not be so read. The policy and objects of the 2013 Act The Preamble to the 2013 Act makes it clear that the 2013 Act is not only about pensions. It reads: An Act to make provision for public service pension schemes; and for connected purposes. This is a very wide formulation. A purpose may be connected with another even if it does not directly or otherwise promote that other provided that it has a relationship with that other. It is enough that it is reasonably or logically associated with it. The reason for having such a wide formulation is to be found in the circumstances leading to the 2013 Act. We take these circumstances from the final report of the Independent Public Sector Pensions Commission issued on 10 March 2011 under the chairmanship of Lord Hutton of Furness (the Hutton Report). This forms part of the context of the 2013 Act admissible on its interpretation since it explains why the legislation was needed and what changes were introduced. What follows is not a comprehensive summary. The Hutton Report found that the then current pensions structure for the public sector needed structural reform, for example because the cost was unfairly borne by employees, employers and the taxpayer. There was an unfunded past service deficit on the LGPS which fell on the employer, and ultimately in the case of local government employees, the taxpayer. Lord Huttons first set of recommendations were directed to ensuring the sustainability of public service pensions. The measures which he recommended included an employers cap, that is, a limit on the amount of contributions which employers would be obliged to make. Such a cap was introduced by the 2013 Act. There was praise for some aspects of local authority pension scheme management (see para 6.62), in particular for the adoption by individual funds within the LGPS of express, transparent investment strategies. However, the Hutton Report also recommended improvements in governance of pension schemes, including the management of investments. It concluded there were valid reasons for differences in the governance arrangements between public service and private pension schemes, but the former could learn from the latter. At the time of his report, some functions were carried out by government departments. On governance, the Hutton Report stated: Clear guidance will be required for members of pension boards on their role and duties. They would fulfil similar duties to trustees, acting in accordance with scheme rules, impartially and prudently, balancing the interests of scheme beneficiaries and of taxpayers. There will be a need for effective committee structures to facilitate sound decision making and strong oversight of scheme administrators and fund managers. (para 6.16) The government accepted the Hutton Report, subject to consultation. What this brief summary makes clear is that the 2013 Act was not simply about matters internal to pension schemes: it also concerned the relationship of ministers to pension schemes and the interests of the taxpayer. There was no suggestion that we have found that the powers of ministers should be limited to protecting the interests of members of pension schemes. The systems for governance would have to be put in place by government. The changes made by the 2013 Act were very significant indeed. In his speech introducing the second reading of the Bill which became the 2013 Act, the Chief Secretary to the Treasury (Danny Alexander MP), the minster responsible for promoting the Bill, stated: Lord Huttons fourth key test related to governance and transparency. The reformed schemes should be widely understood, both by scheme members and by taxpayers. People understand what is in their pay packet each month, and it should be just as easy to understand how their pension works. Under the Bill, the schemes will have robust and transparent management arrangements. Clause 5 [which became section 5] provides for each scheme to have a pension board which will work to ensure that the scheme is administered effectively and efficiently. There will be local pension boards in the case of the locally administered police, fire and local authority schemes. The boards will consist of member representatives, employer representatives and officials. They will operate in a similar way to boards of trustees, holding scheme administrators to account and providing scheme members and the public with more information about the pensions. The board members will be identified publicly, and their duties will be made clear to scheme members. I welcome the greater transparency that the Bill will bring to this area of public pension administration. (Hansard, vol 552, col 63 4, 29 October 2012) Unusually for public service pension schemes, the pension funds within the LGPS are funded. Their aggregate value as at 31 December 2020 was some 287 billion, which makes them very substantial investors indeed. There are some other funded public service pension schemes. The relevant provisions of the 2013 Act apply to both funded and unfunded schemes. In the case of funded schemes like the LGPS, the funding for them has been provided by the state in the past (by funding the employers contributions from taxation and also funding the salaries of relevant employees from taxation, out of which employee contributions have been made) and continues to be provided and underwritten by the state into the future (subject to the employers cap). This is one reason why such public pension schemes are liable to be identified with the British state (para 58 above). It is also a further reason why the government and taxpayer have a legitimate interest in regulating how public sector pension schemes manage the money which is provided to them. In our judgment, having regard to the scope and context of the 2013 Act, in particular as indicated by its preamble and the Hutton Report, the policy and objects of the 2013 Act include not simply setting up the new pension schemes but also the working out of the role of central government in relation to the newly created schemes and in ensuring that the right balance is struck between the public interest and the interests of fund members. The 2013 Act is about introducing a new structure whereby these interests can be brought into account and held in balance. Accordingly, we consider that the part of the guidance in issue was promulgated for reasons falling within the policy and objects of the 2013 Act. At first instance Sir Ross Cranston held the relevant guidance could not be for a pensions purpose because ex hypothesi the decision would have no adverse financial impact on the scheme. He held that the purpose is a desire to advance UK foreign and defence policy, without mentioning its significance in the pension context. However, as Mr Julian Milford for the Secretary of State submits, the court has to read the guidance as a whole and in its proper context. The relevant part of the guidance applies when the administering authority is making an investment decision. It regulates the extent to which they may act other than on the basis of ordinary financial factors. They may only take non financial factors into account if that can be done without any material financial detriment for scheme members. In order to be Padfield compliant, the relevant part of the guidance does not have to promote or affect the LGPS financially. The policy of the 2013 Act was also to establish suitable governance more generally for the deregulated LGPS. The public interest is implicated in decisions which might be made by scheme managers and hence is an appropriate matter to be covered in the guidance relating to such governance. Therefore, if the minister considered that it was in the public interest to restrict the investment decisions that the managers could take consistently with their duties to the scheme members, then in our view this fell within the policy and objects of the 2013 Act. Paragraph 12 of Schedule 3 to the 2013 Act (set out at para 52 above) is in general terms. It does not limit the scope of regulations to the management and administration of pension funds forming part of the LGPS or other public sector pension schemes. The power can be used for any purpose the minister thinks appropriate subject to the Padfield principle. We have already explained that there are some limits on the broad discretion to make regulations to be deduced from the policy and objects of the 2013 Act. The minister cannot require the administering authority, the scheme managers or the board appointed pursuant to section 5 to transgress the primary legal duties upon them to safeguard the financial interests of scheme members. But the relevant part of the guidance has not sought to do this. There was some confusion at the hearing as to whether the guidance in issue would force the administering authority to invest in any particular stock. However, that is not a fair reading of the guidance. The relevant part of it is simply guidance that the administering authority should refrain from making an investment decision for the particular purposes there stated. Moreover, it does not, for example, say that the administering authority could not decide that the LGPS should divest itself of an investment with the incidental purpose of relinquishing all investments in an industry to which the administering authority or the scheme members had ethical objections; but they could not do so for the sole or principal purpose of pursuing boycotts, divestment or sanctions against foreign nations which the UK government had not subjected to sanction, nor against the UK defence industry. This reading of the relevant passage in the guidance is precisely in line with the evidence which the government has filed and with Information Note 01/16, which Lord Wilson considers of no relevance. That Note explains that There are wider national and international consequences from imposing such local level boycotts. They can damage integration and social cohesion within the United Kingdom, hinder Britains export trade, and harm foreign relations to the detriment of economic and international security. The Secretary of State referred to this Note in the consultation document in November 2015 leading to the 2016 Regulations and in the governments response to the consultation in September 2016. It follows that we do not accept that the distinction made by Lord Wilson in para 31 of his judgment between how an administering authority should approach investment decisions and what investments they should not make applies in this situation. The guidance in issue does not purport to tell administering authorities what investments they must hold. One of the points made against the conclusion to which we have come is that government policy on relations with particular foreign nations may change. That is of course so, but it does not follow that the part of the guidance in issue falls outside the purpose and objects of the 2013 Act. The proper characterisation of the guidance is that it reflects and articulates the legitimate role of central government in relation to public sector pensions. Lord Wilson considers that the guidance must be about procedures. That is in our judgment an inappropriately one dimensional view of what management in relation to a scheme created under the 2013 Act involves. Guidance cannot in our judgment realistically be limited to operational controls but must be capable of extending more widely so as to include the objectives of pension provision, including the delineation of the functions of central government in relation to the fund. A public service pension scheme may, by reason of its particular status as a public service scheme funded in substance by the public, entirely properly be made subject to restrictions which are different from those of private sector pensions. For example, as explained by Mr Milford, the public sector equality duty may well apply in relation to public service schemes. Sir Stephen Richards was surely correct to say in his judgment in the Court of Appeal that the administering authority is part of the machinery of the state. On the other hand, we agree entirely that the pensions provided by the LGPS are earned. As Sir Nicholas Browne Wilkinson VC held in Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 1 WLR 589, 597: Beneficiaries of the scheme, the members, far from being volunteers, have given valuable consideration. However, the benefits for scheme members are guaranteed by statute and so are underwritten by the state. If, for example, there is a significant change in life expectancy, and a deficiency emerges as regards employees or former employees of a local authority, that deficiency must be made good by the relevant local authority. That burden may therefore end up with local council taxpayers or possibly central government through the grant system. This is an aspect of the public interest in the LGPS. The fact is that there is both a public interest and private interests of scheme members which co exist in relation to the LGPS. Both aspects are recognised by the statute and receive due respect according to the terms of the guidance. Moreover, the guidance which the Secretary of State may give must, as a matter of ordinary language as employed in paragraph 12 of Schedule 3, be capable of covering any action of the administering authority in issue in this case, as regards the taking into account of non financial considerations. We do not accept that the power could only be to explain the approach to investment and not in relation to the substantive power to invest in the circumstances with which we are concerned. There is no obvious or straightforward distinction between these matters, which both fall within the concepts of administration and management of a scheme. This point is reinforced by the terms of paragraph 11 of Schedule 3, which refers to the administration, management and winding up of any pension funds within a scheme, where the terms administration and management clearly cover both procedural and substantive aspects of fund administration and management. We therefore consider that the Court of Appeal were correct to say that the judge read the legislation too narrowly. We would dismiss this appeal. |
Determining what is the effective date of the termination of a persons employment has fundamental implications for any claim for unfair dismissal. This case illustrates the substantial penalty that will be paid by an employee who fails to recognise its significance, for the effective date of the termination of employment is the effective date on which time begins to run on the short period within which an employee must launch his or her claim for unfair dismissal. The facts On 19 October 2006 the respondent, Lauren Barratt, was suspended from her employment with the appellant, a small charitable organisation. It was alleged that she had behaved inappropriately at a private party. A disciplinary hearing was held on 28 November 2006. At the end of the hearing Ms Barratt was told that she could expect to receive a letter on Thursday, 30 November. This would inform her of the outcome of the hearing. Ms Barratt knew that she was at risk of dismissal. It was an important time for her, therefore. As is so often the case in human affairs, however, this episode coincided with another significant event in her life. She has a sister who had given birth to a baby a week earlier. This was a happy circumstance for she had lost an earlier baby. Naturally, Ms Barratt wanted to see her sister and the baby and to give what help she could so, at 8 am on 30 November, she left her home to travel to London. Later on the same day a recorded delivery letter arrived for her. It was signed for by the son of Ms Barratts boyfriend. She had not left instructions for it to be opened or read and so it was left, unopened and unread, awaiting her return. Ms Barratt did not return home until late on Sunday evening, 3 December. She did not open the envelope containing the letter that evening. Indeed, it was not until the following morning that she asked her boyfriend and his son whether any post had arrived. The son remembered that he had signed for a recorded delivery item. He found it among his school homework and handed it to Ms Barratt who, on reading the letter, discovered that she had been summarily dismissed for gross misconduct. An internal appeal against the dismissal existed and, unsurprisingly, Ms Barratt availed of it. She was unsuccessful in her appeal. It was dismissed on 19 December 2006. Thus it was that on 2 March 2007 a claim for unfair dismissal and sex discrimination was presented on her behalf to an Employment Tribunal. Depending on the view that one takes of the date on which Ms Barratts employment was brought to an effective end, her complaint was lodged either just within or just outside the period of three months from that date. This is of pivotal importance to the question of whether she is able to maintain her claim to have been unfairly dismissed. The relevant statutory provisions The effective date of the termination of employment is a term of art that has been used in successive enactments to signify the date on which an employee is to be taken as having been dismissed. The fixing of the date of termination is important for a number of purposes. These include, but are by no means confined to, the marking of the start of the period within which proceedings for unfair dismissal may be taken. In the present case the relevant definition of the term, effective date of termination, is contained in section 97 (1) of the Employment Rights Act 1996. This definition largely mirrors the meaning given to the same term by section 55 (4) of the Employment Protection (Consolidation) Act 1978, by paragraph 5 (5) of the First Schedule to the Trade Union and Labour Relations Act 1974 and by section 23 (5) of the Industrial Relations Act 1971. So far as is relevant, section 97 (1) of the 1996 Act provides: (1) in this Part the effective date of termination (a) in relation to an employee whose contract of employment is terminated by notice, whether given by his employer or by the employee, means the date on which the notice expires, (b) in relation to an employee whose contract of employment is terminated without notice, means the date on which the termination takes effect Ms Barratt had been dismissed without notice and her case was therefore governed by sub paragraph (b) of the subsection. The simple but crucial question therefore is, when did the termination of her employment take effect? Was it when her employer decided to terminate the employment? Alternatively, was it when the letter was sent or on the day that it was delivered? Was it when Ms Barratt read the letter or should the termination be regarded as having taken effect when she had a reasonable opportunity of learning of the contents of the letter? If so, when did that reasonable opportunity arise? When, by whatever means, the effective date of the termination of employment is established, section 111 of the 1996 Act comes into play. Subsection (2) of this section is the relevant provision. It is in these terms: (2) an [employment tribunal] shall not consider a complaint [of unfair dismissal] unless it is presented to the tribunal (a) before the end of the period of three months beginning with the effective date of termination, or (b) within such further period as the tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of that period of three months. The dispensing provision contained in section 111 (2) (b) is not available to Ms Barratt. Current jurisprudence suggests that that provision is to be narrowly construed and sparingly invoked. One need not embark on an examination of that issue, however, for, whatever the possible scope of the sub paragraph, Ms Barratt could not have demonstrated that it was not reasonably practicable for her to present a claim within the three month period. Establishing the effective date of the termination of employment is also important in relation to the availability of interim relief in unfair dismissal claims. This subject is dealt with in section 128 of the 1996 Act, as amended by section 1 of the Employment Rights (Dispute Resolution) Act 1998. The relevant provisions of the section are these: (1) An employee who presents a complaint to an employment tribunal (a) that he has been unfairly dismissed by his employer, may apply to the tribunal for interim relief. (2) The tribunal shall not entertain an application for interim relief unless it is presented to the tribunal before the end of the period of seven days immediately following the effective date of termination (whether before, on or after that date). If the effective date of termination is taken to mean the date on which an employer decides to summarily dismiss an employee or the date on which a letter is dispatched to inform the employee of that decision, it can be seen that the period provided for in this subsection might either expire completely before the employee would become aware of the need to have recourse to it or be unrealistically shortened. For reasons which I shall develop, this consideration militates strongly against the interpretation of section 97 (1)(b) for which the appellants contend. The history of the proceedings Having received the complaint, the employers (who are the appellant in the present appeal) argued during a pre hearing review that both claims were out of time. The Employment Judge, Mr J C Hoult, held that both claims were in time. He also held, however, that if he had been of the view that the unfair dismissal claim had not been made in time, he would not have found in Ms Barratts favour on the issue of reasonable practicability. In respect of the sex discrimination claim he held that, if it had not been made in time, he would have exercised his discretion in her favour under the provisions of the Sex Discrimination Act 1975 (which, in section 76(5) allows a court or tribunal to consider a complaint which is out of time if, in all the circumstances of the case, it considers that it is just and equitable to do so). Before the Employment Judge the case for the employers appears to have been put solely on the basis that Ms Barratt had had a reasonable opportunity to discover the contents of the letter and that, on that account, the effective date of the termination of her employment was more than three months before the presentation of her claim. Mr Hoult rejected this argument in the following passages of his judgment: The Claimant clearly had the opportunity to make enquiries about any letter having been received and, had she have discovered that one had [been], she could have learnt the contents. Had she have made an enquiry by the telephone this would not have given her a reasonable opportunity to read it but of course she could have discovered the contents. I did not accept that the Claimant had gone away deliberately to avoid reading the letter. I was satisfied that given the circumstances of her sister that the reason for the visit to London was genuine it was to help her sister with housekeeping and looking after her child. It was clear that she left for London without knowing the decision. In my view the Claimant did not have a reasonable opportunity of reading the letter of dismissal until 4 December 2006. Whilst she may have been able to ask someone to read the letter over to her she did not and this did not seem to be an unreasonable position to adopt given the reason for her absence from the home. The employers appeal against the decision of the Employment Judge was confined to the single issue of whether he had been right to find that the unfair dismissal claim had been brought in time. No challenge was made to his finding in relation to the sex discrimination claim nor to his indication that he would not have found in Ms Barratts favour on the matter of the extension of time for the bringing of the unfair dismissal claim, if that had been in issue before him. The case for the employers before the EAT was more broadly based than it had been before the Employment Judge. It was argued that whether a contract of employment remained in force should not depend on an examination of what a claimant did or on an investigation of what he or she had the opportunity to do. A contract could be terminated by one party without the other party actually being aware of the termination. It was so terminated when the communication could be expected in the normal course of things to have come to the other party's attention. The same approach should be followed in determining the effective date of termination under section 97 of the 1996 Act. This argument was rejected by the EAT in a judgment delivered by Bean J. Mr Greatorex (who by then was appearing for the employers) had relied on a decision of the Court of Appeal in The Brimnes [1975] QB 929, [1974] 3 WLR 613, [1974] 3 All ER 88. In that case the owners of a ship sent a telex to the charterers at 5.45 pm on 2 April 1970 purporting to withdraw the vessel on the ground of late payment of the hire charge. The charterers normal business hours ended at 6.00 pm. The telex was not seen until the morning of 3 April, although it had arrived in the charterers' office at 5.45 pm on 2 April. Brandon J found that the notice must be regarded as having been received by the charterers before 6.00 pm on 2 April. The Court of Appeal upheld that decision, Megaw LJ stating what Bean J took to be the correct principle of law in the following passage at pages 966 967: if a notice arrives at the address of the person to be notified, at such a time and by such a means of communication that it would in the normal course of business come to the attention of that person on its arrival, that person cannot rely on some failure of himself or his servants to act in a normal businesslike manner in respect of taking cognisance of the communication so as to postpone the effective time of the notice until some later time when it in fact came to his attention. Bean J rejected the purported analogy with The Brimnes decision, saying in para 17 of his judgment: It is one thing to say that the owners or charterers of a ship, or similar large commercial concerns, must be taken to receive and read documents sent to them during normal business hours. It is quite another thing to say that the same principle of constructive knowledge should apply to individuals to whom a letter is sent at their home address. What of the person who lives alone and goes on holiday? What of the commercial traveller? What of the student who lives at university during term time and at the family home in the holidays? What of the individual fortunate enough to have a second home to which he or she goes at weekends? There is no principle equivalent to that enunciated in The Brimnes that an individual is expected to be at home to receive and open the post when it arrives or in the evening when he or she gets home, or that some arrangement must be made for someone else to open what may well be confidential correspondence in the recipient's absence. The argument before the Court of Appeal followed the course that it took before the EAT. It was submitted that the Employment Tribunal ought to have concluded that Ms Barratt had a reasonable opportunity of reading the dismissal letter before 3 December 2006. Mr Greatorex argued that the Tribunal had erred in law in looking at the reasonableness of Ms Barratt's conduct rather than whether she had a reasonable opportunity to know of her dismissal before 3 December 2006. What the Court of Appeal rightly called the more substantial and radical ground was contained in counsels second argument. It was to the effect that earlier decisions of the EAT (such as Brown v Southall & Knight [1980] IRLR 130 EAT and McMaster v Manchester Airport plc [1998] IRLR 112 EAT), which suggested that the effective date of termination was when the employee had actually read the letter and knew of the decision or, at any rate, had a reasonable opportunity of reading it, had been wrongly decided and should be overruled. By a majority, the Court of Appeal, [2009] IRLR 933, (Mummery LJ and Sir Paul Kennedy, Lloyd LJ dissenting) dismissed the appeal. As to the first argument, it was unanimously held that the Tribunal had not erred in law. Mummery LJ stated that it was open to the Employment Tribunal to conclude on the evidence that the claimant had not gone away deliberately to avoid reading the letter, that she had left for London without knowing the decision and that she did not have a reasonable opportunity of reading the letter of dismissal until 4 December. Lloyd LJ agreed with the appellants argument that, in principle, an opportunity to read the letter could include an opportunity to have it read over to the addressee on the telephone, or to have its contents communicated in some other way but he did not agree that the tribunal's judgment on this issue involved an error of law. On the second argument, the majority of the Court of Appeal accepted that Gisda's contractual analysis was a possible starting point in the approach to the proper interpretation of section 97(1). The contractual analysis proffered by the appellant had been that since the effective termination of an employment contract may predate the employee's actual knowledge of the summary dismissal, and since there was no principle of contract law that required an employer to communicate the termination of the contract to the employee for the termination to take effect, it was wrong to fix the date of summary dismissal as the date of the employee's actual knowledge of the dismissal or the date on which he or she had a reasonable opportunity to learn of the dismissal. The majority dismissed this argument for a number of reasons outlined by Mummery LJ in paras 34 38 of his judgment. Those reasons may be broadly summarised as follows: (i) The expression effective date of termination is not a term of contract law but a statutory construct specifically defined for the purposes of a legislative scheme of employment rights based on a personal contract. (ii) The critical act triggering the time limit is that of the employer. When and how the summary dismissal is notified is outside the employee's control. If the employer chooses to communicate the summary dismissal by post rather than in a face to face interview, it is reasonable that he should accept that until the employee either knows of the dismissal or has a reasonable opportunity to learn of it, it will not be effective. (iii) The employment protection legislation is designed to achieve fairness in the dismissal process. An employee cannot reasonably be expected to take action until informed of the dismissal on which action is to be taken. The legislation gives the employee three months, not three months less a day or two, in which to make a complaint. (iv) The rule that the effective date of termination was when the employee actually knew of the decision or had a reasonable opportunity of discovering it had been established and followed for nearly 30 years without challenge. While it was not binding on the Court of Appeal, considerations of certainty in practice and consistency in approach dictated that it should not be lightly cast aside. (v) Finally the rule had been in existence for a considerable period without legislative amendment, even though there have been Parliamentary opportunities to eliminate legal error, manifest injustice or practical inconvenience from the operation of employment protection laws. Lloyd LJ considered that, since at first sight employment was a matter of contract, the termination date was to be determined according to the general law of contract as it applies to employment contracts. In principle, therefore, the quest to discover the date on which the termination of the employment contract took effect should begin with the general law of contracts of employment. This was the first opportunity for the Court of Appeal to pronounce on the subject and Lloyd LJ considered that the court should not be deterred from striking out on a different course simply because the opportunity to do so had not arisen since 1980. He expressed his conclusions on the appeal in the following passage from para 77: the correct view of the law is that an employment contract is brought to an end by a dismissal letter sent by or on behalf of the employer to the employee at his or her address, and delivered to that address, and that it comes to an end on the date of such delivery, regardless of whether or not the employee was there at that time or later on that day, or did not see the letter, for whatever reason, until a later date The appeal In a submission of conspicuous ability, Mr Greatorex renewed the arguments that he had presented so forcefully to the Court of Appeal. He asserted that it was fundamentally wrong to link the termination of the contract to knowledge (or the reasonable opportunity to obtain it) on the part of the employee that employment had been brought to an end. Even if this was a correct approach, however, reasonable opportunity should be given a much narrower interpretation than that which it had been traditionally afforded. Section 97 (1) was, in its essence, a jurisdictional provision. As a matter of principle the question of jurisdiction should not be determined by examining the reasonableness of the behaviour of the person who sought to establish it. If the concept of reasonable opportunity had any part to play in determining the effective date of termination, it should be objectively assessed. The examination should focus on whether there was in fact an opportunity to learn of the dismissal, not whether, in failing to avail of the opportunity, the employee could be considered to have acted reasonably. On the more substantial issue Mr Greatorex contended that, by reason of her misconduct, Ms Barratt had repudiated the contract of employment and that this repudiation had been accepted by the employer. He acknowledged that, conventionally, acceptance of repudiation normally takes the form of communication of the decision to accept or an unequivocal overt act which is inconsistent with the subsistence of the contract State Trading Corporation of India Ltd v M. Golodetz Ltd [1989] 2 Lloyds Rep 277 at 286. Where, as in this case, there was no unequivocal overt act, the question of what is required by way of communication predominates. Relying again on The Brimnes, Mr Greatorex argued that, where an employer had done all that could reasonably be required of him to communicate his decision to accept the employees repudiation of the contract of employment, the termination has occurred. In advancing this argument, counsel accepted that the contractual analysis route to the application of section 97 had not been followed by the EAT in Brown v Southall & Knight [1980] ICR 617 and McMaster v Manchester Airport plc. But, he submitted, these decisions represented an unacceptable deviation from the normal application of contractual principles in the field of employment law. They also provided a different and unfairly onerous rule for termination by employers from that of termination by employees. Mr Greatorex pointed out that other decisions in employment law cases could be seen to cleave to common law contractual principles. London Transport Executive v Clarke [1981] ICR 355, [1981] IRLR 166 and Kirklees Metropolitan Council v Radecki [2009] ICR 1244, for instance, were examples of the courts recognising that actions by employers can constitute an unequivocal overt act which is inconsistent with the subsistence of the contract of employment. These actions were sufficient to bring those contracts to an end. It was submitted that there was no justification for abandoning common law contractual principles where communication of the acceptance of the repudiatory breach was the issue rather than an unequivocal overt action which terminated the contract. On the question of bringing a contract of employment to an end by communication, Mr Greatorex referred to two cases where, he suggested, ordinary contractual principles were applied. In Potter v RJ Temple plc (in liquidation) [2003] All ER (D) 327 (Dec) the employee sent a letter of resignation by facsimile transmission to his employer. The EAT held that the effective date of termination was when the fax was received, regardless of when it had been read or acted upon. And in George v Luton Borough Council (EAT/0311/03) [2003] All ER (D) 04 (Dec) the EAT held that the effective date of termination of the contract was when the employees posted letter of resignation was date stamped as having been received. Whether it had been read was neither here nor there. Finally, Mr Greatorex argued that the adoption of contractual principles would lead to greater certainty in the application of section 97. It would obviate the need for protracted hearings inquiring into the reasonableness of the opportunity to learn of the contents of a letter of summary dismissal and it would restore the necessary balance between the duties cast on employers and employees in relation to communications about the termination of employment. The respondent was not represented on the appeal to this court and we are therefore particularly grateful to Mr Greatorex for his comprehensive and scrupulously fair examination of the arguments that lie on both sides of the debate on how section 97 should be interpreted. The narrow issue In examining the question whether Ms Barratt had the opportunity to learn of the contents of the letter, should the focus be on the reasonableness of her behaviour in failing to avail of the chance to discover what it contained, or should it be on the existence of the opportunity to do so? The Employment Judge, the EAT and all the members of the Court of Appeal were unanimous in the view that to include consideration of the behaviour of the respondent in an assessment of whether she had a reasonable opportunity to find out what the letter contained was not an error of law. We agree. The circumstances of the present case exemplify the need to be mindful of the human dimension in considering what is or is not reasonable to expect of someone facing the prospect of dismissal from employment. To concentrate exclusively on what is practically feasible may compromise the concept of what can realistically be expected. The prospect of summary dismissal for gross misconduct (which Ms Barratt apparently entertained) is a fairly unenviable one. That she should wish to read the letter in which that prospect materialised is not in the least surprising. If it contained details of the findings made against her, it is entirely to be expected that, at least in the first instance, she would wish to absorb these alone. She is not to be condemned, therefore, for failing to give instructions that the letter should be opened and read to her during the weekend that she spent with her sister. Of course, the fact that it would have been possible for her to have found out over the weekend what the letter contained is not to be left out of account in deciding when she had a reasonable opportunity to discover its contents but the fact that she chose to wait until she could read the letter herself should not be regarded as irrelevant to the reasonableness of the opportunity to be informed of her summary dismissal. In common with all the judges who have pronounced on this issue hitherto, we consider that taking into account the actions and omissions of the respondent in relation to finding out what the letter contained was not erroneous in law. The examination of the reasons for not having learned of the contents of the letter should not be a protracted affair. It is to be expected that in the vast majority of cases, the reasons for not having done so can be shortly stated and equally shortly evaluated. The substantial issue The genesis of the reasonable opportunity to discover test is to be found in the decision of the EAT in Brown v Southall & Knight. In that case it was held that where dismissal is communicated to an employee in a letter, the contract of employment does not terminate until the employee has actually read the letter or has had a reasonable opportunity of reading it. It was not enough to establish that the employer had decided to dismiss a person or had posted a letter saying so. If, however, the employee deliberately did not open the letter or if he went away to avoid reading it, he might well be debarred from saying that notice of his dismissal had not been given to him. This decision has not been challenged (at least so far as reported cases are concerned) since it was promulgated. It was followed in McMaster v Manchester Airport plc. In that case Mr McMaster was summarily dismissed while he was on sickness leave. A letter informing him of this arrived at his home on 9 November 1995. He did not see the letter that day, however, because he was on a day trip to France. He returned home the following day when he read the letter. His unfair dismissal complaint was received by the industrial tribunal on 9 February 1996. Accordingly, if the effective date of termination of his employment was 9 November when the letter arrived at his home, his complaint was presented one day out of time. If, on the other hand, his employment did not effectively terminate until the following day when he read the letter, his complaint was in time. The EAT held that the effective date of termination of a contract of employment could not be earlier than the date on which an employee received knowledge that he was being dismissed. The doctrine of constructive or presumed knowledge had no place in questions as to whether a dismissal had been communicated, save only in the evidential sense that an industrial tribunal would be likely to assume that letters usually arrive in the normal course of post and that people are to be taken, normally, as opening their letters promptly after they have arrived. Underlying both decisions (although not expressly articulated in either) is the notion that it would be unfair for time to begin to run against an employee in relation to his or her unfair dismissal complaint until the employee knows or, at least, has a reasonable chance to find out that he or she has been dismissed. This is as it should be. Dismissal from employment is a major event in anyones life. Decisions that may have a profound effect on ones future require to be made. It is entirely reasonable that the time (already short) within which one should have the chance to make those decisions should not be further abbreviated by complications surrounding the receipt of the information that one has in fact been dismissed. These considerations provide the essential rationale for not following the conventional contract law route in the approach to an interpretation of section 97. As Mummery LJ said, it is a statutory construct. It is designed to hold the balance between employer and employee but it does not require nor should it that both sides be placed on an equal footing. Employees as a class are in a more vulnerable position than employers. Protection of employees rights has been the theme of legislation in this field for many years. The need for the protection and safeguarding of employees rights provides the overarching backdrop to the proper construction of section 97. An essential part of the protection of employees is the requirement that they be informed of any possible breach of their rights. For that reason we emphatically agree with the EATs view in McMaster that the doctrine of constructive knowledge has no place in the debate as to whether a dismissal has been communicated. For the short time of three months to begin to run against an employee, he or she must be informed of the event that triggers the start of that period, namely, their dismissal or, at least, he or she must have the chance to find out that that short period has begun. Again, this case exemplifies the need for this. During the three months after Ms Barratts dismissal, she pursued an internal appeal; she learned that she was unsuccessful in that appeal; she sought advice in relation to the lodging of a complaint of unfair dismissal; and she presumably required some time to absorb and act upon that advice. Viewed in the abstract, three months might appear to be a substantial period. In reality, however, when momentous decisions have to be taken, it is not an unduly generous time. We do not consider, therefore, that what has been described as the general law of contract should provide a preliminary guide to the proper interpretation of section 97 of the 1996 Act, much less that it should be determinative of that issue. With the proposition that one should be aware of what conventional contractual principles would dictate we have no quarrel but we tend to doubt that the contractual analysis should be regarded as a starting point in the debate, certainly if by that it is meant that this analysis should hold sway unless displaced by other factors. Section 97 should be interpreted in its setting. It is part of a charter protecting employees rights. An interpretation that promotes those rights, as opposed to one which is consonant with traditional contract law principles, is to be preferred. For these reasons we reject the thesis that cases such as London Transport Executive v Clarke, Kirklees Metropolitan Council v Radecki, Potter v RJ Temple plc and George v Luton Borough Council represent a general acceptance that statutory rights given to employees should be interpreted in a way that is compatible with common law contractual principles, if indeed they are as they have been represented to be. (On this latter point, we have not received contrary argument on the common law position and we wish to make clear that this judgment should not be taken as an endorsement of the appellants argument as to the effect of those principles). Of course, where the protection of employees statutory rights exactly coincides with common law principles, the latter may well provide an insight into how the former may be interpreted and applied but that is a far cry from saying that principles of contract law should dictate the scope of employees statutory rights. These cases do no more, in our opinion, than recognise that where common law principles precisely reflect the statutorily protected rights of employees they may be prayed in aid to reinforce the protection of those rights. The need to segregate intellectually common law principles relating to contract law, even in the field of employment, from statutorily conferred rights is fundamental. The common law recognised certain employment rights, but the right at common law not to be wrongfully dismissed is significantly narrower than the statutory protection against unfair dismissal. The deliberate expansion by Parliament of the protection of employment rights for employees considered to be vulnerable and the significance of the creation of a separate system of rights was recognised by the House of Lords in Johnson v Unisys Ltd [2001] UKHL 13, [2003] 1 AC 518. In that case the employee had succeeded in an unfair dismissal claim but, because of the statutory cap on compensation, sought to bring a claim at common law for breach of an implied term of trust and confidence during the dismissal process. The House of Lords refused to permit the supplanting of the legislative scheme by entertaining a second claim at common law. The leading judgment of Lord Hoffmann recognised the deliberate move by Parliament away from the ordinary law of contract as governing employer/employee contractual relations. At para 35 of his opinion Lord Hoffmann said: At common law the contract of employment was regarded by the courts as a contract like any other. The parties were free to negotiate whatever terms they liked and no terms would be implied unless they satisfied the strict test of necessity applied to a commercial contract. Freedom of contract meant that the stronger party, usually the employer, was free to impose his terms upon the weaker. But over the last 30 years or so, the nature of the contract of employment has been transformed. It has been recognised that a person's employment is usually one of the most important things in his or her life. It gives not only a livelihood but an occupation, an identity and a sense of self esteem. The law has changed to recognise this social reality. Most of the changes have been made by Parliament. The Employment Rights Act 1996 consolidates numerous statutes which have conferred rights upon employees In an earlier case, essentially the same message was delivered. In Redbridge London Borough Council v Fishman [1978] ICR 569, EAT, at 574 Phillips J described the difference between the contractual cause of action of wrongful dismissal and the statutory regime of unfair dismissal thus: The jurisdiction based on paragraph 6 (8) of Schedule 1 to the Trade Union and Labour Relations Act 1974 has not got much to do with contractual rights and duties. Many dismissals are unfair although the employer is contractually entitled to dismiss the employee. Contrariwise, some dismissals are not unfair although the employer was not contractually entitled to dismiss the employee. Although the contractual rights and duties are not irrelevant to the question posed by paragraph 6(8), they are not of the first importance. The essential underpinning of the appellants case, that conventional principles of contract law should come into play in the interpretation of section 97, must therefore be rejected. The construction and application of that provision must be guided principally by the underlying purpose of the statute viz the protection of the employees rights. Viewed through that particular prism, it is not difficult to conclude that the well established rule that an employee is entitled either to be informed or at least to have the reasonable chance of finding out that he has been dismissed before time begins to run against him is firmly anchored to the overall objective of the legislation. The fact that this rule has survived, indeed has been tacitly approved by, successive enactments merely reinforces the conclusion that it is consonant with the purpose of the various provisions relating to time limits. As Mummery LJ so pithily and appositely put it, the legislation is designed to allow an employee three months not three months less a day or two to make a complaint of unfair dismissal. When one considers that the decision to lodge such a complaint is one not to be taken lightly, it is entirely to be expected that the period should run from the time that the need to make such a decision is known to the employee. There is no reason to suppose that the rule in its present form will provoke uncertainty as to its application nor is there evidence that this has been the position hitherto. The inquiry as to whether an employee read a letter of dismissal within the three months prior to making the complaint or as to the reasons for failing to do so should in most cases be capable of being contained within a short compass. It should not, as a matter of generality, occupy a significantly greater time than that required to investigate the time of posting a letter and when it was delivered. In any event, certainty, although desirable, is by no means the only factor to be considered in determining the proper interpretation to be given to section 97. What will most strongly influence that decision is the question of which construction most conduces to the fulfilment of the legislative purpose. And, of course, an employer who wishes to be certain that his employee is aware of the dismissal can resort to the prosaic expedient of informing the employee in a face to face interview that he or she has been dismissed. On that issue, it appears to us that the matter is put beyond plausible debate when one considers the effect that the appellants suggested interpretation of section 97 would have on the availability of the relief provided for in section 128 of the 1996 Act. An application for interim relief may well prove in certain cases to be an immensely important facility. In the case of a whistleblower, for instance, the opportunity to forestall a recriminatory dismissal or one designed to frustrate the intentions of the conscientious employee may be of vital consequence. But this right would be severely attenuated, and in many cases wholly eliminated, if the appellants interpretation of section 97 is accepted. Sensibly recognising the significance of this point, Mr Greatorex sought to minimise its importance by pointing out that applications for interim relief are made in a very small percentage of cases. But, as we have indicated, the true importance of this remedy lies not in the number of cases in which it might be invoked but in the nature of the few cases where it may be crucial. No dispensing provision is available to extend the period within which an application for interim relief might be made. It is therefore, in our view, inconceivable that Parliament would have intended that section 97 should be interpreted to mean that seven days only would be available for the making of such an application, regardless of whether the applicant was aware of the dismissal within that period. Yet that is the inevitable consequence of interpreting section 97 in the manner that the appellants suggest. Of all the reasons that this interpretation cannot be right, this is perhaps the most strikingly obvious. Conclusion The appeal must be dismissed. |
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. |
Sigma Finance Corporation (Sigma) and those who invested in it are victims of the current financial crisis. Sigma is a structured investment vehicle, whose business involved acquiring asset backed securities and other instruments, using funds raised by issuing or guaranteeing US dollar and Euro medium term notes (MTNs) as well as liquidity from other sources, such as facilities, derivatives, repurchase (or repo) contracts and capital notes (the last two categories representing its unsecured creditors). All of Sigmas assets are secured in favour of its secured creditors upon the terms of a Security Trust Deed (STD), dated 27 March 2003, made between Sigma as issuer and Deutsche Trustee Company Limited (Deutsche Trustee) as security trustee and governed by English law. The financial crisis affected the value and liquidity of Sigmas assets, as well as its ability to issue notes and raise funds to cover its obligations under previously issued notes and instruments as they matured from time to time. As a result, it began to resort to selling assets, either outright or under repo agreements. The latter involved Sigma in further potential liability to meet margin calls, if and when the value of the assets sold and agreed to be repurchased at some future date fell below a certain level. In September 2008, Sigma received margin calls which it did not honour. On 30 September 2008, its board resolved that it could no longer continue in business, and on 1 October 2008 Sigma wrote informing Deutsche Trustee as security trustee that it had resolved that there was no reasonable likelihood of Sigma avoiding an insolvent liquidation and that there had been non payment of interest due on 30 September 2008 constituting a Potential Enforcement Event for the purposes of the Security Trust Deed. On 2 October 2008 one of Sigmas liquidity providers gave notice of an event of default under its facility agreement. In consequence, an actual Enforcement Event occurred and the floating charge created under clause 4.1 of the Security Trust Deed crystallised on that date, and the liquidity facility was also cancelled. On 6 October 2008 the Security Trustee appointed Receivers under clause 14.1 of the Deed, and directed them to comply with clauses 7.6 to 7.9 of the Deed as if references in those clauses to the Security Trustee were references to the Receivers. Under the Security Trust Deed, the occurrence of an Enforcement Event started a 60 day Realisation Period, and triggered an obligation on the Trustee to use its reasonable endeavours to establish by the end of that period a Short Term Pool (for Short Term Liabilities, defined by clause 1 to cover outstanding payment obligations which are due 2 and payable or which have scheduled maturity or payment dates falling less than 365 days from the Enforcement Date), as well as a number of Long Term Pools (for any liabilities . which are not Short Term Liabilities) and a Residual Equity Pool. Following realisation of its remaining portfolio in December 2008 after the Court of Appeal had given judgment and refused a further stay, Sigmas assets consist of cash of no more than around US$450m. Sigmas unpaid secured liabilities are estimated to total around US$6.2bn. They include (a) about US$900,000, representing coupon payments on notes which fell due on 30 September and 1 October 2008, (b) about US$1.350bn, representing principal and coupon payments on notes which fell due during the Realisation Period, (c) about US$3.134bn, representing principal on notes constituting Short Term Liabilities falling due between 30 November (i.e. after the end of the Realisation Period) and 1 October 2009 and (d) about US$1.511bn, representing principal on notes constituting Long Term Liabilities falling due after 2 October 2009. As is evident, Sigmas remaining assets fall far short of the liabilities included in (a) and (b), or in (b) alone. The issue on these appeals is how Sigmas remaining assets are to be distributed. This is an issue of construction of the Security Trust Deed. Secured creditors are under the terms of their notes precluded from seeking to wind up Sigma, and the Security Trust Deed defines their contractual rights against Sigma and in respect of its assets. Four interested creditors have advanced various possibilities. Interested parties A and B submit that the assets fall to be distributed preferentially to the creditors in respect of the debts identified in (b), or in (a) and (b). Assuming that to be right, they differ between themselves as to priority. Mr Howard QC representing interested party A submits that the assets are to be distributed according to the dates when the relevant debts became due, while Mr Sheldon QC representing interested party B submits that all debts falling due in (or prior to) the Realisation Period are part of a single pool, within which Sigmas remaining assets fall to be distributed pari passu. Mr Mortimore QC representing interested party C and Miss Prevezer QC representing interested party D maintain, first, that Sigmas remaining assets fall to be allocated equitably as between Short and Long Term Liabilities, and, secondly, that, having been so allocated, its Short Term Liabilities identified in (a), (b) and (c) fall in effect to be distributed pari passu in relation to each other, and that its Long Term Liabilities identified in (d) fall to be treated likewise in relation to each other. Sales J and, by a majority, the Court of Appeal accepted the case advanced by Mr Howard for interested party A. Lord Neuberger 3 dissented, concluding that the case advanced by interested parties C and D was generally correct, but with the refinement that creditors with debts falling due in the Realisation Period were entitled to be paid within that period such amount as the Trustee was confident would ultimately be paid to them out of the Short Term Pool, with any balance due being paid later from that Pool. Against the decision of the majority, these appeals are brought by leave of the House of Lords. The Security Trust Deed The appeals turn ultimately on the meaning given to the final sentence of clause 7.6 of the Deed. But this needs to be set in its context. Clause 7 is long and detailed, and provides inter alia: 7. ENFORCEMENT 7.1 The Security Trustee shall be entitled to enforce the Security on and from the Enforcement Date only in accordance with this Clause notwithstanding any contrary instruction or direction from any Beneficiary or any other person. The Security Trustee shall not exercise any of its powers under this Clause until the Enforcement Date. 7.2 Without prejudice to any rule of law which may have a similar effect, the floating charge constituted by Clause 4.1.2 shall on the Enforcement Date automatically be converted with immediate effect into a fixed charge as regards the assets subject to such floating charge and without notice from the Security Trustee to the Issuer. 7.3 On the Enforcement Date or as soon thereafter as can practicably be arranged the Security Trustee shall (to the extent that the relevant Liquidity Facility has not been cancelled by the relevant Liquidity Provider) on behalf of, and as attorney for, the Issuer draw Advances under each Liquidity Facility up to the Available Amount and shall specify repayment dates (except in the case of Swing line Advances) for such Advances falling after the Realisation Period. If the Issuer has Committed Liquidity (as defined in the IMC) and more than one Liquidity Facility, the Security Trustee shall ensure that, as between Liquidity Facilities, any drawings are made pro rata to the aggregate available commitments under such Liquidity Facilities. Advances drawn shall be used in order (i) to discharge the Issuers obligations to pay sums due and owing to Beneficiaries in accordance with the relevant Beneficiaries Documents and (ii) to effect replaying of any Advance made 4 under a Liquidity Facility. If and to the extent that all or any part of the Advances drawn down are not immediately required by the Security Trustee for the purposes of (i) or (ii) above, the Security Trustee shall deposit the unutilised portion(s) of such Advances on a call basis with any bank or financial institution whose short term unsecured, unguaranteed and unsubordinated debt is rated A 1 by S&P, P 1 by Moodys and F1 by Fitch or shall invest such portion(s) in certificates of deposit, United States or United Kingdom government securities or commercial paper rated A 1 + by S&P and P 1 by Moodys. If the Security Trustee applies an Advance (or part 7.4 thereof) to discharge any of the Issuers Short Term Liabilities because of the default, late payment or non performance of any Asset in the Short Term Pool (a non performing asset) any monies subsequently recovered or received in respect of such non performing asset shall be applied by the Security Trustee in repayment (or part payment) of such Advance before being applied pursuant to the trust declared in Clause 7.11.2. 7.6 The Security Trustee shall use its reasonable endeavours (and in doing so may rely upon the advice of any investment or other advisers as it shall in its absolute discretion consider appropriate and shall not be responsible for any loss which results from such reliance) to establish by the end of the Realisation Period a Short Term Pool, a number of Long Term Pools (one in relation to each Series of EMTNs each Series of ADMTNs and each Series of USMTNs, and one in relation to each other group of Long Term Liabilities having the same payment and/or maturity dates), and a Residual Equity Pool. In order to establish such Pools, the Security Trustee shall during Realisation Period (but not thereafter) realise, dispose of or otherwise deal with the Assets in such manner as, in its absolute discretion, it deems appropriate. During the Realisation Period the Security Trustee shall so far as possible discharge on the due dates therefor any Short Term Liabilities falling due for payment during such period, using cash or other realisable or maturing Assets of the Issuer. 7.7 The Security Trustee shall use its reasonable endeavours (and in doing so may rely upon the advice of any investment or other advisers as it shall in its absolute discretion consider appropriate and shall not be responsible for any loss which results from such reliance) to ensure that at the time the Short Term Pool and each Long Term Pool is established (1) 5 the aggregate principal amount of the Assets allocated to each such Pool is equal to the aggregate principal amount of the liabilities to which such Pool has been allocated, (2) the Assets allocated to each such Pool have maturity and payment dates corresponding to the relevant liabilities and (3) payments, recoveries and receipts in respect of the Assets allocated to each such Pool are scheduled to be made or received in the currency in which the relevant liabilities are denominated and (4) the aggregate principal value of Assets rated AA/Aa or lower (or if the Asset has a short term rating, A 1 + or lower) issued or guaranteed by any one single body corporate or sovereign or by separate bodies corporate which are members of the same group does not exceed an amount equal to 50% of the Residual Equity Pool Stake attributable to such Short Term Pool or, as the case may be, Long Term Pool and (5) the aggregate principal value of Assets rated A (or if the Asset has a short term rating, A 1/P 1) issued or guaranteed by any one single body corporate or sovereign or by separate bodies corporate which are members of the same group does not exceed an amount equal to 50% of the Residual Equity Pool Stake attributable to the Issuers Short Term Liabilities or, as the case may be, those of its Long Term Liabilities in relation to which a Long Term Pool is established. The Security Trustee shall also use its reasonable endeavours to ensure that the credit quality by rating category and percentage of Assets comprising the Short Term Pool and each Long Term Pool is the same or better than the following: Long Term Rating Short Term Rating Percentage by Principal Value of Short Term/ Long Term Pool AAA (S&P)/Aaa Minimum 20% AA (S&P)/Aa A 1 + (S&P) Minimum 50% A A 1/P 1 Maximum 30% 7.8 Subject to Clause 7.7, it is a matter for the Security Trustees absolute discretion which Assets are allocated to 6 which Pool and no liability shall attach to the Security Trustee if its allocation of Assets between Pools proves to be unfavourable or disadvantageous to any person. Provided that the Security Trustee uses its reasonable endeavours as provided in Clause 7.7, no liability shall attach to the Security Trustee if the purpose for which such endeavours were to be made fails to be realised and the Security Trustee shall be under no liability to any Beneficiary if the Assets allocated to any Pool are insufficient to meet the liabilities of the Issuer to which such Pool related in full or in a timely manner, notwithstanding that the claim of any other Beneficiary shall have been discharged in full. For the avoidance of doubt, the Security Trustee shall not be obliged to ensure that each Pool complies with the criteria set out in the Second Schedule to the IMC. Subject to the above and to Clause 7.7, the Security Trustee (i) shall have no regard to the credit quality of each Asset when establishing the Short Term and Long Term Pools and when determining which Assets should be allocated to which Pool and (ii) shall not be concerned with the ultimate composition of each of the Short Term Pool and Long Term Pools with regard to the concentration of assets by rating category nor to the spread across the Pools of Assets of any given rating category. 7.9 If the principal amount of the Assets is less than the principal amount of the Issuers Total Indebtedness, the Security Trustee shall calculate the proportion borne by the deficit to the Issuers Total Indebtedness and shall reduce the principal amount of the Assets allocable to the Short Term Pool and each Long Term Pool accordingly. 7.11 Subject to Clause 7.4, all payments, recoveries or receipts in respect of Assets in the Short Term Pool shall be held by the Security Trustee on trust and shall be applied in accordance with the following priority of payments: 7.11.1 first, to pay the Relevant Proportion of the remuneration payable to the Security Trustee pursuant to this Deed and of any amount due in respect of costs, charges, liabilities and expenses incurred by the Security Trustee or a Receiver appointed by it (and for the purposes of this sub clause the Relevant Proportion shall be the principal amount of the Issuers Short Term Liabilities divided by the Issuers Total Indebtedness, 7 both such amounts to be determined on the last day of the Realisation Period); 7.11.2 second, to pay when due or as soon thereafter as can practicably be arranged all principal, interest or other amounts in respect of the Issuers Short Term Liabilities to Beneficiaries (pro rata to the respective amounts of the Short Term Liabilities due, owing or incurred to each Beneficiary); and third, in accordance with the provisions of 7.11.3 Clause 7.13 Provided that (in respect of 7.11.2 above): (a) if at any time after the Realisation Period the Security Trustee reasonably believes that payments, recoveries and receipts in respect of Assets allocated to the Short Term Pool will be insufficient to meet the Issuers Short Term Liabilities, the Security Trustee shall calculate the proportion of the Short Term Liabilities which, in its reasonable opinion, can be met and shall pay only that proportion of any amounts due in respect of the Issuers Short Term Liabilities to any Beneficiary; and (b) if at the time a payment is proposed to be made to a Beneficiary pursuant to this Clause such Beneficiary is in default under any of its obligations to make a payment to the Issuer pursuant to any Beneficiaries Document (the defaulted payment) the amount of the payment which shall be made to such Beneficiary shall be reduced by an amount equal to the amount of the defaulted payment. Any amount so withheld shall be paid to the relevant Beneficiary as and when (and pro rata to the extent that) the defaulted payment is duly paid by that Beneficiary. 7.12 Subject to Clause 7.5, all payments, recoveries or receipts in respect of Assets in the Long Term Pool shall be held by the Security Trustee on trust and shall be applied in accordance with the following priority of payments: [There follow provisions largely similar to those of clause 7.11, relating to the Short Term Pool] Clause 17 further provides: . 17 GENERAL PROVISIONS. SECURITY TRUSTEE 8 17.3 The Security Trustee (save as expressly provided otherwise herein) as regards all the trusts, powers, authorities and discretions vested in it by these presents or by operation of law, have absolute and uncontrolled discretion as to the exercise or non exercise thereof . 17.5 The Security Trustee as between itself and the other Beneficiaries shall have full power to determine all questions and doubts arising in relation to any of the provisions of these presents and every such determination, whether made upon a question actually raised or implied in the acts or proceedings of the Security Trustee, shall be conclusive and shall bind the Security Trustee and the other Beneficiaries. The scheme of the Security Trust Deed is thus that, upon the occurrence of an Enforcement Event, there will be a Realisation Period of up to 60 days, to enable the Security Trustee to establish the relevant Pools using Sigmas Assets. Assets are defined in clause 1 in the widest possible terms, including, in a final sub clause, all other rights, benefits, property, assets and undertaking whatsoever and wheresoever situate. The Short and Long Term Pools are under clauses 7.7 and 7.8 to be structured with a view to matching the principal amount of Sigmas short and long term liabilities with high quality rated assets in corresponding principal amounts and with corresponding maturity and payment dates. If that is not possible, because the principal amount of Sigmas Assets is less than that of its Total Indebtedness, then, under clause 7.9, the Trustee is to calculate the proportionate deficit, and reduce the principal amount of Assets allocable to each Pool accordingly. Once the Pools have been set up, then, under clauses 7.11 and 7.12, each Pool is to operate separately, but within each Pool, if it later appears that the Assets allocated to that Pool will be insufficient to meet the Pools liabilities, the Trustee is to calculate and pay to any creditor only that proportion which can, in its reasonable opinion, be met. Under clause 17.3 and 17.5, the Trustee is given the broadest discretion and powers. It is in the context of this scheme that it is necessary to read and understand the provision in the third and last sentence of clause 7.6, that During the Realisation Period the Security Trustee shall so far as possible discharge on the due dates therefor any Short Term Liabilities falling due for payment during such period, using cash or other realisable or maturing Assets of the Issuer. 9 The Law The principles upon which a court should interpret a document such as the present are not in doubt. They have been reviewed and restated by the House of Lords in a series of cases: Charter Reinsurance Co. Ltd. v Fagan [1997] AC 313, Mannai Investment Co. Ltd. v Eagle Star Life Assurance Co. Ltd. [1997] AC 749, Investors Compensation Scheme Ltd. v West Bromwich Building Society [1998] 1 WLR 896 and Chartbrook Ltd. v Persimmon Homes Ltd. [2009] UKHL 38. In Charter Reinsurance Lord Mustill underlined the danger of focusing too narrowly on a critical phrase (in that case, a phrase defining the term net loss as meaning the sum actually paid by the Reinsured in settlement of claims), saying (at p.384G H) that: This is . an occasion when a first impression and simple answer no longer seem the best, for I recognise that the focus of the argument is too narrow. The words must be set in the landscape of the instrument as a whole. Once this is done the shape of the policy and the purpose of the terms become quite clear Adopting that approach, the House concluded that the words actually paid were in context intended not to introduce a pre condition of pre payment by the insurer to the original insured, but to ensure that the reinsurers liability was measured precisely by reference to any settlement of liability as between the insurer and insured. Later (at p.387D) Lord Mustill said that the principle that the liability of a reinsurer is wholly unaffected by whether the insurer has in fact satisfied the claim under the inward insurance is one which can undoubtedly be changed by express provision, but clear words would be required; and it would to my mind be strange if a term changing so fundamentally the financial structure of the relationship were to be buried in a provision such as clause 2, concerned essentially with the measure of indemnity, rather than being given a prominent position on its In Investors Compensation Scheme at pp.912G 913F, Lord Hoffmann summarised the development of the principles of contractual interpretation in this well known passage: 10 The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of "legal" interpretation has been discarded. The principles may be summarised as follows: (1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. (2) The background was famously referred to by Lord Wilberforce as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man. (3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them. (4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against relevant background would reasonably have been understood to mean. The background may not merely enable the the 11 reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax. (see Mannai Investments Co. Ltd. vs Eagle Star Life Assurance Co. Ltd. [1997] AC 749). (5) The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in The Antaios Compania Neviera S.A. vs Salen Rederierna A.B. [1985] A.C. 191, 201: . if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense. In the present case the focus is on the general nature of the business involved apparent from the document itself and upon the scheme and wording of the Security Trust Deed read as a whole. As in Miramar Maritime Corporation v Holborn Oil Trading Ltd [1984] 1 AC 676 (per Lord Diplock at p 682A F), so here the document is one which would be expected to have a consistent meaning as between all parties to whom it applied. I therefore also agree with Lord Collins supplementary remarks on the approach to interpretation. I pay tribute to the speed with which the courts below have addressed the issue, and the meticulous attention which they have given it. Ultimately, Sales J and the majority in the Court of Appeal were persuaded in favour of interested party As case by the consideration that the last sentence of clause 7.6 had a clear natural meaning, and that there was nothing in its language (particularly in the phrase so far as possible) to affect the operation of that meaning in the circumstances which arose. The Trustees obligation during the Realisation Period was to continue to discharge Sigmas debts as and when they fell due, so 12 long and so far as such payment was possible using cash or other realisable or maturing Assets; and the reference to such debts being discharged on the due dates therefor was inconsistent with party Bs argument in favour of pari passu distribution of available assets between creditors whose debts fell due during the Realisation Period. Analysis In my opinion, the conclusion reached below attaches too much weight to what the courts perceived as the natural meaning of the words of the third sentence of clause 7.6, and too little weight to the context in which that sentence appears and to the scheme of the Security Trust Deed as a whole. Lord Neuberger was right to observe that the resolution of an issue of interpretation in a case like the present is an iterative process, involving checking each of the rival meanings against other provisions of the document and investigating its commercial consequences (para. 98, and also 115 and 131). Like him, I also think that caution is appropriate about the weight capable of being placed on the consideration that this was a long and carefully drafted document, containing sentences or phrases which it can, with hindsight, be seen could have been made clearer, had the meaning now sought to be attached to them been specifically in mind (paras. 100 1). Even the most skilled drafters sometimes fail to see the wood for the trees, and the present document on any view contains certain infelicities, as those in the majority below acknowledged (Sales J, paras. 37 40, Lloyd LJ, paras. 44, 49 52 and 53, and Rimer LJ para. 90). Of much greater importance in my view, in the ascertainment of the meaning that the Deed would convey to a reasonable person with the relevant background knowledge, is an understanding of its overall scheme and a reading of its individual sentences and phrases which places them in the context of that overall scheme. Ultimately, that is where I differ from the conclusion reached by the courts below. In my opinion, their conclusion elevates a subsidiary provision for the interim discharge of debts so far as possible to a level of pre dominance which it was not designed to have in a context where, if given that pre dominance, it conflicts with the basic scheme of the Deed. The starting point is that the occurrence of an Enforcement Event is not necessarily to be equated with insolvency, still less insufficiency of assets to meet all secured liabilities. On the contrary, and this is I think a point with a relevance which does not emerge from the judgments below, clauses 7.3 to 7.8 are all drafted on the assumption of a situation in which Sigma has enough assets to cover at least its secured creditors. The detailed provisions in clause 7.3 and 7.4 for drawing down on any relevant Liquidity Facility can have little or very limited 13 application in any situation where Sigma lacked funds to cover such creditors, since in such a situation any liquidity provider would be expected to cancel any relevant facility (as happened in this case: see para. 12 above). The provisions of clauses 7.7 and 7.8 contemplate that there will be sufficient assets to create matching Pools of assets of high rating quality and liabilities. Only in clause 7.9 does the Deed turn to and address the possibility of a shortfall in the principal amount of the Assets needed to cover Sigmas liabilities. The provision by clause 7.6 for discharge of Short Term Liabilities as they fall due thus appears in a context where the underlying assumption is that all secured liabilities can be covered and no issue of priority can arise. To treat it, in the different context of insolvency, as creating effective priority for such Short Term Liabilities as may happen to fall due during the Realisation Period may, therefore, involve a similar risk to that identified by Lord Mustill in Charter Re that of giving to a sentence, buried in a provision like clause 7.6 concerned essentially with a different situation, the effect of changing fundamentally the apparent financial structure of the relationship. A second point is that the Short and Long Term Pools were under clauses 7.6, 7.9, 7.11 and 7.12 to be established to meet Sigmas total indebtedness, with the Short Term Pool covering all its Short Term Liabilities and the Long Term Pool covering all its Long Term Liabilities as defined by clause 1. Any suggestion that the final sentence of clause 7.6 was intended to extract, from the Short Term Liabilities, any which happened to fall due during the Realisation Period and to constitute them a separate pool or class with effective priority over other Short Term Liabilities is questionable on its face. Yet, the conclusion accepted in the courts below means that Realisation Period debts will not (or only in very rare circumstances) form part of the Short Term Liabilities to be met out of the Short Term Pool. Sigmas assets could normally be expected to consist of cash or other maturing or realisable Assets even if, in the case of some realisable assets, their realisation prior to maturity would come at some cost, because of the element of fire sale involved. Accordingly, on the approach taken by the courts below, Realisation Period debts will either have been paid during the Realisation Period before any Pools are established at all, or their payment will exhaust all the Assets with the result that there will never be any Pools at all. In any case where there is an overall shortfall of Assets, the priority given by the courts below to Realisation Period debts would also skew the relationship of any Short and Long Term Pools which were created. Clause 7.9 requires an overall comparison of Total 14 Indebtedness and Assets, and a pro rata reduction of the amount of Assets allocated to each Pool. Realisation Period debts fall within the definition of Short Term Liabilities. However, they would on the approach of the courts below have been paid in full. This would further reduce the amount available for payment to other Short Term Liabilities, which would accordingly receive a lesser pro rata payment than Long Term Liabilities. The only alternative, to treat Realisation Period debts as an entirely separate pool, conflicts with the definition of Short Term Liabilities in clause 1 and with the express recognition of such debts as Short Term Liabilities in the third sentence of clause 7.6 itself, and gives the third sentence a significance which seems in context improbable. There are further conceptual difficulties about drawing any clear cut distinction between Realisation Period debts and other Short Term Liabilities. Three subsidiary points arise. First, the last sentence of clause 7.6 contemplates on any view that it may not always be possible to pay Realisation Period debts on their due dates during the Realisation Period. Some might as a result not even be paid within that Period. They would then fall within the general body of Short Term Liabilities where they would have no especial priority. That raises the question why Realisation Period debts should be given priority according to the happenstance that their payment was possible within the Realisation Period. The second subsidiary point is that Pools were to be established by the end of the Realisation Period. The processes of making realisations and establishing matching Assets envisaged by clauses 7.6 and 7.7 and of calculating whether any and if so what deficit adjustment was necessary under clause 7.9 were bound to take time and to be potentially complex. In a fully solvent situation, there would be little problem about continuing to discharge Realisation Period debts as they fell due. But, in an insolvent situation, with the risk that further indebtedness might arise during that Period from margin calls or the acceleration of other debts and a shortage of Assets overall, the Trustee would, on the approach accepted by the courts below, face conflicting pressures which it would be difficult to reconcile: on the one hand, the short term duty to meet Realisation Period debts as they arose, if necessary by fire sales; on the other the long term duty to ensure balanced and equitable Pools for the benefit of Short and Long Term creditors. The third subsidiary point is that the language of clause 7.6 indicates on its face that Pools might be established before the end of the Realisation Period, as Rimer LJ accepted (para. 89), though Sales J, as I read his judgment, did not (para. 28). It is true that clauses 7.11.1, 7.11.3(a) and 7.12.1 all operate by reference to the last day of the 15 Realisation Period, in a way which might be said to assume that the Pools will not have been established until then. This may well be no more than a drafting infelicity, since it would seem strange, if it were not open, as clause 7.6 suggests it is, to the Trustee to establish the Pools on a day prior to the 60th day after the Enforcement Event. Assuming this to be so, then, in a situation where clause 7.9 came into operation, the setting up of the Pools would be expected to exhaust Sigmas assets. Yet, on the approach of the courts below, clause 7.6 would, read literally, require the Trustee to continue to discharge Realisation Period debts in full, after the setting up of the Pools, in circumstances where Sigmas assets were now held on the express trusts established by clauses 7.11 and 7.12. The only alternative would be to treat the obligation under clause 7.6 as coming to an end, despite its terms, before the end of the Realisation Period. However, this third subsidiary point is a small one. A third main point is the fortuitous effect of the interpretation placed on clause 7.6 by the courts below. Depending upon when an Enforcement Event occurred, those whose debts happened to fall due during the ensuing Realisation Period would gain priority. Creditors might be able to procure priority for themselves by making a margin call or giving notice advancing the payment date of their debts. Sales J treated this as representing a normal assumption of risk, under which every lender to Sigma took a chance . that it might be in the advantageous position in which Party A now finds itself (para. 26). Rimer LJ was also influenced by the fact that the Deed was a commercial bargain, intended to operate in insolvent and solvent situations, although he thought it improbable that the parties had foreseen the possibility of the extraordinary, probably unprecedented, market events that had actually unfolded (para. 92). Accepting what Rimer LJ says, it remains in my view improbable that commercial parties would contemplate that, after so important an occurrence as an Enforcement Event, priority would be conferred even to a modest extent and in the short term on a particular group of creditors on the basis of the chance of their indebtedness falling due, or being capable of being made to fall due, during the Realisation Period. The basic aim of clause 7.6 is to provide for the establishment of the Pools and the realisation of Assets, in such manner as the Trustee may in its absolute discretion deem appropriate, for that purpose. The Pools are under clauses 7.7 to 7.9 to contain Assets matching, or corresponding pro rata with, the payment and maturity dates of Sigmas Short and Long Term Liabilities. The third sentence of clause 7.6 has in this context the flavour of an ancillary provision designed to achieve a similar interim position during the Realisation Period. To my mind, it is unlikely that the Trustees obligation under the third sentence was 16 intended to override the absolute discretion given to it under the second sentence. This may be part of the explanation for the use of the phrase so far as possible. Whether that is so or not, the third sentence appears in a context and form which makes it, to my mind, an improbable vehicle for a duty to pay Realisation Period debts, regardless of any conclusion by the Trustee that clause 7.9 applies or will apply and that such payment will accordingly diminish the Assets capable of allocation to the Short Term Pool (or to the Short and Long Term Pools). The fourth point is that, if the final sentence of clause 7.6 is intended to operate even in circumstances where this would give Realisation Period creditors priority over other Short and Long Term creditors, it fails notably to address the position of creditors whose unpaid debts fell due for payment prior to the Realisation Period, i.e. in this case the US$900,000 of debts representing coupon payments on notes which fell due on 30 September and 1 October 2008 (para. 4 above). Sales J thought that there was no difficulty about reading the words falling due as embracing debts already due, once it was borne in mind that a debt remains due on each day until it is satisfied (para. 36). Lloyd LJ (para. 51) and Rimer LJ (para. 90) thought that no specific thought can have been given to such liabilities when clause 7 was drafted (although they fall within the definition of Short Term Liabilities and so naturally within clause 7.11.2). Both thought that it would not be a major qualification to read the final sentence of clause 7.6 as if it referred to Short Term Liabilities already due or falling due (paras. 52 and 90). Elsewhere, Lloyd LJ laid some weight upon the Deed being a commercial document prepared by skilled and specialist lawyers for use in relation to sophisticated financial transactions (para. 67), and Rimer LJ upon it being a 45 page document reflecting the considered input of (probably) a team of commercial lawyers (para. 86). But it contains, as their judgments also accept (paras. 51 52 and 90) infelicities, which indicate, at the lowest, the importance of keeping an eye on and making sense of the overall picture. I add that, on the view I take of the third sentence of clause 7.6, it is not surprising that it makes no reference to unpaid pre enforcement debts; the sentence appears, as I have said, in a context where the assumption is one of solvency, in which context one would not expect any unpaid pre enforcement debts. However, when the sentence is transposed and applied to a situation of insolvency, pre enforcement debts are more easily and naturally catered for as part of the general body of Short Term Liabilities, on the construction advanced by parties C and D, with or without Lord Neubergers refinement, for reasons pointed out by Lord Neuberger (para. 107). A fifth point relates to the provisions for payment of the fees and expenses of the Security Trustee and any Receiver. Under clauses 7.11.1 and 7.12.1, these are, as one would expect, express prior charges on the relevant Pool Assets. In a solvent situation, there would be no problem about payment of such fees and expenses out of Sigmas Assets during the Realisation Period before any Pools or Pool Assets were established. But, if the final sentence of clause 7.6 applies to require payment out in insolvent situations, although discharge in full of the Realisation Period debts might (as here) exhaust the whole of the available Assets, there is nothing in clause 7.6 to give the Security Trustee or Receiver any priority or protection. Sales J (paras. 37 40), with whom Lloyd LJ agreed on the point (para. 53), regarded this as no more than infelicity of drafting. Sales J suggested that, in practice, the Receiver could be covered if the Trustee fixed his remuneration and directed that it be paid out of the Assets under clause 14.3.4 and if the Receiver, with the Trustees permission, then, in order to cover his fees and expenses, borrowed money on the security of Sigmas Assets in priority to any secured creditor, as expressly permitted by clause 14.3.6. As to the Trustee, he thought the position slightly less clear, but that the Trustee could cover itself in one or two ways. First, it could appoint a Receiver to act on its behalf, in which case the Receivers fees and expenses would be recoverable as above. Second, clause 13.2 allowed the Trustee, out of the profits and income of the Assets and monies received by it in the exercise of any of its powers, to pay and discharge all expenses and outgoings incurred in and about the exercise of any such powers, and the word expenses could be read as including remuneration. These ingenious solutions do not overcome the basic problem, that, if the last sentence of clause 7.6 was ever envisaged as creating a continuing pay as you go regime, which would give effective priority to Realisation Period creditors, even though nothing would then remain for other creditors, it is remarkable that no special provision was made for the Trustees or Receivers fees and expenses. However remote the risk of non payment, such priority would normally be standard form. The inference is that the Trustees and Receivers prior right under clauses 7.11.1 and 7.12.1 was thought to be all that could ever be required, and that it was never contemplated that payments could or would be made under clause 7.6 in circumstances which could conceivably affect their entitlement to such fees and expenses. That argues for considerable caution before concluding that it must nevertheless be interpreted and so taken to have been intended to have that effect. Most if not all of the above points were identified by both Sales J and by the majority in the Court of Appeal and are summarised clearly and cogently, for example by Lloyd LJ (paras. 57 and 58) and Rimer LJ (para. 80). At the end of the day, other considerations persuaded them that the last sentence of clause 7.6 must be regarded as applying so as to 18 require payment in full of Realisation Period debts as they fell due, regardless of the effect on the creation of the Pools in general or on other Short Term creditors in particular. In support of this approach, Mr Howard and Mr Sheldon submit that an important key to understanding the last sentence of clause 7.6 is to see it as no more than the agreed continuation for a short period of the pay as you go regime prevailing prior to the occurrence of the Enforcement Event. While realisations were being made, they submit, it would have been thought convenient to continue this regime and to be unlikely to have much if any effect on non Realisation Period creditors. However, that in my opinion fails to give proper weight to the major significance attaching under the scheme of the Deed to an Enforcement Event. It may be (although the House understood it to be contentious) that Sigma was free to continue with a pay as you go system after it had become clear that this could affect later creditors, by realising assets and entering into repo agreements for the purpose. But the purpose of clause 7 is evidently to draw a line at a certain point. The crystallisation of powers and of the floating charge under clauses 7.1 and 7.2 and the definitions in clause 1 of Short and Long Term Liabilities and of the Pools to be established under clauses 7.6 to 7.9 strongly support a conclusion that that point was the Enforcement Date. The argument remains, nevertheless, that the third sentence of clause 7.6 is an unequivocal short term provision, and that nothing in its language or in the Deed as a whole limits, or entitles the court to limit, its application in a situation like the present. The majority in the Court of Appeal in rejecting the arguments advanced for parties C and D attached importance to the fact that the sentence used the words so far as, rather than if. Further, in rejecting Lord Neubergers refinement of the argument, they noted the absence of any definition of the state of mind which the Trustee would have to have or of what it would have to do, as well as the absence of any definition of the scope of the Trustees discretion, or judgment, if it was in whatever was the relevant state of mind as regards the prospects for payment in full, or only on account, of Sigmas various secured liabilities (paras.62 72, per Lloyd LJ). I think that a similar objection could however be made in relation to clause 7.9. Its operation must involve a substantial and time consuming process of evaluation and judgment during the Realisation Period. Whether and how it applies must be potentially complex matters for the Trustees judgment, having regard to the provisions of clause 7.7 regarding maturity and rating quality. Ultimately, in Lloyd LJs view, the position was that the sentence is on the face of it, clear and unequivocal as to the Trustee's obligation to discharge the Short Term Liabilities falling due during the 19 Realisation Period (para. 63), in a commercial document prepared by skilled and specialist lawyers, the clear and natural meaning of the words should prevail (para. 67) and, especially bearing in mind the elaborate and careful provisos to clauses 7.11 and 7.12 whereby an obligation to pay pro rata was introduced, the argument for pari passu distribution involves placing on the words so far as possible a weight and significance that they cannot bear (para. 69). Rimer LJ adopted similar reasoning, considering that, if the approaches advanced by parties C and D or adopted by Lord Neuberger had been intended, that could and would have been said (paras. 86 88). Both Lloyd and Rimer LJJ recognised that the parties would, when subscribing to notes on the terms of the Deed, not have had in contemplation the extraordinary market events which have occurred, or what, they recognised, might be regarded on their approach as leading to an unfair result (paras. 69 and 92). But they noted (paras.30 31, 85 and 92) that the Deed foresaw that an Enforcement Event might result from insolvency as from solvency. In those circumstances, and in the absence of any appropriate limitation, they saw the last sentence of clause 7.6 as equally applicable in both situations. At one point in his judgment (para. 59), Lloyd LJ also said that The sentence does not say if possible, but so far as possible; the latter phrase seems clearly to indicate that partial payment may be possible. However, if he was here suggesting that the sentence was expressly addressing a situation of insolvency in which Realisation Period debts would exhaust all Sigmas assets, the suggestion is in conflict with what was said elsewhere about the improbability of the parties foreseeing any such situation, and with the probable reality. I return to my starting point. The last sentence of clause 7.6 appears in and was drafted in contemplation of the situation where no question of insolvency arose. It is not until clause 7.9 that any such possibility is addressed. In practice, no doubt, an Enforcement Event would be more likely than not to result from some financial difficulty on Sigmas part. But that is not the situation which clauses 7.6 to 7.8 are drafted to address. The last sentence of clause 7.6 has therefore now to be interpreted in a quite different context to that in which it appears and for which it was designed. This is not an unusual phenomenon, as Sales J and the majority in the Court of Appeal recognised, when they found it necessary to expand or to qualify or read words into certain of the Deeds provisions in the light of the infelicities of drafting which on their approach emerged. In the present situation, the reasonable mans task in understanding the meaning and application of the last sentence of clause 7.6 is in my opinion greatly facilitated by the existence of a clear basic 20 scheme, from which it is improbable that the parties would have wished to depart. That basic scheme involved the creation of a Short and of Long Term Pools, each with sufficient nominal assets of sufficient rating quality to meet, or meet pro rata, the Pools liabilities as and when they matured. The basic purpose of the Realisation Period was to give time for the creation of such Pools. Realisation Period debts were to be part of the Short Term Pool. Seen in the context in which the third sentence of clause 7.6 appears, its aim was to put Realisation Period debts in the same position as other Short Term Liabilities. They were to be paid so far as possible on their maturity and payment dates. Seen in a context where the Trustee concludes that clause 7.9 applies, the approach of the courts below achieves the opposite result. It elevates Realisation Period creditors to a special status, extracts them from the Pool to which the Deed assigns them, distorts the apparent aim to achieve equity between all creditors by the creation of Short and Long Term Pools, and probably also distorts the relationship between the Short and the Long Term Pools. These considerations are sufficient to persuade me, as they persuaded Lord Neuberger, that the parties to the Deed cannot have contemplated the approach adopted by the courts below, even in a less extreme situation of insolvency than the present, such as they might have foreseen. The phrase so far as possible was used in a context where what were in mind were no doubt relatively minor discrepancies (during the Realisation Period when the Trustees main concern would be the creation of appropriate Pools) between available cash or other realisable or maturing Assets and liabilities, which could delay or prevent payment of all or some Realisation Period debts. That alone would explain why the word if was not used instead of so far as. But, when the sentence is transposed and applied to a situation in which clause 7.9 applies, those words are apposite to enable the Trustee to determine that no further payments can appropriately be made, having regard to the overall aim of achieving equitable Pools and an equitable allocation of Assets between the two (or more) main Pools. I would, in this context and so far as necessary, be prepared to read the words so far as as equating with if. I find it difficult in any event to attach as much weight as the Court of Appeal did to the difference. But it seems to me, as it did to Lord Neuberger, that it would also be open to the Trustee to make on account payments during the Realisation Period in respect of Realisation Period debts as they fell due. The calculation made or being made under clause 7.9 would indicate what proportion of such debts could safely be paid. The Trustees extensive and absolute discretions and powers under clauses 17.3 and 17.5 would avoid any argument. It is however unnecessary on the facts to reach any concluded decision on the correctness of Lord Neubergers refinement to the case advanced by 21 parties C and D. It is not, in my opinion, critical to the outcome of these appeals whether or not that refinement be accepted. Conclusion I would therefore allow the appeals of interested parties C and D and dismiss the appeal of interested party B, set aside the decisions of the courts below and declare that, on the true construction of clause 7.6 of the Security Trust Deed, and in the events that have happened, the Receivers were not obliged to use cash or other realisable or maturing assets of Sigma to pay Short Term Liabilities falling due for payment during the Realisation Period after 6 October 2008 either in the order in which they fell due or pari passu with other Short Term Liabilities due for payment during the Realisation Period. I would further declare that such Liabilities are to be treated along with all other Short Term Liabilities in respect of which payments fall to be made under clause 7.11 out of the Short Term Pool to be established under clauses 7.6 to 7.10. LORD COLLINS (with whom Lords Hope and Mance concur) I agree with Lord Mance that the appeals of interested parties C and D should be allowed for the reasons he gives, and I add only a few remarks of my own on the approach to interpretation. In complex documents of the kind in issue there are bound to be ambiguities, infelicities and inconsistencies. An over literal interpretation of one provision without regard to the whole may distort or frustrate the commercial purpose. This is one of those too frequent cases where a document has been subjected to the type of textual analysis more appropriate to the interpretation of tax legislation which has been the subject of detailed scrutiny at all committee stages than to an instrument securing commercial obligations: cf Satyam Computer Services Ltd v Upaid Systems Ltd [2008] EWCA Civ 487, [2008] 2 CLC 864, at [2]. Sigma financed its investments over a 13 year period by debt securities issued or guaranteed by it. It entered into liquidity facilities intended to hedge against market liquidity risks. It entered into financial instruments intended to hedge against currency and interest rate risk. Others provided liquidity facilities, or entered into financial hedging instruments. The Security Trust Deed secures a variety of creditors, who hold different instruments, issued at different times, and in different circumstances. Consequently 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 22 way. I do not consider, therefore, that there is much assistance to be derived from the principles of interpretation re stated by Lord Hoffmann in the familiar passage in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912 913. 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. Detailed semantic analysis must give way to business common sense: The Antaios [1985] AC 191, 201. Once clause 7.6 of the Security Trust Deed is seen in context, the conclusion that the Receivers were not obliged to give priority to the first maturing Short Term Liabilities is consistent with the wording of the clause in the context of the Trust Deed as a whole and with the commercial purpose of the instrument. LORD WALKER (dissenting) These appeals will determine how the enormous loss incurred by Sigma Finance Corporation is to be borne as between the anonymous investment banks, hedge funds and other entities which are its secured creditors. Lord Mance refers to them as victims of the current financial crisis. An alternative view would be that they are among the authors of the crisis. But that is not an issue for the Court. Although I was one of those who gave permission for a further appeal (as it then was, to the Appellate Committee of the House of Lords) I find, on closer consideration, that the case involves no issue of general public importance. There is no doubt as to the principles of construction to be applied. They are clearly summarised (under the heading the law) in Lord Mances judgment. The only issue is as to the interpretation of the security trust deed in the light of those principles. Sales J and the majority of the Court of Appeal (Lloyd and Rimer LJJ) took one view but Lord Neuberger (sitting in the Court of Appeal) took a different view. In respectful dissent from the majority of this Court I prefer the view taken by the judge and the majority of the Court of Appeal. Since no issue of principle is involved it would be quite inappropriate to give any lengthy explanation of my reasons. I will limit myself to three fairly general points. First, I completely agree that it is necessary to construe the language of clause 7.6 of the deed in the landscape of the instrument as a whole (in the words of Lord Mustill in Charter Reinsurance Co Ltd v Fagan [1997] AC 313, 384H). One of the most striking features of the landscape of the deed, to my mind, is that clause 7 does not provide for the immediate winding up of Sigma on the occurrence of a default which amounts to an enforcement event. On the contrary, secured creditors are prohibited from taking steps to wind up the company. It is therefore necessary to repress any instinctive feeling (and it is, I acknowledge, a strong instinctive feeling) that pari passu distribution at the earliest practicable date is the most natural (one might almost say the only rational) solution. Instead, the assets were to be retained and marshalled (in accordance with the detailed provisions of clauses 7.6 to 7.10) in order to match the companys short term and long term liabilities, as defined, all of which were to be paid (under clause 7.11 or 7.12) as they fell due. The procedure envisaged was comparable to that of a funded occupational pension scheme which is closed to new entrants but not wound up. In such a case the trustees would adjust the way in which the fund was invested in order to match its predictable short term, medium term and long term liabilities. Scheme members would still have to wait for the payment of their respective pensions to fall due, and as each became entitled to a pension he or she would (in the typical case) then be entitled to preference, as against those whose pensions had not fallen due, if and when there was eventually a winding up. Second, the need to exclude any instinctive feeling about insolvent winding up is reinforced by the fact, to which Lord Mance rightly attaches importance, that the parties cannot have contemplated that Sigma would have insufficient assets to meet its liabilities even to secured creditors especially not on the scale of the extraordinary loss that has actually occurred. These skilled and sophisticated investors expected to make money, not to lose it. The fact that the effect of the deed, in a situation which the parties never contemplated, may appear fortuitous or arbitrary does not therefore carry much weight. It is not for the Court to make a new contract for experienced commercial operators advised by expert lawyers. Third, clause 7.6 (the crucial provision which has to be fitted into the landscape of the deed as a whole) is concerned with what is to happen during the 60 day realisation period. In setting up the pools the trustee was to perform what might well be a difficult exercise, but it was essentially an exercise of an administrative nature. The references to the trustees absolute discretion are to my mind explained by the trustees 24 wish to protect itself from possible criticism, rather than to any power for the trustee to prefer one secured creditor to another. The direction for payment of liabilities falling due for payment during the realisation period was no doubt expected to be more or less ancillary (as Lord Mance puts it) but it has, in the wholly unexpected events which have occurred, assumed unexpected importance. Reference was made to the direction applying so far as possible (rather than if and so far as possible) and to the fact that those words are not immediately adjacent to the words on the due dates therefore. I would not attach any importance to those details of language. The words are wide enough to cover both the possibility that a payment might for practical reasons have to be delayed by a few days, and the much more remote possibility (as it would have appeared to the parties at the time) that there would be a permanent deficiency of assets. I would therefore dismiss these appeals. |
The principal issue in these two appeals relates to the circumstances in which the concept of statutory incompatibility will defeat an application to register land as a town or village green where the land is held by a public authority for statutory purposes. In R (Newhaven Port & Properties Ltd) v East Sussex County Council [2015] UKSC 7; [2015] AC 1547 (Newhaven) this court held that the duty under section 15 of the Commons Act 2006 did not extend to an area held under the specific statutes relating to the Newhaven Harbour. We are asked to decide whether the same principle applies to land held by statutory authorities under more general statutes, relating respectively (in these two cases) to education and health services. Although the two appeals raise similar issues, they were dealt with by different procedural routes. The first (Lancashire) is within the area of a pilot scheme under the Commons Registration (England) Regulations 2008, under which, where the registration authority (in this case Lancashire County Council LCC) has an interest in the land, applications are referred for determination to the Planning Inspectorate (regulations 27 28). The second case (Surrey) was not covered by the pilot scheme. The application was determined by Surrey County Council as registration authority, following a non statutory inquiry before a barrister appointed by the council. Modern greens development of the law As will be seen, in Newhaven the issue was described as one of statutory interpretation. Unfortunately, interpreting the will of Parliament in this context is problematic, because there is no indication that the concept of a modern green, as it has been developed by the courts, was part of the original thinking under the Commons Registration Act 1965. Lord Carnwath reviewed the earlier history, including the Report of the Royal Commission on Common Land 1955 1958 (1958) (Cmnd 462) which preceded the 1965 Act, in his judgments at first instance in R v Suffolk County Council, Ex p Steed (1995) 71 P & CR 463 (one of the first cases under the 1965 Act), and later in the Court of Appeal in Oxfordshire County Council v Oxford City Council [2006] Ch 43 (the Trap Grounds case). As he observed in the latter: 51. The concept of a modern class c green, as it has emerged in the cases since 1990, would, I think, have come as a surprise to the Royal Commissioners, and to the draftsman of the 1965 Act. There is no hint of it in the Royal Commission Report, or the Parliamentary Debates on the Bill. The commissioners terms of reference were directed to sorting out the problems of the past, not to creating new categories of open land, for which there was no obvious need. By this time, of course, there were numerous statutes conferring on public authorities modern powers for the creation and management of recreational spaces for the public. Lord Carnwath also noted, at para 52, that, as late as 1975, in New Windsor Corpn v Mellor [1976] Ch 380 (New Windsor), all three members of the Court of Appeal (including Lord Denning MR) had thought it natural to read the Act as referring to 20 years before the passing of the Act (at pp 391, 395) an interpretation which would have ruled out the possibility of a modern green being established by more recent use. It was not until the early 1990s that claims were first put forward based on 20 years use since the 1965 Act had come into force at the end of July 1970 (apparently following the advice of the Open Spaces Society in their publication Getting Greens Registered (1995)). When the first case came before the House of Lords in 1999 (R v Oxfordshire County Council, Ex p Sunningwell Parish Council [2000] 1 AC 335 Sunningwell), no one seems to have argued that the Act was directed to pre 1965 use only. In that case, the House of Lords, led by Lord Hoffmann, adopted a relatively expansive view of the new concept. He drew a parallel with the Rights of Way Act 1932, which he thought had reflected Parliaments view that the previous law gave too much weight to the interests of the landowner and too little to the preservation of rights of way which had been for many years in de facto use and the strong public interest in facilitating the preservation of footpaths for access to the countryside (p 359D E). He commented, at p 359E: in defining class c town or village greens by reference to similar criteria in 1965, Parliament recognised a similar public interest in the preservation of open spaces which had for many years been used for recreational purposes. That interpretation of Parliaments thinking would, with respect, have been difficult to deduce from the 1965 Act itself, or from anything said in Parliament or anywhere else at the time. However, when the issue came before the House again, in the Trap Grounds case [2006] 2 AC 674, Lord Hoffmann was able to claim implicit Parliamentary support in the debates which preceded the amendments made by the Countryside and Rights of Way Act 2000. As he said, at para 26: No one voiced any concern about the construction which the House in its judicial capacity had given to the 1965 Act. On the contrary, the only question raised in debate was whether the locality rule did not make it too difficult to register new village greens. By then, as he also noted (para 28) the new Commons Bill (the 2006 Act as it became) was before Parliament, providing a further opportunity for legislative reconsideration if thought appropriate. In Newhaven [2015] AC 1547, para 18, this fact was cited as a reason for not having given permission to reopen the general approach adopted in the Trap Grounds case. As to the attributes of a modern green, the 2006 Act itself, like the 1965 Act which preceded it, is very sparse in the information it gives. Section 1 of the 2006 Act requires each registration authority to maintain a register of town or village greens. Section 15 indicates that any person can apply to register land as a green where, in subsection (1)(a) a significant number of the inhabitants of any locality, or of any neighbourhood within a locality, have indulged as of right in lawful sports and pastimes on the land for the period of at least 20 years As to the purpose of registration, section 2(2)(a) states simply that the purpose of the register is to register land as a town or village green. The Act offers no further guidance as to the interpretation of the section 15 formula, nor as to the practical consequences of registration. An unexplained curiosity is that section 10 of the 1965 Act, which provided that the register was conclusive evidence of the matters registered, as at the date of registration, is not repeated in the 2006 Act. As things stand the repeal of section 10 has been brought into effect only in the pilot areas. (Section 18 of the 2006 Act, headed Conclusiveness, which has effect in the pilot areas, does not on its face go so far as section 10.) In the Trap Grounds case, Lord Hoffmann had agreed (at para 43) with Lord Carnwaths analysis in the Court of Appeal [2006] Ch 43, para 100, that the 1965 Act created no new legal status, and no new rights or liabilities other than those resulting from the proper interpretation of section 10. It was on the rational construction of section 10 that he relied for his view that land registered as a town or village green can be used generally for sports and pastimes (para 50), and was also subject to section 12 of the Inclosure Act 1857 and section 29 of the Commons Act 1876 (para 56). None of the experienced counsel before us was able to offer an explanation for the disappearance of section 10, but none sought to argue that it had made any material difference to the rights following registration. Not without some hesitation, we shall proceed on that basis. Lord Hoffmann made clear that, following registration, the owner was not excluded altogether, but retained the right to use the land in any way which does not interfere with the recreational rights of the inhabitants, with give and take on both sides (para 51). That qualification was further developed in R (Lewis) v Redcar and Cleveland Borough Council [2010] UKSC 1; [2010] 2 AC 70 (Lewis), in which it was held that the local inhabitants rights to use a green following registration could not interfere with competing activities of the landowner to a greater extent than during the qualifying period. One important control mechanism which emerged from the cases was the need for the use to be as of right. It was established that these words, by analogy with the law of easements, imported the principle nec vi, nec clam, nec precario, or in other words the absence of any of the three characteristics of compulsion, secrecy or licence (per Scott LJ in Jones v Bates [1938] 2 All ER 237, 245, cited by Lord Hoffmann in Sunningwell [2000] 1 AC 335, 355). It followed that in practice an owner could prevent use qualifying under section 15 by making it sufficiently clear to those seeking to use the land (generally by suitable notices) either that their use was objected to, or that it was permissive. On the other hand, silent acquiescence in the use, or toleration, did not prevent it being as of right. More recently (from 25 April 2013) amendments made by the Growth and Infrastructure Act 2013 (embodied in new sections 15A and following of the 2006 Act) have provided some assistance to landowners, first by enabling a formal statement to be made to bring user as of right to an end, and secondly by defining certain planning related trigger events which suspend or extinguish the right to apply to register a green. In Wiltshire Council v Cooper Estates Strategic Land Ltd [2019] EWCA Civ 840; [2019] PTSR 1980, para 4, Lewison LJ said of these amendments: Ever since the Trap Grounds case the courts have adopted a definition of a TVG [town or village green] which goes far beyond what the minds eye would think of as a traditional village green. The consequence of this interpretation of the definition is that there have been registered as TVGs: rocks, car parks, golf courses, school playgrounds, a quarry, scrubland, and part of a working port. If land is registered as a TVG the effect of the registration is, for practical purposes, to sterilise land for development. This became a concern for the Government, because the criteria for registration did not take into account any planning considerations; and because it was thought in some quarters that applications for registration of TVGs were being used as a means of stopping development outside the planning system. The 2013 amendments are of no direct relevance to the issues in the present appeal, but they are relied on as showing that Parliament has given specific attention to the balance to be drawn between the rights of the various interests involved. We would draw two main lessons from the historical review. First, whatever misgivings one may have about the unconventional process by which the concept of a modern green became part of our law, the emphasis now should be on consolidation, not innovation. Secondly, the balance between the interests of landowners and those claiming recreational rights, as established by the authorities, and as now supplemented by the 2013 Act, should be respected. Our task in the present appeal is not to make policy judgments, but simply to interpret the majority judgment in Newhaven and apply it to the facts of these cases. The proceedings and the parties Lancashire The land at issue in the first appeal is known as Moorside Fields, in Lancaster. It lies adjacent to Moorside Primary School and extends to some 13 hectares. It is divided into five areas, referred to in the proceedings as Areas A to E, described (by the planning inspector) as follows: Area A, referred to as the meadow was, until recently, an undeveloped plot of land. It is adjacent to Moorside Primary School (the school) and is currently being used to facilitate the construction of an extension at the rear of the school. Area B is a mowed field, referred to as the school playing field and both it and Area A are currently surrounded by fencing. Areas C and D border Areas A and B. In the past they have been the subject of mowing tenancy agreements but these ceased in around 2001. They are separated from each other and from Areas A and B by hedges and in places are overgrown with brambles. Area E, also adjacent to the school, is currently overgrown and difficult to access. At some times of the year it contains a pond. Like the school the land is owned by LCC, the present appellant, which is both education authority and registration authority. On 9 February 2010 Ms Janine Bebbington, a local resident, applied to register the land as a town or village green. Her application was based on 20 years qualifying use up to the date of registration, or alternatively up to 2008. LCC, as local education authority, objected. Following a statutory inquiry, an inspector appointed by the Secretary of State (Ms Alison Lea, a solicitor) in a decision letter dated 22 September 2015 determined that four of the five areas (that is A to D, but not E) should be registered under the Act. She excluded Area E because she found insufficient evidence of its use over the 20 year period. LCC has postponed formal registration of Areas A to D, pending the outcome of the judicial review claim. LCC maintains that the land was acquired for and remains appropriated to educational purposes, in exercise of the LCCs statutory powers as education authority. The statutory provisions upon which LCC relied (or now rely) as showing incompatibility were: (1) section 8 of the 1944 Education Act which imposed a duty on local education authorities to secure that there shall be available for their area sufficient schools for providing primary and secondary education, sufficient in number, character and equipment; (2) sections 13 and 14 of the Education Act 1996 which require local authorities to contribute to the development of the community by securing efficient primary and secondary education; (3) section 542 of the 1996 Act which requires school premises to conform to prescribed standards, including (under regulation 10 of the School Premises (England) Regulations (SI 2012/1943)) suitable outside space for physical education and outside play; and (4) section 175 of the Education Act 2002 which requires the education authority to make arrangements for ensuring that their education functions are exercised with a view to safeguarding and promoting the welfare of children. (The issue of safeguarding does not appear to have been raised at the inquiry.) The inspector was not satisfied that the land was held for educational purposes (an issue to which we shall return below), but even on the assumption that it was she found no incompatibility: 119. Furthermore, even if the land is held for educational purposes, I agree with the applicant that that could cover a range of actual uses. LCC states that the landholding is associated with a specific statutory duty to secure a sufficiency of schools and that if LCC needed to provide a new school or extra school accommodation in Lancaster in order to enable it to fulfil its statutory duty, it would not be able to do so on the Application Land were it to be registered as a town or village green. However, Areas A and B are marked on LCCs plan as Moorside Primary School. The school is currently being extended on other land and will, according to Lynn MacDonald [a school planning manager for the county council], provide 210 places which will meet current needs. There is no evidence to suggest that the school wishes to use these areas other than for outdoor activities and sports and such use is not necessarily incompatible with use by the inhabitants of the locality for lawful sports and pastimes. 120. Areas C and D are marked on LCCs plan as Replacement School Site. However, there is no evidence that a new school or extra school accommodation is required on this site, or indeed anywhere in Lancaster. Lynn MacDonald stated that the Application Land may need to be brought into education provision at some time but confirmed that there were no plans for the Application Land within her five year planning phase. 121. Nevertheless, she pointed out there is a rising birth rate and increased housing provision in Lancaster, and that although there are surplus school places to the north of the river, no other land is reserved for school use to the south of Lancaster. Assets are reviewed on an annual basis and if not needed land can be released for other purposes. However there was no prospect that this would happen in relation to the Application Land in the immediate future. 122. I do not agree with LCCs submission that the evidence of Lynn MacDonald demonstrates the necessity of keeping the Application Land available to guarantee adequate future school provision in order to meet LCCs statutory duty. Even if at some stage in the future there becomes a requirement for a new school or for additional school places within Lancaster, it is not necessarily the case that LCC would wish to make that provision on the Application Land. She concluded (para 124): 124. It seems to me that, in the absence of further evidence, the situation in the present case is not comparable to the statutory function of continuing to operate a working harbour where the consequences of registration as a town or village green on the working harbour were clear to their Lordships [in Newhaven]. Even if it is accepted that LCC hold the land for educational purposes, there is no clear incompatibility between LCCs statutory functions and registration of the Application Land as a town or village green. Accordingly I do not accept that the application should fail due to statutory incompatibility. On the LCCs application for judicial review, the inspectors decision was upheld by Ouseley J [2016] EWHC 1238 (Admin), including her approach to the issue of statutory incompatibility. Surrey The second appeal relates to some 2.9 hectares of land at Leach Grove Wood, Leatherhead, owned by NHS Property Services Ltd (NHS Property Services), a company wholly owned by the Secretary of State for Health. The land adjoins Leatherhead Hospital, and is in the same freehold title. An application for registration under the Act was made by Ms Philippa Cargill on 22 March 2013, with the support of Mr Timothy Jones and others. They relied on use over a period of 20 years ending in January 2013 (when permissive signs were erected on the land). At the time of the application, the land was owned by the Surrey Primary Care Trust. By section 83(1) of the National Health Service Act 2006 primary care trusts were under a duty to provide, or to secure the provision of, primary medical services in their area. The land was held by the Trust pursuant to the statute, for those purposes. On the dissolution of the Trust in 2013, the freehold title of the land was transferred to NHS Property Services, which had been created by the Secretary of State for Health under his power to form companies to provide facilities or services to persons or bodies exercising functions, or otherwise providing services, under this Act (section 223(1) of the National Health Service Act 2006). Following the amendment of the National Health Service Act 2006 by the Health and Social Care Act 2012, functions previously exercised by the Secretary of State acting through a primary care trust fell to be exercised by a clinical commissioning group (CCG) in this case the Surrey Downs Clinical Commissioning Group. The principal statutory duties of a CCG are defined by section 3(1) of the National Health Service Act 2006; in summary they involve the provision of hospital accommodation and medical services to such extent as it considers necessary to meet the reasonable requirements of the persons for whom it has responsibility. Following a non statutory inquiry, the inspector, William Webster, barrister, in his report dated 9 June 2015, recommended refusal of registration. He rejected the companys objection based on statutory incompatibility (paras 175(d) (f)). He contrasted the case with Newhaven [2015] AC 1547 in which there had been an obvious and irreconcilable clash as between the conflicting statutory regimes: (e) The position of the NHS is quite different in that no positive duty (analogous to that imposed on the undertaker in Newhaven) arises on the part of the landowner to do anything in the case of the land (in contrast to Newhaven) and the general duty imposed on the Secretary of State to promote a comprehensive health service is wholly unaffected. (f) It seems to me that it is irrelevant that the land may be held under the same title as the remainder of the hospital site. The fact that the relevant NHS bodies had (and still has [sic]) the capacity to use the land for health and ancillary purposes is no different to any other public body holding land for a purpose which they do not choose to exercise for the time being. He also accepted that there had been sufficient qualifying use of the land by local inhabitants for more than 20 years, but he held that it was not in respect of a relevant locality or neighbourhood as required by section 15. Surrey County Council, as registration authority, did not accept his recommendation, but determined to register the land which was done on 5 October 2015. On the application for judicial review by NHS Property Services, on 13 July 2016 Gilbart J ([2016] EWHC 1715 (Admin); [2017] 4 WLR 130) quashed the registration, holding that the county council had failed properly to consider the question of statutory incompatibility. He had before him the judgment of Ouseley J in the Lancashire case ([2016] EWHC 1238 (Admin)), but distinguished it by reference to the wider powers conferred by the education statutes: 134. It is clear that there was no general power in any of the relevant bodies to hold land. Land could only be acquired or held if done so for the purposes defined in the relevant Acts. The defined statutory purposes do not include recreation, or indeed anything outside the purview of (in summary) the purposes of providing health facilities. Could the land be used for the defined statutory purposes while also being used as a town or village green? No one has suggested that the land in its current state would perform any function related to those purposes, and the erection of buildings or facilities to provide treatment, or for administration of those facilities, or for car parking to serve them, would plainly conflict with recreational use. 135. Indeed, it is very hard indeed to think of a use for the land which is consistent with those powers, and which would not involve substantial conflict with use as a village green. A hospital car park, or a clinic, or an administrative building, or some other feature of a hospital or clinic would require buildings or hard standing in some form over a significant part of the area used. By contrast, it is easy to think of functions within the purview of education, whereby land is set aside for recreation. Indeed, there is a specific statutory duty to provide recreational facilities, which may include playing fields, and other land, for recreation, the playing of games, and camping, among other activities see section 507A Education Act 1996. 136. It is not relevant to the determination of the issue that the land has not in fact been used for the erection of hospital buildings or used for other hospital related purposes. The question which must be determined is not the factual one of whether it has been used, or indeed whether there any plans that it should be, but only whether there is incompatibility as a matter of statutory construction. If the land is in fact surplus to requirements, then the use of the [2006 Act] is not the remedy. 137. Given those conclusions, it is my judgement that there is a conflict between the statutory powers in this case and registration. The Court of Appeal The appeals in both cases, respectively by LCC and the applicants for registration in the Surrey case, were heard together by the Court of Appeal (Jackson, Lindblom and Thirlwall LJJ). In a judgment dated 12 April 2018 ([2018] EWCA Civ 721; [2018] 2 P & CR 15), given by Lindblom LJ, with whom the others agreed, the court upheld the decision to register in both cases. On the issue of statutory incompatibility, he distinguished the Newhaven case [2015] AC 1547, for reasons which are sufficiently apparent from the following short extracts from the judgment: Lancashire 40. Crucially, as a matter of statutory construction there was no inconsistency of the kind that arose in Newhaven Port & Properties between the provisions of one statute and the provisions of the other. The statutory purpose for which Parliament had authorized the acquisition and use of the land and the operation of section 15 of the 2006 Act were not inherently inconsistent with each other. By contrast with Newhaven Port & Properties, there were no specific statutory purposes or provisions attaching to this particular land. Parliament had not conferred on the county council, as local education authority, powers to use this particular land for specific statutory purposes with which its registration as a town or village green would be incompatible. Surrey 46. As in the Lancaster case, therefore, the circumstances did not correspond to those of Newhaven Port & Properties. The land was not being used for any defined statutory purposes with which registration would be incompatible. No statutory purpose relating specifically to this particular land would be frustrated. The ownership of the land by NHS Property Services, and the existence of statutory powers that could be used for the purposes of developing the land in the future, was not enough to create a statutory incompatibility. The clinical commissioning group would still be able to carry out its statutory functions in the provision of hospital and other accommodation and the various services and facilities within the scope of its statutory responsibilities if the public had the right to use the land at Leach Grove Wood for recreational purposes, even if the land itself could not then be put to use for the purposes of any of the relevant statutory functions. None of those general statutory functions were required to be performed on this land. And again, it is possible to go somewhat further than that. Although the registration of the land as a village green would preclude its being developed by the construction of a hospital or an extension to the existing hospital, or as a clinic or administrative building, or as a car park, and even though the relevant legislation did not include a power or duty to provide facilities for recreation, there would be nothing inconsistent either in principle or in practice between the land being registered as a green and its being kept open and undeveloped and maintained as part of the Leatherhead Hospital site, whether or not with access to it by staff, patients or visitors. This would not prevent or interfere with the performance of any of the relevant statutory functions. But in any event, as in the Lancaster case, the two statutory regimes were not inherently in conflict with each other. There was no statutory incompatibility. Was the Lancashire land held for educational purposes? Before we turn to the main issue it is convenient to dispose of a preliminary issue which arises only in respect of the first appeal. For what purposes was the land held? The inspector recorded the evidence on which LCC relied as showing that the land was held for the relevant statutory purposes. 113. LCC has provided Land Registry Official copies of the register of title which show that LCC is the registered proprietor of the Application Land. Areas A, B and E were the subject of a conveyance dated 29 June 1948, a copy of which has been provided. It makes no mention of the purposes for which the land was acquired but is endorsed with the words Recorded in the books of the Ministry of Education under section 87(3) of the Education Act 1944. The endorsement is dated 12 August 1948. 114. Areas C and D were the subject of a conveyance dated 25 August 1961. Again the conveyance makes no mention of the purposes for which the land was acquired but the copy provided has a faint manuscript endorsement as follows Education Lancaster Greaves County Secondary School. 115. In addition LCC provided an instrument dated 23 February 1925 and a letter from LCC to the school dated 1991. The instrument records that the Council of the Borough of Lancaster has applied to the Minister of Health for consent to the appropriation for the purposes of the Education Act 1921 of the land acquired by the council otherwise than in their capacity as Local Education Authority. The land shown on the plan is the [Barton Road Playing Field (land also owned by LCC, to the immediate west of Areas C and D and separated from them by a shallow watercourse, but accessible from them via a stone bridge and also stepping stones)]. An acknowledgement and undertaking dated March 1949 refers to the transfer to the county council of the education functions of the City of Lancaster and lists deeds and documents relating to school premises and other land and premises held by the corporation. It lists the [Barton Road Playing Field]. The 1991 letter encloses a note from Lancashire Education Committee outlining a proposal to declare land surplus to educational requirements. This relates to the land adjacent to Area C which was subsequently developed for housing. As none of this documentation relates directly to the Application Land I do not find it of particular assistance. 116. At the inquiry LCC provided a print out of an electronic document headed Lancashire County Council Property Asset Management Information which in relation to Moorside Primary School records the committee as E. I accept that it is likely that this stands for Education. An LCC plan showing land owned by CYP education shows Areas A, B and E as Moorside Primary School and Areas C and D as Replacement School Site. In relation to Areas C and D the terrier was produced, and under committee is the word education. The whole page has a line drawn through it, the reason for which is unexplained. 117. LCC submits that the documentation provides clear evidence that the Application Land is held for educational purposes and that no further proof is necessary. However, no council resolution authorising the purchase of the land for educational purposes or appropriating the land to educational purposes has been provided. The conveyances themselves do not show for what purpose the council acquired the land, and although the endorsements on those documents make reference to education, the authority for them is unknown. Lynn MacDonald confirmed that the Application Land was identified as land which may need to be brought into education provision, but was unable to express an opinion about the detail of LCCs ownership of the land. 118. The information with regard to the purposes for which the Application Land is held by LCC is unsatisfactory. Although there is no evidence to suggest that it is held other than for educational purposes, it is not possible to be sure that The inspector stated her conclusions: LCCs statement that the Application Land was acquired and is held for educational purposes and was so held throughout the 20 year period relevant to the Application accurately reflects the legal position. In fairness to the inspector, we should note that this issue seems to have been raised rather the late in the day, and was less than fully explored in LCCs submissions before her (see Ouseley J [2016] EWHC 1238 (Admin), para 49, noting Ms Bebbingtons evidence as to what took place at the inquiry; the counsel who have appeared for LCC in the court proceedings did not act for it at the inquiry. Ouseley J indicated that, left to himself, he would have been likely to have reached a different view, at para 57: I rather doubt that, confined to the express reasoning in the DL [the decision letter], I would have reached the same conclusion as the inspector as to what could be inferred from the conveyances and endorsements on them in relation to the purpose of the acquisition of the various areas. I can see no real reason not to conclude, on that basis, that the acquisition was for educational purposes. No other statutory purpose for the acquisition was put forward; there was no suggestion that the parcels were acquired for public open space. I would have inferred that there were resolutions in existence authorising the acquisitions for that contemporaneously evidenced intended purpose, which simply had not been found at this considerable distance in time. It would be highly improbable for the lands to have been purchased without resolutions approving it. The presumption of regularity would warrant the assumption that there had been resolutions to that effect, and that the purpose resolved upon would have been the one endorsed on the conveyances. This is reinforced by the evidence in DL para 116, which shows the property, after acquisition, to be managed by or on behalf of the Education Committee. The actual use made of some of the land is of limited value in relation to the basis of its acquisition or continued holding. However, he was unwilling to conclude that the inspectors decision was irrational, at para 61: As I read the DL, the fundamental problem for the inspector in the LCC evidence was the absence of what she regarded as the primary sources for power under which the acquisition or appropriation of the land occurred: the resolutions to acquire or to appropriate it for educational purposes. She was entitled to regard those as the primary sources to prove the basis for the exercise of the powers of the authority she approached her decision, as I read it, knowing what transpired before her, not on the basis that resolutions related to acquisition might well have existed but could not be found at this distance in time, but on the basis that none had been produced despite proper endeavours to find them, endeavours which had nonetheless produced the conveyances, and other related documents. So she was not prepared to assume that resolutions in relation to acquisition had existed. That was entirely a matter for her, and cannot come close to legal error. The Court of Appeal in substance adopted Ouseley Js reasoning. In this court, Mr Edwards QC for LCC accepts that this issue was one of fact for the inspector. But he submits that her conclusion was unsupportable on the evidence before her, or was vitiated by error of fact (under the principles set out in E v Secretary of State for Home Department [2004] QB 1044). For good measure he submits that the courts below were wrong not to admit evidence, discovered after the inquiry, in the form of council minutes from February 1948 recording the resolution to acquire Areas A and B (and E) for a proposed primary school. He starts from the proposition that the LCC, as a statutory local authority, could only acquire land for the purposes of any of their [statutory] functions (see now the Local Government Act 1972, section 120(1)(a)); and that in normal circumstances the land would continue to be held for the purpose for which it was acquired unless validly appropriated for an alternative statutory purpose, when no longer required for the first (section 122). The inspector, he says, gave no weight to that statutory context. As regards Areas A, B and E, he submits, the evidence before the inspector was quite clear (even without the new evidence). The inspector properly noted that the acquisition had been Recorded in the books of the Ministry of Education under section 87(3) of the Education Act 1944. However, she failed to understand or give due weight to the significance of that note. As Mr Edwards explains, the effect of section 87 of the Education Act 1944 (headed Exemption of assurances of property for educational purposes from the Mortmain Acts) was to exempt from the Mortmain and Charitable Uses Act 1888 and related Acts, land transferred (inter alia) to a local education authority, if the land was to be used for educational purposes. (The law of Mortmain dating back to the Statutes of Mortmain in 1279 and 1290, was not finally abolished until 1960.) A copy of the conveyance or other document by which the transfer of such land was made was required, within six months of its taking effect, to be sent to the Education Minister. Section 87(3) provided that a record should be kept of any conveyance sent to the minister pursuant to the section. Accordingly, says Mr Edwards, the reference to the record under section 87(3) should have been treated by the inspector as clear evidence that the original purpose of the acquisition was for educational purposes, even in the absence of a contemporary resolution to that effect. Against that background, the lack of evidence of any competing purpose to which the land might have been appropriated over the subsequent years pointed to the inference that it continued to be held for its original purpose. As regards Areas C and D, Mr Edwards submits, the indication on the 1961 conveyance of an educational purpose, taken with the references in later documents to its being treated as educational land, and the lack of any evidence of a competing purpose, were sufficient to support the inference, on the balance of probabilities, that education was the purpose for which it had been acquired and subsequently held. Discussion Although Mr Edwards has accepted that this issue was one of fact for the inspector, that concession needs to be seen in context. The inspectors assessment was one depending, not so much on evaluation of oral evidence, but largely on the inferences to be drawn from legal or official documents of varying degrees of formality. In our view, Ouseley Js approach to the natural inferences to be drawn from the material before the inspector was correct, but he was wrong to be deflected by deference to the inspectors fact finding role. The main difference between them was in the weight given by the inspector to the absence of specific resolutions, from which she found it not possible to be sure that the land had been acquired and held for educational purposes. On its face the language appears to raise the threshold of proof above the ordinary civil test to which she had properly referred earlier in the decision. But even discounting that point, she was wrong in our view to place such emphasis on the lack of such resolutions. Her task was to take the evidence before her as it stood, and determine, on the balance of probabilities, for what purpose the land was held. On that approach, Ouseley Js own assessment ([2016] EWHC 1238 (Admin)) was in our view impeccable. The inspectors assessment was irrational, having regard to the relevant standard of proof and the evidence available. There was no evidence to support any inference other than that each part of the land had been acquired for, and continued during the relevant period to be held for, statutory educational purposes. An assessment made without any supporting evidence cannot stand: Edwards v Bairstow [1956] AC 14, 29. In respect of Areas A and B, furthermore, there was a clear error of law, in the inspectors failure to appreciate, or take account of, the significance of the reference to section 87(3) of the 1944 Act. This may be because she was given little assistance on the point by LCC at the inquiry. It is less clear why the point, having been clearly raised in submissions in the court proceedings (see Ouseley J, para 44), seems to have been ignored in the subsequent judgments. On any view, that reference, and the inferences to be drawn from it, went beyond a pure issue of fact, and were appropriate for review by the court. In agreement with Mr Edwards we would regard it as providing unequivocal support for the conclusion that the land comprising Areas A and B was acquired for educational purposes. There was no evidence to suggest that it had ever been appropriated to other purposes. In respect of Areas C and D, the evidence is less clear cut, but we agree with Mr Edwards submission that it is sufficient, on the balance of probabilities, to support the same conclusion and that, in the absence of any evidence to support any other view, it was irrational for the inspector to reach a different conclusion. Again, we think that Ouseley Js assessment of the facts was the correct one. In these circumstances it is unnecessary to consider whether Ouseley J erred in refusing to admit the new evidence. We note, however, that it does no more than support what was already a strong case in respect of Areas A and B; it does nothing to enhance the case for Areas C and D. Implied permission We can also deal more briefly with an issue that arises only in respect of the Surrey site: that is Mr Laurence QCs application for permission to argue (for the first time) that the publics use of the land for recreation should be treated as having implied permission from NHS Property Services or its predecessors, thus showing that the use was by right rather than as of right. This, as he accepts, is a departure from Sunningwell [2000] 1 AC 335, where it was held that mere toleration by a landowner of the publics use could not be taken as evidence that the landowner had impliedly consented to that use. He seeks to distinguish the position of land that is held for public purposes such as by his client. We quote his printed case: there is a critical distinction between (i) a private owner (such as the kindly rector in Sunningwell) tolerating use of land not held for public purposes which can provide no evidence of an implied permission and (ii) a public owner passively responding to recreational use in a statutory context which justifies the inference that that response to the publics use of the land is evidence of an implicit permission so long as the permitted use does not disrupt the public authoritys use of the land for its statutory purposes. In such a case it is irrelevant that in a non statutory, private context such a response might be characterised as toleration. He also relies on section 120(2) of the Local Government Act 1972, which authorises land acquired by agreement by a local authority for a particular purpose to be used, pending its requirement for that purpose, for any of the authoritys functions, which, he submits, would include recreational use. It can be inferred, accordingly, that any use by the public was permitted under that power, and as such was pursuant to the same kind of public law right, derived from statute, as was held in R (Barkas) v North Yorkshire County Council [2014] UKSC 31; [2015] AC 195 (Barkas) and Newhaven [2015] AC 1547 to give rise to implied permission. This submission seems to us to face two major difficulties. The first is that no such claim was made before the inspector. As he recorded: 174(f) No issue arises on as of right. There were no vitiating features in play which would preclude use as of right and the application land was at no time held by SCC [Surrey County Council] or by any of the various NHS bodies mentioned herein for purposes which conferred an entitlement on members of the public to use the land for informal recreation. For instance, there was no evidence of any overt act or acts on the part of the objector, or its predecessor, to demonstrate that, before January 2013, the landowner was granting an implied permission for local inhabitants to use the wood. In answer to this, Mr Laurence asserts that the issue is one of law rather than fact. Even if that were so, it would in our view be unfair to all those who took part in the five day inquiry in 2015 to allow the point to be taken for the first time four years later in this court. However, his main difficulty is that the submission is contradicted by clear authority. In R (Beresford) v City of Sunderland [2003] UKHL 60; [2004] 1 AC 889 Lord Walker had accepted the emphasis placed by Mr Laurence himself (appearing on that occasion for the supporters of registration) on the need for the landowner to do something (para 78); passive acquiescence could not be treated as having the same effect as permission communicated (whether in writing, by spoken words, or by overt and unequivocal conduct) (para 79). Later in the judgment (para 83) Lord Walker accepted that permission might be implied by (or inferred from) overt conduct of the landowner, such as making a charge for admission, or asserting his title by the occasional closure of the land to all comers, but he found no evidence in that case of overt acts (on the part of the city council or its predecessors) justifying the inference of an implied licence. Nothing in Barkas or Newhaven undermines the principle that passive acquiescence is insufficient. Mr Laurences then submission that the land owner must do something remains good law, even if there has been some qualification of the form of communication required to the public. The existence in each case of an overt act of the owner was emphasised in the majority judgment in Newhaven [2015] AC 1547, para 71: In this case, as in Barkas, the legal position, binding on both landowner and users of the land, was that there was a public law right, derived from statute, for the public to go onto the land and to use it for recreational purposes, and therefore, in this case, as in Barkas, the recreational use of the land in question by inhabitants of the locality was by right and not as of right. The fact that the right arose from an act of the landowner (in Barkas, acquiring the land and then electing to obtain ministerial consent to put it to recreational use; in this case, to make the Byelaws which implicitly permit recreational use) does not alter the fact that the ultimate right of the public is a public law right derived from statute (the Housing Act 1936 in Barkas; the 1847 Clauses Act and the 1878 Newhaven Act in this case). The law remains, as submitted by Mr Laurence in Beresford, that passive acquiescence, even by a statutory authority with power to permit recreational use, is not enough. Accordingly we would refuse permission for this additional ground of appeal. Statutory incompatibility We turn next to the central issue in the case, based on the Newhaven case. The majority judgment In the judgment of the majority (given by Lord Neuberger PSC and Lord Hodge JSC) the decision not to confirm the registration was supported by two separate lines of reasoning: implied permission and statutory incompatibility. Although the latter was unnecessary for the decision, it was clearly identified as a separate ground of decision (para 74). Lord Carnwath was alone in basing his decision on the implied permission issue alone (para 137), seeing considerable force in the contrary reasoning on the latter issue of Richards LJ in the Court of Appeal ([2014] QB 186). No one has argued that we should regard the majoritys reasoning on this issue as other than binding. Accordingly our decision in the present case depends to a large extent on the correct analysis of that reasoning, and its application to the facts of the two cases before us. The operation of Newhaven Harbour had been subject to legislation since at least 1731. At the relevant time the governing statutes included (inter alia) the Newhaven Harbour and Ouse Lower Navigation Act 1847, section 49 of which required the trustees to maintain and support the said harbour of Newhaven, and the piers, groynes, sluices, wharfs, mooring berths, and other works connected therewith and section 33 of the Harbours, Docks and Piers Clauses Act 1847, which provided that, subject to payment of rates the harbour, dock and pier shall be open to all persons for the shipping and unshipping of goods, and the embarking and landing of passengers. The land owned by the harbour company (NPP) included an area known as West Beach, described in the judgment as part of the operational land of the Harbour (para 8), although not currently used for any harbour purpose. As the judgment explained, at para 9: The Beach owes its origin to the fact that, in 1883, pursuant to the powers granted by the 1863 Newhaven Act, the substantial breakwater was constructed to form the western boundary of the Harbour. The breakwater extends just over 700 metres out to sea. After the construction of the breakwater, accretion of sand occurred along the eastern side of the breakwater, and that accretion has resulted in the Beach. Following an application by the Newhaven Town Council to register the Beach as a town or village green, and the holding of a public inquiry, it was found by the inspector that the beach had been used by residents of the locality for well over 80 years (save during the war periods) for recreation. On that basis the registration authority resolved to register the land. That decision was subject to an application for judicial review, which succeeded before Ouseley J, but was dismissed by the Court of Appeal. Their decision was in turn reversed by the Supreme Court. The judgment of this court in Newhaven In the part of their judgment directed to the statutory incompatibility issue, Lord Neuberger and Lord Hodge referred to case law on public rights of way, easements and servitudes by way of analogy, adopting a cautious approach (paras 76 90). Nonetheless, they found it did provide guidance. In English law, public rights of way are created by dedication by the owner of the land, and the legal capacity of the landowner to dedicate land for that purpose is a relevant consideration (para 78, referring in particular to British Transport Commission v Westmorland County Council [1958] AC 126; see also para 87). Similarly, in the English law of private easements, the capacity of the owner of the potential servient tenement to grant an easement is relevant to prescriptive acquisition, which is based on the fiction of a grant by that owner (para 79). The law of Scotland with respect of creation of public rights of way and private servitudes had also developed on the footing that the statutory capacity of a public authority landowner to allow the creation of such rights was a relevant matter. In particular, in Magistrates of Edinburgh v North British Railway Co (1904) 6 F 620 it was held that it was not possible that a public right of way which it would be ultra vires to grant can be lawfully acquired by user ([2015] AC 1547, paras 83 84); and in Ellices Trustees v Comrs of the Caledonian Canal (1904) 6 F 325 it was held that the commissioners of the canal did not have the power to grant a right of way which was not compatible with the exercise of their statutory duties, and that this also meant that no private right of way or servitude could arise by virtue of user of the land over many years by those claiming such a right of way (paras 85 86). Although the Scots law of prescription had been reformed by statute, Lord Neuberger and Lord Hodge still regarded the historic position as instructive. Their discussion of English law and Scots law in respect of dedication and prescription at paras 76 90 is significant for present purposes, because the reasoning in the cases in those areas regarding statutory incompatibility is general, and is not dependent on the narrower rule of statutory construction that a general provision does not derogate from a special one (generalia specialibus non derogant), to which they also later referred by way of analogy. There follows the critical part of the majority judgment, under the heading Statutory incompatibility: statutory construction, the material parts of which we should quote in full, at paras 91 96: 91. As we have said, the rules of prescriptive acquisition apply only by analogy because Parliament in legislating for the registration of town and village greens has chosen similar wording (indulging as of right in lawful sports and pastimes) in the 1965 and 2006 Acts. It is, none the less, significant in our view that historically in both English law and Scots law, albeit for different reasons, the passage of time would not give rise to prescriptive acquisition against a public authority, which had acquired land for specified statutory purposes and continued to carry out those purposes, where the user founded on would be incompatible with those purposes. That approach is also consistent with the Irish case, McEvoy v Great Northern Railway Co [1900] 2 IR 325, (Palles CB at pp 334 336), which proceeded on the basis that the acquisition of an easement by prescription did not require a presumption of grant but that the incapacity of the owner of the servient tenement to grant excluded prescription. 92. In this case if the statutory incompatibility rested only on the incapacity of the statutory body to grant an easement or dedicate land as a public right of way, the Court of Appeal would have been correct to reject the argument based upon incompatibility because the 2006 Act does not require a grant or dedication by the landowner. But in our view the matter does not rest solely on the vires of the statutory body but rather on the incompatibility of the statutory purpose for which Parliament has authorised the acquisition and use of the land with the operation of section 15 of the 2006 Act. 93. The question of incompatibility is one of statutory construction. It does not depend on the legal theory that underpins the rules of acquisitive prescription. The question is: does section 15 of the 2006 Act apply to land which has been acquired by a statutory undertaker (whether by voluntary agreement or by powers of compulsory purchase) and which is held for statutory purposes that are inconsistent with its registration as a town or village green? In our view it does not. Where Parliament has conferred on a statutory undertaker powers to acquire land compulsorily and to hold and use that land for defined statutory purposes, the 2006 Act does not enable the public to acquire by user rights which are incompatible with the continuing use of the land for those statutory purposes. Where there is a conflict between two statutory regimes, some assistance may be obtained from the rule that a general provision does not derogate from a special one (generalia specialibus non derogant), which is set out in section 88 of the code in Bennion, Statutory Interpretation, 6th ed (2013), p 281: Where the literal meaning of a general enactment covers a situation for which specific provision is made by another enactment contained in an earlier Act, it is presumed that the situation was intended to continue to be dealt with by the specific provision rather than the later general one. Accordingly the earlier specific provision is not treated as impliedly repealed. While there is no question of repeal in the current context, the existence of a lex specialis is relevant to the interpretation of a generally worded statute such as the 2006 Act. 94. There is an incompatibility between the 2006 Act and the statutory regime which confers harbour powers on NPP to operate a working harbour, which is to be open to the public for the shipping of goods etc on payment of rates: section 33 of the 1847 Clauses Act. NPP is obliged to maintain and support the Harbour and its connected works (section 49 of the 1847 Newhaven Act), and it has powers to that end to carry out works on the Harbour including the dredging of the sea bed and the foreshore: section 57 of the 1878 Newhaven Act, and articles 10 and 11 of the 1991 Newhaven Order. 95. The registration of the Beach as a town or village green would make it a criminal offence to damage the green or interrupt its use and enjoyment as a place for exercise and recreation section 12 of the Inclosure Act 1857 or to encroach on or interfere with the green section 29 of the Commons Act 1876 See the Oxfordshire case [2006] 2 AC 674, per Lord Hoffmann, at para 56. 96. In this case, which concerns a working harbour, it is not necessary for the parties to lead evidence as to NPPs plans for the future of the Harbour in order to ascertain whether there is an incompatibility between the registration of the Beach as a town or village green and the use of the Harbour for the statutory purposes to which we have referred. Such registration would clearly impede the use of the adjoining quay to moor vessels. It would prevent the Harbour authority from dredging the Harbour in a way which affected the enjoyment of the Beach. It might also restrict NPPs ability to alter the existing breakwater. All this is apparent without the leading of further evidence. We discuss this reasoning in detail below. Finally in this part of the majority judgment reference is made to cases in which registration of land held by public bodies had been approved by the court: New Windsor, the Trap Grounds case and Lewis [2010] 2 AC 70. The treatment of these cases by Lord Neuberger and Lord Hodge is also significant for present purposes. As regards New Windsor, they emphasised that the land was not acquired and held for a specific statutory purpose, so [n]o question of statutory incompatibility arose (para 98). They observed that in the Trap Grounds case, though the land was wanted for use as an access road and housing development there was no suggestion that [the city council] had acquired and held the land for specific statutory purposes that might give rise to a statutory incompatibility (para 99). With respect to Lewis they pointed out that [it] was not asserted that the council had acquired and held the land for a specific statutory purpose which would be likely to be impeded if the land were to be registered as a town or village green; hence [a]gain, there was no question of any statutory incompatibility (para 100). In relation to each of these cases, Lord Neuberger and Lord Hodge referred in entirely general terms to the statutory powers under which a local authority might hold land and were at pains to emphasise that the land in question was not in fact held in exercise of any such powers which gave rise to a statutory incompatibility. That was the basis on which they distinguished the cases. It is clearly implicit in this part of their analysis that they considered that land which was acquired and held by a local authority in exercise of general statutory powers which were incompatible with use of that land as a town or village green could not be registered as such. Their discussion concludes, at para 101: In our view, therefore, these cases do not assist the respondents. The ownership of land by a public body, such as a local authority, which has statutory powers that it can apply in future to develop land, is not of itself sufficient to create a statutory incompatibility. By contrast, in the present case the statutory harbour authority throughout the period of public user of the Beach held the Harbour land for the statutory harbour purposes and as part of a working harbour. Incompatibility the case for the appellants For LCC Mr Edwards submits that the decision in Newhaven is of general application to land held by a statutory authority for statutory purposes, whatever the nature of the Act. He points out that the statutory duties or powers in Newhaven were not specific to the beach itself, but rather applied to all of the land acquired and held, from time to time, by NPP and its predecessors for the operation of the Port. NPP had not, within living memory, used the Beach for its statutory harbour purposes. The critical passage in the majority judgment (para 93) refers generally to land which has been acquired by a statutory undertaker (whether by voluntary agreement or by powers of compulsory purchase) and which is held for statutory purposes It is not limited to statutory powers directed to a specific location or undertaking. No one has argued that the principle is limited to statutory undertakers, as opposed to public authorities in general. Nor is there any requirement for the land to be in actual use for statutory purposes at the point of registration; it simply has to be held for such purposes. In Newhaven the Beach had not been used for harbour purposes nor was there any fixed intention to do so at any particular time in the future (see para 96). In the present case, notwithstanding the inspectors findings, there was, he submits, clear incompatibility with LCCs functions in respect of the land. The effect of registration would be that there accrues a right vested in the inhabitants of Scotforth East Ward to use the land for lawful sports and pastimes of a variety of forms, including walking and dog walking. LCC could not restrict their entry onto the land, including Area B which was at the time of the inspectors decision used as a playing field by the school (see Decision Letter, para 10). Given the statutory safeguarding obligations towards primary school pupils, the use of that area for play could not continue. Any use of the land to provide a new or expanded school would be precluded. In substance, the land would be no longer available in any meaningful sense for use in fulfilment of the LCCs statutory duties as local education authority. Mr Laurence makes similar submissions in respect of the Surrey site, supported in that case by the conclusions of Gilbart J [2017] 4 WLR 130. Discussion In our judgment, the appeals should be allowed in both cases. On a true reading of the majority judgment in Newhaven on the statutory incompatibility point, the circumstances in each of these cases are such that there is an incompatibility between the statutory purposes for which the land is held and use of that land as a town or village green. This has the result that the provisions of 2006 Act are, as a matter of the construction of that Act, not applicable in relation to it. The principle stated in the key passage of the majority judgment at para 93 is expressed in general terms. The test as stated is not whether the land has been allocated by statute itself for particular statutory purposes, but whether it has been acquired for such purposes (compulsorily or by agreement) and is for the time being so held. Although the passage refers to land acquired by a statutory undertaker, we agree with Mr Edwards that there is no reason in principle to limit it to statutory undertakers as such, nor has that been argued by the respondents. That view is supported also by the fact that the majority felt it necessary to find particular reasons to distinguish cases such as New Windsor, the Trap Grounds case and Lewis, all of which involved local authorities rather than statutory undertakers. Accordingly, the appellants argue with force that the test is directly applicable to the land acquired and held for their respective statutory functions. The reference in para 93 to the manner in which a statutory undertaker acquired the land is significant. Acquisition of land by a statutory undertaker by voluntary agreement will typically be by the exercise of general powers conferred by statute on such an undertaker, where the land is thereafter held pursuant to such powers rather than under specific statutory provisions framed by reference to the land itself (as happened to be a feature of the provisions which were applicable in Newhaven itself). That is also true of land acquired by exercise of powers of compulsory purchase. In relation to the latter type of case, the majority said in terms that the 2006 Act does not enable the public to acquire by user rights which are incompatible with the continuing use of the land for those statutory purposes (para 93). On our reading of the majority judgment, it is clear that in relation to both types of case Lord Neuberger and Lord Hodge took the view that an incompatibility between general statutory powers under which land is held by a statutory undertaker (or, we would add, a public authority with powers defined by statute) and the use of such land as a town or village green excludes the operation of the 2006 Act. This interpretation of the judgment is reinforced by the analysis it contains of the English and Scottish cases on dedication and prescription in relation to rights of way, easements and servitudes and the guidance derived from those cases (see paras 76 to 91): para 47 above. It is also reinforced by the way in which Lord Neuberger and Lord Hodge distinguished the New Windsor, Trap Grounds and Lewis cases: paras 49 and 50 above. The respondents in these appeals submit that the reasoning of Lord Neuberger and Lord Hodge is more narrowly confined, and depends upon identifying a conflict between a particular regime governing an area of land specified in the statute itself and the general statutory regime in the 2006 Act. In support of this interpretation the respondents point to the highly specific nature of the statutory provisions governing the relevant land in Newhaven and to the reference in para 93 to the rule of statutory construction that a general provision does not derogate from a special one (generalia specialibus non derogant). However, for the reasons we have set out above, this interpretation of the judgment does not stand up to detailed analysis. Lord Neuberger and Lord Hodge stated only that some assistance could be obtained from consideration of that rule of construction, not that it provided a definitive answer on the issue of statutory incompatibility. In other words, they treated it as a helpful analogy for the purposes of seeking guidance to answer the question they posed in para 93, just as they treated the English and Scottish cases on prescriptive acquisition as helpful. The way in which they posed the relevant question in para 93 shows that their reasoning is not limited in the way contended for by the respondents, as does their discussion of the prescriptive acquisition cases and the local authority cases of New Windsor, Trap Grounds and Lewis. We do not find the construction of the 2006 Act as identified by the wider reasoning of the majority in Newhaven surprising. It would be a strong thing to find that Parliament intended to allow use of land held by a public authority for good public purposes defined in statute to be stymied by the operation of a subsequent general statute such as the 2006 Act. There is no indication in that Act, or its predecessor, that it was intended to have such an effect. Lord Hoffmann in Sunningwell concluded that it could be inferred that Parliament intended to allow for the creation of new rights pursuant to the 1965 Act by reason of the public interest in the preservation of open spaces which had for many years been used for recreational purposes, but in doing so he recognised that [a] balance must be struck between rights attaching to private property and competing public interests of this character (p 359B E). It is natural to expect that where a public authority is holding land for public purposes defined by statute which are incompatible with the public interest identified by implication from the 1965 Act, and now the 2006 Act, that balance will be affected. The proper inference as to Parliaments intention is that the general public interest identified by Lord Hoffmann will in such a case be outweighed by the specific public interest which finds expression in the particular statutory powers under which the land is held. As Lord Neuberger and Lord Hodge appreciated, this general point can be made with particular force in relation to land purchased using compulsory purchase powers set out in statute. Such powers are generally only created for use in circumstances where an especially strong public interest is engaged, such as could justify the compulsory acquisition of property belonging to others. It seems highly unlikely that Parliament intended that public interests of such a compelling nature could be defeated by the operation of the general provisions in the 2006 Act. In construing the 2006 Act it is also significant that it contains no provision pursuant to which a public authority can buy out rights of user of a town or village green arising under that Act in relation to land which it itself owns. That is so however strong the public interest may now be that it should use the land for public purposes. Since in such a case the public authority already owns the land, it cannot use any power of compulsory purchase to eradicate inconsistent rights and give effect to the public interest, as would be possible if the land was owned by a third party. Although section 16 of the 2006 Act makes specific provision for deregistration of a green on application to the appropriate national authority, in relation to land which is more than 200 square metres in area the application must include a proposal to provide suitable replacement land: subsections (2), (3) and (5). This procedure is available to any owner of registered land, public or private; it is not designed to give effect to the public interest reflected in specific statutory provisions under which the land is held. Often it will be impossible in practice for a public authority to make a proposal to provide replacement land as required to bring section 16 into operation. Again, it would be surprising if Parliament had intended to create the possibility that the 2006 Act should in this way be capable of frustrating important public interests expressed in the statutory powers under which land is held by a public authority, when nothing was said about that in the 2006 Act. In our view, applying section 15 of the 2006 Act as interpreted in the majority judgment in Newhaven, LCC and NHS Property Services can show that there is statutory incompatibility in each of their respective cases. As regards the land held by LCC pursuant to statutory powers for use for education purposes, two points may be made. First, so far as concerns the use of Area B as a school playing field, that use engages the statutory duties of LCC in relation to safeguarding children on land used for education purposes. LCC has to ensure that children can play safely, protected from strangers and from risks to health from dog mess. The rights claimed pursuant to the registration of the land as a town or village green are incompatible with the statutory regime under which such use of Area B takes place. Secondly, however, and more generally, such rights are incompatible with the use of any of Areas A, B, C or D for education purposes, including for example construction of new school buildings or playing fields. It is not necessary for LCC to show that they are currently being used for such purposes, only that they are held for such statutory purposes (see Newhaven, para 96). The 2006 Act was not intended to foreclose future use of the land for education purposes to which it is already dedicated as a matter of law. Similar points apply in the Surrey case. Although the non statutory inspector found against the appellant on the statutory incompatibility issue, the registration authority failed to consider it. Gilbart J was satisfied that, within the statutory regime applicable in that case, there was no feasible use for health related purposes, and indeed none had been suggested. The Court of Appeal took a different view, but largely, as we understand it, on the basis that recreational use of the subject land would not inhibit the ability of NHS Property Services to carry out their functions on other land. We consider that Gilbart J was correct in his assessment on this point. The issue of incompatibility has to be decided by reference to the statutory regime which is applicable and the statutory purposes for which the land is held, not by reference to how the land happens to be being used at any particular point in time (again, see Newhaven, para 96). As Lady Arden and Lord Wilson take a different view regarding the effect of the majority judgment in Newhaven, we should briefly explain why, with respect, we are not persuaded by their judgments. We are all in agreement that the outcome of these appeals turns upon the proper interpretation of the majority judgment in Newhaven. We cannot accept their interpretation of that judgment. In our view, although the case might have been decided on narrower grounds, Lord Neuberger and Lord Hodge deliberately posed the relevant question in para 93 in wide terms, specifically in order to state the issue as one of statutory incompatibility as a matter of principle, having regard to the proper interpretation of the relevant statute pursuant to which the land in question is held. That is why the heading for the relevant section of their judgment is Statutory incompatibility: statutory construction. They say in terms in para 93, The question of incompatibility is one of statutory construction. Nowhere do they say it is a matter of statutory construction and an evaluation of the facts regarding the use to which the land has been put. According to their judgment, the issue of incompatibility is to be determined as a matter of principle, by comparing the statutory purpose for which the land is held with the rights claimed pursuant to the 2006 Act, not by having regard to the actual use to which the authority had put the land thus far or is proposing to put it in future. We consider that this emerges from the critical para 93, and also from the paragraphs which follow in their judgment. Thus, in para 94 they identify the relevant incompatibility as that between the 2006 Act and the statutory regime which confers harbour powers on NPP to operate a working harbour. In para 96, it is to that statutory incompatibility that they refer, not to incompatibility with any use to which NPP had as yet put the land in question or might in fact put it in the foreseeable future. As a matter of fact, the Beach had not been used for the applicable statutory purposes. Further, in our opinion, by stating in para 96 that it was not necessary for the parties to lead evidence as to NPPs plans for the future of the harbour in order to ascertain whether there is an incompatibility between the registration of the Beach as a town or village green and the use of the Harbour for the statutory purposes to which we have referred, Lord Neuberger and Lord Hodge were seeking to emphasise, contrary to Lady Ardens and Lord Wilsons interpretation of their judgment, that what matters for statutory incompatibility to exist so as to prevent the application of the 2006 Act is a comparison with the relevant statutory powers under which the land is held, not any factual assessment of how the public authority might in fact be using or proposing to use the land. The same point can be made about para 97, where Lord Neuberger and Lord Hodge said that it was unnecessary to consider evidence about actual proposed use of the land on the facts, since they were able to determine by looking at the statutory powers that there is a clear incompatibility between NPPs statutory functions in relation to the Harbour, which it continues to operate as a working harbour [ie to hold under the statutory powers referred to in para 94], and the registration of the Beach as a town or village green. Their discussion at paras 98 to 100 of New Windsor, the Trap Grounds case and Lewis supports the same conclusion. In each of those cases the relevant land had been held for a very long period without actually being put to use which was inconsistent on the facts with use as a town or village green and without any proposal that it should be put to such use. The implication from what Lord Neuberger and Lord Hodge say about them is that if it had been shown that the land was held for specific statutory purposes which were incompatible with registration under the 2006 Act, that would have constituted statutory incompatibility which would have prevented registration. Their treatment of these cases cannot be reconciled with Lady Ardens and Lord Wilsons proposed interpretation of their judgment. We do not think that para 101 can be reconciled with that proposed interpretation either. In that paragraph Lord Neuberger and Lord Hodge contrast a case in which a public body might have statutory purposes to which it could in future appropriate the land (but has not yet done so) with the situation in Newhaven itself, where in the relevant period NPP held the Beach for the statutory harbour purposes and as part of a working harbour (ie under the statutory regime referred to in para 94). In our view they were there emphasising that what matters for a statutory incompatibility defence to arise is that the land in question should be held pursuant to statutory powers which are incompatible with registration as a town or village green. Nor, with respect, do we think that Lady Arden and Lord Wilson have offered any good answer to the points we have made at paras 61 to 64 above. We also consider that the reading of Newhaven proposed by Lady Arden and Lord Wilson would undermine the very clear test which Lord Neuberger and Lord Hodge plainly intended to state. Instead of focusing on the question of the incompatibility of the statutory powers under which the relevant land is held, Lady Arden and Lord Wilson would introduce an additional factual inquiry into the actual use to which the authority is putting the land or proposes to put the land in the foreseeable future. Thus, Lady Arden and Lord Wilson would adopt from the English case of Westmorland [1958] AC 126 a test of what use could reasonably be foreseen for the land in question, even though Lord Neuberger and Lord Hodge say nothing to support that in the relevant part of their judgment. They refer to both English and Scottish cases on prescriptive acquisition as being relevant to their assessment of the correct approach to be adopted in interpreting the 2006 Act, and in each case only by way of broad analogy, as they explain at para 91. The Scottish cases they cite do not employ any such test as in the Westmorland case and are consistent with the clear principled test, based on statutory construction, which we understand Lord Neuberger and Lord Hodge to have laid down. Future use Finally, for completeness, we should mention briefly an issue which does not strictly arise within the scope of the appeals, but has been the subject of some discussion. That is the question whether, notwithstanding registration, there might be scope for use by the appellants of the land for their statutory purposes. This arises from a suggestion put forward in Lord Carnwaths minority judgment in Newhaven. He noted that in the Trap Grounds case it had not been necessary to consider the potential conflict between the general village green statutes and more specific statutory regimes, such as under the Harbours Acts. He said, at para 139: It is at least arguable in my view that registration should be confirmed if the necessary use is established, but with the consequence that the 19th century restrictions are imported subject only to the more specific statutory powers governing the operation of the harbour. Mr Edwards, supported by Mr Laurence, seeks to build on that tentative suggestion, taken with the principle of equivalence adopted in the Lewis case [2010] 2 AC 70. As he submits, the Supreme Court accepted that there should be equivalence between the use of the land for lawful sports and pastimes in the qualifying period (in that case subject to concurrent use as a golf course) and the extent of rights vested in local inhabitants after registration. That approach was taken a stage further by the Court of Appeal in TW Logistics Ltd v Essex County Council [2019] Ch 243, holding that the 19th century statutes, as applied to a registered modern green, are not to be construed as interfering with the rights of the landowner to continue pre existing uses so far as not inconsistent with the uses which led to registration (per Lewison LJ, paras 63 82). This is not a suitable occasion to examine the scope of the principle of equivalence, so far as it can be relied on to protect existing uses by the landowner. Lewis was a somewhat special case. Lord Brown was able to draw on [his] own experience both as a golfer and a walker for over six decades (para 106) to attest to the feasibility of an approach based on give and take in that particular context. The same approach may not be so easy to apply in other contexts, and as applied to other forms of competing use. Permission has been granted for an appeal to this court in TW Logistics. That may, if the appeal proceeds, provide an opportunity for further consideration of this difficult issue. In any event, those cases were concerned with actual uses by the owners, not with potential uses for statutory purposes for which the land is held, as in the present cases. In view of our conclusion that the land in each appeal should not have been found to be capable of being registered under the Act, the issue of what uses might have been open to a statutory owner if it were so registered does not arise, and we prefer to say no more about it on this occasion. Conclusion For these reasons we would allow the appeals in both cases. LADY ARDEN: (partly dissenting) Identifying the difference of view My views differ from those of Lord Carnwath and Lord Sales on these appeals in an important respect. My conclusion is that the question of incompatibility between two sets of statutory provisions (on this appeal, the provisions of the Commons Act 2006 (the 2006 Act) and the statute authorising the holding of land by the public authority in question) involves an assessment of the facts as well as a proposition of law. The fact that a public authority holds land for statutory purposes which are incompatible with the use of the land as a town or village green (TVG), is not of itself sufficient to make the land incapable of being registered under the 2006 Act as a TVG. It must be shown that the land is in fact also being used pursuant to those powers, or that it is reasonably foreseeable that it will be used pursuant to those powers, in a manner inconsistent with the publics rights on registration as a TVG. That requirement in my judgment follows from R (Newhaven Port & Properties Ltd) v East Sussex County Council [2015] AC 1547. References in this judgment to public authorities exclude public authorities which are subject to a statutory duty to carry out a particular function on specified land, identified by statute, where such land is sought to be registered as a TVG. Such authorities are outside the scope of this judgment. Identifying the correct approach to questions of statutory inconsistency As a matter of constitutional principle, courts must approach the statute book on the basis that it forms a coherent whole. That means that, when interpreting legislation, courts must, in the absence of an indication of some other intention by Parliament, strive to ensure that the provisions work together and apply so far as possible to their fullest extent, such extent being judged according to the intention of Parliament demonstrated principally in the words used. (We have not been shown any other admissible evidence as to Parliaments intention, such as ministerial statements in Hansard.) The courts cannot simply decline to enforce parts of a statute because there may be a conflict with some other statute. It has to be shown that the part sought to be disapplied is irreconcilable with another part of it. If the two can stand together there is no statutory irreconcilability or inconsistency: compare, for example, The Tabernacle Permanent Building Society v Knight [1892] AC 298. One statute cannot be said to be incompatible with another if the two statutes can properly be read together. So, the test is: can the two statutes in question properly be interpreted so that they stand together and each has the fullest operation in the sense given above? In Newhaven, as I shall demonstrate by reference to the majority judgment in that case in the next section of this judgment, the point was that there was a risk that the statutory undertakings working harbour would be stymied in its operations if the Beach was held to be a TVG. It was not a case where a statutory authority has acquired land for a statutory purpose but, at the time of the proposed registration as a TVG, it is not likely that the land will be used for that purpose in the reasonably foreseeable future. Newhaven and the limits of this Courts decision in that case The judgments in Newhaven in my judgment should be approached on the basis that they are consistent with the principles explained in para 78 above, even though the members of this Court in that case did not articulate them. This court should read their decision, if this can properly be done as a matter of statutory interpretation, as leading to the result that where public authority ownership of land and registration as a TVG can co exist, that course will be available. As a matter again of constitutional principle, land should not be relieved of the burden of an Act of Parliament having (so far as relevant) unqualified application if there is an alternative, properly available interpretation which will lead to the two enactments in question standing together. On timing, the question whether there is any conflict between public authority powers and TVG legislation must be determined as at the date when the application for registration is made. At that point in time, the public authority may be holding land it has acquired under statutory powers for a particular purpose for which it is not yet required. It is not required to apply the land for that purpose and it may decide not to do so and for example to sell the land or use it for some other purpose. Moreover, even while holding the land for a particular purpose, the local authority may be using it for another purpose because it is not required for the statutory purpose for which it is appropriated at that point in time (Local Government Act 1972, section 120(2)). The factual scenario in Newhaven was different: the harbour company was already in operation and the beach was liable to be involved in its then current trading operations. The case shows that incompatibility is not a purely legal matter depending on the existence of statutory powers which if exercised would be inconsistent with use of the land as a TVG. It is necessary on the facts to be satisfied that that is likely to occur after registration. It requires a real world assessment of the situation. The court is not precluded from looking at the facts subsequent to the acquisition of the land any more than the determination as to the reasonableness of a landlords refusal to give a consent under a lease is restricted to the facts known to the parties at the date of the lease (see Ashworth Frazer Ltd v Gloucester City Council [2001] 1 WLR 2180). Interpreting the decision of this Court in Newhaven In the Newhaven case, the harbour company (NPP) had a statutory duty to maintain a harbour. The dispute concerned a tidal beach in one part of the harbour which as it happened was no longer operational. The Beach had been used for the past 80 years or so by members of the locality. The issue with which these appeals are concerned is the issue in that case as to whether the Beach could be registered as a TVG. This court held that the land in issue, namely the Beach, could not be registered as a TVG. In Newhaven, Lord Neuberger and Lord Hodge jointly gave the leading judgment. The other members of the Supreme Court agreed with them. Lord Carnwath also wrote a concurring judgment. On these appeals, Lord Carnwath and Lord Sales examine the leading judgment in detail. They conclude that Lord Neuberger and Lord Hodge held that, where a person applies to register as a TVG land which is held for statutory purposes which would be inconsistent with the land also being TVG, the land is not capable of being so registered, and that the question is purely one of statutory construction. Thus, Lord Neuberger and Lord Hodge formulated the relevant question as, at para 93: does section 15 of the 2006 Act apply to land which has been acquired by a statutory undertaker (whether by voluntary agreement or by powers of compulsory purchase) and which is held for statutory purposes that are inconsistent with its registration as a town or village green? Having stated that question, Lord Neuberger and Lord Hodge immediately answered it by the following sentence: In our view it does not. In that sentence, the word it, as I read it, refers to section 15 itself. The next sentence in the judgment of Lord Neuberger and Lord Hodge states (also at para 93): Where Parliament has conferred on a statutory undertaker powers to acquire land compulsorily and to hold and use that land for defined statutory purposes, the 2006 Act does not enable the public to acquire by user rights which are incompatible with the continuing use of the land for those statutory purposes. That sentence makes it clear that Lord Neuberger and Lord Hodge regarded use as a critical issue. That clearly involves fact. Moreover, the expression continuing use also makes it clear that they regarded the operations of NPP as constituting use which was being perpetuated and that that was so even though the tidal beach which was in issue was in a part of the harbour which was not itself being used. It is further clear from that sentence, in my judgment, that the Supreme Court was not considering the question what would happen if the relevant use had never started or if the relevant land had become surplus to the obligation or power to carry out any particular activity which had been imposed by Parliament. We have not been shown any statutory requirement that a public authority should regularly consider the need for any land and if thought fit dispose of land which is not required for some purpose for which it was acquired, so it may end up holding land for which it has no further need. The local authority could voluntarily appropriate the land to some other purpose but, if it fails to reconsider the use for which it acquired land, or appropriates it to some other use, it is likely that the only basis on which the local authoritys decision or omission to act could be challenged would be on the basis that its decision attained the standard of irrationality, which is a high standard for an applicant to have to meet. Under the judgment of Lord Carnwath and Lord Sales, that land would remain immune from the accrual of rights leading to registration as a TVG even though there would not in fact be any irreconcilability between registration and the statutory power for which the land was conferred. It is not clear what on this basis would happen if the local authority accepts that the original purpose is spent and after the application is made decides to appropriate the land to some other statutory purpose. Furthermore, in Newhaven, para 96, Lord Neuberger and Lord Hodge held: 96. In this case, which concerns a working harbour, it is not necessary for the parties to lead evidence as to NPPs plans for the future of the Harbour in order to ascertain whether there is an incompatibility between the registration of the Beach as a town or village green and the use of the Harbour for the statutory purposes to which we have referred. Such registration would clearly impede the use of the adjoining quay to moor vessels. It would prevent the Harbour authority from dredging the Harbour in a way which affected the enjoyment of the Beach. It might also restrict NPPs ability to alter the existing breakwater. All this is apparent without the leading of further evidence. It follows that they regarded it as important that the harbour in question was a working harbour and that there was a risk of a clash between the registration of the Beach and the use of the harbour for the statutory purposes. They considered that registration would inhibit the use of the adjoining quay to moor vessels. It would prevent the harbour authority from dredging the harbour in a way which affected the enjoyment of the Beach and restrict its ability to alter the existing breakwater. So, I deduce from that paragraph that Lord Neuberger and Lord Hodge also regarded it as important that there was factual evidence establishing the continuing use and the impact of registration on that use. There had to be real, not theoretical, incompatibility. Lord Neuberger and Lord Hodge continue at the end of that paragraph to observe: All this is apparent without the leading of further evidence. The word further confirms that the preceding analysis involved a consideration of the evidence on the ground. In fact the further evidence appears to have been evidence as to plans to upgrade the harbour and use it as a container terminal: see the judgment of Ouseley J in R (Newhaven Port & Properties Ltd) v East Sussex County Council [2012] 3 WLR 709, para 127. In para 97, Lord Neuberger and Lord Hodge continue by summarising further matters on which the harbour company relied, but it was not necessary in the light of the conclusion in para 96 to consider those matters. It is to be noted that in para 97, Lord Neuberger and Lord Hodge refer to an incompatibility between the proposed TVG registration and the statutory functions of NPP, which they add: continues to operate as a working harbour This is an express reference to the state of fact. It would clearly have been material if the harbour company held the land but had ceased its statutory functions. In paras 98 to 101, Lord Neuberger and Lord Hodge refer to previous leading cases to show that the question of statutory incompatibility had not previously had to be considered. But, importantly for my interpretation, they conclude that (at para 100): It was not asserted that the council had acquired and held the land for a specific statutory purpose which would be likely to be impeded if the land were to be registered as a town or village green. So, in a case concerned with future use, the court must consider if the statutory purpose would be likely to be impeded, not likely to be impeded if invoked. Lord Neuberger and Lord Hodge clearly envisaged that there would have to be a factual inquiry as to future use and that it would have to be shown that TVG registration would be likely to impede the exercise of those powers. Lack of impediment can logically be shown either by showing that the local authority has acquired the land for purposes (eg recreational purposes) which are not inconsistent with registration as a TVG, or by showing that there is no realistic likelihood of the land being used for the purposes for which it was acquired. held: In addition, at para 101 of their judgment, Lord Neuberger and Lord Hodge In our view, therefore, these cases do not assist the respondents. The ownership of land by a public body, such as a local authority, which has statutory powers that it can apply in future to develop land, is not of itself sufficient to create a statutory incompatibility. By contrast, in the present case the statutory harbour authority throughout the period of public user of the Beach held the Harbour land for the statutory harbour purposes and as part of a working harbour. In that paragraph, Lord Neuberger and Lord Hodge addressed the question of a future development of the land. The mere power to undertake such development would not itself be sufficient to create a statutory incompatibility. They contrasted that with the position in the Newhaven case. Lord Neuberger and Lord Hodge again referred to the evidence that the tidal beach was part of the working harbour. Paragraph 102 dealt with the separate issue of user as of right and para 103 was the summary of the conclusion, which does not take the matter further. For the avoidance of doubt, I agree that this court should apply statutory incompatibility, the concept sought to be employed in Newhaven, to determine the question of inconsistency between the provisions of the 2006 Act enabling registration of land in issue on these appeals as TVGs and the statutory provisions, also conferred by public general Acts of Parliament, empowering the acquisition and holding of land by the public authorities in both appeals. However, in my judgment, that concept is as a matter of constitutional principle to be interpreted as I have explained in para 78 above. Determination of incompatibility where the issue arises from a future use The use relied on by the local authority in the Lancashire case in relation to Areas A and B is, as in Newhaven, a current use, and my analysis of Newhaven detailed above does not lead to any different conclusion in relation to those Areas from that reached by Lord Carnwath and Lord Sales. I would accept the submission of Mr Douglas Edwards QC, for Lancashire County Council, that in practice the land could not be used by the primary school currently using it when there was unrestricted public access as this would not be consistent with the schools safeguarding obligations: this may be inferred from the fact that the site is currently fenced. Schools are responsible for creating and maintaining a safe environment for their pupils. Mr Edwards submission on this point was not challenged on these appeals. However, as I shall next explain, where the use is only a use which may occur in the future, my analysis makes it necessary to answer further questions before any conclusion about statutory incompatibility can be reached. This has a practical impact in relation to Areas C and D in the Lancashire case. Those Areas have never been used for the statutory purpose of education for which they were acquired and are now held. That raises the question, what test should apply if the case is only one of possible future use? Must it be shown that it is simply possible that the land may be used for the statutory purpose or must it be shown that it is reasonably likely or foreseeable that it will be so used? These questions did not directly arise in Newhaven. In answering these questions, I have found assistance in the decision of the House of Lords in British Transport Commission v Westmorland County Council [1958] AC 126, in which a railway company contended that it would have been inconsistent with the statutory powers conferred on it for the public to have a right of way over a bridge spanning the railway line (originally built for private benefit) and that accordingly its predecessor (another statutory company) could not have dedicated it to the public. In Newhaven, Lord Neuberger and Lord Hodge cited the judgment of Lord Keith of Avonholm in this case as authority for the proposition that incompatibility with an Act of Parliament is a question of fact, at para 87: In British Transport Commission [1958] AC 126, 164 165 Lord Keith of Avonholm commented on Lord Kinnears opinion in Magistrates of Edinburgh, suggesting that it would be going too far to hold that the public could never acquire a right of way over railway property but acknowledging that incompatibility with the conduct of traffic on the railway could bar a public right of passage. He opined at p 166, that incompatibility was a question of fact and that it was for the statutory undertaker to prove incompatibility. The other members of the House also treated it as a question of fact (see Viscount Simonds at p 144, Lord Morton of Henryton at p 149, Lord Radcliffe at p 156, Lord Cohen at p 163 and Lord Keith at p 166). Moreover, they held that, to show compatibility, it was not necessary to show that there were no circumstances in which a conflict could arise. That would make it impossible for members of the public ever to acquire a public right of way over land belonging to the railway company. The House also rejected the argument that a statutory company could not grant an easement over a footpath over its railway. To hold otherwise would be a grave impediment to public amenity (per Lord Radcliffe at p 153). It was unlikely on the facts that the railway company would ever need to pull the bridge down. The relevant question was whether a conflict, or incompatibility, was reasonably foreseeable. Thus, Viscount Simonds (at p 144), Lord Morton (at p 149) and Lord Keith (see p 166) rejected the following test: was it possible that land would be used in future for a certain purpose? They considered that the normal statutory burden should apply and be discharged, namely that it should be shown that the use was reasonably likely to occur. The House considered the question on a current basis and did not decide whether the critical time was the date of dedication or some other date (see for example pp 144 145). At all events it did not seek to determine the question as at the date of the incorporation of the statutory company when its statutory powers were conferred. In my judgment, the test of reasonable foreseeability is the correct test also to apply in this context, ie when asking whether there is incompatibility between registration of land as a TVG and the statutory powers of a public authority in relation to the same land where the relevant use that the public authority might make of the land under those powers is a potential future use which has not yet started. It is said by Lord Carnwath and Lord Sales that this test is not clear. It may not be easy to apply on the facts but that is necessarily so if the law applies a solution which is fact dependent rather than drawing a bright line as the majority does. Lord Neuberger and Lord Hodge refer to the Westmorland case at two points in their judgment. In the light of their conclusion that the evidence as to current use was sufficient it was not necessary for them to consider it in any further detail, but they would not have cited it if they did not approve of its approach. If I am right there is no question of the use of land being stymied by the 2006 Act (cf para 61 above). Circumstances may have moved on and the public authority may no longer require the land it is holding for any particular statutory purpose. Application of the principles to the facts of the appeals (1) The Lancashire appeal The issue of future use of the land arises on the Lancashire appeal in relation to Areas C and D. The local authority in the Lancashire appeal did not adduce evidence that it was reasonably likely that these Areas would be used for educational purposes in the future. There had in the past been a plan to relocate a school on this area but that was not proceeded with and there was no substitute. Moreover, those Areas had never been used for educational purposes. Accordingly, as I see it, those plots should have been registered as a village green. The only objection to doing so was one of statutory incompatibility and as I see it, that fails on the facts. The position is different in relation to Areas A and B which are currently used for educational purposes. Importantly, as I read the facts, the sites cannot be registered as TVGs and be school playgrounds at the same time for the reason that this would be inconsistent with the schools safeguarding duty. The school has an obligation to provide outdoor space as a playground under regulation 10 of the School Premises (England) Regulations 2012, and that is its current use. The inspector did not reach any conclusion on the question of the compatibility in fact of the current use of Areas A and B with their registration as TVGs, and she expressly left open the door to further evidence on incompatibility. (2) The Surrey appeal In the Surrey appeal, the result is different because the site in issue lies immediately next to the hospital. On the basis of my judgment, the correct legal test applying to future use was not applied. There have been no findings of fact as to whether it is reasonably foreseeable that even now the land will be used for the statutory purposes for which it is currently held. In those circumstances, in my judgment, this matter should be remitted to the registration authority for a decision on that issue. Restrictions on TVG registration in the Growth and Infrastructure Act 2013 Lord Carnwath and Lord Sales begin their judgment with an analysis of the development of the law on TVGs since the report of the Royal Commission on Common Land 1955 1958 (1958) (Cmnd 462), chaired by Sir Ivor Jennings QC, which led to the Commons Registration Act 1965. Undoubtedly that Act and its successor, the 2006 Act, have led to the registration of TVGs at a more significant level than can have been envisaged by the Royal Commission. Accordingly, it is now an inescapable fact that the actual use of the TVG legislation has, in the light of practical experience and the needs and expectations of local communities up and down the country, eclipsed the original conception of a more limited role for TVG registration. The clock cannot be turned back. Moreover, Parliament has essentially given its approval to that use in later legislation. The Growth and Infrastructure Act 2013 (the 2013 Act) introduced a package of measures designed to restore the balance between the public and landowners but retaining the same basic system of registration. The three main changes brought about by the 2013 Act in this connection can be summarised, and it will be seen that they were substantial: (1) The period within which a person may apply to register land as a TVG after the landowner has terminated the use by members of the public without permission has been reduced from three years to one year (2006 Act, section 15(3A) as amended). (2) The 2013 Act has inserted a new section 15C into the 2006 Act terminating the publics right to apply to register land as a town or village green after any one of a range of trigger events occurs. These include an application for planning permission. The right to apply for registration as a TVG will arise again if a terminating event occurs, namely (in the case of an application for planning permission) the planning application is withdrawn, is refused or expires, or the local planning authority (LPA) does not determine it. (Where the planning application is for a project of public importance under section 293A of the Town and Country Planning Act 1990, the right to make an application to register as a TVG does not arise where the LPA declines to determine it.) (3) Landowners have a new right to deposit statements with the appropriate registration authority with respect to any land and this will have the effect of terminating any existing or accruing rights to register that land as a TVG (2006 Act, section 15A, as amended). Landowners already had a right to apply to deregister land as a TVG, but comparable land must be offered in exchange (2006 Act, section 16). Lord Carnwath and Lord Sales are right to say that these changes are not directly relevant, and there is no information about any fall in the number of TVG registrations. However, these changes are important. It is open to public authorities to take advantage of these changes (and this is my core answer to the points that Lord Carnwath and Lord Sales make in para 64 above). They show, among other matters, that Parliament did not consider that there should be some special exemption applying in respect of all publicly held land. That may be a recognition of the fact that public bodies may be holding land which is surplus to their statutory requirements. While many statutes confer a power on statutory bodies to acquire and hold land, we have not been shown any provision requiring the body on which the power is conferred to sell it when it becomes clear that the land is not required or is no longer required for the purpose for which it was acquired. If a public authority took no action to dispose of land it did not need, it might well be difficult to obtain judicial review of its action as irrationality may have to be shown. Moreover, Parliament took no steps in the 2013 Act to revise the conditions for registration for TVGs. Judgment of Lord Wilson Since circulating the first draft of my judgment I have had the benefit of reading the judgment of Lord Wilson. He agrees with the approach of the Court of Appeal [2018] 2 P & CR 15. I have great admiration for his judgment and that of Lindblom LJ, with which Jackson and Thirlwall LJJ agreed. In particular, I agree with the three general points made by Lindblom LJ in para 36 of his judgment. In a sense my approach might be described as a halfway house between their judgments and that of Lord Carnwath and Lord Sales. The ten judges who have considered the issues on these appeals have unfortunately been very divided. For my own part, I do not consider that the view of the Court of Appeal addresses the effect on incompatibility of the possibility of future use of the sites sought to be registered as TVGs, or the intention of Parliament in such cases. However, if I am wrong on the approach I have taken, I would adopt that of Lord Wilson and the Court of Appeal in preference to that of Lord Carnwath and Lord Sales. Respectfully, their approach results in introducing into the legislation a blanket exemption for public authorities which Parliament has not itself expressly given. Parliament has instead provided all landowners with other measures which they can use to protect their position for the future. Limiting the issue of incompatibility to a desktop exercise of considering the statutory powers of the landowner, without reference to the facts on the ground, runs the risk, to borrow Lord Radcliffes words in British Transport Commission at p 153, of a grave impediment to public amenity. There will potentially be a loss of access by the public to land which they have used for very many years. Conclusion My approach to statutory incompatibility in my judgment strikes a fairer balance between the public interest in the use of land by the public authority for the appropriated statutory purpose and that of the public who are intended by the 2006 Act to have a right of access to recreational spaces than the approach of Lord Carnwath and Lord Sales. That is my principal answer to the points which they make in paras 61 to 64 and 67 to 71 above and my other responses to those paragraphs appear from this judgment. My judgment does not as suggested in any way involve frustrating the intention of Parliament since the statutory powers under which the public authority holds the land will prevail if it is shown that there is a current use of the land in exercise of those powers, or that it is reasonably foreseeable that such use will occur (se para 77 above). Accordingly, I would hold that the appeal in Lancashire should be allowed in part and that in Surrey the appeal should also be allowed on the basis that the matter remitted to the registration authority for a determination of the application in accordance with this judgment. LORD WILSON: (dissenting) I would have dismissed both appeals. Although I hold each of my three colleagues in the majority in the highest esteem, I am driven to suggest that today they make a substantial inroad into the ostensible reach of a statutory provision with inadequate justification. It is agreed that, in their capacity as education authorities, local authorities, such as the appellant in the Lancashire case, can hold land only for specified statutory purposes referable to education; that health authorities, such as the appellant in the Surrey case, can hold land only for specified statutory purposes referable to health; and that, for example, in their capacity as housing authorities, local authorities can hold land only for specified statutory purposes referable to housing. If public authorities which hold land for specified statutory purposes are to be immune from any registration of it as a green which would be theoretically incompatible with their purposes, the reach of section 15 of the Commons Act 2006 Act is substantially reduced. One would expect that, had such been its intention, Parliament would have so provided within the section. In the absence of any such provision, whence does justification for it come? It comes, according to todays ruling, from the decision of this court in the Newhaven case, cited in para 1 above, from which the court would in any event be able to depart if necessary. In my view interpretation of that decision by todays majority is controversial. The claim in para 11 above that their interpretation represents no more than consolidation of the law is unfortunately not one to which I can subscribe. The decision in the Newhaven case wrought an exception to the availability of registration under section 15. It is always dangerous to interpret an exception too widely lest it becomes in effect the rule and the rule becomes in effect the exception. In the Newhaven case statutes had cast upon the harbour authority, as the owner/operator of the port, specific duties in relation to that particular harbour; and the operational land of that harbour included that particular beach. An Act of 1847 obliged the authority to maintain and support that harbour. An Act of 1878 obliged it to keep that harbour open to all for the shipping and unshipping of goods and the embarking and landing of passengers. Incidental to these obligations were statutory powers, including one in an instrument of 1991 to dredge the foreshore of that harbour. Were it to exercise its power to dredge the area of the foreshore to the east of the breakwater, the authority would destroy the beach. It is therefore no surprise to read within the joint judgment of Lord Neuberger and Lord Hodge emphasis on the statutory duties cast upon the authority in relation to that particular harbour; no surprise that, in the opening paragraph they described the relevant point of principle as the interrelationship of the statutory law relating to village greens and other duties imposed by statute (emphasis supplied); and no surprise that, at the outset of the crucial paragraph (namely para 93, set out in para 48 above), in which they set out their reason for allowing the appeal on the relevant point, they stated: The question of incompatibility is one of statutory construction. What did Lord Neuberger and Lord Hodge mean by statutory construction? They meant conflict between two statutory regimes. They explained in the same paragraph that, where such conflict existed, some assistance may be obtained from the rule that a general provision does not derogate from a special one , which is set out in Bennion, Statutory Interpretation, 6th ed (2013), p 281: Where the literal meaning of a general enactment covers a situation for which specific provision is made by another enactment contained in an earlier Act, it is presumed that the situation was intended to continue to be dealt with by the specific provision rather than the later general one. In the next paragraph they proceeded to explain that the specific duties conferred by statutes on the authority in relation to that harbour were incompatible with the general provision in the 2006 Act which, on the face of it, permitted registration of the beach as a green and that therefore the general provision had to give way. By contrast, statutory provisions which confer power to acquire and hold land, not there identified, for educational and health purposes, such as are in play in the present appeals, cannot be said to be incompatible with the general provision in the 2006 Act which, on the face of it, permits registration of the respective parcels of land as greens. No reason for the disapplication of section 15 of the 2006 Act is advanced other than the alleged effect of the decision in the Newhaven case. It is in the light of the above circumstances that I would have dismissed the appeals. Let me, however, suppose that my understanding of the decision in the Newhaven case is flawed; and that, had I better understood it, its reasoning would extend to the facts in these appeals. Even in those circumstances the majority falls, so I venture to suggest, into error. In The King v The Inhabitants of Leake (1833) 5 B and Ad 469 the issue was whether villagers in the fenlands were obliged to repair a road. If it had been dedicated as a public highway, they were obliged to do so. The land on which the road had been constructed was owned by commissioners who had bought it pursuant to statutory powers to drain specified fens and to keep them drained. They had constructed drains on it and, with the excavated earth, had built a wide bank which the villagers had used as a highway for more than 20 years. In the Court of Kings Bench the villagers contended that any dedication by the commissioners of the road as a public highway would have been inconsistent with their powers. On behalf of the majority Parke J, later Lord Wensleydale, made clear that the contention should be addressed by means of a practical inquiry on the ground. He said at p 480: The question then is reduced to this, whether, upon the finding of the jury in this case, the public use of the bank as a road would interfere with the exercise of these powers? The answer was no. The Leake case demonstrates that for almost 200 years the law of England and Wales in relation to the capacity of a public authority to dedicate its land as a public highway, or indeed as a public footpath, has been to assess its alleged incompatibility with the statutory purposes for which the land is held on a practical, rather than a theoretical, basis. Such is made clear in the Opinions of the appellate committee of the House of Lords in British Transport Commission v Westmorland County Council [1958] AC 126, cited in para 71 above. A railway company was authorised by statute to buy land in Kendal for the purposes of operating a railway and to build bridges across it where necessary. On one of its bridges it built a footpath, which the public had used for more than 20 years. The question was whether, in the light of the limited statutory purposes for which it could hold land, the company could have dedicated the footpath as a public highway. Applying the Leake case, the appellate committee held that the answer was to be found by determining whether the use of the footpath by the public was incompatible with the statutory purposes; that incompatibility was a question of fact (p 143); that the test was pragmatic (p 152); that the question was not whether it was conceivable but whether it was reasonably foreseeable that the public use of the footpath would interfere with the companys use of its land in the exercise of its powers for the statutory purposes (p 144); that the burden lay on the company to establish that it was reasonably foreseeable (p 166); and that, by reference to the case stated by the local justices, the company failed to discharge that burden. In para 78 of their judgment in the Newhaven case Lord Neuberger and Lord Hodge explained the decision in the Westmorland case. In paras 77 and 91 they stressed that, like other decisions which they examined and which related to the acquisition of prescriptive rights under English and Scots law, the decision applied only by analogy to the statutory registration of a green on land owned pursuant to statutory purposes. Nevertheless, in a case in which the objection to registration as a green is cast as incompatibility with statutory purposes, there is in my view every reason to assess incompatibility in accordance with the approach adopted in the Leake case and indorsed in the Westmorland case. I am convinced that in the Newhaven case such was also the view of Lord Neuberger and Lord Hodge, and indeed of Lady Hale and Lord Sumption who agreed with them. I refer to four passages in the joint judgment. First, from para 91: It is significant in our view that historically in both English law and Scots law, albeit for different reasons, the passage of time would not give rise to prescriptive acquisition against a public authority, which had acquired land for specified statutory purposes and continued to carry out those purposes, where the user founded on would be incompatible with those purposes. (Emphasis supplied) Second, from the crucial para 93: Where Parliament has conferred on a statutory undertaker powers to acquire land compulsorily and to hold and use that land for defined statutory purposes, the 2006 Act does not enable the public to acquire by user rights which are incompatible with the continuing use of the land for those statutory purposes. (Emphasis supplied) Third, the whole of para 96: In this case, which concerns a working harbour, it is not necessary for the parties to lead evidence as to [the authoritys] plans for the future of the Harbour in order to ascertain whether there is an incompatibility between the registration of the Beach as a town or village green and the use of the Harbour for the statutory purposes to which we have referred. Such registration would clearly impede the use of the adjoining quay to moor vessels. It would prevent the Harbour authority from dredging the Harbour in a way which affected the enjoyment of the Beach. It might also restrict [the authoritys] ability to alter the existing breakwater. All this is apparent without the leading of further evidence. And fourth, from para 101: The ownership of land by a public body which has statutory powers that it can apply in future to develop land, is not of itself sufficient to create a statutory incompatibility. By contrast, in the present case the statutory harbour authority throughout the period of public user of the Beach held the Harbour land for the statutory harbour purposes and as part of a working harbour. (Emphasis supplied) It thus seems clear from the Newhaven case that registration of the beach as a green was there precluded as incompatible with the existing use of the land as a working harbour; and that, in the absence of existing use of the land, the public authority needs to adduce evidence. What evidence? Evidence which makes it reasonably foreseeable that public use of the land as a green would in practice interfere with a proposed exercise of the authoritys powers in relation to the land for the statutory purposes. It follows that I respectfully disagree with the suggestion in paras 65 and 66 of the judgment of Lord Carnwath and Lord Sales that incompatibility with statutory purposes should be assessed as a theoretical exercise rather than by means of a practical inquiry into interference with the authoritys existing or proposed future use of the land. Adopting what I believe to be the correct, practical, approach to the assessment of incompatibility in relation to the present appeals, I agree with the Court of Appeal that neither the education authority nor the health authority has established that public use of its land as a registered green would be likely to be incompatible with its use of it pursuant to its statutory powers. In the Lancashire case the Inspector conducted the requisite practical assessment, which led her to reject the alleged incompatibility; and, like the Court of Appeal, Ouseley J in the Administrative Court found no fault with her reasoning. I discern no ground upon which this court might have concluded otherwise. In the Surrey case the Inspector, while recommending refusal of the application for a different reason later shown to be invalid, also rejected the alleged incompatibility on apparently practical grounds; and the error of law which Gilbart J in the Administrative Court perceived him to have made in assessing it practically rather than as a matter of statutory construction was in my view correctly held by the Court of Appeal to have been no error at all. It was with complete passivity that, for no less than 20 years, these two public authorities contemplated the recreational use of their land on the part of the public. Their simple erection at some stage during that period of signs permitting (or for that matter prohibiting) public use would have prevented such use of the land being as of right: Winterburn v Bennett [2016] EWCA Civ 482, [2017] 1 WLR 646. In such circumstances it is hardly surprising that they both failed to establish its practical incompatibility with their own proposed use of it. |
This is another round in the series of important points of law which arise as preliminary issues in actions brought by people who claim to have been wrongfully detained or mistreated by British or American troops in the course of the conflicts in Iraq and Afghanistan. The litigation is being expertly managed by Leggatt J, but so far there have been no trials and so the points of law are being decided mainly on the basis of assumed facts. To summarise the issues which have so far been heard in this court: (1) Mr Rahmatullah is a Pakistani national who was captured by the British forces in Iraq on 28 February 2004, transported to a United States detention facility that same day, and transferred by the US to a detention facility in Afghanistan on 29 March 2004, where he remained until his release on 15 May 2014. He is suing the Ministry of Defence and the Foreign and Commonwealth Office, first in respect of the United Kingdoms own treatment of him, and second in respect of the UKs alleged complicity in his detention and treatment by the United States. In relation to the second aspect of his claim, the UK government has raised the defences of state immunity and foreign act of state. The arguments relating to these defences were heard together with the claims of Mr Belhaj and his wife, Mrs Boudchar, against Mr Jack Straw and a number of UK officials and agencies, for alleged complicity in their rendition by Malaysian, Thai and US officials to Libya and their detention and torture there, where the same defences were raised. Judgment is given today: see Belhaj and another (Respondents) v Straw and others (Appellants) and Rahmatullah (No 1) (Respondent) v Ministry of Defence and another (Appellants) [2017] UKSC 3. In relation to the first aspect of his claim, which is based on both the Iraqi law of tort and the UK Human Rights Act 1998, the UK Government has raised the doctrine of Crown act of state in relation to the tort claim, and this judgment is concerned with that doctrine. (2) A large number of Iraqi citizens have made claims similar to that of Mr Rahmatullah in respect of their detention and treatment by UK troops and transfer to the US authorities at various times during the UKs military presence in Iraq. In relation to many of these claims, the UK Government raised the defence that they were statute barred by the Iraqi law of limitation. Judgment on that issue was given on 12 May 2016: see Iraqi Civilians v Ministry of Defence [2016] UKSC 25; [2016] 1 WLR 2001. The UK Government has also raised the doctrine of Crown act of state. Three of the claimants, known as XYZ, ZMS and HTF, have been chosen as representative for the purpose of deciding this issue. (3) Mr Serdar Mohammed is an Afghan national who was captured in a planned International Security Assistance Force (ISAF) operation targeting a senior Taliban commander on 7 April 2010. He was detained by British troops until 25 July 2010 when he was transferred into Afghan custody. He was subsequently tried, convicted and sentenced to ten years imprisonment for offences relating to the insurgency in Afghanistan. He too claims that his detention was unlawful both under the Afghan law of tort and the Human Rights Act 1998. In relation to his Human Rights Act claim, the UK Government argues that his detention was not in breach of article 5 of the European Convention on Human Rights, because article 5 has to be modified to take account of detention during armed conflict which is permitted, either under resolutions of the United Nations Security Council or under International Humanitarian Law. The argument about article 5 was heard together with a similar argument raised against the Ministry of Defence by Mr Al Waheed, an Iraqi national detained in the course of the conflict in Iraq. Judgment is given today: see Abd Ali Hameed Al Waheed (Appellant) v Ministry of Defence (Respondent) and Serdar Mohammed (Respondent) v Ministry of Defence (Appellant) [2017] UKSC 2. In relation to Mr Mohammeds tort claim, the UK Government has raised the same doctrine of Crown act of state as is raised in Mr Rahmatullahs and the Iraqi civilians cases, and with which this judgment is concerned. (4) For completeness, there should also be mentioned the claims brought by the PIL three under both the Human Rights Act 1998 and UK public law in respect of their detention in Afghanistan. They bring no claim under the Afghan law of tort and so the question of Crown act of state does not arise in their cases. The issues relating to Crown act of state So what is this doctrine of Crown act of state? An act of state has been very widely defined, for example, by ECS Wade (in Act of State in English Law: Its Relations with International Law (1934) 15 British Yearbook of International Law 98, at p 103): Act of state means an act of the Executive as a matter of policy performed in the course of its relations with another state, including its relations with the subjects of that state, unless they are temporarily within the allegiance of the Crown. That definition is cited, not entirely approvingly, in the leading case of Nissan v Attorney General [1970] AC 179, at 212 (Lord Reid), 218 (Lord Morris) and 231 (Lord Wilberforce). It is also cited in the footnotes to the current issue of Halsburys Laws of England, with the comment that act of state is not a term of article Halsbury refines the definition slightly: An act of state is a prerogative act of policy in the field of international affairs performed by the Crown in the course of its relationship with another state or its subjects. No doubt it is a necessary component of the doctrine that the act in question falls within some such definition. But, as Lord Wilberforce pointed out in Nissan, that does not tell us what the doctrine is, or to what rule or rules of law it gives rise. The doctrine is very rarely pleaded and so recent authority is scant. In this century, it has been raised in the context of the conflicts in Iraq and Afghanistan, first in Al Jedda v Secretary of State for Defence (No 2) [2010] EWCA Civ 758; [2011] QB 773, which was decided on other grounds, and now in the current cases. In the 20th century, there are only two reported House of Lords cases in which it was raised, Johnstone v Pedlar [1921] 2 AC 262 and Nissan v Attorney General, above, and in neither of them was it successful, although it did succeed in a number of Indian appeals before the Judicial Committee of the Privy Council. We have therefore to go back to the 19th century and beyond to discover its origins and rationale. The starting point is that English law does not recognise that there is an indefinite class of acts concerning matters of high policy or public security which may be left to the uncontrolled discretion of the Government and which are outside the jurisdiction of the courts (H Street, Governmental Liability, A Comparative Study, Oxford University Press, 1953, p 50). That there is no general defence of state necessity to a claim of wrongdoing by state officials was firmly established in the landmark case of Entick v Carrington (1765) 19 St Tr 1029, following on from Leach v Money (1765) 19 St Tr 1001 and Wilkes v Wood (1763) 19 St Tr 1029. This principle was reiterated by Viscount Finlay in Johnstone v Pedlar, at 271: It is the settled law of this country, applicable as much to Ireland as to England, that if a wrongful act has been committed against the person or the property of any person the wrongdoer cannot set up as a defence that the act was done by the command of the Crown. The Crown can do no wrong, and the Sovereign cannot be sued in tort, but the person who did the act is liable in damages, as any private person would be. It was thus no defence to a claim for the return of money and a cheque, taken by the police from a person arrested in Ireland for illegal drilling in 1918, that the Chief Secretary for the Treasury had signed a certificate formally to ratify, adopt and confirm the said seizure and detention of the said cash and cheque as an act of state for the defence of the realm and for the prevention of crime. It made no difference that the person arrested was a US citizen: the United Kingdom was not at war with the United States. As a friendly alien resident here he was a subject by local allegiance with a subjects rights and obligations, per Viscount Cave at 276. However, there was an exception, which Viscount Finlay stated in very wide terms, at 271: This rule of law has, however, been held subject to qualification in the case of acts committed abroad against a foreigner. If an action be brought in the British Courts in such a case it is open to the defendant to plead that the act was done by the orders of the British Government, or that after it had been committed it was adopted by the British Government. In any such case the act is regarded as an act of state of which a municipal court cannot take cognizance. The foreigner who has sustained injury must seek redress against the British Government through his own Government by diplomatic or other means. The question for this court is whether there is indeed a qualification such as that expressed by Viscount Finlay and, if so, how far that qualification goes. It is not contended on behalf of the Government that it is so broad as to cover any act committed against a foreigner abroad which is authorised or ratified by the Crown. The contention of the Government is that the doctrine of Crown act of state covers two distinct principles. The first is a principle of non justiciability: this is that certain acts committed by a sovereign state are, by their very nature, not susceptible to adjudication in the courts. The obvious examples (given by Lord Pearson in Nissan v Attorney General, at 237) are making war and peace, making treaties with foreign sovereigns, annexations and cessions of territory. The second is a defence to an action in tort: that a foreigner cannot sue the Government, or its servants or agents, in the courts of this country in respect of certain acts committed abroad pursuant to deliberate UK policy in the conduct of its foreign affairs. The respondent claimants, on the other hand, argue that there is only the first rule, a narrow rule of non justiciability whereby certain acts of government in the conduct of foreign affairs are by their very nature not justiciable in the courts. The decision to go to war in Iraq, and to remain there after the cessation of hostilities between the allied invaders and the state of Iraq in order to bring about internal peace and stability, and the decision to contribute to the International Security Assistance Force in Afghanistan, were of that nature. But the decision to detain these particular individuals in the course of those operations was of a completely different character. The question of whether the detention of an individual is lawful, under whichever system of law is applicable, is quintessentially a matter for a court (per Leggatt J, in Mohammed v Ministry of Defence [2014] EWHC 1369 (QB), para 381). None of the reasons that might make it non justiciable (helpfully summarised at para 377, referring to Buttes Gas and Oil Co v Hammer (No 3) [1982] AC 888 and R (Al Haq) v Secretary of State for Foreign and Commonwealth Affairs [2009] EWHC 1910 (Admin); see also Shergill v Khaira [2014] UKSC 33; [2015] AC 359) apply: there is no absence of judicial or manageable standards by which to judge it; the courts have the relevant expertise; and this is not a matter of high policy, which is constitutionally in the hands of Government Ministers who are accountable to Parliament and not in the hands of the courts. For those reasons, in Mr Mohammeds case, Leggatt J held that the non justiciability rule did not apply. However, he went on to hold that the tort defence did apply, at para 395: It is not the business of the English courts to enforce against the UK state rights of foreign nationals arising under Afghan law for acts done on the authority of the UK government abroad, where to do so would undercut the policy of the executive arm of the UK state in conducting foreign military operations. He went on to emphasise how narrow this second rule was: it applied only to executive acts done abroad pursuant to deliberate UK foreign policy and might well be confined to acts involving the use of military force (para 397). It was analogous to the conflict of laws rule that English courts will not enforce a right arising under the law of a foreign country if to do so would be contrary to English public policy, and to the rule that English courts will not enforce the penal, revenue and public law of a foreign state (para 396). He returned to this question in the case of Mr Rahmatullah and the Iraqi civilians and rejected the argument that there was no good authority for such a rule; he also rejected the arguments that, if there were, it had been abolished by the Crown Proceedings Act 1947 or was incompatible with the right to a fair hearing under article 6 of the European Convention on Human Rights: Rahmatullah v Ministry of Defence and Foreign and Commonwealth Office; R (Rahmatullah and Ali) v Secretary of State for Defence and Secretary of State for Foreign and Commonwealth Affairs [2014] EWHC 3846 (QB), paras 179 223. The cases were taken together in the Court of Appeal: Mohammed (Serdar) v Ministry of Defence, Qasim v Secretary of State for Defence, Rahmatullah v Ministry of Defence, Iraqi Civilians v Ministry of Defence [2015] EWCA Civ 843; [2016] 2 WLR 247. That court also accepted that there was a tort defence as well as a non justiciability rule. But it was an exception to the general principle that proceedings may be brought in this country founded on a tort which is actionable under the law of a foreign country where the law of that country is the applicable law. They agreed with the judge that the rationale for the exception was to be found in domestic public policy (para 349). Accordingly, it was necessary to identify, in each case, the public policy interests which justified denying access to the courts in this way (para 352). In Mr Mohammeds case there were no compelling considerations of public policy which should prevent reliance on Afghan law as the basis of his tort claims (para 364). In the other cases, the relevant facts and evidence had not yet been pleaded. The court held that claims would be barred by the doctrine of act of state only if the defendant is able to establish that there are compelling grounds of public policy to refuse to give effect to Iraqi law (para 377). On the Governments appeal against those decisions, therefore, the parties have defined the issues thus: (i) Is the doctrine of Crown act of state limited to a non justiciability rule or does it also encompass a tort defence? (ii) If it does encompass a tort defence, what is its scope? (iii) In particular, is the test to be applied, by analogy with section 14(3)(a) of the Private International Law (Miscellaneous Provisions) Act 1995, whether there are compelling grounds of public policy to refuse to give effect to the local law of tort? (iv) Was the tort defence extinguished by the Crown Proceedings Act 1947? (v) Is the tort defence incompatible with article 6 of the European Convention on Human Rights? It may well be, however, that issues (i), (ii) and (iii) can be reduced to a single issue, that is, the circumstances in which a claim is not cognisable in the courts of England and Wales because it relates to a Crown act of state. The following issues are not now in dispute: (i) if the doctrine is limited to a narrow non justiciability rule, of the sort identified before Leggatt J and the Court of Appeal, it is not applicable in these cases, for the reasons given by the judge; (ii) the doctrine is not a defence to claims made under the Human Rights Act 1998 and so those will continue in any event. For the purpose of the Crown act of state issue, it is to be assumed that the claimants detentions were in fact contrary to the Afghan or Iraqi laws of tort, although that too is in issue in the case of Serdar Mohammed. Some context In order to discover the nature and content of the doctrine, it will be necessary to look at some old authorities which, although culminating in Nissan v Attorney General, were decided against a legal landscape which was very different from the legal landscape of today. The conduct of foreign affairs, making treaties, making peace and war, conquering or annexing territories, are all aspects of the Royal prerogative. Until the decision of the House of Lords in Council of the Civil Service Unions v Minister for the Civil Service [1985] AC 374 (the GCHQ case), the general position was that the courts would review whether what had been done fell within the scope of the Royal prerogative but would not review how that prerogative had been exercised. After that case, the exercise of executive power might be excluded from the scope of judicial review, not because of its source, whether statute or the prerogative, but because of its subject matter: hence the need to distinguish between certain acts of high policy, which by their very nature are not subject to judicial review, and other actions taken in pursuance of that policy, which are. Second, the old cases were decided against the backdrop of the principle that the King can do no wrong. The King could not be sued in his own courts. The officials who carried out his policies could be sued for their unlawful actions, and the practice developed of nominating an official as a defendant to claims in tort. But the courts had to grapple with the circumstances in which the Kings prior authority or subsequent ratification might import the doctrine that the King could do no wrong and thus afford a defence to such a claim. We have already seen how the courts distinguished between acts done to foreigners abroad and acts done to citizens or residents here. The Crown Proceedings Act 1947 abolished the general immunity of the Crown from liability in tort and enabled litigants to sue Government departments such as the defendants in these cases. Thirdly, it may be worth bearing in mind that until the Private International Law (Miscellaneous Provisions) Act 1995, a tort committed abroad could only be the subject of a claim in the English courts if the conduct complained of was tortious, both by the law of the place where it took place and by the law of this country. This rule was abolished by the 1995 Act, which established the general rule that the applicable law in an action in tort is the law of the country in which the events took place. Hence it is now accepted that the tort claims have to be determined according to the law of Afghanistan or Iraq respectively, subject to the doctrine of Crown act of state if applicable, while the human rights claims have to be determined according to the Human Rights Act 1998. Finally, as already noted, the term act of state is also used in a completely different context, that of whether the courts of this country will adjudicate upon the acts of a foreign legislature or executive. Sometimes, of course, both doctrines may arise in the same case (they are both, for example, discussed by Lord Wilberforce in the leading case of Buttes Gas and Oil Co v Hammer (No 3) [1982] AC 888). And insofar as the doctrine of foreign act of state covers governmental acts outside the territory of the state concerned, there may be some similarities, as Lord Mance has shown. But Crown act of state was not raised as a defence in Belhaj v Straw and foreign act of state is not the subject matter of this judgment. Does the Crown act of state doctrine encompass two rules? The clearest judicial statement that the doctrine does encompass two rules is that of Lord Wilberforce in Nissans case, at 231: The first rule is one which provides a defendant, normally a servant of the Crown, with a defence to an act otherwise tortious or criminal, committed abroad, provided that the act was authorised or subsequently ratified by the Crown. It is established that this defence may be pleaded against an alien, if done abroad, but not against a friendly alien if the act was done in Her Majestys Dominions. It is supported in its positive aspect by the well known case of Buron v Denman (1848) 2 Exch 167 and in its negative aspect by Johnstone v Pedlar [1921] 2 AC 262. The second rule is one of justiciability: it prevents British municipal courts from taking cognisance of certain acts. The class of acts so protected has not been accurately defined: one formulation is those acts of the Crown which are done under the prerogative in the sphere of foreign affairs (Wade and Phillipss Constitutional Law, 7th ed (1956), p 263). As regards such acts it is certainly the law that the injured person, if an alien, cannot sue in a British court and can only have resort to diplomatic protest. How far this rule goes and how far it prevents resort to the courts by British subjects is not a matter on which clear authority exists. From the terms of the pleading it appears that it is this aspect of the rule upon which the Crown seeks to rely. It would appear, however, that the case was only concerned with the second, the non justiciability rule. The United Kingdom had made a treaty with the government of Cyprus (then an independent country) to provide troops in order to restore peace between the Greek and Turkish Cypriot communities. The claimant, a British subject, ran a successful luxury hotel near Nicosia. The British troops took over the hotel as their headquarters. No claim in tort was made in respect of the occupation of the hotel, to which the claimant had apparently consented. There was a tort claim in respect of damage to furniture and other chattels, but it was accepted that this should go to trial. The main claim was that there was a contractual right to compensation, which was disputed. But if there was such a contract, act of state could not be a defence. The disputed claim was one in restitution, for compensation for the use and occupation of the hotel. To this the government pleaded that the actions of the British forces in Cyprus were acts of state of Her Majesty on the territory of an independent sovereign performed in pursuance of an agreement with the Cyprus government and as such not cognisable by the court. The House of Lords unanimously rejected this defence, Lord Reid on the ground that it could not be pleaded against a British subject, but the other members of the House on the ground that the occupation of the hotel did not have the character of an act of state. A distinction should be drawn between the making of the treaty with Cyprus, which was an act of state, and the actions of the troops complained about, which were not so closely connected with the treaty as to amount to an act of state. Lord Morris regarded Professor Wades definition of an act of state (para 2 above) as helpful but went on to explain why it did not apply (at 218): I do not think that such actions as securing food or shelter in peace time for troops situate abroad are to be regarded as acts of the executive performed in the course of relations with another state within the conception of the above definition. But, even if they were, I would be surprised if the contention were advanced that it was a matter of policy on the part of the executive to take food or shelter and not to make payment. It is worth noting that the House rejected the contention that the UK was acting as agent for the government of Cyprus. But, as Lord Wilberforce pointed out at p 230, if it had been, then the doctrine of foreign act of state might well have applied: they would have been acts attributable to a foreign government in its own territory. As Lord Mance has shown in his judgment in Belhaj, that doctrine may extend to a states appropriation of property within its own territory even if this is illegal by the law of that state. The question for us is not whether the type of rule, with which Nissan was concerned, exists: there is no reason to doubt that it does. The question is whether a different type of rule, affording a tort defence even though the subject matter is entirely suitable for adjudication by a court, also exists. Although its existence was acknowledged in Nissan, and indeed Lord Morris stated that it was so recognised that it cannot now be overthrown (at 220), the foundations upon which it is built are very shaky. The source of such a rule is the direction to the jury by Parke B in the well known case of Buron v Denman (1848) 2 Exch 167, 154 ER 450 (the background is explained by C Mitchell and L Turano in C Mitchell and P Mitchell (eds), Landmark Cases in the Law of Tort (Hart, 2010) and also by A Perreau Saussine, British Acts of State in English Courts [2008] British Yearbook of International Law 176). Briefly, in 1835, as part of its campaign to suppress the slave trade, Britain made a treaty with Spain, which allowed British ships to stop and search Spanish vessels on the high seas if they were suspected of trading in slaves. Commander Denmans patrol was looking for slaving ships at the mouth of the Gallinas river in West Africa. He was asked by the Governor of Sierra Leone to liberate two British subjects who were being held as slaves in one of the barracoons (slave pens) on islands at the mouth of the river. Denman and his crew landed on the islands, chased away the Spanish slavers, and liberated the slaves they were trying to take with them. Denman then made a treaty with the local chiefs, outlawing slavery in their lands, handed over the slavers trade goods in return, took possession of the barracoons, liberated the slaves and burned the barracoons down. He carried several hundred former slaves back with him to Sierra Leone. He also rescued some of the slavers, who were fleeing local retribution, one of whom was Seor Buron. All of this was greeted with great jubilation when the news reached England, the Colonial Secretary and the Foreign Secretary exchanged letters praising Denmans actions, Parliament voted a bounty to him and his crew, and he was promoted to Captain. Seor Buron, however, brought an action in trespass against him, claiming damages for the loss of his chattels, including the slaves. Parke B directed the jury that, slave owning not being shown to be against the law in the Gallinas, Denmans actions could amount to a trespass; but their subsequent ratification by the Government turned them into an act of state, for which he could not be sued (although the judge left open whether Seor Buron might able to proceed against the Crown by petition of right or whether he could only pursue a remedy by diplomatic means, because this was irrelevant to the action he was trying). It appears that the only act of state case cited in argument was Elphinstone v Bedreechund (1830) 1 Kn 316, 12 ER 340. But that was essentially a non justiciability case: the issue was whether the Supreme Court of Bombay had jurisdiction to hear a claim for damages for the seizure of property of the governor of a fortress conquered in the course of military hostilities. There is a whole series of cases, not all of them easy to reconcile (helpfully discussed by Perreau Saussine, loc cit), concerning the appropriation of property in the course of annexing territory in India (and on occasions in Africa) supporting the proposition that the transactions of independent states between each other are governed by other laws than those which municipal courts administer: such courts have neither the means of deciding what is right, nor the power of enforcing any decision which they may make (Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 7 Moore Ind App 476, at 529, 19 ER 388, at 407; Cook v Sprigg [1899] AC 572, at 578). The leading case is Kamachee, where the East India Company, as agent for the British Crown, had seized the Raj of Tanjore, and the whole of the property of the Rajah, who had died without male issue, under Treaties authorising the annexation of the Raj. The Rajahs widow sued for the return of his private property. She succeeded in the Supreme Court of Madras but failed before the Judicial Committee of the Privy Council. No distinction could be drawn between private and public property for the purpose of such an act of state. Most of the discussion relates to the character of the act, but there is a brief reference to Buron v Denman. The subject matter of Buron v Denman, however, was something different. It was not a transaction between states. Denmans actions were not carried out on the high seas in accordance with the treaty with Spain. Britain was not at war with another state or conquering territory (although it could be said to be conducting a war on the slave trade). His actions were by ordinary standards, both of the local law and of English law, unlawful. The case has therefore been treated as establishing a defence to an action in tort over which the ordinary courts would otherwise have jurisdiction. It was so regarded by the House of Lords in Johnstone v Pedlar, in which the scope of such a defence was directly in point, and also in Nissan v Attorney General, where it was not. No doubt it was so regarded, in part at least, because this was how it was regarded by some eminent academic authorities. For example, Lord McNair, in International Law Opinions (1956) in a chapter dealing with The Position of the United Kingdom Government, its Servants and Agents, as Defendants instituted in Actions in British Courts, distinguished between (a) the defence called act of state available to certain defendants in British courts and (b) the rule which entirely excludes from British courts certain areas of British governmental action in the realm of foreign affairs. As to (a): Act of state has been defined in a standard text book as follows: The plea, act of state, can be raised as a defence to an act, otherwise tortious or criminal, committed abroad by a servant of the Crown against a subject of a foreign State or his property, provided that the act was authorised or subsequently ratified by the Crown. (citing Wade and Phillips, Constitutional Law (4th ed (1950), 193 196)) To this very wide definition McNair added the slight qualification: Its scope of operation is the whole field of governmental or official activity in relation to the Crowns dealings with foreign states. The only authorities cited are Buron v Denman, Johnstone v Pedlar, where the argument that it could be relied upon in claims brought by friendly aliens was rejected, and Commercial and Estates Co of Egypt v Board of Trade [1925] 1 KB 271, at 290 and 297, where the argument that it could be relied upon in respect of actions within the realm was rejected; however, Scrutton LJ noted that the owners of the cargo of timber on a British ship which had been requisitioned abroad during the first world war and brought to this country did not rely on any dealings with the cargo outside the realm for the probable reason that on the authority of such cases as Buron v Denman a claim by a foreigner for such acts would be successfully met by the defence that the interference was an act of state. The doctrine was also relied upon in Al Jedda v Secretary of State for Defence (No 2) [2010] EWCA Civ 758; [2011] QB 773. This was another tort claim arising from detention by British forces in Iraq, this time of a person with dual British and Iraqi nationality. As here, the applicable law was the law of Iraq and Underhill J held that the detention was lawful under the law of Iraq. But he also held that the defence of act of state would have been available. In the Court of Appeal, Lord Dyson JSC and Elias LJ agreed with the judge that the detention was not unlawful under Iraqi law. Lord Dyson declined to deal with the act of state issue, on the ground that it did not arise and raised points of very considerable difficulty, on which they had not heard full argument (para 127). Elias LJ did discuss it (paras 192 226) and his tentative view was that it would not be an answer to the claim (para 193). The act did fall into the category of act of state, in that it would have removed the jurisdiction of the courts to question the detention of a foreign subject (para 195); but the courts would be failing in their constitutional duty if they were to leave the executive with unfettered powers to intern British citizens merely because the act of internment occurred abroad (para 216); however, he did float an intermediate possibility, that even if this were to be an act of state, and thus not to give rise to liability for damages in tort, it would be amenable to judicial review on conventional principles. Arden LJ, on the other hand, agreed with Underhill J that act of state was a defence; but this was on the basis of the House of Lords decision in R (Al Jedda) v Secretary of State for Defence [2007] UKHL 58; [2008] AC 332, that the UK was entitled and bound under its obligations under article 103 of the United Nations Charter and the applicable UN Security Council Resolution to intern people where this was necessary for the internal security of Iraq (para 108); thus, not only was the decision to join the Multi National Force an act of state, but acts required to be done pursuant to that decision were also acts of state; the fact that the claimant was a British national made no difference. Clearly, therefore, Al Jedda (No 2) is of very little help in resolving the issue between the parties here. Both Underhill J and Arden LJ appeared to be treating the case as non justiciable, because internment was required under international law; Elias LJ appears to have agreed with them, but considered that this afforded no defence to the internment of a British citizen. In the cases before us, both Leggatt J, at [2014] EWHC 3846, para 197, and the Court of Appeal, at [2016] 2 WLR 247; [2015] EWCA Civ 843, para 330, thought that the issue in Al Jedda (No 2) was better analysed under the tort defence than under the non justiciability rule. In the light of these shaky foundations, it is scarcely surprising that the respondent claimants argue that the tort rule does not, in fact, exist. The only rule is that certain decisions of high policy in the conduct of foreign relations are non justiciable. The arguments to the contrary are of two kinds: first, that the existence of a wider rule is long established both in the case law and in academic commentaries and texts, as already discussed; and second, that there are good reasons for it, certainly in the context of military operations abroad. As I understand it, we are not asked to consider whether it exists outside that context. Sir James Fitzjames Stephen, in his History of the Criminal Law (1883), Vol II, argued that where an injurious act done to a foreigner is an act of open war, duly proclaimed, there can be no doubt at all that it does not amount to a crime the very essence of war is that it is a state of things in which each party does the other all the harm they possibly can. The same should apply to acts which are in their nature warlike done in time of peace: I think that if such acts are done by public authority, or, having been done, are ratified by public authority, they fall outside the sphere of the criminal law (pp 62 63). He could cite no criminal law authority but relied upon Buron v Denman and Secretary of State for India v Kamachee Boye Sahaba. Of course, in those days, the criminal law was even more territorially limited than it is today and so only killings by British subjects abroad would be within the jurisdiction of the English courts. But the point is, if act of state is a defence to the use of lethal force in the conduct of military operations abroad, it must also be a defence to the capture and detention of persons on imperative grounds of security in the conduct of such operations. It makes no sense to permit killing but not capture and detention, the military then being left with the invidious choice between killing the enemy or letting him go. There are conceptual advantages in confining the doctrine to a non justiciability rule; but in doing so, a rather broader concept of non justiciability would be required than that which was espoused in the courts below. It would have to encompass aspects of the conduct of military operations abroad as well as the high policy decision to engage in them, and perhaps also some other aspects of the conduct of foreign relations, even though their subject matter was entirely suitable for determination by the court. It is necessary that the courts continue to recognise that there are some acts of a governmental nature, committed abroad, upon which the courts of England and Wales will not pass judgment. They may, of course, have to hear evidence and find facts in order to determine whether the acts in question fall into that category. It is also necessary to confine that category within very narrow bounds. Contrary to the impression given in some accounts (for example, J Collier, Act of state as a Defence against a British Subject (1968) 26 CLJ 102) it cannot give carte blanche to the authorities to authorise or ratify any class of tortious acts committed abroad in the conduct of the foreign relations of the state. Is this aspect of the doctrine one of public policy? The approach of the Court of Appeal has very real attractions. It is consistent with the policy of the Private International Law (Miscellaneous Provisions) Act 1995, that where the English courts have jurisdiction over a tort committed abroad, the applicable law is the law of the state where the conduct took place, unless to apply that law would conflict with principles of public policy (section 14(3)(a)). It would enable a case by case approach depending upon a range of policy factors, such as those identified by the Court of Appeal. There is, however, no hint of such an approach in the cases concerned with act of state. In essence, public policy may be the reason why the courts of this country will apply the domestic doctrine of act of state rather than the tort law of the state where the events took place, but it cannot tell us what the content of that defence is to be. It is not enough to say that it is not for the courts of this country to enforce the tort laws of another state, because that is exactly what the 1995 Act expects us to do. The question is in what circumstances we should decline to do so. The Court of Appeal, when considering Mr Mohammeds case, concluded that there was no authority to detain him, either under the regime established by the United Nations, or under local Afghan law, and the UK government had deliberately decided to apply a policy outside both of these without promoting UK legislation to permit this. The public interest that not doing harm to the nation by precluding HM Armed Forces from detaining a commander in the Taliban for more than 96 hours because it appeared that questioning him would provide significant new intelligence vital for force protection purposes was not sufficiently compelling to outweigh the public interest in the protection of liberty. In effect, therefore, military necessity, however compelling, provided no defence. If this aspect of the doctrine is to have any content at all, this cannot be right. What is its scope? It would be unwise for this court to attempt a definitive statement of the circumstances in which this aspect of the doctrine might apply. The question is whether it applies in the circumstances of Mr Mohammeds case, some of which have been explored in pleadings and evidence, and how it might apply in the circumstances of Mr Rahmatullah and the Iraqi civilians cases, which have not yet been explored in pleadings and evidence. For the reasons already given, it cannot apply to all torts committed against foreigners abroad just because they have been authorised or ratified by the British Government. It can only apply to acts which are by their nature sovereign acts, acts which are inherently governmental, committed in the conduct of the foreign relations of the Crown. The Government accepts that it cannot apply to acts of torture, even supposing that the Government of the United Kingdom would ever authorise or ratify such acts. The Government also accepts that it cannot apply to the maltreatment of prisoners or detainees, such as happened in Baha Moussas case. Bearing in mind that this is a doctrine of the law of the United Kingdom, I would prefer to regard this as an acknowledgement that such acts are not inherently governmental, rather than creating exceptions to a general rule. The Government of the United Kingdom can achieve its foreign policy aims by other means. Nor would it generally apply to the expropriation of property, for which compensation can always be paid, but there could be circumstances in which the expropriation, or more probably the destruction, of property, for example in the course of battle, was indeed a governmental act. We are left with a very narrow class of acts: in their nature sovereign acts the sorts of thing that governments properly do; committed abroad; in the conduct of the foreign policy of the state; so closely connected to that policy to be necessary in pursuing it; and at least extending to the conduct of military operations which are themselves lawful in international law (which is not the same as saying that the acts themselves are necessarily authorised in international law). For the purpose of these cases, we do not need to go further and inquire whether there are other circumstances, not limited to the conduct of military operations which are themselves lawful in international law, in which the defence might arise. Buron v Denman was at the borderline. The slaves were freed in the conduct of military operations pursuant to British foreign policy. Commander Denman was clever enough to negotiate a treaty with the local chiefs outlawing slavery before he freed most of them and burned down the barracoons but that did not necessarily render his acts lawful by local law. Nor do we need to decide whether the doctrine can ever be pleaded against British citizens: it was freely acknowledged in the courts below that there are arguments either way. They do not arise in these cases. The Crown Proceedings Act 1947 The respondents argue that the defence was abolished by section 2(1) of the Crown Proceedings Act 1947. This provides: Liability of the Crown in tort E+W+S+N.I. Subject to the provisions of this Act, the Crown shall be subject to all those liabilities in tort to which, if it were a private person of full age and capacity, it would be subject: in respect of torts committed by its servants or (a) agents; (b) in respect of any breach of those duties which a person owes to his servants or agents at common law by reason of being their employer; and (c) in respect of any breach of the duties attaching at common law to the ownership, occupation, possession or control of property: Provided that no proceedings shall lie against the Crown by virtue of paragraph (a) of this subsection in respect of any act or omission of a servant or agent of the Crown unless the act or omission would apart from the provisions of this Act have given rise to a cause of action in tort against that servant or agent or his estate. Both Leggatt J and the Court of Appeal held that the 1947 Act had not had the effect of abrogating the defence of act of state. Section 2(1)(a) made the Crown vicariously liable for the torts of its servants or agents. The proviso makes it clear that this does not apply where the act or omission would not have given rise to a cause of action in tort against the servant or agent. The servant or agent could claim the defence of Crown act of state before the Act and the effect is, now, that the Crown can do so too. That is certainly how it was understood at the time, for example, by Professor Glanville Williams, in Crown Proceedings (Stevens, 1948, p 44), although he also suggested that the proviso was an unnecessary bludgeon as the so called defence meant that there was no liability in any event. The claimants argue that the purpose of the 1947 Act was to put the Crown in the same position as any other litigant in civil proceedings. Other litigants did not enjoy the benefit of the defence of Crown act of state. It would be illogical if a provision intended to put the Crown on the same footing as anyone else had a proviso having precisely the opposite effect. It is also odd to do so by a proviso aimed at the agent rather than the Crown. Where the Act intended to create immunities or restrictions, or preserve existing common law rules, or make savings, it did so clearly and expressly; an example is section 2(5), which gives the Crown immunity from liability for anything done by any person while discharging responsibilities of a judicial nature. There is, however, nothing odd about preserving the previous law by means of a proviso aimed at the agent. The Act imposed vicarious liability for the acts of its servants or agents upon the Crown. It is natural, therefore, to make it clear that the Act is not making any difference to the previous law relating to the liability of that servant or agent, even if the previous law in question is one which applies only to Crown servants or agents. It may be that the proviso was unnecessary but there is no reason to doubt that the previous law of Crown act of state, whatever it was, was left intact. Article 6 The respondents accept that if, as held by the Court of Appeal, Crown act of state is only a defence where there are overriding reasons of public policy not to apply the tort law of a foreign state, this would be a proportionate interference with the right of access to a court and thus compatible with article 6 of the European Convention on Human Rights. However, they argue that any wider defence would be an unjustifiable impediment to that right of access. This depends upon two questions: first, whether the defence is an aspect of the substantive law or whether it is a procedural restriction on the right to go to court to vindicate a right; secondly, if it is merely a procedural bar, whether it is justified as a proportionate means of pursuing a legitimate aim. The respondents argue that the defence is not an aspect of a substantive right, akin to the rule of Italian law considered by the Grand Chamber of the European Court of Human Rights in Markovic v Italy (2006) 44 EHRR 52. Claims had been brought in an Italian court against the Prime Minister, Ministry of Defence and Commander of NATO forces in southern Europe in respect of deaths caused by military action in the former Yugoslavia in 1999. The Cour de Cassation had held that the Italian court had no jurisdiction, under a rule very like the non justiciability aspect of our own Crown act of state doctrine, that certain acts of government, including the conduct of hostilities, did not give rise to civil liability. The Grand Chamber held that the claimants had not been deprived of access to a court: their claims had been fairly examined in the Italian courts in the light of the applicable domestic legal principles. Those principles marked out the bounds of the law of tort so that the inability to sue was not the result of an immunity but of the principles governing the substantive right of action. By contrast, argue the respondents, the Crown act of state defence is a procedural bar, which prevents the United Kingdom courts from enforcing rights and liabilities in tort which would otherwise be justiciable. This means, they argue, that the government must justify it and this they cannot do. It cannot be justified on the basis that it pursues the legitimate aim of ensuring that the government and the courts speak with one voice on matters of foreign policy. As the Court of Appeal pointed out (para 372), they are not required to do so in public law claims or in claims under the Human Rights Act. Leggatt J held that it serves the legitimate aim of protecting the interests of the nation abroad, in particular where military action is considered necessary by the executive in the national interest (Rahmatullah, para 217) and was proportionate to that aim (para 218). The respondents accept that it might be justified on the basis that it pursued the legitimate aim of enabling the legality of the Governments conduct of foreign affairs, and in particular military operations abroad, to be determined by international law rather than the law of the place where those operations took place. Thus it enables the Government to comply with its obligations in international law without having to concern itself with local domestic law. But the rule as contended for by the Government goes wider than is necessary to meet that aim and is thus disproportionate to it. The Government, on the other hand, contends that article 6 is not engaged. This is a Markovic case. Article 6 does not guarantee any particular content to the civil rights and liabilities protected by domestic law. It merely guarantees a right of access to the courts to have those rights and liabilities determined: Z v United Kingdom (2001) 34 EHRR 3, paras 87, 92. The claimants have the right to a fair hearing of whether the doctrine of Crown act of state, in either of its aspects, applies. But that doctrine defines the content of their rights. It means that there are certain actions which do not give rise to civil liability. It is not simply a procedural bar. Even if it were, they argue, it pursues the legitimate aim identified by Leggatt J and is proportionate to that aim for the reasons he gave: it applies only to acts done pursuant to deliberate United Kingdom foreign policy and only to claims arising under foreign law. It does not therefore apply to claims under the Human Rights Act. In my view, this is clearly a rule of the substantive law rather than a procedural bar. It does not confer an immunity on a particular class of actors. It defines the circumstances in which there may be liability for a particular type of activity. The rules are the same whether that activity is governed by English law or by foreign law. As these cases show, the claimants do have access to a court to determine the scope of their rights. This court is concerned with the question of law as to how far their rights extend. In Mr Mohammeds case, the facts necessary to determine the extent of his rights have already been examined. In the other cases, the facts have yet to be fully pleaded and evidence filed. When they have, the court will have to decide what the facts are and whether they fall within the defence of Crown act of state as defined by this court. There has been no procedural bar to the claimants bringing these claims and fighting them vigorously through the courts. It is the substantive law which will determine whether, on the facts found, they succeed. Conclusion I would therefore allow the Governments appeal. I would substitute a declaration to the effect that, in proceedings in tort governed by foreign law, the Government may rely on the doctrine of Crown act of state to preclude the court passing judgment on the claim if the circumstances are such as stated in paras 36 and 37 above. It may well be that the declarations made by Leggatt J should be restored. In the case of Serdar Mohammed, he declared that, on the assumption that the facts relating to his arrest and detention pleaded by the Government were true, and without prejudice to his right to challenge the factual basis of his arrest and detention at any further trial, the defendants could rely on the doctrine of Crown act of state to preclude the enforcement of a claim under Afghan law. In the case of Yunus Rahmatullah, he declared that the claims in tort in relation to his arrest and detention by UK armed forces were barred by the doctrine of Crown act of state, if the defendants established that his arrest and detention was authorised pursuant to lawful UK policy. He made a declaration in similar terms in the Iraqi Civilian Litigation. I would, however, invite further submissions as to the precise form of declaration which would be appropriate in each of these cases. LORD MANCE: (with whom Lord Hughes agrees) Crown act of state certainly presents terminological and conceptual difficulties. But I think it clear that the underlying principle is one of non justiciability or (as I would prefer to say: see para 54 below) abstention or restraint. It creates unnecessary confusion to suggest that the principle has two branches, one non justiciability, the other a defence based on Buron v Denman (1848) 2 Exch 167. Lord Sumption suggests a dichotomy between two rules (para 79). But he ends with a proposition that, in the present context, the two rules merge into one (para 81). This is achieved by defining non justiciability in the present context as going to the existence or scope of legal rights (para 80) and so as a defence (para 81). To my mind, this involves confusion. Lord Sumption seeks to support it in para 80 by suggesting that the case of R (Campaign for Nuclear Disarmament) v Prime Minister [2002] EWHC 2777 (Admin) proceeded on the footing that the Divisional Court had both jurisdiction and competence to determine whether a resolution of the United Nations Security Council authorised military operations against Iraq but that it declined to do so because there were no relevant domestic law rights. This, however, in my opinion, misreads the Divisional Courts judgment. The essential ground of the decision in Campaign for Nuclear Disarmament was that the subject matter was non justiciable: see per Simon Brown LJ at para 47(ii), Maurice Kay LJ at para 50, and Stephen Richards LJ at paras 59 60. Absence of domestic foothold was a separate and (as Maurice Kay and Stephen Richards LJJ make clear in these passages) lesser objection to the claim (see also Simon Brown LJ at paras 35 36). The case of Campaign for Nuclear Disarmament therefore lends no support to a proposition that Crown act of state involves a defence. On the contrary, it places Crown act of state, involving foreign policy action including the deployment of armed forces, firmly within the domestic principle of non justiciability or abstention, and this is so whether the Crown or its agent is being impleaded. Crown act of state is at the same time (as Lady Hale notes: paras 43 45) a principle of substantive law outside the scope of article 6 of the European Convention on Human Rights. Crown act of state is in short based on the same underlying principle of abstention that can in some circumstances also apply to preclude adjudication of the third type of foreign act of state identified in my separate judgment on that topic handed down concurrently with this judgment in the present case and in Belhaj v Straw [2017] UKSC 3. That is not to suggest that the principle of abstention applies with the same force or by reference to the same considerations in relation to the latter context. Because of the way in which the issues in these cases were identified and divided for determination, this was not an aspect on which the submissions before us focused. I will say some provisional words about it. Both Crown act of state and the third type of foreign act of state are based on an underlying perception of the role of domestic courts. The constitutional relationship of a domestic court with its own State differs from its relationship with that of any foreign sovereign state. Crown act of state is reserved for situations of sovereign authority exercised overseas as a matter of state policy. In these circumstances a straight forward principle of consistency directly underpins Crown act of state (as identified by Lord Sumption in para 87). In contrast, if and when the third type of foreign act of state applies, its underpinning is a more general conception of the role of a domestic court, and, more particularly, the incongruity of a domestic court adjudicating upon the conduct of a foreign sovereign state, even though the foreign state is neither directly or indirectly impleaded or affected in its rights. However, concern for the international relations of the domestic with the foreign state, and in that sense a concern that the domestic courts stance should not be out of line with that of its own states, may probably in some cases play some part: see the discussion in paras 103 to 105 of my judgment in Belhaj v Straw. This analysis is supported by what Lord Wilberforce said in Buttes Gas, 938A C, quoted in para 42, as well as with my own observations in para 91, of my judgment in Belhaj v Straw. But to immunise the home state of the domestic court from action anywhere (or, in a Buttes Gas type case to refuse to adjudicate upon civil litigation between third parties), by reference to the conduct of a foreign state, is self evidently an extreme step. This is no doubt why the principle of abstention recognised in Buttes Gas has rarely found application. These differences in underpinning and analysis between Crown act of state and foreign act of state mean, in my opinion, that it must 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 the third type of foreign act of state. The relationship is closer and the threshold of sensitivity lower in the case of the former than the latter. It is necessary to grasp the considerations which may make a case non justiciable. A consideration which in the past may have encouraged an overly narrow view is Lord Wilberforces pithy references in Buttes Gas & Oil Co v Hammer [1982] AC 888, 938B C to an absence of judicial or manageable standards by which to judge the issues in that case, placing the court in a judicial no mans land. But it is clear that these references do not represent the definitional limit of non justiciability in the present context. They represent as Lord Sumption pointed out in Shergill v Khaira [2014] UKSC 33; [2015] AC 359, para 40 only one of two reasons why the issue in Buttes Gas was political or non justiciable. The other was that the issue trespassed on the proper province of the executive, as the organ of the state charged with the conduct of foreign relations, a consideration which takes one back to the discussion in the previous paragraphs. Bearing in mind the potential for misunderstanding the concept of non justiciability in the light of Lord Wilberforces aphorisms in Buttes Gas, it may be preferable to refer instead, as I have done above, to a principle of abstention or restraint, whereby Crown decisions and/or activities of a certain nature in the conduct of foreign affairs are not open to question (or are not cognisable) in domestic civil proceedings, at the instance of anyone injured thereby (except, perhaps, someone owing allegiance to the Crown a point which can be left open on this appeal). I have already indicated that I do not accept what was the primary case of the appellants, the Ministry of Defence and the Foreign and Commonwealth Office, namely that there is a dichotomy between two rules (non justiciability and a tort defence). However, the appellants never committed themselves to bringing their case within either rule. On the contrary, they submitted in paras 101, 107 and 173(4) and (5) of their written case: that each of the claims should be dismissed on the grounds that Crown act of state operates as a separate defence and/or a jurisdictional bar: that the Court of Appeal mischaracterised the scope of the justiciability limb of the Crown act of state doctrine, and consequently concluded that it did not apply in the present case; that the Court of Appeal erred in holding that the non justiciability rule only applies in circumstances where the issue is one which the court is constitutionally incompetent to determine; and that in any event, the tort defence and/or non justiciability rule applies to each of the cases. In his oral submissions, Mr Eadie QC maintained this position, in submissions to the effect that how you characterise the doctrine, whether as a defence or non justiciability, does not matter; its criteria and effect are what matters. There is good sense in this. It is, nonetheless, helpful to identify the conceptual basis of Crown act of state. In my view, there is, as I have stated, a single doctrine based on non justiciability or, in the terms which I prefer, judicial abstention or restraint. I turn to examine further the core rationale behind cases where courts will abstain from adjudicating upon civil claims against the Crown or its servants. This is also discussed in some detail in the passages from Campaign for Nuclear Disarmament cited above. Since Council of Civil Service Unions v Minister for the Civil Service (GCHQ) [1985] AC 374, reinforced by R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61; [2009] 1 AC 453, the exercise of prerogative powers, including prerogative legislation in the form of an order in council, has not enjoyed any general immunity from judicial scrutiny. But the nature and subject matter of the particular prerogative power being exercised may make it inappropriate for adjudication before a domestic court. Thus in GCHQ Lord Roskill said, at p 418, that Prerogative powers such as 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 as well as others are not, I think, susceptible to judicial review because their nature and subject matter are such as not to be amenable to the judicial process. In Shergill v Khaira, para 42, Lord Sumption referred to this category of case as beyond the constitutional competence assigned to the courts under our conception of the separation of powers, and included within it the non justiciability of certain transactions of foreign states and of proceedings in Parliament. The thinking behind all these concepts is linked in Blackstones Commentaries on the Laws of England (vol 1) pp 251 and 257 258. There, the non justiciability of the royal prerogative of making war and peace or treaties is explained on the basis that the appropriate forum for its control is Parliament (including, in the last resort, as Blackstone notes, by impeachment). In the case of certain foreign activities of the British state, there is in my view an additional parallel aspect at the international level to their non justiciability in domestic courts. That is that representations and redress in respect of activities involving foreign states and their citizens may be more appropriately pursued at a traditional state to state level, rather than by domestic litigation brought by individuals. In any event, it is, as already shown, wrong to regard either Lord Roskill in GCHQ or the Supreme Court in Shergill v Khaira as basing this category of case on an absence of judicial or manageable standards or the presence of a judicial no mans land. When there is an appropriate domestic foothold and the matter is otherwise justiciable, domestic courts are well able to adjudicate upon and give effect to international law (see the citations from Campaign for Nuclear Disarmament, above). Indeed, customary international law was long said to be automatically incorporated into domestic law: see the discussion in R (Keyu) v Secretary of State for Foreign and Commonwealth Affairs [2015] 3 WLR 1665, paras 117 122 and 144 151. As Lord Sumption also recognised in Shergill v Khaira, para 43, a private claim may require adjudication upon issues of international law, where there is a domestic foothold in the sense of a prima facie domestic law right under whatever may be the relevant law: see eg Republic of Ecuador v Occidental Exploration Production Co [2005] EWCA Civ 1116; [2006] QB 432. The Report of William Murray (later Lord Mansfield) and other Law Officers on the Rules of Admiralty Jurisdiction, etc in time of war dated 18 January 1753 and the decision in The Rolla (1807) 6 Robinson 364, to which Lord Sumption refers (para 83), do no more than exemplify the same point. Both concerned the civil rights of neutrals whose property had been seized during the blockade of an enemy port. They turn on the customary international law of war and prize, treated as incorporated into domestic law. The Law Officers Report was thus sought concerning the consistency of certain Prussian prize proceedings with the Law of Nations, and any Treaties , the established Rules of Admiralty Jurisdiction, and the Laws of this Kingdom (p 889). The Report was given on the basis that By the Maritime Law of Nations, universally and immemorially received, there is an established method of determination, whether the Capture be or be not lawful Prize (p 890), and that In this method, by Courts of Admiralty acting according to the Law of Nations and particular Treaties, all captures at sea have immemorially been judged of, in every Country of Europe (p 892). The Admiralty Court had immemorially held trading with enemy subjects to be illegal: see Oppenheims International Law (7th ed) paras 101, footnote 2, and 192; and see also McNair and Watts, The Legal Effects of War (1966) pp 336 337. Neither the Law Officers Report nor The Rolla bears on the issue currently under discussion. They concern the application of customary international law as and where incorporated into domestic law, giving rise to a foothold for domestic adjudication, as there was for example in the case of The Rolla, where the issue concerned a claim to seize and condemn a ship as prize for contravention of a legal blockade. The Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 7 Moore Ind App 476 is, in contrast, an example of a case falling within the conduct of foreign affairs which the Privy Council held was unsuitable for adjudication in a domestic court. It concerned the annexation by the East India Company (exercising sovereign power on behalf of the British Government) of a foreign territory and the taking of its late rulers public and private property. The late rulers eldest widow brought an action claiming to be entitled to the private property which (the Privy Council was ready to accept) would under Hindoo law pass and belong to the late rulers eldest widow. In relation to the appropriation of the private property, there was clearly a domestic foothold for the claim. But the claim failed in its entirety. This was not because it was non justiciable in some narrow sense, involving absence of judicial or manageable standards. A domestic court could, if necessary, identify standards and rules of international law by reference to which to adjudicate upon such a dispute. It was because the whole case fell within the category of non justiciability identified by Lord Roskill in GCHQ and the Supreme Court in Shergill v Khaira, para 42. It was a case upon which domestic courts should not adjudicate because of its nature and subject matter. It was a classic case of intervention by forces acting for the British Crown intervening in and taking over a foreign territory and property of its subjects. Attempts at a bifurcation in this area between (a) cases of non justiciability (or cases not open to question) in a domestic court and (b) cases falling within the so called rule in Buron v Denman are in my view incorrect and confusing. The correct analysis is that the rule applied in Buron v Denman is no more than a corollary of the principle of non justiciability, abstention or restraint. In short, the rule applied protects the Crowns servants or agents in circumstances where that principle precludes a claim against the Crown itself. A claim which is non justiciable against the Crown itself cannot be justiciable against the servants or agents who, with the Crowns authority or subsequent ratification, undertook the relevant acts. Otherwise, the principle of Crown act of state could and would be subverted. The point is illustrated by the case of Secretary of State in Council of India v Kamachee Boye Sahaba itself. The action there was not against the Crown, but for an act done, as Lord Kingsdown said, by the East India Company as its delegate, over which act domestic courts had no jurisdiction and of the propriety or justice of that act, neither the court below nor the Judicial Committee have the means of forming, or the right of expressing, if they had formed, any opinion (p 540). See also, in the quotations from Lord Kingsdowns judgment that Lord Sumption sets out in para 86: such [viz municipal] courts have neither the means of deciding what is right and an act not affecting to justify itself on grounds of municipal law; over which the Supreme Court of Madras has no jurisdiction and 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. This is the language of non justiciability, abstention or restraint. The authorities relied on by counsel for the East India Company also demonstrate the same point. They included Tandy v Earl of Westmoreland (1792) 27 State 1246, in which the official acts of the Lord Lieutenant of Ireland were considered acts of state, and not within the cognizance of the Municipal jurisdiction, and Mostyn v Fabrigas (1775) Cowp 161, where Lord Mansfield laid it down that no Governor of a Colony could be sued while he is exercising the functions of a Governor. In each case, the principle identified is one of non justiciability. Further, in Lord McNairs magisterial and influential work International Law Opinions vol 1 (1956), from which Lord Wilberforce quoted in Nissan v Attorney General [1970] AC 179, at p 234C F, the general principle of non justiciability is described in terms making clear that it protects the Crowns servants and agents as much as the Crown. The reality is that the rule in Buron v Denman is a necessary aspect of the principle of abstention or non justiciability. Likewise, in the analogical context of state immunity, not only the Crown, but also its servants and agents are protected, or otherwise the rule would be subverted: see Jones v Saudi Arabia [2007] 1 AC 270. Equally, it cannot be open to a Crown servant or agent by waiving a plea of Crown act of state to enable a domestic court to adjudicate upon an area falling within the scope of the concept. Yet that would seem the consequence if Crown act of state were a mere defence, rather than a bar to adjudication based upon a principle of abstention or restraint. There were only two issues in the Court of Exchequer case of Buron v Denman. One, swiftly dispatched by Parke B in summing up (p 187), was whether the plaintiff could show sufficient property or possession in slaves. The other, the main issue, was whether a Crown servant or agent could by ratification of his acts by the Crown be put in the same position as if those acts had been authorised by the Crown from the outset. Had there been prior authorisation, it is clear from the way that Buron v Denman was argued, that there would have been no doubt that the action was not maintainable. The Attorney General cited briefly in this connection at the end of his submissions (p 185) Elphinstone v Bedreechund, which concerned British forces seizure of a military fortress during military hostilities and is, correctly, analysed by Lady Hale in para 25 as a case of non justiciability. Conversely, without prior authorisation or ratification, it was well established before Buron v Denman that a Crown servant could be held liable for unauthorised naval action taken against foreign slavers conducting a trade which remained lawful under the (Spanish) law of the flag of the ship they were using. In Madrazo v Willes (1820) 3 B & Ald 353, relied on by counsel for the plaintiff in Buron v Denman, Captain Willes, commanding a Royal Navy vessel, had without authority taken possession of a Spanish brig engaged in the slave trade between Africa and Cuba, detaining her, her stores and other goods as well as 300 slaves, and preventing her from further trading. The Spanish owner sued Captain Willes, maintaining (consistently with the principle in Entinck v Carrington (1765) 19 State Tr 1029) that he was personally liable. The only question which arose was as to the measure of damages. Reluctantly, the Court of Kings Bench found itself obliged to award Seor Madrazo damages which included not merely the deterioration of the ships stores and goods, but also the alleged profit which would have been made from the ships cargo of slaves. When Buron v Denman was argued nearly 30 years later, the only substantial question was therefore whether a different result could and should follow if the Crown had, after the event, purported to ratify what its naval captain had done. There was a faint suggestion, which led to nothing, that Lord John Russells and Viscount Palmerstons commendations of Captain Denmans very spirited and able and highly meritorious conduct and their expressions of desire that such conduct should be repeated, whenever occasion arose, were insufficient to amount to ratification in fact. The plaintiffs real argument was that ratification was only permissible if the act would have been justified, if done by the principal, whereas here it was not for the purpose of showing that the act was justifiable, but for the purpose of protecting the party committing it against examination as to whether it was right or wrong. That ratification was permissible, if the act done would under domestic law have been justified if done by the principal, was in fact demonstrated by The Rolla. There a British blockade of Monte Video (a Spanish enemy port) was in principle legal under international and domestic law, had however actually been imposed by the local British fleet commander, Sir Home Popham, without governmental authority, but was ratified by the British government after the event. Parke B was in Buron v Denman concerned by the plaintiffs submission that a plea of Crown act of state was of a different character, since it did not turn on any conclusion that the act would, if authorised by the Crown be lawful (but simply withdrew it from domestic adjudication). Ultimately, however, he joined with the other members of the Court in holding that ratification was in this context also equivalent to prior authorisation even if it left the plaintiff without remedy against the Crown because the injury would count as an act of state without remedy (p 189). there is only one principle of Crown act of state; In summary: (i) (ii) Buron v Denman is simply authority for the proposition that conduct capable by its nature of being an act of state may be so not only when authorised in advance but also when subsequently ratified by the Crown; and (iii) Crown servants or agents committing an act of state with prior authorisation or subsequent ratification by the Crown enjoy the same immunity from liability that the Crown does otherwise, indeed, the doctrine of Crown act of state would have very little bite at all. In support of this analysis, I note the following further points: (i) The suggestion that there are two separate rules of Crown act of state, operating somehow in parallel but at different levels, stems essentially from dicta of Lord Wilberforce in Nissan v Attorney General [1970] AC 179, 231C E. Nothing said by other members of the House supports such a bifurcation: see eg per Lord Reid at pp 207G, 208C G and 212C D and Lord Morris at pp 219B 221B. Both analysed the issue in Nissan as turning on the scope of the rule in Buron v Denman ie as treating the rule in Buron v Denman and the principle of non justiciability as interdependent. (ii) It is far from clear that Lord Wilberforce intended the conceptual distinction now proposed between two separate rules. He himself spoke of Crown act of state as a principle that includes within itself two conceptions or rules. His first conception or rule can be seen to have been focused on the liability or immunity of Crown servants whose acts have been authorised or subsequently ratified by the Crown. On that basis, his second conception or rule represents the sole principle focusing on the case of a claim against the Crown itself. (iii) A precursor to Lord Wilberforces dicta consists in Lord McNairs International Law Opinions vol 1 (1956), from which, as I have already noted, Lord Wilberforce quoted at p 234C F in Nissan. Lord McNair confined discussion of the rule in Buron v Denman to circumstances where a claim is made against a Crown servant, and dealt with non justiciability as a wider and more fundamental principle precluding claims against the Crown, its servants or agents (pp 111 112). But, in circumstances where Crown servants are protected under the rule in Buron v Denman, the Crown itself must also be protected. The inference again is that the rule in Buron v Denman is simply an aspect of the protection afforded by the wider and more fundamental principle of non justiciability. The two rules cover different facets of the same situation. (iv) Further, in so far as Buron v Denman addressed the Crowns immunity from suit in relation to foreign military activity at all, it was based on authority addressing circumstances of non justiciability and has subsequently been analysed in the same terms. Thus: (a) the Attorney General in Buron v Denman successfully advanced Crown act of state as a defence by referring to circumstances which were and are clearly non justiciable, referring (at p 184) to acts under a treaty and, as I have already noted, by referring (at p 185) to Elphinstone v Bedreechund, which concerned seizure of a military fortress during military hostilities and is a case of non justiciability; (b) the rationale of Buron v Denman is clearly identified in later authority at the highest level as being that it concerned non justiciable activity, that is (in the light of the ratification) state activity undertaken abroad as a matter of policy at an inter state level or in the course of something like military operations against a foreign state or its subjects: see Johnstone v Pedlar [1921] AC 262, per Viscount Finlay, p 271 foot; per Viscount Cave, p 275 foot; per Lord Atkinson, p 279; and per Lord Sumner, p 290 and pp 291 292. In these passages, both Viscount Cave and Lord Atkinson assimilated Buron v Denman and Kamachee Boye Sahaba, which is another case correctly analysed by Lady Hale at para 25 as an instance of non justiciability. In addition, no rationale for or explanation of the contours of any distinction between circumstances of non justiciability and circumstances falling within a supposedly separate rule to be derived from Buron v Denman is available. Indeed, Lord Sumption argues that the two rules are in the present context one (para 80), but only (as I have pointed out in para 48 above) by assigning to non justiciability the unnatural meaning of a defence. He suggests that, contrary to contemporary and later views, Buron v Denman was a case of a tort law defence. Taking the criteria for activities which are non justiciable or inappropriate to be questioned in domestic civil proceedings, they clearly include all those identified by Lord Sumption in para 82, that is they must involve an exercise of sovereign power, inherently (i) governmental in nature; (ii) done outside the United Kingdom; (iii) with the prior authority or subsequent ratification of the Crown; and (iv) in the conduct of the Crowns relations with other states or their subjects (possibly excluding persons owning allegiance to the Crown). I add two points. First, Crown act of state must be potentially applicable as much to acts in the execution of policy makers decisions as it is to the decisions themselves. It would not otherwise be a coherent doctrine. In this, I am at one with Lady Hale (para 33) and Lord Sumption (para 90). Second, in relation to the availability of Crown act of state as a plea in relation to conduct towards the subjects of foreign states: see eg the citations which Lady Hale gives in her para 2, the first of which was also quoted and endorsed by Lord Wilberforce in Nissan at p 231B; see also per Lord Reid at p 212C D. The upshot is that the criteria suggested for the rule in Buron v Denman are the same criteria as lead to a conclusion that circumstances are non justiciable or inappropriate for adjudication in domestic civil proceedings. The reason is clear. There is only one principle, though it has different aspects protecting Crown servants or agents (Buron v Denman) and the Crown more generally. What matters in any case is therefore its scope and application in relation to the particular circumstances the subject of the relevant civil proceedings. As to this, I agree with Lady Hale and Lord Sumption that the present claimants detention by Her Majestys forces and their transfer from British to United States and Afghan custody were, as such, Crown acts of state which are not justiciable or open to question in domestic proceedings for common law damages such as the present. They were, on the actual or presently assumed facts, steps taken pursuant to or in implementation of deliberately formed policy against persons (none owing any allegiance to the Crown) reasonably suspected to be insurgents or terrorists in the context and furtherance of foreign military operations during a time of armed conflict. I also agree with Lady Hales conclusions regarding the Crown Proceedings Act 1947 and article 6 of the European Convention on Human Rights. As she observes, the rule of Italian law considered by the European Court of Human Rights in Markovic v Italy (2006) 44 EHRR 52 was effectively a rule of non justiciability. The Italian Court of Cassation had before it claims by relatives of persons killed in the NATO bombing of Belgrade, in which Italian forces had participated. The Court of Cassation categorised the impugned act as an act of war, and said that since such acts were a manifestation of political decisions, no court possessed the power to review the manner in which that political function was carried out (para 106). The European Court of Human Rights said, at para 114, that the Court of Cassations ruling 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. It comes to the conclusion that the applicants inability to sue the state was the result not of an immunity but of the principles governing the substantive right of action in domestic law. This statement fits precisely the circumstances of the present case on my approach to Crown act of state. Further, in the light of the above, I agree that there should be a declaration in each appeal as Lady Hale proposes in her para 46, and that we should invite further submissions on its precise form. In the cases of Yunus Rahmatullah and the Iraqi Civilian Litigation, I would specifically invite further assistance as to the effect and appropriateness of the qualifying adjective lawful quoted by Lady Hale in her para 46. LORD SUMPTION: In Nissan v Attorney General [1970] AC 179, 231, Lord Wilberforce, whose speech comes closest to supplying a coherent judicial statement of the doctrine of Crown act of state, reviewed the main relevant authorities on the doctrine and concluded that it comprised two rules. One was a rule of non justiciability, by which he meant a rule which prevents British municipal courts from taking cognisance of certain acts. The other was a rule which provides a defendant, normally a servant of the Crown, with a defence to an act otherwise tortious or criminal, committed abroad, provided that the act was authorised or subsequently ratified by the Crown. The dichotomy between these two rules had previously been suggested by Lord McNair in International Law Opinions (1956), pp 111 116. Non justiciability is a treacherous word, partly because of its lack of definition, and partly because it is commonly used as a portmanteau term encompassing a number of different legal principles with different incidents. Strictly speaking, as this court observed in Shergill v Khaira [2015] AC 359 at para 41, it should be reserved for cases where an issue is said to be inherently unsuitable for judicial determination by reason only of its subject matter. This may result in a court declining to determine an issue notwithstanding its relevance to the dispute between the parties, for example because there are no juridical standards by which to determine it, as in Buttes Gas and Oil Co v Hammer (No 3) [1982] AC 888; or because its determination is not within the constitutional competence of the courts, for example because it would trespass on Parliamentary privilege, as in Prebble v Television New Zealand Ltd [1995] 1 AC 321. These are mandatory rules of public policy, originating in the laws recognition of the separation of powers between different organs of the state. They define the limits of the courts jurisdiction or juridical competence. But there are other principles, also originating in the separation of powers and described as principles of non justiciability, which do not go to the courts jurisdiction or competence but to the existence or scope of legal rights. Thus in R (Campaign for Nuclear Disarmament) v Prime Minister [2002] EWHC 2777 (Admin), the court proceeded on the footing that it had both jurisdiction and competence to determine whether a resolution of the United Nations Security Council authorised military operations against Iraq, but declined to do so because, among other reasons, there were no relevant rights, interests or duties under domestic law: paras 14 15, 36. I venture to suggest that if domestic law rights, interests or duties had been engaged, the court would not have regarded the issues as non justiciable. Crown act of state is a rule of substantive law which belongs in this latter category. The court is not disabled from adjudicating on a Crown act of state by virtue of its subject matter. The acts of the Crown and its agents are always in principle subject to the adjudicative power of the courts. They unquestionably have both jurisdiction and competence to determine the legal effects of a Crown act of state on the rights of those adversely affected by it. The real question is what are those rights. The rule of law relating to Crown acts of state defines the limits which as a matter of policy, the law sets upon certain categories of rights and liabilities, on the ground that they would otherwise be inconsistent with the exercise by the executive of the proper functions of the state. In principle an agent of the Crown is liable as a matter of English law for injury or detention of persons or goods without lawful authority. But that liability does not extend to a limited class of acts constituting Crown acts of state. It follows that the agent has a defence if his acts fall within that class. Like other members of the court, I doubt whether it helps to treat the doctrine as comprising two rules. But in this context, it can fairly be said that Lord Wilberforces two rules merge into one. I agree with Lady Hale that a Crown act of state gives rise to no liability on the part of the Crown or its agents. I also agree with her upon the essential elements of a Crown act of state in this context. They are (i) that the act should be an exercise of sovereign power, inherently governmental in nature; (ii) done outside the United Kingdom; (iii) with the prior authority or subsequent ratification of the Crown; and (iv) in the conduct of the Crowns relations with other states or their subjects. There may be a fifth requirement, that the alleged tort should have been committed against a person not owing allegiance to the Crown. But that raises a distinct and controversial question which does not need to be decided on these appeals. The claimants in these proceedings did not owe allegiance to the Crown. Although the label act of state is modern, the concept is very ancient. The earliest illustrations relate to the right to seize ships or cargoes at sea. The right, without incurring liability under English law, to seize property under letters of marque and reprisal issued on the authority of the Crown, even in peacetime, dates back to the 13th century. It was not, however, until the 18th century that the underlying rationale of the doctrine began to emerge. The growth of British seapower made it necessary to consider the interrelation between international and municipal law concerning captures at sea. In a celebrated opinion of 1753, written by Sir William Murray, later Lord Mansfield, the law officers of the Crown advised that a belligerent power was entitled in international law to seize not only enemy property but the property of neutrals destined for an enemy: British and Foreign State Papers, 20 (1836), 889ff. The result was that the seizure of the property on behalf of the Crown gave rise to no right to damages or possession at the suit of the former owner. In The Rolla (1807) 6 Robinson 364, 365 367, Sir William Scott, perhaps the greatest British international lawyer of his day, identified the basis of the rule as being the authority or ratification of the Crown in the exercise of its sovereign power. The result was that the American owner of a cargo had no rights under English municipal law in respect of the seizure of his property by Admiral Sir Home Popham in the course of his highly irregular (but ratified) blockade of the River Plate in 1806. Greater definition was brought to this area of law in two seminal cases decided in the middle of the 19th century: Buron v Denman (1848) 2 Exch 167, and Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 7 Moo Ind App 476. Buron v Denman is one of those cases which is more significant for what it has always been understood to have decided, than for anything Parke B actually said in the course of his summing up to the jury. Its significance is that Captain Denmans act in seizing the plaintiffs slaves and destroying his property in the Gallinas in West Africa was not a valid act of war, since Britain was at peace with Spain. Nor was it justifiable in international law, since the slave trade had been held to be lawful by the law of nations: see Le Louis (1817) 2 Dod 210. Although the indigenous ruler of the Gallinas had undertaken by treaty with Captain Denman to destroy the barracoons and surrender the slaves, he had not authorised Captain Denman to do these things, which was presumably why the treaty was not relied upon by Captain Denman and ignored by Parke B. There was therefore no legal basis whether in international or municipal law for the invasion of Seor Burons proprietary rights. In those circumstances, the only plea available to Captain Denman was that by virtue of the Crowns adoption of his acts, they were acts of state. The judge took it to be axiomatic that the prior authority of the Crown would have constituted a defence. The defendant would in that case be irresponsible (p 190), ie not liable. The only contentious issue was whether subsequent ratification was equivalent to prior authority. He held that it was. Parke B did not explain why it went without saying that the authority of the Crown was a defence, but the basis of the rule became clearer a decade later in the advice of the Privy Council in Secretary of State in Council of India v Kamachee Boye Sahaba. Lord Kingsdown, delivering the advice of the Board, applied the principle in Buron v Denman (see pp 539 540) to the annexation of the Indian state of Tanjore and the seizure of the late Rajahs property there by the East India Company in the exercise of the sovereign power of the Crown. He declared, at p 529: The general principle of law was not, as indeed it could not, with any colour of reason be disputed. The transactions of independent states between each other are governed by other laws than those which Municipal Courts administer: such courts have neither the means of deciding what is right, nor the power of enforcing any decision which they may make. Lord Kingsdown went on, at p 531, to inquire what was the nature of the act of the East India Companys officers: Was it a seizure by arbitrary power on behalf of the Crown of Great Britain, of the dominions and property of a neighbouring state, an act not affecting to justify itself on grounds of municipal law? Or was it, in whole or in part, a possession taken by the Crown under colour of legal title of the property of the late Rajah of Tanjore, in trust for those who, by law, might be entitled to it on the death of the last possessor? He concluded (p 540) that the property now claimed, by the respondent has been seized by the British Government, acting as a Sovereign power, through its delegate the East India Company; and that the act so done, with its consequences, is an act of state over which the Supreme Court of Madras has no jurisdiction. Of the propriety or justice of that act, neither the court below nor 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. Leggatt J regarded this as a perverse doctrine under which the executive can be held to account if it purports to act legally, but not if it openly flouts the law. But I think that the judge has misunderstood Lord Kingsdowns reasoning. Lord Kingsdown was not saying that the East India Company could not be held to account because it had openly flouted the law. He was doing two things. In the first place he was pointing out that even if the Crowns annexation of Tanjore was unlawful in international law that could not of itself give rise to any legal rights in municipal law. Secondly, he was distinguishing between the sovereign and non sovereign acts of the Crown. If the seizure of the late Rajahs property had been carried out under colour of municipal law, for example as a taking of possession by a trustee, it would not have been a sovereign act but an act such as any non sovereign could have done. As it was, it was an extraterritorial exercise of sovereign power, and as such an act of state. It therefore gave rise to no actionable duty owed to the late Rajahs heirs. The judgment of Lord Kingsdown has been treated by the House of Lords and the Privy Council on many occasions since it was decided as an authoritative statement of the law: see, among other cases, Sirdar Baghwan Singh v Secretary of State for India [1874] LR 2 Ind App 38, 47; Cook v Sprigg [1899] AC 572; Johnstone v Pedlar [1921] 2 AC 262, 275 (Viscount Cave), 278 279 (Lord Atkinson), 290 291 (Lord Sumner); Vajesingji Joravarsingji v Secretary of State for India [1924] LR 51 Ind App 357; Secretary of State for India v Sardar Rustam Khan [1941] AC 536; Nissan v Attorney General [1970] AC 179, 218 (Lord Morris of Borth y Gest), 225 (Lord Pearce), 231 232 (Lord Wilberforce), 238 (Lord Pearson). The reason why the liabilities of the Crown in municipal law do not extend to sovereign acts done in the course of military operations outside the United Kingdom is essentially a principle of consistency. The deployment of armed force in the conduct of international relations, or the threat of its deployment (express or implicit) is one of the paradigm functions of the state. The law vests in the Crown the power to conduct the United Kingdoms international relations, including the deployment of armed force in support of its objectives. Constitutionally, as Blackstone observed, the result is that what is done by the royal authority with regard to foreign powers is the act of the whole nation: Commentaries, para 252. Or, as Willes J put it a century later in Esposito v Bowden 7 EL & BL 763, 781 (1857), speaking of a declaration of war, as an act of state, done by virtue of the prerogative exclusively belonging to the Crown, such a declaration carries with it all the force of law. In the nature of things, the use of armed force abroad involves acts which would normally be civil wrongs not only under English law but under any system of municipal law. People will be detained or killed. Their property will be damaged or destroyed. It would be incoherent and irrational for the courts to acknowledge the power of the Crown to conduct the United Kingdoms foreign relations and deploy armed force, and at the same time to treat as civil wrongs acts inherent in its exercise of that power. In this respect, Crown act of state differs from foreign act of state. When the courts consider an exercise of sovereign authority by a foreign state, no question of consistency arises because the sovereign authority of the foreign state is not derived from English law. Foreign act of state operates purely as a rule of non justiciability. Its effect in the very limited class of cases to which it applies is not to afford a defence but to preclude the courts from taking cognisance of an alleged civil wrong if it necessarily depends on determining the lawfulness of a foreign act of state. None of this means that whatever an agent of the Crown does pursuant to its decisions in the conduct of the United Kingdoms foreign relations gives rise to the defence of act of state. The boundaries are admittedly difficult to draw. The only extended discussion appears in the speeches in the House of Lords in Nissan v Attorney General [1970] AC 179. But the inconsistencies between them, the unsatisfactory terms of the pleading on which the argument was based and the obscurity of the facts combine to make it hard to extract any very clear ratio from this decision. It is unquestionably right to say, as Lord Pearson did at p 237F, that an act of state must be something exceptional. He cited the making of war and peace, the making of treaties and annexations or cessions of territory as obvious examples (p 237F G), and the dispatch of a peacekeeping force to the territory of an independent sovereign as having to some extent the character of acts of state even if it did not follow that everything that it did there was an act of state (pp 239F 240B). But this brings one no closer to a workable criterion on which to decide cases like the present ones. In my opinion, the main relevant limitations on the act of state doctrine are implicit in the doctrine itself. In particular, they are implicit in the requirement that the act must be inherently governmental in nature, and either specifically authorised or ratified by the Crown or inherent in what the Crown has authorised or ratified. Without seeking to formulate a comprehensive definition of a rule whose application is inevitably fact sensitive, I consider that the following points can fairly be made. The first is that an act does not need to raise questions of high policy in order to give rise to a plea of Crown act of state. This is because the rule extends not just to the decisions of policy makers, but to actions taken by the Crowns agents in the execution of those decisions, often at a relatively low level, far below the level of policy making. Moreover, as Lord Reid pointed out in Nissan, at p 212, acts which are unauthorised but ratified after the event are unlikely to have been done in accordance with any high policy of the Crown. Secondly, it is sometimes said that the act must be the necessary consequence of a decision made by the Crown through its ministers. I think that this is right, provided that we are careful about what we mean by necessary. In rejecting the Crowns reliance on act of state in Nissan, two members of the Appellate Committee observed that while the agreement with the government of Cyprus to station troops on the island was itself an act of state, the occupation of the Cornaro Hotel was not necessary to its implementation: pp 216 217 (Lord Morris of Borth y Gest), 227B C (Lord Pearce). But it is important to guard against the suggestion that the availability of the act of state defence depends on a judicial assessment of the political or tactical alternatives, an exercise which must be left to the judgment of the executive or its officers on the spot. As Sir William Scott observed in The Rolla, at p 366, a commander going out to a distant station may reasonably be supposed to carry with him such a portion of sovereign authority delegated to him, as may be necessary to provide for the exigencies of the service on which he is employed. In my opinion, the question depends on the character of the act. It is whether an act of that character is inherent in what the Crown has authorised or ratified. It is in this sense that the concept of necessity is used in this context. Thirdly, however, the fact that the act is of a kind which is inherent in what the Crown has authorised or ratified, although undoubtedly a necessary condition, cannot be a sufficient one. It must also be by its nature a sovereign, ie an inherently governmental act, for the Crown to be capable of authorising or ratifying it as an act of state. In his speech in Nissan (p 218F), Lord Morris, after quoting the definition of act of state in the then current edition of Halsburys Laws of England (an act of the executive as a matter of policy performed in the course of its relations with another state including its relations with the subjects of that state), observed, at p 218F: I do not think that such actions as securing food or shelter in peace time for troops situate abroad are to be regarded as acts of the executive performed in the course of relations with another state within the conception of the above definition. I think that this was the true ratio of the decision. The appropriation of the hotel was not an inherently governmental act in the circumstances pleaded. It was an ordinary case of the army acquiring accommodation in peacetime, in respect of which they were in no different position from any other organisation acquiring accommodation. They therefore had to pay like any one else. As Lord Pearson suggested at p 240B, the position might be different if there had been an urgent military necessity to occupy the hotel. I would prefer to reserve my opinion on the question whether the appropriation of property, with or without compensation, can be an act of state. I think that the answer would be likely to depend on the circumstances. In Buron v Denman and in Kamachee Boye Sahaba and other colonial annexation cases, the seizure of property without compensation was held to be an act of state. The same would, I suspect, be true of most appropriations of property in the course of active military operations. In other circumstances, like those in Nissan, the position would be different. We have heard no argument on this question. In the present cases, Crown act of state is raised by the Secretary of State only so far as the allegations are based on the mere fact of the claimants detention by Her Majestys forces or the mere fact of their transfer from British custody to that of the United States. In my opinion these were acts of state so far as they were authorised by the United Kingdoms detention policy or required by the United Kingdoms agreements with the United States, these being the only particulars of authority relied upon. If these criteria were satisfied, they were both inherently governmental in character and authorised by the Crown in the conduct of the United Kingdoms international relations. The Crown and its servants could not therefore be liable for them in tort. I would make a declaration to that effect. The Secretary of State denies that the claimants were maltreated, but does not contend that any maltreatment which may have occurred was an act of state. That is as one would expect. Any maltreatment of detainees was not authorised by the United Kingdoms detention policy. It is not alleged to have been authorised in any other way, or to have been ratified. It is therefore unnecessary to address the question whether the maltreatment of detainees ever could be an act of state, in the highly improbable event of its being done with the authority of the Crown. I would merely record my reservations about Lady Hales suggestion that the torture or maltreatment of prisoners is not an inherently governmental act, although I agree that in the light of the governments statements on the subject this is a moot point. As an international crime and a statutory offence in the United Kingdom, torture is by definition a governmental act: see Jones v Saudi Arabia [2007] 1 AC 270, paras 19 (Lord Bingham of Cornhill) and 81 85 (Lord Hoffmann). There are, unfortunately, well documented modern instances across the world of the use of torture and other forms of maltreatment as an instrument of state policy authorised at the highest levels. There is a more satisfactory answer to the hypothetical problem of governmental torture and deliberate governmental maltreatment. Given the strength of the English public policy on the subject, a decision by the United Kingdom government to authorise or ratify torture or maltreatment would not as a matter of domestic English law be a lawful exercise of the royal prerogative. It could not therefore be an act of state. Nor would there be any inconsistency with the proper functions of the executive in treating it as giving rise to civil liability. I have nothing to add to Lady Hales analysis of the Crown Proceedings Act 1947, or her conclusions about article 6 of the European Convention on Human Rights, with which I entirely agree. LORD NEUBERGER: (with whom Lord Hughes agrees) This aspect of these proceedings concerns the principle or doctrine of Crown act of state, which has been raised by the defendants in circumstances which have been explained by Lady Hale in paras 1 14 above. Crown act of state, like foreign act of state, is a doctrine which has been developed by judges over the years, as explained in the judgments of Lady Hale, Lord Mance and Lord Sumption. It would be a fruitless exercise to try and reconcile all the judicial dicta, even from the House of Lords, on this doctrine. Indeed, it is very difficult to identify a comprehensive definition of the doctrine, as is clear from the somewhat different approaches in the speeches of Lord Reid, Lord Morris and Lord Wilberforce in the most recent decision of the House of Lords on the topic, Nissan v Attorney General [1970] AC 179. A remarkable aspect of this doctrine is the weight that has been given to Buron v Denman (1848) 2 Exch 167, given that it was a direction to a jury where the nature and extent of the doctrine was not really in issue. The fact that the judge concerned was Baron Parke no doubt helps to explain why the ruling has been accorded particular respect. However, in agreement with Lord Mances analysis of the report, it seems to me that, to the extent that the case is strictly an authority, it is simply for the proposition that an action which would have been an act of state if it had been authorised in advance, will (or at least may) be treated by the court as an act of state if it is subsequently ratified by the Crown. Nonetheless, Buron was cited with approval by Lord Reid, Lord Morris and Lord Wilberforce in Nissan, and by Viscount Finlay, Viscount Cave, and Lord Sumner in Johnstone v Pedlar [1921] 2 AC 262, in relation to what Baron Parke said about the doctrine of Crown act of state. The fact that any attempt to define the precise nature and extent of the principle of Crown act of state is doomed to failure is unsurprising. The doctrine is ultimately based on judicial decisions and dicta as to when the judiciary should decline to rule on the lawfulness of an act on the ground that any challenge to the act should be left to the executive, at least normally where the act is based on the Royal prerogative. However, it is only in relation to some acts based on the Royal prerogative that when a court will decline to adjudicate, namely acts which, because of their nature or circumstances, call for judicial self restraint. There have been very few cases in the past 100 years when the doctrine has been considered and hardly any in which it has been held to apply. And decisions given even 50 years ago may reflect a somewhat different approach to that which appears appropriate today, following the growth of judicial review and the introduction of human rights into our domestic law. The difficulty in identifying or delimiting the doctrine is reinforced by the flexibility and imprecision of the United Kingdoms constitutional settlement. And it appears to me that any observation on the doctrine prior to the decision of the House of Lords in Council of the Civil Service Unions v Minister for the Civil Service [1985] AC 374 must be considered with particular caution, essentially for the reason given by Lady Hale in para 15. However, despite these points, there is no doubt that the doctrine of Crown act of state remains a constitutionally important, if rarely invoked, feature of the common law. For the reasons already given, I agree with Lady Hale (in para 36) that it would be unwise for us to propound a definitive statement as to when the Crown act of state doctrine can be invoked. However, I entirely endorse the attempts in the preceding judgments to give as much guidance as we can on the extent of the doctrine. In that connection, I consider that the formulations of Lady Hale (in paras 32 and 36 37), of Lord Mance (in paras 56 58 and 64) and of Lord Sumption (in paras 88 93) provide helpful guidance as to what may constitute (or may not constitute) a Crown act of state, as do the definitions cited in para 2 of Lady Hales judgment. That leaves the question of the proper characterisation of the doctrine. In those rare cases where an issue involving a Crown act of state arises, it does not mean that a judge lacks the information or expertise to resolve the issue (although in some exceptional cases that may be a different reason for the court not determining an issue). As Lady Hale says in para 45, this is not because the doctrine bestows any sort of immunity, or indeed because of any judicial discretion: it is because there are certain acts of the UK government (sc the executive) which, owing to their nature or circumstances, are not susceptible to judicial assessment. As Lord Sumption says in para 88, the doctrine is ultimately based on the need for consistency or coherence in the distribution of functions between the executive and the judiciary in the United Kingdoms constitutional arrangements. Accordingly, if a claim depends on establishing the unlawfulness of a Crown act of state, then, as a matter of United Kingdom law, the claim must fail, as a Crown act of state cannot give rise to a legal liability. When Crown act of state applies to a particular act, that act is often described as being non justiciable. However, as Lord Sumption explains in para 79, the expression non justiciable can have a number of different meanings, and, for that very reason it seems to me that it is one which is best avoided if one is seeking to explain precisely why an issue cannot be resolved because the doctrine of Crown act of state applies. Thus, the expression non justiciable could well be understood as suggesting that the court is incapable of determining, or choosing not to determine, the lawfulness of the act in question, or that the court is declining to address any legal liability flowing from that act. But, as I have just explained (and is explained more fully in the preceding judgments), none of those analyses represents the basis of Crown act of state. I agree with Lady Hale, for the reasons which she gives, that neither the Crown Proceedings Act 1947 nor article 6 of the European Convention on Human Rights assists the respondents. However, I also agree with her, Lord Mance and Lord Sumption, for the reasons which they all give, that the doctrine of Crown act of state can be relied on by the defendants in this case, and accordingly I would join them in allowing this appeal. LORD CLARKE: I have read all these judgments with interest and admiration. There has been much debate as to whether Crown act of state involves one or two principles. However nobody has so far suggested a case in which it would make a difference as to which of the two principles applied. Like Lord Sumption (the principal proponent of the two principles approach), at the end of para 80, I doubt whether it helps to treat the doctrine as comprising two rules or one. I also agree with him that in this context it can fairly be said that Lord Wilberforces two rules merge into one. The only point that I would stress is this. It does seem to me that whether there is one principle or two, the question whether a defendant can successfully rely upon Crown act of state does not involve the court exercising a discretion or anything approaching a discretion. The defendant either has a legal right to rely upon Crown act of state or it does not. Only in the former case will it succeed, whether it is held that it does so by way of defence or by the application of the principle of non justiciability. I agree that the disposition of this appeal should be as proposed by the other members of the court for the reasons they give. In so far as there may be differences between them, I do not detect any difference which is critical to the resolution of this appeal. |
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. |
This appeal is concerned with the liability of a local authority for what is alleged to have been a negligent failure to exercise its social services functions so as to protect children from harm caused by third parties. The principal question of law which it raises is whether a local authority or its employees may owe a common law duty of care to children affected by the manner in which it exercises or fails to exercise those functions, and if so, in what circumstances. The facts The claimants, who have been given anonymity for the purposes of these proceedings and whom I shall refer to as Colin and Graham (not their real names), seek damages for personal injuries suffered while they were children living in the area of the respondent council. There has been no investigation of the facts, but the matters on which they rely, as set out in the particulars of claim, can be summarised as follows. In May 2006 the claimants and their mother, whom I shall refer to as Amy (not her real name), were placed by the council in a house on an estate in Poole, adjacent to another family who to the councils knowledge had persistently engaged in anti social behaviour. Colin was then nine years old and Graham was seven. Colin is severely disabled both mentally and physically, and requires constant care. The council made extensive adaptations to the house in order to meet his needs, and provided him with a care package through its child health and disability team. He had an allocated social worker. The support provided in respect of Colin was kept under review over the relevant period by the child health and disability team together with Colins social worker. A core assessment of his needs was updated in November 2006. Following the placement an incident occurred when children belonging to the neighbouring family sat on Amys car and kicked a football against it. When she remonstrated with them they abused and threatened her. She reported the matter to the councils chief executive. As a result the police attended and issued a warning to the neighbouring family. This resulted in their targeting Amy and her family for harassment and abuse which persisted over a period of several years. It included vandalism of Amys car, attacks on the family home, threats of violence, verbal abuse, and physical assaults on Amy and Graham. These incidents were reported to the council. Various measures were taken against the neighbouring family, including eviction, the obtaining of injunctions, proceedings for contempt of court, anti social behaviour orders, and the imposition of sentences of imprisonment, but the harassment nevertheless continued. When Amys requests for assistance from the council and other agencies failed to bring the abuse to an end or to secure the rehousing of her family, she contacted councillors and Members of Parliament, prompting coverage by local and national media. This resulted in the Home Office commissioning an independent report, which was critical of the police and of the councils failure to make adequate use of powers available under anti social behaviour legislation. Graham expressed suicidal ideas during 2008, and in September 2009, aged ten, ran away from home leaving a suicide note. He was then provided with psychotherapy by the local health authority. A social worker undertook an initial assessment of his needs in October 2009, concluding that Amy should be referred to mental health services and that a core assessment of Grahams needs should be carried out by the councils family support team. That assessment was completed in February 2010. Graham was then allocated the same social worker as Colin. In May 2010 the strategic manager for childrens services acknowledged that the initial assessment had been flawed. In July 2010 a child protection strategy meeting decided that the risk of Grahams harming himself should be managed under a child in need plan rather than through the child protection system. The child in need plan was completed later that month. In November 2010 the council concluded that its assessment of Grahams needs had been flawed and that a revised core assessment should be undertaken by Grahams social worker. Following its completion in June 2011, the council decided to undertake an investigation in relation to Graham under section 47 of the Children Act 1989 (the 1989 Act). The following month a child protection conference decided to make Graham subject to a child protection plan. In the meantime it had been decided that the family should be rehoused away from the estate. A suitable house was identified, and the necessary adaptations were made. Amy and the children moved into their new home in December 2011. It is alleged that the abuse and harassment which the children underwent between May 2006 and December 2011 caused them physical and psychological harm. The history of the proceedings The claim form which instituted the present proceedings was issued on behalf of Amy and the children in December 2014, following the striking out of an earlier claim issued in 2012. The council is the sole defendant. Particulars of claim were served in April 2015. They advanced allegations under two limbs. The first was to the effect that the council, in the exercise of its housing functions, owed Amy and the children a duty of care to protect them from abuse and anti social behaviour by rehousing them. The second limb was to the effect that the council owed the children a duty of care in relation to the exercise of its functions under sections 17 and 47 of the 1989 Act, which are explained below, and failed to protect them from harm by allowing them to continue to live on the estate. In April 2015 the council applied for the claim to be struck out. On 2 October 2015 Master Eastman acceded to the application and struck out the claim. The main focus of the hearing before him was on the first limb of the claim, and he dealt relatively briefly with the second limb. Referring to X (Minors) v Bedfordshire County Council [1995] 2 AC 633 and to the discussion in Charlesworth & Percy on Negligence, 10th ed (2001), he concluded that no duty of care arose out of the statutory powers and duties of local authorities under the 1989 Act. The claimants appealed in relation to the second limb of the claim only. On 16 February 2016 Slade J allowed the appeal: [2016] EWHC 569 (QB); [2016] HLR 26. She considered that the principal issue arising was whether the decision of the Court of Appeal in D v East Berkshire Community NHS Trust [2003] EWCA Civ 1151; [2004] QB 558, in which it declined to strike out a childs claim against a local authority arising from action which it had taken to separate her from her father following a negligent investigation of suspected child abuse, had been impliedly overruled by the decisions of the House of Lords in Mitchell v Glasgow City Council [2009] UKHL 11; [2009] AC 874 and of this court in Michael v Chief Constable of South Wales [2015] UKSC 2; [2015] AC 1732. She concluded that it had not, and that there was no absolute bar to a negligence claim by a child against a local authority for failure to safeguard him or her against abuse. Whether a common law duty of care was owed by the council to the claimants would in her view depend upon a full examination of the facts. By an order of the same date she gave the claimants permission to amend their particulars of claim. Amended particulars of claim were served in March 2016. These allege both a common law duty of care owed by the council and a duty of care owed by its social workers, social work managers and other staff allocated to the claimants or tasked with investigating their situation, for the breach of which the council is said to be vicariously liable. It is said that the claimants rely in terms of the statutory backdrop giving rise to a common law duty of care on the statutory duty to safeguard the welfare and promote the upbringing of all children in a local authoritys geographical area, as set out in sections 17 and 47 of [the 1989 Act]. In relation to the council itself, it is said that it had a duty to protect children in its area, and in particular children reported to it as being at foreseeable risk of harm. Such a risk is alleged to have been communicated to the council in the present case from July 2006, placing it under a duty to investigate whether the claimants were at foreseeable risk of harm, and thereafter to take reasonable steps to protect them from any such risk. The council is said to have accepted a responsibility for the claimants particular difficulties in purporting to investigate the risk that the claimants neighbours posed to them and subsequently in attempting to monitor the claimants plight. It is said that in so far as such investigation is shown to have been carried out negligently and/or negligently acted on, the defendant is liable for breach of duty. In relation to vicarious liability, it is said that each of the social workers and social work managers who was allocated as the social worker or manager for the claimants or tasked with investigating their plight owed them a duty of care. That duty is said to have included a duty to protect them from physical and psychiatric damage, to monitor their welfare, to arrange for the provision of such medical treatment as they required, to visit them and ascertain their views, wishes, anxieties and complaints, to ascertain whether either of them was at risk of harm from which their mother was unable to protect them, and in the event of such risk to remove them from such risk using the discretion of the defendant to remove the claimants to a home where they would be safe. It is said that the social workers and social work managers knew or ought to have known that the claimants and their mother were being subjected to violence and abuse from which she was unable to protect them due mainly to her own position and vulnerability as a victim of such violence and abuse, that Colin was being targeted for mockery because of his disabilities, and that Graham was being assaulted and was threatening to commit suicide. In relation to breach of duty, it is said that the council failed to assess the ability of the claimants mother to protect her children from the level of abuse and violence they were subjected to, and failed to assess that the mother was unable to meet the claimants needs whilst she lived on the estate with them. As a result, it failed to remove the children from their home: On the balance of probabilities competent investigation at any stage would have led to the removal of the claimants from home. A child in need assessment should with competent care have been carried out in respect of each claimant by September 2006 at the latest. By September 2006 no competent local authority would have failed to carry out a detailed assessment and on the balance of probabilities such detailed assessment if carried out competently would and should have led to the conclusion that each of the claimants required removal from home if the family as a whole could not be moved. With the information obtained by competent assessment in September 2006 on application to the court the defendant would have obtained at least respite care and if necessary by (sic) interim care orders in respect of each claimant. Any competent local authority should and would have arranged for their removal from home into at least temporary care. The council appealed against Slade Js decision. On 21 December 2017 the Court of Appeal allowed the appeal: [2017] EWCA Civ 2185; [2018] 2 WLR 1693. Irwin LJ gave the main judgment, with which Davis and King LJJ agreed. Having considered the authorities in detail he concluded that two considerations in particular militated against liability. The first was the concern articulated in X (Minors) v Bedfordshire County Council and in Hill v Chief Constable of West Yorkshire [1989] AC 53 that liability in negligence will complicate decision making in a difficult and sensitive field, and potentially divert the social worker or police officer into defensive decision making. The second was the principle, illustrated by cases such as Mitchell v Glasgow City Council and Michael v Chief Constable of South Wales, that in general there is no liability for the wrongdoing of a third party, even where that wrongdoing is foreseeable. In his view, none of the exceptions to that general principle applied, since this was not a case in which the council, performing its social services functions, brought about the risk of harm or had control over the individuals representing the risk, nor had it assumed responsibility towards the claimants. The decision of the Court of Appeal in D v East Berkshire was in his view inconsistent with the subsequent decision of this court in Michael, where the majority had rejected an argument, based explicitly on D v East Berkshire, that the common law should be developed in order to achieve consistency with Convention rights. In his view the Court of Appeal was therefore not bound to follow its decision in the East Berkshire case, applying the doctrine of stare decisis as explained in Young v Bristol Aeroplane Co Ltd [1944] KB 718, 725 726. In those circumstances, there was no basis for holding the council liable for the wrongdoing of third parties. King LJ added, in relation to the pleading quoted at para 14 above, that there appeared to be no understanding of the statutory basis upon which an order resulting in the removal of the claimants from their mother could have been made. She explained that where a mother did not consent to the removal of her children from her care under an interim care order, the local authority must satisfy the court, pursuant to section 38(2) of the 1989 Act, that there were reasonable grounds for believing that the threshold criteria mentioned in section 31(2) were satisfied: in particular, that the child concerned was suffering, or likely to suffer, significant harm attributable to the care given to him not being what it would be reasonable to expect a parent to give to him. On the facts of the case it seemed highly unlikely that it could be shown that there were reasonable grounds to conclude that the threshold criteria could be satisfied. Further, numerous Court of Appeal decisions had made it clear that satisfaction of the threshold criteria should not be equated with satisfaction of the case for the removal of a child from its parent. A care plan for the immediate removal of a child from its parent should only be approved by the court if the child's safety demanded immediate separation: see for example In re G (Interim Care Order) [2011] EWCA Civ 745; [2011] 2 FLR 955. There was no such order as a respite care order. She added that the pleadings should have particularised the broad basis on which it was said that the threshold criteria were capable of being satisfied, and why the council would have been permitted to remove the children from their mother. Had that been done, it would have been apparent that the proposal that they should be removed from their mother was legally unsustainable. Davis LJ added at paras 117 118, in relation to the alleged duty to seek and obtain a care order under the 1989 Act: It was never said that the mother was an unfit mother. She loved and cared for her (vulnerable) children. They loved and needed her. Nothing she did or did not do caused them any harm: it was the harassment of the neighbours which did. In the circumstances of this case, there was no justification for potentially separating, without the mothers consent, mother from children, children from mother by use of care proceedings. To countenance care proceedings in the Family Court in order to overcome (or provide a subsequent remedy for) the problems caused by the neighbours on the estate would be, I would have thought, tantamount to an abuse of the process of that court. The legislative context The particulars of claim focus on sections 17 and 47 of the 1989 Act, although mention is also made of the Children Act 2004. No reliance is placed on the functions of local authorities under legislation relating to the provision of support to carers, the provision of housing, or protection from anti social behaviour. Section 17 appears in Part III of the 1989 Act, which is concerned with support for children and families. In particular, section 17 is concerned with the provision of services for children in need, their families and others. Section 17(10) defines a child in need: a child shall be taken to be in need if (a) he is unlikely to achieve or maintain, or to have the opportunity of achieving or maintaining, a reasonable standard of health or development without the provision for him of services by a local authority under this Part; (b) his health or development is likely to be significantly impaired, or further impaired, without the provision for him of such services; or (c) he is disabled Colin was a child in need as so defined, since he was disabled. Graham was also assessed to be a child in need in July 2010. Under section 17(1) it is the general duty of every local authority (a) to safeguard and promote the welfare of children within their area who are in need; and (b) so far as is consistent with that duty, to promote the upbringing of such children by their families, by providing a range and level of services appropriate to those childrens needs. For the purpose of facilitating the discharge of that general duty, every local authority has the specific duties and powers set out in Schedule 2. These include a duty to take reasonable steps to identify the extent to which there are children in need within their area, a duty to assess the needs of any child who appears to be in need, and a duty to take reasonable steps, through the provision of services under Part III of the Act, to prevent children suffering ill treatment or neglect: paragraphs 1, 3 and 4 respectively. Under section 17(6) the services provided under that section may include providing accommodation. Section 17(1) does not impose a duty to meet the needs of any particular child. Rather, it is to be read as imposing a duty on the local authority to provide a range and level of services appropriate to meet the various needs of children in its area: R (G) v Barnet London Borough Council [2003] UKHL 57; [2004] 2 AC 208, para 109. In relation to the provision of accommodation, it is necessary to bear in mind the observations of Lord Hope of Craighead in that case at paras 92 93, with which Lord Millett and Lord Scott of Foscote agreed: 92. Although the services which the authority provides may include the provision of accommodation (see section 17(6)), the provision of residential accommodation to rehouse a child in need so that he can live with his family is not the principal or primary purpose of this legislation. Housing is the function of the local housing authority, for the acquisition and management of whose housing stock detailed provisions are contained in the Housing Acts. Provisions of that kind are entirely absent from this legislation. 93. A reading of that subsection [section 17(1)] as imposing a specific duty on the local social services authority to provide residential accommodation to individual children in need who have been assessed to be in need of such accommodation would sit uneasily with the legislation in the Housing Acts. As Mr Goudie pointed out, it could have the effect of turning the social services department of the local authority into another kind of housing department, with a different set of priorities for the provision of housing Section 47 appears in Part V of the 1989 Act, which is concerned with the protection of children. In particular, section 47(1) imposes a duty on local authorities, where there is reasonable cause to suspect that a child . in their area is suffering, or is likely to suffer, significant harm, to make such enquiries as they consider necessary to enable them to decide whether they should take any action to safeguard or promote the childs welfare. Under section 47(3) those enquiries shall, in particular, be directed towards establishing (so far as material) (a) whether the authority should make any application to the court, or exercise any of their other powers under this Act with respect to the child. Compulsory powers of intervention are provided in Parts IV and V of the 1989 Act. In particular, an application can be made to the court under section 31 for a care order or a supervision order, but in terms of section 31(2) such an order can only be made by the court if it is satisfied (so far as material): that the child concerned is suffering, or is likely to (a) suffer, significant harm; and (b) that the harm, or likelihood of harm, is attributable to (i) the care given to the child, or likely to be given to him if the order were not made, not being what it would be reasonable to expect a parent to give to him An interim care order can be made under section 38 of the 1989 Act, but only if the court is satisfied that there are reasonable grounds for believing that the circumstances with respect to the child are as mentioned in section 31(2): section 38(2). Even if these tests are satisfied at what has become known as the threshold stage, it remains to be considered at the welfare stage whether an order ought to be made. The Court of Appeal has held that interim care orders should be made only where the childrens safety requires removal, and removal is proportionate in the light of the risks posed by leaving them where they are: In re G (Interim Care Order), para 22. In relation to care orders, the court must treat the welfare of the child as the paramount consideration, and any interference with article 8 rights must be proportionate: In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911, paras 32, 73 and 194 195. Relevant developments in the law of negligence It is accepted that the provisions of the 1989 Act which impose duties on local authorities do not create a statutory cause of action. The question is whether local authorities may instead be liable at common law for breach of a duty of care in relation to the performance of their functions under the Act. In order to answer that question, it will be necessary to consider a number of authorities decided over the period between about 1995 and the present day. Before doing so, it may be helpful to begin with an overview, necessarily stated in general and simplified terms, of how legal thinking about the liabilities of public authorities in negligence developed over that period. As will become apparent, the period has been marked by shifting approaches by the highest court. In its recent case law this court has attempted to establish a clearer framework. As was explained in Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4; [2018] AC 736, paras 31 42, public authorities other than the Crown were traditionally understood to be subject to the same general principles of the law of tort, at common law, as private individuals and bodies: see, for example, Entick v Carrington (1765) 2 Wils KB 275 and Mersey Docks and Harbour Board v Gibbs (1866) LR 1 HL 93. That position might be altered by statute, by imposing duties whose breach gave rise to a statutory liability in tort towards private individuals, or by excluding liability for conduct which would otherwise be tortious at common law: see respectively Gorris v Scott (1874) LR 9 Ex 125 and Geddis v Proprietors of Bann Reservoir (1878) 3 App Cas 430. In particular, as Lord Reid explained in Dorset Yacht Co Ltd v Home Office [1970] AC 1004, 1030, a person performing a statutory duty was liable for an act which, but for the statute, would be actionable at common law, if he performed the act carelessly so as to cause needless damage. His liability arose because the defence which the statute provided extended only to the careful performance of the act. The rationale, Lord Reid explained, was that: Parliament deems it to be in the public interest that things otherwise unjustifiable should be done, and that those who do such things with due care should be immune from liability to persons who may suffer thereby. But Parliament cannot reasonably be supposed to have licensed those who do such things to act negligently in disregard of the interests of others so as to cause them needless damage. Lord Reid added at p 1031 that the position was not the same where Parliament conferred a discretion. If the discretion was exercised lawfully, then the act in question would be authorised by Parliament: But there must come a stage when the discretion is exercised so carelessly or unreasonably that there has been no real exercise of the discretion which Parliament has conferred. The person purporting to exercise his discretion has acted in abuse or excess of his power. Parliament cannot be supposed to have granted immunity to persons who do that. Like private individuals, public bodies did not generally owe a duty of care to confer benefits on individuals, for example by protecting them from harm: see, for example, Sheppard v Glossop Corpn [1921] 3 KB 132 and East Suffolk Rivers Catchment Board v Kent [1941] AC 74. In this context I am intentionally drawing a distinction between causing harm (making things worse) and failing to confer a benefit (not making things better), rather than the more traditional distinction between acts and omissions, partly because the former language better conveys the rationale of the distinction drawn in the authorities, and partly because the distinction between acts and omissions seems to be found difficult to apply. As in the case of private individuals, however, a duty to protect from harm, or to confer some other benefit, might arise in particular circumstances, as for example where the public body had created the source of danger or had assumed responsibility to protect the claimant from harm: see, for example, Dorset Yacht Co Ltd v Home Office, as explained in Gorringe v Calderdale Metropolitan Borough Council [2004] UKHL 15; [2004] 1 WLR 1057, para 39. This traditional understanding was departed from in Anns v Merton London Borough Council [1978] AC 728, where Lord Wilberforce laid down a new approach to determining the existence of a duty of care. It had two stages. First, it was necessary to decide whether there was a prima facie duty of care, based on the foreseeability of harm. Secondly, in order to place limits on the breadth of the first stage, it was necessary to consider whether there were reasons of public policy for excluding or restricting any such prima facie duty. These included, in the case of public authorities exercising discretionary powers, the supposed non justiciability of decisions falling into the category of policy as opposed to operations. That two stage approach had major implications for public authorities, as they have a multitude of functions designed to protect members of the public from foreseeable harm of one kind or another, with the consequence that the first stage inquiry was readily satisfied, and the only limits to liability became public policy, including the distinction between policy and operations. The Anns decision led to a period during which the courts struggled to contain liability, particularly for pure economic loss (ie, economic loss which was not the result of physical damage or personal injury) and for the failures of public authorities to perform their statutory functions with reasonable care. Clarification of the general approach to establishing a duty of care in novel situations was provided by Caparo Industries plc v Dickman [1990] 2 AC 605, but the decision was widely misunderstood as establishing a general tripartite test which amounted to little more than an elaboration of the Anns approach, basing a prima facie duty on the foreseeability of harm and proximity, and establishing a requirement that the imposition of a duty of care should also be fair, just and reasonable: a requirement that in practice led to evaluations of public policy which the courts were not well equipped to conduct in a convincing fashion. Although the decision in Anns was departed from in Murphy v Brentwood District Council [1991] 1 AC 398, its reasoning in relation to the liabilities of public authorities remained influential until Stovin v Wise [1996] AC 923, where a majority of the House of Lords reasserted the importance of the distinction in the law of negligence between harming the claimant and failing to confer a benefit on him or her, typically by protecting him or her from harm. The distinction between policy and operations was also rejected. The resultant position, as explained by Lord Hoffmann in a speech with which the other members of the majority agreed, was that [in] the case of positive acts, therefore, the liability of a public authority in tort is in principle the same as that of a private person but may be restricted by its statutory powers and duties (p 947: emphasis in original). In relation to failures to perform a statutory duty, Lord Hoffmann stated at p 952 that [i]f such a duty does not give rise to a private right to sue for breach, it would be unusual if it nevertheless gave rise to a duty of care at common law which made the public authority liable to pay compensation for foreseeable loss caused by the duty not being performed. Further clarification was provided by the decision in Gorringe v Calderdale Metropolitan Borough Council. In a speech with which the other members of the Appellate Committee agreed, Lord Hoffmann reiterated at para 17 the importance of the distinction between causing harm and failing to protect from harm, in the context of a highway authoritys alleged duty of care to provide warning signs on the road: It is not sufficient that it might reasonably have foreseen that in the absence of such warnings, some road users might injure themselves or others. Reasonable foreseeability of physical injury is the standard criterion for determining the duty of care owed by people who undertake an activity which carries a risk of injury to others. But it is insufficient to justify the imposition of liability upon someone who simply does nothing: who neither creates the risk nor undertakes to do anything to avert it. Lord Hoffmann also emphasised the difficulty of finding that a statutory duty or power generated a common law duty of care, observing at para 32 that it was difficult to imagine a case in which a common law duty can be founded simply upon the failure (however irrational) to provide some benefit which a public authority has power (or a public law duty) to provide. Lord Hoffmann stressed at para 38 that the House was not concerned with cases in which public authorities have actually done acts or entered into relationships or undertaken responsibilities which give rise to a common law duty of care. For example, [a] hospital trust provides medical treatment pursuant to the public law duty in the [National Health Service Act 1977], but the existence of its common law duty is based simply upon its acceptance of a professional relationship with the patient no different from that which would be accepted by a doctor in private practice. The duty in such a case rests upon a solid, orthodox common law foundation and the question is not whether it is created by the statute but whether the terms of the statute (for example, in requiring a particular thing to be done or conferring a discretion) are sufficient to exclude it. It took time for the significance of Stovin v Wise and Gorringe to be fully appreciated: they were not cited, for example, in Smith v Chief Constable of Sussex Police [2008] UKHL 50; [2009] AC 225. Confusion also persisted concerning the effect of Caparo until clarification was provided in Michael and Robinson. The long shadow cast by Anns and the misunderstanding of Caparo have to be borne in mind when considering the reasoning of decisions concerned with the liabilities of public authorities in negligence which date from the intervening period. Although the decisions themselves are generally consistent with the principles explained in Gorringe and later cases and can be rationalised on that basis, their reasoning has in some cases, and to varying degrees, been superseded by those later developments. For the purposes of the present case, it is necessary to consider a number of decisions of the House of Lords concerned with local authorities duties of care to children affected by their discharge of their statutory functions, together with some other cases in which the Court of Appeals decision in D v East Berkshire was considered, and the decisions in Mitchell, Michael and Robinson. X (Minors) v Bedfordshire County Council The first authority which is germane to the present case is X (Minors) v Bedfordshire County Council, decided by the House of Lords in 1995. The case concerned a number of claims against local authorities, some relating to their functions under child care legislation and others to their functions as education authorities. All of the claims had been struck out as disclosing no cause of action. In one of the child care appeals, the Bedfordshire case itself, five children brought claims for damages against the council for failing to exercise its statutory powers and duties (including those conferred or imposed by sections 17, 31 and 47 of the 1989 Act, and similar provisions in earlier legislation) so as to protect them from harm at the hands of their parents. In the other child care appeal, M (A Minor) v Newham London Borough Council, a child and her mother brought claims for damages against the council, the area health authority and a consultant psychiatrist employed by the latter. The case against the council was based on vicarious liability for the negligence of a social worker in its employment. It was alleged that he and the psychiatrist had been negligent when investigating allegations of child abuse. They interviewed the child without taking a full history of the mothers domestic circumstances, with the consequence that they mistakenly assumed, when the child referred to her abuser by his first name, that she was referring to the mothers partner, rather than to another man with the same first name who had previously lived at the mothers address. They then told the mother that her partner was the abuser, leading her to exclude her partner from her home. On the basis of the psychiatrists and social workers conclusion that the mother would be unable to protect the child from her partner, the child was taken into compulsory care and placed with foster parents, where she remained for almost a year. Eventually the mother obtained sight of a transcript of the interview, from which it was apparent that the child had not identified her partner as the abuser. She then informed the local authority, and the child was returned to her care. It should be noted at the outset that the Bedfordshire and Newham cases were radically different from one another. In the former case, the allegation was that the council had failed to protect the children from harm inflicted by third parties. The question therefore arose whether there were circumstances, such as an assumption of responsibility to protect the children from harm, which placed the council under a common law duty to protect them. That question did not arise in the Newham case. There, the allegation was that the councils employee had himself harmed the child, by negligently causing her to be removed from her home and detained against her will, with the result that she suffered a psychiatric disorder. Unlike in the Bedfordshire case, there was no need to establish an assumption of responsibility towards the child: that is not a necessary ingredient either of the tort of wrongfully depriving a person of her liberty, or of the tort of negligently inflicting a psychiatric injury. No such distinction was however drawn between the two claims. Lord Browne Wilkinson gave the leading speech, with which Lord Jauncey of Tullichettle, Lord Lane and Lord Ackner agreed. He began by dispelling confusion about some aspects of the law governing the liability of public authorities, concluding at pp 734 735 that in order to found a cause of action flowing from the careless exercise of statutory powers or duties, the plaintiff has to show that the circumstances are such as to raise a duty of care at common law. The mere assertion of the careless exercise of a statutory power or duty is not sufficient. He went on to explain at p 736 that the exercise of a statutory discretion could not be impugned unless it was so unreasonable as to fall outside the ambit of the discretion conferred: It is clear both in principle and from the decided cases that the local authority cannot be liable in damages for doing that which Parliament has authorised. Therefore if the decisions complained of fall within the ambit of such statutory discretion they cannot be actionable in common law. However if the decision complained of is so unreasonable that it falls outside the ambit of the discretion conferred upon the local authority, there is no a priori reason for excluding all common law liability. In these respects, Lord Browne Wilkinsons approach accords with more recent authorities, as well as the older authorities to which he referred. In relation to the Bedfordshire case, Lord Browne Wilkinson convincingly rejected the contention that the statutory provisions created a cause of action for breach of statutory duty. In considering whether the circumstances were such as to impose a duty of care on the council at common law, Lord Browne Wilkinson considered that questions arising from the policy/operational distinction could not be resolved at that preliminary stage. Nor could the question whether the council had acted in the reasonable exercise of its discretion. There remained the three issues mentioned in Caparo: whether the defendants could reasonably foresee that the claimants might be injured, whether their relationship with the claimants had the necessary quality of proximity, and whether it was in all the circumstances just and reasonable that a duty of care should be imposed. The first two of these issues were conceded. The only question which required to be decided was whether it was just and reasonable to impose a duty of care. In that regard, Lord Browne Wilkinson concluded at pp 749 751 that there were a number of reasons of public policy for denying liability: the multi disciplinary nature of the system of decision making, the delicacy and difficulty of the decisions involved, the risk that local authorities would respond to the imposition of liability by adopting a defensive approach to decision making, the risk of vexatious and costly litigation, and the availability of administrative complaints procedures. Lord Browne Wilkinson also noted that Caparo required that, in deciding whether to develop novel categories of negligence, the court should proceed incrementally and by analogy with decided categories. The nearest analogies, in his view, were the cases where a common law duty of care had been sought to be imposed upon the police, in relation to the protection of members of the public, and upon statutory regulators of financial dealings, in relation to the protection of investors. In neither of those situations had it been thought appropriate to impose a common law duty of care: Hill v Chief Constable of West Yorkshire and Yuen Kun Yeu v Attorney General of Hong Kong [1988] AC 175. No claim was made in the Newham case on the basis of direct liability. In relation to the question of vicarious liability raised by that case, and also potentially by the Bedfordshire case, Lord Browne Wilkinson accepted at p 752 that the social worker and the psychiatrist exercised professional skills, and that in general a professional duty of care is owed irrespective of contract and can arise even where the professional assumes to act for the plaintiff pursuant to a contract with a third party, as in Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 and White v Jones [1995] 2 AC 207. The social worker and the psychiatrist had not, however, assumed any responsibility towards the claimants. Although the carrying out of their duties involved contact with or a relationship with the claimants, they were nevertheless employed or retained to advise the local authority and the health authority respectively, not to advise or treat the claimants. The position was not the same as in Smith v Eric S Bush [1990] 1 AC 831, where the purchaser of a house had foreseeably relied on the advice given by the surveyor to the building society which was going to lend money on the security of the property. Even if the advice tendered by the social worker to the local authority came to the knowledge of the child or his parents, they would not regulate their conduct in reliance on the report. The effect of the report would be reflected in the way the local authority acted. Nor was the position the same as in Henderson v Merrett Syndicates, where the duty of care to the claimants was imposed by the terms of the defendants contract with a third party; so also in White v Jones. Lord Browne Wilkinson concluded at p 753: In my judgment in the present cases, the social workers and the psychiatrist did not, by accepting the instructions of the local authority, assume any general professional duty of care to the plaintiff children. The professionals were employed or retained to advise the local authority in relation to the well being of the plaintiffs but not to advise or treat the plaintiffs. Lord Browne Wilkinson added that in any event, the same policy considerations which led to the view that no direct duty of care was owed by the local authority applied with at least equal force to the question whether it would be just and reasonable to impose a duty of care on the social worker and the psychiatrist. The psychiatrist also benefited from witness immunity. The fundamental problem with this reasoning, so far as relating to an assumption of responsibility, is that as explained in para 38 above, the liability of the social worker and the psychiatrist in the Newham case did not depend on whether they had assumed a responsibility towards the child. Lord Browne Wilkinsons conclusion that there was no assumption of responsibility in the child abuse cases can be contrasted with his conclusion in the education cases, which concerned failures to diagnose and address special educational needs. He concluded in the first of those cases (the Dorset case) that a direct claim could lie against the local authority on the basis that it was offering a service to the public, namely the provision of psychological advice, which the claimant had accepted. By holding itself out as offering a service, it came under a duty of care to those using the service, in the same way as a health authority conducting a hospital under statutory powers was under a duty of care to those whom it admitted. There could also be vicarious liability for negligence on the part of the educational psychologists which the local authority employed to provide the service, and on whose professional advice the claimants parents were said to have relied. The position was similar in the second education case (the Hampshire case), which was based on vicarious liability for the negligence of a headmaster and an advisory teacher. Lord Browne Wilkinson concluded that, whether it was operated privately or under statutory powers, a school which accepted a pupil assumed responsibility for his educational needs. The education of the pupil was the very purpose for which the child went to the school. The head teacher, being responsible for the school, came under a duty of care to exercise the reasonable skills of a headmaster in relation to such educational needs. The position was the same where an advisory teacher was brought in to advise on the educational needs of a specific pupil, whether he was consulted privately or was provided by the local authority. If he knew that his advice would be communicated to the pupils parents, he must foresee that they would rely on such advice. Therefore, in giving that advice, he owed a duty to the child to exercise the skill and care of a reasonable advisory teacher. Barrett v Enfield London Borough Council The next case in the House of Lords concerned with local authorities statutory responsibilities towards children was Barrett v Enfield London Borough Council [2001] 2 AC 550. The House declined to strike out a claim alleging that, in making or failing to make a number of decisions relating to a child who had been in its care throughout his childhood, a local authority had been in breach of a common law duty of care, and also alleging that social workers employed by the local authority had failed in a duty of care owed by them in carrying out its obligations to monitor the childs welfare. Most of the allegations concerned failures to confer benefits on the claimant. The critical difference from X (Minors) v Bedfordshire, as Lord Slynn of Hadley explained in a speech with which Lord Nolan and Lord Steyn agreed, was that the claim in Barrett v Enfield related to conduct occurring after the child had been taken into care. Lord Slynn drew on the analogy of a school which accepted a pupil and thereby assumed responsibility for his educational needs, giving rise to a duty of care, as Lord Browne Wilkinson had stated in X (Minors) v Bedfordshire, and that of a prison which had a prisoner in its custody, and consequently assumed responsibility for his physical wellbeing, again giving rise to a duty of care, as had been held in R v Deputy Governor of Parkhurst, Ex p Hague [1992] 1 AC 58. As Lord Hutton explained in his concurring speech, with which Lord Nolan and Lord Steyn agreed, the effect of taking the child into care was that the local authority assumed responsibility for his care. The statutory powers and duties might have provided the local authority with defences in respect of its specific acts or omissions, but that could not be decided without an investigation of the facts. The committee rejected the argument that to impose liability on local authorities for careless acts or omissions in relation to a child in their care would be contrary to public policy. Lord Slynn approved at p 568 an observation in the Court of Appeal that the argument that imposing a duty of care might lead to defensive conduct should normally be a factor of little, if any, weight. He also rejected the argument that the administrative remedies to which Lord Browne Wilkinson had referred in X (Minors) v Bedfordshire were likely to be as effective as the recognition of a duty of care. Phelps v Hillingdon London Borough Council In Phelps v Hillingdon London Borough Council [2001] 2 AC 619 an enlarged committee of the House of Lords considered a number of claims alleging negligence in the assessment of children with special educational needs, with the result that they did not receive the educational facilities which would otherwise have been provided. As in the Bedfordshire case, the claims were based on failures to confer a benefit. They were advanced both on the basis of the local authorities vicarious liability for breaches of a duty of care owed by teachers and educational psychologists in their employment, and also on the basis that the authorities were themselves in breach of a duty of care owed to the children. In the one case which had gone to trial (the Phelps case), it was established, contrary to the understanding on which the education cases had been decided in X (Minors) v Bedfordshire, that the local authority did not offer a psychology service open to the public, in the same way as a hospital is open for the purpose of treating patients. Instead, the psychology service was established to advise the local authority. Nevertheless Lord Slynn, with whose speech Lord Jauncey of Tullichettle, Lord Lloyd of Berwick, Lord Hutton and Lord Millett agreed, concluded at p 654 that where an educational psychologist is specifically called in to advise in relation to the assessment and future provision for a specific child, and it is clear that the parents acting for the child and the teachers will follow that advice, prima facie a duty of care arises. Lord Clyde, with whose speech Lord Jauncey, Lord Lloyd, Lord Hutton and Lord Millett also agreed, emphasised at p 675 that the psychologist in the Phelps case was advising the child through her parents, as well as the local authority, since it was clear that they were going to rely on the advice in question. As in X (Minors) v Bedfordshire, the question whether the child (through his or her parents) was the intended recipient of professional advice, or could be expected to rely on advice provided to the local authority, was the key to whether there was an assumption of responsibility giving rise to a duty of care. Lord Millett commented at p 677 that this reasoning was based on the Hedley Byrne principle (Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465). In addressing counter arguments based on public policy, the committee called into question much of the policy based reasoning advanced by Lord Browne Wilkinson in X (Minors) v Bedfordshire. The idea that the multi disciplinary nature of decision making was a good reason for denying the existence of a duty of care was rejected by Lord Slynn, Lord Nicholls and Lord Clyde at pp 655 656, 665 666 and 674 respectively. The risk of vexatious and costly litigation, and the availability of statutory complaints procedures, were also rejected by Lord Nicholls and Lord Clyde as reasons for refusing to recognise a duty of care, at pp 667 and 672 respectively. D v East Berkshire Community NHS Trust The case of D v East Berkshire Community NHS Trust, decided by the Court of Appeal in 2003, involved three appeals which were heard together. In the first appeal (East Berkshire), a mother claimed damages in respect of psychiatric injury alleged to have been suffered as a result of being falsely accused by doctors of suffering from Munchausen syndrome by proxy. In the second appeal (Dewsbury), a father and his daughter claimed for psychiatric injury and financial loss resulting from unfounded allegations by doctors and social workers of sexual abuse, which led to the father and daughter being prevented from seeing one another for about a fortnight. The daughters claim was thus analogous to that of the child in the Newham case considered in X (Minors) v Bedfordshire. In the third appeal (Oldham), parents claimed in respect of psychological distress suffered as a result of unfounded allegations by doctors of having inflicted injuries on their daughter, which led to the child being separated from her parents for almost a year. The Dewsbury appeal was thus the only case which concerned social workers and the local authority which employed them. The claims in the three appeals were brought against the local authority in the Dewsbury case, and the health authorities in the other two cases, on the basis of vicarious liability. In each case, the court of first instance had determined as a preliminary issue that no duty of care was owed. It was common ground in the appeals that the critical issue was whether the third element of the tripartite test understood to have been adopted in Caparo, that the imposition of a duty of care was fair, just and reasonable, was satisfied. In that regard, the Court of Appeal noted that several of the policy factors which Lord Browne Wilkinson relied on, in X (Minors) v Bedfordshire, had been questioned in Barrett v Enfield and Phelps v Hillingdon. Furthermore, the Human Rights Act 1998 had come into force since X (Minors) v Bedfordshire was decided. The effect of section 8 was to impose a potential liability on local authorities to compensate children where there was a failure to protect them from ill treatment and neglect which infringed their rights under article 3 of the European Convention on Human Rights, and to compensate children and their parents where the children were taken into care, or prevented from having contact with a parent, in circumstances which violated their rights under article 8. Litigation of a kind which in X (Minors) v Bedfordshire the House of Lords had considered it important to avoid as a matter of public policy had therefore become, under statute, a potential consequence of the conduct of those involved in taking decisions in child abuse cases. In those circumstances, the court stated at para 81, the reasons of policy that led the House of Lords to hold that no duty of care towards a child arises, in so far as those reasons have not already been discredited by the subsequent decisions of the House of Lords, will largely cease to apply. It concluded at para 84: It follows that it will no longer be legitimate to rule that, as a matter of law, no common law duty of care is owed to a child in relation to the investigation of suspected child abuse and the initiation and pursuit of care proceedings. It is possible that there will be factual situations where it is not fair, just or reasonable to impose a duty of care, but each case will fall to be determined on its individual facts. Although a duty of care might be owed to the child, the court considered that the position of the parents was different. In view of the potential conflict between the best interests of the child and the interests of the parents, there were in the courts view cogent reasons of public policy for concluding that, where child care decisions were being taken, no common law duty of care should be owed to the parents. Another way of expressing the point would have been to say that the imposition of a common law duty of care towards the parents would be inconsistent with the statutory framework, since it would interfere with the performance by the authority of its statutory powers and duties in the manner intended by Parliament. Applying those conclusions to the facts of the individual appeals, the court concluded that no duty of care was owed to the mother in the East Berkshire case, the father in the Dewsbury case, or the parents in the Oldham case. On the other hand, X (Minors) v Bedfordshire could no longer be regarded as precluding the claim by the child in the Dewsbury case against the local authority for negligence in the manner in which its employees contributed to the child protection investigation. The court did not need to consider whether there had been an assumption of responsibility towards the child, since the doctors and social workers were alleged to have harmed her, rather than to have failed to protect her from harm. The Court of Appeals reasoning effectively knocked away the public policy objection to liability. It did not, however, undermine some other aspects of the reasoning in X (Minors) v Bedfordshire. It remained the position that, where a decision under challenge was taken in the exercise of a statutory discretion, it was necessary to establish that the decision fell outside the ambit of the discretion and was not, therefore, authorised by Parliament. It also remained necessary, in circumstances where a duty of care depended on an assumption of responsibility, to establish that there had been such an assumption of responsibility, and that the duty contended for fell within its scope. The parents in D v East Berkshire appealed to the House of Lords. Their appeals were dismissed: [2005] UKHL 23; [2005] 2 AC 373. No issue was taken with the Court of Appeals decision concerning the child in the Dewsbury appeal, and it was conceded that the doctors in the other appeals owed a duty of care to the children. Like the Court of Appeal, the House of Lords considered that the duty of care admittedly owed to the child in any case of suspected abuse would be compromised by the imposition of a concurrent duty of care towards the parents, since the interests of the parents might conflict with those of the child. In those circumstances, no duty of care could be owed to the parents. Lord Nicholls, in a speech with which Lord Steyn, Lord Rodger of Earlsferry and Lord Brown of Eaton under Heywood agreed, observed at para 82 that the law had moved on since the decision in X (Minors) v Bedfordshire: There the House held it was not just and equitable to impose a common law duty on local authorities in respect of their performance of their statutory duties to protect children. Later cases mentioned by my noble and learned friend, Lord Bingham of Cornhill, have shown that this proposition is stated too broadly. Local authorities may owe common law duties to children in the exercise of their child protection duties. The latter sentence made it clear that the House of Lords accepted that a duty of care could be owed to the child. Later authorities The case of Kay v Lambeth London Borough Council [2006] UKHL 10; [2006] 2 AC 465 was not concerned with social services, but it raised a question as to whether there were circumstances in which lower courts might not be bound by decisions of the House of Lords, in the light of contrary decisions of the European Court of Human Rights. In a speech with which the other members of the committee expressed agreement on that aspect of the case, Lord Bingham concluded that lower courts should normally follow precedents which are binding on them under the domestic principles of stare decisis. He admitted one partial exception to that rule. Explaining that there were a number of considerations which made X v Bedfordshire a very exceptional case, he stated at para 45 that on these extreme facts the Court of Appeal was entitled to hold, as it did in para 83 of its judgment in D [v East Berkshire], that the decision of the House in X v Bedfordshire, in relation to children, could not survive the 1998 Act. The case of Mitchell v Glasgow City Council, decided by the House of Lords in 2009, concerned the question whether a local authority owed a duty of care to warn one of its tenants that he might be in danger when it responded to previous violent behaviour towards him by his neighbour by inviting the neighbour to a meeting and telling him that continued anti social behaviour could result in his eviction. Following the traditional approach re established in Stovin v Wise and Gorringe, the local authority was held not to be under a duty of care to protect its tenant from harm inflicted by a third party. It was accepted that there were particular situations where a duty of care could arise, such as where the defendant had created the source of the danger, or where the third party was under the defendants supervision or control, or where the defendant had assumed a responsibility to the claimant which lay within the scope of the duty alleged, but no such circumstances existed in the case at hand. No reference was made to the decision of the Court of Appeal in D v East Berkshire. The case of Michael v Chief Constable of South Wales Police, decided by this court in 2015, concerned the question whether the police owed a duty of care to a person who made an emergency call reporting threats of violence by a third party. Following essentially the same approach as in Stovin v Wise, Gorringe and Mitchell, this court decided by a majority that no duty of care was owed. It was recognised that liability for harm caused by a third party could arise in certain situations, such as where the wrongdoer was under the defendants control, or where the defendant had assumed a responsibility towards the claimant to protect her, but the situation in the case at hand was not considered to be of that kind. In Michael, the decision of the Court of Appeal in D v East Berkshire was relied on in support of an argument that the common law should be developed in harmony with the obligations of public authorities under the Human Rights Act. That argument was however rejected by Lord Toulson, who observed that the same argument had also been rejected by the House of Lords in Smith v Chief Constable of Sussex Police. The majority of the court agreed. As explained earlier, the reasoning of the Court of Appeal in the East Berkshire case was not that, because the European Court of Human Rights had found violations of the Convention, it followed that British courts should follow suit under the law of tort. Rather, the reasoning was that, since claims could be brought under the Convention, it followed that claims could also be brought under the Human Rights Act: a possibility which pulled the rug from under some of the policy based reasoning in X (Minors) v Bedfordshire. Most recently, the decision of this court in 2018 in the case of Robinson v Chief Constable of West Yorkshire Police drew together several strands in the previous case law. The case concerned the question whether police officers owed a duty to take reasonable care for the safety of an elderly pedestrian when they attempted to arrest a suspect who was standing beside her and was likely to attempt to escape. The court held that, since it was reasonably foreseeable that the claimant would suffer personal injury as a result of the officers conduct unless reasonable care was taken, a duty of care arose in accordance with the principle in Donoghue v Stevenson [1932] AC 562. Such a duty might be excluded by statute or the common law if it was incompatible with the performance of the officers functions, but no such incompatibility existed on the facts of the case. The court distinguished between a duty to take reasonable care not to cause injury and a duty to take reasonable care to protect against injury caused by a third party. A duty of care of the latter kind would not normally arise at common law in the absence of special circumstances, such as where the police had created the source of danger or had assumed a responsibility to protect the claimant against it. The decision in Hill v Chief Constable of West Yorkshire was explained as an example of the absence of a duty of care to protect against harm caused by a third party, in the absence of special circumstances. It did not lay down a general rule that, for reasons of public policy, the police could never owe a duty of care to members of the public. Robinson did not lay down any new principle of law, but three matters in particular were clarified. First, the decision explained, as Michael had previously done, that Caparo did not impose a universal tripartite test for the existence of a duty of care, but recommended an incremental approach to novel situations, based on the use of established categories of liability as guides, by analogy, to the existence and scope of a duty of care in cases which fall outside them. The question whether the imposition of a duty of care would be fair, just and reasonable forms part of the assessment of whether such an incremental step ought to be taken. It follows that, in the ordinary run of cases, courts should apply established principles of law, rather than basing their decisions on their assessment of the requirements of public policy. Secondly, the decision re affirmed the significance of the distinction between harming the claimant and failing to protect the claimant from harm (including harm caused by third parties), which was also emphasised in Mitchell and Michael. Thirdly, the decision confirmed, following Michael and numerous older authorities, that public authorities are generally subject to the same general principles of the law of negligence as private individuals and bodies, except to the extent that legislation requires a departure from those principles. That is the basic premise of the consequent framework for determining the existence or non existence of a duty of care on the part of a public authority. It follows (1) that public authorities may owe a duty of care in circumstances where the principles applicable to private individuals would impose such a duty, unless such a duty would be inconsistent with, and is therefore excluded by, the legislation from which their powers or duties are derived; (2) that public authorities do not owe a duty of care at common law merely because they have statutory powers or duties, even if, by exercising their statutory functions, they could prevent a person from suffering harm; and (3) that public authorities can come under a common law duty to protect from harm in circumstances where the principles applicable to private individuals or bodies would impose such a duty, as for example where the authority has created the source of danger or has assumed a responsibility to protect the claimant from harm, unless the imposition of such a duty would be inconsistent with the relevant legislation. Assumption of responsibility It is apparent from the cases so far discussed that the nature of an assumption of responsibility is of importance in the present context. That topic should be considered before turning to the circumstances of the present case. Although the concept of an assumption of responsibility first came to prominence in Hedley Byrne in the context of liability for negligent misstatements causing pure economic loss, the principle which underlay that decision was older and of wider significance (see, for example, Wilkinson v Coverdale (1793) 1 Esp 75). Some indication of its width is provided by the speech of Lord Morris of Borth y Gest in Hedley Byrne, with which Lord Hodson agreed, at pp 502 503: My Lords, I consider that it follows and that it should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference. Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise. It is also apparent from well known passages in the speech of Lord Devlin, at pp 528 529 and 530: I think, therefore, that there is ample authority to justify your Lordships in saying now that the categories of special relationships which may give rise to a duty to take care in word as well as in deed are not limited to contractual relationships or to relationships of fiduciary duty, but include also relationships which in the words of Lord Shaw in Norton v Lord Ashburton [1914] AC 932, 972 are equivalent to contract, that is, where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract. I shall therefore content myself with the proposition that wherever there is a relationship equivalent to contract, there is a duty of care. Where, as in the present case, what is relied on is a particular relationship created ad hoc, it will be necessary to examine the particular facts to see whether there is an express or implied undertaking of responsibility. Since Hedley Byrne, the principle has been applied in a variety of situations in which the defendant provided information or advice to the claimant with an undertaking that reasonable care would be taken as to its reliability (either express or implied, usually from the reasonable foreseeability of the claimants reliance upon the exercise of such care), as for example in Smith v Eric S Bush, or undertook the performance of some other task or service for the claimant with an undertaking (express or implied) that reasonable care would be taken, as in Henderson v Merrett Syndicates Ltd and Spring v Guardian Assurance plc [1995] 2 AC 296. In the latter case, Lord Goff observed at p 318: All the members of the Appellate Committee in [Hedley Byrne] spoke in terms of the principle resting upon an assumption or undertaking of responsibility by the defendant towards the plaintiff, coupled with reliance by the plaintiff on the exercise by the defendant of due care and skill. Lord Devlin, in particular, stressed that the principle rested upon an assumption of responsibility when he said, at p 531, that the essence of the matter in the present case and in others of the same type is the acceptance of responsibility. Furthermore, although Hedley Byrne itself was concerned with the provision of information and advice, it is clear that the principle in the case is not so limited and extends to include the performance of other services, as for example the professional services rendered by a solicitor to his client: see, in particular, Lord Devlin, at pp 529 530. Accordingly where the plaintiff entrusts the defendant with the conduct of his affairs, in general or in particular, the defendant may be held to have assumed responsibility to the plaintiff, and the plaintiff to have relied on the defendant to exercise due skill and care, in respect of such conduct. That approach is reflected in the cases previously discussed. In X (Minors) v Bedfordshire, the social workers were held not to have assumed any responsibility towards the claimants in the child abuse cases on the basis that they were not providing their professional services to the claimants, and it was not reasonably foreseeable that the claimants would rely on the reports which they provided to their employers. In the education cases, on the other hand, the local authority assumed responsibility for the advisory service which it was understood to provide to the public, since the public could reasonably be expected to place reliance on the advice; a school assumed responsibility for meeting the educational needs of the pupils to whom it provided an education; the headmaster came under a duty of care by virtue of his responsibility for the school; and an advisory teacher assumed responsibility for advice which he knew would be communicated to a childs parents and on which they would foreseeably rely. In Barrett v Enfield, the local authority assumed responsibility for the welfare of a child when it took him into its care. In Phelps v Hillingdon, the educational psychologist assumed responsibility for the professional advice which he provided about a child in circumstances where it was reasonably foreseeable that the childs parents would rely on that advice. It is convenient at this point to consider a submission advanced on behalf of the council in the present case, said to be supported by some recent decisions of the Court of Appeal, that a public authority cannot assume responsibility merely by operating a statutory scheme. The submission was based primarily on the judgment of Dyson LJ in Rowley v Secretary of State for Work and Pensions [2007] EWCA Civ 598; [2007] 1 WLR 2861, paras 51 55, where it was held that the Secretary of State, in carrying out his statutory duty to make an assessment of child support maintenance, did not assume a responsibility towards the parent with care of the children in question. Dyson LJ focused on the requirement that responsibility must be voluntarily accepted or undertaken, as Lord Devlin put it in Hedley Byrne at p 529: a requirement which, he held, was not met merely by the Secretary of States performance of his statutory duty under the legislation. That decision was followed in X v Hounslow London Borough Council [2009] EWCA Civ 286; [2009] 2 FLR 262, a case with similarities to the present case, where it was held that a local authoritys social services and housing departments had not assumed a responsibility to protect vulnerable council tenants and their children from harm inflicted by third parties. Sir Anthony Clarke MR, giving the judgment of the Court of Appeal, observed at para 60 that the case was not one of assumption of responsibility unless the assumption of responsibility could properly be held to be voluntary. That was because a public authority will not be held to have assumed a common law duty merely by doing what the statute requires or what it has power to do under a statute, at any rate unless the duty arises out of the relationship created as a result, such as in Lord Hoffmanns example [in Gorringe, para 38] of the doctor patient relationship. Since the claimants case amounted to no more than that the council had failed to move them into temporary accommodation in breach of its statutory duty or in the exercise of its statutory powers, it failed because none of the statutory provisions relied on gave rise to a private law cause of action. The correctness of these decisions is not in question, but the dicta should not be understood as meaning that an assumption of responsibility can never arise out of the performance of statutory functions. Dyson LJ based his reasoning in Rowley on the decision of the House of Lords in Customs and Excise Comrs v Barclays Bank plc [2006] UKHL 28; [2007] 1 AC 181, where the question was whether the bank had assumed responsibility to the Commissioners to prevent payments out of an account, by virtue of having been served with freezing orders. Dyson LJ cited Lord Binghams statement at para 14 that there was no assumption of responsibility by the bank: they had no choice. Lord Hoffmann considered the question more fully. He observed at para 38 that a duty of care is ordinarily generated by something which the defendant has decided to do: giving a reference, supplying a report, managing a syndicate, making ginger beer: It does not much matter why he decided to do it; it may be that he thought it would be profitable or it may be that he was providing a service pursuant to some statutory duty, as in Phelps v Hillingdon London Borough Council [2001] 2 AC 619 and Ministry of Housing and Local Government v Sharp [1970] 2 QB 223. He added at para 39: The question of whether the order can have generated a duty of care is comparable with the question of whether a statutory duty can generate a common law duty of care. The answer is that it cannot: see Gorringe v Calderdale Metropolitan Borough Council [2004] 1 WLR 1057. The statute either creates a statutory duty or it does not. (That is not to say, as I have already mentioned, that conduct undertaken pursuant to a statutory duty cannot generate a duty of care in the same way as the same conduct undertaken voluntarily.) But you cannot derive a common law duty of care directly from a statutory duty. Likewise, as it seems to me, you cannot derive one from an order of court. There are indeed several leading authorities in which an assumption of responsibility arose out of conduct undertaken in the performance of an obligation, or the operation of a statutory scheme. An example mentioned by Lord Hoffmann is Phelps v Hillingdon, where the teachers and educational psychologists assumption of responsibility arose as a consequence of their conduct in the performance of the contractual duties which they owed to their employers. Another example is Barrett v Enfield, where the assumption of responsibility arose out of the local authoritys performance of its functions under child care legislation. The point is also illustrated by the assumption of responsibility arising from the provision of medical or educational services, or the custody of prisoners, under statutory schemes. Clearly the operation of a statutory scheme does not automatically generate an assumption of responsibility, but it may have that effect if the defendants conduct pursuant to the scheme meets the criteria set out in such cases as Hedley Byrne and Spring v Guardian Assurance plc. The present case In the light of the cases which I have discussed, the decision in X (Minors) v Bedfordshire can no longer be regarded as good law in so far as it ruled out on grounds of public policy the possibility that a duty of care might be owed by local authorities or their staff towards children with whom they came into contact in the performance of their functions under the 1989 Act, or in so far as liability for inflicting harm on a child was considered, in the Newham case, to depend upon an assumption of responsibility. Whether a local authority or its employees owe a duty of care to a child in particular circumstances depends on the application in that setting of the general principles most recently clarified in the case of Robinson. Following that approach, it is helpful to consider in the first place whether the case is one in which the defendant is alleged to have harmed the claimant, or one in which the defendant is alleged to have failed to provide a benefit to the claimant, for example by protecting him from harm. The present case falls into the latter category. Understandably, the reasoning of Irwin LJ in the Court of Appeal in the present case did not follow the approach set out in Robinson, which was decided after the Court of Appeal had given its decision. The first consideration on which Irwin LJ placed particular emphasis, namely the concern expressed in X (Minors) v Bedfordshire and Hill v Chief Constable of West Yorkshire that liability in negligence would complicate decision making in a difficult and sensitive field, and potentially divert the social worker or police officer into defensive decision making, has not been treated as sufficient reason for denying liability in subsequent cases such as Barrett v Enfield, Phelps v Hillingdon and D v East Berkshire. His view that the decision of the Court of Appeal in D v East Berkshire had been implicitly overruled by Michael was mistaken: the decision in D v East Berkshire has not been overruled by any subsequent decision. In Michael, as explained earlier, this court rejected an argument which was said to be supported by D v East Berkshire, but it did not disapprove of the true ratio of that decision. More fundamentally, in cases such as Gorringe, Michael and Robinson both the House of Lords and this court adopted a different approach (or rather, reverted to an earlier approach) to the question whether a public authority is under a duty of care. That approach is based on the premise that public authorities are prima facie subject to the same general principles of the common law of negligence as private individuals and organisations, and may therefore be liable for negligently causing individuals to suffer actionable harm but not, in the absence of some particular reason justifying such liability, for negligently failing to protect individuals from harm caused by others. Rather than justifying decisions that public authorities owe no duty of care by relying on public policy, it has been held that even if a duty of care would ordinarily arise on the application of common law principles, it may nevertheless be excluded or restricted by statute where it would be inconsistent with the scheme of the legislation under which the public authority is operating. In that way, the courts can continue to take into account, for example, the difficult choices which may be involved in the exercise of discretionary powers. The second consideration on which Irwin LJ based his decision, namely the principle that in general there is no liability for the wrongdoing of a third party even where that wrongdoing is reasonably foreseeable, is plainly important but, as he recognised, not conclusive in itself. In Robinson, this court cited at para 34 a helpful summary by Tofaris and Steel, Negligence Liability for Omissions and the Police (2016) 75 CLJ 128, of the situations in which a justification commonly exists for holding that the common law imposes such a liability: In the tort of negligence, a person A is not under a duty to take care to prevent harm occurring to person B through a source of danger not created by A unless (i) A has assumed a responsibility to protect B from that danger, (ii) A has done something which prevents another from protecting B from that danger, (iii) A has a special level of control over that source of danger, or (iv) As status creates an obligation to protect B from that danger. The present case is not brought on the basis that the council was in the second, third or fourth of these situations. It was suggested in argument that a duty of care might have arisen on the basis that the council had created the source of danger by placing Amy and her family in housing adjacent to the neighbouring family. The difficulty of sustaining such an argument is however apparent from Mitchell, paras 41, 61 63, 76 77 and 81 82. As Lord Brown pointed out in the last of these passages, there is a consistent line of authority holding that landlords (including local authorities) do not owe a duty of care to those affected by their tenants anti social behaviour. It is also necessary to remember that there is no claim against the council based on its exercise of its functions under housing legislation. The claim against the council is based instead on an assumption of responsibility or special relationship. The particulars of claim state: In purporting to investigate the risk that the claimants neighbours posed to the claimants and subsequently in attempting to monitor the claimants plight as set out in the sequence of events above, the defendant had accepted a responsibility for the claimants particular difficulties and/or there was a special nexus or special relationship between the claimants and the defendant. The defendant purported to protect the claimants by such investigation and in as far as such investigation is shown to have been carried out negligently and/or negligently acted on the defendant is liable for breach of duty. The sequence of events referred to is a chronology of events. In relation to investigation and monitoring by the councils social services department, it refers to the assignment of social workers to the claimants, to the various assessments of their needs, and to meetings at which the appropriate response to Grahams behaviour was discussed. Irwin LJ rejected the contention that there was an assumption of responsibility by the council on the ground that there was an insufficient basis to satisfy the approach of the Court of Appeal in X v Hounslow London Borough Council and Darby v Richmond upon Thames London Borough Council [2017] EWCA Civ 252. I have also come to the conclusion that the particulars of claim do not provide a basis on which an assumption of responsibility might be established, for the following reasons. As Lord Browne Wilkinson explained in relation to the educational cases in X (Minors) v Bedfordshire (particularly the Dorset case), a public body which offers a service to the public often assumes a responsibility to those using the service. The assumption of responsibility is an undertaking that reasonable care will be taken, either express or more commonly implied, usually from the reasonable foreseeability of reliance on the exercise of such care. Thus, whether operated privately or under statutory powers, a hospital undertakes to exercise reasonable care in the medical treatment of its patients. The same is true, mutatis mutandis, of an education authority accepting pupils into its schools. In the present case, on the other hand, the councils investigating and monitoring the claimants position did not involve the provision of a service to them on which they or their mother could be expected to rely. It may have been reasonably foreseeable that their mother would be anxious that the council should act so as to protect the family from their neighbours, in particular by re housing them, but anxiety does not amount to reliance. Nor could it be said that the claimants and their mother had entrusted their safety to the council, or that the council had accepted that responsibility. Nor had the council taken the claimants into its care, and thereby assumed responsibility for their welfare. The position is not, therefore, the same as in Barrett v Enfield. In short, the nature of the statutory functions relied on in the particulars of claim did not in itself entail that the council assumed or undertook a responsibility towards the claimants to perform those functions with reasonable care. It is of course possible, even where no such assumption can be inferred from the nature of the function itself, that it can nevertheless be inferred from the manner in which the public authority has behaved towards the claimant in a particular case. Since such an inference depends on the facts of the individual case, there may well be cases in which the existence or absence of an assumption of responsibility cannot be determined on a strike out application. Nevertheless, the particulars of claim must provide some basis for the leading of evidence at trial from which an assumption of responsibility could be inferred. In the present case, however, the particulars of claim do not provide a basis for leading evidence about any particular behaviour by the council towards the claimants or their mother, besides the performance of its statutory functions, from which an assumption of responsibility might be inferred. Reference is made to an email written in June 2009 in which the councils anti social behaviour co ordinator wrote to Amy that we do as much as it is in our power to fulfil our duty of care towards you and your family, and yet we cant seem to get it right as far as you are concerned, but the email does not appear to have been concerned with the councils functions under the 1989 Act, and in any event a duty of care cannot be brought into being solely by a statement that it exists: ORourke v Camden London Borough Council [1998] AC 188, 196. I would therefore conclude, like the Court of Appeal but for different reasons, that the particulars of claim do not set out an arguable claim that the council owed the claimants a duty of care. Although X (Minors) v Bedfordshire cannot now be understood as laying down a rule that local authorities do not under any circumstances owe a duty of care to children in relation to the performance of their social services functions, as the Court of Appeal rightly held in D v East Berkshire, the particulars of claim in this case do not lay a foundation for establishing circumstances in which such a duty might exist. The council is also sought to be held liable on the basis of vicarious liability for the negligence of its employees. That is an aspect of the case to which the Court of Appeal did not give separate consideration. The particulars of claim state: Each of the social workers and/or social work managers and other staff employed by the defendant who was allocated as the social worker or manager for the claimants or tasked with investigating the plight of the claimants owed to the claimants a duty of care. It appears from the particulars of claim that social workers carried out assessments of the claimants needs on the councils instructions, and provided the council (and others who may have been involved in decision making) with information and professional advice about the children for the purpose of enabling the council to perform its statutory functions. There is no doubt that, in carrying out those functions, the social workers were under a contractual duty to the council to exercise proper professional skill and care. The question is whether, in addition, they also owed a similar duty to the claimants under the law of tort. That depends on whether the social workers assumed a responsibility towards the claimants to perform their functions with reasonable care. In considering that question, it may be helpful to compare the position of the social workers with the positions of the educational psychologists and the advisory teacher in X (Minors) v Bedfordshire, and the educational psychologists in Phelps v Hillingdon. In the former case, Lord Browne Wilkinson accepted in relation to the Dorset proceedings that the local authority could be vicariously liable for negligence on the part of its educational psychologists because they were providing professional advice to parents on which the parents had foreseeably relied. In the Hampshire proceedings, he accepted that an advisory teacher, brought in to advise on a pupils educational needs, owed a duty to the child to exercise reasonable skill and care provided he knew that his advice would be communicated to the pupils parents, and could therefore reasonably foresee that they would rely on such advice. In Phelps v Hillingdon, the duty of care of the educational psychologist towards the child was again based on the fact that it was reasonably foreseeable that the childs parents would rely on the advice provided. Those were all cases where the duty of care arose on the basis of the Hedley Byrne principle. In the present case, on the other hand, there is no suggestion that the social workers provided advice on which the claimants mother would foreseeably rely. As has been explained, however, the concept of an assumption of responsibility is not confined to the provision of information or advice. It can also apply where, as Lord Goff put it in Spring v Guardian Assurance plc, the claimant entrusts the defendant with the conduct of his affairs, in general or in particular. Such situations can arise where the defendant undertakes the performance of some task or the provision of some service for the claimant with an undertaking that reasonable care will be taken. Such an undertaking may be express, but is more commonly implied, usually by reason of the foreseeability of reliance by the claimant on the exercise of such care. In the present case, however, there is nothing in the particulars of claim to suggest that a situation of that kind came into being. The existence of an assumption of responsibility can be highly dependent on the facts of a particular case, and where there appears to be a real possibility that such a case might be made out, a court will not decide otherwise on a strike out application. In the circumstances which I have described, however, the particulars of claim do not in my opinion set out any basis on which an assumption of responsibility might be established at trial. Any uncertainty as to whether the case is one which can properly be struck out without a trial of the facts is eliminated by the further difficulties that arise in relation to the breach of duty alleged. The case advanced in the particulars of claim is that any competent local authority should and would have arranged for [the claimants] removal from home into at least temporary care. As King LJ explained, however, in order to satisfy the threshold condition for obtaining care orders under section 31(2) of the 1989 Act, it would be necessary to establish that the claimants were suffering, or were likely to suffer, significant harm which was attributable to a lack, or likely lack, of reasonable parental care. The threshold condition applicable to interim care orders requires the court to be satisfied that there are reasonable grounds for believing that the circumstances with respect to the child are as mentioned in section 31(2). Nothing in the particulars of claim suggests that those conditions could possibly have been met. The harm suffered by the claimants was attributable to the conduct of the neighbouring family, rather than a lack of reasonable parental care. There were simply no grounds for removing the children from their mother. Conclusion The particulars of claim in these proceedings do not disclose any recognisable basis for a cause of action. The complaint is that the council or its employees failed to fulfil a common law duty to protect the claimants from harm inflicted by their neighbours by exercising certain statutory powers. The relevant provisions do not themselves create a cause of action. Reliance is placed on an assumption of responsibility arising from the relationship between the claimants and the council or its employees, but there is nothing to suggest that those relationships possessed the necessary characteristics for an assumption of responsibility to arise. Furthermore, it is clear that the alleged breach of duty, namely a failure to remove the claimants from the care of their mother, has no possible basis. Although the court does not have before it all the evidence which might emerge at a trial, there is no reason to believe that the claimants could overcome these fundamental problems as to the legal basis of their claim. That being so, it is to the advantage of all concerned that the claim should not proceed to what would be a costly but inevitably fruitless trial. For these reasons, which differ from those of the Court of Appeal, I would dismiss the appeal. |
This appeal raises the question whether the tort of malicious prosecution includes the prosecution of civil proceedings. It also raises a question about whether and in what circumstances a lower court may follow a decision of the Privy Council which has reached a different conclusion from that of the House of Lords (or the Supreme Court or Court of Appeal) on an earlier occasion. The second question is the subject of a separate judgment: [2016] UKSC 44. The appeal is from a decision of Ms Amanda Tipples QC, sitting as a deputy judge of the Chancery Division, striking out a claim brought by Mr Peter Willers against Mr Albert Gubay as disclosing no cause of action known to English law. The judge was faced with conflicting views of the House of Lords in Gregory v Portsmouth City Council [2000] 1 AC 419 and the Privy Council in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2014] AC 366. She held that she was bound by the decision of the House of Lords but granted a leapfrog certificate under section 12 of the Administration of Justice Act 1969, and permission to appeal was given by this court. In excellent arguments on both sides the court was referred to a large number of authorities. In examining the case law it will be convenient to begin with the Gregory case and the Crawford case, before going back to the earlier authorities, and then to consider the policy arguments. First, it is necessary to explain in brief outline the nature of the claim. Mr Willers claim Mr Gubay was a successful businessman. He died while this appeal was pending and his executors now act on behalf of his estate. Mr Willers was Mr Gubays right hand man for over 20 years until he was dismissed by Mr Gubay in the summer of 2009. Among the group of companies controlled by Mr Gubay was a leisure company, Langstone Leisure Ltd (Langstone). Mr Willers was a director of it. Prior to Mr Willers dismissal, Langstone pursued an action for wrongful trading against the directors of another company, Aqua Design and Play Ltd (Aqua), which had gone into liquidation. That action was abandoned shortly before trial in late 2009 on Mr Gubays instructions. In 2010 Langstone sued Mr Willers for alleged breach of contractual and fiduciary duties in causing it to incur costs in pursuing the Aqua directors. Mr Willers defended the action, and issued a third party claim for an indemnity against Mr Gubay, on the grounds that he had acted under Mr Gubays directions in the prosecution of the Aqua claim. On 28 March 2013, two weeks before the date fixed for a five week trial of the action, Langstone gave notice of discontinuance. On 16 April 2013 Newey J ordered Langstone to pay Mr Willers costs on the standard basis. It is Mr Willers case that the claim brought against him by Langstone was part of a campaign by Mr Gubay to do him harm. It is unnecessary to set out the details pleaded by him in the present action. It is not disputed that they include all the necessary ingredients for a claim of malicious prosecution of civil proceedings, if such an action is sustainable in English law. In particular, it is sufficiently alleged that Mr Gubay was responsible for having caused the claim to be brought; that the claim was determined in Mr Willers favour; that it was brought without reasonable cause, since Mr Gubay knew that it was he who was responsible for causing Langstone to bring the earlier wrongful trading claim; that Mr Gubay was actuated by malice in causing Langstone to sue Mr Willers; and that Mr Willers suffered damage. The heads of damage claimed are damage to his reputation, damage to health, loss of earnings and the difference between the full amount of the costs incurred by him in defending Langstones claim (3.9m) and the amount recovered under the costs order of Newey J (1.7m). Gregory v Portsmouth City Council Mr Gregory was a member of Portsmouth City Council. Allegations were made that he had misused, for his personal advantage, confidential information gained by him as a councillor about matters affecting local properties. Internal disciplinary proceedings resulted in findings of misconduct and his removal from various committees. The details were widely reported in the local press. Mr Gregory successfully challenged the decision by means of judicial review. He then brought an action against the council for malicious prosecution of the disciplinary proceedings. The House of Lords upheld a decision striking out his claim. The main speech was given by Lord Steyn. It was argued by Mr Gregory that disciplinary proceedings were penal in nature and should therefore be covered by the tort of malicious prosecution in the same way as criminal proceedings. This argument was rejected. Lord Steyn observed that there was a great diversity of statutory and non statutory disciplinary proceedings with different purposes. To leave it to the courts to decide on a case by case basis which disciplinary proceedings might ground the tort would be liable to plunge the law into uncertainty. In arguing that the disciplinary proceedings should be regarded as penal, counsel for Mr Gregory conceded that the tort did not extend to civil proceedings generally. Lord Steyn observed (pp 427 428) that it had never been held to be available beyond the limits of criminal proceedings and a few special cases of abuse of civil legal process, such as malicious presentation of a winding up or bankruptcy petition (Johnson v Emerson (1871) LR 6 Ex 329; Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674), malicious obtaining of a search warrant (Gibbs v Rea [1998] AC 786) or bench warrant (Roy v Prior [1971] AC 470), or malicious process to obtain execution against property (Clissold v Cratchley [1910] 2 KB 244). He said that although such cases appeared to be disparate, there was in a broad sense a common feature in that they potentially involved immediate and irreversible damage to the reputation of the victim. Another recognised head of actionable abuse of process was the malicious arrest of a vessel (The Walter D Wallet [1893] P 202) and in such cases the loss was merely financial, but Lord Steyn described them as rare. He said that the traditional explanation for not extending the tort to civil proceedings generally was that in a civil case there was no damage, since the fair name of the victim was protected by the trial and judgment. Lord Steyn acknowledged (p 432) that this theory was no longer plausible in an age when reputational harm can be caused by pre trial publicity, but he said that it was a matter for consideration whether there might be other reasons for restricting the availability of the tort in respect of civil proceedings. Lord Steyn concluded (p 432) that it was not necessary for the disposal of the case to express a view on the argument in favour of extending the tort to civil proceedings generally, but that it would be unsatisfactory to leave the matter in the air, and he therefore stated his opinion briefly. He accepted that there was a stronger case for extending the tort to civil proceedings generally than to disciplinary proceedings, but he said that for essentially practical reasons he was not persuaded that such an extension had been shown to be necessary, taking into account the protection afforded by the torts of defamation, malicious falsehood, conspiracy and misfeasance in public office. Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd Mr Alastair Paterson was a chartered surveyor in the Cayman Islands. He provided services as a loss adjuster and as a project manager, acting through two companies of which he was a director. In those capacities he was instructed by the insurers and owners of residential development in the Cayman Islands that had suffered hurricane damage. Mr Paterson instructed building contractors to carry out the remedial work. Acting on his advice the insurers made substantial payments to the contractors. He was close to finalising his adjustment of the insurers liability, when the insurers internal claim handling was taken over by a newly appointed senior officer, Mr Frank Delessio. From their past acquaintanceship Mr Delessio had a strong dislike of Mr Paterson and a low opinion of his competence. On studying the paperwork, Mr Delessio became concerned that there was a serious lack of documentation to support the payments which the insurers had already made on Mr Patersons advice. He announced that he intended to drive Mr Paterson out of business and to destroy him professionally. He instructed another surveyor and loss adjuster to value the work done, but on Mr Delessios instructions the second surveyor did not speak to Mr Paterson or the contractors. Nor did he make inquiries of the subcontractors or suppliers about costs or consult the structural engineers who had prepared the drawings. On the strength of the figures put forward by the second surveyor, Mr Delessio caused the insurers to sue Mr Paterson, his companies and the contractors, claiming damages on various bases including deceit and conspiracy to defraud. He was also instrumental in alerting the local press to the allegations against Mr Paterson of fraudulent or reckless misrepresentations, and the allegations were published. As intended, the publicity caused great harm to Mr Patersons business and reputation. After the contractors gave disclosure of invoices showing the amounts paid by them to the subcontractors and suppliers, the insurers attorneys were advised by counsel that it would be professionally improper for him, or them, to represent the insurers in the claims of fraud and conspiracy. Days before the trial the insurers and owners discontinued their claims. The judge ordered them to pay the defendants costs on an indemnity basis and gave Mr Paterson permission to amend his counterclaim to claim damages against the insurers for abuse of process. At the trial of the counterclaim the judge considered the torts of abuse of process and malicious prosecution. He rejected abuse of process because the insurers were genuinely seeking the relief claimed in the writ, rather than using the action as a device to secure an entirely extraneous objective. As to malicious prosecution, he found that all the ingredients were established if the tort was capable in law of applying to the relevant proceedings, but, citing Gregory, he held that it was not. He therefore dismissed the claim but said that, if it had been available, he would have awarded Mr Paterson CI$1.3m for his professional losses and CI$35,000 for distress and humiliation. In particular, the judge found that although Mr Delessio believed that Mr Paterson had defrauded the insurers, his belief was without reasonable cause; that Mr Delessio knew that the second surveyors report was not a proper basis for making such allegations; and that the dominant factor which led him to make them was his strong dislike of Mr Paterson and obsessive determination to destroy him professionally. The Privy Council decided by a majority of three to two that on those facts the judge was wrong to dismiss the claim for malicious prosecution. All five members of the panel gave reasons for their opinions. On the majority side the leading opinion was given by Lord Wilson. On the dissenting side the leading opinion was given by Lord Sumption. They each carried out a detailed historical survey of the tort from the middle ages to the present day but with different conclusions. At the risk of over simplification, Lord Wilson concluded that the case law prior to Quartz Hill did not distinguish between civil and criminal proceedings as such, but limited the types of damage recoverable in a way which had the practical effect of restricting the claims that were brought as a result of malicious civil process. Lord Wilson was critical of dicta in Quartz Hill to the effect that by the late 19th century, when that case was decided, no mere bringing of an action, albeit maliciously and without reasonable cause, could give rise to the tort. As to later authority, Lord Wilson noted that Lord Steyns remarks on the subject in Gregory were obiter, and he observed that the practical rationale behind Lord Steyns reluctance about the tort applying to civil proceedings lost its force in circumstances where no other tort was capable of application. As a matter of principle and policy, Lord Wilson concluded that it would be unjust for Mr Paterson to be left without a legal remedy for the damage which Mr Delessio had intentionally caused him to suffer by the malicious prosecution of civil process without any reasonable cause. Lord Sumptions conclusion was that the tort had never applied to civil proceedings as such. Over the course of history there had come to be recognised a small and anomalous class of cases in which the action had been held to be available for maliciously obtaining an ex parte order of the court which caused, or was liable to cause, immediate injury to the claimant through the misuse of the courts coercive powers. Such cases were rare and in Quartz Hill the Court of Appeal had taken a firm stand against their extension. So too had the House of Lords in Gregory. Mr Paterson had suffered an undoubted injustice, but this did not make it right to sweep away restrictions on the application of the tort to civil process which had existed for very many years. Lord Sumption was unpersuaded that there was a general need to extend the tort. To do so would in his view create uncertainty, further anomalies and the likelihood of undesirable practical consequences. Analysis: the case law Lord Wilsons and Lord Sumptions historical analyses were the subject of very detailed critical analysis by counsel in the present case. While respecting the thoroughness of their arguments, I do not intend to rehearse them. It is apparent to my mind that the early case law is capable of more than one respectable interpretation, and it may be that there was never a time when there was a general understanding precisely where the boundaries of the tort lay. The same could be said about other aspects of the common law. In any case, the decision now to be made by this court should not depend on which side has the better argument on a controversial question about the scope of the law some centuries ago. Having said that, it is right that I should indicate the more significant points which I glean from my reading of the case law. But I do so with caution, because the identification of such points involves an element of selection in which I cannot lay any special claim to being necessarily right. Before the judgment of Holt CJ in Savile v Roberts in 1698 (discussed below), I have not detected any authority which excluded the application of the tort to a civil action, and there are some indications that it was capable of applying to civil proceedings. A number were referred to in the reported argument for the plaintiff in Cotterell v Jones (1851) 11 CB 713, 719 724. Counsel cited, among other sources, Waterer v Freeman (1618) Hobart 266, Atwood v Monger (1653) Style 378, and a note by Hargrave to Coke on Littleton. Waterer v Freeman involved double execution on goods, but counsel in Cotterell v Jones relied on what he argued was a statement of general principle by Hobart CJ (who had succeeded Sir Edward Coke as Chief Justice of the Court of Common Pleas): Now to the principal case, if a man sue me in a proper court, yet if his suit be utterly without ground of truth, and that certainly known to himself, I may have an action of the case against him for the undue vexation and damage that he putteth me unto by his ill practice, though the suit itself be legal and I cannot complain of it. This statement was described by Blackburn J as an authority entitled to weight in Wren v Weild (1869) LR 4 QB 730, 736 (to which I refer below). Atwood v Monger arose from proceedings brought against the plaintiff before the conservators of the River Thames, who had a statutory responsibility for the management of the river, for allegedly allowing earth to fall into the river. Counsel for the plaintiff in Cotterell v Jones relied on what they submitted was a statement of general principle by Rolle CJ in the Atwood case: An action upon the case lies for bringing an appeal against one in the Common Pleas, though it be coram non judice, by reason of the vexation of the party, and so it is all one whether here were any jurisdiction or no, for the plaintiff is prejudiced by the vexation and the conservators took upon them to have authority to take the presentment. And I hold that an action upon the case will lye, (sic) for maliciously bringing an action against him where he had no probable cause, and if such actions were used to be brought, it would deter men from such malitious (sic) courses as are to (sic) often put in practice. The passage from Hargraves note to Coke on Littleton read: Where two or more conspire to harass any person by a false and malicious suit, whether criminally or civilly, it is a crime punishable by indictment, or the parties injured may sue for damages by writ of conspiracy; and both of these remedies lie at common law, that part of the statute or ordinance of Articuli super chartas which gives remedies against conspirators by writ out on Chancery, being, according to both Staunford and Lord Coke, only an affirmation of the common law. Staunf CP 172 [Staunfords Common Pleas], 2 Inst 561, 562 [Cokes Institutes]. There is also a remedy for false and malicious prosecution, though the aggravation of a conspiracy or confederacy is wanting, and the injury comes from one only; for, in such a case, the party prosecuted may have an action upon the case for damages. I apprehend, too, that such an action lies, as well where the vexation is practised by a civil suit, as where it is carried on through the medium of a criminal process. FNB 114, D [Fitzherberts Natura Brevium]. (Sir William Staunford was a judge of the Court of Common Pleas from 1554 to 1558. Sir Anthony Fitzherbert was appointed a judge of the Court of Common Pleas in 1522. His new Natura Brevium was published in 1534.) Savile v Roberts was an important case. The defendant on two occasions caused the plaintiff to be prosecuted at quarter sessions on an indictment charging him with riot. After being acquitted both times the plaintiff sued the defendant in the Court of Common Pleas for prosecuting him maliciously. His claim succeeded and he was awarded damages for the expenses which he had incurred in defending himself. The defendant brought a writ of error to have the judgment set aside but the judgment was upheld. There are nine reports of the decision, varying in length and content. Among them, I have found the reports at 5 Mod 405, 12 Mod 208 and 1 Ld Raymond 374 the most helpful. Since the action was on the case, damage had to be proved. Holt CJ identified three types of damage which could support such a claim. The first was damage to the plaintiffs fame or reputation. The second was damage to his person either by assault or by deprivation of his liberty. The third was damage to his property, which included being put to expense. The damages awarded to the plaintiff fell within this category, as to which Holt CJ said (12 Mod 209) that if this injury be occasioned by a malicious prosecution, it is reason and justice that he should have an action to repair him the injury: though of late days it has been questioned, yet it has always been allowed formerly; as Atwood v Monger (to which I have referred). The defendant objected that to allow such an action will be of mischievous consequence, by stopping all prosecutions of this kind; and there is no more reason in this case of a malicious indictment, than a malicious action: and no man shall be responsible for any damages whatsoever for suing a writ or prosecuting in the Kings Courts (12 Mod 210). Holt CJ said that there was a great difference between bringing an action maliciously and prosecuting an indictment maliciously (5 Mod 408, 12 Mod 210, 1 Ld Raymond 379 380). He explained that in former times the common law provided that every claimant should provide pledges, who were amerced (that is, they forfeited the amount pledged) if the claim was false. That method was replaced by statutes which provided for defendants to recover their costs. By contrast Holt CJ said that there was no amercement upon indictments, and the party had not any remedy to reimburse himself but by action (1 Ld Raymond 380). Holt CJ added that if an action were brought merely through malice and vexation, an action on the case would lie in some cases, where the plaintiff could show particular damage (1 Ld Raymond 380) or special matter (5 Mod 408, 12 Mod 211). The ability to sue for malicious prosecution seems therefore to have depended, according to Holt CJ, essentially on the nature of the damage suffered rather than the form which the proceedings took, although the two were likely to be interrelated. It is also possible that when Holt CJ spoke of special matter he was not referring to the damage suffered but to special matter showing the malicious nature of the defendants conduct. I take this interpretation from the judgment of Parker CJ in Jones v Givin (1713) Gilb Cas 185, 196 197 (also reported as Jones v Gwynn 10 Mod 147, 214). After commenting that the demand of right (a civil claim) was more favoured than bringing to punishment, and that if an action was false, the plaintiff was by law amerced, and the defendant to have costs, Parker CJ said: And therefore my Lord Chief Justice Holt, in his excellent argument in Savill and Roberts, where he fully states the difference between the two cases, said that in case for a malicious action the plaintiff must shew special matter which shows malice, for else an action, being the plaintiff seeking and demanding advantage to himself, carries in it [a] fair and honourable cause, unless the recovery be utterly hopeless, and the suit without some other design, which therefore must be specially shewn. It is not necessary, even if it were possible, to decide whether the special matter referred to in these authorities was an evidential requirement, ie a reference to what was needed to prove malice, or related to the type of damage which could give rise to the action. Either way the premise appears to have been that an action would lie if the defendant maliciously invoked civil process against the plaintiff which resulted in the plaintiff suffering a recognised head of damage. In Grainger v Hill (1838) 4 Bing (NC) 212 the plaintiff owned a vessel which he mortgaged to the defendants as security for a loan repayable after 12 months. The plaintiff was to retain the vessels register, which he needed in order to make voyages. Two months later the defendants became concerned about the adequacy of the security and determined to obtain the register. To that end they swore an affidavit of debt and issued a writ of capias for the arrest of the plaintiff in support of a claim of assumpsit. The sheriffs officers told the plaintiff that they had come for the register, and that if he failed to hand it over or provide bail he would be arrested. Under that threat he handed over the register. The defendants claim in debt was settled by the repayment of the loan and release of the mortgage deed. The plaintiff then sued the defendants for malicious issue of the civil proceedings. At the trial the plaintiff obtained a verdict in his favour, but the defendants argued that the plaintiff should be nonsuited among other reasons because he had failed to aver that the action had been commenced without reasonable or probable cause. The plaintiff responded that he had proved that the defendants suit was without reasonable or probable cause, but that in any event this was unnecessary in a case where the action had been brought for an improper purpose, ie as a means of coercing the plaintiff into giving up the register to which the defendants had no right. The court accepted the plaintiffs argument. Tindal CJ said at 221: If the course pursued by the defendants is such that there is no precedent of a similar transaction, the plaintiffs remedy is by an action on the case, applicable to such new and special circumstances; and his complaint being that the process of the law has been abused, to effect an object not within the scope of the process, it is immaterial whether the suit which that process commenced had been determined or not, or whether or not it was founded on reasonable and probable cause. Similarly Park J said at 222: this is a case primae impressionis, in which the defendants are charged with having abused the process of the law, in order to obtain property to which they had no colour of title; and, if an action on the case be the remedy applicable to a new species of injury, the declaration and proof must be according to the particular circumstances. Grainger v Hill has been treated as creating a separate tort from malicious prosecution, but it has been difficult to pin down the precise limits of an improper purpose as contrasted with the absence of reasonable and probable cause within the meaning of the tort of malicious prosecution. This is not entirely surprising because in Grainger v Hill itself there plainly was no reasonable or probable cause to issue the assumpsit proceedings, since the debt was not due to be paid for another ten months as the lenders well knew. It might be better to see it for what it really was, an instance of malicious prosecution, in which the pursuit of an unjustifiable collateral objective was evidence of malice, rather than as a separate tort. This would be consistent with the reference in Parker CJs judgment in Jones v Givin (or Jones v Gwynn), cited above, to some other design as a potential special matter showing malice. It is unnecessary to express a firm view on this point, but Grainger v Hill does at any rate illustrate the willingness of the court to grant a remedy, in what it regarded as novel circumstances, where the plaintiff had suffered provable loss as a result of civil proceedings brought against him maliciously and without any proper justification. In other mid 19th century cases the courts recognised a broad principle underlying the cause of action for malicious prosecution; De Medina v Grove (1847) 10 QB 172 and Churchill v Siggers (1854) 3 E & B 929. In both cases the plaintiff suffered a period of imprisonment and incurred expenditure through the execution of a writ of capias, which the plaintiff claimed that the defendant had issued for an excessive sum. In De Medina v Grove the plaintiffs claim was dismissed on the ground that the facts pleaded by him were consistent with the existence of probable cause. The claim in Churchill v Siggers was allowed to go to trial. The judges in each case adopted a common starting point. Cresswell J, Williams J, Parke B and Rolfe B agreed) began: In De Medina v Grove the judgment of Wilde CJ (with whom Maule J, The law allows every person to employ its process for the purpose of trying his rights, without subjecting him to any liability, unless he acts maliciously and without probable cause. In Churchill v Siggers the judgment of the court (Lord Campbell CJ, Erle J and Crompton J) began: To put into force the process of the law maliciously and without any reasonable or probable cause is wrongful; and, if thereby another is prejudiced in property or person, there is that conjunction of injury and loss which is the foundation of an action on the case. It is argued by those in favour of limiting the cause of action to the various circumstances in which it has been applied that these statements were not intended to be definitive and should be read in their particular factual context. But the statements contained the rationale by reference to which the cases were decided and cannot be regarded as obiter dicta. The reference, for example, to the law allowing every person to apply its process for the purpose of trying his rights, unless he acted maliciously and without probable cause, does not fit with a narrow concept peculiar to the process of execution. The subject was considered indirectly in Wren v Weild (1869) LR 4 QB 730. The claim was in substance a patent dispute. The plaintiffs were manufacturers of machinery. They sued the defendant for falsely and maliciously telling their customers that their machines infringed the defendants patents and threatening legal action if the customers used the machines without paying royalties to the defendant. There was no allegation on the pleading that the defendant acted without reasonable and probable cause. Lush J nonsuited the plaintiffs, who applied to set aside the nonsuit. The judgment of the court (consisting of Blackburn, Lush and Hayes JJ) was given by Blackburn J. He considered whether the circumstances were such as to make the bringing of an action [against the customers] altogether wrongful. In that context Blackburn J considered (p 736) the statement of principle by Hobart CJ in Waterer v Freeman, set out in para 17 above, and the effect of Savile v Roberts: In Waterer v Freeman (1618) Hobart 266, 267, which was an action for maliciously and vexatiously issuing a second fi. fa. whilst the first was unreturned, the Chief Justice says: If a man sue me in a proper court, yet if his suit be utterly without ground of truth, and that certainly known to himself, I may have an action of the case against him for the undue vexation and damage that he putteth me unto by his ill practice. This was not necessary for the decision of the case before the court, but it was by no means irrelevant, and it is therefore an authority entitled to weight. On the other hand, in Savile v Roberts 1 Ld Raym 374, Lord Holt, in delivering the judgment of the Exchequer Chamber, expresses an opinion that no such action would lie without alleging and proving some collateral wrong, such as that he was maliciously held to bail, or the like. For this he gives two reasons, first that a man is entitled to bring an action if he fancies he has a right, which is in accordance with Lord Ellenboroughs reasoning in Pitt v Donovan (1813) 1 M & S 639. But this reason is quite consistent with Lord Hobarts position, that the action will lie where it was certainly known to him that the action was utterly without ground. His second reason is, that the law considers that the party grieved has an adequate remedy in his judgment for costs; and on this the Court of Common Pleas acted in Purton v Honnor (1798) 1 B & P 205. But this artificial reason does not apply in the present Applying the same line of reasoning, the court held in the case before it that the action could not lie, unless the plaintiffs affirmatively proved that the defendants claim was not a bona fide claim in support of a right which, with or without cause, he fancied he had; but a mala fide and malicious attempt to injure the plaintiffs by asserting a claim of right against his own knowledge that it was without any foundation (p 737). The courts reasoning was consistent with the statements of principle in De Medina v Grove and Churchill v Siggers and it confirms that this was a mainstream view. It is noteworthy that by 1869 the court regarded the notion that a party who was sued maliciously and without any ground had an adequate remedy in a judgment for costs as artificial. Blackburn Js statement that Holt CJ in his judgment in Savile v Roberts expresses an opinion that no such action would lie without alleging and proving some collateral wrong, as that he was maliciously held to bail, or the like must have been his interpretation of the sentence in the report in 1 Ld Raymond (the version cited by Blackburn J) at 380: If A sues an action against B for mere vexation, in some cases upon particular damage B may have an action; but it is not enough to say that A sued him falso et malitiose, but he must show the matter of the grievance specially, so that it may appear to the court to be manifestly vexatious. 1 Sid 424, Daw v Swain, where the special cause was the holding to excessive bail. I have discussed the interpretation of Holt CJs reference to particular damage (or special matter as it appears in other reports of the judgment) at paras 20 to 21 above. In Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674, [1882] WN 27, the defendant presented a petition to wind up the plaintiff company and advertised it in several papers. The petition alleged that the companys capital had been raised by a fraudulent prospectus and that there was no possibility of its trading profitably. The defendant believed at that time that he was a shareholder of the company, but immediately after the presentation he learned that his broker had sold his shares and he promptly gave notice that his petition would be withdrawn. The petition was never served on the company and was dismissed by Hall V C. Both parties were represented at the hearing, and each applied for their costs of appearance, but the judge made no order for costs. The reason that the company was not given its costs appears to have been that its appearance was considered unnecessary: see Berry v British Transport Commission [1962] 1 QB 306, 319, per Devlin LJ. The company then sued the defendant for maliciously presenting the petition without reasonable or probable cause. At the trial before Stephen J the company adduced no evidence of special damage other than its costs in respect of the petition. At the close of its case, the judge nonsuited it. His decision was upheld by the Divisional Court (Pollock, B and Manisty, J) but reversed by the Court of Appeal, comprising Brett MR and Bowen LJ, and a new trial was ordered. Counsel for the defendant advanced three arguments why the companys claim must fail. The first was that there was no evidence of special damage necessary to maintain the action: Savile v Roberts. The second was that there was no evidence of malice or absence of reasonable or probable cause. The third was that no action of this kind would lie under the circumstances, because the action taken by the defendant was not of an ex parte character, but an application to the court on which the company had the opportunity of appearing in opposition, and the judge hearing the petition could make an award of costs. Brett MR rejected the first argument on the ground that the publication of the petition in the newspapers would have been destructive of the companys reputation and that this amounted to damage within Holt CJs first category. He accepted that the company was not entitled to recover its costs, because the courts operated on the theory that the jurisdiction to award litigation costs to the successful party covered all costs reasonably and necessarily incurred, and therefore any excess was not to be regarded in law as caused by the conduct of the losing party. The second argument was a purely evidential matter. The third argument has significance in the present case because Mr Bernard Livesey QC argued on behalf of Mr Gubays estate that the cases in which claims for malicious prosecution of civil proceedings have succeeded should be explained as cases in which the defendant took it on himself to make malicious and unjustifiable use of the coercive powers of the state, such as the power of arrest of a person or their property, and that it is only in such a case that the action can be maintained. This submission has a strong echo of the third argument advanced by the defendant in the Quartz Hill case. It was rejected by Brett MR in these terms, at (1883) 11 KB 684: The proposition is that an action cannot be maintained because the petitioning creditor merely asks the court to act judicially, and because it was to be assumed that the court would decide rightly. If that proposition were well founded, it would be an answer to malicious prosecution on a criminal charge, because even in that case the prosecutor merely asks the tribunal to decide upon the guilt of the person whom he charges. If a man is summoned before a justice of the peace falsely and maliciously and without reasonable or probable cause, he will be put to expense in defending himself, and his fame may suffer from the accusation; nevertheless the prosecutor only asks the justice to adjudicate upon the charge. Therefore it is not a good answer to an action for maliciously procuring an adjudication in bankruptcy to say, that the alleged creditor has only asked for a judicial decision. It seems to me that an action can be maintained for maliciously procuring an adjudication under the Bankruptcy Act, 1869, because by the petition, which is the first process, the credit of the person against whom it is presented is injured before he can shew that the accusation made against him is false; he is injured in his fair fame, even although he does not suffer a pecuniary loss. Bowen LJ began his judgment by saying that he was of the same opinion as Brett MR and that he would not have added anything if they had not been overruling the opinion of more than one judge of great experience and ability. He ended by saying that there must be a new trial for the reasons given by the Master of the Rolls and that he hoped that he had not weakened the force of those reasons by stating his own. It is clear therefore that Brett MRs judgment had the full authority of the court. In his judgment Bowen LJ expressed the view, obiter, that under our present rules of procedure, and with the consequences attaching under our present law, the bringing of an action could not give rise to an action for malicious prosecution, even if the first action were brought maliciously and without reasonable and probable cause (pp 690 691). The reason, he explained, was that he could not conceive that under the courts present mode of procedure the bringing of an action could result in any of the three heads of damage recognised in Savile v Roberts. As to damage to reputation, he acknowledged that the publication of the proceedings might incidentally cause damage to a persons reputation, but he said that the bringing of an action itself was not the cause of injury, and that when the action was tried in public his fair fame will be cleared, if it deserves to be cleared: if the action is not tried, his fair fame cannot be in any way assailed by the bringing of the action. In this respect Bowen LJ contrasted the bringing of a civil action with the bringing of a criminal allegation involving scandal to reputation, or the issue of a bankruptcy petition, which he said in its nature caused reputational damage that could not necessarily be repaired afterwards. Where reputational damage is concerned, to draw a distinction between the effect of the bringing of proceedings as such and the effect of attendant publicity seems highly artificial in circumstances where the action is brought as part of a determined campaign to destroy a persons reputation. It seems surprising also that Bowen LJ considered it inconceivable that the making of allegations in a civil suit might result in reputational damage with immediate and irreparable consequences, in the same way as might result from the institution of criminal or insolvency proceedings. But, if it was inconceivable in 1883, it is certainly not inconceivable in todays world. Bowen LJ did not suggest that if he were wrong, and if such damage were to result from the malicious institution of civil proceedings without reasonable or probable cause, there would be any principled reason to leave the injured party without a remedy. That would have been inconsistent with the reasoning which led the court to hold that Quartz Hills claim should go to trial. In Berry v British Transport Commission the plaintiff was prosecuted for the summary offence of pulling the communication cord on a train without reasonable cause. After conviction by the magistrates she appealed to quarter sessions, her conviction was quashed and she was awarded costs against the complainant in a sum which amounted to about a quarter of her actual costs. She sued the defendant for malicious prosecution, claiming that she had suffered damage to reputation; had been held up to ridicule; had suffered mental anxiety; and had incurred special damage by way of the shortfall between the full amount of her expenses and the amount awarded to her at quarter sessions. On the trial of a preliminary question of law, Diplock J struck out her claim as disclosing no cause of action: [1961] 1 QB 149. Diplock J said at p 159 that the action on the case for malicious prosecution could be founded upon any form of legal proceedings, civil or criminal, brought maliciously and without any reasonable or proper cause by the plaintiff against the defendant, but, as the action was in case, damage was an essential ingredient. He held that the criminal allegation was not an imputation affecting her fair fame, and that the rule in Quartz Hill that the difference between actual costs incurred and party and party costs awarded in civil proceedings could not be recovered as special damage should be applied also to costs incurred in defending criminal proceedings, since the criminal court had a discretion to order the prosecutor to pay such costs as were just and reasonable. The Court of Appeal (Ormerod, Devlin and Danckwerts LJJ) upheld Diplock Js judgment on the issue of damage to reputation, but reversed his judgment on the issue of special damages: [1962] 1 QB 306. The court accepted that it was bound by the decision in Quartz Hill that the excess of costs incurred in defending civil proceedings over the taxed costs awarded could not be recovered as special damage in a subsequent action for malicious prosecution, but it declined to extend the rule to costs incurred in defending criminal proceedings. In his judgment, at p 334, Danckwerts LJ repeated Diplock Js obiter dictum that the action for malicious prosecution lies for wrongful and malicious civil proceedings as well as criminal proceedings. The common law is prized for its combination of principle and pragmatism. The doctrine of precedent in the words of Dean Roscoe Pound is one of reason applied to experience: The Spirit of the Common Law, 1963 ed, pp 182 183. Growth he said is insured in that the limits of the principle are not fixed authoritatively once and for all but are discovered gradually by a process of inclusion and exclusion as cases arise which bring out its practical workings and prove how far it may be made to do justice in its actual operation. The case law on the tort of malicious prosecution is in point. It shows how the courts have fashioned the tort to do justice in various situations in which a person has suffered injury in consequence of the malicious use of legal process without any reasonable basis. Drawing on that experience, the court has to decide whether the tort should now apply to the malicious and groundless prosecution of a civil claim causing damage of the kinds alleged in the present case. This requires consideration of the justice and practical consequences whichever way the question is decided. In considering those consequences, it is appropriate to have in mind the essential ingredients of the tort, although they were not the subject of argument (see paras 52 to 56 below). Analysis: policy Mr Willers claim to recover the excess of his legal expenses over the amount awarded under the costs order made in the action brought against him by Langstone raises a question to which I will return. Otherwise I see no difficulty in principle about the heads of damage claimed by him (damage to reputation, health and earnings), subject to the fundamental question whether his action is maintainable in law. The case put on his behalf can be simply stated. In the words of Holt CJ in Savile v Roberts, if this injury be occasioned by a malicious prosecution, it is reason and justice that he should have an action to repair him the injury. This appeal to justice is both obvious and compelling. It seems instinctively unjust for a person to suffer injury as a result of the malicious prosecution of legal proceedings for which there is no reasonable ground, and yet not be entitled to compensation for the injury intentionally caused by the person responsible for instigating it. It was that consideration which led the judges to create the tort of malicious prosecution, as can be seen in the case law. The question is whether there are countervailing factors such that its applicability to civil proceedings should be limited to an assortment of instances where it has previously been applied. A considerable number of countervailing factors have been suggested, and I turn to what appear to me to be the principal ones. Underlying the individual counter arguments, it is a common theme of the opinions of the minority that malicious prosecution of criminal proceedings is now obsolescent, if not obsolete, as a form of tort, and so this is no time to countenance it in the area of civil proceedings. I disagree with the premise of that argument. Maliciously causing a person to be prosecuted on the basis of an allegation known by the complainant to be false is far from being a thing of the past, and in recent times it has led in some cases to the conviction of the complainant for the offence of perverting or attempting to pervert the course of justice. Although in such cases the complainant has typically not been worth suing, if the situation were otherwise there would be no reason to regard an action for malicious prosecution as inappropriate. Floodgates. It is suggested that although Mr Willers claim may be meritorious, there is an unacceptable risk of its being followed by other claims which are unmeritorious. The argument that a good claim should not be allowed because it may lead to someone else pursuing a bad one is not generally attractive, but in this case it is bolstered by two other arguments, the deterrence factor and the finality factor. Deterrence. It is suggested that if the tort is available it may deter those who have valid civil claims from pursuing them for fear that if the claim fails they may face a vindictive action for malicious prosecution. This was the argument advanced 300 years ago in Savile v Roberts for not allowing the tort in criminal proceedings. I am not persuaded that it has greater merit in relation to civil proceedings. There are many deterrents to litigation (uncertainty, time, expense, etc), some of which may be stronger than others. A claimant who brings civil proceedings on an improper basis exposes himself to the risk of having to pay indemnity costs, but I am not aware of evidence that this has deterred those with honest claims from pursuing them. One can always hypothesise that an honest litigant who has not been put off from bringing a claim by the risk of the judge (wrongly) deciding that he had acted improperly and making an indemnity costs order might nevertheless be put off by the extra risk of an opposing party bringing a vindictive action for malicious prosecution, but there is no way of testing the hypothesis and it seems to me intrinsically unlikely. Finality. There is unquestionably a public interest in avoiding unnecessary satellite litigation, whether in criminal or civil matters, but that has not been considered a sufficient reason for disallowing a claim for malicious prosecution of criminal proceedings. Unlike certain other forms of satellite litigation, an action for malicious prosecution does not amount to a collateral attack on the outcome of the first proceedings (subject to the discrete point about a claim for costs in excess of those allowed in the underlying proceedings). Duplication of remedies. In Gregory Lord Steyn expressed himself to be tolerably confident that any manifest injustices arising from groundless and damaging civil proceedings were either adequately protected under other torts or capable of being addressed by any necessary and desirable extensions of other torts: [2000] 1 AC 419, 432. Crawford and the present case show that this is not so. Inconsistency with witness immunity from civil liability. It is suggested that to allow Mr Willers claim would introduce an inconsistency with the rule that evidence given to a court is protected by immunity from civil action, even if the evidence is perjured. If this were a valid objection it would apply to all forms of the tort of malicious prosecution, including prosecution of criminal proceedings, as well as to the instances of malicious institution of civil process which are acknowledged on all sides to be within the scope of the tort. Roy v Prior [1971] AC 470, 477 478, is authority that the rule which bars an action against a witness for making a false statement does not prevent an action in respect of abuse of the process of the court. Lord Morris of Borth y Gest explained the difference: It is well settled that no action will lie against a witness for words spoken in giving evidence in a court even if the evidence is falsely and maliciously given (see Dawkins v Lord Rokeby (1873) LR 8 QB 255, Watson v MEwan [1905] AC 480) This, however, does not involve that an action which is not brought in respect of evidence given in court but is brought in respect of an alleged abuse of process of the court must be defeated if one step in the course of the abuse of the process of the court involved or necessitated the giving of evidence. It must often happen that a defendant who is sued for damages for malicious prosecution will have given evidence in the criminal prosecution of which the plaintiff complains. The essence of the complaint in such a case is that criminal proceedings have been instituted not only without reasonable and probable cause but also maliciously. So also in actions based upon alleged abuses of the process of the court it will often have happened that the court will have been induced to act by reason of some false evidence given by someone. In such cases the actions are not brought on or in respect of any evidence given but in respect of malicious abuse of process (see Elsee v Smith (1822) 2 Chit 304). Inconsistency with the absence of a duty of care by a litigant towards the opposing party. There is a great difference between imposing a duty of care and imposing a liability for maliciously instituting proceedings without reasonable or probable cause. The same distinction is established in relation to criminal cases. The police owe no duty of care towards a suspect (Calveley v Chief Constable of Merseyside Police [1989] AC 1228), but that does not mean that a police officer is immune from the tort of malicious prosecution. The distinction between careless and intentional conduct is a familiar feature of parts of the common law, reflected in Oliver Wendell Holmes, Jrs often quoted saying, Even a dog distinguishes between being stumbled over and being kicked (The Common Law, 1909, lecture 1). The tort should be confined to persons exercising the coercive power of the state. This was the third argument advanced by the defendant in Quartz Hill and was rejected by the Court of Appeal for reasons which I regard as sound: see para 35 above. Implicit in the suggested restriction is the idea that malicious prosecution is a public law tort, available against public officers and others who take it on themselves to exercise the coercive powers of the state; but in Gibbs v Rea [1998] AC 786, 804 Lord Goff and Lord Hope were emphatic that it would be incorrect to see the tort as having any of the characteristics of a public law remedy. They were in a minority in their opinion about the proper decision in that case, but I do not detect any difference on that point. Reciprocity. It is suggested that the logical corollary of allowing a claim for malicious prosecution of civil proceedings should be a right to sue for the malicious defence of a civil claim without reasonable or probable cause. The same argument might logically be advanced in relation to the malicious prosecution of criminal proceedings. It is not uncommon for a criminal suspect, when questioned about an offence, to advance a defence involving false accusations of one kind or another against the complainant, which may be injurious to the complainants reputation. It is easy to think of some high profile examples. That aside, the question whether there should be civil liability for bad faith denial of claims raises other and wider considerations. For an English court to adopt the approach of Supreme Court of New Hampshire in Aranson v Schroeder (1995) 671 A 2d 1023 and recognise the existence of a cause of action of that description would be bold, to say the least, but I do not see that recognition of civil liability for malicious prosecution of civil proceedings carries with it as a necessary counterpart that there should be liability for bad faith denial of a claim. There is an obvious distinction between the initiation of the legal process itself and later steps which may involve bad faith (for which the court is able to impose sanctions) but do not go to the root of the institution of legal process. Uncertainty as to malice. It is suggested that a decision in Mr Willers favour would take the courts into new and uncertain waters about the meaning of malice. The requirement of malice has been considered in the past at the highest level, for example in Glinski v McIvor [1962] AC 726, 766, and Gibbs v Rea [1998] AC 786, 797. No argument was addressed to the court in the present case on this issue for understandable reasons. If the facts alleged by Mr Willers are substantiated, there was undoubtedly malice on the part of Mr Gubay. Lord Mance expresses concern about the concept of malice in the context of a claim for malicious prosecution of civil proceedings (paras 137 to 140). I make two preliminary observations. First, this subject was not raised in either partys written or oral arguments, for understandable reasons. Mr Willers case is that Mr Gubay well knew that Mr Willers had done Mr Gubays bidding in the matter of Langstones claim against the Aqua directors, and the prosecution of Langstones claim against Mr Willers was part of Mr Gubays vendetta against him. Secondly, over the last 400 years there has been a volume of case law about malice, and the related requirement of absence of reasonable and probable cause, for the purposes of the tort of malicious prosecution. Most of it has not been cited, and the court has not had the benefit of the parties analysis of it. I recognise that Lord Mance is registering a concern, rather than seeking to seeking to lay down doctrine. It would be wrong for me to ignore that concern, but anything that I say on this aspect is necessarily obiter. In the early case law Hobart CJ stated the requirements succinctly in the passage from his judgment in Waterer v Freeman cited at para 17 above: if a man sue me in a proper court, yet if his suit be utterly without ground of truth, and that certainly known to himself, I may have an action of the case against him. This formula was adopted by Blackburn J in 1869 in Wren v Weild. It accords with Lord Mances suggestion (para 139) that he would be readier to accept a concept of malicious prosecution which depended on actual appreciation that the original claim was unfounded. Hobart CJs statement remains a helpful starting point and, speaking in general terms, it has in my view much to commend it. It is well established that the requirements of absence of reasonable and probable cause and malice are separate requirements although they may be entwined: see, for example, Glinski v McIver [1962] AC 726, 765, (it is a commonplace that in order to succeed in an action for malicious prosecution the plaintiff must prove both that the defendant was actuated by malice and that he had no reasonable and probable cause for prosecuting, per Lord Devlin). In order to have reasonable and probable cause, the defendant does not have to believe that the proceedings will succeed. It is enough that, on the material on which he acted, there was a proper case to lay before the court: Glinski v McIver, per Lord Denning at 758 759. (Compare and contrast a suit which is utterly without ground of truth, per Hobart CJ.) Malice is an additional requirement. In the early cases, such as Savile v Roberts, the courts used the expression falso et malitiose. In the 19th century malitiose was replaced by the word malicious, which came to be used frequently both in statutes and in common law cases. In Bromage v Prosser (1825) 4 B & C 247, 255, Bayley J said that Malice, in common acceptation, means ill will against a person, but in its legal sense it means a wrongful act, done intentionally, without just cause or excuse. His statement was cited with approval by Lord Davey in Allen v Flood [1898] AC 1, 171. (For a recent discussion of the nineteenth century understanding of the meaning of malicious in the law of tort, see O (A Child) v Rhodes [2016] AC 219, paras 37 to 41.) As applied to malicious prosecution, it requires the claimant to prove that the defendant deliberately misused the process of the court. The most obvious case is where the claimant can prove that the defendant brought the proceedings in the knowledge that they were without foundation (as in Hobart CJs formulation.) But the authorities show that there may be other instances of abuse. A person, for example, may be indifferent whether the allegation is supportable and may bring the proceedings, not for the bona fide purpose of trying that issue, but to secure some extraneous benefit to which he has no colour of a right. The critical feature which has to be proved is that the proceedings instituted by the defendant were not a bona fide use of the courts process. In the Crawford case Mr Delessio knew that there was no proper basis for making allegations of fraud against Mr Paterson, but he did so in order to destroy Mr Patersons business and reputation. The combination of requirements that the claimant must prove not only the absence of reasonable and probable cause, but also that the defendant did not have a bona fide reason to bring the proceedings, means that the claimant has a heavy burden to discharge. All things considered, I do not regard the suggested countervailing considerations as sufficient to outweigh the argument that simple justice dictates that Mr Willers claim for malicious prosecution should be sustainable in English law. Excess costs. Newey Js decision to award costs to Mr Willers on a standard basis is readily understandable. The action had been discontinued and the judge would not have been able to determine whether Mr Willers should recover indemnity costs without conducting what would have amounted to a trial of the present action. On the other hand, the notion that the costs order made has necessarily made good the injury caused by Mr Gubays prosecution of the claim is almost certainly a fiction, and the court should try if possible to avoid fictions, especially where they result in substantial injustice. A trial of Mr Willers claim will of course take up further court time, but that is not a good reason for him to have to accept a loss which he puts at over 2m in legal expenses. Expenditure of court time is sometimes the public price of justice. If Langstones action against Mr Willers had gone to a full trial, and if at the end the judge had refused an application for indemnity costs because he judged that the claim had not been conducted improperly, then to attempt to secure a more favourable costs outcome by bringing an action for malicious prosecution would itself have been objectionable as an abuse of the process of the court, because it would have amounted to a collateral attack on the judges decision. But those are not the circumstances and I do not regard Mr Willers claim to recover his excess costs as an abuse of process. Conclusion For these reasons, which largely replicate the judgments of the majority in Crawford, I would allow the appeal and hold that the entirety of Mr Willers claim should be permitted to go to trial. LORD CLARKE: (agrees with Lord Toulson) Introduction The principal issue in this appeal is whether the tort of malicious prosecution includes the prosecution of civil proceedings. I would firmly answer that question in the affirmative. Lord Toulson and others have set out the facts and the issues in the light of the conflicting approaches of the House of Lords in Gregory v Portsmouth City Council [2000] 1 AC 419 and the Privy Council in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2014] AC 366. I am content to adopt the facts as stated by Lord Toulson at paras 3 to 5 and his analyses of Gregory at paras 6 to 8 and of Sagicor at paras 9 to 15 respectively. Lord Toulsons historical analysis Lord Toulsons analysis of the cases he refers to at paras 16 to 41 is by no means conclusive but I agree with him when he says at the end of para 25 that Grainger v Hill (1838) 4 Bing (NC) 212 does at any rate illustrate the willingness of the court to grant a remedy in what it regarded as novel circumstances, where the plaintiff had suffered provable loss as a result of civil proceedings brought against him maliciously and without any proper justification. Moreover it seems to me to be of some note that, as Lord Toulson says at paras 26 and 27, having briefly set out the facts of De Medina v Grove (1847) 10 QB 172 and Churchill v Siggers (1854) 3 E & B 929, the judges in each case adopted a common starting point. See in particular the quotations in Lord Toulsons para 27, where he sets out a quote from De Medina v Grove in which Wilde CJ (with whom Maule J, Cresswell J, Williams J, Parke B and Rolfe B agreed) began his judgment by stating: The law allows every person to employ its process for the purpose of trying his rights, without subjecting him to any liability, unless he acts maliciously and without probable cause. Similarly in Churchill v Siggers (1854) 3 E & B 929 Lord Campbell CJ, delivering the judgment of the court, including Erle J and Crompton J, began thus: To put into force the process of the law maliciously and without any reasonable or probable cause is wrongful; and, if thereby another is prejudiced in property or person, there is that conjunction of injury and loss which is the foundation of an action on the case. I agree with Lord Toulson (in his para 29) that there is no good reason for limiting the breadth of that proposition: see his paras 30 to 32. I also agree with his analysis of the Quartz Hill case at his paras 33 to 38 and with his analysis of the Berry v British Transport Commission case at his paras 39 to 42. That analysis appears to me to provide at least some support for the proposition stated by Danckwerts LJ in the Court of Appeal [1962] 1 QB 306 in which at p 334 he repeated Diplock Js obiter dictum at first instance that the action for malicious prosecution lies for wrongful and malicious civil as well as criminal proceedings. In all the circumstances I agree with Lord Toulsons conclusion at his para 42 that the courts have fashioned the tort of malicious prosecution to do justice in various situations in which a person has suffered injury in consequence of the malicious use of legal process without any reasonable basis. As he puts it, the court has to decide whether the tort should now apply to the malicious and groundless prosecution of a civil claim causing damage of the kinds alleged in the instant case. Discussion I have reached the clear conclusion, in agreement with the majority in Crawford, and in particular with the leading judgment given by Lord Wilson, that this court should conclude that there is a tort of malicious prosecution of civil claims. I recognise that there is scope for argument but, in my opinion, Lord Toulsons analysis shows that there is a good deal of support for such a tort. In this regard I am not persuaded that the cases show that, in so far as such a tort has been recognised, it has been limited to ex parte applications to secure a claim. In particular it does not seem to me that the jurisprudence on the arrest of ships is limited in that way. Claims for damages for wrongful arrest of a ship are not limited to claims for security obtained on an ex parte basis. They are claims in tort for wrongful arrest in which, if the claimant is successful he or it will obtain damages calculated in accordance with the principles of the common law. A person who arrests a ship does not have to provide security to the defendant in respect of any loss which he might incur. It is thus not helpful (as I see it) to note that it is now commonplace for claimants to be required to give undertakings as a condition of obtaining a freezing order. I recognise that there are those who favour the introduction of such an approach in the case of the arrest of ships; see for example Sir Bernard Eder in a lecture given on 12 December 1996 under the auspices of the London Shipping Law Centre entitled Wrongful Arrest of Ships and see further the articles referred to in paras 82 84 below. However, so far as I am aware, no such approach has been adopted in any decided case. Much of the learning in this area derives from the decision of the Privy Council in The Evangelismos (1858) Swa 378, 12 Moore PC 352, where the judgment of the Board was given by the Rt Hon T Pemberton Leigh, where he said at pp 359 360: Their Lordships think that there is no reason for distinguishing this case, or giving damages. Undoubtedly there may be cases in which there is either mala fides or that crassa negligentia, which implies malice, which would justify a Court of Admiralty giving damages, as in an action brought at Common law damages may be obtained. In the Court of Admiralty the proceedings are, however, more convenient, because in the action in which the main action is disposed of, damages may be awarded. The real question in this case, following the principles laid down with regard to actions of this description, comes to this: is there or is there not, reason to say, that the action was so unwarrantably brought, or brought with so little colour, or so little foundation, that it rather implies malice on the part of the plaintiff, or that gross negligence which is equivalent to it? The test was thus malice or crassa negligentia, defined as that crassa negligentia which implies malice. That decision was preceded by a number of earlier cases to much the same effect including The Orion (1852) 12 Moo 356, The Glasgow (1855) Swa 145, The Nautilus (1856) Swa 105, and The Gloria de Maria (1856) Swab 106. Moreover the principle in The Evangelismos was applied consistently through the late 1800s, usually by Dr Lushington: see The Active (1862) 5 LT (NS) 773, The Eleonore (1863) Br & L 185, The Volant (1864) Br & L 321; 167 ER 385 and The Cathcart (1867) LR 1 A&E 314, The Collingrove, The Numida (1885) 10 PD 158 and The Keroula (1886) 11 PD 92. common law actions for malicious prosecution. He said: In The Kate (1864) Br & L 218, Dr Lushington drew an express analogy with The defendants are not in my opinion entitled to damages, because the circumstances of the case do not shew on the part of the plaintiffs any mala fides or crassa negligentia, without which, according to The Evangelismos unsuccessful plaintiffs are not to be mulcted in damages. The principles in The Evangelismos were further expressly followed by the Privy Council in The Strathnaver (1875) 1 App Cas 58. The position was summarised in the well known case of The Walter D Wallet, [1893] P 202, where Sir Francis Jeune P put the principles thus at pp 205 206: No precedent, as far as I know, can be found in the books of an action at common law for the malicious arrest of a ship by means of Admiralty process. But it appears to me that the onus lies on those who dispute the right to bring such an action of producing authority against it. As Lord Campbell said in Churchill v Siggers , To put into force the process of law maliciously and without any reasonable or probable cause is wrongful; and, if thereby another is prejudiced in property or person, there is that conjunction of injury and loss which is the foundation of an action on the case. Why is the process of law in Admiralty proceedings to be excepted from this principle? It was long ago held that that an action on the case would lie for malicious prosecution, ending in imprisonment under the writ de excommunicato capiendo in the spiritual court: Hocking v Matthews (1670) 1 Ventris 86. It can, therefore, hardly be denied that it would have lain for malicious arrest of a person by Admiralty process in the days when Admiralty suits so commenced, just as for malicious arrest on mesne process at common law. But if for arrest of a person by Admiralty process, why not for arrest of a person's property? I can imagine no answer, and the language of the reasons of the Privy Council in the case of The Evangelismos , quoted with approval in the later case of The Strathnaver appears to me to treat the existence of such an action at common law as indisputable. The words to which I refer were employed by their lordships in speaking of the arrest of a ship in a salvage suit. Their lordships say (at p 67), Undoubtedly there may be cases in which there is either mala fides, or that crassa negligentia which implies malice, which would justify a Court of Admiralty giving damages, as in an action brought at common law, damages may be obtained. In the Court of Admiralty the proceedings are, however, more convenient, because, in the action in which the main question is disposed of, damages may be awarded. It is perhaps noteworthy that, at any rate as I read it, The Walter D Wallet was an action brought at common law, although the President held that the relevant principles were the same as had been applicable in the Court of Admiralty. He said at p 208: Still, the action of the defendants was, I think, clearly in common law phrase, without reasonable or probable cause; or, in equivalent Admiralty language, the result of crassa negligentia, and in a sufficient sense mala fides, and the plaintiffs ship was in fact seized. A little earlier, at p 207 the President said: No doubt in an action on the case for commencing or prosecuting an action, civil or criminal, maliciously and without reasonable or probable cause, damage must be shown: Cotterell v Jones. Cotterell v Jones is reported at (1851) 11 CB 713. It was not necessary to decide whether an action would lie at all because it was held that, if it did, damage must be proved. Although a majority of the judges left the point open, Williams J plainly thought that, if damage was proved, such an action would lie: see p 730. The President was of the same view in The Walter D Wallet. See also Mitchell v Jenkins (1833) 5 B & Ad 588. There has been little analysis in England and Wales of the principles governing wrongful arrest since The Walter D Wallet. The courts have essentially applied the principles in The Evangelismos since then. See, comparatively recently, The Kommunar (No 3) [1997] 1 Lloyds Rep 22, per Colman J at p 30 and the decision of the Court of Appeal in Gulf Azov Shipping Co Ltd v Idisi [2001] 1 Lloyds Rep 727. I note in passing that in The Maule [1995] 2 LRC 192 the Court of Appeal in Hong Kong applied the same principles by reference to the same cases. Moreover it is interesting in the present context to see that Bokhary JA said at p 195, under the heading The analogy with malicious prosecution that [t]he analogy between the tort of malicious prosecution and claims such as the present is well established. I should add that the court does not have a discretion as to whether to permit the arrest of a vessel. It was held by the Court of Appeal in The Varna [1993] 2 Lloyds Rep 253 that, provided the property was within the scope of an action in rem, and provided that there had been procedural compliance with the rules, the plaintiff was entitled to arrest the vessel. The specific issue related to the question whether there was a duty of full and frank disclosure. The court held that after a change in the RSC in 1986, there was no such duty. Before 1986 there was such a duty but, as I see it, there was a right to arrest subject to that duty. Thus in the context of the arrest of ships the courts have recognised a claim for what is in essence malicious prosecution of a civil action by arresting a ship in circumstances where the ingredients of the tort are either mala fides, or that crassa negligentia which implies malice. Moreover the above passage shows that damages were recoverable both in the Admiralty Court and in the courts of common law, where the principles were the same and where the action was on the case. To my mind these principles cannot be disregarded on the basis that they were applied only in some form of interlocutory process. They appear to me to support the historical analysis identified by Lord Toulson. Moreover they show that there are some torts which require proof of malice or something akin to it. There are two other examples which seem to me to support this approach. They are misfeasance in public office and malicious prosecution of a criminal process. I first came across misfeasance in public office in 1995 when I was asked, at first instance, to identify the ingredients of the tort in Three Rivers District Council v Governor and Company of the Bank of England [1996] 3 All ER 558. However the case subsequently went twice to the House of Lords, reported at [2003] 2 AC 1. On the first occasion the House considered the ingredients of the tort. They were identified by Lord Steyn at pp 191 196. His third ingredient focused on two alternative states of mind on the part of the defendant. The first was targeted malice. The second (at p 191E) was where a public officer acts knowing that he has no power to do the act complained of and that the act will probably injure the plaintiff. It involves bad faith inasmuch as the public officer does not have an honest belief that his act is lawful. That test seems to me to be close to the test of malice referred to in the wrongful arrest cases referred to above. It shows that the torts which require malice or something like it are not uncommon. There is in my opinion a close affinity between the tort of malicious prosecution of a crime and the tort of malicious prosecution of a civil action. The ingredients are essentially the same, namely malice or, in the old language, crassa negligentia which implies malice. I agree with Lord Toulsons approach to malice in his paras 52 to 56. In addition, as Lord Toulson explains in para 54, by reference to Lord Devlins opinion in Glinski v McIver [1962] AC 726 at 765, it is commonplace that in order to succeed in an action for malicious prosecution the plaintiff must prove both that the defendant was activated by malice and that he had no reasonable and probable cause for prosecuting. There is some scope for argument as to whether that is the same test as crassa negligentia in a claim based on wrongful arrest. However, this was not discussed in the course of the argument in this appeal and is not relevant to the issue for decision. Equally I should note in passing that there has been some discussion, both in academic articles here and elsewhere and in judgments in common law jurisdictions, on the question whether a less stringent test should be introduced in a claim for damages for wrongful arrest. The articles include, in addition to the article referred to in para 68 above, the following. First there are three articles in volume 38 of the Tulane Maritime Law Journal Winter 2013, No 1, at pp 115 145: the first by Sir Bernard Eder entitled Time for a Change, the second by Martin Davies by way of reply to Sir Bernard and the third a rejoinder by Sir Bernard. The second is by Dr Aleka Sheppard in the third edition of her Modern Maritime Law, 2013 at section 2.4 under the heading Wrongful Arrest of Ships. The third article is by Michael Woodford in (2005) 19 MLAANZ 115 which sets out the position in Australia and discusses many of the cases including those referred to above. As to decided cases, there have been some Singapore cases in recent years which discuss the same cases and, for the most part follow the English cases. They include the decision of Selvam JC in The Ohm Mariana, Ex p Peony [1992] 1 SLR(R) 556 and The Kiku Pacific [1999] SGCA 96, in which the Court of Appeal, endorsed the test of mala fides and crassa negligentia implying malice rather than the test of absence of reasonable and probable cause. That decision was followed by the Singaporean High Court in The Inai Selasih (Ex p Geopotes X) [2005] 4 SLR 1. Subsequently the same point was considered in some detail by the Court of Appeal in The Vasily Golovnin [2008] 4 SLR (R) 994, especially at paras 118 134, where it noted that the test was widespread in the Commonwealth, including Canada and New Zealand: see paras 132 133. Rajah JA, delivering the judgment of the court, concluded as follows: 134. We would agree with the views of both Iacobucci J [in the Canadian Supreme Court] and Giles J [in the High Court in New Zealand] to the extent that the Evangelismos test is long standing, and should not be departed from lightly, without good reasons and due consideration. However, it is always open to this court to depart from this judicially created test if the day comes when it no longer serves any relevant purpose. Having examined the genesis of the Evangelismos test and its current application in Singapore, we shall for now leave this issue to be addressed more fully at a more appropriate juncture. We are prepared to reconsider the continuing relevance and applicability of the Evangelismos test when we have had the benefit of full argument from counsel as well as the submissions of other interested stakeholders in the maritime community in the form of Brandeis briefs. For the present appeal, as will be demonstrated shortly, the outcome reached by this court would nonetheless be the same whether the Evangelismos test or a less onerous test is applied. The court had earlier noted that relaxation of the test had in many cases been achieved by statute. It is not necessary to consider this further here because the issue does not arise. However, it is important to note that nobody has suggested that there should be no claim for damages for wrongful arrest, only that the test should be lower than the test of either mala fides, or that crassa negligentia which implies malice. In so far as the test for malicious prosecution identified in Glinski v McIver includes the requirement that the defendant had no reasonable and probable cause for prosecuting, there may be scope for argument as to precisely what is meant by that expression, but that is not the subject of this appeal. The question here is whether there is a tort of malicious prosecution of a civil claim. For my part I can see no sensible basis for accepting that the tort of malicious prosecution of a crime exists in English law, whereas the tort of malicious prosecution of a civil action does not. Not only are the ingredients the same, but it seems to me that, if a claimant is entitled to recover damages against a person who maliciously prosecutes him for an alleged crime, a claimant should also be entitled to recover damages against a person who maliciously brings civil proceedings against him. The latter class of case can easily cause a claimant very considerable losses. They will often be considerably greater than in a case of malicious prosecution of criminal proceedings. Some members of the court rely upon a number of factors which are said to point to a different conclusion. Lord Toulson has discussed those factors in his paras 44 to 51 under the headings of floodgates, deterrence, finality, duplication of remedies, inconsistency with the absence of a duty of care, witness immunity, limitation to the coercive power of the state and reciprocity. Largely for the reasons given by Lord Toulson I agree that those factors do not have sufficient weight to counter the conclusion that, like malicious prosecution of criminal proceedings, malicious prosecution of civil proceedings is a tort. The only point I would make by way of postscript in relation to the factors discussed by Lord Toulson is that it is to my mind irrelevant that no duty of care is owed because the sole question is whether the tort of malicious prosecution exists. In my opinion it does. Finally, I note that in Congentra AG v Sixteen Thirteen Marine SA (The Nicholas M) [2008] EWHC 1615 (Comm); [2009] 1 All ER (Comm) 479 Flaux J, albeit obiter, considered the question whether English law recognises a tort of wrongful attachment of property. It was argued that it does not based on a passage in the speech of Lord Steyn in Gregory at p 427, which was relied upon as support for the proposition that the tort of malicious prosecution is not generally available in respect of civil proceedings. Flaux J concluded that Lord Steyn was not laying down that proposition as of general application. He referred in particular to Lord Steyns speech at pp 432 433, where he said this: My Lords, it is not necessary for the disposal of the present appeal to express a view on the argument in favour of the extension of the tort to civil proceedings generally. It would, however, be unsatisfactory to leave this important issue in the air. I will, therefore, briefly state my conclusions on this aspect. There is a stronger case for an extension of the tort to civil legal proceeding than to disciplinary proceedings. Both criminal and civil legal proceedings are covered by the same immunity. And as I have explained with reference to the potential damage of publicity about a civil action alleging fraud, the traditional explanation namely that in the case of civil proceedings the poison and the antidote are presented simultaneously, is no longer plausible. Nevertheless, for essentially practical reasons I am not persuaded that the general extension of the tort to civil proceedings has been shown to be necessary if one takes into account the protection afforded by other related torts. I am tolerably confident that any manifest injustices arising from groundless and damaging civil proceedings are either already adequately protected under other torts or are capable of being addressed by any necessary and desirable extensions of other torts. Instead of embarking on a radical extension of the tort of malicious prosecution I would rely on the capacity of our tort law for pragmatic growth in response to true necessities demonstrated by experience. It is important to note that Lord Steyns conclusion was not based upon principle but upon what he called practical reasons. Flaux J concluded (at para 22), that Lord Steyn expressly recognised that there may be scope for incremental growth and extension of existing torts, including wrongful arrest. I agree. Indeed, I would go further and hold that the logical conclusion from the cases is that a person who suffers damage as a result of the malicious prosecution of a civil suit against him is entitled to recover that damage in just the same way as a person who suffers damage as a result of the malicious prosecution of criminal proceedings against him. Conclusion For these reasons and those given by Lord Toulson I would allow the appeal. LORD MANCE: (dissenting) Introduction This appeal revisits before nine Justices in the Supreme Court the question how far the tort of malicious prosecution does or should apply in relation to civil proceedings. The question received intense and helpful consideration in no less than five judgments given by the five members of the court sitting as Privy Counsellors in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17, [2014] AC 366 (Crawford v Sagicor). I would also pay tribute to the meticulous analysis of the issues in the first instance judgment of Miss Amanda Tipples QC in the present case. Much of the discussion in those judgments can be taken as read. The difficulty is that the Judicial Committee was split three to two in Crawford v Sagicor, taking different views both of the case law and of policy. That the Supreme Court must also engage closely with legal policy is I think clear. Viewed in isolation, the assumed facts of this case make it attractive to think that the appellant should have a legal remedy. But the wider implications require close consideration. We must beware of the risk that hard cases make bad law, and we are entitled to ask why, until the Privy Councils majority decision in Crawford v Sagicor, there has been an apparent dearth of authority in this jurisdiction for a claim such as the appellant wishes to pursue. Both sides attached significance to this last question. Mr John McDonnell QC for the appellant said at the outset that he accepted a fundamental difference between creating a remedy for the first time and recognising a remedy that had become over looked with time. He relied on a series of authorities in the 16th, 17th and 18th centuries for an underlying principle, encapsulated he submitted most clearly by Holt CJ in the late 17th century in Savile v Roberts 1 Ld Raym 374, 3 Salk 17, 3 Ld Raym 264, 1 Salk 13, 12 Mod 208, Carthew 416, 5 Mod 405. The principle was, he submitted, that malicious prosecution of an unfounded civil suit can give rise to liability for damage inflicted in respect of reputation, health, earnings and charges. This principle had, he submitted, been misunderstood and wrongly constrained during the 19th century, in particular by the Court of Appeal in Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674. Analysis of the case law McDonnell advocates is not justified: I have come to the conclusion that the reading of the authorities which Mr i) The 16th to 18th century authorities must be seen in the light of contemporary procedures governing civil proceedings. Plaintiffs at the relevant times could on an ex parte basis institute or cause an officer of the state to institute drastic measures affecting the intended defendants person, property or ability to trade. In that context, it was recognised that, once it had been established that the measures had been instituted or caused without any reasonable cause and maliciously, the defendant should have a remedy for what was effectively wrongful imprisonment, wrongful deprivation of goods or wrongful deprivation of the opportunity to trade. He could then recover any concomitant damage to person, reputation, business or pocket. ii) However, it was established that damage to a plaintiffs pocket did not in this connection include extra costs, over and above those recoverable inter partes in the original action. iii) The principle of the prior authorities was in the 1880s extended by analogy to enable the recovery of general damages to reputation arising from malicious pursuit of a winding up petition in respect of a company. But this extension was carefully limited, so as to exclude any general right to bring an action for malicious pursuit of a prior action. iv) good these propositions. I will in the following paragraphs examine the authorities to make Taking the cases prior to Savile v Roberts, in Bulwer v Smith (1583) 4 Leon 52, the defendant, by impersonating a deceased judgment creditor, took out against the judgment debtor successive writs, first a capias ad satisfaciendum whereby the debtor was outlawed and forfeited all his goods and then a capias utlagatum whereby he was arrested and imprisoned for two months. The error having been revealed, it was held that the judgment debtor was entitled to damages. In Waterer v Freeman (1617) Hobart 205, (1618) Hobart 266, the claim was that the defendant had wilfully and vexatiously taken out a second writ of fieri facias, thereby causing the sheriff to levy double execution on the plaintiffs goods. The court held the claim to be maintainable, once the double execution was established and provided that the suit (here the second execution) was utterly without ground of truth, and that certainly known to the person taking it. In Skinner v Gunton (1667) 2 Keb 473, (1668) 1 Saund 228(d), 2 Keb 475 and T Raym 176, (1671) 3 Keb 118, Gunton, maliciously and knowing that Skinner would not be able to find bail, issued an unfounded plaint for trespass allegedly causing loss of 300 against Skinner, causing the sheriff to arrest Skinner and imprison him for 20 days. Gunton was held liable for damages of 10. Finally, Daw v Swaine (or Swayne) (1668) 1 Sid 424, (1668) 2 Keble 546, (1669) 1 Mod 4, was another case of malicious issue of a plaint in a sum (variously put at 5,000 or 600), in the knowledge that it was not due and the defendant would not be able to afford bail and would suffer incarceration. In fact a much lesser sum was due. Skinner v Gunton was followed. All these cases involved imprisonment or at least seizure of goods. A case outside that ambit was Gray v Dight (1677) 2 Show KB 144 where the plaintiff, having given an account as churchwarden before the Ecclesiastical Court, was prosecuted a second time by the defendant, who went and told the Judge that he would not account, on which he [was] excommunicated. It was resolved the action though nothing ensued by an excommunication, and no capias, nor any express damage laid; for this court will consider of the consequences of an excommunication; and an action lies for a malicious prosecution, though the judges proceedings are erroneous, for that is not material in this case. lies, It may be inferred from this reasoning that the court was conscious that it was outside the normal area of malicious prosecution, where a capias led to arrest, but justified this because of the seriousness attaching to excommunication. In holding that judicial error in giving effect to the second action was no bar to the claim, the court was also anticipating much later decisions in Johnson v Emerson (1871) LR 6 Ex 329 and Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674: see below. Against this background I turn to Savile v Roberts. It was in fact a case of alleged malicious indictment (for taking part in a riot, by stopping a road by which the defendant used to carry his tithes). But both counsels submissions and the judgment also addressed malicious pursuit of civil proceedings. The Privy Council in Crawford Adjusters Ltd v Sagicor Insurance Ltd considered that the best encapsulation of the central decision in Savill v Roberts, which makes no distinction between criminal and civil proceedings, is to be collected from the report at 5 Mod 394, as follows: It is the malice that is the foundation of all actions of this nature, which incites men to make use of law for other purposes than those for which it was ordained. It is now clear that the report at 5 Mod 394 is of counsels submissions. The judgment of Holt CJ is covered by other reports, notably 1 Ld Raym 374, 1 Salkeld 13 and 12 Mod 208. From those reports, it is clear that Holt CJ, speaking for all three members of the court, drew distinctions between maliciously pursued criminal proceedings and maliciously pursued civil proceedings. Thus, addressing an objection that there was no more reason that an action should be maintainable in this case (ie for a malicious indictment) than where a civil action is sued without cause, for which no action will lie Holt CJ said (taking the report at 1 Ld Raym 374): There is a great difference between the suing of an action maliciously, and the indicting of a man maliciously. When a man sues an action, he claims a right to himself, or complains of an injury done to him; and if a man fancies he has a right, he may sue an action. He went on: 2. The common law has made provision, to hinder malicious and frivolous and vexatious suits, that every plaintiff should find pledges, who were amerced, if the claim was false; which judgment the court heretofore always gave, and then a writ issued to the coroners, and they affeered them according to the proportion of the vexation. See 8 Co 39 b FNB 76a. But that method became disused, and then to supply it, the statutes gave costs to the defendants. And though this practice of levying of amercements be disused, yet the court must judge according to the reason of the law, and not vary their judgments by accidents. But there was no amercement upon indictments, and the party had not any remedy to reimburse himself but by action. 2. If A. sues an action against B. for mere vexation, in some cases upon particular damage B. may have an action; but it is not enough to say that A. sued him falso et malitiose, but he must shew the matter of the grievance specially, so that it may appear to the court to be manifestly vexatious. 1 Sid 424, Daw v Swain, where the special cause was the holding to excessive bail. But if a stranger who is not concerned, excites A. to sue an action against B. B. may have an action against the stranger. FNB 98 n and 2 Inst 444. The report at 1 Salkeld 13 adds a further reference at the end to 3 Cro 378. That is the case of Robodham v Venleck, recognising a malicious assertion that a person had lied on his oath in court as involving an actionable slander. The citation of 2 Inst 444 in the context of a stranger exciting the pursuit of an action indicates that Holt CJ was referring to a statute of 13 Ed I Stat 1 (Westminster second) chapter 36 entitled A Distress taken upon a Suit commenced by others. This was enacted to deal with abuses of position by feudal courts. Its opening words were: Forasmuch as lords of courts, and others that keep courts, and stewards, intending to grieve their inferiors, where they have no lawful means so to do, procure others to move matters against them, and to put in surety and other pledges . (Holt CJ also referred to the statute expressly in a passage cited in para 103 below.) The remedy for such abuses was prescribed to be triple damages. This cause of action no longer exists, and no distinction was drawn in counsels submissions on the present appeal between the liability of a party maliciously suing and the liability of a third party knowingly procuring or assisting a party to sue maliciously. It seems right that the two should be assimilated, certainly in a case like the present where Mr Gubay is said to have been the alter ego of the company alleged to have pursued civil proceedings maliciously at his instance. In the report at 12 Mod 208, Holt CJ is reported as referring to both Daw v Swain and Skinner v Gunton, and as adding that: There is another case where an action of this nature will lie, and that is, where a stranger, who is not at all concerned, will excite another to bring an action, whereby he is grieved, an action lies against the exciter. There are other cases where this action is allowed; as Carlion v Mills 1 Cro 291, Norris v Palmer 2 Mod 51 and Ruddock v Sherman 1 Danv Abr 209: but though this action does lie, yet it is an action not to be favoured, and ought not to be maintained without rank and express malice and iniquity. Therefore, if there be no scandal or imprisonment, and ignoramus found [ie lack of basis for the original claim], no action lies, though the matter be false. Carlion v Mills and Ruddock v Sherman concerned malicious citations before ecclesiastical courts for respectively inconsistency and adultery, and Norris v Palmer extended the action on the case for malicious prosecution to an indictment for a common trespass in taking away one hundred bricks in respect of which the defendant was only acquitted by the jury at trial after he was compelled to spend great sums of money presumably on lawyers, not the jury. The judgment in Savile v Roberts focused on the nature of the injury which could found an action for malicious indictment. The report at 1 Ld Raym 374 records Holt CJ saying (at p 378) that the nature of the injury for which damages might be recoverable has been much unsettled in Westminster Hall, and therefore to set it at rest is at this time very necessary. And, 1. He said, that there are three sorts of damages, any of which would be sufficient ground to support this action. 1. The damage to a mans fame, as if the matter whereof he is accused be scandalous. But there is no scandal in the crime for which the plaintiff in the original action was indicted. 2. The second sort of damages, which would support such an action, are such as are done to the person; as where a man is put in danger to lose his life, or limb, or liberty, which has been always allowed a good foundation of such an action, as appears by the Statute de Conspiratoribus where the Parliament describes a conspirator, and the Statute of Westm 2, 13 Ed 1, st 1, c 12, which gives damages to the party falsely appealed, respectu habito ad imprisonamentum et arrestationem corporis, and also ad infamiam; but these kinds of damages are not ingredients in the present case 3. The third sort of damages, which will support such an action, is damage to a mans property, as where he is forced to expend his money in necessary charges, to acquit himself of the crime of which he is accused, which is the present charge. That a man in such case is put to expences is without doubt, which is an injury to his property; and if that injury is done to him maliciously, it is reasonable that he shall have an action to repair himself. It cannot be assumed that Holt CJ meant that the same approach applied in respect of an action for malicious pursuit of civil proceedings. In speaking of the third sort of damages, he expressly referred only to crime. In the same judgment he went on to make clear (at p 379) that one of the great differences between criminal and civil proceedings, which explained why a claim could lie for maliciously instituting the former when it did not lie for maliciously pursuing the latter, was that the law did not provide for costs in relation to the former, when it did in relation to the latter: see para 99 above. Further, and as will appear, later authority is almost unanimously to the effect that the costs position in relation to the malicious pursuit of civil proceedings is quite different from that in relation to criminal proceedings (see paras 107, 110, 111, 124 125 and 141 below). The report at 12 Mod 208 also refers to the three sorts of damage which Holt CJ identified: it is necessary to consider what are the true grounds and reasons of such actions as these; and it does appear, that there are three sorts of damages, any one of which is sufficient to support this action. First, damage to his fame, if the matter whereof he be accused be scandalous. Secondly, to his person, whereby he is imprisoned. Thirdly, to his property, whereby he is put to charges and expenses. A scandalous matter in the context of the first sort of damage meant a charge, an oral accusation of which would amount to slander per se (not the case at the time with a charge of riot). Later authority appears to have understood scandal as including any defamatory accusation a point that may require consideration in the context of the present case: see Berry v British Transport Commission [1961] 1 QB 149, pp 163 165, per Diplock J, discussing the effect of Rayson v South London Tramways Co [1893] 2 QB 304 and Wiffen v Bailey and Romford Urban District Council [1915] 1 KB 600. As to the second sort of damage, the report at 12 Mod 208 makes clear that the second sort of damage involved showing actual imprisonment, rather than a mere risk of loss of liberty: Berry v British Transport Commission [1961] 1 QB 149, 161. Two years after Savile v Roberts, Neal v Spencer (1700) 12 Mod 257 held that an action on the case for arresting without cause of action lies not, if it be not that he [the current plaintiff] was held to excessive bail. The nature of the damage recoverable in an action upon the case for malicious indictment was further considered in Jones v Givin (or Gwynn) (1713) Gilb Cas 185, (1712) 10 Mod 147 and 214 (a case where the plaintiff had been wrongly accused of exercising the trade of a badger of corn and grain). Holt CJ having died in 1710, his successor Parker CJ delivered a formidably erudite judgment paying tribute to the excellent argument of that great man in Savile v Roberts. Dismissing a submission that a claim for malicious indictment was no more actionable than certain (unspecified) claims for malicious prosecution of a civil action, Parker CJ said: But I choose to say there is a great difference between the two cases. (1) Because the demand of right or satisfaction is more favoured than the bringing to punishment. An action is to recover his right, or satisfaction for it, perhaps his subsistence. An indictment does himself no good, only punishes another, and there is a case which goes so far as to say, that to indict for a common trespass for which a civil action will lie, is malice apparent. Pas 30 Car 2, C B 2 Mod 306. Lord Chief Justice North not named. And it is observable, that in actions of conspiracy, in cases of appeals, the plaintiffs in appeals never were made defendants, but in case of judgments the prosecutors for the most part were. (2) Because if the action is false, the plaintiff is by law amerced, and the defendant to have costs. And therefore my Lord Chief Justice Holt, in his excellent argument in Savill and Roberts, Mich 10 W 3, where he fully states the difference between the two cases, said that in case for a malicious action the plaintiff must shew special matter which shews malice, for else an action, being the plaintiffs seeking and demanding advantage to himself, carrys in it, 1. A fair and honest cause, unless the recovery be utterly hopeless, and the suit without some other design, which therefore must be specially shewn. Parker CJ concluded that, applying the guidance given in Savile v Roberts regarding the sorts of recoverable damage, a man was just as much intitled to satisfaction as well for damages in his property through expence, as for damage in his fame through scandal, the species of the damage, whether the one or the other is the same, for they can make no difference now, whatsoever it might have done formerly. Again, that was said in the context of the claim for malicious indictment. Then in Chapman v Pickersgill (1762) 2 Wils KB 145, Lord Mansfield CJ considered whether an action would lie for falsely and maliciously petitioning the Lord Chancellor that the plaintiff owed the petitioner a debt of 200 and had committed an act of bankruptcy, whereupon the commission had been issued (the petitioner giving to the Lord Chancellor a bond for 200 to cover loss which the plaintiff might sustain if no such debt was proved) and the plaintiff had been declared bankrupt. The bankruptcy having been set aside, the petitioner, now defendant, objected, first, that a proceeding on a commission of bankruptcy was a proceeding in nature of a civil suit; and that no action of this sort was ever brought and, second, that the statutory remedy excluded any common law claim. Lord Mansfield, giving the judgment of the whole court, gave both objections short shrift. Of the first, he said: The general grounds of this action are, that the commission was falsely and maliciously sued out; that the plaintiff has been greatly damaged thereby, scandalized upon record, and put to great charges in obtaining a supersedeas to the commission. Here is falsehood and malice in the defendant, and great wrong and damage done to the plaintiff thereby. Now wherever there is an injury done to a man's property by a false and malicious prosecution, it is most reasonable he should have an action to As to the second objection, Lord Mansfield said: repair himself. See 5 Mod 407, 8 10 Mod 218 [ie Jones v Givin or Gwynn], 12 Mod 210. I take these to be two leading cases, and it is dangerous to alter the law. See also 12 Mod 273, 7 Rep Bulwers case [ie Bulwer v Smith], 1. 2 Leon 1 Roll Abr 101, 1 Ven 86, 1 Sid 464. But it is said, this action was never brought; and so it was said in Ashby and White. I wish never to hear this objection again. This action is for a tort: torts are infinitely various, not limited or confined, for there is nothing in nature but may be an instrument of mischief, and this of suing out a commission of bankruptcy falsely and maliciously, is of the most injurious consequence in a trading country. we are all of opinion, that in this case the plaintiff would have been entitled to this remedy by action at common law, if this Act had never been made, and that the statute being in the affirmative, hath not taken away the remedy at law. but the most decisive answer is, that this statute remedy is a most inadequate and uncertain remedy; for though there be the most outrageous malice and perjury, and the party injured suffer to the amount of ten or twenty thousand pounds, yet the Chancellor has no power to give him more than the penalty of 200. Besides, the method of applying to the Chancellor is more tedious, expensive, and inconvenient than this common law remedy; and this case, in its nature, is more properly the province of a jury than of any judge whatever. As the first passage shows, the damages awarded had been put in broad terms covering, according to Lord Mansfield, both great damage due to being scandalised upon record and great charges in obtaining a supersedeas to the commission. Lord Mansfield in the second passage was clearly focusing on the former head of damages and on the evident inadequacy of a bond limited to 200 to cover all loss which the victim of a malicious civil suit might suffer up to five figure amounts. He was not addressing the recoverability of extra costs in circumstances where the original court had or has a discretion to award appropriate compensatory costs. In Goslin v Wilcox (1766) 2 Wils K B 303, the plaintiff, a market trader, owed some 5, but the creditor maliciously issued a writ of capias ad respondendum in the Bridgwater Borough court which he knew to have no jurisdiction. On that basis, he caused the plaintiff while trading at his stall in Bridgwater Fair to be arrested by the bailiffs on pain of providing 5 bail, so that the plaintiff was not only put to great charges in freeing himself, but was also during his imprisonment hindered from trading and lost his whole profit at Bridgwater put at some 50. The Common Pleas held that, although Courts will be cautious how they discourage men from suing, the action lay (p 307). Lord Camden CJ, after initial hesitation, was evidently satisfied that the case was sufficiently analogous to those where nothing was due, or where the arrest was for much more than was due, where it had been held that the costs in the cause are not a sufficient satisfaction for imprisoning a man unjustly (p 305). In Purton v Honnor (1798) 1 Bos & Pul 205, the claim was for damages for vexatious ejectment. On the court expressing themselves clearly of opinion on the authority of Savile v Roberts 1 Salk 13, that such an action was not maintainable, counsel for the plaintiff declined to argue the point. The report at 1 Salk 13 is very brief and confined to the proposition that it is not sufficient that the plaintiff prove he was innocent, but he must prove express malice in the defendant. It therefore appears probable that the defect in the claim in Purton v Honnor was simply that there was no plea of malice. On that basis, the case is presently irrelevant. Sinclair v Eldred (1811) 4 Taunt 7 concerned the arrest of the plaintiff by a bill of Middlesex, the device whereby civil proceedings could be commenced in the Court of Kings Bench (rather than the Common Pleas) under the fiction that a trespass had been committed in the County of Middlesex. The bill was indorsed for bail for 10, which the plaintiffs attorney undertook whereupon the plaintiff was released. The defendant allowed the claim to lapse. The plaintiff had by then incurred costs of 13 guineas, but was only allowed 4 4s 6d, leaving him out of pocket for 9, which he claimed to recover. The claim failed, for want of evidence of malice, but Mansfield CJ said during submissions (p 9): The plaintiff has recovered already in the shape of taxed costs all the costs which the law allows, and it cannot be that an action may be sustained for the surplus. And in his judgment (pp 9 10) he added: This is certainly a new species of action, I mean considering it as an action to recover the extra costs, for there was no proof of any inconvenience of any sort arising to the plaintiff, except in the payment of more costs than the law allows him, and which therefore he ought not to recover. Cotterell v Jones (1851) 11 CB 713 involved a claim against two third parties for maliciously commencing an unfounded action against the plaintiff using the name of Osborne and knowing him to be a pauper. The action was non suited without, so far as appeared, any order for costs being made against Osborne who was insolvent. During the elaborate argument, the court evinced scepticism about the proposition that injury to property in putting a person to needless expense could ground a claim for malicious pursuit of a civil claim. After counsel had made extensive reference to Savile v Roberts and other authority, Jervis CJ said (p 718): You will find that doctrine very much qualified, as you approach more modern times, and Williams J said (p 723): I doubt whether we can take notice of the alleged insolvency of the nominal plaintiff in the former action: the costs must be assumed to be a full compensation for the vexation. Ultimately, the claim failed because no judgment for costs had, for whatever reason, been obtained against Osborne, so that his insolvency was not shown to have been causative of any inability to recover costs. But the court endorsed the proposition, which was evidently common ground, that in the ordinary case costs not recoverable in the action cannot be recovered in an action for malicious pursuit of the action. As Jervis CJ said: It is conceded also, that, if the party so wrongfully put forward as plaintiff in the former action had been a person in solvent circumstances, this action could not have been maintained, inasmuch as the award of costs to the defendant (the now plaintiff) upon the failure of that action, would, in contemplation of law, have been a full compensation to him for the unjust vexation, and consequently he would have sustained no damage. To like effect, Maule J said: It is conceded that this action could not be maintained in respect of extra costs, that is, costs ultra the costs given by the statute (23 H 8, chapter 15, section 1) to a successful defendant. Williams and Talfourd JJ started their judgments by saying that they were of the same opinion. Talfourd J also said: It appears from the whole current of authorities, that an action of this description, if maintainable at all, is only maintainable in respect of legal damage actually sustained; and that the mere expenditure of money by the plaintiff in the defence of the action brought against him does not constitute such legal damage; but that the only measure of damage is, the costs ascertained by the usual course of law. There being no averment in this declaration that any such costs were incurred or awarded, no legal ground is disclosed for the maintenance of the action. Churchill v Siggers (1854) 3 E & B 929 and Gilding v Eyre (1861) 10 CB NS 592 were both successful claims for maliciously issuing writs of capias for sums larger than any remaining due, with the result that the plaintiff had been wrongly imprisoned for periods and had also incurred expenses. Sophia de Medina v Grove and Weymouth (1846) 1 QB 152, 166 170 and (1847) 1 QB 172 was a claim for wrongfully issuing a writ of fi fa to enforce a judgment allegedly obtained for more than remained due, leading to the plaintiffs imprisonment until he provided securities for the full judgment sum. The claim failed in the absence of any plea that the claim was brought without probable cause, as well as maliciously. The plaintiffs remedy in such circumstances was to apply to set aside the judgment. The case adds nothing to the wisdom of other case law. In Johnson v Emerson (1871) LR 6 Ex 329 an order that the plaintiff put up a bond within seven days was stayed, but the allegation was that the petitioner, being aware of this, nonetheless maliciously petitioned ex parte for the plaintiffs bankruptcy for failure to put up such a bond and also ex parte obtained the appointment of a receiver, leading to the plaintiff being adjudicated bankrupt, an adjudication later set aside as having been erroneous. The court split equally on the factual question of awareness and maliciousness, with the result that the verdict below in favour of the plaintiff stood. Cleasby B, who with Kelly CB upheld the claim, distinguished a petition for adjudication [from] an ordinary commencement of an action, which leaves both parties in the same position, describing it as a most important ex parte proceeding against a man, which may be likened to an application for a capias to hold to bail The one makes a mans property liable to be taken, and the other makes his person liable to be taken (p 340). On the other side, Martin B, who would have set aside the verdict in favour of the plaintiff, questioned whether an action for malicious pursuit of civil proceedings could ever lie where a petition would, procedurally, lead in due course to an inter partes adjudication. Martin Bs view was not however followed by the Court of Appeal in Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674. Quartz Hill Quartz Hill concerned a claim for malicious presentation and advertisement of a winding up petition, which was subsequently dismissed. The Court of Appeal consisted of the powerful combination of Brett MR and Bowen LJ. They addressed two main points, which they saw as related. The first was whether an action would lie for falsely and maliciously presenting a petition to wind up a company, while the second related to the nature of any damage which might be recoverable in such an action: see p 688, per Bowen LJ. As to the first, both members of the court treated it as axiomatic that no action lay for maliciously pursuing ordinary civil proceedings. The question was whether a winding up petition could be brought by analogy within the group of ex parte procedural measures involving damage to person, property or reputation which, on past authority, could give rise to such an action. As to the second, both members of the court also treated it as axiomatic that extra costs, over and above those recoverable in the original civil proceedings, could not be recovered in a later action for maliciously pursuing those proceedings. In my opinion, the Court of Appeal was on all these points correct in its analysis of past authority. Taking the first point, a petition to wind up a company could have no immediate effect of any person or property as such. The authorities on arrest of the person and seizure or dispossession of goods were not therefore in point. But the petition to wind up was nonetheless an ex parte procedure which directly affected the companys trading reputation. It was in Brett MRs words (p 685) more like a bankruptcy petition than an action charging fraud, and the very touchstone of this point is that the petition to wind up is by force of law made public before the company can defend itself against the imputations made against it; for the petitioner is bound to publicly advertise the petition seven days before it is to be heard and adjudicated upon Both members of the court gave consideration to the distinction between what they saw as a general inability to found an action upon the malicious pursuit of a prior civil action and the case before them. In a much commented passage, Brett MR suggested (pp 684 685) that the case before them was not like an action charging a merchant with fraud, where the evil done by bringing the action is remedied at the same time that the mischief is published, namely at the trial. That idea was picked up by Buckley LJ in Wiffen v Bailey and Romford Urban District Council [1915] 1 KB 600, 607, who said that the exception of civil proceedings so far as they are excepted, depends not upon any essential difference between civil and criminal proceedings, but upon the fact that in civil proceedings the poison and the antidote are presented simultaneously. Brett MRs and Buckley LJs aphorisms have been well criticised, on the basis that, if they were ever justified, the transparency and publicity surrounding modern day civil actions, at least in common law countries, make them quite unrealistic. This criticism was accepted by the Supreme Court of Victoria in Little v Law Institute of Victoria (No 3) [1990] VR 257, where Kaye and Beach JJ held (in the context of allegedly malicious pursuit of civil proceedings alleging that the plaintiff had been practising as a solicitor without being qualified to do so) that there was no longer justification for confining to a bankruptcy petition and an application to wind up a company the remedy for malicious abuse of civil proceedings where the damages claimed is to the plaintiffs reputation. The criticism was also accepted as valid by the House of Lords in Gregory v Portsmouth City Council [2000] 1 AC 419, 428A. But the House of Lords went on, rightly, to indicate (p 428B) that acceptance of the criticism leaves open for consideration whether the restriction upon the availability of the tort in respect of civil proceedings may be justified for other reasons. In this regard, Bowen LJs judgment is in my opinion of interest for its fuller treatment of the point. He said (p 688): I start with this, that at the present day the bringing of an action under our present rules of procedure, and with the consequences attaching under our present law, although the action is brought falsely and maliciously and without reasonable or probable cause, and whatever may be the allegations contained in the pleadings, will not furnish a ground for a subsequent complaint by the person who has been sued, nor support an action on his part for maliciously bringing the first action. To speak broadly, and without travelling into every corner of the law, whenever a man complains before a court of justice of the false and malicious legal proceedings of another, his complaint, in order to give a good and substantial cause of action, must shew that the false and malicious legal proceedings have been accompanied by damage express or implied. After examining the three sorts of damage contemplated in Savile v Roberts, Bowen LJ went on (pp 690 691): To apply this test to any action that can be conceived under our present mode of procedure and under our present law, it seems to me that no mere bringing of an action, although it is brought maliciously and without reasonable or probable cause, will give rise to an action for malicious prosecution. In no action, at all events in none of the ordinary kind, not even in those based upon fraud where there are scandalous allegations in the pleadings, is damage to a mans fair fame the necessary and natural consequence of bringing the action. Incidentally matters connected with the action, such as the publication of the proceedings in the action, may do a man an injury; but the bringing of the action is of itself no injury to him. When the action is tried in public, his fair fame will be cleared, if it deserves to be cleared: if the action is not tried, his fair fame cannot be assailed in any way by the bringing of the action. In contrast, certain indictments, those involving scandal to reputation or possible loss of liberty, were by their nature considered to affect a persons fair fame and to be actionable, if malicious, and the presentation of a bankruptcy petition fell into the same class: In the past, when a traders property was touched by making him a bankrupt in the first instance, and he was left to get rid of the misfortune as best he could, of course he suffered a direct injury as to his property. But a traders credit seems to me to be as valuable as his property, and the present proceedings in bankruptcy, although they are dissimilar to proceedings in bankruptcy under former Acts, resemble them in this, that they strike home at a man's credit, and therefore I think the view of those judges correct who held, in Johnson v Emerson, that the false and malicious presentation, without reasonable and probable cause, of a bankruptcy petition against a trader, under the Bankruptcy. Act, 1869, gave rise to an action for malicious prosecution. On the general inability to found an action upon the malicious pursuit of a previous civil action, Bowen LJ also said this, vividly and in my view wisely (at pp 690 691): I do not say that if one travels into the past and looks through the cases cited to us, one will not find scattered observations and even scattered cases which seem to shew that in other days, under other systems of procedure and law, in which the consequences of actions were different from those of the present day, it was supposed that there might be some kind of action which, if it were brought maliciously and unreasonably, might subsequently give rise to an action for malicious prosecution. It is unnecessary to say that there could not be an action of that kind in the past, and it is unnecessary to say that there may not be such an action in the future, although it cannot be found at the present day. The counsel for the plaintiff company have argued this case with great ability; but they cannot point to a single instance since Westminster Hall began to be the seat of justice in which an ordinary action similar to the actions of the present day, has been considered to justify a subsequent action on the ground that it was brought maliciously and without reasonable and probable cause. And although every judge of the present day will be swift to do justice and slow to allow himself as to matters of justice to be encumbered with either precedents or technicalities, still every wise judge who sits to administer justice must feel the greatest respect for the wisdom of the past, and the wisdom of the past presents us with no decisive authority for the broad proposition in its entirety which the counsel for the plaintiff company have put forward. But although an action does not give rise to an action for malicious prosecution, inasmuch as it does not necessarily or naturally involve damage, there are legal proceedings which do necessarily and naturally involve that damage These passages highlight the point that civil actions cannot be said to have the same inevitable or necessary effect on trading or any other reputation as a winding up petition. They may be the occasion for serious allegations, which may be reported, but that is a feature of much civil litigation, not merely as a result of the way in which it is initiated and pursued, but as a result of evidence which may be given by independent factual and expert witnesses as well as parties. Civil actions are complex and developing phenomena, not infrequently exciting the interest of the press and public and leading ultimately to a resolution, by judgment, earlier settlement or sometimes withdrawal. This is so with whatever motive or prospect they may be pursued. The basic point which the Court of Appeal in Quartz Hill was concerned to underline was that an action to investigate the maliciousness or otherwise of a full blown prior civil action, which had been fought and resolved inter partes, was and is a quite different proposition to an action for malicious pursuit of an ex parte step taken maliciously with immediate effect on the other partys person, property or business. That distinction is still in my view a valid one. A judge of today would also be as sensible as a judge of Bowen LJs time to heed the fact that the wisdom of the past presents no decisive authority for the broad contrary proposition which counsel for Mr Willers puts forward. The second proposition for which Quartz Hill stands is that extra costs over and above those awarded in a prior civil action cannot on any view ground or be recovered in an action for malicious pursuit of that prior action. That proposition is supported by Sinclair v Eldred (1811), as well as by Johnson v Emerson (1871) to which the Court of Appeal referred. Although such extra costs might be quite reasonable as between solicitor and client, they were as between the parties to be regarded as the only costs which were necessary or were caused by or properly recoverable in respect of the prior litigation: per Brett MR and Bowen LJ at pp 682 and 690. There is an obvious policy imperative behind this rule. A court awarding costs in a civil action is entitled to have regard to all relevant matters, including the absence of any prospects of success and the state of mind in which it was pursued, when deciding what costs, and whether on an indemnity or standard basis; should be recoverable. To permit litigation about these issues after the close of an unsuccessful action would be to invite or risk re litigation of issues which were or could have been decided in the first action. And in so far as the costs assessed by a costs judge are not likely to or may not enable full recovery of all costs incurred, the reason is likely to be that the costs incurred were not in the eyes of the law necessary, reasonable or proportionate in the context of the issues. To allow a claim for their recovery in a separate action for malicious pursuit of the original action would in each of these cases run contrary to the general policy of the law regarding costs. Authority since Quartz Hill Pursuing the line of relevant authority, in Wiffen v Bailey and Romford Urban District Council [1915] 1 KB 600 the Court of Appeal held (albeit applying a view of scandal not necessarily coincident with that which Holt CJ intended in Savile v Roberts: see para 103 above) that non compliance with a Public Health Act 1875 notice did not necessarily and naturally involve damage to the defendants fair fame. Buckley LJ noted Bowen LJ as indicating in Quartz Hill that it is in very few cases that an action for malicious prosecution will lie where the matter is one of civil proceedings (p 606). It was accepted by counsel, and endorsed by Buckley and Phillimore LJJ (pp 607 and 610), that extra costs over and above the five guineas allowable by the Justices were not legal damages within the third head of damage recognised in Savile v Roberts. Over the years since Quartz Hill, there has been a miscellany of further instances in which a remedy has been recognised in respect of procedural measures taken against the person or property. The malicious arrest of a vessel was recognised as actionable in The Walter D Wallet [1893] P 202 and Varawa v Howard Smith Co Ltd (1911) 13 CLR 35, where Quartz Hill was cited with approval (by OConnor J at p 72); the case actually concerned the issue of a writ of capias for breach of an alleged contract for sale of a ship, pursuant to which writ the plaintiff had been arrested, imprisoned and held to bail. There is nothing in The Walter D Wallet or the other Admiralty arrest cases which Lord Clarke cites in his judgment contrary to the general principles and distinctions identified in Quartz Hill. The cases he cites do no more than illustrate that the malicious initiation of civil proceedings by wrongful arrest of a vessel can give rise to liability in similar fashion to the malicious institution of civil proceedings by wrongful arrest of a person. The malicious obtaining of a bench warrant, although supported by false testimony from the witness box, was likewise held actionable in Roy v Prior [1971] AC 470, where the analogy with malicious arrest on a criminal charge was drawn. Maliciously setting in train execution against property was accepted as actionable in Clissold v Cratchley [1910] 2 KB 244. Maliciously procuring the issue of a search warrant by a judge was held actionable in Gibbs v Rea [1998] AC 786, where it was held that such a claim had long been recognised though seldom successfully prosecuted (p 797B), and that it was akin to malicious prosecution which is a well established tort and to the less common tort of maliciously procuring an arrest: Roy v Prior. In Gregory v Portsmouth City Council [2000] 1 AC 419, 427G Lord Steyn said that: These instances may at first glance appear disparate but in a broad sense there is a common feature, namely the initial ex parte abuse of legal process with arguably immediate and perhaps irreversible damage to the reputation of the victim. In Gregory v Portsmouth City Council the House of Lords refused to extend the tort of malicious prosecution to the malicious commencement of disciplinary proceedings (involving in that case the removal of a local counsellor from various committees). But Lord Steyn, giving the only full speech, accepted at p 432F G that there was a stronger case for an extension of the tort to civil legal proceeding than to disciplinary proceedings. Both criminal and civil legal proceedings are covered by the same immunity. And as I have explained with reference to the potential damage of publicity about a civil action alleging fraud, the traditional explanation namely that in the case of civil proceedings the poison and the antidote are presented simultaneously, is no longer plausible. Nevertheless, for essentially practical reasons I am not persuaded that the general extension of the tort to civil proceedings has been shown to be necessary if one takes into account the protection afforded by other related torts. I am tolerably confident that any manifest injustices arising from groundless and damaging civil proceedings are either already adequately protected under other torts or are capable of being addressed by any necessary and desirable extensions of other torts. While the last comment could well be true in relation to disciplinary proceedings not enjoying absolute privilege of the sort actually before the House, it would not necessarily be so in relation to civil proceedings before a court which enjoy absolute privilege. Summary of the effect of the case law As I have indicated in para 95 above, the authorities on malicious prosecution prior to Crawford v Sagicor appear to me to fall into only a limited number of categories, in essence: prosecution of criminal (and, at least anciently, some ecclesiastical) i) proceedings, but not of disciplinary proceedings; ii) institution of coercive measures instituted ex parte (though with the assistance of, or subject to some form of adjudication by, legal authorities) under civil procedures available leading to the arrest, seizure or search of the plaintiffs person or property or scandalisation of his fair fame; iii) petitions for bankruptcy or insolvency, even though the grant of the petition is subject to some form of adjudication. In claims for malicious prosecution within point (i), ie relating to a criminal prosecution, damages could include costs which the plaintiff incurred in successfully defending the malicious prosecution. But in the case of claims within points (ii) and (iii), ie in relation to the pursuit of prior civil proceedings, a plaintiff could, under the rules recognised in and expounded after Savile v Roberts recover damages for injury to person or reputation (in cases of scandal), but could not recover any extra costs over and above those recoverable inter partes in the original action. In Crawford v Sagicor, the debate between Lord Wilson in the majority and Lord Sumption in the minority appeared at times to focus on whether the tort of malicious prosecution had or had not applied to civil proceedings: compare eg paras 42 and 140. But, in reality, the position is more nuanced as appears both by their detailed discussion and by the analysis above of the case law. There is a range of cases in which the ex parte misuse of civil procedures, with immediate effects on the other partys person, property or business, has grounded a tortious claim for malicious prosecution. But it has never been accepted that there is a general right to claim damages for the malicious pursuit of a prior civil action, which has been decided in the original defendants favour by judgment, settlement or abandonment. Policy The question is whether that position should as a matter of policy be maintained. I have already indicated some factors which suggest that it should be. But ultimately it is necessary to review the issues of policy more generally. At this point, I can return gratefully to the discussion in Crawford v Sagicor, in particular in the judgments of Lord Wilson and Lord Sumption, as well as to Lord Neubergers judgment on the present appeal which I have had the benefit of seeing before writing this part of my own judgment. As will appear, I myself see the position in similar terms to Lord Neuberger and Lord Sumption. But I add this. To my mind, one thing is missing from the judgments so far. That is a discussion of the nature of the heads, or sorts, of damage which might be recoverable, if such an action were to be admissible. As Quartz Hill made clear, there can be a close relationship between this issue and the question whether any such action is admissible. According to the Statement of Facts and Issues, it is to be assumed that Mr Willers has suffered damage (1) to his reputation, (2) to his health, (3) in the form of lost earnings, (4) in the form of expenses incurred but not fully recovered, ie his costs of defending the Langstone action net of the costs awarded in it by Newey J on the standard basis. But there is no further information or assumption about the nature or causation of these heads of damage. And we have heard no submissions on them. It is impossible to form any view as to whether all or any of them might be said to have followed necessarily or naturally from the allegations made in the allegedly malicious action brought by Langstone Leisure Ltd against Mr Willers. Nevertheless, I regret that it has not been possible, on the facts being assumed and on the way in which the case has been presented, to give any close examination to the sorts of damage that might be recoverable under any tort of malicious prosecution that might otherwise exist. I shall nevertheless say some words on this. Taking first however the general question of policy, I do not consider that the law should recognise the suggested general tort. The first point I would make is that it is to my mind unconvincing to suggest that, because there is a tort of malicious prosecution of criminal proceedings, therefore it is logical or sensible that there should be a tort of malicious prosecution of civil proceedings. Not only does that ignore the teaching of history, showing courts studiously avoiding any such parallel. It also ignores the fact that, in an era when private prosecutions have largely disappeared, the tort of malicious prosecution of criminal proceedings is virtually extinct. To create a tort of malicious prosecution of civil proceedings might in these circumstances be thought to come close to necromancy. Second, the recognition of a general tort in respect of civil proceedings would be carrying the law into uncharted waters, inviting fresh litigation about prior litigation, the soundness of its basis, its motivation and its consequences. The basis, motivation and consequences of individual ex parte steps, having immediate effects at the outset of litigation, are likely to be relatively easy to identify. The exact opposite is likely to be the position in the context of prior litigation which has extended quite probably over years. Further, there is (and could logically be) nothing in the proposed extension of the tort of malicious prosecution, to limit it to circumstances where the claim was at the outset unfounded or malicious. It would be open to a defendant throughout the course of civil proceedings to tax the claimant with the emergence of new evidence, or the suggested failure of a witness to come up to proof, and to suggest that from then on the claim must be regarded as unfounded and could only be being pursued for malicious reasons. Logically, as Lord Kerr recognised in Crawford v Sagicor, paras 111 113, it must also be open to a claimant to tax a defendant with pursuing a malicious defence. Logically again, any such general tort should extend to any individual application or step in the course of a civil action, which could be said to be unfounded and maliciously motivated, eg to gain time or avoid execution, rather than for genuine litigational purposes. Indeed, logically in my view, once the parties are exposed to claims for maliciously pursuing their respective cases, there is no real reason why witnesses should not likewise be exposed, whether as co conspirators or even as persons having their own individual malicious axe to grind by giving unfounded evidence. Equally, as Lord Neuberger notes (para 162), there seems to be no reason why the extended tort should not extend to family court, domestic tribunal or arbitral proceedings. I do not see how we can avoid considering these implications of the suggested extension, when we decide the present appeal. It is no answer to say that they do not arise for immediate decision. If on the face of it they follow logically from the suggested extension, we must recognise them. Lord Wilson was unperturbed by any idea that claimants might feel exposed to off putting risks or that litigants might misuse the tort of malicious prosecution to their advantage. He suggested in paras 72(a)(i) and (e)(ii) of his judgment in Crawford v Sagicor that the court should have before it empirical evidence before giving weight to any suggestion that litigants might be put off bringing civil actions by threats of malicious prosecution or that actions for malicious prosecution might become pervasive and contaminate the system. In my opinion, such evidence could hardly be expected, when such actions have for long been seen as impossible. In any event, the formation of legal policy does not normally depend on statistics, but rather on judges collective experience of litigation and litigants and, more particularly here, their appreciation of the risks involved in litigation and the risks of its misuse. Judges have enough experience of disingenuous behaviour and procedural shenanigans on the part of litigants to form a view of sound policy in this area. Further, there already exists a clear recognition of the need that civil actions should in general be litigated without any risk of one or another party, or a third party, subsequently being able to go over and claim in respect of anything said or done in such actions. That is the absence of any duty of care owed by one litigant to another, and the general immunity which attaches to what is said or done in court by litigants or witnesses: see Lord Neubergers first and second points in paras 157 and 158 of his judgment on this appeal. A similar recognition informs the House of Lords conclusion in Manifest Shipping Co Ltd v Uni Polaris Insurance Co Ltd [2001] UKHL 1; [2003] 1 AC 469, paras 73 78 that, once parties are in litigation, their conduct is subject to the rules governing litigation, which supersede the application of (in that case) any prior duty of good faith. I need not go further into the reasons why I consider the proposed extension to be unjustified and unwise. I am content simply to say that they have been fully and to my mind powerfully set out in Crawford v Sagicor by Lord Sumption in the four points he made at paras 145 148, supplemented by those made by Lord Neuberger on the basis of United States law and experience in paras 192 196, and on the present appeal by Lord Neuberger in his first ten and final points in paras 157 to 167 and 169. However, I would add that I am also troubled by the role assigned to the concept of malice in the expanded tort for which Mr Willers contends, and reluctant on that ground also to undertake the proposed expansion. The concept is key. The pursuit of an unfounded claim, defence or other step during civil proceedings has never been actionable in itself. Rather, the remedies available for such behaviour include striking out, judgment or costs or, where an undertaking is given or required as a condition of for example an injunction, enforcement of the undertaking. The additional feature of malice is, as Lord Sumption observes in Crawford v Sagicor (para 133 et seq), not as a general rule relevant to tortious (or one may add contractual) liability. One should hesitate before extending its role, for reasons which I will indicate. The starting point is to ask what malice is said to mean in the context of malicious prosecution. This is illustrated by Crawford v Sagicor itself. The facts were that (a) it was unreasonable for Mr Delessio, acting for Sagicor, to believe that Mr Paterson had defrauded Sagicor, but (b) he did nonetheless believe this and (c) his dominant motive in alleging fraud against Mr Paterson was his strong dislike and resentment of Mr Paterson, his wish to gain revenge on him and his obsessive determination to destroy him professionally. These factors were sufficient to make Sagicor liable: see paras 32 and 80, per Lord Wilson. Two points arise from this. First, liability for malicious pursuit of civil proceedings can arise from an unfounded claim, if the claimants dominant motive is to injure, even if he believes the claim to be well founded and intends to injure the defendant by pursuing it to judgment. I would for my part better understand and be readier to accept a concept of malicious prosecution which depended on actual appreciation by the original claimant that the original claim was unfounded. The concept as advanced, and as the case law suggests, opens the door to wider claims, to wider exposure and to wider risks of misuse. Second, the concept as advanced also opens the door to future litigation about the meaning of dominant motive. This was discussed and left unanswered in the very different context of directors duties to act for a proper purpose: see Eclairs Group Ltd v JKX Oil & Gas plc [2015] UKSC 71; [2015] Bus LR 1345. Lord Sumption there considered that but for causation was the answer, whereas I thought that the principal or primary purpose in mind would be likely to be easier to identify, as well as more consistent with such guidance as authority afforded. The sorts of damage recoverable I turn to the sorts of damages that might be contemplated when considering the possibility of an action for malicious pursuit of a prior civil action. As indicated above, although much weight is put by those representing Mr Willers on Savile v Roberts, the submissions before the Supreme Court have not addressed this aspect, which was a significant element in Holt CJs judgment. It was also central to the discussion in Quartz Hill. It seems to me potentially to represent a whole further area for litigation, very likely at the appellate level, though one which it is impossible for us to resolve in any detail without having heard further submissions about it. It seems clear, however, that what is contended is that, once proceedings are found to have been maliciously pursued, all adverse consequences of their pursuit, in terms of damage to reputation, earnings, health and extra costs, are recoverable without further enquiry into their precise nature or causation. I will comment briefly on each of these sorts of damage. As regards injury to reputation, all that can be said is that it will be necessary to revisit the area on which Diplock J touched in Berry v British Transport Commission [1961] 1 QB 149, pp 163 165 (see para 104 above) and then perhaps, having decided what is the correct or the appropriate modern understanding of a scandalous allegation, to consider whether the allegations of breach of common law and statutory duties made against Mr Willers by Langstone Leisure Ltd in action HC10C01760 fell necessarily and naturally within this concept. It seems at least clear from Bowen LJs judgment in Quartz Hill that he would not have contemplated that breaches of this nature could constitute recoverable damage or ground an action for malicious pursuit of a prior civil action: see para 120 above. The damage alleged to health (or by way of distress) lies some way from the damage to the person by way of arrest or imprisonment in issue in the case law discussed above. Both the nature of the damage and its causation are presently unparticularised. Once these are known, consideration will need to be given to whether the claim to recover damages in respect of them is subject to any special rule or simply to ordinary tortious rules. The claim for damage to earnings is put on the basis that it was impossible for Mr Willers to find alternative employment while Langstone Leisure Ltds claims of breach of duty against him were unresolved. He claims 500,000 in respect of the period 27 August 2009 to 28 March 2013. Sinclair v Eldred (1811) 4 Taunt 7 stands as a precedent for the recovery of loss of earnings during a period of unfounded and maliciously caused imprisonment. Mr Willers claim for loss of earnings is not related to imprisonment, but rather, it seems likely, to the alleged damage to his reputation which Langstone Leisure Ltds proceedings allegedly caused. Consideration will need to be given to whether damage of this nature is recoverable at all, whether as general damages on account of the scandalous or other nature of the original malicious action under Savile v Roberts or as special damages on any other principle. Finally, there is Mr Willers claim to recover extra costs amounting to 2,199,966.32, over and above the 1,700,582.20 which he recovered in the proceedings brought by Langstone Leisure Ltd. There is a strong line of case law over the last 200 years holding as a rule that extra costs of this nature are as a matter of principle irrecoverable as between the parties to the original proceedings: Sinclair v Eldred, Cotterell v Jones, Quartz Hill and Wiffen v Bailey (paras 110, 111, 124 and 125 above). This line can also be traced back to Holt CJs reasoning in Savile v Roberts and to Parker CJs in Jones v Givin (paras 99 and 105 above). This line extends back before and continues after Chapman v Pickersgill and, for the reasons I have given in para 107 above, Lord Mansfield CJs approach to the bond for 200 covering all loss in that case does not in my view impinge on it or on the rule it establishes. The rule must in my opinion also apply in a case like the present where Mr Gubay is said to have been the effective instigator of the proceedings brought by Langstone Leisure Ltd (and indeed to have owned as well as controlled that company). Extra costs may in some circumstances be payable to or recoverable from a true third party, eg payable by a party to its solicitor or recoverable under an insurance or other contract. But a claim for malicious pursuit of prior proceedings against those responsible for their instigation is in effect a claim between the parties to the prior proceedings. For the reasons given in the line of authority to which I have referred, and in my discussion of it (in particular in para 124 above), the rule applies and I agree with it. Conclusion It follows from all the above that I would dismiss this appeal. LORD NEUBERGER: (dissenting) The tort of malicious prosecution in the civil context The question whether there should be a cause of action in malicious prosecution in respect of civil proceedings has recently been considered by the Judicial Committee of the Privy Council in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2014] AC 366, and it is now being addressed by the Supreme Court. In each case, the answer is in the affirmative, albeit by a bare majority. As in Crawford v Sagicor, I am in the minority. Although I agree with the judgment of Lord Mance, I propose to summarise my reasons for concluding that the answer should be in the negative, because, no doubt partly thanks to the judgments in Crawford v Sagicor, we have been given a fuller analysis of the history and implications of this tort than we had in the Judicial Committee. So far as the history of the tort of malicious prosecution in civil proceedings is concerned, there was considerable debate as to the effect of the judgments in various cases, starting with the judgment of Wray CJ in Bulwer v Smith (1583) 4 Leon 52, including the much reported judgment of Holt CJ in Savile v Roberts (1698) reported variously in 1 Ld Raym 374, 3 Salk 17, 3 Ld Raym 264, 1 Salk 13, 12 Mod 208, Carthew 416, 5 Mod 405, and ending with the judgment of Campbell CJ in Churchill v Siggers (1854) 3 E & B 929. The appellants argument is that those judgments demonstrate that the tort of malicious prosecution extended to all civil proceedings which had been maliciously and baselessly brought against the potential claimant. The respondents argument is that those cases support the view that, although the tort did not generally apply to civil proceedings, there were exceptions which were limited to cases where the potential claimant loses his liberty or his property as a result of a malicious and baseless ex parte application or the like, and, as legal procedures have developed, those exceptions have largely fallen away. The decision of Sir Francis Jeune P in The Walter D Wallet [1893] P 202 is a relatively late example of a successful malicious prosecution claim in such circumstances (in that case, the malicious arrest of a ship). These old judgments, at least in the form in which they are reported, (i) are sometimes hard to interpret, (ii) often refer to, and may depend on, procedures and rules which have long since ceased to exist, (iii) at least in some cases, are not entirely reliable, as is apparent from differing reports of the same case, and (iv) do not, on any view, speak with one voice. Accordingly, it is perhaps understandable that there is disagreement as to their precise effect in terms of the overall legal position. Nonetheless, having read Lord Mances full and informative analysis in paras 96 110 above, which is supported by that of Lord Sumption in Crawford v Sagicor, I am satisfied that the respondents analysis is correct. Apparently general remarks, such as one finds in the judgment of Lord Campbell CJ in Churchill at p 937 are not, on close analysis, as clear as they might at first appear to a modern reader. He said [t]o put in force the process of law maliciously and without any reasonable or probable cause is wrongful, and the reference to the process of the law seems to me to be to be at least capable of referring to the execution of ex parte legal process, such as detention the claimants person or his assets, attachment and the like. In any event, broad general statements about the law, even by highly respected judges, are by no means always a reliable guide to the precise boundaries of a cause of action, when the extent of those boundaries is not in issue in the case concerned. In any case, any judicial decision is authority for what it decides, not for dicta which plainly go beyond the decision. In addition to the actual contents of those judgments, two factors persuade me that the respondents contention as to the effect of these old judgments is correct. First, there is not a single reported case of a successful claim in malicious prosecution which is inconsistent with the respondents much more limited version of the tort. If the much wider tort, as contended for by the appellant, existed, one would have expected there to have been a reported case of a claim based on such a tort succeeding, or at least having been brought, especially bearing in mind the many law reporters in Westminster Hall between the 17th and 19th centuries. Secondly, in Quartz Hill Consolidated Gold Mining Co v Eyre (1883) 11 QBD 674, both Sir Baliol Brett MR at pp 682 685 and Bowen LJ at pp 688 691 (where, as Lord Mance points out at para 122 above, he discusses, rather more fully, the point made in para 153 above) clearly took the view that the tort of malicious prosecution in civil proceedings had the more limited character contended for by the respondents. In addition, I note from p 677 that the first instance judge was Stephen J, who held that there was no cause of action, and that his decision had been upheld by Pollock B and Manisty J. It is perfectly true that in that case it was not argued that the tort was as wide as the appellant now suggests, and that the issue was whether the malicious and unfounded presentation of a winding up petition (whose immediate effect was then more drastic than under the current state of the law) was to be treated as within the class of ex parte exceptions to the normal rule that there was no general tort of malicious prosecution in civil cases. Not only is that of itself worthy of note, but it appears to me to be little short of fanciful to imagine that all those five distinguished Judges would have misunderstood the scope of the tort of malicious prosecution. All of them had been in practice in the 1860s, well before the fundamental procedural changes effect in the 1870s, and Sir Baliol Brett, Pollock B and Manisty J had all been in practice since the 1840s. Further (at least in the Court of Appeal), they referred to a number of the previous authorities in their judgments. Of course, the fact that the boundaries of the tort were heavily circumscribed in the past does not mean that this court is bound to hold that they should remain circumscribed. However, the fact that the boundaries of the tort have (in my view) always been heavily circumscribed and have (on any view) been treated by the courts as heavily circumscribed since 1883, places a tolerably heavy burden on the appellants argument that those boundaries should, in effect, be removed, or at least substantially widened. A defendant to a malicious groundless civil claim will suffer stress and often will suffer financially in general terms, and many peoples immediate reaction on hearing of what happened in this case (at least as pleaded by the appellant) would be that the malicious claimant should compensate him for any mental distress and other damage which he has suffered as a consequence. However, to my mind, there are powerful reasons, some of which were identified by Lord Sumption in Crawford v Sagicor, against confirming (to use a neutral verb) the existence of a tort such as that contended for by the appellant. Some of those reasons are based on principle and some are based on practical considerations. The first reason, referred to in Crawford v Sagicor, para 124, is that the existence of the tort would be inconsistent with the well established general rule that a litigant owes no duty to his opponent in the conduct of civil litigation, a proposition which is supported by two recent House of Lords decisions, Customs and Excise Comrs v Barclays Bank plc [2007] 1 AC 181, and Jain v Trent Strategic Health Authority [2009] AC 853. In the latter case, at para 35, Lord Scott, who gave the only reasoned judgment, said that, where the defendants slipshod conduct of an investigation and prosecution led to a wholly unjust order which caused the claimant substantial damage, a remedy for the damage cannot be obtained via the imposition on the opposing party of a common law duty of care, but that the solution must depend on the control of the litigation by the court or tribunal in charge of it. The second reason, discussed in Crawford v Sagicor, para 125, is that the existence of the tort would be inconsistent with the equally well established rule that even a perjuring witness in court proceedings is absolutely immune from civil liability for a recent example see Darker v Chief Constable of the West Midlands Police [2001] 1 AC 435, 445 446, 460 461 and 464. As was confirmed in Taylor v Director of the Serious Fraud Office [1999] 2 AC 177, this principle also applies to a potential witness giving a statement. While the decision in Jones v Kaney [2011] 2 AC 398 can be said to have made a slight inroad into this principle, the Supreme Court actually affirmed the general rule (see paras 16 17 and 105). More importantly, the effect of Jones was not to create a new tort or even a new duty of care; it was simply to remove an existing limitation on an existing duty of care: the result of the decision was that an expert witnesss duty to her client did not stop when she came to give evidence in court. The third reason, identified in Crawford v Sagicor, para 145, is that the original justification for the tort in the criminal context does not apply in the ordinary civil context. As Lord Sumption put it, the tort of malicious prosecution was developed as a tool for constraining the arbitrary exercise of the powers of public prosecuting authorities or private persons exercising corresponding functions against the claimant in subsequent potential malicious prosecution proceedings. In the non criminal context this was limited to cases where the court was invited by the potential defendant to exercise ex parte or interlocutory powers which resulted in the claimant losing his liberty or property without the prior opportunity properly to defend himself. That is no basis for extending it to civil proceedings generally. It is perhaps worth adding that the courts have developed a different and more wide ranging power in this context, by requiring, almost as a matter of course in most cases, a cross undertaking in damages to be given by a party who obtains an interlocutory order. In other words, rather than limiting damages claims by victims of wrongly granted ex parte or interlocutory orders to maliciously brought applications leading to loss of liberty or of property, the law grants an almost automatic right to such victims, irrespective of the nature of the loss or of the presence of malice. That seems to me to render it all the more peculiar to resurrect today the tort of malicious prosecution in relation to civil claims generally. The fourth reason, mentioned in Crawford v Sagicor para 146, is that within the past twenty years, in a judgment given by Lord Steyn, the House of Lords in Gregory v Portsmouth City Council [2000] AC 419 made it clear in obiter but very carefully considered remarks that the tort should not be extended beyond criminal proceedings. The contrary view had been very fully expressed by Schiemann LJ in the Court of Appeal, and Lord Steyns detailed discussion and clear conclusion should, in the absence of very telling reasons to the contrary, settle the matter. The fifth reason, as described in Crawford v Sagicor, para 147, is that the precise ambit of the tort, if it extends to civil proceedings of a private nature will be both uncertain and potentially very wide. It appears that it would extend to a malicious defence (see per Lord Kerr in Crawford v Sagicor, paras 111 113), and it may be hard to justify why it should not extend to malicious applications or allegations in proceedings which would otherwise not be malicious. And, as Lord Mance says in para 132 above, the tort could apply at different stages of proceedings, so that a claim which was not malicious initially could arguably become malicious as things change. In particular, as he points out at para 133 above, there are likely to be arguments whether proceedings, which were initially unexceptionable, have become malicious because they are being continued for tactical or costs reasons. Similarly, there could easily be arguments as to whether it could apply to family court proceedings, domestic tribunal proceedings, and arbitrations. As I observed in Crawford v Sagicor, para 194, the present position is clear and simple, and in the field of law clarity and simplicity are at a premium. The sixth reason, adumbrated in Crawford v Sagicor, para 148, arises from the practical consequences in terms of the risk of satellite litigation. There are several recent examples where the House of Lords has had cause to express concern as to how well intentioned changes in the law have spawned such undesirable results eg an industry of satellite litigation in Grovit v Doctor [1997] 1 WLR 640, a new and costly form of satellite litigation in Medcalf v Mardell [2003] 1 AC 120, para 24, and a mass of satellite litigation in Three Rivers District Council v Bank of England [2005] 1 AC 610, para 65. Seventhly, it seems to me that confirmation of the existence of the tort could well have unanticipated knock on effects in other areas of law. For instance, in relation to the law of privilege. Lord Reed pointed out that in Scotland, where such a tort is recognised, the law of privilege in relation to defamation claims is different, and it may need to be amended in this jurisdiction to accommodate the tort, with unpredictable consequences. The unforeseen problems which follow when a court seeks to change the law of tort to do what it sees as justice in particular cases are, as Lord Reed says in para 184 below, well illustrated by the problems thrown up in Zurich Insurance plc UK Branch v International Energy Group Ltd v Zurich Insurance plc UK Branch (Association of British Insurers intervening) [2015] UKSC 33; [2015] 2 AC 509 and the cases cited therein. Eighthly, problems could arise for a defendant to a malicious prosecution claim, who wished to invoke his right to privilege in relation to any document in connection with the allegedly malicious proceedings. This problem would not arise in relation to a claim based on the ruling in Jones v Kaney, as the privilege would be that of the claimant, who would presumably be waiving the privilege in order to bring his claim in the first place. Ninthly, the existence of the tort could have a chilling effect on the bringing, prosecuting or defending of civil proceedings. The notion that a person should not have to face malicious proceedings brought by a ruthless party is said to justify the existence of this tort; but the existence of the tort severely risks creating what would be at least an equally undesirable new weapon in the hands of a ruthless party, namely intimidation through the unjustified, but worrying, threat of a malicious prosecution claim to deter bona fide proceedings. In other words, the creation of a remedy for one wrong is likely to lead to another wrong. Tenthly, it is almost inevitable that the cost and time of some proceedings will be increased as a party manoeuvres in one way or another with a view to setting up a malicious prosecution claim if the other partys case fails. Eleventhly, there is a particular irony that we are creating or affirming the existence of this tort at a time when the courts of England and Wales have more powers than ever before to control litigation and make peremptory orders for costs. Twelfthly, as I discussed in Crawford v Sagicor, paras 170 175 and 181 190, unlike courts in England and Wales, courts in the United States of America have considerable experience of claims for malicious prosecution in the civil field. The state courts are pretty evenly divided as to the existence of the wide tort contended for by the appellant. Many state courts which accept the existence of the wide tort justify departing from what they understand to be the law in England on the basis that [t]he English rule is that generally the loser must pay the winners attorneys fees and so an English plaintiff who brings a frivolous suit does so as the peril of paying his adversarys litigation expenses (to quote Ciparick J in Engel v CBS Inc (1999) 711 NE 2d 626, 629). Thus, even though the costs sanction which applies to litigation in this jurisdiction is largely absent in the United States, a substantial proportion of the courts in that jurisdiction have set their face against the existence of this tort, and many of those that accept it justify their view by reference to the absence of the costs sanction which is routinely available in our courts. In addition to these reasons for not approving the existence of the tort as proposed by the appellant, there are the two rather fundamental points made by Lord Mance in paras 136 139 and 140 144 above, which appear to me to be well founded. Thus, I consider that there could be real problems involved both in identifying what constitutes malice and in deciding what types of loss and damage should be recoverable in connection with claims based on the proposed tort. Finally, in this connection, it seems to me that the risks of according a right of action to those who suffer as a result of wrong doing in the context of litigation are very well illustrated by the unfortunate experience of the litigation prompted by Parliaments decision to extend the right of litigants to seek wasted costs orders against barristers in England and Wales through section 4 of the Courts and Legal Services Act 1990. In Ridehalgh v Horsefield [1994] Ch 205, 239, Lord Bingham MR in the Court of Appeal, after referring to the fact that the number and value of wasted costs orders applied for, and the costs of litigating them, have risen sharply tried to stem the flow of such claims. Subsequently, in the House of Lords case of Medcalf v Mardell, para 13, Lord Bingham referred to the fact that the clear warnings given in [Ridehalgh] have not proved sufficient to deter parties from incurring large and disproportionate sums of costs in pursuing protracted claims for wasted costs, many of which have proved unsuccessful. In Ridehalgh, the Court of Appeal also tried to curtail the expense involved in wasted costs hearings by saying that such hearings should be measured in hours not days (a view repeated in Medcalf). That led to courts refusing to hear wasted costs applications when they became disproportionate see eg Regent Leisuretime Ltd v Skerrett [2006] EWCA Civ 1032. Because wasted costs applications are procedural and ultimately discretionary, it is far easier for the court to control the proceedings than it would be in relation to a malicious prosecution proceedings, where the claim would be based on a substantive legal right (although, as mentioned in para 168 above, the courts generally have greater powers of case management than they did in the past). The judgments in Ridehalgh v Horsefield at pp 233 234 and in Medcalf v Mardell at paras 23 24, 40 and 61 also demonstrate the problems thrown up by the law of privilege in relation to claims founded on the conduct of litigation. In addition, Ridehalgh v Horsefield at pp 233 234 support the concerns I have expressed about the risk of the tort giving rise to intimidation to discourage the bringing of valid claims. For these reasons, I would have held that a tort such as that argued for by the appellants should not be recognised in the courts of England and Wales, and I would have dismissed the appeal. LORD SUMPTION: (dissenting) This appeal has been argued with conspicuous learning and skill on both sides, but the result has been to confirm me in the view which I expressed in Crawford Adjusters (Cayman) Ltd v Sagicor [2014] AC 366, that the recognition of a tort of maliciously prosecuting civil proceedings is unwarranted by authority, unjustified in principle and undesirable in practice. The only exception is the limited category of cases in which the coercive powers of the courts are invoked ex parte at the suit of the former claimant, without any process of adjudication. This exception is less significant today than it was historically, because modern forensic procedure offers less scope for the exercise of this kind of power. The only notable survivor of the panoply of procedures that once existed for the exercise of coercive powers over person or property without judicial intervention is the power to procure a warrant for the arrest of a ship, a context in which the exception is still germane and valuable. But whatever its limits, the exception is at least certain and rationally founded upon the special features of such cases. It has no application in this case any more than it did in Crawford v Sagicor. Since I expressed my reasons at length in that case, and I entirely agree with the judgments of Lord Neuberger and Lord Mance in this one, I shall limit myself to some brief general observations. The appellants are contending for a tort of general application, which was thought to have received its quietus from the Court of Appeal more than a century ago in Quartz Hill Consolidated Gold Mining Co v Eyre 11 QBD 674 and has never once been successfully invoked in the period of some five centuries during which the question has arisen. The alleged tort can therefore fairly be described as novel, whatever ones interpretation of the language of Holt CJ in Savile v Roberts (1698) 1 Ld Raym 374. Novelty as such is of course no bar to the recognition of a rule of law. But in a system of judge made customary law, judges have always accepted limitations on their ability to recognise new bases of non consensual liability. Two limitations are particularly germane in this case, neither of which is consistent with recognising the wider tort for which the appellant are arguing. The first is that where the courts develop the law, they must do so coherently. This means, among other things, that the development must be consistent with other, cognate principles of law, whether statutory or judge made. The recognition of a general liability for maliciously prosecuting civil proceedings fails that test. It circumvents the careful and principled limits that the courts have imposed on the tort of abuse of civil process. It cuts across the immunities which the law has always recognised for things said and done in the course of legal proceedings. It introduces malice as an element of tortious liability contrary to the long standing principle of the law of tort that malice is irrelevant. Logically, it would entitle litigants to recover as of right costs which by statute are a matter of discretion. And unless we are to overrule not just the reasoning but the decision of the House of Lords in Gregory v Portsmouth City Council [2000] 1 AC 419, it would introduce an unjustifiable distinction between civil proceedings sounding in private law and those sounding in public law such as the disciplinary proceedings in issue in that case. The recognition of the wider basis of liability urged by the appellant would make the law relating to the conduct of legal proceedings incoherent in ways that cannot simply be brushed aside or left to other cases to sort out. The second limitation is that the proposed development of the law should be warranted by current values and current social conditions. Unless the law is to be reinvented on a case by case basis, something must generally have changed to make appropriate that which was previously rejected. The appellants arguments fail that test also. The courts have far more extensive powers today than they did a century and a half ago to prevent abuse of their procedures, and the closer judicial supervision of the interlocutory stages of litigation makes it easier to exercise them. Of course, these powers will not be enough to identify in time the more determined and skilful abuses, but that is part of the price to be paid for access to justice. The reluctance of the courts to accept rules of law justifying secondary or satellite litigation is born of long standing judicial experience of the incidents of litigation and the ways of litigants. That experience is as relevant today as it has ever been. The volume of litigation has increased exponentially in the last 70 years. Its tendency to generate persistence, obsession and rancour is as great as ever. The hazards of losing, already considerable in terms of costs, must inevitably be greater if one adds the threat of secondary litigation for prosecuting the earlier action in the first place. Doubtless the great majority of secondary actions will fail, but that makes it even less satisfactory to enlarge the opportunities for bringing them. On the status as authority of the judgments of the Privy Council, I have nothing to add to the judgment of Lord Neuberger, with which I entirely agree. I would dismiss this appeal. LORD REED: (dissenting) I agree with the judgments of Lord Neuberger and Lord Mance, and wish to add only three observations. The first concerns the extent to which the discussion in the present appeal has focused on the interpretation of law reports from the 16th to the 18th centuries. It is often valuable to understand how the modern law has come to be shaped as it is, especially where, as in the present case, the court is faced with an argument that it contains an anomaly. The judgment of Lord Sumption in Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17; [2014] AC 366, and that of Lord Mance in the present case, are therefore valuable in explaining how the modern law came about, and why criminal prosecutions and certain ex parte civil proceedings have been treated differently from other civil proceedings. But the significance of the historical inquiry to the courts decision should not be exaggerated. My own conclusion in the present case would have been the same even if a judgment had been discovered which unequivocally demonstrated that a right of action had been held to lie 300 years ago for the malicious prosecution of a civil suit inter partes. That is because, in the first place, the question raised by the appeal has to be answered in the context of the modern law of tort and modern civil procedure, rather than the corresponding law of 300 years ago. More generally, the court must not lose sight of the fact that it is deciding the law for the 21st century. We have to develop a body of law which is well suited to the conditions of the present day, looking back to the achievements of our predecessors, and also, often more pertinently, to those of our contemporaries in other jurisdictions (as Lord Neuberger did in Crawford, in his consideration of the US authorities). As Maitland observed, every age should be the mistress of its own law (The making of the German Civil Code, in Fisher (ed), The Collected Papers of Frederic William Maitland, Vol III, p 487 (1911)). The great judges of the past, such as Holt and Mansfield, would have been the first to recognise that. The second point also concerns the use made of the reports of judgments given several centuries ago. As any modern judge knows, the citation of something he has said in a judgment, taken out of its context, is liable to be misleading. The same is surely true of the judgments of our predecessors. The court must therefore have a secure understanding of the factual and legal context of those judgments in order to be able to determine the intended scope of any judicial pronouncements. It is often difficult, however, to attain such an understanding of the judgments of the distant past. Difficulties arising from an unfamiliar procedural context, and an equally unfamiliar remedy centred approach to legal thinking, are liable to be exacerbated by the variable quality of the reports themselves, and the variations between reports of the same case. It is unsurprising that, in the present case, notwithstanding the careful research carried out by counsel and members of the court, the authorities are nevertheless interpreted differently. Thirdly, major steps in the development of the common law should not be taken without careful consideration of the implications, however much sympathy one may feel for the particular claimant. The confusion resulting from the development of the law in order to afford justice to the victims of mesothelioma, in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32, should have taught us that lesson. In the present case, the basic problem facing the appellant, so far as his claim is based on damage to his reputation caused by allegations made against him in earlier civil proceedings, is the absolute privilege accorded by the modern law of defamation. The solution favoured by the majority results in the circumvention of that problem by the creation or extension of another tort. The question where that leaves the law of defamation, and the other issues identified by Lord Mance, appear to me to require fuller consideration than they have received. Sooner or later, this court will have to address them. |
This appeal raises a well formulated issue as to the construction of section 21 of the Limitation Act 1980, and a rather more diffuse question as to the meaning and application of section 32 of the Act, in both cases in relation to what is assumed to have been (although this is hotly contested in the proceedings) an unlawful distribution in specie by the Claimant company of its shareholding in a trading subsidiary by the directors of the Claimant (including the two defendants), six years and three days before the issue of the claim form in these proceedings. The Defendants sought summary judgment dismissing the claim on the ground that it was statute barred, and succeeded at first instance, before HHJ Hodge QC, sitting as a judge of the High Court. The Court of Appeal (Arden, Tomlinson and David Richards LJJ) held, first, that time did not run against the Claimant company because of section 21(1)(b) of the Act and that, in any event, there was a triable issue as to whether, within the meaning of section 32 of the Act, there had been deliberate concealment of the facts involved in the breach of duty constituted by the unlawful distribution. Whatever the conclusion of this court as to the construction of sections 21 and 32, there could not now be summary judgment for the Defendant directors. This is because the Claimant has since amended its claim to include the allegation that the claimed unlawful distribution amounted to a fraudulent breach of trust to which the Defendants were party, within the meaning of section 21(1)(a). Nonetheless the issue as to the meaning of section 21(1)(b) is of sufficient importance to have made it appropriate for this appeal (for which permission had been sought prior to the amendment pleading fraud) to proceed. The Assumed Facts At all material times before October 2007, the Claimant was a holding company with a number of trading subsidiaries. The subsidiaries operated in two business areas, the supply and construction of conservatories and a combined heat and power business. Two trading subsidiaries in the conservatory business are referred to in the particulars of claim, K2 Conservatory Systems Ltd (K2) and Cestrum Conservatories Ltd (Cestcon). The combined heat and power business was carried on by Vital Energi Utilities Ltd (Vital). The directors of the Claimant were at all material times the Defendants, Mr and Mrs Fielding, and three other executive directors, Mr Beckett, Mr Whitelock and Mr Kavanagh. The issued share capital of the Claimant comprised three classes of shares: 50,000 A ordinary shares, 50,000 B ordinary shares, and 50,000 D ordinary shares. The A and B ordinary shares were held by Mr and Mrs Fielding in equal parts, while the D ordinary shares were held by Mr Beckett, Mr Whitelock and The Burnden Group Trustee Limited (TBGT), the trustee of an employee share scheme. The controlling shareholders were Mr and Mrs Fielding. In or about July 2007, Scottish & Southern Energy plc (SSE) offered to purchase a 30% shareholding in Vital for 6m, subject to a significant number of conditions including, in particular, the complete separation of Vital from the conservatory business. In October 2007, the following pre arranged transactions were carried out: a. On 4 October 2007, the shareholders of the Claimant exchanged their shares for shares in a new holding company for the group, BHU Holdings Ltd (BHUH), with the shareholdings in that company precisely mirroring the former shareholdings in the Claimant. b. On 12 October 2007, a distribution in specie of the Claimants shareholding in Vital was approved by a unanimous resolution of the directors of the Claimant and by a resolution in writing of BHUH as the sole member of the Claimant. The distribution was effected on 12 October 2007, with the transfer of the only issued share in Vital from the Claimant to BHUH being registered in the register of members of Vital on that day. Although it is pleaded in the particulars of claim that Vital was a subsidiary of the Claimant until 15 October 2007, it is accepted by the Claimant for present purposes that the share in Vital was distributed in specie on 12 October 2007. c. On 15 October 2007, BHUH went into members voluntary liquidation. A special resolution to that effect was passed on that day by the members of BHUH, and the directors of BHUH made a statutory declaration as to its solvency. Also on 15 October 2007, pursuant to reconstruction agreements made on that day under section 110 of the Insolvency Act 1986, the liquidator of BHUH transferred the share in Vital to a new company, Vital Holdings Limited (VHL) and the shares in the Claimant to a new company, Burnden Group Holdings Limited (BGHL). The two new holding companies issued shares to the former shareholders in BHUH, again precisely mirroring their shareholdings in BHUH and, previously, in the Claimant. d. On 19 October 2007, Mrs Fielding sold a 30% shareholding in VHL to SSE for 6m. Of that sum, 3m was lent to the Claimant and the balance was, according to the Claimants case, put towards the purchase of a property for 8.3m by Mr and Mrs Fielding in May 2008. Subsequently, on 2 October 2008, the Claimant, K2 and Cestcon all went into administration. In December 2009, the Claimant went into liquidation and the present liquidator was appointed in December 2012. It is alleged by the Claimant that the distribution in specie of the Claimants shareholding in Vital to BHUH was unlawful, and it is claimed that the Defendants breached their duties to the Claimant in making the distribution. The basis of the claim that the distribution was unlawful, at least when the matter was before the Court of Appeal, was that the Claimant company did not have sufficient accumulated, realised profits to enable the distribution of its shareholding in Vital to be lawfully made. The detailed basis of that allegation has changed over time and has, throughout, been firmly challenged by the Defendants. The detail is irrelevant to the limitation issues before this court. It is simply to be assumed that the distribution was unlawful, that the Defendants participation in it amounted to a breach of their fiduciary duties to the Claimant and that, because the distribution was made to a company, BHUH, in which they were majority shareholders and directors, the distribution was one from which they derived a substantial benefit. Section 21 Section 21 of the Limitation Act 1980 provides, so far as is relevant, as follows: 21. Time limit for actions in respect of trust property. (1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action in respect of any fraud or fraudulent (a) 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. (2) Where a trustee who is also a beneficiary under the trust receives or retains trust property or its proceeds as his share on a distribution of trust property under the trust, his liability in any action brought by virtue of subsection (1)(b) above to recover that property or its proceeds after the expiration of the period of limitation prescribed by this Act for bringing an action to recover trust property shall be limited to the excess over his proper share. This subsection only applies if the trustee acted honestly and reasonably in making the distribution. (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. For the purposes of this subsection, the right of action shall not be treated as having accrued to any beneficiary entitled to a future interest in the trust property until the interest fell into possession. It is common ground (and clear beyond argument) that, as directors of an English company who are assumed to have participated in a misappropriation of an asset of the company, the Defendants are to be regarded for all purposes connected with section 21 as trustees. This is because they are entrusted with the stewardship of the companys property and owe fiduciary duties to the company in respect of that stewardship: see Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400; JJ Harrison (Properties) Ltd v Harrison [2002] 1 BCLC 162, in particular per Chadwick LJ at paras 25 29; Williams v Central Bank of Nigeria [2014] AC 1189, per Lord Sumption at para 28 and, most recently, First Subsea Ltd (formerly BSW Ltd) v Balltec Ltd [2018] Ch 25, per Patten LJ at para 50. By the same token, the company is the beneficiary of the trust for all purposes connected with section 21. Complications have arisen where, although a director, the Defendants breach of duty did not involve the misapplication of company property: see for example Gwembe Valley Development Co Ltd v Koshy (No 3) [2004] 1 BCLC 131, but those difficulties (if indeed they survive the decision of the Court of Appeal in the First Subsea case) do not arise on this appeal. It is also now common ground that, unless section 21(1) applies, the Defendants have the benefit of the six year period of limitation laid down by section 21(3), because the relevant breach of duty arising from the distribution of the shareholding in Vital occurred on 12 October 2007, and these proceedings were issued more than six years later. At the time of the hearing before the Court of Appeal there was no relevant allegation of fraud: see para 32 of the judgment of David Richards LJ [2017] 1 WLR 39. Although such an allegation has since been pleaded, this appeal has been argued upon the basis that the only question to be decided is whether the Defendants ability to rely upon a six year period of limitation under section 21(3) is denied to them by reason of section 21(1)(b). Section 21(1)(b) is about actions to recover from the trustee trust property or the proceeds of trust property A preliminary objection was taken in the Court of Appeal by Mr David Chivers QC (who appears also on this appeal for the Defendants) that a claim such as the present, for an account of profits or alternatively equitable compensation, did not fall within section 21(1)(b) at all. This was rejected by the Court of Appeal (at para 38), upon the basis that a claim for equitable compensation, in a case where the trustees indirect interest in the trust asset had been converted to the use of the trustee, was an appropriate remedy to seek in an action falling within section 21(1)(b). That analysis of David Richards LJ has not been challenged on this appeal. Rather, Mr Chivers focus has been on the remaining part of section 21(1)(b), by way of submissions that the relevant trust property (namely the shareholding in Vital) was never in the possession of the Defendants, or previously received by them and converted to their use. The gist of his submission, both here and below, was that from start to finish the shareholding in Vital had been in the legal and beneficial ownership and therefore possession of a succession of corporate entities, namely the Claimant company, then BHUH, to which the shareholding was unlawfully distributed, and later VHL, to which the shareholding was later transferred as part of the corporate reconstruction which led to these proceedings, and where it ultimately remained. Although the Defendants were from time to time shareholders and directors in all those corporate entities, the shareholding in Vital was never in their possession, nor previously received by them and converted to their use. To hold otherwise would, he submitted, involve the lifting of one or more corporate veils, or ignoring the separate legal personality of the companies concerned, all of which are prohibited, save in circumstances which do not apply to this case, by the reasoning of this court in Prest v Petrodel Resources Ltd [2013] 2 AC 415. In the Court of Appeal, David Richards LJ acknowledged (at para 35) that this submission responded well to a literal reading of section 21(1)(b) but that such an interpretation would be a recipe for avoidance by trustees because, in the modern world, it is commonplace for companies to be used to hold assets, where the beneficial ownership is vested in the company but the entire economic benefit is available for the shareholders. Relying upon and approving the analysis of Mr Richard Field QC in In re Pantone 485 Ltd; Miller v Bain [2002] 1 BCLC 266, David Richards LJ concluded that, in order to achieve its purpose, section 21(1)(b) had to be construed so as to include within its terms a transfer (in breach of trust) to a company directly or indirectly controlled by the defaulting trustee. which may be summarised as follows: In this court, Mr Chivers made a detailed and thorough attack on that analysis, i) There was no need to be concerned with anti avoidance when construing section 21(1)(b). If trustees deliberately inserted a company between them and the misappropriated assets this would be a recognised ground for lifting the corporate veil: see the Prest case, at paras 34 35. It would be an abuse of corporate legal personality. ii) In any event, the deliberate use of a corporate vehicle to insulate trustees from liability, after six years, for breach of trust would in most cases give rise to a claim in fraud within section 21(1)(a). iii) It was wrong in principle to equate control of a company with possession of its assets save, perhaps, where the company was a pure nominee. For that purpose, he relied upon the analysis of possession for the purposes of section 8 of the Trustee Act 1888 (the distant predecessor of section 21) by Lindley LJ in Thorne v Heard [1894] 1 Ch 599, at 605 606. In practical terms, he submitted that majority shareholders had much less than absolute control over a companys property, because of the requirement to have regard to the interests of other stakeholders, such as minority shareholders and creditors. iv) As to the Pantone case, he submitted that the deputy judges analysis had been based upon the Harrison case (cited above), in which Chadwick LJs conclusion was grounded on facts which included the acquisition (in breach of duty) by a director of the company by a purchase at an undervalue, followed by an on sale of it to a third party. In that type of case, Mr Chivers submitted, the companys property had indeed been previously received by the director/trustee before being converted to his use by its on sale. v) In response to a question from the court as to whether an unlawful distribution in specie could itself be said to be a conversion of trust property Mr Chivers submitted that a distribution, even if unlawful, affirmed rather than denied the companys title to that which was distributed. vi) Finally, in response to the question whether a director could not be said to have previously received company property by virtue of his office as director, in advance of any misapplication of it in breach of trust, Mr Chivers submitted that this would render the requirement of previous receipt otiose, since it would apply in every case. These carefully constructed submissions were of real force, to the extent that they demonstrated that there was no need to have regard to anti avoidance in construing section 21(1)(b). The deliberate use of a corporate vehicle to distance a defaulting trustee from the receipt or possession of misappropriated trust property might justify lifting the corporate veil. In any event it would in most cases justify a finding of fraud, within the meaning of section 21(1)(a). Furthermore, the submission that control of a company afforded by being a majority shareholder and director is not so absolute as to confer de facto possession of its property is persuasive: see eg Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627. But taken as a whole, Mr Chivers submissions do not lead to the conclusion that section 21(1)(b) is inapplicable to the assumed facts with which this appeal is concerned, merely because the misappropriated property has remained legally and beneficially owned by corporate vehicles throughout, rather than becoming vested in law or in equity in the defaulting directors. The starting point in the construction of section 21(1)(b) is to pay due regard to its purpose. This was laid down, in relation to its predecessor, in In re Timmis, Nixon v Smith [1902] 1 Ch 176 at 186 by Kekewich J as follows: The intention of the statute was to give a trustee the benefit of the lapse of time when, although he had done something legally or technically wrong, he had done nothing morally wrong or dishonest, but it was not intended to protect him where, if he pleaded the statute, he would come off with something he ought not to have, ie, money of the trust received by him and converted to his own use. That this is the purpose of what is now section 21 was confirmed by Chadwick LJ in the Harrison case at para 40. Mr Chivers did not, when it was put to him, challenge it in any way. It is necessary to bear in mind that section 21 is primarily aimed at express trustees, and applicable to company directors by what may fairly be described as a process of analogy. An express trustee, such as a trustee of a strict settlement, might or might not from time to time, or indeed at all, be in possession or receipt of the trust property. The property might consist of land in the possession of a tenant for life. By contrast, in the context of company property, directors are to be treated as being in possession of the trust property from the outset. It is precisely because, under the typical constitution of an English company, the directors are the fiduciary stewards of the companys property, that they are trustees within the meaning of section 21 at all. Of course, if they have misappropriated the property before action is brought by the company (the beneficiary for this purpose) to recover it they may or may not by that time still be in possession of it. But if their misappropriation of the companys property amounts to a conversion of it to their own use, they will still necessarily have previously received it, by virtue of being the fiduciary stewards of it as directors. It may well be that, in relation to trustees who are company directors, the requirement in section 21(1)(b) that the property be previously received by them before its conversion adds little or nothing to the conditions for the disapplication of any limitation period which would otherwise have operated in their favour. But that requirement is not otiose in relation to trustees generally, for the reason already given. Thus, for example, the trustee of a strict settlement who had, without dishonesty, committed a breach of trust by neglecting to exercise available powers to prevent dissipation of the trust property by the tenant for life, would not be deprived of the benefit of the trustees six year limitation period by virtue of section 21(1)(b). He would neither be in possession of the trust property, nor would he ever have received it nor, incidentally, would he have converted it to his own use. There is nothing in Mr Chivers objection that to treat individual directors as being in possession, or in previous receipt, of company property by virtue of their office would unfairly assume a level of control over it which they might in practice lack, for example by being in a minority on the Board. Trustees of an express trust in whom the trust property is vested in law are each treated as being in possession or receipt of the trust property, notwithstanding that they hold title to it jointly with all the other trustees. In the present case, (of course only on the assumed facts), the Defendant directors converted the companys shareholding in Vital when they procured or participated in the unlawful distribution of it to BHUH. It was a conversion because, if the distribution was unlawful, it was a taking of the companys property in defiance of the companys rights of ownership of it. It was a conversion of the shareholding to their own use because of the economic benefit which they stood to derive from being the majority shareholders in the company to which the distribution was made. By the time of that conversion the Defendants had previously received the property because, as directors of the Claimant company, they had been its fiduciary stewards from the outset. For those reasons, although they differ to some extent from the Court of Appeals analysis, I would dismiss this appeal so far as it relates to section 21. Section 32 Section 32 of the Limitation Act 1980, as amended by section 6(6) of, and paragraph 5 of Schedule 1 to, the Consumer Protection Act 1987, provides, so far as relevant for present purposes, as follows: 32. Postponement of limitation period in case of fraud, concealment or mistake. (1) Subject to subsections (3) and (4A) below, where in the case of any action for which a period of limitation is prescribed by this Act, either the action is based upon the fraud of the (a) Defendant; or (b) any fact relevant to the plaintiffs right of action has been deliberately concealed from him by the Defendant; or (c) consequences of a mistake; the action is for relief from the the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it. References in this subsection to the Defendant include references to the Defendants agent and to any person through whom the Defendant claims and his agent. (2) For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty. The Court of Appeal reversed the judges order by way of Defendants summary judgment in relation to section 32, mainly because they regarded the issues as to its applicability as being too fact sensitive to be suitable for summary judgment: see per David Richards LJ at paras 51 and 55. On the way to that conclusion David Richards LJ adopted an interpretation of section 32(2) which has, on this appeal, been subjected to significant, albeit commendably brief, criticism by Mr Chivers, both orally and in writing, centred around issues as to the meaning of the phrase some time in subsection (2), and the interpretation placed upon it by Lewison J in JD Wetherspoon plc v Van de Berg & Co Ltd [2007] EWHC 1044 (Ch); [2007] PNLR 28, at para 40. The in depth analysis of this difficult question would take the court into a potential minefield of difficulties which surround section 32 and, in this corporate context, would also involve a consideration of questions of attribution. There cannot be summary judgment in favour of the Defendants in this case, both because of the recent plea of fraud and because of this courts decision about the meaning of section 21. Whatever the correct interpretation of section 32(2), there would still be fact intensive issues calling for a trial. In view of the relatively summary way in which this issue has been addressed by counsel (about which I express no criticism at all), I have not therefore considered it appropriate to reach any final view about it. It is sufficient for present purposes for me to conclude that the appeal in relation to section 32 should be dismissed because the issue is unsuitable for summary judgment. I express no view one way or the other on the correctness or otherwise of the interpretation of section 32(2) adopted en passant by the Court of Appeal. |
From time to time over many years the Secretary of State for the Home Department has been concerned to deport a foreign national on the grounds of national security. Sometimes, indeed with increasing frequency, those facing such deportation decisions have wished to contest them, either by challenging that they present a national security risk, or by invoking the European Convention on Human Rights and contending that they would be at risk of article 3 ill treatment if returned to their home country. To enable such cases to be properly heard, Parliament, by the Special Immigration Appeals Commission Act 1997 (the 1997 Act) established SIAC and, as will be very familiar to all with any interest in this area of the law, provided for an appeal system which allows where necessary for closed material procedures and the appointment of special advocates. All this has been rehearsed time and again in a succession of judgments not least, indeed, in paras 4 15 of the judgment below and no useful purpose would be served by my repeating it all here. Put very shortly, if the Secretary of State wishes to adduce evidence which, for reasons of national security or other sufficient public interest reasons, cannot safely be communicated to the appellant, SIACs rules and procedures provide for this to be done just how satisfactorily being a matter of continuing debate into which, happily, there is on this appeal no need to enter. The difficulty raised by the present case is a very different one and, it should be recognised at once, one that faces the court with what can only be regarded as the most unpalatable of choices. It is lesser evils which the court is searching for here, not perfect solutions. The difficulty and dilemma now before us can most easily be illustrated by my immediately sketching out a notional set of facts. Suppose that an appellant before SIAC (A) is a suspected terrorist whom it is proposed to return to Algeria. Such, indeed, is the position of each of the appellants now before us. Suppose this, too, is no mere supposition; it has been common ground before SIAC in a number of cases that Algeria is a country where torture is systematically practised by the DRS (Information and Security Department) and that no DRS officer has ever been prosecuted for it; and that: in the absence of [certain assurances from the Algerian Government] there would be a real risk that on his return to Algeria A (and persons in a similar position) would be tortured or subject to other ill treatment (SIACs judgment of 8 February 2007 in G v Secretary of State for the Home Department: Appeal No SC/02/05 G being one of the appellants now before us). Suppose that the Algerian authorities are hostile to any independent scrutiny of their actions in the human rights sphere: human rights organisations such as Amnesty and Human Rights Watch are not permitted to operate there; even the International Red Cross is denied access to DRS facilities. And suppose, as is also here the case, that the Secretary of State obtains assurances from the Algerian Government that As rights will be respected on return, the value of these assurances being the principal question at issue on As SIAC appeal. Suppose, then, that A wishes to adduce evidence from someone with inside knowledge of the position in Algeria asserting that, notwithstanding the Algerian Governments official assurances, those in As position on return to Algeria are in fact likely to be subject to torture or other article 3 ill treatment. Perhaps this prospective witness (W) was himself ill treated on return. Perhaps W is a whistleblower working within the Algerian prison service: an official or an interrogator or a medical practitioner. Perhaps he is a journalist or other outsider who has obtained particular information as to the fate of those like A on their return. Suppose that W (whether or not himself still in Algeria) is in a vulnerable position: he fears future torture or ill treatment either of himself or of someone near and dear to him. Perhaps at an earlier stage he had raised his concerns internally and been threatened that if ever he voiced them abroad his wife or children would suffer for it. Suppose finally that, such being the circumstances, W is not prepared to give evidence in As appeal to SIAC save only on one unalterable condition, namely that his identity and evidence will forever remain confidential to SIAC and the parties to the appeal (A and the Secretary of State). He is concerned in particular that the Secretary of State might seek to communicate something at least of his evidence to the Algerian authorities (or indeed to others in such a way as may bring him to the attention of the Algerian authorities) if only to seek to assess its veracity and reliability, and that her doing so might place him or his family in peril, something he is simply not prepared to risk. W, therefore, requires an absolute and irreversible guarantee of total confidentiality before he will permit his identity and evidence to be disclosed to the Secretary of State. Is it open to SIAC to make an order providing for such a guarantee? That, as will shortly appear, is the central question now before us. It is not, I should make clear at this stage, the appellants case that, SIAC having made an absolute and irreversible order giving W the guarantee he seeks, Ws evidence will necessarily then have to be regarded by SIAC as properly before them when finally it comes to their determining the disputed issue as to As safety on return. Rather the appellants propose an intermediate, inter partes hearing, by which time the Secretary of State must have been provided with full information as to Ws identity and intended evidence, and at which she will be able to contend that, for whatever reason, it would be wrong for SIAC to admit Ws evidence on the substantive appeal. She may suggest that in reality W has advanced no coherent case for saying that he is at risk of reprisals. Or she may say that Ws proposed evidence is inherently implausible and that, without her being afforded the least opportunity to check its authenticity or credibility or reliability it would simply not be right to afford it any weight whatever. Or she may have other arguments to advance. If, having heard them, SIAC then chooses to shut the evidence out, so be it. If, however, SIAC admits the evidence, then, reluctant though doubtless they will be to give it the weight it might have been expected to carry had the Secretary of State been permitted to check it, at least it will be before them (when ex hypothesi it would otherwise not have been) and in the result SIAC will have the benefit of the fullest possible picture on a critically important issue in the appeal: the question of As safety on return. It is on this basis and in this context that the question now arises: in such circumstances can SIAC ever properly make an absolute and irreversible order (necessarily on an ex parte application by A without the Secretary of State having an opportunity to resist it), prohibiting the Secretary of State from ever disclosing to anyone anything of Ws identity or evidence? This question the Court of Appeal on 29 July 2010 answered in the negative: [2010] EWCA Civ 898. Giving the only reasoned judgment (with which Jacob and Sullivan LJJ simply agreed), Sir David Keene (at para 27) concluded that: [I]t is not open to SIAC to make an order giving the absolute and irrevocable guarantee which is sought by the appellants. This may create a difficulty for the appellants, because of the reluctance of their potential witnesses, but it is inescapable. The adverse effect on them can be mitigated by such steps as anonymity orders and hearings in private, but irrevocable orders preventing the Secretary of State from disclosing material to a foreign state in any circumstances cannot properly be made by SIAC in advance of the Secretary of State seeing that material. As counsel for the Secretary of State said at the SIAC hearing, such a proposal is unworkable and in my view falls outside the scope of SIACs powers to give directions, broad though those powers are. Before turning to the Secretary of States objections I should observe that, although Sir David there spoke of the appellants proposals fall[ing] outside the scope of SIACs powers, he had earlier, at para 20, recorded that: Mr Tam QC, on behalf of the Secretary of State, accepts that SIAC could give directions under the Procedure Rules preventing the Secretary of State from disclosing such material to any other person, including the Algerian authorities. He acknowledges that SIACs power under rule 39 (1) to give directions relating to the conduct of any proceedings is expressed in wide and unlimited terms and could be used in conjunction with the rule 43(2) power to conduct a hearing in private for any good reason so as to prevent disclosure to other persons, including the authorities of the appellants country of origin. And that, indeed, I understand to remain the Secretary of States position. It is not for want of jurisdiction that SIAC should never make an order of the sort here contended for; rather it is because, so the Secretary of State submits, such an order could never properly be made; it can never be appropriate. Such being the case, I shall not burden this judgment with an exposition and analysis of all the various rules which arguably bear upon SIACs powers but instead shall turn at once to the Secretary of States principal reasons for saying that no order of the kind here sought should ever be made, notwithstanding that, for want of it, evidence directly going to the issue of As safety on return will on occasion not be available to SIAC when otherwise it would have been. Essentially, it seems clear, the Secretary of States fundamental objection to an order of the sort proposed is this: such an order having been made, the Secretary of State may then find herself in possession of information which (whether or not appreciated by SIAC, A or even W himself) might in one way or another suggest the existence of a terrorist threat abroad or some other risk to national security. Viewed in the context of myriad other pieces of information, it may be seen to form part of a jigsaw or mosaic (one is well familiar with the concept) whereby such risks come to be recognised. Because, however, of SIACs order, the Secretary of State will be unable to alert the foreign state to the risk, thereby gravely imperilling future diplomatic relations. True, but for the order, the Secretary of State would never have been put in possession of the information in the first place. But, runs the argument, the Secretary of State is in fact worse off with it than without it. Without it she cannot be criticised. But with it, yet bound by SIACs order to keep it to herself, she may become deeply embarrassed if the risk were then to eventuate. The court below, at paras 24 and 25 of Sir David Keenes judgment, accepted this argument: SIAC cannot, it seems to me, tie its hands in advance and say that, whatever the fresh slant on the material provided by the Secretary of State, it will in no circumstances allow disclosure to the authorities of a foreign state. How could it? It might be that the appellants material, innocuous when seen in isolation, becomes of vital diplomatic importance once combined with material in the possession of the Secretary of State. As was explored in argument, it might reveal a potential terrorist risk within the foreign state. It might indicate that, instead of the appellant having been the perpetrator of a terrorist outrage, as suspected hitherto, the true culprit remains at large in a foreign state and presents a real and immediate threat to that state. It is no answer for Mr Fordham to argue that, without the cast iron and irrevocable guarantee of non disclosure, the British Government would not even come into possession of the information. That is true, but the consequences for the United Kingdoms diplomatic relations differ radically between the two scenarios. If this countrys government is in possession of information indicating the existence of a risk of a terrorist outrage in a foreign state with which we have friendly relations and it does not warn that state, the potential impact on the United Kingdoms diplomatic relations with that state could be very serious indeed if it ever became known that our government knew of the risk. If, however, the government does not possess such information, then while the terrorist risk to the foreign state may remain the same, this country could not be accused of withholding vital information, and our diplomatic relations would not be affected. I confess to finding the argument a good deal less persuasive than did the Court of Appeal. Nor to my mind was it made good by a post hearing note submitted by the Secretary of State at our invitation giving five examples of prospective scenarios (understandably at a high level of generality) suggested to illustrate the problem. In all five examples, as it happens, the Home Secretarys stated concern is at her inability to communicate not with the country to which she proposes deporting A (here Algeria) but rather with some other foreign country (country C) to which, let us suppose, W, a known terrorist mastermind who trains suicide operatives, now says that he has moved (following torture on his return to Algeria), something about which the Secretary of State would wish to inform country C (an example in fact suggested by Lord Kerr during the hearing). Even, however, were such a scenario to play out and culminate in a terrorist atrocity in country C and it were later to emerge that the Secretary of State had known, but failed to warn country C, about Ws move there, it must surely be a substantial defence to any diplomatic complaint by country C that the Secretary of State was subject to a final and absolute court order prohibiting her from acting differently. After all, as the appellants point out, a number of recent international instruments are replete with statements urging states to ensure that witnesses are protected against ill treatment or intimidation, particularly in a human rights context see, for example, article 13 of the UN Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment; Principle 3(b) of Annex I to the Istanbul Protocol Principles on the Effective Investigation and Documentation of Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment; paras 3, 7, 12, 13 and 20 of the 28 July 2010 Report of the United Nations High Commissioner for Human Rights on the Right to the truth; and para 3.2.8 (under the heading, Handling reluctant Sources) of the November 2010 EU common guidelines on (Joint) Fact Finding Missions. In short, I regard the Secretary of States concerns at learning more than she is permitted to divulge as an insufficient ground on which to deny A and SIAC the possible benefits of Ws evidence. That said, I do not overlook the radical nature of orders of the sort proposed here, nor, indeed, the kinds of difficulty they may bring in their wake. In the first place, such orders could be thought to come perilously close to offending against basic principles of open justice. There is nothing novel, of course, in the making of ex parte orders. But it is difficult to think of any other situation in which a respondent would be unable to seek release from a permanent injunction in this case, not to communicate his knowledge to others. The respondent can, as indicated, object at the inter partes hearing to the material being used at the eventual substantive hearing. But that is by no means the same thing as seeking to overturn the original order. There is, moreover, as the respondent points out, the further difficulty that, even though theoretically it will be open to SIAC at the inter partes hearing to rule out Ws evidence, it may be difficult for them to ignore it entirely. SIAC are, after all, required by section 5(6)(a) of the 1997 Act and by rule 4(3) of their 2003 Rules to ensure that on the material before them they can properly determine the proceedings. And there could hardly be a more important issue in those proceedings than that of As safety on return. It is that consideration, indeed, which weighs so very heavily in As favour in justifying the making of these proposed orders in the first place, given that without them SIAC will by definition never see the material. There is the obvious further problem with regard to evidence adduced on the basis proposed that the Secretary of State will be largely unable to investigate it and will find it difficult, therefore, to explain or refute it. Accordingly, the very making of the initial order must to a degree undermine the likely weight of the evidence and devalue its overall worth. In the last analysis, however, none of these considerations to my mind outweighs the imperative need to maximise SIACs chances of arriving at the correct decision on the article 3 issue before them and their need, therefore, to obtain all such evidence as may contribute to this task. I would rule, therefore, that it is open to SIAC to make such absolute and irreversible ex parte orders as are here contended for and that on occasion it may be appropriate to do so. This is, I conclude, the least worst option open to us the lesser of two evils as I put it at the outset. But at the same time I should make plain that I am far from enthusiastic about such orders and would certainly not expect a rash of them. Rather it would seem to me that the power to make them should be most sparingly used. There is, of course, the risk that the very availability of such orders may be exploited by the unscrupulous in the hope that SIAC may thereby be induced to receive untruthful evidence which, had it in the ordinary way been subject to full investigation, would have been exposed as such. I would advocate that before making one of these proposed ex parte orders, SIAC should require the very fullest disclosure from A of (a) Ws proposed evidence (namely a detailed final statement or proof of evidence depending upon whether it is proposed to adduce the evidence orally or in writing, and if the latter why in writing), (b) the particular circumstances in which W claims to fear reprisals, and (c) how A and his legal advisers came to hear about Ws proposed evidence and what if any steps they have taken to encourage him to give that evidence in the usual way subject to the usual steps generally taken to safeguard witnesses in these circumstances, namely by anonymity orders and hearings in private. If, moreover, one of these orders is made and it does then come to appear to the Secretary of State that the information disclosed may indeed be of some importance with regard to national security concerns, whether here or abroad, it should be open to the Secretary of State to try to persuade SIAC either to seek from A and W a sufficient waiver of the ex parte order forbidding any further communication of the information to enable these national security concerns to be met or, if such waiver, unreasonably in SIACs view despite their recognition of Ws fears, proves unobtainable, to shut out (or regard with additional scepticism) the evidence submitted. This power, in other words, should be exercised sensibly as well as sensitively, there being ample room for flexibility in its operation notwithstanding the absolute and irreversible nature of whatever order may initially be made. I should perhaps add this. In striking the balance in this way, I am in no way influenced by the consideration that, as earlier stated, there are circumstances in which the Secretary of State for her part is on occasion entitled to adduce evidence in closed proceedings divulged only to a special advocate and not to A. I do not see the scope for orders of the sort contended for here as, so to speak, levelling the playing field or providing equality of arms between the parties. The plain fact is that the Secretary of State is acting in these cases in the wider public interest, not as an interested party. She is, for example, obliged (now under the rules) to search for and disclose material, both open and closed, which may possibly assist As case. (He, of course, is under no corresponding duty towards the Secretary of State.) And the special advocate will to the best of his ability serve As interests, procuring on occasion rulings which may preclude the Secretary of State from relying on material however apparently damning to As cause. As Sir David Keene observed below (at para 26): The reality is that the position of an appellant and the position of the Secretary of State are not comparable, because of the public responsibilities of the latter. Since completing this judgment I have seen in draft the judgment of Lord Dyson and agree with him also. I would accordingly allow these appeals to the extent indicated. It must, of course, now be for SIAC to consider what, if any, impact our decision has upon the outcome of these appellants individual appeals: whether there is a need now to reopen them and what, if any, orders should now be made. It is to be hoped that no further order (save as to costs as to which the parties may have 28 days for written submissions) is required from this court. LORD DYSON National security issues continue to present difficult challenges to the courts. Lord Brown has explained the problem that is raised by the facts of the present case. The appellants are all Algerian nationals whom the Secretary of State for the Home Department decided under section 3(5)(a) of the Immigration Act 1971 to deport to Algeria on the basis that their presence in the United Kingdom is not conducive to the public good on grounds of national security. They appealed to the Special Immigration Appeals Commission (SIAC) who held that they posed a risk to national security and that the decisions to deport them were lawful and compatible with the European Convention on Human Rights (the Convention). Their appeals were dismissed by the Court of Appeal. The issue in all these cases is whether, if returned to Algeria, there is a real risk that the appellants would be subjected to ill treatment at the hands of the Algerian Authorities (AAs) contrary to article 3 of the Convention. One of the appellants (Z) was in a position to put forward material from a source or sources in Algeria which was relevant to safety on return. But the source(s) feared reprisals in Algeria if there were to be any disclosure of their identity to the AAs. They were willing to tell their story to SIAC (and indeed to the Secretary of State), but only on an absolute and irrevocable assurance that there would be no onward disclosure to the AAs. Rule 4(1) of the Special Immigration Appeals Commission (Procedure) Rules 2003 (SI 2003/1034) (the SIAC Rules) provides that, when exercising its functions, SIAC shall secure that information is not disclosed in any other circumstances where disclosure is likely to harm the public interest. Rule 39(1) confers on SIAC the power to give directions relating to the conduct of any proceedings. Subrule (2) provides that the power to give directions is to be exercised subject to the obligation in rule 4(1); and subrule (5) provides that directions under rule 39(1) may in particular (e) relate to any matter concerning the preparation for a hearing. Rule 43(2) enables SIAC to conduct a hearing or part of a hearing in private for any good reason (in addition to the reason identified in rule 43(1) which is not material to the appeal). It is common ground that these rules are wide enough to give SIAC the jurisdiction to make an absolute and irrevocable order prohibiting the Secretary of State from disclosing material to any person and to do so at or after a hearing from which the Secretary of State is excluded. The question is in what circumstances (if any) it may be appropriate to make such an order (which I shall refer to as an irrevocable non disclosure order). For the appellants, Mr Fordham QC submits that SIAC has the power to make such an order although it has not received informed representations from the Secretary of State as to whether the order should be made. It is able subsequently to hear informed representations from the Secretary of State as to the admission of the material in evidence. For the Secretary of State, Mr Tam QC accepts that there may be cases where an appellant is found to have good reasons for wishing to keep certain material confidential and this might provide a sound basis for SIAC to exercise its power to hold a private hearing under rule 43 and make an irrevocable non disclosure order. But he submits that it is never appropriate to make such an order on the basis of a hearing from which the Secretary of State is excluded and she should always be given the opportunity to apply subsequently to vary or discharge the order. In testing these submissions, it should be borne in mind that, as is illustrated by the circumstances of the present appeals, two conflicting considerations are in play here. On the one hand, the appellants say that, unless the order that they seek is made, they will be unable to place material before SIAC which may be crucial to their case that, if returned to Algeria, they face a real risk of ill treatment by the AAs contrary to article 3 of the Convention. If they are able to persuade SIAC of this risk, their appeals will succeed. Thus, the appellants say that it is essential to their case that they are able to place this evidence before SIAC: the stakes could hardly be higher for them (short of a risk to life itself). They also rely on rule 4(3) of the SIAC Rules which provides that subject to paragraphs (1) and (2), SIAC must satisfy itself that the material available to it enables it properly to determine proceedings. In other words, it has a duty to ascertain all relevant facts. On the other hand, it is said on behalf of the Secretary of State that there are important countervailing considerations both in relation to the conduct of the appeals and more generally. So far as the conduct of the appeals is concerned, the ability of the Secretary of State to participate in them effectively may be seriously undermined by an irrevocable non disclosure order. There are two aspects to consider. First, the cogency and validity of the reasons asserted by the source(s) in support of the claimed need for confidentiality may be open to question, but the Secretary of State will be denied the ability to test the reasons or to obtain information and/or adduce evidence from or with the assistance of the AAs to demonstrate that the asserted reasons for the claim to confidentiality are groundless. Secondly (and of perhaps even greater importance) is the fact that the Secretary of State may be seriously disadvantaged in her ability to test and challenge the substance of the evidence of the witness(es). The effect of the order may be to deprive the Secretary of State of the ability to place before SIAC relevant evidence which it should properly consider in deciding the substantive issues arising in the appeals. This would occur, for example, if the AAs were able to provide information bearing on the issue of safety on return of the appellants, but could not do so unless the identity of the witness(es) and what they have to say are disclosed to them. Once the authorities know the identity of the witness(es) and the substance of their evidence, the authorities might be able to demonstrate that what is said about the risk to the appellants on return to Algeria is false. I should add that the SIAC Rules do not make provision for the appointment of special advocates to represent the interests of the Secretary of State and it is (rightly) not suggested that SIAC could appoint special advocates under any of the powers conferred by the general rules. It follows that the difficulties to which the Secretary of State draws attention cannot be overcome or even mitigated by the appointment of a special advocate. In addition to the problems that are likely to be suffered by the Secretary of State in relation to the appeals, she says that irrevocable non disclosure orders may also cause collateral prejudice. It became clear during the course of the argument that this prejudice is the potential risk of harm to future diplomatic relations with a friendly foreign state. This is a factor which carried considerable weight with the Court of Appeal and which Lord Brown deals with at paras 11 to 15. In weighing these competing considerations, I have no doubt that the scales come down in favour of making an irrevocable non disclosure order where SIAC is satisfied that such an order is necessary in the interests of justice. I agree entirely with what Lord Brown says at paras 19 to 21 as to how the power to make an order should be exercised. SIAC should be astute to guard against the danger of abuse and should scrutinise with great care and test rigorously the claimed need for an order. But if SIAC (i) is satisfied that a witness can give evidence which appears to be capable of belief and which could be decisive or at least highly material on the issue of safety of return and (ii) has no reason to doubt that the witness genuinely and reasonably fears that he and/or others close to him would face reprisals in Algeria if his identity and the evidence that he is willing to give were disclosed to the AAs, then in my view an irrevocable non disclosure order should be made. I accept that to make such an order is a striking step for any court to take and is contrary to the instincts of any common lawyer. It is inimical to the fundamental principles which we rightly cherish of open justice and, above all, procedural fairness. To make an order without giving the Secretary of State an opportunity to be heard is a clear breach of the principles of natural justice. Any such order requires compelling justification. Regrettably, however, the circumstances of a case sometimes call for unusual and undesirable remedies. Ultimately, the court has to decide what is demanded by the interests of justice. In weighing the prejudice that the Secretary of State may suffer in the appeal process as a result of an irrevocable non disclosure order, it should not be overlooked that the appeals themselves will be conducted entirely inter partes. In particular, no material that is placed before SIAC by the appellants will be withheld from the Secretary of State. She may be able to demonstrate that the claimed need for confidentiality is without foundation and to persuade SIAC to give the evidence little or no weight for that reason alone. She may also be able to test the evidence of the witness(es) effectively even though she has been unable to discuss it with the AAs. For example, she may be able to show on the basis of objective general material about the conditions in Algeria that the evidence of the witness is unlikely to be true; and even where the evidence is more specific, she may be able to obtain information from the AAs which will enable her to rebut the evidence without divulging the name or identity of the witness or saying anything which might lead to his or her identification. It will, of course, depend on the nature of the evidence to be given by the witness. I do not wish to suggest that the effect of an irrevocable non disclosure order may not inhibit the ability of the Secretary of State to resist the appeals. In some cases, such an order will undoubtedly have that effect. But it cannot safely be said that it is bound to do so in every case. As regards the collateral prejudice claimed by the Secretary of State, like Lord Brown I consider that this has relatively little weight for the reasons that he gives. In my view, if SIAC concludes that the two conditions to which I have referred at para 34 above are satisfied, then the countervailing considerations relied on by the Secretary of State should not outweigh the need to ensure that the appellants are able to deploy any material which might show that, on return to Algeria, they would face a real risk of treatment contrary to article 3 of the Convention. The same considerations and the same result would follow if the case raised a question under article 2 of the Convention. But if the ground on which an appellant is resisting deportation is an alleged risk of breach of some other article of the Convention, the balance will almost certainly be struck the other way. For example, in many appeals against orders for deportation, the ground of appeal is that to deport the appellant would involve a breach of his or her article 8 rights. I find it difficult to conceive of a case in which it would be appropriate to make an order in order to protect the wish for confidentiality of a witness in those circumstances. For these reasons as well as those given by Lord Brown (with which I am in entire agreement), these appeals should be allowed to the extent indicated. LORD PHILLIPS, LORD KERR AND LORD WILSON We agree with both the judgments of Lord Brown and Lord Dyson. |
The Sea Fish Industry Authority (the Authority) is established under the Fisheries Act 1981 with powers granted for the purpose of promoting the efficiency of the sea fish industry and so as to serve the interests of that industry as a whole (section 2(1)). For the purpose of financing its activities, the Authority may, by regulations confirmed by ministerial order, impose a levy on persons engaged in the sea fish industry (section 4(1) and (2)). The issues on this appeal are, firstly, whether this power extends to imposing a levy in respect of sea fish or parts of sea fish first brought to land (by the catching or another vessel) outside the United Kingdom and only later imported into the United Kingdom (in the same form or in the form of some other fish product); and, secondly, if it does, whether the imposition of any such levy was and is a charge equivalent to a customs duty, contrary to articles 28 and 30 of the Treaty on the Functioning of the European Union (TFEU), in so far as it applies to imports from other EU member states. The respondents are importers who have brought these proceedings to challenge the validity of levies made on them in respect of imports. The appellants are the Department for Environment, Food and Rural Affairs, and the Authority, having been a defendant in the proceedings, now appears as intervener. The respondents challenge failed before Hamblen J [2009] EWHC 1721 (QB), but succeeded in the Court of Appeal [2010] EWCA Civ 263, [2010] 1 WLR 2117. Before the Supreme Court, they suggest that the second issue should also cover imports from non EU states and that consideration be given to a further issue under article 110, if articles 28 and 30 do not apply. I will return to these suggestions later in this judgment. Section 14(2) defines the sea fish industry and persons engaged in it: the sea fish industry means the sea fish industry in the United Kingdom and a person shall be regarded as engaged in the sea fish industry (a) he carries on the business of operating vessels for catching or processing sea fish or for transporting sea fish or sea fish products, being vessels registered in the United Kingdom; or (b) he carries on in the United Kingdom the business of breeding, rearing or cultivating sea fish for human consumption, of selling sea fish or sea fish products by wholesale or retail, of buying sea fish or sea fish products by wholesale, of importing sea fish or sea fish products or of processing sea fish (including the business of a fish fryer). Section 4(3) to (5) state the bases upon which a levy may be imposed: (3) Regulations under this section may impose a levy either (a) in respect of the weight of sea fish or sea fish products landed in the United Kingdom or trans shipped within British fishery limits at a prescribed rate which, in the case of sea fish, shall not exceed 2p per kilogram; or (b) in respect of the value, ascertained in the prescribed manner, of sea fish or sea fish products landed or trans shipped as aforesaid at a prescribed rate not exceeding 1 per cent of that value. (4) If regulations under this section impose a levy as provided in subsection (3)(a) above the prescribed rate in relation to any sea fish product shall be such that its yield will not in the opinion of the Authority exceed the yield from a levy at the rate of 2p per kilogram on the sea fish required on average (whether alone or together with any other substance or article) to produce a kilogram of that product. (5) Different rates may be prescribed for sea fish or sea fish products of different descriptions; . (8) For the purposes of this section (a) parts of a sea fish shall be treated as sea fish products and not as sea fish; (b) references to the landing of fish include references to the collection for consumption of sea fish which have been bred, reared or cultivated in the course of fish farming whether in the sea or otherwise and references to the landing of fish or fish products include references to bringing them through the tunnel system as defined in the Channel Tunnel Act 1987. The second part of section 4(8), referring to the landing of fish or fish products through the Channel Tunnel, was inserted by the Channel Tunnel (Amendment of the Fisheries Act 1981) Order 1994 (SI 1994/1390). Section 2(2A) was inserted by the Fisheries Act 1981 (Amendment) Regulations 1989 (SI 1989/1190) to cater for a concern raised by the European Commission that the effect of the levy might be unduly to burden the sea fish industries of other EU states to the benefit of the United Kingdoms sea fish industry: (2A) If any levy imposed under section 4 below has effect in relation to sea fish or sea fish products from the sea fish industries of member States other than the United Kingdom, the Authority shall so exercise its powers under this Part of this Act as to secure that benefits are conferred on those industries commensurate with any burden directly or indirectly borne by them in consequence of the levy. The regulations made by the Authority are currently the Sea Fish Industry Authority (Levy) Regulations 1995 ("the 1995 Regulations"), as contained in the Schedule to the Sea Fish Industry Authority (Levy) Regulations 1995 Confirmatory Order 1996 (SI 1996/160). They cover imports expressly: 2. Interpretation In these Regulations, unless the context otherwise requires, the following expressions have the meanings hereby respectively assigned to them . firsthand sale means (a) in relation to any sea fish or sea fish product which has been first landed in the United Kingdom the first sale thereof (other than a sale by retail) whether prior to or after landing in the United Kingdom; (b) in relation to any sea fish or sea fish product which has been first landed outside the United Kingdom and any sea fish product manufactured outside the United Kingdom from such sea fish or sea fish product which in either case is purchased by a person carrying on business in the sea fish industry and is imported or brought into the United Kingdom for the purposes of any such business, the first sale thereof (whether in the United Kingdom or elsewhere) to such a person as aforesaid; (c) in relation to any sea fish or sea fish product which is trans shipped within British fishery limits, the first sale thereof;. sale by retail means a sale to a person buying otherwise than for the purpose of resale or processing or use as bait, and includes a sale to a person for the purposes of a catering business (other than a fish frying business); and sell by retail has a corresponding meaning; 4. Imposition of levy (1) There shall be paid to the Authority subject to and in accordance with the provisions of these Regulations by every person engaged in the sea fish industry who (a) purchases any sea fish or any sea fish product on a firsthand sale; or (b) trans ships within British fishery limits any sea fish or any sea fish product by way of firsthand sale; or (c) lands any sea fish or sea fish product in the United Kingdom for subsequent sale other than in the United Kingdom; a levy (hereinafter referred to as the levy) at the rate per kilogram set out in the second column of the Schedule hereto in respect of any sea fish or sea fish product specified opposite thereto in the first column of the said Schedule so purchased or trans shipped or landed by him. (6) Where the levy becomes payable in respect of any sea fish it shall not be payable in respect of the products of such sea fish. 5. Time Limits for Payment (1) Levy payable by a person who purchases any sea fish or sea fish product on a firsthand sale shall be paid to the Authority within seven days after the end of (a) the week during which there took place the firsthand sale of the fish or fish product in respect of which the levy is payable; or (b) the week during which such fish or fish product was imported or brought into the country; whichever is the later. The Schedule to the Regulations contains rates of levy for sea fish and sea fish products. There are ten different categories of sea fish products, starting with fresh, frozen or chilled sea fish, under which different rates are set out for gutted, headless and gutted, fillets, skin on and fillets, skinless. Consistently with section 4(8) of the Act, parts of a sea fish are treated as sea fish products. Other categories include smoked sea fish, again with different rates for headless and gutted, fillets, skin on and fillets, skinless, salted and cured sea fish, with different rates for wet and dried, sea fish products sold for fishmeal, sea fishmeal, any sea fish product not referred to above and any pelagic fish product not referred to above, each with a different rate. The different rates reflect the usable fish content in the various sub categories. The meaning of landed The first issue is whether the statutory power enables a levy in respect of sea fish or parts of sea fish first brought to land (by the catching or another vessel) outside the United Kingdom and only later imported into the United Kingdom (in the same form or in the form of some other fish product). The issue has, strictly, to be formulated in these terms, because fish first landed in the United Kingdom from a vessel not registered in the United Kingdom are under European Union law to be regarded as imported. There is a choice between a wider and a narrower sense of the word landed in section 4(3). The former would cover any form of bringing into the United Kingdom, commonly by sea or air, wherever the sea fish or fish product may have been first landed after catch. The latter would cover only their first landing after catch. Hamblen J acknowledged that the narrower meaning was, in many contexts, likely to have been intended, but considered that, in the specific context of the 1981 Act, the wider meaning applied. Richards LJ, giving the only full judgment in the Court of Appeal started with the provisional view that the normal meaning did not cover the arrival of fish or fish product on a ferry or aircraft from another country, and that it would be highly artificial to extend it to their importation by road or rail as might occur between Eire and Northern Ireland. He looked at the factors on which the judge had relied, and found none of them sufficient to displace that view. In matters of statutory construction, the statutory purpose and the general scheme by which it is to be put into effect are of central importance. They represent the context in which individual words are to be understood. In this area as in the area of contractual construction, the notion of words having a natural meaning is not always very helpful (Charter Reinsurance Co Ltd v Fagan [1997] AC 313, 391C, per Lord Hoffmann), and certainly not as a starting point, before identifying the legislative purpose and scheme. In the case of a statute which has, like the 1981 Act, been the subject of amendment it is not lightly to be concluded that Parliament, when making the amendment, misunderstood the general scheme of the original legislation, with the effect of creating a palpable anomaly (see eg the principle that provisions in a later Act in pari materia with an earlier may be used to aid the construction of the former, discussed in Bennion on Statutory Interpretation, 5th ed (2008), section 234). The purpose and scheme of the 1981 Act are identified in sections 2(1) and 14(2). The Authority is set up and given powers to promote the efficiency of the sea fish industry, and this is defined specifically to include importers of sea fish or sea fish products. The purpose and scheme are expressed in terms extending to importers generally. Yet the narrower sense of the word landed would mean that very few of such importers actually contributed to the levy. Some of such importers would be the operators of foreign fishing vessels who first landed their fish in the United Kingdom, but the specific reference to importers in section 14(2) would be unnecessary to catch their fish, since (accepting that they would not themselves be likely to be carrying on business in the United Kingdom) those who purchased their fish would be covered by the reference in section 14(2) to buying by wholesale or selling by retail. Section 2(2A) is clearly intended to address a concern that the burden of the levy would fall on those engaged in the sea fish industries of other EU member states, while the benefits would accrue disproportionately to those engaged in the United Kingdoms sea fish industry. Such a situation would have involved an obvious risk of infringement of European Union law, in the form currently of TFEU article 110, considered below (see Case 73/79, Commission v Italy [1980] ECR 1533) that is the point that the European Commission had been making to the United Kingdom government (para 6 above). Section 2(2A) is in terms which suggest a general concern, whereas the narrower sense would eliminate any impact on the sea fish industries of other member states, with the exception of the catching sector. The predecessor schemes to that introduced by the 1981 Act had all involved levies imposed on imports. In particular, under the Sea Fish Industry Act 1970, the White Fish Authority was given power to impose a general levy on persons engaged in the white fish industry in respect of white fish and white fish products landed in the United Kingdom (section 17(1)(a)) and references to persons so engaged were to be construed as including references to persons carrying on in Great Britain the business of buying the products of white fish by wholesale or of importing white fish or their products (section 17(8)). The Authority had the general function of reorganising, developing and regulating the white fish industry in Great Britain, having regard to the interest of consumers in a plentiful supply of white fish at reasonable prices, as well as to the interests of the different sections of the white fish industry (section 1(1), 4(1) and 27(1)), and persons engaged and vessels used in the industry were required to be registered (sections 8 and 9). For these purposes, a person was without prejudice to section 17(8) . deemed to engage in the white fish industry if he carries on the business of operating vessels to which this Part of the Act applies for catching or processing white fish or for transporting white fish or the products of white fish, or if he carries on in Great Britain the business of selling white fish by wholesale or by retail or of processing white fish (including the business of a fish fryer) (section 27(1)). The conjunction of section 17(1)(a) and section 17(8), which Richards LJ did not mention, makes it impossible to suggest that the 1970 Act did not authorise levies on imports. While the present Authority has no regulatory function, no reason has been suggested for any change of policy under the 1981 Act as regards the ambit of its promotional role or the source of its funding, so as largely to exclude fish importations and importers. It is true that, in the 1981 Act, the reference to persons carrying on in the United Kingdom the business of importing sea fish or sea fish products appears in the interpretation section 14(2) at the end of Part I, rather than in section 2(1) identifying the Authoritys duties or section 4 providing for levies. But that drafting change is of no significance. The interpretation section defines the meanings of the sea fish industry to which the duties imposed by section 2(1) refer and of persons engaged in the sea fish industry on whom levies may be imposed under section 4(1) and (2). It would be particularly surprising therefore if the word landed, introduced in section 4(3) as the basis on which levies may be imposed, had the effect that they could not be imposed at all on a large number of imports. Taking landed in its narrower sense, the reference to sea fish products landed in the United Kingdom in section 4(3)(a) could in fact only apply to the sea fish parts which result from the de heading, gutting and filleting which occurs on board catching or mother vessels and which are by section 4(8) to be treated as sea fish products, rather than as sea fish. Yet section 4(8) is not framed as an exclusive definition, and section 4(4) confirms that the concept of sea fish products is intended to operate more widely. It refers expressly to sea fish products resulting from the addition of other substances or articles to, or their admixture with, fish parts. Section 4(8), providing that landing includes bringing through the Channel Tunnel, is also significant. Richards LJ accepted that, if the narrower sense of landed otherwise applied, the specific provision relating to the Channel Tunnel was a striking anomaly. However, he thought it no more than that, saying that it could not have been intended to have any wider effect on the pre existing statutory language, that, if the wider meaning otherwise applied, then it was not necessary at all and that, if the wider meaning had been otherwise intended, the natural place to make this clear was section 4(8). To my mind these are unconvincing responses to the discriminatory and on its face irrational distinction, between cross Channel imports by ferry or air and by the Tunnel, that results from the narrower sense of the word landed. First, it is clear that section 4(8) in its original form was introduced with a clarificatory intent, to put beyond doubt, rather than because it was actually necessary. The collection and bringing to shore of fish from a fish farm is an activity which one would have thought was anyway embraced within the narrow sense of the word landed. But I can understand the draftsman making this clear, while at the same time assuming that there was no doubt about importations by cross Channel ferry or aircraft constituting landing in the United Kingdom. Secondly, the Channel Tunnel was in 1994 the first land link to the rest of the Continent. One can understand that those responsible for introducing legislation necessary to cater for this new phenomenon might wonder whether goods that remained on (or under) land throughout a Channel crossing could be regarded as landed, and might decide to put that beyond doubt. It is inconceivable that they intended or thought to introduce a striking anomaly or to ensure anything other than a coherent scheme. It is not surprising that they did not cater expressly for cross Channel importations by ferry or air: their remit was no doubt to cater for the Channel Tunnel and their starting point must have been that such importations were already embraced by the word landed. As to the possibility of land importations of fish or fish products across the border from Eire to Northern Ireland, if the original draftsman of the 1981 Act intended the wider sense of landed and directed his or her mind to that possibility at all, he or she must have assumed that the wider meaning of landed would cover it. It is again understandable if those concerned with ensuring that the Channel Tunnel was covered by appropriate legislation did not direct their minds to that specific border. Most of these points were covered in the judges very clear judgment. The Court of Appeals approach does not in my view give due weight to the legislative purpose and scheme as a whole, having particular regard to the definition of persons engaged in the sea fish industry which relates to the Authoritys duties and powers, including its power to levy. Viewed in this context, the word landed, used as a measure of the levies which can be applied, is capable of covering and, to make sense of the legislative purpose and scheme, should be read as covering all sorts of arrival of sea fish and sea fish products in the United Kingdom. The striking anomaly which would otherwise result from the provision catering for the Channel Tunnel is further confirmation of this conclusion. It is in the circumstances unnecessary to address the detailed submissions made by the parties on the admissibility of various exchanges which took place in Parliament during the passage of the 1981 Act as reported in Hansard. A primary issue here was, assuming the relevant provisions to be at least ambiguous, whether and how far it is legitimate to apply the rule in Pepper v Hart [1993] AC 593 to give rise to an expanded power to impose a levy, rather than to narrow executive power. It is not necessary or appropriate to go further into that issue in this case. The wider view of the word landed is, I consider, plainly correct. Suffice it to say, that, had it been appropriate to have regard to Hansard, the ministerial statements in response to specific questions in the course of the Bills passage through Parliament would in my view have confirmed very clearly that it was intended, by section 14(2), to maintain the pre existing levying power in relation to imports generally. The Court of Appeals conclusions on European Union law led it to add that a narrow interpretation of the word landed was in any event required to avoid incompatibility with European Union law: Case 106/89 Marleasing SA v La Comercial Internacional de Alimentacin SA [1991] ECR I 4135. For reasons which will appear in the next section of this judgment, I do not agree with the Court of Appeals conclusion on European Union law. But, even if I had done, I would not have considered them to require a narrow interpretation of landed. The wider meaning would have been compatible with the making of regulations which complied with European Union law. The incompatibility would have affected the validity of the present regulations, not the interpretation of the 1981 Act. A charge having equivalent effect to customs duty (CEE)? (a) The law The second issue which arises in the light of my conclusion on the first issue is whether the levy constitutes a charge having equivalent effect to customs duty (a CEE) in respect of imports of sea fish or sea fish products from other member states of the European Union, contrary to TFEU articles 28 and 30. If it is a CEE, then it is in relation to such imports void. If it is not, it may fall to be considered as an internal tax or due within article 110, in which case it will be valid except to the extent that it may be held to be discriminatory in relation to imports from other member states. The articles to which I have referred provide as follows: PART 3 UNION POLICIES AND INTERNAL ACTIONS TITLE II FREE MOVEMENT OF GOODS Article 28 The Union shall comprise a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries. CHAPTER 1 THE CUSTOMS UNION Article 30 Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature. TITLE VII COMMON RULES ON COMPETITION. TAXATION AND APPROXIMATION OF LAWS Article 110 No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products. Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products. The distinction between a CEE within articles 28 and 30 and a tax within article 110 is clear cut in principle. The two are alternatives, and a levy must fall into one category or the other. It cannot fall into both. But it is not always easy in practice to decide into which category a levy does fall. The distinction, though clear cut, can be very fine. So Advocate General Jacobs observed in Case C 90/94 Haahr Petroleum Ltd v benr Havn [1997] ECR I 4085, para 38 and again in Case C 213/96 Proceedings brought by Outokumpu Oy [1998] ECR I 1777, para 15. The underlying objective is the same, to avoid discrimination against goods from other member states, and overlapping considerations apply in relation to each. However, it is clear that a charge may be within the scope of and in breach of article 110 without this meaning that it is or becomes a CEE prohibited under articles 28 and 30: see eg Case 32/80 Officier van Justitie v Kortmann [1981] ECR 251, para 18 (which reads more intelligibly in the French), Haahr, paras 25 44 and Joined Cases C 78/90 to C 83/90 Compagnie commerciale de lOuest v Receveur principal des douanes de La Pallice Port [1992] ECR I 1847, discussed below. There are thus different stages at which a question of prohibited discrimination may arise; one is where a charge constitutes a CEE, the other is where it does not constitute a CEE but is part of a general system of internal dues organised in a manner which discriminates against products originating in another member state. The principal feature of a CEE is that it is levied solely or exclusively by reason of goods crossing the frontier, whereas domestic products are excluded from similar charge. Internal taxation within article 110 falls in contrast on both imported and domestic products: Case 78/76 Firma Steinike und Weinlig v Germany [1977] ECR 595, paras 28 29, Case 32/80 Officier van Justitie v Kortmann [1981] ECR 251, para 18 and Outokumpu, para 27. However, a charge may be regarded as levied solely or exclusively by reason of its crossing the frontier, although it is applied at a later stage, such as marketing or processing of the product: Steinike, para 29. The Court amplified the distinction as follows in Steinike: . the prohibition [of a CEE] is aimed at any tax demanded at the time of or by reason of importation and which, being imposed specifically on an imported product to the exclusion of a similar domestic product, results in the same restrictive consequences on the free movement of goods as a customs duty by altering the cost price of that product. The essential characteristic of a charge having an effect equivalent to a customs duty, which distinguishes it from internal taxation, is that the first is imposed exclusively on the imported product whilst the second is imposed on both imported and domestic products. A charge affecting both imported products and similar products could however constitute a charge having an effect equivalent to a customs duty if such a duty, which is limited to particular products, had the sole purpose of financing activities for the specific advantage of the taxed domestic products, so as to make good, wholly or in part, the fiscal charge imposed upon them. 28. The last sentence (not directly relevant on the present appeal and deriving originally from Case 77/72 Capolongo v Maya [1973] ECR 611) needs to be read with the fuller explanation or qualification given in the later Joined Cases C 78/90 to C 83/90 Compagnie commerciale de lOuest v Receveur principal des douanes de La Pallice Port [1992] ECR I 1847: 26 Where a charge is imposed on domestic and imported products according to the same criteria, the Court has nevertheless stated that it may be necessary to take into account the purpose to which the revenue from the charge is put. Thus, if the revenue from such a charge is intended to finance activities for the special advantage of the taxed domestic product, it may follow that the charge imposed on the basis of the same criteria nevertheless constitutes discriminatory taxation in so far as the fiscal burden on the domestic products is neutralized by the advantages which the charge is used to finance whilst the charge on the imported product constitutes a net burden (judgment in Case 73/79 Commission v Italy [1980] ECR 1533, para 15). 27 It follows from the foregoing considerations that if the advantages stemming from the use of the proceeds of the charge in question fully offset the burden borne by the domestic product when it is placed on the market, that charge constitutes a charge having an effect equivalent to customs duties, contrary to article 12 [now 30] et seq of the Treaty. If, on the other hand, those advantages only partly offset the burden borne by domestic products, the charge in question is subject to article 95 [now 110] of the Treaty. In the latter case, the charge would be incompatible with article 95 [110] of the Treaty and is therefore prohibited to the extent to which it discriminates against imported products, that is to say to the extent to which it partially offsets the burden borne by the taxed domestic product. This explanation helps to point the differing spheres of operation of a CEE prohibited under articles 28 and 30 and an internal, but none the less discriminatory, tax falling within article 110. In the present case, the respondents did in their pre trial skeleton argument seek to raise a case that the levy amounted to a CEE because its benefits went exclusively to domestic sea fish and products, or alternatively that it infringed article 110 because the latter derived proportionately greater benefit than imported sea fish and products. This case raised factual issues which the judge ruled could not be dealt with at the trial. However, by post trial order dated 24 July 2009, I understand that he ultimately permitted them to be raised by amendment as a separate issue for subsequent trial. A charge levied by reason of goods crossing a frontier will not be regarded as a CEE if it forms part of a general system of internal dues applied systematically to categories of products according to objective criteria applied without regard to the origin of the products. This or a close approximation is the formulation used in a large number of authorities from Case C 90/79 Commission v France [1981] ECR 283 to Case C 314/82 Commission v Belgium [1984] ECR 1543, paras 11, 13 and 19, Case C 90/94 Haahr Petroleum Ltd v benr Havn, above, para 20, Case C 213/96 Outokumpu, above, para 20, Case C 234/99 Nygrd v Svineafgiftsfonden [2002] ECR I 3657, para 29 and Case C 387/01 Weigel v Finanzlandesdirektion fr Vorarlberg [2004] ECR I 4951, para 64. Another way of analysing the position may be that, if a charge forms part of a general system of internal dues meeting these conditions, then it is not imposed solely by reason of the goods crossing the frontier. If a charge forms part of such a general system of internal dues, any suggestion of discrimination will fall to be considered under article 110. The Court said in Steinike, para 30, that: The objective of article 95 [now 110] is to abolish direct or indirect discrimination against imported products but not to place them in a privileged tax position in relation to domestic products. There is generally no discrimination such as is prohibited by article 95 [110] where internal taxation applies to domestic products and to previously imported products on their being processed into more elaborate products without any distinctions of rate, basis of assessment or detailed rules for the levying thereof being made between them by reason of their origin. As an example, in Haahr a 40% import surcharge imposed on goods imported into Denmark by ship from other member states was held not to be a CEE. Rather it was (as a surcharge) an integral part of a general system of internal dues for the use of commercial ports and their facilities imposed on goods, both domestic and imported, at the same time and in accordance with the same objective criteria, namely when they are taken on board or put ashore and according to the type of goods and their weight (paras 21 24); and, as a result: the fact that the import surcharge is payable ex hypothesi solely on imported goods and that the origin of the goods determines the amount of the duty to be levied cannot remove the tax in general or the surcharge in particular from the scope of article 95 [now 110] of the Treaty; accordingly, their compatibility with Community law must be assessed in the light of that provision and not articles 9 to 13 [now 28 to 31] of the Treaty The Court went on (in para 27) to refer to the issue of discrimination that can arise under article 110, saying: It is . beyond question that application of a higher charge to imported products than to domestic products or application to imported products alone of a surcharge in addition to the duty payable on domestic and imported products is contrary to the prohibition of discrimination laid down in article 95 [now 110]. The respondents rely upon statements from another case, important in the development of the case law under what are now articles 28 and 30 and pre dating those cited in paragraph 29 above: Case 132/78 Denkavit Loire Srl v France [1979] ECR 1923. The Court there explained the criteria identifying a CEE, and distinguished a CEE from an internal tax within article 110, using somewhat different wording. The respondents suggest that this wording establishes a need for identical treatment of imported and other goods in every relevant respect, before a levy will avoid being categorised as a CEE. In particular, the Court in Denkavit referred to systematic application in accordance with the same criteria to domestic products and imported products alike (para 7) and continued (para 8): It is however appropriate to emphasise that in order to relate to a general system of internal dues, the charge to which an imported product is subject must impose the same duty on national products and identical imported products at the same marketing stage and that the chargeable event giving rise to the duty must also be identical in the case of both products. It is therefore not sufficient that the objective of the charge imposed on imported products is to compensate for a charge imposed on similar domestic products or which has been imposed on those products or a product from which they are derived at a production or marketing stage prior to that at which the imported products are taxed. To exempt a charge levied at the frontier from the classification of a charge having equivalent effect when it is not imposed on similar national products or is imposed on them at different marketing stages or, again, on the basis of a different chargeable event giving rise to duty, because that charge aims to compensate for a domestic fiscal charge applying to the same products apart from the fact that this would not take into account fiscal charges which had been imposed on imported products in the originating Member State would make the prohibition on charges having an effect equivalent to customs duties empty and meaningless. The requirements set out in the first sentence of para 8 in Denkavit have themselves been echoed in a number of cases, including Joined Cases C 149/91 and C 150/91 Sanders Adour Snc v Directeur des Services Fiscaux des Pyrnes Atlantiques [1992] ECR I 3899 at para 17, Outokumpu at para 24, Joined Cases C 441/98 and C 442/98 Kapniki Mikhailidis AE v Idryma Kinonikon Asphaliseon [2000] ECR I 7145 and Nygrd at para 20. The same requirements have however been given a generous interpretation. In Sanders the Court said (para 18): As to the requirement that the chargeable events be identical, no difference may be discerned in the present case in the fact that the charge is levied on an imported product at the time of importation and on the domestic product when it is sold or used, for in actual economic terms the marketing stage is the same since both operations are carried out with a view to utilisation of the product. In Outokumpu the Court treated a duty on electricity as forming part of a general system of taxation (and so within article 110, rather than the equivalents of articles 28 and 30) although it was levied not only on electrical energy as such but also on several primary energy sources such as coal products, peat, natural gas and pine oil (para 21). The duty was levied on these primary sources, on electricity produced from other sources domestically and on imported electricity, and the Court, citing Sanders, para 18, said at para 25 that: . in circumstances such as those of this case, no difference may be discerned in the fact that imported electricity is taxed at the time of importation and electricity of domestic origin at the time of production, since in view of the characteristics of electricity the marketing stage is the same for both operations, namely the stage when the electricity enters the national distribution network . In the same case, at para 30, Advocate General Francis Jacobs QC noted that in previous decisions the Court had accepted that a tax on the wort used in making beer domestically and a tax on imported beer adjusted to take account of the notional amount of wort used in its overseas production fell within article 110, rather than the equivalents of articles 28 and 30: Case 152/89 Commission v Luxembourg [1991] ECR I 3141 and Case 153/89 Commission v Belgium [1991] ECR I 3171. In Nygrd the Court held that a levy on pigs sent for slaughter on the domestic market and exported live to other member states satisfied similarly stated requirements. Citing Sanders, para 18, and Outokumpu, para 25, it said that: 29. the event giving rise to the levy here in issue in the main proceedings must be considered to be the withdrawal of the pigs from the national herd, regardless of whether that levy is charged on pigs intended for slaughter in Denmark or for live export. In both cases, therefore, the fiscal obligation arises when the animals leave the primary national production. 30 In those circumstances, no difference may be discerned in the fact that pigs exported live are taxed at the time of exportation, whereas pigs intended for slaughter on the national market are taxed at the time of supply for purposes of slaughter, as in real economic terms those two moments correspond to the same marketing stage, both operations being carried out with a view to releasing the pigs from national primary production . The approach in these cases is consistent with that taken in the earlier case of Case 90/79 Commission v France [1981] ECR 283, where the Court addressed the situation of a French levy on sales and appropriations for own use, other than for export, of reprographic machines, in circumstances where 99% of such machines were imported. The Court said (para 14) that: . even a charge which is borne by a product imported from another Member State, when there is no identical or similar domestic product, does not constitute a charge having equivalent effect but internal taxation within the meaning of article 95 of the Treaty if it relates to a general system of internal dues applied systematically to categories of products in accordance with objective criteria irrespective of the origin of the products. It went on to treat the levy as internal taxation because its purpose was to redress the inequity resulting from the copying of published material, which would, if sold and bought in published form, have attracted a levy, and because it could be regarded as part of the same internal system of taxation as that levy: 16 The Court is of the opinion that the particular features of the levy in issue lead to its being accepted as forming part of such a general system of internal dues. That follows first from its inclusion in taxation arrangements which have their origin in the breach made in legal systems for the protection of copyright by the increase in the use of reprography and which are designed to subject, if only indirectly, the users of those processes to a charge which compensates for that which they would normally have to bear. 17 That conclusion follows in the second place from the fact that the levy in issue forms a single entity with the levy imposed on book publishers by the same internal legislation and from the fact, too, that it is borne by a range of very different machines which are moreover classified under various customs headings but which have in common the fact that they are all intended to be used for reprographic purposes in addition to more specific uses. (b) Application of the law to this case Applying the guidance given in these authorities to the present case, the first question is whether the regulations impose any levy on sea fish and sea fish products by reason of their crossing a frontier within the European Union. In Weigel the Court held that a tax imposed on the registration of second hand vehicles, as well as vehicles sold and hired out for the first time for use on the road, was not, in the case of an imported second hand car, imposed by reason of its import, but by reason of the need to register it. In the present case, however, the levy is expressly authorised to be imposed on importers in respect of sea fish and sea fish products landed (accepting, as I do, the wider sense) from other member states, after first landing outside the United Kingdom. The consideration that, under regulation 5, a firsthand sale is also required as the trigger for a chargeable event does not alter the fact that the levy is imposed by reason of the import: see Steinike, para 29, cited above. That does not conclude the matter, or mean that the levy is imposed solely or exclusively by reason of the import, in particular if the levy forms part of a general system of internal dues applied systematically to categories of products according to objective criteria applied without regard to the origin of the products, or, to the extent that this differs, meets the generously interpreted requirements that it impose[s] the same duty on national products and identical imported products at the same marketing stage and that the chargeable event giving rise to the duty must also be identical in the case of both products: see paras 30 to 39 above. On this, Richards LJ said: 55. In purely formal terms the 1995 Regulations appear to meet those requirements. They lay down a uniform system that draws no distinction between domestic and imported products as regards rates of levy, production or marketing stage or chargeable event. The authorities make clear, however, that one must look beyond form and examine contents and effects. It is here that, in my judgment, the scheme runs into difficulties in relation to sea fish products that have been processed on land. By virtue of regulation 4(1)(a), a levy is payable by a person who purchases a sea fish product on a firsthand sale. That takes one to the definition of firsthand sale in regulation 2. Imported products are covered by paragraph (b) of that definition, the application of which will in practice generally produce a liability to levy, since there will be both an importation and a first sale of the products to a relevant person. Domestic products are covered by paragraph (a) of the definition, but the application of that paragraph will in practice produce no liability to levy. That is because liability arises only in relation to sea fish products which have been "first landed" in the United Kingdom; but products resulting from processing on land are in no sense "landed", let alone "first landed", in the United Kingdom. The sea fish or sea fish product ingredients from which they are produced may have been first landed in the United Kingdom, but the resulting products are not. 56. In practice, therefore, the 1995 Regulations involve a material difference of treatment between domestic and imported products. This reasoning compares the levy payable on fish products imported into and bought by an importer, wholesaler or retailer carrying on business in the United Kingdom with the levy which it is assumed is not payable in respect of sea fish products which are both manufactured and sold in the United Kingdom. However, sea fish products which are imported into and sold in the United Kingdom will be subject, in accordance with section 4(4) of the Act and the regulations, to a levy which will reflect their sea fish content. If sea fish products are manufactured in the United Kingdom from sea fish or sea fish products first landed in the United Kingdom which have themselves been the subject of a firsthand sale (or either of the other two levy triggering events identified in regulation 4(1)), the sea fish content of the subsequently manufactured sea fish products will have borne the levy, as a result of its imposition on the sea fish or sea fish products used in their manufacture. Regulation 4(6) confirms that the manufactured sea fish products cannot themselves attract the levy on any sale. But the reverse implication from regulation 4(6) is that, if sea fish products are manufactured in the United Kingdom from sea fish or sea fish products first landed in the United Kingdom which have not themselves been the subject of a firsthand sale (or either of the other two levy triggering events identified in regulation 4(1)), then the subsequently manufactured sea fish products will bear the levy according to their sea fish content. The manufactured sea fish products must in this connection be equated with the sea fish or sea fish products from which they were manufactured. The wording of the regulations is not perfect, but they must be read as intended to introduce a coherent scheme. It cannot have been intended that sea fish products manufactured in the United Kingdom from sea fish or sea fish products first landed in the United Kingdom which have not themselves been the subject of levy should escape the levy. This conclusion could, if it were necessary, also be reinforced by the consideration that, if the regulations would otherwise involve what would be a CEE favouring certain domestic producers as opposed to importers (as the Court of Appeal thought), then this too cannot have been intended, and the regulations should not be interpreted in this sense: Case 106/89 Marleasing SA v La Comercial Internacional de Alimentacin SA [1991] 1 ECR 4135. Even on such an analysis, it appears that Richards LJ may have considered that the levy would constitute a CEE since it would involve the imposition of charges at differing production or marketing stages, which is impermissible although their effect is to compensate or balance each other. I say appears, because a later comment in para 60 of his judgment (to which I will revert) leaves room for doubt. On the other hand, he was not impressed by submissions that the scheme involved different chargeable events or higher rates on imported than domestic products (para 62). As to the imposition of the levy at differing production or marketing stages, Richards LJ relied upon Denkavit and Kapniki. In Denkavit the impugned tax was payable on lard and other pig fat produced by rendering or solvent extracted. The only relevant domestic charge was levied on slaughter. The Court said that a charge was a CEE, when it is imposed on imported goods, even though no charge is imposed on similar domestic products or according to different criteria, in particular by reason of a different chargeable event. In Kapniki a special contribution (to go towards pensions and compensation payable to tobacco workers) was charged on unprocessed tobacco exported from Greece. A preliminary ruling was sought on the basis that no equivalent contribution was levied on either imports or domestic products distributed in the home market, and it was unclear that any other tax on tobacco existed in any form at the relevant times, apart from VAT and excise duties on the retail consumption of processed tobacco. Not surprisingly, the Court expressed serious doubts as to whether the special contribution matched any comparable charge levied on domestic products at the same rate and marketing stage and on the basis of an identical chargeable event, while emphasising that it was for the national court alone to determine the exact effect of the national legislative provisions at issue (para 25). In contrast to the position in these cases, the present scheme identifies, according to objective criteria, the time when sea fish or sea fish products can be said to enter the United Kingdom market on a commercial basis, following upon their production or importation and firsthand sale (in whichever order these events occur). In effect, it is as the judge said (para 125) imposed when the sea fish is placed on the market and enters the supply chain. As the judge went on to note: the rate of levy paid on processed and unprocessed fish is proportionately the same, since the rate of levy rises according to the proportion of inedible parts removed by processing, and (one can add) is adjusted to leave out of account any other substance or article added to or mixed with sea fish parts to make a sea fish product these being the requirements of section 4(4). If a general system of taxation within article 110 covers a tax on wort used in domestic production and a tax on beer reflecting the wort assessed as to have been used in the overseas production of imported beer (see para 37 above), that points strongly to the present scheme falling within article 110, rather than involving any CEE. If, as in Outokumpu (para 36 above), an internal system of taxation within article 110 may embrace not only electricity imported and electricity produced domestically, but also a levy not only on electrical energy as such but also on several primary energy sources such as coal products, peat, natural gas and pine oil (para 21), then such a system must be well capable of embracing the present scheme. So too, if, as in Commission v France (para 39 above), a levy on the sale or appropriation for use (other than for export) constitutes part of such an internal system, and a fortiori when the Courts analysis was that the levy forms a single entity [forme un ensemble] with the levy imposed on book publishers. Like both the judge (and in this respect it seems also the Court of Appeal: para 62), I am also unable to accept that the chargeable events under the present scheme operate upon materially different bases, where, as here, the difference is as to whether the levy attaches on import or sale, but in actual economic terms the marketing stage is the same since both operations are carried out with a view to utilisation of the product: see Sanders, para 18 (para 35 above). Arguments that the judge wrongly took the actual levies on domestic and imported sea fish or sea fish products as equating with each other were barely if at all raised, and I reject them both on the ground of the judges contrary finding and in any event. I also doubt if they have any relevance under articles 28 and 30, as opposed to article 110. It follows that I have no doubt that the present carefully structured scheme falls to be regarded as a general system of internal dues applied systematically to categories of products according to objective criteria applied without regard to the origin of the products within the requirements of the case law set out in paras 26, 30 and 33 34 above. It falls therefore within the scope of article 110, rather than constituting a CEE under articles 28 and 30. It also appears from para 60 of Richards LJs judgment that the Court of Appeal might itself have reached this conclusion, but for its view that sea fish products manufactured in the United Kingdom where there had been no sale of (or therefore levy on) either the sea fish or the sea fish products from which they were manufactured, escape all levy. I have already indicated my disagreement with that view (paras 43 44 above). The respondents suggested that, unless the appeal was dismissed, there should, before its resolution, be a preliminary reference to the Court of Justice under TFEU article 267. The Court of Justice has however established the principles in a large number of authorities, including those which I have examined, in a manner which enables its resolution. As the Court has stressed, it is for national courts to apply such principles to particular facts even in cases as apparently unpromising from the national governments viewpoint as Kapniki (para 46 above). The Court of Justices role is one of interpretation, the national courts one of application. There is no need to refer any question of principle to the Court of Justice in order to resolve this appeal. This is despite the Court of Appeals differing conclusion as to the outcome, which in any event appears, as I have said (paras 43 45 and 50 above), to have revolved substantially if not entirely around a point of construction of the domestic regulations. Additional points Before the Supreme Court, the respondents sought to raise two additional points. The first is that the prohibition of any CEE applies not merely to imports from other member states of the European Union, but to imports from other states in particular where a common customs tariff applies in respect of those products and there is a Cooperation Agreement between the EU and the countries from which the products are imported. This is a new point. It is one which cannot arise in view of my conclusion that the levy does not impose a CEE within articles 28 and 30, and I need say no more than that. But I would add that it would have involved enquiries, eg as to the existence and dates of entry into force of any relevant common customs tariffs and Cooperation Agreements (see eg Case C 126/94 Socit Cadi Surgels v Ministre des Finances [1996] ECR I 5647). This would in my view have made it in any event inappropriate to entertain it for the first time on this appeal. The second is that, if article 110 applies, then the levy imposed taxation in excess of that imposed on similar domestic products. The respondents wish is, in other words, to argue a point along the lines contemplated in Steinike, para 30 (para 31 above) and in Haahr (para 32 above) to the effect that, although the levy was part of a general system of internal taxation, it involved distinctions of rate, basis of assessment or detailed rules for the levying thereof being made on imported sea fish or sea fish product by reason of their origin. This is also a new point, not covered by the judgment below or, so far as one can judge, by the permission to amend given by the judge on 29 June 2009, and it is also not one which this Court should now entertain. Conclusion I would allow the appeal and make such orders as are appropriate to restore the judges judgment dismissing the respondents claim and allow the Authoritys counterclaim for levy and otherwise. LORD PHILLIPS I agree with the judgment of Lord Mance on each of the issues that arise on this appeal. The first is one of statutory interpretation and I wish to add some comments on this, because there is one feature of this case which is unusual, and which should not pass unnoticed. The issue of interpretation turns on the meaning to be attached to landed in the United Kingdom in section 4(3)(a) of the Fisheries Act 1981. Does this mean brought ashore for the first time in the United Kingdom (the narrow meaning), or does its meaning extend to embrace bringing onto the territory of the United Kingdom, whether directly from the sea or indirectly after having been brought ashore in another country (the broad meaning)? The unusual feature is that for nearly thirty years everyone concerned has proceeded on the basis that the phrase should be given the broad meaning. Thus the levy has been imposed and paid not only on fish and fish products brought ashore for the first time in the United Kingdom, but fish and fish products imported into the United Kingdom from other countries. The funds raised by the levy have been disbursed in payment for schemes intended to benefit the sea fish industry, which includes those whose business involves importing sea fish or sea fish products from other countries. By the time that these proceedings were commenced some 75% of the levy income was derived from imports. If the decision of the Court of Appeal is correct, the activities of the Authority must be drastically curtailed. Indeed, I would expect that the impact of potential claims for reimbursement of monies wrongfully levied would render the Authority insolvent. In circumstances such as these 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. Carnwath LJ expressed one reason for this in Isle of Anglesey County Council v Welsh Ministers [2009] EWCA Civ 94, [2010] QB 163: 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. This has the air of pragmatism rather than principle, but courts are understandably reluctant to disturb a settled construction and the practice that has been based on that construction see Bennion on Statutory Interpretation, 5th ed (2008), section 288 at p 913 and the authorities there cited. A more principled justification for the principle is that of contemporaneous exposition. Thus in Clyde Navigation (Trustees of) v Laird & Sons (1883) 8 App Cas 658 the issue was whether the Clyde Navigation Consolidation Act 1858 required dues to be paid on logs which were chained together and floated down the River Clyde. The evidence was that these dues had been levied and paid without protest for a quarter of a century. Lord Blackburn commented at p 670 that this raised a strong prima facie ground for thinking that there must exist some legal ground for exacting the dues. Lord Watson at p 673 did not, however, agree with this approach. 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. The 1981 Act was introduced as a successor to legislation of similar character dating back to 1935. I would not readily have been persuaded that those who, when the 1981 Act came into force, charged and paid levies on imports of fish and fish products had misunderstood the effect of the Act. The Court of Appeal reached this conclusion, however, on the basis of a narrow textual analysis that was, in my view, flawed and which produced a number of anomalies. The textual analysis was flawed because it was dictated by the concept of landing a fish, which does indeed naturally suggest the bringing of the fish ashore for the first time. It did not, however, give proper weight to the fact that the landing referred to was not just of sea fish but of sea fish products. While these included parts of sea fish it was not suggested, nor sensibly could it have been, that sea fish products were confined to parts of sea fish. As soon as one applies the meaning of landed in the United Kingdom to products the natural conclusion is that these must include products produced from fish brought ashore in countries other than the United Kingdom, so that landed must bear the broader meaning. The anomalies produced by giving landed the narrow meaning are two fold. The first is that it produces a disparity between those who contribute to the levy and those who benefit from it. Those who carry on the business of importing sea fish or sea fish products are included in those for whose benefit the funds raised by the levy are used (see sections 2(1) and 14 (2)), but do not have to contribute to it. The second anomaly, recognised by Richards LJ, relates to the amendment made to section 4(8) by the Channel Tunnel (Amendment of the Fisheries Act 1981) Order 1994 (SI 1994/1390). If landed means brought ashore for the first time it is a nonsense to extend its meaning to cover sea fish or fish products brought into the United Kingdom through the Channel Tunnel. Hamblen J referred to the principle that the meaning and effect of an amended statute should generally be ascertained by an examination of the language of that statute as amended (Inco Europe Ltd v First Choice Distribution [1999] 1 WLR 270, 272 273). I do not think that that is the correct approach in this case. Had it been right to interpret landed as bearing the narrow meaning before this amendment was made, I do not consider that it would have been right to treat this amendment as altering the overall interpretation of the Act so as to give landed the broad meaning. The amendment was peripheral to the Act as a whole and it would not have been right to allow the tail (the amendment) to wag the dog (the Act). The significance of the amendment is that it reflects the accepted meaning given by everybody, including Parliament, to the meaning of landed. It thus reinforces the principle that I have identified at paras 58 to 61 above. The same point applies to the insertion of section 2(2A) by the Fisheries Act 1981 (Amendment) Regulations 1989. It is for these reasons that I agree with the conclusions of Lord Mance in relation to the first issue. I have nothing to add to his analysis in respect of the second issue. Accordingly I would allow this appeal. |
These appeals concern requests made for the surrender under Part 1 of the Extradition Act 2003 of three persons wanted to serve sentences imposed upon their conviction in other member states of the European Union. The requests relating to the appellants Mindaugas Bucnys (Bucnys) and Marius Sakalis (Sakalis) come from the Ministry of Justice of the Republic of Lithuania. The third request, relating to the respondent Dimitri Lavrov (Lavrov), comes from the Ministry of Justice of the Republic of Estonia. The Ministries made the requests in the form of European arrest warrants intended to meet the requirements of Council Framework Decision 2002/584/JHA on the European arrest warrant and surrender procedures between member states of the European Union (the Framework Decision). Within the United Kingdom, Part 1 of the Extradition Act 2003 was enacted to give effect to the same requirements. Under section 2(7) of the 2003 Act the requests were, after receipt in this country, certified by the Serious Organised Crime Agency (SOCA), the designated authority under section 2(9), as Part 1 warrants issued by a judicial authority of a category 1 territory having the function of issuing arrest warrants. The questions of principle raised by the present appeals are whether the requests are open to challenge on the basis that (i) they were not the product of a judicial decision by a judicial authority within the terms of the Framework Decision and/or of Part 1 of the United Kingdom Extradition Act 2003, and (ii) the Ministries making them did not have the function of issuing domestic arrest warrants and were incorrectly certified by SOCA under section 2(7) of the 2003 Act. If a challenge is open on either or both of these bases, the third question is (iii) whether the challenge is on the evidence well-founded in the case of either or both of the Ministries. The Administrative Court (Aikens LJ and Globe J) on 12 December 2012 answered the first question in the affirmative and the second in the negative: [2013] 1 All ER 1220. As to the third, it concluded that a ministry of justice would under European law be regarded as a judicial authority for the purposes of issuing a conviction warrant if it was sufficiently independent of the executive for the purposes of making that judicial decision (para 98); it held further that the antecedent process, in the form of a request for the issue of a European arrest warrant coming from the court responsible for the conviction, was relevant, and that, in the light of these considerations, the requests made by the Ministry of Justice of Lithuania in the cases of Bucnys and Sakalis were valid, while the request made by the Ministry of Justice of Estonia in the case of Lavrov was invalid. Bucnys and Sakalis now appeal, while the Estonian Ministry appeals in the case of Lavrov. The bases of the requests The request in respect of Bucnys results from his conviction for six housebreaking and one fraud offences, for which a total sentence of 5 years 4 months was passed on 29 February 2007. He was released conditionally by the Alytus Region District Courts order on 12 September 2008, but on 20 February 2010 the Vilnius City 1st District Court quashed his conditional release for failure to abide by the condition, requiring him to serve a further period of 1 year 7 months 28 days. The request for his surrender was expressed to be based on this court order dated 20 February 2010. Since preparing this judgment, the court has been informed by those instructed by Bucnys that he has died, presumably since the hearing. The issue raised remains of general importance, and this judgment records the Courts conclusions on it. Sakalis is wanted as a result of his conviction of a series of serious sexual assaults, including buggery, inflicted on the same victim on 28 October 2006. A sentence of 4 years was imposed by the Vilnius City 1st District Court on 25 January 2008, and his appeal was dismissed in his absence by the Vilnius County Court on 24 December 2008. Sakalis absconded before serving any part of this sentence. The request for his surrender was issued by the Minister of Justice signing as representative of the Ministry of Justice. Lavrov is wanted as a result of murder of an invalid paranoid schizophrenic in the nursing home where Lavrov worked as a medical orderly. He was sentenced to 13 years imprisonment on 23 March 2001, released on parole on 14 July 2008 with an obligation to fulfil supervision requirements. He was recalled to prison by the Viru County Court on 2 December 2009 for failure to fulfil such requirements, meaning that he would have to serve a further 4 years 2 months and 25 days in prison, but he absconded. On 9 February 2010 the Viru County Court issued an arrest warrant. On 10 February 2011, it sent a request to the Ministry of Justice to issue a warrant, leading to the Head of the Ministrys International Cooperation Unit issuing the request in issue dated 31 May 2011, expressed to be on the basis of the warrant dated 9 February 2010. Extradition Act 2003 and Framework Decision Section 2 of the 2003 Act, as amended by section 42 of, and paragraph 1(1) of Schedule 13 to, the Police and Justice Act 2006, reads: Part 1 warrant and certificate (1) This section applies if the designated authority receives a Part 1 warrant in respect of a person. (2) A Part 1 warrant is an arrest warrant which is issued by a judicial authority of a category 1 territory and which contains (a) . , or (b) the statement referred to in subsection (5) and the information referred to in subsection (6) . (5) The statement is one that (a) the person in respect of whom the Part 1 warrant is issued has been convicted of an offence specified in the warrant by a court in the category 1 territory, and (b) the Part 1 warrant is issued with a view to his arrest and extradition to the category 1 territory for the purpose of being sentenced for the offence or of serving a sentence of imprisonment or another form of detention imposed in respect of the offence. (6) The information is (a) particulars of the person's identity; (b) particulars of the conviction; (c) particulars of any other warrant issued in the category 1 territory for the person's arrest in respect of the offence; (d) particulars of the sentence which may be imposed under the law of the category 1 territory in respect of the offence, if the person has not been sentenced for the offence; (e) particulars of the sentence which has been imposed under the law of the category 1 territory in respect of the offence, if the person has been sentenced for the offence. (7) The designated authority may issue a certificate under this section if it believes that the authority which issued the Part 1 warrant has the function of issuing arrest warrants in the category 1 territory. (8) A certificate under this section must certify that the authority which issued the Part 1 warrant has the function of issuing arrest warrants in the category 1 territory. (9) The designated authority is the authority designated for the purposes of this Part by order made by the Secretary of State.... The Framework Decision was a third pillar measure agreed between member states under Title VI of the Treaty on European Union (TEU) in its pre- Lisbon Treaty form. The heading of Title VI is Provisions on Police and Judicial Cooperation in Criminal Matters. The Framework Decision was expressed to be made with regard to the TEU and in particular Article 31(a) and (b) [sic] and Article 34(2)(b) thereof. Article 31(1)(a) and (b) are for present purposes relevant: 31(1). Common action on judicial cooperation in criminal matters shall include: (a) facilitating and accelerating cooperation between competent ministries and judicial or equivalent authorities of the member states, including, where appropriate, cooperation through Eurojust, in relation to proceedings and the enforcement of decisions; (b) facilitating extradition between member states; .. The Framework Decision starts with recitals, stating inter alia: (5) The objective set for the Union to become an area of freedom, security and justice leads to abolishing extradition between member states and replacing it by a system of surrender between judicial authorities. Further, the introduction of a new simplified system of surrender of sentenced or suspected persons for the purposes of execution or prosecution of criminal sentences makes it possible to remove the complexity and potential for delay inherent in the present extradition procedures. Traditional cooperation relations which have prevailed up till now between member states should be replaced by a system of free movement of judicial decisions in criminal matters, covering both pre-sentence and final decisions, within an area of freedom, security and justice. (6) The European arrest warrant provided for in this Framework Decision is the first concrete measure in the field of criminal law implementing the principle of mutual recognition which the European Council referred to as the cornerstone of judicial cooperation. . (8) Decisions on the execution of the European arrest warrant must be subject to sufficient controls, which means that a judicial authority of the member state where the requested person has been arrested will have to take the decision on his or her surrender. (9) The role of central authorities in the execution of a European arrest warrant must be limited to practical and administrative assistance. The text of the Framework Decision provides: GENERAL PRINCIPLES Article 1 Definition of the European arrest warrant and obligation to execute it 1. The European arrest warrant is a judicial decision issued by a member state with a view to the arrest and surrender by another member state of a requested person, for the purposes of conducting a criminal prosecution or executing a custodial sentence or detention order. 2. Member states shall execute any European arrest warrant on the basis of the principle of mutual recognition and in accordance with the provisions of this Framework Decision. 3. This Framework Decision shall not have the effect of modifying the obligation to respect fundamental rights and fundamental legal principles as enshrined in Article 6 of the Treaty on European Union. Article 6 Determination of the competent judicial authorities 1. The issuing judicial authority shall be the judicial authority of the issuing member state which is competent to issue a European arrest warrant by virtue of the law of that State. 2. The executing judicial authority shall be the judicial authority of the executing member state which is competent to execute the European arrest warrant by virtue of the law of that state. 3. Each member state shall inform the General Secretariat of the Council of the competent judicial authority under its law. Article 7 Recourse to the central authority 1. Each member state may designate a central authority or, when its legal system so provides, more than one central authority to assist the competent judicial authorities. 2. A member state may, if it is necessary as a result of the organisation of its internal judicial system, make its central authority(ies) responsible for the administrative transmission and reception of European arrest warrants as well as for all other official correspondence relating thereto. Member state wishing to make use of the possibilities referred to in this article shall communicate to the General Secretariat of the Council information relating to the designated central authority or central authorities. These indications shall be binding upon all the authorities of the issuing member state. Article 8 Content and form of the European arrest warrant 1. The European arrest warrant shall contain the following information set out in accordance with the form contained in the Annex: (a) the identity and nationality of the requested person; (b) the name, address, telephone and fax numbers and e-mail address of the issuing judicial authority; (c) evidence of an enforceable judgment, an arrest warrant or any other enforceable judicial decision having the same effect, coming within the scope of articles 1 and 2; (d) the nature and legal classification of the offence, particularly in respect of article 2; (e) a description of the circumstances in which the offence was committed, including the time, place and degree of participation in the offence by the requested person; (f) the penalty imposed, if there is a final judgment, or the prescribed scale of penalties for the offence under the law of the issuing member state; (g) if possible, other consequences of the offence. SURRENDER PROCEDURE Article 9 Transmission of a European arrest warrant 1. When the location of the requested person is known, the issuing judicial authority may transmit the European arrest warrant directly to the executing judicial authority. 2. The issuing judicial authority may, in any event, decide to issue an alert for the requested person in the Schengen Information System (SIS). 3. Such an alert shall be effected in accordance with the provisions of article 95 of the Convention of 19 June 1990 implementing the Schengen Agreement of 14 June 1985 on the gradual abolition of controls at common borders. An alert in the Schengen Information System shall be equivalent to a European arrest warrant accompanied by the information set out in article 8(1). For a transitional period, until the SIS is capable of transmitting all the information described in article 8, the alert shall be equivalent to a European arrest warrant pending the receipt of the original in due and proper form by the executing judicial authority. Status of designation under article 6 and of SOCA certification under section 2(7). The first two questions identified in paragraph 3 above are inter-related. Part 1 of the 2003 Act was enacted to give effect to the United Kingdoms international obligations contained in the Framework Decision. By its decision in Assange [2012] 2 AC 471 this court underlined the strength of the presumption that it did so fully and effectively. The Ministries submit that article 6 of the Framework Decision was intended to leave it to each member state to define its own judicial authority or authorities for the purposes of the Framework Decision, as best suited it; the information given by each state to the General Secretariat of the Council of the competent judicial authority under its law should be taken as conclusive, pursuant to the same spirit of mutual trust as underlies the Framework Decision itself; and section 2(7) of the 2003 Act must be taken as having been intended to involve a simple check by SOCA of the information received by the Secretariat, leading to a certificate issued by SOCA which must itself be taken as binding on the question whether the Part 1 warrant was issued by a competent judicial authority for the purposes of the 2003 Act. In a number of domestic authorities, the Ministries analysis has been accepted: Enander v Governor of Brixton Prison [2006] 1 CMLR 999, where Openshaw J thought that any further inquiry would be attended with considerable practical difficulty, it would be fraught with uncertainty, and would deprive the Act of its efficacy and cannot, in my judgment, have been intended by Parliament (para 30), Goatley v HM Advocate 2008 JC 1 and Harmatos v Office of the King's Prosecutor in Dendermonde, Belgium [2011] EWHC 1598 (Admin). In more recent authorities, a different attitude has been taken. At first instance in Assange [2011] EWHC 2849 (Admin), para 17, Sir John Thomas P, giving the judgment of the Divisional Court of the Queens Bench Division thought that: it is clear that in the present state of development of the common area for justice, mutual confidence in the common area for justice and the operation of the EAW will not be advanced unless the courts of the executing state scrutinise requests for surrender under the EAW with the intensity required by the circumstances of each case. . Later, he said: 46. Although the approach in Enander is one that will ordinarily apply, the designation under article 6 does not, in our view, always compel the recognition by another member state as conclusive, if the authority is self evidently not a judicial authority within the meaning of that broad term in the Framework Decision. It is of some interest to note in the light of our observation at para 37 on the status of a Ministry of Justice that in 2007 the Commissioner for Justice and Home Affairs in the Report on the Evaluation of the Transposition of the Framework Decision stated that the designation by some states directly or indirectly of the Ministry of Justice as a judicial authority was contrary to the terms of the Framework Decision. However there appear to have no instances where the Commission has taken action in respect of a body that should not have been designated as a judicial authority. 47. For example, if a warrant was issued by a Ministry of Justice which the member state had designated as an authority under article 6, it would not, in our view, be a valid EAW under the Framework Decision. The principles of mutual recognition and mutual confidence which underpin the common area for justice would not require the recognition of such a warrant, as it would self evidently not have been issued by a body which, on principles universally accepted in Europe, was judicial. In our view a national judge within the European Union is bound to uphold the principles of mutual recognition and mutual confidence for the reasons we have given at para 17; public confidence in the EAW would only be undermined by the recognition of an EAW issued by a Ministry of Justice in contradistinction to an EAW issued by a judge or prosecutor. 48. It was accepted by Miss Montgomery QC (who appeared for the prosecutor) that if circumstances arose where it could be said that the person issuing the EAW was not a judicial authority, the designating certificate issued by SOCA would not be conclusive. It would have to be challenged by judicial review. She was right to accept that the certificate was not conclusive, as under section 2(8) of the 2003 Act the function entrusted to SOCA is to certify that the issuing authority has the function of issuing EAWs. It does not certify that it is a judicial authority. In Dhar v National Office of the Public Prosecution Service, The Netherlands [2012] EWHC 697 (Admin), King J pursued the same theme, saying: 38. True it is that the certificate must be certifying that the issuing authority has been designated by the law of the requesting state as the competent judicial authority for the purpose of issuing such warrants and that the requesting state has given notice to this effect to the General Secretariat of the European council pursuant to article 6(3) of the Framework Decision, but this is not the same in my judgment as certifying that such designated authority is as a matter of fact a judicial authority within the meaning of section 2(2). 39. Hence in my judgment it must be open, the grant of the certificate under section 2(7) notwithstanding, to this appellant to raise on this appeal (as he could have done before the District Judge) the issue whether the warrant was an invalid Part 1 warrant on the grounds that the purported issuing authority was not a judicial authority within the meaning of section 2(2) of the Act. When Assange was before the Supreme Court [2012] 2 AC 471, Miss Montgomery initially maintained the attitude she had taken in the Administrative Court, but in a late change of stance she aligned herself with the Lord Advocate for Scotlands written intervention advancing the same case as the present Ministries. In the event, the majority decision on other points made it unnecessary to decide this point: see per Lord Phillips of Worth Matravers at paras 81-82. However, Lord Kerr of Tonaghmore and I expressed views obiter that article 6 did not mean that any authority about which information was given to the Council Secretariat was ipso facto judicial (paras 105 and 238). Mr Knowles QC for the Ministries of Justice on the present appeal submits that, although Lord Phillips said that he was leaving the point open, he had in effect answered it in reasoning with which other members of the majority concurred. Mr Knowles points out that Miss Montgomerys wider submission in Assange was that, although judicial authority had a broad and autonomous meaning, this meaning describes any person or body authorised to play a part in the judicial process (Lord Phillips judgment, para 5); and that at para 76 Lord Phillips concluded that the issuing judicial authority bears the wider meaning for which Miss Montgomery contends and embraces the Prosecutor in the present case. Mr Knowless submission reads more into these passages in Assange than can be justified. By authorised to play a part in the judicial process must have been meant more than simply authorised to issue a European arrest warrant domestically and designated to the Secretariat under article 6(3). Otherwise, there would be no autonomous content at all. Even if one takes the sens vague of autorit judiciare which Lord Phillips approved in paras 18 and 65, this does not make an unlimited (only a wider) range of authorities eligible to be regarded as judicial. Such authorities must be at the least authorities qui appartient la justice, par opp[osition] legislative et administrative. Further, and most importantly, it is clear that the ratio of Assange was and is confined to the status of public prosecutor, and that other members of the majority cannot be taken as necessarily having agreed with all that Lord Phillips said on a number of points: see eg Lord Walker of Gestingthorpe at para 91, Lord Brown of Eaton-under- Heywood at para 95, Lord Kerr generally and Lord Dyson at paras 155 to 159 and 171. Finally, in the present case, the Administrative Court also disagreed with Enander [2006] 1 CMLR 999 and Harmatos [2011] EWHC 1598 (Admin) in so far as they stated that any certificate issued by SOCA under section 2(7) was conclusive or could only be challenged by judicial review, and preferred the views expressed on this aspect by King J in Dhar and by Lord Kerr and myself in Assange. Status and interpretation of Framework Decision For reasons explained in this Court in Assange [2012] 2 AC 471, paras 208- 217, the Framework Decision falls outside the scope of the European Communities Act 1972. It is true, as Aikens LJ observed in para 48 of his judgment in this case, that this makes inapplicable the provision in section 3 of the 1972 Act imposing a duty on domestic courts to treat any question as to the meaning of any European Treaty or any European Union instrument as a question of law to be determined in accordance with the principles laid down by the European Court of Justice. But, viewing the Framework Decision as an international measure having direct effect only at an international level, the United Kingdom must still have contemplated that it would be interpreted uniformly and according to accepted European legal principles. When applying the common law presumption that Part 1 of the 2003 Act gives effect to the United Kingdoms international obligations fully and consistently (Assange, paras 201 and 204-206), I would therefore think it appropriate to have regard to European legal principles in interpreting the Framework Decision. Ultimately, however, this is not a point which I see as critical to these appeals. The recitals to the Framework Decision emphasise the importance being attached to the replacement of traditional cooperation relations by a system of surrender between judicial authorities and of free movement of judicial decisions. Article 1 emphasises at its outset that a European arrest warrant is a judicial decision, while article 6 states that the issuing [or the executing] judicial authority shall be the judicial authority of the issuing [or executing] member state which is competent to issue a [or execute the] European arrest warrant by virtue of the law of that state. Under European law, if a matter is left expressly to national law, then that must be the basic approach. In contrast, if there is no reference to national law at all, then a concept may well fall to be given an autonomous meaning: see eg Criminal Proceedings against Kozlowski (Case C- 66/08) [2009] QB 307, paras 42-43 and Criminal Proceedings against Mantello (Case 261/09) [2010] ECR I-11477, para 38. But even concepts the meaning of which is left to national law may require to be construed as subject to limitations deriving from general European legal principles: see eg Eman v College van burgemeester en wethouders van Den Haag (Case C-300/04) [2007] All ER (EC) 486. As a matter of construction, the provision in article 6(3) that each member state shall inform the Secretariat of the competent judicial authority under its law cannot in my view be read as making such information unchallengeable and binding all other member states to accept any authority whatever as judicial which any member state chooses to designate and nominate as such. In the light of the recitals and articles 1 and 6(1) and (2), the proper view of article 6(3) may well be that it does no more than address the question which judicial authority is competent. But, even if that is wrong, its language is too unspecific to remove from all scrutiny the question whether the authority nominated really does fulfil the express purpose of the Framework Decision to replace the traditional executive liaison with a new system of judicial cooperation between judicial authorities by virtue of judicial decisions. The Framework Decision must be viewed in the light of Title VI under which it was made. The pre-Lisbon Treaty on European Union operated largely on a traditional, inter-governmental basis. But it provided a structure of objectives, principles, powers and procedures within which individual measures such as the Framework Decision fell to be agreed and operated. The Framework Decision is a subsidiary measure, which must be interpreted subject to the general objectives and principles of and powers conferred by that Treaty: see Edward and Lane, European Union Law, 3rd ed (2013), paras 6.23-6.24. It is relevant that Title VI not only provides for judicial cooperation, but that the language of article 31(1)(a) - one of the express jurisdictional bases of the Framework Decision (see para 9 above) - expressly distinguishes between competent ministries and judicial or equivalent authorities. It is in my view implausible to suggest that, under the law of the European Union, the concept judicial in Title VI has no autonomous content whatever. If that is so, then the concept in the Framework Decision cannot give member states carte blanche to agree that each of them could put whatever meaning they chose upon the concept for the purposes of that measure. Further, even if the boundaries of judicial are under Title VI to be regarded as potentially limitless according to the nature and context of the powers being exercised, it by no means follows that the concept has equal width in the context of a specific measure like the Framework Decision. In this context, it does not to my mind advance the argument far to say that member states must be taken to trust each other, or that the Framework Decision was designed (as it clearly was) to eliminate delay and complexity (Dabas v High Court of Justice in Madrid, Spain [2007] UKHL 6, [2007] 2 AC 31, para 53, per Lord Hope of Craighead). The Framework Decision was agreed between member states. But, in a sensitive area which could involve the surrender of a member states own citizens, it was only agreed on the fundamental premise that the relevant decisions would be taken by and the relevant trust existed between judicial authorities. As Sir John Thomas observed, public confidence would not be advanced if this meant whatever individual member states chose it to mean. In a measure designed to do away with executive involvement, it is also unlikely that European law would leave it to the executive to identify whatever authority it chose as judicial. Even Lord Phillips sens vague interpretation of judicial authority distinguishes between an authority belonging to the system of justice, as opposed to the legislature or administration; and the distinction cannot be elided by accepting that any authority given the function of issuing a European arrest warrant must ex hypothesi be judicial. Section 2(7) of the 2003 Act Section 2(7) of the 2003 Act does not take the Ministries further. First, if the case advanced by Bucnys, Sakalis and Lavrov is right, then section 2(7) does not reflect article 6. Rather, it represents an additional safeguard, of the sort which Lord Hope in Office of the Kings Prosecutor, Brussels v Cando Armas [2006] 2 AC 1, para 24 contemplated that Parliament might have included. The safeguard would require any judicial authority requesting surrender to be an authority with general authority to issue domestic arrest warrants. But, second, if that is wrong, then the certificate contemplated by section 2(7) is not concerned with the question whether an authority is judicial. The certificate is to state that the authority which issued the Part 1 warrant has the function of issuing arrest warrants in the issuing territory. Under section 2(2): A part 1 warrant is an arrest warrant which is issued by a judicial authority of the issuing territory. The certificate therefore assumes, but does not certify, that the issuing authority is judicial. If (as I consider) judicial is in the context of the Framework Decision a concept with autonomous content, then sections 2(2) and 2(7) must clearly be read (as they can be) as preserving and reflecting its autonomous meaning. How restricted the boundaries are of that autonomous meaning is a different matter. Bearing in mind the diversity within member states of judicial systems and arrangements, they may be quite relaxed. The Assange case witnesses to this. I will return to this aspect, after considering the second ground of challenge to the requests for surrender. Meaning of section 2(7) The second ground of challenge is that the Ministries of Justice of Lithuania and Estonia did not have the function of issuing domestic, as opposed to European, arrest warrants within their respective states and SOCAs certificates under section 2(7) were as a result invalid. The issue of a certificate under section 2(7) is a critical stage in the execution within the United Kingdom of a European arrest warrant. Without it there can be no arrest under section 3 and the person whose surrender is sought cannot be brought before the appropriate judge under section 4. Where a provisional arrest occurs under section 5, the certificate under section 2(7) must be produced to the judge within 48 hours, or such extended period as the judge may grant. Failing this, the person whose surrender is sought will have to be discharged under section 6. In the case law to date, it appears to have been assumed that the certificate contemplated by section 2(7) is a certificate relating to the function of issuing European arrest (or Part 1) warrants. But Mr James Lewis QC for Bucnys and Sakalis has made a powerful contrary submission, which Mr Alun Jones QC for Lavrov adopts. Mr Lewis points out that the drafters of the Act have been careful to use the concept Part 1 warrant when it first appears in any section, referring thereafter where appropriate simply to the warrant: see eg sections 2(3) and (5), 6(4) and 7(1) and (2). Yet in section 2(7) the drafters used the generic arrest warrants, when they could have used specific wording like such warrants or such a warrant. Further, as the House of Lords held in Louca v Public Prosecutor, Bielefeld, Germany [2009] UKSC 4, [2009] 1 WLR 2550, the words any other warrant in section 2(4) do refer to any domestic arrest warrant that may exist. On the other hand, section 2(2) makes clear that a Part 1 warrant is a type of arrest warrant, there were strong contextual reasons for the conclusion in Louca and it is possible that the drafters did not use the phrase such warrants in section 2(7) because other member states do not have Part 1 warrants; rather they issue European arrest warrants or some other nationally expressed equivalent, when giving effect to the Framework Decision. Mr Lewis responds to this last point by noting that, if the drafters had had in mind the authority which had the function under domestic law of issuing European arrest warrants and was so designated under article 6(3), they could easily have made this clear by substituting for the last 18 words of section 2(7) words such as has been designated to the Secretariat of the Council of Ministers under article 6(3) of the Framework Decision as having the function of issuing European arrest warrants in the category 1 territory. If section 2(7) were intended as a safeguard, it would have odd features. First, it would require SOCA to investigate overseas practice, rather than look at the information given to the Secretariat under article 6(3) of the Framework Decision. Second, it would mean that SOCA should refuse a certificate in respect of any request coming from a state which chose to assign competence to issue European arrest warrants to a specialist or different (perhaps a higher) judicial body than that responsible for domestic arrest warrants. It is true that in the present certificates SOCA certified, inter alia, that the Part 1 warrants issued by the Ministries of Justice were issued by a judicial authority, with the function of issuing arrest warrants. But it was no part of their statutory function to purport to certify the judicial nature of the issuers, and their doing so can have had no effect in law if the authority certified was not truly judicial within the meaning of the Framework Decision and Act. Mr Lewis submits that a conclusive indication as to the nature of the function of issuing arrest warrants to which section 2(7) refers is provided by section 212. Section 212 deals with alerts issued at the request of an authority of a category 1 territory under article 95 of the Convention implementing the Schengen Agreement of 14 June 1985 (OJ L 239, p 19). The history of section 212 is described in para 258 of my judgment in Assange [2012] 2 AC 471. Article 95 reads: 95.1. Data on persons wanted for arrest for extradition purposes shall be entered at the request of the judicial authority of the requesting contracting party. 2. Before issuing an alert, the contracting party shall check whether the arrest is authorised under the national law of the requested contracting parties. If the contracting party issuing the alert has any doubts, it must consult the other contracting parties concerned. The contracting party issuing the alert shall send the requested contracting parties by the quickest means possible both the alert and the following essential information relating to the case: (a) the authority which issued the request for arrest; (b) whether there is an arrest warrant or other document having the same legal effect, or an enforceable judgment; (c) the nature and legal classification of the offence; (d) a description of the circumstances in which the offence was committed, including the time, place and the degree of participation in the offence by the person for whom the alert has been issued; (e) in so far as is possible, the consequences of the offence. . The Schengen alert system thus operates through data entered at the request of a domestic judicial authority, but sent by one contracting state to another. To give continuing effect to this system, section 212 of the 2003 Act, as amended by section 68 of the Policing and Crime Act 2009, provided (originally on a temporary, but in the event on a continuing basis) that, where an article 95 alert is issued, then (2) The reference in section 2(2) to an arrest warrant issued by a judicial authority of a category 1 territory is to be read: (a) as if it were a reference to the alert issued at the request of the authority, and (b) as if the alert included any information sent with it which relates to the case. . (3) In consequence of subsection (2), this Act has effect with these modifications (a) in sections 2(7) and (8) . for authority which issued the Part 1 warrant substitute authority at the request of which the alert was issued; . The effect of section 212 is thus that sections 2(7) and (8) must, in the context of article 95 Schengen alerts be read: (7) The designated authority may issue a certificate under this section if it believes that the authority at the request of which the alert was issued has the function of issuing arrest warrants in the category 1 territory. (8) A certificate under this section must certify that the authority at the request of which the alert was issued has the function of issuing arrest warrants in the category 1 territory. When certifying under section 212, SOCA must be intended to focus on the question whether the domestic judicial authority at the request of which the data were put on the Schengen system in the overseas state had the function of issuing domestic arrest warrants. This shows, Mr Lewis submits, that the very same words used in their original unmodified form in section 2(7) and (8) must also focus on the function of issuing domestic arrest warrants. In my view, that does not follow. When section 212 is in play, there is only one possible judicial authority in play, that is the overseas judicial authority at whose instance the Schengen alert is entered on the system and which is distinct from the contracting state by which the alert is communicated to the United Kingdom. It is natural that any certificate required should look at the status and functions of that overseas domestic judicial authority. When section 212 is not in play, the directly relevant judicial authority is the authority which issues the European arrest warrant. The status and functions of the authority issuing any domestic warrant (if any) are of subsidiary interest, even though the existence of any such domestic warrant will need to be noted in the European arrest warrant under article 8(1)(c) of the Framework Decision and section 2(4)(b) of the 2003 Act, as decided in Louca [2009] 1 WLR 2550. It is therefore possible for the same phrase to point in different directions in these two different contexts. To treat section 212 as altering what would otherwise be the appropriate meaning to put on section 2(7) and (8) would, in my view, be to treat the tail as wagging the dog. Mr Lewis seeks to rely on Parliamentary material under the principle in Pepper v Hart [1993] AC 593. That involves showing that the provision is ambiguous or obscure and that there are ministerial statements which, viewed in the context of the Parliamentary material as a whole, provide a clear answer as to its meaning. I do not consider that these conditions are met. I doubt whether section 2(7) is even sufficiently ambiguous or obscure to justify looking at Parliamentary material on this point. Assuming that it is, it is true that one finds ministerial statements that European arrest warrants would be issued by precisely the same authorities as currently issued the (necessarily domestic) warrants on the basis of which executive requests were previously made between states for surrender: see eg Mr Ainsworths statements in Standing Committee on 9 January 2003 (Hansard (HC Debates), col. 48), which I quoted in Assange [2012] 2 AC 471, para 253. But immediately afterwards Mr Ainsworth went on to say that By the time that countries start to operate the European arrest warrant, we will know which authorities will be competent to issue them. It will be reasonably straightforward for the issuing authority to be identified and it will be possible to cross-check them with the central record kept by the general secretariat and a little later (at col 51) that If the issuing authority were not a judicial authority as designated in the framework document, the body charged with certifying would not accept the warrant. These statements made clear that in the ministers mind certification was linked with the information provided under article 6 of the Framework Decision, which goes to the function of issuing European arrest warrants, not domestic warrants. The upshot is that neither in these nor in any other passages is there the clarity of statement that could assist to put a different meaning on section 2(7) to that which I consider otherwise follows on ordinary principles of construction. In my view, section 2(7) must (other than in the context of Schengen alerts under section 212) be taken as referring, however awkwardly, to the function of issuing European arrest warrants, not domestic. Judicial authority The second ground of challenge to the requests therefore fails, and I turn to consider whether the Ministries can be regarded as judicial authorities for the purposes of issuing the requests in issue on these appeals. The question is whether the concept of judicial authority embraces any category of persons beyond courts, judges, magistrates and (in the light of Assange) public prosecutors, and if so in what circumstances. Mr Knowles argued for a positive answer, relying on all five reasons on which Lord Phillips based his judgment in Assange. But only one of these reasons received any real endorsement even in the other majority judgments in that case: see Lord Walker at para 92. Lord Brown at para 95, Lord Kerr generally and Lord Dyson at paras 155 to 159 and 171. I add only, with regard to the third reason, that I agree with Lord Dyson (para 158) that the removal from the December 2001 Council redraft of the Commissions September 2001 proposal of definitions of judicial authority in terms of a judge or public prosecutor provides no basis for concluding that it was intended to broaden the scope of the concept beyond judge or public prosecutor. It is at least as likely that there were considerable reservations in some member states about appearing to accept a judge or public prosecutor as an appropriate judicial authority for the purposes of both issuing and executing European arrest warrants, as would have been the effect of the definitions included in the September 2001 proposal. Any further conclusion would be speculation. As regards the fourth reason, I also agree with Lord Dyson (para 159) that the assumption in article 6 that there may be a range of judicial authorities from which to chose that which is to be competent to issue European arrest warrants says nothing significant about the scope of the concept of judicial authority. This is all the more so, now that it is decided by Assange that the range can include both courts and public prosecutors. The one ground which did influence most members of the court in Assange was Lord Phillips fifth and final ground, based on applying the principles of the Vienna Convention on the Law of Treaties 1969 to the international agreement reached under Title VI and embodied in the Framework Decision. As appears by the five paragraph coda which appears at the end of the Courts judgment in Assange as published in [2012] 2 AC 471, 569-570, the relevance of the principles in the Vienna Convention was assumed, not argued, in Assange. When, after the draft judgment on the substance was handed down, Miss Rose QC applied to re- open the appeal to take issue with the relevance of the Vienna Convention, her application was rejected as being without merit, not because the point she wished now to raise would itself have been meritless, but because it was too late to do so on that appeal. She had had her chance to raise it during the course of oral argument before the hand down, but had accepted that the Vienna Convention applied and that state practice was a potentially relevant aid to construction. On the present appeals, there has been no such acceptance. The applicability of the Vienna Convention and the relevance of state practice have been put squarely in issue. The issue is of potential relevance (though each countrys law and practice may raise different considerations) because, in addition to Lithuania and Estonia, it appears that Finland and Sweden have under article 6 designated bodies operating as part of or under their Ministries of Justice as their issuing judicial authority in the case of conviction warrants - in the case of Finland the Criminal Sanctions Agency, in the case of Sweden the National Police Board; and Germany has designated its Ministry of Justice, although stating that its powers have been transferred to the public prosecutor at the relevant regional court. Further, two countries have designated their Ministries of Justice as their issuing authority in the case of accusation warrants Denmark outright, and Germany subject to the same transfer of powers to the regional public prosecutor. The evidence of state practice is thus, on any view, much more limited than that which existed in relation to the use of public prosecutors as recounted in Assange, where it appeared that some 11 states had nominated public prosecutors in the case of accusation warrants and some ten in relation to post-conviction warrants. (The information now before the court indicates that these figures were slightly inaccurate, and should have been ten, or pre-trial 12, in the case of accusation warrants and eight in the case of conviction warrants.) Nonetheless, Mr Knowles submits that the designation of Ministries of Justice should, even if limited, be regarded as significant, because of the absence of evidence that other states have challenged the designation or refused to execute warrants. Bearing in mind that it is unclear how far any challenge would fall to be raised by executing states, rather than by the persons whose surrender was sought, and that there has been no detailed study of state legislation or practice in cases where it is by implication suggested that a challenge might have been raised, I am unimpressed by the strength of the alleged practice as an indicator of any agreement of the state parties regarding interpretation, within the meaning of article 31(3)(c) of the Vienna Convention. As I noted in Assange, at para 242, the fact that three states (Denmark, Germany and Romania) have also designated their Ministries of Justice as executing judicial authorities is also capable of raising questions about the reliability of state practice as a guide, even if otherwise admissible. As to the question of principle, whether the Vienna Convention is applicable to the Framework Decision, in my view it is unlikely as a matter of European law that it is or would be so regarded. For reasons already indicated in paragraph 23 above, the Framework Decision must be understood in the context of Title VI of the pre-Lisbon Treaty on European Union, and the structure of objectives, principles, powers and procedures contained in that Treaty, including, where individual States agreed, provisions relating to the Court of Justices jurisdiction: see eg articles 2 to 6, 29, 31, 35 and 39. So viewed, I do not consider it correct to describe the Framework Decision as a treaty at all. It is a subsidiary measure, which fell to be agreed by unanimity within the scope of the powers conferred by, as well as in accordance with the procedures defined by, the pre- Lisbon Treaty on European Union. It must be interpreted as such: see the passages from Edward and Lane cited in paragraph 23 above. Under the pre-Lisbon Treaty on European Union, among the important pre-conditions to the agreement of the Framework Decision was the express requirement under article 39(1) for the Council to consult the European Parliament upon it as a measure agreed for facilitating extradition within article 34(2)(b). The European Parliament had three months to deliver an opinion upon the measure. Its opinion, delivered on 9 January 2002, approved the measure, but with the request that the Council notify the Parliament should it intend to depart from the approved text. The argument that subsequent state practice by members of the Council could change or affect the meaning of a Framework Decision potentially sidelines the European Parliaments role. For that reason alone, it is not one that I believe that the Court of Justice would be likely to endorse even under the pre-Lisbon Treaty on European Union. There is a striking absence in the textbooks and case law of any reference to, or any instance of the application of, subsequent member state practice as establishing the agreement of member states to a particular interpretation, or as having any real relevance to interpretation, of a measure introduced under any of the European Treaties. The court was referred to The Court and the Tribunal of the EC and the Vienna Convention on the Law of Treaties 1969, an article by P J Kuijper (a legal adviser to the Commission), published in Legal Issues of European Integration, (1998) vol 25, issue No 1. The article focuses on references to the Vienna Convention in relation to treaties and secondary legal acts entered into by the Community with third parties. The European Treaties themselves are of a special and different nature, as the article points out with reference to the Court of Justices Opinion 1/91 [1991] ECR I-6079. In that Opinion the court said: 21 In contrast, the EEC Treaty, albeit concluded in the form of an international agreement, none the less constitutes the constitutional charter of a Community based on the rule of law. As the Court of Justice has consistently held, the Community treaties established a new legal order for the benefit of which the states have limited their sovereign rights, in ever wider fields, and the subjects of which comprise not only member states but also their nationals (see, in particular, the judgment in Van Gend en Loos (Case 26/62) [1963] ECR 1). The essential characteristics of the Community legal order which has thus been established are in particular its primacy over the law of the member states and the direct effect of a whole series of provisions which are applicable to their nationals and to the member states themselves. With regard to the possibility that subsequent practice might influence the interpretation of Community law, the article at pp 9-10 states bluntly that: It may be interesting to recall here that, as far as Community law is concerned, and certainly where the provisions of the Community Treaty are concerned, the Court of Justice does not accept arguments of subsequent practice at all. The Court in such cases has recourse to the standard phrase that mere practice cannot change the treaty. Cited in support are French Republic v Commission of the European Communities (Case C-327/91) [1994] ECR I-3641 and the Court of Justices Opinion 1/94 [1994] ECR I-5267. In the former, the issue was the extent of the Commissions powers to conclude agreements with third countries, under article 228 EEC which provided for such agreements to be negotiated by the Commission and concluded by the Council after consulting the Parliament subject to the powers vested in the Commission (reconnues la Commission) in this field. The Commission argued that its powers might be derived from previous practice of the respective Community institutions, to which the Court observed (para 36) that a mere practice cannot override the provisions of the Treaty. Likewise, the court held in United Kingdom of Great Britain and Northern Ireland v Council of the European Communities (Case 68/86) ECR 855, para 24, and reiterated in its Opinion 1/94 [1994] ECR I-5267 in relation to suggested external competence in the field of GATs (the General Agreement on Trade in Services) that a mere practice of the Council cannot derogate from the rules laid down in the Treaty and cannot, therefore, create a precedent binding on Community institutions with regard to the correct legal basis (para 52), that, it would, in the field of TRIPs (trade-related aspects of intellectual property rights), enable the Community institutions to escape the internal constraints to which they are subject in relation to procedures and to rules as to voting (para 60) and that Institutional practice in relation to autonomous measures or external agreements adopted on the basis of article 113 cannot alter this conclusion (para 61). These statements, made in the context of arguments about institutional competence under the Treaties themselves, are a strong indicator of the attitude that the court would take to any suggestion that the member states could by agreement between themselves alter or influence the meaning of Community measures arrived at under the Treaties, following procedures for their negotiation and enactment, including consultation with the European Parliament, contained in such Treaties. The only case which the Ministries have been able to locate in which the court might be said to have taken account of member state practice in interpreting a Community instrument under any of the European Treaties is Skatteministeriet v Henriksen (Case 173/88) [1989] ECR 2763. There, after giving its reasons for a particular construction, the court added a paragraph saying: That interpretation is also in conformity with the view common to all the member states, none of which has adopted legislation [consistent with the interpretation which the court rejected] (para 13) That comment, in a case where member states view or practice was consistent with that at which the court had arrived, is wholly inapt to show that such practice is capable of changing the meaning of an autonomous European concept in a Community or Union instrument agreed under the Treaties. I can therefore put aside the suggestion that member states alleged practice can affect the question whether the Ministries are capable of being designated as judicial authorities for the purpose of issuing European arrest warrants under the Framework Decision. Equally, however, the interpretation of the Framework Decision cannot, as it seems to me, be influenced by comments made in some evaluation reports to the effect that Ministries of Justice are not judicial authorities: see eg Council Evaluation Report on Lithuania 12399/1/07, para 7.2.1.1, reporting that The Lithuanian authorities recognised that EAWs should be issued by judicial authorities and that the Ministry of Justice could not be considered a judicial authority; and the Commission report on the operation of the Framework Decision COM(207) 407, commenting in relation to both Lithuania and Estonia that the Ministry of Justice is not a judicial authority. In my opinion, the concept of judicial authority falls simply to be interpreted in the teleological and contextual manner that Professor Anthony Arnull indicates in The European Union and its Court of Justice, 2nd ed (2006), pp. 612 and 621, as I stated in paragraph 229 of my judgment in Assange [2012] 2 AC 471. In the context of the Framework Decision, the most obvious purpose of insisting on the concept was to ensure objectivity (including freedom from political or executive influence) in decision-making and to enhance confidence in a system which was going to lead to a new level of mutual cooperation including the surrender of member states own nationals to other member states. The special emphasis in recital 6 on the importance of this concept in the context of execution of European arrest warrants indicates a possible difference between its significance in the contexts of issuing and executing a European arrest warrant. Likewise, article 19 with its distinction between the competent executing judicial authority and another judicial authority which may need to be involved at the hearing stage in order to ensure the proper application of this article and of the conditions laid down. This leads to consideration of the features which an authority must as a minimum have, if it is to be regarded as an issuing judicial authority for the purposes of the Framework Decision. Mr Lewis, submits that they are three: (i) it must be functionally independent of the executive, (ii) it must be capable of making a judicial decision and (iii) it must be separate from the designated central authority, a separation assumed by recital 9 and article 7. In Assange, at para 153, Lord Dyson was inclined to think that the essential characteristics of an issuing judicial authority are that it should be functionally (but not necessarily institutionally) independent of the executive. In the Administrative Court in the present cases, Aikens LJ considered that a ministry of justice could be an issuing judicial authority for a conviction warrant if the person in the ministry making the decision was sufficiently independent of the executive for the purposes of making that judicial decision and thought, in this connection, that there was much force in Lord Phillips point [in Assange [2012] 2 AC 471, paras 62-64] about the requisite safeguards being predominantly in the antecedent process which forms the basis on which the conviction European arrest warrant is issued (para 98). I would make three points in relation to these observations. First, Assange was a case of an accusation warrant and Lord Dyson noted at paras 156-157 the difficulty about Lord Phillips point, which constituted his second reason in Assange (see paras 62-64): there is no guarantee that a domestic accusation warrant would be based on any judicial decision at all, and the implications of a European arrest warrant are likely to be more serious than those of a domestic arrest warrant. Second, a test which would mean seeking to ascertain whether one or more individual decision-makers within a ministry was or were functionally, even though not institutionally, independent of the ministry in which they served, may be regarded as problematic, both in principle and because of the evidential issues to which it could give rise. On no view, in any event, would the Minister of Justice signing on behalf of the Ministry of Justice of Lithuania appear to satisfy any such test. I need say no more than that on these appeals. Third, Aikens LJ must I think have had this point in mind when he went on, immediately after his above quoted observations, to focus his conclusions on the need for a prior court request that a European arrest warrant should be issued, and on the consequent restriction of any positive ministry role to determining that effect be given to such a request: If the national law concerned provides that the pre-condition to the issue of a conviction EAW by the ministry of justice is that there must be not only an enforceable judgment and sentence but also a request from the sentencing court that a conviction EAW be issued, then the scope for executive interference is much reduced if not entirely eliminated. (para 98) This postulates a situation in which the ministrys decision to issue a conviction European arrest warrant has by law to be and is firmly founded on a judicial decision by the responsible court that such a warrant is appropriate. Consistently with this approach, both Ministries of Justice sought in their submissions and evidence to meet the criteria suggested by Aikens LJ. Accusation and conviction warrants do not necessarily raise the same considerations. A conviction warrant must necessarily have been preceded by a domestic court process. There is less scope for discretion in relation to the issue of a European arrest warrant following from a conviction. If the court responsible for the conviction or execution of the sentence considers that the European arrest warrant should be sought, and the issue of such a warrant follows from its decision, then the issue of the warrant can be regarded as the result of a judicial decision, even though the issue takes place by and in the name of a different authority. The key question is whether the issuing authority can in such a case be regarded as a judicial authority for the purposes of the Framework Decision or 2003 Act, when it is, as here, the Ministry of Justice or a section within that Ministry. Mr Lewis and Mr Jones submit that it cannot, on the basis that a body, which cannot act of its own initiative and which simply box ticks, cannot be a judicial authority taking a judicial decision. They also point out that the two Ministries have also been designated as their respective countries central authorities for the purposes of article 7, in circumstances where both recital 9 and article 7 contemplate that such a body will be separate from and have a limited role in proving practical and administrative assistance to the competent judicial authorities. Before going further into these questions, it is however relevant to look more closely at the evidence and facts in the cases under appeal. The evidential material The Administrative Court proceeded on the basis that the two requests made by the Ministry of Justice of Lithuania were based in each case upon a request made by a court, not by a prison or the Prison Department; the functions of the officials of the Ministry were tightly defined by the Rules and the decision on whether to issue the conviction European arrest warrant has to be made on the basis of those Rules alone (para 104). The warrants, though signed for the Ministry by the Minister of Justice, were on this basis regarded as issued by a judicial authority. In relation to the procedure in Estonia there was, however, much less material before the Administrative Court; there appeared to be no requirement that the sentencing court must prepare a draft European arrest warrant and then request the ministry to issue the European arrest warrant and no procedural rules which dictate what the ministry officials have to do or which dictate the time in which a request to issue a conviction warrant be carried out. The court was not satisfied that the Ministry of Justice of Estonias decision to issue a European arrest warrant could be regarded as judicial or that the International Judicial Cooperation Unit within that Ministry and its personnel had sufficient functional independence from the executive to enable the Ministry to be characterised as a judicial authority for the relevant purposes (para 106). Before the Supreme Court further material has been produced, in relation to both the Lithuanian and the Estonian positions. Mr Lewis referred to and relied upon the Lithuanian material as did eventually Mr Jones, after initially objecting to its admission. I for my part consider that the new material should be admitted and considered, even though it should have been before the Administrative Court. Without it, it is clear that we would be at risk of deciding these appeals on a false basis. The Lithuanian position The picture which emerges in relation to Lithuania from communications to the Crown Prosecution Service by the Vice Minister of Justice is that the Ministry only issues any European arrest warrant after conviction on the initiative of either (a) a court or (b) an authority responsible for executing the sentence. It does so then after examination of all the documents to ascertain that valid grounds exist for issuing such a warrant. In this connection, article 69 of the Code of Criminal Procedure provides: 2. European arrest warrants regarding citizens of the Republic of Lithuania or other persons who have been sentenced to imprisonment by enforceable judgments in the Republic of Lithuania and who have absconded from serving the sentence in another member state of the European Union shall be issued and competent authorities of that state shall be contacted by the Ministry of Justice of the Republic of Lithuania. 3. The procedure for issuing a European arrest warrant and surrendering the person under the European arrest warrant shall be defined by the Prosecutor General of the Republic of Lithuania and by the Minister of Justice of the Republic of Lithuania. Under article 69(3), the following Rules for issuing European arrest warrant were duly promulgated by Order No. IR-95/I-114 of 26 August 2004. They provide: I. GENERAL PROVISIONS 4. The Ministry of Justice of the Republic of Lithuania shall issue the European arrest warrant with a view to arrest a person who has been punished by custodial sentence but who has gone into hiding from the enforcement of this sentence. In this case the European arrest warrant shall be issued under the following circumstances: 4.1. when the remainder of the sentence to be served is of four months or of longer term; 4.2. when there is a ground to believe that the convicted person may be located in the member state of the European Union or other State, which applies the surrender procedure of the persons concerned pursuant to the European Arrest Warrant. . RECOURSE FOR ISSUING EUROPEAN ARREST WARRANT 7. If the case has been heard in the trial and the judgement of conviction rendered in absentia of the accused, the court shall send a copy of the enforceable judgement of conviction whereby a sentence of imprisonment has been imposed together with the draft European arrest warrant (except section (i)) to the Ministry of Justice of the Republic of Lithuania after taking into consideration the criteria for issuing a European arrest warrant laid down in paragraph 12 of the Rules. 8. If the convicted person, who has not been arrested until the court judgement became enforceable, absconds from the execution of the custodial sentence imposed on him by the court's judgment, or if the convicted person while serving his custodial sentence runs away from the correctional institution or fails to return there, the request to issue the European arrest warrant shall be submitted to the Ministry of Justice by the institution executing the sentence after taking into consideration the criteria for issuing a European arrest warrant laid down in paragraph 12 of the Rules. A copy of the enforceable judgement of conviction whereby a sentence of imprisonment has been imposed and the draft European arrest warrant (except section (i)) shall be enclosed with the request. . 9. When the court renders a Ruling to quash the suspension of the sentence execution, a Ruling to quash either a conditional early release from custodial sentence or conversion of the remainder of the sentence into a more lenient punishment or a Ruling to refer the person released conditionally from the correctional institution to serve the remaining sentence of imprisonment in the correctional institution, the court shall forward a copy of the aforesaid Ruling together with the draft European arrest warrant (except section (i)) to the Ministry of Justice of the Republic of Lithuania after taking into consideration the criteria for issuing a European arrest warrant laid down in paragraph 12 of the Rules. III. ISSUING OF THE EUROPEAN ARREST WARRANT 12. Upon receiving the documents set out in Chapter II of these Rules, the Prosecutor General's Office of the Republic of Lithuanian or the Ministry of Justice of the Republic of Lithuania shall analyse the above documents and, if there are all preconditions listed in paragraphs 3 or 4 of the Rules, shall issue the European arrest warrant taking into consideration the severity and type of the offence committed and the suspected, accused or convicted person's personality. If the information is insufficient to issue the European arrest warrant, the Prosecutor General's Office of the Republic of Lithuania or the Ministry of Justice of the Republic of Lithuania shall contact the institution, which has requested to issue the European arrest warrant, asking to provide the missing information within the time-limit specified by the Prosecutor General's Office of the Republic of Lithuania or the Ministry of Justice of the Republic of Lithuania. If there are no grounds for issuing the European arrest warrant or the missing information is not obtained during the time- limit defined, or if the issuance of the European arrest warrant does not satisfy the principles of proportionality and procedural economy, the request to issue the European arrest warrant shall be returned to the requesting institution. 13. The European arrest warrant shall be issued not later than within 5 days after receiving all information necessary for preparing the European arrest warrant. 14. The European arrest warrant shall be prepared in accordance with the form contained in the Annex 1 of these Rules. . 16. . if the European arrest warrant is issued by the Ministry of Justice of the Republic of Lithuania, then it shall be undersigned by the Minister of Justice of the Republic of Lithuania or his delegated persons. Contrary to the Administrative Courts understanding, it is now clear (from the Ministry of Justices letter dated 5 November 2012) that, while the request made to the Ministry of Justice in respect of Bucnys, came under rule 9 from the Vilnius City 1st District Court after it had on 20 February 2010 quashed Bucnyss conditional release, the request in respect of Sakalis came from the Prison Department of the Republic under rule 8, based on its assessment that Sakalis had absconded from the whole of the four year sentence imposed by the Vilnius City 1st District Court on 25 January 2008 and upheld on appeal on 24 December 2008. The Vice-Minister of Justice of Lithuania has explained in correspondence put before the Supreme Court that the prison department would only act after being provided by the Vilnius City 1st District Court with relevant documentation regarding the conviction and sentence. It does not follow that the District Court made any sort of judicial decision at this point and the evidence does not show that it did. Both in law and in practice, the responsibility for requesting the Ministry of Justice to issue a European arrest warrant rested on the prison authorities, upon which rule 8 conferred it. In these circumstances, I cannot regard the European arrest warrant issued in respect of Sakalis as having been either issued by a judicial authority or as being the result of a judicial decision. The Prison Department is an executive agency charged, as rule 8 states, with the execution of the sentence. It is not a judicial body considering and ruling upon the question whether the person wanted has absconded. The language of rules 8 and 12, read together, makes it possible (though surprising) that the Prison Department is required before submitting a request to issue a European arrest warrant to the Ministry to take into consideration the severity and type of the offence committed and the convicted persons personality. In other words, it may have a discretion. If so, the evident oddity in the context of a European arrest warrant of such a discretion being entrusted to a prison department merely underlines the fact that it cannot be regarded as a judicial authority. The Ministry of Justice after receiving the Prison Department request is under rule 12 required not only to consider for itself whether the formal pre-conditions listed in rule 4 are satisfied but (it appears) also to take into consideration the severity and type of the offence and the . convicted persons personality. Assuming again that this connotes an element of discretion, even in the case of a conviction, as to whether it issues a warrant, the mere fact that the Ministry of Justice is given a discretion does not make it a judicial body. If anything, it points once again towards a need for a judicial decision by a body or bodies which could be regarded as judicial. I would therefore allow the appeal by Sakalis and set aside the Part 1 warrant issued in respect of him. The position in relation to Bucnys is different. Under the combination of rules 9 and 12, the Vilnius City 1st District Court not only took the decision to quash his conditional release on 12 September 2008, it also forwarded copies of its ruling to the Minister with a draft European arrest warrant, and it must be taken to have done this after taking into account the criteria for issuing such a warrant laid down in rule 12, including the severity and type of the offence and the . convicted persons personality. The Ministry of Justices only role was to repeat the same exercise. Its review could not worsen the position of the convicted person. At best, if the Ministry took a different view on the question whether the criteria were met, its review might lead to a decision not to issue a European arrest warrant which the Vilnius court had adjudged to be appropriate. Essentially, therefore, the European arrest warrant issued in respect of Bucnys emanated from the court responsible for him having to serve a further period in prison. That was a judicial decision by a judicial authority. The Ministry by issuing the warrant effectively endorsed that decision. Under article 7 of the Framework Decision, it would have been permissible for Lithuania to designate the Vilnius City 1st District Court as the relevant judicial authority and to restrict the Ministrys role to its capacity of central authority. If a court were to out-source its registry and the registry were to be designated as the judicial authority responsible for issuing warrants or other orders to give effect to the courts orders, it should I think be possible to regard the registry as a judicial authority issuing a judicial decision, even though - or because - it would simply be giving effect to the courts orders. In the present case, it appears that the Ministry of Justice had some discretion, but only in the sense of a one-way discretion to check that, in its view also, a European arrest warrant was appropriate. This requirement for two concurrent decisions in favour of such a warrant could only operate to the benefit of the person whose surrender was proposed by the court responsible for the conviction or sentence. In these circumstances, I consider that European law would accept that the spirit of the Framework Decision was met in the case of European arrest conviction warrants issued by the Ministry of Justice of Lithuania to give effect to a corresponding request by the Court responsible for the sentence, and would treat the Ministry of Justice in that context as an appropriate issuing judicial authority. I have been addressing the present situation of a Ministry of Justice acting at the request of the responsible court. It is possible that the spirit of the Framework Decision may also be satisfied in some other situations, for example when a Ministry of Justice acts on the basis of a request made by a public prosecutor, held by this court in Assange to be capable of being regarded as a judicial authority. To take a specific instance, in Germany the Ministry of Justice is designated as the relevant judicial authority for the purpose of issuing conviction (and indeed also accusation) European arrest warrants, but has in some way transferred or delegated its role to the public prosecutor at the relevant regional court. As we have no details of the arrangements or how they operate, I can express no conclusion either way, but it may prove appropriate to treat the Federal Ministry of Justice as the issuing judicial authority, when a German public prosecutors decision that a conviction European arrest warrant should be issued is simply endorsed by or leads to the issue of such a warrant in the name of the Ministry. The Estonian position Turning to the position of the European arrest warrant issued by the Head of the International Cooperation Unit of the Estonian Ministry of Justice, it is now known that the Viru County Court on 10 February 2011, on learning that Lavrov was living in the United Kingdom, sent a request to the Ministry of Justice to issue a warrant to give effect to the domestic arrest warrant that it had itself issued on 9 February 2010. There is also substantial further information about the Estonian legal position in the form of answers dated 28 February 2013 to a questionnaire submitted by the Crown Prosecution Service. The legal framework is contained in article 507 of the Code of Criminal Procedure of Estonia which reads: Submission of European arrest warrant (1) In pre-trial proceedings, the Prosecutor's Office and, in court proceedings, the court which conducts proceedings regarding a criminal offence which is the basis for a European arrest warrant is competent to submit the European arrest warrant. (2) The Ministry of Justice is competent to submit a European arrest warrant for the execution of a court judgment which has entered into force. (21) In pre-trial proceedings, a preliminary investigation judge may, at the request of the Prosecutor's Office, apply arrest for surrender before preparation of a European arrest warrant. (22) If surrender of a person is requested in court proceedings, the arrest for surrender of the person shall be applied by the court which conducts proceedings regarding the criminal offence. (3) A European arrest warrant shall be prepared in Estonian and it shall be translated into the language determined by the requesting state by the Ministry of Justice. (4) A European arrest warrant shall be communicated to a requesting state through the Ministry of Justice. (5) In cases of urgency, a request for application of arrest for surrender with regard to a person to be surrendered may be submitted to a member state of the European Union through the International Criminal Police Organisation (Interpol) or the central authority responsible for the national section of the Schengen Information System with the consent of the Prosecutor's Office before a European arrest warrant is submitted. In the case of Lavrov, articles 507(2) and 507(22) both applied. The Deputy Secretary-General of the Ministry of Justice explained by letter dated 28 February 2013: The court ruling declaring the person a wanted and applying arrest- on-sight towards him or her is the prerequisite for later issuance of a European arrest warrant. No European arrest warrant can be issued without a court first declaring the person a wanted and applying arrest-on-sight (domestic arrest warrant) towards him or her. Pursuant to section 507 (21) and (22) of the Estonian Code of Criminal Procedure, applying arrest for surrender is a prerequisite for issuing an European arrest warrant. If no arrest pending surrender has been applied towards the person, then an European arrest warrant cannot be issued. This letter gives the following further information: in this current case a court requested the Ministry of Justice to issue a European arrest warrant on the basis of court decisions entered into force. The issuance of an European arrest warrant in conviction cases by the Estonian Ministry of Justice only takes place upon request by the court who made the decision in the specific case or a court that has the competence to issue the arrest warrant and to declare the person a fugitive in cases where the person was convicted by conditional sentence and the person escaped from the execution of sentence or the person was in freedom during the court procedures but has to appear to prison on a specific date and time to start the service of his/her sentence. Thus, this is the court that sends to the Ministry of Justice the judgment or ruling with request to issue the European arrest warrant. The court's decision has to be either a final and enforceable judgment satisfying the requirements of the framework decision or a domestic arrest warrant stating that the detention conditions are met. . The only restrictions that the Ministry of Justice is obliged to follow upon issuing a European arrest warrant on a court's request, are the general restrictions on issuing of European arrest warrants from [the] Framework Decision ie the requirement that the punishment of imprisonment applicable to a crime for which the person has been convicted must be longer than four months of imprisonment. If the materials sent to the Ministry of Justice for issuance of an European arrest warrant regarding a person towards whom the court has applied arrest for surrender, indicate that the actual punishment imposed on the person or actually servable part thereof is less than four months, then the Ministry of Justice may inform the court that there are no legal grounds for issuing an EAW. In other cases the court's request to issue a specific EAW is compulsory for the Ministry of Justice. The same letter also addresses the possibility that a European arrest warrant might be issued under executive influence: The Judicial Co-operation Unit is one of the structural units of the Ministry of Justice, but it is independent in its decisions and bases its actions solely on the law and the international instruments. This independence is also expressed in the fact that all documents prepared by the unit, ie both European arrest warrants and MLA [mutual legal assistance] requests for judicial assistance are undersigned by the head of unit or the advisor who prepared the letter. All materials, ie requests from courts, materials of the prosecutor's office, and also judicial co-operation materials and requests for legal assistance received from abroad are forwarded from the Ministry's office directly to the Judicial Co-operation Unit without passing through the Minister, the Secretary General or the Deputy Secretary General. Therefore the executive has no information about whether, how much or which judicial co-operation materials are being preceded by the unit at any time. There has been no intervention by the executive in the unit's work and there cannot be any intervention of that kind because communication in the field of international law is very strictly regulated by domestic legislation and by various other legal acts, so it is unthinkable that the Minister or the Secretary General could order the issuance of some request for legal assistance without the initiative of a prosecutor's office or a court. . International judicial co-operation is very strictly and precisely regulated by various international conventions and treaties which prescribe also the role and competence of Ministries of Justice as central authorities. It is unthinkable that the Ministry of Justice could exceed its limits of competence by way of its executive ordering a request for legal assistance for which the Ministry of Justice has competence. It is also unthinkable that the executive of the Ministry of Justice could order that a request for legal assistance be not issued or not forwarded. As described above, in daily work the management has no information at all about the requests that are preceded [sic] by the Unit at any given time. Furthermore, the Public Service Act of the Republic of Estonia prohibits (article 62) unlawful orders from the executive and gives the ways how to react in such situations. On the basis of this detailed description of the legal, procedural and practical position, it is clear that the real decision is taken by the court responsible for the conviction and sentence, and the Judicial Cooperation Unit of the Ministry of Justices only lawful role is to check that the formal conditions for issue of a European arrest warrant are satisfied, and, if they are, to issue the warrant. On the basis, by parallel reasoning to that which I have indicated in relation to Bucnys, I consider that the Ministry can be regarded as a judicial authority issuing a warrant containing a judicial decision, albeit one taken in reality by the responsible court, here the Viru County Court. However, Mr Jones points to other information in the form of the Council Evaluation Report on Estonia 5301/07 dated 20 February 2007, which states: 3.1. THE DECISION TO ISSUE The Estonian authorities do not have a formal practice guide concerning the instigation of European arrest warrant proceedings or the subsequent steps to be taken. Standardised European arrest warrant practices have been outlined to all European arrest warrant stakeholders during training provision supplied by the CA together with professional trainers from the Estonian Law Centre. It states that, in the case of accusation warrants, the following factors will be taken into consideration by a review made before any decision to issue a European arrest warrant: severity of the offence, degree of participation, extent of the injury/damage. It continues: In cases concerning the enforcement of a sentence, officials within the CA will apply similar merit tests to assess the appropriateness of the application. They will then obtain, directly from the criminal court concerned, a copy of the order to be enforced and proceed to draft an European arrest warrant. In real terms therefore a pragmatic de minimis test is brought to bear, balancing the seriousness of the criminality against the merits (costs or otherwise) of issuing an European arrest warrant. Estonia reported that their outgoing European arrest warrants were all of a benchmarked standard. This second-hand account of the Estonian system does not bear much relationship with that given by the Ministry of Justice itself in 2012 and 2013. It makes no reference to the provisions of article 507 of the Code of Criminal Procedure, or to any role of the court responsible for the conviction, still less to any duty on the part of the Ministry to issue a European arrest warrant, once satisfied that the formal conditions are met. Although the report points out earlier that the Ministry of Justice has been designated both as the competent judicial authority and as the central authority in relation to the issue of European arrest conviction warrants, it speaks at this point only of the CA. The report was based on a visit by experts to Estonia in September 2006, little over two years after Estonia joined the European Union on 1 May 2004. The European arrest warrant system may not have been well digested by that date. The Code of Criminal Procedure may have been amended since 2006 it seems clear that article 507(21) 2 and (2) must have been added at some point. However, even if, contrary to the Ministrys emphatic explanation, the Judicial Cooperation Unit of the Ministry does enjoy some form of proportionality discretion, when it comes to the exercise of a European arrest warrant requested by a court responsible for a sentence, this is again a factor which can only weigh in favour of the person whose surrender is sought. It does not therefore mean, in my opinion, that the Ministry in issuing the European arrest warrant in respect of Lavrov should not be regarded as a judicial authority communicating a judicial decision made by the Viru County Court. Conclusions The conclusions of principle that I reach are: - For the purposes of Council Framework Decision 2002/584/JHA and Part 1 of the Extradition Act 2003: i) A European arrest warrant issued by a Ministry in respect of a convicted person with a view to his or her arrest and extradition can be regarded as issued by a judicial authority for the purposes of Council Framework Decision 2002/584/JHA and Part 1 of the Extradition Act 2003 if the Ministry only issues the warrant at the request of, and by way of endorsement of a decision that the issue of such a warrant is appropriate made by: a) the court responsible for the sentence; or b) some other person or body properly regarded as a judicial authority responsible for its execution (see para 57 above). ii) If this condition is satisfied, the existence of a discretion on the part of the Ministry not to issue a European arrest warrant which the responsible court (or other judicial authority) has decided appropriate and requested it to issue does not affect this. iii) Subject only to the second point in para 47 above (so far as left open), a Ministry which has power to issue and issues a European arrest warrant of its own motion or at the request of non-judicial authority, including an executive agency such as a prison department, cannot be regarded as a judicial authority for the above purposes. The conclusions I reach on these appeals are that: i) The European arrest warrant issued in respect of Bucnys by the Ministry of Justice of Lithuania at the request of the Vilnius City 1st District Court was a valid Part I warrant under the 2003 Act, and Bucnyss appeal should accordingly be dismissed. ii) The European arrest warrant issued in respect of Sakalis by the same Ministry of Justice at the request of the Prison Department was not a valid Part 1 warrant, and Sakaliss appeal should accordingly be allowed. iii) The European arrest warrant issued in respect of Lavrov by the Ministry of Justice of Estonia at the request of the Viru County Court was a valid Part I warrant, and the Ministry of Justice of Estonias appeal in the case of Lavrov should accordingly be allowed. |
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. Unusual features of the disease led the House of Lords to create a special rule governing the attribution of causation to those responsible for exposing victims to asbestos dust. This was advanced for the first time in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32 and developed in Barker v Corus UK Ltd [2006] UKHL 20; [2006] 2 AC 572. Parliament then intervened by section 3 of the Compensation Act 2006 further to vary this rule. The rule in its current form can be stated as follows: 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. These two appeals involve cases where the defendant was the sole known source of occupational exposure to asbestos dust. In each case the extent of the exposure found was very small. In each case, the Court of Appeal, applying the special rule, held the defendant liable for causing the disease. In Willmore v Knowsley Metropolitan Borough Council the Council contends that the trial judge erred in finding that it was responsible for exposing Mrs Willmore to sufficient asbestos dust to cause a material increase in risk. The appeal involves an attack on findings of fact by the judge, which were upheld by the Court of Appeal, but no issue of principle, albeit that it nicely illustrates the effect of the special rule of causation. I agree that this appeal must be dismissed for the reasons given by Lord Rodger and I have nothing to add to these. In Sienkiewicz v Greif (UK) Ltd (Greif) the respondent is the daughter of Mrs Enid Costello and sues as administratrix of her estate. The appellant, Greif, raises two separate, albeit interrelated, grounds of appeal. The exposure for which the judge found Greif to have been responsible only increased the total amount of exposure which Mrs Costello would have experienced as a result of environmental exposure to asbestos, that is exposure to asbestos in the atmosphere, by 18%. Greif submits that in these circumstances the respondent failed to prove on balance of probability that Greif caused Mrs Costellos mesothelioma; to do this she would have had to prove that the exposure for which Greif was responsible had more than doubled the environmental exposure. This submission raises the following important issue of principle. Does the special rule of causation that applies in cases of mesothelioma leave any room for applying a test of balance of probability to causation? It also raises a general issue as to the applicability as proof of causation in personal injury cases of a test usually applied to epidemiological evidence that I shall call the doubles the risk test. Shortly stated this test attributes causative effect to any factor that more than doubled a risk that would otherwise have been present of the injury that occurred. Greifs alternative submission is that occupational exposure to asbestos dust will only constitute a material increase in risk for the purpose of the special rule of causation if it more than doubles the environmental exposure to such dust to which the victim was subject. It did not do so in the case of Mrs Costello. Methods of proving causation Most claims for death or personal injury result from accidents. In such cases the cause of death or personal injury will seldom be in issue. A body of knowledge which I shall call medical science will enable a witness, expert in that science, to describe the precise mechanism by which the accident brought about the death or injury. I shall describe this as the biological cause of death or injury. It is sometimes referred to by the more general description of the cause in fact. In some cases, however, medical science will not yet have identified the precise mechanism by which an injury gives rise to a particular physical consequence. In such cases it may be possible to deduce that there was a causative link between the two by evidence of what usually happens. Epidemiological evidence that a particular injury or disease usually follows a particular type of bodily insult may enable a court to conclude in a particular case, on balance of probability, that the former was caused by the latter. Post hoc ergo propter hoc. A finding of causation based on such evidence is sometimes described as the cause in law. Where the court is concerned with a speculative question what would have happened but for a particular intervention it is likely to need to have regard to what normally happens. A good example of such a situation is the task of estimating the loss of expectation of life of a person whose death has been caused by negligence or breach of duty. In such a situation the evidence upon which the court will reach its conclusion is likely to be provided, at least in part, by a statistician or an epidemiologist. Medical science will identify whether the deceased had any physical characteristic relevant to his life expectancy. Epidemiology will provide statistical evidence of life expectancy of the group or cohort to which the deceased belonged. With this material the court answers the hypothetical question of the length of the life that the victim would have enjoyed but for the breach of duty of the defendant. Epidemiology can also provide a court with assistance in deciding what actually happened, when the cause of a disease or injury is not clear. For one remarkable example of the use, and ultimate rejection, of epidemiological evidence see Loveday v Renton [1990] 1 MLR 1. Another remarkable case, to which I shall make further reference was XYZ v Schering Health Care Ltd [2002] EWHC 1420 (QB); 70 BMLR 88. When a scientific expert gives an opinion on causation, he is likely to do so in terms of certainty or uncertainty, rather than probability. Either medical science will enable him to postulate with confidence the chain of events that occurred, ie the biological cause, or it will not. In the latter case he is unlikely to be of much assistance to the judge who seeks to ascertain what occurred on a balance of probability. This reality was expressed by Lord Prosser in Dingley v The Chief Constable, Strathclyde Police 1998 SC 548, 603 with a clarity that merits quotation: In ordinary (non lawyers) language, to say that one regards something as probable is by no means to say that one regards it as established or proved. Yet in the civil courts, where we say that a pursuer must prove his case on a balance of probabilities, what is held to be probable is treated as proved. I do not suggest that any lawyer will be confused by this rather special meaning of the word proved. But speaking very generally, I think that the civil requirement of a pursuer that he satisfy the court that upon the evidence his case is probably sound would in ordinary language be regarded as very different from, and less stringent than, a requirement that his case be established or proved. More importantly in the context of such a case as the present, the fact that the two concepts are distinct in ordinary language, but the same in this legal context, seems to me to give rise to a risk of ambiguity or misunderstanding in the expressed opinions of expert witnesses. And this risk will be increased if the expert in question would normally, in the exercise of his profession, adopt an approach to such issues starkly different from that incumbent upon a court. Whether one uses the word scientific or not, no hypothesis or proposition would be seen as proved or established by anyone with any form of medical expertise merely upon the basis that he had come to regard it as probably sound. (Indeed, I think even the word probable would be reserved for situations where the likelihood is thought to be much more than marginal). And even if, in relation to any possible proposition or hypothesis, such an expert even troubled to notice that he had come to the point of regarding it as not merely possible but on balance probable, then I think he would regard that point as one from which he must set off on further inquiry, and by no means as being (as it is in the courts) a point of arrival. Mere marginal probability will not much interest him. But it must satisfy a court. The issue in Dingley was whether the development of multiple sclerosis had been caused by physical injury sustained in a motor accident. Medical science was not able to demonstrate the connection between the two, and reliance was placed on epidemiological evidence. Lord Prosser, at pp 604 605, had this to say about this method of proof: I am not much impressed by one argument advanced for the defender to the effect that the pursuers argument is essentially post hoc, ergo propter hoc, and therefore unsound. Plainly, one will more readily conclude that B is caused by A, or probably caused by A, if one can identify, or at least envisage, some kind of mechanism whereby B might be caused by A. Equally, if one simply cannot identify or envisage such a mechanism, the mere fact that on one occasion B happened after A (and perhaps very quickly after A) would not, in the absence of other indications, lead one easily to conclude that B was caused by A. But no one, certainly in this case, suggests that such a single coincidence is to be interpreted as involving a causal relationship. And once one moves from single coincidence to a number of occasions when B follows (perhaps quickly) upon A, dismissiveness of post hoc, ergo propter hoc reasoning seems to me to become less and less appropriate. Indeed, unless and until one can identify or envisage a connecting mechanism, countless conclusions as to causal relationship are reached precisely upon a form of post hoc, ergo propter hoc reasoning: if B is observed never to occur except shortly after A, the conclusion may be relatively easy but if B is observed to occur frequently after A, then even if each sometimes occurs without the other, the frequency with which B occurs after A may nonetheless well justify a more or less firm conclusion that A, in certain circumstances, causes B. I do not regard such conclusions as based on false (or indeed simple) logic. The approach is in my opinion inherent not only in conclusions drawn from ones general experience or anecdotal evidence. It is inherent also in much experimental research, and also, as it seems to me, in epidemiology. And while it may always seem somewhat insufficient, until one can find an identifiable possible mechanism, as a basis for claiming that the causal link is proved or established, in either ordinary or scientific terms, that feeling of insufficiency strikes me as much less appropriate if one stops short of such claims and contents oneself with saying that the causal relationship is marginally probable (or is proved or established only as required in civil litigation). Knowledge about mesothelioma is based in part on medical science and in part on statistical analysis or epidemiology. These appeals raise the question of whether, and if so to what extent, the court can satisfactorily base conclusions about causation on the latter, both in mesothelioma cases and more generally. Principles of causation in relation to disease Many diseases are caused by the invasion of the body by an outside agent. Some diseases are caused by a single agent. Thus malaria results from a single mosquito bite. The extent of the risk of getting malaria will depend upon the quantity of malarial mosquitoes to which the individual is exposed, but this factor will not affect the manner in which the disease is contracted nor the severity of the disease once it is contracted. The disease has a single, uniform, trigger and is indivisible. The contraction of other diseases can be dose related. Ingestion of the agent that causes the disease operates cumulatively so that, after a threshold is passed, it causes the onset of the disease. Lung cancer caused by smoking is an example of such a disease, where the disease itself is indivisible. The severity of the disease, once it has been initiated, is not related to the degree of exposure to cigarette smoke. More commonly, diseases where the contraction is dose related are divisible. The agent ingested operates cumulatively first to cause the disease and then to progress the disease. Thus the severity of the disease is related to the quantity of the agent that is ingested. Asbestosis and silicosis are examples of such diseases, as are the conditions of vibration white finger and industrial deafness, although the insults to the body that cause these conditions are not noxious agents. For this reason it is important to distinguish between asbestosis and mesothelioma when considering principles of causation. Mesothelioma is an indivisible disease. As I shall explain there is uncertainty as to whether its contraction is related to the amount of asbestos fibres ingested. It is a basic principle of the law of tort that the claimant will only have a cause of action if he can prove, on balance of probabilities, that the defendants tortious conduct caused the damage in respect of which compensation is claimed. He must show that, but for the defendants tortious conduct he would not have suffered the damage. This broad test of balance of probabilities means that in some cases a defendant will be held liable for damage which he did not, in fact, cause. Equally there will be cases where the defendant escapes liability, notwithstanding that he has caused the damage, because the claimant is unable to discharge the burden of proving causation. There is an important exception to the but for test. Where disease is caused by the cumulative effect of the inhalation of dust, part of which is attributable to breach of duty on the part of the defendant and part of which involves no breach of duty, the defendant will be liable on the ground that his breach of duty has made a material contribution to the disease Bonnington Castings Ltd v Wardlaw [1956] AC 613. The disease in that case was pneumoconiosis. That disease is divisible. The severity of the disease depends upon the quantity of silica inhaled. The defendant did not, however, argue that, if held liable, this should only be to the extent that the dust for which it was responsible had contributed to the plaintiffs symptoms. It was held liable for 100% of the disease. There have, however, been a series of cases at first instance and in the Court of Appeal in which it has been recognised that where there has been a number of exposures of a claimant to bodily insults that have cumulatively caused a divisible disease, responsibility should be apportioned so that an individual defendant is liable for no more than his share of the disease. This apportionment may necessarily be a rough and ready exercise: see Mustill Js analysis in Thompson v Smiths Shiprepairers (North Shields) Ltd [1984] QB 405 at pp 437 444 and the cases cited in McGregor on Damages, 18th ed (2010) at 8 010 to 8 016 What is known about mesothelioma The special rule of causation applied to mesothelioma was devised because of ignorance about the biological cause of the disease. It was accepted in Fairchild and Barker that this rendered it impossible for a claimant to prove causation according to the conventional but for test and this caused injustice to claimants. It is not possible properly to consider the issues raised by this appeal without reference to what is known about mesothelioma. This has been summarised in many cases, and much of my own summary in Bryce v Swan Hunter Group plc [1988] 1 All ER 659 of what was known 25 years ago remains true today. The cases under appeal did not involve the introduction of detailed evidence of what is known today about mesothelioma, proceeding on the basis that findings in previous cases could be taken as read. There was, however, introduced in evidence a case control study by Peto and Rake, published in 2009 by the Health and Safety Executive, on Occupational, Domestic and Environmental Mesothelioma risks in Britain (the Peto Report), which is said to be the first representative study to quantify the relationship between mesothelioma risk and lifetime occupational and residential history in this country. In these circumstances I have turned to recent judicial authority in order to augment the information contained in Peto and Rakes study. It has not been necessary to look further than the collation of data about mesothelioma set out by Rix LJ in his judgment in the series of appeals collectively described as Employers Liability Insurance Trigger Litigation [2010] EWCA Civ 1096. I shall set out in an annex to this judgment details of the current knowledge about mesothelioma that I have obtained from these sources. I can summarise the effect of the material in the Annex as follows: i) Mesothelioma is always, or almost always, caused by the inhalation of asbestos fibres. ii) A significant proportion of those who contract mesothelioma have no record of occupational exposure to asbestos. The likelihood is that 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, ie attributable to an unknown cause other than asbestos. Mr Stuart Smith QC for Greif submitted that the Peto Report indicates that this is more than a possibility, but I do not so read it. I do not, however, think that it matters whether some cases of the disease are idiopathic. iii) The more fibres that are inhaled, the greater the risk of contracting mesothelioma. iv) 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. v) There will be a lengthy period between the development of the first malignant cell and the point at which the disease can be diagnosed. At the time of Fairchild this was thought to be 10 years, but is now thought to be at least 5 years. During this period, further exposure to asbestos fibres will have no causative effect. vi) 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. vii) These propositions are based in part on medical science and in part on epidemiological studies. They represent the current understanding of a disease about which much remains to be discovered. The development of the special rule of causation that applies to mesothelioma The starting point in tracing the development of the special rule of causation is the decision of the House of Lords in McGhee v National Coal Board [1973] 1 WLR 1, an appeal from the First Division of the Court of Session. The pursuer claimed against his employers for dermatitis which he alleged had been caused by breaches of their common law duties. He was employed in a brick kiln, where he got covered in brick dust. This, so it was held, involved no breach of duty on the part of the defenders. They were, however, held in breach of duty for failure to provide a shower which would have enabled him to wash off the dust as soon as he finished work. He had to cycle home covered in dust and sweat. Two medical experts were called. The effect of their evidence was that the brick dust caused the dermatitis but that the precise mechanism whereby it did so was not known. It was agreed, however, that the risk of contracting the disease would have been reduced had the pursuer been able to wash off the dust before he cycled home. The cycle ride home in his unwashed state increased his risk of getting dermatitis. Lord Reid at p 4 summarised this evidence as follows: The medical evidence is to the effect that the fact that the man had to cycle home caked with grime and sweat added materially to the risk that this disease might develop. It does not and could not explain just why that is so. But experience shows that it is so. The nature of the evidence of that experience is not apparent. It does not appear to have been based on epidemiological research. Neither witness was able to quantify the extent to which failure to wash increased the risk, and one said that it was not possible to do so. If epidemiological data had existed it might have been possible to make a quantitative assessment based upon it of the extent to which delay in washing off brick dust increased the risk of dermatitis. On the very limited evidence available it was possible that the dermatitis had already been triggered by the time that the pursuer stopped work. It is equally possible that the additional exposure while he cycled home caked in dust had a critical incremental effect in triggering the disease. The defenders failure to provide showers increased the hazard posed to their workforce by brick dust and it was impossible on the evidence to determine whether this increase in hazard was or was not the critical factor in causing the pursuers dermatitis. Thus the facts of McGhee were not on all fours with those of Bonnington. In Bonnington it was possible to say that the inhalation of the silica attributable to breach of duty had contributed to causing the plaintiffs pneumoconiosis. In McGhee it was not possible to say whether or not the lack of a shower had in fact contributed to the contraction of the dermatitis. I have not found it possible to identify in McGhee reasoning that is common to all members of the House. The analysis of the decision that is now generally accepted is that the majority of their Lordships adapted the approach in Bonnington to the facts of McGhee by equating contribution to the risk of contracting dermatitis with contribution to the disease itself. They did so in circumstances where it was impossible to say whether, on balance of probability, the absence of shower facilities had been critical. What four of their Lordships did not consider was what the position would have been if there had been epidemiological evidence that gave a negative answer to that question. Lord Salmon did, however, expressly confront this question at p 12. After observing that the expert evidence did not enable one to place a percentage figure on the extent to which the lack of shower facilities had increased the risk of contracting dermatitis, he added: It is known that some factors materially increase the risk and others materially decrease it. Some no doubt are peripheral. Suppose, however, it were otherwise and it could be proved that men engaged in a particular industrial process would be exposed to a 52 per cent risk of contracting dermatitis even when proper washing facilities were provided. Suppose it could also be proved that that risk would be increased to, say, 90 per cent when such facilities were not provided. It would follow that if the decision appealed from is right, an employer who negligently failed to provide the proper facilities would escape from any liability to an employee who contracted dermatitis notwithstanding that the employers had increased the risk from 52 per cent to 90 per cent. The negligence would not be a cause of the dermatitis because even with proper washing facilities, ie without the negligence, it would still have been more likely than not that the employee would have contracted the disease the risk of injury then being 52 per cent. If, however, you substitute 48 per cent for 52 per cent the employer could not escape liability, not even if he had increased the risk to, say, only 60 per cent. Clearly such results would not make sense; nor would they, in my view, accord with the common law. In the example given by Lord Salmon the lack of shower facilities did not quite double the risk of contracting dermatitis. Thus, if one applies the doubles the risk test, the lack of shower facilities could not be shown to be the cause of any individual workmans dermatitis. I can understand why Lord Salmon considered that to base a finding of causation on such evidence would be capricious, but not why he considered that to do so would be contrary to common law. The balance of probabilities test is one that is inherently capable of producing capricious results. Nor do I understand his cryptic comment: I think that the approach by the courts below confuses the balance of probability test with the nature of causation. The doubles the risk test is one that, as I shall show in due course, has been adopted in subsequent cases as a valid method of deciding causation on balance of probabilities, and one which Mr Stuart Smith has sought to apply on these appeals. In Hotson v East Berkshire Area Health Authority [1987] AC 750 causation again caused a problem. The plaintiff, aged 13, had fallen out of a tree and sustained injury which reduced the flow of blood to cartilage in his hip joint. In breach of duty the defendants failed to diagnose this for five days. He suffered permanent disability of the hip joint. The issue was whether the injury itself was so severe that the subsequent disability of the hip joint was inevitable or whether, but for the five day delay, it would have been possible to prevent that disability. The medical evidence was that there was a 75% likelihood that the former was the case, but a 25% possibility that the delay in treatment was critical. At first instance [1985] 1 WLR 1036 Simon Brown J held that the defendants breach of duty had robbed the plaintiff of a 25% chance of avoiding the disability. The House of Lords held that this analysis was erroneous. The plaintiff was not robbed of a chance of avoiding the disability. The die was cast as soon as he had sustained his injury. Either the disability was inevitable or it could, with due skill and care, have been avoided. On balance of probability, estimated at 75/25, the former was the position, so the plaintiff had failed to prove causation. The particular interest of Hotson in the present context is the consideration given by Lord Mackay of Clashfern to McGhee, a case in which he had appeared as leading counsel for the employers. Like Lord Salmon, he took an epidemiological example. He said, at p 786: In McGhee v National Coal Board [1973] 1 WLR 1 this House held that where it was proved that the failure to provide washing facilities for the pursuer at the end of his shift had materially increased the risk that he would contract dermatitis it was proper to hold that the failure to provide such facilities was a cause to a material extent of his contracting dermatitis and thus entitled him to damages from his employers for their negligent failure measured by his loss resulting from dermatitis. Material increase of the risk of contraction of dermatitis is equivalent to material decrease in the chance of escaping dermatitis. Although no precise figures could be given in that case for the purpose of illustration and comparison with this case one might, for example, say that it was established that of 100 people working under the same conditions as the pursuer and without facilities for washing at the end of their shift 70 contracted dermatitis: of 100 people working in the same conditions as the pursuer when washing facilities were provided for them at the end of the shift 30 contracted dermatitis. Assuming nothing more were known about the matter than that, the decision of this House may be taken as holding that in the circumstances of that case it was reasonable to infer that there was a relationship between contraction of dermatitis in these conditions and the absence of washing facilities and therefore it was reasonable to hold that absence of washing facilities was likely to have made a material contribution to the causation of the dermatitis. In contrast to Lord Salmons figures, Lord Mackays figures demonstrate that, statistically, the lack of washing facilities more than doubled the risk of contracting dermatitis. Had evidence supporting such figures been given, it would have enabled the House, by application of the doubles the risk test, to conclude that the lack of shower facilities had, on balance of probabilities, caused Mr McGhee to contract dermatitis. I do not at this stage comment on whether or not it would have been appropriate for the House to apply that test. Lord Mackay went on to comment: Although neither party in the present appeal placed particular reliance on the decision in McGhee since it was recognised that McGhee is far removed on its facts from the circumstances of the present appeal your Lordships were also informed that cases are likely soon to come before the House in which the decision in McGhee will be subjected to close analysis. Obviously in approaching the matter on the basis adopted in McGhee much will depend on what is know of the reasons for the differences in the figures which I have used to illustrate the position. In these circumstances I think it unwise to do more than say that unless and until this House departs from the decision in McGhee your Lordships cannot affirm the proposition that in no circumstances can evidence of loss of a chance resulting from the breach of a duty of care found a successful claim of damages, although there was no suggestion that the House regarded such a chance as an asset in any sense. Once again I find this comment cryptic. Lord Mackay seems to be treating epidemiological evidence as evidence of loss of a chance, but it is not clear whether he is suggesting that such evidence might lead to a partial recovery rather than a full recovery in a case such as McGhee. The next step in the story is Wilsher v Essex Area Health Authority [1988] AC 1074. A baby boy, born three months prematurely, developed a condition of the retina which rendered him blind. There were five possible causes of the condition. One was the negligent administration of an excessive quantity of oxygen. The other four involved no fault on the part of the defendants medical staff. The expert witnesses were unable to say which caused the disease. The Court of Appeal, purporting to apply the principle in McGhee, held in favour of the infant. Mustill LJ expressed the principle, as he understood it, as follows [1987] QB 730, 771 772: If it is an established fact that conduct of a particular kind creates a risk that injury will be caused to another or increases an existing risk that injury will ensue; and if the two parties stand in such a relationship that the one party owes a duty not to conduct himself in that way; and if the first party does conduct himself in that way; and if the other party does suffer injury of the kind to which the risk related; then the first party is taken to have caused the injury by his breach of duty, even though the existence and extent of the contribution made by the breach cannot be ascertained. This analysis of McGhee was principled and coherent, but it was of wide general application and fundamentally rewrote the law of causation. It opened the floodgates and, I suspect, this may, in part, be the reason why it was subsequently rejected. Appeal at p 779, did not accept Mustill LJs analysis: In Wilsher, Sir Nicolas Browne Wilkinson V C, dissenting in the Court of To apply the principle in McGhee v National Coal Board [1973] 1 WLR 1 to the present case would constitute an extension of that principle. In the McGhee case there was no doubt that the pursuers dermatitis was physically caused by brick dust: the only question was whether the continued presence of such brick dust on the pursuers skin after the time when he should have been provided with a shower caused or materially contributed to the dermatitis which he contracted. There was only one possible agent which could have caused the dermatitis, viz, brick dust, and there was no doubt that the dermatitis from which he suffered was caused by that brick dust. In the present case the question is different. There are a number of different agents which could have caused the RLF. Excess oxygen was one of them. The defendants failed to take reasonable precautions to prevent one of the possible causative agents (eg excess oxygen) from causing RLF. But no one can tell in this case whether excess oxygen did or did not cause or contribute to the RLF suffered by the plaintiff. The plaintiffs RLF may have been caused by some completely different agent or agents, eg hypercarbia, intraventricular haemorrhage, apnoea or patent ductus arteriosus. In addition to oxygen, each of those conditions has been implicated as a possible cause of RLF. This baby suffered from each of those conditions at various times in the first two months of his life. There is no satisfactory evidence that excess oxygen is more likely than any of those other four candidates to have caused RLF in this baby. To my mind, the occurrence of RLF following a failure to take a necessary precaution to prevent excess oxygen causing RLF provides no evidence and raises no presumption that it was excess oxygen rather than one or more of the four other possible agents which caused or contributed to RLF in this case. The position, to my mind, is wholly different from that in the McGhee case [1973] 1 WLR 1, where there was only one candidate (brick dust) which could have caused the dermatitis, and the failure to take a precaution against brick dust causing dermatitis was followed by dermatitis caused by brick dust. In such a case, I can see the common sense, if not the logic, of holding that, in the absence of any other evidence, the failure to take the precaution caused or contributed to the dermatitis. To the extent that certain members of the House of Lords decided the question on inferences from evidence or presumptions, I do not consider that the present case falls within their reasoning. A failure to take preventative measures against one out of five possible causes is no evidence as to which of those five caused the injury. In the House of Lords, Lord Bridge of Harwich, reversing, with the agreement of the other members of the House, the decision of the Court of Appeal, approved the Vice Chancellors analysis. He went on to hold at p 1090 that McGhee laid down no new principle of law whatever. On the contrary, it affirmed the principle that the onus of proving causation lies on the pursuer or plaintiff. Adopting a robust and pragmatic approach to the undisputed primary facts of the case, the majority concluded that it was a legitimate inference of fact that the defenders negligence had materially contributed to the pursuers injury. The decision, in my opinion, is of no greater significance than that and to attempt to extract from it some esoteric principle which in some way modifies, as a matter of law, the nature of the burden of proof of causation which a plaintiff or pursuer must discharge once he has established a relevant breach of duty is a fruitless one. This analysis of McGhee has fared no better than that of Mustill LJ, cited at para 31. Bryce v Swan Hunter Group plc [1988] 1 All ER 659 was heard after the decision of the Court of Appeal and before the decision of the House of Lords in Wilsher. It was a claim in respect of mesothelioma against three defendants who, as successive employers, had tortiously exposed the plaintiff to asbestos dust. He had had other exposure to this less than 10 years before the onset of the disease and those responsible for this had not been joined as defendants. McGhee, as explained by Mustill LJ in Wilsher, was applied, resulting in a finding that each of the defendants was liable. I understand that after this decision insurers of employers who had consecutively subjected workmen to asbestos dust tended to accept joint and several liability for mesothelioma and to agree apportionment. At all events, this Court was not referred to any decision where such an approach was challenged until Fairchild. Fairchild involved three separate mesothelioma claims, which had been heard together by the Court of Appeal [2002] 1 WLR 1052. In each case the victim had been employed by a series of employers, each of which had wrongly exposed him to asbestos dust. No attempt had been made to prove, by epidemiology or otherwise, that on balance of probabilities, any particular employer had caused the victim to contract the disease. The Court of Appeal ruled against each claim on the ground that it had not been shown on balance of probability that any defendant had caused the disease. Reliance on McGhee was rejected on the ground that Lord Bridge in Wilsher had held that it established no new principle of causation and that, in McGhee, there had been no doubt that the defendant had caused the dermatitis the only question was whether the defendant had done so in breach of duty. If McGhee was applied in the Fairchild situation there was a risk that a defendant would be held liable for a disease that it had not caused at all. The House of Lords reversed the Court of Appeal, holding that the principle in McGhee was applicable. Lord Bingham at paras 21 and 22 held that Lord Bridge had been wrong in Wilsher to hold that McGhee represented no more than a robust finding of fact that the defenders negligence had materially contributed to the pursuers injury. The opinions of at least the majority in McGhee could not be read as decisions of fact or orthodox applications of settled law. The House had adapted (rather than adopted) the orthodox test to meet the problem of proving causation that had arisen on the facts of that case. Lord Nicholls of Birkenhead put the matter this way at para 44: Given the medical evidence in McGhee, it was not open to the House, however robustly inclined, to draw an inference that the employers negligence had in fact caused or materially contributed to the onset of the dermatitis in the sense that, but for that negligence, the dermatitis would not have occurred. Instead, a less stringent causal connection was regarded as sufficient. It was enough that the employer had materially increased the risk of harm to the employee. There is room for debate, and there has been debate, as to the precise basis upon which the House in Fairchild applied the McGhee principle to the mesothelioma claims under consideration. I do not propose to enter that debate, for it was overtaken by the decision of the House in Barker. At this point it suffices to note the following. The House was agreed that the application of the McGhee principle was circumscribed by a number of conditions, though not agreed as to what these were. Lord Bingham at para 2 identified 6 relevant factors that applied to the cases under consideration, before going on to hold that they brought into play the McGhee principle: (1) C was employed at different times and for differing periods by both A and B, and (2) A and B were both subject to a duty to take reasonable care or to take all practicable measures to prevent C inhaling asbestos dust because of the known risk that asbestos dust (if inhaled) might cause a mesothelioma, and (3) both A and B were in breach of that duty in relation to C during the periods of C's employment by each of them with the result that during both periods C inhaled excessive quantities of asbestos dust, and (4) C is found to be suffering from a mesothelioma, and (5) any cause of C's mesothelioma other than the inhalation of asbestos dust at work can be effectively discounted, but (6) C cannot (because of the current limits of human science) prove, on the balance of probabilities, that his mesothelioma was the result of his inhaling asbestos dust during his employment by A or during his employment by B or during his employment by A and B taken together. At para 7 Lord Bingham explained the shortcomings of medical science: It is not known what level of exposure to asbestos dust and fibre can be tolerated without significant risk of developing a mesothelioma, but it is known that those living in urban environments (although without occupational exposure) inhale large numbers of asbestos fibres without developing a mesothelioma. It is accepted that the risk of developing a mesothelioma increases in proportion to the quantity of asbestos dust and fibres inhaled: the greater the quantity of dust and fibre inhaled, the greater the risk. But the condition may be caused by a single fibre, or a few fibres, or many fibres: medical opinion holds none of these possibilities to be more probable than any other, and the condition once caused is not aggravated by further exposure. So if C is employed successively by A and B and is exposed to asbestos dust and fibres during each employment and develops a mesothelioma, the very strong probability is that this will have been caused by inhalation of asbestos dust containing fibres. But C could have inhaled a single fibre giving rise to his condition during employment by A, in which case his exposure by B will have had no effect on his condition; or he could have inhaled a single fibre giving rise to his condition during his employment by B, in which case his exposure by A will have had no effect on his condition; or he could have inhaled fibres during his employment by A and B which together gave rise to his condition; but medical science cannot support the suggestion that any of these possibilities is to be regarded as more probable than any other. There is no way of identifying, even on a balance of probabilities, the source of the fibre or fibres which initiated the genetic process which culminated in the malignant tumour. Lord Bingham identified at para 23 the problem raised by the facts of Fairchild as follows: The problem of attributing legal responsibility where a victim has suffered a legal wrong but cannot show which of several possible candidates (all in breach of duty) is the culprit who has caused him harm is one that has vexed jurists in many parts of the world for many years. He justified his decision by the following policy considerations set out at para 33: It can properly be said to be unjust to impose liability on a party who has not been shown, even on a balance of probabilities, to have caused the damage complained of. On the other hand, there is a strong policy argument in favour of compensating those who have suffered grave harm, at the expense of their employers who owed them a duty to protect them against that very harm and failed to do so, when the harm can only have been caused by breach of that duty and when science does not permit the victim accurately to attribute, as between several employers, the precise responsibility for the harm he has suffered. I am of opinion that such injustice as may be involved in imposing liability on a duty breaking employer in these circumstances is heavily outweighed by the injustice of denying redress to a victim. Lord Bingham did not expressly consider the approach to be adopted where a claimant had been exposed to asbestos dust both from employers in breach of duty and from sources that did not involve fault, or which involved fault on the part of the claimant himself. At para 34 he expressly limited the special rule of causation that he was endorsing to a situation where all six of the factors that he had identified at the start of his speech were present. At para 22 he underlined why the special rule did not apply on the facts of Wilsher: It is plain, in my respectful opinion, that the House was right to allow the defendants' appeal in Wilsher, for the reasons which the Vice Chancellor had given and which the House approved. It is one thing to treat an increase of risk as equivalent to the making of a material contribution where a single noxious agent is involved, but quite another where any one of a number of noxious agents may equally probably have caused the damage. The other members of the House did not circumscribe the special rule of causation as tightly as Lord Bingham. In McGhee itself the causal competition had been between exposure to dust that involved no fault and exposure that involved fault on the part of the employers, a point made by Lord Rodger at para 153. He also held that Mustill LJ had illegitimately extended the special causation test in Wilsher. He held, at para 149: Mustill LJs extension of the approach in McGhee to a situation where there were all kinds of other possible causes of the plaintiff's condition, resulted in obvious injustice to the defendants. In particular, there was nothing to show that the risk which the defendants' staff had created that the plaintiff would develop retrolental fibroplasia because of an unduly high level of oxygen had eventuated. That being so, there was no proper basis for applying the principle in McGhee. As [Sir Nicolas Browne Wilkinson V C] decisively observed, a failure to take preventive measures against one of five possible causes was no evidence as to which of those five had caused the injury. The reasoning of the Vice Chancellor, which the House adopted, provided a sound and satisfactory basis for distinguishing McGhee and for allowing the appeal. Lord Rodger set out his conclusions at para 170: First, the principle is designed to resolve the difficulty that arises where it is inherently impossible for the claimant to prove exactly how his injury was caused. It applies, therefore, where the claimant has proved all that he possibly can, but the causal link could only ever be established by scientific investigation and the current state of the relevant science leaves it uncertain exactly how the injury was caused and, so, who caused it. McGhee and the present cases are examples. Secondly, part of the underlying rationale of the principle is that the defendant's wrongdoing has materially increased the risk that the claimant will suffer injury. It is therefore essential not just that the defendant's conduct created a material risk of injury to a class of persons but that it actually created a material risk of injury to the claimant himself. Thirdly, it follows that the defendant's conduct must have been capable of causing the claimant's injury. Fourthly, the claimant must prove that his injury was caused by the eventuation of the kind of risk created by the defendant's wrongdoing. In McGhee, for instance, the risk created by the defenders' failure was that the pursuer would develop dermatitis due to brick dust on his skin and he proved that he had developed dermatitis due to brick dust on his skin. By contrast, the principle does not apply where the claimant has merely proved that his injury could have been caused by a number of different events, only one of which is the eventuation of the risk created by the defendants wrongful act or omission. Wilsher is an example. Fifthly, this will usually mean that the claimant must prove that his injury was caused, if not by exactly the same agency as was involved in the defendant's wrongdoing, at least by an agency that operated in substantially the same way. A possible example would be where a workman suffered injury from exposure to dusts coming from two sources, the dusts being particles of different substances each of which, however, could have caused his injury in the same way. Without having heard detailed argument on the point, I incline to the view that the principle was properly applied by the Court of Appeal in Fitzgerald v Lane [1987] QB 781. Sixthly, the principle applies where the other possible source of the claimant's injury is a similar wrongful act or omission of another person, but it can also apply where, as in McGhee, the other possible source of the injury is a similar, but lawful, act or omission of the same defendant. I reserve my opinion as to whether the principle applies where the other possible source of injury is a similar but lawful act or omission of someone else or a natural occurrence. The conundrum Neither Lord Bingham nor Lord Rodger explained the nature of the principle that justifies restricting the application of McGhee to the situation where the competing causes of the injury suffered by the claimant involve the same or a similar noxious substance or agency. There is, however, a more significant conundrum raised by Fairchild which is particularly relevant to this appeal. Lord Bingham observed (see para 40 above) that it is accepted that the risk of developing mesothelioma increases in proportion to the quantity of asbestos dust and fibres inhaled. If this is so why should one not determine the probability that a particular defendant caused a claimants mesothelioma by analysing the extent to which he wrongfully contributed to the exposure of the claimant to asbestos dust and fibres? This conundrum is highlighted by the decision of the House in Barker. Barker The question that Lord Rodger had expressly left open at the end of his speech in Fairchild was raised directly in Barker, one of three appeals that were heard together. The claimant was the widow of a man who had died of mesothelioma. He had been exposed to asbestos dust on three occasions in his working life. Once when working for a company which had since become insolvent, once when working for the defendant and once when working for himself. On the last occasion he had failed to take reasonable precautions for his own safety. In the courts below the defendant had been held jointly and severally liable with the insolvent company, but the claimants damages had been reduced by 20% to reflect her husbands contributory negligence. The other two appeals involved employees who had been exposed to asbestos dust by a series of employers, many of whom had since been held insolvent. In the courts below the solvent employers who had been sued were held jointly and severally liable. In each appeal the defendants argued that the special rule of causation that the House had applied in Fairchild should be further refined so as to render each employer liable only for that proportion of the damages which represented his contribution to the risk that the employee would contract mesothelioma. This submission was accepted by all members of the Committee with the exception of Lord Rodger, who dissented. Lord Hoffmann gave the leading speech for the majority. He dealt first with the question of whether the Fairchild principle could apply in a case where part of the exposure was non tortious. At para 17 he gave a positive answer to that question: The purpose of the Fairchild exception is to provide a cause of action against a defendant who has materially increased the risk that the claimant will suffer damage and may have caused that damage, but cannot be proved to have done so because it is impossible to show, on a balance of probability, that some other exposure to the same risk may not have caused it instead. For this purpose, it should be irrelevant whether the other exposure was tortious or non tortious, by natural causes or human agency or by the claimant himself. These distinctions may be relevant to whether and to whom responsibility can also be attributed, but from the point of view of satisfying the requirement of a sufficient causal link between the defendant's conduct and the claimant's injury, they should not matter. Lord Hoffmann then turned to deal with apportionment. He did so on the premise that mesothelioma is an indivisible injury caused by a single exposure to asbestos dust. The greater the overall exposure, the greater the risk of an individual fatal exposure: see paras 2 and 26. If, under the Fairchild principle exposure had been treated as if it had actually contributed to the disease, the conventional approach would have resulted in all those responsible for exposure being held jointly and severally liable for the injury caused. Lord Hoffmann did not consider it fair to impose such liability on employers in cases in which there is merely a relatively small chance that they caused the injury (paras 43 and 46). He avoided this consequence by interpreting the Fairchild principle as one that rendered a defendant liable for contributing to risk, not contributing to injury. The risk created was itself the damage, albeit that the principle only applied where injury had been caused. As risk or chance was infinitely divisible, each defendant could be held liable for his contribution to the risk. At the end of his consideration of the issue of causation, Lord Hoffmann made the following finding as to the limit of the Fairchild principle or exception: 24. In my opinion it is an essential condition for the operation of the exception that the impossibility of proving that the defendant caused the damage arises out of the existence of another potential causative agent which operated in the same way. It may have been different in some causally irrelevant respect, as in Lord Rodger's example of the different kinds of dust, but the mechanism by which it caused the damage, whatever it was, must have been the same. So, for example, I do not think that the exception applies when the claimant suffers lung cancer which may have been caused by exposure to asbestos or some other carcinogenic matter but may also have been caused by smoking and it cannot be proved which is more likely to have been the causative agent. In considering how apportionment would work in practice, Lord Hoffmann said this: 36. Treating the creation of the risk as the damage caused by the defendant would involve having to quantify the likelihood that the damage (which is known to have materialised) was caused by that particular defendant. It will then be possible to determine the share of the damage which should be attributable to him. The quantification of chances is by no means unusual in the courts. For example, in quantifying the damage caused by an indivisible injury, such as a fractured limb, it may be necessary to quantify the chances of future complications. Sometimes the law treats the loss of a chance of a favourable outcome as compensatable damage in itself. The likelihood that the favourable outcome would have happened must then be quantified: see, for example, Chaplin v Hicks [1911] 2 KB 786 and Kitchen v Royal Air Force Association [1958] 1 WLR 563. 37.These are of course cases in which there is uncertainty as to what will be, or would have been, the outcome of a known event; for example, the consequences of a fractured ankle, a beauty contest or a lawsuit. The present case involves uncertainty as to the cause of a known outcome, namely, the mesothelioma. But in principle I can see no reason why the courts cannot quantify the chances of X having been the cause of Y just as well as the chance of Y being the outcome of X. He returned to this theme under the heading of quantification at para 48: But when the damage is apportioned among the persons responsible for the exposures to asbestos which created the risk, it is known that those exposures were together sufficient to cause the disease. The damages which would have been awarded against a defendant who had actually caused the disease must be apportioned to the defendants according to their contributions to the risk. It may be that the most practical method of apportionment will be according to the time of exposure for which each defendant is responsible, but allowance may have to be made for the intensity of exposure and the type of asbestos. These questions are not before the House and it is to be hoped that the parties, their insurers and advisers will devise practical and economical criteria for dealing with them. These passages raise the conundrum to which I have referred in para 45 above in an acute form. If it is possible, on the basis of responsibility for exposure, to deduce the relative likelihood of a defendant being the employer who actually caused the injury, why should one not resolve liability according to the normal test of balance of probability. If one can determine that there was a relatively small chance that a particular employer caused the injury, why should that employer not be absolved from liability on the ground that he can prove, on balance of probability, that he was not responsible? Lord Scott agreed with the reasoning and the result reached by Lord Hoffmann. He recognised, however, that the limitations on medical knowledge rendered it impossible to say whether mesothelioma was caused by a single exposure, and thus a single employer, or by a combination of more than one exposures and thus, possibly, by more than one employer: para 51. His speech also implicitly raised the conundrum. When dealing with apportionment he said this, at para 62: Ascertainment of the degree of risk would be an issue of fact to be determined by the trial judge. The issue would depend upon the duration of the exposure for which each negligent defendant was responsible compared with the total duration of the claimant's exposure to the injurious agent in question. It might depend also on the intensity of the exposure for which the defendant was responsible compared with the intensity of the exposure for which the defendant was not responsible. The exact type of agent might be a relevant factor in assessing the degree of risk. I have in mind that there are different types of asbestos and some might create a greater risk than others. Other factors relevant to the degree of risk might come into the picture as well. The assessment of the percentage risk for which an individual defendant was responsible, and therefore the percentage of the total damage for which that defendant could be held liable, would, as I have said, be an issue of fact to be decided on the evidence in each case. Why could one not assess the probability of having caused the injury on the same basis as that used to apportion contribution to the risk of causing the injury? The same question is raised by the speech of Lord Walker, who also agreed with the reasoning and result reached by Lord Hoffmann. He observed, 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). This possible unfairness cannot be eliminated, as the House recognised in Fairchild, but it is considerably reduced if each employer's liability is limited in proportion to the fraction of the total exposure (measured by duration and intensity) for which each is responsible. The underlying premise of all three speeches, as of the speeches in Fairchild, is that it is not possible to determine causation unless medical science enables one to do so with certainty. But the law of causation does not deal in certainties; it deals in probabilities. Lady Hale agreed in general with the majority, but she did not accept that the gist of the actions was the risk created rather than the mesothelioma. To that extent she shared the reasoning that had led Lord Rodger to dissent. The result of the decision in Barker was that, where not all those who were responsible for an employees mesothelioma were before the court, only a proportion of the relevant damages would be recoverable. This was highly significant having regard to the very long latency period of the disease, for in most cases there was a high likelihood that there would be employers who had contributed to exposure and who had gone into liquidation. Apportionment also dealt with the problem of contributory negligence. The rejoicing with which the insurance industry must have greeted this result was short lived as Parliament intervened. The Compensation Act 2006 The preamble to the 2006 Act includes among its objects to make provision about damages for mesothelioma. The relevant parts of the provision made are as follows: 3. Mesothelioma: damages (1)This section applies where (a) a person (the responsible person) has negligently or in breach of statutory duty caused or permitted another person (the victim) to be exposed to asbestos, (b) the victim has contracted mesothelioma as a result of exposure to asbestos, (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 mentioned in paragraph (a) or another exposure which caused the victim to become ill, and (d) the responsible person is liable in tort, by virtue of the exposure mentioned in paragraph (a), in connection with damage caused to the victim by the disease (whether by reason of having materially increased a risk or for any other reason). (2) The responsible person shall be liable (a) in respect of the whole of the damage caused to the victim by the disease (irrespective of whether the victim was also exposed to asbestos (i) other than by the responsible person, whether or not in circumstances in which another person has liability in tort, or (ii) by the responsible person in circumstances in which he has no liability in tort), and (b) jointly and severally with any other responsible person. This provision has grafted onto the Fairchild/Barker principle a special rule in relation to liability in damages that applies only to mesothelioma. The 2006 Act, coupled with Fairchild, has draconian consequences for an employer who has been responsible for only a small proportion of the overall exposure of a claimant to asbestos dust, or his insurers, but it would be wrong to have regard to that fact when considering the issues raised by these appeals. Parliament has willed it so. The facts in Greif as found by the judge Mrs Costello died of mesothelioma in January 2006 at the age of 74. She had worked for Greif or their predecessors at their factory at Ellesmere Port, Cheshire, between 1966 and 1984. Greif exposed those working at that factory to asbestos dust in breach of duty. The greatest exposure was on the factory floor, but to a much lesser extent asbestos dust permeated to other parts of the factory. Mrs Costellos exposure was in those other parts as she moved around the factory. This occupational exposure was very light. The judge, His Honour Judge Main QC, heard expert evidence which quantified this exposure and compared it to the environmental exposure that would be experienced by everyone. While he held that he could only use the broadest sorts of estimates as to Mrs Costellos asbestos exposure he none the less based some very specific findings on this expert evidence. He held that her exposure to asbestos over her working life at Greifs factory increased the risk to which environmental exposure subjected her from 24 cases per million to 28.39 cases per million an increase of risk of 18%. It was on the basis of this finding that the judge held that the claimants case on causation had not been made out. His starting point was that the special rule in Fairchild had no application where there was only one tortfeasor and where the competition as to causation was between an innocent and a tortious source of dust. In that situation he adopted an approach to causation which had been adopted, by agreement between the parties, in an earlier case on similar facts in the Cardiff County Court decided by HH Judge Hickinbottom: Jones v Metal Box Ltd (unreported) 11 January 2007: 53. (ii) It was common ground that, in order to succeed with the claim, the claimant must show that as a result of her exposure to asbestos dust at work as I have described, Mrs Jones risk of mesothelioma at least doubled from that which it would have been without that exposure. That in my judgment is a correct analysis of the position with regard to medical causation: because unless the claimant can show that the risk was doubled, then it is more likely than not that the mesothelioma had an idiopathic rather than an occupational cause Thus Judge Hickinbottom applied the doubles the risk test. Applying that test Judge Main held: On the facts of this case, the claimant could only succeed if she were able to prove that all Mrs Costellos exposure to asbestos was within the Oil Sites premises, cumulatively, over her 18 years employment exceeded her environmental risks. Here environmental risks are the same as those idiopathic risks referred to by Judge Hickinbottom. This in my judgment regrettably, she failed to do. Whilst Mrs Costellos risk of contracting mesothelioma increased by 18% the bottom line is that it was caused by her environmental exposure to asbestos. Her claim against the defendants accordingly must be dismissed. In the Court of Appeal Smith LJ gave the leading judgment. In discussing the legal principles applicable she first referred to McGhee and Fairchild. She then considered the doubles the risk test in relation to cases of diseases other than mesothelioma. She reached the following conclusion of general principle: 20. The theory that causation could be proved on the balance of probabilities by reference to a doubling of the risk of injury was first applied by Mackay J in the oral contraceptive litigation XYZ v Schering Health Care Ltd (2002) 70 BMLR 88. As a preliminary issue, the parties agreed that the judge should examine the epidemiological evidence relating to the risk of deep vein thrombosis arising from two different types of oral contraceptive. The claimant group could succeed only if the epidemiology showed that the risk of harm arising from the type of contraceptive they had been taking (which it was assumed they had not been warned about and would not have taken if warned) was at least twice that arising from the type which they had formerly been taking (which it was assumed they had been warned about and which risk they had accepted). The logic behind this was that, if the risk from potential cause A is x% and the risk from the other potential cause B is 2.1x%, it is more likely than not that the condition which has eventuated has been caused by B. 21. Since the oral contraceptive case, this method of proving causation has been applied in cases of lung cancer where the claimant has been tortiously exposed to asbestos and non tortiously exposed to cigarette smoke, both of which are potent causes of the condition. Expert evidence is received as to the relative risks created by the two forms of exposure and, if, on the individual facts of the case, the risk from the asbestos exposure is more than double the risk from smoking, the claimant succeeds. 22. The only case of which I am aware in which this approach has been applied or approved in the Court of Appeal is Novartis Grimsby Ltd v Cookson [2007] EWCA Civ 1261. That was a case of bladder cancer, in which the claimant had been tortiously exposed to carcinogens in the course of his employment in a dye works. He had also been a regular smoker. Both were potential causes of bladder cancer. At trial, the defendants case was that the tortious exposure at work had been minimal. The recorder held that it was not minimal and applied the Bonnington case [1956] AC 613; he held that the tort had made a material contribution to the disease. On appeal, the appellant employer argued, correctly, that that was wrong as the tort could not be said to have made a contribution to the disease, only to the risk of the disease developing. The claimant argued that the case ought to come within the Fairchild exception so that all that was necessary was to prove a material increase in risk. The appellant employer contended that the Fairchild case [2003] 1 AC 32 should not be extended to cover such a case. In the event, the Court of Appeal observed that there was expert evidence, which the recorder had accepted, to the effect that the tortious exposure had more than doubled the risk arising from smoking. The court held that that was sufficient for the claim to succeed. 23. In my view, it must now be taken that, saving the expression of a different view by the Supreme Court, in a case of multiple potential causes, a claimant can demonstrate causation by showing that the tortious exposure has at least doubled the risk arising from the non tortious cause or causes. Smith LJ went on to consider whether the doubles the risk test could be applied in relation to mesothelioma. She held that it could not. She did so on the basis that by enacting section 3(1)(d) of the Compensation Act 2006 Parliament had laid down a rule that causation in a mesothelioma case could be established by proof of a material increase in risk: para 34. This precluded a defendant from averring, in a case of mesothelioma, that the claimant had to satisfy the doubles the risk test. She held, at para 27, that the judge should have applied the test of material increase of risk, ie the Fairchild/Barker rule, and in consequence the appeal should be allowed: it is not now possible for this court to consider whether, at common law, the Fairchild exception should be limited in application to cases in which it is quite impossible for a claimant to prove causation by reference to a more than twofold increase in risk. That is because Parliament has intervened by enacting section 3 of the Compensation Act 2006 so that the common law simpliciter no longer governs claims for damages in mesothelioma cases. Had Smith LJ held that the doubles the risk test could be applied to mesothelioma, she would not have allowed the decision of the judge to stand. She held that the doubles the risk test had been advanced without adequate notice, so that Sienkiewicz had been wrong footed and denied a fair chance to deal with the expert evidence. The case would have to be remitted for a new trial. i) Scott Baker LJ and Lord Clarke agreed with the judgment of Smith LJ. Lord Clarke held that the Fairchild test had to be applied by reason both of common law and the construction of section 3 of the 2006 Act. Submissions I can summarise the arguments advanced by Mr Stuart Smith on behalf of Greif as follows, adopting a different order to that adopted in his printed case: The Court of Appeal erred in holding that section 3 of the 2006 Act mandated the application of the Fairchild/Barker rule of causation in mesothelioma cases. ii) The Fairchild/Barker rule does not apply in this case because this is a single exposure case. iii) It is possible in this case to adopt a conventional approach to causation by applying the doubles the risk test. This approach demonstrates that Mrs Costello contracted mesothelioma as a result of environmental exposure and not as a result of the slight additional exposure to which she was subjected by Greif. iv) The claim also fails because the exposure to which Greif subjected Mrs Costello was not material. Occupational exposure is not material unless it more than doubles the amount of environmental exposure to which a claimant is subject. In the case of Mrs Costello the exposure for which Greif was responsible was insignificant. The findings of exposure made by the trial judge could not be supported by the evidence and there was no justification for a fresh trial. Mr Melton QC for Mrs Costellos estate challenged all these submissions. He submitted that the Fairchild test was applicable and attacked the application of the doubles the risk test. He further submitted that the asbestos dust to which Mrs Costello was subjected materially increased the risk that she would contract mesothelioma and that, applying the Fairchild test and section 3 of the 2006 Act, the Court of Appeal had properly held the claim to be made out in full. Discussion five headings: I propose to discuss the problems raised by this appeal under the following involving diseases other than mesothelioma? i) The effect of section 3 of the Compensation Act 2006. ii) Epidemiology and the nature of the doubles the risk test. iii) Can the doubles the risk test be applied in multiple cause cases iv) Can the doubles the risk test be applied to mesothelioma cases. v) What constitutes a material increase in risk? vi) The result in this case. The effect of section 3 of the Compensation Act 2006 The Court of Appeal treated section 3(1) as enacting that, in cases of mesothelioma, causation can be proved by demonstrating that the defendant wrongfully materially increased the risk of a victim contracting mesothelioma. This was a misreading of the subsection. Section 3(1) does not state that the responsible person will be liable in tort if he has materially increased the risk of a victim of mesothelioma. It states that the section applies where the responsible person is liable in tort for materially increasing that risk. Whether and in what circumstances liability in tort attaches to one who has materially increased the risk of a victim contracting mesothelioma remains a question of common law. That law is presently contained in Fairchild and Barker. Those cases 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. The common law is capable of further development. Thus section 3 does not preclude the common law from identifying exceptions to the material increase of risk test, nor from holding, as more is learned about mesothelioma, that the material increase of risk test no longer applies. The Fairchild/Barker rule was adopted in order to cater for the ignorance that existed at the time of those decisions about the way in which mesothelioma is caused. Section 3 does not preclude the courts from reverting to the conventional approach of balance of probabilities in mesothelioma cases should advances in medical science in relation to this disease make such a step appropriate. Greif contend that the Court should identify an exception to the Fairchild/Barker rule where there has been only one occupational exposure to risk and that, in those circumstances, the Court can and should apply the doubles the risk test. Section 3 poses no bar to that contention; it must be considered on its merits. Epidemiology and the nature of the doubles the risk test The doubles the risk test is one that applies epidemiological data to determining causation on balance of probabilities in circumstances where medical science does not permit determination with certainty of how and when an injury was caused. The reasoning goes as follows. If statistical evidence indicates that the intervention of a wrongdoer more than doubled the risk that the victim would suffer the injury, then it follows that it is more likely than not that the wrongdoer caused the injury. I propose first to consider the authorities to which Smith LJ referred to see the extent to which they support the general proposition that she stated at para 23 of her judgment. Smith LJ founded the general proposition in para 23 of her judgment (see para 63 above) on one decision of Mackay J, one decision of the Court of Appeal and on unspecified cases of exposure both to asbestos and to cigarette smoke. When these are examined it becomes apparent that they exemplify the application of the doubles the risk test in three quite different circumstances. I propose to look at these before considering the nature of the epidemiological principle applied in each of them. XYZ is a lengthy and complex judgment devoted exclusively to a preliminary issue on the effect of epidemiological evidence. The issue was whether a second generation of oral contraceptives more than doubled the risk of causing deep vein thrombosis (DVT) that was created by the first generation of oral contraceptives. It was common ground that, if the claimants in this group litigation could not establish this, their claims under the Consumer Protection Act 1987 were doomed to failure. I do not believe that Smith LJ has correctly identified the relevance of this issue. It was not whether the DVT suffered by the claimants had been caused by the second generation of oral contraceptives which they had taken. It was whether the second generation of contraceptives created a significantly greater risk than the first. The experts appear to have been in agreement that the doubles the risk test was the proper one to apply in order to resolve this issue. Thus I do not believe that that decision affords any direct assistance to the question of whether the doubles the risk test is an appropriate test for determining causation in a case of multiple potential causes. It does, however, contain a detailed and illuminating discussion of epidemiology and I shall revert to it when considering that topic. Shortell v BICAL Construction Ltd (Liverpool District Registry, 16 May 2008), another decision of Mackay J, was a claim in relation to a death caused by lung cancer where there were two possible causes of the cancer. One was occupational exposure to asbestos and the other was cigarette smoke. The defendant was responsible for the former but not for the latter. Applying the Bonnington test of causation, the issue was whether the asbestos to which the victim had been exposed had made a material contribution to the cause of the victims lung cancer. The expert evidence, given by both medical and epidemiological experts, but based in the case of each, I suspect, on epidemiological data, was that asbestos and cigarette smoke not merely combined cumulatively to cause lung cancer, but that they had a synergistic effect in doing so. This evidence was enough, as I see it, to satisfy the Bonnington test of causation, as the victim had been exposed both to significant quantities of asbestos fibres and to significant cigarette smoke. judgment: In these circumstances, I am puzzled by the following passages in the 49.The causation of lung cancer as opposed to mesothelioma is dependent on an aggregate dose either of asbestos fibre or smoke. Mr Feeny for the defendants rightly in my view concedes that if the claimant proves on a balance of probabilities that the risk factor created by his clients breach of duty more than doubled the deceaseds relative risk of contracting lung cancer then the claimants case is proved, and the only remaining issue is contributory negligence. For the reasons I have advanced above I am satisfied on the balance of probabilities that once the estimate of 99 fibre/ml years is accepted as I have accepted it the relative risk is on any view more than doubled. 51. Where, as here, it is the case that the claimant has proved causation against this defendant by showing a more than doubled relative risk it is not relevant as between the claimant and the defendant to argue that another agent (tortious or otherwise) may also have contributed to the occurrence of the disease. Epidemiological evidence indicated that, had the victim not been a smoker, his exposure to asbestos would have more than doubled the risk that he would get lung cancer. I do not, however, see that it was essential for the claimant to prove this. For this reason I question whether Smith LJs endorsement of the doubles the risk test is correct in cases where asbestos and tobacco smoke have combined to cause lung cancer. Novartis Grimsby Ltd v Cookson [2007] EWCA Civ 1261, which was the third case to which Smith LJ referred, was an appeal in which she gave the only reasoned judgment. The claimant sought damages against his employers for causing him bladder cancer. It is known that bladder cancer is caused by exposure to amines and the claimant had been so exposed from two sources. One was his employment, which wrongfully exposed him to amines used in the manufacture of dyes. The other was smoking, for cigarette smoke contains amines. There was expert evidence, which the recorder accepted, that the occupational exposure had more than doubled the risk caused by smoking. There was an issue as to whether Bonnington applied or whether the claimant had to prove that but for the occupational exposure he would not have suffered the cancer. Smith LJ did not find it necessary to resolve this issue, for at para 74 she held that the but for test was satisfied: In terms of risk, if occupational exposure more than doubles the risk due to smoking, it must, as a matter of logic, be probable that the disease was caused by the former. On analysis, it is only this last proposition that supports Smith LJs general statement that a claimant can prove causation where there are a number of potential causes of a disease or injury by showing that the tortious exposure had at least doubled the risk arising from the non tortious cause or causes. I agree with her that, as a matter of logic, if a defendant is responsible for a tortious exposure that has more than doubled the risk of the victims disease, it follows on the balance of probability that he has caused the disease, but these are statistical probabilities and the issue in this case is whether a statistical approach to determining causation should be applied in place of the Fairchild/Barker test. I have derived assistance in relation to the next section of this judgment from the judgment of Mackay J in XYZ. He there set out a careful and detailed introduction into the discipline of epidemiology and I shall gratefully borrow some of the clear language that he used. Epidemiology is the study of the occurrence and distribution of events (such as disease) over human populations. It seeks to determine whether statistical associations between these events and supposed determinants can be demonstrated. Whether those associations if proved demonstrate an underlying biological causal relationship is a further and different question from the question of statistical association on which the epidemiology is initially engaged. Epidemiology may be used in an attempt to establish different matters in relation to a disease. It may help to establish what agents are capable of causing a disease, for instance that both cigarette smoke and asbestos dust are capable of causing lung cancer, it may help to establish which agent or which source of an agent, was the cause, or it may help to establish whether or not one agent combined with another in causing the disease. Epidemiological data can be obtained by comparing the relevant experience (eg contraction of a disease) of a group or cohort that is subject to exposure to a particular agent with the experience of a group or cohort that is not. Where an agent is known to be capable of causing a disease, the comparison enables the epidemiologist to calculate the relevant risk (RR) that flows from the particular exposure. An RR of 1 indicates that there is no association between the particular exposure and the risk. An RR of 2 indicates that the particular exposure doubled the chance that the victim would contract the disease. Statistically the likelihood that the victim would have contracted the disease without the particular exposure is then equal to the likelihood that the victim would not have contracted the disease but for that exposure. Where the RR exceeds 2 the statistical likelihood is that the particular exposure was the cause of the disease. The greater the RR the greater the statistical likelihood that the particular exposure caused the disease. An RR of just over 2 is a tenuous basis for concluding that the statistical probable cause of a disease was also the probable biological cause, or cause in fact. The greater the RR the greater the likelihood that the statistical cause was also the biological cause. One reason why an RR of just over 2 is a tenuous basis for determining the biological cause is that the balance of that probability is a very fine one. Another is that the epidemiological data may not be reliable. One reason for this may be that the relevant survey or surveys have been insufficiently extensive to produce data that is truly representative. Epidemiologists conventionally seek to indicate the reliance that can be placed on an RR by determining 95% confidence limits or intervals (C1) around it. The approach that I have been describing focuses on one specific causal agent or a number of specific causal agents. There may well, however, be other causal factors that operate in conjunction with the agent exposure to which is the particular object of investigation, eg the age or genetic susceptibility of the victim. The identification of one probable cause of a disease does not preclude the possibility that there are other contributory causes. Mr Stuart Smith in his printed case helpfully referred us to a number of foreign authorities which demonstrate that the weight to be attached to epidemiological evidence can vary significantly according to judicial policy. In America the test of causation in toxic tort cases varies from state to state. The most helpful case in the present context is Merrell Dow Pharmaceuticals Inc v Havner (1997) 953 SW 2d 706, a decision of the Supreme Court of Texas, for this gives detailed consideration to the doubles the risk test. The claim was one of a large number brought against the manufacturer of the prescription drug Bendectin. The parents of a child born with a limb reduction birth defect alleged that the cause of this was Bendectin, taken by the mother when she was pregnant. The parents sought to establish causation by epidemiological evidence which they contended demonstrated that taking this drug more than doubled the risk of such birth defects. Giving the judgment of the court Phillips CJ remarked, at p 716, that the doubling of the risk issue in toxic tort cases had provided fertile ground for the scholarly plow. He proceeded to refer to much of this, summarising the position as follows, at p 717: Some commentators have been particularly critical of attempts by the courts to meld the more than 50% probability requirement with the relative risks found in epidemiological studies in determining if the studies were admissible or were some evidence that would support an award for the claimant. But there is disagreement on how epidemiological studies should be used. Some commentators contend that the more than 50% probability requirement is too stringent, while others argue that epidemiological studies have no relation to the legal requirement of more likely than not. The Chief Justice went on to hold that, although there was not a precise fit between science and legal burdens of proof, properly designed and executed epidemiological studies could form part of evidence supporting causation in a toxic tort case and that there was a rational basis for relating the requirement that there be more than a doubling of the risk to the more likely than not burden of proof. At p 718 the Chief Justice commented: But the law must balance the need to compensate those who have been injured by the wrongful actions of another with the concept deeply imbedded in our jurisprudence that a defendant cannot be found liable for an injury unless the preponderance of the evidence supports cause in fact. The use of scientifically reliable epidemiological studies and the requirement of more than a doubling of the risk strikes a balance between the needs of our legal system and the limits of science. We do not hold, however, that a relative risk of more than 2.0 is a litmus test or that a single epidemiological test is legally sufficient evidence of causation. Other factors must be considered. As already noted, epidemiological studies only show an association. He then emphasised the need for the design and execution of epidemiological studies to be examined in order to identify possible bias. At pp 720 721 he made a comment that is particularly pertinent in the context of this appeal: Finally, we are cognizant that science is constantly re evaluating conclusions and theories and that over time, not only scientific knowledge but scientific methodology in a particular field may evolve. We have strived to make our observations and holdings in light of current, generally accepted scientific methodology. However, courts should not foreclose the possibility that advances in science may require re evaluation of what is good science in future cases. Can the doubles the risk test be applied in multiple cause cases involving diseases other than mesothelioma? For reasons that I have already explained, I see no scope for the application of the doubles the risk test in cases where two agents have operated cumulatively and simultaneously in causing the onset of a disease. In such a case the rule in Bonnington applies. Where the disease is indivisible, such as lung cancer, a defendant who has tortiously contributed to the cause of the disease will be liable in full. Where the disease is divisible, such as asbestosis, the tortfeasor will be liable in respect of the share of the disease for which he is responsible. Where the initiation of the disease is dose related, and there have been consecutive exposures to an agent or agents that cause the disease, one innocent and one tortious, the position will depend upon which exposure came first in time. Where it was the tortious exposure, it is axiomatic that this will have contributed to causing the disease, even if it is not the sole cause. Where the innocent exposure came first, there may be an issue as to whether this was sufficient to trigger the disease or whether the subsequent, tortious, exposure contributed to the cause. I can see no reason in principle why the doubles the risk test should not be applied in such circumstances, but the court must be astute to see that the epidemiological evidence provides a really sound basis for determining the statistical probability of the cause or causes of the disease. McGhee may have been such a case. The facts were puzzling, for no other workman had ever contracted dermatitis at the defendants brick kiln, so one wonders what the basis was for finding that the lack of shower facilities was potentially causative. Had there been epidemiological evidence it seems unlikely that this would have demonstrated that the extra ten or fifteen minutes that, on the evidence, the pursuer took to cycle home doubled his risk of contracting dermatitis, or came anywhere near doing so. Where there are competing alternative, rather than cumulative, potential causes of a disease or injury, such as in Hotson, I can see no reason in principle why epidemiological evidence should not be used to show that one of the causes was more than twice as likely as all the others put together to have caused the disease or injury. Can the doubles the risk test be applied in mesothelioma cases? This question calls for consideration of the conundrum that I identified when considering the decisions in Fairchild and Barker. In the course of argument I put the conundrum to Mr Stuart Smith. Why, if it was possible to equate increasing exposure to increasing risk, could one not postulate that, on balance of probabilities, where one employer had caused over 50% of a victims exposure, that employer had caused the victims mesothelioma? Why could one not, by the same token, postulate that where over 50% of the victims exposure was not attributable to fault at all, on balance of probability, the victims mesothelioma had not been caused tortiously? In short, why was there any need to apply the Fairchild/Barker rule where epidemiological evidence enabled one to use statistics to determine causation on balance of probability? Mr Stuart Smith replied that this was a question which puzzled him also. He believed that the answer could be found in consideration given in earlier cases to a hypothetical injury caused by either a blue or a red taxi cab. This led to some inconsequential discussion as to the colours of the cabs involved. The example in question can be traced, via the speech of Lord Mackay in Hotson [1987] AC 750, 789 to the dissenting judgment of Brachtenbach J in Herskovits v Group Health Cooperative of Puget Sound (1983) 664 P 2d 474, a decision of the Supreme Court of Washington: Brachtenbach J dissented. He warned against the danger of using statistics as a basis on which to prove proximate cause and indicated that it was necessary at the minimum to produce evidence connecting the statistics to the facts of the case. He gave an interesting illustration of a town in which there were only two cab companies, one with three blue cabs and the other with one yellow cab. If a person was knocked down by a cab whose colour had not been observed it would be wrong to suggest that there was a 75 per cent chance that the victim was run down by a blue cab and that accordingly it was more probable than not that the cab that ran him down was blue and therefore that the company running the blue cabs would be responsible for negligence in the running down. He pointed out that before any inference that it was a blue cab would be appropriate further facts would be required as, for example, that a blue cab had been seen in the immediate vicinity at the time of the accident or that a blue cab had been found with a large dent in the very part of the cab which had struck the victim. This example is an extreme example of the fact that statistical evidence may be an inadequate basis upon which to found a finding of causation. Keeping to that example, it was not possible to postulate that the risk of being knocked down by a negligent driver of a taxi cab was proportional to the number of taxi cabs in the town. Much more significant would have been the care taken by the rival taxi firms in employing competent drivers, and the past accident record of the firms in question. Thus the first answer to the conundrum may be that, in the case of mesothelioma, epidemiological evidence alone has not been considered by the courts to be an adequate basis for making findings of causation: that so long as medical science is unable to demonstrate, as a matter of fact, the aetiology of mesothelioma, data relating incidence to exposure is not a satisfactory basis for making findings of causation. Not only is the adequacy of epidemiological evidence relevant to the weight to be attached to it. So is its reliability. A helpful description of the factors that can limit the reliability of epidemiological evidence is to be found in an article by C E Miller on Causation in personal injury: legal or epidemiological common sense? in 26 Legal Studies No 4, December 2006, pp 544 569. Deducing causation in relation to mesothelioma on the basis of epidemiological evidence requires a comparison between the statistical relationship between exposure and the incidence of the disease and the experience of the victim who has sustained the disease. A number of factors make this exercise particularly problematic. The first is the difficulty in collating sound epidemiological data. The second is the difficulty of obtaining reliable evidence as to the relevant experience of the victim. The third is uncertainty as to the adequacy of the epidemiological evidence that is available as a guide to causation. The epidemiological data that has been collated in relation to mesothelioma relates largely to the exposure of victims to asbestos dust. It must be gathered from the histories of those who, tragically, have succumbed to mesothelioma. Because of the very long latency of the disease and the limited time between the first experience of its symptoms and death, obtaining the necessary data is difficult. Most of the data relates to victims who were subjected to substantial occupational exposure to dust. This data has been extrapolated to cover victims who have had very light exposure, but there is no certainty that this extrapolation is reliable. The same difficulty arises in relation to obtaining details of the relevant experience of the particular victim. That difficulty is illustrated by the two appeals before the Court. The most significant inhibition on the use of epidemiological evidence to determine causation in cases of mesothelioma is uncertainty as to the adequacy of the data. The data is relied on as establishing that the risk of contracting mesothelioma is proportional to exposure to asbestos dust. It used to be thought that mesothelioma was probably triggered by a single asbestos fibre and that the cause of the disease could be attributed exclusively to that one fibre. Were that the case it would be reasonable to postulate that the risk of contracting the disease was proportional to the exposure. In the words of Lord Hoffmann in Barker at para 26, referring to the decision of Moses J at first instance: the more you are exposed, the more likely you are to get it, in the same way as the more you spin the roulette wheel, the more is a given number likely to come up. The single fibre theory has, however, been discredited. The amount of exposure does not necessarily tell the whole story as to the likely cause of the disease. There may well be a temporal element. The Peto Report also raised the possibility (but no more) of synergistic interaction between early and later exposures. Causation may involve a cumulative effect with later exposure contributing to causation initiated by an earlier exposure. Applying the conventional test of causation, the relevant question is, on balance of probability, which exposures in an individual case may have contributed to causing the disease? Epidemiology does not enable one to answer that question by considering simply the relative extent of the relevant exposures. The House of Lords was not, in Fairchild nor in Barker invited to consider the possibility that it might be possible in an appropriate case to demonstrate by epidemiological evidence that, on balance of probabilities, the mesothelioma had been caused by exposure that was not wrongful, or alternatively that such evidence might demonstrate that one particular employer had, on balance of probabilities, caused the disease. Had it been I do not believe that the House would have been persuaded that epidemiological evidence was sufficiently reliable to base findings as to causation upon it. I believe that the cumulative effect of the various factors that I have set out above justifies the adoption of the special rule of causation that the House of Lords applied in Fairchild and Barker. The justification for that rule may diminish or vanish as the aetiology of the disease is revealed by scientific research. Nor does the rule wholly displace a conventional approach to causation. Epidemiological data and medical science show that exposure once a cell has become malignant is not causative and thus exposure once that point is probably passed, can be discounted as a potential contributor to the disease. The possibility that mesothelioma may be caused as the result of the cumulative effect of exposure to asbestos dust provides a justification, even if it was not the reason, for restricting the Fairchild/Barker rule to cases where the same agent, or an agent acting in the same causative way, has caused the disease, for this possibility will not exist in respect of rival causes that do not act in the same causative way. I would add that even if one could postulate with confidence that the extent of the contribution of a defendant to the victims exposure to asbestos precisely reflected the likelihood that his breach of duty had caused the victims disease, there would still be justification for the application of the Fairchild rule where all the exposure was wrongful. Imagine four defendants each of whom had contributed 25% to the victims exposure so that there was a 25% likelihood in the case of each defendant that he had caused the disease. The considerations of fairness that had moved the House in Fairchild would justify holding each of the defendants liable, notwithstanding the impossibility of proving causation on balance of probability. Thus the conundrum is answered by saying that there are special features about mesothelioma, and the gaps in our knowledge in relation to it, that render it inappropriate to decide causation on epidemiological data as to exposure. So far as concerns apportionment between tortfeasors jointly liable for causing mesothelioma it is likely to be necessary to use epidemiological evidence faute de mieux. What constitutes a material increase in risk? Liability for mesothelioma falls on anyone who has materially increased the risk of the victim contracting the disease. What constitutes a material increase of risk? The parties were, I think, agreed that the insertion of the word material is intended to exclude an increase of risk that is so insignificant that the court will properly disregard it on the de minimis principle. Mr Stuart Smith submitted that there should be a test of what is de minimis, or immaterial, which can be applied in all cases. Exposure should be held immaterial if it did not at least double the environmental exposure to which the victim was subject. It does not seem to me that there is any justification for adopting the doubles the risk test as the bench mark of what constitutes a material increase of risk. Indeed, if one were to accept Mr Stuart Smiths argument that the doubles the risk test establishes causation, his de minimis argument would amount to saying that no exposure is material for the purpose of the Fairchild/Barker test unless on balance of probability it was causative of the mesothelioma. This cannot be right. I doubt whether it is ever possible to define, in quantitative terms, what for the purposes of the application of any principle of law, is de minimis. This must be a question for the judge on the facts of the particular case. In the case of mesothelioma, a stage must be reached at which, even allowing for the possibility that exposure to asbestos can have a cumulative effect, a particular exposure is too insignificant to be taken into account, having regard to the overall exposure that has taken place. The question is whether that is the position in this case. The result in this case. Despite Judge Mains heroic endeavours, the nature of the exercise on which he embarked must raise doubts over his precise finding that Greifs wrongful exposure to asbestos dust increased the environmental exposure to which Mrs Costello was subject by 18%. Having made that finding, Judge Main wrongly applied the doubles the risk test rather than the Fairchild/Barker test. He did not expressly consider whether the exposure to which Greif wrongly subjected Mrs Costello was so insignificant that it could be disregarded as de minimis. None the less, had he thought it de minimis, he might well have said so. He did describe the very small quantities of fibres that might have been on furniture in Greifs offices as of statistically insignificant effect and de minimis: para 50. I do not think that Judge Main would have dismissed the addition that Greifs wrongful exposure made to the risk that Mrs Costello would contract mesothelioma as statistically insignificant or de minimis. If one assumes, as is likely, that Mrs Costellos disease was asbestos induced, it is plain that a very low level of exposure sufficed to cause the disease. This accords with the expert evidence that there is no known lower threshold of the exposure that is capable of causing mesothelioma. No one could reasonably conclude that there was no significant possibility that the incremental exposure to which Greif subjected Mrs Costello was instrumental in causing her to contract the disease. I am in no doubt that the wrongful exposure to which she was subjected materially increased her risk of contracting mesothelioma. The reality is that, in the current state of knowledge about the disease, the only circumstances in which a court will be able to conclude that wrongful exposure of a mesothelioma victim to asbestos dust did not materially increase the victims risk of contracting the disease will be where that exposure was insignificant compared to the exposure from other sources. I note that in Rolls Royce Industrial Power (India) Ltd v Cox [2007] EWCA Civ 1189 counsel for the employer conceded that exposure to asbestos dust for a period of one week would not be de minimis. For these reasons I would dismiss the appeal in Greif. ANNEX A. In the Trigger litigation Rix LJ set out the following extract from the judgment of Longmore LJ in Bolton Metropolitan Borough Council v Municipal Mutual Insurance Ltd [2006 EWCA Civ 50, [2006] 1 WLR 1492: 7 There are three forms of asbestos: brown (amosite), blue (crocidolite) and white (chrysotile). Their fibres have different bio persistence: 20 years after exposure to fibres about half the inhaled amosite fibres remain in the body, a smaller proportion of the crocidolite fibres remains and, relatively, few chrysotile fibres remain. 8 The human body is composed of cells of various types. Of the fibres which reach the lungs many are engulfed by macrophages (scavenger cells). The macrophages may then be expelled by the mucosiliary process or may die within the lungs. All cells can and do die for various reasons, but cells are in communication with each other and the death of one can cause another to divide so, with some exceptions such as men losing their hair with age, the number of cells remains approximately the same throughout a person's life. When macrophages die in the lungs they release various chemicals, some of which attract neutrophils, another type of cell, which can engulf fibres. A different mechanism which destroys fibres in the lungs is that they are dissolved in tissue fluids. Another mechanism, by which the body protects itself, is that some fibres become coated by proteinaceous material containing iron which, it is believed, renders them less likely to produce fibrosis. 9 The division of cells in human tissue is important for understanding how mesothelioma occurs. Each cell in the body contains all the genetic information necessary for the construction and functioning of the entire body. This information is contained in the form of DNA, a molecule consisting of two intertwining strands. The different structure and function of the various types of cell in the body occurs because in each cell only some of the genes contained in the DNA are active and in different cells different genes are active. The coded information in a DNA molecule is in the form of about 3,000,000,000 base pairs. Each pair consists of two collections of atoms called nucleotides. There is one half of each pair in each of the two intertwining strands. When cell division occurs the strands unravel and two daughter double helices are created. Normally the daughters are identical with each other but sometimes they are not. Dr Rudd uses the word mutation for an imperfect copy. This word mutation thus means a thing a cell and not a process, and is not a synonym of change; for change Dr Rudd uses the term generic alteration. I shall adopt this usage. The word mutation does not have any derogatory connotations. A mutation is different from, but not necessarily worse than, the cell from which it is derived or otherwise undesirable. The body contains what can be described as a repair mechanism which sometimes corrects the discrepancy between a daughter and its parent. This repair mechanism is vital to normal health, and people whose repair system lacks some components (a very rare condition) will die early, often of cancer. Sometimes, however, a perfectly normal repair and correction mechanism fails to correct a mutation. Such failure can lead to any of three possibilities. First, the mutation may be unable to survive and die. Secondly it may be better fitted for its purpose than the cell from which it is derived, and this is the cause of evolution. As Dr Moore Gillon put it Without the normal process of imperfect copying, mankind (and indeed all other species) would not have emerged. 10 It is the third possibility with which this case is concerned. A mutation which does not die, which is not repaired and which does not perform its purpose better than the cell from which it was derived may itself divide, and the daughter cells or (to continue the parental analogy) the grand daughter or more distant descendants may in turn die, be repaired or be mutations from the cell from which they are derived. Eventually there may be a mutation which is malignant, i e a cell which divides in an uncontrolled manner, as opposed to maintaining the normal balance between cells dying and cells dividing. It normally takes a heredity of six or seven genetic alterations before a malignant cell occurs. The body has natural killer cells which, as their name indicates, can target and destroy mutations, possibly even after they have become malignant. A tumour is a growth consisting of a number of cells dividing in that uncontrolled manner. Mesothelioma is a tumour in the pleura. B. Rix LJ then summarised the findings of Burton J in the Trigger litigation, which brought the findings of Longmore LJ up to date: 11 Asbestos fibres in the pleura increase the likelihood of genetic mutation. It is now thought likely that, if there is a series of genetic alterations which ends with a malignant cell in the pleura, fibres will have acted in causing several of those genetic alterations, rather than just one genetic alteration. However the final genetic alteration which results in a malignant cell is not necessarily caused by fibres directly. Fibres may also inhibit the activity of natural killer cells. Pre cancerous genetic alterations in cells do not give rise to any symptoms or signs. They cannot be detected by any routine clinical or radiological examination. It would be possible to detect them by examining in a laboratory tissue taken from a part of the body containing cells which have become genetically modified, but the exercise would be pointless because pre cancerous genetic alterations do not necessarily or even usually lead to mesothelioma. 12 It is furthermore important to note that there may be a long time lapse not only between exposure and the first formation of a malignant cell but that there may be a similarly lengthy lapse of time between first malignancy and the onset of noticeable symptoms such as breathlessness. 50. The judge heard evidence from five internationally recognised experts in the field: Dr Rudd and Dr Moore Gillon, who have between them given evidence in most if not all of the cases involving mesothelioma in recent years including Fairchild and Bolton itself; Professor Geddes, on whose pioneering work the first two experts have based their own theories (see his crucial 1979 paper concerning the rate of tumour growth, published in volume 73 of the British Journal of Diseases of the Chest, The Natural History of Lung Cancer: a Review based on Rates of Tumour Growth (the Geddes article)); and Professor Phillips of the Institute of Cancer Research and Professor Heintz of the Vermont Cancer Centre. The last two are biochemists, the first three are respiratory consultants. The judge observed that the evidence of the biochemistry experts is a new feature of such litigation. 51. On the basis of this expert evidence, the judge remarked on two matters which were common ground between the parties. One is that it is the exposure to quantities of fibres which is causative of mesothelioma, and the risk increases with the dosage. This was recognised already in Fairchild (see Lord Bingham at para 7; and Lord Rodger at para 122, where the latter observed: the greater the number of asbestos fibres taken into the body, the greater are the chances that one of them will trigger a malignant transformation). The second matter is that once the mesothelioma tumour is present and assured of growth (ie has passed the stage where a malignant mutation may die off), further asbestos exposure and indeed further asbestos fibres in the body can make no difference and are not causative. 52. Burton J also described the unknowability and indescribability of much of the pathogenesis of mesothelioma as being common ground (at para 30). Subject to that caution, the judge made the following findings about the disease. He described asbestos fibre as a complete carcinogen, ie no other agent or co agent is required to cause the ultimate malignancy (at para 130). Unlike a normal cancer of spherical or similar shape which sooner or later can be seen on a scan or x ray, the mesothelioma tumour grows along the surface of the lungs rather like a fungus and is thus practically undetectable, and only becomes diagnosable when the symptoms of impaired breathing bring it to the patient's and his doctor's attention. As the details of actions 1 3 illustrate, that is only shortly before death. The average time between manifestation/diagnosis and death is some fourteen months. 53. The judge described the normal process of cell mutations in healthy bodies and lungs. Even in a person who has not been exposed to asbestos as part of his occupation, the lungs will typically contain millions of asbestos fibres, albeit not the hundreds of millions to be found in the occupationally exposed and with far less proportionately of the more dangerous blue and brown asbestos varieties. He said: 108The mesothelial cells, like all cells in the body, are constantly dividing: Dr Rudd told us that there are 10 trillion cells in the body and 50 billion are replicated every day. Cell division, or mitosis, by which the cell divides, duplicates its chromosomes and passes on a complete set to each of its "daughters", is the norm; but there can be mutations again Dr Rudd told us that incorrect copying can take place in one in a million cell divisions and thus possibly 5,000 times per day in the human body, or every 17 seconds. The body's repair mechanisms are quick to correct and abort the mutations, but even if there are mutations there are four possible consequences. The incorrect copy may be unable to survive, and die; the mutation can make no difference; the mutation can positively improve the cell hence evolution; or the mutated cell can survive and can itself divide, passing on the genetic alterations, eventually after many generations and with further mutations creating a malignant cell. 54. What then makes the difference between a normal and a diseased process? The judge continued: 109. There will or may be thousands of mutations, only one of which may have any deleterious effect on successive mitosis. But, the experts gave evidence that there are six or seven genetic alterations which are required, not necessarily occurring in the same or any particular order, which, when they are all in place, can lead to a malignant cell. The characteristics of a malignant cell are (i) self sufficiency of growth signals (ii) insensitivity to growth inhibitory signals (iii) evasion of programmed cell death (apoptosis) (iv) limitless replicative potential (v) the ability to invade tissues and to metastasise ie to transfer to other parts of the body (vi) the availability of its own blood supply obtained by a process which is called angiogenesis 111. Once a cell has acquired what Dr Rudd calls a full house of the necessary 6/7 mutations, and has evaded all the bodily defences (described by Dr Rudd as full house plus), then it can be described as a malignant cell, and can and does begin a period of uncontrolled by multiplication. Notwithstanding what Dr Rudd has called evasion of the bodily defences, Professors Phillips and Heintz [the biochemists] conclude that many full house cells with malignant potential may fail to grow into tumours. It appears to be common ground, at any rate so far as the biochemists are concerned, that such cell or cells at this stage are still at risk from natural killer cells, although they apparently develop a method of switching off the signals which summon the natural killer cells or put them on notice. There is also, despite the characteristic of limitless replication, the possibility or probability, of periods of dormancy. Professor Phillips points out that the norm of 40 years from exposure to diagnosability growth suggests either that the mutation period lasts a long time or that there are periods of tumour dormancy (or both). 55. The judge then described the growth of a malignant cell towards the status of a mesothelioma tumour, premised on the figures to be derived from the Geddes article concerning the more normal type of spherical tumour. Professor Geddes found that the average rate of doubling of cells was 102 days (albeit that was a speculative average, which could vary between 45 and 130 days). It is only at a tumour size of 106 cells (1 million cells) that it becomes unlikely for the bodily defences, still until then available, to be able to neutralise it. Angiogenesis then occurs at somewhere between 106 and 109 (1 billion cells). Symptoms of breathlessness will begin to be experienced when the tumour is between 109 and 1012 (1 trillion cells). In the biochemists' view, angiogenesis occurred about 5 years or so before death. The Peto and Rake study led the authors to the following conclusions: 1. Mesothelioma risk is determined largely by asbestos exposure before age 30, and ranges from a lifetime risk of 1 in 17 for ten or more years of carpentry before age 30 to less than 1 in 1,000 in apparently unexposed men and women. Our results suggest that the predicted total of 90,000 mesotheliomas in Britain between 1970 and 2050 will include approximately 15,000 carpenters. 2. The risk of lung cancer caused by asbestos is likely to be of the same order as the mesothelioma risk. This would imply that more than 1 in 10 of British carpenters born in the 1940s with more than 10 years of employment in carpentry before age 30 will die of a cancer caused by asbestos. 3. Asbestos exposure was widespread, with 65% of male and 23% of female controls having worked in occupations that were classified as medium or higher risk. 4. Britain was the largest importer of amosite (brown asbestos), and there is strong although indirect evidence that this was a major cause of the uniquely high mesothelioma rate. The US imported far less amosite than Britain but used similar amounts of chrysotile (white asbestos) and more crocidolite (blue asbestos), and US mesothelioma death rates in middle age are now 3 to 5 times less than British rates. British carpenters frequently worked with asbestos insulation board containing amosite. 5. We found no evidence of increased risk associated with non industrial workplaces or those that were classified as low risk, including motor mechanics and workers handling gaskets and mats that may have contained asbestos. 6. The only potential non occupational exposure associated with increased risk was living with an exposed worker. 7. The increasing trend in female rates in Britain and a comparison between British and US female rates both suggest that a substantial proportion of mesotheliomas with no known occupational or domestic exposure were probably caused by environmental asbestos exposure. The sources of this presumably included construction, building maintenance and industrial activities but may also include release of asbestos from buildings due to normal occupation and weathering. LORD RODGER Defendants whose breaches of duty expose someone to asbestos and so materially increase the risk that he will develop mesothelioma are liable jointly and severally for the damage which he suffers if he does in fact develop mesothelioma. The fundamental question in these two appeals is whether this special rule the so called Fairchild exception, as it applies to mesothelioma applies in cases where only one defendant is proved to have exposed the victim to asbestos, but she was also at risk of developing the disease from low level exposure to asbestos in the general atmosphere (environmental exposure). I would hold that the special rule does apply in such cases. Karen Sienkiewicz v Greif (UK) Ltd In these proceedings the claimant, Mrs Karen Sienkiewicz, is the daughter, and administratrix of the estate of, the late Mrs Enid Costello who died of mesothelioma on 21 January 2006. From 1966 until 1984 Mrs Costello worked for the defendants predecessors in title at their factory premises in Ellesmere Port where they manufactured steel drums. The process involved the release of asbestos dust into the factory atmosphere. Although Mrs Costello worked mostly in an office, she spent time in areas of the factory which were, from time to time, contaminated with asbestos. The trial judge held that Mrs Costellos exposure to asbestos on the defendants premises was very light and that it would have been through the inhalation of the general factory atmosphere, as she moved about. The judge also held that this exposure was in breach of the relevant legal duties owed by the defendants to Mrs Costello. It was common ground that, like anyone else, Mrs Costello would have been subject to environmental exposure to low levels of asbestos in the atmosphere in the areas where she lived. The trial judge found that the defendants exposure of Mrs Costello to asbestos over her working life at their premises increased her background risk (of contracting mesothelioma) from 24 cases per million to 28.39 cases per million, an increase of risk of 18%. Putting the point slightly more precisely, the environmental risk of contracting mesothelioma was 24 cases per million; exposure of the level of the occupational exposure in Mrs Costellos case would increase the risk of contracting mesothelioma to 28.39 cases per million an increase of 18%. The trial judge concluded that the claimant had failed to establish that any exposure by the defendants had caused Mrs Costellos mesothelioma because once there is only one occupational cause for the mesothelioma the claimant has to prove that it is the likely cause. On this basis he held that the special rule of law laid down by the House of Lords in Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 did not apply and that the claimant could therefore not succeed on the basis that, on the balance of probability, Mrs Costellos exposure to asbestos in the course of her employment with the defendants had materially increased the risk that she would contract mesothelioma. She could only succeed by proving, on the balance of probability, that the defendants breach of duty had caused Mrs Costellos mesothelioma. The Court of Appeal (Lord Clarke of Stone cum Ebony, Scott Baker and Smith LJJ) allowed the claimants appeal: Sienkiewicz v Greif (UK) Ltd [2009] EWCA 1159; [2010] QB 370. They held that the decision of the House of Lords in Fairchild applied. The defendants breach of duty had materially increased the risk of Mrs Costello developing mesothelioma. So they were liable. The defendants appeal against that decision. Although the Court of Appeal ultimately held that the rule in Fairchild applied to mesothelioma cases of this kind because of section 3 of the Compensation Act 2006 (the 2006 Act), in the course of her judgment, [2010] QB 370, 379, at para 23, Smith LJ made a very general statement about the approach which courts should adopt to issues of causation: In my view, it must now be taken that, saving the expression of a different view by the Supreme Court, in a case of multiple potential causes, a claimant can demonstrate causation by showing that the tortious exposure has at least doubled the risk arising from the non tortious cause or causes. An important issue in the present appeals is whether this guidance is sound. Willmore v Knowsley Metropolitan Borough Council In these proceedings the claimant is Mr Barr Willmore. He is the husband, and administrator of the estate, of the late Mrs Dianne Willmore who died of mesothelioma on 15 October 2009 at the age of 49. Prior to her death, Mrs Willmore had raised proceedings for damages for her illness against Knowsley Metropolitan Borough Council (the Council). After her condition was diagnosed, Mrs Willmore made a number of different allegations as to her possible exposure to asbestos. Initially she alleged that she had been exposed to asbestos dust in the course of her employment with the Army & Navy Stores in Liverpool between 1979 and 1981. But when she raised her proceedings against the Council in February 2008 she alleged that she had been exposed to asbestos when some prefabricated houses near her childhood home in Huyton were demolished. She also alleged that she had been exposed to asbestos while a pupil at her primary school run by the Council. On 14 February 2008, however, Mrs Willmore read an article in the Liverpool Echo referring to a report prepared by the Council which identified the presence of asbestos in a number of secondary schools, including Bowring Comprehensive, where she had been a pupil. On 27 November 2008 Mrs Willmore amended the particulars of claim to allege, in essence, that when she first attended Bowring Comprehensive, the construction of the school had not been completed and she and other pupils had been exposed to asbestos as a result of workmen using materials containing asbestos. She also alleged that she had been exposed to asbestos as a result of other disturbance of asbestos materials at the school. She subsequently abandoned all her allegations of exposure to asbestos except those relating to Bowring Comprehensive. Following a trial in July 2009, Nicol J found that, while a pupil at Bowring Comprehensive, Mrs Willmore had been exposed to the type of asbestos known as amosite in three separate ways: (1) as a result of work involving the removal, handling and disturbance of ceiling tiles in a corridor along which pupils, including Mrs Willmore, passed; (2) as a result of pupils misbehaviour, which caused ceiling tiles containing asbestos to be damaged or broken; (3) as a result of asbestos ceiling tiles, including broken tiles, being stored in a girls lavatory which had been used by Mrs Willmore on many occasions. The judge held that each of these exposures to asbestos fibres had materially increased the risk of Mrs Willmore contracting mesothelioma later in life. In so concluding, he found that none of these exposures was de minimis. He awarded Mrs Willmore the agreed gross sum of 240,000 as damages. The Council appealed to the Court of Appeal. The Court of Appeal held, [2009] EWCA Civ 1211, that the judge had been wrong to hold that she had been exposed to asbestos as a result of pupils misbehaviour. But they confirmed that the judge had been entitled to find that Mrs Willmore had suffered significant exposure to asbestos from the other two sources. On that basis the Court upheld his judgment and his award of damages. The Council now appeal to this Court. Since the lower courts applied the Fairchild exception, obviously the same point as to its application in this type of case arises. But the Council also challenge the judges findings in fact. The Defendants Legal Argument As already indicated, the feature of both the cases under appeal to which the defendants attach importance is that the proceedings are directed against only one defendant. In this respect they are different from the leading authorities, Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 and Barker v Corus UK Ltd [2006] 2 AC 572, in both of which the claimants alleged that the victims had been exposed to asbestos as a result of a breach of duty by more than one employer. In Barker, however, one of the three material exposures had occurred when Mr Barker was working as a self employed plasterer. On behalf of the defendants in both of the appeals, Mr Stuart Smith QC characterised the present cases as single exposure cases: the claimants alleged only one possible tortious source for the exposure. In both cases the exposure could be regarded as slight. In addition, the victims had been exposed to asbestos in the general atmosphere in the areas where they lived. Counsel renewed the argument that in such cases the special rule in Fairchild did not apply and that, in order to establish liability, the claimant required to prove, on the balance of probability, that the victims mesothelioma is to be attributed to her exposure to asbestos as a result of the defendants breach of duty. The claimant could do this by leading epidemiological evidence to show that the exposure by the defendant had doubled the risk of the victim developing mesothelioma. This was essentially the argument which the trial judge had accepted in Sienkiewicz: the claimant failed because the defendants breach of duty had merely increased the risk of her developing mesothelioma by 18% far short of doubling the environmental risk. Section 3 of the 2006 Act In the Court of Appeal in Sienkiewicz [2010] QB 370, 379, para 26, Smith LJ saw considerable force in the view that in Fairchild and Barker the House of Lords had not been considering a single exposure case and that, if they had done so, they would not have included such a case within the scope of the rule. But she held that such speculation was now pointless since Parliament had intervened by enacting section 3 of the 2006 Act, which had the effect that the common law simpliciter no longer governed claims for damages in mesothelioma cases. In this regard Smith LJ observed, [2010] QB 370, 381 382, at paras 34 and 35: 34. However, in my view, Parliament used clear words which provide that, in all mesothelioma cases, a claimant can take advantage of section 3(2) provided that he or she can satisfy the four conditions in section 3(1) and the fourth condition can, in my judgment, be satisfied by proof of causation by reference to a material increase in risk. 35. I conclude therefore that, in a mesothelioma case, it is not open to a defendant to put the claimant to proof of causation by reference to a twofold increase in risk. The judge was therefore wrong to require the claimant in this case to attempt to cross that hurdle. If he had applied the correct test on causation, namely whether or not the tortious exposure had materially increased the risk, the answer was plainly yes. In my view, the claimant should have succeeded and the appeal must be allowed. Scott Baker LJ agreed with Smith LJ, as did Lord Clarke of Stone cum Ebony. Lord Clarke considered, [2010] QB 370, 387, at para 57, that it was plain from the terms of section 3 and from the analysis of the common law that the respondent was liable for the mesothelioma which caused Mrs Costellos death. Subsection (1) of section 3 of the 2006 Act describes the circumstances in which the section is to apply in actions of damages for mesothelioma. According to subsection (1)(d), it applies where the responsible person is liable in tort, by virtue of the exposure mentioned in paragraph (a) in connection with damage caused to the victim by the disease (whether by reason of having materially increased a risk or for any other reason). Smith LJ appears to have considered that, by referring to the defendant being held liable in tort by reason of having materially increased a risk, Parliament had precluded any argument that, in particular circumstances, a defendant could not be held liable on that basis. I would not read the provision in that way. Section 3 was not concerned with prescribing the basis for defendants being held responsible for claimants mesothelioma. Rather, its purpose was to reverse the decision of the House of Lords in Barker v Corus UK Ltd [2006] 2 AC 572. The House had held that, where more than one defendant had materially increased the risk that an employee would contract mesothelioma, liability was to be attributed, not jointly and severally, but according to each defendants degree of contribution to the risk. In section 3 Parliament laid down that, on the contrary, where a defendant was held liable in a mesothelioma case, he was to be liable for the whole of the damage caused to the victim and, if anyone else was held responsible, they were to be liable jointly and severally. The reference to the defendant having been held liable by reason of having materially increased a risk is simply designed to show that the statutory rule applies in cases where the defendant is held liable (as in Barker) on the basis of materially increasing the risk to the claimant. But the concluding words, or for any other reason, show that Parliament envisages that a defendant might be held liable on some other basis. In that eventuality also he is to be liable for the whole of the damage and, if anyone else is held responsible, they are to be liable jointly and severally. It follows that section 3 of the 2006 Act does not shut out the appellants argument that in a single exposure case a defendant should not be held liable unless the claimant proves on the balance of probability that his breach of duty caused the victims mesothelioma. That argument and the more particular argument, that the claimant must show that the defendant more than doubled the risk of the victim developing mesothelioma, have therefore to be addressed on their merits. The Rock of Uncertainty The discussion and decision in Fairchild proceeded on the basis described by Lord Bingham, [2003] 1 AC 32, 43, at para 7: There is no way of identifying, even on a balance of probabilities, the source of the fibre or fibres which initiated the genetic process which culminated in the malignant tumour. This was what he described as the rock of uncertainty: [2003] 1 AC 32, 43G H. On behalf of the appellants, Mr Stuart Smith accepted that this remains the position in cases where a victim has been exposed to asbestos in the course of his employment with a number of employers. The same would presumably apply if the victim had been exposed to asbestos, say, when visiting a number of cinemas run by different companies. But he submitted that, where the claimant alleges that only one defendant wrongfully exposed her to asbestos and environmental exposure is also a possible source of the asbestos which affected her, the claimant must prove on the balance of probability that her disease was caused by the defendant rather than by environmental exposure. In Fairchild, as can be seen from Lord Binghams speech, at p 40, para 2, it was common ground that any cause of [the claimants] mesothelioma other than the inhalation of asbestos dust at work can be effectively discounted (emphasis added). At the time, some commentators indeed found this surprising, since exposure can occur in a variety of ways. Most obviously, perhaps, a factory may pollute the surrounding area and lead to the residents inhaling asbestos fibres in the atmosphere. But fibres are actually widespread in the atmosphere throughout most of the country. One European study suggested that one person in seven shows lung damage of a kind caused by exposure to asbestos. See the examples in Jane Stapleton, Lords aleaping evidentiary gaps, (2002) 10 Torts Law Journal 276, 277 279. But, for some reason, only certain people develop mesothelioma as a result of being exposed to asbestos. The issue in the present appeals arises because both parties accept that Mrs Costello and Mrs Willmore, who did develop mesothelioma, might have developed it as a result of being exposed to asbestos in the general atmosphere. At first sight it is somewhat surprising that the defendants should submit that in these cases the claimant must prove, on the balance of probability, that the defendants breach of duty caused her illness, since Fairchild proceeded on the basis that there is no way of identifying, on the balance of probability, the source of the fibre or fibres which initiated the genetic process that culminated in the victims malignant tumour. Medical science has not advanced significantly in this respect in the intervening eight years. So counsels argument is and must be that, in a case where the only possible source of the fibre or fibres which caused the disease is either environmental exposure to asbestos or exposure by the defendant, a claimant could always have proved, on the balance of probability, that the defendant was the source of the relevant fibre or fibres by leading appropriate epidemiological evidence to show that the exposure by the defendant more than doubled the background risk of the victim developing mesothelioma. So the Fairchild exception would never have applied. Take Sienkiewicz as an example. The defendants argue that the claim fails since, on the basis of the expert evidence, the judge found that the exposure due to their breach of duty increased Mrs Costellos risk of developing mesothelioma by only 18%. By contrast, it is said, if the expert evidence had shown that their exposure had doubled the background risk, Mrs Costello would have proved that, on the balance of probability, her mesothelioma had been caused by the defendants breach of duty rather than by any environmental exposure. In that event the claim would have succeeded. There is no rock of uncertainty and so no room for the Fairchild exception. By applying Fairchild, the Court of Appeal had erred in law and the appeal should therefore be allowed. Unpacking the Defendants Legal Argument The defendants argument appears simple, but it would actually involve a major change in the law. Usually, in English or Scots law, a court awards a claimant or pursuer damages for his injuries only if the judge is satisfied, on the balance of probability, that the wrongful act of the defendant or defender actually caused, or materially contributed to, his injury. Unless he proves this, his claim will fail. In the case of a disease like mesothelioma the claimant will be able to prove on the balance of probability that he is suffering from mesothelioma and that he has suffered loss as a result. He may also be able to prove, on the balance of probability, that a defendant or a number of defendants negligently exposed him to asbestos in the course of his employment with them, or while as in Mrs Willmores case she was a pupil in a school run by the Council. What, however, the claimant will be quite unable to prove, on the balance of probability, in the present state of medical knowledge, is that he developed mesothelioma as a result of inhaling any particular fibre or fibres and that, therefore, a particular defendant was responsible for exposing him to the fibre or fibres that caused his illness. Moreover, medical experts are no more able to tell whether the fibre or fibres which triggered the claimants mesothelioma came from the general atmosphere than they can tell whether they came from exposure during the claimants work with one or other of a number of employers. Faced with the problem that, in the present state of medical science, a claimant can never prove his case to the standard that the law usually requires, a legal system may react in a variety of ways. It may simply adhere to its usual stance and say that, since the claimant has not proved on the balance of probability that the defendant actually caused his disease, the claim must fail. That was, in effect, what the Court of Appeal decided in Fairchild v Glenhaven Funeral Services Ltd [2002] 1 WLR 1052. Alternatively, if that approach seems to be unduly harsh on victims, a system may hold that, if the claimant proves on the balance of probability that the defendants breach of duty has exposed him to asbestos, an evidential burden falls on the defendant to show that this exposure did not play any part in the claimants illness. Menne v Celotex Corp 861 F 2d 1453 (10 Cir 1988) is a case in point. Another possibility would be that a system would choose to hold a defendant liable because his breach of duty doubled the risk that his employee would develop mesothelioma. The decision of the Supreme Court of Texas in Merrell Dow Pharmaceuticals Inc v Havner (1997) 953 SW 2d 706 is an example of that approach being carefully applied in relation to proof that a mothers consumption of a drug caused a birth defect in her baby. As I point out at para 154 below, the court was conscious that it was deliberately applying a special rule to deal with the particular evidential difficulties facing plaintiffs in that kind of case. Or else a system may adopt a (different) rule to the effect that, if the claimant proves, on the balance of probability, that the defendant materially increased the risk that he would develop mesothelioma, then the defendant is to be held to have contributed materially to the development of the claimants illness. That is what the House of Lords appeared to do in Fairchild. In Barker v Corus UK Ltd [2006] 2 AC 572, however, the approach in Fairchild was refined: it was now said that a defendant was liable simply on the basis that his breach of duty had materially increased the risk that his employee would contract mesothelioma and the employee had done so. The response of English law to the problem posed by the rock of uncertainty in mesothelioma cases is therefore to be found in the combination of the common law, as laid down in Fairchild and Barker, and section 3 of the 2006 Act. Defendants whose breaches of duty materially increase the risk that the victim will develop mesothelioma are liable jointly and severally for the damage which the victim suffers if he does in fact develop mesothelioma. This is the current version of the Fairchild exception, as it applies in cases of mesothelioma. Of course, the Fairchild exception was created only because of the present state of medical knowledge. If the day ever dawns when medical science can identify which fibre or fibres led to the malignant mutation and the source from which that fibre or those fibres came, then the problem which gave rise to the exception will have ceased to exist. At that point, by leading the appropriate medical evidence, claimants will be able to prove, on the balance of probability, that a particular defendant or particular defendants were responsible. So the Fairchild exception will no longer be needed. But, unless and until that time comes, the rock of uncertainty which prompted the creation of the Fairchild exception will remain. Proof of a Fact and Proof of a Probability Although a claimant cannot prove what happened, in any given case his illness has a determinate cause. In other words, his mesothelioma was actually caused by a particular fibre or fibres and so a particular defendant either did or did not materially contribute to his contraction of the disease. Whether a defendant did so is a matter of fact, but one which, in the present state of medical science, we can never know. In Hotson v East Berkshire Area Health Authority [1987] AC 750 the plaintiff fell from a tree and sustained an acute traumatic fracture of the left femoral epiphysis. He was taken to hospital, but his injury was not correctly diagnosed or treated for five days. In the event, he suffered avascular necrosis of the epiphysis, involving disability of the hip joint and the virtual certainty that he would later develop osteoarthritis. The health authority admitted negligence. The trial judge, Simon Brown J, found that, even if the hospital had diagnosed the injury and treated the plaintiff promptly, there was a 75% chance that the necrosis would still have developed. He held that the plaintiff was entitled to damages for the loss of the 25% chance that he would have made a full recovery if treated promptly: [1985] 1 WLR 1036. The Court of Appeal upheld the trial judge: [1987] AC 750. The House of Lords allowed the health authoritys appeal. The House of Lords emphasised that what had happened to the plaintiff by the time he reached hospital was a matter of fact albeit one as to which there was no direct evidence and as to which the medical experts who gave evidence were divided. As a matter of fact, by the time he reached hospital, the plaintiff either did or did not have sufficient intact blood vessels to keep the affected epiphysis alive. In the words of Lord Mackay of Clashfern, [1987] AC 750, 785A B, on that matter, having regard to all the evidence, including the conflicting medical evidence, the trial judge took the view that it was more probable than not that insufficient vessels had been left intact by the fall to maintain an adequate blood supply to the epiphysis . Lord Mackay went on to say, at p 785C E: It is not, in my opinion, correct to say that on arrival at the hospital he had a 25 per cent chance of recovery. If insufficient blood vessels were left intact by the fall he had no prospect of avoiding complete avascular necrosis whereas if sufficient blood vessels were left intact on the judges findings no further damage to the blood supply would have resulted if he had been given immediate treatment, and he would not have suffered the avascular necrosis. In Hotson therefore not only was the plaintiffs condition by the time he reached hospital a matter of fact, but it was one which, the House held, the trial judge had been able to determine, on the balance of probability: insufficient vessels were left intact to maintain an adequate blood supply to maintain the epiphysis. Here, by contrast, although as a matter of fact, for instance, the defendants exposure of Mrs Costello to asbestos dust either did or did not materially contribute to her contraction of the disease, in the present state of medical science we can never know and the claimant can never prove whether it did or did not. Lord Hoffmann made the same point in Gregg v Scott [2005] 2 AC 176, 196, at para 79, when he said that, for the law Everything has a determinate cause, even if we do not know what it is. The blood starved hip joint in Hotsons case, the blindness in Wilshers case, the mesothelioma in Fairchilds case; each had its cause and it was for the plaintiff to prove that it was an act or omission for which the defendant was responsible. The narrow terms of the exception made to this principle in Fairchilds case only serves to emphasise the strength of the rule. The fact that proof is rendered difficult or impossible because no examination was made at the time, as in Hotsons case, or because medical science cannot provide the answer, as in Wilshers case, makes no difference. There is no inherent uncertainty about what caused something to happen in the past or about whether something which happened in the past will cause something to happen in the future. Everything is determined by causality. What we lack is knowledge and the law deals with lack of knowledge by the concept of the burden of proof. It appears that in the House of Lords in Hotson there was some argument about the use of statistical evidence, but most members of the appellate committee did not find it necessary to deal with it. Lord Mackay did address the issue, however while making it clear that his comments were obiter. At the hearing of the present appeals counsel made some reference to Lord Mackays comments and Lord Phillips has referred to them in his judgment. It may therefore be worthwhile to look a little more closely at what Lord Mackay said in order to see whether it has any application in the present case. Lord Mackay put forward a hypothetical example loosely based on McGhee v National Coal Board [1973] 1 WLR 1. He supposed a case in which an employer had negligently failed to provide washing facilities at the end of their shift for men who had been exposed to brick dust in the course of their work. One of the men developed dermatitis and sued his employer. He led epidemiological evidence which showed that of 100 men working in the same conditions 30 would develop dermatitis even though they had showered after their shift. But the evidence also indicated that, if the men did not shower, 70 would develop dermatitis. Lord Mackay observed, [1987] AC 750, 786D E: Assuming nothing more were known about the matter than that, the decision of this House [in the McGhee case] may be taken as holding that in the circumstances of that case it was reasonable to infer that there was a relationship between contraction of dermatitis in these conditions and the absence of washing facilities and therefore it was reasonable to hold that absence of washing facilities was likely to have made a material contribution to the causation of the dermatitis. Two comments are appropriate. First, the decision of the House of Lords in McGhee actually goes much further than holding that, in such circumstances, it is reasonable to infer that the absence of washing facilities was likely to have made a material contribution to the causation of the dermatitis. As Lord Mackay himself pointed out, in McGhee there were no statistics. The House had to deal with the appeal on the basis of the evidence of Dr Hannay, a dermatologist led by the pursuer, which the Lord Ordinary had accepted. Dr Hannay, who was not cross examined on the point, said that the provision of showers would have materially reduced the risk of the pursuer contracting dermatitis: 1973 SC (HL) 37, 42. So the lack of showers materially increased the risk of the pursuer contracting dermatitis. In these circumstances, from a broad and practical viewpoint, Lord Reid could see no substantial difference between saying that what the defender did materially increased the risk of injury to the pursuer and saying that what the defender did made a material contribution to his injury: McGhee v National Coal Board [1973] 1 WLR 1, 5B C. From his previous reference, at p 4D F, to Bonnington Castings Ltd v Wardlaw [1956] AC 613 it is evident that Lord Reid was thinking of any increase in the risk that could not be regarded as de minimis. There would, for example, have been a material (20%) increase in the risk in a case like McGhee, if 30 out of the population of 100 workmen would have been expected to develop dermatitis even after showering, but 36 would have been expected to develop it if no showers were provided. On that basis the House would have held the defenders liable. Secondly, as Lord Phillips points out, Lord Mackay must be supposed to have chosen the figures in his hypothetical example because, among the population of 100 workmen exposed to brick dust, more than twice as many (70) would be expected to develop dermatitis if no showers were provided, as would be expected to develop it even if showers were provided (30). In terms of the defendants argument in the present appeals, failure to provide showers would more than double the risk. In that situation, assuming that nothing more were known, Lord Mackay thought that the House might be taken as holding that it was reasonable to infer that there was a relationship between contraction of dermatitis in these conditions and the absence of washing facilities and therefore it was reasonable to hold that absence of washing facilities was likely to have made a material contribution to the causation of the claimants dermatitis. Lord Mackays introductory words (assuming nothing more were known) show that he was conscious that, if the House did indeed reason in that way, it would be reasoning, from statistics about the situation in a population of 100 workmen in the same conditions, to the case of the individual claimant. Obviously, care has to be taken in doing so. For example, if the claimant had some underlying condition which made him particularly sensitive to brick dust, that would affect any reliance that could be placed on the statistics in his case. More fundamentally, however, it is necessary to see what the epidemiological evidence would actually show in Lord Mackays hypothetical case. Suppose the claimant, who had not been able to shower, developed dermatitis. As a matter of fact, he either developed the dermatitis because of the lack of a shower or he developed it simply because of his exposure to the dust. In other words, either he was one of 30 who would have developed dermatitis anyway, or he was one of the additional 40 who, the epidemiological evidence suggested, would have developed it only because there were no showers. Ex hypothesi, however, general medical science is incapable of saying into which category the claimant falls. And epidemiological science is equally incapable of determining that particular question indeed it is no part of its function to do so. In that situation a court could simply say that the claimants case failed since he had not proved that he was among the 40 who would have developed dermatitis only because there were no showers, rather than among the 30 who would have developed it even if they had showered. Alternatively, a court might say that it was more likely that the claimants dermatitis was caused by the lack of showers. And, in fact, various courts have adopted an approach based on doubling the risk as their way of dealing with the problems of proof in toxic tort cases. As already mentioned at para 140 above, an example is the decision of the Supreme Court of Texas in Merrell Dow Pharmaceuticals Inc v Havner (1997) 953 SW 2d 706 which Lord Phillips discusses at paras 85 89. It should be noticed, however, that the starting point for the courts discussion was that epidemiological studies cannot establish the actual cause of an individuals injury or condition. The court explained the basis of its approach in this way: In the absence of direct, scientifically reliable proof of causation, claimants may attempt to demonstrate that exposure to the substance at issue increases the risk of their particular injury. The finder of fact is asked to infer that because the risk is demonstrably greater in the general population due to exposure to the substance, the claimant's injury was more likely than not caused by that substance. Such a theory concedes that science cannot tell us what caused a particular plaintiff's injury. It is based on a policy determination that when the incidence of a disease or injury is sufficiently elevated due to exposure to a substance, someone who was exposed to that substance and exhibits the disease or injury can raise a fact question on causation. The court acknowledged that it was adopting a particular policy on what counted as raising a question on causation in such circumstances. On the basis of McGhee Lord Mackay envisaged that in an appropriate case the House of Lords would take a somewhat similar approach. Lord Mackay first suggests that in his hypothetical case the House could be taken as holding that, on the basis of the statistics, it would be reasonable to infer that there was a relationship between contraction of dermatitis in these conditions and the absence of washing facilities. Assuming that the epidemiological evidence is reliable, that is plainly so. He goes on to suggest that, on the basis of that inference, it might be reasonable to hold that the absence of washing facilities was likely to have made a material contribution to the causation of the dermatitis by which he means the claimants dermatitis. This is the critical step. It is important to recognize that in such a case the claimant would not have proved, on the balance of probability, that his exposure to the brick dust by the defendant actually caused his dermatitis. Indeed the starting point of the entire hypothetical example is that, in the present state of medical knowledge, the claimant could not prove this. Assuming that the epidemiological study is reliable, the statistics in Lord Mackays example would simply indicate that, if you took 100 workmen who developed dermatitis after working in the same conditions, you would expect to find that 30 developed it after having showered and 70 developed it when they had not been able to shower. So, by leading the epidemiological evidence, the only fact that the claimant can prove and offers to prove, on the balance of probability, is that in most cases the dermatitis would have been related to the lack of showers. So, if the judge accepts the evidence, it may legitimately satisfy him, on the balance of probability, not that the claimants dermatitis was caused by the lack of showers, but that, in the absence of any evidence that the claimant is atypical, it is more probable than not that his dermatitis was caused by the lack of showers. In short, the chances are that it was. Whether, in any particular case, the claimants dermatitis was actually caused by the lack of showers is a matter of fact and one that remains unknown, if the only available evidence is statistical. See Steve Gold, Causation in Toxic Torts: Burdens of Proof, Standards of Persuasion, and Statistical Evidence (1986) 96 Yale LJ 376, 382 384. Where the claimant led only statistical evidence, a court could simply say that his case failed. Alternatively, as Lord Mackay envisaged, the court might have held, exceptionally, that, where no other proof was possible, the defendant should be held liable on the basis of Lord Mackays rule. Of course, it is possible to conceive of a legal system which chose, as a matter of policy, to make defendants liable for all the damage which a court was satisfied, on the balance of probability, they had probably caused. But only the legislature could alter English or Scots law so as to introduce a general rule to that effect, which would change the very nature of the system and completely alter its balance, in favour of claimants and against defendants and their insurers. In Hotson Lord Mackay was not suggesting that English law operated, or should operate, generally on that basis. On the contrary, he had just been at pains, along with the other members of the appellate committee, to emphasise that in civil proceedings for damages the role of the judge is to decide, on the balance of probability, what actually happened. He introduced his discussion of the hypothetical case by saying, [1987] AC 750, 786A B, that he considered that it would be unwise, however, to lay it down as a rule that a plaintiff could never succeed by proving loss of a chance in a medical negligence case. He then referred to McGhee. So he seems to have envisaged that the court might adopt such an approach in an exceptional case like McGhee where, because of the state of medical knowledge, the claimant could not prove his case on the usual approach. There is now no room, however, for Lord Mackays rule in cases of that kind in English or Scots law since, in Fairchild, the House dealt with the problem of proof which they present by adopting a different and for claimants much less stringent rule. With Lord Mackays rule, the claimant would succeed if he showed, on the balance of probability, that it was more likely than not that the defendants breach of duty had materially contributed to the causation of his dermatitis; under the rule in Fairchild, the claimant succeeds if he shows, on the balance of probability, that the defendants breach of duty materially increased the risk that he would contract dermatitis. Indeed, the rule in Fairchild is more generous to claimants precisely because it is modelled on the rule which the House had adopted in McGhee and which was itself more generous to pursuers than the rule described by Lord Mackay. Put shortly, if the House had applied Lord Mackays rule, the claimants in Fairchild would unquestionably have failed since there was no evidence, whether epidemiological or of any other kind, to show that, on the balance of probability, it was more probable than not that the breach of duty of any of the individual defendants had materially contributed to the causation of the victims disease. All that the claimants could show was that, on the balance of probability, each of the defendants had materially increased the risk that the victims would develop mesothelioma. For the policy reasons which it gave, the House of Lords held that this was enough. Single Exposure Mesothelioma Cases Similarly, in my view, there is now no room for introducing the doubling of the risk approach in single exposure mesothelioma cases. As already explained, in these cases, because of the state of medical knowledge, it is impossible to prove whether the victims mesothelioma was actually caused by the defendants breach of duty or by asbestos fibres in the general atmosphere. The claimant comes up against the same rock of uncertainty. In that respect single exposure cases are no different from multiple defendant cases and the same approach should be applied. The point is covered by what Lord Hoffmann said in Barker v Corus UK Ltd [2006] 2 AC 572, 584H 585B, at para 17, in a short passage with which all the members of the appellate committee agreed: The purpose of the Fairchild exception is to provide a cause of action against a defendant who has materially increased the risk that the claimant will suffer damage and may have caused that damage, but cannot be proved to have done so because it is impossible to show, on a balance of probability, that some other exposure to the same risk may not have caused it instead. For this purpose, it should be irrelevant whether the other exposure was tortious or non tortious, by natural causes or human agency or by the claimant himself. These distinctions may be relevant to whether and to whom responsibility can also be attributed, but from the point of view of satisfying the requirement of a sufficient causal link between the defendant's conduct and the claimant's injury, they should not matter. The position accordingly is that in single exposure cases the Fairchild exception applies and a claimant succeeds if he proves, on the balance of probability, that the defendants breach of duty materially increased the risk that he would develop mesothelioma. Since that is the rule which applies in cases where the state of medical knowledge makes it impossible for a claimant to prove whether a defendants breach of duty actually caused his disease, there is no reason why a claimant needs to prove anything more than that the defendants breach of duty materially increased the risk that he would develop the disease. So in such cases the doubling of the risk approach is irrelevant. And there is no room for Mr Stuart Smiths fall back suggestion that, in single exposure cases, a material increase in risk should be equated with doubling the risk. That would be utterly inconsistent with the established law that, for these purposes, a risk is material if it is more than de minimis. See the discussion of the hypothetical use of statistics in McGhee at para 150 above. It also follows that there is no room in such cases for applying the approach laid down by Smith LJ in the Court of Appeal in the passage quoted at para 121 above. The purported guidance to courts in that passage should not be followed. Finally, nothing which I have said is intended to discourage the use of epidemiological evidence or to depreciate its value in cases where a claimant has to prove his case on the balance of probabilities. Far from it. Obviously, for example, epidemiology is likely to lie behind much of the evidence on which a court determines whether an exposure has materially increased the risk of the claimant developing a disease. Epidemiological evidence may also be relevant when deciding whether it would have been reasonable for a defendant to take precautions to avoid the risk of the claimant suffering a particular injury say, the side effect of a drug. And, of course it must be emphasised once more epidemiological and statistical evidence may form an important element in proof of causation. I have simply emphasised the point made by Phipson on Evidence,17th ed (2010), para 34 27, that, unless a special rule applies, Where there is epidemiological evidence of association, the court should not proceed to find a causal relationship without further, non statistical evidence. In other words, since, by its very nature, the statistical evidence does not deal with the individual case, something more will be required before the court will be able to reach a conclusion, on the balance of probability, as to what happened in that case. For example, where there is a strong epidemiological association between a drug and some condition which could have been caused in some other way, that evidence along with evidence that the claimant developed the condition immediately after taking the drug may well be enough to allow the judge to conclude, on the balance of probability, that it was the drug that caused the claimants condition. Of course, in any actual dispute, the epidemiological evidence may be contested. The judge will then have to decide which expert view he accepts and how reliable the evidence is whether, for example, the study has been properly constructed and, in particular, what the confidence intervals are. In that respect epidemiological evidence is no different from other evidence. Disposal Since the Fairchild exception applies in single exposure cases, the claimants in the present appeals were entitled to succeed if they proved that the defendants breach of duty materially increased the risk that Mrs Costello and Mrs Willmore would develop mesothelioma. There was therefore no error of law on the part of the Court of Appeal. The defendants appeal in Sienkiewicz must accordingly be dismissed. So far as the law is concerned, the same applies to Willmore. In that case the Council also appealed on the facts. The Court of Appeal reviewed the evidence and the judges reasoning. Having rejected his finding on one point, they accepted that he had been entitled to find that she had been exposed to asbestos in two other ways and that those exposures had been material. It is important that judges should bear in mind that the Fairchild exception itself represents what the House of Lords considered to be the proper balance between the interests of claimants and defendants in these cases. Especially having regard to the harrowing nature of the illness, judges, both at first instance and on appeal, must resist any temptation to give the claimants case an additional boost by taking a lax approach to the proof of the essential elements. That could only result in the balance struck by the Fairchild exception being distorted. Mr Feeny made a number of plausible criticisms of the findings of Nicol J and of the approach of the Court of Appeal and suggested that they had been unduly favourable to Mrs Willmore. Some of the inferences which Nicol J drew in Mrs Willmores favour from the evidence relating to her exposure at Bowring Comprehensive can properly be regarded as very generous. With considerable hesitation, however, I have concluded that the criticisms would not justify this Court in taking the exceptional step of disturbing the concurrent findings of fact of the courts below. I would accordingly dismiss the Councils appeal on the facts. In the result, the appeal in Willmore must also be dismissed. LADY HALE I pity the practitioners as well as the academics who have to make sense of our judgments in difficult cases. But these cases are hard rather than difficult. We are here concerned with one case of relatively light but long term exposure and one case of very slight and short term exposure, both set against a lifetime of environmental and other possible exposures about which nothing much is known. As Lord Brown implies, Fairchild kicked open the hornets nest. The House of Lords were confronted with several employers, each of which had wrongly exposed their employees to asbestos, but none of which exposure could be shown to have caused the disease. I find it hard to believe that their Lordships there foresaw the logical consequence of abandoning the but for test: that an employer or occupier whose wrongful exposure might or might not have led to the disease would be liable in full for the consequences even if it was more likely than not that some other cause was to blame (let alone that it was not more likely than not that he was to blame). But, as Lord Rodger has explained, that is the logical consequence and there is nothing we can do about it without reversing Fairchild. Even if we thought it right to do this, Parliament would soon reverse us, and it is easy to understand why. Asbestos has long been known to be a dangerous (as well as a useful) substance, employers and occupiers turned a blind eye to those dangers long after they knew or should have known about them, and mesothelioma is a dreadful disease. In Barker, Mr Stuart Smith tried very hard to persuade the House of Lords that the Fairchild exception applied only where all the exposure was in breach of duty. He failed in that, although he succeeded in persuading the majority that the price to be paid for abandoning conventional rules of causation was aliquot liability. Parliament swiftly disagreed. The Compensation Act 2006 restored the principle that any tortfeasor is liable in full for an indivisible injury. But that leaves us with the result that a defendant who may very well not have caused the claimants disease indeed probably did not do so is fully responsible for its consequences. I do not see any answer to that. It is the inevitable result of Barker, made even more severe through the intervention of Parliament, but inevitable none the less. That means that in cases where the Fairchild exception applies, there is no room for the more than doubles the risk approach to causation: it is not necessary in order to establish causation and it is not an appropriate test of what is a more than de minimis increase in risk. So we do not need to go into the relevance of statistical probabilities to the finding of causation for the purpose of deciding these cases. Nor, in the event, did the Court of Appeal need to do so. The reason why Lord Phillips and Lord Rodger have discussed the subject at such length is the obiter observation of Smith LJ, at para 23 of her judgment in Sienkiewicz, that in a case of multiple potential causes, a claimant can demonstrate causation by showing that the tortious exposure has at least doubled the risk arising from the non tortious cause or causes. Anything we say on the subject, therefore, is also obiter. However, I do agree with Lord Rodger that doubling the risk is not an appropriate test of causation in cases to which the Fairchild exception does not apply. Risk is a forward looking concept what are the chances that I will get a particular disease in the future? Causation usually looks backwards what is the probable cause of the disease which I now have? Epidemiology studies the incidence and prevalence of particular diseases and the associations between both of these and particular variables in the diseased population. From these it is possible to predict that a particular percentage of the population, for example of women aged between 60 and 70, will contract a particular disease, for example, breast cancer. It is also possible to say that certain variables, such as life style or age of first child bearing, are associated with a greater chance of developing the disease. So a doctor will sensibly advise her patient to behave in a way which will reduce the risks. But if the disease materialises, the existence of a statistically significant association between factor X and disease Y does not prove that in the individual case it is more likely than not that factor X caused disease Y. The same applies to less sophisticated calculations. The fact that there are twice as many blue as yellow taxis about on the roads may double the risk that, if I am run over by a taxi, it will be by a blue rather than a yellow one. It may make it easier to predict that, if I am run over by a taxi, it will be by a blue rather than a yellow one. But when I am actually run over it does not prove that it was a blue taxi rather than a yellow taxi which was responsible. Likewise, if I actually develop breast cancer, the fact that there is a statistically significant relationship between, say, age at first child bearing and developing the disease does not mean that that is what caused me to do so. But as a fact finder, how can one ignore these statistical associations? Fact finding judges are told that they must judge a conflict of oral evidence against the overall probabilities coupled with the objective facts and contemporaneous documentation: see, for example, Robert Goff LJ in Armagas Ltd v Mundogas SA (The Ocean Frost) [1985] 1 Lloyds Rep 1, 57. Millions of pounds may depend upon their decision. Yet judges do not define what they mean by the overall probabilities other than their own particular hunches about human behaviour. Surely statistical associations are at least as valuable as hunches about human behaviour, especially when the judges are so unrepresentative of the population that their hunches may well be unreliable? Why should what a (always middle aged and usually middle class and male) judge thinks probable in any given situation be thought more helpful than well researched statistical associations in deciding where the overall probabilities lie? As it seems to me, both have a place. Finding facts is a difficult and under studied exercise. But I would guess that it is not conducted on wholly scientific lines. Most judges will put everything into the mix before deciding which account is more likely than not. As long as they correctly direct themselves that statistical probabilities do not prove a case, any more than their own views about the overall probabilities will do so, their findings will be safe. So in my view it would be wrong for judges to change their fact finding behaviour because of anything said in this case. On the issues of law, the Fairchild exception has to apply to these single tortious exposure cases, no matter how unjust it may seem to the defendants. Even if I were convinced of the merits of the more than doubling the risk approach to causation in other contexts, which I am not, it does not apply in these cases. That is enough to dispose of the appeal in the case of the late Mrs Costello. In the case of Mrs Willmore, the judges findings of fact were truly heroic, and I would endorse what Lord Rodger says about this, but I do not think that it is open to us to disturb them. I would dismiss both appeals. LORD BROWN Mesothelioma claims are in a category all their own, so special indeed that Parliament in 2006 chose to legislate specifically for them: section 3 of the Compensation Act 2006. Whilst entertaining no doubt that the position now reached in respect of such claims is precisely as Lord Phillips and Lord Rodger have explained and that these appeals must accordingly fail, I think it only right to indicate just how unsatisfactory I for my part regard this position to be and how quixotic the path by which it has been arrived at. The present position, exemplified by the facts of these very appeals, can be simply stated as follows: any person who negligently or in breach of duty exposes another more than minimally to the inhalation of asbestos fibres will be liable to make full compensation if that other develops mesothelioma more than five years later (five years being now thought to be the minimum period between the development of the first malignant cell and the diagnosis of the disease see Lord Phillips judgment at para 19(v)). That statement of the position holds true irrespective of whether the victim was exposed by others to even longer and more intensive inhalation (and indeed inhalation of more noxious fibres), whether negligently or not, and irrespective too of any environmental or other exposure (again, however intensive). It requires qualification only if and to the extent that the victim negligently exposed himself to the inhalation of asbestos fibres (when there may be a finding of contributory fault). One need hardly stress how radically different such an approach to compensation represents from that followed in all other cases of physical injury. All other cases require that the claimant satisfies the but for test of causation. True, in the case of cumulative injuries, the law holds a negligent employer liable even if his negligence is responsible for part only of the victims condition (provided only that it made a material, ie more than de minimis, contribution to the development of the condition). I have difficulty, however, in seeing this as a true exception to the but for test: although the claimant in Bonnington Castings Ltd v Wardlaw [1956] AC 613, the case which first established the principle, recovered full damages for his condition (pneumoconiosis from the inhalation of silica), that appears to have been because the defendants took no point on apportionment; in a series of subsequent such cases damages have been apportioned, however broadly for example, as between negligent and non negligent exposure respectively in dust inhalation cases, in noise cases and in cases of vibration white finger, and, in respiratory disease cases, between the damage caused by the inhalation of fumes or other noxious agents on the one hand and the claimants habit of cigarette smoking on the other. It therefore seems to me that there is just one single authority that needs to be noticed before one turns to the three stage process by which the present approach to compensation in mesothelioma cases came to be dictated, namely, of course, McGhee v National Coal Board [1973] 1 WLR 1. McGhee is undoubtedly a problematic case. The House of Lords was later in Wilsher v Essex Area Health Authority [1988] AC 1074 to regard it as not having laid down any principle of law at all; rather it was described by Lord Bridge of Harwich, at p 1090, as merely a robust and pragmatic approach to the undisputed primary facts of the case on the basis that, as in Bonnington Castings, the negligent prolongation of the claimants contact with (in McGhee) brick dust had materially contributed to his development (in McGhee) of dermatitis. Rightly or wrongly, however (and whether rightly or wrongly now matters nothing), the House of Lords in Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 found altogether greater force in McGhee. As was pointed out, for example by Lord Nicholls, it had really not been open to the House in McGhee to infer from the established facts that the employers negligence had caused or materially contributed to the onset of his condition. In short, the House in Fairchild regarded McGhee as authority for the application to certain cases of a less stringent test than the usual but for test for establishing the necessary causal connection between the employers negligence and the claimants condition. That said, however, the judgments in Fairchild provided no support whatever for a general principle of compensation in mesothelioma cases remotely as wide as I have described the present position to be today. Quite the contrary. The circumstances in which the more relaxed approach to causation said to have been adopted in McGhee were held to apply to mesothelioma cases were narrowly circumscribed. One should note particularly Lord Binghams six relevant factors (conveniently set out at para 39 of Lord Phillips judgment), all of which had to be present before the special rule of causation was to apply. Note too the agreement between the parties in Fairchild that any cause of [the claimants] mesothelioma other than the inhalation of asbestos dust at work can be effectively discounted (Lord Binghams speech at para 2). Consider also the rationale identified by Lord Bingham as justifying this special rule: the strong policy argument in favour of compensating those who have suffered grave harm, at the expense of their employers who owed them a duty to protect them against that very harm and failed to do so, when the harm can only have been caused by breach of that duty and when science does not permit the victim accurately to attribute, as between several employers, the precise responsibility for the harm he has suffered (Lord Bingham at para 33). Lord Bingham was there positing a situation where, for example, a mesothelioma victim had worked for three successive employers each, say, for fifteen years, all of whom had negligently exposed him to the inhalation of asbestos fibres. Faced with the rock of uncertainty Lord Binghams graphic characterisation of sciences inability to establish on a balance of probabilities which particular source(s) of asbestos fibre exposure had caused mesothelioma to develop one can readily see how the House came unanimously to endorse this new principle. I am not, of course, suggesting that their Lordships in Fairchild were intent on confining the application of this new principle quite so narrowly as that. Lord Rodger, for example, expressly recognised (at para 170 of his speech) that it can also apply where, as in McGhee, the other possible source of the injury is a similar, but lawful, act or omission of the same defendant. But he immediately then reserve[d] [his] opinion as to whether the principle applies where the other possible source of injury is a similar but lawful act or omission of someone else or a natural occurrence. The point I make is that it is hardly to be thought that had the House, on the occasion of the Fairchild hearing, been considering not the facts of those three appeals but instead the facts of the present appeals the claimants would have succeeded and the law have developed as it has. Before parting from Fairchild it is, I think, worth noting that, just as in Bonnington Castings half a century before, the respondent defendants in Fairchild similarly took no point on apportionment: their stance now as then was one of all or nothing doubtless in the hope (and perhaps even the expectation) of defeating the claims in their entirety. Coming then to stage two of the three stage process, by which the present position with regard to mesothelioma cases came to be established, Barker v Corus UK Ltd [2006] 2 AC 572, one finds the House having to face up to some of the problems it had left open with Fairchild and, as it seems to me, beginning to have second thoughts both as to the juristic basis for this special rule of causation which Fairchild held to apply in certain toxic tort cases and as to where the abandonment of the but for principle was taking the law. In the result, the Fairchild approach was (as Lord Rodger now puts it at para 140 of his judgment) refined; Lord Hoffmann explained that Fairchild had recognised a new tort, that of negligently increasing the risk of personal injury (although, of course, the injury had to eventuate before any tort was committed), and logically it followed that any liable defendant should be liable only for his aliquot share of the victims loss, not for its entirety. The damage was no longer to be treated as the indivisible mesothelioma but rather as the readily divisible creation of the risk of developing mesothelioma. Damages, therefore, were to be apportioned according to the contribution made by any particular defendant to the overall risk. On that basis, of course, the special rule whereby the but for test of causation is relaxed applies equally whether or not other exposures are partly tortious and partly non tortious, or indeed wholly non tortious, and whether they result from natural causes or indeed, from the employees own negligence. It is to my mind quite clear that the preparedness of the majority of the court in Barker to extend the reach of the Fairchild principle this far was specifically dependent upon there being aliquot liability only. Lord Rodger alone thought that liability under the Fairchild exception to the but for rule should be for full compensation (in solidum). But he made clear that had that been the view of the majority, then in a case where the victim had himself been solely responsible for a material exposure especially where, as in one of the three appeals before the court in Barker, the victim had himself been at fault he would have applied the normal but for rule for proof of causation. The third and final stage of the process by which the law with regard to compensation in mesothelioma cases came to reach its present position was, of course, Parliaments enactment of section 3 of the Compensation Act 2006. I have no doubt that Lord Rodger is right (at paras 131 and 132 of his judgment) in saying that the sole effect of section 3 is to reverse the Houses decision in Barker on the issue of quantum; in no way does it pre empt or dictate the proper approach of the common law to questions of causation and liability. On the other hand it would be a remarkable thing for this Court now in effect to reverse the decision in Fairchild and revert, in mesothelioma cases as in all others, to the normal, but for, rule of causation the principle, vindicated periodically down the years in cases of indivisible no less than of cumulative injury (Gregg v Scott [2005] 2 AC 176 being the latest such decision in point), that to establish liability the claimant must show that but for the defendants negligence he would probably not have suffered his injury (or at least not have suffered it to the full extent that he has). In my judgment it could only be by reversing Fairchild and allowing no exception whatever to the normal rule of causation that this Court could now avoid what Lord Phillips (at para 58 of his judgment) rightly describes as the draconian consequences of coupling section 3 to the Fairchild/Barker principle: the liability in full even of someone responsible for only a small proportion of the overall exposure of a claimant to asbestos dust. There is in my opinion simply no logical stopping place between the case of successive negligent employers dealt with in Fairchild itself (apparently circumscribed though that decision was) and the extreme (draconian) position now arrived at, well exemplified as it seems to me by the facts of these very appeals. If, because of the rock of uncertainty, the law is to compensate by reference to negligence which merely increases the risk of such injury as then develops, why should not that relaxation of the normal rule of causation apply equally when, as here, there is but one negligent employer (or negligent occupier) as when there are several? As Barker recognised, there can be no rational basis for confining the special rule within narrow bounds, whatever may have been contemplated by the House in Fairchild. In short, the die was inexorably cast in Fairchild although, as already suggested, it is doubtful if that was then recognised and it is noteworthy too that, even when in Barker it came to be recognised, it was then thought palatable only assuming that compensation was going to be assessed on an aliquot basis. Parliament, however, then chose although, of course, only in mesothelioma cases to go the whole hog. The result must surely be this. As I began by saying, mesothelioma cases are in a category all their own. Whether, however, this special treatment is justified may be doubted. True, as Lord Phillips observes at the outset of his judgment, mesothelioma is indeed a hideous disease. (And it is perhaps also the case, as Lord Phillips suggests at para 104, that mesothelioma, after all, may result from the cumulative effect of exposures to asbestos dust.) The unfortunate fact is, however, that the courts are faced with comparable rocks of uncertainty in a wide variety of other situations too and that to circumvent these rocks on a routine basis let alone if to do so would open the way, as here, to compensation on a full liability basis would turn our law upside down and dramatically increase the scope for what hitherto have been rejected as purely speculative compensation claims. Although, therefore, mesothelioma claims must now be considered from the defendants standpoint a lost cause, there is to my mind a lesson to be learned from losing it: the law tampers with the but for test of causation at its peril. There is a rough justice about the law of personal injury liability as a whole. To compensate a claimant in full for a lost finger because there was a 60:40 chance that he would have worn protective gloves had they been made available to him may be regarded as rough justice for defendants. But it is balanced by the denial of compensation to a claimant who cannot establish that he would probably have worn the gloves or whose finger the judge concludes was probably already doomed because of frostbite. Save only for mesothelioma cases, claimants should henceforth expect little flexibility from the courts in their approach to causation. Since Fairchild and Barker there has been much academic focus on a supposedly critical distinction between so called single agent and multiple agent cases, the suggestion being that the former more readily lend themselves to special rules of causation than the latter. For my part I have difficulty even in recognising the distinction between these categories, at any rate in some cases. But I have greater difficulty still in accepting that the courts should now, whether on this or any other basis, be thinking of creating any further special rules regarding the principles governing compensation for personal injury. The same logic which requires that the claims of these respondents succeed to my mind requires also that the courts should in future be wary indeed before adding yet further anomalies in an area of law which benefits perhaps above all from clarity, consistency and certainty in its application. LORD MANCE Cases of mesothelioma are subject to the special rule of causation established in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32 and developed in Barker v Corus UK Ltd [2006] UKHL 20; [2006] 2 AC 572, but significantly amended by the Compensation Act 2006. I agree that this special rule is applicable to both the appeals before this court, although in each (a) only one person (an employer in one case, a school in the other) is shown to have exposed the victim of mesothelioma to asbestos, the only other such exposure being the general low level atmospheric exposure incurred by members of the public at large, and (b) the exposure by that person did no more than increase the sufferers general low level atmospheric exposure to asbestos materially (or, more specifically, in the case of Mrs Costello represented by Mrs Sienkiewicz, by some 18%). The submission that causation can be shown by proving a doubling of the ambient risk, or can be negatived by disproving this, is inconsistent with, or would make a radical and uncertain inroad into, the special rule. I reach this conclusion in agreement with the reasoning on this aspect of Lord Phillips, Lord Rodger, Lady Hale and Lord Dyson, on the basis that our understanding of the aetiology of mesothelioma remains as incomplete and inadequate as ever. I also concur with the further remarks of Lady Hale in her first paragraph and of Lord Brown in his judgment about the impossibility of going back on Fairchild, as well as on the lesson of caution that the history may teach in relation to future invitations to depart from conventional principles of causation. I too would therefore dismiss the appeal in Mrs Costellos case. An interesting debate has, somewhat unexpectedly, developed about the significance or value of epidemiological or statistical evidence relating to a population or group in the context of decision making in particular cases. I share a reluctance to place too much weight on such evidence. This is not because statistics are lies, or because truth can be stranger than fiction. It is because the law is concerned with the rights or wrongs of an individual situation, and should not treat people and even companies as statistics. Despite the intense sympathy which can arise in particular cases like the present, an attribution of liability based substantially on statistical evidence, that, viewing the relevant population or group as a whole, it is more likely than not that the particular defendant was negligent or causatively responsible, appears to me most undesirable. That epidemiological evidence used with proper caution, can be admissible and relevant in conjunction with specific evidence related to the individual circumstances and parties is, however, common ground and clearly right. What significance a court may attach to it must depend on the nature of the epidemiological evidence, and of the particular factual issues before the court. Whether and if so when epidemiological evidence can by itself prove a case is a question best considered not in the abstract but in a particular case, when and if that question arises. If it can, then, I would hope and expect that this would only occur in the rarest of cases. In other cases, there will be continuing good sense in the House of Lords reminder to fact finders in Rhesa Shipping Co SA v Edmunds (the Popi M) [1985] 1 WLR 948 that it is not their duty to reach conclusions of fact, one way or the other, in every case. There are cases where, as a matter of justice and policy, a court should say that the evidence adduced (whatever its type) is too weak to prove anything to an appropriate standard, so that the claim should fail. The American material which we have seen, particularly Smith v Rapid Transit Inc (1945) 58 NE 754, Merrell Dow Pharmaceuticals Inc v Havner (1997) 953 SW 2d 706 and Causation in Toxic Torts: Burdens of Proof, Standards of Persuasion, and Statistical Evidence by Steve Gold (1986) 96 Yale LJ 376, demonstrates, with innumerable further references, the detailed and extensive thought which has been given across the Atlantic to the significance and use of epidemiological or statistical evidence. In that light and without hearing fuller argument, as well as because it raises fact specific issues and is unnecessary for the resolution of these appeals, I think it inappropriate to say more about the use of epidemiological evidence. On the material before us, I would myself see Willmore v Knowsley Metropolitan Borough Council as a case where there was no sufficient proof that the defendant exposed the claimant to asbestos. The judge found exposure on a slender and speculative basis which Lady Hale describes as heroic. But, the concurrent findings below on two of the three bases of exposure found by the judge are entitled to some weight, and on that basis I do not dissent from the general view that the appeal on fact in Willmore should also be dismissed. LORD KERR What has been called the Fairchild exception was described in a variety of ways in Barker v Corus UK Ltd [2006] 2 AC 572 but common to all the various formulations is the proposition that where employers through breach of duty expose their employee to asbestos and thereby materially increase the risk to the employee of developing mesothelioma, they will be jointly and severally liable if he or she develops that condition. This involved a modification of the previously applicable legal rules in relation to the causation element in employers liability claims. That alteration was thought necessary in order to cater for the particular difficulties that asbestos related disease presents. Implicit in the modification of the normal rule is the acceptance that an employer thus found liable may, in truth and in fact, not have been responsible for the damage at all. This is the price that it was deemed necessary to pay in order to hold the balance of justice between the parties. Because of the limitations of medical and scientific knowledge, it was recognised that it would be unjust to enforce a rigorous requirement of proof that a particular employment had actually caused or contributed to the damage. A potent factor in this equation was that the insidious nature of asbestos and the calamitous consequences that exposure to it can cause, allied to the current lack of scientific knowledge about the aetiology of mesothelioma, warrant a different approach to the conventional burden of proof. To insist on its stringent application would set what would in many instances prove an impossible practical difficulty in the way of a claimant. These considerations viz the constraints that arise from the unavailability of scientific proof and the dreadful illnesses that can result from asbestos exposure are just as relevant in the approach to so called single exposure cases as they are in cases of multiple employment exposure cases. The use of the expression single exposure may be misleading in this context. In Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32 the defendants had argued that the claims should be dismissed because there were various exposures each of which could have caused the mesothelioma and each of which might not have done so. In the present cases the appellants argument resolves to essentially the same proposition. They suggest that there were two possible sources of exposure in each case in Mrs Costellos case exposure while employed by the defendant and environmental exposure and in Mrs Willmores case exposure while at school and environmental exposure. It is argued that each of these exposures might have caused the mesothelioma but each of them might not have done so. In effect, therefore, the appellants submit that there is more than one possible source for the mesothelioma that both women suffered. The difference in these cases is not that they involved a single exposure but that each had a tortious and a non tortious source of exposure. But the same difficulties as to proof as arose in Fairchild and Barker afflict the present cases. And it was those difficulties that prompted the modification of the causation rules. It might be suggested that it is easier to accept that several employers, none of whom could be positively identified as having caused or contributed to the condition, should have to participate in the compensation package, on the basis that one of them (at least) had actually caused the mesothelioma and because each of the employers had, in any event, been prepared to have their employee run the risk of contracting the disease. But that is not the basis on which the adjustment to the requirements of proof was made. That adjustment was made precisely because, as a matter of policy, it was considered that it would be unfair to impose on a claimant a requirement of proof which in most cases, because of the limitations of scientific knowledge, was quite incapable of fulfilment. In so far as such considerations might be considered relevant, however, the fact remains that both defendants in the present appeals were prepared to countenance a material increase in the risk to Mrs Costello and Mrs Willmore. The circumstance that the other possible source of mesothelioma in these cases was non tortious should make no difference. Nor did it in Barker. In that case it was expressly accepted by Lord Hoffmann, Lord Scott of Foscote and Lord Rodger of Earlsferry that the Fairchild exception did apply to a non tortious source of risk. At para 17 Lord Hoffmann said: The purpose of the Fairchild exception is to provide a cause of action against a defendant who has materially increased the risk that the claimant will suffer damage and may have caused that damage, but cannot be proved to have done so because it is impossible to show, on a balance of probability, that some other exposure to the same risk may not have caused it instead. For this purpose, it should be irrelevant whether the other exposure was tortious or non tortious, by natural causes or human agency or by the claimant himself. These distinctions may be relevant to whether and to whom responsibility can also be attributed, but from the point of view of satisfying the requirement of a sufficient causal link between the defendants conduct and the claimants injury, they should not matter. Lord Scott stated that he was in complete agreement not only with Lord Hoffmanns conclusions but also with his reasons for reaching them (para 50) and at para 97 Lord Rodger said: Starting from the McGhee extension, counsel considered whether Fairchild would apply where one or more of the sources of exposure to asbestos dust had been lawful but unconnected with any wrongdoer. For instance, the victim had been employed for a period before the dangers of exposure to asbestos dust should have been known in the industry and there had been no fault on the part of the employer. Having reserved my opinion on the point in Fairchild, I would now hold that the rule should apply in that situation. For the reasons given by Lord Phillips and Lord Rodger in the present appeals, therefore, I agree that there is no basis on which the Fairchild exception should not be applied in these cases and, on that account, that the appeals should be dismissed. The policy reason for introducing the modified rule in that case applies with equal force here and it would be anomalous and arbitrary to require these respondents to establish that it was twice as likely that the indicted exposure was the cause of the mesothelioma, while not imposing such a requirement on a claimant in a multiple employer exposure case. In all relevant respects the appellants are in an exactly similar position to a defendant in such a case. In both instances none of the defendants can be proved to have caused the mesothelioma but all have materially increased the risk by wrongfully exposing Mrs Costello and Mrs Willmore to asbestos. In these circumstances the interesting debate that has been had between Lord Phillips and Lord Rodger as to the use to which epidemiological evidence might be put is, at this stage certainly, academic. But I wish to say that I share the misgivings that have been expressed about the capacity of this type of evidence to prove that mesothelioma is more likely to have been caused by a particular exposure, even if advances in medical and scientific knowledge erode the rock of uncertainty. Epidemiology is the branch of medical science which normally deals with the incidence and prevalence of disease in large populations and with the detection of the sources and causes of disease. It involves the collection of data, usually over significant periods. Unless these coincide with periods of relevant exposure or replicate conditions of exposure experienced by individual claimants, the use of such data to seek to establish any specific proposition in an individual case requires to be treated with great caution, in my opinion. It is an essential and minimum requirement, as Brachtenbach J said in Herskovits v Group Health Cooperative of Puget Sound (1983) 664 P 2d 474, that there be evidence connecting avowedly relevant statistical information produced by the epidemiological studies to the facts of the case. In my view, no such connection was made in the present appeals. The epidemiological evidence which was adduced consisted of a series of assumptions and speculations rather than actual data which could be related to the experience of those who developed mesothelioma. What the testimony amounted to was the promotion of a theory rather than the establishment of facts and it did not constitute evidence on which reliable conclusions could be reached. There is a real danger that so called epidemiological evidence will carry a false air of authority. It is necessary to guard against treating a theory based on assumptions as a workable benchmark against which an estimate of the increase in risk could be measured. Whether and in what circumstances epidemiological evidence can assist in the determination of whether a particular case of mesothelioma is likely to have been caused by a particular exposure will have to be decided according to the particular circumstances of an individual case. In my view, the epidemiological material adduced in evidence in the present case could not have assisted in the determination of that issue. LORD DYSON The central question that arises in these appeals is whether the so called Fairchild exception applies in a single exposure case, that is to say a case where a victim has been exposed to asbestos by a single defendant in breach of duty and has also been exposed to asbestos in the general atmosphere. In Fairchild itself, the victims had been exposed to asbestos by a number of defendants in breach of their duty of care. The limitations of medical knowledge prevented them from being able to prove on the balance of probability which exposure had caused their mesothelioma. In order to avoid injustice, the House of Lords held that proof on the balance of probability that each defendants wrongdoing had materially increased the risk of contracting the disease was sufficient to satisfy the causal requirements for liability. For understandable reasons, the Court of Appeal had applied a conventional approach and had dismissed the claims because the claimants had been unable to prove on the balance of probability that their wrongful exposure to asbestos by any particular defendant had caused their disease. Each defendant was able to say that the offending asbestos might have been the result of exposure caused during the claimants employment by a different defendant. Thus it was that the claims were rejected by the Court of Appeal on what Lord Bingham called this rock of uncertainty. The Fairchild exception was created to circumvent the rock of uncertainty. It is implicit in the reasoning in Fairchild (repeated in Barker) that, if the rock of uncertainty were to disappear in the light of increased medical knowledge, then the rationale for the Fairchild exception would disappear and claimants would be required to prove their cases on the balance of probability in the usual way. It is common ground that medical knowledge about the aetiology of mesothelioma has not materially advanced since Fairchild. Mr Stuart Smith QC accepts that, if this were a multiple exposure case, the claimants would not be required to prove on the balance of probability (whether by the doubling of the risk test or otherwise) that their mesothelioma had been caused by wrongful exposure to asbestos. All that they would have to prove was that the defendant or defendants had materially contributed to the risk of mesothelioma. There has been no previous decision on a single exposure case. In Barker, the House of Lords held that the Fairchild exception applied even where not all the exposures to asbestos which could have caused the claimant employees mesothelioma involved breaches of duty by his employers (in that case, the employee was also exposed to asbestos during a period when he was self employed). At para 17, Lord Hoffmann said that the purpose of the Fairchild exception was: to provide a cause of action against a defendant who has materially increased the risk that the claimant will suffer damage and may have caused that damage, but cannot be proved to have done so because it is impossible to show, on a balance of probability, that some other exposure to the same risk may not have caused it instead. For this purpose, it should be irrelevant whether the other exposure was tortious or non tortious, by natural causes or human agency or by the claimant himself. These distinctions may be relevant to whether and to whom responsibility can also be attributed, but from the point of view of satisfying the requirement of a sufficient causal link between the defendants conduct and the claimants injury, they should not matter. Lord Scott expressed the same view at para 59. But Barker was not a single exposure case. So why should the Fairchild exception not be applied in a single exposure case? Mr Stuart Smith advances a number of reasons. He submits that there is no suggestion in any previous case that exposure to asbestos in the general atmosphere should be taken into account as a relevant exposure for the purposes of the Fairchild exception. The breathing of ambient air, which should merely be regarded as part of the ordinary vicissitudes of life, is not under the control of any single person or group of persons and should not be treated in the same way as exposures to a carcinogen controlled and caused by an identifiable individual. In my view, these are not good reasons for disapplying the Fairchild exception in a single exposure case. In view of the present state of medical knowledge, a single exposure claim would founder on the same rock of uncertainty as a multiple exposure claim. The exception was devised as a matter of policy to overcome the injustice that claimants would suffer if they were prevented by the rock of uncertainty from establishing causation in mesothelioma cases. This policy justification for the exception is articulated in a number of the speeches in both Fairchild and Barker: see, for example, per Lord Bingham at para 33 and Lord Nicholls at paras 41 and 42 in Fairchild. There is no reason in policy or principle why the exception should not apply to a single exposure claim just as it does to a multiple exposure claim. It is true that none of the previous decisions involves a single exposure claim. But that is not a good reason for refusing to apply the Fairchild exception if there is no material difference between single and multiple exposure claims. It is also true that the breathing of ambient air is a vicissitude of life. But that is not a good reason for distinguishing Fairchild either. On the present state of medical knowledge, the rock of uncertainty is as much of a problem for victims of single exposure as for victims of multiple exposure. It is implicit in Fairchild and Barker that, if it were possible for a victim of mesothelioma to establish causation on the balance of probability in the conventional way, then the rationale for the Fairchild exception would disappear. Mr Stuart Smith submits that causation can be established in the conventional way in a single exposure case (but, he accepts, not yet in a multiple exposure case). He says that a claimant can prove causation on a balance of probability by proving that the tortious exposure has at least doubled the risk arising from the non tortious cause. This was the approach adopted by Judge Main in Sienkiewicz and adopted as a correct statement of the law by Smith LJ at para 23 of her judgment. In fact, Smith LJ seems to have considered that it was a legitimate approach even in multi exposure cases, since she referred to a doubling of the risk arising from the non tortious cause or causes (emphasis added). Lord Phillips and Lord Rodger are in agreement that there is no scope in single exposure mesothelioma cases for the application of a doubling of the risk test based entirely on epidemiological evidence. But their reasoning differs to some extent. Lord Phillips considers that it is not possible to prove causation on the basis of epidemiological evidence alone because first it is not sufficiently reliable (paras 97 to 101), and secondly there continue to be gaps in our understanding of the aetiology of mesothelioma (paras 102 to 105). If these shortcomings in our understanding were made good, then it is implicit in the first reason that, if epidemiological data were to become sufficiently reliable, victims of mesothelioma would be able (and therefore required) to prove causation on the balance of probability on the basis of epidemiological evidence alone. Lord Rodger agrees with Lord Phillipss second reason. But his objection to proof on the basis of epidemiological evidence alone is not based on the unreliability of epidemiological data. It is more fundamental than that. Lord Rodger draws a distinction between claimant A, who proves on the balance of probability that a defendant probably injured him, and claimant B, who proves on the balance of probability that a defendant actually injured him. He says that, as a matter of law, claimant B will succeed but claimant A will fail. A claimant who seeks to prove his case on the balance of probability in reliance entirely on statistical evidence will inevitably fail, since he is able to do no more than prove on the balance of probability that the defendant probably injured him. I am grateful to Lord Rodger for drawing attention to the article by Steve Gold, Causation in Toxic Torts: Burdens of Proof, Standards of Persuasion, and Statistical Evidence (1986) 96 Yale LJ 376. The article distinguishes between fact probability and belief probability. The former is a more than 50% statistical probability of an event having occurred. An illustration of this is the 75% probability that the victim was run down by a blue cab in the example given by Brachtenbach J in Herskovits v Group Health Cooperative of Puget Sound (1983) 664 P 2d 474 (see para 95 of Lord Phillipss judgment). The latter is a more than 50% belief in the decision maker that a knowable fact has been established. Mr Gold points out that, particularly in toxic tort cases, US courts have often collapsed the distinction between fact probability and belief probability and simply asked the question whether the fact that the claimant seeks to prove has been established as more likely than not. In my view, this is an important distinction and it is of particular relevance in relation to causation in toxic torts. It is often the basic impossibility of proving individual causation which distinguishes toxic tort cases from ordinary personal injury cases. As Mr Gold points out, epidemiology is based on the study of populations, not individuals. It seeks to establish associations between alleged causes and effects. With proper scientific interpretation, these correlations lend great weight to an inference of causation. However, in an individual case, epidemiology alone cannot conclusively prove causation. At best, it can establish only a certain probability that a randomly selected case of disease was one that would not have occurred absent exposure. Ultimately, questions of burden and standard of proof are policy matters for any system of law. It is trite law that our system requires a civil claim to be proved by a claimant on the balance of probability. It is a matter of policy choice whether and, if so, in what circumstances the courts are willing to find causation proved on the balance of probability on the basis of epidemiological evidence alone. In the United States, some courts have been willing to find causation established on the balance of probability on the basis of epidemiological evidence alone. They have been criticised by Mr Gold for collapsing the distinction to which I have referred. As I have said, the House of Lords produced in the Fairchild exception a particular policy response to the causation problems created by the lack of scientific knowledge about the aetiology of mesothelioma. This response has been confirmed by the 2006 Act. In these circumstances, I agree with Lord Phillips and Lord Rodger that there is no room for the application of a different test which would require a claimant to prove (whether on the basis of doubling of the risk or otherwise) that on the balance of probability the defendant caused or materially contributed to the mesothelioma. It follows that I do not find it necessary to decide whether there are any circumstances in which, as a matter of English law, causation can be proved on the basis of epidemiological evidence alone. I am unaware of any English authority in which the question whether causation can be proved in a straightforward personal injury case on the basis of epidemiological evidence alone has been the subject of decision. Toxic torts, such as mesothelioma, give rise to particular causation problems. That is why special rules sometimes have been devised so as to avoid injustice. Such problems are not inherent in straightforward personal injury cases where it must be rare for a claimant to rely exclusively on epidemiological evidence to prove his or her claim. The claimant will almost always also be able to point to some specific evidence relating to the particular circumstances of the case. I note that in Smith v Rapid Transit Inc (1945) 317 Mass 469, 58 NE 2d 754 it was held on the facts of that case that statistical likelihood alone was insufficient to support a finding that the bus that injured the plaintiff was the defendants. But ultimately, as I have said, it is not necessary for the resolution of the present appeal to decide whether epidemiological evidence alone suffices, since Lord Phillips and Lord Rodger are agreed that there has been no material change in the understanding of the aetiology of mesothelioma and there is no basis for distinguishing single exposure cases from multiple exposure cases. It seems to me, however, that there is no a priori reason why, if the epidemiological evidence is cogent enough, it should not be sufficient to enable a claimant to prove his case without more. Our civil law does not deal in scientific or logical certainties. The statistical evidence may be so compelling that, to use the terminology of Steve Gold, the court may be able to infer belief probability from fact probability. To permit the drawing of such an inference is not to collapse the distinction between fact probability and belief probability. It merely recognises that, in a particular case, the fact probability may be so strong that the court is satisfied as to belief probability. Whether an inference of belief probability should be drawn in any given case is not a matter of logic. The law does not demand absolute certainty in this context or indeed in any context. Judges are frequently called upon to decide difficult and finely balanced questions on the balance of probability and sometimes say that they have reached their conclusions after much anxious consideration of the facts. It is true that, once the facts have been determined, they are treated as having been established and, subject to any appeal, they cannot be challenged. But the judge may even acknowledge in his judgment that he cannot be certain that the facts are as he found them to be. He cannot exclude another possibility. But he is satisfied on the balance of probability as to the facts and that is all that the law requires. I would in any event endorse what Lord Phillips has said about the limits of epidemiological evidence at paras 97 to 101 and also what he has said about what constitutes a material increase in risk at paras 107 and 108. I also agree with what Lord Rodger has said at paras 130 to 132 about the observations by Smith LJ about the effect of section 3 of the 2006 Act. For these reasons, I would dismiss these appeals. |
This case is about the criteria for judging whether the living arrangements made for a mentally incapacitated person amount to a deprivation of liberty. If they do, then the deprivation has to be authorised, either by a court or by the procedures known as the deprivation of liberty safeguards, set out in the Mental Capacity Act 2005 (the Mental Capacity Act). If they do not, no independent check is made on whether those arrangements are in the best interests of the mentally incapacitated person, although of course the health or social care bodies who make the arrangements do so in the hope and belief that they are the best which can practicably be devised. It is no criticism of them if the safeguards are required. It is merely a recognition that human rights are for everyone, including the most disabled members of our community, and that those rights include the same right to liberty as has everyone else. The statutory background The deprivation of liberty safeguards were introduced into the Mental Capacity Act by the Mental Health Act 2007. In a sense the wheel has turned full circle. Throughout the 19th century it was assumed that persons of unsound mind (then known as either lunatics or idiots) should be kept in some form of confinement and reformers concentrated upon providing more and better institutions where they could live. But it was also recognised that there was a risk of unjustified confinement and assumed that some form of judicial certification was the best protection against this. This was therefore the approach adopted under the Mental Deficiency Acts of 1913 and 1927, under which publicly funded institutions were established for people whose mental handicaps ranged from the severe (known as idiots), through the moderate (known as imbeciles), to the mild (known as feeble minded). Those Acts did not provide for a voluntary status for patients who were able to consent to their admission to hospital, nor did they provide for an informal status for those who lacked the capacity to consent but raised no objection to their admission. However, unlike the institutions providing for people with mental illnesses, the institutions in question were not prohibited from admitting patients without formal certification. During the 1950s, therefore, this was first encouraged for patients admitted for a short time; and the Report of the Royal Commission on the Law relating to Mental Illness and Mental Deficiency 1954 1957 (chaired by Lord Percy), recommended that this could and should become the general practice without waiting for legislative reform (1957, Cmnd 169). Certification was seen, not only as bringing with it some stigma, but also as inconsistent with the goal of normalising the care and treatment of these patients and bringing it into line with the care and treatment of people with physical disorders and disabilities. A legislative basis for such informal admissions to hospital was provided by section 5(1) of the Mental Health Act 1959, now contained in section 131(1) of the Mental Health Act 1983 (the 1983 Act): Nothing in this Act shall be construed as preventing a patient who requires treatment for mental disorder from being admitted to any hospital or registered establishment in pursuance of arrangements made in that behalf and without any application, order or direction rendering him liable to be detained under this Act . But that, of course, begged the question of the underlying law: on what legal basis could a person who lacked the capacity to decide to go into hospital or indeed anywhere else be admitted and treated there, whether for mental or physical disorder? The answer came in the case of In re F (Mental Patient: Sterilisation) [1990] 2 AC 1. The House of Lords confirmed that there was no one authorised by law to consent to treatment on behalf of an adult who lacked the capacity to consent for himself, nor was there any jurisdiction in the courts to give such consent. It was, however, lawful for him to be given such treatment and care as was necessary in his own best interests. In cases of doubt or dispute, moreover, the High Court could declare whether or not proposed treatment would be lawful. That principle has now been given statutory backing in section 5 of the Mental Capacity Act; as originally enacted, however, section 6(5) of the Act was designed to make it clear that this did not permit hospitals or other carers to deprive a person of his liberty. This was prompted by the litigation concerning HL. Quite how far the necessity principle might extend at common law was tested in the case of R v Bournewood Community and Mental Health NHS Trust, ex p L [1999] 1 AC 458. HL was autistic and profoundly mentally disabled. He had lived in a hospital for many years before being discharged to live with paid foster carers, Mr and Mrs E. One day he became agitated at his day centre and, as the foster carers could not be contacted, a social worker and doctor were called, he was sedated and taken to A & E, where he was examined by a psychiatrist. The psychiatrist assessed that he needed in patient treatment, but by then he appeared fully compliant, and so he was admitted informally. Although the plan was to return him to Mr and Mrs E as soon as the hospital staff thought it possible, their contact with him was restricted and he would have been prevented from leaving had he tried to do so. Habeas corpus and judicial review proceedings were brought on his behalf. These succeeded in the Court of Appeal (whereupon HL was promptly sectioned under the Mental Health Act), but failed in the House of Lords. The majority held that the hospital had not detained him. Lord Nolan and Lord Steyn held that it had. Lord Steyn expressed himself with some force, at p 495: Counsel for the trust and the Secretary of State argued that L was in truth always free not to go to the hospital and subsequently to leave the hospital. This argument stretches credulity to breaking point. The truth is that for entirely bona fide reasons, conceived in the best interests of L, any possible resistance by him was overcome by sedation, by taking him to hospital and by close supervision of him in hospital and, if L had shown any sign of wanting to leave, he would have been firmly discouraged by staff and, if necessary, physically prevented from doing so. The suggestion that L was free to go was a fairy tale. Nevertheless, both he and Lord Nolan agreed with the majority that what had been done was justified by the necessity principle and that section 131(1) covered, not only a patient who was able to and did give a valid consent, but also a patient who was unable to do so. The case then went to the European Court of Human Rights as HL v United Kingdom (2004) 40 EHRR 761. The court agreed with Lord Steyn that HL had been deprived of his liberty. It found violations, both of the right to liberty, in article 5(1) of the Convention for the Protection of Human Rights and Fundamental Freedoms, and of the right of a detained person to speedy access to a court which can order his release if his detention is not lawful, in article 5(4). Article 5(1)(e) permits the lawful detention of persons of unsound mind, but that detention has to conform to the Convention standards of legality, and the doctrine of necessity did not provide HL with sufficient protection against arbitrary deprivation of his liberty. The court was struck by the difference between the careful machinery for authorising the detention and treatment of compulsory patients under the Mental Health Act and the complete lack of any such machinery for compliant incapacitated patients such as HL. Key passages from the judgment are these: 89. It is not disputed that in order to determine whether there has been a deprivation of liberty, the starting point must be the specific situation of the individual concerned and account must be taken of a whole range of factors arising in a particular case such as the type, duration, effects and manner of implementation of the measure in question. The distinction between a deprivation of, and restriction upon, liberty is merely one of degree or intensity and not one of nature or substance. 90. . The majority of the House of Lords specifically distinguished actual restraint of a person (which would amount to false imprisonment) and restraint which was conditional upon his seeking to leave (which would not constitute false imprisonment). The court does not consider such a distinction to be of central importance under the Convention. Nor, for the same reason, can the court accept as determinative the fact . that the regime applied to the applicant (as a compliant incapacitated patient) did not materially differ from that applied to a person who had the capacity to consent to hospital treatment, neither objecting to their admission to hospital. The court recalls that the right to liberty is too important in a democratic society for a person to lose the benefit of Convention protection for the single reason that he may have given himself up to be taken into detention, especially when it is not disputed that that person is legally incapable of consenting to, or disagreeing with, the proposed action. 91. the court considers the key factor in the present case to be that the health care professionals treating and managing the applicant exercised complete and effective control over his care and movements from the moment he presented acute behavioural problems on 22 July 1997 to the date he was compulsorily detained on 29 October, 1997. Accordingly, the concrete situation was that the applicant was under continuous supervision and control and was not free to leave. Any suggestion to the contrary was, in the Courts view, fairly described by Lord Steyn as stretching credulity to breaking point and as a fairy tale. It therefore became necessary for this country to introduce some such machinery for the many thousands of mentally incapacitated people who are regularly deprived of their liberty in hospitals, care homes and elsewhere. The Mental Health Act 2007 amended the Mental Capacity Act accordingly. Section 6(5) was repealed and replaced with sections 4A and 4B. Deprivation of liberty is not permitted under the Act save in three circumstances: (i) it is authorised by the Court of Protection by an order under section 16(2)(a); (ii) it is authorised under the procedures provided for in Schedule A1, which relates only to deprivations in hospitals and in care homes falling within the meaning of the Care Standards Act 2000 (see Schedule A1, para 178); (iii) it falls within section 4B, which allows deprivation if it is necessary in order to give life sustaining treatment or to prevent a serious deterioration in the persons condition while a case is pending before the court. The safeguards have the appearance of bewildering complexity, much greater than that in the comparable provisions for detaining mental patients in hospital under the Mental Health Act; but their essence is to secure professional assessment, by people independent of the hospital or care home in question, of (a) whether the person concerned lacks the capacity to make his own decision about whether to be accommodated in the hospital or care home for the purpose of care or treatment (Schedule A1, para 15), and (b) whether it is in his best interests to be detained (para 16). The procedures are administrative, but the authorisation can be challenged in the Court of Protection under section 21A. There have been far fewer authorisations under Schedule A1 than was predicted before the amendments came into force, although the numbers are rising (from 7157 applications in 2009 2010 to 11,887 in 2012 13). There have also been very few cases coming before the Court of Protection seeking authority to deprive someone of his liberty in a setting other than a hospital or care home (it is not known how many of the 88 applications made in 2012 were challenges under section 21A or for orders under section 16). It would not be at all surprising if those arranging for the care of people with severe learning disabilities were reluctant to see those arrangements, made in what they think are the best interests of the people concerned, as also depriving them of their liberty. As with detention under the Mental Health Act, they may worry that it carries a stigma. They may also baulk at the bureaucracy of the procedures and the time they take. They may even see the procedures as a return to the bad old days before the Mental Health Act 1959, when all mental patients were seen as prisoners rather than patients or residents like any others. Legal formalities may be seen as the antithesis of the normalisation which it is the object of both the Mental Health and the Mental Capacity Acts to achieve. The facts of the two cases before us are a good illustration of the sort of benevolent living arrangements which many might find difficult to characterise as a deprivation of liberty. What follows are the facts as they were when the cases were heard in the Court of Protection, which is now a long time ago. The facts: P (otherwise known as MIG) and Q (otherwise known as MEG) v Surrey County Council MIG and MEG are sisters who first became the subject of care proceedings under the Children Act 1989 in 2007, when they were aged respectively 16 and 15. MIG has a learning disability at the lower end of the moderate range or the upper end of the severe range. She also has problems with her sight and her hearing. She communicates with difficulty and has limited understanding, spending much of her time listening to music on her iPod. She needs help crossing the road because she is unaware of danger. MEG has a learning disability at the upper end of the moderate range, bordering on the mild. Her communication skills are better than her sisters and her emotional understanding is quite sophisticated. Nevertheless, she may have autistic traits and she exhibits challenging behaviour. Until 2007 they lived with their mother and from 1997 also with their step father. They were ill treated and neglected there. They were removed from home after siblings made allegations of sexual abuse against their step fathers father, and then against their step father and their mother. Their step father was later convicted of raping their half sister and their mother of indecently assaulting her. At the time of the final hearing before Parker J in 2010, MIG (then aged 18) was living with a foster mother with whom she had been placed when she was removed from home. She was devoted to her foster mother (whom she regarded as her mummy). Her foster mother provided her with intensive support in most aspects of daily living. She had never attempted to leave the home by herself and showed no wish to do so, but if she did, the foster mother would restrain her. She attended a further education unit daily during term time and was taken on trips and holidays by her foster mother. She was not on any medication. MEG (then aged 17) had originally been placed with a foster carer, who was unable to manage her severe aggressive outbursts, and so she was moved to a residential home. She mourned the loss of that relationship and wished she was still living with her foster carer. The home was an NHS facility, not a care home, for learning disabled adolescents with complex needs. She had occasional outbursts of challenging behaviour towards the other three residents and sometimes required physical restraint. She was also receiving tranquillising medication. Her care needs were met only as a result of continuous supervision and control. She showed no wish to go out on her own and so did not need to be prevented from doing so. She was accompanied by staff whenever she left. She attended the same further education unit as MIG and had a much fuller social life than her sister. In 2008, when the sisters were aged 17 and 16, the care proceedings were transferred to the Court of Protection, the interim care orders expired, and Court of Protection proceedings were issued instead. (The Court of Protection has jurisdiction over people aged 16 or more, whereas a family court cannot make a care order once a child has reached 17: Children Act 1989, s 31(3).) On 15 April 2010, Parker J decided that the sisters living arrangements were in their best interests and concluded that they did not amount to a deprivation of liberty: [2010] EWHC 785 (Fam), [2011] Fam Law 29 (sub nom In re MIG and MEG). The Court of Appeal agreed: [2011] EWCA Civ 190 [2012] Fam 170. Wilson LJ, who gave the leading judgment, laid stress on the relative normality of the sisters lives, compared with the lives they might have at home with their family (paras 28, 29), together with the absence of any objection to their present accommodation (para 26). Mummery LJ was also impressed with the greater fulfilment in an environment more free than they had previously had (para 52). Smith LJ, on the other hand, thought their previous arrangements were not relevant, but stressed that what may be a deprivation of liberty for one person may not be for another (para 40). The facts: Cheshire West and Chester Council v P P was aged 38 at the time of the Court of Protection hearing. He was born with cerebral palsy and Downs syndrome and required 24 hour care to meet his personal care needs. Until he was 37 he lived with his mother, who was his principal carer, but her health began to deteriorate and the local social services authority concluded that she was no longer able to look after P. In 2009 they obtained orders from the Court of Protection that it was in Ps best interests to live in accommodation arranged by the local authority. Since November 2009, he had been living in Z house. This was not a care home. It was a spacious bungalow, described by an independent social worker as cosy and with a pleasant atmosphere, and close to Ps family home. At the time of the final hearing, he shared it with two other residents. There were normally two staff on duty during the day and one waking member of staff overnight. P received 98 hours additional one to one support each week, to help him to leave the house whenever he chose. He went to a day centre four days a week and a hydrotherapy pool on the fifth. He also went out to a club, the pub and the shops, and saw his mother regularly at the house, the day centre and her home. He could walk short distances but needed a wheel chair to go further. He also required prompting and help with all the activities of daily living, getting about, eating, personal hygiene and continence. He wore continence pads. Because of his history of pulling at these and putting pieces in his mouth, he wore a body suit of all in one underwear which prevented him getting at the pads. Intervention was also needed to cope with other challenging behaviours which he could exhibit. But he was not on any tranquillising medication. By the time of the final hearing before Baker J in April 2011, the principal issue was whether these arrangements amounted to a deprivation of liberty. Baker J held that P was completely under the control of the staff at Z House, that he could not go anywhere, or do anything, without their support and assistance (para 59). Further, the steps required to deal with his challenging behaviour lead to a clear conclusion that, looked at overall, P is being deprived of his liberty (para 60). Nevertheless it was in his best interests for those arrangements to continue: [2011] EWHC 1330 (Fam). The Court of Appeal substituted a declaration that the arrangements did not involve a deprivation of liberty: [2011] EWCA Civ 1257, [2012] PTSR 1447. Munby LJ, who delivered the leading judgment with which Lloyd and Pill LJJ agreed, developed the concept of relative normality adopted in P and Q, and considered it appropriate to compare Ps life, not with that which he had enjoyed before when living with his mother, but with that which other people like him, with his disabilities and difficulties, might normally expect to lead. As Lloyd LJ put it, It is meaningless to look at the circumstances of P in the present case and to compare them with those of a man of the same age but of unimpaired health and capacity. the right comparison is with another person of the same age and characteristics as P (para 120). What is a deprivation of liberty? In cases under the Human Rights Act 1998, the courts have frequently to consider how far their duty, in section 2(1), to take into account the jurisprudence of the European Commission and Court of Human Rights goes. That problem does not trouble us in this case. Section 64(5) of the Mental Capacity Act states that: In this Act, references to a deprivation of a persons liberty have the same meaning as in article 5(1) of the Human Rights Convention. As the object was to avoid the violation identified in HL 40 EHRR 761, it seems clear that we are expected to turn to the jurisprudence of the Strasbourg Court to find out what is meant by a deprivation of liberty in this context. There is no case in Strasbourg which concerns the type of placements with which we are here concerned. However, there have been several relevant decisions in Strasbourg since the judgments in the courts below. The most important is probably the decision of the Grand Chamber in Stanev v Bulgaria (2012) 55 EHRR 696, because this concerned the placement of a mentally disabled man in a care home rather than a hospital. The Court summarised the general principles in the context of people with mental disorders or disabilities. It is therefore convenient to repeat each of those principles, together with an explanation of the previous case law from which it is taken. First, 115. The Court reiterates that the difference between deprivation of liberty and restrictions on liberty of movement, the latter being governed by article 2 of Protocol No 4, is merely one of degree or intensity, and not one of nature or substance. Although the process of classification into one or other of these categories sometimes proves to be no easy task in that some borderline cases are a matter of pure opinion, the Court cannot avoid making the selection upon which the applicability or inapplicability of article 5 depends. In order to determine whether someone has been deprived of his liberty, the starting point must be his concrete situation and account must be taken of a whole range of criteria such as the type, duration, effects and manner of implementation of the measures in question. This is a reference back to the well known cases of Guzzardi v Italy (1980) 3 EHRR 333, paras 92 93, where the same points were made, derived from Engel v Netherlands (1976) 1 EHRR 647, paras 58 and 59, and to Storck v Germany (2005) 43 EHRR 6, para 71, where they were repeated. Guzzardi was a case of internal exile, where a suspected Mafioso was confined to a small area on an island with various other restrictions designed to prevent his engaging in Mafia activities. This was held to deprive him of his liberty. Secondly, 116. In the context of deprivation of liberty on mental health grounds, the court has held that a person could be regarded as having been detained even during a period when he was in an open hospital ward with regular unescorted access to the unsecured hospital grounds and the possibility of unescorted leave outside the hospital. This is a reference to Ashingdane v United Kingdom (1985) 7 EHRR 528, para 42. Ashingdane was concerned with the rather different question of whether article 5 could protect a patient from being detained in a secure hospital such as Broadmoor when he did not need to be there. But the court accepted that a compulsory patient is deprived of his liberty in the hospital where he is detained, irrespective of the openness or otherwise of the conditions there. Thirdly, 117. Furthermore, in relation to the placement of mentally disordered persons in an institution, the Court has held that the notion of deprivation of liberty does not only comprise the objective element of a persons confinement in a particular restricted space for a not negligible length of time. A person can only be considered to have been deprived of his liberty if, as an additional subjective element, he has not validly consented to the confinement in question. (Emphasis supplied) This is again a reference to Storck v Germany 43 EHRR 6, para 74. That case concerned a young woman who had twice been admitted to a private clinic for psychiatric treatment. The first time she had gone there with her father, had been placed in a locked ward and forcibly medicated, had tried to escape and been returned to the clinic by the police. The court held that she could not be taken to have consented to her confinement. The second time she had presented herself to the clinic and had not tried to escape, so the court accepted the factual finding of the national court that she had not been confined against her will. Fourthly, 118. The court has found that there was a deprivation of liberty in circumstances such as the following: (a) where the applicant, who had been declared legally incapable and admitted to a psychiatric hospital at his legal representatives request, had unsuccessfully attempted to leave the hospital; (b) where the applicant had initially consented to her admission to a clinic but had subsequently attempted to escape; and (c) where the applicant was an adult incapable of giving his consent to admission to a psychiatric institution which, nonetheless, he had never attempted to leave. (a) is a reference to Shtukatarov v Russia (2008) 54 EHRR 962, para 108; (b) is another reference to Storck, at para 76; and (c) is a reference to HL v United Kingdom 40 EHRR 761, at para 90 (see para 7 above). Fifthly, 119. The court has also held that the right to liberty is too important in a democratic society for a person to lose the benefit of Convention protection for the single reason that he may have given himself up to be taken into detention, especially when it is not disputed that person is legally incapable of consenting to, or disagreeing with, the proposed action. The first reference is to De Wilde, ooms and Versyp v Belgium (No 1) (1971) 1 EHRR 373, paras 64 65, and the second is again to HL v United Kingdom 40 EHRR 761, para 90 (see para 7 above). Finally, and for completeness, 120. In addition, the court has had occasion to observe that the first sentence of article 5(1) must be construed as laying down a positive obligation on the state to protect the liberty of those within its jurisdiction. Otherwise, there would be a sizeable gap in the protection from arbitrary detention, which would be inconsistent with the importance of personal liberty in a democratic society. The state is therefore obliged to take measures providing effective protection of vulnerable persons, including reasonable steps to prevent a deprivation of liberty of which the authorities have or ought to have knowledge. Thus, having regard to the particular circumstances of the cases before it, the court has held that the national authorities responsibility was engaged as a result of detention in a psychiatric hospital at the request of the applicants guardian and detention in a private clinic. The references are once again to Storck and to Shtukaturov. On occasions, therefore, the state may be accountable even for arrangements which it has not itself made. The applicant in Stanev had spent many years in a social care home where conditions were so bad that the court also found they amounted to inhuman and degrading treatment for the purpose of article 3. But the court also considered that (i) the objective requirement of deprivation of liberty was met because he had been kept at the home, in a mountain region far from his home town, needing permission to go out to the nearest village and leave of absence to visit his home, entirely at the discretion of the homes management which kept his identity papers and managed his finances, and accordingly he was under constant supervision and was not free to leave the home without permission (para 128); and (ii) the subjective element was met because he could understand his situation and had expressed his wish to leave, thus setting the case apart from the decision in HM v Switzerland (2002) 38 EHRR 314, where the court found that there was no deprivation of liberty as the applicant had been placed in a nursing home purely in her own interests and after her arrival there had agreed to stay (para 131). HM v Switzerland concerned an old lady who was placed, by order of the authorities confirmed by the courts, in a care home because of severe neglect in her own home. It is a difficult case, not least because the Swiss legislation in question referred to the deprivation of liberty. In deciding that she had not been deprived of her liberty, the Strasbourg court referred to the fact that she had freedom of movement and was able to entertain social contacts with the outside world (para 45), that she hardly felt the effects of her stay and was undecided as to which solution she in fact preferred (para 46), that after she had moved there she agreed to stay (para 47), but in particular the fact that the Cantonal Appeals Commission placed the applicant in the foster home in her own interests in order to provide her with the necessary medical care, as well as satisfactory living conditions and hygiene, and also taking into consideration the comparable circumstances in the case of Nielsen v Denmark (para 48). There was a powerful dissent from Judge Jorundsson, who pointed out that it was clear that she was not permitted to leave the institution and go home; and that if she did, she would have been brought back (para O 16). This reference to the benevolent purpose of the placement is inconsistent with the later Grand Chamber decisions of Creanga v Romania (2012) 56 EHRR 361, para 93, and Austin v United Kingdom (2012) 55 EHRR 14, para 58. There it was stated that an underlying public interest motive has no bearing on the question whether that person has been deprived of his liberty . The same is true where the object is to protect, treat or care in some way for the person taken into confinement, unless that person has validly consented to what would otherwise be a deprivation of liberty (para 58). In HL v United Kingdom, the Court distinguished HM v Switzerland principally on the basis that she had often stated that she was willing to enter the nursing home and, within weeks of being there, she had agreed to stay, although it also referred to a regime entirely different to that applied to the present applicant (para 93). However, the court has also distinguished it in four later cases concerning placements in social care homes rather than in hospitals. In Stanev v Bulgaria 55 EHRR 696, the court distinguished it on the basis that she had agreed to stay whereas the applicant in that case had at no time consented to the placement or accepted it tacitly. In DD v Lithuania (Application no 13469/06), 14 February 2012, the Court distinguished it on the same basis, coupled with the procedural safeguards, including judicial scrutiny, which were in place to protect HM (para 147). In Kedzior v Poland (Application no 45026/07), 16 October 2012, the government relied upon HM v Switzerland, but the court did not refer to it in its assessment. Finally, in Mihailovs v Latvia (Application no 35939/10), 22 January 2013, the court referred to it, not during its assessment of the objective element of confinement but only during its assessment of the subjective element of consent (see para 135). The Court did not refer in its assessment in any of these later cases to Nielsen v Denmark (1988) 11 EHRR 175, which concerned a 12 year old boy placed in a childrens psychiatric unit by his mother (who alone had parental responsibility for him). The court held, by a majority of nine to seven, that he had not been deprived of his liberty. The restrictions to which he was subject were no more than the normal requirements for the care of a child of 12 years of age receiving treatment in hospital. The conditions . did not, in principle, differ from those obtaining in many hospital wards where children with physical disorders are treated (para 72). Hence his hospitalisation did not amount to a deprivation of liberty within the meaning of article 5, but was a responsible exercise by his mother of her custodial rights in the interest of the child (para 73). The seven dissenting judges considered that placing a 12 year old boy who was not mentally ill in a psychiatric ward for several months against his will was indeed a deprivation of liberty. It would appear, therefore, that the case turns on the proper limits of parental authority in relation to a child. As already mentioned (para 4 above) there is no equivalent in English law to parental authority over a mentally incapacitated adult. In any event, the Strasbourg court was not deterred from finding a deprivation of liberty in the cases of Stanov, DD, Kedzior and Mihailovs by the fact that the placements were arranged by the person who had been appointed legal guardian of the applicant. In all these cases, the applicant lacked the legal capacity to consent to the placement. In Shtukaturov v Russia 54 EHRR 962, decided in 2008, the applicant had been placed in a psychiatric hospital at the request of his legal guardian, which in Russian law was regarded as a voluntary admission. Although he lacked the de jure legal capacity to decide for himself, this did not necessarily mean that he was de facto unable to understand his situation (para 108). Indeed, he had evinced his objections. The subjective element of lack of consent was made out (para 109). The court took the same view in DD (para 150) and in Kedzior (para 58). Thus it appeared to give some weight to the objections of a person who lacked legal capacity when deciding that the subjective element was made out despite the consent of the persons legal guardian. But in Mihailovs, the court seems to have gone further. In relation to one of the care home placements, the court held that there was a deprivation of liberty, because although the applicant lacked legal capacity he subjectively perceived his compulsory admission there as such a deprivation (para 134). In relation to a later placement, however, he did not raise any objections or attempt to leave and the court concluded that he had tacitly agreed to stay there and thus had not been deprived of his liberty (paras 139, 140). In contrast, of course, in HL v United Kingdom, the patient was deprived of his liberty in the hospital despite his apparent compliance. The Strasbourg case law, therefore, is clear in some respects but not in others. The court has not so far dealt with a case combining the following features of the cases before us: (a) a person who lacks both legal and factual capacity to decide upon his or her own placement but who has not evinced dissatisfaction with or objection to it; (b) a placement, not in a hospital or social care home, but in a small group or domestic setting which is as close as possible to normal home life; and (c) the initial authorisation of that placement by a court as being in the best interests of the person concerned. The issue, of course, is whether that authorisation can continue indefinitely or whether there must be some periodic independent check upon whether the placements made are in the best interests of the people concerned. The arguments The first and most fundamental question is whether the concept of physical liberty protected by article 5 is the same for everyone, regardless of whether or not they are mentally or physically disabled. Munby LJ in Ps case appears to have thought that it is not, for he criticised the trial judge for failing to grapple with the question whether the limitations and restrictions on Ps life at Z house are anything more than the inevitable corollary of his various disabilities. The truth, surely, is they are not. Because of his disabilities, P is inherently restricted in the kind of life he can lead. Ps life, wherever he may be living, whether at home with his family or in the home of a friend or in somewhere like Z House is, to use Parker Js phrase, dictated by his disabilities and difficulties (para 110). In the same way, both Lloyd LJ in that case, and Smith LJ in P and Q, thought that a persons life had to be compared with that of another person with his same characteristics. What was a deprivation of liberty for some people might not be a deprivation for others. The answer given by Mr Richard Gordon QC, who appears instructed by the Official Solicitor on behalf of all three appellants, is that this confuses the concept of deprivation of liberty with the justification for imposing such a deprivation. People who lack the capacity to make (or implement) their own decisions about where to live may justifiably be deprived of their liberty in their own best interests. They may well be a good deal happier and better looked after if they are. But that does not mean that they have not been deprived of their liberty. We should not confuse the question of the quality of the arrangements which have been made with the question of whether these arrangements constitute a deprivation of liberty. Allied to the inevitable corollary argument it might once have been suggested that a person cannot be deprived of his liberty if he lacks the capacity to understand and object to his situation. But that suggestion was rejected in HL v United Kingdom. In any event, it is quite clear that a person may be deprived of his liberty without knowing it. An unconscious or sleeping person may not know that he has been locked in a cell, but he has still been deprived of his liberty. A mentally disordered person who has been kept in a cupboard under the stairs (a not uncommon occurrence in days gone by) may not appreciate that there is any alternative way to live, but he has still been deprived of his liberty. We do not have any difficulty in recognising these situations as a deprivation of liberty. We should not let the comparative benevolence of the living arrangements with which we are concerned blind us to their essential character if indeed that constitutes a deprivation of liberty. The whole point about human rights is their universal character. The rights set out in the European Convention are to be guaranteed to everyone (article 1). They are premised on the inherent dignity of all human beings whatever their frailty or flaws. The same philosophy underpins the United Nations Convention on the Rights of Persons with Disabilities (CRPD), ratified by the United Kingdom in 2009. Although not directly incorporated into our domestic law, the CRPD is recognised by the Strasbourg court as part of the international law context within which the guarantees of the European Convention are to be interpreted. Thus, for example, in Glor v Switzerland, Application No 13444/04, 30 April 2009, at para 53, the Court reiterated that the Convention must be interpreted in the light of present day conditions and continued: It also considers that there is a European and Worldwide consensus on the need to protect people with disabilities from discriminatory treatment (see, for example, Recommendation 1592 (2003) towards full inclusion of people with disabilities, adopted by the Parliamentary Assembly of the Council of Europe on 29 January 2003, or the United Nations Convention on the Rights of Persons with Disabilities, which entered into force on 3 May 2008). The second question, therefore, is what is the essential character of a deprivation of liberty? It is common ground that three components can be derived from Storck, paras 74 and 89, confirmed in Stanev, paras 117 and 120, as follows: (a) the objective component of confinement in a particular restricted place for a not negligible length of time; (b) the subjective component of lack of valid consent; and (c) the attribution of responsibility to the state. Components (b) and (c) are not in issue here, but component (a) is. Ms Jenni Richards QC, who appears for both the local authorities involved, relies heavily on the statement in Guzzardi v Italy, which is repeated in all the later cases, that the difference between restriction and deprivation of liberty is one of fact and degree in which a number of factors may be relevant. Simply asking whether a person is confined is not enough except in obvious cases. The starting point is always upon the concrete situation of the particular person concerned and account must be taken of a whole range of criteria such as the type, duration, effects and manner of implementation of the measures in question: 3 EHRR 333, para 92. The presence or absence of coercion is also relevant. Thus there is no single touchstone of what constitutes a deprivation of liberty in this or any other context. She contrasts the concrete situations of those who were held to have been deprived of their liberty in hospitals or care homes with others who were not: in particular in this context, Nielsen v Denmark and HM v Switzerland. She also refers to Haidn v Germany (Application no 6587/04), 13 January 2011, para 82, where the court expressed serious doubts whether instructing the applicant to live in an old peoples home which he was not to leave without his custodians permission amounted to a deprivation rather than a restriction of liberty. However, the court did not have to decide the question, as the applicant was complaining about his preventive detention in prison after the expiry of his sentence for serious sexual offences. Mr Gordon argues that, in this context, the answer is clear: it is, as expressed in HL v United Kingdom 40 EHRR 761, para 91, whether the concrete situation of the person concerned is that he [is] under continuous supervision and control and [is] not free to leave the accommodation where he has been placed. By free to leave he means what Munby J meant in JE v DE [2007] 2 FLR 1150, para 115: The fundamental issue in this case . is whether DE was deprived of his liberty to leave the X home and whether DE has been and is deprived of his liberty to leave the Y home. And when I refer to leaving the X home and the Y home, I do not mean leaving for the purpose of some trip or outing approved by SCC or by those managing the institution: I mean leaving in the sense of removing himself permanently in order to live where and with whom he chooses . Freedom to leave in this sense was the crucial factor, not only in HL v United Kingdom, where the complainant was placed in a hospital, but also in Stanev v Bulgaria, where the complainant was placed in a care home, as were the complainants in DD v Lithuania, Kedzior v Poland, and Mihailovs v Latvia. In each of these, the courts focus when considering the confinement question was on whether the complainant was under the complete supervision and control of the staff and not free to leave. The fact that these were social care settings with relatively open conditions was no more determinative than had been the open hospital conditions in Ashingdane. In these more recent cases, HM v Switzerland, another care home placement, has consistently been distinguished because of the complainants willingness to be in the home, rather than because of the conditions within the home. Although Nielsen has not been departed from, it is to be regarded as a case of substituted consent, and thus not fulfilling component (b). In none of the more recent cases was the purpose of the confinement which may well have been for the benefit of the person confined considered relevant to whether or not there had been a deprivation of liberty. If the fact that the placement was designed to serve the best interests of the person concerned meant that there could be no deprivation of liberty, then the deprivation of liberty safeguards contained in the Mental Capacity Act would scarcely, if ever, be necessary. As Munby J himself put it in JE v DE [2007] 2 FLR 1150, para 46: I have great difficulty in seeing how the question of whether a particular measure amounts to a deprivation of liberty can depend upon whether it is intended to serve or actually serves the interests of the person concerned. For surely this is to confuse . two quite separate and distinct questions: Has there been a deprivation of liberty? And, if so, can it be justified? This view has been confirmed by the rejection in Austin v United Kingdom 55 EHRR 359, para 58, with specific reference to the care and treatment of mentally incapacitated people, of any suggestion by the House of Lords in Austin v Comr of Police of the Metropolis [2009] AC 564 that a beneficial purpose might be relevant (and see also MA v Cyprus (Application No 41872/10), 23 July 2013 and Creanga v Romania 56 EHRR 361). Nevertheless, while a benevolent or beneficial purpose may be irrelevant, the context of the measures may not. Mr Paul Bowen QC, for the Equality and Human Rights Commission, has analysed the deprivation of liberty cases into two types. Type 1 consists of those situations which are catered for in article 5(1), including the detention of convicted criminals and of persons of unsound mind. In such cases, the Strasbourg Court has not had to concern itself with questions of degree, because the confinement is always potentially justifiable. Hence a person can be deprived of his liberty in an open prison, in an unlocked hospital ward, or in the ordinary conditions of a care home. The problem lies with type 2 cases, where deprivation of liberty is not catered for in the exhaustive list of permissible deprivations in article 5(1)(a) to (f) and thus what has happened, if it is a deprivation, cannot be justified. This was the position in Guzzardi v Italy, which concerned preventive measures against a suspected Mafioso, and for that matter in the English control order cases (such as Secretary of State for the Home Department v JJ [2008] AC 385), which concerned preventive measures against suspected terrorists. It was also the position in Austin v United Kingdom, which concerned kettling to maintain public order at a demonstration. Ms Richards rejects any such distinction. Indeed it cannot be found in the Strasbourg case law, which, as we have seen, repeats all the principles irrespective of the context. Nevertheless, we may find it helpful in understanding some of its decisions: for example, why it was not a deprivation of liberty to kettle people at Oxford Circus for some seven hours (Austin) while it was a deprivation to confine a person for several hours in a police station (Creanga) or in a sobering up centre (Litwa v Poland (2001) 33 EHRR 1267). We may therefore find it most helpful to consider how the question has been approached in the particular context, in this case the placement of mentally incapacitated people, whose lawful detention in any setting designed for their care is always potentially justifiable under article 5(1)(e). Discussion In my view, it is axiomatic that people with disabilities, both mental and physical, have the same human rights as the rest of the human race. It may be that those rights have sometimes to be limited or restricted because of their disabilities, but the starting point should be the same as that for everyone else. This flows inexorably from the universal character of human rights, founded on the inherent dignity of all human beings, and is confirmed in the United Nations Convention on the Rights of Persons with Disabilities. Far from disability entitling the state to deny such people human rights: rather it places upon the state (and upon others) the duty to make reasonable accommodation to cater for the special needs of those with disabilities. Those rights include the right to physical liberty, which is guaranteed by article 5 of the European Convention. This is not a right to do or to go where one pleases. It is a more focussed right, not to be deprived of that physical liberty. But, as it seems to me, what it means to be deprived of liberty must be the same for everyone, whether or not they have physical or mental disabilities. If it would be a deprivation of my liberty to be obliged to live in a particular place, subject to constant monitoring and control, only allowed out with close supervision, and unable to move away without permission even if such an opportunity became available, then it must also be a deprivation of the liberty of a disabled person. The fact that my living arrangements are comfortable, and indeed make my life as enjoyable as it could possibly be, should make no difference. A gilded cage is still a cage. For that reason, I would reject the relative normality approach of the Court of Appeal in the case of P [2012] PTSR 1447, where the life which P was leading was compared with the life which another person with his disabilities might be leading. To some extent this approach was premised on the relevance of the reason for and purpose of the placement (para 76), derived from the House of Lords decision in Austin, and later disapproved by the Grand Chamber. It is in any event inconsistent with the view that people with disabilities have the same rights as everyone else. I have much more sympathy with the relative normality approach in P and Q, where the lives which MIG and MEG were living were compared (by the majority) with the ordinary lives which young people of their ages might live at home with their families. This seems both sensible and humane. But the fact remains that the lives which MIG and MEG were leading were not the same as those which would be led by other teenagers of their age. Their comparative normality in the sense of their home like quality does not answer the question of whether in other respects they involved a deprivation of liberty for which the state was responsible. So is there an acid test for the deprivation of liberty in these cases? I entirely sympathise with the desire of Munby LJ to produce such a test and thus to avoid the minute examination of the living arrangements of each mentally incapacitated person for whom the state makes arrangements which might otherwise be required. Ms Richards is right to say that the Guzzardi test is repeated in all the cases, irrespective of context. If any of these cases went to Strasbourg, we could confidently predict that it would be repeated once more. But these cases are not about the distinction between a restriction on freedom of movement and the deprivation of liberty. P, MIG and MEG are, for perfectly understandable reasons, not free to go anywhere without permission and close supervision. So what are the particular features of their concrete situation on which we need to focus? The answer, as it seems to me, lies in those features which have consistently been regarded as key in the jurisprudence which started with HL v United Kingdom 40 EHRR 761: that the person concerned was under continuous supervision and control and was not free to leave (para 91). I would not go so far as Mr Gordon, who argues that the supervision and control is relevant only insofar as it demonstrates that the person is not free to leave. A person might be under constant supervision and control but still be free to leave should he express the desire so to do. Conversely, it is possible to imagine situations in which a person is not free to leave but is not under such continuous supervision and control as to lead to the conclusion that he was deprived of his liberty. Indeed, that could be the explanation for the doubts expressed in Haidn v Germany. The National Autistic Society and Mind, in their helpful intervention, list the factors which each of them has developed as indicators of when there is a deprivation of liberty. Each list is clearly directed towards the test indicated above. But the charities do not suggest that this court should lay down a prescriptive list of criteria. Rather, we should indicate the test and those factors which are not relevant. Thus, they suggest, the persons compliance or lack of objection is not relevant; the relative normality of the placement (whatever the comparison made) is not relevant; and the reason or purpose behind a particular placement is also not relevant. For the reasons given above, I agree with that approach. Application in the case of P In the case of P, the Court of Appeal should not have set aside the decision of the judge for the reasons they gave. Does it follow that the decision of the judge should be restored? In my view it does. In paragraph 46 of his judgment, he correctly directed himself as to the three components of a deprivation of liberty derived from Storck; he reminded himself that the distinction between a deprivation of and a restriction of liberty is one of degree or intensity rather than nature or substance; and he held that a key factor is whether the person is, or is not, free to leave. This may be tested by determining whether those treating and managing the patient exercise complete and effective control of the persons care and movements (para 46(5)). It is true that, in paragraph 48, he summarised the further guidance given by the Court of Appeal in P and Q, including the relevance of an absence of objection and the relative normality of the persons life, which in my view are not relevant factors. But when he considered the circumstances of Ps life at the Z house, he remarked (para 58) upon the very great care taken by the local authority and the staff of Z House to ensure that Ps life was as normal as possible, but continued (para 59): On the other hand, his life is completely under the control of members of staff at Z House. He cannot go anywhere or do anything without their support and assistance. More specifically, his occasionally aggressive behaviour, and his worrying habit of touching and eating his continence pads, require a range of measures, including at time physical restraint, and, when necessary, the intrusive procedure of inserting fingers into his mouth whilst he is being restrained. In my view, in substance the judge was applying the right test, derived from HL v United Kingdom, and his conclusion that looked at overall, P is being deprived of his liberty (para 60) should be restored. Application in the case of P (MIG) and Q (MEG) Wilson LJ found MEGs case difficult and only reached the conclusion that she had not been deprived of her liberty after protracted thought: [2012] Fam 170, para 34. He relied upon the small size of the adolescent home, her lack of objection to life there, her attendance at the educational unit; her good family contact; and her fairly active social life. It is, however, very difficult to see how her case can be distinguished from that of P, who also enjoyed all of those features. She did not require the sort of restraint which P required because of his incontinence pads, but she did sometimes require physical restraint and she received medication to control her anxiety. Above all, the staff did exercise control over every aspect of her life. She would not be allowed out without supervision, or to see people whom they did not wish her to see, or to do things which they did not wish her to do. MIGs case was different in one important respect. She was living in an ordinary family home, and also going out to attend an educational unit, and enjoying good family contact. Both Parker J and Wilson LJ were concerned that if these arrangements constituted a deprivation of liberty for which the state was responsible, then so too would HLs placement with his foster carers: but no one had suggested this indeed, the restriction on contact with them was one of the features relied upon in concluding that the hospital had deprived HL of his liberty. But the court was not called upon to confront that issue. The reality is that MIGs situation is otherwise the same as her sisters, in that her foster mother and others responsible for her care exercised complete control over every aspect of her life. She too would not be allowed out without supervision, or to see anyone whom they did not wish her to see, or to do things which they did not wish her to do. If the acid test is whether a person is under the complete supervision and control of those caring for her and is not free to leave the place where she lives, then the truth is that both MIG and MEG are being deprived of their liberty. Furthermore, that deprivation is the responsibility of the state. Similar constraints would not necessarily amount to a deprivation of liberty for the purpose of article 5 if imposed by parents in the exercise of their ordinary parental responsibilities and outside the legal framework governing state intervention in the lives of children or people who lack the capacity to make their own decisions. Several objections may be raised to the conclusion that both MIG and MEG are being deprived of their liberty. One is that neither could survive without this level of supervision and control: but that is to resurrect the comparison with other people sharing their disabilities and to deny them the same concept of liberty as everyone else. Another is that they are both content with their placements and have shown no desire to leave. If the tacit acceptance of the applicant was relevant in Mihailovs, why should the same tacit acceptance of MIG and MEG not be relevant too? I have found this the most difficult aspect of the case. But Mihailovs was different because he had a level of de facto understanding which had enabled him to express his objections to his first placement. The Strasbourg court accepts that there are some people who are not capable of expressing a view either way and this is probably the case with both MIG and MEG. As HL 40 EHRR 761 shows, compliance is not enough. Another possible distinction is that, if either of them indicated that they wanted to leave, the evidence was that the local authority would look for another placement: in other words, they were at least free to express a desire to leave. In the end, none of these suggested distinctions is satisfactory. Nor, in my view, should they be. It is very easy to focus upon the positive features of these placements for all three of the appellants. The local authorities who are responsible for them have no doubt done the best they could to make their lives as happy and fulfilled, as well as safe, as they possibly could be. But the purpose of article 5 is to ensure that people are not deprived of their liberty without proper safeguards, safeguards which will secure that the legal justifications for the constraints which they are under are made out: in these cases, the law requires that they do indeed lack the capacity to decide for themselves where they should live and that the arrangements made for them are in their best interests. It is to set the cart before the horse to decide that because they do indeed lack capacity and the best possible arrangements have been made, they are not in need of those safeguards. If P, MIG and MEG were under the same constraints in the sort of institution in which Mr Stanev was confined, we would have no difficulty in deciding that they had been deprived of their liberty. In the end, it is the constraints that matter. Policy Because of the extreme vulnerability of people like P, MIG and MEG, I believe that we should err on the side of caution in deciding what constitutes a deprivation of liberty in their case. They need a periodic independent check on whether the arrangements made for them are in their best interests. Such checks need not be as elaborate as those currently provided for in the Court of Protection or in the Deprivation of Liberty safeguards (which could in due course be simplified and extended to placements outside hospitals and care homes). Nor should we regard the need for such checks as in any way stigmatising of them or of their carers. Rather, they are a recognition of their equal dignity and status as human beings like the rest of us. Conclusion I would therefore allow both appeals. In the case of P I would restore the declaration of the judge. In the case of MIG and MEG I would make a declaration that their living arrangements at the relevant time constituted a deprivation of liberty within the meaning of section 64(5) of the Mental Capacity Act 2005. LORD NEUBERGER Having read the judgment of Lady Hale, with which Lord Kerr and Lord Sumption agree, and the judgment of Lord Carnwath and Lord Hodge, with which Lord Clarke agrees, I have come to the conclusion that I agree with Lady Hale. The issues raised by these appeals are both difficult and important, and the reasons which Lord Carnwath and Lord Hodge advance for differing from Lady Hale plainly merit serious consideration. Accordingly, I propose to explain the reasons for my conclusion, while avoiding retreading the ground covered by Lady Hale so far as I can. I start with the proposition that, particularly in the field of mental health, it would be highly desirable to have as much authoritative guidance, or, as Lord Carnwath and Lord Hodge put it, as focussed a test, as possible in order to decide whether the circumstances of a particular case involve a deprivation of liberty falling within article 5.4 or a restriction on liberty falling outside article 5. Psychiatrists, social workers, local authorities, charities, and no doubt many others responsible for the health and welfare of those suffering from mental and physical impairment, as well as those people whose liberty is being interfered with, need, and are entitled to, as much in the way of clear guidance as it is possible for the courts to give. Of course, the issue of whether a particular case involves deprivation or restriction must depend on the specific facts of that case, but that does not mean that there can be no focussed guidance. It is also true that, however clear the guidance, there will be cases where it will be difficult to decide which side of the line the facts fall, but that is not a reason for the courts not seeking to minimise the uncertainty. On the contrary. Accordingly, at least in principle, the approach proposed by Lady Hale appears to me to be attractive, and should be adopted unless there is good reason not to do so. Lord Carnwath and Lord Hodge suggest that there are two reasons for not adopting that approach, both of which reasons merit serious consideration. The first reason is that the Strasbourg jurisprudence has not gone as far as Lady Hales analysis, and this is a case where we cannot properly go beyond Strasbourg in the light of section 64(5) of the Mental Capacity Act 2005. The second reason is that Lady Hales analysis produces an undesirable or inappropriate outcome in cases such as those of P and Q in the appeal involving Surrey County Council. So far as the first reason is concerned, it is true that there has been no decision of the Strasbourg court involving the combination of factors which arise in the present cases. It is also true that, in almost every decision to which we were referred, the Strasbourg court has been at pains to emphasise that the question whether article 5.4 is engaged is highly fact sensitive, and that the distinction between deprivation and restriction is matter of degree or intensity. However, it is self evident that this does not mean that this court cannot seek to extract specific principles from those decisions, and then apply them to the facts of the cases before us. In agreement with Lady Hale, I consider that the Strasbourg court decisions do indicate that the twin features of continuous supervision and control and lack of freedom to leave are the essential ingredients of deprivation of liberty (in addition to the area and period of confinement). In that connection, see Guzzardi v Italy (1980) 3 EHRR 333, para 95 (supervision carried out strictly and on an almost constant basis [and] not able to leave his dwelling between 10 pm and 7 am), HL v United Kingdom (2004) 40 EHRR 761, para 91 (under continuous supervision and control and not free to leave), Storck v Germany (2005) 43 EHRR 96, para 73 (continuous supervision and control and not free to leave), Kedzior v Poland (Application No 45026/07) 16 October 2012, para 57 (constant supervision and not free to leave), Stanev v Bulgaria (2012) 55 EHRR 696, para 128 (constant supervision and not free to leave), and Mihailovs v Latvia [2013] ECHR 65, para 132 (under constant supervision and not free to leave). The factors which are relied on by Lord Carnwath and Lord Hodge to support the point that these cases differ from those decided by the Strasbourg court are as follows: a) the person concerned lacks capacity to decide upon her placement but has not evinced dissatisfaction with or objection to it; the placement is in a small group or domestic setting which is as close as possible to normal home life; b) c) d) a court authorised that placement for the best interests of the person concerned; and the regime is no more intrusive or confining than is required for the protection and well being of the person concerned. It is convenient to take factor (d) first, followed by factor (a), and then factor (c), and finally factor (b). As to factor (d), the Grand Chamber made it clear in Austin v United Kingdom (2012) 55 EHRR 359, para 58 that the fact that the object is to protect treat or care in some way for the person taken into confinement has no bearing on the question whether that person has been deprived of his liberty, although it might be relevant to the subsequent inquiry whether the deprivation of liberty was justified . To the same effect, the Grand Chamber said in Creanga v Romania (2012) 56 EHRR 361, para 93 that the purpose of measures by the authorities depriving applicants of their liberty no longer appears decisive for the courts assessment of whether there has in fact been a deprivation of liberty, on the basis that the purpose is to be taken into account only at a later stage of its analysis, when examining the compatibility of the measure with article 5.1. So far as factor (a) is concerned, I consider that it would be inappropriate to hold that, if certain conditions amounted to a deprivation of liberty in the case of a person who had the capacity to object and did object, they may, or even worse would, not do so in the cases of a person who lacked the capacity to object. On one view, such a conclusion would mean that, however confining the circumstances, they could not amount to a deprivation of liberty if the person concerned lacked the capacity to object. That cannot possibly be right. Alternatively, there would be a different test for those who were unable to object and those who could do so. That would be a recipe for uncertainty. In addition, the notion that the absence of objection can justify what would otherwise amount to deprivation of liberty is contrary to principle. It is true, and indeed sensible, that a persons consent (provided that it is freely and properly given) may serve to defeat a contention that she has been deprived of her liberty. However, it involves turning that principle on its head to say that the absence of objection will justify what would otherwise be a deprivation of liberty save in those rare circumstances where the absence of objection can be said to amount to consent, as in Mihailovs v Latvia, paras 138 139. Further, if factor (a) had validity, it would tend to undermine the universality of human rights to which Lady Hale rightly refers. Over and above this, it seems to me that the principle referred to by the Grand Chamber in the decisions in para 66 would be infringed. I also draw support from the closing comments of the Strasbourg court in HL v United Kingdom 40 EHRR 761, para 90, where, after stating that a person should not lose the benefit of Convention protection for the single reason that he may have given himself up to be taken into detention, the court added especially when it is not disputed that that person is legally incapable of consenting to, or disagreeing with, the proposed action. I am unimpressed with factor (c). The courts involvement in cases such as those to which these appeals relate is not equivalent to that of a court sentencing a criminal to a specific term of imprisonment. It is deciding that the circumstances of an innocent and vulnerable person, suffering from disability, are such that there must be an interference with his liberty. If that interference would otherwise amount to a deprivation of liberty, I find it hard to understand why it should be otherwise simply because the court has approved it. The courts approval will almost always justify the deprivation from its inception, but, again, it is hard to see why it should continue to justify it for a potentially unlimited future. The only reason which can be advanced to justify such a conclusion is, as I see it, based on the purpose of the interference with liberty which brings one back to the observations in the Grand Chamber referred to in para 8 above. Factor (b) forms the basis upon which Lord Carnwath and Lord Hodge rest their view that P and Q have not been deprived of their liberty. It is a fair point that the Strasbourg court has never had to consider a case where a person was confined to what may be described as an ordinary home. However, I cannot see any good reason why the fact that a person is confined to a domestic home, as opposed to a hospital or other institution, should prevent her from contending that she has been deprived of her liberty. In that connection, however, I note that article 5.4 was held to be infringed in Guzzardi v Italy 3 EHRR 333, where, as mentioned above, the Grand Chamber referred to the applicant not being able to leave his dwelling between 10 pm and 7 am. I agree with Lord Carnwath and Lord Hodge that many people might react with surprise at simply being told that a person living in a domestic setting could complain of deprivation of liberty, but that is a point of little weight, particularly as such people may well retract the surprise when the consequences either way under article 5 are explained. In the case of children living at home, what might otherwise be a deprivation of liberty would normally not give rise to an infringement of article 5 because it will have been imposed not by the state, but by virtue of what the Strasbourg court has called the rights of the holder of parental authority, which are extensive albeit that they cannot be unlimited (see Nielsen v Denmark (1988) 11 EHRR 175, para 72, a decision which, at least on its facts, is controversial, as evidenced by the strength of the dissenting opinions). However, it is fair to say that, while this point would apply to adoptive parents, I doubt that it would include foster parents (unless, perhaps, they had the benefit of a residence order). But in the great majority of cases of people other than young children living in ordinary domestic circumstances, the degree of supervision and control and the freedom to leave would take the situation out of article 5.4. And, where article 5.4 did apply, no doubt the benignly intimate circumstances of a domestic home would frequently help to render any deprivation of liberty easier to justify. I do not accept that the cases cited by Lord Carnwath and Lord Hodge cast doubt on the notion that such confinement can fall within article 5.4. The comparison of the restrictions in the hospital in Nielsen v Denmark 11 EHRR 175, para 70 with a real home was made in connection with consideration of the contention that the treatment given at the hospital and the conditions under which it was administered were inappropriate in the circumstances. The case involved a child, and was decided on the basis that his mother was exercising her article 8 rights responsibly, in good faith and on the basis of medical advice see para 71. Indeed, the strength of the minority view to the contrary in that decision is a measure of the importance which the Strasbourg court attaches to the protection afforded by article 5.4. HM v Switzerland (2002) 38 EHRR 314 does not assist on the issue, not least because it turned on the consent given by the applicant, as explained in HL v United Kingdom 40 EHRR 761 para 93. HL itself seems to assist Lady Hales conclusion to the extent that, as explained by the Grand Chamber in Stanev v Bulgaria 55 EHRR 696, para 118, the court there held that there was a deprivation of liberty where the applicant was an adult incapable of giving his consent to admission to a psychiatric institution which, nonetheless, he had never attempted to leave. The serious doubts expressed in Haidn v Germany [2011] ECHR 39, para 82 take matters no further, not least because the factual circumstances are unclear. Accordingly, I agree with Lady Hale that the appeal of P and Q against Surrey County Council, as well as the appeal of P against Cheshire West and Chester Council, should be allowed. LORD KERR For the reasons given by Lady Hale and Lord Neuberger, with which I agree, I would allow these appeals. While there is a subjective element in the exercise of ascertaining whether ones liberty has been restricted, this is to be determined primarily on an objective basis. Restriction or deprivation of liberty is not solely dependent on the reaction or acquiescence of the person whose liberty has been curtailed. Her or his contentment with the conditions in which she finds herself does not determine whether she is restricted in her liberty. Liberty means the state or condition of being free from external constraint. It is predominantly an objective state. It does not depend on ones disposition to exploit ones freedom. Nor is it diminished by ones lack of capacity. The question whether one is restricted (as a matter of actuality) is determined by comparing the extent of your actual freedom with someone of your age and station whose freedom is not limited. Thus a teenager of the same age and familial background as MIG and MEG is the relevant comparator for them. If one compares their state with a person of similar age and full capacity it is clear that their liberty is in fact circumscribed. They may not be conscious, much less resentful, of the constraint but, objectively, limitations on their freedom are in place. All children are (or should be) subject to some level of restraint. This adjusts with their maturation and change in circumstances. If MIG and MEG had the same freedom from constraint as would any child or young person of similar age, their liberty would not be restricted, whatever their level of disability. As a matter of objective fact, however, constraints beyond those which apply to young people of full ability are and have to be applied to them. There is therefore a restriction of liberty in their cases. Because the restriction of liberty is and must remain a constant feature of their lives, the restriction amounts to a deprivation of liberty. Very young children, of course, because of their youth and dependence on others, have an objectively ascertainable curtailment of their liberty but this is a condition common to all children of tender age. There is no question, therefore, of suggesting that infant children are deprived of their liberty in the normal family setting. A comparator for a young child is not a fully matured adult, or even a partly mature adolescent. While they were very young, therefore, MIG and MEGs liberty was not restricted. It is because they can and must now be compared to children of their own age and relative maturity who are free from disability and who have access (whether they have recourse to that or not) to a range of freedoms which MIG and MEG cannot have resort to that MIG and MEG are deprived of liberty. Lord Clarke has commended the judgment of Parker J in the case of P and Q as setting out the factors relevant to an assessment of whether they are deprived of their liberty. The judgment is indeed a model of clarity but it is because it proceeds on the premise that liberty is to be judged subjectively that I cannot agree with it. Although the Strasbourg court has not had to confront precisely the situation in which the parties in these cases find themselves, it is clear, in my view, that the approach adopted by that court to the question of a deprivation of liberty is primarily rooted in an objective assessment of the conditions which are said to amount to that state. Thus in Stanev v Bulgaria (2012) 55 EHRR 696 and the cases which preceded it, the European Court of Human Rights was careful to point out that the starting point was the concrete situation of the person concerned. The rubric employed to describe the criteria to be taken into account, the type, duration, effects and manner of implementation of the measures confirms the paramount importance of an objective assessment. The subjective element in deprivation of liberty is the absence of valid consent to the confinement in question see para 117 of Stanev. This must be distinguished from passive acquiescence to the deprivation, particularly where that stems from an inability to appreciate the fact that ones liberty is being curtailed. In para 118 (c) the court said that deprivation of liberty occurs when an adult is incapable of giving his consent to admission to a psychiatric institution, even though he had never attempted to leave it. And, as Lady Hale has pointed out (in para 24 of her judgment) the court also said in para 119 that the right to liberty was too important to be lost simply because a person had given himself up to detention, especially where he is legally incapable of consenting to or disagreeing with it. Benevolence underpinning a regime which restricts liberty is irrelevant to an assessment of whether it in fact amounts to deprivation. Lord Carnwath and Lord Hodge suggest (in para 90 of their judgment) that the fact that a regime is no more intrusive or confining than is required for the protection and welfare of the person concerned, while principally relevant to justification of restriction of liberty, may also be taken into account in deciding whether the restriction amounts to deprivation of liberty. I cannot agree. The suggestion has echoes of some oblique observations in HM v Switzerland (2004) 38 EHRR 314 where it was found that the applicant had been placed in a nursing home in her own interests. But, as Lady Hale has pointed out (in para 28) this is inconsistent with later Grand Chamber decisions in Creanga v Romania (2012) 56 EHRR 361, and Austin v United Kingdom (2012) 55 EHRR 359. In Creanga the court said (at para 93) that the purpose of the measures which deprived applicants of their liberty was no longer decisive for the courts assessment of whether there has in fact been a deprivation of liberty. This factor was to be taken into account only at a later stage of [the courts] analysis, when examining the compatibility of the measure with article 5.1 of the Convention, in other words, whether the deprivation was justified. And in Austin at para 58 the point is made even more directly. There it was said that the courts jurisprudence made it clear that an underlying public interest motive has no bearing on the question whether [the] person has been deprived of his liberty, although it might be relevant to the subsequent inquiry whether the deprivation of liberty was justified under one of the subparagraphs of article 5.1. These statements are consistent with the analysis of whether liberty has been deprived as involving principally an objective assessment. Placing restrictions on someones liberty for their own good or even to make available to them a range of activities that they might not otherwise be capable of does not transform the restrictions into something less than constraints. To suggest that the purpose of the restriction is relevant to whether it amounts to a deprivation of liberty is to conflate the object of the restraints with their true character. If, as Lord Carnwath and Lord Hodge have suggested, section 64(5) of the Mental Capacity Act 2005 ties us yet closer to the jurisprudence of Strasburg than does section 2 of the Human Rights Act 1998, this does not alter the requirement that we meet and deal with the claim that the restrictions on Ps and MIGs and MEGs liberty amount to a deprivation under article 5 of the Convention for the Protection of Human Rights and Fundamental Freedoms, even if there is no clear and constant line of authority from the European Court of Human Rights on similar facts to those which arise in the present appeals. Reference has been made to Lord Dysons judgment in Ambrose v Harris [2011] 1 WLR 2435 para 88, where he said that it may be possible to find a sufficiently clear indication in the Strasbourg jurisprudence of how the European court would resolve the question. But Lord Carnwath and Lord Hodge state that, in the absence of such a clear indication, this court should be cautious about extending a concept as sensitive as deprivation of liberty beyond the meaning which it would be regarded as having in ordinary usage para 93 of their judgment. With respect, I do not agree that caution is the appropriate reaction to an absence of authoritative guidance from Strasbourg. This court, in common with all public authorities, has the duty under section 6 of the Human Rights Act not to act in a way which is incompatible with a Convention right. That statutory obligation, to be effective, must carry with it the requirement that the court determine if the Convention right has the effect claimed for, whether or not Strasbourg has pronounced upon it. This court must therefore resolve the question of whether a claim to a Convention right is viable or not, even where the jurisprudence of the Strasbourg court does not disclose a clear current view. In any event for the reasons given by Lady Hale, it is apparent that two central features of the current Strasbourg jurisprudence point clearly to the conclusion that there is a deprivation of liberty in these cases. These are that the question of whether there has been a deprivation is to be answered primarily by reference to an objective standard and that the subjective element of the test is confined to the issue of whether there has been a valid and effective consent to the restriction of liberty. I do not accept that this clear guidance can be substituted with an ordinary usage approach to the meaning of deprivation of liberty. If deprivation of liberty is to be judged principally as an objective condition, then MIG, MEG and P are unquestionably subject to such deprivation, no matter how their situation might be regarded by those using ordinary language. LORD CARNWATH AND LORD HODGE We gratefully adopt the bulk of Lady Hales judgment, including her exposition of the legislative history, the relevant jurisprudence, and the facts of the cases before us. There is much common ground. We agree that the comparator should in principle be a person with unimpaired health and capacity for the reasons which the judgment advances. We also see real value in the clarity of a focused test as it would greatly assist the psychiatrists and other professionals who have to administer the Mental Capacity Act 2005 (the 2005 Act). We also recognise the arguments in favour of a policy of periodic supervision of arrangements made under that Act to safeguard those who have an incapacity in order to ensure that those arrangements are in their best interests. That is consistent with a commitment to give effective protection to vulnerable persons. On the other hand, as she recognises, there are legitimate concerns about the potential bureaucracy of the statutory procedures, and about including within the test the sort of benevolent living arrangements which many might find difficult to characterise as a deprivation of liberty (para 10). There is also common ground that the approach proposed by Lady Hale goes further than any existing Strasbourg case law. As she says, Strasbourg has not yet ruled on a case which combines the following features of the cases before us: (a) a person who lacks both legal and factual capacity to decide upon his or her own placement but who has not evinced dissatisfaction with or objection to it; (b) a placement, not in a hospital or social care home, but in a small group or domestic setting which is as close as possible to normal home life; and (c) the initial authorisation of that placement by a court as being in the best interests of the person concerned. To those we would add a fourth: (d) that the regime is no more intrusive or confining than is required for the protection and well being of the person concerned. We recognise that this fourth point, like the purpose of a regime, is principally relevant to the justification of that regime rather than the analysis of its nature: see Austin v United Kingdom (2012) 55 EHRR 359, para 58. But in our view the degree of intrusion is nonetheless relevant to the latter. The Strasbourg jurisprudence seems to us of added significance where, as Lady Hale notes (para 19), section 64(5) of the 2005 Act ties the concept of deprivation of liberty into article 5(1) of the Convention for the Protection of Human Rights and Fundamental Freedoms by providing that it will have the same meaning. As the Strasbourg court is the authoritative interpreter of the Convention, it appears to us that under the 2005 Act we are more closely tied to its interpretation of the Convention than we are under section 2(1) of the Human Rights Act 1998. In effect Parliament has decided that it is to the Strasbourg jurisprudence that we must turn to find out what is meant by deprivation of liberty. Even if we are wrong in suggesting that section 64(5) constrains us more than section 2 of the 1998 Act, we have clear and recent authority from a nine Justice Bench that we should follow a clear and constant line of decisions, especially those of the Grand Chamber (Manchester City Council v Pinnock (Secretary of State for Communities and Local Government Intervening) [2011] 2 AC 104, per Lord Neuberger (giving the judgment of the court) at para 48). See also R (Chester) v Secretary of State for Justice [2013] UKSC 63, [2013] 3 WLR 1076 per Lord Sumption at para 121. We accept that the mere fact that Strasbourg has not yet had occasion to consider a case with this combination of factors does not of itself preclude us from forming our own view of how it would decide the matter if cases such as the present were to come before it. As Lord Dyson said, in Ambrose v Harris (Procurator Fiscal, Oban) [2011] 1 WLR 2435, para 88, it may be possible to find a sufficiently clear indication in the Strasbourg jurisprudence of how the European court would resolve [the] question. However, short of such a clear indication, we should be cautious about extending a concept as sensitive as deprivation of liberty beyond the meaning which it would be regarded as having in ordinary usage. We can see the attractions of a universal test, applicable to all regardless of any physical or mental disabilities, as Lady Hale proposes (para 46). But it is not a concept which we can find reflected in the Strasbourg cases. The court has remained wedded to a case specific test. It has consistently reaffirmed the need for an examination of the concrete situation taking into account a whole range of criteria such as the type, duration, effects and manner of implementation of the measure in question; and that the difference between deprivation of liberty and restrictions on liberty was merely one of degree or intensity, and not one of nature or substance. Turning to the individual cases discussed by Lady Hale, we would attach particular importance to Stanev v Bulgaria (2012) 55 EHRR 696, as a recent Grand Chamber decision in which the court also took the opportunity to review the early cases. It is important however to keep in mind that the focus of the judgment was on state run social care institutions, such as the one in issue in that case, rather than the more domestic environments with which we are concerned. The relevant facts have been sufficiently summarised by Lady Hale (para 26). We would highlight the following points in the judgment: (a) The test is not hard edged. The court repeated its standard Engel formula: In order to determine whether someone has been deprived of his liberty, the starting point must be his concrete situation and account must be taken of a whole range of criteria such as the type, duration, effects and manner of implementation of the measure in question (para 115) (b) The court summarised the effect of previous decisions in comparable cases: The court has found that there was a deprivation of liberty in circumstances such as the following: (a) where the applicant, who had been declared legally incapable and admitted to a psychiatric hospital at his legal representatives request, had unsuccessfully attempted to leave the hospital (see Shtukaturov v Russia (2008) 54 EHRR 962, para 108); (b) where the applicant had initially consented to her admission to a clinic but had subsequently attempted to escape (see Storck v Germany (2005) 43 EHRR 96, para 76); and (c) where the applicant was an adult incapable of giving his consent to admission to a psychiatric institution which, nonetheless, he had never attempted to leave (see HL v United Kingdom (2004) 40 EHRR 761, paras 89 94). (c) It is true that the court attached weight to the fact that he was under constant supervision and was not free to leave the home without permission whenever he wished (para 128), but this was not treated as conclusive in itself; it was only one of a number of factors leading to the overall assessment. (d) The court noted (at para 130) its previous holding that the fact that a person lacks legal capacity does not necessarily mean that he is unable to comprehend his situation (see Shtukaturov, at para 108) In Stanev itself, the subject was well aware of his situation, and had expressed his desire to leave the social care home. Unlike HM (see below) it could not be said that he had consented to or tacitly accepted his placement there (para 130 131). It is notable that all the cases cited in the courts review related to people living in institutions of some kind, not in ordinary homes. Conversely, we have been referred to no Strasbourg case in which detention has been found in comparable circumstances to the present. A number of cases, in which no deprivation of liberty was found, contain pointers in the other direction: i) ii) iii) In Nielsen v Denmark (1988) 11 EHRR 175 it was significant that restrictions on the child applicants freedom of movement and contacts were no different from restrictions which might be imposed on a child in an ordinary hospital, the conditions being as similar as possible to a real home (para 70). In HM v Switzerland (2002) 38 EHRR 314 it was relevant that, though not able to go home (para 32), she had freedom of movement, was able to maintain social contact with the outside world and hardly felt the effects of her stay (paras 45 46). The case was regarded as comparable to Nielsen v Denmark (para 48). In HL v United Kingdom (2004) 40 EHRR 761, para 93 the court distinguished HM on the grounds that the nursing home in that case was an open institution which allowed freedom of movement and encouraged contacts with the outside world and offered a regime entirely different from that in HL. (It is true that in Stanev 55 EHRR 696, HM was distinguished in part on the basis that HM, unlike Stanev, had agreed to stay (para 131). However, that is not the ground on which HM was actually decided, and the fuller discussion in HL shows that such assumed agreement was only part of the story.) iv) In Haidn v Germany (Application No 6587/04) 13 January 2011, the subject, following release from detention on probation, was required by the court to live in an old peoples home, which he could not leave without his custodians permission (para 82). The court expressed serious doubts whether there was a deprivation of liberty, although did not need to decide the point. None of these cases is conclusive. As Lady Hale has shown, different interpretations are possible. However, if we are to look, in Lord Dysons words, for a clear indication of how Strasbourg would decide the matter, we are not persuaded that they provide sufficient support for the general test proposed by Lady Hale. We are concerned that nobody using ordinary language would describe people living happily in a domestic setting as being deprived of their liberty. We recognise that the concept in the Convention may be given an autonomous meaning by the Strasbourg court. But we are struck by how the judges in the courts below, with far more experience than we ourselves can claim, have laboured to keep the concept of deprivation of liberty in touch with the ordinary meaning of those words. Although we agree with some of the criticisms made of the Court of Appeal's relevant comparator approach, we understand what the judges were striving to achieve. We also share the concern of some of the judges below as to how such a test would have applied to HL, once returned from hospital to the placement with his foster parents, as required by the courts decision in that case. It is true as Lady Hale says (para 53) that no one suggested in that case that his position there would involve a deprivation of liberty. But that, surely, was because it had not occurred to anyone (including the court) that such a placement in an ordinary home environment could constitute a deprivation of liberty for the purpose of article 5, even though the degree of control for practical purposes would be the same as before. The present cases No doubt P and Q can be said to have had their liberty restricted, by comparison with a person with unimpaired health and capacity. But that is not the same as a deprivation of liberty. Parker J summarised their position in this way: 228 In neither placement in my judgment is there confinement in a restricted space for a not negligible length of time. [P] is living in a foster home and goes to college during the day; [Q] is living in a residential home and goes to college during the day. In the evenings they return to their respective homes 229 The concrete situation is that each lives exactly the kind of life that she would be capable of living in the home of her own family or a relative: their respective lives being dictated by their own cognitive limitations. In our view that is entirely consistent with the Strasbourg jurisprudence and we would uphold her decision. In P v Cheshire West and Chester Council Baker J took a different view, on the facts of that case. Lady Hale has summarised the judges reasoning. He concluded: 59. On the other hand, his life is completely under the control of members of staff at Z House. He cannot go anywhere or do anything without their support and assistance. More specifically, his occasional aggressive behaviour, and his worrying habit of touching and eating his continence pads, require a range of measures, including at times physical restraint, and, when necessary, the intrusive procedure of inserting fingers into his mouth whilst he is being restrained. The Court of Appeal took a different view. While we agree with Lady Hales criticisms of parts of their reasoning, we see some force in their point that occasional restraint for purely therapeutic purposes should not be enough in itself to tip restriction over the edge into deprivation. As Munby LJ said: The measures described by the judge as applied from time to time to P are far removed from the physical or chemical restraints which one sometimes finds, for example, in mental hospitals. They are, in truth, the kinds of occasional restraint that anyone caring for P in whatever setting for example, his own mother if he was still living at home would from time to time have to adopt. ([2012] PTSR 1447, para 113) However, we think that this is too narrow a reading of the judges assessment overall and was not enough in itself to justify the court interfering with his decision in what in our view was a marginal case. Although we might not have reached the same decision, we are satisfied that he directed himself correctly on the legal principles, and that his conclusion was one which was reasonably open to him on the particular facts of the case. For these reasons, we would dismiss the appeal in P & Q but, in agreement with the majority, allow the appeal in P v Cheshire West. LORD CLARKE Introduction I agree with the conclusions and reasoning of Lord Carnwath and Lord Hodge. As I see it, the question in these appeals is whether, on the facts found, the appellants were deprived of their liberty or whether their liberty was interfered with. This is a question of fact which, as so often, depends upon all the circumstances of the case. The jurisprudence of the European Court of Human Rights (ECtHR), which is discussed in detail by others, shows to my mind that, in order to answer the question, it is necessary to conduct a multi factorial exercise which involves a balancing of a number of considerations. The ECtHR has not held that there is only one question (or acid test), namely whether the individual concerned is free to leave. Its approach is more nuanced than that. As Smith LJ put it in P and Q [2012] Fam 170, para 40, whether in each case MIG and MEG was deprived of her liberty or whether her liberty was merely interfered with is a question of fact and degree. It is essentially a jury question and thus a question for the trial judge. Given that it involves a balancing of many different considerations, the decision of the judge should not be interfered with by an appellate court unless it concludes that the judge has erred in principle or that the judge was wrong. An appellate court should not simply substitute its own view for that of the judge. In these cases the judges of first instance, Parker J in P and Q and Baker J in P, were very experienced in this field so that their opinions deserve great respect. In P and Q Parker J conducted a careful analysis of the facts relevant to each case: see paras 207 to 237. In para 224 she concluded (in my opinion correctly) that mere lack of capacity to consent cannot in itself create a deprivation of liberty. If it did, everyone placed by a local authority would be considered to be deprived of their liberty. She then said this: 225. Freedom to leave has to be assessed against the background that neither wants to leave their respective homes, there is no alternative home save that of their mother where neither wishes to live, and neither appears to have the capacity to conceptualise any alternative unfamiliar environment. I have been told and I accept that if the local authority felt that either was actively unhappy where they were placed, then other arrangements would be made. 226. In my view it is necessary to analyse what specific measures or restraints are in fact required. The judge then referred to Salford City Council v GJ [2008] EWHC 1097 (Fam), [2008] 2 FLR 1295 a case in which declaration had been made as to the lawfulness of certain measures and continued in this way. 227. No such declarations or authorisations were sought here. Specifically no authorisation was sought to prevent either from leaving the placement. No declaration was sought that it was lawful to administer Risperidone to MEG. In the draft order submitted at the hearing the relevant declarations sought in the event that I concluded that there was a deprivation of liberty were that each should live in their respective homes, attend C College, and have contact with family members as set out in the schedule to the draft order. There was no reference to medication. No more specific measures were referred to in the draft order, or in the care plans which were sought to be authorised. On the basis, as I have found, that placement in itself and lack of consent in itself is not sufficient to create a deprivation of liberty in the circumstances of this case, then there must in my judgment be some other specific course of action adopted or measure taken whereby restraints or restrictions are placed upon an individual of sufficient degree and intensity to constitute a deprivation of liberty. The guidance in the Deprivation of Liberty Safeguards Code supports this analysis. 228. In neither placement in my judgment is there confinement in a restricted space for a not negligible length of time. MIG is living in a foster home and goes to college during the day; MEG is living in a residential home and goes to college during the day. In the evenings they return to their respective homes. In their circumstances, and by comparison with the considerations in the control order cases, neither is subject to any form of house arrest or curfew. 229. The concrete situation is that each lives exactly the kind of life that she would be capable of living in the home of her own family or a relative: their respective lives being dictated by their own cognitive limitations. Each is subject to limitations on her own autonomy and freedom of movement and ability to enjoy activities by being guided or accompanied in order to provide for her own immediate protection. 233. With specific regard to the measures said to amount to deprivation of liberty here, and to the Deprivation of Liberty Safeguards Code set out above, it is relevant that: i) Each was under the age of majority when admitted under the powers conferred by the Care Orders to their respective homes. Neither was admitted using restraint or medication. ii) The question of where each is to live is for the court, and no decision has been taken by MIG's foster mother (who is not staff) or the staff of B Home that either cannot leave; iii) Each lacks freedom and autonomy dictated by their own disability, rather than because it is imposed on them by their carers. Each is under the continuous supervision and control of her carers (and in the case of MIG, of her foster family rather than staff) so as to meet her care needs rather than to restrain her in any way. iv) MEG is accommodated as a child in need. v) Neither is restrained save for immediate purpose of ensuring safety, and, in the case of MEG, for her immediate protection and that of others when she has an outburst. In my view the case of neither does this cross the line so as to constitute deprivation of liberty. vi) Medication is not administered to MEG so as to restrain her from leaving or to restrain her activities generally. In my view this does not cross the line either. vii) Neither is in a locked environment. viii) If either wished to leave in the immediate sense each would be restrained or brought back for their safety. If either were unhappy in their residential settings other arrangements would be sought. ix) Neither is deprived of social contacts, and in the school environment they can associate with whom they will, subject to the teachers or other support staff in that environment. Specific controls are placed on their contact with their mother and stepfather, but these controls are imposed not by their carers, but by court order. The arrangements in relation to contact with HG and SG are dictated by practicalities. x) Neither is in their respective homes all the time. They go to college for significant periods of time, where it is not suggested that either is deprived of her liberty, notwithstanding their respective lack of capacity to consent to attending college or to restraints on leaving that environment during the school day. xi) Some relatives support their placements and some do not. None actively objects to the placement. No relative objects to the care regime. No request by any interested person for either to be released into their care has been refused. xii) The fact that MEG is living in a residential home does not mean that she is deprived of her liberty. It is, to quote McFarlane J in LLBC v TG, JG and KR1, an ordinary care home where only ordinary restrictions on liberty applied; xiii) As in LLBC v TG, JG and KR, the subjects of these proceedings have at all times been the subject of either care orders or Court of Protection orders, under whose auspices they have been placed originally, and each person with an interest in the care and other arrangements for MIG and MEG has and has had the ability to apply to the court; xiv) No challenge to their placements has been made and the case has proceeded without any active attempt to invite the court to authorise deprivation of liberty until the final hearing; xv) No other arrangements less restrictive or invasive could be devised that would meet their care needs. 234. I have not met MIG or MEG but I have read much about them and heard much too. Their wishes and feelings are manifest and clearly expressed. They plainly have no subjective sense of confinement. In a non legal sense they have the capacity to consent to 1 [2007] EWHC 2640, [2009] 1 FLR 414, per McFarlane J at [105(i)] their placements. I cannot imagine that any person visiting MIG at the home of JW, or MEG at B Home would gain any sense of confinement or detention. 235. Those circumstances are in my judgment very far from the paradigm example of imprisonment. I have set out that part of Parker Js judgment in detail because it seems to me to set out the many relevant factors with clarity and to demonstrate why she was entitled to hold that MIG and MEG were not deprived of their liberty. For my part, I see no reason to hold that the judge reached a wrong conclusion. In particular I agree with the conclusions of Lord Carnwath and Lord Hodge that nobody using ordinary language would describe people living happily in a domestic setting as being deprived of their liberty. I am not persuaded that the ECtHR would so hold. A more measured conclusion would be that MIGs liberty was interfered with and not that she had been deprived of her liberty. The same is true of MEG. In conclusion, I would stress that, contrary to the view expressed by Lord Kerr in para 80, I do not read Parker J as adopting a subjective approach. As I see it she is essentially carrying out an objective assessment of the various factors in arriving at her conclusion. I have tried to do the same. This is not a comparative exercise with other people in different circumstances but an assessment of the position of MIG and MEG on the facts of their particular cases. For these reasons, in agreement with Lord Carnwath and Lord Hodge, I would dismiss the appeals in P and Q v Surrey County Council. Applying the same approach in P v Cheshire West and Chester Council, I would again decline to interfere with the conclusions of the judge at first instance, Baker J, and would allow the appeal. |
The Aarhus Convention (more fully, the Convention on Access to Information, Public Participation in Decision Making and Access to Justice in Environmental Matters) requires that the procedures to which it refers should be fair, equitable, timely and not prohibitively expensive (article 9.4). Although the United Kingdom is a party to the Convention, it is not directly applicable in domestic law. However, the same requirements have been incorporated by amendments made in 2003 into directives, relating in particular to environmental impact assessment (EIA Directive 85/337/EEC) and integrated pollution prevention and control (IPPC Directive 96/61/EC); compliance was required by 25 June 2005 (Council Directive 2003/35/EC article 6) (The EIA Directive is now consolidated at 2011/92/EC). It has not been disputed that the present proceedings, though begun before that date, are at least at this level subject to what I will call the Aarhus tests under directly applicable European law. For reasons explained in its judgment of December 2010 ([2010] UKSC 57; [2011] 1 WLR 79), the Supreme Court referred to the Court of Justice of the European Union (CJEU) certain questions relating to the expression not prohibitively expensive. The reference followed the dismissal of the substantive appeal, and the making of an order for costs against the effective appellant, Mrs Pallikaropoulos (Edwards v Environment Agency [2008] 1 WLR 1587; [2008] UKHL 22). The answers of the CJEU were given in a judgment dated 11 April 2013: Edwards v Environment Agency (No 2) (Case C 260/11) [2013] 1 WLR 2914 (following an opinion of Advocate General Kokott dated 18 October 2012). We heard oral submissions from the parties on 22 July 2013. Following that hearing it was agreed that our decision would be deferred pending receipt of the same Advocate Generals opinion in infraction proceedings against the United Kingdom relating to alleged non implementation of the directives. That opinion was delivered on 12 September 2013 (Commission of the European Union v United Kingdom (Case C 530/11)). We have received further submissions of the parties on that opinion. We have also been informed that a request by the UK government to reopen the oral procedure in that case has been refused by the court. Judicial review proceedings Before turning to those issues, it is necessary to recall briefly the subject matter, and somewhat unusual course, of the substantive judicial review proceedings, including the circumstances in which Mrs Pallikaropoulos became a party. The proceedings concerned a cement works in Rugby. On 12 August 2003 the Environment Agency issued a permit to continue operations with an alteration in its fuel from coal and petroleum coke to shredded tyres. This proposal gave rise to a public campaign on environmental grounds, one opponent being a local pressure group called Rugby in Plume. Judicial review proceedings were begun on 28 October 2003 challenging the Agencys decision. The proceedings were begun in the name of a local resident, Mr David Edwards. The background to his involvement was described by Keith J, when permitting the claim to proceed ([2004] EWHC 736 (Admin)), paras 12 13). He noted the public campaign led by Rugby in Plume, its leading light being Mrs Pallikaropoulos, who claimed to speak for between 50,000 and 90,000 local residents affected by the proposals, and to have committed substantial funds of her own to the campaign. Following the decision of the Rugby Borough Council, on advice from leading counsel, not to pursue its own claim for judicial review, she was reported as pledging to carry on the battle using legal aid, and was also reported as saying: I'm too rich [to get legal aid], because I own my own house, so someone in Rugby has to come forward who feels strongly enough to take the case forward under the legal aid scheme. Although there was no direct evidence from Mr Edwards that he had responded to this request for assistance, the judge found it difficult to resist the inference that he had been put up as a claimant in order to secure public funding of the claim by the Legal Services Commission when those who are the moving force behind the claim believe that public funding for the claim would not otherwise have been available. Keith J held that this somewhat unconventional background neither deprived Mr Edwards of a sufficient interest to bring judicial review proceedings, nor constituted an abuse of process. There was no appeal from that conclusion. It had the consequence that the proceedings in the High Court continued at public expense and without significant risk to the applicant, or to his supporters, of an adverse costs order if they lost. The substantive application was heard by Lindsay J and dismissed on 19 April 2005: [2005] EWHC 657 (Admin), [2006] Env L R 56. He observed that the public opposition was not unnatural: I say that that was not unnatural as burning rubber is notorious for the noxious smell given off and the dense smoke created and many, unaware of the way in which the chipped tyres would be burned in a modern state of the art kiln at temperatures of up to 1400 degrees, would expect and fear the worst. (para 5) However, as he found in the course of his judgment, these fears, natural or not, were contradicted by the evidence. He dismissed an argument that the proposal was a change which may have significant adverse effects on the environment (EIA Directive Annex II para 13), saying: it is plain that tyre burning in itself as a fuel has no significant adverse effects on the environment and, indeed, overall may even have beneficial effects on the environment. (para 31). Lord Hoffmann, giving the leading judgment in the House of Lords on the substantive appeal, described this as an unchallenged finding of fact that the only change in operation proposed by the application, namely the use of tyres, would not have significant negative effects on human beings or the environment ([2008] 1 WLR 1587, para 30) Lindsay J rejected grounds alleging non compliance with the two directives. He upheld a complaint of procedural unfairness by the Agency arising from failure to disclose an internal assessment report AQMAU 1 relating to emissions of particulate matter (PM10), but exercised his discretion to refuse relief. He also declined to make a reference to the CJEU. Mr Edwards appealed to the Court of Appeal with permission granted by Keene LJ. The appeal was heard over three days beginning on 6 February 2006, and was dismissed on similar grounds, including the exercise of discretion ([2006] EWCA Civ 877; [2007] Env LR 126). The court held that the change was not a project within the meaning of the EIA directive, but that if that were wrong there had been substantial compliance. On the procedural issues, Auld LJ observed: given the Judge's finding on the evidence before him of no environmental harm from the plant and the continuous and dynamic nature of the PPC regulatory system enabling assessments to be made on what is known rather than predicted by AQMAU over three years ago, it would be pointless to quash the permit simply to enable the public to be consulted on out of date data. (para 126) The court again declined to make a reference to the CJEU. There had been an unexpected development on the third and final day of the hearing. Mr Edwards, while wishing to continue with his appeal, withdrew his instructions from both solicitors and counsel (Mr Wolfe QC). Mrs Pallikaropoulos, described by Auld LJ as a prime mover, who had been in court throughout the appeal, applied without objection to be joined as an additional appellant. This course was described by Auld LJ as plainly in the public interest to enable the appeal to be concluded. He agreed to Mr Wolfes proposal that her potential liability to costs in the Court of Appeal should be capped at 2,000. Following dismissal of the appeal, the respondents costs capped at this level were awarded against her. She was given leave to appeal by the House of Lords. She applied to the House of Lords for an order varying or dispensing with the ordinary requirement, under the applicable practice direction of the House (not replicated in the new Supreme Court rules), to give security for costs in the sum of 25,000, and for a protective costs order, under the principles set out in R (Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192, [2005] 1 WLR 2600. On 22 March 2007 the Judicial Office wrote to the parties informing them that the applications had been rejected for the following reasons: Their Lordships proceed on the basis that the appeal raises an issue or issues of general importance and they are prepared to assume that [existence] of private interest may not always preclude the making of a special costs order in such a case. But their Lordships do not accept that information about the applicant's means, about the identity and means of any who she represents and about the position generally in the absence of any special order, are or should be regarded as immaterial; further, they do not consider that the suggested protective orders regarding costs appear proportionate on the information which is before them and in the light of the nature of the issues involved; and they do not consider that any case has been made for saying that the proposed appeal would be 'prohibitively expensive' or that Directive 2003/35/EC would be breached without a special order. Mrs Pallikaropoulos was evidently not deterred by that ruling. The security was duly paid and the appeal proceeded. In the substantive hearing before the House of Lords, the main issues came down to two, one of interpretation of the EIA Directive, the other procedural. The first was whether the proposed use of tyres and the related adaptations constituted a waste disposal installation within paragraph 10 of Annex I to the Directive, rather than a change or extension of an Annex I project, within paragraph 13 of Annex II. The main practical difference was that paragraph 13 was limited to changes which may have significant adverse effects on the environment, and therefore (on the findings of Lindsay J) would have had no application to this case. The second issue was one of fairness, relating to failure to disclose the AQMAU report. The House split on the issue of interpretation: the majority held that that the proposal was not within paragraph 10, but accepted that, if this point had been determinative, a reference to the European Court would have been necessary. However, all were agreed that it was not determinative, because, if the EIA directive applied, its requirements had been complied with (para 58, per Lord Hoffmann; para 82, per Lord Mance). On the procedural issue, Lord Hoffmann doubted whether a common law duty arose as claimed (para 44), but held in agreement with the courts below that relief should in any event be refused since the relevance of the reports had been completely overtaken by events, in the shape of more recent reports showing no exceedances as a result of the Cemex plant (para 64 65). The dispute over costs The present dispute arises out of the order for costs of the appeal in the House of Lords made on 18 July 2008 in favour of both respondents, the Environment Agency and the Secretary of State. They submitted bills totalling respectively 55,810 and 32,290. In the course of the assessment, following transfer of jurisdiction to the Supreme Court, the costs officers determined, as a preliminary issue, that in accordance with the directives they should disallow any costs which they considered prohibitively expensive ([2011] 1 WLR 79, 92 et seq). On the defendants application to the full court for a review, it was decided that the costs officers had had no jurisdiction to consider this issue, but that it was a matter that could be considered by the court under its jurisdiction to correct a possible injustice arising from the original costs order ([2011] 1 WLR 79 para 35, per Lord Hope). As to the application of the Aarhus test, the court referred to the judgment of Sullivan LJ in R (Garner) v Elmbridge Borough Council [2011] 3 All ER 418; [2010] EWCA Civ 1006, in which he had identified an important point of principle, as to whether the question should be approached objectively or subjectively: Should the question whether the procedure is or is not prohibitively expensive be decided on an 'objective' basis by reference to the ability of an 'ordinary' member of the public to meet the potential liability for costs, or should it be decided on a 'subjective' basis by reference to the means of the particular claimant, or upon some combination of the two bases? (para 42) Sullivan LJ had taken the view that a purely subjective approach would not be consistent with the objectives underlying the Directive. On the facts of the Garner case, which was concerned only with the position at first instance, he held that an order should have been made capping the claimants potential costs liability to the defendant at 5,000. Lord Hope thought it plain that the difficult issues highlighted by Sullivan LJ had not been previously addressed by the House of Lords in the present case, either when declining to make a protective costs order or in its final order for costs, both decisions apparently being based on a purely subjective approach (para 33). He concluded that there was no clear and simple answer, and that accordingly a reference should be made to the CJEU for guidance, the order for costs being stayed in the meantime (para 36). Government consultation While the reference was pending, the government issued a consultation paper on the issue of cost capping, and the scope for providing clearer guidance in the procedural rules: Costs Protection for Litigants in Environmental Judicial Review Claims (CP16/11 October 2011). This consultation ran in parallel with the consultation on the proposals for reform of costs rules generally, following the report of Jackson LJ. The paper noted the developing practice of the courts: 18 A number of domestic cases dating from R (Corner House Research) v Secretary of State for Trade and Industry [2005] 1 WLR 2600 including R (Garner) v Elmbridge Borough Council [2011] 1 Costs LR 48 (8 September 2010), have set out the basic principles underpinning the use of PCOs in judicial review proceedings. 19 The cases did not provide detailed guidance on the level at which a PCO should be set, but Garner made it clear that a level of twice the national average income would be too high. In Garner itself the court awarded a PCO at 5,000. One question raised was whether any figure laid down by the rules should be absolute, or merely presumptive: 27 An absolute cap would have the advantage for users of providing the most certainty, but it would also provide the same protection for wealthy organisations and individuals as for those of more limited means. A presumptive limit would be more capable of being targeted at those most in need, but if too flexible could give rise to unnecessary and time consuming arguments about costs. As to the level of cap a figure of 5,000 was proposed: 35 Taking account of the levels which are currently being used by the courts as well as the importance of setting a level which could not be further reduced, it is proposed that the cap should be set at a level of 5,000. This is on the basis that any claimant who is so impecunious that the possibility of being liable for 5,000 would present an insuperable barrier to proceeding would in most cases be eligible for legal aid, with its attendant cost protection in any event. The conclusions on these issues were given in a Report on Response to Consultation (CP(R) 16/11 August 2012). As to the level of the cap, it was noted that while there was only minority support for the proposed cap of 5,000 there was no strong consensus for any alternative: 3 On the basis of the results of this consultation and the evidence of current practice in the courts, the Government takes the view that a cap of 5,000 is a proportionate amount to ask individual claimants to pay. On the same basis it believes that it is reasonable to make a distinction between the position of individuals and organisations and therefore proposes to set a cap of 10,000 for organisations. Consideration was also given to the position on appeal: 8 The similarity of the proposals to a fixed costs regime indicates in the Governments view, and as one respondent strongly argued, that it will be appropriate for appeals to be dealt with in accordance with the rule proposed by Lord Justice Jackson for appeals in cases to which a fixed or restricted costs regime applied at first instance. Under that rule, when it is implemented as part of the wider Jackson reforms, the judge considering whether to give permission to appeal in a case which was subject at first instance to a fixed or restricted costs regime will at the outset determine the appropriate costs limit or limits having had regard to the decisions in the lower court. These proposals were given effect by amendment to the Civil Procedure Rules. It is enough for present purposes to refer to a summary of the changes in an update to the rules dated 1 April 2013: Amendments are made to comply with the Aarhus Convention so that any system for challenging decisions in environmental matters is open to members of the public and is not prohibitively expensive. Two limits are set: on the costs recoverable by a defendant from a claimant (5,000 where the claimant is an individual and 10,000 in any other circumstances) and; on the costs recoverable by a claimant from a defendant (35,000). Consequential amendments are made to PD 25A, Part 54 and the Pre Action Protocol Judicial Review. The amendments do not apply to a claim commenced before 1 April 2013. For appeals a new rule was added in CPR 52: Orders to limit the recoverable costs of an appeal 52.9A.(1) In any proceedings in which costs recovery is normally limited or excluded at first instance, an appeal court may make an order that the recoverable costs of an appeal will be limited to the extent which the court specifies. (2) In making such an order the court will have regard to (a) the means of both parties; (b) all the circumstances of the case; and (c) the need to facilitate access to justice. (3) If the appeal raises an issue of principle or practice upon which substantial sums may turn, it may not be appropriate to make an order under paragraph (1). (4) An application for such an order must be made as soon as practicable and will be determined without a hearing unless the court orders otherwise. In the Supreme Court, the Costs Practice Direction No 13 (as amended with effect from November 2013) now includes specific provision for an order limiting the recoverable costs of an appeal in an Aarhus Convention claim (para 2.2.c). The CJEUs decision The court reaffirmed the principles established in its judgment in Commission of the European Communities v Ireland (Case C 427/07) [2010] Env LR 123; [2009] ECR I 6277, noting in particular that Aarhus Convention does not affect the powers of national courts to award reasonable costs, and that the costs in question are all the costs arising from participation in the judicial proceedings (paras 25 27). In response to the questions raised by the Supreme Court, it began by affirming the duty of member states to ensure that the directive is fully effective, while retaining a broad discretion as to the choice of methods (para 37). The national court, in turn, when ruling on issues of costs, must satisfy itself that that requirement has been complied with, taking into account both the interest of the person wishing to defend his rights and the public interest in the protection of the environment (para 35). The following paragraphs of the judgment, which contain the substantive guidance, must be set out in full: 40 That assessment cannot, therefore, be carried out solely on the basis of the financial situation of the person concerned but must also be based on an objective analysis of the amount of the costs, particularly since, as has been stated in para 32 of the present judgment, members of the public and associations are naturally required to play an active role in defending the environment. To that extent, the cost of proceedings must not appear, in certain cases, to be objectively unreasonable. Thus, the cost of proceedings must neither exceed the financial resources of the person concerned nor appear, in any event, to be objectively unreasonable. 41 As regards the analysis of the financial situation of the person concerned, the assessment which must be carried out by the national court cannot be based exclusively on the estimated financial resources of an average applicant, since such information may have little connection with the situation of the person concerned. 42 The court may also take into account the situation of the parties concerned, whether the claimant has a reasonable prospect of success, the importance of what is at stake for the claimant and for the protection of the environment, the complexity of the relevant law and procedure and the potentially frivolous nature of the claim at its various stages: see, by analogy, DEB Deutsche Energiehandels und Beratungsgesellschaft mbH v Bundesrepublik Deutschland (Case C 279/09) [2010] ECR I 13849, para 61. 43 It must also be stated that the fact, put forward by the Supreme Court of the United Kingdom, that the claimant has not been deterred, in practice, from asserting his or her claim is not in itself sufficient to establish that the proceedings are not, as far as that claimant is concerned, prohibitively expensive for the purpose (as set out above) of Directives 85/337 and 96/61. 44 Lastly, as regards the question whether the assessment as to whether or not the costs are prohibitively expensive ought to differ according to whether the national court is deciding on costs at the conclusion of first instance proceedings, an appeal or a second appeal, an issue which was also raised by the referring court, no such distinction is envisaged in Directives 85/337 and 96/61, nor, moreover, would such an interpretation be likely to comply fully with the objective of the European Union legislature, which is to ensure wide access to justice and to contribute to the improvement of environmental protection. 45 The requirement that judicial proceedings should not be prohibitively expensive cannot, therefore, be assessed differently by a national court depending on whether it is adjudicating at the conclusion of first instance proceedings, an appeal or a second appeal. A number of significant points can be extracted from the Edwards judgment: First, the test is not purely subjective. The cost of proceedings must not exceed the financial resources of the person concerned nor appear to be objectively unreasonable, at least in certain cases. (The meaning of i) the latter qualification is not immediately obvious, but it may be better expressed in the German version in Einzelfllen, meaning simply in individual cases.) The justification is related to the objective of the relevant European legislation (referred to in para 32 of the judgment), which is to ensure that the public plays an active role in protecting and improving the quality of the environment. ii) The court did not give definitive guidance as to how to assess what is objectively unreasonable. In particular it did not in terms adopt Sullivan LJs suggested alternative of an objective assessment based on the ability of an ordinary member of the public to meet the potential liability for costs. While the court did not apparently reject that as a possible factor in the overall assessment, exclusive reliance on the resources of an average applicant was not appropriate, because it might have little connection with the situation of the person concerned. iii) The court could also take into account what might be called the merits of the case: that is, in the words of the court, whether the claimant has a reasonable prospect of success, the importance of what is at stake for the claimant and for the protection of the environment, the complexity of the relevant law and procedure, the potentially frivolous nature of the claim at its various stages. (para 42) iv) That the claimant has not in fact been deterred for carrying on the proceedings is not in itself determinative. v) The same criteria are to be applied on appeal as at first instance. I do not understand the last point as intended to imply that the same order must be made at each stage of the proceedings, or that there should be a single global figure covering all potential stages, but rather that the same principles should be applied to the assessment at each stage, taking account of costs previously incurred. In her 2013 opinion in Commission of the European Union v United Kingdom (Case C 530/11), the Advocate General said of the courts reasoning on this point: that finding cannot be interpreted as meaning that in assessing the permissible cost burden in appeal proceedings the costs already incurred in courts below may be ignored. Instead, each court must ensure that the costs at all levels of jurisdiction taken together are not prohibitive or excessive. (para 23) However, as she had recognised in her earlier opinion (2012 opinion in Edwards v Environment Agency (No 2) (Case C 260/11) [2013] 1 WLR 2914, paras 58 61), while prohibitive costs must be prevented at all levels of jurisdiction, the considerations may differ at each level. Thus, on the one hand, as she notes, the decision of the House of Lords as the final court was potentially of special significance, because it alone had a duty to make a reference to the CJEU in case of doubt as to EU law. On the other hand, it is possible that after the decision by the lower court, public interest in the further continuation of the proceedings would be reduced. Accordingly, she said, it was compatible with Aarhus tests to re examine at each level of jurisdiction the extent to which prohibitive costs must be prevented. More generally, in her 2012 opinion, in support of the need for account to be taken of both objective and subjective considerations, she had emphasised the importance of the public interest in the protection of the environment: 42. Recognition of the public interest in environmental protection is especially important since there may be many cases where the legally protected interests of particular individuals are not affected or are affected only peripherally. However, the environment cannot defend itself before a court, but needs to be represented, for example by active citizens or non governmental organisations. Conversely A person who combines extensive individual economic interests with proceedings to enforce environmental law can, as a rule, be expected to bear higher risks in terms of costs than a person who cannot anticipate any economic benefit. The threshold for accepting the existence of prohibitive costs may thus be higher where there are individual economic interests. (para 45) It is less clear how the court saw the merits of the case (para 23(iii) above) being brought into account. There is in the judgment no indication as to how the identified factors might affect the ultimate level of recovery, one way or the other. (The comparison there drawn with DEB Deutsche Energiehandels und Beratungsgesellschaft mbH v Bundesrepublik Deutschland (Case C 279/09) [2010] ECR I 13849 provides little direct assistance. That case was not related to environmental law, and it concerned the circumstances in which legal aid should be granted to a claimant, rather than the extent of his potential liability to the other party.) Taking the points in turn I would suggest the following: i) A reasonable prospect of success Lack of a reasonable prospect of success in the claim may, it seems, be a reason for allowing the respondents to recover a higher proportion of their costs. The fact that frivolity is mentioned separately (see below), suggests that something more demanding is envisaged than, for example, the threshold test of reasonable arguability. ii) The importance of what is at stake for the claimant As indicated by Advocate General Kokott, this is likely to be a factor increasing the proportion of costs fairly recoverable. As she said, a person with extensive individual economic interests at stake in the proceedings may reasonably be expected to bear higher risks in terms of costs. iii) The importance of what is at stake for the protection of the environment Conversely, and again following the Advocate Generals approach, this is likely to be a factor reducing the proportion of costs recoverable, or eliminating recovery altogether. As she said, the environment cannot defend itself, but needs to be represented by concerned citizens or organisations acting in the public interest. iv) The complexity of the relevant law and procedure This factor is not further explained. Its relevance seems to be that a complex case is likely to require higher expenditure by the respondents, and thus, objectively, to justify a higher award of costs. Although mention is only made of complexity of law or procedure, the same presumably should apply to technical or factual complexity. v) The potentially frivolous nature of the claim at its various stages The respondents should not have to bear the costs of meeting a frivolous claim. In domestic judicial review procedures, whether at first instance or on appeal, this issue is likely to be resolved in favour of the claimant by the grant of permission, The present case The present case is unusual in that the Aarhus issue did not arise in the same form at a lower level. Full protection at first instance was given by legal aid. In the Court of Appeal the costs cap provided for Mrs Pallikaropoulos reflected the unusual circumstances in which she became a party, and the courts view that it was in the public interest that the case could be completed with the same representation. It therefore provides no guide to the appropriate order on the further appeal. On the other hand, as Lord Hope recognised, the initial decision of the House itself not to provide any costs protection was made without full consideration of all the factors now known to be relevant. The respondents are not now seeking recovery of their full costs. They have agreed to limit their joint claim to 25,000, which is the amount of the security already paid by the appellant as the condition for bringing the appeal. There is limited evidence as to the resources of the appellant herself, and none that an order for payment of the sum of 25,000 already in court would be beyond her means or cause her hardship. Furthermore, it must be assumed that following the refusal of a protective costs order in March 2007, her decision to proceed was made with full knowledge of the risks involved. It is impossible in my view on the material before us to hold that the order sought would be subjectively unreasonable. The more difficult question is whether there should be some objectively determined lower limit, and if so how it should be assessed. Although this was one of the main issues raised by the reference, the European court has not offered a simple or straightforward answer. Mr Wolfe relies on the last sentence of para 40 of the judgment in Edwards v Environment Agency (No 2 ) (Case C 260/11) [2013] 1 WLR 2914, supported as he says by the Advocate Generals 2013 opinion in Commission of the European Union v United Kingdom (Case C 530/11), para 55: the correct position is that litigation costs may not exceed the personal financial resources of the person concerned and that, in objective terms, that is to say, regardless of the persons own financial capacity, they must not be unreasonable. In other words, even applicants with the capacity to pay may not be exposed to the risk of excessive or prohibitive costs and, in the case of applicants with limited financial means, objectively reasonable risks in terms of costs must in certain circumstances be reduced further. (emphasis added) Thus, he says, it is necessary to start from an objectively defined standard, the circumstances of the particular individual being relevant only to the extent that they may reduce that figure. Furthermore, in his submission, the question of what is objectively reasonable was answered definitively by the government itself, when following extensive consultation it adopted the figure of 5,000 (as now embodied in the High Court rules). As he submits, the respondents cannot properly go behind that figure, at least without evidence to support any alternative suggestion. I am doubtful whether so prescriptive an approach can be extracted from the European courts decision. If it were, it is difficult to see how the merits factors would play a significant part. In any event, I cannot agree that the respondents are bound by the figure of 5,000 adopted for the purpose of the new rules. The new rules only apply to proceedings commenced after June 2013. More importantly, they recognise (as did the Advocate General: para 25 above) that, while the same general principles apply in the Court of Appeal, the factors affecting the judgment of what is subjectively or objectively reasonable may have changed. This applies with even more force at the highest level, where the case for a second appeal needs special justification. Furthermore, the factors which justify a relatively low standard figure for an advance cap, including the desirability of avoiding satellite litigation in advance of a hearing on the merits, will not apply with the same force to consideration after the event. At that stage the court will be in a much better position to take a view on both the merits of the case (in the sense discussed above) and on the costs incurred and their consequences for the parties. The test in principle remains the same but the court is considering it in a different context. Of the five merits factors mentioned by the court, I would discount the second and fifth immediately. There is no evidence that the appellant had any economic interest of her own in the proceedings, and, given the grant of permission at each stage, including the appeal to the House of Lords, they could not be said to be frivolous. The relative complexity of the case (factor (iv)) is evidenced by the fact that it took three days before the House. It has not been suggested that the costs incurred by the respondents were excessive in respect of the issues involved in the case. They are not out of line with those incurred by the appellant. The 25,000 now claimed represents a very significant reduction from that figure. The other two factors (i) the prospects of success and (iii) the importance of the case for the protection of the environment are at best neutral from the applicants point of view. The issue of construction of the EIA Directive was one of some difficulty, as is clear from the division of views within the House. However, by the time it reached the House it seems to have become a point of limited practical significance for the protection of the environment in the area, given the judges unchallenged finding on that aspect. Nor was there any clear evidence of more general public support for her appeal at this level. Furthermore the prospects of a final order in her favour in the appeal were highly questionable. Whatever the answer to the bare legal issue, there was a serious risk of the courts discretion being exercised against her, in the same way as had happened in the lower courts. Accordingly, the potential significance of the legal issue in my view carries relatively little weight in the overall balance. The alternative disclosure issue had been overtaken by events, as the Court of Appeal had held, and the House confirmed. Taking all these factors into account, I find it impossible to say that the figure of 25,000, viewed objectively, is unreasonably high, either on its own or in conjunction with the 2,000 awarded in the Court of Appeal. Mr Wolfe submits that if this court has any doubt as to his interpretation of the European courts decision and the Advocate Generals opinions, we should delay matters until the final judgment in the infraction proceedings. I do not think that is necessary or desirable. Resolution of this case has already been long delayed. The European court has given such specific answers as it thought appropriate to the questions referred in the present case. Although they leave some scope for judgment in their application, there is nothing in the Advocate Generals later opinion, in my view, which suggests that more definitive guidance for the purposes of the present case is to be expected from the forthcoming judgment. objectively excessive. Accordingly, I would make an order for costs in that amount in favour of the respondents jointly. Michaelmas Term [2010] UKSC 57 JUDGMENT R (on the application of Edwards and another (Appellant)) v Environment Agency and others (Respondents) Lord Hope, Deputy President before Lord Walker Lord Brown Lord Mance Lord Dyson JUDGMENT GIVEN ON 15 December 2010 Heard on 11 November 2010 Appellant David Wolfe (Instructed by Richard Buxton Environmental and Public Law) Respondents James Eadie QC James Maurici Charles Banner (Instructed by Treasury Solicitor) LORD HOPE, delivering the judgment of the Panel 1. This is an appeal against a decision by two costs officers appointed by the President of the Supreme Court under rule 49(1) of the Supreme Court Rules 2009, Mrs Registrar di Mambro and Master OHare, a copy of which is annexed to this judgment. From the issues they were asked to decide they selected two preliminary issues which arose in the detailed assessment of bills of costs lodged by the respondents in an appeal to the House of Lords in which they were successful. The appellant, Mrs Pallikaropoulos, had been ordered to pay the costs of the appeal. The first respondent, the Environment Agency, had lodged a bill totalling 55,810. The second respondent, the Secretary of State for the Environment, Food and Rural Affairs, had lodged a bill totalling 32,290. 2. The preliminary issues were about the proper application of article 10a of Council Directive 85/337/EEC of 27 June 1985 on the assessment of the effects of certain public and private projects on the environment (the EIA Directive) and article 15a of Council Directive 96/61/EC of 24 September 1996 concerning integrated pollution prevention and control (the IPPC Directive). Those articles had been inserted by articles 3(7) and 4(4) of Council Directive 2003/35/EC of 26 May 2003 to implement provisions which first appeared in the Convention on Access to Information, Public Participation in Decision Making and Access to Justice in Environmental Matters of 25 June 1998 (the Aarhus Convention). Among the provisions as to access to justice in article 9 of the Aarhus Convention is a requirement that the procedures to which it refers should be fair, equitable and timely and not prohibitively expensive: article 9(4). In proceedings to which the EIA Directive applies, article 10a requires 3. Member States to ensure that members of the public have access to a review procedure before a court of law or another independent and impartial body established by law to challenge the substantive or procedural legality of decisions, acts or omissions subject to the public participation provisions of the directive. It also provides that Any such procedure shall be fair, equitable, timely and not prohibitively expensive. Article 15a of the IPPC Directive makes identical provision with respect to proceedings to which that directive applies. 4. The costs officers were asked to consider the proper application of those articles to this case. The issues which were identified from the skeleton arguments provided by the parties were as follows: (i) where an order for costs has been made, whether as a general rule the court assessing those costs has any jurisdiction to implement the directives; (ii) if so, whether in the particular circumstances of this case the costs officers should seek to do so; and (iii) if so, whether on the evidence presented the amount of costs payable by the appellant should be moderated or even excluded altogether. The costs officers decided the first two issues in favour of the appellant. They reserved their opinion on the third issue until they had given written reasons for their decision on the first two issues and the parties had had an opportunity to consider whether to appeal against it. 5. The respondents appealed against the costs officers decision under rule 53 of the Supreme Court Rules. They asked the single Justice to refer the following questions to a panel of Justices under rule 53(2): (1) whether it was open to the costs officers, in the circumstances of this case in which applications to the court to reduce or cap a partys liability had been made to and considered by and rejected by the Court, to achieve that result through the detailed assessment process; and (2) if it was, whether the test indicated by the phrase prohibitively expensive should be focused exclusively on the actual circumstances of the parties to the litigation and not on the question what would be prohibitively expensive for the ordinary member of the public. The single Justice referred the application to a panel of five Justices and directed that these questions should be decided after an oral hearing. The panel, having now heard counsel, is grateful for their assistance on these issues of principle. Background 6. The issues about costs are in respect of the appellants application for judicial review of the decision of the first respondent to issue a permit on 12 August 2003 for the operation of a cement works in Lawford Road, Rugby. Permission had been sought and granted to replace the fuel that had previously been used for their operation, which was coal and petroleum coke, with shredded tyres. The use of tyres for this purpose gave rise to a public campaign against the proposal on environmental grounds. The application was originally brought in the name of a Mr David Edwards. His claim for judicial review was dismissed by Lindsay J: [2005] EWHC 657 (Admin), [2006] Env L R 3. He appealed to the Court of Appeal, but on the third and final day of the hearing he withdrew his instructions from his solicitors, Richard Buxton & Co, and his counsel, David Wolfe. Mrs Pallikaropoulos, who had been present in court throughout the appeal and had been closely involved in opposition to the permit, was added as an appellant for the remainder of the proceedings. Her liability in the Court of Appeal was capped at 2,000. The appeal was dismissed and the respondents costs, capped at 2,000, were awarded against Mrs Pallikaropoulos: [2006] EWCA Civ 1138. Mrs Pallikaropoulos was given leave to appeal by the House of Lords. 7. Mrs Pallikaropoulos then applied to the House of Lords for an order varying or dispensing with the requirement to give security for costs in the sum of 25,000 in accordance with House of Lords Practice Direction 10.6. She also applied for a protective costs order, in which she sought a cap on her liability for costs on her appeal under the principles set out in R (Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192, [2005] 1 WLR 2600. She relied in support of these applications on the requirement of articles 10a and 15a of the EU Directives and article 9(4) of the Aarhus Convention that access to the courts should not be prohibitively expensive. She declined to provide details of her means or details of the means of those whom she claimed to represent. Her applications were opposed by the respondents. 8. By letter dated 22 March 2007 the Judicial Office of the House of Lords wrote to the parties informing them that Mrs Pallikaropouloss applications had been rejected. The following reasons were given for this decision: Their Lordships proceed on the basis that the appeal raises an issue or issues of general importance and they are prepared to assume that absence of private interest may not always preclude the making of a special costs order in such a case. But their Lordships do not accept that information about the applicants means, about the identity and means of any who she represents and about the position generally in the absence of any special order, are or should be regarded as immaterial; further, they do not consider that the suggested protective orders regarding costs appear proportionate on the information which is before them and in the light of the nature of the issues involved; and they do not consider that any case has been made for saying that the proposed appeal would be prohibitively expensive or that Directive 2003/35/EC would be breached without a special order. Notwithstanding the rejection of these applications Mrs Pallikaropoulos proceeded with her appeal. 9. On 16 April 2008 the House of Lords affirmed the Court of Appeals decision and dismissed the appeal: [2008] UKHL 22, [2008] Env LR 34. The parties were given time to make written submissions on costs. It was submitted for Mrs Pallikaropoulos that there should be no order as to costs. As in the case of her application for a protective costs order, she relied in support of that submission on the requirement of articles 10a and 15a of the EU Directives and article 9(4) of the Aarhus Convention that access to the courts should not be prohibitively expensive. Some information was given about her means, but it was in general terms and it was not accompanied by detailed evidence. Her submission was opposed by the respondents, who sought an order for the costs of the appeal. On 18 July 2008, following consideration of what had been offered on either side, the House of Lords pronounced a costs order in these terms: That the appellant do pay or cause to be paid to the respondents their costs of the appeal to this House, the amount of such costs to be certified by the Clerk of the Parliaments if not agreed between the parties. No reasons were given for this decision. 10. On 1 October 2009 the jurisdiction of the House of Lords was transferred to the Supreme Court by section 40 of the Constitutional Reform Act 2005. Among the transitional provisions in Schedule 10 to the Act relating to proceedings transferred to the Supreme Court from the House of Lords or the Judicial Committee of the Privy Council is para 5, which provides: (1) Any act, judgment or order of the original court in the transferred proceedings is to have the same effect after the transfer day as if it had been an act, judgment or order of the Supreme Court in corresponding proceedings in that court. (2) Accordingly, after the transfer day, further proceedings may be taken in the Supreme Court in respect of such an act, judgment or order. 11. Rule 49 of the Supreme Court Rules 2009 provides that every detailed assessment of costs shall be carried out by two costs officers appointed by the President. Rule 50, as to the basis of the assessment, provides: (1) Where the Court is to assess the amount of costs it will assess those costs (a) on the standard basis, or (b) on the indemnity basis, in the manner specified by rule 51 or (where appropriate) on the relevant bases that apply in Scotland or Northern Ireland. (2) Where (a) the Court makes an order about costs without indicating the basis on which the costs are to be assessed, or (b) the Court makes an order for costs to be assessed on a basis other than one specified in paragraph (1), the costs will be assessed on the standard basis. (3) This rule applies subject to any order or direction to the contrary. 12. Supreme Court Practice Direction 13, para 16.1 provides: The costs officers have discretion as to the amount to allow. In exercising this discretion they bear in mind the terms unreasonably incurred and unreasonable in amount in CPR 44.4, (or in appeals from Scotland the provisions of rule 42.10 of the Rules of the Court of Session 1994) and in particular consider to what extent an item assisted the Court in determining the appeal. The costs officers judgment 13. Having identified the three preliminary issues referred to in para 4 above, the costs officers dealt with them as follows. They held that compliance with the EU Directives was a relevant factor for them to take into account on the detailed assessment of costs in cases to which the directives apply unless the court awarding costs had already done so: para 13. In deciding what costs it was reasonable for the respondents to obtain, they said that they would disallow any costs which they considered to be prohibitively expensive: para 17. As to the meaning of the phrase prohibitively expensive, they said that they were minded to adopt the test which had been propounded by Mr Justice Sullivan, as he then was, in the report of his Working Group, Ensuring access to environmental justice in England and Wales (May 2008), where he said costs, actual or risked, should be regarded as prohibitively expensive if they would reasonably prevent an ordinary member of the public (that is, one who is neither very rich nor very poor, and would not be entitled to legal aid) from embarking on the challenge falling within the terms of Aarhus. 14. They then addressed the respondents argument that, as the appellant had raised the Aarhus principles on two occasions in the House of Lords and those submissions had been rejected on both occasions, she was estopped from raising those issues again before the costs officers. They rejected it, for the reasons given in para 23 where they said: We neither have nor assert any right to set aside or vary any decision already made by the Law Lords or by the Justices in this case. If, in advance of the hearing before us, the Law Lords or the Justices had made any decision on the implementation of the EU Directives in this case we would of course act in compliance with that decision. However, we take the view that the pronouncements which the Law Lords have made in this case do not prevent us from applying the Aarhus principles in the course of our assessment. In their view no part of the decision in March 2007 ruled out their discretion to decide that the reasonable costs in the case should be nil or should be no more than a nominal amount: para 25. While the costs order of 18 July 2008 gave the respondents stronger ground for saying that the appellant had raised the Aarhus principles already and had lost them, they noted that the order did not expressly deal with them. They said that this was consistent with their finding that those matters were best dealt with at the stage at which costs are assessed rather than at the stage at which costs are awarded. The order expressly left the amount of costs to be determined. They decided that they should determine that amount taking into account the Aarhus principles: para 27. The jurisdiction of the costs officers 15. The costs officers judgment raises a short but important point about the extent of their jurisdiction when they are carrying out their detailed assessment of costs under rule 49(1) of the Supreme Court Rules 2009. 16. In Lahey v Pirelli Tyres Ltd [2007] EWCA Civ 91, [2007] 1 WLR 998, the Court of Appeal held that, where a costs order was deemed to have been made on the standard basis, the claimant was entitled to 100% of his assessed costs and that the costs judge had no power in advance of the assessment to vary the deemed order so as to reduce the claimants percentage entitlement to costs. The relevant rules of the CPR were rule 44.3(1), which gives the court a discretion as to (a) whether costs are payable by one party to another, (b) the amount of those costs and (c) when they are to be paid; rule 44.4, which sets out the basis of assessment; and rule 44.5, which sets out the factors to be taken into account in deciding the amount of costs. 17. The Supreme Court rule which corresponds to CPR rule 44.3 is rule 46(1), which provides: The Court may make such orders as it considers just in respect of the costs of any appeal, application for permission to appeal, or other application to or proceeding before the Court. The rules about the basis of assessment of costs which correspond to those in CPR rules 44.4 and 44.5 are set out in rule 49 which provides for the detailed assessment of costs to be carried out by the costs officers (see para 11, above), and in rule 51 which provides with regard to the standard basis of assessment: (1) Costs assessed on the standard basis are allowed only if they are proportionate to the matters in issue and are reasonably incurred and reasonable in amount. (2) Any doubt as to whether costs assessed on the standard basis are reasonably incurred and are reasonable and proportionate in amount will be resolved in favour of the paying party. 18. As Dyson LJ explained in Lahey v Pirelli Tyres Ltd, paras 20 21: 20 There is a real distinction between (a) carrying out an assessment and deciding as part of the assessment to reduce the bill by a percentage and (b) deciding in advance of the assessment that the receiving party will only receive a percentage of the assessed costs. The figure that results from (a) represents 100% of the assessed costs. In deciding as part of the assessment to reduce the bill by a percentage, the costs judge is giving effect to an order that the successful party is entitled to his costs, to be assessed if not agreed. The figure that results from (b) represents less than 100% of the assessed costs. In deciding in advance of the assessment that the receiving party will only receive a percentage of the assessed costs, the costs judge is not giving effect to an order that the successful party is entitled to his costs, to be assessed if not agreed. 21 Rule 44.3 gives a judge jurisdiction to make a type (b) order. There is no doubt that at the end of a hearing the judge may make an order of the kind that the defendant sought from the [costs judge] in the present case. In such a case, the judge is not purporting to vary an order if he disallows the successful party a proportion of his costs. He is making the order. He does not have the advantage accorded to the costs judge of having a detailed bill of costs. He cannot, therefore, carry out a detailed assessment. But he usually has the benefit, denied to the costs judge, of knowing a good deal about the case, and is often in a good position to form a view about the reasonableness of the parties conduct. When carrying out a detailed assessment, the costs judge is not making an order for costs. His position is quite different from that of a judge exercising the jurisdiction given by rule 44.3. 19. The distinction in principle between carrying out an assessment and then deciding as part of the assessment to reduce the bill by a percentage on the one hand, and deciding in advance that the receiving party will receive only a percentage of the assessed costs on the other, is fully recognised by the Supreme Court Rules. The function of the costs officers under rule 49(1), read together with Practice Direction 13, para 16.1 (see para 12, above) is to carry out the detailed assessment. That is the limit of their jurisdiction. Decisions as to whether the receiving party is to receive less than 100% of the assessed costs are reserved to the Court, in the exercise of the jurisdiction that is given to it by rule 46(1). 20. The costs officers recognised the distinction that was drawn between these two functions in Lahey v Pirelli Tyres Ltd. But they were persuaded that the task of giving effect to the EU Directives fell naturally within the assessment of reasonableness. They drew an analogy with the task that has to be performed where a party was legally aided for some but not all of the proceedings covered by the order for costs. Section 11(1) of the Access to Justice Act 1999 provides: Except in prescribed circumstances, costs ordered against an individual in relation to any proceedings or part of proceedings funded for him shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including (a) the financial resources of all the parties to the proceedings, and (b) their conduct in connection with the dispute to which the proceedings relate; and for this purpose proceedings, or a part of proceedings, are funded for an individual if services relating to the proceedings or part are funded for him by the Commission as part of the Community Legal Service. Since in most cases the reasonable sum that results from this exercise is nil, the assessments of reasonableness could vary substantially between periods when a losing litigant was legally aided and when he was not. In the costs officers view the factors which they would have to take into account in implementing the EU Directives were not wholly dissimilar from the factors that they have to take into account under section 11 of the 1999 Act when it applies: para 16. 21. This view of the costs officers jurisdiction is, with respect, misconceived. Where section 11 of the 1999 Act applies the statute itself gives to the costs judge the authority to depart from the ordinary basis of assessment by setting a limit on the amount which it is reasonable for the paying party to pay. In this case a statutory direction of that kind is absent, and there has been no direction by the Court that any basis of assessment other than the standard basis is to be applied. So the costs officers must confine the exercise which they carry out to that which they are directed to perform under the rules. It is not enough for them to refrain from deciding in advance of their assessment that the respondents will receive only a part of the assessed costs, which they have no jurisdiction to do for the reasons explained in Lahey v Pirelli Tyres Ltd. They must refrain from introducing a different basis than that prescribed by the rules when they are carrying out their assessment. The test of reasonableness which they must apply is directed to their assessment of the costs incurred by the receiving party: see CPR 44.5 as to the factors to be taken into account by the costs judge when exercising his discretion as to costs. It is not directed to the entirely different question whether the cost to the paying party would be prohibitively expensive, which is what the Aarhus test is concerned with. 22. Mr Wolfe submitted that the costs officers were obliged to give effect to the EU Directives under the principle explained in Case C 62/00 Marks & Spencer plc v Customs and Excise Comrs [2003] QB 866, 888, para 24 where the European Court said that in applying domestic law the national court called upon to interpret that law is required to do so, as far as possible, in the light of the wording and purpose of a directive, in order to achieve its purpose and thereby comply with the third paragraph of article 189 of the EC Treaty (now the third paragraph of article 288 TFEU): see also Case C 106/89 Marleasing SA v La Commercial Internacional de Alimentacin SA [1990] ECR I 4135, 4159, para 8; Case C 72/95 [1996] ECR I 5403 Aannemersbedrijf P K Kraaijeveld BV v Gedeputeerde Staten van Zuid Holland, para 55, where it was said in the context of an EIA Directive that the obligation of a Member State to take all the measures necessary to achieve the result prescribed by a directive is a binding obligation imposed by the EC treaty and by the directive itself. He said that this obligation had to be given effect to by the costs officers unless the words of the rules precluded this, which in his submission they did not. 23. The answer to this submission is to be found in the division of responsibility that the rules themselves recognise between the Court on the one hand and the costs officers on the other. The question whether the review procedure is prohibitively expensive is a matter that can, and should, be addressed by the Court itself. Preferably this should be done at the outset of the proceedings. The Sullivan Working Group recommended in Appendix 4 to its May 2008 Report that, for the proper conduct of the case, a protective costs order should be sought with the application for permission for judicial review and should wherever possible be decided at the same time as permission. No mention was made in its recommendations of what is to be done at the stage of an appeal. But the advantages of having the matter resolved at the outset apply just as much at that stage as they do at first instance. So a protective costs order to meet the requirement that the proceedings should not be prohibitively expensive should be sought when permission to appeal is being asked for, or as soon as possible thereafter. That is what Mrs Pallikaropoulos did in this case. 24. But the refusal of a protective costs order does not preclude further consideration of the matter by the Court at the end of the proceedings. The Aarhus Convention has been authenticated in three languages: English, French and Russian. The English word prohibitively in the English version of article 9 suggests that the question is for consideration at the outset, as the act of prohibiting must always anticipate what is prohibited. The French language version uses the word prohibitif. The Russian text uses the word , indicating that the costs must not be inaccessibly high. The words prohibitively and prohibitif are carried forward into the English and French language versions of the EU directives and the adjective in the Greek version carries the same meaning. But the words used in the translations of the directives into German (bermssig teuer), Italian (eccessivamente onerosa) and Spanish (excesivamente onerosos) indicate that, so far as the directives are concerned, the question of expense is not exclusively for consideration at the outset. 25. The general rule is that EU Directives should be interpreted in a manner that is consistent with international agreements concluded by the EU: Case C 341/95 Bettati v Safety Hi Tech Srl [1998] ECR I 4355, para 20. The emphasis of the Convention, as all three language versions show, is on facilitating access to an effective remedy. But its object and purpose would not be well served if a narrow view were to be taken of the time when the issue about the expense of the proceedings can be considered. The essential question seems to be whether the bill of costs will be, or is, excessive bearing in mind the overriding requirement of access to justice. This is best dealt with by making a protective costs order, but the Court can deal with the matter at the end of the case by setting a limit on the paying partys liability which meets the objective of the directives. It does not need to carry out a detailed assessment of the costs in order to do this, any more than it does when it is making a protective costs order. The costs officers, for their part, must confine their attention to the basis of assessment prescribed by rule 50, subject to any directions that may be given to them by the Court. 26. For these reasons the answer to the first question which the respondents referred to the single Justice under rule 53 (see para 5, above) must be in the negative. The ruling by the costs officers that they have jurisdiction to implement the EU Directives must be set aside. The Courts obligation under the Directives 27. As there is a division of responsibility, the question that must now be addressed is whether the House of Lords fulfilled its obligation to take the measures that were necessary to achieve the objects of the Directives. That is an obligation which, in its turn, rests on this Court. 28. Mr Eadie QC for the respondents submitted that the issue was fully and properly addressed in March 2007 when the appellant applied for a protective costs order. He said that the House of Lords was right to rely on the fact that Mrs Pallikaropoulos had not provided the information that was needed for her to show that the proceedings would be prohibitively expensive. As the House made clear in the reasons that it gave for not considering it appropriate to make the order, she had not made out a case for saying that the proposed appeal would be prohibitively expensive. Furthermore she proceeded with the appeal notwithstanding that decision. So there were no grounds for taking a different view at the stage when the order for costs was made on 18 July 2008. That was a final decision, and the issue was not open to be considered again. 29. The question however is whether, when it made these decisions, the House was proceeding upon a correct understanding of the test that is to be applied in order to determine whether the proceedings in question are prohibitively expensive. There are various possible approaches to this issue. In R (Garner) v Elmbridge Borough Council [2010] EWCA Civ 1006 the judge had refused to grant a protective costs order because he was of the view that it was impossible to tell whether the proceedings would be prohibitively expensive unless there was detailed information about the appellants resources to fund the proceedings. In the Court of Appeal Sullivan LJ said of his decision in para 42: This raises an important issue of principle. Should the question whether the procedure is or is not prohibitively expensive be decided on an objective basis by reference to the ability of an ordinary member of the public to meet the potential liability for costs, or should it be decided on a subjective basis by reference to the means of the particular claimant, or upon some combination of the two bases? 30. Sullivan LJ observed that in an ideal world he would have preferred to defer taking a decision on such an important issue of principle until after the findings of the Aarhus Convention Compliance Committee as to whether our domestic costs rules are Aarhus compliant, and until after it was known whether the European Commission will accept or reject the United Kingdoms response to the Commissions reasoned opinion, announced in a press release dated 18 March 2010, in which the Commission was contending that the United Kingdom is failing to comply with the EIA Directive because challenges to the legality of environmental decisions are prohibitively expensive: para 43. But as the court had to reach a decision as to whether the judge was wrong to refuse to grant a protective costs order, he went on to say this in para 46: Whether or not the proper approach to the not prohibitively expensive requirement under article 10a should be a wholly objective one, I am satisfied that a purely subjective approach, as was applied by Nicol J, is not consistent with the objectives underlying the directive. Even if it is either permissible or necessary to have some regard to the financial circumstances of the individual claimant, the underlying purpose of the directive to ensure that members of the public concerned having a sufficient interest should have access to a review procedure which is not prohibitively expensive would be frustrated if the court was entitled to consider the matter solely by reference to the means of the claimant who happened to come forward, without having to consider whether the potential costs would be prohibitively expensive for an ordinary member of the public concerned. There was evidence that without a protective costs order the liability and costs of an unsuccessful appellant was likely to be prohibitively expensive to anyone of ordinary means. So the judges decision was set aside. 31. The importance that is to be attached to Sullivan LJs observations in R (Garner) v Elmbridge Borough Council gathers strength when they are viewed in the light of the proposal in para 4.5 of Chapter 30 of the Jackson Review of Civil Litigation Costs (December 2009) as to environmental judicial review cases that the costs ordered against the claimant should not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances, and the entirely different proposal in para 30 of the Update Report of the Sullivan Working Group (August 2010) that an unsuccessful claimant in a claim for judicial review should not be ordered to pay the costs of any other party other than where the claimant has acted unreasonably in bringing or conducting the proceedings. They have to be viewed too in the light of the conclusion of the Aarhus Convention Compliance Committee which was communicated by letter dated 18 October 2010 that, in legal proceedings in the UK within the scope of article 9 of the Convention, the public interest nature of the environmental claims under consideration does not seem to have been given sufficient consideration in the apportioning of costs by the courts and that despite the various measures available to address prohibitive costs, taken together they do not ensure that the costs remain at a level which meets the requirements of the Convention: see paras 134 135. It is clear that the test which the court must apply to ensure that the proceedings are not prohibitively expensive remains in a state of uncertainty. The balance seems to lie in favour of the objective approach, but this has yet to be finally determined. 32. It is unclear too whether a different approach is permissible at the stage of a second appeal from that which requires to be taken at first instance. The question in R (Garner) v Elmbridge Borough Council was about the approach that was required to be taken at first instance. In this case Mrs Pallikaropoulos did not appear at first instance. She was given a protective costs order in the Court of Appeal, where her appeal was unsuccessful, because her liability in costs was capped at 2,000. By the stage when her appeal reached the House of Lords the question which she wished to raise had already been considered twice in the courts below without the claimant having been deterred from seeking judicial review on grounds of expense. It is questionable whether the public interest is best served if a limit must be set on the amount of the costs payable to the successful party in the event of a second appeal as this will inevitably mean that, if the public authority wins, some of the costs reasonably incurred by it will not be recoverable. 33. It is plain from the reasons that were given by the House of Lords for its decision to refuse a protective costs order on 22 March 2007 that these difficult issues were not addressed at that stage. It took a purely subjective approach to the question whether a case for such an order had been made. No reasons were given for the costs order of 18 July 2008. But it is to be inferred from its terms that the House was not satisfied that a case had been made out for any modification of its approach. It must be concluded that here too the House took an approach to this issue which was a purely subjective one. It is to say the least questionable whether in taking this approach, which has now been disapproved by the Court of Appeal in Garner v Elmbridge Borough Council, it fulfilled its obligations under the directives. Conclusion 34. In R v Bow Street Metropolitan Stipendiary Magistrate, Ex p Pinochet Ugarte (No 2) [2000] 1 AC 119, 132 Lord Browne Wilkinson observed that the respondents concession that their Lordships had jurisdiction in appropriate cases to rescind or vary an earlier order of the House of Lords was rightly made both in principle and on authority: 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. He went on to say that it should be made clear that the House would not reopen any appeal save in circumstances where, through no fault of a party, he or she had been subjected to an unfair procedure. 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. In this case it seems that, through no fault of the appellant, an injustice may have been caused by the failure of the House to address itself to the correct test in order to comply with the requirements of the directives. 36. The appellant has submitted that, taken overall, no clear and simple answer is available to the question as to what is the right test. That indeed does seem to be the position. In any event it cannot be said to be so obvious as to leave no reasonable scope for doubt as to the manner in which the question would be resolved: CILFIT (Srl) v Ministry of Health (Case C 283/81) [1983] 1 CMLR 472. In these circumstances the Court will refer the issue to the Court of Justice of the European Union for a preliminary ruling under article 267 TFEU (ex article 234 EC). The order for costs of 18 July 2008 will be stayed pending the reference. The parties are invited to make submissions in writing within 28 days on the questions to be referred to the Court of Justice. ANNEX IN THE SUPREME COURT OF THE UNITED KINGDOM Parliament Square London, Date: 15 January 2010 MRS REGISTRAR DI MAMBRO AND MASTER OHARE Before : Between : THE QUEEN ON THE APPLICATION OF [DAVID EDWARDS] LILIAN PALLIKAROPOULOS THE ENVIRONMENT AGENCY THE FIRST SECRETARY OF STATE FOOD AND RURAL AFFAIRS CEMEX UK CEMENT LIMITED and and SECRETARY OF STATE FOR THE ENVIRONMENT Appellant Respondents Intervener Mr Wolfe (instructed by Richard Buxton) for the Appellant Mr Maurici (instructed by Environment Agency Legal Services and the Treasury Solicitors) for the Respondents Hearing date: 4 December 2009 Approved Judgment . . . . . . Mrs Registrar di Mambro and Master OHare: 1. This is our decision on two preliminary issues which arose in the detailed assessment of the bills of costs lodged by the Respondents in respect of the appeal to the House of Lords in this case. The appeal arose out of a Judicial Review, which was initially brought by a Mr David Edwards. He instructed Mr Richard Buxton, whose fees were funded by the Legal Services Commission. The claim was dismissed by Lindsay J ([2005] EWHC 657) and Mr Edwards brought an appeal to the Court of Appeal. On the third and final day of that appeal Mr Edwards withdrew his instructions from Messrs Richard Buxton, and, at that stage, Mrs Pallikaropoulos was added as an additional party in order to continue the appeal. Mrs Pallikaropoulos was not eligible for legal aid, but the Court of Appeal made a costs capping order limiting her exposure to the Respondents costs to the sum of 2,000. 2. The appeal to the Court of Appeal was dismissed ([2006] EWCA Civ 1138) and Mrs Pallikaropoulos successfully petitioned the House of Lords for leave to appeal to that court. Having obtained leave she then applied for a waiver of the security sum payable on such an appeal, and also applied for a protective costs order. By letter dated 22 January 2007 the Judicial Office indicated to her that, on the basis of the information then before them, the members of the Appeal Committee were not then minded to grant either application. 3. The appeal was heard in January 2008 and lasted three days. On 16 April 2008 the House of Lords dismissed the appeal, thereby affirming the Court of Appeals decision. The matter was then adjourned for the parties to make written representations on costs. On 18 July 2008, despite her Counsels written submissions to the contrary, Mrs Pallikaropoulos was ordered to pay the Respondents costs of the appeal. The First Respondent has now lodged a bill totalling 55,810, and the Second Respondent has lodged a bill totalling 32,290. 4. The preliminary issues which arose in this case concern the proper application of certain articles under the Environment Impact Assessment (EIA) Directive (85/337/EEC), and the Integrated Pollution Prevention and Control (IPPC) Directive (96/61/EC) both of which implement provisions which first appeared in the Treaty known as the Aarhus Convention (UNECE Convention on Access to Information, Public Participation in Decision Making and Access to Justice in Environmental Matters: 25 June 1998). In proceedings to which the EIA Directive applies, Article 10a requires Member States to ensure that members of the public as there defined: have access to a review procedure before a court of law or another independent and impartial body established by law to 5. challenge the substantive or procedural legality of decisions, acts or omissions subject to the participation provisions of this directive. and it also provides that: Any such procedure shall be fair, equitable, timely and not prohibitively expensive. 6. In proceedings to which the IPPC Directive applies, Article 15a makes provision identical to that set out above in respect of Article 10a of the EIA Directive. 7. These EU Directives were considered by the Court of Appeal in Morgan v Hinton Organics (Wessex) Ltd [2009] EWCA Civ 107 from which judgment we would like to set out two quotations. The first concerns points made in a document called the 2008 Sullivan Report, which has influenced our decision in this case. The second quotation summarised the argument heard by the Court of Appeal on these directives. The Court of Appeal did not give a ruling on these arguments since, as paragraph 47(ii) indicates, the directives were not applicable in that case. 32. The 2008 Sullivan report, to which Carnwath LJ referred in granting permission in the present case, was a report of another informal working group representing a range of interested groups, this time under Sullivan J (Ensuring Access to Environmental Justice in England and Wales Report of the Working Group on Access to Environmental Justice May 2008). The report expressed views on the application of the Aarhus principles, in the context of domestic procedures relevant to environmental proceedings, including protective costs orders. The present case was mentioned, without further discussion, as apparently the first which has reached this court raising issues under the Convention in relation to a costs order in private law proceedings. The following points from the report are possibly relevant in the present context: i) That the "not prohibitively expensive" obligation arising under the Convention extends to the full costs of the proceedings, not merely the court fees involved (in this respect differing from the Irish High Court in Sweetman v An Bord [2007] including Pleanala and the Attorney General IEHC 153); ii) That the requirement for procedures not to be to all prohibitively expensive applies for proceedings, applications injunctive relief, and not merely the overall application for final relief in the proceedings; iii) That costs, actual or risked, should be regarded as "prohibitively expensive" if they would reasonably prevent an "ordinary" member of the public (that is, "one who is neither very rich nor very poor, and would not be entitled to legal aid") from embarking on the challenge falling within the terms of Aarhus (para 20). iv) That there should be no general departure from the present "loser pays" principle, provided that the loser's potential liability does not make litigation prohibitively expensive in the way described above (para 38). It may be helpful at this point to draw together some of the threads of the discussion, without attempting definitive conclusions: i) The requirement of the Convention that costs should not be "prohibitively expensive" should be taken as applying to the total potential liability of claimants, including the threat of adverse costs orders. ii) Certain EU Directives (not applicable in this case) have incorporated Aarhus principles, and thus given them direct effect in domestic law. In those cases, in the light of the Advocate General's opinion in the Irish cases, the court's discretion may not be regarded as adequate implementation of the rule against prohibitive 47. costs. Some more specific modification of the rules may need to be considered. iii) With that possible exception, the rules of the CPR relating to the award of costs remain effective, including the ordinary "loser pays" rule and the principles governing the court's discretion to depart from it. The principles of the Convention are at most a matter to which the court may have regard in exercising its discretion. iv) This court has not encouraged the development of separate principles for "environmental" cases (whether defined by reference to the Convention or otherwise). In particular the principles governing the grant of Protective Costs Orders apply alike to environmental and other public interest cases. The Corner House statement of those principles must now be regarded as settled as far as this court is concerned, but to be applied "flexibly". Further development or refinement is a matter for legislation or the Rules Committee. v) The Jackson review provides an opportunity for considering the Aarhus principles in the context of the system for costs as a whole. Modifications of the present rules in the light of that report are likely to be matters for Parliament or the Civil Procedure Rules Committee. Even if we were otherwise attracted by Mr Wolfe's invitation (on behalf of CAJE) to provide guidelines on the operation of the Aarhus convention, this would not be the right time to do so. vi) Apart from the issues of costs, the Convention requires remedies to be "adequate and effective" and "fair, equitable, timely". The variety and lack of coherence of jurisdictional routes currently available to potential litigants may arguably be seen as additional obstacles in the way of achieving these objectives. 8. Although the EIA Directive and the IPPC Directive were not applicable in Morgan, both of them are applicable in the case now before us. That was accepted by Counsel for the Respondents, who also accepted that the directives were therefore directly binding upon the courts. The skeleton argument for the Appellant set out the following quotation from the judgment of the ECJ in Marks & Spencer v Commissioners for Customs & Excise [2002] ECR I 06325: 24. In that regard it should be remembered, first that the member states obligation under a directive is to achieve the result envisaged by the directive and their duty to take all appropriate measures whether general or particular, to ensure fulfilment of that obligation, are binding on all the authorities of the member state including, for matters within their jurisdiction, the courts 25. whenever the provisions of a directive appear, so far as their subject matter is concerned, to be unconditional and sufficiently precise, they may be relied upon before the national courts by individuals against the state where the latter has failed to implement the directive in domestic law 26. implementation of a directive must be such as to ensure its application in full 9. In preparation for the hearing before us both parties supplied skeleton arguments which were extremely helpful and explicit. From these we were able to identify three preliminary issues, which are as follows: i) Where an order for costs has been made, whether, as a general rule, the court assessing those costs has any jurisdiction to implement the EU Directives. If so, whether, in the particular circumstances of this case, we should seek to implement the EU Directives. If so, whether, on the evidence presented to the court, the amount of costs payable by the Appellant should be moderated or even excluded. 10. At the hearing we decided the first two issues in favour of the Appellant, but thought it right not to hear argument as to the third issue until we had given written reasons for our decision, sight of which by the parties might enable them to agree the third issue subject of course to any appeal against ii) iii) our ruling on the first two issues. We also ruled that the time for appealing our decision on the first two issues should not expire until 28 days after the delivery of our written decision. Issue 1 : Jurisdiction of Costs Officers Generally 11. On this point Mr Maurici, Counsel for the Respondents, argued that application of EU Directives falls wholly outside the jurisdiction of Costs Officers. He placed reliance upon the Supreme Court Practice Direction 13 para 16.1, which states as follows: The Costs Officers have discretion as to the amount to allow. In exercising this discretion they bear in mind the terms unreasonably incurred and unreasonable in amount in CPR 44.4 and in particular consider to what extent an item assisted the court in determining the appeal 12. From this he argued that Costs Officers are limited to assessing the reasonableness of the costs awarded by another court. It is for the court awarding costs to decide how and in what way to implement the European Directives. It is not a proper function of the assessing court. Counsel also placed reliance upon the Court of Appeal decision in Lahey v Pirelli Tyres Ltd [2007] EWCA Civ 91 which held that, where a court awards costs, the Costs Judges duty is to assess 100% of the reasonableness of the costs awarded. The Costs Judge has no power to vary the award of costs made so as to allow less than 100% of the reasonable costs. Counsel drew our attention to paragraphs 20 and 21 of the judgment in that case, which we now set out: 20. There is a real distinction between (a) carrying out an assessment and deciding as part of the assessment to reduce the bill by a percentage and (b) deciding in advance of the assessment that the receiving party will only receive a percentage of the assessed costs. The figure that results from (a) represents 100% of the assessed costs. In deciding as part of the assessment to reduce the bill by a percentage, the costs judge is giving effect to an order that the successful party is entitled to his costs, to be assessed if not agreed. The figure that results from (b) represents less than 100% of the assessed costs. In deciding in advance of the assessment that the receiving party will only receive a percentage of the assessed costs, the costs judge is not giving effect to an order that the successful party is entitled to his costs, to be assessed if not agreed. 21. Rule 44.3 gives a judge jurisdiction to make a type (b) order. There is no doubt that at the end of a hearing, the judge may make an order of the kind that the defendant sought from the district judge in the present case. In such a case, the judge is not purporting to vary an order if he disallows the successful party a proportion of his costs. He is making the order. He does not have the advantage accorded to the costs judge of having a detailed bill of costs. He cannot, therefore, carry out a detailed assessment. But he usually has the benefit, denied to the costs judge, of knowing a good deal about the case, and is often in a good position to form a view about the reasonableness of the parties' conduct. When carrying out a detailed assessment, the costs judge is not making an order for costs. His position is quite different from that of a judge exercising the jurisdiction given by rule 44.3. 13. We take the view that compliance with the EU Directives is a relevant factor for us to take into account on the detailed assessment of costs in cases to which the Directives apply unless, of course, the court awarding costs has already taken them into account. 14. We accept the submission of Mr Wolfe, Counsel for the Appellant, that the reasonableness. falls within task naturally Reasonableness can mean different things in different contexts. We draw an analogy here with what happens when costs are awarded against a party who was legally aided for some but not all of the proceedings covered by the order for costs. Section 11 of the Access to Justice Act 1999 provides that costs ordered against a legally aided party: the definition of shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including (a) the financial resources of all the parties to the proceedings, and their conduct in connection with the dispute to which the proceedings relate (b) 15. The Legal Aid Regulations now leave the task of making that assessment to the Costs Officers of the courts in which those costs were awarded. In this court paragraph 4 of Practice Direction 13 requires the Costs Officers to 16. assess the sum reasonable for a legally aided party to pay as part of the detailed assessment proceedings. Since, in most cases, the reasonable sum is nil, the assessments of reasonableness vary substantially between periods when a losing litigant was legally aided and when he was not. In our judgment the factors we ought to take into account in implementing the EU Directives are not wholly dissimilar from the factors we have to take into account in applying section 11 of the Access to Justice Act when it applies. It seems to us that the implementation of any relevant EU Directive is more naturally and conveniently dealt with at the detailed assessment stage rather than at the stage of awarding costs, unless of course, the court awarding costs had already made a decision on these questions. 17. We take the view that in deciding what costs it is reasonable for the Respondents to obtain we will disallow any costs which we consider to be prohibitively expensive. Therefore, in making any such disallowance, we will be acting in compliance with, and not defiance of, the principles stated in Lahey. 18. The passages from Morgan which we have quoted indicate that the EU Directives here in question have not yet been implemented by Parliament or by the Civil Procedure Rule Committee. In Morgan the Court of Appeal expressed the hope that the current Jackson Review may consider the Aarhus principles and stated that it was not appropriate to give guidance in the context of Morgan. In the absence of authority we are presently minded to adopt the test of prohibitively expensive which was propounded in the 2008 Sullivan Report: costs, actual or risked, should be regarded as prohibitively expensive if they would reasonably prevent an ordinary member of the public (that is, one who is neither very rich nor very poor, and would not be entitled to legal aid) from embarking on the challenge falling within the terms of Aarhus. 19. That seems to us to require us to start by making an objective assessment of what costs are reasonable costs. However, any allowance or disallowance of costs we make must be made in the light of all the circumstances. We presently take the view that we should also have regard to the following: i) The financial resources of both parties. ii) Their conduct in connection with the appeal. iii) The fact that the threat of an adverse costs order did not in fact prohibit the appeal. security was in fact provided. iv) The fact that a request to waive security money was refused and v) The amount raised and paid for the Appellants own costs. Issue 2 : Issue Estoppel 20. For the Respondents, Mr Maurici submitted that the Appellants have raised Aarhus principles on two occasions in the House of Lords and those submissions were rejected on both occasions. The first occasion was in respect of the Appellants applications for waiver of security monies and for a protective costs order. On 22 March 2007 the Appeal Committee made the following decision: Their Lordships do not consider it appropriate to make any order on the application made to them for a dispensation in respect of the requirement to put up security and for a protective costs order. Their Lordships have considered the criteria in R (Cornerhouse Research) v Secretary of State for Trade & Industry [2005] EWCA Civ 192 and the submissions made with regard to their application and potential relaxation. Their Lordships proceed on the basis that the appeal raises an issue or issues of general importance and they are prepared to assume that absence of private interest may not always preclude the making of a special costs order in such a case. But their Lordships do not accept that information about the Applicants means, about the identity and means of any who she represents and about the position generally in the absence of any special order, are or should be regarded as immaterial: further, they do not consider that the suggested protective orders regarding costs appear proportionate on the information which is before them and in the light of the nature of the issues involved; and they do not consider that any case has been made for saying that the proposed appeal would be prohibitively expensive or that Directive 2003/35/EC would be breached without a special order. 21. The second occasion upon which the Aarhus principles were considered in this case preceded the making of the costs order dated 18 July 2008. In the written submissions on costs lodged on behalf of the Appellant, much greater information about the Appellants financial resources was given than had been given on the previous occasion. In the light of that information it was submitted that there should be no order for costs. In the alternative, the following submissions were made: In the event of their Lordships, notwithstanding the above, deciding to award costs in favour of the Respondents, they are requested to consider: Limiting them to the costs of one Respondent Limiting the costs to 70% of the Respondents costs. At the High Court and Court of Appeal stages only 70% of costs were awarded Reducing the burden on the Appellant by ordering any costs in excess of the 25,000 security monies already lodged with the House of Lords to be payable by instalments of at most 5,000 per annum and without interest (other than in the event of late payment). In any event staying the effect of the order until the issues relating to prohibitive expense and Directive 2003/35/EC are resolved between the Commission and the UK Authorities. 22. In response to those submissions the House made a standard order for costs: That the Appellant do pay or cause to be paid to the Respondents their costs of the appeal to this House, the amount of such costs to be certified by the Clerk of the Parliaments if not agreed between the parties. 23. We neither have nor assert any right to set aside or vary any decision already made by the Law Lords or by the Justices in this case. If, in advance of the hearing before us, the Law Lords or the Justices had made any decision on the implementation of the EU Directives in this case we would of course act in compliance with that decision. However, we take the view that the pronouncements which the Law Lords have made in this case do not prevent us from applying the Aarhus principles in the course of our assessment. 24. The decision made in March 2007 was made without a hearing and was made on the basis of the information about the Appellants means, about the identity and means of any who she represents and about the position generally. This being so the order states that their Lordships did not consider that any case had been made for saying that the proposed appeal would be prohibitively expensive. In the circumstances, we do not think that that was a final ruling upon these principles in this case. On the 25. contrary, we think the wording their Lordships there adopted invited the Appellant to provide the court with the information it would need to decide such principles. In our view no part of the decision made in March 2007 rules out our discretion to decide that the reasonable costs in this case should be nil or should be no more than a nominal amount. Whilst it is difficult to imagine circumstances in which it would be appropriate for us to allow less than 25,000 if the Respondents costs would otherwise reasonably exceed that sum, it is not in theory impossible that we should do so. In requiring the Appellant to raise such a sum as security monies their Lordships could not know, for example, what terms and conditions the Appellant might be required to agree to in order to borrow such a sum. It may be appropriate for us to take any such terms and conditions into account when assessing whether the costs of this appeal would have been prohibitively expensive. 26. At the hearing before us we made reference to a Court of Appeal decision on security for costs raised for an appeal: R v The Common Professional Examination Board, ex p. Mealing McLeod [2000] EWCA Civ 138. In that case the Court of Appeal overturned an earlier order which permitted monies paid as security for an appeal to be used in part satisfaction of costs orders made in earlier proceedings. The Court of Appeal made its decision on the basis of the terms of the loan agreement by which the security monies had been raised: they had been raised solely for the purpose of providing security and not for any other purpose. In fact, on examination of the decision in that case, we now appreciate that it is not directly relevant to the issues which arise in this case. In our view, the costs order dated 18 July 2008 gives the Respondents stronger ground for saying that the Appellant has raised the Aarhus principles already in this case and has lost them. However, on this point also, we find in favour of the Appellant. The order dated 18 July 2008 does not expressly deal with the Aarhus principles. As such, it is consistent with our finding that these matters are better dealt with at the stage at which costs are assessed rather than at the stage at which costs are awarded. The order expressly leaves the amount of costs to be determined. In our view we should determine that amount taking into account the Aarhus principles. 27. NEXT STEPS 28. In a draft of this judgment which was sent to the parties some time ago we foresaw the possibility that the parties may agree what sums should reasonably be allowed as costs in this case and may make such agreement subject to the decision upon any appeal the Respondents may bring against our rulings on Issues 1 and 2. Alternatively, the parties may agree to defer any decision as to the amount of reasonable costs pending a decision on such an appeal. The draft stated that the parties are neither required nor expected to attend the hearing at which we shall formally deliver this judgment, although they may do so if they wish. 29. Accordingly, we will now consider any submissions any party wishes to make. If appropriate, we will adjourn this matter to a further hearing and, perhaps, fix a date for that hearing. In conclusion, I am satisfied that in the special circumstances of this case the figure of 25,000 now claimed by the respondents is neither subjectively nor |
This appeal is about the distribution of European Structural Funds among the regions of the United Kingdom. It arises out of the complaint of a number of local authorities in Merseyside and South Yorkshire about the way in which it is proposed to distribute funds allocated to the United Kingdom for the years 2014 to 2020. The appellants say that they should receive more and other regions correspondingly less. Article 174 of the Treaty on the Functioning of the European Union requires the European Union to aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions. Article 175 requires Member States to conduct their economic policy in such a way as to further this objective and the Union to support it by distributions from the European Structural and Investment Funds (or ESI Funds). These funds are the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund. For present purposes the most significant of them are the Social Fund and the Regional Development Fund. The Social Fund was established under article 162 of the Treaty, whose terms identify its purpose: In order to improve employment opportunities for workers in the internal market and to contribute thereby to raising the standard of living, a European Social Fund is hereby established in accordance with the provisions set out below; it shall aim to render the employment of workers easier and to increase their geographical and occupational mobility within the Union, and to facilitate their adaptation to industrial changes and to changes in production systems, in particular through vocational training and retraining. Article 176 established the Regional Development Fund. This fund, which is much the largest of the Structural Funds, is intended to help to redress the main regional imbalances in the Union through participation in the development and structural adjustment of regions whose development is lagging behind and in the conversion of declining industrial regions. The distribution of money from the EU Structural Funds is a shared responsibility of the Commission and the authorities of the Member States. The Commission is solely responsible for the allocation of funds to each Member State. The money is then used to co finance programmes, the Union contribution currently varying between 50% and 85% and the rest being met from national budgets. The expenditure of sums allocated by the Commission within a Member State is jointly determined by the Commission and the Member State. In the United Kingdom this is the responsibility of the Secretary of State for Business, Innovation and Skills. Regulation (EU) 1303/2013 Funds are allocated from the EU budget to programmes co financed by the European Structural Funds for successive seven year funding periods. The transition to a new funding period will commonly involve a measure of disruption. Funding budgets rise and fall. Strategic priorities both at Union and at national level change. The number and definition of the various categories of region entitled to funding support also change. Statistical tests for funding support, which commonly depend on the relationship between indices of regional development and the corresponding EU averages, may be significantly affected by the accession of new Member States. There may or may not be transitional provisions to ease the passage from one funding period to the next. The allocation of funds for programmes co financed by the European Structural Funds for 2014 2020 is governed by Regulation (EU) 1303/2013, which I shall call the 2013 Regulation. The legal base of the 2013 Regulation is article 177 of the Treaty on the Functioning of the European Union, which requires the European Parliament and the Council to make regulations to define the tasks, priority objectives and the organisation of the Structural Funds. So far as the current period is concerned, these objectives are summarised in the recitals to the 2013 Regulation. The overall objective is succinctly expressed in Recital (3). It is to provide a framework within which the Union and Member States should implement the delivery of smart, sustainable and inclusive growth, while promoting harmonious development of the Union and reducing regional disparities. This recital reflects one of the main features of the scheme, which is that it has been designed on the footing that there is a close interaction between the reduction of regional imbalances and the promotion of growth generally. This is reflected in the drafting of the 2013 Regulation, which is directed not just to the reduction of regional disparities but to economic development in its broadest sense. Under article 89(1) of the 2013 Regulation, the Structural Funds are required to contribute to two missions. One is the actions of the Union leading to strengthening of its economic, social and territorial cohesion in the broad sense envisaged in article 174 of the Treaty. The other is the delivery of the Union strategy for smart, sustainable and inclusive growth. Both missions are to be fulfilled by pursuing two goals identified in article 89(2), namely investment for growth and jobs in Member States and regions, and European territorial co operation. Of the two goals, the first is much the most important. Article 91 provides for an overall budget of (in round figures) EUR 322 billion, representing the global resources allocated for the years 2014 2020 to the Social Fund and the Regional Development Fund (together with the Cohesion Fund from which the United Kingdom does not benefit). Under article 92, 96.33% of this global amount is allocated to the Investment for growth and jobs goal and of this, specified proportions are allocated to three categories of region: less developed, transition and more developed. The regions in question are standard geographical units used for statistical purposes by the Commission and known as NUTS2 regions (Nomenclature of Territorial Units for Statistics, Level 2). The categorisation of regions depends on the ratio of their average GDP per capita to that of the Union as a whole: see article 90 of the 2013 Regulation. Less developed regions have a GDP per capita below 75% of the EU average; transition regions have a GDP per capita between 75% and 90% of the EU average; and more developed regions have a GDP per capita over 90% of the EU average. To calculate a Member States allocation from the Structural Funds, the Commission notionally allocates an annual amount of funding to each region within that state in accordance with a methodology prescribed for each of the three categories of region by Annex VII of the 2013 Regulation. In each category, the calculation is based mainly on the regions GDP per capita relative to the EU average. The Commission uses the resulting figures to calculate an aggregate amount for each of the three categories of region in that Member State. The sum of the three categories is then allocated to the Member State, plus a sum from the Cohesion Fund in the case of those Member States (not including the United Kingdom) which are supported by that fund. In contrast to the allocation of Structural Funds among Member States, which is prescribed by the 2013 Regulation in detail, there is no formula for the allocation of funds among regions within Member States. Instead, what is prescribed is a detailed administrative procedure for arriving at the internal regional allocations under a scheme of shared management involving the Commission, the Member States, and local entities. The initiative, or right of proposal, belongs to the Member State. Article 4.4 provides: Member States, at the appropriate territorial level, in accordance with their institutional, legal and financial framework, and the bodies designated by them for that purpose shall be responsible for preparing and implementing programmes and carrying out their tasks, in partnership with the relevant partners referred to in Article 5, in compliance with this Regulation and the Fund specific rules. The critical instrument is the Partnership Agreement, which determines the allocation of resources between regions and programmes to be co financed. It is defined by article 2.20 as a document prepared by a Member State with the involvement of partners in line with the multi level governance approach, which sets out that Member State's strategy, priorities and arrangements for using the ESI Funds in an effective and efficient way so as to pursue the Union strategy for smart, sustainable and inclusive growth, and which is approved by the Commission following assessment and dialogue with the Member State concerned. The function of the Partnership Agreement is described by Recital (20). It is to translate the elements set out in the [Common Strategic Framework] into the national context and set out firm commitments to the achievement of Union objectives through the programming of the ESI Funds. The Partnership Agreement should set out arrangements to ensure alignment with the Union strategy for smart, sustainable and inclusive growth as well as with the Fund specific missions pursuant to their Treaty based objectives, arrangements to ensure effective and efficient implementation of the ESI Funds and arrangements for the partnership principle and an integrated approach to territorial development. A distinction should be made between the essential elements of the Partnership Agreement which are subject to a Commission decision and other elements which are not subject to the Commission decision and can be amended by the Member State. The preparation of the Partnership Agreement is governed by article 14. The agreement shall cover all support from the ESI funds in the Member State concerned. It is to be prepared by Member States in dialogue with the Commission and in accordance with their institutional and legal framework, and then submitted to the Commission in draft by 22 April 2014. The Commissions functions in relation to the draft are to be found in article 16. The Commission is required to assess the consistency of the Partnership Agreement with this Regulation and with other Union instruments, and to make observations within three months of submission. The Member State is required to provide any additional information required of it and to make such revisions as are required in the light of the Commissions observations. Finally, the Commission must within four months of submission adopt a decision by means of implementing acts, approving all the elements of the Partnership Agreement which are required by the 2013 Regulation to be included. A similar process governs the Commissions approval of any amendments that may subsequently be proposed by a Member State. In the absence of specified criteria for the internal allocation of strategic funding, it is clear that the role of the Commission, as a party to the dialogue leading to the submission of the draft Partnership Agreement and the body charged with commenting on and approving it, is not simply to rubber stamp the proposals of Member States. It calls for a scrutiny of the proposals which is at once expert and exacting. It constitutes the main machinery of compliance envisaged by the legislator. It is an important feature of the 2013 Regulation that the criteria to be applied by both the Commission and the Member States in finalising the Partnership Agreement are not based on the amounts calculated by the Commission for each region when arriving at their national allocations. Indeed, these amounts are not even published, although they can be estimated from the methodology described in Annex VII of the 2013 Regulation. Nor are allocations within a Member State based, as the Commissions calculations are, on GDP per capita or other measures of deprivation. Instead, the proposals in the Partnership Agreement are governed by broadly based criteria that are purely qualitative. Recital (21) declares that Member States should concentrate support to ensure a significant contribution to the achievement of Union objectives in line with their specific national and regional development needs. The Union objectives are identified by article 9. The overall objective is to support the Union strategy for smart, sustainable and inclusive growth. This is defined by article 2.1 as meaning the targets and shared objectives guiding the action of Member States and the Union identified in three documents adopted by the European Council. The first is the Strategy for Jobs and Growth at Annex I of the Conclusions of the European Council of 17 June 2010. This identifies a number of Headline Targets, which can be summarised as an increase in the rate of employment, an improvement in the conditions for research and development, a reduction in greenhouse gas emissions, the improvement of educational levels and the promotion of social inclusion. The second is the Council Recommendation of 13 July 2010 on guidelines for the economic policies of Member States. These deal with the quality and sustainability of public finances, macroeconomic imbalances, research and development, resource efficiency and the reduction of greenhouse gas emissions, and the business and consumer environment. The third document is Council Decision 2010/707/EU on guidelines for the employment policies of Member States. These deal with labour market participation, skills, education and social inclusion. The thematic objectives mentioned in article 9 are set out in the article itself, which provides as follows: Thematic objectives In order to contribute to the Union strategy for smart, sustainable and inclusive growth as well as the Fund specific missions pursuant to their Treaty based objectives, including economic, social and territorial cohesion, each ESI Fund shall support the following thematic objectives: (1) strengthening research, technological development and innovation; (2) enhancing access to, and use and quality of, ICT; (3) enhancing the competitiveness of SMEs, of the agricultural sector (for the EAFRD) and of the fishery and aquaculture sector (for the EMFF); (4) supporting the shift towards a low carbon economy in all sectors; (5) promoting climate change adaptation, risk prevention and management; (6) preserving and protecting the environment and promoting resource efficiency; (7) promoting sustainable transport and removing bottlenecks in key network infrastructures; (8) promoting sustainable and quality employment and supporting labour mobility; (9) promoting social inclusion, combating poverty and any discrimination; (10) investing in education, training and vocational training for skills and lifelong learning; (11) enhancing institutional capacity of public authorities and stakeholders and efficient public administration. Thematic objectives shall be translated into priorities that are specific to each of the ESI Funds and are set out in the Fund specific rules. The thematic objectives are complemented by strategic guiding principles contained in a Common Strategic Framework at Annex I, which provide guidance as to how they are to be achieved, and by certain conditions (ex ante conditionalities) to be satisfied by Member States in relation to each thematic objective, which are identified in articles 18 and 19 and Annex XI. It will be apparent that, as foreshadowed by Recital (3), not all of the thematic objectives are directly concerned with reducing regional disparities. A few of these criteria are directed to traditional indices of deprivation such as employment and skill levels. Most are directed to specific developmental needs such as technical research capacity, training, information technology, business start ups or transport infrastructure, the need for which will vary even among regions with comparable levels of poverty or deprivation. Some are directed to more general policy objectives with no necessary connection to either deprivation or developmental needs, such as climate change adaptation. Articles 14 and 15, which lay down the required contents of the Partnership Agreement, closely reflect the objectives identified in article 9 and its incorporated instruments. The treatment of the United Kingdom NUTS2 regions There are 37 NUTS2 regions in the United Kingdom. Thirty are in England, four in Scotland, two in Wales and one in Northern Ireland, which constitutes a region in itself. In order to understand the way that Merseyside and South Yorkshire have been treated in the current Partnership Agreement, it is necessary to refer to the way that they had been treated in the two previous periods, 2000 2006 and 2007 2013. In 2000 2006, there were three categories of region called Objective 1, Objective 2 and Objective 3 regions. Objective 1 corresponded to the current less developed category, comprising regions with a GDP per capita less than 75% of the EU average. Regions in this category received the most generous funding. Merseyside and South Yorkshire were both Objective 1 regions in 2000 2006. The allocations for the next period, 2007 2013, were fixed shortly after the enlargement of the European Union by the admission of ten new members, mostly in Eastern Europe. The new members had lower levels of GDP per capita, which depressed the EU average and meant that a number of regions which had previously been in the bottom category of development and received the most generous treatment were now in a higher category. The Regulation for 2007 2013 ((EC) 1083/2006), which I shall call the 2006 Regulation, provided for two main categories of region: convergence regions, which broadly corresponded to the current less developed regions with a GDP per capita less than 75% of the EU average, and competitiveness regions which were above the 75% threshold and broadly corresponded to the current transition and more developed categories. Article 8 of the 2006 Regulation carved out of the competitiveness category two intermediate categories of region which had previously had a GDP per capita below 75% and would have been particularly badly affected by the move into a higher category. These came to be known as phasing in regions and phasing out regions, although the terms themselves are not used in the 2013 Regulation. Phasing out regions were regions which would have been convergence regions in 2007 2013 (the least developed category) but for the expansion of the EU, but moved above the 75% threshold because of the statistical impact of enlargement: see article 8.1. Phasing in regions were regions which had moved from less than 75% to more than 75% of the EU average GDP per capita and would have done so even without enlargement. That is their development status had improved. To ease their passage into the competitiveness category, phasing in and phasing out regions were both eligible for additional financial support on what was described as a transitional and specific basis, over and above the support that they would have received as competitiveness regions. In the United Kingdom, the only phasing in regions in 2007 2013 were Merseyside and South Yorkshire. They were entitled under Annex II, para 6(b) of the 2006 Regulation to an allocation of 75% of the 2006 level in 2007, tapering down to the national average level for competitiveness regions by 2011. The only phasing out region was Highlands & Islands. It was entitled under Annex II, para. 6(a) to an allocation of 80% of the 2006 level in 2007, tapering down to the national average level of funding support for competitiveness regions in 2013. The new categorisation for 2014 2020 had three categories, as we have seen. In effect, the old competitiveness category for regions with a GDP per capita over 75% of the EU average was divided into two new categories, transition and more developed. According to the Secretary of States evidence, the transition category was devised against the background of tight budgetary constraints to provide an increased level of funding notwithstanding the reduction of the overall budget for the Structural Funds. But in the course of negotiations in the European Council, the budget for transition regions originally proposed by the Commission was cut, thus reducing the value of the new category to those whom it was intended to benefit. In the current categorisation, the United Kingdom has two less developed regions, West Wales and Cornwall. There are 11 transition regions: Northern Ireland; Highlands & Islands in Scotland; and nine English regions including Merseyside and South Yorkshire. The other 24 regions are all classified as more developed. The Commissions allocation to the United Kingdom for 2014 2020 represented a 5% reduction at 2011 prices on the allocation for the previous funding period. The Secretary of States proposals for its allocation were formulated in two stages. The first covered the distribution of the United Kingdoms national allocation between its four component countries and the second covered allocations to regions within each country. At each stage the Secretary of States approach was to assess the allocation of each country or region by reference to its allocation for the previous funding period. This approach was adopted so as to limit as far as possible the scope for disruptive change in the new period. It was possible because the governments regional allocations for the previous period had been carried out using a basket of economic and social indicators, and the Secretary of State considered that there had been no significant change of the economic and social geography of the country in the interval. The Secretary of States first decision, which was announced on 26 March 2013, was that each of the four countries comprising the United Kingdom would have its overall allocation reduced by the same proportion, about 5%. The second decision, which was announced on 27 June 2013, distributed the allocations of each country among its NUTS2 regions. In the case of Northern Ireland, the allocation automatically followed from the first decision, because it was a region in itself. For present purposes, the critical points decided on the second occasion were that the nine English transition regions should receive an allocation per year for the current funding period representing an increase of 15.7% (at 2011 prices) on its allocation for 2013, the last year of the previous funding period, while Highlands & Islands (the only Scottish transition region) should receive an allocation per year of 95% of its average annual allocation over the whole of the previous funding period. The applicants have two fundamental complaints about this way of doing things. The first complaint is that although the allocation for Merseyside and South Yorkshire had risen by 15.7% from the base year of 2013, this represented a 61% reduction (at 2011 prices) on its allocation for the previous funding period as a whole. This was because in the previous funding period, although they would otherwise have ranked as competitiveness regions, they had received the special transitional and specific support provided for by article 8 of the 2006 Regulation. Under the terms of the 2006 Regulation it had tapered down to nil by 2011. In 2007 2013 as a whole, Merseyside and South Yorkshire had received substantially more than competitiveness regions because of the article 8 funding. But by taking 2013 as the base year for the uplift of 15.7%, the Secretary of State chose the year in which Merseyside and South Yorkshire had been entitled to no special transitional funding and had received no more than the national average for competitiveness regions. By comparison, the other English transition regions had received no special article 8 funding in the previous period and their allocations profile in that period had been flat in real terms. The second complaint is that Merseyside and South Yorkshire have done badly by comparison with Highlands & Islands and Northern Ireland. This, it is said, is because the first decision had protected the allocations to Scotland and Northern Ireland by guaranteeing them 95% of their allocations in the previous funding period. Highlands & Islands had then been allowed by the second decision to base the calculation of the 95% on its average annual allocation in the previous period, notwithstanding that, as a phasing out region in the previous period, part of its allocations in 2007 2013 had also represented transitional additional funding tapering down to zero over the period. In other words, Highlands & Islands was not limited to the relevant proportion of its last and lowest year in 2007 2013. The net result, the appellants say, was that their regions fared worse than other transition regions in spite of having higher levels of deprivation than most of them. What they want is a principle of allocation more closely related to levels of relative deprivation. Preliminary observations Three points should be made at the outset. The first is that the Secretary of States allocation is a discretionary decision of a kind which the courts have traditionally been particularly reluctant to disturb. There is no right answer prescribed by the EU Treaty or the 2013 Regulation to the question how EU Structural Funds should be distributed within a Member State. There is not even any clear principle on which this should be done. Instead, the Secretary of State was required to make a complex evaluation of a wide range of overlapping criteria, all of which involved difficult and sometimes technical judgments about matters of social and economic policy. Secondly, it was a judgment of a particularly delicate kind, involving the distribution of finite resources, including domestic taxpayers funds as well as EU funds, between the four countries and the distinctive regions of the United Kingdom. In such cases, the Secretary of State is in reality arbitrating between different public interests affecting different parts of our community. It is an exercise in which the legitimacy of the decision making process depends to a high degree on the fact that ministers are answerable politically to Parliament. As Lord Hoffmann observed in a lecture given in 2001, Separation of Powers, 7 JR 137 (2002)), at paras 19 20: there are certain areas in which, although the decision is formally justiciable because it involves the interpretation of statute or the common law, the outcome is likely to have an important impact upon public expenditure. The allocation of public expenditure whether we should spend more or less on defence, health, education, police and so forth, whether at a national or local level is very much a matter for democratic decision. Furthermore, a court deciding a case which will affect one form of public expenditure for example, impose a burden of expenditure upon education authorities has no way of being able to decide whether such expenditure should or should not have a prior claim over other forms of expenditure. It may consider that, viewed in isolation, it is fair and reasonable that children in schools should receive certain benefits or financial compensation for not having received other benefits. But because it can only view the matter in isolation, it has no way of knowing whether this means that other people dependent upon social security, police protection and so on will have to make sacrifices because there is less money for them. The only people who can make such decisions are the democratically elected bodies who are in charge of the budget as a whole. This means that even when a case appears to involve no more than the construction of a statute or interpretation of a common law rule, the courts are very circumspect about giving an answer which would materially affect the distribution of public expenditure. The third preliminary observation is that the disputed allocations are not a matter for the sole decision of the United Kingdom or the Secretary of State as its representative. Under the 2013 Regulation, the United Kingdom has the right of proposal, but its proposals must be embodied in a Partnership Agreement before they can be adopted. The Partnership Agreement is made with the Commission, acting as the relevant organ of the European Union. Once approved by the Commission it is implemented by a Commission decision. It then takes effect as an instrument of the Union. At the time when the present proceedings were brought, there was no Partnership Agreement in existence. There were only proposals which had been announced by the Secretary of State. At a number of stages (I shall return to this point) these had been prepared in consultation with the Commissions officials. Ultimately, they were embodied in a draft Partnership Agreement which was submitted by the Secretary of State to the Commission on 22 April 2014. It is a long, elaborate and highly technical document. We were referred to it in the form published on the United Kingdom governments website. The Commission was certainly aware of these proceedings and in general terms of the nature of the appellants complaints, not least because according to Mr Eyres evidence they lobbied the relevant commissioner about them. The Commission made a number of observations on the draft, which have not been disclosed because the Commission regards them as confidential. Finally the document was agreed by a Commission decision notified on 29 October 2014, shortly after this appeal was argued. I make these points not in order to suggest that the present issues are beyond the scope of judicial review in the English courts. The Secretary of States proposals are amenable to judicial review like any other decision of the executive. If his proposals were unlawful, he may be obliged to reconsider them and if necessary to propose an amendment. I am prepared to assume that the Commission would adopt the amendment, as it has indicated that it is in principle willing to do if it is consistent with the objectives of the Funds. However, the Commissions involvement has a broader significance. It is, as I have pointed out, the main mechanism of compliance envisaged in the 2013 Regulation. The Commission is an expert administrative body at arms length from the Secretary of State, with considerable experience of the economic and social issues involved. It is able to review the economic merits of the Secretary of States judgments and if necessary substitute its own evaluation in a way that is beyond the institutional competence of any court, let alone a national court. The Commission is evidently satisfied that the Partnership Agreement complies with the 2013 Regulation. That does not rule out the possibility that it may be equally satisfied with some alternative proposal. But a national court should be extremely cautious before accepting that a proposal is inconsistent with the 2013 Regulation which the Commission charged with applying it has found to be consistent with it. Grounds of review The appellants case is that taking the Secretary of States two decisions together, the allocation to Merseyside and South Yorkshire which resulted was unlawful. Mr Coppel QC, who appeared for them, submitted that the Secretary of State treated Merseyside and South Yorkshire differently from Northern Ireland and Highlands & Islands when they were for practical purposes in the same position, and in the same way as other English transition regions when they were in a materially different position. This, he said, was contrary to the general principle of equality in EU law as well as ordinary principles of English public law which require a decision maker to have regard only to legally relevant considerations. He submits that to make his case good, it is enough to demonstrate that Merseyside and South Yorkshire were comparable to Highlands & Islands or different from the other English transition regions. The Secretary of State had no discretion or margin of judgment on that question. His discretion or margin of judgment related only to the question whether the discrimination was objectively justifiable, and according to Mr Coppel QC the Secretary of State has never set out to satisfy that test. Before turning to the Secretary of States decisions, I should make it clear that I do not accept the rigid scheme of analysis by which Mr Coppel QC seeks to confine us. The general principle of equality in EU law is that comparable situations are not to be treated differently or different situations comparably without objective justification. This is not a principle special to the jurisprudence of the European Union. It is fundamental to any rational system of law, and has been part of English public law since at least the end of the nineteenth century. As Lord Hoffmann pointed out when delivering the advice of the Privy Council in Matadeen v Pointu [1999] 1 AC 98, para 109: Is it of the essence of democracy that there should be a general justiciable principle of equality? Their Lordships do not doubt that such a principle is one of the building blocks of democracy and necessarily permeates any democratic constitution. Indeed, their Lordships would go further and say that treating like cases alike and unlike cases differently is a general axiom of rational behaviour. It is, for example, frequently invoked by the courts in proceedings for judicial review as a ground for holding some administrative act to have been irrational. Unequal treatment, Baroness Hale explained in Ghaidan v Godin Mendoza [2004] 2 AC 557, para 132, is the reverse of the rational behaviour we now expect of government and the state. Power must not be exercised arbitrarily. If distinctions are to be drawn, particularly upon a group basis, it is an important discipline to look for a rational basis for those distinctions. The two stage process by which courts in discrimination cases distinguish between comparability and objective justification is a useful tool of analysis and probably indispensable in dealing with allegations of discrimination on ground of gender, race or other personal characteristics. More generally, a rigid distinction between the two stages was implicit in the four stage test proposed by Brooke LJ in Wandsworth London Borough Council v Michalak [2003] 1 WLR 617, para 20, for cases arising under article 14 of the European Convention on Human Rights. But a tool of analysis should not be transformed into a rule of law. As Lord Hoffmann pointed out in R (Carson) v Secretary of State for Work and Pensions [2006] 1 AC 173, paras 29 31, the question whether two situations are comparable will often overlap with the question whether the distinction is objectively justifiable: If an analogous situation means that the two cases are not relevantly different (no two cases will ever be exactly the same) then a relevant difference may be the justification for the difference in treatment [T]his division of the reasoning into two stages is artificial. People don't think that way. There is a single question: is there enough of a relevant difference between X and Y to justify different treatment? [T]he invocation of the rational and fair minded person (who is, of course, the judge) suggests that the decision as to whether the differences are sufficient to justify a difference in treatment will always be a matter for the judge. Baroness Hale, making a very similar point in Ghaidan v Godin Mendoza at para 134, deprecated a formulaic approach for precisely this reason. The problem about Mr Coppel QCs scheme of analysis as applied to the allocation within a Member State of EU Structural Funds is that there is no clear measure of comparability, whether between different regions or between different ways of treating them. The appellants say that Merseyside, South Yorkshire, Highlands & Islands and Northern Ireland are comparable by virtue of being transition regions under the classification, and that they have been treated differently by virtue of receiving an allocation for 2014 2020 which represents a smaller proportion of what they received in 2007 2013 than the rest. But neither proposition is coherent in the context of this particular scheme. The four regions are transition regions only because they all have an average GDP per capita between 75% and 90% of the EU average. But that only means that they are all eligible to participate in the pool of money allocated by the Commission for United Kingdom transition regions. The mere classification by GDP per capita is consistent with significant differences in other respects which are relevant to the allocation of EU Structural Funding. The criterion for the allocation is not GDP per capita but contribution to the EUs policy objectives as set out in article 9 and its incorporated instruments. To paraphrase Lord Hoffmann, there is only one question: is there enough of a relevant difference between Merseyside and South Yorkshire on the one hand and the remaining transition regions on the other to justify any difference in their treatment? The answer to that question may ultimately be for the court, but the nature of the question requires a particularly wide margin of judgment to be allowed to the decision maker. That is partly because the questions posed by the 2013 Regulation, whether they come under the heading of comparability or justification, call for a complex policy judgment based on a broad range of economic and social factors which the court is not competent to carry out and could not legitimately carry out. And it is partly because the discretion allowed to Member States and the Commission by the 2013 Regulation is itself very wide, and the courts cannot confine it more narrowly. There are many solutions consistent with the Regulation, none of which is any more right than the next. It follows, in my opinion, that the appellants cannot succeed on this appeal simply by pointing to the classification of Merseyside and South Yorkshire as transition regions, and denouncing the outcome of the Secretary of States two decisions as more burdensome to them than to others in the same category. They must show that there was something unlawful about the process or reasoning by which that outcome was arrived at. Against that background, I turn to the Secretary of States two decisions. The first decision The first decision was to allocate to each of the four countries comprising the United Kingdom 95% of what they had received from the Structural Funds in the previous funding period (at 2011 prices). Instead of applying the 5% reduction in the United Kingdoms national allocation to the United Kingdom as a whole, he applied it separately to each component country. The Secretary of States reasons for this decision are explained in a witness statement of Dr Susan Baxter, a senior official in his department. It is clear from her evidence that Ministers chief concern was that the radical reclassification of European regions in the current Regulation should not lead to an excessively abrupt change in the funding allocated to the United Kingdoms regions. Although the Commission had not disclosed how much it had allowed for each region when calculating its allocations to Member States, the department was able to estimate the Commissions regional figures from the formula in the 2013 Regulation. This revealed that if the Secretary of State were to allocate funds to regions according to the same GDP based methodology as the Commission had used to allocate funds to the United Kingdom, England would have received an increase of 7% on its allocation for 2007 2013 (at 2011 prices), with the largest increases going to the south of England. The three other countries comprising the United Kingdom would have received substantially less than their allocation for 2007 2013: 22% in the case of Wales, 32% in the case of Scotland and 43% in the case of Northern Ireland. The Secretary of State considered allocating funds within the United Kingdom on this basis, but rejected the idea in order to protect the devolved administrations from sudden and significant cutbacks to funding. His reasons were described by Dr Baxter as follows: 41. Ministers were aware that the decision to equalise the cuts meant that there was proportionately less for England than the EUs notional calculation methodology would have rendered. Accordingly Ministers were fully aware that both (a) that this approach to the allocation of funds (rather than allocation on the basis of the EU Commissions approach) would reduce the amount of money available for regions in England; and (b) that it would limit the funding available for distribution for the Transition regions in England and the allocation for Northern Ireland and Highlands & Islands regions would come out of the transition budget. However, this was seen in the context of an overall cut in the funding for Northern Ireland and Scotland. 42. There were a number of reasons for applying the cut equally as between the nations, including: Transparency a decision that was easy for non experts to understand; Simplicity a single number applied to each Devolved Administration; Consistency the same approach was taken to all four Devolved Administrations; and Balanced it took account of the status of the Devolved Administrations under the UK's constitutional settlement. 43. The Government was not, at this stage, looking at the detailed effects at NUTS 2 level. Ministers were aware that increasing the funding for the Devolved Administrations would mean less for certain regions in England, as allocations had be [sic] made from a set budget category for each category of region. However, it was decided that this would be dealt with at the next stage of the allocation process and that only the big picture within the UK would be looked at when trying to distribute the cut fairly as between the UK nations. In these passages, references to the English regions getting less mean less than they would have got if the Secretary of State had replicated the notional regional allocations which it was estimated that the Commission had made. In my opinion the Secretary of State was entitled to adopt this approach. The EU Structural Funds are primarily concerned with economic development, which is a devolved responsibility. It is true that the relevant entity in international law is the United Kingdom, and that, as regards the institutions of the European Union, the United Kingdom is the Member State. England and the devolved administrations of Scotland, Wales and Northern Ireland have no formal status in the EU legal order. But it does not follow that their status within the United Kingdom is irrelevant. EU law is not insensitive to the relationship between Member States and their internal federal or regional units of government and will not necessarily treat regional variations arising from the distribution of constitutional responsibility within a Member State as discriminatory. In (Case C 428/07) R (Horvath) v Secretary of State for the Environment, Food and Rural Affairs [2009] ECR I 6355, the Court of Justice was concerned with the Memorandum of Understanding between the United Kingdom government and the Scottish Government which assigned to the devolved administration of Scotland responsibility for the implementation of Community law concerning the common agricultural policy. The relevant EC Regulation empowered Member States to set minimum standards of compliance at national or regional level. Mr Horvath complained that regulations requiring the maintenance by landowners of public rights of way over agricultural land infringed the Community law principle of equality because equivalent obligations had not been imposed by the devolved administration in Scotland. The Advocate General, in her Opinion, had advised that differences in the way that Community obligations were implemented by different devolved administrations could not be regarded as discriminatory because they cannot be attributed to the conduct of the same public authority (para 112). The Grand Chamber reached the same conclusion, but on a broader basis, namely that such differences were inherent in the distribution of responsibility for implementing Community law among distinct territorial units of government within a Member State. They were therefore no more discriminatory than differences in the way that EU law was implemented by different Member States: 48. As a preliminary point, it should be pointed out that, in conferring on Member States the responsibility of defining minimum GAEC requirements, the Community legislature gives them the possibility of taking into account the regional differences which exist on their territory. 49. It should be recalled that, when provisions of the Treaty or of regulations confer power or impose obligations upon the States for the purposes of the implementation of Community law, the question of how the exercise of such powers and the fulfilment of such obligations may be entrusted by Member States to specific national bodies is solely a matter for the constitutional system of each State (Joined Cases 51/71 to 54/71 International Fruit Co and Others [1971] ECR 1107, para 4). 50. Thus, it is settled case law that each Member State is free to allocate powers internally and to implement Community acts which are not directly applicable by means of measures adopted by regional or local authorities, provided that that allocation of powers enables the Community legal measures in question to be implemented correctly (Case C 156/91 Hansa Fleisch Ernst Mundt [1992] ECR I 5567, para 23). 51. The Court has, in addition, held that, where a regulation empowers a Member State to take implementing measures, the detailed rules for the exercise of that power are governed by the public law of the Member State in question (see (Case 230/78) Eridania Zuccherifici nazionali and Societ italiana per lindustria degli zuccheri [1979] ECR 2749, para 34, and Case C 313/99 Mulligan and Others [2002] ECR I 5719, para 48). 54. It must nevertheless be examined whether, in those circumstances, the mere fact that the rules establishing GAEC laid down by the regional authorities of the same Member State differ constitutes discrimination contrary to Community law. 57. Where, as in the main proceedings, it is the devolved administrations of a Member State which have the power to define the GAEC minimum requirements within the meaning of article 5 of and Annex IV to Regulation No 1782/2003, divergences between the measures provided for by the various administrations cannot, alone, constitute discrimination. Those measures must, as is clear from para 50 of this judgment, be compatible with the obligations on the Member State in question which stem from that regulation. 58. In the light of the foregoing, the answer to the second question is that, where the constitutional system of a Member State provides that devolved administrations are to have legislative competence, the mere adoption by those administrations of different GAEC standards under article 5 of and Annex IV to Regulation No 1782/2003 does not constitute discrimination contrary to Community law. The decision is significant not just for the answer that was given to the particular question posed by the High Court, but because it necessarily followed from the reasoning that the mere fact that the United Kingdom was a unitary state in international law did not mean that regional differences in the way that Community law was applied called for objective justification. The present case differs from Horvath. The sole decision maker was the Secretary of State. It was not the devolved administrations. However, this seems to me to be a largely formal distinction which avoids the substance of the matter. The 2013 Regulation requires a Partnership Agreement to be agreed between the Commission and the United Kingdom. Proposals for inclusion in that agreement are therefore necessarily prepared for submission to the Commission on behalf of the United Kingdom. But internally, the Secretary of State was entitled to give effect to the wishes of the devolved administrations in areas such as these where they would be constitutionally responsible for implementation, notwithstanding that that might introduce differences between the different countries of the United Kingdom. Article 5(1) of the 2013 Regulation provides that a Member State must in accordance with its institutional and legal framework organise a partnership with the competent regional and local authorities. Article 5(2) provides: In accordance with the multi level governance approach, the partners referred to in para 1 shall be involved by Member States in the preparation of Partnership Agreements and progress reports and throughout the preparation and implementation of programmes What the Secretary of State did when making his first decision was to treat the four countries comprising the United Kingdom as if they were separate entities for the purpose of implementation of the 2013 Regulation, and to divide the United Kingdoms allocation from the Structural Funds between them on a consistent basis, pro rata to their allocations in the previous funding period. In my opinion, he was entitled to have regard in this way to the constitutional settlement of the United Kingdom, provided (i) that the basis on which he did so did not unjustifiably discriminate between the four countries, and (ii) that the financial implications for the individual regions of the United Kingdom were consistent with the 2013 Regulation. The Secretary of States first decision was in my opinion within his margin of judgment in both of these respects. There is no material before us to suggest that the relative positions of England, Wales, Scotland and Northern Ireland had changed so radically since the last funding period that a distribution between them proportionate to their previous allocations could be regarded as in itself discriminatory. The argument of Merseyside and South Yorkshire is directed entirely to the financial impact of the decision on individual regions within the four countries, in other words to the second of the two provisos which I have mentioned. But the first decision did not mean that English transition regions such as Merseyside and South Yorkshire would necessarily fare worse than Highlands & Islands or Northern Ireland. The appellants do not suggest that the first decision necessarily meant that Highlands & Islands and Northern Ireland would get a larger proportion of the United Kingdoms transition region pot than they would have done if the 5% reduction, instead of being applied to the four countries separately, had been applied to the United Kingdom as a whole. That would depend on how the allocations to individual regions were dealt with in the second decision, both in Scotland and in England. Indeed, Mr Eyres, whose witness statements constitute the appellants evidence, says that Merseyside and South Yorkshire assumed in the light of the first decision that they would receive a similar degree of protection to that received by the devolved regions when it came to allocating funds among the regions of England at the second stage. The appellants evidence is not that the first decision reduced the total amount available for allocation to English transition regions below what it would have been if the 5% reduction had been applied across the United Kingdom as a single entity. It is that it reduced the total amount below what it would have been if the Secretary of State had simply allocated funds between the regions in accordance with the notional regional allocations made by the Commission when calculating the allocation of the United Kingdom. But that could not possibly make the first decision unlawful. This is because under the 2013 Regulation the calculation of national allocations by the Commission depended on a precise formula based primarily on regional GDP per capita, whereas the allocation of the funds within a Member State are based on criteria that are qualitative and altogether wider. Developmental needs in the respects covered by the thematic objectives cannot be measured simply by reference to general measures of poverty such as GDP per capita. The Secretary of State cannot therefore have been obliged to replicate the methodology of the Commission or to employ some other GDP based formula in his decision about how to allocate the funds among the regions of the United Kingdom, provided that he respected the thematic objectives and that his proposals were agreed by the Commission in the Partnership Agreement. It is not suggested that he failed to respect the thematic objectives, and the Partnership Agreement has been agreed by the Commission. The second decision The appellants, as I have pointed out, recognised that the first decision did not prevent the Secretary of State from protecting them against a sudden and significant cutback. Their real target is the Secretary of States second decision in which he failed to do so. Their complaint is that it did not protect them against a sudden and significant cutback by comparison with the 2007 2013 allocations, because the selection of 2013 as the base year meant that their uplift was based on the year in which their funding in the previous funding period had been lowest. This was because under article 8.1 and Annex II, para 6(b), their funding had been tapered down by 2013 to the national average level for competitiveness regions. Moreover, the national average for competitiveness regions was exactly that, an average. It did not take account of the special needs of those competitiveness regions in the north and midlands of England which were below the average and had relatively low GDP per capita and high levels of deprivation. The appellants argue that in order to avoid unjustifiable discrimination the Secretary of State should, when making his second decision, have based the uplift of the English transition regions for 2014 2020 on their average allocations over the whole of the previous funding period. As it was, his decision to use 2013 as the base year discriminated against them, (i) by comparison with other English transition regions, which had had a flat annual allocations profile in the previous period, and (ii) by comparison with Highlands & Islands whose annual allocations for the new period were calculated by reference to the average of its annual allocations in 2007 2013 instead of just 2013. 39. The Secretary of State did not overlook these factors. He considered that Merseyside and South Yorkshire were not comparable to other English transition regions or to Highlands & Islands. I shall deal first with the question of comparability to the other English transition regions. In her witness statement (at paras 47 55), Dr Baxter says that ministers considered four main options: Option A was to replicate the notional regional allocations made by the Commission in arriving at the national allocation of the United Kingdom. This would have resulted in allocations which were proportionate to regional GDP per capita, but would have resulted in a significant shift of funding from the north of England to the south. They considered that there had been no fundamental change in the economic landscape in the last few years such as to justify a shift of allocations of this kind, which would have reduced the funding available for the poorest parts of England. Officials consulted the Commission. The Commission said that it would be uncomfortable about the use of their methodology, which had been designed for the calculation of national, not regional allocations. Option B was to apply a standard uplift to each regions allocations for 2013. Option C was the same as Option B, but with the allocations of Merseyside and South Yorkshire being based on their average allocations over the whole of the period 2007 2013. (This was already the case for the other English transition regions, whose allocations profile had been flat over the previous funding period). Option C would have resulted in Merseyside and South Yorkshire receiving a higher allocation than under Option B, but it would have involved a reduction of 22% in the allocations of all English transition regions, including Merseyside and South Yorkshire, compared to 2007 2013. This was because the high cost of funding Merseyside and South Yorkshire on the basis of their allocations over the whole of the previous funding period would have had to come out of the pot available to transition regions generally. It was considered that for this reason Option C would be inconsistent with the thinking which lay behind the creation of the transition category for 2014 2020, and would have caused difficulty in agreeing the allocations with the Commission. This was because the transition category had been specifically introduced to provide enhanced levels of funding for regions at an intermediate stage of development notwithstanding the reduction of the total budget. Option D was a hybrid scheme using the Commissions notional allocations for all transition regions combined with what is described as a UK specific formula for more developed regions. For transition regions this would have been the same as Option A. Ministers also considered a fifth method, which involved using a basket of economic indicators together with a suitable safety net. They thought that there was a strong case for this, but rejected it because, like Option A, it would have produced a large drop in funding for the midlands and north of England, in favour of the south. 40. As Dr Baxter points out, no solution was wholly satisfactory from every point of view: 48. Given the funding reductions to the overall programme, and the limitations imposed by the EU Regulations, there was no outcome possible which would not have resulted in funding reductions to some regions. The advantages and disadvantages of a range of options had to be considered and Ministers had to take a range of considerations into account in determining their preferred solution. Ministers, she notes, had to make difficult decisions: 87. Officials presented them with a range of options after undertaking very detailed and comprehensive analysis and Ministers chose those options which they felt in sum were fairest to all. The available budget was set by the EU and so it was always unlikely that a single option would satisfy all regions. Giving Merseyside and South Yorkshire a larger allocation would have meant reducing the allocations to the other UK Transition regions. Decisions over the Transition allocations were particularly problematic as the negotiations in the European Council had resulted in significant cuts to the budget for Transition regions compared to the European Commission proposal. This level of reduced funding at EU meant that any decision was going to come as a disappointment for some. 41. The Secretary of State chose Option B, fixing the uplift at 15.7%. His reasons are described as follows by Dr Baxter: 54. A key aspect of the decision, of course, was the status of Merseyside and South Yorkshire as phasing in regions for the 2007 2013 period, thus receiving additional payments in 2007, 2008, 2009, 2010 on a specific and transitional basis, as explained above. Ministers decided to make the allocations using 2013 allocations as a baseline because such a baseline: maintained higher levels of funding in the North of England, where need is greatest; avoided large drops in funding levels as between 2013 and 2014 (even in relation to South Yorkshire and Merseyside); treated all English Transition regions in the same way, whilst taking account of the phased in status of South Yorkshire and Merseyside by basing allocations on the jumping off point from the 2007 2013 allocation; and treated all More Developed regions in the same way. 55. Had allocations been calculated based on a 2007 2013 average or overall quantum, then Ministers felt that Merseyside and South Yorkshire would have been unduly advantaged in relation to other English Transition areas, in so far as their boosted allocations in the period 2007 2010 were expressly intended to be transitional and specific rather than to be enshrined into future allocations. 42. In the light of this reasoning it is impossible to say that the Secretary of States decision was outside the broad range of decisions that he could lawfully make. Merseyside and South Yorkshire had already received additional funding over and above that available to other regions with a GDP per capita exceeding 75% of the EU average during the previous funding period. Article 8.2 and Annex II, para 6(b) of the 2006 Regulation had provided for the level of funding to taper down to the national average for competitiveness regions by 2011. Mr Eyres, the appellants witness, says that this had not been enough to lift Merseyside and South Yorkshire into the category of competitiveness regions (in the 2007 2013 categorisation) or the category of more developed regions (in the categorisation of 2014 2020). That is so, but it misses the point, which is that it was of the essence of the transitional and specific additional funding allowed by article 8 of the 2006 Regulation that it was temporary. Once it had expired, the 2006 Regulation 43. envisaged in terms that the regions which had benefitted should be funded only at the national average aid intensity level for competitiveness regions. In the new categorisation for 2014 2020, these regions would be assisted by being included in the intermediate category of transition regions created for regions with a GDP per capita between 75% and 90% of the EU average. However, the budget for transition regions was tight. If the Secretary of State had based the uplift in 2014 2020 on the average allocations for the whole of the previous period, the effect would have been to continue the impact of the transitional additional funding provided for the years 2007 2011 into 2014 2020. This represented a very significant difference between Merseyside and South Yorkshire on the one hand and the other English transition regions on the other. In practice it is difficult to see what else the Secretary of State could have done. Unlike pay discrimination cases, where it is possible to level up to match the highest paid, the distribution of EU Structural Funds within each category of regions is a zero sum game. One regions gain is anothers loss. Since the fund available for transition regions is ring fenced the additional cost of providing Merseyside and South Yorkshire with allocations based on the whole of the previous period would have had to come out of the allocations of the other English transition regions and would have left all of them with 22% less than they had had in 2007 2013 instead of 15.7% more. The Secretary of State was entitled to take the view that this would be contrary to the purpose for which this intermediate category had been created. I do not find it in the least surprising that the Secretary of State anticipated difficulty in getting the Commissions agreement to such a scheme, and I can see no basis on which his judgment of the Commissions likely reaction can be challenged. 44. Much of the evidence before the court is devoted to a technical and ultimately inconclusive dispute arising from Mr Eyres assertion that if, hypothetically, Merseyside and South Yorkshire had been competitiveness regions in 2007 2013 rather than phasing in regions, they would have received a higher allocation in 2013, and therefore a higher allocation in 2014 2020 as well. Dr Baxter challenges his methodology and produces alternative figures of her own, based on rerunning the original calculations made for 2007 2013 on Mr Eyres hypothesis. The value of this exercise is diminished by the fact that both witnesses agree that if Merseyside and South Yorkshire had actually been competitiveness regions in 2013, the methodology used to calculate allocations in 2014 2020 would in fact have been different. They disagree about what the differences would have been. It is neither necessary nor possible for a court of review to resolve this issue. It is not in fact true that Merseyside and South Yorkshire were at the bottom of the transition category. At 80.14% of the EU average GDP per capita, Merseyside was the third poorest of the nine English transition regions, according to the 45. 46. governments figures, while South Yorkshire at 84.46% was somewhere in the middle of the range. But it is unquestionably true that the result of the allocations process was to inflict a very large reduction on two of the poorer regions of the United Kingdom. However, the only way that that problem could have been addressed on a common basis for all transition regions would have been to use a formula based on GDP per capita, as the Commission had done when calculating national allocations, or else some other formula more closely related to measures of poverty and deprivation. It is impossible for this court to say that the Secretary of State was bound in law to adopt some such formula. In the first place, under the 2013 Regulation allocations within Member States are not based on GDP per capita and are only to a limited extent based on other measures of deprivation. Secondly, the evidence is that the Commission when approached discouraged the use of their own methodology as inappropriate to an internal allocation. And, third, concentration on GDP per capita would have produced an overall shift of funding towards the south which the Secretary of State was entitled to regard as even more anomalous. I turn to the argument that the appellants allocation was discriminatory by comparison with Highlands & Islands. It is correct that Highlands & Islands funding was reduced by 5% (at 2011 prices) by comparison with 2007 2013, as against a much larger reduction for Merseyside and South Yorkshire, even though as a phasing out region it had also received transitional additional funding on a tapered basis in the earlier period. Dr Baxter draws attention to three differences between former phasing in regions like Merseyside and South Yorkshire and a former phasing out region like Highlands & Islands. As a phasing out region, Highlands & Islands had previously been funded under the convergence objective in recognition of its greater developmental challenges. Its tapering profile had been more gradual in 2007 2013. And its co financing rate had been higher (75% against 50% for phasing in regions) so that allocations to it represented better value for money for UK taxpayers. I doubt whether the different tapering profile really differentiates Highlands & Islands from the two English phasing in regions. There may be more in the other two points. So far as the Secretary of State attached weight to these factors, it was very much a matter of judgment for him. In fact, however, the evidence suggests that the treatment of Highlands & Islands was not due to these factors. It was the combined result of the first decision, which treated Scotland as a separate territorial unit with its own 5% reduction, and of wishes of the Scottish Government, which naturally preferred to base Highlands & Islands allocations on the average of its annual allocations in the previous period than to limit it to 95% of its 2013 allocation and spend the rest on its more developed regions. So far as it arose from the treatment of Scotland as a separate territorial unit, I have already explained why I regard that treatment as defensible. So far as the decision about Highlands & Islands arose from the preferences of the Scottish Government, it seems to me to be the natural and legitimate result of the decentralisation of the United Kingdom under its current constitutional settlement. No doubt if the 5% reduction had been applied to the United Kingdom as a whole, Highlands & Islands would have got less than in the event they did, and the saving would have left a bit more in the pot for the nine English transition regions. But there is nothing in the evidence to suggest that the dilemmas affecting allocations to English transitional regions, which I have already discussed, would have been any less acute or that the outcome for Merseyside and South Yorkshire would have been significantly better. Proportionality 47. The appellants advance an alternative case based on proportionality, which I can deal with quite shortly, for I agree with the Court of Appeal that it adds nothing to the case based on alleged discrimination. The appellants say that the effect of the Secretary of States decision was to impose upon them a disproportionate burden. The problem about this submission is that it fails to answer the question: disproportionate to what? Proportionality is a test for assessing the lawfulness of a decision makers choice between some legal norm and a competing public interest. Baldly stated, the principle is that where the act of a public authority derogates from some legal standard in pursuit of a recognised but inconsistent public interest, the question arises whether the derogation is worth it. In this case the only legal standard by which the treatment of Merseyside and South Yorkshire can be regarded as disproportionately onerous to them is provided by the terms of the 2013 Regulation and the principle of equality. The two regions have no entitlement to support from the Structural Funds except what they can derive from these two sources. If the Secretary of States decisions are consistent with both, as I consider them to have been, their treatment cannot be regarded as disproportionate. Lord Mances judgment 48. I have naturally revisited my views in the light of the judgments of Lord Mance and Lord Carnwath. To some extent, the differences between us relate to the supposedly anomalous consequences of the first decision, in particular on the different treatment of Merseyside and South Yorkshire on the one hand and Highlands and Islands on the other. I do not feel that I can usefully add anything to what I have already said about the first decision, which I regard as justifiable. Two other differences do, however, call for further comment. The first concerns the purpose of the structural funds, which is central to the analysis of Lord Mance. The second is his analysis of the relationship between the allocations for 2014 2020 and those of the previous funding period. 49. We may all agree that the distribution within the United Kingdom of EU structural funds must be consistent with their purpose. Where I part company with Lord Mance is that he appears to me to take too narrow a view of the purposes of the funds and the means by which those purposes may legitimately be achieved. The Social Fund is not directly concerned with the reduction of regional imbalances, but with the promotion of employment and geographical and occupational mobility. The Regional Development Fund is concerned with the reduction of regional imbalances, but not only by the direct improvement of GDP per capita and other measures of deprivation. The purpose of both funds is to support the action of the Union in these areas. The action of the Union is guided by the targets and shared objectives referred to in the three Council policy documents of 2010 identified in article 2.1, and summed up generally in the concept of smart, sustainable and inclusive growth. This concept runs through the whole of the 2013 Regulation, and the thematic objectives in article 9 are mainly directed to promoting it. They involve a wide range of economic criteria, which will not directly diminish regional divergences, even if they can be expected to do so indirectly in the long term. Lord Mance and Lord Carnwath both consider that the allocations to Merseyside and South Yorkshire were not based on their actual needs. But that is a conclusion which they appear to have reached solely by reference to standard measures of deprivation such as GDP per capita. This assumes that there must necessarily be a close correlation between these measures of relative deprivation and the distribution of EU structural funds. But since the reduction of such differences is only one purpose of the structural funds, and even that purpose may be achieved indirectly by promoting growth through the thematic objectives, that assumption is on the face of it unjustified. 50. The second major difference arises out of Lord Mances rejection of the view of both the judge and the Court of Appeal about the justification for taking allocations for 2013 as the reference point for the uplift applied in 2014 2020. The same point appears to be implicit in the analysis of Lord Carnwath. In the absence of any complaint about the distribution of allocations in the previous funding period, and in the absence of any material change in the economic geography of the United Kingdom since then, the mere fact that allocations were made for 2014 2020 by reference to those in the previous period is unobjectionable. The objection is specifically to the choice of 2013 as the reference year. It is in my opinion clear that it was this decision which accounts for the differences between Merseyside and South Yorkshire on the one hand, and the remaining transition regions in the current funding period on the other. It was certainly not the decision to reduce the allocations to the four countries comprising the United Kingdom by a flat 5%. This first decision did not in fact, as Lord Mance suggests, diminish the pot available for the nine English transition regions. The government could have distributed the overall allocation to the English transition regions in such a way as to ensure that all of them received a flat 5% reduction on their total allocations for the previous period. It could have distributed them in such a way as to ensure that Merseyside and South Yorkshire received no more than a 5% reduction even if the others did not. Some such solution is what the appellants say that they hoped and expected would happen after the first decision had been announced. Their real complaint is that it did not happen. The reason why it did not is that the purpose of the 2013 Regulation in dividing the former competitiveness category into a transition category and a more developed category was to enable the former to receive an uplift. The reason why Merseyside and South Yorkshire did worse than that was that their uplift, although the same as that of the other transition regions, was based on the 2013 funding allocation and ignored the fact that they had been receiving tapered transitional funding between 2007 and 2011. The same problem would have existed, and would have been equally acute, if the 5% reduction in the total funds for distribution had been applied across the whole of the United Kingdom, instead of to each of the four countries separately. I have set out earlier in this judgment my reasons for agreeing with the courts below that disregarding the tapered transitional funding was justifiable. Lord Mance disagrees (i) because he considers that the tapered transitional funding which they received under article 8 of the 2006 Regulation in that period should be regarded as no different in character from the rest of their funding in that period; and (ii) because the allocation for the previous period had tapered down to the average for allocations for competitiveness regions, and Merseyside and South Yorkshire were worse off than the average competitiveness region. The problem about the first of these points is that but for article 8 of the 2006 Regulation, they would have been competitiveness regions in 2007 2013. The tapered funding was a temporary increase in their allocations designed to ease their path from Objective 1 status in 2000 2006 to competitiveness status in 2007 2013. Its function could properly be treated as spent by 2013. The problem about the second point is one that I have already pointed out in another context, namely that it assumes a more precise correlation between relative deprivation and allocations than anything required by the 2013 Regulation. Conclusion 51. I would dismiss the appeal. LORD NEUBERGER: Introductory: the background and the issues 52. This appeal arises out of a challenge to the decision of the Secretary of State relating to the distribution between various regions of the United Kingdom of money allocated by the European Commission to the UK. The money in question (the UK allocated funds) emanates from the European Structural Funds, and is payable in respect of the years 2014 2020, pursuant to Regulation (EU) 1303/2013 (the 2013 Regulation). 53. The background to the appeal is set out by Lord Sumption in paras 2 19, 30 31 and 37 41, and by Lord Mance in paras 113 148 below, and it is unnecessary to repeat much of what they have said. In particular, the relevant provisions of the 2013 Regulation are explained by Lord Sumption in his paras 5 to 13. 54. The Secretary of State for Business, Innovation and Skills decided to distribute the UK allocated funds by reference to a two stage process. First, they were apportioned between each territory (for want of a better word) of the United Kingdom. This apportionment was effected on the basis that, for 2014, Northern Ireland (which was one region), Wales (which was divided into two regions), Scotland (which was divided into four regions) and England (which was divided into 30 regions) would each receive an annual sum which was 5% less than the they had received in the last year of the previous period, 2013. This was because the UK allocated funds for 2014 were 5% less than they had been for 2013 (in 2011 prices). Secondly, the distribution of the English portion between the 30 English regions involved each of the nine English regions designated under the 2013 Regulations as transition regions, (ie regions which have a GDP between 75% and 90% of the average of the 27 EU member states) receiving a 15.7% increase in their distribution over 2013. It is to be noted in this connection that, while there is practically no freedom to distribute funds allocated by the Commission for transition regions to other regions (and vice versa), there are no specific provisions in the 2013 Regulations as to how the funds allocated for transition regions of a member state should be distributed between those regions. 55. The grounds upon which the decision of the Secretary of State is challenged can be expressed in a number of ways. I have found the most helpful approach to analyse the challenge as having four lines of attack, the first two of which are aimed at the procedure whereby the UK allocated funds were distributed amongst the 37 regions of the UK, and the third and fourth of which are aimed at the outcome. Each of the attacks has been advanced on the grounds of (i) breach of the EU principles of equality or proportionality and/or (ii) breach of domestic public law principles. However, the essence of each of the attacks is that the process adopted by the Secretary of State and/or the outcome of that process was unlawful on the grounds that it was (i) not in accordance with the 2013 Regulation, and/or (ii) so unreasonable as to be unlawful. In practice, these two grounds march together very closely, and it is hard to envisage circumstances in which only one of them was satisfied (cf Kennedy v The Charity Commission [2014] UKSC 20, [2014] 2 WLR 808, paras 51 56 in relation to domestic law and Human Rights law). 56. The four attacks all effectively involve contending that the approach that the Secretary of State adopted to the distribution of the UK allocated funds wrongly failed to have proper regard to the relative economic stages of development of the 37 regions of the UK, or the nine transition regions of England. It may seem somewhat artificial to treat the attacks as having separate procedural and substantive aspects, but I have found it helpful to consider whether each of the two stages of the process was in accordance with the law as a matter of principle, before addressing the question of whether the outcome of those processes was in accordance with the law. If the procedure is not in accordance with the law, then it would be very difficult, but probably not inconceivable, for the outcome of the procedure to stand. On the other hand, if the procedure was lawful, it would nonetheless be quite possible for the outcome to be unlawful. After all, one could expect a person responsible for the allocation of such funds to consider, where appropriate, the outcome of the procedure which was proposed before finally adopting it. Such an exercise of distribution may frequently involve a degree of iteration in terms of determining a procedure, considering the outcome, and then adjusting the procedure if appropriate. 57. 58. The procedural attack on the first stage is based on the proposition that, in the light of the terms of the 2013 Regulation, there can be no justification for apportioning the UK allocated funds on the basis that the four territories, England, Scotland, Wales and Northern Ireland, should each suffer the same reduction in funding from 2013. Such a division, runs the argument, pays no regard to the disparities in the stages of development between individual regions, or groups of regions, and it is that with which the 2013 Regulation is concerned. 59. The procedural attack on the second stage is based on the proposition that, by adopting a 2013 baseline for all nine English transition regions, the Secretary of State wrongly disregarded the status of Merseyside and South Yorkshire (regions which for convenience I will call the appellants) as phasing in regions in the previous, 2007 2013, period. Because of the tapering provisions applicable to such regions during that period, it is said that the appellants are significantly and unjustifiably disadvantaged as against the other seven transition English regions, as those other regions had not been phasing in regions during the 2007 2013 period. 60. The two attacks on outcome are founded on what are said to be indefensible discrepancies between the 2014 2020 payments to the appellants and those made to a number of other transition regions in the UK. The first such attack relies in particular on Highlands & Islands in Scotland (as well as on Northern Ireland) and essentially arises from the first procedural stage. The second attack on outcome focuses on the difference between the appellants and most of the other seven transition regions in England, and arises only from the second procedural stage. The proper approach for the court to adopt 61. The courts have no more constitutionally important duty than to hold the executive to account by ensuring that it makes decisions and takes actions in accordance with the law. And that duty applies to decisions as to allocation of resources just as it applies to any other decision. However, whether in the context of a domestic judicial review, the Human Rights Act 1998, or EU law, the duty has to be exercised bearing in mind that the executive is the primary decision maker, and that it normally has the information, the contextual appreciation, the expertise and the experience which the court lacks. The weight to be given to such factors will inevitably depend on all the circumstances. That is clear from a number of cases, including the decisions of this court in Bank Mellat v Her Majestys Treasury (No 2) [2013] UKSC 39, [2014] AC 700, paras 20 21 and 68 76, and in R (Lord Carlile of Berriew QC) v Secretary of State for the Home Department [2014] UKSC 60, [2014] 3 WLR 1404, paras 19 22, 67 68, and 111, where the judicial review and Human Rights aspects were considered. In the EU law context, the same sort of point was made in R (Sinclair Collis Ltd) v Secretary of State for Health [2011] EWCA Civ 437, [2012] QB 394, para 200. 62. The importance of according proper respect to the primary decision making function of the executive is particularly significant in relation to a high level financial decision such as that under consideration in the present case. That is because it is a decision which the executive is much better equipped to assess than the judiciary, as (i) it involves an allocation of money, a vital and relatively scarce resource, (ii) it could engage a number of different and competing political, economic and social factors, and (iii) it could result in a large number of possible outcomes, none of which would be safe from some telling criticisms or complaints. 63. Therefore, like Lord Carnwath, I agree with the Court of Appeal that the Secretary of States decision under consideration in this case is in the classic territory where the courts afford the decision maker a wide margin of discretion [2014] EWCA Civ 1080, [2014] PTSR 1387, para 57. This is a particularly forceful factor in the present case, which concerns a decision which involves the distribution of funds between different parts of the United Kingdom, in respect of which the relevant legislation is very imprecise as to the criteria to be adopted. I am not so sure that I get much assistance from the test of manifestly wrong (although I acknowledge that it is used by the Court of Justice), unless the expression means that no reasonable government could have taken the decision. I agree with the thrust of what Lord Sumption says on this aspect in his paras 22 23, but, although there is obvious force in the passage which he quotes from Lord Hoffmanns speech, I think the issue is susceptible to somewhat more subtle and discriminating analysis than might be inferred from reading that passage. To say that the allocation of public expenditure is very much a matter for democratic decision takes matters very little further at least in connection with a decision made by the executive. The fact that the legislature assigns such a decision to the executive does not alter the fact that it is the executives decision and not that of the legislature. In any event, the legislature will obviously have intended the rule of law to apply, so that such a decision, as with any executive decision, must be susceptible to judicial oversight. 64. 65. Nonetheless, a court should be very slow about interfering with a high level decision as to how to distribute a large sum of money between regions of the UK. But the degree of restraint which a court should show must depend on the purpose of the allocation, the legal framework pursuant to which the resources are allocated, and the grounds put forward to justify the allocation. The line between judicial over activism and judicial timidity is sometimes a little hard to tread with confidence, but it is worth remembering that, while judicial bravery and independence are essential, the rule of law is not served by judges failing to accord appropriate respect to the primary policy making and decision making powers of the executive. Some other preliminary points 66. Particularly in the light of the differences of opinion in this court, I think it is right to mention that the statutory purpose of the distribution of the UK allocated funds does not appear to me to be by any means solely to reduce imbalances or inequalities between different UK regions. The 2013 Regulation refers in article 2.1 to three documents adopted by the European Council, which are identified by Lord Sumption in his para 11, and recital (3) states that the Structural Funds are intended to achieve economic growth, promote harmonious development, and reduc[e] regional disparities, which, according to article 89 are to be achieved through strengthening [of the EUs] economic, social and territorial cohesion and the delivery [of] smart, sustainable and inclusive growth, by investing in growth and jobs and working towards EU wide co operation. Accordingly, while the reduction of inter regional imbalances is an important factor when deciding on distribution, a point which is underlined by article 176 of TFEU (which is directed to cohesion), it is by no means the only factor and it is a long term one. The 2013 Regulation is concerned not only with articles 174 176, but also article 162 (which is concerned with promoting employment), a point underlined by the thematic objectives in article 9 of the 2013 Regulations, which also demonstrate that economic convergence is simply one of the purposes of the Funds. 67. Turning to the exercise of distributing the UK allocated funds for the 2014 2020 period, each of the two stages of that exercise was based on the distribution which had taken place in the previous, 2007 2013, period. This approach was apparently adopted partly for reasons of transparency, convenience and simplicity, but there were two further reasons. The first was to minimise the risk of a disruptive change in any region or territory in 2014, by ensuring that it did not receive a substantial reduction compared with the payment it received for 2013. The second reason was that the distribution for the 2007 2013 period had been effected by reference to a number of different indicators, and the Secretary of States view was that there had not been any significant change from 2006/2007 to 2013/2014 in the economic or other relevant differentials between the regions of the UK. It is significant that there has, rightly in my view, been no challenge to this approach as a matter of broad principle (although, for the reasons discussed below, the two specific stages, and their consequences, are challenged). To take the payments for the previous period as the baseline may well not be the ideal basis for distribution of funds for the current period, but I find it hard to see how it could be said to be unreasonable, unless it can be shown to be so by reference to specific facts or reasons. 68. Another point that should be mentioned is that, as Lord Sumption says, the Commission appears to be content with the Secretary of States distribution process, and has, we were told, adopted it. That is a point which has some traction, particularly in the context of a regulation which envisages (in articles 14 17) that a member states proposed distribution between its regions will be submitted to the Commission for the purpose of its entering into a partnership agreement with the member state, and that, before adopting the proposed agreement the Commission will assess [its] consistency with this Regulation. However, that does not alter the fact that the courts of this country have a fundamental constitutional duty to apply their view of the law to a decision or action of the executive, when it is challenged. In addition, of course, the attack made by the appellants is not only based on EU law, but also on domestic common law. 69. Two other factors deserve comment. First, the absence of any prior consultation between the Secretary of State and individual regions (as opposed to the devolved governments). In my view, if such consultation had occurred and the Secretary of State had taken what had been said into account in a reasonable way (even if he had ultimately rejected it), that would have assisted his case. However, the fact that there were no such consultations does not undermine his case as a matter of principle, although it may, of course, in practice have assisted him in avoiding errors. In that sense, it makes it easier for the appellants to attack his decision, but in the end the decision has to be assessed on its own merits. In some circumstances, a failure to consult can of itself render a decision unlawful, but that will, at least normally, only be where there is a specific obligation or commitment to consult (see for instance R (Bhatt Murphy) v The Independent Assessor [2008] EWCA Civ 755). However, it has not been suggested that such an argument could be advanced here. 70. Secondly, it is clear from the evidence that a fair amount of thought was involved in the decision making process and four options were considered in relation to the second stage see paras 30 31 and 39 41 of Lord Sumptions judgment. That is of some assistance to the Secretary of State, because (i) a considered decision deserves more judicial respect than a relatively unconsidered one, and (ii) it underlines the reasons why the court should be very reluctant to overturn the decision. However, it is not very likely to be a determinative point. The ultimate decision is either in accordance with the law or it is not. Furthermore, the fact that the process adopted is better than three others which were rejected merely shows that there are worse processes, not that the adopted process is acceptable. The procedural attack on the first stage: distribution between the four territories 71. The first stage of the Secretary of States decision involved distributing the UK allocated funds between the four territories in precisely the proportions which reflected their respective shares in 2013. Accordingly, as already explained, because the UKs allocation in 2014 2020 was reduced by 5% from what it had been in 2007 2013, each territorys share was reduced by 5%. This aspect of the decision is attacked by the appellants because (i) it was not based on consideration of the relative economic and development demands and needs of individual regions, or even of the four individual territories, and (ii) it limited the Secretary of States freedom of manoeuvre so far as distributions to individual regions were concerned. 72. The concern of the appellants, as English regions, is easy to understand. It is not really in dispute that, if the approach of the Commission to the assessment of the UK allocated funds had simply been reflected by the Secretary of State when effecting the distribution of those funds between the four territories in 2014 2020, England as a whole would have seen an overall increase of about 7% over 2007 2013, whereas Scotland, Wales and Northern Ireland would respectively have seen decreases of around 32%, 22% and 43%. However, these percentages have been arrived at by retrospective, informal analysis of the sum allocated. The Commission has been anxious to emphasise that the basis upon which each member states allocation was fixed should not be disclosed and that any guesses as to how the allocations were fixed should be avoided. In my view, the appellants objection to the first stage adopted by the Secretary of State should be rejected. In the first place, it is inappropriate to equate the function of the Secretary of State, when deciding how to distribute the UK allocated funds among the regions, with the function of the Commission, when deciding how to allocate the funds among the member states. The terms of the 2013 Regulation, and the documents to which it refers, are obviously relevant when considering the Secretary of States approach to distribution. However, in contrast to the position relating to the assessment of the funds to be allocated to a member state, the 2013 Regulation includes no formula as to how those funds should be distributed among the regions of a member state. 73. 74. Thus, Annex VII to the 2013 Regulation sets out a detailed Allocation Methodology governing the allocation of funds by the Commission among member states. The allocation is assessed by aggregating a sum for each region, which sum is assessed on a per capita basis, with the per capita amount being greatest for regions with less than 75% of the EU average GDP per capita and least for those with more than 90%, with the transition regions being in the middle (see paragraphs 1 4 of the Annex). However, this rather precise methodology does not apply to the distribution of those funds within member states. And the fact that the Commission refuses to say how a member states allocation was determined serves to show that no specific approach by a member state to the distribution of its funds among its regions is encouraged in practice. 75. There is no provision which expressly limits the freedom of a member state when deciding how to distribute its allocated funds between regions. It is true that article 176 TFEU refers to redress[ing] the main regional imbalances and structural adjustments of regions whose development is lagging behind, but it does not require convergence and it has nothing to say about timing. Having said that, in the light of the terms of the 2013 Regulation, I accept that the level of economic development of each of its regions must be a point of real relevance when a member state decides how to distribute its allocated funds between them. Thus, if it could be shown that it was treated as irrelevant by a state, then the decision would be likely to be held unlawful. However, as I have sought to explain in para 66 above, it appears clear that a member state is not required to base the distributions of its allocated funds between regions solely by reference to their relative stages of economic development, let alone to their GDP per capita. Further, the thematic objectives referred to in article 9 of the 2013 Regulation have to be taken into account. 77. 76. The fact that, by contrast with the detailed directions with regard to allocation between member states, there are no express constraints on member states as to how they should distribute their allocated funds renders it difficult to justify a substantial degree of constraint as to the manner of distribution. While article 93 of the 2013 Regulation limits transfers between the three types of region, it does nothing to limit transfers between regions of the same type, which again suggests a relatively high degree of freedom when the state is deciding how to distribute allocated funds between regions with the same status. The fact that such transfers would be notional, as the Commission does not reveal the split between individual regions in its allocation, itself suggests that it cannot have been intended that member states were to be very limited in their scope for deciding how to distribute between regions. In the course of his impressive judgment, Stewart J said that, essentially for the reasons discussed in paras 73 76 above, the appellants attack on the Secretary of States decision to adopt what I have called the first stage falls at first base [2014] EWHC 232, [2014] LGR 389, para 73. I agree that those reasons establish that the attack faces an insurmountable problem in so far as it relies on the point that the distribution of payments among the regions of the United Kingdom does not simply reflect their relative state of economic development. However, it can still be argued that the apportionment between the four territories is arbitrary and inconsistent with the purpose of the 2013 Regulation, because the UK allocated funds were a lump sum for the United Kingdom as a whole, and the apportionment between the four territories pays no regard to the relative claims of the 37 regions of the United Kingdom, and unjustifiably ties the hands of the Secretary of State in relation to the distribution of the funds between those individual regions. I accept that there is real force in that point, but the decision that the 5% reduction in the United Kingdoms allocation should be visited equally on, or pro rata between, England, Scotland, Wales and Northern Ireland is very much a policy decision, or a politically based decision, which is therefore 78. particularly difficult for a court to evaluate and therefore to criticise, and therefore to condemn. The decision reflects both the increasingly decentralised nature of UK administration and the political realities of the devolution process. As I see it, neither of those two features is an illegitimate factor for the Secretary of State to take into account, and neither is a factor whose importance a court is well placed to assess, let alone to dispute. I agree with Lord Sumption that the decision of the Grand Chamber in (Case C 428/07) R (Horvath) v Secretary of State for the Environment, Food and Rural Affairs [2009] ECR I 6355 supports the notion that the first stage of the decision was justifiable under EU law. 79. Apportioning the UK allocated funds between the four territories on this pro rata approach based on the 2007 2013 payments may not be a course which most people would expect, or even which many ministers would have adopted. But I do not consider that it can be said that it is contrary to the 2013 Regulation, particularly as it contains no express restriction as to how nationally allocated funds are distributed; nor do I consider that it could be said to be irrational. Indeed, I think that there is some force in the point that the Secretary of States view that each territory should be protected in the 2014 2020 period against a substantial overall reduction from the amount it received in the 2007 2013 period accords with the inclusion in Appendix VII of a ceiling on any increase (para 13), and a floor on any decrease (para 16), in a member states allocation in the 2014 2020 period as against the 2007 2013 period. The procedural attack on the second stage: distribution between English regions 80. The complaint of the appellants about the second stage of the distribution process is that they should not have been treated in the same way as the other seven English transition regions because, unlike the other seven regions, the appellants were phasing in regions in the 2007 2013 period. This means that, although the appellants will receive a 15.7% increase in 2014 on what they had received the previous year, they are due to receive in the 2014 2020 period around 61% less than they received over the previous 2007 2013 period, whereas the seven other transition regions will receive rather more in the 2014 2020 period than they received for the 2007 2013 period. 81. The explanation for the fact that the appellants will receive a year on year increase between 2013 (the last year of the previous period) and 2014 (the first year of the current period), but a substantial overall aggregate decrease between the two periods, is that they were phasing in regions for the 2007 2013 period. In other words they were regions, which during the 2000 2006 funding period had had GDPs per capita of below 75% of the average of the EU member states (and hence were Objective 1 regions), but by 2007 were no longer in that category, but were competitiveness regions (ie regions having GDPs per capita of between 75 90% of the EU average), owing to their relative economic growth. This meant that during the 2007 2013 period their allocation of funds had started at a higher level than the other competitiveness regions, which had had GDPs per capita of 75 90% of the average of the member states during the 2000 2006 period (and therefore had been Objective 2 regions in that period). However, as the name suggests, the level of funds allocated to phasing in regions in 2007 tapered down over the next four years, so that by 2011 it was at the national average level per capita as other competitiveness regions. 83. 82. By contrast, the seven other English regions were not only competitiveness regions during the 2007 2013 period, but they were effectively in the same category (namely Objective 2 regions) during the 2000 2006 period, as they each had a GDP per capita between 75 90% of the EU average in 2000. In my view, the attack on the second stage should also be rejected. The appellants cannot logically invoke the fact that they received more in the 2007 2013 period than other competitiveness regions to justify their being treated more favourably than the other competitiveness regions for the 2014 2020 period. This is because the only reason that they were treated better in the earlier period was to smooth the passage from having been Objective 1 regions in the 2000 2006 period to being competitiveness regions in the 2007 2013 period. From 2011, when the tapering stopped, the appellants received aid at the average rate per capita for competitiveness regions between 2011 and 2013, and there is no reason why the Secretary of State should be expected to treat them any differently for the 2014 2020 period. As Stewart J said in para 78(iii) of his judgment, if the Secretary of State had adopted the approach suggested by the appellants, it would have unduly advantaged the [appellants] in relation to the other English transition regions. 84. However, the appellants raise a separate argument based on the point that the annual payments for the 2007 2013 period made to the appellants, as phasing in regions, were, exceptionally and unlike the payments to other competitiveness regions, determined by the Commission rather than by the UK government. Accordingly, runs the argument, using the payment received in 2013 as the base for determining the 2014 payment for each transition region in England involved treating the appellants differently from the other seven English transition regions. There is undoubted force in this argument, particularly given that (reflecting the UK governments distribution decision in 2006) the 2013 payments to the other transition regions in the north and midlands of England were increased above what they would otherwise have been, owing to the UK governments decision to favour the north and midlands over the south, whereas this did not apply to the 2013 payments to the appellants. 85. This point has force. None the less, given (i) the fact that it was a reasonable decision in principle to take the 2013 payments for each region as the basis for calculating the 2014 payments, (ii) the wide margin of discretion accorded to member states when deciding how to distribute allocated funds nationally, (iii) the large number of factors which are potentially relevant, (iv) the long term nature of the aims of the 2013 Regulation and its predecessors, (v) the fact that the Secretary of State appreciated and addressed the level of payment per capita received by the appellants, and (vi) the perceived desirability of maintaining a degree of continuity for each region, I have reached the conclusion that this point should also be rejected. The relevant Ministers and civil servants in the Department of Business, Innovation and Skills were aware of the fact that the proposed distribution would result in the appellants receiving a relatively low sum per capita when compared with other transition regions, they considered the possibility of increasing the appellants share of the UK allocated funds. However, they decided that such a course would be unfair on other transition regions, especially as the appellants had fared better than those other regions, as competitiveness regions, thanks to phasing, during the years 2007 2010. The procedural attacks: summary 86. For the reasons given in paras 71 85 above, I consider that the appellants attacks on the two stages adopted by the Secretary of State for deciding how to distribute the UK allocated funds in 2014 2020 fail, in so far as they are considered as a matter of principle. However, as explained in paras 56 60 above, the fact that the procedure adopted by the Secretary of State was defensible in principle is not the end of the matter. It is still necessary to examine the outcome in the light of the criticisms raised by the appellants. The attack on outcome: Highlands & Islands and Northern Ireland 87. The first attack on outcome is primarily based on a comparison between the appellants and the Scottish region of Highlands & Islands, and it largely results from the first stage. As explained above, although the appellants will receive a 15.7% increase in 2014 on what they had received in 2013, the total amount they are due to receive in the 2014 2020 period would be over 60% less than they received over the previous 2007 2013 period, whereas Highlands & Islands would suffer no decrease in the 2014 2020 period as against the 2007 2013 period. In actual euros per capita, Highlands & Islands will receive about three times as much as the appellants will receive (around 400 per capita as against around 130 per capita). 88. The status of the appellants as phasing in regions in the period 2007 2013 is explained in para 81 above. The status of Highlands & Islands is slightly different. Like the appellants, it is a transition region under the current, 2014 2020, regime, but, unlike the appellants, it was a phasing out (rather than phasing in) region, during the 2007 2013 period. This meant that (i) like the appellants, it had been an Objective 1 region, with a GDP per capita of below 75% of the average of the EU member states in the 2000 2006 period, and by 2007 it was no longer in that category, but (ii) unlike the appellants, its exit from the category arose not because of an improvement in GDP per capita, but because of the accession of ten new (and, on average, poorer) member states to the EU between 2000 and 2007. Accordingly, Highlands & Islands was subject to a rather different tapering regime under the allocation arrangements for 2007 2013, which only reached the level for competitiveness regions in 2013. 89. On that ground, the courts below considered that it was simply inappropriate to compare Highlands & Islands with the appellants, and therefore that any attack by the appellants on the outcome of the Secretary of States decision based on the Highlands & Islands 2014 2020 payment was misconceived. That may be right, but, at least if one confines oneself to the reason for, and consequences of, the difference between phasing in and phasing out regions, I am not particularly impressed with that view, because all three regions were competitiveness regions, and any phasing had ended by 2013. However, the differences in co financing (ie the extent of the domestic contribution, as briefly explained by the Judge in para 50(c) of his judgment) may conceivably justify the view taken by the courts below. It is unnecessary to decide that rather nice point: even if one assumes that it is relevant that Highlands & Islands had a different status from the appellants in the 2007 2013 period, the difference in outcome between its 2014 2020 aggregate payment and those for the appellants is striking. As already mentioned, the appellants will receive around 130 per capita, whereas Highlands & Islands will receive around 400 per capita. This follows from the combination of (i) the fact that Scotland was more favourably treated than England at the first stage, and (ii) the fact that Highlands & Islands is the only transition region in Scotland, and it was thought to be wrong to reduce its 2014 payment to bring it more into line with the English transition regions as that would benefit the other three, richer, regions in Scotland. 90. 91. A somewhat similar, if less forceful, point can be made by the appellants about Northern Ireland, also a transition region in 2014 2020, which is to receive around 260 per capita in 2014. Again, it is true that it was a competitiveness region in 2006 2013 period, and therefore was not strictly comparable with the appellants (or with Highlands & Islands), but I doubt that that point has much force (subject to the co financing point referred to at the end of para 89 above). But, even if it does, the fact that in 2014 Northern Ireland receives twice the amount per capita that the appellants receive is rather striking. 93. 92. These disparities do give one pause for thought. Many people in the position of the Secretary of State might well have taken the view that the disparities such as those discussed in paras 90 91 above would have justified making adjustments as between the payments which would otherwise be made to each region, or even reconsidering the whole methodology. However, bearing in mind the wide margin of discretion which should be accorded to the Secretary of State in the distribution of the funds, I do not consider that this justifies the conclusion that the distribution scheme which he adopted was unlawful. I start with the point that the disparities arise primarily from the first stage of the distribution process, which, as already mentioned, does not seem to me to be objectionable in principle. The first stage almost inevitably will result in a degree, and no doubt often a significant degree, of disparity between a region in one territory and a very similar region in another. The same sort of problem could arise between similarly developed (or undeveloped) regions in different member states. Particularly bearing in mind that the apportionment of the UK allocated funds between the four territories of the UK was based on a high level political decision which is lawful in principle, it would require a compelling case on the outcome before a court could rule the decision unlawful in practice. I do not consider that a compelling case has been made. 94. When considering the disparities relied on by the appellants, it is a mistake to assume that, merely because a region has in 2014 and/or had in 2013 the same status as, or had reached the same stage of economic development as, another region, that the two regions should be accorded a similar level of distribution. The purpose of distributing the funds is not only to improve the growth, or relative growth, of poorer regions: it is also to achieve the multifarious thematic objectives. Accordingly, it is dangerous to focus, and inappropriate to focus exclusively, on GDP per capita when comparing different regions. 95. The selection of a regions GDP per capita figure as governing the appropriate level of payment may well reflect the Commissions overall assessment of the UK allocated funds under the provisions of the 2013 Regulation. However, as already mentioned, (i) the Regulation has no such provisions in relation to the distribution of the UK allocated funds between individual regions, and (ii) the payments in 2007, on which the 2014 payments are based, were arrived at by reference to a basket of indicators, which were assumed to be equally valid in 2013, on the basis that there had been no significant shift in the social geography of the United Kingdom. To take obvious examples which are admittedly speculation on my part, Highlands & Islands with its low population density and its meteorological and geographical character must be a relatively expensive region to service, and Northern Ireland has unique social issues. 96. The danger of focussing on GDP per capita can be demonstrated by comparing two sets of regions which were both English competitiveness regions in 2007 2013 and are both English transition regions in 2014 2020, and have very similar GDP per capita. First, Devon receives a payment for 2014 2020 of 67 per capita, whereas Cumbria receives 166; secondly, Lincolnshire receives 137 per capita, whereas Tees Valley & Durham receives 280 per capita. Given that these two examples do, on any view, involve comparing like with like, and that the 2014 payments are based on those for the 2007 2013 period, it underlines the point that the Secretary of State has not based his distribution, even within a territory, simply on the basis of a regions GDP per capita. Indeed, that is clear from the Secretary of States evidence, which, as mentioned in para 67 above, explains that the distribution for the 2007 2013 period, on which the 2014 payments were based, (i) was not effected simply by reference to a regions GDP per capita but was based on much more material, and (ii) was intentionally loaded in favour of regions in the north and midlands of England as against those in the south (hence Devons payment per capita is much lower than Cumbrias). 97. Furthermore, as is clear from what I have just said and is discussed more fully in paras 100 103 below, it is not by any means necessarily the case that the appellants would have been treated better, or that Highlands & Islands or Northern Ireland would have been treated worse, than they have been treated, if there had been no first stage. There are many ways in which the distribution of the UK allocated funds could have been effected. 98. Particularly in the light of these features, I consider that the Secretary of State was entitled to take the view that, whatever scheme he adopted would prove objectionable to some regions, and that if he adhered to the two stage system he did adopt and made adjustments, that too would cause problems and give rise to complaints. Accordingly, he was entitled to decide that it was simpler and politically advisable to stick with the scheme and not make adjustments. 99. This brings one back to the point that the Secretary of States decision involved a substantial measure of political judgment. Accordingly, his decision to adhere to a distribution scheme which was clear, simple and transparent, rather than one which was nuanced, subjective and complex is one which it is difficult for a court to challenge unless of course the outcome appears to be inconsistent with the 2013 Regulations or simply unreasonable. When one considers the figures mentioned in paras 90 91 above together with the reasons summarised in paras 94 98 above, it appears to me that it cannot fairly be said that the appellants have managed to establish either ground. The attack on the outcome: the other English transition regions 100. The second attack on outcome is based on a comparison between the 2014 payments to the appellants and the other seven English transition regions in the light of their relative stages of economic development. This attack is effectively based solely on the second stage of the distribution decision in relation to the 2014 2020 period. In my opinion, the attack should be rejected for very similar reasons to those given in paras 93 99 above. However, it is fair to say that the starting point, namely the nature of the decision in principle, is somewhat less of a formidable hurdle for the appellants. The decision how to distribute the UK allocated funds between the English transition regions was a more workaday, relatively less high level political, decision than the first stage decision. Nonetheless, as already explained, it was a defensible policy decision at least in principle and it must inevitably carry with it a degree of inevitable rough justice. 101. However, although the initial hurdle may be lower for the appellants attack on the outcome for English transition regions than it is in relation to Highlands & Islands and Northern Ireland, I consider that, when one examines the appellants case on this fourth aspect, it should be rejected. 102. In a nutshell, the principal criticism raised by the appellants is that, given that he based the 2014 2020 distributions on the distributions in the previous period, the Secretary of State should have assessed the allocation for the English transition regions by reference to the average annual distribution which they received for the 2007 2013 period rather than the 2013 distribution which they received. On the face of it, at least, I do not consider that the Secretary of States decision on this point can be criticised. The difference arising from the choice of the 2013 distribution only affects regions which were phasing in regions during the 2007 2013 period, and the appellants are the only English regions which can claim to suffer in this way. However, there is, at the very least a real argument that it would be wrong to take the benefit of their tapering payments for the years 2007 2013, into account when assessing their 2014 distributions, given that these payments were intended to soften the blow of their having become competitiveness regions, a softening which was intended to be spent by 2013, and therefore, a fortiori, by 2014. 103. Quite apart from this, as already mentioned, it is apparent that there is no direct or simple correlation between the level of economic development of an English transition region and its 2014 payment, and there is no clear reason to think that the appellants would be better off under another scheme. 104. The relevant figures for the nine English transition regions are set out in para 55.4.2 of Stewart Js judgment, and I have already discussed some of the figures in para 96 above. More specifically, the appellants, each of whom receive around 130 per capita during 2014 2020 (123 in the case of South Yorkshire, and 135 in the case of Merseyside), fare better than Devon (67 per capita, as already mentioned), but worse than five of the other six English transition regions, if one looks simply at the payment per capita and the level of the regions GDP per capita. Ignoring Devon, the other six English transition regions received between (i) slightly more than the appellants, Lincolnshire at 137 per capita, and (ii) a little more than twice as much as the appellants, Tees Valley & Durham at 280 per capita. Ignoring the two outliers, Devon and Tees Valley & Durham, the figures vary between 137 per capita for Lincolnshire and 167 for Shropshire & Staffordshire. Lincolnshires GDP per capita is lower than either South Yorkshires or Merseysides, whereas Shropshire & Staffordshires is a little lower than South Yorkshires and somewhat higher than Merseysides. 105. Ignoring Devon, which receives less per capita because it is in the south (see paras 84 and 96 above), it is noteworthy that Lincolnshire (which in terms of GDP per capita is somewhat worse off than either of the appellants), receives a payment which is very similar on a per capita basis to that of the appellants, whereas Tees Valley & Durham (which in terms of GDP per capita is only slightly lower than Lincolnshire) receives twice as much. On the other hand, Cumbria (which is richer than any other English transition region) receives a payment per capita significantly more than Lincolnshire. 106. Thus, the figures demonstrate that there is no reliable correlation between payment per capita and GDP per capita for 2014 2020, even for English regions which were ordinary (ie not phasing in or phasing out) competitiveness regions in 2013 and transition regions in 2014. That does not mean, of course, that any level of payment for the appellants would be justified. However, the important point for present purposes is that, on a GDP per capita basis, (i) the appellants plainly fare better than one region, Devon, and, more significantly, fare consistently with another region, Lincolnshire, and (ii) there is nothing like a precise correlation with the 2014 payments per capita. 107. This analysis of the distributions to the other English transition regions thus leads to the conclusion that criticism of the outcome of the Secretary of States method of distributing the UK allocated funds is not soundly based, if it rests on the presumption that each English transition region (or even each transition region in the north and midlands) should get the same payment per capita, or the same payment per capita adjusted to take account of the regions 2014 GDP per capita. Indeed, as mentioned in para 96 above, that conclusion is consistent with the Secretary of States evidence, which states that the 2014 payment for transition regions was arrived at by a fixed percentage uplift on the 2013 payment, which itself had been arrived at by reference to a number of different indicators in 2007. 108. Furthermore, it appears to be very difficult, at least on the evidence in these proceedings, to assess what difference it would have made if the appellants 2014 2020 payments had been determined by reference to what they would have received in 2013, or in the period 2007 2013, had they been ordinary competitiveness regions, rather than phasing in regions. Conclusion 109. In these circumstances, I have come to the conclusion that this appeal fails. I must, however, confess that I have reached this conclusion with some hesitation. Although I do not agree by any means entirely with the approach adopted by Lord Mance (who places more emphasis than I do on the criteria and limits imposed by the 2013 Regulation on the Commission, when considering a member states freedom of movement when distributing allocated funds) or by Lord Carnwath (who considers that the Secretary of State has a greater duty to justify his distributions between individual regions than I believe is mandated by the 2013 Regulation), I see force in much of their reasoning, and indeed I was at one time persuaded that they had reached the right conclusion. 110. While I would dismiss this appeal, it is right to re affirm the courts duty to declare that decisions of the executive, whether relating to the distribution of funds or otherwise, are unlawful if they are insufficiently justified or do not accord with the lawful aims or requirements pursuant to which the distributions in question are made. I appreciate that the decision under consideration in this case was difficult and potentially complex, and that it involved many competing factors, political and social as well as economic. However, with the expertise and information available to the Secretary of State, one would have hoped for a more sophisticated and considered, and a more consultative, approach to the question of how to apportion such a large sum of money between different regions of the United Kingdom. I note from the evidence put in by the Secretary of State that it does appear that a much more careful approach was adopted in relation to the distribution for the 2007 2013 period. 111. In summary, then, while the decision as to how to distribute the UK allocated funds between the 37 regions of the United Kingdom may have been unimpressive in some respects, it was not unlawful. LORD CLARKE: 112. I have read the other judgments in this appeal with great interest (and no little admiration). I have throughout been inclined to agree with Lord Sumption. It does seem to me that the court should be very reluctant to interfere with decisions of the kind under scrutiny here because they raise questions of policy which are essentially matters for the executive. I recognise that in an appropriate case it is the duty of the court to interfere. However, I agree with Lord Neuberger at para 66 that the decisions under review involved a range of different policy considerations and that it cannot fairly be said that the choices made by the Government were unlawful. Like Lord Neuberger I have had some doubts in the course of the argument, especially in the light of the judgment of Lord Mance. However, again like Lord Neuberger, I prefer the reasoning of Lord Sumption to that of Lord Mance. I do not detect any significant difference between the reasoning of Lord Sumption and that of Lord Neuberger. I agree with them and Lord Hodge that the appeal should be dismissed. LORD MANCE: (with whom Lady Hale agrees) Introduction 113. The European Union (EU) has a set of structural and investment funds (the ESI funds), of which the three main elements relate to the Common Agricultural Policy, the Cohesion Fund and the Structural Funds. The Structural Funds, defined by article 1 of Council Regulation (EC) No 1303/2013, consist of the Regional Development Fund (ERDF) and the somewhat smaller Social Fund (ESF). The ERDF is established under article 176 TFEU, and the ESF under articles 162 to 164 TFEU. The EU makes available the Structural Funds on the basis of its overall assessment of each Member States regional development needs, but their allocation within each Member State is, subject to limits, the responsibility of that State. The EU operates on the basis of seven year budgets, each of which determines the Structural Funds available for the next seven year period. The budget for the years 2014 2020 was thus agreed in 2013. 114. On this appeal various local authorities in the Merseyside and South Yorkshire regions challenge the defendant Secretary of States allocation of the Structural Funds within the United Kingdom during the EU budgetary period of 2014 2020. The challenge focuses on two successive decisions taken by the Secretary of State. The first was to allocate the funds received in respect of the period 2014 2020 between the individual territories or nations of the United Kingdom (that is England, Scotland, Wales and Northern Ireland) in the same proportions as in the previous seven year period 2007 2013. The second was to base the allocations for English transitional regions in the period 2014 2020 on the amounts each such region received in 2013 under the scheme in place during that previous seven year period. These decisions, taken individually or in combination, are alleged to have affected Merseyside and South Yorkshire in a manner which, it is submitted, is not supported by the relevant EU Regulations and involves anomalies and inequalities of treatment which cannot be and have not been justified. 115. Structural funding is made available by reference to the NUTS level 2 (NUTS 2) regions. NUTS 2 regions are second tier regions corresponding broadly to large counties in the United Kingdom. They are defined by the Nomenclature of Territorial Units for Statistics (NUTS 2006/EU27) (NUTS) established pursuant to article 1 and Annex I of regulation (EC) 1059/2003. There are 30 NUTS 2 regions in England (including Merseyside and South Yorkshire), 4 in Scotland and 2 in Wales while Northern Ireland is a single NUTS 2 region. For the purposes of structural funding, the EU also identifies categories of NUTS 2 regions. It determines the total funding which each Member State receives from the ERDF and ESF by reference to its own assessment of regional development needs within each such category. The categorisation adopted has changed from seven year period to seven year period, as has the extent to which the relevant regulations define at an EU level the amount which each region is to receive, or leave this to the relevant Member State to determine. All Structural Funds funding has to be co financed or matched by domestic investment in a defined percentage. 116. The broad purposes for which the Structural Funds are made available are defined in article 174 TFEU in the case of the ERDF and article 162 in the case of the ESF. Article 174 is part of a title consisting of articles 174 178, headed Economic, Social and Territorial Cohesion. It provides: In order to promote its overall harmonious development, the Union shall develop and pursue its actions leading to the strengthening of its economic, social and territorial cohesion. In particular, the Union shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions. Among the regions concerned, particular attention shall be paid to rural areas, areas affected by industrial transition, and regions which suffer from severe and permanent natural or demographic handicaps such as the northernmost regions with very low population density and island, cross border and mountain regions. Article 176 further provides that the ERDF is intended to help to redress the main regional imbalances in the Union through participation in the development and structural adjustment of regions whose development is lagging behind and in the conversion of declining industrial regions. 117. Article 162 provides that the ESF is established: In order to improve employment opportunities for workers in the internal market and to contribute thereby to raising the standard of living and that it shall aim to render the employment of workers easier and to increase their geographical and occupational mobility within the Union, and to facilitate their adaptation to industrial changes and to changes in production systems, in particular through vocational training and retraining. 118. Articles 164 and 178 provide for the European Parliament and Council to adopt implementing regulations relating to, respectively, the ESF and the ERDF, while article 177 confers further more generally worded power to make regulations defining the tasks, priority objectives and organisation of such funds. 2000 2006 119. During the period 2000 2006 regions were classified in three categories, which have been described as Objectives 1, 2 and 3. Objective 1 (the most needy) contained five UK regions, namely Cornwall and the Scillys, West Wales and the Valleys, Highlands & Islands, Merseyside and South Yorkshire, plus the whole of Northern Ireland. 2007 2013 120. During the period 2007 2013, Regulation (EC) No 1083/2006 provided for a different categorisation. The most needy and the least needy regions were the two main categories, and have been described as respectively convergence and competitiveness regions. But in between them, under articles 8.1 and 8.2 of the regulation, were two sub categories to which support was allocated on a transitional and specific basis, and these have been described as phasing out and phasing in regions. 121. Regulation No 1083/2006 determined the precise amounts allocated to particular regions falling within the convergence and the two transitional categories. All that was left to the United Kingdom was to determine the allocation between competitiveness regions of the funds allocated by the EU to United Kingdom competitiveness regions. There was no scope for any transfer of funds between categories. The allocation between competitiveness regions was done on a basis which, because of the use of NUTS 1 as distinct from NUTS 2 criteria and a safety net limiting any reduction by reference to the prior period of 2000 2006 to 6.7%, did not necessarily correspond precisely with but nonetheless reflected (in the words of counsel for the Secretary of State, Mr Jonathan Swift QC) an approximation of each such competitiveness regions economic needs. The indicators and safety net used by the Government to determine regional allocations within the competitiveness category also had the intended effect of channelling relatively high levels of funding to northern regions, compared with southern regions with similar economic profiles. 122. Under article 8, read with para 6 of Annex II, of Regulation 1083/2006, the transitional support for phasing out regions was 80% of their individual 2006 per capita aid intensity level in 2007 and a linear reduction thereafter to reach the national average per capita aid intensity level for the Regional competitiveness and employment objective in 2013. For phasing in regions, it was 75% of their individual 2006 per capita aid intensity level in 2007 and a linear reduction thereafter to reach the national average per capita aid intensity level for the Regional competitiveness and employment objective by 2011. 123. The purpose of transitional support was thus to smooth the relevant regions movement from the most needy category to full competitiveness by the linear reduction of funding. However, the final figure, based on the national average per capita aid intensity level for competitiveness regions was necessarily aspirational. In other words, whether or not any phasing in or phasing out region actually achieved the same level of development as the average for all competitiveness regions was something that could only be determined with time. There was no guarantee that any of such regions would do so. 124. In the case of the United Kingdom the convergence regions (those with less than 75% of the GDP of the 25 EU member states) were Cornwall and the Scillys and West Wales and the Valleys. The only phasing out region (ie with more than 75% of the GDP of the 25 EU member states, but less than 75% of the GDP of the 15 member states) was Highlands & Islands. The only phasing in regions (those which had been old Objective 1 regions, but with GDP now exceeding 75% of the average of that of the 25 EU Member States) were Merseyside and South Yorkshire. 125. The linear reduction prescribed by the regulation led both phasing out and phasing in regions to receive a flow of funds tapering sharply downward during the seven year period. The tapering extended in the case of phasing out regions over the full seven year period, but took in the case of phasing in regions only four years, leading to the receipt of monies based on the national average per capita aid intensity level for competitiveness regions during each of the last three years, 2011 2013. Taking rounded figures, Merseyside thus received some 161m in 2007, 129m in 2008, 95m in 2009, 60m in 2010 and 23m in each of the three years 2011 to 2012, while South Yorkshire received some 142m in 2007, reducing each year to 52m in 2010 and then remaining stable at 21m in each of the last three years. The phasing out regions only received monies based on the national average per capita aid intensity level for competitiveness regions in the last year, 2013. 2014 2020 126. For the period 2014 2020, Regulation (EU) No 1303/2013 applies. This is expressed to have been made with particular regard to article 177. Recital 1 records that article 174 TFEU provides that, in order to strengthen its economic, social and territorial cohesion, the Union is to aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions or islands Recital 77 recites that in order to promote the TFEU objectives of economic, social and territorial cohesion, the investment for growth and jobs goal should support all regions and that to provide balanced and gradual support and reflect the level of economic and social development, resources under that goal should be allocated from the ERDF and the ESF among the less developed regions, the transition regions and the more developed regions according to their GDP per capita in relation to the EU 27 average. 127. The regulation states both common or general principles (article 1) and thematic objectives (article 9) which are to apply to all ESI funds and fund specific, general rules governing the two Structural Funds and the Cohesion Fund (articles 1, 2(4) and 4 and Part 3). In relation to the Structural Funds, article 89 (the first in Part 3) identifies one mission and two goals to be pursued for the purpose of that mission. The mission is stated in article 89(1): 89(1). The Funds shall contribute to developing and pursuing the actions of the Union leading to strengthening of its economic, social and territorial cohesion in accordance with article 174 TFEU. The actions supported by the Funds shall also contribute to the delivery of the Union strategy for smart, sustainable and inclusive growth. The goals are defined as follows: 89(2). For the purpose of the mission referred to in paragraph 1, the following goals shall be pursued: (a) Investment for growth and jobs in Member States and regions, to be supported by the Funds; and (b) European territorial cooperation, to be supported by the ERDF. 128. The thematic objectives which under article 9 all ESI Funds should support do not alter or detract from the fund specific mission and goals identified in the case of the Structural Funds in Part 3. On the contrary, article 9 makes clear that they are introduced in order to contribute to the Union strategy for smart, sustainable and inclusive growth as well as the Fund specific missions pursuant to their Treaty based objectives, including economic, social and territorial cohesion They represent, in short, ways in which the fund specific mission and goals may be promoted. They are identified as strengthening research, technological development and innovation; enhancing access to, and use and quality of ICT; enhancing the competitiveness of SMEs and of the agricultural, fishery and aquaculture sectors; supporting the shift towards a low carbon economy; promoting climate change adaptation, risk prevention and management; preserving and protecting the environment and promoting resource efficiency; promoting sustainable transport and removing bottlenecks in key network infrastructures; promoting sustainable and quality employment and supporting labour mobility; promoting social inclusion, combating poverty and any discrimination; investing in education, training and vocational training for skills and lifelong learning; enhancing institutional capacity of public authorities and stakeholders and efficient public administration. Article 9 concludes by stating that these thematic objectives are to be translated into priorities that are specific to each of the ESI Funds and are set out in the Fund specific rules. 129. Article 91 provides that, for the purposes of the mission identified in article 89(1), the resources available for the Structural Funds and the Cohesion Fund are some 322,000m in 2011 prices, 96.33% (some 313,000m) of which is under article 92(1) for the growth and jobs goal, while only 2.75% is under article 92(9) for the territorial cooperation goal. 130. Critically, for present purposes, article 90 introduces a new three fold categorisation for the period 2014 2020. This is quite different from the categorisation used in the prior period 2007 2013. It identifies less developed regions (those with less than 75% of the GDP of the now 27 Member States), transition regions (those with GDP between 75% and 90% of the average of the 27 Member States) and more developed regions (those with more than 90% of the average GDP of the 27 Member States). Article 90(4) provides for the Commission to decide which regions fall within each category, by a list valid for the whole period 2014 2020. 131. Further, a fixed percentage of the total resources of 313,000m available for the growth and jobs goal is under article 92(1) allocated to each of the defined categories of region viz 52.45% for less developed regions, 10.24% for transition regions and 15.67% for more developed regions (with 21.19% also going to the Cohesion Fund and 0.44% for additional funding for outermost regions). The fixed nature of these allocations is identified in article 93.1: The total appropriations allocated to each Member State in respect of less developed regions, transition regions and more developed regions shall not be transferable between those categories of regions. Article 93.2 gives Member States a very limited possibility of altering these fixed allocations. It allows the Commission in duly justified circumstances which are linked to the implementation of one or more thematic objectives to accept a Member States proposal to transfer up to 3% of the total appropriation for a category of regions to other categories of regions. 132. Annex VII prescribes the allocation method for each Member States entitlement in respect of less developed, transition and more developed regions (basically, in each case, the sum of allocations or shares calculated for each of its individual NUTS level 2 regions, on bases taking into account specified factors including GDP). The total allocated to the United Kingdom for less developed regions was some 2.118 billion, for transition regions some 2.3266 billion and for more developed regions some 5.126 billion. The Commissions calculations of individual regional needs are not published (though the parties have been able to work out what they approximately were), and they have no domestic application. 133. The overall funds allocated to the United Kingdom for the period 2014 2020 were (after allowing for inflation) reduced by 5% compared with 2007 2013. The Secretary of State was under article 93.2 permitted to transfer to the two less developed regions in the United Kingdom, that is Cornwall and the Scillys and West Wales and the Valleys, 3% of the budget which the EU had assigned to transition and more developed regions, and to split the amount so transferred between these two regions, achieving thereby an equal 16% cut in funding compared with the prior seven year period. The Partnership Agreement 134. Within the above parameters, it is for the United Kingdom to adopt national rules on the eligibility of expenditure (see Recital 61), by preparing a Partnership Agreement, to be approved by the Commission. Partnership Agreement is defined in article 2 as: Partnership Agreement means a document prepared by a Member State with the involvement of partners in line with the multi level governance approach, which sets out that Member State's strategy, priorities and arrangements for using the ESI Funds in an effective and efficient way so as to pursue the Union strategy for smart, sustainable and inclusive growth, and which is approved by the Commission following assessment and dialogue with the Member State concerned. 135. Article 4(4) and 5 provide: 4(4). Member States, at the appropriate territorial level, in accordance with their institutional, legal and financial framework, and the bodies designated by them for that purpose shall be responsible for preparing and implementing programmes and carrying out their tasks, in partnership with the relevant partners referred to in article 5, in compliance with this Regulation and the Fund specific rules. 5(1). For the Partnership Agreement and each programme, each Member State shall in accordance with its institutional and legal framework organise a partnership with the competent competent urban and other public authorities; regional and local authorities. The partnership shall also include the following partners: (a) (b) economic and social partners; and (c) relevant bodies representing civil society, including environmental partners, non governmental organisations, and bodies responsible for promoting social inclusion, gender equality and non discrimination. 136. Any Partnership Programme prepared for the purposes of articles 4(4) and 5(1) must self evidently comply with, and be prepared on the basis of considerations relevant to, the fund specific mission and goals of the regulation. It must also comply with more general principles of European and domestic law, including those of equality and rationality. The present challenges were brought at a stage when the programme submitted by the United Kingdom to the Commission had not yet been approved. The Commission was kept informed about the challenge, but regarded it as an internal issue for the United Kingdom to resolve. It stated that, if this Courts ruling required the United Kingdom Government to review the Partnership Agreement after it had been adopted, this could be done through the mechanism of article 16 of the regulation. Article 16(4) enables a Member State to propose an amendment, whereupon the Commission will carry out a (re )assessment and, where appropriate, adopt a decision within three months. In the event, the Commission has, since the oral hearing, issued a decision dated 29 October 2014 approving the Partnership Programme proposed by the United Kingdom. Given the Commissions stance, the United Kingdom Government also, successfully, resisted a claim for disclosure of the communications between it and the Commission about the Partnership Agreement, as not relevant to any issue in this appeal. 137. No submission has been made to the Supreme Court at any stage that the Commission should be regarded as the judge of the present challenge made to the Secretary of States decisions, or that any decision that the Commission might make, or has now made, approving the Partnership Programme in its present form has or could have any effect on the challenge, if otherwise valid, to such decisions. Lord Sumptions statements in paras 10 and 24 of his judgment that the Commission is the mechanism of compliance envisaged in the Regulation is not based on any argument which was or could in the circumstances fairly be put before the Court. I am also unable to accept the further assertion that the Commission is able to review the merits of the Secretary of States value judgments in a way that is beyond the institutional competence of any court. There is no information at all whether or how the Commission has looked into the subject matter of the present challenges. The suggestion that it is beyond the institutional competence of any court, let alone a national court to review the merits of the Secretary of States value judgments furthermore begs the question whether the appellants present challenges are to value judgments. Courts, national and international, have a significant role in reviewing the conformity of administrative decisions with the legislative framework within which they are made. It is their role to consider the relevance of the considerations on the basis of which such decisions are taken, and their compliance with fundamental principles of equality and rationality. The Secretary of State and the Commission were both fulfilling administrative functions, the former at the national, the latter at a supranational level. The issue in detail 138. The critical issue on this appeal is whether the Secretary of States decisions were in conformity with the legislative framework. The appellants case on this falls under three heads: (i) the Secretary of State was obliged when making such decisions to take as their basis the relative economic needs and disparities of the regions, but in fact reached the decisions on a different basis; (ii) the decisions were in breach of the general EU principle of equality; (iii) the decisions were in breach of the general EU principle of proportionality. 139. In relation to (i), the Secretary of State accepts that the underlying purpose of Structural Funds is to reduce development disparities between regions and the Court of Appeal was, in my view correctly, content to assume that the objective of reducing economic disparities was a mandatory relevant consideration and that the Secretary of State was therefore required to have regard to the relative economic needs of the transition regions (para 88). The fund specific mission of the Structural Funds is under article 89(1) of the regulation the strengthening of economic, social and territorial cohesion in accordance with article 174 TFEU. This is to be pursued overwhelmingly through the goal of investment for growth and jobs (articles 89(2)(a) and 92(1) of the regulation) with reference to the specified thematic objectives set out in article 9 of the regulation. 140. In relation to (ii), the Secretary of State accepts that the principle of equality applies. The Court of Appeal stated the position before it as follows (para 65): 65. The equal treatment principle requires that comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified: see, for example, the Arcelor Atlantique case [2008] ECR I 9895, para 23. Justification is not in issue in this case. Accordingly, the only question is whether there was a failure to treat like cases alike and unlike cases differently. Later, in para 82, the Court of Appeal again noted that the Secretary of State does not rely on justification, but added: We acknowledge that, as a matter of legal analysis, there is a clear distinction between the fact of differential treatment and its justification. But in the circumstances of this case, as is clear from the evidence of Dr Baxter the dividing line is not easy to maintain. I will revert to Dr Baxters evidence later in this judgment. 141. In relation to (iii), the Secretary of State submits and the Court of Appeal agreed that proportionality can add nothing to a challenge based on the principle of equality or rationality, in the absence of some specific legal standard in the light of which it can gain greater content. This seems to me correct, and I shall proceed on that basis. 142. With regard to the two principal grounds which are therefore open to the appellants, the Secretary of State submits that both the challenged decisions involved complex evaluative judgments, which can only attract what may be described as a light standard of review. Referring to its previous decision in R (Sinclair Collis Ltd) v Secretary of State for Health [2011] EWCA Civ 437, [2012] QB 394, the Court of Appeal said (para 70) that: In principle, the more complex and the more judgment based the decision, the greater the margin of discretion [that] should be afforded to the decision maker. That too is a proposition which I accept as relevant, in any context where different institutions of the State, the administration and the courts, have different institutional competence and the courts are asked to review the administrations decision making in an area which is with the administrations particular competence. But that does not apply to, or exclude closer review of, a decision which is based on irrelevant considerations or fails to treat like cases alike. Further, the lack of prior consultation with the appellants, or with Merseyside and South Yorkshire, and the informality of the process by which the Secretary of State made his decisions, take this case outside the most extreme category of cases in which courts have expressed reluctance judicially to review public funding decisions. The first decision 143. Against this background, it is necessary to examine more closely the Secretary of States two impugned decisions. The first arose as follows. During the period 2014 2020, the only less developed regions are the two former convergence regions. Transition regions include not only the three former phasing out and phasing in regions, but also eight former competitiveness regions, including Northern Ireland. The total EU funding for the ERDF and ESF was divided between the three categories of region as follows. The total allocated to the United Kingdom for less developed regions was some 2.118 billion, for transition regions some 2.3266 billion and for more developed regions some 5.126 billion. 144. The overall funds allocated to the United Kingdom for the period 2014 2020 were (after allowing for inflation) reduced by 5% compared with 2007 2013. The Secretary of State was under article 93.2 permitted to transfer to the two less developed regions in the United Kingdom, that is Cornwall and the Scillys and West Wales and the Valleys, 3% of the budget which the EU had assigned to transition and more developed regions, and to split the amount so transferred between these two regions, achieving thereby an equal 16% cut in funding compared with the prior seven year period. The Secretary of State then took the amounts allocated to each of the four territorial units making up the United Kingdom that is England, Wales, Scotland and Northern Ireland in the period 2007 2013 and determined that each such territorial unit should receive the same amount as in that period, less a 5% reduction. 145. At this stage, Dr Baxter confirms in her first witness statement, that Ministers did not consider the split of funding within Scotland or England and that Ministers were aware that increasing the funding for the Devolved Administrations [ie in comparison with that which would have resulted from a region by region assessment] would mean less for certain regions in England, as allocations had to be made from a set budget category for each category of region. However, it was decided that this would be dealt with at the next stage of the allocation process and that only the big picture within the UK would be looked at when trying to distribute the cut fairly between the UK nations. 146. The first decision was taken after the Department of Business Innovation and Skills had calculated that an allocation to all United Kingdom regions on a basis similar to that used by the Commission to arrive at the figures set out in para 132 above would lead to England receiving 439m more than in the period 2007 2013, while Wales, Scotland and Northern Ireland would receive, respectively, 494m, 272m and 216m less. 147. As a result of the first decision: (a) Northern Ireland, a unit consisting of one transition region which had previously been a competitiveness region, received the same as it had received both in 2013 and (because it had been receiving monies on a flat line basis) in each year during the period 2007 2013 less 5%. (b) Highlands & Islands received the yearly average of its total receipts during the period 2007 2013, less 5%. This was effectively inevitable. The only other regions in Scotland were competitiveness regions, and the Secretary of State was not likely to (and after discussion with the Scottish Ministers did not) increase their allocation in order to reduce that of Highlands & Islands. (c) The allocation for West Wales and the Valleys was set as described in para 144, with the effect of allocating to the one remaining Welsh region, East Wales, a more developed region, the whole of the remaining amount allocated to Wales. The second decision 148. The second decision arose as follows. Within England there are in all nine transition regions. Seven of these are former competitiveness regions, and two are former phasing in regions, Merseyside and South Yorkshire. The Secretary of State determined that, taking the amount that each region has received in the year 2013 (not the annual average it had received over the whole period 2007 2013), each should receive a 20% uplift, reduced by 4.3% for technical assistance and for funding of the national offenders programme, making a final uplift of 15.7%. Regions in the more developed category received a 5% uplift, reduced again by 4.3% making a 0.7% uplift, while Cornwall and the Scillys received a 16% reduction. The effects of the two decisions 149. The combined effect of the two decisions was that, while Northern Ireland was guaranteed an allocation based, albeit not exactly, on an assessment of its actual needs during the prior period and while Highlands & Islands would receive an allocation based on the average of its receipts as a transitional region over the whole of the prior period, Merseyside and South Yorkshire received an allocation which was, in contrast, not referable to any assessment of its actual needs or its average receipts during the prior period, but based on the average of the aid which had been estimated as required by competitiveness regions in the prior period (since that was the basis of Merseysides and South Yorkshires receipt of aid in the year 2013). 150. By any measure of development and need, however, Merseyside and South Yorkshire still fall well below the average for competitiveness regions. The indicators of economic development selected by the Government itself for allocating funding in 2007 2013 were per capita business expenditure on research and development, start ups, qualifications, GVA per workforce job, percentages of working age population unemployed or inactive, percentages of working age population without qualifications and with NVQ level 1 qualifications. Applying such indicators, Merseyside and South Yorkshire are ranked third and sixth most deprived out of the total of 34 regions not falling into the convergence and phasing out categories in 2007 2013. Using the Commissions methodology, Merseyside and South Yorkshire would have received about 315m and 236m respectively, while on the Governments current approach, they would receive only 202m and 178m respectively, in each case for the whole period 2014 2020. It is common ground that, even on the basis of the calculation most favourable to the United Kingdom Government that the Secretary of State has been able to support, Merseyside and South Yorkshire would, if their entitlement during the period 2014 2020 were computed as if they had then been competitiveness regions, receive at least 10.3m and 24.1m more than they would be under the Governments present intended allocation. They submit that the figures would be much greater. GDP is not of course the only possible measure of any regions entitlement, and Lord Neuberger has identified variations in funding even between regions whose funding was arrived at on a comparable basis. But the use of inconsistent bases to arrive at the level of funding is on its face likely to lead to distortions, unless it can be justified by considerations relevant under Regulation 1303/2013. The combined effect of the two decisions was in my view to preclude this. 151. The further combined effect of the two decisions is that Merseyside and South Yorkshire will as transition regions receive funding calculated, as a matter of substance, on a different basis from that received by other English transition regions which were formerly competitiveness regions. First, by taking the year 2013 as the base for the seven former English competitiveness regions, the Secretary of State was taking as his base for those seven regions funding which applied in each of the years 2007 2013 and was calculated on a basis with a relationship to each such regions needs and characteristics. Second, the 2013 base reflected in the case of the seven former competitiveness regions the Governments deliberate policy of favouring northern regions over southern regions, which it was free to adopt in the period 2007 2013 in relation to regions which fell in that period into the competitiveness category. 152. In contrast, the 2013 base taken for Merseyside and South Yorkshire was derived from an average for United Kingdom competitiveness regions, which these two regions do not match. Secondly, their 2013 base was pre determined by the EU by Regulation (EC) No 1083/2006. It was not a figure which was (or could have been) uplifted to cater for the United Kingdom Government policy of favouring northern over southern regions. Yet on the evidence Merseyside and South Yorkshire are among the neediest of northern regions. 153. In the light of the above, the appellants are therefore right, I consider, when they observe that (a) the first decision committed a significant part of the transition funding to two particular transition regions (Northern Ireland and Highlands & Islands) on a basis which continued to give, subject only to a 5% reduction, the average level of funding received throughout the whole of the prior seven year period, (b) it did this without regard to the extent to which this would impact on the funding available for the new range of English transition regions (including seven former competitiveness regions) formed by the Commissions re categorisation of regions for the period 2014 2020 and (c) in reality there would be an adverse impact, since effectively preserving the pot for Northern Ireland and Highlands & Islands (less 5%) was bound to diminish the pot available for the nine English transition regions, including not only Merseyside and South Yorkshire, but also seven former competitiveness regions now entitled to enhanced funding as transition regions in the period 2014 2020. Lord Sumptions contrary view in paras 35 and 50 ignores the reduced size of the pot for the new category of transition regions embracing seven former competitiveness regions, once the previous allocation to Northern Ireland and Highlands & Islands was effectively ring fenced (less 5%), compared with the average funding they received throughout the whole prior seven year period, by the Secretary of States first decision. As to the second decision, the appellants are also right, in my opinion, in submitting that this allocated monies to Merseyside and South Yorkshire on a basis which, although superficially similar, was in fact fundamentally different from that applied to other English transition regions, as well as Northern Ireland and Highlands & Islands. 154. In her first witness statement, Dr Baxter identified the reasons for dividing the United Kingdoms Structural Fund allocation between the four territories constituting the United Kingdom. She stated that they were transparency, simplicity, consistency and a balance taking account of the status of the devolved administrations under the United Kingdoms constitutional settlement. However, none of these reasons relates directly to the fund specific mission of strengthening economic and social cohesion and the reduction in that connection of development disparities between regions or indeed with delivery of the Union strategy for smart, sustainable and inclusive growth or the thematic objectives introduced to contribute thereto (see paras 126 128 above). On the contrary, they involve an initial four way division, essentially for political reasons, which operates irrespective of the position in individual regions, and potentially and actually to the detriment of one or more English regions. Dr Baxters witness statement effectively accepts this (para 145 above). Regional disparities, and consideration of the mission and goal identified in article 89 of Regulation 1303/2013 were displaced by territorial and political considerations deriving from the United Kingdoms devolution settlements. In so far as she goes on to suggest that any adverse effect would or might be addressed at the second stage of decision making, I have already noted in para 153(c) that this would not have been practicable and in any event it was not done. 155. The Secretary of State seeks to make good this approach by reference to his view that there had been no significant change from the years 2006 2007 to the years 2013 2014 in the economic or other relevant differentials between different United Kingdom regions. Lord Sumption endorses this response in para 35, as does Lord Neuberger in para 67. But the response could only have been relevant, had the categorisation of and treatment of regions introduced by Regulation No 1303/2013 remained the same as it was in the previous period 2007 2013 under Regulation No 1083/2006. This was not the case. A division of total available funding between the four territories of the United Kingdom in the period 2014 2020 in the same totals (less 5%) as had applied throughout the whole period 2007 2013 was bound to lead to anomalies in the light of (a) the re categorisation of regions under Regulation No 1303/2013, (b) the recognition of seven former competitiveness regions as meriting enhanced treatment as transition regions, along with Merseyside and South Yorkshire, and (c) the different bases and levels of funding which different transition regions would necessarily enjoy in the period 2014 2020 compared with the period 2007 2013. The consistency and balance involved in giving each devolved administration the same amount (less 5%) were in fact bound to lead to inconsistency and imbalance. Two unlike situations (those existing in the periods 2007 2013 and 2014 2020) were treated alike, in a manner and with results that none of Dr Baxters four reasons justifies. 156. Reference was made in argument to the Court of Justices decision in (Case C 428/07) R (Horvath) v Secretary of State for Environment, Food and Rural Affairs [2009] ECR I 6355. But that decision turned on the constitutional settlement involved in devolution. It was of its essence that the devolved administrations had under the relevant devolution arrangements the primary responsibility for implementing the common agricultural policy, and on that basis the Court of Justice held that divergences between the measures provided for by the various administrations cannot, alone, constitute discrimination (para 57). In para 56 the Court distinguished discrimination resulting from a measure adopted by that Member State implementing a Community obligation, referring in this regard to its decision in Joined Cases 201/85 and 202/85. Further, the relevant measure expressly required and permitted Member States to define, at national or regional level, minimum requirements for funding support, a provision which the court interpreted as expressly recognising the possibility for the Member States, to the extent authorised by their constitutional system or public law, to permit regional or local authorities to implement Community law measures, by defining such minimum requirements. 157. The present case is critically different. The Structural Funds are allocated to the United Kingdom, primarily to strengthen its social and economic cohesion. The Secretary of State retains responsibility for the internal allocation of the Structural Funds within the United Kingdom. That he consulted with the devolved administrations in relation to the decisions which he took does not affect this, or alter his duty to avoid discrimination between those affected by his decisions. If he chose to divide up the total funding available between territories of the United Kingdom, he was obliged to do so in a way which was consistent with the fund specific mission of cohesion and the goal of growth and jobs set by Regulation No 1303/2013, and would lead to like cases being treated alike, and unlike cases differently, across the whole United Kingdom. The mathematical division between the four territories of the funding allocated to the United Kingdom for the period 2014 2020 was, as noted in para 155 above, bound to lead to discrepancies detrimental to cohesion, in particular when arrived at in disregard of the re categorisation of regions effected by Regulation No 1303/2013. 158. The appellants challenge to the Secretary of States decisions, on the basis of the discrepancies to which they lead between the bases of allocation to Merseyside and South Yorkshire and to other regions within the United Kingdom is, I consider, also made good. All transition regions must in my view be regarded as comparable, and on this basis differences in treatment between them require to be considered and justified. The Secretary of State appears to have foregone any case of justification in the courts below, but, even if justification is treated as a live issue or an issue which is in the present context inextricably linked with comparability, I do not consider that the difference in treatment has been shown to be legitimate. 159. Merseyside and South Yorkshire were given an allocation which took as relevant funding they received in 2013 by reference to an average for competitiveness regions, which clearly did not reflect their position or needs. Highlands & Islands on the other hand received funding based on the average of the tapered funding they received over the whole 2007 2013 period. They were both transitional regions. Their funding reduced in each case to the same level in 2013. Highlands & Islands was admittedly a phasing out region, of whom it could be said that in 2006 their GDP had been less than 75% of that of the original 15 EU Member States. This could not be said of Merseyside and South Yorkshire and they were only transitional regions because they had been Objective 1 regions in the period 2000 2006. But, nevertheless, funding in the period 2007 2013 was in each case arranged on the basis that it reduced to the average for competitiveness regions by 2013. There was no reason to assume, without analysis, that the needs of Highlands & Islands merited a complete preservation (subject only to a 5% reduction) of their average funding in the period 2007 2013, whereas Merseyside and South Yorkshire required no more than the preservation with a 15.7% uplift of their very low level funding in the year 2013, based on an average which did not on any view reflect their actual position. There is (with respect to Lord Sumptions comment in para 42 about additional funding) no basis for concluding that Merseyside and South Yorkshire received (but Highlands & Islands did not) some sort of uncovenanted bonus through the higher early funding allocated to them during the prior period 2007 2013 which should now be carried forward as a form of debit to their account in respect of the period 2014 2020. Differences in the co financing received in the period 2007 2013 between phasing out regions (which had only to find 33.33p for every pound of EU funding) and phasing in regions (which had to match EU funding pound for pound) play against rather than for continuing to award Highlands & Islands funding on a more favourable basis than Merseyside and South Yorkshire during the period 2014 2020 when both are now transition regions. 160. Lord Sumptions reference to additional funding and much of paras 20, 28, 37 and 42 44 of his judgment are focused on a case which was originally advanced by the appellants that Merseyside and South Yorkshire should, like Highlands & Islands, have received funding by reference to an average of what they had received in the period 2007 2013. However, save to highlight the obvious disparity with the funding of Highlands & Islands, the appellants in their case before the Supreme Court focused on the disparity arising from the use of the base year 2013. In that respect, in my opinion, the appellants have made good their challenge to the Secretary of States decisions. There was no good reason for awarding funding on the basis of the same 15.7% uplift over the 2013 level both in relation to English transition regions which had been competitiveness regions and to Merseyside and South Yorkshire which had not been, but whose funding in 2013 had been based on an average which did not reflect their actual position. Contrary to Dr Baxters statement in para 54 of her first witness statement, the result was not to treat all English Transition regions in the same way, since the nature of the 2013 base differed significantly between them. 161. Dr Baxter states, in her first witness statement, para 49, that attention was given to the possibility of using, indeed that Ministers did see a strong case for using, a basket of indicators based on the latest economic data to determine the allocations within England during the period 2014 2020, together with applying a suitable safety net. She says that this option was rejected because it would have led to too great a shift of resources from north to south, and would have had to be countered by a safety net which, she suggests, would have taken one back to the present position. But an assessment of actual development needs would have avoided the use of 2013 allocations as a base for transition regions, and would have meant that Merseyside and South Yorkshire would have been treated on the same basis as other English transition regions. Further, in circumstances where, as a matter of general policy, a shift in funding from south to north was desired, that could and would then have been given effect in relation to all English regions, including Merseyside and South Yorkshire. The actual basis of allocation fails to give Merseyside and South Yorkshire the benefit of any such policy. Any additional safety net could also have been applied on a basis which affected all English transition regions in like fashion. 162. In proceeding as he did, therefore, the Secretary of State in my view gave priority to irrelevant considerations (the maintenance in the period 2014 2020 of similar funding, less 5%, for each United Kingdom territory to that which obtained in the period 2007 2013, when the re categorisation of regions during the current period makes the comparison inappropriate), failed to treat like situations alike (although all were transition regions, Merseyside and South Yorkshire were treated quite differently from Northern Ireland and Highlands & Islands) and treated unlike situations alike (by taking 2013 as an appropriate base for funding for all English transition regions, although it had been arrived at in the case of Merseyside and South Yorkshire on a quite different basis bearing no relationship to their actual needs, in contrast to the basis on which it had been arrived at in the case of other transition regions). Whether the matter is viewed under EU law or at common law, these are manifest flaws which are neither problems of value judgment nor fall within the margin of discretion undoubtedly due when value judgments are in issue. 163. I would only add that, even if I had arrived at a different view with regard to the legitimacy of the first decision, the discrepancy in the bases on which funding was allocated to different English transition regions would still have led me to conclude that the second decision was illegitimate. 164. I have also had the benefit of reading the judgment prepared by Lord Carnwath, who reaches the same conclusions as I do and with whose reasoning in paras 176 187 I find myself in substantial agreement. 165. It follows that, in my opinion, the appeal should be allowed, and the Secretary of State required to reconsider and re determine the allocations between all the transition regions within the United Kingdom in the light of the guidance given in this judgment. LORD CARNWATH: 166. I agree with Lord Mance that this appeal should be allowed, substantially for the reasons given by him. While I agree also with much of Lord Sumptions analysis, I am not persuaded that he provides an adequate answer to the essential complaints made by Mr Coppel QC. In the circumstances I will confine myself to some comments on the correct general approach, and a short explanation of my reasons for disagreeing with the majority. General approach 167. Equal treatment and proportionality are of course well established principles of EU law, but they are not the starting point. Whether under European or domestic law, such general principles have to be seen in the context of the legislative scheme in question. I agree with the Court of Appeal (para 57) that these decisions were concerned with matters of broad economic, social and political judgment, for which the objectives were widely defined. As they said, it is classic territory for affording the decision maker a wide margin of discretion (or appreciation), where the court should only interfere if satisfied that the decisions were manifestly inappropriate or manifestly wrong. On the other hand, the lack of formality in the decision making process distinguishes the case, for example, from domestic authorities where public funding decisions have been subject to review in Parliament, and the courts have accordingly a very restrictive view of the scope for judicial review (see R v Secretary of State for Environment, Ex p Hammersmith and Fulham London Borough Council [1991] 1 AC 521). 168. The Court of Appeal referred to the exhaustive review of the relevant European and domestic authorities by all three members of the Court of Appeal in R (Sinclair Collis Ltd) v Secretary of State for Health [2012] QB 169. I do not find it necessary to analyse the differences of emphasis between the three judgments in that case, nor to enter into discussion about different formulations of the test. I agree with Lord Neuberger of Abbotsbury MR (para 200): The breadth of the margin of appreciation in relation to any decision thus depends on the circumstances of the case and, in particular, on the identity of the decision maker, the nature of the decision, the reasons for the decision, and the effect of the decision. Further, because the extent of the breadth cannot be expressed in arithmetical terms, it is not easy to describe in words which have the same meaning to everybody, the precise test to be applied to determine whether, in a particular case, a decision is outside the margin. It is therefore unsurprising that in different judgments, the same expression is sometimes used to describe different things, and that sometimes different expressions are used to mean the same thing. As the Court of Appeal said of the present case, the context is one where the treaty and the regulation together confer a wide area of policy choice on both the Commission and the member states, within the objectives set by them. Further, since responsibility is shared between the European and national agencies, there is no reason for any material differences in the approach of the courts to their respective decisions. 170. For similar reasons, it is unhelpful in the present context to look for a clear cut distinction between issues of comparability on the one hand and justification on the other. As the regulation makes clear (and as Mr Coppel QC ultimately accepted), the Secretary of State had a wide discretion as to the factors he could properly take into account in comparing the various regions for the purpose of allocating funds. This exercise cannot be equated to a simple comparison (as in R (Chester) v Secretary of State for Justice [2014] AC 271) between prisoners and non prisoners, or the issue of equality between men and women (specifically addressed in article 7 of the regulation). 171. None of the cases relied on by Mr Coppel QC seems to me sufficiently close to the present context to advance his argument for a more stringent test. For example he cites Franz Egenberger GmbH Molkerei und Trockenwerk v Bundesanstalt fr Landwirtschaft und Ernhrung (Case C 313/04) [2006] ECR I 6331 para 33, for the proposition that the general principle of equality requires that comparable situations must not be treated differently and different situations must not be treated alike unless such treatment is objectively justified. The case itself related to the narrow issue of where applications for butter import licences should be lodged, and provides no assistance in the present case. 172. The highpoint of his argument perhaps is in Socit Arcelor Atlantique et Lorraine v Premier Ministre (Case C 127/07) [2008] ECR I 9895, where the equal treatment principle was treated by the European court as applicable to a scheme for trading in greenhouse gas emission allowances. The issue was whether that principle had been breached by a scheme which applied to the steel sector but not to the plastics or aluminium sectors (para 24). The court accepted that the emissions from all these activities were in principle in a comparable situation, since they all contributed to greenhouse emissions and were capable of contributing to the functioning of a trading allowance scheme (para 34). It went on, first, to accept that the different treatment had caused disadvantage to the steel sector (paras 42 44), but, secondly, to hold that it was justifiable (not manifestly less appropriate than other measures), taking account of the broad discretion allowed to the Commission (paras 57 59), and the difficulties of managing a novel and complex scheme with too great a number of participants (paras 60ff). 173. The case offers some help to Mr Coppel QCs argument, to the extent that even in an area of broad policy discretion the court adopted a three stage analysis comparability, disadvantage, justification. The margin of discretion was applied only at the last stage. However, there the issue of comparability turned on a narrow view of the purpose of the scheme, which applied equally to all industrial emissions whatever the form of the industry. There is no parallel with the much more varied objectives of the present scheme, which allow a broad discretion at all stages, and make it impossible to draw a meaningful distinction between comparability and justification. 174. The Secretary of State no doubt needed to adopt rational and consistent criteria for his allocations, within the objectives set by the regulation, and he needed to be able to justify those criteria and their application as between the regions. But nothing is gained for this purpose by treating justification as a separate stage in the legal analysis. The court must look at the reasoning as a whole to decide whether it was affected by legal error, or otherwise manifestly inappropriate. Issues of equal or unequal treatment and proportionality may play a part in that assessment, in both European and domestic law (see Kennedy v Charity Commission [2014] UKSC 20, [2014] 2 WLR 808, para 54, per Lord Mance). 175. The danger of the formulaic approach advocated by Mr Coppel QC is that it may make it more difficult to separate the wood from the trees, and distract attention from the ultimate question, under EU law or domestic law: whether something has gone seriously wrong with the decision making process such as to justify the intervention of the court. The two decisions 176. It is unnecessary to repeat Lord Sumptions description of the two decisions. The essential complaint against the first decision is simply stated. The decision to start by dividing the UK allocation between the four jurisdictions had the effect of limiting the Secretary of States options to achieve fairness at the second stage, in a way which was not justified by anything in the scheme or objectives set out by the regulation. 177. The complaint against the second decision turns on the adoption of 2013 as a base for all transition regions. The appellant authorities from the two regions say that, by taking the 2013 figure as a base for all, the Secretary of State was not comparing like with like. In the previous round all the other transition regions had been competitiveness regions, but their allocations had been determined by reference to their relative economic and social circumstances, rather than the application of a single formula, and the allocations were constant throughout the period. By contrast the allocations of the two regions, as phasing in regions, had been determined, not by reference to their relative circumstances, but by a special formula set by the regulations; the last year was based on the national average for all competitiveness regions throughout the UK (regardless of relative strength). That meant that their last year did not reflect either their own circumstances relative to the other transition regions, nor in particular the extra funding allowed to the north in the previous period, to reflect its greater development needs a balance which had not changed in the interim. 178. This is explained most clearly in the evidence of Mr Eyres (para 33). Although the precise methodology for calculating allocations to the competitiveness regions in the previous period had not been disclosed, the government had confirmed that it took account of the greater development needs of the North and Midlands, and, as he understood, it had used a basket of indicators reflecting the relative deprivation of those areas. Had the allocations for 2013 been calculated on the same basis as the neighbouring regions they would have been allocated far in excess of the amounts resulting from the phasing in formula. He adds (para 50(3)): The Secretary of State seems to assume that the additional, transitional funding was awarded between 2007 2010, leaving the funding for 2011, 2012 and 2013 as the correct funding allocation for Merseyside and South Yorkshire. Yet this ignores the fact that the funds allocated in 2011, 2012 and 2013 were significantly below the level for Competitiveness regions in the North and Midlands, which had no protected status. This is because the allocation for 2013 was based on the 'national average for Competitiveness regions and takes no account of the GDP and high levels of deprivation within individual Competitiveness regions in North and Midlands, including within Merseyside and South Yorkshire themselves (which the Government did take into account when making 2007 2013 allocations to Competiveness regions). 179. In short, the appellants case can be reduced to two apparent anomalies which required explanation: (a) Alone of all the transition regions in the UK (including Highland & Islands, which had been also subject to a tapered funding regime in the previous period), the two regions were given no protection from a substantial reduction in funding (65%) as compared with the previous period taken as a whole; (b) Alone of all the English transition regions, their funding was fixed by reference to a base which had taken no account of their relative economic and other circumstances in the previous period. I will take them in turn. 180. The first, as respects the comparison with Highlands & Islands, was in large part attributable to the prior decision to adopt a two stage process. In itself there could be no objection to the Secretary of State taking account of the territorial divisions and governance arrangements within the UK. The provisions of the regulation confer a wide discretion on member states to take account of local structure at all levels. Although the decisions on funding were not themselves devolved, the devolved administrations had a clear interest in the process, both as partners, and (presumably) as possible sources of co financing. 181. I note also that no objection was taken on behalf of the two regions to the two stage process at the time of the first decision. On the contrary Mr Eyres records (para 40) that the Mayor of Liverpool, as Chair also of the Liverpool partnership, wrote to the minister welcoming the decision to amend the EU formula to provide a 95% safety net for devolved areas provided the same principles were applied in England. 182. However, the judge was wrong with respect to treat this as a socio economic decision by the Secretary of State which thereby absolved him of the need for further comparisons between different parts of the UK (para 72). That would in my view be contrary to the scheme of the EU regulation (and indeed to the devolution settlement), which gives him responsibility for the fairness and consistency of the distribution as between all the regions in the UK, so far as not predetermined by the Commission. Rightly, that was not how the case was argued by Mr Swift QC in the Court of Appeal or before us. As has been seen, his submission, in substance accepted by the Court of Appeal, turned on lack of comparability between phasing in and phasing out regions. 183. I agree that there were significant differences of detail between the two categories, as explained by Dr Baxter, although it is not clear why some of them were reasons for less favourable treatment for the two regions. For example, the fact that the co financing regime was more onerous for them seems on its face a point going the other way. However, none of these points addresses the main complaint. The reasons which led the Secretary of State to include Highlands & Islands in the 95% safety net by reference to the 2007 2013 funding as a whole, were apparently no less applicable to the two regions. That indeed was the point made by the Mayor of Liverpool at the time. Conversely, the main reason which led the Secretary of State to treat the two regions differently in this respect from the other English transition regions (that is, the higher funding for 2007 2013 overall, tapered down to the average competitiveness level) was in principle no less applicable to Highlands & Islands. 184. As Dr Baxter indicates, the Secretary of State was aware of this apparent discrepancy, but as far as Scotland was concerned he felt constrained (in practice if not in law) by the overall budget envelope that had already been set (para 62 of her witness statement). The idea of a safety net for the two regions was rejected because of the negative impact on the other transition regions. That with respect is little more than a statement of the obvious. If I take from Peter to give to Paul, it will no doubt have an adverse impact on Peter, but that says nothing about the balance of fairness as between the two. 185. Similar issues arise in respect of the second decision. Viewed by reference simply to a comparison with the other English transition regions (and ignoring Highlands & Islands), he was entitled to take account of the different funding regime in the previous period. Since the overall funding for the two regions in that period had been on a more generous basis than for the others, and since that was by definition special and transitional, there was no reason to carry it forward into the exercise for 2014 2020. Furthermore, if their figure for 2013 had been related in some way to their own circumstances (as was the case with the other transition regions), it might have formed a suitable base for the subsequent period. However, that was not the case. The 2013 figure for the two regions (as for Highlands & Islands) reflected the average of all the former competitive regions, a category which had included even the most prosperous regions (that is, those now categorised as more developed). 186. The Secretary of State was faced with a difficulty in that the transition regions were a new intermediate category, encompassing a relatively wide range of relative development (between 75% and 90% of the EU average). Had his distribution been based, as in the previous period, on a comparison of economic or other factors, within the scope of the regulation, it would have been very difficult to challenge. It is perhaps understandable that he preferred a more simple blanket approach to the new category, particularly as his view of the general economic balance had not changed. However, that could only be justified if he took steps to ensure that the two regions were dealt with on a comparable basis. His principal reason for his not doing so was, not a view as to the relative needs of the two regions as compared to the others, but again the negative impact for them of a 22% cut where they (and probably the Commission) had expected enhanced levels of funding. This, by implication, assumed a finite budget for England, in effect predetermined by the first decision. 187. I conclude that the criticisms made by the two regions of the decision making process, including both decisions, have not been satisfactorily answered. I do so with some hesitation in view of the risk of over simplification of some very complex issues and material. It matters not, in my view, whether this is expressed as an issue of unequal treatment or lack of proportionality under European law, or inconsistency and irrationality under domestic law, the anomalies are in my view sufficiently serious to have required explanation which has not been given, and which renders the resulting decisions manifestly inappropriate under EU and domestic principles. 394. The term manifestly inappropriate in European jurisprudence was traced back by Arden LJ (para 115ff) to R v Minister for Agriculture, Fisheries and Food, Ex p Fedesa (Case C 331/88) [1990] ECR I 4023, a case relating to decisions implementing the Common Agricultural Policy. She showed that it has been treated as applicable also in appropriate cases to decisions of national legislatures or other decision makers (para 129). |
Each of these three appeals involves a challenge to an order for costs made by a High Court judge against a newspaper publisher after a trial. In two of the appeals, Flood v Times Newspapers Ltd and Miller v Associated Newspapers Ltd, the trial involved an allegation that the newspaper had libelled the claimant; in the third appeal, Frost and others v MGN Ltd, the trial involved allegations that the newspaper had unlawfully gathered private information about the claimants by hacking into their phone messages. In each case, the newspaper publisher lost and was ordered to pay the claimants costs, and in each case the newspaper publisher contends that the costs order infringes its rights under article 10 of the European Convention on Human Rights. In Flood v TNL, the newspaper publisher also argues that the order for costs made against it was outside the ambit of what a reasonable judge could have decided. In all three cases, the proceedings against the newspaper publisher had been brought by claimants who were able to take advantage of the costs regime introduced by the Access to Justice Act 1999 and reflected in the provisions of the relevant Civil Procedure Rules then in force, in particular CPR 44. It is the provisions of this regime (the 1999 Act regime) which found the basis of the contention that article 10 is infringed. The 1999 Act regime has now been largely replaced by a new regime, and, although the new regime has no bearing on the awards of costs in the present cases, it is of some relevance to the issues which have to be considered. Accordingly, I shall start by briefly describing the 1999 Act regime and its aftermath. I will then summarise the facts of each case before turning to the issues. I will deal first with the article 10 issues which apply in all three cases, and I will finally discuss the issue specific to Flood v TNL, which turns on its own facts. The 1999 Act regime and its aftermath The 1999 Act regime, Callery v Gray and Campbell v MGN Around 20 years ago, the government decided to curtail the availability of civil legal aid very substantially, and it appreciated that in order to do so a new system had to be introduced if people who were not particularly well off financially were to be able to enjoy access to legal advice and representation. After some, if limited, consultation, the government introduced a Bill into Parliament which became the 1999 Act. That statute severely cut down the availability of legal aid in the field of civil law and introduced the 1999 Act regime instead. The 1999 Act regime was described in a little detail in the leading judgment of this Court in Lawrence v Fen Tigers Ltd (No 3) [2015] 1 WLR 3485, paras 12 25, and its background is more fully explained in paras 65 69 of that judgment. In essence, under the 1999 Act and the rules made thereunder, a claimant could bring proceedings on terms which involved (i) the claimants lawyers agreeing under a conditional fee agreement (a CFA) to be paid nothing if the claim failed, but to be entitled to receive up to twice their normal rates if the claim succeeded, and/or (ii) the claimant taking out so called after the event (ATE) insurance against the risk of his having to pay the defendants costs (and on terms that the insurer was only paid if the claim succeeded), and (iii) the claimant being able to recover from the defendant the success fee, payable under the CFA, and the premium payable in respect of the ATE insurance, as part of his costs if his claim succeeded. The 1999 Act regime was considered by the House of Lords in two cases, Callery v Gray (Nos 1 and 2) [2002] 1 WLR 2000, and Campbell v MGN Ltd (No 2) [2005] 1 WLR 3394. In the former case, which involved a successful personal injury claim, the defendant challenged the level of success fee and the ATE premium which had been held to be recoverable by the claimant, in circumstances where the level of success fee had been reduced by the Court of Appeal. It was said that the success fee was too high and that the ATE insurance had been taken out prematurely. Both arguments failed. However, while accepting that the system introduced by the 1999 Act improved access to justice for claimants, all members of the panel were plainly concerned about the possibility of abuse of the 1999 Act regime. In Campbell (No 2), the newspaper publisher, MGN, which had lost a privacy infringement claim and had been ordered to pay Ms Campbells costs, contended that they should not be liable to pay any part of the success fee on the ground that, in the circumstances of this case, such a liability is so disproportionate as to infringe their right to freedom of expression under article 10 of the Convention para 6, per Lord Hoffmann. In para 22, he explained that this argument was based in part on the disproportionality of the level of costs bearing in mind what was at stake in the litigation, and in part on the fact that the particular claimant did not need to fund the litigation with the benefit of a CFA and ATE insurance. Lord Hoffmann then proceeded to reject both contentions in paras 23 28, and made the point that the 1999 Act regime had to be considered as a whole, because concentration on the individual case does not exclude recognising the desirability, in appropriate cases, of having a general rule in order to enable the scheme to work in a practical and effective way (para 26). However, he went on to express considerable reservations about the level of recoverable costs engendered by the 1999 Act regime in relation to claims against the press. The Jackson Review, the Leveson Inquiry, and subsequent legislation The concern about the 1999 Act regime expressed in those two cases had started to become widespread by the time Campbell (No 2) was decided. In 2008, the then Master of the Rolls, Sir Anthony Clarke, asked Sir Rupert Jackson to investigate the costs of civil litigation, and this resulted in the Review of Civil Litigation Costs: Final Report (December 2009), which was published in 2010. In the Review, Sir Rupert was very critical of the 1999 Act regime, and proposed substantial changes, most of which have now been implemented by and pursuant to the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), and which (as a broad generalisation) apply to proceedings begun after 1 April 2013. However, some of his proposals have not been adopted, although it is clear that the implementation of a new regime to replace the 1999 Act regime is still work in progress. Some of the principal changes to the 1999 Act regime effected by LASPO did not apply to defamation and privacy claims see article 4 of the LASPO (Commencement No 5 and Saving Provision) Order 2013 (SI 2013/77). Thus, such claims are now an exception to the general rule which excludes the recoverability of success fees and ATE premiums by successful claimants. (The only other current exception is mesothelioma claims). This was justified by the fact that such claims would be covered by other legislation. Another recommendation made by Sir Rupert, namely qualified one way costs shifting, has also been introduced, but only to a limited extent, in that it only extends to personal injury claims, and therefore does not apply to defamation or privacy claims. However, certain changes introduced following Sir Rupert Jacksons Review do apply to defamation and privacy cases. They include more muscular case management by the courts to deal with cases proportionately, costs budgeting and costs management, which involve the parties and the court controlling the level of recoverable costs at the start of the proceedings (see CPR 3.12(1)), costs capping (by virtue of PD 3F para 1), and new provisions which limit the level of overall recoverable costs to what is proportionate (pursuant to CPR 44.3(2)(a)). There are two other statutes which should be mentioned in the present context. The Defamation Act 2013 contained provisions which afforded a degree of substantive protection to potential defendants in defamation actions; however, that statute did not deal with costs. The Crime and Courts Act 2013 (the CCA 2013) on the other hand did concern itself with costs (among many other issues). The CCA 2013 was enacted in part to give effect to the recommendations of Sir Brian Leveson in his An Inquiry into the Culture, Practices and Ethics of the Press (November 2012) (HC 780). Section 40 of the CCA 2013 (which is not in force) provided that if a newspaper publisher became a member of an approved press regulator, it would have a measure of protection against an adverse costs order in any court proceedings brought against it which could have been brought under the regulators arbitration scheme, but any publisher which was not a member of such a regulator would be at greater risk of adverse costs orders than before. The Government has launched a public consultation as to whether section 40 of the CCA 2013 should be implemented, and this has led to a sharp difference of views. MGN v UK and Lawrence v Fen Tigers Meanwhile, MGN was dissatisfied with the House of Lords decision in Campbell (No 2), and applied to the Strasbourg court, who, on 18 January 2011, decided that MGNs article 10 rights were infringed by having to reimburse the claimant the success fee and the ATE premium which Ms Campbell had incurred MGN v United Kingdom (2011) 53 EHRR 5 (MGN v UK). The Strasbourg court acknowledged that the 1999 Act regime sought to achieve the legitimate aim of the widest public access to legal services for civil litigation funded by the private sector (para 197). However, at paras 207 to 210 of its judgment, the Strasbourg court discussed a number of flaws in the system that Sir Rupert Jackson had identified in his Review; to quote from Lawrence (No 3), para 43: The flaws were (i) the lack of focus of the regime and the lack of any qualifying requirements for appellants who would be allowed to enter into a CFA; (ii) the absence of any incentive for appellants to control the incurring of legal costs and the fact that judges assessed costs only at the end of the case when it was too late to control costs that had been spent; (iii) the blackmail or chilling effect of the regime which drove parties to settle early despite good prospects of a defence; and (iv) the fact that the regime gave the opportunity to cherry pick winning cases to conduct on CFAs. At para 217, the court concluded that: the depth and nature of the flaws in the system are such that the court can conclude that the impugned scheme exceeded even the broad margin of appreciation to be accorded to the state in respect of general measures pursuing social and economic interests. Accordingly the Strasbourg court held that the order for costs upheld by the House of Lords in Campbell (No 2) infringed the article 10 rights of MGN. In a subsequent judgment, the Strasbourg court awarded MGN compensation in a figure the precise basis for whose quantification is impossible to assess (2012) 55 EHRR SE9. In Lawrence (No 3), this Court had to consider the contention that a substantial order based on the 1999 Act regime against unsuccessful defendants in a nuisance claim was incompatible with their rights under article 6 of the Convention (access to court) and/or article 1 of the First Protocol to the Convention (right to property A1P1). The Supreme Court rejected the argument that this contention was supported by the reasoning of the Strasbourg court in MGN v UK. In the leading judgment, Lord Dyson MR and I said that the criticisms of the 1999 Act regime in MGN v UK were made in the context of the Strasbourg courts concern about the effect of the scheme in defamation and privacy cases, and that the balancing of the article 6 rights of [claimants] against those of [defendants] is an exercise of a wholly different character, and the same applied to A1P1 para 52. The leading judgment then went on to address the defendants further contention that, even if MGN v UK was not of assistance to their case, the 1999 Act regime, at least in so far as it applied in the case of Lawrence v Fen Tigers was incompatible with their article 6 and/or A1P1 rights. After considering the question in some detail, Lord Dyson and I rejected that contention also, concluding in para 83: We accept that, in a number of individual cases, the scheme might be said to have interfered with a defendants right of access to justice. But it is necessary to concentrate on the scheme as a whole. The scheme as a whole was a rational and coherent scheme for providing access to justice to those to whom it would probably otherwise have been denied. It was subject to certain safeguards. The government was entitled to a considerable area of discretionary judgment in choosing the scheme that it considered would strike the right balance between the interests of appellants and respondents whilst at the same time securing access to justice to those who would previously have qualified for legal aid. A summary of the facts of each case Flood v Mr Flood was a detective sergeant with the Metropolitan Police, although he retired during the currency of these proceedings. Following an allegation of corruption against him, a police investigation was begun in April 2006, and he was suspended from his duties. On 2 June 2006, an article was published in the Times newspaper, both in hard copy and on the Times website, suggesting that there were strong grounds to believe that Mr Flood had been guilty of corruption. The investigation resulted in a report which was made available internally only in December 2006, which found no evidence against Mr Flood, and he returned to his duties that month. In July 2006, Mr Flood instructed solicitors in connection with the publication of the article, and in January 2007 they instructed junior counsel, who entered into a conditional fee agreement (a CFA). In May 2007, Mr Flood issued proceedings claiming damages for libel against the publisher of the Times, TNL. In July 2007 TNL served its Defence advancing, inter alia, a defence based on (i) justification and (ii) the principle in Reynolds v Times Newspapers Ltd [2001] 2 AC 127 ie that, even if Mr Flood was innocent of any wrong doing, the article had been properly researched and was in the public interest (the Reynolds defence). A Reply was served on behalf of Mr Flood in August 2007. On 5 September 2007, TNL received a letter from the Metropolitan Police informing them that Mr Flood had been exonerated by the investigation. Despite this, TNL did not take down the story from the Times website. Between mid September and mid November 2007, the parties tried to settle the claim in negotiations which were expressed to be without prejudice save as to costs. When those negotiations came to nothing, Mr Flood took out ATE insurance in connection with his claim. In January 2007, he entered into a CFA with his solicitors and a second CFA with junior counsel. He also entered into a CFA with leading counsel in early 2010. Meanwhile, after procedural hearings and further attempts at settlement, there was a four day hearing before Tugendhat J of TNLs Reynolds defence. In a judgment given on 16 October 2009, he held that the defence succeeded albeit only up to 5 September 2007 [2010] EMLR 169. The Court of Appeal allowed Mr Floods appeal, but the Supreme Court restored the judgment of Tugendhat J [2011] 1 WLR 153 and [2012] 2 AC 273. The parties have reached agreement as to the costs of these two appeals. The consequence of Tugendhat Js judgment was that the only publications of the article in respect of which Mr Floods case could succeed were those that remained on TNLs website after 5 September 2007. On 25 July 2013, Tugendhat J gave judgment in favour of Mr Flood as to the meaning of the words used in the article, and ordered TNL to pay Mr Floods costs of that issue [2013] EWHC 2182 (QB). On 1 October 2013, TNL withdrew its defence of justification. Accordingly, the way was clear for Mr Flood to succeed in his claim for damages in respect of the continuing publication of the article on TNLs website. Following a two day hearing, Nicola Davies J handed down judgment awarding Mr Flood 60,000 damages [2013] EWHC 4075 (QB). In arriving at that figure, she took into account the attitude of TNL in open correspondence with Mr Flood, which she described as aggressive and unpleasant, and she said that it had increased the distress and anxiety of [Mr Flood] paras 27, 76. She also characterised TNLs attitude as oppressive and high handed and concluded that it serve[d] to aggravate the award of damages para 78. It is also worth mentioning that the Judge considered that TNLs conduct meant that [Mr Flood] had no choice but to pursue these proceedings in order to clear his name para 79. There followed a hearing on costs, and Nicola Davies J ordered TNL to pay all Mr Floods costs of the proceedings (other than those which had been the subject of a prior order or agreement) [2013] EWHC 4336 (QB). TNLs appeal to the Court of Appeal was dismissed [2014] EWCA Civ 1574. TNL now appeals against that decision. In this Court, TNL runs two arguments. The first is that, despite the Court of Appeal holding otherwise, the Judges order that TNL pay all Mr Floods costs was, in all the circumstances illogical, factually unsustainable and unjust, to quote from its printed case. Secondly, TNL argues that, relying on MGN v UK, the order for costs, insofar as it requires TNL to reimburse Mr Flood any success fee or ATE premium, constitutes an infringement of its article 10 rights, and should be set aside. As already mentioned, I propose to deal with the first point at the end of this judgment. Miller v ANL On 2 October 2008, the Daily Mail published an article suggesting that Mr Millers management consultancy had received contracts worth millions of pounds of public money as a result of improper conduct and cronyism. In September 2009, Mr Miller instructed solicitors and counsel, all of whom entered into CFAs, and he took out ATE insurance. In the same month, Mr Millers solicitors issued proceedings for libel against the publishers of the Daily Mail, ANL. After various discussions and a hearing as to the meaning of the article in question and the issue of an amended particulars of claim, the claim was met by ANL with a formal defence of justification, served in July 2010. Thereafter, there were further discussions, during which Mr Miller warned ANL that he would have to increase his ATE cover unless ANL agreed to limit their recoverable costs if they were to win, a proposal to which they did not agree. Accordingly, Mr Miller increased his ATE cover in June 2011 (and negotiated a further increase in June 2012). In December 2011, Mr Miller offered to settle the case for 18,000 pursuant to CPR Part 36, and this was met by an offer from ANL in March 2012 in the sum of 5,000 with no apology. Following further discussions, the case did not settle and there was a full trial before Sharp J. In her judgment given on 21 December 2012, she rejected the defence of justification and awarded Mr Miller 65,000 [2012] EWHC 3721 (QB). As this exceeded the sum he had offered to accept, he was awarded his costs on a standard basis until January 2012 and on an indemnity basis thereafter. Mr Millers base costs (ie his costs ignoring any success fees or the ATE premium) have been agreed at 633,006.08. However, he claimed in addition 587,000 in respect of success fees and 248,000 in respect of his ATE premium. While not challenging the reasonableness of these figures as such, ANL contended that, following the reasoning in MGN v UK, it would infringe their article 10 rights if they had to reimburse these sums. That issue was referred to Mitting J, who held that he was bound by the reasoning in Campbell (No 2) to reject ANLs arguments, although he also said that reimbursement of the ATE premium was justified under article 10(2) [2016] EWHC 397 (QB). He granted a leapfrog certificate. The issue on this appeal is whether this Court should reverse Mitting Js order that ANL should reimburse Mr Miller the success fees and the ATE premium. Frost v MGN A number of individuals had their phones hacked by MGN, the publisher of the Daily Mirror, Sunday Mirror and the People. More particularly, this involved MGN or its agents hacking, ie unlawfully listening to voicemails on mobile phones, and blagging, ie masquerading as the individuals concerned or as other people legitimately entitled to obtain telephone call data, and then MGN publishing articles in its newspapers based on the information so obtained. Many of these individuals began proceedings against MGN; they included eight wave one claimants, whose claims were ordered to be heard together. Those claimants proceeded to the trial of their claims, which succeeded, in sums varying between 72,500 and 260,250, for reasons given by Mann J in a comprehensive judgment in May 2015 against whose decision the Court of Appeal dismissed MGNs appeal see sub nom Gulati v MGN Ltd [2016] FSR 12 and [2017] QB 149 respectively. The other 15 claimants settled their claims prior to the hearing before Mann J. Each of the 23 claimants is entitled to recover his or her costs from MGN. On various dates between August 2011 and October 2014, each of the 23 claimants entered into CFAs with their lawyers, and 18 of them took out ATE insurance. The parties were able to agree (subject to an issue on proportionality) as to the reasonable base costs in each of the 23 cases, varying between 22,000 and 210,000. The Costs Judge determined a reasonable success fee in each case, varying between 25% and 100%, and the ATE premiums incurred by the claimants varied between 13,515 and 87,450. MGN contended that, following the reasoning of the Strasbourg court in MGN v UK, it would be an infringement of their article 10 rights to require them to reimburse the claimants the success fees or the ATE premiums. Mann J rejected that argument [2016] EWHC 855 (Ch). MGN was granted a leapfrog certificate to appeal to this Court against that conclusion. Similar arguments arise in relation to the costs in the Court of Appeal, where the claimants are seeking from MGN 739,456.87 by way of base costs, 645,799.88 by way of success fees and 318,000 for their ATE premium. Overview of issues and conclusions As explained in para 19 above, the appeal in Flood v TNL raises a discrete and case specific issue, namely whether the first instance judges decision to award Mr Flood all his costs of the proceedings (other than those which had already been awarded or agreed) was a permissible exercise of her discretion, and I propose to deal with that point at the end of this judgment. The main focus of this judgment is on the issues raised in all three appeals arising from the engagement of article 10 by the costs orders made by each first instance judge. In that connection, there are four issues to be considered. The first is whether, as ANL contends (with the support of TNL and MGN), the domestic law should reflect the Strasbourg courts decision in MGN v UK to the extent of laying down a general rule (the Rule). That rule is that, where a claim involves restricting the defendants freedom of expression, then at least where the defendant is a newspaper or broadcaster, it would, as a matter of domestic law, normally infringe the defendants article 10 rights to require it to reimburse the success fee and ATE premium for which the claimant is liable under the 1999 Act regime. If we reject the existence of the Rule, then the remaining article 10 issues fall away, whereas if we accept its existence, those remaining issues are as follows. The second issue is whether the effect of the Rule should be that the costs orders made by Mitting J and Nicola Davies J in Miller v ANL and in Flood v TNL respectively must be amended to exclude the defendant in each case paying the success fee and the ATE premium for which the claimant is liable. The third issue is whether the Rule could be relied on by MGN in Frost v MGN, so that the orders for costs against MGN made by Mann J and by the Court of Appeal should be amended to exclude any liability for the claimants success fees and ATE premiums. The fourth issue is whether this Court should make a declaration of incompatibility under section 4 of the Human Rights Act 1998 in relation to the 1999 Act regime, or indeed the costs regime which applies following LASPO and the 2013 Act. For reasons which are set out in paras 42 to 63 below, I consider that, even if the answer to the first of those issues is that the Rule applies, so that it would normally infringe a newspaper publishers article 10 rights to require it to reimburse the claimants success fee and ATE premium under the 1999 Act regime in a case involving freedom of expression, the orders for costs made in the three cases should not be varied to remove the defendants liability for the claimants success fee and ATE premium. In those circumstances, I believe that it would not be appropriate to express a concluded view on the first issue, because the party who would be, at least potentially, most detrimentally affected by the decision is not before us. That party is of course the United Kingdom government. If we were to conclude that the Rule is part of domestic law, it would not technically bind the government, but it would make it difficult for the government to re open the question in this country, and it could make it more difficult for the government to challenge the conclusion and reasoning in MGN v UK in Strasbourg. Although we are not being asked to make a declaration of incompatibility, a decision that the Rule applies but cannot assist the appellants in the three appeals could have very similar consequences, and section 5 of the Human Rights Act 1998 requires the government to be notified if a declaration of incompatibility is sought in any proceedings. The article 10 arguments Should MGN v UK be applied domestically? I turn now to the issue of whether ANLs (and TNLs) article 10 rights are infringed by the order for costs made by Mitting J (and Nicola Davies J). In this section and the next section (starting with para 42 below) of the judgment, I shall concentrate on Miller v ANL, as the article 10 argument was advanced in relation to that appeal, but my comments apply equally to Flood v TNL. It is, of course, open to a domestic court to refuse to follow the Strasbourg courts analysis and conclusion in MGN v UK, especially as it is a single decision of one section of the Strasbourg court. It is not as if there is a number of section decisions to the same effect or a decision of the Grand Chamber; it is also of some possible relevance that there was no oral argument in MGN v UK. However, there is undoubtedly a very powerful argument for concluding that we should effectively follow the Strasbourg courts approach in that case. The judgment was full and careful, and the ultimate decision was based on a report which was prepared by a senior United Kingdom judge and was largely acted on by the UK government. The 1999 Act regime gave rise to some concern in the House of Lords in Campbell (No 2) and was criticised in this court in Lawrence (No 2) [2015] AC 106, para 37. The UK government did not try to have the decision in MGN v UK reconsidered by the Grand Chamber. Indeed, the UK government relied on the decision in MGN v UK to justify its initial decision to forbid recovery of success fees and ATE premiums in defamation and privacy actions (see the Joint Committee on Human Rights Legislative Scrutiny: Defamation Bill Seventh report of Session 2012 2013 (HLP84: HC 810), para 64). It also appears to have been assumed (albeit without expressly deciding the point) by the five Justices in the majority in Lawrence (No 3) that MGN v UK represented the domestic law, and the conclusion reached by the two dissenting Justices was based on the proposition that it did represent domestic law. Nonetheless, in a spirited and impressive argument on behalf of Mr Miller, Mr McCormick QC contended that there were good reasons for this court to refuse to follow the Strasbourg courts decision. I would reject his first argument, namely that the Strasbourg court merely decided that the imposition of reimbursement of the success fee and the ATE premium represented an infringement of MGNs article 10 rights on the facts of the particular case. It seems to me clear that the decision of the Strasbourg court was based on the 1999 Act regime in principle. In paras 217 and 218, the court said that it was the depth and nature of the flaws in the system, highlighted in convincing detail by the public consultation process, and accepted in important respects by the Ministry of Justice which led the court to conclude that the impugned scheme exceeded even the broad margin of appreciation to be accorded to the state in respect of general measures pursuing social and economic interests and that this conclusion is indeed borne out by the facts of the present case. This does not mean that article 10 is automatically infringed in every case involving freedom of expression where an unsuccessful defendant has to reimburse the claimant the success fee and ATE premium, but it does mean that it will normally be the case. There is perhaps a little more force in the contention that the Strasbourg court did not have regard to the wide range of civil cases to which the 1999 Act regime applied. The Strasbourg court concentrated on civil claims where article 10 was engaged, rather than looking at civil claims across the board, which were subject to the 1999 Act regime. However, in my view, they were entitled, and arguably bound, to do that. The principle that claims involving article 10 were in a special category for present purposes was accepted by Lord Hoffmann in Campbell (No 2), para 19, where he emphasised the importance of freedom of expression and the special position of the media as defendants to actions for defamation and wrongful publication of personal information. There is more force in the contention that the Strasbourg court does not appear to have taken into account that the 1999 regime could actually assist defendants who wished to defend claims involving article 10, as they could enter into CFAs and take out ATE insurance, as pointed out in Lawrence (No 3), para 68. It is also a fair criticism of the judgment in MGN v UK that the Strasbourg court accepted at para 208 the argument that under the 1999 Act regime, there was no incentive on the part of a claimant to control the incurring of legal costs on his or her behalf. In fact, in many cases claimants could often find themselves liable for at least some costs which were held to be irrecoverable from the defendants, and in other cases the defendants might not be financially able to meet a costs order, which would leave a claimant out of pocket. Another criticism of the judgment in MGN v UK which has some, if limited, force is in relation to its reliance on the blackmail effect of the 1999 Act regime (in para 209). In most cases, a claimant under that scheme will have ATE insurance which would reduce this factor significantly by allowing a successful defendant to recover its costs (and the cases cited in footnote 73 to para 209 were cases where the claimant had not taken out ATE insurance). Although the points discussed in the immediately preceding paragraph have some force, it seems to me that they are not particularly powerful. They represent qualifications to some of the factors relied on by the Strasbourg court, but it seems to me unlikely that they would have caused the Strasbourg court to reach a different conclusion if they had been raised. However, there are other points relied on by Mr Miller. In particular, it is argued that events after the decision in MGN v UK justify this Court not applying the reasoning in that decision. There is nothing in this point in so far as it relies on changes in the law ie the changes which have been made by and pursuant to LASPO and which have been mooted in the CCA 2013. Those changes do not apply to any of the instant three cases, and there is therefore no basis for relying on them to justify the regime which does apply. However, there is somewhat more force so far as other matters which occurred after the decision in MGN v UK are concerned: they provide some support for the notion that the 1999 Act regime could reasonably have been thought to be the least bad option to enable access to justice in relation to defamation and privacy claims. Thus, the UK government failed to persuade the House of Commons to include in the Defamation Act 2013 a provision which reduced the potential exposure of defendants to costs in defamation and privacy actions. And the Joint Committee in its report referred to in para 32 above expressed concern about any change to CFAs and ATE as it may prevent claimants and defendants of modest means from accessing the courts, a particularly pertinent concern when the action is one of defamation para 68. Sir Brian Levesons Inquiry expressed similar concerns at Part J, Chapter 3, paras 3.7 and 3.13, suggesting that simply removing recoverability of success fees and ATE premium would risk turning the clock back to the time when, in reality, only the very wealthy could pursue claims [for defamation or breach of privacy]. These points demonstrate the difficulty in which the government found itself after deciding to reduce drastically the availability of legal aid, while wishing to ensure access to justice. The exclusion of defamation and privacy cases from some of the major changes effected by LASPO and the politically controversial nature of section 40 of CCA 2013, and indeed the decisions in Campbell (No 2) and MGN v UK, demonstrate the even greater difficulties involved in balancing access to justice for claimants and the article 10 rights of defendants in such actions. I rather doubt, however, that these points, even taken together with the points made in para 36 above, would justify a domestic court refusing to follow the reasoning and conclusion of the Strasbourg court. The Strasbourg court accepted that the government enjoyed a broad or wide margin of appreciation in this connection. However for reasons which were largely sound and reflected Sir Rupert Jacksons criticisms, and which have led to significant changes and projected changes as explained above, the court decided that the article 10 rights of MGN had been infringed. However, as explained in para 29 above, I consider that we should leave the point open, and proceed to the remaining article 10 issues on the assumption that we should follow MGN v UK, and so the Rule as defined in para 27 above does apply. Would the Rule prevent Mr Miller and Mr Flood recovering the success fee and ATE premium? As just explained, in this and the next section of this judgment (starting at para 57), I am assuming that the effect of MGN v UK is that, where a claim involves restricting a defendants freedom of expression, it would normally be a breach of its article 10 rights to require it to reimburse the claimant any success fee or ATE premium which he would be liable to pay. Even if that contention is correct, it is argued on behalf of Mr Miller (and Mr Flood) that it would be wrong to invoke it to deprive him of the ability to recover from ANL (and TNL) the success fee and ATE premium for which he is liable to his legal advisers and ATE insurers respectively. If the Rule applies, it was effectively conceded on behalf of Mr Miller that, in the absence of any good reason to the contrary, it would mean that this Court should ensure that any order for costs should not impose such a liability on ANL. That is because section 6(1) of the Human Rights Act 1998 provides that it is unlawful for a public authority to act in a way which is incompatible with a Convention right, and subsection (3) provides that public authority includes a court or tribunal. I am prepared to proceed on the basis that this concession is correct, although it may be that Mr Miller could have invoked section 6(2) of the Human Rights Act, which provides: (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 in the case of one or more provisions of, or made (b) 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. On the face of it, this does not assist Mr Miller, as the primary legislation merely provides that an order for costs may, subject in the case of court proceedings to rules of court, include any success fee or ATE premium payable by the party in whose favour a costs order is made see section 58A(6) of the Courts and Legal Services Act 1990, as inserted by section 27 of the 1999 Act, and section 29 of the 1999 Act, set out in Lawrence (No 3), paras 16 and 17. Accordingly, there is obvious force in the point that the provisions which would have the effect of infringing the article 10 rights of ANL in the instant case are in the CPR and Practice Directions (whose relevant provisions are set out in Lawrence (No 3), paras 19 to 25), and they can, indeed, at least normally, should, be disapplied by a court to the extent that they infringe the Convention. However, all these provisions are part of a single statutory scheme, as Lord Dyson MR and I explained in Lawrence (No 3), paras 76 78, and it may be arguable that section 6(2) of the Human Rights Act could be invoked on the basis that disapplying provisions which enable Mr Miller to recover the success fee and ATE premium from ANL would imperi[l] the whole scheme which had been put in place by the 1999 Act to quote from Lawrence (No 3), para 78. It is right to add that Lord Clarkes view as expressed in para 136 of his dissenting judgment in that case (with which Lady Hale agreed) is to the contrary. Whatever the right analysis, I am prepared to proceed on the basis that, if the Rule applies as a matter of domestic law, ANL would in the absence of a good reason to the contrary, be entitled to require the costs order made by Mitting J to be amended so as to remove the success fee and ATE premium from the scope of that order. On behalf of Mr Miller it is argued that there is a good reason to the contrary, in that, if we were to order that ANL should not have to pay the success fee or the ATE premium for which Mr Miller is liable, we would be wreaking a plain injustice on him. He embarked on his claim against ANL, and in particular he incurred liabilities to his lawyers for any success fee and to his insurer for the ATE premium, in the expectation that, if the claim succeeded and he obtained an order for costs, ANL would be liable to reimburse not only the base costs but also the success fee and ATE premium. And he did so in 2009, to the knowledge of ANL and at a time when that expectation not only reflected the law according to the relevant legislation (ie the 1999 Act and the consequential provisions of the CPR), but also when that law had been held by the House of Lords in Campbell (No 2) to be consistent with the Convention, and in particular with article 10. In this connection, I consider that it would not simply be a plain injustice on Mr Miller to deprive him of the ability to recover the success fee and the ATE premium; it would in my view infringe his rights under A1P1, and that is a factor which can, indeed which must, be taken into account when considering how to dispose of ANLs appeal. That view derives direct support from the concurring judgment of Lord Mance (with whom Lord Carnwath agreed) in Lawrence (No 3), para 106, where he said that claimants who had entered into a CFA and taken out ATE insurance under the 1999 Act regime must have had a legitimate expectation that the system would apply and be upheld, especially as appellate courts have repeatedly endorsed the system. Accordingly, he said: [The claimants] legitimate expectation that the system would be enforced is one which falls to be taken into account at the present stage [ie when deciding whether to extend the costs order to payment of the success fee and ATE premium] and is not merely a matter that might (being itself a protected possession within A1P1) be raised as against the United Kingdom in Strasbourg. Support for the notion that Mr Miller can rely on A1P1 in the instant circumstances appears to me to be found in the discussion on A1P1 in Simor and Emmerson on Human Rights Practice para 15.010, which includes the proposition that where in reliance on a legal act, an individual incurs financial obligations, he may have a legitimate expectation that that legal act will not be retrospectively invalidated to his detriment. Strasbourg jurisprudence also supports this proposition. Pine Valley Developments v Ireland (1991) 14 EHRR 319, Pressos Cia Naviera SA v Belgium (1995) 21 EHRR 301, and Stretch v United Kingdom (2003) 38 EHRR 12 are all cases where the applicants disappointed legitimate expectation of a legal right was held to justify his A1P1 claim. In Pine Valley (assumed validity of a planning permission) and Stretch (assumed validity of a contractual option), the basis of the claim was not as strong as here, where it is based on primary legislation whose validity was approved by the Law Lords; on the other hand, both cases related to loss of land related rights rather than a money claim. Pressos provides a closer analogy for present purposes, as it involved retrospective amendment of legislation which deprived the applicant of an accrued statutorily based claim for damages. Having said that, not all retrospective deprivations of accrued rights will offend A1P1. As the Strasbourg court pointed out in Pressos, para 38, the question of proportionality will normally arise, and this typically involves balancing the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights. Even bearing that factor in mind, I find it very difficult to see how Mr Millers A1P1 claim could be defeated. Parliament did not see fit to render the LASPO regime retrospective: on the contrary, as explained above, the 1999 Act regime applies to all proceedings begun before 1 April 2013. Parliament thereby correctly recognised that, while the 1999 Act regime was unsatisfactory, it would be wrong to disapply it to proceedings which had been issued in the expectation that that regime would continue to apply to those proceedings. In addition to A1P1, although this was not raised in argument, it seems to me that, especially given that the purpose of the 1999 Act regime (as the Strasbourg court accepted in MGN v UK at para 197) was to enable people to get access to the courts, to hold that Mr Miller could not recover the success fee and the ATE premium could infringe his rights under article 6 of the Convention. As Lord Dyson MR and I said in Lawrence (No 3), para 77, recovery of success fee and ATE premium was integral to the means of providing access to justice in civil disputes in what may be called the post legal aid world, and necessary in order to secure access to justice, so that [i]f it were otherwise, there would have been a real danger that litigants who previously qualified for legal aid would have been unrepresented and the fundamental and legitimate aim of the 1999 Act scheme would have been frustrated. In MGN v UK at paras 142 and 199, the Strasbourg court unsurprisingly accepted that a claimants article 6 rights were engaged in a case such as Miller v ANL. In those circumstances, given that the 1999 Act regime was intended to enable potential claimants to obtain access to the courts, and that the recoverability of the success fee and ATE premium was an essential ingredient of the regime, it appears to me that a decision which deprives a successful claimant of the right to recover such sums retrospectively would probably serve to infringe his article 6 rights. I note that in Stankov v Bulgaria 49 EHRR 7, paras 53 and 54, the Strasbourg court accepted that the imposition on a successful claimant of a considerable financial burden due after the conclusion of the proceedings infringed his article 6(1) rights even though he had access to all stages of the proceedings. Further, it may be that such a decision would infringe Mr Millers article 8 rights as well, given that the purpose of his bringing the proceedings was for the purpose of restoring or maintaining his personal dignity. However, no argument based on article 6 or article 8 was raised at all on behalf of Mr Miller (or Mr Flood). In those circumstances, I prefer to base my conclusion on Mr Millers A1P1 right not to be deprived of his accrued rights and his legitimate expectations. It follows from all this that upholding Mitting Js costs order would infringe ANLs article 10 rights for the reasons given by the Strasbourg court in MGN v UK and would therefore involve an injustice, but amending that costs order in the way sought by ANL would not only involve an infringement of Mr Millers A1P1 rights: it would undermine the rule of law. It is a fundamental principle of any civilised system of government that citizens are entitled to act on the assumption that the law is as set out in legislation (especially when its lawfulness has been confirmed by the highest court in the land), secure in the further assumption that the law will not be changed retroactively ie in such a way as to undo retrospectively the law upon which they committed themselves. To refuse the costs order which Mr Miller seeks would directly infringe that fundamental principle. While freedom of expression is, of course, another fundamental principle, it is not so centrally engaged by the issue in this case: the decision in MGN v UK is essentially based on the indirect, chilling, effect on freedom of expression of a very substantial costs order. In these circumstances, whether we allow or dismiss this appeal, a Convention right would be infringed. When deciding what to do in such circumstances, section 6 of the Human Rights Act does not assist ANL any more than it assists Mr Miller. However, section 8(1) of that Act seems to me to be in point. It provides: In relation to any act (or proposed act) of a public authority which the court finds is (or would be) unlawful, it may grant such relief or remedy, or make such order, within its powers as it considers just and appropriate. It appears clearly to follow from this that the just and appropriate order is to dismiss ANLs appeal because to allow the appeal would involve a graver infringement of Mr Millers rights than the infringement of rights which ANL will suffer if we dismiss the appeal. It is right to record that we were pressed with the argument that Mr Miller would not in fact suffer if the costs order did not entitle him to recover the success fee or ATE premium, because his lawyers and insurance company would not in practice press for payment of, respectively, the success fee or ATE premium, if they knew that he could not recover them from ANL. That was an argument which was also raised in Lawrence (No 3), and it was rejected see the first point discussed in each of paras 91 and 92. In any event, it must be at least arguable that lawyers who conducted their professional practices on the basis that the 1999 Act regime was lawful, could claim that their A1P1 rights were infringed if they were, in practice, deprived of their success fees by a determination that the CFAs into which they had entered into with their clients were not fully enforceable. In summary, then, in the present case either ANL or Mr Miller has to suffer an injustice (including infringement of Convention rights), and it is clear to me that it should be ANL that suffers, as the injustice on Mr Miller would be significantly more substantial. Accordingly, I would dismiss the appeal in Miller v ANL, and, at least on the article 10 ground, the appeal in Flood v TNL. If MGN v UK applies, can Ms Frost recover the success fee and ATE premium? The claimants argument in Frost v MGN to the same effect as that just discussed in Miller v ANL is weaker in that they all entered into CFAs and took out ATE insurance after publication of the judgment of the Strasbourg court in MGN v UK. Despite that, I would reach the same conclusion as in Miller v ANL. Notwithstanding the judgment in MGN v UK, until LASPO came into force, the 1999 Act regime, as approved by the House of Lords in Campbell (No 2), was lawful in domestic terms, and, with all its flaws, it represented the domestic policy whereby citizens could get access to the courts to vindicate their civil legal rights. Parliament could have enacted that decisions of the Strasbourg court had direct effect on UK law, but, for good reasons, it did not do so: such decisions are, of course, simply to be take[n] into account by a UK judge when they are relevant to the proceedings before him or her see section 2(1) of the Human Rights Act. However, in my view, there is another, more fundamental, reason why it is not open to MGN to rely on the Rule when it comes to the costs orders in Frost v MGN. In order to rely on the Rule, MGN would have to establish that the principle laid down in MGN v UK applies in cases where information is obtained illegally by or on behalf of a media organisation. Although I accept that article 10 is engaged in such a case, I cannot accept that the Rule can have any application, at least on facts such as those in Frost v MGN. When it comes to a costs order in a successful claim against a media organisation in proceedings where the 1999 Act regime applies, there are two applicable principles at play. The first is that, where article 10 is not engaged, there is normally no Convention basis for refusing to order an unsuccessful defendant to reimburse the claimants success fee and ATE premium see Lawrence (No 3). The second principle is that in such proceedings where article 10 is engaged, the Rule applies and so it is normally a breach of such a defendants Convention rights if he is required to pay the success fee and ATE premium. In Frost v MGN, the court was not merely concerned with the complaint that MGN had published, or threatened to publish, information which infringed the claimants privacy rights. It was also concerned with the complaint that the information in question had been obtained unlawfully by or on behalf of MGN. Thus, as Mann J said in his judgment at [2016] FSR 12, paras 1, 13 and 702, In all [eight] cases the infringements of privacy rights were founded in what has become known as phone hacking, though there are also claims that confidential or private information was also obtained in other ways (principally from private investigators). In all cases except [one], there is also a claim that infringements of privacy rights led to the publication of articles in the various newspapers just described, which articles were themselves said to be an invasion of privacy rights and which would not have been published but for the earlier invasions which provided material for them. [T]he claimants make claims which are said to fall into three main categories wrongfully listening to private or confidential information left for or by the claimant, wrongfully obtaining private information via private investigators, and the publication of stories based on that information. MGN admits all those activities None of the articles in respect of which I have awarded compensation would (on the admitted case) have been published had it not been for the underlying prolonged phone hacking that went on, which was known to be wrongful. That hacking existed in all cases whether or not an article resulted. The length, degree and frequency of all this conduct explains why the sums I have awarded are so much greater than historical awards. People whose private voicemail messages were hacked so often and for so long, and had very significant parts of their private lives exposed, and then reported on, are entitled to significant compensation. When the Judge assessed damages, he awarded seven of the eight claimants separate sums for (i) hacking, (ii) blagging, and (iii) (save in one case) publications, (iv) general distress, and (v) (in one case) aggravated damages. The remaining claimant, who was subjected to hacking and blagging, but not publication, was awarded a single figure which included a modest sum for aggravated damages. The awards of these sums were upheld by the Court of Appeal, in a judgment which includes a schedule which sets out the details of the damages awarded to each of the eight claimants. I accept that this is a case where MGNs article 10 rights are engaged, in the sense that an aspect of the complaints of most of the claimants is that their private information was published in MGN newspapers. However, to treat this case as one where the newspaper publishers article 10 rights are not merely engaged, but should be given anything like the sort of weight which they were given in MGN v UK seems to me quite unrealistic. The fundamental complaint of all the claimants is that their phone records were unlawfully hacked or blagged by agents of MGN on a persistent and systematic basis. It is true that this hacking and blagging was done with a view to obtaining information which might be published in MGNs newspapers. However, this was not a case where there can be any suggestion of MGN or its agents even hoping, let alone intending or expecting, that the end would justify the means, as might be the case where unlawful means are used in the expectation, or even the reasonable hope, that it may yield information which it would be in the public interest to reveal. The claimants were generally celebrities, footballers, television personalities and the like; people whose private lives may be of interest to the public, but the revelation of whose private lives is not normally in the public interest. I accept that the courts must be careful before deciding that a particular case of this sort involves newsgathering whose nature is so extreme as to lie outside the territory which should be subject to the Rule. However, bearing in mind the persistence, pervasiveness and flagrancy of the hacking and blagging, and the lack of any public significance of the information which it would be expected to and did reveal, it appears to me that this is not a case where the Rule can properly be invoked by MGN. As the Strasbourg court explained at para 201, its decision that the liability for costs in MGN v UK offended article 10 was based on the proposition that the most careful scrutiny on the part of the Court is called for when measures taken by a national authority are capable of discouraging the participation of the press in debates over matters of legitimate public concern. I cannot accept that such a proposition applies in relation to claims based on a defendants unlawful hacking and blagging of the phone records of individuals such as the 23 claimants in Frost v MGN. A declaration of incompatibility? For the reasons given in para 29 above, it would be inappropriate to grant a declaration of incompatibility. In addition, it would not be right to grant such a declaration in relation to legislation which contains the 1999 Act regime, because that regime has been superseded by other legislation, including LASPO, the Defamation Act 2013 and CCA 2013. And it would plainly be inappropriate even to consider making a declaration of incompatibility in relation to those statutes, as their effect does not need to be, and was not, considered in any detail in order to dispose of the instant appeals. The exercise of the Judges discretion in Flood v TNL The final issue is whether TNL is right in its contention that, in ordering it to pay Mr Floods costs of the proceedings (other than those costs which had already been the subject of an order of the court or agreement between the parties), Nicola Davies J acted outside the ambit of her discretionary powers. This is not a point which would normally come before this court: it is a one off issue relating to the exercise of a discretionary power where the first instance judges decision has been upheld by the Court of Appeal. It is only before this Court because the article 10 issues in relation to the costs order are before us, and it seemed sensible not to shut out TNL from pursuing its contention that Nicola Davies J had erred in principle when making that order. The Judge formed the view that, as Mr Flood had established that he had been defamed and had obtained an order for substantial damages, the starting point was that he should have his costs, and there was no reason to depart from that position. She thought that this conclusion was supported by the fact that Mr Flood had vindicated his reputation, and she also considered that TNLs attitude in open and without prejudice save as to costs correspondence made it substantially harder for the case to settle. TNL complains that the Judge wrongly concluded that she was not persuaded that there were good grounds to depart from the starting point, notwithstanding (i) the importance of freedom of expression, (ii) the without prejudice save as to costs correspondence (the correspondence), (iii) the fact that Mr Flood had fought the Reynolds defence and lost, and (iv) the fact that TNL had successfully defeated the claim in respect of all publications apart from those posted on TNLs website after 5 September 2007. In my judgment, the Court of Appeal was correct in holding that Nicola Davies J made no error in her decision. She was clearly right to start with the proposition that the prima facie position was that, as Mr Flood was the winner, he therefore ought to get his costs. He had had to go to trial to vindicate his reputation, when TNL had accused him of corruption and had maintained a plea of justification for a substantial time, and to recover substantial damages, indeed substantially more than he had offered to accept. As Sharp LJ put it in the Court of Appeal, [t]he outcome of the litigation could properly be described as a victory for Mr Flood (para 27). In those circumstances, as the successful party, the general rule set out in CPR 44.2(2)(a) was that he should have his costs. However, as Nicola Davies J rightly acknowledged, that is only the starting point. It is thus necessary to consider whether any of the points raised on behalf of TNL justify its contention that the Judge could not reasonably have refused to depart from that starting point. First, the importance of freedom of expression. In my view, important though freedom of expression undoubtedly is, it cannot assist TNL in its challenge to the unqualified order for costs made in favour of Mr Flood (save, of course, in so far as MGN v UK assists its contention in relation to the success fee and the ATE premium as discussed above). There are many cases in domestic courts and in the Strasbourg court which emphasise the fact that potential and actual defamation actions have an inhibiting effect on freedom of speech, and the consequent need for the court to scrutinise orders which it makes in that connection (see eg Derbyshire County Council v Times Newspapers Ltd [1993] AC 534, 547F and 548D and Bladet Troms and Stenaas v Norway (1999) 29 EHRR 125, para 64). However, save in exceptional circumstances, it would be quite inappropriate to invoke that principle so that it renders it more difficult for claimants in defamation actions to obtain access to justice than claimants in other types of civil claim. As pointed out on his behalf, Mr Flood also had rights: just as TNLs rights are covered by the Convention (through article 10) so were his (through article 8). While such exceptional circumstances were found to exist in MGN v UK, it is worth noting that no complaint was ever made about the level of base costs in Campbell v MGN. And it is worth pointing out that, while, as already mentioned, Lord Hoffmann emphasised the importance of freedom of expression and the special position of the media in Campbell (No 2), para 19, he nonetheless refused to accept that even requiring MGN to reimburse the success fee and ATE premium payable by Miss Campbell offended freedom of expression. Secondly, the correspondence. Although we were taken to the correspondence in a little detail by counsel on behalf of each party, it is unnecessary to consider it in any detail. As is not uncommon in such correspondence, there were passages emanating from each side, which, at any rate with the benefit of hindsight, would have been better omitted. More importantly, I can see nothing in that correspondence which assists TNLs challenge to the Judges award of costs. I accept that some people might characterise the attitude revealed by Mr Flood in that correspondence as intransigent, but I consider that description would be unkind. TNL were adopting a very tough attitude in the correspondence; some people might use a more critical adjective. Thus, as in the open negotiations alluded to in paras 16 and 17 above, TNL was making it very clear in the correspondence that it was maintaining its plea of justification and would be taking steps to find witnesses to support that case. TNLs plea of justification would have involved showing that there were grounds to justify a police investigation, and it was a plea which was of course eventually abandoned after TNL lost on meaning. In addition, TNL suggested that Mr Flood would be likely to be financially ruined by the costs if he proceeded with his claim and lost, whereas TNL could easily take such a risk if it lost; the Judge not unfairly described TNLs approach as involving unsubtle threats (para 20). It is fair to emphasise that nothing said on behalf of TNL in the correspondence was improper, but, if the correspondence is to be relied on in relation to the issue of costs, in my view, and in agreement with the Judge (who described TNLs approach as involving a die hard attitude: para 20), it was undoubtedly TNLs negotiating stance far more than that of Mr Flood which prevented the claim from being settled. On any view, it is impossible to suggest that it assists TNLs case on costs. Indeed, in my view the Judge was entitled to regard TNLs attitude in the open discussions and in the correspondence as a reason which militated against departing from the prima facie position, namely an unqualified costs order in favour of Mr Flood. Thirdly, the Reynolds defence. It is true that Mr Flood contested TNLs Reynolds defence case very strongly. In so far as the costs attributable to that issue going to appeal are concerned, they have been disposed of by agreement or by court orders. As to the success of the Reynolds defence it was, as Nicola Davies J pointed out, no clear cut win for [TNL], as the defence failed in relation to the continuing website publication after 5 September 2007. In any event, Tugendhat J, whose experience in this field was unrivalled, refused to make a costs order in favour of TNL following his judgment on the preliminary issue as to the availability of the Reynolds defence, on 25 July 2009 after a four day trial. He said that having regard to the way the matter has been contested, I see no reason to doubt that the defendant would have conducted the trial of the preliminary issue very substantially, if not identically, to the way in which they did, even if the claimant had conceded that qualified privilege was a defence in respect of the print publication, and even if they had conceded it was a defence in respect of some of the website publications. To much the same effect, Nicola Davies J said that the defences of Reynolds privilege and of justification could not easily be separated (para 21). In other words the costs of arguing the Reynolds defence would have been incurred anyway. Finally, there is the fact that Mr Flood was only partially successful. There are, of course, cases where a claimant (or indeed a defendant) is successful, but the success is partial or limited to an extent which would make it unreasonable to award him all his costs. In the instant case, there is an initial attraction in the notion that the fact that Mr Flood succeeded on the material posted on TNLs website after 5 September 2007 but failed on the hard copy and website material published before that date, means that there should be some amendment in TNLs favour to the costs order made by Nicola Davies J. However, as Sharp LJ said in the Court of Appeal (para 41), the fact that TNL had won on a significant part of the case, comprising numerically the greater proportion of the publications was a factor to be taken into account when deciding what costs order to make, but the effect of that factor on the eventual decision was a matter for the first instance judge. As she also said, on the facts of this case, the first instance judge was entitled to resolve to award costs on the basis that Mr Flood was the overall winner rather than making an issues based order. Conclusion It follows from this that all three appeals must be dismissed. |
This is a judgment of the Court. This appeal requires a revisiting of a vexed but highly important topic. The significance of parenthood in private law disputes about residence and contact has exercised many courts over many years but one might have thought that the final word on the subject had been uttered in the comprehensive and authoritative opinion of Baroness Hale of Richmond in In re G (Children) (Residence: Same sex Partner) [2006] UKHL 43, [2006] 1 WLR 2305. As this case illustrates, however, misunderstandings about the true import of that decision and the applicable principles persist. The case concerns a young boy whom we will call Harry, although that is not his real name. Harry will be four years old in December of this year. Until recently, apart from at weekends, he has lived continuously with the appellant, GB, who is his maternal grandmother. On 6 March 2009 Lowestoft Family Proceedings Court made a residence order in favour of GB. A contact order allowing staying contact with both parents was also made. The orders of the Family Proceedings Court were appealed by Harrys father RJB to the Family Division. His Honour Judge Richards, sitting as a High Court Judge, heard the appeal on 3 April 2009 and he made an order which, among other things, directed that there should be a transfer of residence to the father on 25 April. GB appealed Judge Richards order and her appeal was heard by the Court of Appeal (Wall and Elias LJJ) on 21 May 2009. At the conclusion of the hearing, the court dismissed the appeal and stated that the reasons for dismissal would be given later. Permission to appeal to the House of Lords was refused. The reasons for dismissing the appeal were provided in a judgment handed down on 11 June 2009. A stay on the transfer of residence was granted on that date to allow GB to petition the House of Lords for permission to appeal. It was a condition of the grant of the stay, however, that Harry should have contact with his father from Thursday afternoon until 4 pm on Monday each week. That level of contact continued until the hearing of the appeal before this court. Permission to appeal was granted on 30 July 2009 and the appeal was heard on 14 October. Both GB and RJB were represented on the appeal. Harrys mother, GLB, appeared on her own behalf and her only albeit important submission to this court was to the effect that she wanted the best for her son. When the hearing ended, this court announced that the appeal would be allowed for reasons that we would provide at a later date. This judgment contains those reasons. Family Background Harrys parents met in the autumn of 2004. They separated in April 2005, eight months before Harry was born. GB has been principally responsible for caring for him from the time of his birth. Indeed, she was present when he was born and immediately afterwards he went to live in her home. Until the order of the Court of Appeal giving extended contact to his father, Harry has lived there ever since. Neither of Harrys parents was able to care for him satisfactorily in the first years of his life. His mother, GLB, lived with her mother and Harry intermittently at GBs home from the time that he was born until July 2006. She left GBs home then and has not returned. On 9 November 2006 GB was granted a residence order. This was made on consent. At the same time a parental responsibility order was made in favour of Harrys father, RJB. This also appears to have been made on consent. Thereafter he spent a night and a day of every weekend with each of his parents in turn. In July 2007, Harrys father was convicted of racially aggravated assault. He was sentenced to a term of imprisonment. It is not clear whether this term was twelve or eighteen months but that is not important in relation to the issues which arise on the appeal. While in prison RJB met SB, the sister of another inmate. On his release in March 2008 they formed a relationship and they married some time later. On 11 February 2009 their daughter was born. SB also has an older daughter of about the same age as Harry from an earlier relationship. The older daughter lives with RJB, SB and the daughter born in February 2009. RJB has a much older son from another relationship but there is no contact between this son and his father. GB has not been without difficulties in her personal life. Tests have revealed that she has had a high alcohol consumption level in the past. She has a conviction for driving with excess alcohol and she has been the victim of domestic violence. Some episodes of this violence occurred in Harrys presence but the person who was responsible for them no longer lives with GB. The Family Proceedings Court Hearing On 28 May 2008 Harrys mother applied for a residence order. In the course of the proceedings which followed, Harrys father made his own application for a residence order. Despite having applied herself for a residence order, Harrys mother supported the fathers application. The order of 9 November 2006 in favour of GB was, of course, still in force at this time and she made plain her wish to continue to care for Harry. A report from a social care manager of the local authority, AW, was prepared for the hearing pursuant to section 7 of the Children Act 1989. It is dated 4 January 2009. It is not clear whether AW spoke to SB, the wife of Harrys father, but he certainly spoke to Harrys grandmother and to both his parents. AW considered that Harry was thriving in the care of his grandmother. He enjoyed contact with other family members, however, and had developed positive relationships with them. AW concluded that Harrys mother was not capable of providing a safe and stable environment for Harry. While there were some concerns about GB, AW reached the view that she had proved capable of meeting Harrys needs. In relation to Harrys father, AW said this: In my opinion, there is very little in [RJBs] commitment, motivation and capabilities to indicate that he could not meet [Harrys] needs. He is in a secure relationship and can provide stability to his son. He and his wife possess the necessary knowledge and skills to raise a child healthily. Their situation with the birth of their child places them in an untested situation that only a period of time would resolve. AW considered that to transfer Harrys residence to his mother or father would have a significant impact on him. In his view, the stability and security that Harry enjoyed was due to the consistency and predictability of his grandmothers care. He had begun to form his first significant peer relationships at nursery and a move away from this would be disruptive for him. AW concluded therefore that, while Harrys placement with GB was not perfect, on balance it should continue. A sentence in the conclusion section of AWs report has proved to be somewhat controversial in the case. It was to this effect: In my opinion there needs (sic) to be compelling reasons to disrupt [Harrys] continuity of care and the consistency and predictability that accompanies (sic) it. The justices used the same formulation in the pro forma document that recorded the reasons for their decision. Incongruously, however, this appeared as the final paragraph in the section of the form that recorded findings of fact. It read: We have not found compelling reasons to disrupt [Harrys] continuity of care and the consistency and predictability that accompanies (sic) it. Plainly, this was a verbatim quotation from AWs report. It has been suggested that the justices fell into error in stating that they required compelling reasons to remove Harry from his grandmothers care. We do not accept that suggestion. In the first place, the justices did not say that they required compelling reasons merely that they did not find such reasons. More importantly, taken as a whole, the pro forma that the justices prepared points unmistakably to their having conducted a careful weighing of the various factors that bore directly on what was in Harrys best interests. Thus, for instance, they reviewed his development while in the care of GB; noted that she had facilitated contact with both Harrys parents, even when his father was in prison; noted the risk of harm if he was moved; recorded that he had good relationships with both parents and his grandmother, all of whom were significant in his life; and expressly stated that they had balanced all interests in making their decision and had treated Harrys welfare as paramount. We are satisfied, therefore, that the justices did not consider that compelling reasons were an essential prerequisite to any alteration of the status quo. It is perhaps unfortunate that the social care manager made the compelling reasons reference and unfortunate too that it was incorporated by the justices in their statement of reasons but one should guard against an overly fastidious approach in parsing the contents of such statements. Isolated from its context, the phrase is redolent of an over emphasis on the importance of continuing what had gone before but we have concluded that, on a fair reading of the entire statement, it can be confidently said that this did not happen. The decision of Judge Richards In para 21 of his judgment, Judge Richards acknowledged that the justices had taken all the evidence into account and that their recorded reasons betokened a very careful weighing of that evidence. He concluded, however, that they had been distracted by their consideration of the settled way in which [Harry] has been brought up. (para 29) The judge referred to the decision of In re G, (which had received a passing reference in the justices statement of reasons that we will consider later in this judgment). He suggested, at para 23, that the House of Lords had made clear in that case that in the ordinary way the rearing of a child by his or her biological parents can be expected to be in the childs best interests, both in the short term and, more importantly, in the longer term. For reasons that we shall give presently, we do not consider that this is a proper representation of the decision in In re G and we believe that it was the failure to properly understand the burden of the decision in that case that led the judge into error. The theme that it was preferable for children to be raised by their biological parent or parents was developed by the judge in paras 24 and 25 of his judgment. He stated that it was the right of the child to be brought up in the home of his or her natural parent. (It is clear from the context that the judge was using the term natural parent to mean biological parent.) We consider that this statement betrays a failure on the part of the judge to concentrate on the factor of overwhelming indeed, paramount importance which is, of course, the welfare of the child. To talk in terms of a childs rights as opposed to his or her best interests diverts from the focus that the childs welfare should occupy in the minds of those called on to make decisions as to their residence. The distraction that discussion of rights rather than welfare can occasion is well illustrated in the latter part of Judge Richards judgment. In paras 28 and 30 he suggested that, provided the parenting that Harrys father could provide was good enough, it was of no consequence that that which the grandmother could provide would be better. We consider that in decisions about residence such as are involved in this case; there is no place for the question whether the proposed placement would be good enough. The courts quest is to determine what is in the best interests of the child, not what might constitute a second best but supposedly adequate alternative. As the Court of Appeal pointed out at para 61, the concept of good enough parenting has always been advanced in the context of public law proceedings and of care within the wider family as opposed to care by strangers. Judge Richards acknowledged that he could only reverse the decision of the justices if he came to the conclusion that they were plainly wrong. He explained his reasons for coming to that conclusion in the following passage from para 29: I have come to the view, applying as I do the test of whether this was plainly wrong, that in circumstances where it is clear that the father can meet this childs needs that he would have a settled and established home with his own family, that the justices were plainly wrong in coming to their conclusion that [Harry] should remain with his grandmother. After the judge had delivered his judgment, counsel on behalf of Harrys grandmother applied for leave to appeal. She submitted that the judge had attached undue importance to what he perceived to be the desirability of Harry being brought up by his biological parent and that he had been thereby distracted from concentrating on Harrys welfare. The judge rejected that submission, stating: For my part, I hope I made it clear that [Harrys] welfare is, and remains, the paramount consideration. The test that the justices should have applied was the welfare test. That is the test that I apply as well. In fact, at no point in his judgment did the judge say that Harrys welfare was the paramount consideration. We do not suggest that this statement requires to be intoned like a mantra on every occasion that a judgment on the residence of a child is given. Often it will be clear from the approach of the judge that this fundamental consideration underlay his or her reasoning. In the present case, however, we are satisfied that the judge, notwithstanding what he said in refusing leave to appeal, did not afford Harrys welfare the dominant position that it should have occupied in the decision as to his residence. Instead, he allowed the question of the childs so called right to be raised by his biological parent to influence indeed to define the outcome of the residence debate. The judgment of the Court of Appeal The Court of Appeal concluded at para 24 that the justices had made what were described as two important errors of law. The first of these related to their treatment of In re G. At para 14 of the section in the justices statement of reasons entitled findings of fact the following appeared: In re G (Residence: Same sex Partner) [2005] EWCA Civ 462, [2005] 2 FLR states a child should not be removed from primary care of biological parents. [Harry] has never resided with his father. Grandmother has been his psychological parent. Wall LJ, who delivered the judgment of the court, observed at para 23 that it was unfortunate that the justices had referred to the decision of the Court of Appeal in In re G since that had been reversed by the House of Lords. In fairness to the justices, the incorrect citation appears to have derived from the skeleton argument of counsel for the father. In any event, it is clear from the reference in para 14 that the justices had considered (to the extent that they had considered it at all) the decision of the House of Lords rather than that of the Court of Appeal. In her skeleton argument, counsel for RJB had quoted the virtual entirety of the short speech of Lord Nicholls of Birkenhead. It would appear that this provided the source material for the justices statement that a child should not be removed from the primary care of biological parents. Despite the fact that Baroness Hale had delivered the leading opinion in In re G and that all the other members of the appellate committee had expressed their unqualified agreement with it, her speech does not appear to have been extensively considered indeed a single sentence of her opinion was all that was quoted in the skeleton argument submitted on behalf of the father. It was to the effect that parenthood is to be regarded as an important and significant factor in considering which proposals advance the welfare of the child ([2009] 1 WLR 2305, para 31). As we shall see, the significance of Baroness Hales speech to the outcome of this case went far beyond this somewhat selective quotation. In developing its first criticism of the justices approach the Court of Appeal suggested that there had not been a sufficient discussion of the respective roles of parents and grandparents in a childs life. As a consequence, the court concluded that the justices had fallen into error in referring to the grandmother as Harrys psychological parent while failing to acknowledge his fathers role beyond recording that he was capable of meeting Harrys needs. When considering the criticism that the justices had failed to in the words of Wall LJ at para 24 grapple adequately with the fundamental issue in the case one must keep closely in mind that the context in which discussion of the respective roles of the father and the grandmother in Harrys life should take place is how those roles and the manner in which the parent and grandparent fulfil them can conduce to the childs welfare. Whether this particular criticism is justified depends, therefore, on the sufficiency of the justices consideration of the roles of the father and grandmother in terms of the contribution that they could make to Harrys welfare. The pro forma document that the justices prepared giving the reasons for their decision should not, we believe, be treated as containing an exhaustive record of all the material that was considered by them. From the note of the evidence given in the family proceedings court it is clear that the role that the father could play in Harrys life and the care that he had provided in the past were comprehensively canvassed and debated. Both GB and AW were cross examined extensively about these issues and it is difficult to accept that the justices did not have them in mind in making the decision about residence. It would perhaps have been preferable if the justices had placed on record that they had considered the role of his father in Harrys life but it is not easy to see what they might have said beyond that. They had commented that RJB had helped with Harrys care in the past and had expressed himself willing to do so again; they acknowledged that he was capable of meeting Harrys needs; and they accepted that Harry had enjoyed a good relationship with his father. It is clear that they were alert to the role that he had played in this young boys life. We cannot therefore agree that they failed to grapple with the respective roles of father and grandmother. The second important error of law identified by the Court of Appeal was the justices statement in relation to compelling reasons. Wall LJ said this about that statement: 25. in our judgment, it was clearly an error of law for the justices to say, as they did, that it required compelling reasons to remove H from his grandmother's care. Whilst they make it clear that [Harry's] welfare was their paramount consideration, the question which they had to decide was whether or not it was in [Harry's] interests in both the short and the long term to live with his grandmother or his father. The introduction of 'compelling reasons' clearly means, we think, that the justices gave too much weight to the 'status quo' argument, and too little to the role of his father in [Harry's] life and care. Indeed, they appear to have created a presumption that the status quo should prevail unless there are compelling arguments to the contrary. As we have pointed out at [14] above, the justices did not say that they required such reasons, merely that they had not found them. When one examines the statement of reasons as a whole and has in mind that this was a direct quotation from AWs report, it is not difficult to reach the conclusion that the justices did not regard this as an essential pre condition to Harrys residence being transferred to his father. We find it impossible to agree with the judgment of the Court of Appeal that this statement betokened an over emphasis by the justices on preserving the status quo. In re G The Court of Appeal acknowledged that In re G had given the final quietus to the notion that parental rights have any part to play in the assessment of where the best interests of a child lay. Indeed, (correctly in our view) it identified this as the principal message provided by the case. It is certainly the principal message that was pertinent to the present case. It appears, however, that the urgency of that message has been blunted somewhat by reference to the speech of Lord Nicholls and some misunderstanding of the opinion that he expressed. Having agreed that the appeal should be allowed for the reasons to be given by Baroness Hale, Lord Nicholls said at para 2: He then said: The present unhappy dispute is between the children's mother and her former partner Ms CW. In this case, as in all cases concerning the upbringing of children, the court seeks to identify the course which is in the best interests of the children. Their welfare is the court's paramount consideration. In reaching its decision the court should always have in mind that in the ordinary way the rearing of a child by his or her biological parent can be expected to be in the child's best interests, both in the short term and also, and importantly, in the longer term. I decry any tendency to diminish the significance of this factor. A child should not be removed from the primary care of his or her biological parents without compelling reason. Where such a reason exists the judge should spell this out explicitly. As we have observed, it appears to have been in reliance on the latter passage that the justices stated that a child should not be removed from the primary care of biological parents. A careful reading of what Lord Nicholls actually said reveals, of course, that he did not propound any general rule to that effect. For a proper understanding of the view that he expressed, it is important at the outset to recognise that Lord Nicholls comment about the rearing of a child by a biological parent is set firmly in the context of the childs welfare. This he identified as the court's paramount consideration. It must be the dominant and overriding factor that ultimately determines disputes about residence and contact and there can be no dilution of its importance by reference to extraneous matters. When Lord Nicholls said that courts should keep in mind that the interests of a child will normally be best served by being reared by his or her biological parent, he was doing no more than reflecting common experience that, in general, children tend to thrive when brought up by parents to whom they have been born. He was careful to qualify his statement, however, by the words in the ordinary way the rearing of a child by his or her biological parent can be expected to be in the child's best interests (emphasis added). In the ordinary way one can expect that children will do best with their biological parents. But many disputes about residence and contact do not follow the ordinary way. Therefore, although one should keep in mind the common experience to which Lord Nicholls was referring, one must not be slow to recognise those cases where that common experience does not provide a reliable guide. Although the factual background to the case of In re G was, as Baroness Hale described it, novel (a lesbian couple decided to have children together, arranged for anonymous donor insemination and brought up the children together until their relationship broke down) the issues arising and the legal principles that applied were, as Baroness Hale pointed out, just the same as would arise in the case of a heterosexual couple. After conducting what the Court of Appeal rightly described as a scholarly analysis of the statute and the authorities which pre dated the 1989 Act, Baroness Hale turned to consider the recommendations of the Law Commission report on private law cases relating to child care. She said this at para 30: law and [30] My Lords, the [Children Act 1989] brought together the Government's proposals in relation to child care the Law Commission's recommendations in relation to the private law. In its Working Paper No 96, Family Law: Review of Child Law: Custody (1986), at para 6.22, having discussed whether there should be some form of presumption in favour of natural parents, the Law Commission said: We conclude, therefore, that the welfare of each child in the family should continue to be the paramount consideration whenever their custody or upbringing is in question between private individuals. The welfare test itself is well able to encompass any special contribution which natural parents can make to the emotional needs of their child, in particular to his sense of identity and self esteem, as well as the added commitment which knowledge of their parenthood may bring. We have already said that the indications are that the priority given to the welfare of the child needs to be strengthened rather than undermined. We could not contemplate making any recommendation which might have the effect of weakening the protection given to children under the present law. Nor should we. The statutory position is plain: the welfare of the child is the paramount consideration. As Lord MacDermott explained in J v C [1070] AC 668, 711, this means that it rules upon or determines the course to be followed. There is no question of a parental right. As the Law Commission explained: the welfare test itself is well able to encompass any special contribution which natural parents can make to the emotional needs of their child or, as Lord MacDermott put it, the claims and wishes of parents can be capable of ministering to the total welfare of the child in a special way. This passage captures the central point of the In re G case and of this case. It is a message which should not require reaffirmation but, if and in so far as it does, we would wish to provide it in this judgment. All consideration of the importance of parenthood in private law disputes about residence must be firmly rooted in an examination of what is in the childs best interests. This is the paramount consideration. It is only as a contributor to the childs welfare that parenthood assumes any significance. In common with all other factors bearing on what is in the best interests of the child, it must be examined for its potential to fulfil that aim. There are various ways in which it may do so, some of which were explored by Baroness Hale in In re G, but the essential task for the court is always the same. For the reasons that we have given, we consider that the justices decision cannot be characterised as plainly wrong. True it is that they misapprehended the real import of In re G and it was, as we have said, unfortunate that they repeated the phrase compelling reasons from AWs report but we do not consider that these detract from their careful evaluation of the evidence and their weighing of the various competing factors involved in their determination of the question of Harrys residence. Nor do they detract from their important recognition that his welfare was the paramount consideration in that determination. It follows that Judge Richards erred in his conclusion that it was open to him to reverse the justices findings. The judge was correct in his view that G v G [1985] 1 WLR 647 forbade interference with the exercise of the justices discretion unless the decision was plainly wrong. Where he fell into error was in deciding that his analysis of their statement of reasons supported his conclusion that it was so. The Court of Appeal recognised some of the deficiencies in the judges analysis, in particular his apparent application of the principles relevant only in public law cases to private law proceedings under the 1989 Act; his pronouncement of something which came close to a presumption that a child should live with his biological parent or parents; and of the relevance of the concept of good enough parenting in this case. But the court considered that it could overlook these shortcomings because the judges fundamental [approach] was not plainly wrong (para 62). This in turn depended on their acceptance of the judges conclusion that the justices decision was plainly wrong. Since we have concluded that it was not, the basis on which the Court of Appeal felt able to uphold Judge Richards decision falls away. As we have said earlier, many disputes about residence and contact do not follow the ordinary way. This case is one such. Harry has lived virtually all of his young life with his grandmother. He has naturally formed a strong bond with her. There is reason to apprehend that, if that bond is broken, his current stability will be threatened. Harrys father had undergone significant changes in his own domestic arrangements at the time that the justices made their decision. While he was assessed as capable of meeting Harrys needs, those arrangements remained untested at the time the justices had to determine where Harry should live. There was therefore ample material available to the justices to reach the determination they did. That determination lay comfortably within the range of the decisions that the justices, in the exercise of their discretion, could reasonably make. For these reasons we allowed the appeal. What we heard of the contact and residence arrangements made as a result of the conditions imposed by the Court of Appeals order granting a stay confirmed the view that considerable disruption to Harrys life would have been involved in a transfer to live with his father. The distance between the homes of his grandmother and his father exceeds thirty miles, we were told. It seems inevitable that, if he were to live with his father, he would no longer be able to attend the nursery where he has already made good progress. Transfer of his residence would involve a great deal more than a change of address. Many of the familiar aspects of his life which anchor his stability and sense of security would be changed. The justices were therefore right to give significant weight to the desirability of preserving the status quo. This is a factor which will not always command the importance that must be attached to it in the present case but we are satisfied that it was of considerable significance in the debate as to where this childs best interests lay. For that reason, it is perhaps regrettable that such a radical change to Harrys residence and contact arrangements came about as a result of the conditions imposed by the Court of Appeal. Conscious of the need to minimise the sense of bewilderment that can accompany abrupt and substantial changes to a childs living arrangements, we made a transitional order that provided for a phased return to those that were in place before. We consider that, as a general rule, conditions such as were imposed by the Court of Appeal in this case should not be made where a party seeks permission to appeal, not least because these might be seen as an unwarranted disincentive to the pursuit of what proved in this case to be a fully merited application. |
These appeals raise issues as to the respective duties of the Secretary of State and the First tier Tribunal, on an appeal against refusal of an application to vary leave to enter or remain under the Immigration Act 1971, more particularly as to the operation of the so called one stop procedures. The Master of the Rolls (para 40), echoing words of Jackson LJ, described the law in this field as an impenetrable jungle of intertwined statutory provisions and judicial decisions. It is difficult to disagree, although on this occasion the judiciary must share some of the blame. The Patels Mr Patel and his wife arrived from India in the United Kingdom on 24 March 2009. He had been granted leave to enter as a working holiday maker until 6 March 2011, and she as his dependent wife. Their only child was born here in 2010. On 26 February 2011, they applied for further leave to remain in the UK, relying on article 8 of the European Convention on Human Rights, and rule 395C of the Immigration Rules. Their application was refused by the Secretary of State on 30 March 2011. That refusal was neither combined with, nor followed by, a decision to remove the family from the United Kingdom. They had a right of appeal to the First tier Tribunal, but that was dismissed on 14 July 2011. The merits of the refusal on the issues there raised are no longer in dispute. On further appeal to the Upper Tribunal they took a new point. This was that, in the light of the decision of the Court of Appeal in R (Mirza) v Secretary of State for the Home Department [2011] EWCA Civ 159, [2011] Imm AR 484, followed in Sapkota v Secretary of State for the Home Department [2011] EWCA Civ 1320, [2012] Imm AR 254, the Secretary of States failure to make a removal decision at the same time as, or shortly after, the decision to refuse leave to remain was unlawful. This argument, which failed before the Upper Tribunal and the Court of Appeal, is the principal issue in this court. Mr Alam Mr Alam, a citizen of Bangladesh, entered the country on 26 August 2007, as a Tier 4 student with leave to remain until 12 April 2011. On 1 April 2011 he applied for leave to remain to continue his studies. On 20 April 2011 the Secretary of State refused his application on the basis that he had not produced the required documentation. The bank statements submitted with his application were more than a month old, and therefore did not, as required by the guidance under the Points Based System, show that he had held the necessary level of funds for a consecutive period ending no more than one month before the application. By the time of the hearing before the tribunal, on 10 June 2011, he had produced the appropriate bank statements. The tribunal held that, for the purposes of his appeal under the rules, this new material was excluded from consideration by section 85A of the Nationality, Immigration and Asylum Act 2002 (which had come into effect between the date of his appeal and the date of the hearing). However, the immigration judge held that this did not prevent him taking it into account in the appeal under article 8 of the Convention, on the basis that, since he clearly meets the requirements of the rules, it was not proportionate to the aims of immigration control to refuse his application. The Upper Tribunal reversed that decision, holding that the judge had erred in treating the new evidence as showing effective compliance with the rules for the purpose of article 8. The tribunal accepted that the appellant having been in the country undertaking studies for some four years had thereby formed some sort of protected private life for the purposes of article 8. But no other aspect of his life in this country was relied on. His family ties were all with his native Bangladesh, to which he wished to return after his studies. Although the new evidence was not directly relevant under article 8, it took account of the unusual circumstances in which the right to prove compliance with the rules had been lost: I have considered the circumstances in which the claimant has failed to meet the Rules: viz. that he is one of a necessarily fixed class whose ability to prove compliance with the Rules has changed by operation of law since he began his appeal proceedings. Those circumstances do, to some extent, diminish the State's interest in removing the claimant, merely in order to maintain the integrity of the Rules. If the claimant's article 8 rights had been any stronger, I might well have concluded in the circumstances that his removal in consequence of the immigration decision would be disproportionate. As it is, however, I consider that the balance falls to be struck in favour of the Secretary of State. (para 22) Mr Anwar Mr. Anwar, a citizen of Pakistan, entered on 26 February 2010 with leave to remain as a student until 1 April 2011. On 31 March 2011 he applied to extend his leave as a Tier 4 student to enable him to complete his course. The application was supported by a Confirmation of Acceptance for Studies (CAS), which recorded that he had been assessed by reference to a document entitled ACCA examination Financial Accounting (F3). The F3 document itself was not included with the application. On 10 May 2011 the Secretary of State refused the application because, contrary to the relevant guidance, it had not included a document referred to in the CAS, and accordingly no points had been awarded for the CAS. On his appeal to the First tier Tribunal the appellant produced the relevant document, claiming that it had in fact been sent with his application form. The tribunal allowed his appeal, but their decision was set aside by the Upper Tribunal, which held that on the balance of probabilities he had not sent the relevant document with his application. That factual finding is not now in dispute. Although there was a reference to the European Convention in the grounds of appeal to the First tier tribunal, no separate appeal on human rights grounds was pursued at the hearing before either tribunal. The Court of Appeal heard the appeals of Mr Alam and Mr Anwar together, and dismissed them both on 13 July 2012. The arguments were wide ranging, summarised by Sullivan LJ under eight grounds. Most are no longer in issue. The issues According to the agreed statement, the following issues are said to arise in the appeals to this court: Patel i) Whether there is an obligation on the Secretary of State to issue a decision to remove at the same time as or immediately after refusing an individuals application for variation of leave to remain in the United Kingdom. ii) Whether there is an obligation on the Secretary of State to issue a one stop notice under section 120 of the 2002 Act when refusing an individuals application for variation of leave to remain in the United Kingdom. iii) Whether the Secretary of States refusal to vary an individuals leave to remain in the United Kingdom is unlawful if it is issued in isolation from a one stop notice or a decision to remove. Alam/Anwar iv) Whether the conclusion of the majority in AS (Afghanistan) v Secretary of State for the Home Department [2009] EWCA Civ 1076, [2011] 1 WLR 385, that an appeal to the FTT covers not only any ground before the Secretary of State when she made the decision under appeal but also any grounds raised in response to a one stop notice issued under section 120 of the 2002 Act, even if they had not been the subject of any decision by the Secretary of State and did not relate to the decision under appeal, is correct. v) Whether the statements and evidence filed by Mr Alam and Mr Anwar to the FTT amounted to additional grounds under section 120 of the 2002 Act which the FTT was obliged to consider and determine, notwithstanding the bar in section 85A of that Act. vi) In an article 8 case, when balancing the demands of fair and firm immigration control against the disruption to the family or private life of a person if removed for non compliance with the Immigration Rules, whether the nature and degree of the non compliance is significant or, as the Court of Appeal has held (in Miah v Secretary of State for the Home Department [2012] EWCA Civ 261; [2013] QB 35), irrelevant. While these issues were agreed between the parties, and they conveniently identify the main matters on which we heard submissions, it will be necessary to consider in due course the extent to which they do properly arise for decision on these appeals. For example, the question of an obligation to serve notices under section 120 (issue (ii)) does not arise in any of the three cases, since such notices were in fact served in all of them. The statutory provisions The Immigration Act 1971, and the rules made under it, constitute the principal statutory framework for the control of immigration, and the Secretary of States functions in that respect. Both the statute and the rules have been subject to frequent amendment and addition. The issues in the present appeals turn principally on the provisions of the Nationality, Immigration and Asylum Act 2002 which established a new statutory code relating to appeals against immigration decisions, including the so called one stop notices under section 120. In relation to the Secretary of States powers of removal, it will be necessary also to consider the Immigration and Asylum Act 1999 section 10, and the Immigration, Asylum and Nationality Act 2006 section 47. The starting point is section 3 of the 1971 Act. It provides that a person who is not a British citizen may not enter the United Kingdom except with leave under the Act. Where leave is given for a limited period, it may be varied by restricting, enlarging or removing the limit on its duration (section 3(3)). Section 3C (added by the 2002 Act) is entitled Continuation of leave pending variation decision. It applies where a person with limited leave applies, before the leave expires, for a variation of the leave. Subsection (2) has the effect that the leave is extended during any period when (a) the application for variation is neither decided nor withdrawn, (b) an appeal under section 82(1) of the 2002 Act could be brought while the appellant is in the United Kingdom, or an appeal brought while the appellant is within the United Kingdom is pending. By section 3C(4), a person may not make a further application for variation of his leave while it is extended under this section, but that does not prevent a variation of the application already made. It is common ground that such a variation may include grounds unrelated to those in the initial application. This provision needs to be understood also in the context of section 92 of the 2002 Act. That makes clear that for most categories of immigration decision, other than asylum or human rights claims made from within the United Kingdom and those decisions listed in subsection (2), an appeal must be brought from outside the country. Section 3C provides a limited exception for applications to extend existing leave made before its expiry. Section 82(1) of the 2002 Act confers a right of appeal to the tribunal in respect of an immigration decision. By section 82(2) immigration decision is defined as including (inter alia) a refusal to vary leave to enter or remain if the result of the refusal is that the person has no leave to remain (para (d)); and a decision that a person is to be removed by way of directions under either section 10 of the 1999 Immigration and Asylum Act or section 47 of the Immigration, Asylum and Nationality Act 2006 (paras (g), (ha)). Section 84 enumerates the possible grounds of appeal which include: (a) that the decision is not in accordance with immigration rules; (c) that the decision is unlawful under section 6 of the Human Rights Act 1998 as being incompatible with the appellants Convention rights; (e) that the decision is otherwise not in accordance with the law; (f) that the person taking the decision should have exercised differently a discretion conferred by immigration rules; (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 85 is headed Matters to be considered. Its present form, along with section 85A, is derived from amendments made by the UK Borders Act 2007, which were brought into effect, subject to transitional provisions, on 23 May 2011. It provides: (1) An appeal under section 82(1) against a decision shall be treated by the Tribunal as including an appeal against any decision in respect of which the appellant has a right of appeal under section 82(1). (2) If an appellant under section 82(1) makes a statement under section 120, the Tribunal shall consider any matter raised in the statement which constitutes a ground of appeal of a kind listed in section 84(1) against the decision appealed against. (3) Subsection (2) applies to a statement made under section 120 whether the statement was made before or after the appeal was commenced. (4) On an appeal under section 82(1), 83(2) or 83A(2) against a decision the Tribunal may consider evidence about any matter which it thinks relevant to the substance of the decision, including evidence which concerns a matter arising after the date of the decision. (5) But subsection (4) is subject to the exceptions in section 85A. The exceptions in section 85A include the following: (3) Exception 2 applies to an appeal under section 82(1) if (a) the appeal is against an immigration decision of a kind specified in section 82(2)(a) or (d), (b) the immigration decision concerned an application of a kind identified in immigration rules as requiring to be considered under a Points Based System, and (c) the appeal relies wholly or partly on grounds specified in section 84(1)(a), (e) or (f). (4) Where Exception 2 applies the Tribunal may consider evidence adduced by the appellant only if it (a) was submitted in support of, and at the time of making, the application to which the immigration decision related, (b) relates to the appeal in so far as it relies on grounds other than those specified in subsection (3)(c), (c) is adduced to prove that a document is genuine or valid, or (d) is adduced in connection with the Secretary of States reliance on a discretion under immigration rules, or compliance with a requirement of immigration rules, to refuse an application on grounds not related to the acquisition of points under the Points Based System. This provision, which is relevant to the Alam and Anwar appeals, needs a little unravelling. It is not in dispute that exception 2 applied to both appeals, because the applications had fallen to be considered under the Points Based System. Accordingly, (under subsection (4)(a)) the tribunal was unable to consider the new evidence in support of the case under the rules. It could only consider it (under subsection (4)(b)) in so far as it related to grounds other than those specified in (3)(c), that is grounds other under section 84(1)(a), (e) or (f). Such other grounds include the human rights grounds under section 84(1)(c) and (g). Accordingly, consideration of the new evidence so far as relevant to such grounds, in particular article 8 of the Convention, was not excluded. Section 86 deals with the determination of the appeal. The tribunal is required to determine any matter raised as a ground of appeal and any matter which section 85 requires it to consider. It must allow the appeal in so far as it thinks that a decision against which the appeal is brought or is treated as being brought was not in accordance with the law. It may also allow the appeal on the grounds that a discretion exercised in making such a decision should have been exercised differently (section 86(3)(b)), but refusal to depart from the immigration rules is not treated as the exercise of a discretion for these purposes (section 86(6)). One stop notice Section 120 of the 2002 Act applies to a person (a) who has made an application to enter or remain in the UK, or (b) in respect of whom an immigration decision has been taken or may be taken. By subsection (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 to 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. There is no express provision dealing with the form of the response, nor imposing on the Secretary of State any express duty to consider it or determine the issues raised by it. Under section 85(2) as already noted, the tribunal, hearing an existing appeal under section 82(1), is required to consider any matter raised in the section 120 statement if it constitutes a ground of appeal of a kind listed in section 84(1) against the decision appealed against. Furthermore, by section 96, the section 120 notice opens the way for the Secretary of State to issue a certificate limiting the scope for subsequent appeal. Thus section 96(2) precludes an appeal against an immigration decision (the new decision) in respect of a person where the Secretary of State or an immigration officer certifies: (a) that the person received notice under section 120 by virtue of a decision other than the new decision, (b) that the new decision relates to an application which relies on a matter that should have been, but has not been raised in a statement made in response to that notice, and (c) that, in the opinion of the Secretary of State or the immigration officer, there is no satisfactory reason for that matter not having been raised in a statement in response to that notice. Removal decisions The Secretary of States powers of removal are defined by section 10 of the 1999 Act and section 47 of the 2006 Act. The former provides that 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; By subsection (9) the reasonable costs of complying with the direction must be met by the Secretary of State. Section 47 of the 2006 Act, as originally enacted, provided: (1) Where a persons leave to enter or remain in the United Kingdom is extended by section 3C(2)(b), the Secretary of State may decide that the person is to be removed from the United Kingdom, in accordance with directions to be given by an immigration officer if and when the leave ends. Again the costs of compliance must be met by the Secretary of State (section 47(4)). For completeness, I note that on 8 May 2013 (after the time relevant for the present appeals) a new form of the section was inserted, providing for notice of a pre removal decision (which includes the decision on an application to vary leave to remain) to be given at the same time as the removal direction under section 47. This change was designed to deal with a practical problem arising from Sapkota which had been highlighted by a subsequent decision of the Upper Tribunal (upheld by the Court of Appeal). It is not directly material to the present appeals. The Patel appeals There is no dispute now as to the merits of the refusal of leave to remain in the Patel cases, under either the rules or the Convention. The sole issue is one of law relating to the form in which the decision was made, more particularly its segregation (the word used in some of the cases) from the decision to direct removal. The failure to issue such a direction, it is said, was not only unlawful in itself, but also undermined the validity of the previous decision to refuse leave to remain. A similar issue in relation to service of a section 120 notice, although identified in the agreed statement, does not arise on the facts of the case, since such a notice was in fact served. In support of this argument, Mr Malik relies principally on the decisions of the Court of Appeal in the cases of Mirza [2011] Imm AR 484 and Sapkota [2012] Imm AR 254 to which I have already referred. It was held, in summary, (in Mirza) that a policy of separating the refusal of leave to remain from the decision to remove was contrary to the policy and objectives of the 2002 Act to deal compendiously with all issues on the lawfulness of a persons residence in the United Kingdom; and consequently (in Sapkota) that an unjustified deferral of the removal decision would mean that the actual immigration decision was not in accordance with the law. Those judgments, and the subsequent Court of Appeal authorities, are discussed in detail in the judgment of the Master of the Rolls in the present case. Without disrespect to the judges involved in those decisions, or to Mr Maliks determined arguments in support of them, I do not propose to add materially to the voluminous discussion which this issue has already generated. It is sufficient to say that I am in entire agreement with the reasons of the Court of Appeal for not following them. The powers to issue removal directions under section 10 of the 1999 Act and section 47 of the 2006 Act (like the power to issue notices under section 120 of the 2002 Act) are just that powers. Their statutory purpose is as part of the armoury available to the Secretary of State for the enforcement of immigration control. Any extra protection provided to an appellant is incidental. Neither section can be read as imposing an obligation to make a direction in any particular case, still less as providing any link between failure to do so and the validity of a previous immigration decision. As Burnton LJ said in the Court of Appeal [2013] 1 WLR 63, para 73: This language is clearly and unequivocally the language of discretion, not duty, and it is simply not open to the court to interpret it as imposing a duty. For the court to do so is to amend the legislation, not to interpret it. The contrary argument depends to my mind on a misapplication of the so called Padfield principle (Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997). Under that principle, it is clear that discretionary powers conferred by statute must not be used in such a way as to thwart or run counter to the policy or objects of the Act (per Lord Reid, at p 1030C D)). It can no doubt be said that one of the purposes of the 2002 Act was to reduce the scope for repeat appeals, and that, as Laws LJ observed, the legislation leans in favour of what are called one stop appeals (JM (Liberia) v Secretary of State for the Home Department [2006] EWCA Civ 1402; [2007] Imm AR 293, para 23). It may be also, as Mr Malik submits, that the exercise of the Secretary of States powers has the incidental effect in some cases of adding to the range of matters an appellant is able to raise by way of appeal during the period that his leave is extended under section 3C. However, neither such general observations nor such incidental effects can be translated into an overriding policy requiring the Secretary of State to act in a particular way, nor into a right for the appellant to insist that he does so. It is to be borne in mind also that exercise of the powers to direct removal, which alone are at issue in the Patel case, is likely to involve both public cost and personal hardship or indignity. The Secretary of State does not thwart the policy of the Act if she proceeds in the first instance on the basis that unlawful overstayers should be allowed to leave of their own volition (as on the evidence the great majority do). The Upper Tribunal observed in the present case, commenting on its concerns at the implications of the decision in Sapkota: For every person whose real claim is one outside the Rules, there are many who merely want a decision in accordance with the Rules and would either voluntarily depart or make a fresh application if that appeal were to be unsuccessful. Further, the developing jurisprudence of the Upper Tribunal has moved beyond the proposition that human rights only arise on removal decisions, to cases where variation of leave applications may need to take into account a wide variety of aspects of private life under article 8 rights, thereby enabling an independent assessment of this claim to remain without the person concerned running the risk of breaking the law. (para 32) It follows that the Secretary of State was under no duty in the Patels case to issue removal directions at the time of the decision to refuse leave to remain, and that the actual decision was not invalidated by the failure to do so. In so far as the decisions of the Court of Appeal in the cases of Mirza and Sapkota indicate the contrary, they were in my view wrongly decided. It is unnecessary to consider whether the Court of Appeal was entitled as a matter of precedent to depart from them. No such inhibition affects this court. The Alam/Anwar appeals I have set out above the agreed issues said to arise in these appeals. The practical problem faced by the appellants arises from their failure to produce relevant information as required under the Points Based System at the relevant time. Each appellant was able to adduce the relevant evidence in response to the section 120 notice, but was barred by exception 2 of section 85A from relying on it directly in support of his appeal. The issue in short is whether an indirect route could be found to achieve a favourable result. The proposed route depends on using the evidence before the tribunal in support of a putative appeal against the refusal of leave to remain, relying not on the rules, but on human rights grounds (article 8 of the Convention), and thus taking it outside the scope of exception 2. This in turn depends on two propositions: first, that the tribunal was obliged to consider the new evidence in that context (scope of appeal), and secondly, that, if it had done so, the evidence that the rules could have been complied with would significantly improve the human rights case under article 8 (merits of appeal). I would accordingly dismiss the Patel appeals. Scope of appeal The first issue was the subject of detailed discussion in AS (Afghanistan) v Secretary of State for the Home Department [2011] 1 WLR 385. The Court of Appeal by a majority held that section 85(2) was to be construed as imposing a duty on the tribunal to consider any potential ground of appeal raised in response to a section 120 notice, even if it was not directly related to the issues considered by the Secretary of State in the original decision. In AQ (Pakistan) v Secretary of State for the Home Department [2011] EWCA Civ 833; [2011] Imm AR 832), it was held that majoritys approach did not require consideration of events subsequent to the Secretary of States decision. That issue does not arise in the present cases, where the new evidence related to material which was available at the time of the decisions. Turning to the judgments in AS itself, it would be difficult to expand on or improve the depth of legal and contextual analysis to be found in the judgments of all three judges. The fact that the analysis led such experienced judges to opposite conclusions suggests that the path to enlightenment will not be found by attempting a similar exercise in this judgment. The problem lies in the drafting of the relevant provisions, which defies conventional analysis. It is not only obscure in places and lacking in detail, but contains pointers in both directions. On the one hand, the words against the decision appealed against in section 85(2) suggest a focus on the content of the original decision. As Arden LJ said: A ground of appeal is not a ground of appeal against the decision appealed against if it would not, if accepted, lead to its reversal, as opposed to its being superseded by a new decision on the new evidence that leave to enter or remain should be granted. (para 30) On the other hand the first ground of appeal under section 84(1) is that the immigration decision is not (not was not) in accordance with the Rules; and in considering that question the tribunal is specifically empowered (subject to the exceptions in section 85A) to have regard to evidence concerning a matter arising after the date of appeal. Moore Bick LJ (with whom Sullivan LJ agreed) thought that the reference to the decision appealed against did not imply a limitation to the original grounds. Having decided that the decisions referred to sections 85(1) and (2) were immigration decisions of the kind identified in section 82(1), he said at para 79: . the natural meaning of these provisions is to impose on the tribunal a duty to consider matters raised by the appellant insofar as they provide grounds for challenging a substantive decision of a kind identified in section 82 that affects his immigration status. On the face of it they do not restrict that duty to considering grounds that relate to the reasons for that decision or to the original grounds of appeal. There was a similar lack of agreement on the effect of section 85(4), and in particular of the reference to matters relevant to the substance of the decision appealed against. That seems a curiously ambiguous term, which can fairly be read as referring either to the substantive effect of the decision or to the substantive reasons underlying it. Arden LJ took the latter view, which she saw as supporting her interpretation of section 85(2) (paras 31 2). At para 30 she adopted as plainly correct the approach of the Asylum and Immigration Tribunal (EA (Nigeria) v Secretary of State for the Home Department [2007] UKAIT 00013), which had read these words as meaning that the new evidence had to be relevant to the decision actually made, and had added at para 6 that: a decision on a matter under the Immigration Rules is a decision on the detailed eligibility of an individual by reference to the particular requirements of the rule in question in the context of an application that that person has made. Sullivan LJ took the opposite view, seeing section 85(4) as consistent with his view that the tribunals consideration was not limited to the grounds considered by the Secretary of State: Since section 85(2) is concerned with statements of additional grounds which must include any reasons why an appellant should be allowed to remain, and which are expressly not confined to the reasons why he should be allowed to remain under rule x of the Rules, I am not persuaded that the reference to the decision appealed against must be a reference to the decision to refuse to vary leave to remain under rule x, rather than the decision to refuse to vary leave to remain, being one of the immigration decisions as defined by section 82 (2). Such an approach to section 85 (2) would be consistent with the reference in section 85 (4) to the substance of the decision. (para 113) Moore Bick LJ thought that section 85(4) itself had little bearing on the issues before the court, since it was concerned only with the evidence which the tribunal could consider (para 83). However, his understanding of the word substance in this context, agreeing with that of Sullivan LJ, is apparent from his earlier discussion of the appropriate response to a section 120 notice. He saw its purpose as to impose on the appellant a duty to put forward any grounds he may have for challenging the substance of the decision made against him, rather than simply the grounds on which it was made (para 80, emphasis added). The broader approach of the majority seems to me to gain some support from the scheme of section 3C, under which (as is common ground) the initial application for leave to remain, if made in time, can later be varied to include wholly unrelated grounds without turning it into a new application or prejudicing the temporary right to remain given by the section. Thus the identity of the application depends on the substance of what is applied for, rather than on the particular grounds or rules under which the application is initially made. The same approach can be applied to the decision on that application, the identity or substance of which in the context of an appeal is not dependent on the particular grounds first relied on. It is of interest that, at an earlier stage, the broader approach seems to have accorded with the reading of those responsible within the Home Office for advice to immigration officers. The Immigration Directorates Instructions, issued in September 2006, noted that it was not possible under section 3C to make a second application, but continued: On the other hand, it is possible to vary the grounds of an application already made, even by introducing something completely new. A student application can be varied so as to include marriage grounds. If an application is varied before a decision is made, the applicant will be required to complete the necessary prescribed form to vary his application. If an application is varied post decision, it would be open to the applicant to submit further grounds to be considered at appeal Once an application has been decided it ceases to be an application and there is no longer any application to vary under section 3C(5). So any new information will fall to be dealt with during the course of the appeal rather than as a variation of the original application. (para 3.2 emphasis added) The same approach is supported by the current edition of Macdonalds Immigration Law & Practice 8th ed (2010) para 19.22 (under the heading The tribunal as primary decision maker). The only implicit criticism made of the majority approach in AS is that it did not go far enough. They observe that even without a section 120 notice the tribunal should be free to consider any matter including a matter arising after the decision which is relevant to the substance of the decision regardless of whether a one stop notice has been served. The substance of the decision is not the decision makers reasoned response to the particular application or factual situation that was before it but is one of the immigration decisions enumerated in section 82 and a matter includes anything capable of supporting a fresh application to the decision maker Whether or not such an extension of the majoritys reasoning can be supported, that passage indicates that the broader approach in itself is not controversial. In the end, although the arguments are finely balanced, I prefer the approach of the majority in AS. Like Sullivan LJ, I find a broad approach more consistent with the coherence of this part of the Act. He noted that the standard form of appeal, echoing the effect of the section 120 notice, urged appellants to raise any additional ground at that stage, on pain of not being able to do so later, and observed: . it seems to me that appellants would have good reason to question the coherence of the statutory scheme if they were then to be told by the AIT that it had no jurisdiction to consider the additional ground that they had been ordered by both the Secretary of State and the AIT to put forward. (para 99) Merits of appeal The second issue is the materiality to the human rights case of evidence that the appellant could in fact have complied with the rules, even though he failed to do so. The argument is that, if it is shown that the appellant could have met the substantive requirements of the rules, the failure to do so should be regarded as purely formal, and that accordingly, in the proportionality balance required by article 8, the objectives of immigration control should carry relatively less weight. A variant of this argument, referred to as the near miss principle, is that the degree of failure to meet the requirements of the rules may be relevant in the proportionality balance. Support for such an approach is said to be found in the judgment of Sedley LJ (agreed by Rimer and Sullivan LJJ) in Pankina v Secretary of State for the Home Department [2010] EWCA Civ 719; [2011] QB 376. The main issue in that case was the extent to which it was permissible for mandatory criteria relevant to the Points Based System to be contained in guidance rather than rules submitted to Parliament under section 3(2) of the 1971 Act. That issue has since been considered in the Supreme Court in R (Alvi) v Secretary of State for the Home Department (Joint Council for the Welfare of Immigrants intervening) [2012] UKSC 33; [2012] 1 WLR 2208 and R (New College London Ltd) v Secretary of State for the Home Department (Migrants Rights Network intervening) [2013] UKSC 51, [2013] 1 WLR 2358. However Sedley LJ also considered the application of article 8 under such a system. He said at paras 45 46: There appears to me, in this situation, to be no escape from the proposition that in exercising her powers, whether within or outside the rules of practice for the time being in force, the Home Secretary must have regard and give effect to applicants' Convention rights. This will mean in most cases evaluating the extent and quality of their family and private life in the United Kingdom and the implications, both for them and for the United Kingdom, of truncating their careers here. That in turn will require consideration of the significance of the criteria by which their eligibility has been gauged and found wanting. It is one thing to expect an applicant to have the necessary academic and linguistic qualifications: here a miss is likely to be as good as a mile. It is another for an applicant to fall marginally or momentarily short of a financial criterion which in itself has no meaning: its significance is as a rough and ready measure of the applicant's ability to continue to live without reliance on public funds. Having 800 in the bank, whether for three continuous months or simply at the date of application, is no doubt some indication of this; but people who are able to meet the test may fall on hard times after obtaining indefinite leave to remain, and others who fail it would, if allowed to remain, never become a charge on public funds. The Home Office has to exercise some common sense about this if it is not to make decisions which disproportionately deny respect to the private and family lives of graduates who by definition have been settled here for some years and are otherwise eligible for Tier 1 entry. If the Home Secretary wishes the rules to be blackletter law, she needs to achieve this by an established legislative route. The court can be seen in that passage to have endorsed the view that, at least in relation to financial criteria, a near miss (a marginal or momentary shortfall) might affect the consideration of proportionality under article 8. That view did not affect the results in any of the cases before it. In the only one to which it might have been relevant (Mrs Maleckia), it was held that there was in any event no prospect of success under article 8 (para 53). Mr Malik also relies on other cases, before and since, which have adopted a similar approach without reference to Pankina. In SB (Bangladesh) v Secretary of State for the Home Department [2007] EWCA Civ 28, the court when allowing an appeal against the tribunals decision on other grounds agreed with them that the fact that the appellant only just failed to qualify for admission was a fact to be counted in her favour. Ward LJ, at para 30, adopted the observation of Collins J in Lekstaka v Immigration Appeal Tribunal [2005] EWHC 745 (Admin) para 38 that: one is entitled to see, whether in all the circumstances, this case falls within the spirit of the Rules or the policies, even if not within the letter. Ward LJ added: That seems to us to be the right approach. As Simon Brown L.J. said in Ekinci at paragraph 16: Even if strictly he fails to qualify so that the ECO would be prohibited from granting leave to enter, given the obvious article 8 dimension to the case the ECO would refer the application to an Immigration Officer who undoubtedly has a discretion to admit someone outside the Rules. And if entry were to be refused at that stage, then indeed a section 59 right of appeal would certainly arise in which, by virtue of section 65(3), (4) and (5) the adjudicator would have jurisdiction to consider the appellant's human rights. (I note in passing that those comments of Simon Brown LJ were made with reference to the rather different appeal provisions of the Immigration and Asylum Act 1999, and were directed specifically to a case with an obvious article 8 dimension.) More recently, in R (Mansoor) v Secretary of State for the Home Department [2011] EWHC 832 (Admin), Blake J, sitting on this occasion in the Administrative Court, held that on the facts the interference with the applicants family life was such as to make it disproportionate under article 8 to remove her, notwithstanding that she was unable to satisfy a relevant criterion in the rules. He said, at para 35 (without specific reference to Pankina): the terms of the immigration rules are not a legitimate aim in their own right A judgment needs to be made as to how significant the aim, and how far the removal of the particular claimant in the circumstances of her case is necessary to promote that aim. The mere fact a genuine spouse lawfully admitted with her British citizen husband and settled children can no longer meet one requirement of the rules through no fault of her own is unlikely to amount to a weighty reason to justify interference with family life here that is otherwise to be respected. The opposite approach is supported by the judgment of Stanley Burnton LJ (agreed by Maurice Kay and Lewison LJJ) in Miah v Secretary of State for the Home Department [2013] QB 35. In that case the applicant was refused leave to remain as a Tier 2 (General) Migrant at a time when he was two months short of the five years continuous residence necessary to support a case for indefinite leave to remain under the rules. It was argued that, in assessing whether his removal should be permitted under article 8.2 of the Convention, the weight to be given to the maintenance of immigration controls should be diminished because he had missed satisfying the rules by only a small margin. Burnton LJ observed that, as formulated in the skeleton submissions of Mr Malik (appearing for the appellant in that case as in the present), the argument was not so much near miss as sliding scale, by virtue of which There is an inverse relationship between the degree to which there is compliance with the rules and the immigration policy imperative which demands that unsuccessful applicants be removed (paras 9 10). In rejecting that argument, Burnton LJ referred to a passage in the speech of Lord Bingham in Huang v Secretary of State for the Home Department [2007] 2 AC 167, in which he discussed the long established and central role of the immigration rules in determining those to whom leave to enter or remain should be granted. Although the near miss argument as such was not in issue in that case, Burnton LJ thought it inconsistent with Lord Binghams approach. He said at para 14: I find Lord Bingham's reference in para 6 to rules, to be administratively workable, [requiring] that a line be drawn somewhere and in para 16 to the general administrative desirability of applying known rules if a system of immigration control is to be workable, predictable, consistent and fair as between one applicant and another; the damage to good administration and effective control if a system is perceived by applicants internationally to be unduly porous, unpredictable or perfunctory to be helpful and generally inconsistent with a near miss principle. He referred to two previous Court of Appeal judgments (not cited in Pankina) in which similar arguments had been rejected: Mongoto v Secretary of State for the Home Department [2005] EWCA Civ 751, and R (Rudi) v Secretary of State for the Home Department [2007] EWCA Civ 1326. In the latter case, citing Mongoto, I said of the near miss argument: 28. This argument is, in my view, based on a misconception. The Secretary of State is of course entitled to have a policy. The promulgation of the policy normally creates a legitimate expectation that it will be applied to those falling within its scope unless there is good reason for making an exception. So much is trite law. It is also trite law that the existence of the policy does not excuse the decision maker from due consideration of cases falling outside it. However, the law knows no near miss principle. There is no presumption that those falling just outside the policy should be treated as though they were within it, or given special consideration for that reason. Faced with the conflict between the approach taken in these authorities and that of Pankina Burnton LJ had no difficulty in preferring the former, which he regarded as binding on the court (paras 21 25). He could see no principled basis for distinguishing, as Sedley LJ had proposed, between rules to which the near miss principle did and did not apply. In particular he disagreed with Sedley LJ that a financial criterion has in itself no meaning, and could therefore be distinguished from other rules, such as those relating to academic qualifications, in respect of which a miss is as good as a mile. In conclusion he said at paras 25 26: Finally, quite apart from authority, I prefer the approach stated in Mongotos case and Rudis case. A rule is a rule. The considerations to which Lord Bingham referred in Huangs case require rules to be treated as such. Moreover, once an apparently bright line rule is regarded as subject to a near miss penumbra, and a decision is made in favour of a near miss applicant on that basis, another applicant will appear claiming to be a near miss to that near miss. There would be a steep slope away from predictable rules, the efficacy and utility of which would be undermined. For these reasons, I would dismiss the appeal in relation to the near miss argument. In my judgment, there is no near miss principle applicable to the Immigration Rules. The Secretary of State, and on appeal the tribunal, must assess the strength of an article 8 claim, but the requirements of immigration control are not weakened by the degree of non compliance with the Immigration Rules. The difference between the two positions may not be as stark as the submissions before us have suggested. The most authoritative guidance on the correct approach of the tribunal to article 8 remains that of Lord Bingham in Huang. In the passage cited by Burnton LJ Lord Bingham observed that the rules are designed to identify those to whom on grounds such as kinship and family relationship and dependence leave to enter should be granted, and that such rules to be administratively workable, require that a line be drawn somewhere. But that was no more than the starting point for the consideration of article 8. Thus in Mrs Huangs own case, the most relevant rule (rule 317) was not satisfied, since she was not, when the decision was made, aged 65 or over and she was not a widow. He commented at para 6: Such a rule, which does not lack a rational basis, is not to be stigmatised as arbitrary or objectionable. But an applicant's failure to qualify under the rules is for present purposes the point at which to begin, not end, consideration of the claim under article 8. The terms of the rules are relevant to that consideration, but they are not determinative. Thus the balance drawn by the rules may be relevant to the consideration of proportionality. I said much the same in Rudi. Although I rejected the concept of a near miss principle, I did not see this as inconsistent with the Collins Js words in Lekstaka: Collins J's statement, on which the court relied [in SB], seems unexceptionable. It is saying no more, as I read it, than that the practical or compassionate considerations which underlie the policy are also likely to be relevant to the cases of those who fall just outside it, and to that extent may add weight to their argument for exceptional treatment. He is not saying that there arises any presumption or expectation that the policy will be extended to embrace them. (para 31(ii)) (My reference to exceptional treatment needs to be read now in the light of Huang para 20 in which Lord Bingham made clear that, contrary to previous Court of Appeal case law, there was no separate test of exceptionality.) Although the context of the rules may be relevant to the consideration of proportionality, I agree with Burnton LJ that this cannot be equated with a formalised near miss or sliding scale principle, as argued for by Mr Malik. That approach is unsupported by Strasbourg authority, or by a proper reading of Lord Binghams words. Mrs Huangs case for favourable treatment outside the rules did not turn on how close she had come to compliance with rule 317, but on the application of the family values which underlie that rule and are at the heart also of article 8. Conversely, a near miss under the rules cannot provide substance to a human rights case which is otherwise lacking in merit. It is important to remember that article 8 is not a general dispensing power. It is to be distinguished from the Secretary of States discretion to allow leave to remain outside the rules, which may be unrelated to any protected human right. The merits of a decision not to depart from the rules are not reviewable on appeal: section 86(6). One may sympathise with Sedley LJs call in Pankina for common sense in the application of the rules to graduates who have been studying in the UK for some years (see para 47 above). However, such considerations do not by themselves provide grounds of appeal under article 8, which is concerned with private or family life, not education as such. The opportunity for a promising student to complete his course in this country, however desirable in general terms, is not in itself a right protected under article 8. The present appeals I have discussed the respective arguments on this point in some detail because of its general importance and the conflicting statements found in some of the judgments. However, I can deal relatively shortly with the two cases before us. The near miss argument was not advanced in the same form before the Court of Appeal, apparently because it was thought to be precluded by Miah. Even if otherwise well founded, it is not in my view available to Mr Anwar, since no separate human rights grounds were advanced on his behalf before either tribunal. So the issue as to whether the tribunal would have been obliged to consider them, and with what effect, did not arise. In Mr Alams case the human rights case was considered at both levels, but ultimately failed before the Upper Tribunal on its merits. The Upper Tribunal fairly gave some weight to the unusual circumstances in which he had lost his ability to rely on the new evidence (as a result of a change in the rules after the start of the appeal). But there was little or nothing to weigh on the other side of the balance, apart from the time he had spent in this country as a student under the rules. It would be surprising if that status, derived entirely from the rules, was sufficient in itself to add weight to a case for favourable treatment outside the rules. I see no error in the approach of the Upper Tribunal. Conclusion For these reasons, I would dismiss all three appeals. LORD MANCE (with whom Lord Kerr, Lord Reed and Lord Hughes agree) I would also dismiss these appeals for the reasons given by Lord Carnwath. Anything that we say about AS (Afghanistan) v Secretary of State for the Home Department [2009] EWCA Civ 1076, [2011] 1 WLR 385 is obiter, since in the case of Anwar no separate human rights ground was advanced in either tribunal and in the case of Alam the Upper Tribunal held correctly that there is nothing in any human rights point that was raised. If we were to disagree with the majority approach in AS, that would raise a problem of precedent for lower courts, but since I would on balance also favour leaving the majority view undisturbed, that problem does not arise. In fact, it appears that the whole area of appeals is likely to be reshaped by the Immigration Bill 2013 (HC Bill 110), so that the majority approach in AS and any view we express about the correct approach are likely to become irrelevant in future cases. The issue arising under section 85(2) of the Nationality, Immigration and Asylum Act 2002 which was addressed in AS is undoubtedly a difficult and very arguable one, and the arguments for and against the rival approaches are comprehensively discussed in AS. As I see it, the essential question was well defined by Sullivan LJ at paras 111 113. It is whether the decision appealed against to which section 85(2) refers is the generic decision to refuse leave to remain (i.e. in the present cases, within section 82(2)(d)), or the particular decision to refuse leave under a particular head, for example under a particular rule of the Immigration Rules or on a Human Rights ground. The majority approach in AS does not mean that section 85(2) enables an appellant, who has sought leave to remain, to go outside the scope of a leave to remain application by adding or substituting an appeal under a different head of section 82(2), e.g. by asserting a wrongful refusal of entry clearance or of a certificate of entitlement: see sections 82(2)(b) or (c)). To that extent, it seems to me that the majority approach is not open to the criticism that it amounts to re reading section 85(2) as if it used the words against a decision of a kind listed in section 82(2) or omitted the words against the decision appealed against altogether. Where the Secretary of State chooses to give a section 120(2) notice, the aim is to flush out any new (a) reasons for wishing to enter or remain and/or (b) grounds for being permitted to enter or remain and/or (c) grounds for not being removed or required to leave the UK. The statement in response need not repeat reasons or grounds set out in the existing application or decision which is the occasion for giving the notice: section 120(3). When section 85(2) requires the Tribunal to consider any matter raised in the [section 120] statement which constitutes a ground of appeal of a kind listed in section 84(1) against the decision appealed against, it is therefore referring to new reasons or grounds not previously covered by the decision appealed against. So long as they [constitute] a ground of appeal of a kind listed in section 84(1), they can be relied upon. By inference, it can be said, it is or becomes legitimate to treat them as constituting a ground of appeal, even though they were not raised before or decided by the Secretary of State. So, instead of relying on the Immigration Rules to justify leave to remain, an appellant can rely on a Human Rights ground, as Alam sought to do. And in AS itself, it would follow that the majority was correct to hold that an appellant could invoke a different Immigration Rule to justify leave to remain in the case of AS herself: that she qualified under the International Graduate Scheme, rather than as a person intending to establish herself in business, in the other case of NV, on the basis that she had ten years residence, rather than on the basis that she was a student. Section 3C(4) of the 1971 Act certainly provides some forceful arguments to the contrary of the majority conclusion in AS. But I am inclined to think that Moore Bick and Sullivan LJJ deal sufficiently in their paras 84 86 and 102 with the problem of reconciling their conclusion with section 3C(4). Essentially, it is up to the Secretary of State to decide whether to serve a section 120 notice. It is true that the majority approach to section 85(2) means that an applicant may open up issues which would otherwise be closed, at least until conclusion of the existing appeal (after which the applicant, if unsuccessful in the appeal, would be an overstayer). But it does at the same time close down some further applications which the appellant might, whether as an overstayer or from abroad, make. The fact that the Tribunal will, in a wider area, become primary decision maker appears to me relatively indecisive, bearing in mind that it anyway acts as decision maker in some significant areas. The overlap argument advanced by Sullivan LJ at para 106 also seems to me relevant, if one is considering the advantages and disadvantages of each solution. help identify at what level of detail that decision is to be considered. On the other hand, I am not persuaded that there is anything in the substance point based on section 85(4). Moore Bick LJ (para 83), rather than Sullivan LJ (para 113) was in my view right on this. Section 85(4) is dealing only with evidence which goes to the substance (heart) of the decision, but does not |
This appeal raises a short question on the true construction of the Immigration Rules, House of Commons Paper 395 (HC 395). The question is what rules apply to family members seeking entry to the United Kingdom, where the sponsor has been granted asylum and has subsequently obtained British citizenship. The respondent Entry Clearance Officer (ECO) says that they must satisfy the ordinary rules dealing with applications by family members, notably paras 281 (spouses and civil partners) and 297 (children) of HC 395. The appellant family members say that that is wrong and that their cases fall to be considered under the rules dealing with applications to join relatives in this country who have been granted asylum here, notably paras 352A (spouses and civil partners) and 352D (children) of HC 395. The distinction is important to the family because a person entitled to apply under para 352A or 352D does not have to meet the requirements concerning maintenance and accommodation imposed by paras 281 and 297. The facts The appellants are nationals of Afghanistan. The first appellant, ZN, married her husband (the sponsor) in Afghanistan in 1979. ZN and the sponsor are the parents of the other six appellants, who were born between 1985 and 1998. The sponsor fled Afghanistan in order to seek international protection and arrived in the United Kingdom on 8 August 1999. At some time in 1999 the family went to Pakistan, where they have extended family members. The sponsor was granted indefinite leave to remain in the United Kingdom as a refugee on 13 December 2001. Since 2002 the sponsor has made a number of attempts to bring his family to the UK to join him. None of these is relevant to the resolution of the issues in this appeal. The sponsors application for British citizenship was granted on 22 March 2005. On 15 October 2005 the appellants made a fresh application for entry clearance as, respectively, the spouse and children of a person granted asylum. It was stated that the appellants were seeking entry clearance under paras 352A and 352D of HC 395. On 7 July 2006 the ECO refused the applications under the rules relating to family members, namely paras 281 and 297 of HC 395. He held that they could not meet the accommodation and maintenance requirements imposed by sub paras (iv) and (v) of paras 281 and 297. The appellants appealed against those refusals to the Asylum and Immigration Tribunal (the Tribunal) on the ground that ZNs application should have been considered under para 352A as the sponsors wife and that four of the childrens applications should have been considered under para 352D. The other two children, the sixth and seventh appellants, were by that time over eighteen years of age. All the appellants also relied upon their rights protected by Article 8 of the European Convention on Human Rights (ECHR). The appeals The appeals were heard by IJ Wiseman on 23 July 2007 and were dismissed on 9 August 2007. He held that the sponsor and ZN had been married in 1979, which had been in dispute, and that the remaining appellants were their children. He also found that the sponsor had at all material times been in poor health, suffering from heart disease and osteoarthritis, and must on any showing be significantly handicapped in the labour market. He held that paras 352A and 352D did not apply because the sponsor had acquired British nationality at the time of the ECOs decision. He rejected the appellants case under Article 8 on the basis (1) that the decision did not interfere with their right to respect for their private life because the sponsor could return to Pakistan and resume family life there, and/or (2) that any such interference was proportionate to the interests of immigration control and/or (3) that the decision was in accordance with the law because the appellants had the ability to comply with the immigration rules by various means. The appellants sought and obtained an order for the reconsideration of that decision but on 8 February 2008 SIJ Eshun held that IJ Wiseman had made no error of law and that the decision therefore stood. On 17 May 2008, on consideration of the papers, Buxton LJ gave permission to appeal to the Court of Appeal on the basis that the issue as to the extent of paras 352A and 352D was important. The appeal was heard with another appeal in the case of ECO (Pretoria) v DL (DRC), in which the appellants had succeeded. This Court is not concerned with that case. The Court of Appeal considered three issues as follows: 1(a) Is a person who is outside his country of origin and recognised as a refugee, and who has subsequent to that recognition taken on the nationality of the host country, still a refugee within the meaning of the 1951 Geneva Convention on the Status of Refugees? (b) If such a person does cease to be a refugee, does his refugee status cease only following a procedural process, or automatically by operation of law? 2. What is the effect, if any, of Directives 2004/83/EC and 2005/85/EC on these cases? 3. Do paragraphs 352A (relating to spouses) and 352D (relating to dependant children) apply to a person who was recognised as a refugee and is now a British citizen? Laws LJ, with whom Rix and Wilson LJJ agreed, considered issue 3 first. He restated the question as being whether the sponsor must enjoy refugee status at the time his spouse or child seeks to join him under the paras 352A and 352D. He held that the references to asylum and refugee were directed to a status of the sponsor that was current and accepted. He so held as a matter of construction of the language (at paras 18 to 20), which he said was entirely clear (at para 25), because any other result would lead to absurdity (at para 21) and because there are no considerations going the other way (at paras 22 to 24). In the light of that conclusion, he considered issues 1 and 2 together, which he restated as being whether a person who has been recognised as a refugee, but thereafter assumes the nationality of his host country, remains a refugee within the meaning of the Refugee Convention and, if not, whether his status ceases automatically or only by a procedure as contemplated by EC Directives 2004/83 and 2005/85 (the Directives). Laws LJ answered the first of those questions in the negative (at paras 29 to 31). As to the second, he held that it was open to a State Party to the Refugee Convention to prescribe the procedures under which cessation of refugee status pursuant to Article 1C(3) would have effect but that, if a State Party had not done so, cessation would occur automatically (see para 32). He then considered whether the Directives laid down such a procedure and held that they did not (see paras 33 to 35). In a judgment handed down on 18 December 2008 the Court of Appeal accordingly rejected the appellants submission that paras 352A and 352D applied. It also rejected their case under Article 8 of the ECHR (at paras 44 and 45). It refused permission to appeal but this Court subsequently gave permission. Is this appeal academic? The circumstances have recently changed from those that existed when the case was before the Court of Appeal. On 27 January 2010 the UK Border Agency wrote to the appellants solicitors saying that the position under Article 8 had been reconsidered and that it was accepted that the Immigration Judges decision was not sustainable, principally because he did not take the familys recent history into account when considering whether it was reasonable to expect the sponsor to relocate to Pakistan. There followed some correspondence between the parties. The upshot was that the Treasury Solicitor (TSol) wrote on 3 February to say that the appellants would be granted three years discretionary leave to remain without any restrictions on employment or recourse to public funds. The TSol further wrote on 9 February to say that, if the appellants were successful on issues one and/or two they would, due to the particular circumstances, and subject to the terms of the judgment be granted indefinite leave to enter or remain, depending upon whether the person concerned was in the United Kingdom by then. It follows from the exchanges between the parties that the appeal against the decision under Article 8 is academic but that the appeal on issues one and/or two is not. Those issues are as stated in the statement of facts and issues, as follows: 1) Did the Court of Appeal err in its construction of paragraphs 352A and 352D of HC 395 and, in particular, did it err in concluding that the said paragraphs apply only to the family members of a person who has the status of a refugee at the time those family members apply to join him or her in the UK? 2) Does a person who has been recognised as a refugee, but thereafter assumes the nationality of his host country, remain a refugee within the meaning of the Refugee Convention; or does his status cease automatically upon acquisition of that nationality or only by a procedure such as that contemplated by Directives 2004/83 and 2005/85? The correspondence thus shows that if, for example, this Court were to hold that the Court of Appeal erred in holding that paras 352A and 352D did not apply to the appellants because their sponsor had become a British citizen on 22 March 2005 and was thus a British citizen when they made their application for entry clearance on 15 October, they would be granted indefinite leave to enter or remain, depending upon whether the particular appellant was in the United Kingdom by then. That position was subject only to the terms of the judgment. When this appeal came on for hearing on 15 February, this Court accepted that there is a significant difference between the position, on the one hand, of a person to whom paras 352A or 352D apply and, on the other hand, of each of the appellants as set out in the letter of 3 February. It is true that in each case there would be no restrictions on employment or recourse to public funds. However, in the former case the appellants would have indefinite leave to remain or enter, whereas in the latter case they would only have three years discretionary leave to remain. In these circumstances the Court decided that the appeal was not academic in the case of all the appellants other than the sixth and seventh appellants and heard argument on the true construction of paras 352A and 352D. The sixth and seventh appellants cannot succeed under para 352D because they were over 18 at the relevant time. They do however have the benefit of the concession of three years discretionary leave to remain granted under Article 8 of the ECHR. The decision of the court Having heard argument directed to paras 352A and 352D, the Court considered the submissions and decided to allow the appeal. It said that it would give its reasons later. These are the reasons of the Court for reaching that conclusion. The Refugee Convention and the Immigration Rules Article 1A(2) of the 1951 United Nations Convention on the Status of Refugees (the Refugee Convention) defines a refugee as 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. Article 1C provides: This Convention shall cease to apply to any person falling under the terms of section A if: . (3) protection of the country of his new nationality. He has acquired a new nationality, and enjoys the Article 1F provides: The provisions of this Convention shall not apply to any person with respect to whom 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; (b) he has committed a serious non political crime outside the country of refuge prior to his admission to that country as a refugee; (c) he has been guilty of acts contrary to the purposes and principles of the United Nations. As Laws LJ observed, the ordinary rules dealing with applications by family members seeking leave to enter to join a sponsor are to be found in Part 8 of HC 395. Para 281 (as it stood at the material time) includes a number of specific requirements. Critically for present purposes they include requirements (iv) and (v): (iv) there will be adequate accommodation for the parties and any dependants without recourse to public funds in accommodation which they own or occupy exclusively; and (v) dependants adequately without recourse to public funds; the parties will be able to maintain themselves and any There are similar provisions relating to children under 18 in para 297, which, like para 281, is set out by Laws LJ at his para 9. For present purposes the critical paras of HC 395 are paras 352A and 352D because they deal with applications to join relations who have been granted asylum here. At the material time they provided: 352A. The requirements to be met by a person seeking leave to enter or remain in the United Kingdom as the spouse or civil partner of a refugee are that: (i) the applicant is married to or the civil partner of a person granted asylum in the United Kingdom; and (ii) the marriage or civil partnership did not take place after the person granted asylum left the country of his former habitual residence in order to seek asylum; and (iii) the applicant would not be excluded from protection by virtue of article 1F of the United Nations Convention and Protocol relating to the Status of Refugees if he were to seek asylum in his own right; and (iv) each of the parties intends to live permanently with the other as his or her spouse or civil partner and the marriage or civil partnership is subsisting; and (v) if seeking leave to enter, the applicant holds a valid United Kingdom entry clearance for entry in this capacity. 352D. The requirements to be met by a person seeking leave to enter or remain in the United Kingdom in order to join or remain with the parent who has been granted asylum in the United Kingdom are that the applicant: (i) is the child of a parent who has been granted asylum in the United Kingdom, and (ii) is under the age of 18, and (iii) is not leading an independent life, is unmarried and is not a civil partner, and has not formed an independent family unit; and (iv) was part of the family unit of the person granted asylum at the time that the person granted asylum left the country of his habitual residence in order to seek asylum; and (v) would not be excluded from protection by virtue of article 1F of the United Nations Convention and Protocol relating to the Status of Refugees if he were to seek asylum in his own right; and (vi) if seeking leave to enter, holds a valid United Kingdom entry clearance for entry in this capacity. Para 352E provided: 352E. Limited leave to enter the United Kingdom as the child of a refugee may be granted provided a valid United Kingdom entry clearance for entry in this capacity is produced to the Immigration Officer on arrival. Limited leave to remain in the United Kingdom as the child of a refugee may be granted provided the Secretary of State is satisfied that each of the requirements of paragraph 352D(i) (v) are met. The question The essential question is the third question considered by the Court of Appeal and the first issue in the statement of facts and issues set out at paras 6 and 12 above respectively. It is whether paras 352A and 352D apply to a person who has been recognised as a refugee and granted asylum but has become a British citizen before the date of the relevant application for, or perhaps decision as to, entry clearance. Discussion The answer to the question depends upon the true construction of paras 352A and 352D. The correct approach to such a question in the context of the Immigration Rules has recently been considered in both the House of Lords and this Court. In Odelola v Secretary of State for the Home Department [2009] UKHL 25, [2009] 1 WLR 1230, Lord Hoffmann said at para 4 that the correct interpretation: depends upon the language of the rule, construed against the relevant background. That involves a consideration of the immigration rules as a whole and the function which they serve in the administration of immigration policy. In Ahmed Mahad v Entry Clearance Officer [2009] UKSC 16, [2010] 1 WLR 48, Lord Brown said at para 10: The Rules are not to be construed with all the strictness applicable to the construction of a statute or a statutory instrument but, instead, sensibly according to the natural and ordinary meaning of the words used, recognising that they are statements of the Secretary of State's administrative policy. the courts task is to discover from the words used in the Rules what the Secretary of State must be taken to have intended. See also per Lord Kerr at para 51. The critical words of para 352A (omitting the references to civil partnership for simplicity) are these: 352A. The requirements to be met by a person seeking leave to enter or remain in the United Kingdom as the spouse of a refugee are that: (i) the applicant is married to a person granted asylum in the United Kingdom; There is also a reference to the person granted asylum in sub para (ii). The respondent ECO points to the necessity for the applicant to be the spouse of a refugee and submits that that indicates that he or she must be a refugee at the time of the application. The ECO further relies upon para 352E, which refers to the child of a refugee. The appellants, on the other hand, say that the opening words of para 352A make it clear that the rule is identifying the requirements to be met by an applicant seeking leave to enter or remain in the United Kingdom as the spouse of a refugee and that the sub paras simply identify the criteria to be satisfied by the applicant. The only relevant requirements, which are contained in sub paras (i) and (ii) respectively, are that the applicant must be married to a person granted asylum and that the marriage did not take place after the person granted asylum left his former habitual residence in order to seek asylum. The appellants point to the fact that the rules do not say when the person must have been granted asylum. Nor do they say that such a person is not a refugee for this purpose once he or she becomes a British citizen. Para 352D contains a curiosity. When it was introduced it was in the same terms as para 352A. However, with effect from 18 September 2002, the words in order to join or remain with the parent who has been granted asylum replaced the original phrase as the child of a refugee. It is submitted on behalf of the appellants that that is significant because it shows that the expression the child of a refugee in the original para 352D could not have referred to the status of the refugee at the time of the application for, or decision as to, entry, at any rate unless it was intended to have a different test for refugee in para 352D from the test in para 352A, which seems very unlikely. It is further submitted that in the new para 352D, the position is clear. The expression parent who has been granted asylum appears, not only in the first words of the para but also in sub para (i), where the applicant must be the child of a parent who has been granted asylum. Similarly, by sub para (iv) the applicant must have been part of the family unit of the person granted asylum at the time that the person granted asylum left the country of his habitual residence in order to seek asylum. It is submitted that para 352D makes it clear that part of the purpose of the rules was to protect the refugees family unit as recommended in the Final Act of the Conference that adopted the Refugee Convention. Reliance in this regard is placed on Chapter VI, entitled The Principle of Family Unity, in the UN High Commissioner for Refugees Handbook on Procedures for Determining Refugee Status under the Refugee Convention and the 1967 Protocol. The reasoning of the Court of Appeal accepting the ECOs submissions can be seen in paras 18 to 20 of Laws LJs judgment. The key to his analysis is in para 18: 18. The opening words of paragraph 352A seeking leave to enter . as the spouse . of a refugee import that the sponsor is currently a refugee. Compare 352E: Limited leave to enter[/remain in] the United Kingdom as the child of a refugee . The references to refugee are references to a current status. It is true that paragraph 352D has a different formulation: . in order to join or remain with the parent who has been granted asylum. However this is a familiar use of the perfect tense, to denote a state of affairs which arose in the past but is still continuing. It is in contrast to the aorist or past historic tense, which denotes a past state of affairs which has come to an end. Compare It rained last night with It has been raining since last night. The Court is not persuaded by that approach. In particular, it is not persuaded that the difference between the language of paras 352D and 352A can be explained by reference to the familiar use of the perfect tense to denote that the state of affairs is still continuing. This involves reading the expression the parent who has been granted asylum as if it read the parent who has been granted asylum and remains a refugee, which it does not. The Court regards the construction advanced on behalf of the appellants as the more natural meaning of the words used. The grant of asylum is a specific event. This is underlined by the words of sub para (i) of para 352A, which simply says that the applicant must be married to a person granted asylum and thus naturally refers to a particular historic event and not to an existing condition. See also sub para (ii). In para 19 Laws LJ made the point that it is apparent from Article 1A(2) of the Refugee Convention that it is no part of the definition of refugee that the subject be formally recognised as such. He added that it was plain that those who drafted the rules did not intend that persons seeking entry to the United Kingdom might have the benefit of the especially advantageous provisions of the rules relating to the family members of a refugee in cases where there was only an assertion that the sponsor was a refugee, but no authoritative finding or confirmation to that effect. The Court entirely accepts that that is so. It further accepts that the term has been granted asylum is used in para 352D so as to confine the rules operation to circumstances where the sponsor has been recognised as a refugee by the Secretary of State before an application for family reunion under the paragraph can be made. Finally, it accepts that the expression person granted asylum in sub paras 352A(i) and (ii) has the same effect. However, these conclusions are not inconsistent with the appellants case. As the Court understands it, it is accepted that a person is not granted asylum until the Secretary of State has formally granted it. In any event, whether it is accepted or not, in the instant case it could not properly be argued that the sponsor had been granted asylum until he was given indefinite leave to remain as a refugee on 13 December 2001. Until then he was not a person granted asylum within the meaning of the rules. In para 20 Laws LJ gave a particular example of his conclusion that the indications are that the references to asylum/refugee in 352A, 352D and 352E are directed to a status of the sponsor which is current and accepted. It was that the requirements in sub paras (iii) and (v) of paras 352A and 352D respectively that the applicant would not be excluded from protection by virtue of article 1F of the [Refugee Convention] if he were to seek asylum in his own right suggests that the rule is directed to current status. The Court does not agree that it is appropriate to draw the inference sought to be drawn from those sub paras. They apply, not to the sponsor, but to the applicant. The fact that, by Article 1F, the Refugee Convention does not apply to an applicant where there are serious reasons for considering that he or she has committed a serious crime of the kind identified in sub paras (a) or (b) or has been guilty of acts contrary to the purposes and principles of the United Nations within the meaning of (c), is not, in the opinion of the Court, relevant to the question whether a sponsor is no longer a refugee within the meaning of para 352A or para 352E or whether he is a parent who has been granted asylum within the meaning of para 352D. At para 21 the Court of Appeal accepted a submission made to it that any other construction would lead to absurd results. The plainest instance was said to be where a persons refugee status has been cancelled because it had been obtained by fraud. On the appellants argument he would still be a person who has been granted asylum and his relatives could rely on the special provisions of paras 352A et seq. However, in the opinion of this Court it is implicit in the rules read as a whole that a person would not be treated as having been granted asylum for the purpose of the rules if he or she had obtained the grant by fraud. At paras 22 to 24 the Court of Appeal rejected a number of policy points made on behalf of the appellants. However, it ultimately did so on the basis that, as Laws LJ put it at para 25, the language of paras 352A and 352D is clear. This Court has reached a different conclusion on the language of the rules. It has done so for the reasons given above. As to policy, it may well be that it would be possible to produce a coherent policy argument for the view that applications for leave to enter or remain in the United Kingdom made by the spouse or children of those granted asylum should be dealt with under paras 352A and 352D until the other spouse or parent became a British citizen but that thereafter such applications should be dealt with under paras 281 and 297. It can be said with force that all applications by a spouse or child to join or remain with a British citizen should be subject to the same rules. On the other hand there are coherent policy reasons for applying the same principles to applications to join or remain with a spouse or parent who has been granted asylum both before and after such a sponsor has become a British citizen. An important factor in this regard is that referred to in para 25 above, namely that one of the purposes of the Refugee Convention is to protect and preserve the family unit of a refugee. The need for protection for a member of such a family unit is likely to be the same whether the sponsor obtains British citizenship or not. Moreover, the risk of persecution may be such that the need for protection for family members is particularly stark. The question is what policy is encapsulated in the rules, which is essentially a matter of construction of the language of the rules. For the reasons given above the Court has reached a different conclusion from the Court of Appeal. It agrees that the sponsor must have been granted asylum in order to be (1) a refugee within the meaning of the opening words of para 352A and of para 352E; (2) a person granted asylum within sub paras (i) and (ii) of para 352A and sub para (iv) of para 352D; and (3) a person who has been granted asylum within the opening words of para 352D. However it does not agree that there is an additional requirement, namely that the person granted asylum or the person who has been granted asylum must not have become a British citizen before the application for entry clearance is made, or perhaps determined. There is no express language to that effect and it is not, in the judgment of the Court, implicit in the language used. The fact that British citizenship has been granted to the spouse or parent does not change the fact that the spouse or parent is a person granted asylum or a person who has been granted asylum. The Court has reached this conclusion as a matter of construction of the rules. In these circumstances there is no need for the Court to analyse the decisions of the Tribunal. It is sufficient to note that there have been a number of decisions of the Tribunal which reached a conclusion consistent with that stated above: see eg Case no OA/27245/2007, 1 September 2008 Joined Appeals OA/45531, OA/45526/2007 and OA/45522/2007, 27 June 2008, and YS and YY, 16 September 2008 [2008] UKAIT 00093. It was for the reasons stated above that the Court decided that the appeals of the first to fifth appellants should be allowed on the footing that para 352A applied to the first appellant as the sponsors wife, and that para 352D applied to the second, third, fourth and fifth appellants as the sponsors children who were under 18 at the relevant time. As the Court reads the letter of 9 February 2010, it follows that in the light of this judgment they will be granted indefinite leave to enter or remain without any restrictions on employment or recourse to public funds. The appeals of the sixth and seventh defendants, which relied only upon Article 8 of the ECHR, became academic because of the concession referred to above, namely that they would be granted three years discretionary leave to remain without any restrictions on employment or recourse to public funds. In the light of the decision made at the hearing on the construction of paras 352A and 352D, the Court did not hear oral submissions on any of the other issues raised in the written cases. In particular, the Court did not hear argument on the position which would have obtained if, contrary to the Courts conclusion, paras 352A and 352D would only have applied if they required that the sponsor remain a refugee after being granted British citizenship. This would have involved argument on issues one and two identified by the Court of Appeal (set out at para 6 above) and issue two in the statement of facts and issues (set out in para 12 above), which covers essentially the same ground. In these circumstances the Court expresses no view upon these questions one way or the other. |
The issue in this case is whether and in what circumstances a judge who has announced her decision is entitled to change her mind. The issue arises in the context of fact finding hearings in care proceedings in a family court, but it could obviously arise in any civil or family proceedings. So a subsidiary question is whether the principles are any different in that context. One difference is that section 1(2) of the Children Act 1989 requires that any court hearing a case in which a question about the upbringing of a child arises is to have regard to the general principle that delay in determining it is likely to prejudice the welfare of the child. This court heard the appeal on 21 January 2013. The final hearing to determine the future of the child in question was fixed to take place the following week. Accordingly, we announced our decision to allow the appeal at the end of the hearing, with judgment to follow. The facts The proceedings concern a little girl whom I shall call Susan, who was born on 8 July 2010, and her elder half brother whom I shall call Terry, who was born on 30 January 2006. On 21 September 2010, Susan was taken to hospital by her mother and found to have suffered a number of fractures to her ribs, clavicle and long bones, as well as some bruising to her face and head. Care proceedings were brought in respect of both children three days later. Susan was placed in foster care, where she has remained ever since. Terry was initially removed from his home with his maternal grandparents, but was returned to them after a few days, and has remained with them ever since. On 15 November 2010, Judge Penna directed that the case be listed for a fact finding hearing to determine the nature and extent of Susans injuries, their causation whether accidental or non accidental, and if non accidental, the identity of the perpetrator or perpetrators. That hearing began on 31 May 2011. Unfortunately, it became necessary to adjourn the hearing on the second day, because of the mothers mental health. She suffers from a serious mental illness and was unable to cope with giving evidence in the ordinary way. The hearing was resumed on 26 September 2011, with the mother giving evidence via a video link, but she was also unable to cope with this. On 29 September the judge concluded that the mother lacked the capacity to take part in the proceedings and invited the Official Solicitor to act as her litigation friend. This he agreed to do on 20 October 2011. The fact finding hearing resumed on 22 November and concluded on 25 November 2011. The mother gave no more evidence but the father gave evidence over two days. Thus the father was cross examined but the mother was not. The judge also heard oral evidence from various family members and from the paediatric sister at the time of Susans admission to hospital, the health visitor, and the mothers community psychiatric nurse. She had written reports from the medical witnesses about the nature and causation of Susans injuries. By that stage it was common ground that these were non accidentally caused and that the only possible perpetrators were the mother and the father. The judge also had written psychiatric reports about the mothers mental condition. After the conclusion of the evidence, the parties made written submissions. The local authority, in a noticeably balanced account of the evidence, submitted that it was not possible to identify a sole perpetrator on the evidence. The mother argued that the father was sole perpetrator and the father argued that the mother was sole perpetrator. The childrens guardian took a neutral stance. The judge gave her first judgment orally on 15 December 2011. When it was partially transcribed much later (the recording started after the judge had begun to deliver judgment but we are told that nothing of substance has been missed), the judgment was headed Preliminary Outline Judgment approved by the Court. The transcript consists of only 15 paragraphs. It does not deal at all with the specifics of the injuries to the child, their nature, or their timing. It concentrates on the stresses upon the family caused by financial problems, the mothers mental illness, and caring for a young baby who cried often and was not easy to feed. It concluded that the pressures upon the father, who took the lions share of the responsibility for looking after Susan, became intolerable and he snapped. So the finding was that the father was the perpetrator, although the judge took care to stress that under ordinary circumstances he was a loving and competent parent and had a valuable role to play in his daughters life. The judge also stated that if any party would be assisted by the provision of detail in relation to specific points, she would address them. At that hearing and by email the following day, counsel for the father asked her to address a number of matters in an addendum to her judgment: the context in which both mother and father had given their evidence; the mothers opportunity to have perpetrated the injuries; the inconsistencies in the mothers account; the mothers lack of parenting skills and what she did when the baby cried and the father was not there. This accords with the guidance given in In re A (Children) (Judgment: Adequacy of Reasoning) (Practice Note), [2011] EWCA Civ 1205, [2012] 1 WLR 595. At para 16, Munby LJ stressed that: . it is the responsibility of the advocate, whether or not invited to do so by the judge, to raise with the judge and draw to his attention any material omission in the judgment, any genuine query or ambiguity which arises on the judgment, and any perceived lack of reasons or other perceived deficiency in the judges reasoning process. The order drawn up as a result of the judgment of 15 December recorded that the Court provided a summary judgment in respect of the fact finding hearing where the father was seen to have caused the injuries to [the child]. It went on to order the next steps in the case, including an experts meeting before a further directions hearing on 23 January 2012, with the final hearing provisionally booked for 20 February 2012. Unbeknown to anyone at the time, that order was not formally sealed by the Manchester County Court until 28 February 2012. The local authoritys care plan was for Susan to be placed with the maternal grandparents where her half brother Terry was already living. At the directions hearing on 23 January 2012, it was recorded that the court would use three days of the hearing beginning on 20 February to determine whether Susan should be placed in the grandparents care. The judge ordered that a perfected judgment would be distributed by 9 February and deemed to have been handed down on the date of distribution. However, on 15 February, the judge delivered a bombshell in the shape of a written perfected judgment. This expanded upon the earlier judgment in some respects: it gave an account of the injuries, concluded that they were non accidental, that one of the parents must have been the perpetrator, that the same parent was likely to have inflicted all the injuries, that Susan had been injured during the course of the day before she was taken to hospital or the two or three days beforehand, and that she had been injured on (at least) one occasion before that. However, it reached a different conclusion from the conclusion reached in December: Given the uncertain nature of the evidence after the passage of so much time I am unable to find to the requisite standard which of the parents it was who succumbed to the stress to which the family was subject. It could have been either of them who injured [Susan] and that is my finding. At the hearing on 20 February, counsel for the mother asked the judge to explain why she had changed her mind and not given the parties an opportunity to make further submissions before doing so. She delivered a short extempore judgment apologising to the parties, although she did not view the development of this matter as a complete change of direction and the scenario which I posited when giving my view in December remains a possibility. She went on, the decision I reached had to be reached on the balance of probabilities and when I considered the matter carefully I could not exclude the mother because I was not sufficiently satisfied that no time had arisen when she had been alone with the child and might have caused some injury. The order made on 20 February recorded that The mother through her counsel, supported by the other parties, sought clarification of the reasons behind the courts determination that it could not identify a sole perpetrator as between the mother and the father in its judgment of 15 February 2012, compared with the conclusion indicated in the preliminary judgment of 15 December 2011. It was ordered that the hearing listed for 23 February should be for case management, with a view to a further assessment of the father as a carer for Susan, rather than for considering the placement with the maternal grandparents. The mother, the Official Solicitor still acting as her litigation friend, was granted permission to appeal against the February judgment. The Grounds of Appeal complained, firstly, that the second judgment was flawed and/or unjust. No adequate reasons have been provided to account for the change of decision and to place the mother back into the pool of possible perpetrators, and secondly, that no opportunity to make further representations was afforded to the mother beforehand. Before the appeal hearing, the mother and the childrens guardian proposed that the case should be remitted to the judge for amplification and clarification of her change of mind. The local authority and the father argued that it had been adequately explained. No one was suggesting that the December findings be restored without more ado. At the outset of the appeal hearing on 14 June 2012, the court suggested to the mothers counsel that she should be arguing that the judge was functus officio after the December judgment had been recorded in a perfected order. Only after inquiries were made of the Manchester Civil Justice Centre did it emerge that the order had not in fact been sealed until 28 February. Nevertheless, the Court of Appeal, by a majority, not only allowed the mothers appeal but ordered that the findings of 15 December 2011 stand as the findings of fact as to the perpetration of the injuries, the judgment of 15 February 2012 was quashed, and all reference to it excised from the orders made on 20 and 23 February. The father now appeals to this court. With the support of the local authority, the childrens guardian and (tellingly) the maternal grandparents, he argues that the judge was entitled to change her mind and the February judgment should be restored. The mother, now acting on her own behalf, opposes this. Given the passage of time, no party is suggesting that the case be remitted, either for further clarification of the judges reasoning or for a rehearing. The judge has now recused It has long been the law that a judge is entitled to reverse his decision at any herself and the final hearing took place before His Honour David Gee in the week beginning 28 January 2013. The parties written submissions to this court spent some time discussing whether the majority in the Court of Appeal decided (a) that the judge had no jurisdiction to change her mind; or (b) that she had such a jurisdiction but should not have exercised it on the facts of this case. For reasons which will later appear, I believe that they must have meant (b), although there are passages, particularly in the judgment of Sir Stephen Sedley which are more consistent with (a). But we do not need to discuss what they really meant, as those are the very issues before this court. Rimer LJ dissented. He held that the judge did have jurisdiction and was entitled to exercise it in the way that she did. The jurisdiction time before his order is drawn up and perfected. The modern story begins with the Judicature Acts 1873 (36 & 37 Vict c 66) and 1875 (38 & 39 Vict c 77), which amalgamated the various common law, chancery and doctors commons jurisdictions into a single High Court and created a new Court of Appeal for England and Wales. In In re St Nazaire Company (1879) 12 Ch D 88, the Court of Appeal decided that there was no longer any general power in a judge to review his own or any other judges orders. Sir Richard Malins V C had permitted a petition to proceed which sought to vary an earlier order which he had made and which had been unsuccessfully appealed to the Court of Appeal. The Court of Appeal held that he had no power to do so. Sir George Jessel MR explained that the Judicature Acts had changed everything. Before they came into force, the Lord Chancellor, Vice Chancellor and Master of the Rolls had power to rehear their own decisions and, indeed, the decisions of their predecessors. He remarked that the hope of every appellant was founded on the change of the judge: p 98. (An example of Jessel MR revisiting one of his own orders is In re Australian Direct Steam Navigation (Millers Case) (1876) 3 Ch D 661). But such an application was in the nature of an appeal and jurisdiction to hear appeals had now been transferred to the Court of Appeal. Thesiger LJ added that, whatever may have been the practice in the High Court of Chancery before the Judicature Act as to the review of their decisions or the rehearing of their decisions, nothing can be clearer than that there was nothing analogous to that in the Common Law Courts 12 Ch D 88, 101. The courts conclusions harmonised the practice in all Divisions of the newly amalgamated High Court. Nothing was said in In re St Nazaire about the position before the judges order was perfected. In re Suffield and Watts, Ex p Brown (1888) 20 QBD 693, a High Court judge had made an order in bankruptcy proceedings which had the effect of varying a charging order which he had earlier made under the Solicitors Act 1860 (23 & 24 Vict c 127). All the members of the Court of Appeal, citing In re St Nazaire, agreed that he had no power to do this once his order had been drawn up and perfected. Unlike the bankruptcy jurisdiction, the Solicitors Act gave no power of variation. As Fry LJ put it, at p 697: So long as the order has not been perfected the judge has a power of re considering the matter, but, when once the order has been completed, the jurisdiction of the judge over it has come to an end. Strictly speaking, the reference to what may be done before the order is perfected was obiter, but that this was the law was established by the Court of Appeal no later than the case of Millensted v Grosvenor House (Park Lane) Ld [1937] 1 KB 717, where the judge had revised his award of damages before his order was drawn up and the court held that he was entitled to do so. Thus there is jurisdiction to change ones mind up until the order is drawn up and perfected. Under the Civil Procedure Rules (rule 40.2(2)(b)), an order is now perfected by being sealed by the court. There is no jurisdiction to change ones mind thereafter unless the court has an express power to vary its own previous order. The proper route of challenge is by appeal. On any view, therefore, in the particular circumstances of this case, the judge did have power to change her mind. The question is whether she should have exercised it. Exercising it As Wilson LJ pointed out in Paulin v Paulin [2009] EWCA Civ 221, [2010] 1 WLR 1057, para 30(c), Until 1972 the courts made no attempt to narrow the circumstances in which it would be proper for a judge to exercise his jurisdiction to reverse his decision prior to the sealing of the order. He referred to In re Harrisons Share Under a Settlement [1955] Ch 260, in which the judge recalled an order approving the variation of a settlement on behalf of infant, unborn and unascertained persons, because after he had pronounced it but before it was formally drawn up the House of Lords had decided that there was no power to make such an order. The Court of Appeal rejected the submission that the order could only be corrected for manifest error or omission (as can a perfected order under the slip rule): When a judge has pronounced judgment he retains control over the case until the order giving effect to his judgment is formally completed: pp 283 284. The court went on to say that This control must be . exercised judicially and not capriciously but that was all. The court clearly contemplated that people might act upon an order before it was drawn up, but they did so at their own risk. In 1972, however, the Court of Appeal decided In re Barrell Enterprises [1973] 1 WLR 19, in which it refused to allow the re opening of an unsuccessful appeal in which judgment had been given some months previously dismissing the appeal but the order had for some reason never been drawn up. Russell LJ, giving the judgment of the court, stated, at pp 23 24, that: When oral judgments have been given, either in a court of first instance or on appeal, the successful party ought save in the most exceptional circumstances to be able to assume that the judgment is a valid and effective one. The cases to which we were referred in which judgments in civil courts have been varied after delivery (apart from the correction of slips) were all cases in which some most unusual element was present. There was no such justification in that case. In Paulin [2010] 1 WLR 1057, 1070, Wilson LJ also pointed out that the limitation thus placed on the proper exercise of the jurisdiction was not universally welcomed. In Pittalis v Sherefettin [1986] 1 QB 868, Dillon LJ had in effect emasculated [it] into insignificance by pointing out that it was exceptional for a judge to be satisfied that the order he had previously pronounced was wrong. In Stewart v Engel [2000] EWCA Civ 362, [2000] 1WLR 2268, the Court of Appeal unanimously held that the power to recall orders before perfection had survived the coming into force of the Civil Procedure Rules 1998. However, for some reason (probably the submissions of counsel) they termed this the Barrell jurisdiction. By a majority, they affirmed the Barrell limitation, which Sir Christopher Slade said must apply a fortiori where the judgment is a formal written judgment in final form, handed down after the parties have been given the opportunity to consider it in draft and make representations on the draft: pp 2274, 2276. Clarke LJ dissented on this point. He did not think that the court was bound by Barrell to look for exceptional circumstances. He clearly took as a starting point the overriding objective in the Civil Procedure Rules of enabling the court to deal with cases justly. He considered that the judge had been right to direct himself that the examples given by Neuberger J in In re Blenheim Leisure (Restaurants) Ltd (No 3), The Times, 9 November 1999, a plain mistake by the court, the parties failure to draw to the courts attention a plainly relevant fact or point of law and the discovery of new facts after judgment was given were merely examples: How the discretion should be exercised in any particular case will depend upon all the circumstances: [2000] 1WLR 2268, 2285 . Other formulations of the Barrell principle have been suggested. In Cie Noga DImportation et dExportation SA v Abacha [2001] 3 All ER 513, Rix LJ, sitting in the Commercial Court, referred at para 42 to the need to balance the concern for finality against the proper concern that courts should not be held by their own decisions in a straitjacket pending the formality of drawing up the order. He went on, at para 43: Provided that the formula of exceptional circumstances is not turned into a straitjacket of its own, and the interests of justice and its constituents as laid down in the overriding principle are held closely to mind, I do not think that the proper balance will be lost. Clearly, it cannot be in every case that a litigant should be entitled to ask the judge to think again. Therefore, on one ground or another the case must raise considerations, in the interests of justice, which are out of the ordinary, extraordinary or exceptional. An exceptional case does not have to be uniquely special. Strong reasons is perhaps an acceptable alternative to exceptional circumstances. It will necessarily be in an exceptional case that strong reasons are shown for reconsideration. In Robinson v Fernsby [2003] EWCA Civ 1820, [2004] WTLR 257 May LJ commented that that expression [exceptional circumstances] by itself is no more than a relatively uninformative label. It is not profitable to debate what it means in isolation from the facts of a particular case (para 94). Peter Gibson LJ commented, at para 120: With one possible qualification it is in my judgment incontrovertible that until the order of a judge has been sealed he retains the ability to recall the order he has made even if he has given reasons for that order by a judgment handed down or orally delivered. Such judicial tergiversation is in general not to be encouraged, but circumstances may arise in which it is necessary for the judge to have the courage to recall his order. If . the judge realises that he has made an error, how can he be true to his judicial oath other than by correcting that error so long as it lies within his power to do so? No doubt that will happen only in exceptional circumstances, but I have serious misgivings about elevating that correct description of the circumstances when that occurs as exceptional into some sort of criterion for what is required . The possible qualification was when the judgment has been reasonably relied upon by a party who has altered his position irretrievably in consequence. Thus one can see the Court of Appeal struggling to reconcile the apparent statement of principle in Barrell [1973] 1 WLR 19, coupled with the very proper desire to discourage the parties from applying for the judge to reconsider, with the desire to do justice in the particular circumstances of the case. This court is not bound by Barrell or by any of the previous cases to hold that there is any such limitation upon the acknowledged jurisdiction of the judge to revisit his own decision at any time up until his resulting order is perfected. I would agree with Clarke LJ in Stewart v Engel [2000] 1 WLR 2268, 2282 that his overriding objective must be to deal with the case justly. A relevant factor must be whether any party has acted upon the decision to his detriment, especially in a case where it is expected that they may do so before the order is formally drawn up. On the other hand, in In re Blenheim Leisure (Restaurants) Ltd, Neuberger J gave some examples of cases where it might be just to revisit the earlier decision. But these are only examples. A carefully considered change of mind can be sufficient. Every case is going to depend upon its particular circumstances. Exercising the discretion in this case If that be the correct approach, was this judge entitled to exercise her discretion as she did? Thorpe LJ concluded (at para 56) that she was bound to adhere to the conclusion in her December judgment, having recited (at para 55) the clarity of the conclusion reached, the general assumption that the order had been perfected, the general implementation of her conclusion, her adherence to it at the hearing on 23 January, and the absence of any change in the circumstances and the general slackness that left the order unsealed. He was also somewhat puzzled as to why the result of her change of mind was seemingly to elevate the father from low to first consideration as the primary carer, albeit the rationality of that elevation is not clear to me, given that he remained a suspected perpetrator (para 56). Sir Stephen Sedley held that something more than a change in the judges mind was required, because it will only be exceptionally that the interests of finality are required to give way to the larger interests of justice (paras 79, 80). Rimer LJ, on the other hand, held that the judge was honouring her judicial oath by correcting what she had come to realise was a fundamental error on her part. the judge would be presented with real difficulty in her future conduct of this case were she required to proceed with it on the basis of a factual substratum that she now believes to be wrong. The court should not be required to make welfare decisions concerning a child on such a false factual basis. It could not be in the interests of the child to require a judge to shut his eyes to the reality of the case and embrace a fiction. The Court of Appeal were, of course, applying an exceptionality test which in my view is not the correct approach. They were, of course, right to consider the extent to which the December decision had been relied upon by the parties, but in my view Rimer LJ was also correct to doubt whether anyone had irretrievably changed their position as a result. The care plan may have been developed (we do not have the details of this) but the childs placement had yet to be decided and she had remained where she was for the time being. The majority were, of course, also right to stress the importance of finality, but the final decision had yet to be taken. I agree with Rimer LJ that no judge should be required to decide the future placement of a child upon what he or she believes to be a false basis. Section 1(1) of the Children Act 1989 provides that where a court determines any question with respect to the upbringing of a child the welfare of the child shall be its paramount consideration. While that provision does not apply to procedural decisions made along the way, it has to govern the final decision in the case. Mr Charles Geekie QC, on behalf of the mother, argues that even if the judge was entitled to change her mind, she was not entitled to proceed in the way that she did, without giving the parties notice of her intention and a further opportunity of addressing submissions to her. As the court pointed out in Re Harrisons Share Under a Settlement [1955] Ch 260, 284, the discretion must be exercised judicially and not capriciously. This may entail offering the parties the opportunity of addressing the judge on whether she should or should not change her decision. The longer the interval between the two decisions the more likely it is that it would not be fair to do otherwise. In this particular case, however, there had been the usual mass of documentary material, the long drawn out process of hearing the oral evidence, and very full written submissions after the evidence was completed. It is difficult to see what any further submissions could have done, other than to re iterate what had already been said. For those reasons, therefore, we ordered that the fathers appeal against the decision of the Court of Appeal be allowed. No party had sought to appeal against the judges decision of 15 February 2012, so the welfare hearing should proceed on the basis of the findings in the judgment of that date. We were pleased subsequently to learn that agreement has now been reached that Susan should be placed with her half brother and maternal grandparents under a care order and, after a settling in period, have visiting and staying contact with her father and her paternal family. The local authority plan to work with both families with a view to both mother and father having unsupervised contact in the future and it is hoped that the care order will be discharged after a period of one to two years. But what if the order had been sealed? On the particular facts of this case, that is all that need be said. But what would have been the position if, as everyone thought was the case, the order made by the judge on 15 December 2011 had been formally drawn up and sealed? Whatever may be the case in other jurisdictions, can this really make all the difference in a care case? The Court of Appeal, despite having themselves raised the point, do not appear to have thought that it did. Sir Stephen Sedley said that it seemed to be of little or no consequence that the order recording the first judgment had not been sealed or that a final order in the case remained to be made (para 74). Both Thorpe and Rimer LJJ held that the relevant order in care proceedings is the final care order made at the end of the hearing. They expressly agreed with Munby LJ in In re A (Children: Judgment: Adequacy of Reasoning) [2011] EWCA Civ 1205, [2012] 1 WLR 595, para 21. This was a case in which the mother challenged the adequacy of the judges reasons for finding her complicit in the sexual abuse of her daughter in a fact finding hearing in care proceedings. Having quoted my observation in In re B (Children: Care Proceedings: Standard of Proof) (CAFCASS intervening) [2009] AC 11, para 76, that a split hearing is merely part of the whole process of trying the case and once completed the case is part heard, Munby LJ continued, at para 21: Consistently with this, the findings at a fact finding hearing are not set in stone so as to be incapable of being revisited in the light of subsequent developments as, for example, if further material emerges during the final hearing: see In re M and MC (Care: Issues of Fact: Drawing of Orders) [2003] 1 FLR 461, paras 14, 24. This court has since agreed with that proposition. In Re S B (Children)(Care Proceedings: Standard of Proof) [2009] UKSC 17, [2010] 1 AC 678, all seven justices agreed that: It is now well settled that a judge in care proceedings is entitled to revisit an earlier identification of the perpetrator if fresh evidence warrants this (and this court saw an example of this in the recent case In re I (A Child) (Contact Application: Jurisdiction) (Centre for Family Law and Practice intervening) [2010] 1 AC 319). (para 46) There are many good reasons for this, both in principle and in practice. There are two legal issues in care proceedings. First, has the threshold set by section 31(2) of the 1989 Act been crossed? Secondly, what does the paramount consideration of the childs welfare require to be done about it? Much of the evidence will be relevant to both parts of the inquiry. It may be very helpful to separate out some factual issues for early determination, but these do not always neatly coincide with the legal issues. In this case, for example, there was no dispute that the threshold had been crossed. Nevertheless, it was convenient to attempt to identify who was responsible for the childs injuries before moving on to decide where her best interests lay. In such a composite enquiry, the judge must be able to keep an open mind until the final decision is made, at least if fresh evidence or further developments indicate that an earlier decision was wrong. It would be detrimental to the interests of all concerned, but particularly to the children, if the only way to correct such an error were by an appeal. This is reinforced by the procedural position. As Munby LJ pointed out in In re A [2012] 1 WLR 595, para 20, in the context of a fact finding hearing there may not be an immediate order at all. It was held in In re B (A Minor) (Split Hearings: Jurisdiction) [2000] 1 WLR 790 that the absence of an order is no bar to an appeal. Nevertheless, it would be very surprising these days if there were no order. In Re M and MC (Care: Issues of Fact: Drawing of Orders) [2002] EWCA Civ 499, [2003] 1 FLR 461, the Court of Appeal ruled that the central findings of fact made at a fact finding hearing should be the subject of recitals to an order issued there and then. But this is merely a recital in what is, on any view, an interlocutory order. Both the Civil Procedure Rules and the Family Procedure Rules make it clear that the courts wide case management powers include the power to vary or revoke their previous case management orders: see CPR r 3.1(7) and rule 4.1(6) of the Family Procedure Rules 2010 (SI 2010/2955). This may be done either on application or of the courts own motion: CPR r 3.3(1), rule 4.3(1). It was the absence of any power in the judge to vary his own (or anyone elses) orders which led to the decisions in In re St Nazaire 12 Ch D 88 and In re Suffield and Watts, Ex p Brown 20 QBD 693. Where there is a power to vary or revoke, there is no magic in the sealing of the order being varied or revoked. The question becomes whether or not it is proper to vary the order. Clearly, that power does not enable a free for all in which previous orders may be revisited at will. It must be exercised judicially and not capriciously. It must be exercised in accordance with the over riding objective. In family proceedings, the overriding objective is enabling the court to deal with cases justly, having regard to any welfare issues involved: rule 1.1(1) of the Family Procedure Rules. It would, for the reasons indicated earlier, be inconsistent with that objective if the court could not revisit factual findings in the light of later developments. The facts of in In re M and MC [2003] 1 FLR 461 are a good example. At the fact finding hearing, the judge had found that Mr C, and not the mother, had inflicted the childs injuries. But after that, the mother told a social worker, whether accurately or otherwise, that she had inflicted some of them. The Court of Appeal ruled that, at the next hearing, the judge should subject the mothers apparent confession to rigorous scrutiny but that, if he concluded that it was true, he should alter his findings. The question is whether it makes any difference if the later development is simply a judicial change of mind. This is a difficult issue upon which the arguments are finely balanced, not least because the difference between a change of circumstances and a change of mind may not be clear cut. On the one hand, given that the basis of the general rule was the lack of a power to vary the original order and there undoubtedly is power to vary these orders, why should it make any difference in principle if the reason for varying it is that, on mature reflection, the judge has reached a different conclusion from the one he reached earlier? As Rimer LJ said in the current case at para 71, it cannot be in the best interests of the child to require the judge to conduct the welfare proceedings on the basis of a false substratum of fact. That would have been just as true if the December order had been sealed as it was when it had not. In this respect, children cases may be different from other civil proceedings, because the consequences are so momentous for the child and for the whole family. Once made, a care order is indeed final unless and until it is discharged. When making the order, the welfare of the child is the courts paramount consideration. The court has to get it right for the child. This is greatly helped if the judge is able to make findings as to who was responsible for any injuries which the child has suffered. It would be difficult for any judge to get his final decision right for the child, if, after careful reflection, he was no longer satisfied that his earlier findings of fact were correct. Mr Geekie, on behalf of the mother, also argued that the sealing of the order could not invariably be the cut off point. If a judge is asked, in accordance with the guidance given in English v Emery Reimbold & Strick Ltd (Practice Note) [2002] EWCA Civ 605 [2002] 1 WLR 2409, as applied to family cases in In re A [2012] 1 WLR 595, to elaborate his reasoning and in doing so realises that his original decision was wrong, should he not, as part of that process, be entitled or even required to say so? The answer to this point may very well be that the judge should indeed have the courage to admit to the Court of Appeal that he has changed his mind, but that is not the same as changing his order. That is a matter for the Court of Appeal. One argument for allowing a judicial change of mind in care cases is to avoid the delay inevitably involved if an appeal is the only way to correct what the judge believes to be an error. On the other hand, the disconcerting truth is that, as judges, we can never actually know what happened: we were not there when whatever happened did happen. We can only do our best on the balance of probabilities, after which what we decide is taken to be the fact: In re B (Children) (Care Proceedings: Standard of Proof) [2008] UKHL 35, [2009] AC 11, para 2. If a judge in care proceedings is entitled simply to change his mind, it would destabilise the platform of established facts which it was the very purpose of the split hearing to construct; it would undermine the reports, other evidence and submissions prepared on the basis of the earlier findings; it would throw the hearing at the second stage into disarray; and it would probably result in delay. Furthermore, if a judge were entitled to change his mind, a party would presumably be entitled to invite him to do so. No doubt most judges would do their best to have no truck with the invitation. But could the party be prevented from pressing for the exercise of the jurisdiction on the basis that, in his first judgment, the judge had failed to weigh certain evidence sufficiently or at all? In effect the judge would be invited to hear an appeal against himself. There is a distinction between an appeal and a variation for cause. This is the principle underlying the basic rule that an order is final once sealed. The point does not arise in this case and it was not fully developed in the arguments before us. The arguments outlined above are so finely balanced that we shall refrain from expressing even a provisional view upon it. In our view the preferable solution would be to avoid the situation arising in the first place. A concluding comment courage and intellectual honesty to admit ones mistakes. The best safeguard against having to do so is a fully and properly reasoned judgment in the first place. A properly reasoned judgment in this case would have addressed the matters raised in counsels email of the 16 December. It would have identified the opportunities of each parent to inflict each of the injuries by reference to the medical evidence about the nature, manner of infliction and timing of those injuries and to the parents and other evidence about their movements during the relevant periods. It would have addressed the credibility of the evidence given by each parent, having regard in this case to the problems presented by the mothers mental illness. Had she done this, the judge might well have been able to explain why it was that she concluded that it was the father who had more than once snapped under the tension. But she did not do so, and it is a fair inference that it was the task of properly responding to the questions raised by counsel for the father which caused her to reconsider her decision. No doubt the judge was anxious, given the vicissitudes which had beset the fact finding hearing, to deliver her first judgment quickly so that the welfare hearing fixed for the following February could be maintained. But the subsequent history demonstrates all too clearly that this was a false economy. Had that judgment been properly reasoned, none of this would have happened. Furthermore, if the judge had not changed her mind, the father would have had the opportunity of appealing against her findings to the Court of Appeal. One extraordinary result of the Court of Appeals order in this case was that the findings against the father were restored without his having had the opportunity which he should have had of mounting a proper appeal against them. As Peter Gibson LJ pointed out in Robinson v Fernsby [2004] WTLR 257, para 120, judicial tergiversation is not to be encouraged. On the other hand, it takes |
At common law, if an insured makes a fraudulent claim on his insurer, the latter is not liable to pay the claim. In relation to contracts concluded after 12 August 2016, the rule has been restated and its other consequences defined in section 12 of the Insurance Act 2015. The question at issue on this appeal is what constitutes a fraudulent claim. This is a controversial question at common law, which the Act of 2015 does not resolve. Three possible situations may be relevant. First, the whole claim may have been fabricated. In principle the rule would apply in this situation but would add nothing to the insurers rights. He would not in any event be liable to pay the claim. Secondly, there may be a genuine claim, the amount of which has been dishonestly exaggerated. This is the paradigm case for the application of the rule. The insurer is not liable, even for that part of the claim which was justified. Third, the entire claim may be justified, but the information given in support of it may have been dishonestly embellished, either because the insured was unaware of the strength of his case or else with a view to obtaining payment faster and with less hassle. The present appeal is concerned with embellishments of this kind. They are generally called fraudulent devices. The expression is borrowed from a standard clause avoiding contracts of fire insurance which was widely used in the 19th and early 20th centuries. But it is archaic and hardly describes the problem. I shall use the expression collateral lies, by which I mean a lie which turns out when the facts are found to have no relevance to the insureds right to recover. The question is whether the insurer is entitled to repudiate a claim supported by a false statement, if the statement was irrelevant, in the sense that the claim would have been equally recoverable whether it was true or false. The facts On the night of 28/29 January 2010, shortly after leaving Klaipeda in Lithuania with a cargo of scrap iron, the DC MERWESTONE was incapacitated by an ingress of water which flooded the engine room. The ingress of water was the combined result of (i) the negligence of the crew in failing to close the sea inlet valve of the emergency fire pump and drain down the system, after they had used the hoses to clear ice chips from the hatch covers; (ii) damage to the emergency fire system pump casing and filter after the vessel had sailed from Klaipeda, as a result of the freezing and expansion of the seawater inside them; (iii) the negligence of contractors employed on an earlier occasion, who failed to seal the engine room bulkheads after passing cables through them, with the result that they were not watertight; and (iv) defects in the engine room pumping system, which was unable to cope with the rate of ingress. The main engine was damaged beyond repair. The insurers instructed solicitors, Ince & Co, to investigate. Ince asked the owners for their explanation of the casualty. Mr Chris Kornet, the relevant individual in the vessels managers, developed a theory that the bilge alarm had sounded at about noon on 28 January, but the crew had been unable to investigate or deal with the leak because of the rolling of the ship in heavy weather. The judge found that this was a speculation on Mr Kornets part which he genuinely regarded as plausible. But in proffering it to Ince & Co in an e mail of 21 April 2010, he pretended that he had been told about the alarm activation by members of the crew. The judge found that this was a reckless untruth. Mr Kornet had not been told this by the crew and had no reason to believe that the crew would support it. And, although the master did later support the story, he had not done so by 21 April. Mr Kornets reason for acting in this way was that he was frustrated by the insurers delay in recognising the claim and making a payment on account. At a time when the cause of the flooding was not clear, he believed that it would fortify the claim and accelerate payment if the casualty could be blamed on the crews failure to respond to the activation of the bilge alarm. This was because otherwise attention would be concentrated on the defective condition of the ship and on the possible responsibility of the owners for that state of affairs. He had been advised that the wording of the Inchmaree clause in the Institute Time Clauses might afford a defence under the policy if the owners were found to have any responsibility for what happened. In fact, the lie was irrelevant to the merits of the claim. The judge, Popplewell J, held that the loss was proximately caused by a peril of the seas, namely the fortuitous entry of seawater through the sea inlet valve during the voyage, and that the relevant part of the Inchmaree clause had no application to this peril. He rejected a contention that the owners had sent the vessel to sea with defective engine room pumps in breach of the warranty implied by section 39(5) of the Marine Insurance Act 1906, because the managers had not known of the problem at the relevant time. It followed that the owners had a valid claim for some 3.241m whether or not the crew had failed to act on a bilge alarm activation at about noon on 28 January. However, he held that that claim was lost as a result of the collateral lie about it: [2013] 2 All ER (Comm) 465. He reached that conclusion with regret because he regarded it as unjust to the parties before him. At para 225 of his judgment, he observed: In a scale of culpability which may attach to fraudulent conduct relating to the making of claims, this was at the low end. It was a reckless untruth, not a carefully planned deceit. It was told on one occasion, not persisted in at the trial. It was told in support of a theory about the events surrounding the casualty which Chris Kornet genuinely believed to be a plausible explanation. The reckless untruth was put forward against the background of having made the crew available for interview by the Underwriters solicitor, who had had the opportunity to make his own inquiries of the crew on the topic. To be deprived of a valid claim of some 3.2m as a result of such reckless untruth is, in my view, a disproportionately harsh sanction. The case law: exaggerated claims There is a substantial body of case law on the effect of express clauses avoiding the policy or forfeiting the claim if it is affected by fraud. These cases turn on the language of the contract, although it is fair to say that most of them show a strong propensity on the part of the courts to give them an interpretation wide enough to cover any dishonesty in relation to the claim whether or not it was decisive of the merits. Such clauses appear to have been in common use from the end of the 18th century. The common law rule relating to fraudulent claims appears to originate rather later, in the middle of the 19th century. In Britton v Royal Insurance Co (1866) 4 F & F 905, which is generally regarded as the leading case, there was an express clause, but Willes J in his summing up to the jury stated the law altogether generally at pp 908 909: A fire insurance, he said, is a contract of indemnity; that is, it is a contract to indemnify the assured against the consequences of a fire, provided it is not wilful. Of course, if the assured set fire to his house, he could not recover. That is clear. But it is not less clear that, even supposing it were not wilful, yet as it is a contract of indemnity only, that is, a contract to recoup the insured the value of the property destroyed by fire, if the claim is fraudulent, it is defeated altogether. That is, suppose the insured made a claim for twice the amount insured and lost, thus seeking to put the office off its guard, and in the result to recover more than he is entitled to, that would be a wilful fraud, and the consequence is that he could not recover anything. This is a defence quite different from that of wilful arson. It gives the go bye to the origin of the fire, and it amounts to this that the assured took advantage of the fire to make a fraudulent claim. The law upon such a case is in accordance with justice, and also with sound policy. The law is, that a person who has made such a fraudulent claim could not be permitted to recover at all. The contract of insurance is one of perfect good faith on both sides, and it is most important that such good faith should be maintained. It is the common practice to insert in fire policies conditions that they shall be void in the event of a fraudulent claim; and there was such a condition in the present case. Such a condition is only in accordance with legal principle and sound policy. This approach was not initially accepted in Scotland, where the Court of Session held that the genuine part of a fraudulently inflated claim was recoverable: Reid & Co Ltd v Employers Accident & Livestock Insurance Co Ltd (1899) 1 F 1031. But in England the courts consistently applied Willes Js test to avoid the entirety of an exaggerated claim. That approach was endorsed by the House of Lords in Manifest Shipping Co Ltd v Uni Polari Insurance Co Ltd (The STAR SEA) [2003] 1 AC 469. It was settled from an early stage of the history of English insurance law that the duty of utmost good faith applied not only in the making of the contract but in the course of its performance. The principle was given statutory force by section 17 of the Marine Insurance Act. In Brittons Case, Willes J regarded the fraudulent claims rule as a manifestation of the duty of utmost good faith, a view adopted by Christopher Clarke LJ, delivering the leading judgment in the Court of Appeal in the present case (paras 76 77). The rule is peculiar to contracts of insurance, and there can be little doubt that historically it is because they are contracts of utmost good faith that they have this unique characteristic. But I am inclined to agree with the view expressed by Lord Hobhouse in The STAR SEA (paras 50, 61 62) that once the contract is made, the content of the duty of good faith and the consequences of its breach must be accommodated within the general principles of the law of contract. On that view of the matter, the fraudulent claims rule must be regarded as a term implied or inferred by law, or at any rate an incident of the contract. The correct categorisation matters only because if it is a manifestation of the duty of utmost good faith, then the effect of section 17 of the Marine Insurance Act 1906 is that the whole contract is voidable ab initio upon a breach, and not just the fraudulent claim. If, on the other hand, one adheres to the contractual analysis, the right to avoid the contract for breach of the duty must depend on the principles governing the repudiation of contracts, and avoidance would operate prospectively only. The choice is not, however, before us on this appeal because the insurers do not seek to avoid the contract. They seek only to avoid the claim for this particular casualty. What matters for present purposes is the rationale of the rule, on which there is a broad consensus in the authorities. It is the deterrence of fraud. As Lord Hobhouse observed in The STAR SEA at para 62, The logic is simple. The fraudulent insured must not be allowed to think: if the fraud is successful, then I will gain; if it is unsuccessful, I will lose nothing. Cf Galloway v Guardian Royal Exchange (UK) Ltd [1999] Lloyds Rep IR 209, 214 (Millett LJ); Direct Line Insurance v Khan [2002] Lloyds Rep IR 364, para 38; Agapitos v Andrew [2003] QB 556, para 14 (Mance LJ); AXA General Insurance Ltd v Gottlieb [2005] 1 All ER (Comm) 445 (CA), paras 28, 31. The courts have explained the lack of a similar rule in other areas of the law of contract by pointing to the asymmetrical positions of the parties to an insurance contract, the insurer being vulnerable on account of his dependence on the insured for information both at the formation of the contract and in the processing of claims: see Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501, 542B (Lord Mustill); Orakpo v Barclays Insurance Services [1995] Lloyds Rep IR 443, 451 (Hofmann LJ), 452 (Parker LJ). Fraudulent insurance claims are a serious problem, the cost of which ultimately falls on the general body of policy holders in the form of increased premiums. But it was submitted to us that a forfeiture rule was not the answer to that problem. There was, it was said, little empirical evidence that the common law rule was an effective deterrent to fraud, and no reason to think that the problem was peculiar to claims on insurers as opposed to, say, claims in tort for personal injuries, the cost of which also falls ultimately on insurers and policy holders without there being any equivalent common law rule. Informational asymmetry is not a peculiarity of insurance, and in modern conditions may not even be as true of insurance as it once was. These points have some force. But I doubt whether they are relevant. Courts are rarely in a position to assess empirically the wider behavioural consequences of legal rules. The formation of legal policy in this as in other areas depends mainly on the vindication of collective moral values and on judicial instincts about the motivation of rational beings, not on the scientific anthropology of fraud or underwriting. As applied to dishonestly exaggerated claims, the fraudulent claims rule is well established and, as I have said, will shortly become statutory. The case law: collateral lies The extension of the common law rule from dishonestly exaggerated claims to justified claims supported by collateral lies is a more recent and a more controversial development. So far as reported cases go, it makes its first appearance in a brief and unexplained remark of Lord Sumner in Lek v Mathews (1927) 29 Ll L Rep 141, 164. Mr Lek was alleged to have dishonestly exaggerated a claim on the insurers of his stock. In the Court of Appeal, Atkin LJ had held that even a knowing falsehood would not give rise to a forfeiture if Mr Lek genuinely believed that he was entitled to utter it. Commenting on this observation, Lord Sumner said that Lord Atkin must have had in mind mis statements on a purely collateral question, adding that even so I could not agree. Three years later, Roche J offered a somewhat more expansive statement of principle in his direction to the jury in Wisenthal v World Auxiliary Insurance Corpn Ltd (1930) 38 L Rep 54. This case concerned an all risks policy on goods in transit and in storage pending sale. The insurers disputed the insureds title and accused her of fraudulently exaggerating her claim. They also alleged that facts and documents relevant to these issues had been concealed. The report (p 62) records the relevant part of the judges summing up in the following terms: Fraud, said his Lordship, was not mere lying. It was seeking to obtain an advantage, generally monetary, or to put someone else at a disadvantage by lies and deceit. It would be sufficient to come within the definition of fraud if the jury thought that in the investigation deceit had been used to secure easier or quicker payment of the money than would have been obtained if the truth had been told. The jury held that the insured did have title and rejected the allegation of exaggeration. But they found that she had fraudulently suppressed relevant documents, and on that basis Roche J entered judgment for the insurers. In England, matters rested there until 1985, when the relevance of a collateral lie was considered in Black King Shipping Corpn and Wayang (Panama) SA v Massie (The LITSION PRIDE) [1985] 1 Lloyds Rep 437. The LITSION PRIDE was insured against war risks on terms which required her owners to give notice as soon as practicable of her entry into specified war zones and to pay an additional premium. The owners traded her into a war zone without giving notice, dishonestly intending to avoid the payment of the additional premium if the vessel got out unscathed. When she was hit by a missile and sunk, they gave the required notice by a letter which they dishonestly backdated to a date before the vessel entered the war zone. The fraud was irrelevant to the merits of the claim, because the vessel was held to be insured under a held covered clause with or without prior notice. But Hirst J held that the claim was forfeit on the ground that it was a breach of the insureds duty of good faith. His decision has not fared well in subsequent decisions. Royal Boskalis Westminster NV v Mountain [1997] 1 Lloyds Rep LR 523 was a claim on war risk underwriters for the constructive total loss of a fleet of dredgers trapped in Iraq by the Iraqi invasion of Kuwait. The owners abandoned the vessels to the underwriters, but then succeeded in procuring their release by the Iraqi authorities in return for a substantial ransom. They subsequently claimed for (i) the value of the ships, and (ii) sue and labour costs (other than the ransom) incurred in extricating them from Iraq. In presenting their claim to the underwriters, they suppressed the fact of the ransom and the detailed terms on which it was paid, mainly because they were concerned about a possible breach of United Nations sanctions against Iraq. Rix J held that the vessels were not a constructive total loss, but that the insured were entitled to a proportion of their sue and labour costs. He refused to allow the underwriters to argue that the claim was forfeit on account of the dishonest suppression of information about the insureds dealings with Iraq because the point had not been pleaded. But he added that he would have rejected the argument anyway. This was because he considered that the claim for sue and labour costs was entitled to succeed irrespective of the matters which the owners had concealed. At pp 592 593, he observed: Whatever be the precise definition and ambit of the concept of a fraudulent claim, there was no such claim here. I am in the process of finding that the sue and labour claim was and is a good and valid claim. It is not a false or fraudulent claim. It is totally unlike those instances of fraudulent claim to be found in the authorities, such as claims in respect of deliberately self inflicted or pretended losses, or claims in amounts which are knowingly or recklessly exaggerated: see, for instance, Goulstone v The Royal Insurance Co, (1858) I F & F 276, where, in the context of a claim for inter alia the loss of furniture whose value was exaggerated four fold, Pollock CB glossed a fraudulent claim as one wilfully false in any substantial particular at p 279; or Chapman v Pole, (1870) 22 LT 306, where again in the context of exaggerated value Cockburn, CJ spoke of one who knowingly preferred a claim he knew to be false or unjust at p 307; or The Captain Panagos DP, [1986] 2 Lloyds Rep 470, where Mr Justice Evans defined a fraudulent claim as one which is made on the basis that facts exist which constitute a loss by an insured peril, when to the knowledge of the assured those alleged facts are untrue, at p 511. It seems to me that even if one assumed, for instance, that the representation over the existence of any record of the finalization agreement was made fraudulently, that would not make the claim in question a fraudulent claim within these definitions of that expression. Rix Js judgment was appealed in part to the Court of Appeal and the appeal allowed, but not on this point: see [1999] QB 674. I shall refer to the Court of Appeals decision in another context below. Manifest Shipping Co Ltd v Uni Polaris Insurance Co Ltd (The STAR SEA) [2003] 1 AC 469, concerned the insureds non disclosure in good faith of a privileged expert report, said to be relevant to an allegation that the insured had knowingly sent the vessel to sea in an unseaworthy condition. The House of Lords rejected the insurers contention that they were entitled to forfeit the claim, because (i) the duty of the insured in presenting claims under the policy was a duty of honesty only, and (ii) it did not in any event subsist once proceedings had been begun. The relevance of the decision for present purposes lies in the discussion of The LITSION PRIDE in the speech of Lord Hobhouse (para 71), with whom Lord Steyn, Lord Hoffmann and Lord Clyde agreed: The particular claim was only fraudulent in so far as the broker had not been truthful in dealing with the insurers at that stage. The reasoning adopted by Hirst J has been criticised both by academic writers and by other judges in later cases. I consider that it should not any longer be treated as a sound statement of the law. In so far as it is based upon the principle of the irrecoverability of fraudulent claims, the decision is questionable upon the facts since the actual claim made was a valid claim for a loss which had occurred and had been caused by a peril insured against when the vessel was covered by a held covered clause. In K/S Merc Scandia XXXXII v Certain Underwriters (The MERCANDIAN CONTINENT) [2001] 2 Lloyds Rep 563, the point arose in a rather oblique fashion. The owners of the MERCANDIAN CONTINENT had obtained judgment in earlier High Court proceedings against a Trinidadian shipyard for damage caused by negligent repair work. Jurisdiction in the earlier proceedings had been founded on an agreed submission to the jurisdiction of the English court. The yards liability insurers appointed solicitors to conduct the defence on behalf of their insured. They had challenged the jurisdiction of the English court, relying in good faith on a document forged by the shipyards management, which suggested that the agreed submission had been made without authority. In due course the document was exposed as a forgery and the challenge to the jurisdiction was abandoned. The shipyard having gone into liquidation, the owners brought the current proceedings against the yards liability insurers under the Third Parties (Rights Against Insurers) Act 1930. The insurers defended the claim on the ground that they had lawfully avoided the policy because of the fraud of the insured shiprepairer in relation to the question of jurisdiction. Longmore LJ, delivering the leading judgment in the Court of Appeal, drew attention to the fact that the fraud was directed against the shipowners, not the liability insurers. But he rejected the defence on the principal ground that the concocted document would have made no difference to the insurers liability to meet the claim: para 42. He drew attention to the law relating to pre contractual non disclosure and misrepresentation, which required the relevant matters to be material to the risk and their non disclosure to have induced the insurer to act in a way that he would not otherwise have done. He continued (para 26): In my judgment these requirements, which must exist before an underwriter can avoid for lack of good faith pre contract, must also apply, making due allowance for the change of context, where an underwriter seeks to avoid for lack of good faith or fraud in relation to post contractual matters. In particular the requirement of inducement which exists for pre contract lack of good faith must exist in an appropriate form before an underwriter can avoid the entire contract for post contract lack of good faith. Referring (para 29) to Rix Js judgment in Royal Boskalis, he gratefully borrow[ed] the concept that the relevant conduct of the insured must be causally relevant to underwriters ultimate liability, or at least, to some defence of the underwriters before it can be permitted to avoid the policy. This is, I think, the same concept as that underwriters must be seriously prejudiced by the fraud complained of before the policy can be avoided. Longmore LJ considered the question entirely in the context of the right to avoid the policy for breach of the duty of good faith under section 17 of the Marine Insurance Act 1906, because that was the right which the defendant insurers invoked. But I do not think that the requirement for a causal connection between the fraud and the insurers liability can be any different, depending on whether the insurer is seeking to avoid the policy or just the claim. Thus far, it would be fair to say that the case law on post contractual collateral lies since the brief and early references in Lek v Mathews and Wisenthal v World Auxiliary Insurance Corpn Ltd reveals considerable judicial misgivings about their use as a basis for avoiding liability when the claim is well founded. The position, however, changed with the important and influential judgment of Mance LJ in Agapitos v Agnew (The AEGEON) [2003] QB 556. This was a claim for the total loss of the passenger ferry AEGEON following a fire during hot work on the vessel. The hull insurers defended the claim on the ground that the hot work had been carried out in breach of various warranties in the policy. If the warranties alleged were effective, there was undoubtedly a breach. The issue was whether they were. It was argued that they had never been agreed or had been waived. In the course of the proceedings, the insurers purported to avoid the policy for fraud and applied to amend their pleading to rely on this as a defence. The fraud alleged consisted in the owners having pleaded in their reply that hot work had begun on 12 February 1996, when they subsequently disclosed witness statements asserting that it was 12 days earlier on 1 February. The difference of date had no bearing on the merits of the claim, because if the warranties existed and had not been waived, there was a breach whenever hot work began. The question was whether this mattered. Toulson J held that it did not. His reason was that on the footing that the underwriters had a good defence of breach of warranty the defence of fraud was superfluous. On the footing that they did not, he distinguished the cases on fraudulently exaggerated claims on the same ground as Rix J in Royal Boskalis, namely that the alleged lie had to be material to the claim, in the sense that the truth would have afforded the insurers a defence. He therefore refused to allow them to amend. The Court of Appeal affirmed his decision on different grounds. They held, following The STAR SEA, that any duty of good faith in the presentation of claims ceased with the commencement of proceedings. But Mance LJ dealt, obiter, with the question whether the fraudulent claim could ever have applied to a collateral lie. Rejecting Toulson Js analysis, he held that a collateral lie in the presentation of a claim, even if it was irrelevant to the merits of the claim, was as much subject to the fraudulent claim rule as a dishonest exaggeration. Mance LJ distinguished between the common law rule about fraudulent claims and the duty of utmost good faith which was the basis of section 17 of the Marine Insurance Act 1906. He rejected the suggestion that the common law rule depended on the insurer having acted on the lie, and tentatively proposed that the test should be subject to an attenuated test of materiality. On inducement, he said this: 36. What relationship need there then be between any fraud and the claim if the fraudulent claim rule is to apply? And need the fraud have any effect on insurers conduct? Speaking here of a claim for a loss known to be non existent or exaggerated, the answers seem clear. Nothing further is necessary. The application of the rule flows from the fact that a fraudulent claim of this nature has been made. Whether insurers are misled or not is in this context beside the point. The principle only arises for consideration where they have not been misled into paying or settling the claim, and its application could not sensibly depend upon proof that they were temporarily misled. The only further requirement is that the part of the claim which is non existent or exaggerated should not itself be immaterial or unsubstantial: see paras 32 33 above. That also appears consistent with general principle, even though, in a pre contract context, no significance or sanction attaches to a fraudulent misrepresentation or nondisclosure unless it has, by misleading insurers, induced them to enter a contract. On materiality, he continued: 37. What is the position where there is use of a fraudulent device designed to promote a claim? I would see no reason for requiring proof of actual inducement here, any more than there is in the context of a fraudulent claim for non existent or exaggerated loss. As to any further requirement of materiality, if one were to adopt in this context the test identified in the Royal Boskalis case [1997] LRLR 523 and The Mercandian Continent [2001] 2 Lloyds Rep 563, then, as I have said, the effect is, in most cases, tantamount to saying that the use of a fraudulent device carries no sanction. It is irrelevant (unless it succeeds, which only the insured will then know). On the basis (which the cases show and I would endorse) that the policy behind the fraudulent claim rule remains as powerful today as ever, there is, in my view, force in Mr Popplewells submission that it either applies, or should be matched by an equivalent rule, in the case of use of a fraudulent device to promote a claim even though at the end of a trial it may be shown that the claim was all along in all other respects valid. The fraud must of course be directly related to and intended to promote the claim (unlike the deceit in The Mercandian Continent). Whenever that is so, the usual reason for the use of a fraudulent device will have been concern by the insured about prospects of success and a desire to improve them by presenting the claim on a false factual basis. If one does use in this context the language of materiality, what is material at the claims stage depends on the facts then known and the strengths and weaknesses of the case as they may then appear. It seems irrelevant to measure materiality against what may be known at some future date, after a trial. The object of a lie is to deceive. The deceit may never be discovered. The case may then be fought on a false premise, or the lie may lead to a favourable settlement before trial. Does the fact that the lie happens to be detected or unravelled before a settlement or during a trial make it immaterial at the time when it was told? In my opinion, not. Materiality should take into account the different appreciation of the prospects, which a lie is usually intended to induce on insurers side, and the different understanding of the facts which it is intended to induce on the part of a judge at trial. 38. The view could, in this situation, be taken that, where fraudulent devices or means have been used to promote a claim, that by itself is sufficient to justify the application of the sanction of forfeiture. The insureds own perception of the value of the lie would suffice. Probably, however, some limited objective element is also required. The requirement, where a claim includes a non existent or exaggerated element of loss, that that element must be not immaterial, unsubstantial or insignificant in itself offers a parallel. In the context of use of a fraudulent device or means, one can contemplate the possibility of an obviously irrelevant lie one which, whatever the insured may have thought, could not sensibly have had any significant impact on any insurer or judge. Tentatively, I would suggest that the courts should only apply the fraudulent claim rule to the use of fraudulent devices or means which would, if believed, have tended, objectively but prior to any final determination at trial of the parties rights, to yield a not insignificant improvement in the insureds prospects whether they be prospects of obtaining a settlement, or a better settlement, or of winning at trial. Courts are used enough to considering prospects, eg when assessing damages for failure by a solicitor to issue a claim form within a limitation period. Mance LJs analysis of the law relating to collateral lies was applied by the Privy Council in Stemson v AMP General Insurance (NZ) Ltd [2006] Lloyds Rep IR 852 and Beacon Insurance Co Ltd v Maharaj Bookstore Ltd [2014] 4 All ER 418. It was recognised by the Supreme Court in Summers v Fairclough Homes Ltd [2012] 1 WLR 2004, para 29, although in that case the point arose only by way of analogy in a case turning on the inherent procedural power of a court to strike out a dishonest claim. In none of these cases was there any issue about the correctness of the analysis in The AEGEON. Other common law jurisdictions The only Commonwealth jurisdiction in which the application of the fraudulent claim rule to valid claims has been considered in any detail is Australia, whose case law exhibits the same differences of opinion as the English cases. GRE Insurance Ltd v Ormsby (1982) 29 SASR 498 is a decision of the Full Court of South Australia. The insured, whose policy covered theft consequent upon a forcible entry, embellished the evidence of forcible entry by causing further damage to the door and lock before taking a photograph of it and sending it to the insurers. The trial judge found that there had in fact been a forcible entry and the insurer accepted this finding on appeal to the full court. But the insurer defended the claim on account of the dishonest photograph. The defence was rejected. Mitchell J held that the defence did not arise because the claim was valid. A valid claim would not, as it seems to me, become a fraudulent claim, even if it were proved that there was an attempt to support the valid claim by evidence which was intentionally false (pp 502 503). Walters J agreed, adding that at common law an insurer could not be treated as having the necessary fraudulent intent if there never was an intention on the part of the respondents to get, and knowingly to get, more than what they had really lost (p 503). Cox J also agreed, suggesting that in this respect the common law may differ from the effect of some standard express clauses forfeiting fraudulent claims as the courts had construed them (pp 505 506). In Tiep Thi Ho v Australian Associated Motor Insurers Ltd [2001] VSCA 48, the insureds car was damaged in a road accident while being driven by her son. She mistakenly believed that the policy did not cover damage while the car was being driven by her son and so pretended that it had been damaged while being driven by thieves. In fact the son was insured, and the lie was irrelevant to the insurers liability. The Victoria Court of Appeal held that the insurer was entitled to reject the claim. The decision turned mainly on section 56(1) of the Commonwealth Insurance Contracts Act 1984, which provided that it should be a defence that the claim had been made fraudulently. But Buchanan JA, delivering the leading judgment, considered that the same result would have followed at common law, because the mischief of the fraudulent claims rule lay in the insureds dishonest state of mind and not in its consequences. At para 14, he put the matter thus: As a matter of public policy, attributable to the need to promote honesty on the part of insured persons and proponents for insurance, whose knowledge of the relevant circumstances of the casualty as well as the nature of the risk was generally greater than that of their insurers, the courts would not aid a fraudulent claimant. The courts would not look behind fraud to see if otherwise there was a valid claim or a claim unaffected by the fraud, and no effort was made to reduce or extinguish claims only after gauging the effects of the fraud upon insurers. Buchanan JA concluded (para 23) that the existence of an underlying valid claim does not render fraud irrelevant, and that in deciding otherwise in Ormsby the South Australia court had been wrong. In the United States almost all the relevant case law concerns fire policies subject to an express avoidance clause, generally the clause against any fraud or false swearing in the Standard Fire Insurance Policy of the State of New York. The cases ultimately turn on the construction of the language. However, they are nonetheless of interest, because materiality is not in terms dealt with in the clause, and is consequently addressed by the courts as a matter of general principle. In applying the clause, the courts have generally adopted a test of materiality similar to that of Mance LJ in The AEGEON. The leading case is the decision of the US Supreme Court in Claflin v Commonwealth Insurance Co 110 US 81 (1884) in which the court held (p 95) that the materiality of a statement in the eye of the law, consists in their tendency to influence the conduct of the party who has an interest in them, and to whom they are addressed. In Long v Insurance Company of North America 670 F 2d 930 (1982), the insurers defended a claim for loss by fire on the ground (i) that the fire was caused by arson procured by the insured, and (ii) that in the course of the insurers investigation he had untruthfully denied moving his furniture out of his house shortly before it was destroyed. The Tenth Circuit Court of Appeals, applying the test stated in Claflin, held that summary judgment had been properly given against an insured on ground (ii), without there being any need to investigate whether the insured was in fact responsible for the fire. The court held (p 934): Regarding allegations of false swearing, a misrepresentation will be considered material if a reasonable insurance company, in determining its course of action, would attach importance to the fact misrepresented. In Fine v Bellefonte Underwriters Insurance Co 725 F 2d 179 (1984), the Second Circuit Court of Appeals considered that this result followed from the absence of any requirement of inducement in the fraudulent claims rule. It observed that: materiality of false statements is not determined by whether or not the false answers deal with a subject later determined to be unimportant because the fire and loss were caused by factors other than those with which the statements dealt. False sworn answers are material if they might have affected the attitude and action of the insurer. They are equally material if they may be said to have been calculated either to discourage, mislead or deflect the companys investigation in any area that might seem to the company, at that time, a relevant or productive area to investigate. Some states, such as Texas, have overruled these decisions by statute. But they have generally been followed by state and US district courts in cases where similar clauses have appeared in the policy and there is no overriding statutory rule. Analysis This is the first time that the House of Lords or the Supreme Court has had the opportunity to resolve the question whether the fraudulent claims rule applies to justified claims supported by collateral lies. I have reached the conclusion that the rule does not apply to such claims. The starting point is that in law it is not a precondition of the insurers liability that a claim should have been made on him. The insureds right to indemnity arises as soon as the loss is suffered: Chandris v Argo Insurance Co Ltd [1963] 2 Lloyds Rep 65; Firma C Trade SA v Newcastle Protection and Indemnity Association [1991] 2 AC 1, 35 36 (Lord Goff). It follows, as Mance LJ pointed out in AXA General Insurance Ltd v Gottlieb [2005] 1 All ER (Comm) 445, para 26 that the effect of a claim subsequently being made for a fraudulently inflated amount is retrospectively to remove or bar the insureds pre existing cause of action. In other words, it is not a conditional liability but a forfeiture. In this context, there is an obvious and important difference between a fraudulently exaggerated claim and a justified claim supported by collateral lies. Where a claim has been fraudulently exaggerated, the insureds dishonesty is calculated to get him something to which he is not entitled. The reason why the insured cannot recover even the honest part of the claim is that the law declines to sever it from the invented part. The policy of deterring fraudulent claims goes to the honesty of the claim, and both are parts of a single claim: Galloway v Guardian Royal Exchange (UK) Ltd [1999] Lloyds Rep IR 209, 213 214 (CA); Direct Line Insurance v Khan [2002] 1 Lloyds Rep IR 364; AXA General Insurance Ltd v Gottlieb [2005] 1 All ER (Comm) 445 (CA), para 31. The principle is the same as that which applies in the law of illegality. The courts will not sever an agreement affected by illegality into its legal and illegal parts unless it accords with public policy to do so, even if each part is capable of standing on its own: Kuenigl v Donnersmarck [1955] 1 QB 515, 537 (McNair J); Royal Boskalis Westminster NV v Mountain [1999] QB 674, 693 (Stuart Smith LJ), 704 (Pill LJ). The position is different where the insured is trying to obtain no more than the law regards as his entitlement and the lie is irrelevant to the existence or amount of that entitlement. In this case the lie is dishonest, but the claim is not. The immateriality of the lie to the claim makes it not just possible but appropriate to distinguish between them. I do not accept that a policy of deterrence justifies the application of the fraudulent claim rule in this situation. The law deprecates fraud in all circumstances, but the fraudulent claim rule is peculiar to contracts of insurance. It reflects, as I have pointed out, the laws traditional concern with the informational asymmetry of the contractual relationship, and the consequent vulnerability of insurers. It is therefore right to ask in a case of collateral lies uttered in support of a valid claim, against what should the insurer be protected by the application of the fraudulent claims rule? It would, as it seems to me, serve only to protect him from the obligation to pay, or to pay earlier, an indemnity for which he has been liable in law ever since the loss was suffered. It is not an answer to this to say, as Christopher Clarke LJ did in the Court of Appeal, that the insurer may have been put off relevant inquiries or driven to irrelevant ones. Wasted effort of this kind is no part of the mischief against which the fraudulent claims rule is directed, and even if it were the avoidance of the claim would be a wholly disproportionate response. The rule, moreover, applies irrespective of whether or not the lie set a hare running in the insurers claims department. Nor is it an answer to say, as the courts have often said of fraudulently inflated claims, that the insured should not be allowed a one way bet: he makes an illegitimate gain if the lie persuades, and loses nothing if it does not. This observation, which is true of fraudulently inflated claims, cannot readily be transposed to a situation in which the claim is wholly justified. In that case, the insured gains nothing from the lie which he was not entitled to have anyway. Conversely, the underwriter loses nothing if he meets a liability that he had anyway. In The STAR SEA at para 61, Lord Hobhouse warned that the courts should be prepared to examine the application of any such principle to the particular class of situation to see to what extent its application would reflect principles of public policy or the over riding needs of justice. Where the application of the proposed principle would simply serve the interests of one party and do so in a disproportionate fashion, it is right to question whether the principle has been correctly formulated or is being correctly applied. It was for this reason that Rix J questioned the correct formulation of the principle in Royal Boskalis and Longmore LJ did the same in The MERCANDIAN CONTINENT. As their judgments show, the difficulties really arise from the fact that the fraudulent claim rule does not require the insurer to have relied upon the dishonest information or acted on it in any way. In almost every case in which it has been applied, the insurer has declined to pay, either because there were other grounds for declining or because he saw through the exaggeration or both. Indeed, in AXA General Insurance Ltd v Gottlieb [2005] 1 All ER (Comm) 445 (CA) the Court of Appeal held that the insurer was entitled to recover interim payments made in respect of a valid claim before any exaggeration had occurred; and in Stemson v AMP General Insurance (NZ) Ltd [2006] Lloyds Rep IR 252 the rule was applied in a case where not only was the lie irrelevant to the recoverability of the indemnity but it had been corrected before any payment had been made. That these remarkable consequences follow from applying the fraudulent claims rule to a collateral lie suggests that something has gone wrong with the underlying principle. Anomalies of this kind flow from the absence of any requirement of reliance or inducement when a lie is said to have been told in support of a claim. This is a well established feature of the fraudulent claims rule, but nonetheless remarkable for that. There is one other context in which neither reliance nor inducement need be shown, and that is in the criminal law, a position confirmed by the Fraud Act 2006. But there is, as far as I am aware, no other context in which the civil law avoids a transaction on account of a fraud which has had no impact on its intended target. In the law of deceit, it is fundamental that the representee must have acted on the misrepresentation. If he would have done the same thing even in the absence of the misrepresentation, a claim based on it will fail. The same applies in a claim to rescind a contract for misrepresentation, fraudulent or otherwise. Thus, if an insurer were to settle a claim by agreement and then discover that that he had been told a lie in the course of the claim process, he would have to show that his agreement was influenced by the lie in order to rescind it. A lie which had no impact on him would not be good enough. Even in the law of insurance a material misrepresentation or non disclosure in the making of the contract, whether honest or dishonest, will not give rise to a right of avoidance unless it induced the insurer to accept the risk or to do so on the particular terms: Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501. As Lord Mustill pointed out in that case, the need to show inducement reflected the fundamental requirement of the law that the misrepresentation or non disclosure should have had some substantial causative effect. He specifically rejected an argument that in the context of pre contractual misrepresentation or non disclosure the absence of any reference to inducement in the Marine Insurance Act 1906 reflected a disciplinary element in the law of marine insurance, which required that breaches of the insureds duty of utmost good faith should be deterred by imposing condign sanctions even in the absence of reliance or inducement. In language which would later be echoed by Lord Hobhouse in The STAR SEA (para 61, quoted above), he remarked of this submission that to enable an underwriter to escape liability when he has suffered no harm would be positively unjust, and contrary to the spirit of mutual good faith (p 549D). Yet if causation is irrelevant to the application of the fraudulent claim rule, some connection must necessarily exist between the collateral lie and the claim, unless the rule is to part company with rationality. Mr Edelman QC, who appeared before us for the insurers, recognised this. He found the necessary connection in a test of materiality. But he submitted that what was required was that the lie should be material to the potential merits of the claim as they would have appeared to a hypothetical insurer at the time that the lie was uttered, when the full facts were not necessarily known. It did not have to be material to the merits of the claim as they were subsequently shown to be, for example at trial after the facts had been found. For reasons which I shall explain, I agree that materiality provides the necessary connection between the collateral lie and the claim, but in the context of a fraudulent statement in support of a claim I do not accept that it must be assessed by reference to the merits of the claim as they appear to be when the lie was uttered. In this context, I think that hindsight is necessary. Materiality would not ordinarily be relevant at all where a representation was made fraudulently. But that is because causation is ordinarily established in such cases by the mere fact that the representee acted on the statement. If a person sets out to induce the representee to act on a dishonest statement, and the representee does act on it, it is necessarily material, or at any rate the representor having intended the result cannot be heard to say that it was not. The point does not arise in a case where, whatever the insureds intentions, the statement had no relevant impact on the insurer. This is, I think, why Lord Mance acknowledged in The AEGEON (para 38) that while the lie must be in some sense material if the fraudulent claims rule is to apply, the test of materiality cannot be the same in this context as it is in the law of fraud generally. Mance LJs tentative answer was substantially the same as Mr Edelmans. The lie must be such as would, if believed, have tended objectively but prior to any final determination at trial of the parties rights, to yield a not insignificant improvement in the insureds prospects whether they be prospects of obtaining a settlement, or a better, settlement, or of winning at trial. In the Court of Appeal in the present case, Christopher Clarke LJ was inclined (para 165) to modify this test so as to substitute for the requirement of a not insignificant improvement in the insureds apparent prospects, a requirement of a significant improvement. The modification is endorsed by Mance LJ in his judgment on this appeal. In either form, the test proposed is similar to the test for the materiality of pre contractual misrepresentations and non disclosures, from which it was presumably derived. But I do not think that such a test can apply to a collateral lie at the claims stage. I start from the proposition that materiality and inducement are closely connected. This is well established in the context of pre contractual breaches of the insured duty of good faith. The test of inducement is subjective. It depends on the state of mind of the actual insurer when he decided to accept the risk or the particular terms. The test of materiality by comparison is objective. It depends on what would be relevant to a hypothetical prudent insurer in the same situation: see section 18(2) of the Marine Insurance Act 1906; cf section 7(3) of the Insurance Act 2015. Thus it is well established that an insured is required to disclose credible reports that his ship is in trouble, even if they subsequently turn out to have been unfounded; and conversely the insured need not disclose circumstances which were immaterial at the time, even if they subsequently turn out to have been material after all. This is because, as the Court of Appeal held in Brotherton v Aseguradora Colseguros SA [2003] Lloydss Rep IR 746, the materiality of a given circumstance has to be tested at the time of the placing of the risk and by reference to the impact that it would then have on the mind of a prudent underwriter at that time: cf Arnould, The Law of Marine Insurance and Average, 18th ed (2013), paras 15.95 15.107, esp 15.96 15.97; MacGillivray on Insurance Law, 13th ed (2015), para 17.047. There are in my opinion two reasons why this test of materiality cannot apply to lies told in the course of making a claim. The first is that no impact on the mind of the prudent underwriter is required in that context. As Lord Goff said of pre contractual disclosure in Pan Atlantic (p 517G H), if actual inducement is not required, materiality becomes all important. In that case, there were two competing tests of materiality: a weak test, which depended on whether the relevant fact would have influenced the thought processes of the hypothetical prudent underwriter, and a strong test which would have depended on whether it would have been decisive. Lord Goff went on to point out that it was only because the Appellate Committee thought it necessary to show that the actual underwriter was induced to accept the risk on the particular terms that the majority felt able to adopt the weak test of materiality. It is, however, difficult to see what relevance either test of materiality can have if there is no requirement of inducement. The function of materiality in the law of misrepresentation and non disclosure is to limit the matters upon which the insurer can relevantly claim to have relied. If the insureds statements need have no actual impact on the insurer at all, why should it matter what impact it might objectively have been expected to have? Even the strong test of materiality rejected in Pan Atlantic, ie that the relevant fact must be decisive, fails to connect the misrepresentation or non disclosure to the claim if the law does not require the actual insurer to have made any decision at all in response to what he has been told. If the question of materiality is not to depend on the impact of the statement on the mind of the insurer, then it is difficult to see why it should depend on the merits of the claim as they appeared to be at any particular moment, as opposed to the merits of the claim as they actually were. The second reason is that the insurers assessment of a claim is of a quite different character from his assessment of a risk at the pre contract stage. In deciding whether to accept the risk and on what terms, the insurer has a complete discretion. There are no legal standards by which his decision can be assessed. It is a pure question of judgment, which the hypothetical prudent insurer may make for good reasons or bad in his own commercial interest. Hence the critical importance of the impact of non disclosure on his thought processes. But when deciding whether to accept a claim under an existing contract, the insurers position is very different. He has no discretion, because he is already bound. The only question properly before him is whether to acknowledge a liability that if it exists at all exists already, whether or not he realises it. Ultimately, his assessment is simply an attempt to predict what a court would decide. In that context, the only rational test of the materiality of a lie must be based on its relevance to a court which is in a position to find the relevant facts. For this reason, although a lie uttered in support of a claim need not have any adverse impact on the insurer, I consider that it must at least go to the recoverability of the claim on the true facts. By that test, the fraudulent claims rule applies to a wholly fabricated claim. It applies to an exaggerated claim. It applies even to the genuine part of an exaggerated claim if the whole is to be regarded as a single claim, as it must be. But it does not apply to a lie which the true facts, once admitted or ascertained, show to have been immaterial to the insureds right to recover. It is true that the moral character of the insureds lie is in no way mitigated by the fact that it turns out to have been unnecessary. But there are principled limits to the role which a claimants immorality can play in defeating his legitimate civil claims. These limits have been applied outside the realm of insurance ever since the failure two centuries ago of Lord Mansfields attempt to introduce a general duty of good faith in the law of contract. Ultimately, however, even the law of insurance is concerned more with controlling the impact of a breach of good faith on the risk than with the punishment of misconduct. The extension of the fraudulent claims rule to lies which are found to be irrelevant to the recoverability of the claim is a step too far. It is disproportionately harsh to the insured and goes further than any legitimate commercial interest of the insurer can justify. It leads naturally to the anomalous consequences which Popplewell J, rightly to my mind, pointed out in this case. Those anomalies are all the more remarkable for the fact that the rule has no application to collateral lies told after the commencement of legal proceedings, when experience suggests that parties are most likely to gild the lily. In my opinion, it is not the law. The Human Rights Convention I have not dealt with the appellants further arguments based on article 1 of the First Protocol to the Human Rights Convention. They do not arise on the view which I take of the position at common law. Disposition I would accordingly allow the appeal. Subject to any submissions which may be made to us on the form of order, I would enter judgment against the insurers for the sum which the judge found would have been due but for the forfeiture of the claim, namely 3,241,310.60 and interest. LORD CLARKE: Introduction I would allow the appeal, essentially for the reasons given by Lord Sumption, which I will not repeat. This appeal is concerned with what, like Lord Sumption, I will call collateral lies, that is lies which are not relevant to the question whether the underwriters are liable under the insurance contract or not. It seems to me that the question whether collateral lies told by the insured should entitle underwriters to refuse to discharge their liability under a contract is essentially a policy question. Lord Sumption, Lord Toulson and Lord Hughes conclude that the question should be answered in the negative. I agree. As Lord Mance shows, there is a case to be made for the contrary view, but in my opinion public policy does not require that the insurer should have a defence. The critical point is that, in the case of a collateral lie, as Lord Sumption observes at para 26, the insured is trying to obtain no more than the law regards as his entitlement and the lie is irrelevant to the existence or amount of that entitlement. Such a lie is thus immaterial to the claim. As Lord Sumption puts it, the lie is dishonest but the claim is not. This approach reflects the personal views of Popplewell J. Having concluded that the underwriters defence of fraudulent device (ie the telling of a collateral lie) succeeded, he said this in para 225, very near the end of his judgment: I have reached this conclusion with regret. In a scale of culpability which may attach to fraudulent conduct relating to the making of claims, this was at the low end. It was a reckless untruth, not a carefully planned deceit. It was told on one occasion, not persisted in at the trial. It was told in support of a theory about the events surrounding the casualty which Chris Komet genuinely believed to be a plausible explanation. The reckless untruth was put forward against the background of having made the crew available for interview by the Underwriters solicitor, who had had the opportunity to make his own inquiries of the crew on the topic. To be deprived of a valid claim of some 3.2m as a result of such reckless untruth is, in my view, a disproportionately harsh sanction. I agree. In my opinion, legal policy does not require such a harsh result. Moreover, this conclusion seems to me to be consistent with the approach of Rix J in Royal Boskalis Westminster NV [1997] 1 Lloyds Rep 523, which is discussed by Lord Sumption at para 15. I will not repeat his account of the facts, save to note that the shipowners claimed for the value of their ships and sue and labour costs other than a ransom which they had paid. In presenting their claim to the underwriters, they concealed the fact of the ransom and the detailed terms on which it was paid, (as Lord Sumption puts it) because they were concerned about a possible breach of UN sanctions against Iraq. Rix J held (albeit obiter) that he would have rejected the argument on the basis that he considered that the claim for sue and labour was entitled to succeed irrespective of the matters which the owners had concealed. In this regard Rix J said at pp 592 593, in a passage quoted by Lord Sumption: Whatever be the precise definition and ambit of the concept of a fraudulent claim, there was no such claim here. I am in the process of finding that the sue and labour claim was and is a good and valid claim. It is not a false or fraudulent claim. It is totally unlike those instances of fraudulent claim to be found in the authorities, such as claims in respect of deliberately self inflicted or pretended losses, or claims in amounts which are knowingly or recklessly exaggerated: see, for instance, Goulstone v The Royal Insurance Co, (1858) I F & F 276, where, in the context of a claim for inter alia the loss of furniture whose value was exaggerated four fold, Pollock CB glossed a fraudulent claim as one wilfully false in any substantial particular at p 279; or Chapman v Pole, (1870) 22 LT 306, where again in the context of exaggerated value Cockburn, CJ spoke of one who knowingly preferred a claim he knew to be false or unjust at p 307; or The Captain Panagos DP, [1986] 2 Lloyds Rep 470, where Mr Justice Evans defined a fraudulent claim as one which is made on the basis that facts exist which constitute a loss by an insured peril, when to the knowledge of the assured those alleged facts are untrue, at p 511. It seems to me that even if one assumed, for instance, that the representation over the existence of any record of the finalization agreement was made fraudulently, that would not make the claim in question a fraudulent claim within these definitions of that expression. Those conclusions seem to me to be consistent with the approach outlined above. They are also consistent with the views expressed by Lord Hobhouse in The Star Sea [2003] 1 AC 469, para 72 and by Longmore LJ in The Mercandian Continent [2001] 2 Lloyds Rep 563 discussed by Lord Sumption at paras 16 and 17. I agree with him that the relevant conduct must, as Longmore LJ put it, be causally relevant to underwriters ultimate liability. I also agree with him (at the end of para 17) that the requirement for a causal connection cannot be any different depending upon whether the insurer is seeking to avoid the policy or just the claim. Lord Sumption further notes at para 27 that at para 61 in The Star Sea Lord Hobhouse warned that the courts should be prepared to examine the application of any such principle to the particular class of situation to see to what extent its application would reflect principles of public policy or the over riding needs of justice. Where the application of the proposed principle would simply serve the interests of one party and do so in a disproportionate fashion, it is right to question whether the principle has been correctly formulated or is being correctly applied. I agree. In addition to the absent requirement of materiality, there are two other features that seem to me to point to the conclusion that a collateral lie should not be held to be relevant, save no doubt to the veracity of the insured, which may be relevant to the facts found at a trial. The first is that the mere telling of a lie to underwriters in connection with a claim cannot sensibly be treated as forfeiture of the claim. Suppose a collateral lie is told on a Monday but resiled from, say, a week later, can it sensibly be held that it is then too late because the lie has already caused forfeiture of the claim? Such a principle would in my opinion be disproportionate and contrary to public policy. The second is the effect of the principle laid down in The Star Sea and not challenged in this appeal that, as Lord Hughes puts it at para 94, the common law rule of fraudulent claims has evolved to exclude from its operation fraud committed after litigation has begun. It is I think accepted that this includes collateral lies. I agree with Lord Hughes that it would be altogether disproportionate for the insurers to be vouchsafed a new defence to the whole claim if, for example, under pressure in the witness box the claimant were to utter a demonstrable untruth going to the claim. It would mean that the moment the collateral lie was uttered, it would be open to the underwriters to invite the judge to hold that the statement was a lie and to stop the trial on the basis that the underwriters now had a cast iron defence which could not be remedied by admission that the statement was a lie or in any other way, whether the underwriters were liable under the insurance contract or not. This too would in my opinion be disproportionate and contrary to public policy. Could it really make any difference if the lie was uttered just before the issuing of proceedings? In my opinion such a conclusion would make no sense. In all the circumstances I agree that the appeal should be allowed for the reasons given by Lord Sumption. I do not detect any significant difference between the reasons given by Lord Sumption, Lord Toulson and Lord Hughes. LORD HUGHES: A policyholder makes a claim under his insurance policy. The claim is within the cover provided by the policy. The loss has indeed occurred without complicity on the part of the policyholder and it is not exaggerated as to amount. There has been no breach of any specific warranty in the policy. The claim is thus far good in law and would succeed. But the insured embellishes the claim by fraudulent evidence designed to improve the prospects of the insurers accepting it without undue delay or enquiry. Does the claim for this reason fail? What, in other words, is the true extent of what is known as the fraudulent claims rule? I have reached the same conclusion as Lord Sumption. The fraudulent claims rule does not defeat a claim which is wholly good in law, even if a lie is told in support of it. But I do so for reasons which are a little different from, and to an extent additional to, his. It has been common ground between the parties, and is indisputable, that the fraudulent claims rule is well established in English law and that it operates to bar the whole of the policyholders claim where that claim is either wholly invented or fraudulently exaggerated. The claiming policyholder, if he is found fraudulently to have exaggerated his claim, recovers nothing; he does not recover the unexaggerated part. The issue in this case has been whether that rule extends also to bar the claim where the insured has not invented or exaggerated the claim but has employed what has been termed a fraudulent device. By that, in this special context, is meant a lie or other fraud in the presentation of the claim to the insurers, in a case where the underlying claim is in fact good in the amount claimed. Typically the fraudulent device is bogus evidence of some kind advanced in support of the claim in order to bolster it. Plainly, a fraudulent claim, properly so called, ie one which is either wholly invented or fraudulently exaggerated, may also be supported by bogus evidence of this kind. But in the terminology of insurance law, the expression fraudulent device, which derives from language adopted in times past by express clauses in some policies, has been used conveniently to refer only to those cases where the underlying claim, even though supported by bogus evidence or some other fraud, is good. I gratefully adopt Lord Sumptions expression, collateral lie to describe this situation. In the vernacular, the situation contemplated might be described as the policyholder gilding the lily. The issue as to the extent of the fraudulent claims rule, and whether it extends to collateral lies, arises in the present case in the context of a claim under a marine insurance policy for some 3.2m in respect of sea damage to the engines of a ship. However, the law in question applies in exactly the same way to any commercial or domestic insurance policy. Insurance against losses plays a very large part in the lives of most people, whether the context is commercial or domestic. Increasingly, people do not themselves stand the multifarious risks of loss which inevitably attend daily life but, rather, insure against it. Reporting in 2014 after a substantial consultation process, the English and Scottish Law Commissions recorded that: Insurance underpins a healthy and prosperous society, enabling businesses and individuals to protect themselves against risk. The UK insurance industry is the third largest in the world, the largest in Europe and a vital part of the UK economy. (Law Com, No 353, para 1.1) The UK insurance market was noted to manage investments amounting to 25% of the UKs total net worth. The law has for centuries recognised that special rules need to apply to insurance contracts. At the stage when a policy is being taken out, the potential insured will typically know a great deal more about his circumstances, and thus about the risk, than can the insurer to whom he is applying. The response of the common law to this truth was to develop the rule that a contract for insurance must be conducted on both sides in the utmost good faith. In particular, when the contract is in negotiation the general common law rule was that the applicant must volunteer to the insurer, whether he is asked or not, anything which he knows or ought to know and which a prudent insurer would regard as relevant to the assessment of the risk. The consequence of breach, at common law, was that the insurer is entitled to avoid the policy altogether. When the law of insurance as it applied to marine contracts was codified by the Marine Insurance Act 1906, this rule of utmost good faith was repeated in section 17, which read: 17. A contract of marine insurance is a contract based upon the utmost good faith, and, if the utmost good faith be not observed by either party, the contract may be avoided by the other party. This provision was declaratory of the common law relating to insurance generally. As will be seen, this common law/statutory rule has recently been modified by statute, differentially for consumer insurance and non consumer policies, but exacting duties of disclosure are still imposed on the applicant for insurance at the pre contract stage. Otherwise, no doubt, the consequence would either be difficulty obtaining insurance or, more likely, demands for higher premiums. At the later stage when a claim is made, the policyholder will also typically know a good deal more about the facts which give rise to the claim than the insurers possibly can, whether the claim arises out of a motor accident, a burglary, fire damage to a factory or warehouse, the loss of luggage on holiday or the ingress of seawater into a ship. Insured loss is generally adventitious. It may occur anywhere in the world and with or without witnesses. Only sometimes will thorough investigation of the circumstances of the claimed loss be a realistic option for insurers. Moreover, it is very much in the interest of policyholders generally that when a claim arises, it should be accepted promptly by the insurers, payment should be made, and business or private life should be allowed to resume with the loss repaired. Typically, insurers market their policies in part by advertising what they assert to be their prompt and uncomplicated response to claims. If such is to be the response to claims, insurers must take the claiming insured to a considerable extent on trust. Furthermore, if claims have to be investigated in detail and routinely verified by insurers, the cost of the systems necessary to do this will fall on policyholders generally through increased premiums, and good claims will be delayed alongside the bad. The response of the common law to these truths was the development of the fraudulent claims rule. It is a rule of law, imposed by the courts whether or not the policy contains a clause to the same effect, although many do and more used to do in the early days of insurance when the rule was developing. It seems more realistic to acknowledge it as having achieved the status of a rule of common law, grounded in sound policy, rather than depending on an implied term in the contract. Apart from any other reason, it seems far from clear that in every case such an implied term would meet the tests of obviousness or business necessity. To anticipate, it will be seen that the recent legislation in relation to consumer and non consumer insurance preserves the fraudulent claims rule, but without resolving the question raised in the present case about its extent. The very clear rationale of the fraudulent claims rule is the need to discourage fraud in claims. It is notorious that such fraud is endemic. The problem is longstanding, but if anything the evidence suggests that it is increasing rather than diminishing. Recent concerns, chiefly about the connected problem of fraudulent third party claims against insurers (generally alleging personal injury) led to a government established task force formed of representatives of all principal interests. It accepted an Association of British Insurers estimate of between 1.32 billon and 2.1 billon per annum as a likely level of dishonestly inflated or totally fictitious claims: Insurance Fraud Taskforce Final Report PU 1891 January 2016. Although that estimated figure did not distinguish between fraudulent claims by policyholders and those made by third parties, the two species of fraud clearly exhibit shared features. Reviewing the same problem specifically in the context of claims by policyholders, the English and Scottish Law Commissions had concluded just a few months earlier that fraudulent insurance claims are a serious and expensive problem: Insurance Contract Law: Law Com 353 (July 2014) paragraph 19.1. Part of the reason for the level of fraud may be that it is too easy, for in many cases the prospect of discovery may be poor. Another part seems likely to be a prevalent feeling that insurance companies are fair game and deception of them effectively victimless. Although that perception is quite false, since the cost of fraudulent claims is in effect distributed amongst policyholders generally via increased premiums, it is likely that it is one widely shared. An unacceptably high level of fictitious and dishonestly inflated claims thus forms part of the background against which the proper ambit of the fraudulent claims rule falls to be considered. The occasion of the claim in this case The insured claimants were the owners of a cargo ship the DC Merwestone (the vessel). At about 0930 on 27 January 2010 she left Klaipeda in Lithuania bound for Bilbao. From just before 2100 on the following evening, 28 January, seawater was seen to be pushing up through the floor plates in the engine room. By just before 0300 on 30 January, about 30 hours later, the main engine was fully submerged and stopped working. Later that morning a tug came alongside and the vessel was towed to Gdynia. The main engine was damaged beyond repair. The owners were insured against loss under a marine insurance policy. At the trial before Popplewell J there was dispute about what had occurred and whether it was or was not covered by the policy. The judge set out his findings of fact and his construction of the terms of the policy in a careful and comprehensive judgment, and neither has been subject to appeal. Accordingly, it is enough now to record that the cover extended to loss attributable to crew negligence, unless the owners were personally guilty of want of due diligence, and that it extended to unseaworthiness unless, the owners were personally privy to it. The details of what had occurred can similarly now be much abbreviated. The vessel had a duct keel tunnel running more or less its full length in a central position, from the bowthruster room in the foreship to the engine room in the aft. Before leaving Klaipeda the crew had used an emergency fire hose and pump, housed in the bowthruster room, to blast ice from the hatch covers, but had negligently failed to drain seawater from the pump when they finished, nor had they closed the sea inlet valve to the pump. The water froze and expanded, cracking the pump casing and disturbing the seal on the filter. That left two holes in the bowthruster room, open to the sea. After the vessel sailed, the water melted and seawater entered the bowthruster room. From there it ran along the duct keel tunnel and into the engine room, which it was able to do because apertures at each end, through which cables passed, had not been packed or sealed. The lack of seals had been the responsibility of contractors who had modified the vessel. In the engine room there were pumps which ought to have been able to cope with pumping out the water which entered via the duct keel tunnel, but they were defective. Accordingly the causes of the damage were crew negligence, contractors negligence and unseaworthy pumps. The judge determined that the owners were not personally guilty of want of due diligence, nor privy to the unseaworthiness. It followed that the claim was covered by the policy. Whilst that is now accepted to be the position, both the facts of the casualty and the import of the policy were heavily in dispute at the trial. The insurers disputed liability under the policy for a raft of different reasons. On any view, the casualty ought not to have happened, and seaworthiness and the owners possible privity to it were bound to come under active consideration, as must have been apparent to them. It was with this background of a claim which was likely to be disputed, and in due course was disputed, that one of the owners principal directors recklessly misled the insurers with the false statement which amounted to a fraudulent device. The fraudulent device The insurers were understandably sceptical about how the flooding could have resulted from a relatively small leak in the bowthruster room. They made specific written inquiries about a number of matters relating to this and to seaworthiness, included amongst which was a request for the owners explanation of the ingress of the water and the failure of the pumps to control it. By a letter of 21 April 2010, written by way of answer, the owners director Chris Kornet asserted amongst other things that the bilge alarm had sounded at around 1200 on 28 January, that is to say about nine hours before the water was seen to be under the floor plates of the engine room. No action had been taken in relation to the sounding alarm, he said, because it was attributed to the ship rolling in heavy seas. When, later, he was asked the source of these assertions, Mr Kornet said that he had been given this information by the Master and crew. These statements were untrue. The alarm had not sounded before about 2100, nine hours later, and Mr Kornet had not been told by the Master or crew that it had. Later, after Mr Kornet had spoken to him, the Master fell into line with what had been reported to the insurers, but it was not in fact correct. The judge concluded that Mr Kornet had convinced himself that the alarm must have gone off at about the time he asserted, and that his proffered explanation (heavy seas) for non investigation was plausible. Nevertheless, even on these findings, the false assertions were, as the judge found, reckless. The false statements were made when Mr Kornet was frustrated that the insurers were not paying up immediately. They were intended to reassure the insurers that the ship was not unseaworthy and in particular that its alarm systems were working satisfactorily. Otherwise the insurers were, as he knew, likely to focus on the state of the ship and the possible privity of the owners to any unseaworthiness. As it turned out, these false statements made no difference to the claim. The causes of the water ingress were not altered by whether the bilge alarm had sounded earlier than it did or not, nor did it make any difference whether or not the Master and crew had told Mr Kornet that it had gone off. The fraudulent claims rule and the duty of good faith It seems likely that the fraudulent claims rule developed as a matter of history from the general rule that the parties to a contract of insurance owe each other the duty to act with the utmost good faith. In the present case, in the Court of Appeal, Christopher Clarke LJ accepted this as the juridical basis for the fraudulent claims rule: see para 77. In the past it has from time to time been assumed, in cases where any difference between the two rules did not fall for examination, that the fraudulent claims rule was simply a manifestation of the rule of good faith. That assumption was made in passing in the classic direction to the jury of Willes J in Britton v Royal Insurance Co (1866) 4 F & F 905, quoted by Lord Sumption at para 7 above, doubtless for the very good reason that the judge was directing the jury as to the law to be applied rather than embarking on a general lecture upon legal theory. A similar assumption then figured in the judgments in both Orapko v Barclays Insurance Services Co Ltd [1995] 1 LRLR 443 and Galloway v Guardian Royal Exchange (UK) Ltd [1999] Lloyds Rep 209. But in none of those cases did any question of difference between the two rules arise. In each of the three there was fraudulent exaggeration of the claim, and indeed in the last two cases also non disclosure pre contract. In fact, there are significant differences between the two rules. If it were the case that the pre contract duty of good faith continues unaltered post contract, that would no doubt support the contention that the fraudulent claims rule embraces collateral lies deployed in support of a legally sound claim. The collateral lie would be a breach of good faith and, as Lord Sumption says at para 8, the consequence of an unaltered duty of good faith would be that the collateral lie would entitle the insurer to avoid the whole policy, and not simply for the future but ab initio. If that were so, the claim would fall with the policy. It has, however, been clear for many years, and is now indisputable following Manifest Shipping Co Ltd v Uni Polaris Insurance Co Ltd (The Star Sea) [2001] UKHL 1; [2003] 1 AC 469, that although some duty of good faith continues post contract, it differs significantly from the pre contract rule both as to the obligation which it imposes and as to the remedy for breach. There is, for example, no continuing duty on the insured to disclose information which comes to the actual or constructive knowledge of the insured after the cover was issued see Cory v Patton (1872) LR7 QB 304, Lishman v Northern Maritime Insurance Co (1875) LR 10 CP 179, Niger Co Ltd v Guardian Assurance Co Ltd (1922) 13 Lloyds Rep 75 and New Hampshire Insurance Co v MGN Ltd [1997] LRLR 24, all confirmed in The Star Sea. There is no occasion in the present case to pursue the elusive matter of definitive analysis of the content of the post contract duty of good faith, for it is enough that it plainly includes the fraudulent claims rule. Secondly, any duty of disclosure which may exist post contract ends with the commencement of litigation, when the different rules of court take over; they include, significantly, the concept of legal privilege. Thirdly and for present purposes most importantly, as The Star Sea makes clear, the remedy for post contract fraud in the making of the claim is loss of the claim, not avoidance of the whole policy. All of that means that one cannot answer the question in the present case by predicating it on the basis that the fraudulent claims rule is merely a manifestation of the duty of utmost good faith. Whilst the fraudulent claims rule is confirmed by The Star Sea, that case leaves open the present issue, namely what kind of fraud is caught by it. Moreover, the recent legislation (see below) treats the rules of good faith and fraudulent claims differently. It modifies the rule of utmost good faith but leaves the fraudulent claims rule untouched. Fraudulent devices: authority In Agapitos v Agnew (The Aegeon) [2002] EWCA Civ 247; [2003] QB 556, in the course of a thorough review of the question here in issue, Mance LJ, as he then was, justly observed at para 22 that there is a dearth of convincing authority either for or against the inclusion of fraudulent devices within the fraudulent claims rule. There is no direct decision against inclusion. At first instance in Royal Boskalis Rix J expressed strong obiter doubts about it. That case did concern falsity in the presentation of the claim which could properly be analysed as a collateral lie. It amounted to deliberate concealment of the terms on which the ship had been extracted from Iraq. The lie was told for fear that the insurers would try to rely on illegality if the truth were revealed, but on the judges ruling the validity of the claim was not affected by the falsity. Thus, the concealment was collateral because the claim was good. At [1997] LRLR 523, 592, Rix J said: Whatever be the precise definition and ambit of the concept of a fraudulent claim, there was no such claim here. I am in the process of finding that the sue and labour claim was and is a good and valid claim. It is not a false or fraudulent claim. It is totally unlike those instances of fraudulent claim to be found in the authorities, such as claims in respect of deliberately self inflicted or pretended losses, or claims in amounts which are knowingly or recklessly exaggerated: see, for instance, Goulstone v Royal Insurance Co (1858) 1 F & F 276 . or The Captain Panagos DP [1986] 2 Lloyds Rep 470, 511, where Evans J defined a fraudulent claim as one which is made on the basis that facts exist which constitute a loss by an insured peril, when to the knowledge of the assured those alleged facts are untrue I doubt that it is every knowingly or recklessly false statement made in the context of a claim which renders that claim a fraudulent claim for the purpose of the doctrine whereby the making of a fraudulent claim leads to the automatic forfeiture of the whole policy under which the claim is made. However, that case was not decided by the judge on the basis of the fraudulent claims rule, and he refused a late application by the insurers to allege fraud. It was decided on the basis of the scope of the duty of good faith. When in due course it reached the Court of Appeal, the decision was reversed on different grounds and the present issue did not arise for discussion. For the reasons explained by Mance LJ at para 28 in The Aegeon, there is no significant assistance to be had on the present issue from Piermay Shipping Co SA v Chester (The Michael) [1979] 2 Lloyds Rep 1. In The Star Sea the House was clearly exercised by the risk of disproportionately severe remedies, which risk tends to support a policy argument against inclusion. On the other hand, to the extent that the decision concludes that there is an obligation on the insured to treat his insurer with honesty when making a claim, it is capable of supporting inclusion, as perhaps may Lord Hobhouses parting remarks on the topic at para 72, emphasising the fundamental impact which fraud has on the relationship under insurance contracts. But the present issue simply did not arise and was not discussed. The much criticised decision in Black King Shipping Corpn and Wayang (Panama) SA v Massie (The Litsion Pride) [1985] 1 Lloyds Rep 437 did assume that the lie there told defeated the claim, and in The Mercandian Continent at para 29 Longmore LJ (obiter) treated the decision as justified by the fraudulent claims rule. But Hirst J did not so base it, reasoning instead from the duty of good faith, and this was roundly rejected in The Star Sea at para 71. The treatment of The Litsion Pride by Lord Hobhouse in The Star Sea is, to my mind, more consistent with the exclusion of collateral lies from the fraudulent claims rule than with their inclusion. At para 71, Lord Hobhouse said of the earlier case; In so far as it is based upon the principle of the irrecoverability of fraudulent claims, the decision is questionable upon the facts since the actual claim made was a valid claim for a loss which had occurred and had been caused by a peril insured against when the vessel was covered by a held covered clause. True it is that Lord Hobhouse then added: It is not necessary to examine whether there might or might not have been some other basis upon which the case could be decided in favour of the insurer as one feels it clearly ought to have been. It is not at all clear what route towards a finding for the insurers in The Litsion Pride Lord Hobhouse had in mind, but it does not seem likely that he can have been assuming that a collateral lie relating to the claim would have provided it, for then he could not easily have made the first observation. With hindsight, it may be that the better analysis of The Litsion Pride is that the lie told was not part of the presentation of the claim at all, but rather part of a dishonest antecedent attempt to avoid liability to pay the additional premium for taking the ship into a war zone. Likewise the present point was far from arising in The Mercandian Continent, where the lie was in no sense part of the presentation of the claim, indeed was not even directed to the insurers, but rather amounted to a misplaced attempt to serve their interests. In summary, authority for inclusion of fraudulent devices within the rule boils down to a possibly relevant dictum of Lord Sumner in Lek v Matthews (1927) 29 Lloyds List Rep 141 and a first instance trial before Roche J in Wisenthal v World Auxiliary Insurance Corp Ltd (1930) 38 Lloyds List Rep 54, plus the considered obiter view of the Court of Appeal in The Aegeon itself. Lek v Matthews concerned a claim by a stamp collector for valuable stamps lost by theft. The theft had genuinely occurred and many stamps had been stolen. But in the course of quantifying the claim, the insured listed a substantial number of stamps which he knew he had never had. The trial judge, Branson J, held that he had been fraudulent and that his claim accordingly failed. In the Court of Appeal the collector succeeded in persuading Atkin and Bankes LJJ that he had not been fraudulent, although Scrutton LJ disagreed. The House of Lords restored the decision of Branson J. The judgments at every stage are long and heavily detailed as to fact and evidence. It is apparent that there was in some quarters a good measure of judicial sympathy for the claimant, on the grounds that he was a man of wealth and good reputation, who had certainly suffered the theft. The basis of the Court of Appeal decision was, in part, the conclusion of Atkin LJ that Mr Lek had not been dishonest, and thus not fraudulent, if he had genuinely believed that he was entitled to the sum which he claimed, and whether or not he had knowingly or recklessly included stamps which he had never had. Although Lord Phillimore dissented in restoring the finding of fraud, all three members of the House of Lords rejected this Atkin approach to the meaning of fraud, thus perhaps to an extent anticipating the debate many years later in the line of cases which includes Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 and Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37; [2006] 1 WLR 1476. Atkin LJ offered this example at (1926) 25 Lloyds Rep 544: In the course of adumbrating the later overruled view of dishonesty/fraud, The owner of a picture may have valued it at its true value, and may have had undoubted loss by theft. At the same time he may be unwilling to disclose how he acquired it, and in answer to underwriters may give a false account of its purchase. Such a falsehood, however blameworthy, seems to me on the supposed facts to afford no evidence of a fraudulent claim. Referring to this, Lord Sumner said in the House of Lords at 163 164: If a man has claimed for the loss of things which he knew he had not got, I think it is a contradiction in terms to say that he may have honestly believed in his claim. What is the use of a clause of defeasance in case a false claim is made, if we are to say that answers which violate this contractual clause and the most obvious rules of honesty as well do not matter so long as Mr Lek was convinced that he ought to win? It simply means that if he decides his own case in his own mind in his own favour and is persuaded that he is right (as anyone might be), falsehood in securing the victory does not matter. The learned Lord Justice gives an illustration about a picture, which shows, I think, that he had in his mind a case of misstatements on purely collateral matters. Even so, I could not agree: but these present matters are not collateral; they are of the essence. Atkin LJs picture illustration was plainly offered in support of his theory of fraud. It was not related to any issue as to collateral lies. The fraud practised by Mr Lek could not on any view be regarded as a mere collateral fraud, for it pretended that items had been lost which had never been there to be stolen. I respectfully agree entirely with Lord Mance (para 128) that there is no difficulty whatever in describing what Mr Lek did as fraudulent, whether or not he believed that he was morally justified in doing it. But the question which we face in the present case is not whether a collateral lie is dishonest (or fraudulent) but whether it brings the consequence that the whole claim fails. As to that, it is perhaps possible that in his brief riposte Lord Sumner may have had in mind the present issue as to collateral lies, but it does not seem particularly likely in a case where the issue was whether there was fraud at all. On any view, the present issue did not arise and there is no sign of it having been argued. Wisenthal did raise collateral lies. The claim was made on a policy insuring valuable furs and skins which were being taken to Glasgow to be auctioned. The insurers primary case was that the claimed theft had been carried out with the connivance or privity of the insured and most of the cross examination by Mr Norman Birkett QC on their behalf focussed on issues of credit. They also alleged pre contract non disclosure by allowing the insurers to think that daily rental rooms where the sale was to take place were a proper auction house. However, the jury answered questions about whether these complaints were made out either not satisfied or no. The jury further answered that it was not satisfied that there had been fraudulent exaggeration of the claim. The findings which the jury made against the claimant furriers were that (1) they had concealed whatever stock book they had, and had fraudulently told the insurers that there was none, and (2) they had fraudulently concealed a bank account in a name of a relative which was being used habitually for the business, but which name camouflaged the connection. The jury also found that it was impossible to put a quantity or value on the merchandise which had been taken. On these findings the judge gave judgment for the defendant insurers. Although the inability to say what had been stolen would presumably have justified this outcome, it seems clear that the judge took the view that the two collateral frauds specifically found also led to the failure of the claim. Otherwise there would have been no need to ask the jury for findings in relation to those complaints. Moreover he had directed the jury that it would be sufficient to come within the definition of fraud if deceit had been used in the investigation to secure easier or quicker payment of the money than would have been obtained if the truth had been told. Understandably therefore in The Aegeon at para 29 Mance LJ described the case as of interest. The report contains no indication that the issue was argued. Whether there were other first instance trials at this time which made the same assumption that collateral lies were sufficient to defeat a claim, even in the absence of fiction, complicity in loss, or exaggeration, is not known. The considered view of the Court of Appeal in The Aegeon was that the fraudulent claims rule did include fraudulent devices, differing on this point from the view of Toulson J (as he then was) at first instance. The case proceeded on a preliminary point of pleading, and the views on the present issue were technically obiter, because the fraud had been committed after the commencement of litigation, and on the basis of The Star Sea it was held that the fraudulent claims rule, whatever its scope, did not apply after that point. Although expressed at para 45 as a tentative view, the conclusion on the present issue was nevertheless fully reasoned and thorough. It depended not so much on authority, which as has been seen was scanty and equivocal, but upon reasoning from principle. The governing consideration seems to have been that the insured would otherwise enjoy the advantage of what has become known as the one way bet: see especially paras 20 and 37. The conclusion reached in The Aegeon has been assumed subsequently to represent the law in cases both at first instance and on appeal, but in none of them was the point put in issue and in several it could not have arisen for decision. Sharons Bakery (Europe) Ltd v AXA Insurance UK plc [2011] EWHC 210 (Comm); [2012] Lloyds Rep IR 164, was a case of material non disclosure at inception of cover of the fact that a finance company had been deceived into advancing finance, although the same bogus invoices had also been submitted in support of a subsequent claim in relation to a fire which had genuinely happened. The policy was held by Blair J to be avoidable for the non disclosure, irrespective of the fraudulent device employed in support of the claim. Moreover in that case there was an express clause avoiding the policy in the event of fraudulent devices, so that the general law was not in point. Similarly, in Bate v Aviva Insurance UK Ltd [2014] EWCA Civ 334; [2014] Lloyds Rep IR 527 the policy was avoidable for (fraudulent) non disclosure quite apart from that non disclosure being untruthfully denied when a subsequent claim was made. Apart from the facts that the judge found the latter fraudulent device, and that the Court of Appeal upheld his decision, the present issue was simply not discussed. Likewise, although in AXA General Insurance Ltd v Gottlieb [2005] EWCA Civ 112; [2005] 1 All ER 445 the Court of Appeal (per Mance LJ) re stated the conclusion in The Aegeon, the fraud in that case consisted in asserting payments made for alternative accommodation and electrical work when those payments had never been made; the case was one of fraudulent claim properly so called and what was at issue was the extent to which insurers could recover sums previously paid under the policy. Aviva Insurance Ltd v Brown [2012] Lloyds Rep IR 211 was another case of a fraudulent claim rather than of fraudulent device. The claim was for rent allegedly paid out for alternative accommodation when there was no question of payment because the policy holder himself owned the house in question. That he might have made an entirely different claim for the loss of rental which might otherwise have been paid by a third party tenant does not alter the fact that this was a fraudulent claim; if he had sought to make that quite different case he would have had to show that the house would otherwise have been rented out. The correctness of The Aegeon was not debated, although whether the fraud was sufficiently connected to the claim, and/or sufficiently serious, was. The clearest case of direct application of The Aegeon is Stemson v AMP General Insurance (NZ) Ltd [2006] UKPC 30; [2006] 1 Lloyds Rep IR 852. The principal decision of the Privy Council was that there was no reason to disturb the concurrent findings in both courts below that the insured had himself started the house fire on which the claim was predicated. He had, however, also lied to the insurers during the investigation by claiming, falsely, that he had not previously contemplated sale of the house, when in fact he had indeed done so under considerable financial pressure. The Board upheld the judges decision that this lie was, as well as clearly relevant to the conclusion that the insured started the fire, an independent reason why the claim failed. The judgment of Lord Mance records, however, at para 121 that the law as stated in The Aegeon had not been questioned in argument. The real issue was whether the finding that the claim was wholly bogus could stand. Lastly, in Summers v Fairclough Homes Ltd [2012] UKSC 26; [2012] 1 WLR 2004 the Supreme Court dealt with the law relating to fraudulent third party claims against insurers. It is true that at para 29 Lord Clarke, giving the judgment of the court, distinguished the law as between parties to an insurance contract, and that in doing so he included The Aegeon in his list of cases demonstrating the fraudulent claims rule in such cases. But that cannot realistically be treated as expressing any view on the present issue. The personal injuries claimant in Summers made a bogus claim, alleging that he was grossly disabled when in fact he was working and playing football, and on this basis claimed approximately eight times what his case was truly worth. The court referred to the fraudulent claims rule in insurance only to distinguish it from the law applicable to third party claims. Plainly, the fact that The Aegeon has been assumed to represent the law, and indeed has not been questioned, is of some relevance to the present issue. But the present case appears to be the first time since that decision that any court has heard argument about it, and certainly the first time that either this court or the House of Lords has been required to confront the issue. The essential question is whether The Aegeon was right. Authority: other jurisdictions As Lord Sumption records, Australian cases demonstrate a difference of opinion on the present issue. That the second of them involved construction of a statute whereas the first did not does not affect this position. Just as does the English statute (see below), the Australian Act left open the meaning of claim made fraudulently and thus the present issue. Materiality Materiality is a concept of central importance to the law of pre contract disclosure, founded on the duty of utmost good faith: Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501. It means something significant which the proposer knows, or ought to know, but the insurer does not. If that unknown something would affect the decision of a hypothetical insurer whether to take the risk or not, or on what terms to do so, it is material in the sense there used. Can materiality in this sense be read across to the later stage of a claim being made, and if it can, does it assist in providing the answer to the present issue as to whether fraudulent devices are included in the fraudulent claims rule? In Royal Boskalis, Rix J thought, at 597 598, that it was not apparent how the concept of materiality was to apply at the stage of a claim made under the policy. He added that an obstacle to transposing materiality of fraud from the pre contract to the claims stage lies in the fact that by definition at the latter stage it will arise only when the fraud has been detected. But the debate in his case was being conducted before The Star Sea reached the House of Lords. It was being conducted in the context of an issue about whether the pre contract duty of good faith continued unaltered to the post contract stage of the making of a claim, and with it the right to avoid the policy altogether for breach. I do not think that the discovery of the truth is necessarily the difference between the pre and post contract stages. True it is that by the time there is a question whether a lie told in support of a claim does or does not defeat that claim, the lie will normally have been discovered. But the same is true of a failure of pre contract disclosure. By the time there is a question whether it justifies the insurer in avoiding the contract, the truth will normally have been discovered. The insurer avoids the policy, or seeks to do so, because he has found out what he was not told during the negotiations leading to it. It is not difficult in most situations to ask, a propos the collateral lie, whether it was told intending the insurer to act in reliance on it, nor whether it did in fact affect the insurers behaviour during the period before he found out the truth. There may be the occasional case of a lie which is simply irrelevant to the laying of the claim and is told for some different reason, such as the lies in The Litsion Pride (to hide the fact that the insured had been trying to evade his liability to pay the additional premium) and The Mercandian Continent (to support the insurers wish to litigate in Trinidad rather than in London). The genuinely burgled householder who was unquestionably absent at the time but lies about where he was to avoid domestic embarrassment would be another example. But leaving aside such wholly irrelevant lies, generally speaking a lie told in the making of the claim, whether collateral or otherwise, is told with the aim of affecting the behaviour of the insurer. That is the whole point of it. The aim may be to speed up the acceptance of liability, or to avoid further enquiry, or there may be many other reasons. And the insurer, before he learns the truth, may be influenced in his behaviour in these or other ways, by the lie. The important difference between the pre and post contract (claim) stages lies in the power of decision in the hands of the insurer. Pre contract, he is free to take or to refuse the risk. A failure of disclosure or false statement deprives him of the opportunity to consider something. If it might have affected his decision, it is material. And if he had known the truth, he would have had a perfect right to refuse to issue the policy. Post contract, the insurer has no such freedom of choice. If the claim is good, he is legally obliged to pay it. A lie told in the making of the claim may well affect his handling of the claim, or the speed at which he pays it, or the inquiries which he calls for, but it can make no difference to his liability to pay. It may well be material (relevant) to his behaviour, but it is immaterial (irrelevant) to his liability. So materiality means something different at the two stages. The question is: material to what? For this reason, I respectfully agree with Rix Js conclusion that the concept cannot simply be transposed to the post contract situation. It does not migrate unchanged between the two stages, any more than the duty of good faith does. It is therefore possible to say, as Lord Sumption explains, that materiality used in the different sense of relevance to liability provides the answer to the issue in the present case. The collateral lie is immaterial to the liability of the insurer. In analysing the issue in that way one is, in a sense, re stating the question: does a collateral lie defeat the claim? But one is also focussing on the critical difference between the collateral lie and the false or exaggerated claim. The collateral lie is certainly told with the aim of improving the position of the liar, but in fact and in law it makes no difference to the validity of his claim whether it is accepted or found out. The false or exaggerated claim is also made with the aim of improving the position of the liar, but if accepted it provides him with something to which he is not entitled in law. Lest it be thought that to state the present issue only in terms of materiality is to re state rather than to answer the question, it is helpful to address the underlying policy of the law. This becomes relevant in any event since the rule that the exaggerated claim fails altogether can only be because, as a matter of policy, severance is refused in law even where the exaggerated part is eminently severable in fact (as for example where an additional valuable has been added to the list of items lost, just as Mr Lek added stamps he had never had). The rationale of the fraudulent claims rule There is no doubt that the purpose of the fraudulent claims rule is to discourage fraud, having regard to the particular vulnerability of insurers. This rationale has frequently been reiterated. In Galloway v Guardian Royal Exchange (UK) Ltd [1990] Lloyds Rep IR 209, 214, it was expressed thus by Millett LJ at 214: The making of dishonest insurance claims has become all too common. There seems to be a widespread belief that insurance companies are fair game, and that defrauding them is not morally reprehensible. The rule which we are asked to enforce today may appear to some to be harsh, but it is in my opinion a necessary and salutary rule which deserves to be better known by the public. I for my part would be most unwilling to dilute it in any way. And in The Star Sea Lord Hobhouse said this at para 62: The logic is simple. The fraudulent insured must not be allowed to think: if the fraud is successful, then I will gain; if it is unsuccessful, I will lose nothing. This latter formulation of the justification for the rule, which has often been repeated, gives rise to the commonly used shorthand that the fraudulent insured must not be allowed a one way bet. It was the principal argument relied upon by the insurers in The Aegeon and in the present case for the inclusion of collateral lies within the rule. The need for such a rule, severe as it is, has in no sense diminished over the years. On the contrary, Parliament has only recently legislated to apply a version of it to the allied social problem of fraudulent third party personal injuries claims. Section 57 of the Criminal Justice and Courts Act 2015 provides that in a case where such a claim has been exaggerated by a fundamentally dishonest claimant, the court is to dismiss the claim altogether, including any unexaggerated part, unless satisfied that substantial injustice would thereby be done to him. Parliament has thus gone further than this court was able to do in Summers v Fairclough Homes. Severe as the rule is, these considerations demonstrate that there is no occasion to depart from its very long established status in relation to fraudulent claims, properly so called. It is plain that it applies as explained by Mance LJ in The Aegeon at paras 15 18. In particular, it must encompass the case of the claimant insured who at the outset of the claim acts honestly, but who maintains the claim after he knows that it is fraudulent in whole or in part. The insured who originally thought he had lost valuable jewellery in a theft, but afterwards finds it in a drawer yet maintains the now fraudulent assertion that it was stolen, is plainly within the rule. Likewise, the rule plainly encompasses fraud going to a potential defence to the claim. Nor can there be any room for the rule being in some way limited by consideration of how dishonest the fraud was, if it was material in the sense explained above; that would leave the rule hopelessly vague. Nevertheless, the severity of the rule is an important consideration. Addressing the related (but distinct) rule of utmost good faith as applied post contract, and its even more severe sanction of avoidance of the policy ab initio, Lord Hobhouse in The Star Sea warned at para 51 of the dangers of remedies becoming disproportionate to the breach of duty. That consideration underlay the conclusion that the content of the duty of good faith did not extend to mere non disclosure post contract. When speaking of the fraudulent claims rule, he returned to the point at para 61: The courts should likewise be prepared to examine the application of any such principle to the particular class of situation to see to what extent its application would reflect principles of public policy or the over riding needs of justice. Where the application of the proposed principle would simply serve the interests of one party and do so in a disproportionate fashion, it is right to question whether the principle has been correctly formulated or is being correctly applied. In their 2014 report (para 54 supra) the Law Commissions referred at paragraph 1.25 to the same consideration. They said: The 1906 Act is insurer friendly. The principles were developed at a time when the insured knew their business while the insurer did not, and were designed to protect the fledgling insurance industry against exploitation by the insured. Where a policyholder is in breach of an obligation, the law gives wide ranging opportunities for the insurer to avoid the contract and refuse all claims, or to treat its liability as discharged, even where the remedy seems out of proportion to the wrong done by the policyholder. They also noted that the strict legal entitlement of insurers was not always mirrored by best market practice as to enforcement of remedies. There is self evidently a much greater risk of disproportionate remedy when the claimant is legally entitled to everything which he claims. Nor is the proposition that the fraudulent claimant has a one way bet entirely accurate. He does not stand to lose nothing at all if found out. He will commit a criminal offence, although the risk of prosecution is relatively slight, even after some well publicised recent trials, especially if he stood to gain nothing to which he was not entitled, and it may not operate as a significant sanction in many cases. The same may well be true of the potential to be held liable in damages to the insurers. Even, however, if those risks are regarded as comparatively remote, and are disregarded, the consequence of discovery is not limited to them. The insured who is shown to have acted fraudulently will, first of all, forfeit all or most of his credibility in any debate, in court or out of it, as to his entitlement under the policy. He will probably be disbelieved even where he is telling the truth. Secondly, if there is litigation in relation to the claim, he will be likely to be penalised by expensive inter partes costs orders as a result of his fraud. Thirdly, the policy is likely to be terminated by the insurers, at least prospectively. Fourthly, the history will be disclosable in any other insurance proposal which the claimant may make. He is likely to be refused insurance, or to have to pay a good deal more for it than others must. These are, cumulatively, significant sanctions. These sanctions also apply, of course, to the insured who advances a fraudulent claim, properly so called. But the fact that they may be visited both on him and on the teller of a collateral lie does not answer the question whether the additional sanction of forfeiture of the claim is equally proportionate for both cases. It is not. Likewise, the wish to deter the one way bet can be applied to the collateral lie, as it can to fraudulent claims properly so called. But there is plainly a difference of quality between the insured who deals fraudulently with his insurer in an attempt to gain something to which he is not entitled, and the insured who dishonestly gilds the lily with a lie or falsified evidence, but stands thereby to obtain nothing more than was his legal due. Courts meet daily the party who gilds the lily with a lie, and have become used to warning themselves that his case will be damaged severely as a result, but may not nevertheless be altogether bad. It becomes necessary to ask whether the undoubtedly severe rule is required to meet the second category of case. Given the other consequences which are likely to be visited on the perpetrator of a collateral lie, the sanction of loss of the entire (but valid) claim is disproportionate. It is otherwise if the claim is wholly or partially false; in that event these other consequences are not a sufficient sanction. The extension of forfeiture to a purely collateral lie is not justified as part of a generally imposed legal rule irrespective of any expressly agreed term of the policy. It is simply too large a sledgehammer for the nut involved. That conclusion is consistent with the manner in which the common law rule of fraudulent claims has evolved to exclude from its operation fraud committed after litigation has begun. That limitation was derived in The Aegeon from The Star Sea, but is in fact not compelled by it since the earlier case concerned non disclosure rather than fraudulent claims. It has been assumed in the present case to be correct. This important limitation cannot be based on anything but policy and a conclusion that without it the remedy would be disproportionate. It would be perfectly logical to say that whilst of course the separate rules of court regime for disclosure, considered in The Star Sea, overtakes the duty of good faith once litigation is begun, a duty to abstain from fraud is not in the least inconsistent with the regime attending litigation and its eventual resolution by trial. Indeed, there is a passing observation to that effect in the speech of Lord Sumner in Lek v Matthews at p 145, where he appears to have assumed, obiter, that the fraudulent claims rule would apply to false statements made at trial. The reason for the limitation now accepted must be that it would be altogether disproportionate for the insurers to be vouchsafed a new defence to the whole claim if, for example, under pressure in the witness box on the second day of the trial, the claimant were to utter a demonstrable untruth going to the claim. The basis of this important limitation must be that the courts should be left to deal in the other ways available to them with fraud in the course of litigation, for which they have adequate sanctions. The conclusion here arrived at is also consistent with the recent treatment of the law of insurance by Parliament, acting on the recommendation of the Law Commission. Consumer insurance contracts are now dealt with by the Consumer Insurance (Disclosure and Representations) Act 2012, already in force. The Insurance Act 2015, soon to come into force, deals with both commercial and consumer contracts. The effect of the statutes is to separate the duty of good faith from the law relating to fraudulent claims. Both abolish the rule previously codified in section 17 of the Marine Insurance Act 1906 providing for avoidance ab initio for breach of the duty of good faith, although the manner in which the continuing duty of disclosure pre contract is expressed differs as between consumer and commercial contracts. Section 12 of the 2015 Act deals with fraudulent claims. It preserves the rule that the fraudulent claimant recovers nothing, including any unexaggerated element. It takes the opportunity to limit the right of the insurer to avoid the whole policy to a prospective one. But like the Law Commissions, the Act deliberately leaves open the scope of the fraudulent claims rule, and in particular leaves open the present issue as to whether it extends to fraudulent devices. It was clearly contemplated by Parliament that the courts would in due course resolve this question. Conclusion My conclusion is, like that of Lord Sumption but for additional reasons, that the fraudulent claims rule is of considerable importance and must be preserved, but that its extension to collateral lies (fraudulent devices) is not based on sound authority and would result in a remedy disproportionate to the breach of duty involved. It follows that there is no occasion to consider the separate argument of the claimants based upon article 1 of Protocol 1 to the ECHR. LORD TOULSON: I agree with Lord Sumption and Lord Hughes in their conclusion and in what I take to be the essential reasoning in both their judgments. Lord Sumption at paras 25 and 26 identifies and explains the important difference between a fraudulently exaggerated claim and a justified claim supported by collateral lies. In the case of the former, he notes that the court declines to sever the dishonest part of the claim. Unlike the curates egg, the claim is not regarded as good in parts. The reason for adopting a strict approach is one of deterrence. In the case of the latter, Lord Sumption observes that the insured is trying to obtain no more than his legal entitlement, and the lie is irrelevant to the existence or amount of that entitlement. As he succinctly puts it, the lie is dishonest but the claim is not. Lord Sumption expresses the view, with which I agree, that the immateriality of the lie to the claim makes it not just possible but appropriate to distinguish this from the former case, and that a policy of deterrence does not go so far as to justify the denial of a valid claim by reason of a collateral lie. Lord Hughes at para 100 identifies a qualitative difference between the insured who deals dishonestly with his insurer in an attempt to gain something to which he is not entitled and the insured who dishonestly gilds the lily with a lie, but stands thereby to obtain nothing more than his legal due. Like Lord Sumption, he does not consider that the policy of deterrence would justify deprival of the insureds legal right of indemnity under the contract of insurance. I agree with Lord Hughes that the lie told in the latter case may be material to the insureds conduct, in that it may induce the insurer to accept the claim; but, if so, the insurer will have been induced to pay what it was liable to pay, and the insured will have gained no more than his legal entitlement. I agree with Lord Sumption that such a lie should not be regarded as material in the same sense as a lie which goes to the existence or amount of the insureds entitlement. It is aptly described as collateral, or irrelevant to the existence and amount of the insurers liability. In that critical sense it is immaterial to the parties respective rights and obligations. Lord Mance argues that to take this view is to overlook the obvious purpose for which the lie is told and its potential impact on the insurer. I recognise, as I have said, that the lie told in support of a true claim may be material to the insurers conduct by influencing him, as intended, to accept the claim, but the distinction which I draw (echoing the judgments of Lord Sumption and Lord Hughes) is between a lie of that nature and one which is material to the insureds entitlement in the sense that it is an attempt to obtain something to which he is not entitled. As Lord Hughes has pointed out, to tell lies in support of a valid claim is not risk free. Every experienced advocate knows that, as well as being dishonest, it is not a smart thing for a client who has a good cause to try to improve it by lying. In criminal cases it is probably a more likely cause of the wrongful conviction of an innocent person than anything else. For that reason, it is mandatory for the trial judge to give a Lucas direction (named after R v Lucas (Ruth) [1981] QB 720) in any case where it appears that the defendant may have told lies. The jury must be specifically warned that people sometimes lie in an attempt to bolster up a just cause. Insurance claims are tried by judges, not juries, but that does not alter the fact that proof that a party has lied is likely to have an extremely deleterious effect on his credibility. It is also likely to be reflected in any costs order which the court may make. Notwithstanding those risks, people sometimes lie in support of a valid claim, whether under an insurance claim or otherwise; but there is no evidence about the prevalence of lies told in support of valid claims, or about the relative effect of different grades of sanction. I am not a psychologist, but I am sceptical about the idea that knowledge of this judgment will incentivise people with valid insurance claims to lie in support of their claims. Those who are honest will not do so because it would not be in their nature, while some who are dishonest may do so if they think that they will get away with it, despite the risk of it having a boomerang effect on whether the court believes anything that they say. I agree with Lord Mance that integrity on both sides of the claims process is an important consideration. So is arriving at a result which is just and reflects the parties legal rights. In considering whether as a matter of public policy the courts should apply a draconian rule of denying a right of recovery under a contract of insurance to the insured who tells a lie in support of a valid claim, the court must ultimately be guided by its own sense of what is just and appropriate. When all is said and done, that is the critical question on which the court is divided. On that question I agree with all that Lord Sumption and Lord Hughes have said. LORD MANCE: (dissenting) In Agapitos v Agnew (The Aegeon) [2002] EWCA Civ 247; [2003] QB 556, I considered in detail whether, as a matter of policy, the underlying rationale of the fraudulent claim principle should extend to invalidate not merely the whole of a claim where part proves otherwise good, but the whole of a claim where the whole proves good (para 19). As I pointed out, the word proves assumes that all aspects of the litigation proceed to trial and, if the use of fraudulent devices constitutes a defence, there may never be such a trial (para 19). I concluded, tentatively, that the use of a fraudulent device did give rise to a defence, and the other members of the court (Brooke LJ and Park J) agreed. The Court of Appeal in the present case (Christopher Clarke and Vos LJJ and Sir Timothy Lloyd) came to the like result as a matter of ratio after full consideration of the relevant considerations and authorities. In the present case, I have had the benefit of reading the differently nuanced judgments prepared by Lord Sumption and Lord Hughes. Both wrestle from different angles with the difficulty of describing the use of a fraudulent device as anything other than material to a central underwriting decision that is, the decision whether or not a claim should be settled. Insurance is about the assessment of risk and the settlement of claims. Both processes depend on good faith and fair information, and both are normally consensual. Litigation is neither the aim nor the norm. To suggest that a lie which the insured felt necessary to promote settlement of a claim is immaterial or collateral if years later it can be shown that it was after all unnecessary to tell it mistakes the nature of the business and the relationship. Further, it is either a non sequitur or at least begs the issue on this appeal to say, as Lord Sumption says, that because an underwriter assessing a claim will attempt to predict what a court would decide, therefore the only rational test of the materiality of a lie must be based on its relevance to a court which is in a position to find the relevant facts. On the contrary, since the lie is told to influence the underwriters assessment of what a court would decide and thereby to induce the underwriter to pay the claim, its materiality can perfectly well be, and must in my view be, based on its relevance to that assessment and to the underwriters decision whether to pay: see further 130 below. I also differ from Lord Hughess view, on the question whether as a matter of policy the fraudulent claims principle should be seen as extending to or embracing the use of fraudulent devices. More specifically, I do not accept that either the factors he deploys in para 98 or general considerations of proportionality in play in the absence of any expressly agreed term of the policy do or should lead to a conclusion that the fraudulent claims principle does not embrace the use of fraudulent devices. If and in so far as the factors in para 98 have any real validity or weight as sanctions, they would have it in relation to the established fraudulent claims rule. Yet that rule exists notwithstanding them. I will not in the circumstances rehearse all the detailed conclusions which lead me to broadly the same conclusion on the appropriate policy and principles now as I expressed tentatively in 2002. The only alteration that I might make to the principles which I then identified would be to heighten the threshold test of materiality, rather as Christopher Clarke LJ himself tentatively suggested (para 165), so as to substitute, for the requirement of a not insignificant improvement of the insureds prospects, a requirement of a significant improvement of the insureds prospects, before a claim is barred. The relationship of insured and insurer is a special one, in relation to which the good faith or uberrimae fidei has long been fundamental. As a special relationship it survived the failure of Lord Mansfields attempt to introduce a general duty of good faith into English contract law. It did so rightly because of the general imbalance in information and control and the significance of moral hazard in insurance relationships. Insurance fraud is commonplace, often being regarded as a victimless crime in relation to which insurers are fair game. Of course, insurers do not always pay claims as speedily as would be desired, but that is not an excuse for fraud, and is something for which a separate remedy is under current legislative scrutiny. There is long standing if limited authority for the inclusion of fraudulent devices within the ambit of the fraudulent claims principle. In Lek v Matthews (1927) 29 Ll L Rep 141, a case of alleged loss of a stamp collection, the policy provided that, if the assured shall make any claim knowing the same to be false and fraudulent, as regards amount or otherwise, the policy shall become void, and all claims thereunder shall be forfeited: see p 141. The underwriters case was that, if there was any loss and even if the assured believed that it amounted in total to the sum claimed, he had supported this amount by including stamps which he knew he did not possess and had not lost. In this context, Atkin LJ in the Court of Appeal (1926) 25 Ll L Rep 525, 544 concluded that, so long as the assured believed in his entitlement to the amount claimed, he could not be said to have the intent to defraud the underwriters, which is essential to the underwriters defence, explaining that: From this point of view it appears to me immaterial whether in answering the underwriters interrogatories, whether before or during the action, he gave answers that were inaccurate, reckless or were knowingly false. The owner of a picture may have valued it at its true value, and may have had undoubted loss by theft. At the same time he may be unwilling to disclose how he acquired it, and in answer to underwriters may give a false account of its purchase. Such a falsehood, however blameworthy, seems to me on the supposed facts to afford no evidence of a fraudulent claim. This approach was given short shrift in the House of Lords, where Viscount Sumner said rhetorically (pp 163 164): If a man has claimed for the loss of things which he knew he had not got, it is a contradiction in terms to say that he may have honestly believed in his claim. What is the use of a clause of defeasance in case a false claim is made, if we are to say that answers which violate this contractual clause and the most obvious rules of honesty as well do not matter so long as Mr Lek was convinced that he ought to win? It simply means that if he decides his own case in his own mind in his own favour and is persuaded that he is right (as anyone might be), falsehood in securing the victory does not matter. The clause can only be read as permitting this by treating it as mere folly. The learned Lord Justice gives an illustration about a picture which shows, I think, that he had in his mind a case of misstatements on purely collateral matters. Even so, I could not agree; but these present matters are not collateral; they are of the essence. The other two members of the House, Lord Phillimore (dissenting in the result) and Lord Carson, expressed their full concurrence with these remarks. Their upshot is that a dishonest statement made to further a claim in which the claimant honestly believes renders the claim fraudulent, in the context of a clause such as that present in the policy in Lek v Matthews. It is also clear that the remarks embraced the situation of a simply fraudulent device, deployed to promote an insurance claim in respect of goods (eg the picture in Atkin LJs example) which had actually been lost. One can, as more recent authority illustrates, question whether lies about truly collateral matters should attract the operation of the fraudulent devices principle, (see eg para 125 below, with the reference there to The Mercandian Continent), but that is a different matter. What matters for present purposes is the assimilation of fraudulent devices with a fraudulent claim. There is no reason why the position should be any different in this respect under the common law rule mirrored by the wording of the clause in Lek v Matthews. Roche J so held when summing up to the jury in Wiesenthal v World Auxiliary Insurance Corpn Ltd (1930) 38 Ll L Rep 54. By the end of the trial, a core issue in that case was whether Mr Wisenthal had used fraudulent devices (the jury held in the event that he had). The report at pp 61 62 summarises Roche J as instructing the jury, somewhat damningly: Mr Alfred Wisenthal has been shown to be in many respects untruthful, and that was a disadvantage, but if the jury thought his lies were merely the outcome of habit and not intended to obtain a fraudulent advantage in this case they would not count it against him. Fraud was not mere lying. It was seeking to obtain an advantage, generally monetary, or to put someone else at a disadvantage by lies and deceit. It would be sufficient to come within the definition of fraud if the jury thought that in the investigation deceit had been used to secure easier or quicker payment of the money than would have been obtained if the truth had been told. Roche J, later Lord Roche, had had one of the largest commercial practices as a silk and was an experienced commercial judge. His conclusion as to the common law in the 1920s carries weight. A conceptual point which remained unsettled was however the relationship between any such principle and the rule enshrined in section 17 of the Marine Insurance Act 1906, whereby A contract of marine insurance is a contract based upon the utmost good faith, and, if the utmost good faith be not observed by either party, the contract may be avoided by the other party. In Black King Shipping Corpn and Wayang (Panama) SA v Massie (The Litsion Pride) [1985] 1 Lloyds Rep 437 Hirst J held, in the context of a fraudulent device (a dishonest backdating of a notice of entry into the Gulf, unnecessary and irrelevant to the claim in law, but believed by Owners to be relevant at the time they made it), that section 17 applied to enable avoidance ab initio, while operating at the same time, in Hirst Js view, to give underwriters an alternative option simply to rely on the fraud as a defence to the particular claim. This theory did not survive academic criticism or subsequent authority: see Manifest Shipping Co Ltd v Uni Polaris Insurance Co Ltd (The Star Sea) [2003] 1 AC 469, paras 61 62 and 71, per Lord Hobhouse, where the fraudulent claims principle is put as the consequence of a rule of law albeit, one may add, a rule of law no doubt deriving from the foundation of good faith on which insurance rests (see para 114 above), but tailored to the post contractual position. See also the view expressed in Agapitos v Agnew, para 45(d), and the later decision in AXA General Insurance Co Ltd v Gottlieb [2005] EWCA Civ 112; [20015] 1 AER (Comm) 445, para 31 (identifying the fraudulent claims rule as a special common law rule). When stating in The Star Sea that Hirst Js approach should no longer be regarded as a sound statement of the law, Lord Hobhouse also stated in a passage in para 71 quoted by Lord Sumption: In so far as it is based upon the principle of the irrecoverability of fraudulent claims, the decision is questionable upon the facts since the actual claim made was a valid claim for a loss which had occurred and had been caused by a peril insured against when the vessel was covered by a held covered clause. But it is important to note that Lord Hobhouse went on immediately to add: It is not necessary to examine whether there might or might not have been some other basis upon which the case could have been decided in favour of the insurer as one feels clearly it ought to have been. And in the next paragraph (para 72) he also noted that: Fraud has a fundamental impact upon the parties relationship and raises serious public policy considerations. Remediable mistakes do not have the same character. Similarly, in K/S Merc Scandia XXXXII v Certain Underwriters (The Mercandian Continent) [2001] 2 Lloyds Rep 563 Longmore LJ was concerned in the passages from paras 26 to 28 which Lord Sumption has cited in para 16 with the relevance of materiality to avoidance ab initio, not with the present problem. Longmore LJ in fact addressed the present problem in para 29 in terms which constitute further authority for treating the fraudulent claims principle as embracing fraudulent devices and another precursor to the reasoning in The Aegeon. He said: I should lastly refer to what has been called the much discussed decision in The Litsion Pride [1985] 1 Lloyds Rep 437 where the assured did not inform underwriters that their vessel was about to go into an exclusion zone but concocted a letter to their brokers two days after a casualty in that exclusion zone had occurred; this letter was falsely dated the day that the vessel entered the exclusion zone and informed the brokers and the underwriters that was what the vessel was about to do. Owners brokers also wrote later false statements in support of the claim. Mr Justice Hirst held that the false letter was a fraud clearly connected to the claim and the later statements were made in the direct context of the claim. It is thus a case of making a fraudulent claim and to that extent was, with respect, good law, but irrelevant to the present case. To the extent, however, that the case enunciates any wider obligations of post contract good faith in relation to merely culpable non disclosure or misrepresentation, it has been finally and authoritatively disapproved in The Star Sea (see para 71) (emphasis added) In this court we are of course free to reconsider prior authority at a lower level, although we should no doubt be reluctant to upset the instincts of previous courts addressing an issue over the past century. I appreciate the strength of the comment made by Popplewell J, when dismissing the present claim, that To be deprived of a valid claim of some 3.2m as a result of such reckless untruth is, in my view, a disproportionately harsh sanction. However, I think this comment has too narrow a focus; and, further, that it fails to consider the matter in the context of the well established core fraudulent claims principle and the reasoning behind it as a whole. The core fraudulent claims principle deprives an insured of the whole of any claim which he has fraudulently exaggerated. This principle has, at the instance of the Law Commission, been embodied by Parliament in the Insurance Act 2015, which will shortly come into effect, and will provide as follows: If the insured makes a fraudulent claim under a contract 12. Remedies for fraudulent claims (1) of insurance (a) the insurer is not liable to pay the claim, (b) the insurer may recover from the insured any sums paid by the insurer to the insured in respect of the claim, and (c) in addition, the insurer may by notice to the insured treat the contract as having been terminated with effect from the time of the fraudulent act. It is not in dispute that, in proposing this clause in the relevant Bill, the Law Commission left open for the courts to consider its application, directly or by analogy, to fraudulent devices. But it is clear that the policy behind its enactment by Parliament was the policy which the courts have for long applied, based on the special position of insurance and the belief that a stringent legal response to fraudulent claims serves as a necessary and justified deterrence to insurance fraud. We were referred to academic criticism of theories of deterrence in this context, but, as Lord Sumption observes, many legal rules are framed on a basis which assumes that they are capable of having and shaping legal, social or economic behaviour, and here is a classic example of Parliament endorsing this approach. The fraudulent devices rule serves a similar role in encouraging integrity and deterring fraud in the claims process. It should not be forgotten that very frequently fraud in the claims process will be associated with (a) the fraudulent pursuit of a non existent or bad claim or (b) the fraudulent exaggeration of a good claim. And, aside from cases in which either (a) or (b) is with the benefit of hindsight established, it will, or will almost always, be associated with (c) the pursuit of what the insured believes or fears to be at least a questionable claim. (There can be cases where an insured tells lies during the claims process for reasons entirely collateral to the merits of the claim, eg as in The Mercandian Continent or to cover up some personal or business embarrassment, but one would not then expect the threshold test of materiality to be met.) Lord Hughes, Lord Sumption and Lord Toulson suggest a difference in quality between the fraud involved in cases (a) and (b) on the one hand and in case (c) on the other hand. Lord Hughes says (para 100) that the difference in quality is between fraud in an attempt to gain something to which he [the assured] is not entitled, and the insured who dishonestly gilds the lily with a lie or falsified evidence, but stands thereby to obtain nothing more than was his legal due, while Lord Sumption says (paras 24 25) with Lord Toulsons support (para 105) that it is between a fraudulently exaggerated (or no doubt non existent) claim and the position where the insured is trying to obtain no more than the law regards as his entitlement. The difficulty with both analyses is that they look at fraud and the use of a fraudulent device with hindsight, rather than by reference to the state of mind with which a fraudulent device is usually deployed. That, as I have pointed out, is precisely because the assured does not believe or is not confident that he has a good claim. The fraudulent devices rule means that a fraudulent claimant cannot in cases (a) and (b) safely embellish his bad or exaggerated claim with fraudulent devices, and then, when any such device is discovered, hope to do better with the next device or the lies he will tell in court to pursue his bad or exaggerated claim. In case (c), it means that he cannot safely distort the claims process to his advantage and hope to prevent the insurer identifying, relying on or investigating the weakness which led to the insured telling the lie in the first place. In each of cases (a), (b) and (c), the use of a fraudulent device material to the insurance claim operates as a bar to its further pursuit, making further investigation into the underlying circumstances unnecessary and operating as a clear disincentive to lying. These are significant protective effects, which are entirely consistent with the underlying philosophy of insurance, mutual trust. Abolishing the fraudulent devices rule means that claimants pursuing a bad, exaggerated or questionable claim can tell lies with virtual impunity. The same logic governs fraudulent devices as it does fraudulent claims generally. It is, as Lord Hobhouse said in The Star Sea, para 62: simple. The fraudulent insured must not be allowed to think: if the fraud is successful, then I will gain; if it is unsuccessful, I will lose nothing. In short, on the approach advanced by the majority, the fraudulent device will advance the insurance recovery if undiscovered, and quite possibly lead to the recovery of a bad or exaggerated claim, and it will have no effect on any insurance recovery to which the assured may be entitled, even if it is discovered. Either way, it will have distorted the claims process, which Lord Hughes rightly identifies (in para 55) as key to insurance, from the viewpoint of policyholders as much as insurers. And, if the fraudulent device is discovered, it will have distorted the claims process by the time and cost involved in unveiling the fraud and attempting to ascertain its true implications. From the insureds viewpoint the risk that this might lead a court at trial to deprive him of some costs will be unlikely to outweigh the perceived advantages of telling the lie at the time it was told. And in many cases the lie will be undiscovered, the insurers will pay and it will never be investigated or known how far the claim was bad or exaggerated and how far any questions about it might have been answered adversely to the insured. Where an insured has a claim which he believes or fears to be questionable, it makes little sense in my view to say, as Lord Sumption does in para 26 with Lord Toulsons support (para 105) that the lie is dishonest, but the claim is not. When the lie is told, it is, as I have pointed out, often told precisely because the insured does not really believe he has a good claim, even though at a later trial it may be shown (as it was in The Litsion Pride, where notice of entry into the Gulf proved not in law to be a condition of the insurance) that his fears were in law unfounded. Further, although the point is ultimately semantic, there is no difficulty (and neither Viscount Sumner nor Roche J experienced any) in describing a claim otherwise honestly believed in as itself fraudulent if it is being promoted by a fraudulent device. In the relatively rare case, like the present, where the insured pursues a claim to trial, and is found after the event to have had a sound claim, it may seem harsh that the insured loses everything. But policy must by definition look at the position overall, as the core fraudulent claims rule does. In any event a person who uses fraudulent devices in the context of an insurance relationship deserves no real sympathy: see Lord Hobhouses words in The Star Sea, paras 62 and 72, quoted in paras 120 and 129 above. As to materiality, it is clear that inducement has no role in relation to the core fraudulent claims rule, and there is no reason why it should do so in relation to fraudulent devices. It is equally clear that materiality must be considered by reference to the position at the time when the fraudulent device is deployed, and that it cannot be right to consider it retrospectively by reference to whatever a court, years later perhaps, decides is the actual factual or legal position. There is as a matter of common sense no difficulty about describing a lie told during the claims process as material by reference to the circumstances as they were at the time when it was told. It makes no sense to do otherwise. Lies are told in a particular context, and it is only in that context that they can even be identified as lies. To suggest, as Lord Toulson does (para 107), that a lie told to promote a claim is immaterial to the parties respective rights and obligations, simply because, perhaps years later, it can be seen that the lie was unnecessary and the claim good without it, seems a charter for untruth, which overlooks (a) the obvious imperative of integrity on both sides in the claims process and (b) the obvious reality that lies are told for a purpose, almost invariably as here to obtain the uncovenanted advantage of having the claim considered and hopefully met on a false premise. I add that, if a lie could be disregarded as immaterial because it could be shown, years later, that it was irrelevant to the outcome of the claim, then logically a lie exaggerating the value of a claim ought also to be disregarded in relation to whatever was, years later, shown to be the valid claim. The applicability or otherwise of the fraudulent claims rule in relation to lies told during the course of litigation was not argued before us. In Agapitos v Agnew the court (at paras 47 53) applied by analogy in this context the reasoning in relation to non disclosure adopted by the House of Lords in The Star Sea. This might have been an area worth revisiting on the present appeal. But, assuming the correctness of the decision on this point in Agapitos v Agnew, its rationalisation must be that the court process should be allowed to operate independently, with its own inbuilt sanctions in respect of lies or other abuses by either party. That has no bearing on the present issue, which is whether the undoubted fraudulent claims rule, which Parliament has now endorsed, extends to or embraces the use of a fraudulent device. It was submitted that the fraudulent devices rule operates in a case like the present inconsistently with the principle in the first paragraph of Protocol 1 (A1P1) to the European Convention on Human Rights, in that it deprives the insured of a proprietary right in the form of an insurance claim. The court is under section 6(1) of the Human Rights Act 1998 not to act inconsistently with the Convention rights, and this is said to mean that it should define or develop the common law in such a way as to ensure that insurers cannot deprive any insured of his insurance rights in a way which would be disproportionate. In the light of the view of the majority on this appeal, I do not propose to spend time considering the merits or implications of this sort of horizontal application of the Convention rights in the present context. Accepting that the fraudulent claims rule, including the fraudulent devices rule, can deprive an insured of a valid claim, the deprivation clearly has a legitimate aim, and my view would be that it would be and was proportionate as a bright line rule for the reasons I have given and which the Court of Appeal gave. For these reasons, I consider that the Court of Appeal came to the right conclusion and would myself dismiss the appeal. In the light of the majority judgment, insurers will no doubt be advised about whatever may be the potential merits of making express in future whatever understanding they have, or action they may wish to take, regarding the effect of fraudulent devices, as and when such are discovered to have been used by an insured during the claims process. |
A refugee who has been granted a right of lawful presence in the receiving state needs the assurance that this right will not be withdrawn, with the result that he or she may again become an uprooted person in search of refuge. That assurance is given by article 32(1) of the Geneva Convention relating to the Status of Refugees (1951) (Cmd 9171) and the New York Protocol (1967) (Cmnd 3906), which provides: The Contracting States shall not expel a refugee lawfully in their territory save on grounds of national security or public order. This provision is to be contrasted with article 33(1), which 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. Every refugee has the protection of article 33. The protection of article 32 is more generous. Its effect is that, once a refugee has been admitted or his presence has been legalised and so long as entitlement to refugee status continues, he is entitled to stay indefinitely in the receiving state. He can only forfeit that right by becoming a risk to national security or by disturbing the public order. But he requires to have been afforded a certain degree of attachment to the receiving state before this privilege becomes available. The question that this case raises is the extent of the attachment that is needed to attract that protection. Does the protection of article 32 extend to a refugee who has been temporarily admitted to the United Kingdom according to the rules of its domestic law and has engaged with the processes that its legislation provides to determine his status, but has not yet been given leave to enter or to remain here? In other words, does article 32 apply only to a refugee who has been given the right lawfully to stay in the contracting state, as its domestic law would answer that question? Or must the words lawfully present in the territory be given an extended and autonomous meaning, so as to ensure that a refugee who has not yet been given a right to remain in the territory is afforded protection under article 32 that extends beyond the basic obligation under article 33 not to expel or return (refouler) to a territory where his life or freedom would be threatened for a Convention reason? Should they be given this extended meaning to prevent his removal to a country where he will not be able to enjoy the full extent of the rights that the Convention extends to a refugee? The facts The appellant is of Eritrean nationality. But she has never lived in Eritrea. She was born on 2 July 1981 and was formerly resident in Ethiopia. She came to the United Kingdom on 3 July 1998. Immediately on her arrival in this country she claimed protection as a refugee. Her reason was that she feared persecution in both Eritrea and Ethiopia. Her claim was registered, and she was granted temporary admission into the United Kingdom under paragraph 21 of Schedule 2 to the Immigration Act 1971. Paragraph 16 of Schedule 2 provides that a person liable to examination and removal upon his arrival in the United Kingdom 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. Paragraph 21 of the Schedule provides that a person liable to detention under paragraph 16 may, under the written authority of an immigration officer, be temporarily admitted to the United Kingdom without being detained. Section 11(1) of the 1971 Act provides that a person who has not otherwise entered the United Kingdom shall be deemed (for the purposes of that Act) not to do so as long as he is detained, or temporarily admitted or released while liable to detention under the powers conferred by Schedule 2 to the Act. The appellants status has not changed since the date of her arrival more than 13 years ago. Her temporary admission has been extended from time to time, and she remains liable to detention. The latest notification of temporary admission was issued to her on 17 October 2011. She was told that she must reside at the address given on the notification form and she was to report to an immigration official on 22 December 2011 and then on the fourth Thursday every two months. She was also told that she was not allowed to work or engage in any business unless she had been explicitly granted permission to do so. These instructions assume that, as she has been given temporary admission only and is still liable to be detained, she is not entitled to the rights that articles 18 and 26 of the Convention afford to refugees who are lawfully in this countrys territory: see para 23, below. The appellant claimed in a statement made shortly after her arrival that she had a well founded fear of persecution if she were to be returned to Ethiopia. This was because she was afraid that Ethiopia would send her to Eritrea. In a later statement she said that she feared persecution in Eritrea because she had not taken part in the war between Eritrea and Ethiopia. Her claims for asylum and humanitarian protection were refused in a letter dated 1 November 2004. In a notice of refusal of leave to enter dated 5 November 2004 she was informed that the Secretary of State proposed to give directions for her removal to Eritrea. She appealed to an adjudicator. In a decision that was promulgated on 14 February 2005 the adjudicator said that he was satisfied that she would be at serious risk of persecution or ill treatment because of her religion as a born again Christian if she were to be removed to Eritrea. But he was not satisfied that she would be considered as a draft evader or a deserter. He dismissed her appeal on the basis that she could safely be returned to Ethiopia. The appellant sought permission to appeal to the Immigration Appeal Tribunal. This was on the basis that the adjudicator, having found her to be of Eritrean nationality, should have allowed her appeal as he found that she had a well founded fear of persecution in Eritrea. On 23 January 2006 her appeal came before the Asylum and Immigration Tribunal, as the Immigration Appeal Tribunal had now become. It was conceded on behalf of the Secretary of State that her appeal should have been allowed, as the proposal that had been communicated to the appellant on 5 November 2004 was that directions were to be given for her removal to Eritrea. In his determination, which was promulgated on 1 February 2006 and forwarded to the appellants representatives on 20 February 2006, the senior immigration judge said that the tribunal was satisfied that the adjudicator had erred in law. But, using the adjudicators clear and reasoned findings of fact, which were not challenged, the tribunal found that the appellant was a refugee and that she was entitled to international protection as her fear of persecution for a Convention reason in Eritrea was well founded. It also found that her removal to Eritrea would be unlawful as it would lead to her ill treatment contrary to her protected rights under article 3 of the European Convention on Human Rights. The Secretary of State did not appeal against this decision. On 24 August 2006 the Secretary of State issued a fresh reasons for refusal letter and served a new notice of decision to refuse the appellant leave to enter. Notwithstanding the fact that the appellant had already been recognised to be a refugee from Eritrea, she was told that this time her asylum and human rights claims had been examined on the basis that she was an Ethiopian national. She was refused leave to enter the United Kingdom, and she was notified that it was proposed to give directions for her removal to Ethiopia. The letter stated that, in the light of all the evidence available, it had been concluded that the appellant had not established a well founded fear of persecutions in Ethiopia and did not qualify for asylum, that her asylum claim was refused and that it had been recorded as determined on 1 November 2004. It also stated that it had been concluded that her removal would not be contrary to the United Kingdoms obligations under the ECHR. The appellant lodged an appeal against this decision in order to protect her position. But her primary position is that she is entitled to the status of a refugee on the basis of the determination by the Asylum and Immigration Tribunal of 1 February 2006. On 25 September 2006 the appellant commenced these proceedings for judicial review of the decision of 24 August 2006. She seeks a mandatory order requiring the Secretary of State to implement the decision of the AIT granting her leave to remain in the United Kingdom as a refugee, and an order quashing the decision in the letter of 24 August 2006 refusing her leave to remain and proposing that directions be given for her removal to Ethiopia. The Ethiopian appeal has been adjourned pending the outcome of these proceedings. In a letter dated 13 November 2006 which was annexed to his Summary Grounds of Defence the Secretary of State informed the appellants solicitors that he was no longer proceeding on the basis that the appellant was an Ethiopian national. He was proceeding on the basis that she was an Eritrean national. But he maintained his position that the appellant could safely be removed to Ethiopia for the reasons given in the letter of 24 August 2006. The appellant was granted permission to apply for judicial review by Pitchford J on 27 February 2007. On 19 December 2008 Nicola Davies QC, sitting as a deputy judge of the High Court, quashed the decision declining to grant the appellant refugee status and ordered the Secretary of State to recognise her as a refugee and grant her leave to remain: [2008] EWHC 3162 (Admin). In para 22 of her judgment she said: I am satisfied that a determination of the refugee status of the claimant in accordance with article 1 of the Refugee Convention was made by an appropriate tribunal, the AIT. The decision is binding upon the defendant and affords the claimant the protection of article 32(1). Accordingly I grant the relief sought by the claimant. In reaching this decision the deputy judge applied the following observation of Lord Brown of Eaton under Heywood in Szoma v Secretary of State for Work and Pensions [2005] UKHL 64, [2006] 1 AC 564, para 24: The term refugee in article 32(1) of the Refugee Convention can only mean someone already determined to have satisfied the article 1 definition of that term (as for example in article 23 although in contrast to its meaning in article 33). Were it otherwise there would be no question of removing asylum seekers to safe third countries and a number of international treaties, such as the two Dublin Conventions (for determining the EU state responsible for examining applications lodged in one member state) would be unworkable. As she saw it, therefore, the effect of the tribunals determination that the appellant was a refugee of itself meant that she had a right to stay in this country under article 32. The Court of Appeal (Sir Anthony May P, Longmore and Stanley Burnton LJJ) reversed the judges decision [2010] EWCA Civ 643, [2010] 1 WLR 2858. In para 48 of his judgment Stanley Burnton LJ said that he would hold: that article 32 applies only to a refugee who has been granted leave to enter and to stay in the United Kingdom. I would reject the contention that temporary admission or leave to enter for the purpose of the determination of a claim for asylum (or any other ground for claiming a right to stay) renders a stay lawful for the purpose of article 32. The purpose of article 32 is to give security of residence to a refugee who has been given the right to live in the contracting state in question. He declined to apply Lord Browns statement in Szoma v Secretary of State for Work and Pensions. In para 45 he acknowledged that the decision in that case was binding authority of the meaning of lawfully present in the United Kingdom in paragraph 4 of Part 1 of the Schedule to the Social Security (Immigration and Asylum) Consequential Amendments Regulations 2000 (SI 2000/636), which was the provision under consideration in that case. But he said that it was clear that Lord Brown was not deciding any question of removability under the 1971 Act. He also held that the appeal that was determined by the tribunal was not a status appeal under section 83 of the Nationality, Immigration and Asylum Act 2002, but an appeal against an immigration decision under section 82 of that Act. So it could not have the effect of a direction to the Secretary of State to grant asylum: para 58. The legislative provisions As the Secretary of States argument is that the answer to the question whether a refugee is lawfully in the territory must be determined solely with reference to domestic law, the provisions of domestic law which are relevant to the appellants case form an important part of the background. The leading provision is section 11(1) of the Immigration Act 1971, which provides: A person arriving in the United Kingdom by ship or aircraft shall for purposes of this Act be deemed not to enter the United Kingdom unless and until he disembarks, and on disembarkation at a port shall further be deemed not to enter the United Kingdom so long as he remains in such area (if any) at the port as may be approved for this purpose by an immigration officer; and a person who has not otherwise entered the United Kingdom shall be deemed not to do so as long as he is detained, or temporarily admitted or released while liable to detention, under the powers conferred by Schedule 2 to this Act. In R v Secretary of State for the Home Department, Ex p Bugdaycay [1987] AC 514, the House of Lords applied that provision to the case of Mr Musisi, an asylum seeker of Ugandan nationality who had come to this country from Kenya and had been refused leave to enter the United Kingdom. It held that, even if he were properly to be treated as a refugee from Uganda, this would not present an obstacle to his return to Kenya. The argument that he was protected by article 32 because his status as a refugee meant that he was lawfully in the territory was rejected. Lord Bridge of Harwich said at p 526: The United Kingdom was already a party to the Convention when the Act was passed and it would, to my mind, be very surprising if it had the effect contended for. But I am satisfied that the deeming provision enacted by section 11(1) makes Mr Collinss submission on this point quite untenable. Then there are the provisions which set out the procedure that is to be adopted. Paragraph 2 of Schedule 2 to the 1971 Act provides for the examination of persons who have arrived in the United Kingdom by immigration officers for the purpose of determining whether, if he is not patrial, he may or may not enter the United Kingdom without leave and, if he may not, he should be given leave or should be refused leave. 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. Paragraphs 21(1) and (2) provide (as amended by section 10 of and paragraph 10 of the Schedule to the Immigration Act 1988): (1) A person liable to detention or detained under paragraph 16 above may, under the written authority of an immigration officer, be temporarily admitted to the United Kingdom without being detained or be released from detention; but this shall not prejudice a later exercise of the power to detain him. (2) So long as a person is at large in the United Kingdom by virtue of this paragraph, he shall be subject to such restrictions as to residence, as to his employment or occupation and as to reporting to the police or an immigration officer as may from time to time be notified to him in writing by an immigration officer. Immigration and asylum appeals are provided for in Part V of the Nationality, Immigration and Asylum Act 2002. Sections 82 and 83, as amended by sections 26(2) and 26(3) of the Asylum and Immigration (Treatment of Claimants, etc) Act 2004, and section 84 provide for a general right of appeal, for a right of appeal in the case of an asylum claim and for the grounds of appeal respectively. Section 82(1) provides that where an immigration decision is made in respect of a person he may appeal to the tribunal. A definition of the expression immigration decision is provided in section 82(2). It includes, so far as relevant: (a) refusal of leave to enter the United Kingdom, (b) refusal of entry clearance (g) a decision that a person is to be removed from the United Kingdom by way of directions under section 10(1)(a), (b) or (c) of the Immigration and Asylum Act 1999 (c 33) (removal of person unlawfully in United Kingdom) Section 83 provides that a person may appeal to the tribunal against the rejection of his asylum claim. Section 84(3) provides that an appeal under section 83 must be brought on the grounds that removal of the appellant from the United Kingdom would breach the United Kingdoms obligations under the Refugee Convention. The expression asylum claim is defined in section 113, as substituted by section 12 of the Immigration, Asylum and Nationality Act 2006, as a claim made by a person that to remove the person from or require him to leave the United Kingdom would breach the United Kingdoms obligations under the Refugee Convention. At the relevant time paragraph 334 of the Statement of Changes in Immigration Rules (1994) (HC 395) provided An asylum applicant will be granted asylum in the United Kingdom if the Secretary of State is satisfied that: (i) he is in the United Kingdom or has arrived at a port of entry in the United Kingdom; and (ii) he is a refugee, as defined by the [Refugee] Convention and Protocol; and (iii) refusing his application would result in him being required to go (whether immediately or after the time limited by any existing leave to enter or remain) in breach of the Convention and Protocol, to a country in which his life or freedom would be threatened on account of his race, religion, nationality, political opinion or membership of a particular social group. Section 2 of the Asylum and Immigration Act 1993, which has as its side note the words Primacy of the Convention, provides: Nothing in the immigration rules (within the meaning of the 1971 Act) shall lay down any practice which would be contrary to the Convention. The Refugee Convention By article 1A(2) of the Convention the term refugee applies to any person who as a result of events occurring before 1 January 1951 and 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; or who, not having a nationality and being outside the country of his former habitual residence as a result of such events, is unable or, owing to such fear, is unwilling to return to it. The rights that attach to the status of refugee under the Convention depend in each case on the possession of some degree of attachment to the contracting state in which asylum is sought. Drawing on the way the hierarchy of attachment has been described by Professor Hathaway, Rights of Refugees under International Law (Cambridge, 2005), pp154 160, under the heading Attachment to the Asylum State, the appellants written case provides a helpful analysis. An examination of the Convention shows that it contemplates five levels of attachment to the contracting states, which from the weakest to the strongest may be set out as follows: a. subject to the contracting states jurisdiction (articles 3, 5, 7(1), 7(3), and (4), 9, 12, 16(1) and (3), 17(3), 20, 22, 24(3) and (4), 29, 30, 33 and 34); b. physical presence [sur leur territoire] (articles 4, 27 and 28(1)); c. lawful presence [se trouvant rgulirement sur leur territoire] (articles 18, 26 and 32); d. lawful stay [rsidant rgulirement sur leur territoire ] (articles 7(2), 10, 15, 17, 19, 21, 23, 24(1) (3), 25 and 28); and e. habitual residence [o il sa rsidence habituelle] (articles 14 and 16(2)). The level of attachment which article 32 requires is commonly referred to by the commentators as lawful presence: eg Hathaway, Rights of Refugees in International Law, 657. Article 32 provides: 1. The Contracting States shall not expel a refugee lawfully in their territory save on grounds of national security or public order. 2. The expulsion of such a refugee shall be only in pursuance of a decision reached in accordance with due process of law. Except where compelling reasons of national security otherwise require, the refugee shall be allowed to submit evidence to clear himself, and to appeal to and be represented for the purpose before competent authority or a person or persons specially designated by the competent authority. 3. The Contracting States shall allow such a refugee a reasonable period within which to seek legal admission into another country. The Contracting States reserve the right to apply during that period such internal measures as they may deem necessary. Articles 18 and 26 require the same level of attachment. Article 18, which is headed self employment, provides: The Contracting States shall accord to a refugee lawfully in their territory treatment as favourable as possible and, in any event, not less favourable than that accorded to aliens generally in the same circumstances, as regards the right to engage on his own account in agriculture, industry, handicrafts and commerce and to establish commercial and industrial companies. Article 26, which is headed freedom of movement, provides: Each Contracting State shall accord to refugees lawfully in its territory the right to choose their place of residence to move freely within its territory, subject to any regulations applicable to aliens generally in the same circumstances. The issues The dispute between the parties is as to whether the appellant is entitled to the protection of article 32 of the Convention, which precludes the contracting states from expelling a refugee who is lawfully in their territory save on grounds of national security or public order. At first sight the question at issue is a relatively narrow one, directed to the meaning of the phrase lawfully in their territory. For the Secretary of State Miss Giovannetti QC submits that the appellant is not, and never has been, lawfully in the United Kingdom for the purposes of that article. Nor will she be lawfully in the United Kingdom for its purposes if she loses the Ethiopian appeal. There will be no obstacle to her removal should that event occur and she were to lose her article 3 case too. The question is to be determined solely by reference to the domestic law of the state in question. The effect of the relevant legislation is that a refugee is not lawfully present in the United Kingdom if she does not have leave to enter or remain in this country. So the Secretary of State will be free to bring her temporary admission to an end if her appeal against the directions for her removal to Ethiopia is dismissed. Mr Drabble QC for the appellant, on the other hand, invites the court to look at the issue much more broadly. The basic thrust of his argument, which he did not develop in this form before the Court of Appeal, is that it would be contrary to the proper construction and spirit and intendment of the Convention to hold that the appellant was not lawfully present in the United Kingdom and that the Secretary of State was free to bring her lawful presence to an end by issuing directions for her removal to Ethiopia. He takes his stand on the principle that the Convention is an international instrument which falls to be interpreted in accordance with the general rule of interpretation that article 31(1) of the Vienna Convention on the Law of Treaties 1969 (Cmnd 4140) sets out, that 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. This approach, he said, should lead one to conclude that article 32 had a broader purpose than a study of its language, if taken on its own, might suggest. Its purpose was to ensure that a refugee who had been admitted to the appeal process of a contracting state, and had been found to be a refugee by the operation of that process, was not removed to a country that could not provide the full panoply of rights to which a refugee was entitled under the Convention. The way that Mr Drabble has invited us to approach the issue suggests that it would be helpful to take it in two stages. The first is to examine the language of article 32 and to determine, provisionally, whether the words that it uses, taken by themselves, can accommodate the situation in which the appellant finds herself. The second is to consider whether, if they cannot, the object and purpose of the Convention require the words to be read and given effect more broadly so as to afford the appellant the protection which she seeks against her removal to Ethiopia. Two points need to be stressed, however. First, it was no part of Mr Drabbles case that an exception should be made for the appellant simply because of the inordinate length of time that it is taking for her case to work its way through the appeal process. He said that the mere passage of time was not the sole or main reason why she should have the benefit of article 32, although the stage which the proceedings had reached was relevant. The issue whether the mere passage of time is an obstacle to her removal is for another day. So Mr Drabbles argument, if sound, will apply to all refugees who have been given temporary permission to remain and have been admitted to the appeal process of the contracting state. I do not see how his argument can be limited in its effect to the case of this particular appellant. The second point is that Mr Drabble was not aware of any other case in which the Secretary of State has insisted on removing a person to a country, such as Ethiopia, which did not satisfy the general criteria of a safe country. This case therefore breaks new ground. He said that he was not aware of any other case like this, as the Secretary of State was not known ever to have claimed that Ethiopia satisfied the general criteria for a safe third country. He finds some support for his argument that the class of beneficiary referred to in article 32 should be broadly interpreted in Professor James C Hathaways work, The Rights of Refugees under International Law (Cambridge, 2005), pp 177 179 and 667 668 and in the wide ranging discussion of the issue in Atle Grahl Madsen, The Status of Refugees in International Law (Leiden, 1972), vol II, paras 215 216 where the point is made that, while a refugee who is lawfully in a territory according to municipal law is clearly entitled to the benefit of those provisions of the Convention whose applicability is subject to this test, persons may be considered to be lawfully there although they are not formally so, while at the same time not lawfully there for other purposes: pp 359 360. But I do not find anything in the passages to which we were referred that shows that their approach has universal acceptance, and there is no judicial authority that is directly in point. The argument has to be examined, therefore, as raising an issue of principle. "Lawfully in their territory" As Lord Bingham of Cornhill said in R (European Roma Rights Centre) v Immigration Officer at Prague Airport (United Nations High Commissioner for Refugees intervening) [2004] UKHL 55, [2005] 2 AC 1, para 15, the Refugee Convention, like most international conventions, represented a compromise between competing interests. On the one hand there was the need to ensure humane treatment of the victims of oppression. On the other there was the wish of sovereign states to maintain control over those seeking entry to their territory: Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR, 225, 247 248, 274; Rodriguez v United States (1987) 480 US 522, 525 526. There is no doubt that the Convention should be given a generous and purposive interpretation, bearing in mind its humanitarian objects and the broad aims reflected in its preamble, which states: The high contracting parties Considering that the Charter of the United Nations and the Universal Declaration of Human Rights approved on 10 December 1948 by the General Assembly have affirmed the principle that human beings shall enjoy fundamental rights and freedoms without discrimination, Considering that the United Nations has, on various occasions, manifested its profound concern for refugees and endeavoured to assure refugees the widest possible exercise of these fundamental rights and freedoms, Considering that it is desirable to revise and consolidate previous international agreements relating to the status of refugees and to extend the scope of and protection accorded by such instruments by means of a new agreement, Considering that the grant of asylum may place unduly heavy burdens on certain countries, and that a satisfactory solution of a problem of which the United Nations has recognised the international scope and nature cannot therefore be achieved without international co operation, Expressing the wish that all states, recognising the social and humanitarian nature of the problem of refugees, will do everything within their power to prevent this problem from becoming a cause of tension between states, Noting that the United Nations High Commissioner for Refugees is charged with the task of supervising international convention, providing for the protection of refugees, and recognising that the effective co ordination of measures taken to deal with this problem will depend upon the co operation of states with the High Commissioner Support for this approach is to be found in article 31(1) of the Vienna Convention on the Law of Treaties to which Mr Drabble referred: see para 25, above. Reflecting principles of customary international law, it requires a treaty to be interpreted in the light of its object and purpose. So it must be interpreted as an international instrument, not a domestic statute. It should not be given a narrow or restricted interpretation. But it must be remembered too that, however generous and purposive its approach to interpretation may be, the courts task remains one of interpreting the document to which the contracting parties have committed themselves by their agreement. As Lord Bingham was at pains to emphasise in the Roma Rights case, at para 18, it must interpret what the parties have agreed to. It has no warrant to give effect to what they might, or in an ideal world would, have agreed. One should not overlook the fact that article 31(1) of the Vienna Convention also states that a treaty should be interpreted in accordance with the ordinary meaning to be given to the terms of the treaty in their context. So the starting point of the construction exercise should be the text of the Convention itself: Adan v Secretary of State for the Home Department [1999] 1 AC 293, per Lord Lloyd of Berwick at p 305; Januzi v Secretary of State for the Home Department [2006] UKHL 5, [2006] 2 AC 426, para 4. A treaty must be interpreted in good faith. But this is not to be taken to be a source of obligation where none exists, as the International Court of Justice has repeatedly emphasised: In re Border and Transborder Armed Actions (second phase) (Nicaragua v Honduras) [1988] ICJ Rep 69, para 94; In re Land and Maritime Boundary between Cameroon and Nigeria (Cameroon v Nigeria) [1988] ICJ Rep 175, para 39. As a general principle of law it has only marginal value as a source of rights and duties: see the Roma Rights case, para 62. There is no want of good faith if the Convention is interpreted as meaning what it says and the contracting states decline to do something that its language does not require them to do. Everything depends on what the Convention itself provides. The context in which the word lawfully appears in article 32 is important too. The phrase in which it appears contemplates that the refugee is not merely present in the territory of the contracting state, but that he is there lawfully. This implies that his presence is not just being tolerated. On the contrary, it is to be assumed that he has a right to be there. As to the source of that right, the power to admit, exclude and expel aliens was among the earliest and most widely recognised powers of the sovereign state: Roma Rights, para 11. The Convention itself shows that it has come to be recognised that there is a right and indeed a duty in sovereign states to give refuge to aliens who are fleeing from persecution and to refuse to surrender them to the authorities in their home states. But states the world over consistently have exhibited great reluctance to give up their sovereign right to decide which persons will, and which will not, be admitted to their territory and be given a right to settle there: Hyndman, Refugees under International Law with a Reference to the Concept of Asylum (1986) 60 ALJ 148, 153, in a passage quoted by Lord Bingham in the Roma Rights case, para 19. The approach which our own domestic law takes to this issue was explained by Lord Mustill in T v Secretary of State for the Home Department [1996] AC 742, 754: Neither under international nor English municipal law does a fugitive have any direct right to insist on being received by a country of refuge. Subject only to qualifications created by statute this country is entirely free to decide, as a matter of executive discretion, what foreigners it allows to remain within its boundaries. There is no indication in the travaux prparatoires that the other states who were party to the framing of the Convention were minded to surrender control over those seeking entry to their territory. On the contrary, Nehemiah Robinsons analysis of the Commentary on the 1951 Convention and the most important documents which had a bearing on its interpretation, Convention relating to the Status of Refugees, its History, Contents and Interpretation (New York, 1953), pp 110 111, led him firmly to the contrary conclusion: Lawfully in the country was understood to refer to refugees either lawfully admitted or whose illegal entry was legalized but not to refugees who, although legally admitted or legalized, have overstayed the period for which they were admitted or were authorised to stay or who have violated any other condition attached to their admission or stay. Referring to this passage, the UNHCR states in Lawfully Staying A Note on Interpretation (1988) that its conclusion from the travaux is that the lawfulness of the stay is to be judged against national rules and regulations governing such a stay: para 8. The Michigan Guidelines on Protection Elsewhere, which were adopted on 3 January 2007 at a colloquium of which Professor James Hathaway was the convener, appear to contradict this approach. They state in para 5: Lawful presence must be defined by the sending state in good faith and in accordance with the requirements of international law. Lawful presence is in any event established not later than such time as a decision is reached on the admissibility of the protection claim. This passage shows, as do Professor Hathaways own writings, that some of the current thinking on the subject has developed substantially from that which appears to have been the guiding force when the wording of the Convention were under discussion over 60 years ago. But I agree with Lord Dyson that there is no consensus among the commentators that lawful presence should be given an autonomous meaning or what that meaning should be: para 63, below. So we must take our guidance from what the framers of the Convention must be taken to have agreed to, as understood by the UNCHR. The problem to which its note was addressed was that created by the practice of some states simply to tolerate a stay for long periods without regularising the status of the refugee. The UNHCR recommended that a judgment as to lawfulness should take into account all the prevailing circumstances, including the fact that the stay in question is known and not prohibited tolerated, in other words because of the precarious circumstances of the person: para 23. That is not the point that needs to be considered here. The national rules and regulations are being applied in this case, and it is clear that the appellant has not yet been given leave to enter or to remain in the United Kingdom. She is still liable to be detained and, in the words of section 11(1) of the 1971 Act, she is deemed not to have entered this country. There is, of course, no question of the appellant being expelled from the United Kingdom while the processes of appeal that are afforded by the 2002 Act remain open to her and have not been brought to an end. It might be thought, in these circumstances, that the Secretary of State could have no objection to it being held that, because she has been granted temporary admission pending her examination or removal, the appellant was lawfully in the territory within the meaning of article 32(1) so long as it was clear that she will cease to be lawfully present once her temporary admission comes to an end. Mr Drabble made it clear that he would be content with that interpretation, subject to the qualification that the protection of article 32 would remain available after the removal of her temporary admission to prevent her being removed to a country which could not provide the full panoply of rights to which a refugee was entitled under the Convention. But, as Miss Giovannetti explained, there is no basis in domestic law for holding that the appellant is entitled to be present in this country. To give her the protection of article 32 at this stage would have far reaching consequences. As Nehemiah Robinson explained in his Commentary, p 157: The prohibition of the expulsion of refugees lawfully in the country means in substance that, once a refugee has been admitted or legalized, he is entitled to stay there indefinitely and can forfeit this right only by becoming a national security risk or by disturbing public order and having these grounds established in accordance with the procedure prescribed in para 2. So one should be cautious about saying that, just because in practice the appellant is not at risk of removal for the time being, she is here lawfully within the meaning of that article. Furthermore, the proper interpretation of the word lawfully is of wider significance. This can be seen from the use of the same phrase lawfully in their territory in articles 18 and 26. A refugee who is lawfully present in the territory of a contracting state is entitled to the same treatment as regards self employment as is accorded to aliens generally who are in the same circumstances: article 18. He must also be accorded the right to choose his place of residence and to move freely within the territory, subject to any regulations that are applicable to aliens generally in the same circumstances: article 26. The notifications that have been issued to the appellant from time to time, which require her to reside at an address notified to her by an immigration officer, to report to an immigration official every two months and not to work or engage in any business unless she has explicitly been granted permission to do so, make it plain that she is not being accorded the rights referred to in these articles. They are rights the granting of which a sovereign state could be expected to reserve to itself, in just the same way as it would wish to reserve to itself the decision as to whether a refugee should be granted permission to enter in its territory. The fact that Mr Drabbles interpretation of the word lawfully in article 32 would apply to these articles too, so that the appellant could not be denied the rights that they afford to refugees lawfully in the territory, is a further indication that much caution is needed before that conclusion is drawn. It seems unlikely that the contracting states would have agreed to grant to refugees the freedom to choose their place of residence and to move freely within their territory before they themselves had decided, according to their own domestic laws, whether or not to admit them to the territory in the first place. Mr Drabble did not seek to rely on Lord Browns observations in Szoma v Secretary of State for Work and Pensions [2006] 1 AC 564, para 24, that in R v Secretary of State for the Home Department, Ex p Bugdacay [1987] AC 514 Lord Bridge has decided the case of In re Musisi rightly but for the wrong reasons, and that the term refugee in article 32(1) of the Refugee Convention must be taken to mean someone who has been determined to have satisfied the article 1 definition of that term. I think that he was right not to do so. The ancient maxim verba accipienda sunt secundum subjectam materiam (words are to be understood according to the subject matter with which they deal) provides the best guide to the meaning that should be given to what Lord Brown said in this paragraph. As Stanley Burnton LJ said in the Court of Appeal, Lord Brown was not deciding any question of irremovability under the 1971 Act in Szomas case: [2010] 1 WLR 2858, para 45. He was concerned with quite different legislation: see para 5. I am confident that, if his mind had been directed to the issue which arises under the 1971 Act, he would have been less ready than he was, in the context of that case, to hold that Lord Bridges analysis in Bugdacay of the effect of section 11(1) of the 1971 Act was wrong. For my part, I think that Lord Bridges analysis was right and it is directly in point in this case: see para 14, above. I would endorse Sedley LJs way of reconciling the decision in Szoma with what Lord Bridge said in Bugdacay in JA (Ivory Coast) v Secretary of State for the Home Department [2010] Imm AR 381, para 20, where he said: Illegal entrants who are temporarily admitted rather than detained may thus be lawfully present here in the restricted sense material to the decision in Szomas case, but they remain without an entitlement to be here. For these reasons I would hold, provisionally, that the word lawfully in article 32(1) must be taken to refer to what is to be treated as lawful according to the domestic laws of the contracting state. The "panoply of rights" argument The essence of this argument is that there must be implied into article 32 a proposition that the article itself has not expressed. This is not, perhaps, an impossible conclusion to draw. But the general rule is that the parties to an international agreement are not to be treated as having agreed something that they did not agree, unless it is clear by necessary implication from the text or from uniform acceptance by states that they would have agreed or have subsequently done so: Januzi v Secretary of State for the Home Department [2006] 2 AC 426, para 4. It is generally to be assumed that the parties have included the terms they wish to include and on which they were able to agree, omitting other terms which they did not wish to include or on which they were not able to agree: Brown v Stott [2003] 1 AC 681, 703. It is not open to the court to give effect to what, in an ideal world, the parties would have agreed to as a matter of obligation binding on all states parties to the Convention. One should bear in mind too that there may be a profound gap between what commentators, however respected, would like the article to mean and what it has actually been taken to mean in practice: R(Hoxha) v Special Adjudicator [2005] UKHL 19, [2005] 1 WLR 1063, para 5. Mr Drabble submitted that it was not enough to give the appellant the protection against refoulement that article 33 provides. What she needed, and was entitled to in view of the fact that the United Kingdom had accorded her substantial recognition as a refugee, was the assurance that she would not be removed to a third country that was not able to provide her with the full panoply of rights she would get as a refugee under the Convention. Article 32(1) had to be read in that sense. Her presence here was to be taken, for this purpose, to be lawful and it could not be brought to an end unless to do this would fit in with the purpose of the Convention as a whole. He accepted that removal to another member state of the European Union under Council Regulation (EC) No 343/2003, which replaced the Dublin Convention 1990 and was designed to give effect to a common policy on asylum throughout the EU (see R (Yogathas) v Secretary of State for the Home Department [2002] UKHL 36, [2003] 1 AC 920, para 27), would not be objectionable, and article 32(1) was not to be construed as making the removal under that system of a refugee who had been temporarily admitted to the United Kingdom pending a decision to give or refuse him leave to enter impermissible. So there would be no breach of article 32(1) if the refugee were to be returned immediately to another Dublin Convention country or to a country whose status as a safe country was not in doubt. But removal to a third country such as Ethiopia was a quite different matter. Mr Drabble relied on the discussion of the meaning to be given to lawful presence by Professor Hathaway, Rights of Refugees under International Law, pp 173 184 in support of his argument. Support for his approach, as matter of principle, is also to be found elsewhere. In Ng v Canada, UN Doc CCPR/C/49/469/1991 (7 January 1994), para 14.2 the Human Rights Committee established under article 28 of the International Covenant on Civil and Political Rights said: If a State party extradites a person within its jurisdiction in such circumstances that as a result there is a real risk that his or her rights under the Covenant will be violated in another jurisdiction, the State party itself may be in violation of the Covenant. This proposition may be applied equally to the responsibility that attaches to States parties under the Refugee Convention, as Catherine Phuong, The concept of effective protection in the context of irregular secondary movements and protection in regions of origin, Global Migration Perspectives No 26, April 2005, has suggested. At p 9 of her paper, having acknowledged her debt to Professor Hathaway for this thought in footnote 38, she states: It would surely defeat the purpose of the Convention if a state avoided its duties by merely transferring a refugee to another jurisdiction without ensuring that the receiving state protects the rights acquired by the refugee in the sending state. Refugees ought not to be deprived of the protection of their rights as defined in the 1951 Refugee Convention by virtue of the fact that another state has assumed responsibility for their protection. Mr Drabble also relied on a passage in Lord Clydes speech in Horvath v Secretary of State for the Home Department [2001] 1 AC 489 where he said at p 508: What [the Convention] seeks to achieve is the preservation of those rights and freedoms for individuals where they are denied them in their own state. Another state is to provide a surrogate protection where protection is not available in the home state. The Convention assumes that every state has the obligation to protect its own nationals. But it recognises that circumstances may occur where that protection may be inadequate. The purpose of the Convention is to secure that a refugee may in the surrogate state enjoy the rights and freedoms to which all are entitled without discrimination and which he cannot enjoy in his own state. I am inclined to think, with respect, that the proposition in the last sentence of this passage was perhaps too widely expressed. In my own speech, at p 495, I said that the purpose of the Convention was to afford protection and fair treatment for those for whom neither is available in the home country and that, if the principle of surrogacy was applied, the criterion must be whether the alleged lack of protection in the home state was such as to indicate that it was unable or unwilling to discharge its duty to establish and maintain a system for the protection against persecution of its own nationals. Also, the issue in that case was very different from that which we are being asked to consider here. The allegation was that the applicant was at risk of violence at the hand of non state agents whose actions the home state was unable or unwilling to control. The question whether, leaving that problem aside, the home state was in a position to provide the full panoply of rights under the Convention was not in issue. This case is not subject to the provisions of Council Directive 2004/83/EC of 29 April 2004 on minimum standards for the qualification and status of third country nationals or stateless persons as refugees or as persons who otherwise need international protection and the content of the protection granted (the Qualification Directive). The Directive was designed to give effect to the Tampere conclusion which provided that there should be a Common European Asylum System, based on a full and inclusive application of the Convention as supplemented by the New York Protocol, and that the system should include the approximation of rules on the recognition of refugees and the content of refugee status. It goes further in some respects than the Refugee Convention because, for example, it requires a residence permit to be issued as soon as possible where an applicant qualifies as a refugee: article 24(2). This Directive entered into force on 20 October 2004, and member states were required by article 38 to bring into force such laws, regulations and administrative provisions necessary to comply with it before 10 October 2006. The most recent decision to remove the appellant was dated 24 August 2006, before the date for its transposition. Mr Drabble did not develop the argument of which he had given notice in his written case that the appellant was entitled to rely on its provisions against the Secretary of State. But its provisions are of interest, because they show that the principle which he was urging upon this court is undergoing a process of development among the Member States of the European Union. This process was taken a step further by article 27(1) of Council Directive 2005/85/EC of 1 December 2005 on minimum standards on procedures in Member States for granting and withdrawing refugee status (the Minimum Standards Directive) which applies to applications for asylum lodged after 1 December 2007. It provides: Member States may apply the safe third country concept only where the competent authorities are satisfied that a person seeking asylum will be treated in accordance with the following principles in the third country concerned: (a) life and liberty are not threatened on account of race, religion, nationality, membership of a particular social group or political opinion; (b) the principle of non refoulement in accordance with the Geneva Convention is respected; (c) the prohibition of removal in violation of the right to freedom from torture and cruel, inhuman or degrading treatment as laid down in international law is respected; and (d) the possibility exists to request refugee status and, if found to be a refugee, to receive protection in accordance with the Geneva Convention. This provision sets out what the Member States must be taken to have agreed are the full panoply of rights that the person seeking asylum must be afforded if the principles on which articles 32 and 33 of the Refugee Convention are based are to receive effect. But it is one thing to acknowledge, as I would readily do, the force of these principles, to expect that the Secretary of State will, even in this case, give effect to them and to express the hope too that they will be taken into account if it becomes necessary for the appellant to pursue her Ethiopian appeal. It is another to find a basis in them for giving a different meaning to the words lawfully in their territory in article 32 of the Convention than the contracting states appear to have had in mind when they agreed to them, which is what Mr Drabble appeared to be urging the court to do on this branch of his argument. I do not think that article 32 is capable of being expanded in the way that was being suggested. The United Kingdom was entitled to design its rules as to what was needed for a refugee to come within its terms under domestic law, as were all the other states who have undertaken to be bound by the Convention, on the basis of the ordinary meaning of the words of the article in their context and in the light of their object and purpose, as article 31(1) of the Vienna Convention indicates. Phrases such as these are entitled to be read in accordance with the principle of legal certainty. They ought not to be taken to have their meaning changed or expanded unless this is expressly agreed to or is shown to have been recognised generally among the contracting states. The weakness in Mr Drabbles argument was that he was unable to show how this could be done without breaching these fundamental principles. Conclusion For these reasons, I am not persuaded that there are sound grounds for departing from my provisional view that the word lawfully in article 32(1) must be taken to refer to what is to be treated as lawful according to the domestic laws of the contracting state. I think, in agreement with the Court of Appeal and with Lord Dyson, that this is what the framers of the Convention intended by the use of this word in this context. I would dismiss the appeal. LORD DYSON The appellant is a national of Eritrea. She was born in Ethiopia and lived there continuously until she departed for the United Kingdom arriving on 3 July 1998. On arrival, she claimed protection as a refugee on the grounds of a fear of persecution in Eritrea and Ethiopia. The Secretary of State granted her temporary admission pursuant to paragraph 21 of Schedule 2 to the Immigration Act 1971 (the 1971 Act). The somewhat tortuous subsequent history has been described by Lord Hope. It is sufficient to say that her claims were refused by the Secretary of State on 1 November 2004. By a decision promulgated on 1 February 2006, the Asylum and Immigration Tribunal allowed her appeal and held that her fear of persecution in Eritrea on Refugee Convention grounds was well founded. Her status as a refugee was thereby established. The Secretary of State did not appeal against this decision. On 24 August 2006, she served a new notice of decision to refuse the appellants application for leave to enter on the grounds of a fear of persecution in Ethiopia and on the following day gave notice of her intention to give directions for the removal of the appellant to Ethiopia. The appellant appealed these decisions, but on 25 September 2006, she started judicial review proceedings seeking an order that she be given leave to enter/remain in the United Kingdom as a refugee pursuant to the tribunals decision of 1 February 2006 and an order quashing the removal directions to Ethiopia. The appeal has been adjourned pending the outcome of the judicial review proceedings. Two questions arise in these proceedings. The first is whether the appellant is lawfully in the United Kingdom within the meaning of article 32(1) of the Refugee Convention where she has been granted temporary admission, has submitted an asylum application, has been admitted to the states appeal process and has been found to be a refugee by operation of that appeal process. The second is whether, if the appellants presence in the United Kingdom is lawful but she loses her appeal against the removal directions to Ethiopia, the Secretary of State can terminate the temporary admission, thereby bringing the lawful presence to an end. In summary, Mr Drabble QC submits that the meaning of the phrase lawfully in their territory in article 32(1) is to be determined not only by reference to the domestic law of the Contracting State. The normative requirements of the Convention must also be taken into account and on that basis the appellants presence in the United Kingdom is lawful within the meaning of article 32(1) because she has temporary admission and has been permitted to embark on a substantive procedure to determine the question of whether she is entitled to refugee status and has been found to be a refugee. As regards the second question, Mr Drabble submits that, whatever the outcome of the Ethiopian appeal, the Secretary of State cannot terminate the appellants lawful presence in the United Kingdom by bringing the temporary admission to an end and removing her to a territory where (i) she would be at risk of persecution (so as to place the Secretary of State in breach of article 33) and (ii) she would not be able to enjoy the full rights vouchsafed by the Convention (what were referred to in argument as the panoply of rights). Ms Giovannetti QC submits that the question whether a person is lawfully in the territory of a Contracting State is to be determined exclusively by reference to the domestic law of that state. As a matter of domestic law, a person is not lawfully in the United Kingdom if she does not have leave to enter or remain, but has merely been granted temporary admission pending examination of her case or pending removal: see section 11(1) of the 1971 Act which Lord Hope has set out at para 14 above. As regards the second question, Ms Giovannetti submits that, if the appellants appeal against the removal directions is dismissed, then the Secretary of State will be free to terminate or not renew her temporary admission and there can at that stage be no question of the appellants presence in the United Kingdom being lawful within the meaning of article 32(1). The meaning of lawfully in their territory in article 32(1) The general approach to the interpretation of the Convention is not in doubt: see the discussion by Lord Hope at paras 29 to 31 above. In summary, it is to be interpreted in good faith in accordance with the ordinary meaning of its terms read in their context and in the light of the object and purpose of the Convention. The starting point is the language. It is generally to be assumed that the parties to the Convention included the terms that they wished to include and on which they were able to agree and omitted other terms which they did not wish to include or on which they were unable to agree. They are not to be treated as having agreed to something they did not agree, unless it is clear by necessary implication from the text or from uniform acceptance by states that they would have agreed or have subsequently done so. Some provisions of the Convention have an autonomous single meaning. Thus, in R v Secretary of State for the Home Department, ex p Adan [2001] 2 AC 477, the House of Lords held that there was a single autonomous meaning of the term refugee in article 1A(2). The meaning of this term cannot vary according to the differing interpretations of the Contracting States. It is not to be ascertained by reference to their domestic law. But there is no single autonomous meaning of the phrase lawfully in the territory in article 32(1). There is no international standard by reference to which lawful presence can be determined. That is not surprising. The power to admit, exclude and expel aliens is a widely recognised power of the sovereign state: a person has no right to live elsewhere than in his country of nationality and has no right to claim asylum: see the authorities to which Lord Hope refers at paras 32 and 33 above. Lord Bingham referred to this as a familiar, uncontentious and fundamental principle in Januzi v Secretary of State for the Home Department [2006] 2 AC 426 at para 6. Of all the commentators, Professor Hathaway provides perhaps the strongest support for the case advanced by Mr Drabble. But even he acknowledges (with qualifications) the important part played by domestic law in determining lawful presence within the meaning of article 32(1) in his discussion in The Rights of Refugees under International Law (Cambridge, 2005). He says at pp 177 178: As a starting point, the logic of deference to national legal understandings of lawful presence is clearly sensible. Not only is it correct that there is no uniform and comprehensive international standard by reference to which lawful presence can be determined but, as the debates cited above regarding temporary admission confirm, the drafters did generally intend for the third level of attachment to be determined by reference to national standards. Yet there is no indication that this deference was intended to be absolute, a proposition whichif carried to its logical conclusioncould result in refugees never being in a position to secure more than rights defined by the first two of the five levels of attachment agreed to by state parties Interpretation of the notion of lawful presence should therefore look primarily to domestic legal requirements, interpreted in the light of the small number of international legal understandings on point, in particular those reached by the drafters of the Refugee Convention. Deference to domestic law cannot therefore be absolute. At a minimum, the domestic meaning of lawful presence should not be adopted for refugee law purposes where to do so would be at odds with the normative requirements of the Refugee Convention. What is the position under United Kingdom domestic law? Without statutory intervention, it might be difficult to decide whether a person who has been granted temporary admission pending determination of her application for asylum is lawfully present in the territory. It is not self evident that she is not lawfully present in these circumstances. After all, she is physically present in the territory and her presence has been authorised by the state, admittedly for a limited period. But the power to grant temporary admission is conferred by Schedule 2 para 21 of the 1971 Act. It was open to Parliament to define its legal effect and it did so in section 11(1) of the 1971 Act. In Bugdaycay v Secretary of State for the Home Department; In re Musisi [1987] AC 514, Lord Bridge rejected the argument that, because Mr Musisi had been granted temporary admission pending the determination of his application for leave to enter, he was lawfully present within the meaning of article 32(1). The effect of section 11(1) of the 1971 Act was that he was deemed not to have entered the United Kingdom at all. The reasoning of Lord Bridge (although not the result) was said to have been wrong by the House of Lords in Szoma v Secretary of State for Work and Pensions [2006] 1 AC 564 at para 24. Like Lord Hope, I agree with Lord Bridges reasoning and would hold, for the reasons given by Stanley Burnton LJ, that the criticism of it in Szoma was not well founded. The position in domestic law is, therefore, now clear: the appellant is not lawfully present in the United Kingdom. There is nothing in the language of article 32 itself which suggests that lawful presence should not be judged by reference to domestic law. Moreover, there is support elsewhere in the Convention for the view that the grant of temporary admission pending the determination of an application for asylum does not give rise to lawful presence within the meaning of article 32(1). The phrase lawfully in [a] territory is also used in articles 18 and 26. Article 18 provides that the Contracting States shall accord to a refugee lawfully in their territory treatment as favourable as possible and, in any event, not less favourable than that accorded to aliens generally in the same circumstances as regards the right to engage on his own account in agriculture, industry, handicrafts and commerce and to establish commercial and industrial companies. Article 26 provides that each Contracting State shall accord to refugees lawfully in its territory the right to choose their place of residence to move freely within its territory, subject to any regulations applicable to aliens generally in the same circumstances. It is most unlikely that the Contracting States intended that refugees who apply for asylum and are given temporary admission while their application is being considered should be accorded rights of this kind. It seems to me far more likely that they intended such rights to be given to refugees who have established some real right to stay in the territory. I agree with what Lord Hope says at para 36. More generally, an interpretation of article 32(1) which defers the question of lawful presence to the domestic law of the territory of refuge is consistent with the fundamental principle that the power to admit and expel is a power of the sovereign state. Nor do I find it surprising that the generous protection afforded by article 32 should be confined to those whose claims for asylum have succeeded. The fundamental objective of the Convention is to protect persons who have a well founded fear of persecution for the reasons stated in the article 1A(2) definition. Article 33 (the duty of non refoulement) is an essential part of that protection. That is the principal duty owed to refugees. This is the point made by Lord Bingham in R (Yogathas)v Secretary of State for the Home Department [2003] 1 AC 920 at para 9: The second consideration is that the Convention is directed to a very important but very simple and very practical end, preventing the return of applicants to places where they will or may suffer persecution. Legal niceties and refinements should not be allowed to obstruct that purpose. It can never, save in extreme circumstances, be appropriate to compare an applicants living conditions in different countries if, in each of them, he will be safe from persecution or the risk of it. It is true that, where a person is recognised as a refugee and is granted asylum, the signatory states are under a duty to discharge many other obligations under the Convention. But the existence of the article 32(1) duty, which is plainly owed to refugees who have been granted asylum, does not detract from the fact that the overriding aim of the Convention is to provide refugees with protection against persecution. Article 33 applies to refugees whether they are lawfully present in the territory or not. It applies to any refugee to whom the Convention applies. It provides the protection that lies at the heart of the Convention. Article 32(1) does not provide protection to a refugee against the risk of persecution. It provides protection against expulsion in any circumstances except on grounds of national security or public order. It undoubtedly provides this additional protection to the refugee who has been granted asylum. Bearing in mind the fundamental object of the Convention, it is not surprising that it was intended by the Contracting States that this degree of protection was not to be accorded to a refugee who has been given temporary permission to remain in a territory pending the determination of her claim to asylum. If a refugee who is claiming asylum is to be protected from the risk of persecution, she needs the protection afforded by article 33. She does not need the additional protection afforded by article 32(1). We were shown various passages in the travaux prparatoires. But in my view, they contain no clear indication that the parties to the Convention intended that the benefit of article 32(1) should be conferred on refugees who have not been granted asylum. There is no consensus among the commentators that lawful presence within the meaning of article 32(1) should be given an autonomous Convention interpretation or what that meaning should be. For that reason, I do not think that it is profitable to set out their differing views in any detail. I have already referred to what Professor Hathaway says. As we have seen, he suggests that lawful presence should be determined primarily by reference to domestic law, but modified if necessary to reflect the normative requirements of the Convention. I do not know how this would work in practice. It seems to me that this is a difficult interpretation and one which would be likely to give rise to much uncertainty and dispute. A different view is expressed in Goodwin Gill and McAdam The Refugee in International Law (3rd edition) (2007) at p 524 525 where the editors say that in principle there appears to be no reason why the temporarily present refugee should not be subject to the same regime of deportation as applies to aliens generally. They suggest: On balance, article 32 may be interpreted as a substantial limitation upon the States power of expulsion, but with its benefits confined to lawfully resident refugees, that is, those in a State on a more or less indefinite basis. Professor Hathaway disagrees with this view. He says (loc cit at p 173, footnote 97) that it is no more than an assertion and that no legal argument is offered to justify this clear deviation from the express provisions of the Convention, relying instead on a bald appeal to the importance of achieving consistency with relevant state practice. In my view, if it had been intended to restrict the power of the Contracting States to decide whether a refugee is lawfully present in its territory, this would surely have been stated explicitly. Where the Convention limits the power of a state to expel a refugee, it says so in terms: see articles 32 and 33. There are no circumstances in which a refugee may be expelled in breach of article 33. But if a refugee is to enjoy the additional protection afforded by article 32(1), she must be lawfully present in the territory. As to what that means, I see no warrant for interpreting the article as prohibiting the expulsion of a refugee who is not lawfully present on the basis of domestic law, but whose expulsion would contravene Convention norms. Whether a refugee would have the benefit of the panoply of Convention rights in a territory to which she is expelled cannot have any bearing on the question whether she is lawfully present in the territory from which she is being expelled. In any event, Professor Hathaway and Mr Drabble are seeking to add a further restriction to the power to expel a refugee which cannot be found in article 32(1) or 33. Applying the principles of interpretation to which I refer at para 5 above, I find it impossible to say that it is clear by necessary implication from the text that the Contracting States would have agreed to such an additional restriction to the power of expulsion. I should add that Mr Drabble concedes that there is no breach of article 32(1) in immediately returning (i) an individual who arrives in the United Kingdom after residing in an obviously safe third country and (ii) an individual who can be sent to another Dublin Convention country so that her status can be investigated there. I agree with this concession. But it is difficult to see, on Mr Drabbles argument, why such individuals are not lawfully present in the United Kingdom. They are likely to have been given temporary admission and their cases will have been considered. I do not see why lawfulness of their presence is any different from that of others who are granted temporary admission, but whose cases are more difficult to determine. For all these reasons, I would therefore hold that there is nothing in article 32(1) which requires us to disapply section 11(1) of the 1971 Act and say that a refugee who is given temporary admission pending determination of her status is lawfully in the United Kingdom. Termination of temporary admission If (as I have held) the appellant is not lawfully present in the United Kingdom within the meaning of article 32(1), clearly she does not enjoy the protection afforded by that provision. It is rightly conceded by Ms Giovannetti that to attempt to remove the appellant from the United Kingdom before the application for asylum (including any appeals) has run its course would be improper. She has no intention of doing that. But if the appeal against the removal directions to Ethiopia is dismissed, the appellant will not be able to invoke article 32(1) as a reason for avoiding expulsion, although she may well have other grounds for doing so. Conclusion For these reasons as well as those given by Lord Hope, I would dismiss this appeal. |
This appeal is about the burden of proof in actions against a shipowner for loss of or damage to cargo. It may seem strange that a species of litigation which has generated reported decisions over four centuries should not yet have returned a definitive answer to this question. The reason is probably to be found in the fact that the courts very rarely decide issues of fact on the burden of proof. The trial judge is usually able to find some persuasive evidence, however exiguous, to break the impasse. This case is, or may be, different. The six claimants were the owners and bill of lading holders for nine separate consignments of bagged Colombian green coffee beans shipped at Buenaventura in Colombia between 14 January and 6 April 2012 on various vessels owned by the defendant shipowners for carriage to Bremen. They were stowed in a total of 20 unventilated 20 foot containers. These were transhipped at Balboa in Panama and discharged at Rotterdam, Hamburg or Bremerhaven for on carriage to Bremen. Each consignment was covered by a bill of lading covering the entire carriage to Bremen. The bills of lading, which were subject to English law and jurisdiction and incorporated the Hague Rules, were on LCL/FCL (less than full container load/full container load) terms. It is common ground that this means that the carriers were contractually responsible for preparing the containers for carriage and stuffing the bags of coffee into them. They employed two firms of stevedores to perform this function. Coffee is a hygroscopic cargo. It absorbs, stores and emits moisture. It can be carried in ventilated or unventilated containers. In 2012 both types of container were in widespread use for the carriage of bagged coffee, and the shippers had specified unventilated containers for these consignments. The use of unventilated containers is cheaper, but if they are used to carry coffee beans from a warm to a cooler climate, as they were in this case, the beans will inevitably emit moisture which will cause condensation to form on the walls and roof of the container. This makes it necessary to protect the coffee from water damage by dressing the containers, ie lining the roof and walls with an absorbent material such as cardboard, corrugated paper or Kraft paper. The use of Kraft paper was a common commercial practice in 2012, and it was employed in this case. When the containers were opened at Bremen, however, the bags in 18 of them were found to have suffered water damage from condensation. The cargo owners pleaded their case in what has for many years been standard form. Their primary case was that in breach of their duties as bailees the carriers failed to deliver the cargoes in the same good order and condition as that recorded on the bill of lading on shipment. Alternatively, they pleaded that in breach of article III, rule 2 of the Hague Rules they had failed properly and carefully to load, handle, stow, carry, keep, care for and discharge the cargoes. A number of particulars of negligence was pleaded. For present purposes, the only relevant one is that the carriers failed to use adequate or sufficient Kraft paper to protect the cargoes from condensation. The carriers joined issue on all of these points, and pleaded inherent vice on the ground that the coffee beans were unable to withstand the ordinary levels of condensation forming in containers during passages from warm to cool climates. The cargo owners pleaded in reply that any inherent characteristic of the cargo which resulted in damage, did so only because of the carriers negligent failure to take proper measures for its protection. The case was tried in the London Mercantile Court by David Donaldson QC, sitting as a deputy High Court judge. He held that there was no legal burden on the carrier to prove that the damage to the cargo was caused without negligence or by an excepted peril. There was only a factual presumption that damage ascertained on discharge was due to negligence. The critical issues of fact, as they emerged at the trial, concerned the weight of paper and the number of layers that (i) were, and (ii) should have been used. The deputy judges conclusions were as follows: (1) Bagged coffee can be (and at the time routinely was) carried without damage from warm to cooler countries in unventilated containers lined with Kraft paper, provided that a sufficient thickness of paper or number of layers is used. (2) The evidence did not establish what weight of paper was used for these shipments, except that it was more than 80 gsm. Nor did it establish how many layers were used, except that the photographs appeared to the judge to show that there was only one. (3) There was no evidence to show what thickness of paper ought to be used for a given number of layers, in order to avoid condensation damage. (4) There was no generally accepted commercial practice on point (3). It was not suggested that the paper had been improperly fixed by the stevedores. These conclusions were criticised on a number of grounds by the Court of Appeal, which proceeded to make its own findings. I shall return to the Court of Appeals treatment of the facts later in this judgment. But for the moment I shall proceed on the basis of the deputy judges conclusions, for it is those which give rise to the major issue of law on this appeal. On whom was the burden of proving whether the cargoes were damaged by (i) negligent preparation of the containers, or (ii) inherent vice? Bailment at common law The bills of lading in this case incorporated the Hague Rules. It is, however, necessary to examine the common law position apart from the Rules, first, because it is an essential part of the legal background against which they were drafted; and, secondly, because the common law position had been considered in a number of authorities decided before the Rules were promulgated, which have remained influential since and indeed were relied upon on this appeal. The delivery of goods for carriage by sea is a bailment for reward on the terms of the bill of lading. Bailment is a transfer of possession giving rise to a legal relationship between the bailor and the bailee which is independent of contract, although in practice it is commonly contractual and the terms of the contract will commonly modify its incidents. Two principles of the common law of bailment are fundamental. The first is that a bailee of goods is not an insurer. His duty is limited to taking reasonable care of the goods. This has been true of bailees generally for as long as bailment has existed as a recognised source of legal responsibility at common law: see S Stoljar, The early history of bailment, American Journal of Legal History, vol i (1957), p 5, and the landmark decision of Chief Justice Holt in Coggs v Bernard (1703) 2 Ld Raym 909, 917 918. In the 19th century some shipowners, especially in the liner and tariff trades, were common carriers, bearing a more onerous responsibility at common law. The characteristic feature of a common carrier was that he held himself out as accepting for carriage the goods of all comers on a given route, subject to capacity limits. As such, he was strictly liable at common law for loss of or damage to the cargo subject only to exceptions for acts of God and the Queens enemies. The absence of negligence was irrelevant. But although the position of common carriers is commonly referred to by way of background in the case law, as it was in the judgments below, it is no longer a useful paradigm for the common law liability of a shipowner. Common carriers have for many years been an almost extinct category. For all practical legal purposes, the common law liability of a carrier, unless modified by contract, is the same as that of bailees for reward generally. The second principle, which is equally well established, is that although the obligation of the bailee is thus a qualified obligation to take reasonable care, at common law he bears the legal burden of proving the absence of negligence. He need not show exactly how the injury occurred, but he must show either that he took reasonable care of the goods or that any want of reasonable care did not cause the loss or damage sustained. As Cockburn CJ put it in Reeve v Palmer (1858) 5 CBNS 84, 90: The jury have found that he lost it: and I am of opinion that that must be taken to mean, in the absence of any explanation, that he lost it for want of that due and proper care, which it was his duty to apply to the keeping of it, unless it is qualified by circumstances shewing that the loss of the deed could not have been prevented by the application of ordinary care. The law was declared in this sense and applied to carriage by water by the House of Lords in Dollar v Greenfield, The Times, 19 May 1905, and Morison, Pollexfen & Blair v Walton (10 May 1909), which is unreported but the relevant parts of which were set out and adopted by the Court of Appeal in Joseph Travers & Sons Ltd v Cooper [1915] 1 KB 73, 88. Lord Loreburn said in his judgment in that case that once damage was ascertained on outturn, I cannot think it is good law that in such circumstances he should be permitted to saddle upon the parties who have not broken their contract the duty of explaining how things went wrong. It is for him to explain the loss himself, and if he cannot satisfy the court that it occurred from some cause independent of his own wrong doing he must make that loss good. Lord Halsbury said: It appears to me that here there was a bailment made to a particular person, a bailment for hire and reward, and the bailee was bound to shew that he took reasonable and proper care for the due security and proper delivery of that bailment; the proof of that rested upon him. In The RUAPEHU (1925) 21 Ll L Rep 310, 315, Atkin LJ assimilated the law applied to carriers in these cases to the principles applicable generally to bailees, which he summarised as follows: If this were a pure bailment, a delivery of a chattel to a bailee entrusted with the chattel to execute repairs on it and then redeliver it to the owner, I apprehend that the bailee would be under the obligation to exercise reasonable care and skill in preserving the safety of the chattel. If he failed to deliver the chattel at all the onus would be upon him to show that the non delivery was not due to absence of care and skill on his part. Moreover, if he redelivered the chattel in a damaged condition , the onus is on the bailee to show that the damage was not due to the absence of reasonable care and skill on his part. This he may do by showing that he took all reasonable precautions, but if he has to admit or is convicted of some act of negligence then the rule necessarily requires him to show that the loss was not caused by that act of negligence. Three points should be made by way of amplification of these statements. First, it is clear that the burden of proof with which these decisions were concerned was a legal burden. It is quite different from the evidential burden which may arise where the facts give rise to a rebuttable inference of negligence or under the principle res ipsa loquitur. Secondly, while the rule about the burden of proof in English law developed long before any pragmatic justification was advanced for it, its continued importance in the law of bailment has consistently been supported on the ground that because the bailee is in possession of the goods it may be difficult or impossible for anyone else to account for the loss or damage sustained by them: see The RUAPEHU (1925) 2 Ll L Rep 310, 315 (Atkin LJ); British Road Services Ltd v Arthur V Crutchley & Co Ltd (No 1) [1968] 1 All ER 811, 822 (Sachs LJ). Modern scientific techniques of investigation have eased this particular problem to some degree, but have not removed it. Thirdly, although the principle regarding the burden of proof was independently developed by the common law, it is not a peculiarity of the common law. The duty of a depositary to justify his inability to deliver the goods in the condition in which he received them is a basic feature of the civil law. So far as carriers are concerned, it originates in the Roman praetorian edict Nautae, Caupones Stabularii, which in modified form remains the basis of the law of deposit in French and Scots law and other civil law systems: see Pothier, Trait du Contrat de Louage 6th ed (1821), para 199; R Zimmermann, The Law of Obligations: Roman Foundations of the Civilian Tradition (1996), pp 514 526. For the current position in France, see Code Civil, Book III, Title VIII, Chapter III, article 1784 governing carriers by land and water (Ils sont responsables de la perte et des avaries des choses qui leur sont confies, moins qu'ils ne prouvent qu'elles ont t perdues et avaries par cas fortuit ou force majeure); and for Scotland, Gloag on Contract 2nd ed (1929), p 721; McBryde, The Law of Contract in Scotland 3rd ed (2007), paras 9.53 9.57 and The Laws of Scotland, Stair Memorial Encyclopaedia, vol 8 (Deposit), at para 13. There is no significant dispute about these principles on this appeal. The real issue is whether the incidence of the burden of proof is different in a modern contract for carriage by sea incorporating the Hague Rules. I therefore turn to the Rules. The Hague Rules The relevant provisions of the Rules are as follows: Article II Article III Subject to the provisions of article VI, under every contract of carriage of goods by sea the carrier, in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods, shall be subject to the responsibilities and liabilities, and entitled to the rights and immunities hereinafter set forth. 1. The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to (a) Make the ship seaworthy. (b) Properly man, equip and supply the ship. (c) Make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation. 2. Subject to the provisions of article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. 8. Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connection with, goods arising from negligence, fault, or failure in the duties and obligations provided in this article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect. Article IV resulting 1. Neither the carrier nor the ship shall be liable for loss or damage arising or from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped and supplied, and to make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation in accordance with the provisions of paragraph 1 of article III. Whenever loss or damage has resulted from unseaworthiness the burden of proving the exercise of due diligence shall be on the carrier or other person claiming exemption under this article. 2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from (a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship. (b) Fire, unless caused by the actual fault or privity of the carrier. (c) Perils, dangers and accidents of the sea or other navigable waters. (d) Act of God. (e) Act of war. (f) Act of public enemies. (g) Arrest or restraint of princes, rulers or people, or seizure under legal process. (h) Quarantine restrictions. (i) Act or omission of the shipper or owner of the goods, his agent or representative. (j) Strikes or lockouts or stoppage or restraint of labour from whatever cause, whether partial or general. (k) Riots and civil commotions. (l) Saving or attempting to save life or property at sea. (m) Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods. Insufficiency of packing. (n) Insufficiency or inadequacy of marks. (o) (p) Latent defects not discoverable by due diligence. (q) Any other cause arising without the actual fault or privity of the carrier, or without the actual fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage. 3. The shipper shall not be responsible for loss or damage sustained by the carrier or the ship arising or resulting from any cause without the act, fault or neglect of the shipper, his agents or his servants. The burden of proof arises on this appeal at two stages of the analysis. The first is concerned with article III.2. Does the cargo owner bear the legal burden of proving breach of that article, or is it for the carrier, once loss or damage to the cargo has been ascertained, to prove compliance? The second relates to article IV.2, and particularly to exception (m). The carrier accepts that he must bear the burden of proving facts which bring the case within an exception, but submits that once he has done so it is for the cargo owner to prove that it was the negligence of the carrier which caused the excepted peril (in this case, inherent vice) to operate on the cargo. Burden of proof: Article III.2 Article III.2 imposes on the carrier a general duty to take reasonable care of the cargo during carriage. Mr Rainey QC, who appeared for the carrier, submitted that the burden of proving a breach of it lay upon the cargo owner. His argument proceeded as follows: (i) the Hague Rules constitute a complete code governing the care of the cargo; (ii) an international convention such as the Hague Rules should not be construed in the light of particular features of English law or any other domestic system of law; and (iii) article III.2 of the Hague Rules, by imposing an obligation to take reasonable care of the cargo, displaces the English law rule about the burden of proof, because as a general rule he who asserts must prove. In my judgment, each of these steps in the argument is fallacious. As to proposition (i), the Hague Rules never had statutory application, save to the carriage of goods shipped from a port in the United Kingdom: Carriage of Goods by Sea Act 1924, section 1. That Act has now been repealed by the Carriage of Goods by Sea Act 1971 which gives the force of law to the Hague Visby Rules but does not apply to the shipments in issue on this appeal. Accordingly, the Hague Rules have effect only by virtue of their contractual incorporation into the bill of lading. Subject to the other terms of the contract, the Rules are a complete code on those matters which they cover. But they are not exhaustive of all matters relating to the legal responsibility of carriers for the cargo. As is well known, the background against which they were drafted was the attempt of (mainly British) shipowners in the late 19th century to limit their legal responsibility for cargo, and the attempt of other countries, notably the United States, Canada and Australia, to impose a minimum standard of performance by law. The purpose of the Rules was to standardise the obligations of the carrier and to limit the exceptions on which he should be entitled to rely. They are accordingly concerned almost exclusively with the standard of performance. Apart from certain articles, such as IV.1 and IV.2(q), which deal in terms with the burden of proof for specific purposes, the Rules do not deal with questions of evidence or the mode of proving a breach of the prescribed standard or the application of an exception. These are matters which in accordance with generally recognised principles of private international law are for the law of the forum. They are part of the law of evidence and the rules of procedure, which are liable to vary from one jurisdiction to another. Turning to proposition (ii), it is well established that even in a contract governed by English law, provisions derived from an international convention are intended to have an internationally uniform effect and should not be construed by national courts by reference to principles of purely domestic application: Stag Line Ltd v Foscolo, Mango & Co Ltd [1932] AC 328, 350 (Lord MacMillan); James Buchanan & Co Ltd v Babco Forwarding and Shipping (UK) Ltd [1978] AC 141, 152 (Lord Wilberforce). But this principle has no bearing on the present issue. In the first place, as I have explained in the preceding paragraph, the Rules are not concerned with the incidence of the burden of proof save in limited respects. Secondly, it has not been shown that the common law principles regarding the burden of proving negligence or the lack of it in the carriage of goods are principles of purely domestic application, except in the limited sense that their historical origins lie in the common law. As I have pointed out above, the principle that the custodian of goods has a legal responsibility to justify their loss or redelivery in damaged condition is common to civil law jurisdictions as well. One of those jurisdictions is Scotland, to which the Hague Rules were applied by the Carriage of Goods by Sea Act 1924 on the same basis as England. The common law of bailment has no application in Scotland, but the law of Scotland regarding the burden of proof lying on a warehouseman or a carrier is substantially the same. Civil law jurisdictions party to the Hague Convention vary widely in the way that they implement the Rules. In many of them, the occurrence of damage during carriage is treated not just as casting the burden of proving absence of fault on the carrier, but as conclusive of breach of article III.2, unless the carrier can prove that one of the article IV.2 exceptions applies. This is, for example, the effect of the French Code des Transports L 5422 12 and of successive decisions of the Cour de Cassation: see Chambre Commerciale, 27 mai 1975, 74 10388, 10 juillet 2001, 99 12258, 13 dcembre 2016, 14 28332. The researches of counsel have shown that a corresponding principle applies in Belgium, the Netherlands, Italy, Germany, Norway and Spain. The carriers proposition (iii) is based, in my view, on a misconception. Mr Rainey argued that the reason why at common law the bailee had the burden of disproving negligence was that at common law a bailee had a strict obligation to redeliver the goods in the same condition as when received. The position, he submitted, was different where the obligation was a qualified obligation to take reasonable care, as it is in article III.2. However, as I have pointed out, the common law obligation of a bailee is not strict, save in the somewhat theoretical case of common carriers. His obligation is to take reasonable care. The common law has always treated that as consistent with a rule imposing on him the burden of disproving negligence. In the same way, the imposition of a corresponding duty of care on the carrier by article III.2 is consistent with his bearing the burden of disproving negligence. When one examines the scheme of the Hague Rules, it is apparent that they assume that the carrier does indeed have the burden of disproving negligence albeit without imposing that burden on him in terms. This is because of the relationship between articles III and IV. Article III.2 is expressly subject to article IV. A number of the exceptions in article IV cover negligent acts or omissions of the carrier which would otherwise constitute breaches of article III.2: for example articles IV.1 and IV.2(a). It is common ground, and well established, that the carrier has the burden of proving facts which bring him within an exception in article IV, and in the case of articles IV.1 and IV.2(q) this is expressly provided. It would be incoherent for the law to impose the burden of proving the same fact on the carrier for the purposes of article IV but on the cargo owner for the purposes of article III.2. As will be seen below, a rather similar problem arises in relation to the exception for inherent vice. Nothing in the Hague Rules alters the status of a contract of carriage by sea as a species of bailment for reward on terms. As Hobhouse J pointed out in Aktieselskabet de Danske Sukkerfabrikker v Bajamar Compania Naviera SA (The TORENIA) [1983] 2 Lloyds Rep 210, 216: The relationship between the present parties is contractual. It follows that the question of legal burden of proof has ultimately to be decided by construing the contract between them. In ascertaining the effect of the contract one must take into account the nature of the contract. The contract here is a contract in a bill of lading; it is a contract of carriage that is to say, a species of a contract of bailment. For these reasons I consider that in principle where cargo was shipped in apparent good order and condition but is discharged damaged the carrier bears the burden of proving that that was not due to its breach of the obligation in article III.2 to take reasonable care. I say in principle because it is next necessary to consider whether the authorities in cases governed by the Hague Rules point to a different rule. I turn, therefore, to the authorities. The first case to address directly the burden of proof in relation to article III.2 was Gosse Millard v Canadian Government Merchant Marine Ltd [1927] 2 KB 432, a decision of Wright J shortly after the Carriage of Goods by Sea Act came into force. On the footing that the damage ascertained on outturn had not been explained, he held the carrier liable because the burden of disproving negligence lay on him. He gave two reasons. The first was that the words properly discharge in article III.2 of the Hague Rules meant deliver in the same apparent order and condition as on shipment, so that if damage was ascertained on discharge there was a prima facie breach. Wright J did not mean by this that the damage was prima facie evidence of breach of the article. He meant that the carrier was in breach unless he could excuse himself under article IV: see pp 435 436. This reason was bad, as the House of Lords later held in G H Renton & Co Ltd v Palmyra Trading Corpn of Panama [1957] AC 149. Properly in article III.2 did not impose an obligation to achieve a particular outcome, but to load, carry and discharge in accordance with a sound system: see pp 166 (Viscount Kilmuir LC), 169 170 (Lord Morton of Henryton), 174 (Lord Somervell of Harrow), approving the statement of Lord Devlin in Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 2 QB 402, 417 418. That error did not, however, affect Wright Js second reason, which was that the carrier was a bailee. Citing the pre Hague Rules cases on the liability of carriers as bailees, he put the point in this way, at pp 435 436: I do not think that the terms of article III put the preliminary onus on the owner of the goods to give affirmative evidence that the carrier has been negligent. It is enough if the owner of the goods proves either that the goods have not been delivered, or have been delivered damaged. The carrier is a bailee and it is for him to show that he has taken reasonable care of the goods while they have been in his custody (which includes the custody of his servants or agents on his behalf) and to bring himself, if there be loss or damage, within the specified immunities. It is, I think, the general rule applicable in English law to the position of bailees that the bailee is bound to restore the subject of the bailment in the same condition as that in which he received it, and it is for him to explain or to offer valid excuse if he has not done so. It is for him to prove that reasonable care had been exercised. The case ultimately went to the House of Lords, but on another point [1929] AC 223. Wright Js decision was followed by Scrutton LJ, delivering the leading judgment in the Court of Appeal in Silver v Ocean Steamship Co Ltd [1930] 1 KB 416, 424 425. He held, as Wright J had done, that the Hague Rules had made no difference to the incidence of the burden of proof in cases of bailment for carriage. I have already referred to the statement of Hobhouse J in The TORENIA [1983] 2 Lloyds Rep 210, 216 about the importance of the legal characterisation of a contract of carriage as a bailment. Hobhouse J went on to state the law as follows at pp 216 217: It is only because the contract in this case is a contract of bailment that the plaintiff sets up a sustainable cause of action by proving the non delivery of the goods. It was then for the defendants to set up a sustainable defence. I use the word sustainable in preference to prima facie, since prima facie is frequently used to refer to a case which shifts the evidential burden of proof rather than giving rise to a legal burden of proof in the opposite party In the 20th century, a convenient statement of the relevant principle is to be found in the judgment of Denning LJ in Spurling Ltd v Bradshaw [1956] 1 WLR 461, at p 466: A bailor, by pleading and presenting his case properly, can always put on the bailee the burden of proof. In the case of non delivery, for instance, all he need plead is the contract and a failure to deliver on demand. That puts on the bailee the burden of proving either loss without his fault (which, of course, would be a complete answer at common law) or, if it was due to his fault, it was a fault from which he is excused by the exempting clause. Nor do the Hague Rules contradict this conclusion. Lord Hobhouse made the same point in Homburg Houtimport BV v Agrosin Pte Ltd [2003] 1 AC 715, para 138. Scrutton LJ and Lords Wright and Hobhouse (as they later became) were notable authorities in this area of law. Apart from Wright Js error as to the meaning of properly to discharge in article III.2, an error which was not made by either Scrutton LJ or Hobhouse J, their analyses of the burden of proof under contracts of carriage incorporating the Hague Rules are in my view entirely in accordance with principle. This proposition has sometimes been expressed by saying that once it is shown that the cargo was loaded in good condition and discharged in bad, the carrier bears the burden of proving that this was caused by one of the excepted perils in article IV: see, for example, the statement of Viscount Sumner in F C Bradley & Sons Ltd v Federal Steam Navigation Co Ltd (1927) 27 Ll L Rep 395, 396, and of Lord Wright, delivering the advice of the Privy Council in Paterson Steamships Ltd v Canadian Co operative Wheat Producers Ltd [1934] AC 538, 545 546. This formulation is common in codes giving effect to the Hague Rules in civil law jurisdictions, as I have observed. But it is not entirely satisfactory to an English lawyer, because it misses out a stage of the analysis. The true rule is that the carrier must show either that the damage occurred without fault in the various respects covered by article III.2, or that it was caused by an excepted peril. If the carrier can show that the loss or damage to the cargo occurred without a breach of the carriers duty of care under article III.2, he will not need to rely on an exception. So far as that analysis has been doubted, it is because of dicta in the House of Lords in the Scottish case of Albacora SRL v Westcott & Laurence Line Ltd 1966 SC(HL) 19; and in the High Court of Australia in Great China Metal Industries Co Ltd v Malaysian International Shipping Corpn Bhd (The BUNGA SEROJA) [1999] 1 Lloyds Rep 512. The Albacora is important mainly for its analysis of the meaning of inherent vice, and I shall return to it in that context. However, Lord Pearce expressed doubt in that case about the correctness of Wright Js view that the burden of disproving negligence lay upon the carrier, without giving reasons. And Lord Pearson rejected Wright Js view, giving as his reason that Wright J had been wrong about the meaning of properly to discharge. In The BUNGA SEROJA McHugh J dealt briefly with the burden of proof under article III.2 of the Hague Rules in the following terms, at para 98: The delivery of the goods in a damaged state is evidence of a breach of article III and imposes an evidentiary burden on the carrier to show that no breach of article III has occurred. But unlike the common law, failure to deliver the goods in the state received does not cast a legal onus on the carrier to prove that the state of, or non delivery of the goods, was not due to the carriers fault. Any statement from these sources is entitled to respect. But the force of these dicta is diminished by a number of considerations. In the first place, in neither case was the burden of proof in issue, because in both the trial judge had found as a fact that the carrier was not negligent. Secondly, no doubt for that reason, none of the relevant authorities on the burden of proof are cited except, in the case of The Albacora, for Wright Js decision in Gosse Millard. Thirdly, Lord Pearson, while rightly criticising Wright Js construction of the words properly to discharge in article III.2 of the Hague Rules, does not address his second reason, based on the characterisation of the contract as one of bailment. Fourthly, these dicta involve an unexplained departure from the basic principles governing the burden of proof borne by a bailee for carriage by sea, and are out of line with English authority of long standing. In my view, so far as they suggest that the cargo owner has the legal burden of proving a breach of article III.2, they are mistaken. Burden of proof: Article IV.2(m) Article IV.2 of the Hague Rules is a notoriously unsatisfactory provision, because there is no unifying legal principle behind the highly miscellaneous list of excepted causes of loss. Some of them refer to matters which by their nature would otherwise constitute breaches of the carriers duty to care for the cargo. Some refer to matters which may or may not be caused by such a breach. In other cases, such as act of God, the carrier would not be liable even in the absence of an exception. The explanation for this intellectual disorder is historical. The exceptions are generally those which were allowed by the draftsmen of the Rules because their inclusion in bills of lading was sanctioned by long standing practice, or because they were common law exceptions to the liability of a common carrier, or because they were excepted in existing national legislation such as the US Harter Act and corresponding legislation in Canada and Australia. Only one of the article IV.2 exceptions expressly imposes the burden of proof on the carrier, namely (q). It is, however, well established that the carrier bears the burden of bringing himself within any of the exceptions. Mr Rainey does not challenge this. His case is that once he has proved that the cargo suffered from an inherent vice, the cargo owner must positively prove that it was only because of the carriers negligence that the cargos vicious propensities resulted in damage. The starting point in the authorities is the decision of the Exchequer Chamber in Notara v Henderson (1872) LR 7 QB 225. The facts were that a cargo of beans was delivered damaged by seawater. The beans had been wetted when the vessel was involved in a collision. She put into Liverpool for repairs, and it was proved that it would have been reasonable for the master temporarily to discharge the beans there, so that they could be spread out and dried in a warehouse, and then reloaded before the vessel proceeded on her voyage. If that had been done, part of the damage would have been avoided. The bill of lading excepted loss or damage arising from accidents of the seas. The court held that the exception did not protect the carrier from liability for that part of the damage which could have been avoided by the exercise of due care. Willes J, delivering the judgment of the court, stated the law as follows at pp 235 236: In the result it appears to us that the duty of the master, in this respect, is to take reasonable care of the goods intrusted to him, not merely in doing what is necessary to preserve them on board the ship during the ordinary incidents of the voyage, but also in taking reasonable measures to check and arrest their loss, destruction, or deterioration, by reason of accidents, for the necessary effects of which there is, by reason of the exception in the bill of lading, no original liability. [T]he exemption is from liability for loss which could not have been avoided by reasonable care, skill, and diligence, and that it is inapplicable to the case of a loss arising from the want of such care, and the sacrifice of the cargo by reason thereof, which is the subject matter of the present complaint. Willes J did not in terms address the burden of proving absence of fault, but the critical point is that he treated absence of fault as an integral part of the exception. It was an exception only in respect of such loss as could not by the exercise of reasonable care be avoided. It must in principle follow that if the burden of proving the application of the exception is on the carrier, that must extend to proving that the damage could not be avoided by the exercise of reasonable care. The decisions of the House of Lords in Thomas Wilson, Sons & Co v Owners of the Cargo per The XANTHO (1887) 12 App Cas 503 and Hamilton, Fraser & Co v Pandorf & Co (1887) 12 App Cas 518, were handed down on the same day by differently constituted appellate committees. In both cases, it was held that a bill of lading exception for dangers and accidents of the seas excused the carrier only if the relevant danger or accident happened without his fault. The law on this point can conveniently be taken from The XANTHO. Lord Herschell, delivering the leading speech, put the matter in this way at pp 510 511: If the goods are not carried with reasonable care, and are consequently lost by perils of the sea, it becomes necessary to reconcile the two parts of the instrument, and this is done by holding that if the loss through perils of the sea is caused by the previous default of the shipowner, he is liable for this breach of his covenant. However, Lord Herschell expressly declined (p 512) to say who bore the burden of proving absence of fault on the carriers part. The sheet anchor of the carriers case on this appeal is the decision of the Court of Appeal in The GLENDARROCH [1894] P 226, where the question left open by Lord Herschell was decided. The GLENDARROCH was decided 30 years before the Hague Rules were adopted. It concerned a specific exception assumed to be included in a bill of lading. Like most of the case law on the burden of proving an exception in the contract of carriage, it was about the exception for perils of the sea, which was commonly included in bills of lading before the Hague Rules and was reproduced in article IV.2 of the Rules as exception (c). The facts were that the cargo suffered water damage because the vessel ran aground on St Patricks causeway in Cardigan Bay. During the trial, the judge ruled that the carrier had the burden of proving that the grounding had occurred without negligence in the navigation of the vessel. Thereupon, the carriers counsel declined to call any evidence to explain how the vessel came to be in a place where the action of the wind and waves was liable to put her aground. Accordingly, the judge entered judgment for the cargo owner. The Court of Appeal allowed the appeal, holding that the burden of proving that an excepted peril had been occasioned by the carriers negligence lay on the cargo owner. Today, the result on the same facts would be the same because, assuming that the vessel was initially seaworthy, the carrier would be exempted from liability for negligent navigation under article IV.2(a) as well as perils of the sea under article IV.2(c). But that is by the way. What matters for present purposes is the reasoning of the Court of Appeal on the footing that the only relevant exception was for perils of the sea. Lord Esher MR delivered the leading judgment. He appears to have regarded the shipowner as a common carrier, for he observed (p 230) that but for the contractual exception for perils of the seas, the carrier would have been strictly liable and negligence utterly immaterial. On that footing, any negligent navigation of the vessel could be relevant to the exception for perils of the seas only if one read it as meaning Except the loss is by perils of the sea, unless or except that loss is the result of the negligence of the servants of the owner. Lord Esher proceeded on the assumption that that construction was correct. But he held that on that footing negligent navigation was an exception to an exception. It followed that once the carrier had proved that the wind and waves had deposited the vessel on St Patricks causeway, he had done all that the exception required of him, and the burden of proving that this had happened only because of its negligent navigation by the crew lay upon the cargo owner. He referred in support of this conclusion to the practice of the court regarding the pleading of exceptions upon exceptions. The reasoning of Lopes LJ was the same. As he pointed out (p 235), the result was that where a peril of the sea is set up it is sufficient for the defendant to prove the peril relied on, and he need not go on to shew that that was really not caused by him; but if the plaintiff says that it was, then he must set it up in his replication and must prove it. Davey LJ agreed with Lord Esher. The decision in The GLENDARROCH derives some support from obiter dicta by Lord Sumner in Owners of Steamship MATHEOS v Louis Dreyfus & Co [1925] AC 654, 666, Lord Wright in Joseph Constantine Steamship Line v Imperial Smelting Corpn Ltd [1942] AC 154, 194, Lord Pearson in The Albacora, supra, at p 31, and Mason and Wilson JJ in Shipping Corpn of India Ltd v Gamlen Chemical Co (A/Asian) Pty Ltd (1980) 147 CLR 142, 167 168, although in none of these cases were the authorities examined. None of them, moreover, confronted the practical and conceptual problems about the analysis in The GLENDARROCH. Fundamental to that analysis was a distinction between an exception and an exception to an exception. This distinction is in my view unsatisfactory. This is partly because the attempt to distinguish between the case where absence of fault is part of the test for the exception and the case where it is an exception to the exception seems to me to import a refinement of some subtlety, unrelated to any commercial purpose which the parties can sensibly be thought to have had in mind. But it is mainly because if an exception is subject to an exception for cases where it was avoidable by the exercise of due care, then the issue must ultimately be one of causation. Thus, in The GLENDARROCH itself, the question was whether the effective cause of the loss was the action of the wind and waves, or the conduct of the crew in allowing the action of the wind and waves to damage the cargo when with reasonable diligence on their part both ship and cargo could have withstood the storm. If, as the Court of Appeal rightly accepted in that case, the burden of proving facts bringing the carrier within the exception lay on him, that must extend not just to the question whether the sea conditions were perilous, but also to the question whether that was the effective cause of the damage. That is unquestionably the position of a bailee at common law: Coldman v Hill [1919] 1 KB 443; British Road Services Ltd v Arthur V Crutchley & Co Ltd (No 1) [1968] 1 All ER 811, 822, 824 (Sachs LJ, with whom Danckwerts LJ agreed). It is also, under the express terms of article IV.2 of the Hague Rules an integral part of what must be proved for any of the exceptions to apply (Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from (emphasis supplied).) Yet, as Lopes LJ recognised, the reasoning of the Court of Appeal involved a distinction between the existence of the excepted circumstance on the one hand and its causative effect on the other. The GLENDARROCH has stood for a long time. But it has rarely featured in the reasoning of subsequent case law, and the basis on which it was decided is technical, confusing, immaterial to the commercial purpose of the exception and out of place in the context of the Hague Rules. The decision may have been justifiable in the more formal conditions of pleading and trial practice in the 1890s, or as applied to the notional bill of lading terms which the Court of Appeal was considering. But as the source of a general rule governing the burden of proof, it should no longer, in my view, be regarded as good law. I consider that the carrier has the legal burden of disproving negligence for the purpose of invoking an exception under article IV.2, just as he has for the purpose of article III.2. Even if I had thought that The GLENDARROCH was correct as applied to the exception for perils of the sea, I would not have regarded it as applicable to the exception for inherent vice. This is because the distinction between the existence of the peril and the standard of care required of the carrier is impossible to make in that context. A cargo does not suffer from inherent vice in the abstract, but only in relation to some assumed standard of knowledge and diligence on the part of the carrier. Thus the mere fact that coffee beans are hygroscopic and emit moisture as the ambient temperature falls may constitute inherent vice if the effects cannot be countered by reasonable care in the provision of the service contracted for, but not if they can and should be. At the time that The GLENDARROCH was decided, this had already been established by the decision of the Court of Appeal in Nugent v Smith (1876) 1 CPD 423. In that case, a mare carried in the hold died as a result of a combination of more than usually bad weather and the fright of the animal herself which caused her to struggle and injure herself. Cockburn CJ described inherent vice (p 438) as the rule that the carrier is not liable where the thing carried perishes or sustains damage, without any fault of his, by reason of some quality inherent in its nature . (Emphasis supplied) Likewise, Mellish LJ (p 439) thought that if the jury had found that the injury was caused solely by the conduct of the mare herself by reason of fright and consequent struggling, without any negligence on the part of the defendants servants, I am of opinion that a plea that the injury to the mare was caused by the vice of the mare herself would have been proved. (Emphasis supplied) The leading modern case is The Albacora, which I have already mentioned in another context. It is authority for the proposition that the standard of care by reference to which the exception for inherent vice is to be assessed may depend on the nature of the service contracted for. The issue was whether a cargo of fish was capable of withstanding carriage in unrefrigerated spaces, that being the service stipulated in that case. The ratio can conveniently be taken from the speech of Lord Reid, at p 23: Article IV, rule 2(m), provides that the carrier shall not be responsible for damage arising from inherent defect, quality, or vice of the goods. A number of authorities were cited and perhaps the most concise statement is that of Gorell Barnes J in The Barcore [1896] P 294: This cargo was not damaged by reason of the shipowner committing a breach of contract, or omitting to do something which he ought to have done, but it was deteriorated in condition by its own want of power to bear the ordinary transit in a ship. By the ordinary transit I would understand the kind of transit which the contract requires the carrier to afford. I agree with the Lord President when he says: rule 2(m) is in my opinion intended to give effect to the well settled rule in our law that if an article is unfitted owing to some inherent defect or vice for the voyage which is provided for in the contract, then the carrier may escape liability when damage results from the activation of that inherent vice during the voyage. It follows that whether there is inherent defect or vice must depend on the kind of transit required by the contract. If this contract had required refrigeration there would have been no inherent vice. But as it did not, there was inherent vice because the goods could not stand the treatment which the contract authorised or required. The effect of these statements, and others to the same effect, are accurately summarised in Scrutton on Charterparties and Bills of Lading 23rd ed (2015), para 11.055: By inherent vice is meant the unfitness of the goods to withstand the ordinary incidents of the voyage, given the degree of care which the shipowner is required by the contract to exercise in relation to the goods. It follows that if the carrier could and should have taken precautions which would have prevented some inherent characteristic of the cargo from resulting in damage, that characteristic is not inherent vice. Accordingly, in order to be able to rely on the exception for inherent vice, the carrier must show either that he took reasonable care of the cargo but the damage occurred nonetheless; or else that whatever reasonable steps might have been taken to protect the cargo from damage would have failed in the face of its inherent propensities. The judgment of the Court of Appeal The judgment of the Court of Appeal was given by Flaux J, with whom Gloster and King LJJ agreed. Flaux Js analysis of the burden of proof is not entirely clear. He appears to have considered that if damage was ascertained on outturn, the cargo owner had the legal burden of proving that this was due to a breach of article III.2, but that there was an evidential inference from the mere fact of damage that such a breach had occurred. The carrier would have to point to evidence to rebut the inference or fail on that issue. On that footing, there appears to have been little practical difference between a legal and an evidential burden. Once a breach of article III.2 had been established (whether by evidence or inference), Flaux J considered that the carrier had the legal burden of establishing a prima facie case for the application of one of the exceptions in article IV.2. Flaux J cannot have been using the expression prima facie case in its ordinary sense, ie a case on the facts which unless rebutted by further evidence would entitle the carrier to succeed. He must, I think, have meant that the carrier had the legal burden of proving that one of the circumstances listed in article IV.2 existed at the relevant time. It was then, he thought, for the cargo owner to bear the legal burden of showing that it only resulted in damage to the cargo because the carrier had failed to take reasonable care of it. I have already explained why I do not accept this analysis in principle. I also have great difficulty with the way in which Flaux J applied it to the exception for inherent vice. What is a prima facie case for the application of that exception? Flaux J seems to have thought that the carrier need only prove that the cargo had an inherent propensity to deteriorate, but not that he took reasonable care to prevent that propensity from manifesting itself. He criticised the deputy judge for conflating the issues of whether there was some inherent defect, quality or vice in the cargo and whether the carrier properly and carefully cared for and carried the cargo. At the same time, he recognised that there was a degree of overlap, if not of circularity between these two things, in the sense that one is focussing on the ability of the cargo to withstand the ordinary incidents of carriage, pursuant to obligations of the carrier under the contract of carriage. The reason why, in spite of the overlap or circularity, he nevertheless felt it necessary to treat them as discrete questions was that he thought that the burden of proof lay with the carrier on the former issue and the cargo owner on the latter. The problem with this analysis is that, as I have observed, and as Flaux J came close to acknowledging, it is conceptually impossible to define inherent vice except by reference to some assumed standard of care for the cargo. A cargo may have inherent characteristics that make its deterioration inevitable whatever care is taken of it. In that case negligence is irrelevant and inherent vice is proved without more. But inevitable deterioration is rare in cargoes that are habitually carried by sea. In the great majority of cases, the cargos inherent propensity to deteriorate may or may not manifest itself in damage, depending on the ambient conditions of stowage and the way it is handled. If, within the limits of the kind of carriage contracted for, reasonable care would have prevented the cargos inherent propensity from causing damage, then the cargo is fit to withstand the ordinary incidents of the carriage contracted for and there is no inherent vice. This makes it difficult to support Flaux Js analysis of the incidence of the burden of proof. If the existence of inherent vice depends on the appropriate standard of care, the law cannot coherently apply a different burden of proof to one of them from that which applies to the other. Having held that the cargo owner had the burden of proving that the carriers absence of care had caused the exception to operate, the Court of Appeal went on to find that he had failed to discharge it. This was not because of the absence of evidence of matters which it was for the cargo owner to prove. Starting from the proposition that the carriers obligation under article III.2 was to care for and carry the goods in accordance with a sound system, they thought that the deputy judge had misdirected himself that this meant in accordance with a system that would prevent damage, and that inherent vice could be demonstrated only if damage was inevitable. I am not persuaded that the deputy judge made either of these mistakes. He simply observed that at the relevant time bagged coffee was commonly carried in unventilated containers from warm climates to cooler ones without mishap, and there was nothing out of the ordinary about this particular cargo. It therefore seemed probable that with reasonable care the cargo was perfectly capable of withstanding the risks reasonably to be expected during unventilated carriage. But it is unnecessary to examine this point further, because while the Court of Appeals criticisms encouraged them to reopen the facts, the decisive reason why they overruled him was that they disagreed with two of his critical conclusions about the evidence, and made positive findings of their own which he had felt unable to make. In the first place, the deputy judge had found that there was no evidence of any generally accepted industry practice to which the carrier could claim to have conformed. The Court of Appeal found that there was an accepted industry practice in 2012 for lining unventilated containers for the carriage of bagged coffee. It was, they said, to use two layers of paper of at least 80 gsm or one layer of at least 125 gsm. Secondly, the deputy judge had found that apart from a tentative conclusion to be drawn from the photographs, there was no evidence of the number of layers of paper in place at the time of shipment, and no evidence of its weight except that it was more than 80 gsm. The Court of Appeal found by an examination of the photographs and of the pre loading documentation that two layers of paper had been used. It therefore followed from the deputy judges finding that the paper used weighed at least 80 gsm that the containers had been lined in accordance with accepted industry practice. This court has on a number of occasions pointed out that while an appeal to the Court of Appeal is by way of rehearing, a trial judges findings of fact should not be overturned simply because the Court of Appeal would have found them differently. It must be shown that the trial judge was wrong: ie that he fundamentally misunderstood the issue or the evidence, or that he plainly failed to take the evidence into account, or that he arrived at a conclusion which the evidence could not on any view support. Within these broad limits, the weight of the evidence is a matter for the trial judge. There is a world of difference between the impression which evidence makes on a judge who has followed it as it was deployed and the impression that an appellate court derives from cold transcripts. The judgment of Flaux J in the Court of Appeal attaches no intrinsic weight to the deputy judges analysis. It simply substitutes his own. In my judgment, the Court of Appeal was not justified in overturning the deputy judges findings on either of the two critical points which I have identified. On the question of industry practice, the judge had before him a joint memorandum by the expert witnesses, referring to a number of recommendations, none of them more recent than 2004. The issue was addressed by the experts in their oral evidence in terms which were not wholly consistent. Some of it suggested that in 2012 practice in the trade was variable, fluid and developing. The assessment of this evidence was very much a matter for the deputy judge. He found that it fell short of proving any sufficiently uniform or accepted practice to serve as a benchmark against which to measure the carriers care for the cargo. To my mind this was a conclusion which was open to him on the material deployed at trial. Turning to the paper actually used, the Court of Appeal thought that the deputy judges conclusions were against the weight of evidence. There was an issue at trial about what could be deduced from the reports of inspectors who examined the containers on outturn, on which the evidence was inconclusive and the deputy judge made no finding. There was an issue about the weight to be attached to documentary evidence suggesting that before shipment it had been intended to use two layers of paper. The deputy judge discounted this, mainly because of the absence of documentation such as invoices which one would have expected to find if this intention had been carried into execution. That left the inferences to be drawn from photographs taken at the port of loading. The deputy judge thought that they tended to show that single layers of paper had been used, the Court of Appeal that it was doubled. The difference depends on whether certain of the photographs showed double layers or an overlap of sheets laid as single layers. For my part, I think that there is some force in the criticism that the deputy judge too readily discounted the documentary evidence generated before shipment. But this was only part of a larger and more complex body of evidence which, taken as a whole, could have supported either of the competing analyses. This falls well short of what was necessary to show that the deputy judge was wrong. Disposal I would hold that the carrier had the legal burden of proving that he took due care to protect the goods from damage, including due care to protect the cargo from damage arising from inherent characteristics such as its hygroscopic character. I would reinstate the deputy judges conclusions about the practice of the trade in the lining of unventilated containers for the carriage of bagged coffee and the absence of evidence that the containers were dressed with more than one layer of lining paper. In the absence of evidence about the weight of the paper employed, it must follow that the carrier has failed to prove that the containers were properly dressed. For these reasons, I would allow the appeal and restore the order of the deputy judge. |
This appeal raises a question of contractual interpretation. It concerns an indemnity clause in an agreement dated 13 April 2010 (the SPA) for the sale and purchase of the entire issued share capital of a company, Sureterm Direct Limited (the Company), which carries on business as a specialist insurance broker, primarily offering motor insurance for classic cars. The sellers of the Company were the respondent, Mr Andrew Wood (Mr Wood), who owned 94% of its share capital, and Mr Christopher Kightley and Mr Howard Collinge, who owned 1% and 5% of its share capital respectively. Each was a director of the Company and Mr Wood was its managing director. The purchaser was Capita Insurance Services Ltd (Capita). Mr Wood remained as managing director of the Company until the end of 2010. He brought proceedings against Capita arising out of the termination of his employment and Capita brought a counterclaim against him under the indemnity provision in the SPA, which is the subject matter of this appeal. Mr Kightley and Mr Collinge were, but are no longer, parties to the proceedings. It is not necessary to set out in any detail the circumstances in which Capita came to make its claim under the indemnity. It suffices to summarise Capitas claim as follows. In about August 2008 the Company began to sell motor insurance through online aggregator sites such as Confused.com. The sales were not completed online: potential customers obtained a quotation from the Company on the aggregator site and the Company then contacted the potential customer directly with a view to confirming their risk details before selling them the appropriate insurance policy. Shortly after Capitas purchase of the Companys share capital, employees of the Company raised concerns about the Companys sales processes, which had resulted in some customers paying substantially more than they had been quoted online. The employees alleged that the Company had presented customers with higher quotations without informing them why the quotations had increased. The Company had thus increased its own arrangement fees when neither the underwriting premium nor the risk profile had changed significantly. The Company responded to the allegations by carrying out a review of its sales between January 2009 and January 2011. This review revealed that in many cases the Companys telephone operators had misled customers into believing that an underwriter had required a higher premium or that their risk profile was worse than it was or had pressurised the customer to make sure that a sale was made. Capita and the Company were obliged to inform the Financial Services Authority (FSA) of the findings and did so on 16 December 2011. The FSA informed them that the customers had been treated unfairly and had suffered detriment and that there would have to be redress. After the FSA had conducted a risk assessment visit to the Company in November 2012, Capita and the Company agreed with the FSA to conduct a remediation scheme to pay compensation to customers who were identified as potentially affected by the Companys mis selling. Capita alleges that it, the Company and Capitas other subsidiaries have suffered loss as a result of the mis selling or suspected mis selling of insurance products in the period before the completion of the sale under the SPA. Capitas claim is for 2,432.883.10, comprising an estimate of the compensation at 1.35m, interest of about 400,000 and the costs of the remediation scheme. It is appropriate to record that some of Capitas allegations are disputed, including the extent of the mis selling and any detriment to customers. Other than, perhaps, the facts narrated in para 4 above (which do not appear to be disputed), they are not facts by reference to which the SPA is to be construed. But the circumstances in which Capita and the Company were required to set up the remediation scheme are of some importance because Mr Wood contends that they fall outside the scope of the indemnity clause which is the subject matter of this action. In particular, the requirement to compensate was not the result of a claim by one or more of the Companys customers or a complaint by those customers to the FSA or another public authority. It resulted, as I have said, from information about the internal review which Capita and the Company gave the FSA and the requirement by the FSA that compensation should be paid to the customers. Contractual interpretation In his written case counsel for Capita argued that the Court of Appeal had fallen into error because it had been influenced by a submission by Mr Woods counsel that the decision of this court in Arnold v Britton [2015] AC 1619 had rowed back from the guidance on contractual interpretation which this court gave in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900. This, he submitted, had caused the Court of Appeal to place too much emphasis on the words of the SPA and to give insufficient weight to the factual matrix. He did not have the opportunity to develop this argument as the court stated that it did not accept the proposition that Arnold had altered the guidance given in Rainy Sky. The court invited him to present his case without having to refer to the well known authorities on contractual interpretation, with which it was and is familiar. It is not appropriate in this case to reformulate the guidance given in Rainy Sky and Arnold; the legal profession has sufficient judicial statements of this nature. But it may assist if I explain briefly why I do not accept the proposition that Arnold involved a recalibration of the approach summarised in Rainy Sky. The courts task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on a parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning. In Prenn v Simmonds [1971] 1 WLR 1381 (1383H 1385D) and in Reardon Smith Line Ltd v Yngvar Hansen Tangen [1976] 1 WLR 989 (997), Lord Wilberforce affirmed the potential relevance to the task of interpreting the parties contract of the factual background known to the parties at or before the date of the contract, excluding evidence of the prior negotiations. When in his celebrated judgment in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 Lord Hoffmann (pp 912 913) reformulated the principles of contractual interpretation, some saw his second principle, which allowed consideration of the whole relevant factual background available to the parties at the time of the contract, as signalling a break with the past. But Lord Bingham in an extra judicial writing, A new thing under the sun? The interpretation of contracts and the ICS decision Edin LR Vol 12, 374 390, persuasively demonstrated that the idea of the court putting itself in the shoes of the contracting parties had a long pedigree. Lord Clarke elegantly summarised the approach to construction in Rainy Sky at para 21f. In Arnold all of the judgments confirmed the approach in Rainy Sky (Lord Neuberger paras 13 14; Lord Hodge para 76; and Lord Carnwath para 108). Interpretation is, as Lord Clarke stated in Rainy Sky (para 21), a unitary exercise; where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense. But, in striking a balance between the indications given by the language and the implications of the competing constructions the court must consider the quality of drafting of the clause (Rainy Sky para 26, citing Mance LJ in Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd (No 2) [2001] 2 All ER (Comm) 299 paras 13 and 16); and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest: Arnold (paras 20 and 77). Similarly, the court must not lose sight of the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms. This unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated: Arnold para 77 citing In re Sigma Finance Corpn [2010] 1 All ER 571, para 10 per Lord Mance. To my mind once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each. Textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation. Rather, the lawyer and the judge, when interpreting any contract, can use them as tools to ascertain the objective meaning of the language which the parties have chosen to express their agreement. The extent to which each tool will assist the court in its task will vary according to the circumstances of the particular agreement or agreements. Some agreements may be successfully interpreted principally by textual analysis, for example because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals. The correct interpretation of other contracts may be achieved by a greater emphasis on the factual matrix, for example because of their informality, brevity or the absence of skilled professional assistance. But negotiators of complex formal contracts may often not achieve a logical and coherent text because of, for example, the conflicting aims of the parties, failures of communication, differing drafting practices, or deadlines which require the parties to compromise in order to reach agreement. There may often therefore be provisions in a detailed professionally drawn contract which lack clarity and the lawyer or judge in interpreting such provisions may be particularly helped by considering the factual matrix and the purpose of similar provisions in contracts of the same type. The iterative process, of which Lord Mance spoke in Sigma Finance Corpn (above), assists the lawyer or judge to ascertain the objective meaning of disputed provisions. On the approach to contractual interpretation, Rainy Sky and Arnold were saying the same thing. The recent history of the common law of contractual interpretation is one of continuity rather than change. One of the attractions of English law as a legal system of choice in commercial matters is its stability and continuity, particularly in contractual interpretation. The Sale and Purchase Agreement The SPA is a detailed and professionally drafted contract. It provided for the sale and purchase of the Companys share capital (clause 3) for the consideration of 7,681,661 payable on completion (clause 4), and it also provided for deferred consideration (Schedule 8). Clause 1 contained the following definitions which are relevant to the construction of the disputed indemnity: Authority means any local, national, multinational, governmental or non governmental authority, statutory undertaking, agency or public or regulatory body (whether present or future) which has jurisdiction over the Business or any decision, consent or licence which is required to carry out the Business and Authorities shall be construed accordingly. Company means Sureterm Direct Ltd Completion Date means the date of this Agreement. Employees has the meaning given to it at paragraph 6 of Schedule 4 [which refers to a list of all of the employees employed by the Company]. FSA means the Financial Services Authority and any body which supersedes it. Regulatory Authority means any body by which any part of the Business is or was regulated pursuant to any Applicable Financial Services Laws (including, but not limited to, the FSA, the Personal Investments Authority Ltd, the General Insurance Standards Council, the Insurance Brokers Registration Council and including the Financial Services Ombudsman and any voluntary regulatory body with whose rules the Company has agreed to comply). Relevant Person means an Employee or a former employee of the Company and any dependant of an Employee or a former employee of the Company. Shares means all of the issued shares in the capital of the Company. Warranties means the Tax Warranties and the warranties set out in Schedule 4. Clause 7 dealt with warranties and indemnities. Each of the sellers severally warranted to the buyer on a proportionate basis in terms of the Warranties (clause 7.1); the Warranties were qualified by matters which had been fairly disclosed in the disclosure letter (clause 7.2); and where a Warranty was qualified by an expression such as so far as the Sellers are aware that referred to the actual knowledge of the sellers, who confirmed that they had made due and careful enquiry of the Companys compliance manager, IT Director and HR Director (clause 7.3). The indemnity clause whose interpretation is in dispute is clause 7.11. It provided: The Sellers undertake to pay to the Buyer an amount equal to the amount which would be required to indemnify the Buyer and each member of the Buyers Group against all actions, proceedings, losses, claims, damages, costs, charges, expenses and liabilities suffered or incurred, and all fines, compensation or remedial action or payments imposed on or required to be made by the Company following and arising out of claims or complaints registered with the FSA, the Financial Services Ombudsman or any other Authority against the Company, the Sellers or any Relevant Person and which relate to the period prior to the Completion Date pertaining to any mis selling or suspected mis selling of any insurance or insurance related product or service. This clause must be seen in its contractual context. Schedule 4 contained 30 pages of detailed warranties. In Part 12 of that Schedule, which concerned litigation, disputes and investigations, the sellers warranted that they were not aware of circumstances which were likely to give rise to any investigation or enquiry by any Authority (para 12.4) and that no breach of contract, tort, statutory duty or law had been committed for which the Company was or might be liable (para 12.5). Part 14 which was concerned with compliance and regulatory matters included the following para: 14.1 (a) The Company conducts, and has conducted the Business in accordance with the requirements of all Competition laws and Applicable Financial Services Laws applicable to the business and has not been and is not being investigated for any alleged non compliance or infringement of such Competition Laws and Applicable Financial Services Laws. (c) The Company has no reason to believe that any action will be taken against it in relation to any of its current or past activities based on any alleged non compliance or infringement of any Competition Laws and Applicable Financial Services Laws. Part 14 also contained detailed warranties that the Company had complied with its regulatory obligations and that correspondence between the Company and all Regulatory Authorities had been disclosed, that the Company, its officers and employees had not been subject to any regulatory sanction and that no such sanction was likely or pending; and that the Company had not been subject to a regulatory investigation and, so far as the Sellers were aware, there were no circumstances which could give rise to a visit by any Regulatory Authority. Clause 8 of the SPA provided for limitations on the sellers liability in Schedule 5, which in para 1 provided that the aggregate maximum liability of all claims under the SPA (with one exception) would not exceed the purchase price and that the liability of each seller would not exceed his proportionate liability (ie 94%, 5% and 1%). That limitation applied to claims under clause 7.11 as well as under the warranties. But paragraph 3 of Schedule 5 imposed time limits on the warranties by providing: 3.1 Save in respect of a Warranty Claim or a claim under the Tax Covenant notified in writing to the Sellers prior to such a date, the Sellers will cease to be liable: (a) for any claim under the tax warranties or under the Tax Covenant on the seventh anniversary of Completion; and (b) anniversary of Completion. for any other Warranty Claim on the second Thus in contrast to the indemnity under clause 7.11, the warranties relating to, among other things, regulatory compliance, had a lifespan of only two years. In a judgment dated 14 October 2014 ([2014] EWHC 3240 (Comm)) Popplewell J decided the preliminary issue of the interpretation of the indemnity clause and held, in effect, that it required Mr Wood to indemnify Capita even if there had been no claim or complaint by a customer. The Court of Appeal (Patten LJ, Gloster LJ and Christopher Clarke LJ) in a judgment written by Christopher Clarke LJ ([2015] EWCA Civ 839) disagreed. In its order dated 30 July 2015 the Court of Appeal declared that Mr Woods liability under the indemnity in clause 7.11 of the SPA: cannot arise unless the matter in respect of which indemnity is sought follows and arises out of either (i) a claim made against the Company, a Seller or a Relevant Person or (ii) a complaint registered with the FSA, the Financial Services Ombudsman or any other Authority against the Company, a Seller or a Relevant Person and, in either case, the claim or complaint (a) relates to the period prior to the Completion Date and (b) pertains to any mis selling or suspected mis selling of any insurance or insurance related product. Capita appeals against that order, arguing that the contractual indemnity is not confined to loss arising out of a claim or complaint. In this case both Popplewell J and the Court of Appeal have considered and weighed both the language of the disputed clause 7.11 and the commercial considerations. They have both started by examining the language but have reached opposing conclusions. This disagreement is not caused by any failure to apply the correct principles but is, in my view, the result of an opaque provision which, as counsel for each party acknowledged, could have been drafted more clearly. I have concluded that the Court of Appeal has come to the correct view as to the meaning of this difficult clause. I set out below my reasons, which are essentially the same as those which Christopher Clarke LJ presented. Discussion Clause 7.11 has not been drafted with precision and its meaning is avoidably opaque. My preliminary view of the meaning of the clause on a first reading was consistent with the view which the Court of Appeal favoured, namely that the indemnity covered loss and damage which (a) followed and arose out of claims or complaints against the Company, the Sellers or any Relevant Person, (b) related to the period before completion and (c) pertained to the mis selling or suspected mis selling of insurance products or services. But it is necessary to place the clause in the context of the contract as a whole, to examine the clause in more detail and to consider whether the wider relevant factual matrix gives guidance as to its meaning in order to consider the implications of the rival interpretations. The contractual context is significant in this case. The indemnity in clause 7.11 is an addition to the detailed warranties in Schedule 4. The mis selling which clause 7.11 addresses is also covered by the warranty in paragraph 14.1 of Schedule 4 (para 18 and para 19 above). But liability for the Schedule 4 warranties is time limited by Schedule 5. In particular paragraph 3.1(b) of that Schedule (para 20 above) required the Company to claim within two years of the completion of the sale and purchase. The scope of the clause 7.11 indemnity, breach of which gives rise to a liability which is unlimited in time, falls to be assessed in the context of those time limited warranties. All of the parties to the SPA were commercially sophisticated and had experience of the insurance broking industry. Capita was not involved in the management of the Company before the share purchase. The Sellers were the directors and the only shareholders of the Company. They were the people who knew or ought to have known how the Company had operated its business; Capita would in all probability not have that knowledge. The parties to the SPA would have known this. That lack of knowledge explains why Capita required the disclosures in the disclosure letter and the detailed warranties in Schedule 4; but it does not assist the court to determine the scope of the indemnity clause. The court is not aware of the negotiations which led to the SPA; they are not relevant to the task of interpreting that agreement: Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101. Business common sense suggests that Capita had an interest in obtaining as broad an indemnity against the adverse consequences of mis selling as it could obtain. But the sellers had given warranties of compliance with regulatory requirements, which covered such mis selling, subject to the agreed limits of quantum and time. The sellers were exposed to a potential liability under those warranties for the two years after the Completion Date, during which Capita could learn of the Companys sales practices. One may readily infer that they had an interest in minimising their further exposure to liability after that time had elapsed. Business common sense is useful to ascertain the purpose of a provision and how it might operate in practice. But in the tug o war of commercial negotiation, business common sense can rarely assist the court in ascertaining on which side of the line the centre line marking on the tug o war rope lay, when the negotiations ended. I therefore turn to examining the clause in more detail before returning to the commercial context. In order to illustrate the competing contentions of the parties Popplewell J helpfully divided clause 7.11 into its constituent parts. I set that presentation out below with the addition in (B) of the sub headings (i) and (ii) to assist my exegesis. Clause 7.11 thus divided provides: The Sellers undertake to pay to the Buyer an amount equal to the amount which would be required to indemnify the Buyer and each member of the Buyers Group against (1) all actions, proceedings, losses, claims, damages, costs, charges, expenses and liabilities suffered or incurred, and (2) all fines, compensation or remedial action or payments imposed on or required to be made by the Company following and arising out of claims or complaints (A) registered with the FSA, the Financial Services Ombudsman or any other authority against the Company, the Sellers or any Relevant Person (B) (i) and which relate to the period prior to the Completion Date (ii) pertaining to any mis selling or suspected mis selling of any insurance or insurance related product or service. Counsel for Capita submitted that the clause should be read by treating (2) and (A) as a composite phrase so that the Sellers were bound to indemnify against both (1) and (2+A), each of which was subject to the two conditions in (B). This meant that it was only the fines etc in (2) which had to follow on or arise out of claims or complaints made to the FSA or other Authority against the Company etc as provided in (A). Thus, it was submitted, the indemnity covered all liabilities in (1) provided only that (i) they related to the period prior to the completion date and (ii) pertained to any mis selling or suspected mis selling of insurance products etc. Counsel for Mr Wood submitted that the clause was properly construed by treating both (1) and (2) as being subject to three conditions, namely (A), B(i) and (B)(ii). He submitted that (A) should be read as if there was a comma after claims, so that it provided as a condition for the triggering of the indemnity under (1) or (2) that there must be either claims by customers, or complaints made to the regulatory authorities, in each case against the Company, the Sellers or any Relevant Person. Thus, on his approach, either a claim by a customer against the Company, the Sellers or an employee or former employee of the Company, or a complaint to a regulatory authority against the Company, the Sellers or an employee or former employee of the Company would trigger the indemnity if the two conditions in (B) were met. Both counsel accepted that, because of the breadth of the terms used in (1), the types of loss and damage in (1) covered all of the types of loss and damage in (2). Thus it was suggested that (2) must have been included only for the avoidance of doubt. This means that on Mr Woods approach (2) was otiose while on Capitas approach the composite (2+A) was otiose. I find the latter proposition remarkable and unlikely for two reasons. First, and to my mind most significantly, (A) would serve no purpose by restricting the source of loss and damage if (A) governed only (2) and therefore (1) was unrestricted. (A) would not restrict the scope of the indemnity in any way. On Mr Woods construction the words in (A) have a purpose as they limit the scope of both (1) and the otiose (2). Secondly, if one airbrushes out (2+A) as otiose, the clause does not specify against whom the actions, proceedings and claims in (1) are directed. The clause would read: The Sellers undertake to pay to the Buyer an amount equal to the amount which would be required to indemnify the Buyer and each member of the Buyers Group against all actions, proceedings, losses, claims, damages, costs, charges, expenses and liabilities suffered or incurred, and which relate to the period prior to the Completion Date pertaining to any mis selling or suspected mis selling of any insurance or insurance related product or service. The identity of the persons against whom the relevant claims etc could be made so as to trigger the sellers indemnity would, on Capitas approach, be left to implication. There must be a limit on who such persons could be as it would be absurd for Capita to have a claim against the Sellers for indemnity resulting from any mis selling on its part before the Completion Date. But, even assuming that the target was mis selling by or on behalf of the Company, it is far from obvious that the delimited class of persons would be the Company, the Sellers or any Relevant Person. Capita made three further points against Mr Woods interpretation. First, there is an element of tautology as the claims in (1) are said in (A) to follow and arise out of claims. But as Christopher Clarke LJ observed, tautology in commercial contracts is not unknown and the verbal exuberance (or torrential drafting) of (1) makes tautology difficult to avoid. Secondly, Capita pointed out that there is a comma after incurred at the end of (1) and no comma after Company at the end of (2). This could support the separation of (1) from (2) and the conjunction of (2) and (A). Similarly, Mr Woods interpretation would involve inserting in (A) a comma after claims and also after any other Authority so as to limit both the claims and the regulatory complaints to those against the Company, the Sellers or any Relevant Person. Again in agreement with Christopher Clarke LJ I do not think that the use of commas in this clause is a strong pointer in favour of Capitas interpretation, both because there are no set rules for the use of commas and in any event the draftsmans use of commas in this clause is erratic. Thirdly, the draftsman used an adjectival participle at the start of (A) (following and arising out of) and changed tone by using a relative pronoun (and which) at the start of (B). But the use of the adjectival participle does not tie (A) exclusively into (2) because in (B) the adjectival participle (pertaining to) unquestionably applies to both (1) and (2). These detailed points of style and syntax are of little assistance in construing an admittedly opaque clause. I return to the commercial context and the practical consequences of the rival interpretations. On Mr Woods interpretation it requires a customer or customers to make a claim, or complaint to the regulatory authorities, against the Company, the sellers or a Relevant Person in order to trigger the indemnity. Thus if a whistle blower alerted the regulatory authorities of suspected or actual mis selling, or if (as in fact occurred) management, complying with their regulatory obligations, reported such mis selling to the FSA, which ordered the payment of compensation, the indemnity would not be triggered. Yet in each case, the mis selling before the date of completion causes the Company loss. The general purpose of clause 7.11, to indemnify Capita and its group against losses occasioned by mis selling is clear. Had clause 7.11 stood on its own, the requirement of a claim or complaint by a customer and the exclusion of loss caused by regulatory action which was otherwise prompted might have appeared anomalous. But clause 7.11 is in addition to the wide ranging warranties in Part 14 of Schedule 4 (paras 18 and 19 above) which probably covered the circumstances which eventuated. Capita had two years after completing the purchase to examine the sales practices of the Companys employees and so uncover any regulatory breaches in order to make a claim under the Schedule 4 indemnities. Prima facie that was not an unreasonable time scale. Indeed, Capita was able to send its findings to the FSA within 20 months of the Completion Date. It is not contrary to business common sense for the parties to agree wide ranging warranties, which are subject to a time limit, and in addition to agree a further indemnity, which is not subject to any such limit but is triggered only in limited circumstances. From Capitas standpoint the SPA may have become a poor bargain, as it appears that it did not notify the sellers of a warranty claim within two years of Completion. But it is not the function of the court to improve their bargain. In this case, the circumstances which trigger that indemnity are to be found principally in a careful examination of the language which the parties have used. Conclusion I would therefore dismiss the appeal. |
What happens if land is registered as a town or village green when it should not have been? There is power to rectify the register, but what is the effect of the lapse of time (a less pejorative term than delay) between the registration and the application to rectify? There are many private and public interests in play those of the landowners who have wrongly been severely restricted in the use to which they can put their land, those of the local inhabitants who have rightly been enjoying the amenity of the green since its registration, and those of the wider public which are many and varied such as protecting the accuracy of public registers, preserving public open spaces, or securing that land earmarked or suitable for development can be used for that purpose. The statutory background The principal purpose of the Commons Registration Act 1965 was, as its long title says, to provide for the registration of common land and of town and village greens. Section 1(1)(a) requires that land which is a town or village green be registered in accordance with the Act. Section 1(2)(a) provides that no land capable of being registered under this Act shall be deemed to be . a town or village green unless it is so registered by the deadline prescribed by the Minister, which was 31 July 1970. This meant that the rights of local inhabitants over such ancient but unregistered greens were extinguished. However, the Act contemplated the possibility of land becoming a town or village green in the future. Regulations under section 13(b) could and did provide for registers to be amended where any land becomes . a town or village green (emphasis supplied) (see the Commons Registration (New Land) Regulations, SI 1969 No 1843). Three separate categories of town or village green are defined in section 22 of the Act (since amended by section 98 of the Countryside and Rights of Way Act 2000, but not so as to affect these cases): Town or village green means land which has been allotted by or under any Act for the exercise or recreation of the inhabitants of any locality or on which the inhabitants of any locality have a customary right to indulge in lawful sports and pastimes or on which the inhabitants of any locality have indulged in such sports and pastimes as of right for not less than twenty years. The first and the third might arise after the statutory deadline, whereas the second could not. In reality, however, provided that the local inhabitants continued to exercise their customary rights as of right for 20 years, they would be able to register the land as a new or modern green. But it was also possible for many other pieces of land on which the inhabitants of any locality had indulged in lawful sports and pastimes as of right for at least twenty years to be registered. This gave rise to several important cases deciding upon the requirements for registration as a new or modern green and on the consequences of such registration, many of them relevant to the issues in the two cases with which we are concerned: see, for example, R v Oxfordshire County Council, Ex p Sunningwell Parish Council [2000] 1 AC 335, R (Beresford) v Sunderland City Council [2003] UKHL 60, [2004] 1 AC 889, Oxfordshire County Council v Oxford City Council [2006] UKHL 25, [2006] 2 AC 674, and R (Lewis) v Redcar and Cleveland Borough Council (No 2) [2010] UKSC 11, [2010] 2 AC 70. No procedure was laid down, either in the Act or in the Regulations, for the registration authority, normally a County Council, to decide such matters. Practice varies, with some holding elaborate public inquiries and others deciding matters more informally, as illustrated in the two cases before us. By section 10 of the Act, registration of any land as a town or village green is conclusive evidence of the matters registered, as at the date of registration. the register in two circumstances, only one of which is relevant here: Section 14 of the Act gives the High Court power to order the amendment of . if (b) the register has been amended in pursuance of section 13 of this Act and it appears to the court that no amendment or a different amendment ought to have been made and that the error cannot be corrected in pursuance of Regulations made under this Act; and . the court deems it just to rectify the register. Anyone may apply for rectification, although the owners of the land registered as a green are most likely to want to do so. There is no statutory deadline for making such an application. The question, therefore, once it has been decided that the entry on the register ought not to have been made, is the relevance of the lapse of time since the registration in deciding whether it is just to order rectification. Betterment: the facts In 1994, a Mrs Horne applied to Dorset County Council, on behalf of the Society for the Protection of Markham and Little Francis, for the registration of some 46 acres of open land in Weymouth. These were part of a larger area of land owned by the Curtis family which had been let for grazing but had ceased to be so used in around 1980. Two public footpaths crossed the land but local residents and their dogs had wandered more freely over the area. Mrs Horne relied upon 20 years use by local inhabitants for lawful sports and pastimes after 31 July 1970. The Curtis family objected. Her first application was declined but she made a second one in 1997 which the County Councils Rights of Way Sub committee decided should be referred to a non statutory public inquiry before a panel of three county councillors. They held an oral hearing in December 2000 and received a great deal of written material, oral evidence and both oral and written submissions. In June 2001, the Council notified the parties, in a detailed reasoned decision letter, that it had decided to register the land as a new town or village green. In December 2001, a Mr and Mrs Thompson bought a house at the south west corner of the registered land, having been told of the registration by the vendors and having researched the matter on the website of the Open Spaces Society (which is supporting this appeal). They also discovered that none of the Curtis familys land was designated for development in the draft local plan although the Curtis family were objecting to aspects of this. In August 2001, Mr Barry Curtis applied on behalf of the landowners for judicial review of the Councils decision. The Council objected that this was inappropriate as Parliament had provided the remedy of rectification in section 14 of the 1965 Act. Acting on legal advice, therefore, Mr Curtis discontinued the judicial review proceedings in December 2001, without prejudice to his right to apply under section 14. The Curtis family subsequently sold the land to Betterment Properties (Weymouth) Ltd for a price which was much less than the land would have been worth had it not been registered as a green but rather more than it was worth as a registered green. Agreement was reached with the various members of the Curtis family in stages over 2003 and 2004 and Betterment finally acquired title to the whole of the Curtis familys land in May 2005. In December 2005, Betterment began the present proceedings under section 14 for rectification of the register. Two preliminary issues were raised, one being the scope of the jurisdiction: was it a full rehearing or a review to be conducted on either appellate or judicial review principles? Lightman J determined that it was a full rehearing and this was confirmed by the Court of Appeal: [2008] EWCA Civ 22. The case therefore returned to the Chancery Division for a hearing, which was conducted by Morgan J over nine days in June 2010, partly in Weymouth and partly in London. By that time, Betterment accepted that most of the land had been used for lawful sports and pastimes for twenty years before the application made in 1997. The principal issues were whether the whole of the land had been used for that purpose for that period and whether the use had been as of right. Morgan J gave judgment allowing the application to rectify in November 2010: [2010] EWHC 3045 (Ch). The greater part of his judgment is devoted to the two substantive issues bearing on the first requirement of section 14(b): whether the entry on the register ought to have been made. He decided that it ought not: he found that the use of the land had been contentious and thus not as of right until some time in the 1980s, which he put at 1984. He went on to consider whether it would be just to rectify the register. In relation to Mr and Mrs Thompson he found that they bought the house on the basis that development to the north was unlikely, but without distinguishing between the registered green and the rest of the open land. If they had investigated the position further, they would have discovered that the landowners had reserved the right to apply to rectify the register. In any event, the landowners were not responsible for their state of mind. Among the other objections raised was the delay of 9 and a half years during which the land had been registered and the inhabitants had been enjoying its use. He did not see the mere passage of time as material, one way or the other, to the issue of the justice of rectifying the register (para 189). Balancing all proper points which could be made on behalf of the landowners and the inhabitants, he concluded that If rectification is ordered the result will be that the landowners will be free from burdens which should not have been placed upon them and the inhabitants of Wyke Regis will be denied, in the future, rights which they have enjoyed in the past, but which they should never have had (para 191). Mrs Taylor, who had replaced Mrs Horne as the representative of the Society for the Protection of Markham and Little Francis, appealed to the Court of Appeal, which dismissed her appeal: [2012] EWCA Civ 250. Once again the major part of the judgment is devoted to the as of right issue. However, Patten LJ, who gave the leading judgment, did comment that the justice issue had become the most significant aspect of both this and the Paddico appeals. In his view, although delay was a relevant factor, it will not be a barrier to rectification unless there is material before the court to show that other public or private decisions are likely to have been taken on the basis of the existing register which have operated to the significant prejudice of the respondents or other relevant interests (para 87). Sullivan LJ, with whom Carnwath LJ agreed (para 103), would have gone further. In his view, there is a strong public interest in upholding the register in the absence of a prompt challenge to its contents, so that there would be exceptional cases where the delay is so long that prejudice to good administration can properly be inferred in the absence of evidence of prejudice. He suggested that a decade would be capable of raising such an inference (para 95). Paddico: the facts In December 1996, application was made, on behalf of the Clayton Fields Action Group, for the registration of an area of some six and a half acres of grassland lying between Edgerton and Birkby in north west Huddersfield which had long been known as Clayton Fields. Most of the land was owned by Geo. H. Haigh and Co Ltd (the company). There were two extant planning permissions, dating back to the 1960s, for housing development on the land. The land had also been designated for housing in the Huddersfield Town map in 1972, again in the Huddersfield local plan in 1986, and in the draft Kirklees Unitary Development Plan in 1993. In 1997 an inspector reported that the land should remain allocated for housing, noting that a development brief including requirements for access, footpaths, open space and the protection of trees is to be prepared. This plan was eventually adopted by the Council in 1999. Meanwhile, the company had objected to the application to register the land as a green and on 14 April 1997 the Policy (General Purposes) (Executive) Sub Committee of Kirklees Metropolitan Council held an oral hearing. After a short adjournment the Chairman announced, without more, that the application was granted. The company began proceedings to rectify the register in May 1997 but these were delayed pending the decision of the House of Lords in the Sunningwell case. Following that decision, the company were advised that they were very likely to lose their action and so took no further steps. The action was automatically stayed under CPR Part 51, PD 19(1) in April 2000. In 2005, the company sold their land to Paddico (267) Ltd. As in the Betterment case, the price was much less than it would have been worth without it. Unlike the Betterment case, the contract included overage provisions, entitling the company to 30% of the uplift in market value in the event of planning permission being obtained for development of all or part of the land within 10 years of the transfer. In 2008 Paddico applied to lift the stay on the companys section 14 application and to be substituted as claimant. This was refused by the Deputy Master in 2009, permission to appeal was refused on paper in January 2010, and on renewal in March 2010. Meanwhile, Paddico had begun its own section 14 claim in January 2010. This was heard before Vos J over five days in May and June 2011. Vos J gave judgment allowing the application to rectify in June 2011: [2011] EWHC 1606, [2011] LGR 727. As with the Betterment case, the major part of the judgment is devoted to the substantive issue of whether the land ought to have been registered. This turned on the meaning of any locality in the definition in section 22(1). Vos J held that the inhabitants using the land for lawful sports and pastimes had to be predominantly from a single locality and that neither Edgerton nor Birkby qualified as a locality recognised by law, nor were the users predominantly from either of the suggested alternatives. As to the justice of rectifying the register after 14 years, he considered that the delay did weigh against rectification but was unlikely to be conclusive (para 118). The fact that registration was not justified in 1997 and if refused then would be very unlikely ever to be granted was a very strong, though not conclusive, factor. The delay was a significant factor, but little other prejudice had been demonstrated by the residents. The planning permission obtained required part of the land to be made available for recreation (para 119). Hence the balance came down fairly clearly in favour of rectification (para 120). Interestingly, he concluded with the hope that local residents would be allowed a reasonable area for recreation and in that way, perhaps, justice will ultimately be done (para 122). The appeal on behalf of the Action Group was heard by the same constitution of the Court of Appeal that heard the Betterment appeal and at the same time. But in this case, by a majority, the appeal was allowed: [2012] EWCA Civ 262, [2012] LGR 617. Once again, the greater part of the leading judgment, this time given by Sullivan LJ, was devoted to the locality issue. On this, the court was unanimous in upholding the judges decision that the amendment to the register ought not to have been made. But they differed on the justice issue. Sullivan LJ held that there was an analogy with judicial review of inaccurate entries in other registers, in particular the planning register, where section 31(6) of the Senior Courts Act 1981 gives the court power to refuse relief if delay is prejudicial to good administration. There was a strong public interest in resolving alleged errors in the register at the earliest opportunity. Although Parliament had not prescribed a time limit for making applications under section 14, it must have envisaged that persons adversely affected by an erroneous amendment of the register would take reasonably prompt action to secure rectification, and would not sleep on their rights. All other things being equal, the longer the delay in seeking rectification the less likely it is that it will be just to order rectification (para 37). In this case, he considered that all other things were equal, because neither side could claim prejudice: Paddico had taken a calculated risk (para 38). Over 12 years delay was so excessive as to make it not just to rectify (para 39). Carnwath LJ agreed. The owners rights were an important consideration. The rectification procedure fills the gap in a process of controlling the owners rights which would otherwise not comply with article 6 of the European Convention on Human Rights. Thus a precise analogy with judicial review was not appropriate (para 67). However, the balance had to include considerations of public administration. Justice in this context need not turn on proof of individual prejudice, but is wide enough to cover general prejudice to the public (including planning authorities) who are entitled to rely on the register to order their affairs, public and private. While it would not be appropriate for the court to lay down a specific time limit, he would regard a delay beyond the normal limitation period of six years as requiring very clear justification (para 68). Patten LJ disagreed. In his view, it was necessary to identify some significant or material prejudice attributable to the delay which makes it just to refuse to restore to Paddico its full legal rights as owner of this land (para 43). There would be an injustice to Paddico if rectification were refused (para 46), while there was no demonstrable prejudice in depriving the appellant of rights to which he was never entitled (para 44). Furthermore, the public interest in planning policies in relation to the land no longer being frustrated militated strongly in favour of rectification (para 45). The scope of this appeal The local inhabitants, in the person of Mrs Taylor on behalf of the Society for the Protection of Markham and Little Francis, appeal against the decision to allow rectification in the Betterment case. Paddico, supported by the company, which has been given permission to intervene in this Court, appeals against the refusal of rectification in their case. These appeals are not concerned with whether the courts below were correct in their judgments on the as of right and locality issues. They are solely concerned with the relevance of the lapse of time (as I prefer to call it) to whether or not it is just to rectify the register. The proper approach? What then is the proper approach in principle to the lapse of time? There are at least three possible analogies, none of which is precise: (1) with the principles applicable to public law claims; (2) with the principles applicable to private law claims where Parliament has provided a limitation period; and (3) with the principles applicable to private property law claims where Parliament has not provided a limitation period, as embodied in the equitable doctrine of laches. (1) Public law There is a public law aspect to such claims. This is a register kept by a public authority which is open to public inspection and upon which both public authorities and private persons may rely in making their decisions. The decision to make an entry may be challenged by way of judicial review as well as by an application to rectify. While no one is suggesting that the short time limit applicable to applications for judicial review should apply, all members of the Court of Appeal appear to have thought it appropriate to take into account the interests of good public administration. Section 31(6) of the Senior Courts Act 1981 provides that where the High Court considers that there has been undue delay in making an application for judicial review, it may refuse either to grant permission to make the application or the relief sought in it, if it considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantially prejudice the rights of, any person or would be detrimental to good administration. This means that there is an interest in good administration which is independent of the interests of individuals. But it does, of course, beg the question of what is meant by a detriment to good administration. This criterion was recommended by the Law Commission in their Report on Remedies in Administrative Law (Law Com No 73, 1976) (Cmnd 6407). They pointed out that when an individual applies for judicial review, what will be in issue will be not only the vindication of his personal right but also the assertion of the rule of law in the public sphere. Hence they thought that the formula should recognise not only the interests of individuals but also the public interest in good administration (para 50). They did not, however, explain what they meant by this. On the one hand, there is the view taken by Lord Goff of Chieveley in Caswell v Dairy Produce Quota Tribunal for England and Wales [1990] 2 AC 738. He did not consider it wise to attempt to formulate a precise definition, because the contexts were so various, but in the context of the allocation of a finite quantity of milk quota between dairy farmers, the interest in good administration lies essentially in a regular flow of consistent decisions, made and published with reasonable dispatch; in citizens knowing where they stand, and how they can order their affairs in the light of the relevant decision. Allowing a late claim for judicial review of an erroneous decision could lead to attempts to reopen many other decisions, to the obvious prejudice to good administration (pp 749 750). A similar approach was taken, in the rather more analogous context of the grant of outline planning permission, in R v Newbury District Council, Ex p Chieveley Parish Council [1999] PLCR 51. Pill LJ observed that a planning permission is contained in a public document which potentially confers benefit on the land to which it relates. Important decisions may be taken by public bodies and private bodies and individuals upon the strength of it, both in relation to the land itself and in the neighbourhood. A chain of events may be set in motion. It is important to good administration that, once granted, a permission should not readily be invalidated. Hence, relief against an invalid grant of permission was refused on account of a three year delay in bringing the proceedings, notwithstanding the absence of convincing evidence that the applicants for planning permission have been prejudiced by the delay (pp 66 67). On the other hand, in R v Bassetlaw District Council, Ex p Oxby [1998] PCLR 283, 302, Hobhouse LJ stated that if it has been clearly established . that a planning consent was improperly and invalidly granted, then it should, in principle, be declared to be void. This was cited by Schiemann LJ in Corbett v Restormel Borough Council [2001] EWCA Civ 330, at para 24, who had earlier said this: However, as is well known, there clashes with this principle of legal certainty another principle which is also of great value the principle of legality which requires that administrators act in accordance with the law and within their powers. When they do things they are not empowered to do this principle points towards the striking down of their illegal actions. (para 16) Sedley LJ added this: Schiemann LJs reasoning shows once again how distracting and unhelpful [section 31(6) of the Senior Courts Act 1981] is. It selects one element time of the many which may affect the grant of relief and builds upon it some of the many other possible factors which can as the present case shows be relevant. It also includes, delphically, detriment to good administration. How, one wonders, is good administration ever assisted by upholding an unlawful decision? If there are reasons for not interfering with an unlawful decision, as there are here, they operate not in the interests of good administration but in defiance of it. (para 32) Nevertheless, Mr Charles George QC, on behalf of the inhabitants, has drawn our attention to other examples where the principle of certainty in upholding the contents of public registers of various sorts has prevailed over the principle of legality in ensuring the correctness of the decisions upon which the entries are based and hence the accuracy of those entries. Thus in Bahamas Hotel Maintenance & Allied Workers Union v Bahamas Hotel Catering & Allied Workers Union [2011] UKPC 4, the Privy Council upheld the trial judges refusal to grant judicial review of the unlawful registration of a trade union in part because of the delay by the rival union in challenging it. Lord Walker of Gestingthorpe observed that conclusive evidence provisions (there was one akin to section 10 of the 1965 Act here) are often included in legislation relating to official registers, because such registers cannot serve their purpose unless members of the public can safely rely on them (para 33). In Smith Kline & French Laboratories Ltd v Evans Medical Ltd [1989] 1 FSR 561, Aldous J refused an application to amend a patent (made in order to save the validity of the patent for the purpose of infringement proceedings) because of a delay of eight years in making the application. He held that where a patentee delays for an unreasonable period before seeking an amendment it will not be allowed unless he shows reasonable grounds for the delay (p 569). It was not enough to show that no one had been hurt by the delay (p 577). He had earlier cited the opinions in the House of Lords in Raleigh Cycle Co Ltd v Miller (H) & Co Ltd (1950) 67 RPC 226, where Lord Morton had placed particular emphasis on the fact that the wide claims had remained on the register of patents for a considerable period, so although bicycles were not being manufactured for a large part of it because of the second world war, it is impossible to say how many inventors and workers in this art may have been deterred from research and experiment by reason of the fact that the plaintiffs had marked out so wide a territory as their own (p 236). However, although the element of public confidence and possible reliance will be there irrespective of whether or not the applicant for relief knew of the illegality, Mr George accepts that it is only delay after the applicant knew or ought to have known of the illegality which should be taken into account. The above cases tend to support that proposition. Ironically, however, Mr George derives that proposition from the opinion of the Judicial Committee of the Privy Council in Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, which was a laches case. (2) Statutory limitation periods Although applications to rectify may be brought by anyone, the people most likely to apply are the owners of the registered land, whose own right to use that land is severely curtailed by the rights of the local inhabitants to use it for lawful sports and pastimes and by the Victorian legislation which prevents it being used for other purposes (see the Oxford City Council case). The view that this is principally a matter of vindicating private rights, rather than controlling the legality of the acts of public authorities, is reinforced by the European Convention on Human Rights. The rights conferred by registration, while they may not deprive the landowner of his property for the purposes of article 1 of the First Protocol to the Convention, undoubtedly control his use of it. This amounts to the determination of his civil rights and obligations within the meaning of article 6. The administrative process of registration does not fulfil the requirement in article 6 for a fair hearing by an impartial tribunal established by law. The section 14 process of rectification fills that gap. That is one reason why it has to be a full rehearing rather than a review of the registration authoritys decision. Most actions to vindicate private rights are subject to statutory limitation periods, typically, but not invariably, three, six or twelve years. Where an equitable claim is not expressly covered by any statutory [limitation] period but is closely analogous to a claim which is expressly covered, equity will act by analogy and apply the same period (Snells Equity, 32nd Edn (2010), para 5 018). Both Sullivan LJ and Carnwath LJ thought it appropriate to apply a similar approach, being prepared to infer prejudice to other interests after the lapse of time. Sullivan LJ talked of a delay of a decade or more, whereas Carnwath LJ talked of six years or more. There are, of course, many other periods which could have been chosen if this analogy were the appropriate one. Some might think that the most appropriate would be 12 years, the time limit for actions to recover land, after which title is extinguished (Limitation Act 1980, ss 15 and 17). There are many arbitrary features of the statutory limitation regime apart from the variety of periods prescribed. Except in cases of fraud or concealment, for example, the starting point is that knowledge of the facts giving rise to the cause of action is irrelevant; but that principle has been replaced in personal injury and some other cases with a date of knowledge principle (1980 Act, ss 11, 11A (as inserted by Schedule 1 to the Consumer Protection Act 1987), 12, and 14A (as inserted by section 1 of the Latent Damage Act 1986)). Another starting point is that there is no general discretion to disapply or extend these limitation periods; but again that principle has been departed from in defamation and personal injury cases (1980 Act, ss 32A (as substituted by section 5 of the Defamation Act 1996) and 33). Ms Crail, for Paddico, argues that Mr Georges concession that the duty to act promptly, for which he contends, does not arise unless the claimant has or ought to have knowledge is inconsistent with the approach of the majority in the Court of Appeal; they would be prepared to assume prejudice after a certain period of time; but if one allows for knowledge, such assumed prejudice loses the paramount importance which the majority attributed to it. (3) Laches Finally, therefore, there is the analogy of actions to vindicate private property rights, for which no limitation period has been prescribed by Parliament. Here the equitable doctrine of laches may provide the answer: inaccurately summed up in the Latin tag, vigilantibus, non dormientibus, jura subvenient (the law supports the watchful not the sleeping). Sullivan LJs reference to sleeping on his rights comes from the words of Lord Camden LC in Smith v Clay (1767) 3 Bro CC 639n, at 640n: A Court of Equity has always refused its aid to stale demands, where a party has slept upon his right and acquiesced for a great length of time. Nothing can call forth this Court into activity, but conscience, good faith, and reasonable diligence; where these are wanting, the Court is passive, and does nothing. According to Snells Equity (32nd Edn, para 5.016) mere delay, however lengthy, is not sufficient to bar a remedy (referencing Burroughs v Abbott [1922] 1 Ch 86 and Weld v Petrie [1929] 1 Ch 33). Mr George disputes this (but referencing Wright v Vanderplank (1856) 2 K & J 1, 8 De GM & G 133, where there was an express finding of acquiescence, and RB Policies at Lloyds v Butler [1950] 1 KB 76, which was a limitation case turning on the date when the cause of action accrued, so scarcely giving strong support for his position). This is not the place definitively to resolve that debate, as we are concerned with analogies rather than the direct application of the doctrine. Nevertheless, the general principle is that there must be something which makes it inequitable to enforce the claim. This might be reasonable and detrimental reliance by others on, or some sort of prejudice arising from, the fact that no remedy has been sought for a period of time; or it might be evidence of acquiescence by the landowner in the current state of affairs. In Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, the judgment of the Board, given by Lord Selbourne LC (but wrongly attributed to Sir Barnes Peacock in the actual report), contains the following oft quoted passage: Now the doctrine of laches in Courts of Equity is not an arbitrary or technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. (pp 239 240) Lord Neuberger cited this passage in Fisher v Brooker [2009] UKHL 41, [2009] 1 WLR 1764, in support of his observation that Although I would not suggest that it is an immutable requirement, some sort of detrimental reliance is usually an essential ingredient of laches, in my opinion (para 64). Later in Lindsay Petroleum (p 241) Lord Selbourne said this: In order that the remedy should be lost by laches or delay, it is, if not universally at all events ordinarily . necessary that there should be sufficient knowledge of the facts constituting the title to relief. (p 241) It is for this reason that Mr George accepts that there must be knowledge of the facts before delay can constitute a bar to relief. Discussion Obviously, there is no precise analogy here, because there are elements of both public and private law involved. But it is necessary to have a starting point and it is always useful to start with the statute itself. First, it lays down no limitation period for section 14 applications. Second, in the rectification power contained in section 14, which is the one relevant to these proceedings, there is no bias either for or against rectification. The section merely requires that it be just. Third, it makes no reference to good administration, not surprisingly, as that concept was articulated later, in the Law Commissions Report. Furthermore, the principles of good administration seem to me to cut both ways. While there is a public interest in respecting the register, which is conclusive until rectified, there is also a public interest in the register being accurate and lawfully compiled. I share the view of Sedley LJ in Restormel that If there are reasons for not interfering with an unlawful decision, . they operate not in the interests of good administration but in defiance of it. Nor do I find the analogy with the other registers referred to compelling. Each register is compiled for different reasons and in a different context. To my mind, therefore, although the interests of the wider public are not irrelevant, the section is principally focussing on justice as between the applicant for rectification of a registration and the local inhabitants who are the beneficiaries of that registration. Where the applicant is the owner of the land, the starting point, as it seems to me, is that the landowners rights have been severely curtailed when they should not have been, and the inhabitants have acquired rights which they should not have had. It does not follow that the lapse of time is immaterial. None of the appellate judges thought that it was. Parliament has seen fit to deprive people of their right to bring proceedings to vindicate their rights after a certain period of time no matter how unjust this might seem to be (an illustration might be found in the facts of A v Hoare [2008] UKHL 6, [2008] AC 844, where the law as laid down in Stubbings v Webb [1993] AC 498 denied a remedy to the victim of a convicted rapist who had later won the lottery, until the House of Lords in Hoare departed from its previous decision in Stubbings). But Parliament has not seen fit to set a deadline for these applications, nor is there an obvious close analogy within the Limitation Acts. The better analogy would therefore appear to be with the equitable doctrine of laches, which generally requires (a) knowledge of the facts, and (b) acquiescence, or (c) detriment or prejudice. As to (a), this is unlikely to be a problem in most of these cases: the original landowner will have been notified of and had an opportunity of objecting to the proposed registration and a subsequent purchaser such as Betterment or Paddico will have had the opportunity of consulting the register before deciding to buy. But the point might arise in relation to other successors in title, such as donees or legatees, who have acquired the land in ignorance of the registration. However, if the landowner does know about the registration, it does not appear to me that the fact that a purchaser bought with knowledge of the registration and at a discounted price is likely to make much difference. His rights as landowner have still been severely curtailed and he sustains harm as a result. So too does the original landowner in the position of the company in the Paddico case. As Mr Carter pointed out on their behalf, the overage provisions in the contract of sale to Paddico meant that the company retained an interest in rectifying the register and from their point of view things were very definitely not equal, as Sullivan LJ suggested. As to (b), acquiescence may be especially relevant where an application for rectification is made by someone other than the landowner. Then the applicant probably has no private interest to vindicate and the fact that the landowner has chosen to take no action may be highly relevant to the justice of the case. Even here, however, the considerations might be different if the applicant were a public authority perhaps another local authority seeking to vindicate some public interest. It is a curiosity of the Paddico case that the land was registered as a green even though it had long been allocated for housing by the local planning authorities. The fact that the landowner was content for local inhabitants to enjoy rights of recreation which they should never have had might not be decisive if there were other such public interests in play. Whoever is the applicant, it would not in my view be appropriate to treat the landowners failure to object to the inhabitants use of the land after it had been registered as a green by putting up fences, notices, etc as acquiescence on his part. Once the land is registered, it is conclusive evidence of the inhabitants rights unless and until the register is rectified and he would not be entitled to prevent them. As to (c), detriment or prejudice, this, it seems to me, will usually be the crux of the matter. Because this is a public register and there are public as well as private interests involved I would not limit the potential prejudice caused by rectification to the prejudice to the local inhabitants who will no longer be entitled to use the land for lawful sports and pastimes. There are at least four categories of prejudice which might be relevant and no doubt more might be imagined: (i) Prejudice to the local inhabitants Given that this is a right which they should never have had, this element of prejudice may not be very weighty. Nevertheless, practices may have developed over the years which it would be detrimental to the inhabitants to lose, such as holding an annual fair or feast or celebrating the foiling of the gunpowder plot. Decisions may have been taken on the basis that the green would stay a green: for example, if the local cricket club had declined the opportunity of securing a cricket ground elsewhere in the village because they were entitled to play on the village green. (ii) Prejudice to other individuals There may be people who have made decisions which they would not otherwise have made on the basis that the land is a registered town or village green. People may have bought houses because of it or they may have refrained from selling houses because of it. It is worth bearing in mind, as Lord Sumption pointed out in the course of the hearing, that the right which is protected by registration is not the right to a view, but the right to use the land for lawful sports and pastimes. But many people are attracted to properties near a village green because of the recreational opportunities it offers and the community spirit which these engender anyone who grew up with a traditional village green can understand the focus it brings to village life which would not be there if the green were not there. (iii) Prejudice to public authorities and the public they serve The authorities too may have made decisions in reliance on the registration which they would not have made without it. For example, the local planning authority may have granted planning permission for residential development on other land because the green is not available for development. On the other hand, maintaining the registration of a village green which ought not to have been registered may be damaging to such interests, as where the land is allocated for much needed local housing. (iv) Prejudice to the fair hearing of the case The longer the lapse of time since the original registration, the more difficult it may be to have a fair trial of the issues relating to registration, perhaps in particular as to the length and nature of the use to which the land was put in the twenty years previously and to whether it was contentious or as of right. As this is a full hearing, evidence of those matters will be necessary, but the people who could give such evidence may have died or moved away or otherwise be unavailable. This is perhaps a species of prejudice to the local inhabitants, who may find it much more difficult many years later to adduce evidence of their use of the land than they would have done had the challenge been made earlier. There is a further point about prejudice. Mr Laurence on behalf of Betterment and Paddico objected in particular to the view of the majority in the Court of Appeal that after a certain lapse of time prejudice could be inferred without evidence. The correct view, as it seems to me, is that there must be some solid material from which such inferences can be drawn. Speculation or assumptions are not enough. But the longer the delay, the easier it will be to draw such inferences. In general I would agree with the approach of Patten LJ in the Betterment case, that there should be material before the court to show that other public or private decisions are likely to have been taken on the basis of the existing register which have operated to the significant prejudice of the respondents or other relevant interests. Application in the Betterment case I would not agree with the trial judge that the lapse of time is immaterial to the justice of the case. The Court of Appeal were correct to consider it a material factor. But the general approach of Patten LJ is closer to the principles discussed above than that of Sullivan and Carnwath LJJ. Even adopting their rather different approach, the majority did not consider that the lapse of time was such as to cause them to allow the appeal. Applying the principles set out above, I would agree with the Court of Appeal in the result. Specifically, the lapse of time between the registration and the Betterment application was from June 2001 to December 2005. During all of that time, the possibility of an application under section 14 was known to the registration authority and could presumably have been discovered by others had they asked. There is no evidence of prejudice and no material from which the likelihood of prejudice can be inferred, other than the position of Mr and Mrs Thompson. They contracted to buy their house in December 2001, only six months after the registration and long before there could be any suggestion that delay in applying for rectification would make it unjust to grant it. Application in the Paddico case The trial judge took the lapse of time into account in his consideration of the justice of the case but decided to order rectification nonetheless. The majority of the Court of Appeal disagreed. The approach of the trial judge and of Patten LJ is closer than theirs to the principles discussed above. The lapse of time between the registration and the Paddico application to rectify was from April 1997 to January 2010, much longer than in the Betterment case. But there had been an early application to rectify which was not pursued because of legal advice. During much of this time, the law was in a considerable state of flux, as the series of cases mentioned earlier made their way through the courts, sometimes reaching as far as the House of Lords. The same small group of lawyers were involved in most of these cases and were thoroughly aware of what was going on and how the arguments were shifting. There is no evidence at all of any specific prejudice to the local inhabitants, other than the loss of the right to use the land for recreation. On the other side of the coin, Sullivan LJ was in my view wrong to suggest that all other things were equal. Paddico would suffer injustice as a result of being wrongly deprived of the right to seek to develop the land. The company would suffer injustice in being deprived of the likelihood that they would benefit from the overage provisions in the sale contract. The public would suffer prejudice in the land not being available for the use to which the democratic planning procedures had decided that it should eventually be put. In my view the judge was entitled to reach the conclusion that he did and his decision should be restored. Conclusion I would therefore dismiss Mrs Taylors appeal on behalf of the Society in the Betterment case and allow the landowners appeal in the Paddico case. |
KV, a national of Sri Lanka and of Tamil ethnicity, comes to the UK and claims asylum. He alleges that he was tortured by government forces there in the course of detention on suspicion of association with the LTTE (the Tamil Tigers). He has five long scars on his back and two shorter scars on his right arm, all of which were on any view the product of branding with a hot metal rod. He contends that they are evidence of the torture. But the tribunal in effect concludes that the scars represent wounding which was Self Inflicted By Proxy (wounding SIBP), in other words which was inflicted by another person at KVs own invitation in an attempt on his part to manufacture evidence in support of a false asylum claim. It dismisses his appeal against the refusal of asylum. By a majority the Court of Appeal, [2017] EWCA Civ 119, [2017] 4 WLR 88, dismisses his further appeal and, in doing so, makes controversial observations about the limit of the role of a medical expert in contributing to the evidence referable to a claim of torture. Now KV brings a third appeal to this court. This court must address the Court of Appeals controversial observations. They raise the point of general public importance which precipitated the grant to him of permission to appeal. But the disposal of his appeal will instead depend on whether he persuades us of an error of law, in particular an error of reasoning, in the dismissal of his appeal on the part of the tribunal. Background KV was born in 1986 and lived in Sri Lanka until his arrival in the UK in February 2011. He made his claim for asylum promptly. In March 2011 he was interviewed on behalf of the Home Office. His account was that he had worked in his fathers jewellery shop; (a) that in 2003 he had begun to assist the Tamil Tigers in valuing (b) jewellery which its members had brought to him and, with his father, in melting their gold at their request; (c) continued to assist in those ways until 2008; that, while never having been a member of the Tamil Tigers, he had (d) that government forces had arrested him in May 2009 and detained him in a camp until, with outside help, he had escaped from it in February 2011; and that during his detention they had beaten him with gun butts or (e) wooden poles every few days and, having learnt of the assistance given by him to the Tamil Tigers in respect of its gold and other valuables, had thereby sought to extract information from him about where they were kept. At the interview KV produced photographs of the scars on his back and right arm which, he said, were the product of an occasion of torture in about August 2009. It is important to note that in this initial interview his account, to which he has consistently adhered, was that his captors had first applied hot metal rods to his arm while he was conscious; that the pain had rendered him unconscious; that, while he remained unconscious, they had applied the rods to his back; that, when he regained consciousness, they had further increased the severity of the pain by pouring petrol on him and threatening to set him alight; and that some three months had elapsed before the skin had healed into scars. Later in March 2011 the Home Office refused KVs claim for asylum. It identified various perceived inconsistences in his account; and, in relation to his scars, it noted that he had produced no medical evidence in support of his account of torture, which it did not accept. In May 2011 the First tier Tribunal dismissed KVs appeal against the refusal of his claim for asylum. But the Upper Tribunal held that an error of law had vitiated the dismissal and it directed that the appeal be reheard. It then identified the appeal as an appropriate vehicle for the issue of general guidance to medical experts invited to analyse scars allegedly caused by torture, in particular if suggested on the contrary to represent wounding SIBP; and so the appeal was directed to be heard by a panel of judges in the Upper Tribunal itself. In the event the appeal was heard over three days by three of the most experienced judges of the Upper Tribunal, namely Judge Storey, Judge Dawson and Judge Kopieczek. The tribunal (as the Upper Tribunal will hereafter be described) permitted a charity, the Helen Bamber Foundation (the HBF), to intervene in the appeal. The HBF is recognised by the Home Office as a responsible provider both of expert support and treatment to those who have suffered torture or other serious harm and of medical reports intended to help UK public authorities to determine whether allegations of such suffering are true. On 22 May 2014 the tribunal explained its dismissal of KVs appeal in a mammoth document, entitled Determination and Reasons which contains 368 paragraphs on 78 pages, [2014] UKUT 230 (IAC). Massive effort on the part of each of the three judges plainly underlies the determination. As a result of it the tribunal issued six propositions of general guidance to those preparing medico legal reports in relation to scars borne by asylum seekers who allege them to be the product of torture and particularly when, on the contrary, wounding SIBP is more than a fanciful possibility. The Court of Appeal, however, considered that wounding SIBP was generally so unlikely that it was inappropriate to issue the guidance. In particular the court disagreed with the apparent suggestion in the guidance that medical experts should routinely consider it even when not canvassed by the Home Office as being a reasonably possible explanation of the asylum seekers scarring. So the court directed that the tribunals guidance be treated as of no effect. This court has not been invited to review whether it was right to jettison it. The tribunal subjected KVs evidence, together with that of his two brothers and his uncle, to appropriately rigorous analysis. It recognised that throughout the three years since his arrival in the UK his accounts of his experiences in Sri Lanka had been broadly consistent and that background country information, including that set out in para 32 below, had confirmed the existence of a practice on the part of state forces there of torturing detainees by burning them with soldering irons. It nevertheless concluded that various aspects of his evidence were unconvincing, including in relation to his alleged work for the Tamil Tigers, the frequency and severity of his alleged beatings during the years of his alleged detention, the circumstances of his alleged escape and the surprising immunity of his father from arrest and detention. But the tribunals substantial reservations about KVs credibility recede into the background in the light of its helpful identification of the central issue as follows: 337. If the appellants scarring was caused by torture in detention then the possibility of the appellants account being true, notwithstanding the identified shortcomings, becomes a real one. The tribunal thereupon embarked upon a detailed analysis of the medical evidence referable to KVs scarring, to some of which it will be necessary to return. Its conclusion was as follows: 364. In relation to the medical evidence, we have found that whilst it assisted in eliminating some possible causes, it left us with only two that were real possibilities: that the appellant was tortured as claimed; that his scarring was SIBP. Of these two real possibilities, we have found, on analysis, that the former claim does not withstand scrutiny. Certainly we cannot say in his case that the evidence inexorably points to SIBP, but given that we have concluded it is left as the only real possibility that we have not been able to discount, taking the evidence as a whole, we are satisfied that he has not shown his account is reasonably likely to be true. Thereupon the tribunal volunteered an emphatic rejection of almost all of KVs evidence: 365. We find that after 2003 he remained in Colombo and at no stage then or thereafter did he come to the adverse attention of the army or police before coming to the UK. One should respectfully place a question mark against the tribunals disclaimer in para 364 of any conclusion that the evidence inexorably pointed to wounding SIBP. If your inquiry into the disputed circumstances of a past event leads you to conclude that there are only two real possibilities and if you then proceed to reject one of them (indeed in this case to reject it in terms which could not be more absolute: see para 365), you are necessarily concluding that the other real possibility represents what happened. Evidence of Dr Zapata Bravo KV presented several pieces of medical evidence to the tribunal but much of it proved to be of limited use. The most important was that given by Dr Zapata Bravo. He was qualified both in internal (particularly chest) medicine and in psychiatry; had clinical experience of surgery; and had been subject to the apparently rigorous training of the HBF in the assessment of the physical and psychological effects of torture. On examination of KV in October 2013 Dr Zapata Bravo noted five scars on his back and two scars on his right upper arm, more particularly described as follows: (a) a flat scar on the left side of the back, just below the shoulder blade, measuring 130 x 11 mm and in the shape of an elongated and narrow parallelogram; (b) (a), slightly shorter but in the same shape; a flat scar on the right side of the back, at a level equivalent to that at a flat scar on the right side of the back, underneath that at (b), shorter a flat scar on the right side of the back, just below the waist, a flat scar on the left side of the back, underneath that at (a), shorter a slightly raised scar on the right upper arm, measuring 50 x 15 mm in a flat scar on the right upper arm, below that at (f), but longer (75mm) (c) but parallel to it and in the same shape; (d) but parallel to it and in the same shape; (e) underneath that at (d), shorter but parallel to it and in the same shape; (f) the shape of a parallelogram; and (g) and in a different, oval, shape. It was the opinion of Dr Zapata Bravo that the scars at (a) and (b) had in the past been joined together, as had the scars at (c) and (d), but that in each case they had become separated when the scarring in the small of the back, where the injury had been less severe, had disappeared. Thus, he reasoned, there had originally been five rather than seven scars, reflective of five burns caused (he had no doubt) by application of a hot metal rod. He added that the scar at (f) was the only raised scar and indicated burning even more profound than elsewhere. He could not be more precise than to say that KV had sustained the injuries prior to September 2010. For present purposes the most important part of the evidence of Dr Zapata Bravo was the distinction which he drew between the scars at (a) to (e) on the back and those at (f) and (g) on the arm. It was a distinction confirmed by photographs placed before the tribunal. The doctor pointed out that the scars on the back were long, narrow and parallel and that in particular their edges were precise. This perfect branding, as he described it, could not have occurred while KV was conscious: even if, when conscious, he had been forcibly held down, his reflex reaction to pain would have blurred the edges of the area burnt and thus of the resulting scars. But those on the arm were different. Here the branding was not perfect. The edges were blurred. They were not parallel to each other. Their length, their width and their shape were different from each other; and they did not replicate the shape of a rod. The different presentation of the scars on the arm from those on the back indicated to him that the former represented burns caused while KV had not been unconscious and so had been reacting to the pain by reflex flinching and other movements which had blurred the branding effect. And here the doctor proceeded to note that KV had indeed consistently maintained that he had not been unconscious when his arms had been burnt but had then, as a result, fallen into unconsciousness before his back was burnt. Dr Zapata Bravos conclusion was that his clinical findings were highly consistent with KVs account of torture; and that the other hypothesis, namely of wounding SIBP, was unlikely. Istanbul Protocol Dr Zapata Bravo explained in his report that his training by the HBF in relation to the effects of suggested incidents of torture had been in accordance with the Manual on the Effective Investigation and Documentation of Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, usually known as the Istanbul Protocol, submitted to the UN High Commissioner for Human Rights in 1999. As was said in its introduction, the manual was the result of three years of effort on the part of more than 75 experts in law, health and human rights, representing 40 organisations from 15 countries. The principles of effective investigation etc were collected into Annex 1 of the manual and were adopted by the General Assembly of the UN on 4 December 2000 (Resolution 55/89). The manual provides as follows: 187. For each lesion and for the overall pattern of lesions, the physician should indicate the degree of consistency between it and the attribution given by the patient. The following terms are generally used: (a) Not consistent: the lesion could not have been caused by the trauma described; (b) Consistent with: the lesion could have been caused by the trauma described, but it is non specific and there are many other possible causes; (c) Highly consistent: the lesion could have been caused by the trauma described, and there are few other possible causes; (d) Typical of: this is an appearance that is usually found with this type of trauma, but there are other possible causes; (e) Diagnostic of: this appearance could not have been caused in any other way than that described. 188. Ultimately, it is the overall evaluation of all lesions and not the consistency of each lesion with a particular form of torture that is important in assessing the torture story It follows that, in concluding that his clinical findings were highly consistent with KVs account of torture, Dr Zapata Bravo was framing his conclusion in accordance with para 187(c) of the manual. The Controversial Observations The tribunal did not suggest that, in concluding that his findings were highly consistent with KVs account of torture, Dr Zapata Bravo had exceeded the limit of his role. On the contrary, it cited authority to the effect that one of the functions of a medical report in relation to scars was to offer a clear statement in relation to their consistency with the history given. Nor did the Home Secretary submit to the Court of Appeal that Dr Zapata Bravos conclusion had been in any way professionally inappropriate. But in the Court of Appeal Sales LJ (with whom Patten LJ agreed) made observations to the opposite effect. He said: 33. In making this latter statement [that his findings were highly consistent with KVs story], Dr Zapata Bravo seems to have moved from an assessment whether the relevant lesions (ie the burns scars) could have been caused by the trauma described (ie the application of a heated metal rod) a matter on which he was capable of giving a view based on his medical expertise and which he had already addressed by saying that the scars were diagnostic of such trauma into an expression of view that he was disposed to accept the claimants account of how heated metal rods came to be applied to his skin. Dr Zapata Bravo seemed to use the Istanbul Protocol highly consistent classification, but inappropriately in relation to the claimants story, which is something different from the trauma to which that classification is expressly directed. 34. In my judgment, at this point he rather trespassed beyond his remit as an expert medical witness into the area where it was for the UT to make an assessment of all the evidence 35. [P]ara 187 of the Protocol focuses, appropriately in my view, on the question of the likely immediate cause of a lesion or wound on the body of the complainant (in our case, application of a heated metal rod to the claimants skin), which is a proper subject for expert medical evidence [I]n any event, where a medical expert is providing evidence for use in the tribunal, they should seek guidance primarily from the relevant Tribunal Rules and Practice Direction In the course of a dissenting judgment in which he concluded that the reasoning of the tribunal had been unsatisfactory and that the court should have remitted KVs appeal to it for fresh determination, Elias LJ in para 110 disagreed with the observations of the majority that Dr Zapata Bravo had exceeded the proper limit of his role in the manner alleged. In this further appeal the Home Secretary has felt unable to defend the observations of the majority and, with the benefit of the full argument which the Court of Appeal never enjoyed, nor, to be fair to counsel, never invited, it is clear that they are erroneous. In their supremely difficult and important task, exemplified by the present case, of analysing whether scars have been established to be the result of torture, decision makers can legitimately receive assistance, often valuable, from medical experts who feel able, within their expertise, to offer an opinion about the consistency of their findings with the asylum seekers account of the circumstances in which the scarring was sustained, not limited to the mechanism by which it was sustained. Had the contribution of Dr Zapata Bravo been limited to confirming KVs account that the scarring was caused by application of a hot metal rod, it would have added little to what was already a likely conclusion. But, when he proceeded to correlate his findings of a difference in the presentation of the scars on the back and those on the arm with KVs account of how the alleged torture had proceeded, he was giving assistance to the tribunal of significant potential value; and it never suggested that he lacked the expertise with which to do so. In para 33 of his judgment, set out in para 19 above, Sales LJ suggested that the references in para 187 of the Istanbul Protocol to the trauma described relate only to the mechanism by which the injury is said to have been caused. That is too narrow a construction of the word trauma. It is clear that in the protocol the word also covers the wider circumstances in which the injury is said to have been sustained. Paragraph 188 of the protocol, set out in para 16 above, which Sales LJ had himself quoted in para 31 of his judgment, guides the expert towards the type of evaluation which is important in assessing the torture story. Paragraph 105 of the protocol recommends that, in formulating a clinical impression for the purpose of reporting evidence of torture, experts should ask themselves six questions, including whether their findings are consistent with the alleged report of torture and whether the clinical picture suggests a false allegation of torture. Paragraph 122 says: The purpose of the written or oral testimony of the physician is to provide expert opinion on the degree to which medical findings correlate with the patients allegations of abuse In another case of alleged torture, namely SA (Somalia) v Secretary of State for the Home Department [2006] EWCA Civ 1302; [2007] Imm AR 1 236, the Court of Appeal, by the judgment of Sir Mark Potter, President of the Family Division, held in paras 27 and 28 that the task for which an asylum seeker tendered a medical report was to provide a clear statement as to the consistency of old scars found with the history given , directed to the particular injuries said to have occurred as a result of the torture or other ill treatment relied on as evidence of persecution. In paras 29 and 30 Sir Mark quoted paras 186 and 187 of the Istanbul Protocol and commended them as particularly instructive for those requested to supply medical reports in relation to alleged torture. In RT (medical reports causation of scarring) Sri Lanka [2008] UKAIT 00009 the Asylum and Immigration Tribunal in para 37 described the SA (Somalia) case as a landmark authority in the identification of the purpose of a medical report in relation to alleged torture and in the indorsement of the Istanbul Protocol. It is no surprise that the European Court of Human Rights should have adopted a similar construction of the role of the expert in accordance with the Istanbul Protocol: in Mehmet Eren v Turkey (2008) (Application No 32347/02), it relied in para 43 upon the conclusion of a medical report about the consistency of the clinical findings with the applicants account of serious ill treatment while he was in police custody. Again, no surprise that, in para 3.2 of its Guidelines on the Judicial Approach to Expert Medical Evidence dated June 2010, the International Association of Refugee Law Judges should have recognised the function of the report as being to provide expert opinion on the degree of correlation between the asylum seekers presentation and his allegations of torture. And indeed, no surprise that, in para 3.3 of his instruction to case workers entitled Medico Legal Reports from the Helen Bamber Foundation and the Medical Foundation Medico Legal Report Service dated July 2015, the Home Secretary should have required them to give due consideration to medical opinions given on behalf of those organisations upon the degree of consistency between the clinical findings and the account of torture. The reader will have noticed that, in making the erroneous observations quoted in para 19 above, Sales LJ added in para 35 that the primary source of guidance for experts in such circumstances should be the Tribunal Rules and the Practice Direction rather than the Istanbul Protocol. This was a point to which he returned in para 94, as follows: Contrary to what some of the expert witnesses in this case seem to have thought, it is the Practice Direction, not the Istanbul Protocol, which provides the relevant authoritative guidance as to their duty, helpful though parts of the Istanbul Protocol might be as a reference resource. Sales LJ was there referring to Practice Direction 10 in Part 4 of the Practice Directions of the Immigration and Asylum Chambers of the First tier Tribunal and the Upper Tribunal, dated 10 February 2010 and amended on 13 November 2014. But there is no inconsistency between that Practice Direction and the protocol. Of course the expert must comply with the Practice Direction, including in particular the requirement in paras 10.2 and 10.4 not to offer an opinion outside the area of his expertise. But the Practice Direction does not address the specific area addressed by the protocol, namely the investigation of torture. When invited to investigate an allegation of torture, the expert should therefore recognise the protocol as equally authoritative in accordance with the Court of Appeals decision in the SA (Somalia) case, cited in para 22 above. But Ms Harrison QC on behalf of the HBF made a further submission to the Court of Appeal, repeated before us, that in a case of alleged torture experts are entitled to express the view that they believe that the person has suffered the torture. She cited R (AM) v Secretary of State for the Home Department [2012] EWCA Civ 521, in which Rix LJ, with whom Moses LJ and Briggs J agreed, observed in paras 29 and 30 that the expert had believed the appellants account of torture and that her belief constituted independent evidence of torture which had disentitled the Home Secretary from continuing to detain her. It is not clear from the judgment of Rix LJ whether the expert had in terms said that she believed the appellant. But, as he pointed out in para 15, she had, when categorising her findings in accordance with para 187 of the Istanbul Protocol (set out in para 16 above), in effect chosen the most positive category, namely (e) Diagnostic of could not have been caused in any other way than that described in relation to one of the scars. Such a diagnosis was indeed tantamount to belief in the accuracy of the description of how that scar had been caused. A corresponding placement of a conclusion within the most negative category, namely (a) Not consistent could not have been caused by the trauma described would be tantamount to disbelief in the accuracy of the description. Where, however, more usually, the expert places his or her conclusion within categories (b), (c) or (d), there is no room, nor sanction in the protocol, for the expression of belief or otherwise in the account given. The conclusion about credibility always rests with the decision maker following a critical survey of all the evidence, even when the expert has placed his conclusion within category (a) or (e). Indeed, in an asylum case in which the question is only whether there is a real possibility that the account given is true, not even the decision maker is required to arrive at an overall belief in its truth; the inquiry is into credibility only of a partial character. Disposal of the Appeal In his dissenting judgment Elias LJ set out in detail his concerns about the reasoning of the tribunal in rejecting KVs claim of torture. In an attempt not to overburden this present judgment with analogous factual detail, I will confine it to a review of three main points. The first relates to KVs account, confirmed by the appearance of the scars on the back, that the burns there had been inflicted while he was unconscious. He said that the burns on his arms had made him lose consciousness. But the bigger question, rightly addressed by the tribunal, was how he had remained unconscious while the burns on the back were inflicted. This in turn raised the question: how long would it have taken to inflict the burns on the back? In their written reports none of the experts had addressed this question. But, at the end of his oral evidence by telephone, Dr Zapata Bravo, when asked, suggested that it would have taken ten minutes to inflict the burns on the back but added that his suggestion was speculative. But could KV have remained unconscious for ten minutes? The doctors answer was hesitant: it was that he might possibly have done so if he had been in a bad state of health, with loss of weight as a result of malnutrition, and if he had not eaten nor taken fluids. Another expert, Dr Allam, who had been asked a general question about the usual speed of recovery of consciousness, had already written, in fair conformity with Dr Zapata Bravos later hesitant hypothesis, that an individuals state of health could affect the speed of recovery. In the end, however, the tribunal found it to be an unlikely hypothesis that KV did not regain consciousness for the period of about ten minutes while the alleged torturers inflicted the burns on the back. Although the tribunal there attached central importance to an estimate of ten minutes given off the cuff and stressed to have been speculative, and although it seems altogether to have discounted Dr Zapata Bravos hesitant explanation for more prolonged unconsciousness, it is in my opinion hard for an appellate court to rule that it had not been entitled to conclude that this part of KVs account was unlikely. Its conclusion on this point cannot, however, mark the end of an overall inquiry into the existence of a real possibility that the scars reflected torture. The second point relates to Dr Zapata Bravos pivotal opinion that the different, blurred, edges to the scars on the arm indicated the infliction of burns during consciousness, which correlated with the account which KV had always given. The problem arises from the reasons given by the tribunal for rejecting the conclusion which he based upon it. It said: 348. we do not consider that Dr Zapata Bravos conclusion that the appellants scarring was highly consistent with his account of having been tortured is justified when account is taken of the doctors own evidence indicating (i) it was clinically unlikely, given their precise edging, that his scarring could have been inflicted unless he was unconscious; and (ii) that it was clinically unlikely a person could remain unconscious throughout multiple applications of hot metal rods to his arms and back, unless he was anaesthetised The paragraph raises big questions. Why does the summary of the doctors evidence at (i), in relation to precise edging, fail to limit the reference to scarring to scarring on the back? Why does the summary of his evidence at (ii) address a hypothesis, contrary to that which he (and KV himself) had advanced, that he had remained unconscious throughout the application of the rods to his arms as well as to his back? By the time it came to draft para 348, had the tribunal mislaid the pivotal point? The answer given to these questions by Sales LJ in para 21(ii) of his judgment was that in his oral evidence Dr Zapata Bravo must have said or have appeared to say that the scars on the arm as well as on the back were precisely defined and that complete analgesia would have been required to produce all of them. Sales LJ observed that KV had failed to provide the court with a transcript of the doctors oral evidence and that, without a transcript, there was no basis for criticising the tribunal. But it is dangerous for us who work in appeal courts to assume that the answer to an apparent mistake at first instance must lie in oral evidence not recorded in the judgment and not transcribed for the purposes of the appeal. The court of first instance should be expected to record the oral evidence on which it places reliance. Stung by the observations of Sales LJ, KV has provided to this court for the purposes of his further appeal a transcript of all the oral evidence given to the tribunal; and with great respect, it is clear and agreed that in his oral evidence Dr Zapata Bravo never wavered from his clinical findings of a difference in the scars as between the back and the arm, nor from the significance which he had attached to it. The Home Secretary correctly invites us to be realistic. We must accept that the drawing of a fine tooth comb through any judicial survey of complex evidence written across 368 paragraphs is likely to discover a tangle in it. In para 12 of his judgment in SS (Iran) v Secretary of State for the Home Department [2008] EWCA Civ 310 Lord Neuberger of Abbotsbury observed that appeal courts should be particularly wary of interfering with evidential conclusions made in relation to claims for asylum, in which, among other things, the paucity and fragility of the evidence are likely to be acute. On the other hand he added: given the potentially severe, even catastrophic, consequences of a mistaken rejection of an appeal, where fear of ill treatment (or worse) is alleged, it is plainly right to scrutinise any [such] decision very carefully Paragraph 348 of the tribunals determination contains more than a minor tangle. It represents its reason for rejecting Dr Zapata Bravos categorisation of high consistency in accordance with para 187(c) of the Istanbul Protocol. The tribunal there mislaid the difference in the scars on the arm to which he had attached such significance. But it needed to address it. Elias LJ said in para 108: In my judgment the [tribunal] had to find an explanation for the different appearance of these scars and it could not characterise his account of being tortured as implausible without having done so. That was his judgment. It should also, I suggest, be ours. The third point arises out of the tribunals final conclusion that there were only two real possibilities, namely that KV had been tortured and that his wounding was SIBP. The point is that the likelihood of both possibilities had to be compared with each other before either of them could be discounted. And the contention is that, when it came to compile the final section of its determination entitled Assessment of the Appellants Appeal, and in particular the final subsection, entitled Conclusion, in which it discounted the possibility of torture, the tribunal made no reference to the likelihood, or rather on any view the unlikelihood, that the wounding was SIBP. That there was extensive torture by state forces in Sri Lanka in 2009 was well established in the evidence before the tribunal. For example at para 187 of its determination it quoted an EU report dated October 2009 as follows: International reports indicate continual and well documented allegations of widespread torture and ill treatment committed by state forces (police and military) particularly in situations of detention. The UN Special Rapporteur on Torture has expressed shock at the severity of the torture employed by the army, which includes burning with soldering irons and suspension of detainees by their thumbs. By contrast, evidence of wounding SIBP on the part of asylum seekers was almost non existent. The tribunal referred at para 11 to just one unreported decision in 2011 in which it had concluded that the wounding had been SIBP. Dr Zapata Bravo said that, in the field of immigration, neither he nor any colleague to whom he had spoken had experience of wounding SIBP. He contrasted it with tribal and ritual scarring, administered with social consent, which no one had suggested to account for the scars in question. His and the other medical evidence before the tribunal indicated that the wounding of a body which that person deliberately achieved by his own hand was slightly less uncommon; but that there were parts of a body which that person could not burn without assistance and that they certainly included the burnt parts of KVs back. Dr Zapata Bravo said that in the literature he had found only one statement referable to a persons burning of himself by use of a proxy. Very rarely, it had said, an accomplice might be asked to cause a wound in a place the person cannot reach. There is no doubt that, particularly in the light of the serious lack of KVs credibility in several other areas of his evidence, the tribunal was correct to address the possibility of wounding SIBP. But, in assessing the strength of the possibility, it had to weigh the following: It is an extreme measure for a person to decide to cause himself to (a) suffer deep injury and severe and protracted pain. (b) Moreover KV needed someone to help him to do it. (c) Wounding SIBP is, in the words of Sales LJ at para 93 of his judgment, generally so unlikely. (d) If KVs wounding was SIBP, the wounds on his back could have been inflicted only under anaesthetic and so he would have needed assistance from a person with medical expertise prepared to act contrary to medical ethics. (e) If his wounding was SIBP, an explanation had to be found for the difference in both the location and in particular the presentation of the scarring as between the back and the arm. (f) If his wounding was SIBP, an explanation had to be found for the number of the wounds, namely the three wounds on the back, albeit now represented by five scars, and the two wounds on the arm. As Elias LJ observed in para 99, one or two strategically placed scars would equally well have supported a claim of torture. Elias LJ offered a summary in para 101: In my view very considerable weight should be given to the fact that injuries which are SIBP are likely to be extremely rare. An individual is highly unlikely to want to suffer the continuing pain and discomfort resulting from self inflicted harm, even if he is anaesthetised when the harm is inflicted. Moreover, the possibility that the injuries may have been sustained in this way is even less likely in circumstances where the applicant would have needed to be anaesthetised. This would in all probability have required the clandestine co operation of a qualified doctor who would have had to be willing to act in breach of the most fundamental and ethical standards, and who had access to the relevant medical equipment. That was his view. It should also, I suggest, be ours. I propose that we should direct the tribunal to determine afresh KVs appeal against the refusal of asylum. |
The present appeals involve claims by prisoners sentenced to indeterminate prison sentences (life or IPP) that they were not sufficiently progressed during their sentences towards release on or after the expiry of their tariff periods. The principal issue is what the Supreme Court should now hold the law of the United Kingdom to be, taking account of the judgment of the European Court of Human Rights (ECtHR) in James, Lee and Wells v United Kingdom (2012) 56 EHRR 399 (James v UK) disagreeing with the decision of the House of Lords in R (James, Lee and Wells) v Secretary of State for Justice [2009] UKHL 22; [2010] 1 AC 553 (R (James)). The House of Lords in R (James) held that no breach of article 5(1) of the European Convention on Human Rights (ECHR) was involved in a failure properly to progress prisoners towards post tariff release. The ECtHR in James v UK took a different view. Correctly, the courts below, from which the present appeals lie, held themselves bound by the House of Lords reasoning and decision. The Supreme Court must now consider whether and how far to modify its jurisprudence. Indeterminate prison sentences in English law: summary Since the abolition of capital punishment in 1965, the most severe form of sentence imposed under English law has been a sentence of life imprisonment. A life sentence does not mean imprisonment for the rest of the defendants natural life; it means a sentence composed of two parts. The first part is a minimum term, fixed by the court according to the gravity of the offence and the circumstances of the offender. The second is an indefinite term beyond that minimum, in which period the prisoner may be released, not unconditionally but on licence, if he is judged no longer to present an unacceptable risk to the public. In modern times the decision on release is committed to the Parole Board, an independent body correctly treated as a court by the ECtHR. Release on licence is required by statute when the Parole Board has directed it, but it may so direct only when satisfied that it is no longer necessary for the protection of the public that the prisoner be confined: sections 28(5) and (6) of the Crime (Sentences) Act 1997. Such a life sentence may be passed in defined circumstances only: (a) (b) It is required by law for those convicted of murder (a mandatory life sentence). It is available as a discretionary penalty (a discretionary life sentence) for a restricted group of offenders convicted of a few of the most serious offences known to the law, for which the maximum sentence available is life imprisonment, where the gravity of the offence warrants a very long sentence and where the risk of grave future harm to the public from the offender cannot reliably be estimated at the time of sentencing (R v Hodgson (1967) 52 Cr App R 113 and R v Chapman [2000] 1 Cr App R 77). (c) Unless its imposition would in the circumstances be unjust it is required in the case of those convicted for a second time of a defined group of very serious violent or sexual offences, where both offences called for determinate terms of ten years or more, or their equivalent: see section 122 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). (d) Between 1997 and April 2005 it was required, unless in the circumstances its imposition would be unjust because the offender did not pose a risk to the public of serious harm, in the case of a few offenders convicted for the second time of a restricted group of the most serious violent or sexual offences: section 109 Powers of Criminal Courts (Sentencing) Act 2000, repealed by section 303 of and Schedule 37 to the Criminal Justice Act 2003. This form of life sentence was generally known as an automatic life sentence. 4. In addition to these forms of life sentence, the Criminal Justice Act 2003 created from April 2005, until it was abolished by LASPO, the different form of indeterminate sentence called Imprisonment for Public Protection (IPP). As is well known, IPP was available (and for the first three years was in some circumstances mandatory) for a much wider class of offences than was a life sentence. It was, however, structured in a similar manner to a life sentence, formed of a minimum term fixed by the court in accordance with the gravity of the offence and the circumstances of the offender, to be followed by an indefinite period with release on licence only when the prisoner was judged by the Parole Board no longer to present an unacceptable risk to the public of serious harm. The terms of section 28(5) and (6) of the Crime (Sentences) Act 1997, governing release, apply to IPP prisoners as they do to life sentence prisoners. 5. As is also well known, and chronicled in both R (James) and to a lesser extent in James v UK, the advent of IPP in April 2005 put the prison administration in England and Wales under an entirely new strain. Previously there had been fairly steady numbers of prisoners serving indeterminate periods, namely those serving one or other of the forms of life sentence set out at (a), (b) and (d) above. IPP prisoners were also indeterminate prisoners but their numbers greatly increased the total, which by 2008 was effectively doubled. The present claimants 6. The four appellants were convicted of various offences and were sentenced as follows: (a) Mr Haney was on 13th November 2003 ordered to serve an automatic life sentence, with a minimum specified term expiring on 13th November 2012, the sentence being passed for robbery committed with others while armed with sawn off shot guns. (b) Mr Robinson was on 2nd October 2006 sentenced to IPP for sexual offences, with a seven year minimum term (to which time on remand counted as usual) expiring on 10th December 2012. (c) Mr Massey was on 15th May 2008 sentenced to IPP for sexual offences, with a minimum term of two years six months (again allowing for time on remand) expiring on 11th September 2010. (d) Mr Kaiyam was on 20th July 2006 sentenced to IPP with a minimum term of two years and 257 days, expiring on 3rd April 2009. Mr Haneys life sentence was passed under section 109 of the Powers of Criminal Courts (Sentencing) Act 2000. The sentences on Mr Robinson, Mr Massey and Mr Kaiyam were passed under section 225 of the Criminal Justice Act 2003. 7. All these sentences were, when passed, outside the scope of the provisions of section 142(1) of the Criminal Justice Act 2003 requiring a sentencing court to have regard to reform and rehabilitation as an express purpose of sentencing. As from 14th July 2008, section 142 was amended to require regard to be had to reform and rehabilitation as an express purpose of any life or IPP sentence passed under section 225. In R (James) the House on 6 May 2009 held that, prior to this amendment, the only purposes of section 225 were commensurate punishment and public protection. It accepted however that the premise of section 225 and the context in which it was enacted were that prisoners would be given a fair chance of rehabilitating themselves; and, consistently with this, the Ministry of Justices National Offender Management Service instruction issued in July 2010 indicated (para 4.1.1) that ISP [indeterminate sentence prisoner] sentence plans will aim to identify the risks the prisoner must reduce and offer the effective and timely delivery of properly identified interventions, having regard to available resources, so that Parole Board reviews can be meaningful; the release of ISPs is facilitated where it is safe to do so; [and] any period of continued detention beyond tariff is necessary because the risk of harm remains too high for release to be appropriate. The instruction also recognised (para 4.8.1) that In most mandatory lifer cases, a phased release from closed to open prison is necessary in order to test their readiness for release into the community on life licence. In James v UK the ECtHR took a different view from the House of the purposes of IPP sentences in the context of the ECHR. It regarded a real opportunity for rehabilitation [as] a necessary element of any part of the detention which is to be justified solely by reference to public protection and on this basis held that one of the purposes of IPP sentences was the rehabilitation of those so sentenced (para 209). 8. Each of the appellants now complains that his progress towards post tariff release was hampered by failures relating to his rehabilitation for which the respondent Secretary of State was responsible. In summary: (a) Mr Haney complains under article 5 that he was only transferred to open prison conditions on or around 16th July 2012, too close to the expiry date of his minimum term to allow release immediately upon such expiry. The Secretary of State conceded that a systemic failure (to provide adequately for the increase in numbers of prisoners serving indeterminate terms) had led to excessive delay in transferring him to open conditions, and Lang J proceeded on that basis. But both she and the Court of Appeal dismissed his claim under article 5 in the light of the Houses decision in R (James). (b) Mr Haney also complains under article 14 that he was discriminated against by a decision of the prison authorities, taken in October 2011 in the light of the shortage of available places in open prisons, to prioritise the movement to open conditions of those whose tariff period had already expired. Lang J and the Court of Appeal dismissed this complaint, as they were bound to, in the light of the Houses decision in R (Clift) v Secretary of State for the Home Department [2006] UKHL 54, [2007] 1 AC 484, notwithstanding the later judgment of the ECtHR in Clift v United Kingdom (Application No 7205/07) (13 July 2010), disagreeing with this decision of the House. (c) Messrs Robinson and Massey complain that they were unable to commence an extended sexual offenders treatment programme (ESOTP) until, in the case of Robinson, 1st July 2013, over five years after the course was first recommended for him and over nine months after his tariff period expired, and, in the case of Massey, until May 2013, nearly three years after it was first recommended and over three years since his tariff period expired. The Divisional Court (Richards LJ and Irwin J) on 4th December 2013 found that the number of IPP prisoners at the relevant times greatly exceeded the number of ESOTP places on courses, and held itself satisfied that there is a continuing failure on the part of the Secretary of State to make reasonable provision of systems and resources, specifically the reasonable provision of ESOTP courses, for the purpose of allowing IPP prisoners a reasonable opportunity to demonstrate to the Parole Board, by the time of the expiry of their tariff periods or reasonably soon thereafter, that they are safe to be released. (para 62) Having dismissed the claims in the light of R (James) but stating also that it did not consider that they would have succeeded under the principles indicated in James v UK the Divisional Court certified the cases as suitable for leapfrog appeal to this Court. (d) Mr Kaiyams complaint under article 5 is not based on any allegation of systematic failure by the Secretary of State. It is a complaint about various decisions and delays which he says affected him individually and meant that he was not offered or put on various courses during the period 2010 to 2013, after his tariff period expired. Supperstone J and the Court of Appeal dismissed his claim in the light of R (James). Analysis of the duty of the Secretary of State 9. Article 5 of the ECHR reads: the lawful detention of a person after conviction by a 1. 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: (a) competent court; (b) the lawful arrest or detention of a person for noncompliance with the lawful order of a court or in order to secure the fulfilment of any obligation prescribed by law; (c) the lawful arrest or detention of a person effected for the purpose of bringing him before the competent legal authority on reasonable suspicion of having committed an offence or when it is reasonably considered necessary to prevent his committing an offence or fleeing after having done so; (d) the detention of a minor by lawful order for the purpose of educational supervision or his lawful detention for the purpose of bringing him before the competent legal authority; (e) the lawful detention of persons for the prevention of the spreading of infectious diseases, of persons of unsound mind, alcoholics or drug addicts or vagrants; (f) the lawful arrest or detention of a person to prevent his effecting an unauthorised entry into the country or of a person against whom action is being taken with a view to deportation or extradition. 2. Everyone who is arrested shall be informed promptly, in a language which he understands, of the reasons for his arrest and of any charge against him. Everyone arrested or detained in accordance with the provisions of para 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. Release may be conditioned by guarantees to appear for trial. 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. Everyone who has been the victim of arrest or detention in contravention of the provisions of this article shall have an enforceable right to compensation. 10. The cases of R (James) and James v UK concerned mandatory IPP sentences with tariffs of respectively two years, 12 months and nine months, at the expiry of which the three applicants still remained in their local prisons without access to recommended rehabilitative courses. Messrs James, Wells and Lee were only transferred to first stage lifer prisons five months, 21 months and 25 months after their respective tariffs expired. The Divisional Court and Court of Appeal in R (James) held the Secretary of State to have been in systemic breach of his public law duty, and granted a declaration to that effect. In the House of Lords there was no appeal against that declaration, but explicit reference was made to its correctness (see per Lord Hope, para 3). However the House of Lords dismissed the claims for breach of articles 5(1) and (4). It held that continued detention remained lawful until the Parole Board was satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined, as provided by section 28(6)(b) of the Crime (Sentences) Act 1997 and in accordance with the principles since considered by this Court in R (Sturnham) v Parole Board (No 2) [2013] UKSC 47, [2013] 2 AC 254. 11. The only possible exception that the House contemplated was for the (hypothetical) case of detention continuing for a very lengthy period in circumstances where the system of review had completely broken down or ceased to be effective: per Lord Hope at para 15 and Lord Brown at para 51. This exception reflected case law of the ECtHR (to which we will return in greater detail) to the effect that compliance with article 5(1)(a) requires more than that the detention is in compliance with domestic law. As the European court stated in Weeks v United Kingdom (1987) 10 EHRR 293, para 42: "The 'lawfulness' required by the Convention presupposes not only conformity with domestic law but also conformity with the purposes of the deprivation of liberty permitted by sub paragraph (a) of article 5(1). Furthermore, the word 'after' in sub paragraph (a) does not simply mean that the detention must follow the 'conviction' in point of time: in addition, the 'detention' must result from, 'follow and depend upon' or occur 'by virtue of' the 'conviction'. In short, there must be a sufficient causal connection between the conviction and the deprivation of liberty at issue." On that basis, the ECtHR in Weeks went on in relation to a discretionary life sentence imposed for the purpose of public protection (para 49): "The causal link required by sub paragraph (a) might eventually be broken if a position were reached in which a decision not to release or to re detain was based on grounds that were inconsistent with the objectives of the sentencing court. 'In those circumstances, a detention that was lawful at the outset would be transformed into a deprivation of liberty that was arbitrary and, hence, incompatible with article 5'." In relation to article 5(4), the House in R (James) held that article 5(4) required a system providing for assessment at reasonable intervals which meets the requirements of procedural fairness: per Lord Hope at para 21. As such a system existed on the facts, it held that there was no breach of article 5(4). 12. The ECtHR took a different view from the House of Lords on article 5(1). It concluded that following the expiry of the applicants tariff periods and until steps were taken to progress them through the prison system with a view to providing them with access to appropriate rehabilitative courses, their detention was arbitrary and therefore unlawful within the meaning of article 5(1) of the Convention. (para 221) It regarded the complaints under article 5(4) regarding the failure to provide relevant courses as raising no separate issue (para 226). The ECtHR later commented that it had found the applicants post tariff detention to have been arbitrary and therefore in breach of article 5(1) during the periods in which they were not progressed in their sentences and has no access to relevant courses to help them address the risk they posed to the public. (para 231) and that It cannot be assumed that, if the violations had not occurred, the applicants would not have been deprived of their liberty. It also logically follows that once the applicants were transferred to first stage prisons and had timeous access to relevant courses, their detention once again became lawful. (para 244) 13. The ECtHR was not concerned with life sentence prisoners in James v UK, but it is clear from cases decided under article 5(4) that it would adopt similar reasoning. As Lord Reed explained in R (Faulkner) v Secretary of State for Justice, R (Sturnham) v The Parole Board (No 1) [2013] UKSC 23 [2013] 2 AC 254, paras 9 10, the ECtHR held in Thynne, Wilson and Gunnell v The United Kingdom (1990) 13 EHRR 666 that, since the need for public protection was likely to change over time, discretionary life prisoners whose tariff periods had expired were entitled to invoke article 5(4): 9. Since there was a question whether their continued detention was consistent with the objectives of the sentencing court, it followed that they too were entitled under article 5(4) to have the question determined. The subsequent judgment in Stafford v United Kingdom (2002) 35 EHRR 1121 confirmed that a mandatory life prisoner was also entitled to the protection of article 5(4), by means of regular reviews of the risk which he presented, once the punitive period of his sentence had expired. 10. The implications of these judgments were then reflected in domestic case law. In relation to automatic life prisoners, in particular, it was held in R (Noorkoiv) v Secretary of State for the Home Department [2002] 1 WLR 3284 that article 5(4) requires a review by the Board of whether the prisoner should continue to be detained once the tariff period has expired, and therefore requires a hearing at such a time that, whenever possible, those no longer considered dangerous can be released on or very shortly after the expiry date. In practice, that meant that the Board should hold hearings prior to the expiry of the tariff period. Since Noorkoiv's case had not been heard until two months after the expiry of his tariff period, he was therefore the victim of a violation of article 5(4). That approach has been followed in the subsequent case law. 14. James v UK has subsequently been applied by the 4th section of the ECtHR in Dillon v UK (Application No 32621/11; 4 Nov 2104) and Thomas v UK (Application No 55863/11; 4 Nov 2014), summarily rejecting the Governments submission that it had been wrongly decided. However in both cases the claims of the applicants failed on the merits. 15. The ECtHRs reasoning in James v UK opens the possibility, discussed in In re Corey [2013] UKSC 76, [2014] AC 516, that it was contemplating that detention could, at least post tariff, fluctuate between the lawful and unlawful, depending upon whether a prisoner serving a sentence of IPP was being offered appropriate opportunity to progress in his or her sentence. Not surprisingly, counsel for the appellants on the present appeal were as keen to disclaim such an analysis as counsel for the Secretary of State. But common ground between counsel in a particular case cannot avoid the need to address an important point of law, which may arise in other cases in which counsel may take different attitudes. In In re Corey, para 62, Lord Mance pointed out that the ECtHR did not directly address the apparent logical consequences of its analysis of article 5(1), when this was questioned by the British Government. Instead, it contented itself with saying simply (para 217) that: The Court accepts that where an indeterminate sentence has been imposed on an individual who was considered by the sentencing court to pose a significant risk to the public at large, it would be regrettable if his release were ordered before that risk could be reduced to a safe level. However, this does not appear to be the case here. 16. It may not have been the case with Messrs James, Wells and Lee that their release was sought or ordered before their risk was reduced to a safe level. But the Supreme Court was informed that various life or IPP prisoners are now relying upon James v UK to challenge in the Administrative Court the legitimacy of their continued detention, before the Parole Board has expressed itself satisfied as to their safety for release. In these circumstances, Mr James Eadie QC for the Secretary of State invites the Supreme Court to rule on the legal position under United Kingdom law, and submits that, whatever the position in Strasbourg, we should declare life and IPP prisoners continuing detention to be lawful, unless and until the Parole Board determines such detention to be unnecessary subject only to the remote possibility, identified by the House in R (James) that a complete breakdown of the parole system might destroy the causal link between the original sentence of life or IPP and the continuing detention. We should in short adhere in this respect to the Houses previous reasoning and decision in R (James). 17. The logical starting point of this submission consists in sections 2, 3 and 6 of the Human Rights Act 1998. These sections read: judgment, decision, declaration or advisory opinion of 2. A court or tribunal determining a question which has arisen in connection with a Convention right must take into account any (a) the European Court of Human Rights, . 3(1) 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. 6(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. 18. The Convention Rights are those set out in Schedule 1 to the Act. It follows from the wording of the Act that domestic courts in interpreting and applying such rights are not bound by the jurisprudence of the ECtHR, but are bound to take it into account. Usually, domestic and Strasbourg jurisprudence march hand in hand, as contemplated by the mirror principle no more, but certainly no less (as put by Lord Bingham in R (Ullah) v Special Adjudicator [2004] UKHL 26, [2004] 2 AC 323, para 20 or no less, but certainly no more (as put by Lord Brown in Al Skeini v Secretary of State for Defence [2007] UKHL 26, [2008] 1 AC 153, para 106). But increasingly it has been realised that situations are not always so simple. The domestic court may have to decide for itself what the Convention rights mean, in a context which the ECtHR has not yet addressed: see eg Rabone v Pennine Care NHS Foundation Trust [2012] UKSC 2, [2012] 2 AC 72. More radically, the domestic court may conclude that such Strasbourg authority as exists cannot be supported, and may decline to follow it in the hope that it may be reconsidered: R v Horncastle [2009] UKSC 14, [2010] 2 AC 373. 19. The position was summarised by Lord Neuberger in Manchester City Corporation v Pinnock [2010] UKSC 45, [2011] 2 AC 104, as follows: 48. 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 eg R v Horncastle[2010] 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 HRA 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. 20. More recently in R (Chester) v Secretary of State for Justice [2013] UKSC 63, [2014] AC 271, para 27, Lord Mance said: 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 [2010] 2 AC 373, 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. 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 Neubergers reference to decisions whose reasoning does not appear to overlook or misunderstand some argument or point of principle or Lord Mances 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 Neubergers omission of such a qualification. 22. The starting point, when considering Mr James Eadie QCs submission, must be the language of article 5. Article 5 lists the cases in which a person may, in accordance with a procedure which must be prescribed by law, be deprived of his or her liberty. The first (article 5(1)(a)) is lawful detention after conviction by a competent court. Article 5(4) entitles anyone detained purportedly pursuant to this or any other of the listed grounds 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. 23. On the face of it, the express wording of article 5(1) and of the last ten words of article 5(4) contemplate that any detention not authorised by article 5(1) should lead to release. On the reasoning of the ECtHR in James v UK, failure after the tariff period properly to progress a life or IPP prisoner towards release makes detention during the period of such failure arbitrary and therefore unlawful. If that reasoning be adopted, then such detention is in breach of the express language of article 5(1)(a), and the prisoner should (in the eyes of the ECtHR) be entitled to an immediate order for speedy release under article 5(4). Under United Kingdom domestic law, release would however be impossible, since primary legislation requires such a prisoner to remain in detention unless and until the Parole Board is satisfied that this is no longer necessary for the protection of the public and section 6(2)(a) of the Human Rights Act 1998 would apply. But, even so, it would then be open to the prisoner under section 4 of the Act to seek a declaration of incompatibility if domestic courts were to interpret the Convention rights scheduled to the Act in the same way as the ECtHR interprets the ECHR at the international level. Considerable importance may therefore attach to the question whether the reasoning of the ECtHR in James v UK is followed and adopted domestically. 24. The reasoning in James v UK has, as its premise, that whether detention is lawful is not conclusively decided by the fact that there has been a valid conviction by the domestic court. In its previous case law the Court had made clear that, although the primary requirement of article 5(1)(a) is that the detention should have a legal basis in domestic law, the article also relates to the quality of the law, requiring it to be compatible with the rule of law, a concept inherent in all the articles of the Convention: Stafford v United Kingdom (2002) 35 EHRR 1121, para 63; Amuur v France (1996) 22 EHRR 533, para 50; Saadi v United Kingdom (2008) 47 EHRR 427, para 67; Kafkaris v Cyprus (2008) 49 EHRR 877, para 117; M v Germany (2009) 51 EHRR 976, para 90; see also Radu v Germany (Application No 20084/07), para 112. In this as in other contexts, the ECHR has not infrequently resorted to a concept of arbitrariness to explain what it means by unlawfulness. The natural meaning of this English word connotes some quite fundamental shortcoming. But it is also clear that, when used at the international level, its sense can depend on the context. Thus, in Saadi v United Kingdom (2008) 47 EHRR 427, the Grand Chamber identified a distinction between arbitrariness in the context of article 5(1)(a) and in the context of other sub paragraphs of article 5(1). It said: 25. 69. One general principle established in the case law is that detention will be arbitrary where, despite complying with the letter of national law, there has been an element of bad faith or deception on the part of the authorities (see, for example, Bozano v France, 18 December 1986, Series A no 111, and onka v Belgium, Application No 51564/99, ECHR 2002 I). 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) (see Winterwerp, cited above, 39; Bouamar v Belgium, 29 February 1988, 50, Series A no 129; and OHara v The United Kingdom, Application No 37555/97, 34, ECHR 2001 X).There must in addition be some relationship between the ground of permitted deprivation of liberty relied on and the place and conditions of detention (see Bouamar, 50, cited above; Aerts v Belgium, 30 July 1998, 46, Reports 1998 V; and Enhorn v Sweden, Application No 56529/00, 42, ECHR 2005 I). 70. The notion of arbitrariness in the contexts of sub paras (b), (d) and (e) also includes an assessment whether detention was necessary to achieve the stated aim. The detention of an individual is such a serious measure that it is justified only as a last resort where other, less severe measures have been considered and found to be insufficient to safeguard the individual or public interest which might require that the person concerned be detained (see Witold Litwa, cited above, 78; Hilda Hafsteinsdttir v Iceland, Application No 40905/98, 51, 8 June 2004; and Enhorn, cited above, 44). The principle of proportionality further dictates that where detention is to secure the fulfilment of an obligation provided by law, a balance must be struck between the importance in a democratic society of securing the immediate fulfilment of the obligation in question, and the importance of the right to liberty (see Vasileva v Denmark, Application No 52792/99, 37, 25 September 2003). The duration of the detention is a relevant factor in striking such a balance (ibid, and see also McVeigh and Others v The United Kingdom, Applications Nos 8022/77, 8025/77, 8027/77, Commissions report of 18 March 1981, Decisions and Reports 25, p 15 at pp 37 38 and 42). 71. The court applies a different approach towards the principle that there should be no arbitrariness in cases of detention under article 5(1)(a), where, in the absence of bad faith or one of the other grounds set out in para 69 above, as long as the detention follows and has a sufficient causal connection with a lawful conviction, the decision to impose a sentence of detention and the length of that sentence are matters for the national authorities rather than for the Court under article 5(1) (see T v The United Kingdom [GC], Application No 24724/94, 103, 16 December 1999, and also Stafford v The United Kingdom [GC], Application No 46295/99, 64, ECHR 2002 IV). 26. According to Saadi, the arbitrariness which might at an international level affect lawfulness under article 5(1) is relatively confined. The main examples which the European Court gave of situations in which detention might, although lawful under domestic law, be unlawful under the Convention, were: (a) Detention following upon the unlawful kidnapping or luring within the domestic jurisdiction of a person wanted for trial can render a persons detention following his or her subsequent conviction unlawful: see the citation of Bozano v France (1986) 9 EHRR 297 and onka v Belgium (2002) 34 EHRR 1298 in footnote 50 to para 69 of the Courts judgment in Saadi. Under English common law a similar result would follow: such conduct would call for a stay of the criminal proceedings and the release of the defendant on the grounds of abuse of process: R v Horseferry Road Magistrates Court, Ex p Bennett [1994] 1 AC 42. (b) The deprivation of liberty must genuinely be for one of the purposes permitted by article 5(1) and must, in the case of a sentence, retain a sufficient causal connection with the original conviction: see eg van Droogenbroeck v Belgium (1982) 4 EHRR 443, paras 35 and 40 (referring to detention based on grounds that had no connection with the objectives of the legislature and the court or on an assessment that was unreasonable in terms of those objectives), Weeks v The United Kingdom (1987) 10 EHRR 293, Kafkaris, para 118 and the Houses reasoning in R (James), paras 15 and 49. 27. However, other authority indicates a tendency on the part of at least some sections of the court to expand the concept of unlawfulness under article 5(1). Thus, in M v Germany, para 90, the fifth section said on 17 December 2009 in a context where article 5(1)(a) was in issue that: Quality of the law in this sense implies that where a national law authorises deprivation of liberty it must be sufficiently accessible, precise and foreseeable in its application, in order to avoid all risk of arbitrariness (see Amuur v France, 25 June 29. 1996, 50, Reports 1996 III; Nasrulloyev v Russia, Application No 656/06, 71, 11 October 2007; and Mooren v Germany [GC], Application No 11364/03, 76, 9 July 2009). The standard of lawfulness set by the Convention thus requires that all law be sufficiently precise to allow the person if need be, with appropriate advice to foresee, to a degree that is reasonable in the circumstances, the consequences which a given action may entail (see Steel and Others v The United Kingdom, 23 September 1998, 54, Reports 1998 VII, and Baranowski v Poland, Application No 28358/95, 52, ECHR 2000 III). 28. In contrast, the First Section in Zagidulina v Russia (Application No 11737/06) (02 May 2013) appears to have deliberately limited itself to article 5(1)(e), when it stated (para 51) that: the notion of lawfulness in the context of article 5(1)(e) of the Convention might have a broader meaning than in national legislation. Lawfulness of detention necessarily presumes a fair and proper procedure, including the requirement that any measure depriving a person of his liberty should issue from and be executed by an appropriate authority and should not be arbitrary (see Winterwerp, cited above, 45, Johnson v The United Kingdom, 24 October 1997, 60, Reports of Judgments and Decisions 1997 VII, and more recently Venios v Greece, Application No 33055/08, 48, 5 July 2011 with further references). Even in the context of article 5(1)(e), the dictum seems to have been unnecessary for the decision, since it is clear from para 61 of the First Sections judgment that the claimants detention on the ground that she was of unsound mind, when she had neither been present in person nor represented at the hearing ordering such detention, was not in accordance with a procedure prescribed by law within the express language of article 5(1), even if attention was confined to domestic law. The extent to which the concept of lawfulness may require a domestic law authorising detention to meet some higher international standard of procedural fairness did not require attention at all. In neither situation covered by points (a) and (b) mentioned in paragraph 26 above does there appear domestically to be any difficulty about accepting that the prisoner should not have been detained and should be, or have been, released. That is subject to the important proviso that the possibility of a break in the chain of causation envisaged by point (b) is understood as we consider that it must and should be in domestic law in the remote and restricted sense indicated by the House in R (James). A requirement that any law authorising detention should be sufficiently accessible, precise and foreseeable (see para 27 above) would probably also be capable of being accommodated within domestic law, again provided that it was understood as directed to situations where the relevant law was palpably defective. As to the reasoning in Zagidulina v Russia (para 28 above), the requirement that any deprivation of liberty be in accordance with a procedure prescribed by law is general to all the heads covered by article 5(1). It is directed primarily to domestic law, but, if one assumes that it may also connote satisfaction of a certain standard of procedural fairness set at the international level, the implications of this have not been worked out in any case law, and it does not follow that any shortfall in procedural fairness must lead to immediate release. 30. The present appeal does not in any event concern procedural fairness. It concerns alleged failures in the provision of appropriate opportunities to prisoners to progress towards release from sentences about the imposition of which, as such, no complaint is or can be made. In this context, there is a real difficulty about accepting a proposition that the Convention rights require a life or IPP prisoners release, before the Parole Board is satisfied that his detention is no longer required for the protection of the public. Not only would this in the United Kingdom context mean that primary legislation section 28(6)(b) of the Crime (Sentences) Act 1997 (para 10 above) was in conflict with the Convention rights. It would also involve the release of someone whose safety for release had not been established; and, as soon as he could be offered appropriate facilities to make progress towards eventual release, it would involve re detaining him always assuming that he either surrendered voluntarily or could be found and rearrested. In In re Corey, paras 63 69 Lord Mance questioned whether the ECtHR could have meant this. He identified certain features of its reasoning which suggest that it did not. We will treat them as repeated here, without setting them out. However, if the ECtHR did not mean this, that seems to undermine the central part of its reasoning that detention becomes arbitrary and unlawful under article 5(1) after the expiry of the tariff period, if the prisoner is not given the facilities to enable him to progress towards release. Detention which is unlawful under the express wording of article 5(1) is, as we have said, detention from which a person is under article 5 entitled on the face of it to be released. 31. 32. The central part of the Courts reasoning in James v UK under article 5(1) finds little if any support in the previous Strasbourg authority. The need for a coherent framework for progression towards release of persons subject 33. to a measure of preventive detention is mentioned in M v Germany, at para 129, but in a quite different part of the judgment from that dealing with the lawfulness of detention namely in the context of considering whether the extension of such a measure from ten years to an unlimited period after six years in preventive detention constituted the introduction of a retrospective penalty. In Grosskopf v Germany (2010) 53 EHRR 280, paras 50 52 the Court again expressed concern about the apparent absence of any special measures, instruments or institutions to address the danger presented by persons subject to preventive detention and to limit the duration of their detention, but did so purely in the context of considering whether a sufficient causal connection existed between the applicants original conviction and his continuing preventive detention. If anything, the courts reference to its concern, coupled with its decision to uphold the continuing detention as not unreasonable in terms of the objectives of the preventive detention order, suggest that the court did not see the absence of any special measures as capable of affecting the lawfulness of the detention, so long as the causal connection based on danger to the public existed. In James v UK the Fourth Section of the ECtHR did however unequivocally identify the absence of measures to assist progression through the prison system as arbitrariness making the detention unlawful. It treated the situation as falling within the language of article 5(1)(a), despite the continuing existence of sufficient causal link between sentence and detention (see para 198). On this basis, it had also to identify the period of detention which was unlawful. It did so by referring, in its holding, to the detention following the expiry of their tariff periods and until steps were taken to progress them through the prison system. That exposes a problem. Particularly where a tariff is of a relatively long period, a prisoners progression towards release through courses and experience in open conditions should, where and to the extent feasible, be facilitated not merely after but also in advance of the tariff period, so as to keep open the possibility of release on or shortly after its expiry. That is indeed Mr Haneys complaint in the present case. Yet, on the ECtHRs approach, treating the present issue as falling within the text of article 5(1)(a), no complaint can apparently arise until the expiry of the tariff period, and any complaint can then only arise if the failure to provide courses, etc continues after the expiry of the tariff period. 34. The second, much more substantial problem about the Fourth Sections approach is that logically it would, if followed in the United Kingdom, mean, as we have stated, that any prisoner not being progressed through the system should be released, and that the Crime (Sentences) Act 1997 section 28(6)(b) should be declared incompatible with the Convention rights insofar as it precludes this. As noted in para 15 above, the ECtHR in para 217 of its judgment avoided, rather than addressed, this difficulty. Mr Southey QC for the appellants suggested, ingeniously, that the difficulty could not arise, because, as soon as a prisoner gets to court and establishes that he is not being duly progressed towards release, the courts order would redress the situation. This does not however follow. Many of the failings revealed by the cases which have come before the courts to date are simply incapable of being redressed at the drop of a hat or wig. Systems failed, due to lack of resources and facilities, and it takes time to mend such failures, whatever order a court might make. Moreover, in a case where the failure was repaired, as it might be by the time a court came to consider the case, by the provision of adequate opportunity to the prisoner, then the court would be left, on this view of the ECtHR decision, with detention which had been unlawful for a time but was no longer. 35. For the reasons which we have given, we do not think that it is possible to follow the reasoning of the Fourth Section of the ECtHR in James v UK. It appears to us to be based on an over expanded and inappropriate reading of the word unlawful in article 5(1)(a), which would not give rise to a sensible scheme. That does not however mean that we would revert to the Houses decision in R (James). The Fourth Section has underlined the link which should be recognised between preventive detention and rehabilitation, and has also concluded that there should be an individual remedy in damages under the ECHR for failure to provide prisoners serving indeterminate sentences with proper means of progression towards release. The Houses refusal of a Convention remedy in R (James) was based on a contrary conclusion that the aim of a life or IPP sentence does not include rehabilitation, at least for the purposes of the ECHR, as well as upon the Houses view that the continuing causal link between sentence and detention prevented any breach of article 5. 36. We consider that the Supreme Court should now accept the Fourth Sections conclusion, that the purpose of the sentence includes rehabilitation, in relation to prisoners subject to life and IPP sentences in respect of whom shorter tariff periods have been set. We also consider that the Supreme Court can and should accept as implicit in the scheme of article 5 that the state is under a duty to provide an opportunity reasonable in all the circumstances for such a prisoner to rehabilitate himself and to demonstrate that he no longer presents an unacceptable danger to the public. But we do not consider that this duty can be found in the express language of article 5(1). Treating it as an aspect of the duty to avoid arbitrariness under article 5(1)(a) has unacceptable and implausible consequences which we have already identified. The Grand Chamber decision in Saadi also remains important authority that arbitrariness has a confined meaning, when used as a test of lawfulness in the context of article 5(1)(a). 37. Article 5(4) would be a more satisfactory home for any duty of the nature identified in the previous paragraph, if its language covered it (which it does not). Article 5(4) gives rise to an ancillary duty on the state, breach of which does not directly impact on the lawfulness of detention. The duty is to make available access to judicial review by a court or here the Parole Board, which will consider whether the information put before it justifies continued detention or release. Speedy access to the Parole Board like reasonable access to proper courses and facilities represents an important aspect of a prisoners progression towards release. But the language of article 5(4) is in terms confined to access to judicial review by the Parole Board on the basis of the information available from time to time. It does not cover the prior stage of provision of courses and facilities in prison, which gives rise to the information necessary on any Parole Board review. 38. The duty to facilitate the progress of such prisoners towards release by appropriate courses and facilities cannot therefore be brought, in our opinion, within the express language of either article 5(1)(a) or article 5(4). But it is on any view closely analogous, at an earlier stage, to the duty involved under article 5(4), and it is far more satisfactory to treat it as an analogous duty arising by implication at an earlier stage than that covered by article 5(4), rather than to treat article 5(1)(a) as incorporating it. We consider that a duty to facilitate release can and should therefore be implied as an ancillary duty a duty not affecting the lawfulness of the detention, but sounding in damages if breached. Such a duty can readily be implied as part of the overall scheme of article 5, read as a whole, as suggested in In re Corey. 39. The appropriate remedy for breach of such duty is, for the reasons explained, not release of the prisoner, for his detention remains the direct causal consequence of his indefinite sentence until his risk is judged by the independent Parole Board to be such as to permit his release on licence. The appropriate remedy is an award of damages for legitimate frustration and anxiety, where such can properly be inferred to have been occasioned. Except in the rarest cases it will not be possible to say what might have been the outcome of an opportunity by way of a prison programme which was not provided or was provided late. It will thus not, except in the rarest cases, be possible to establish any prolongation of detention. Such a breach is likely to attract relief similar to that recognised as appropriate under article 5(4) in frustration/anxiety cases where a Parole Board hearing has been wrongly delayed: we refer to the very full analysis of Strasbourg awards in R (Faulkner) v Secretary of State for Justice, R (Sturnham) v The Parole Board (No 1) [2013] UKSC 23, [2013] 2 AC 254, and we note that in some of them the award needed to reflect not only delay but also procedural unfairness. It may be legitimate to infer rather greater frustration in at least some cases when the point of impending decision, which may be for release, has been arrived at, than at the more speculative earlier stage of delay in the provision of prison treatment. The round figure levels of damages awarded by the ECtHR in James v UK, para 244, do not appear to us to offer appropriate general guidance for future cases under the ancillary duty now recognised. The general approach set out by Lord Reed at points 10 15 in para 13 of R (Faulkner) and R (Sturnham) and the detailed examination of authority later in his judgment should however provide valuable guidance as to the appropriate approach to damages in respect of any such breach of the ancillary duty. 40. This approach will be more satisfactory in result than that which would, apparently, follow from the ECtHRs analysis in James v UK. There would be no risk of detention fluctuating between the legitimate and illegitimate, no requirement to release before the Parole Board is satisfied that this would be safe, and no risk therefore to public safety. But, equally, the prisoner will be able (a) to complain and to seek mandatory orders if and when any breach of such duty occurs and (b) to claim damages in respect of any period of extended detention or other loss which he or she can establish (and this could often prove a very difficult task, bearing in mind the speculative nature of the exercise) to have flowed from the failure properly to progress him or her towards rehabilitation. These rights would exist and damages would be recoverable in respect of any period of extended detention which could be shown to have resulted after the expiry of the tariff period whether the failure occurred before or after the expiry of the tariff period. The prisoners rights would not therefore depend upon showing an overlap between a period during which such a failure occurred and a period of increased detention post tariff, as the ECtHRs approach in James v UK appears to require. The content of the duty 41. On that basis the question arises in what precise terms and in particular at what precise level the duty should be put. As a matter of domestic public law, complaint may be made in respect of any systemic failure, any failure to make reasonable provision for an individual prisoner so egregious as to satisfy the Wednesbury standard of unreasonableness or any failure to apply established policy. The question is whether liability for breach of article 5 is similarly limited. In our opinion, it is not. The express rights conferred by article 5 are individual rights. The ancillary right which we identify as existing under article 5 is also a right in favour of each individual prisoner and its satisfaction or otherwise depends upon the particular circumstances of the individual case. Although the ECtHR was concerned in James v UK with circumstances in which there had been systemic failures in the United Kingdom, the ECtHRs decision was based on a careful individual analysis of each applicants prison history: see eg paras 218 222. 42. The ECtHR does not however insist at the international level on standards of perfection that would be unrealistic, bearing in mind the numbers of prisoners involved and the limits on courses, facilities and resources in the prison system. Nor should domestic courts do so. In Hall v The United Kingdom (Application No 24712/12) (12 November 2013), the ECtHR was concerned with a complaint by an IPP prisoner sentenced on 13 June 2006 with (after appeal) a 30 month tariff expiring on 13 December 2008. Although the ECtHR said that it appears that there may have been some delay from around March 2008 [when the Extended Sex Offenders Treatment Programme ESOTP was identified as a course he should take] until early 2010 [when he completed that programme], it passed over this delay with the comment that it seems that the applicant was able to access the Cognitive Skills Booster programme in the meantime (para 33). It appears that this Booster programme was in fact undertaken in or around 2008, that he was on 23 February 2009 transferred to HMP Usk in order to complete the ESOTP and that he in fact completed the ESOTP in early 2010: paras 10 13. The ECtHR was therefore prepared to look at the matter overall, and to accept that no system is likely to be able to avoid some periods of waiting and delay, especially for a highly intensive course such as the ESOTP. Similarly, a delay from 1 March 2012 when transfer to open conditions was recommended by the Parole Board (or from 20 March 2012 when the Secretary of State accepted the recommendation, saying that such a transfer was envisaged in about three months) until July 2012, when transfer actually occurred was not regarded as unreasonable. Black v The United Kingdom (Application No 23543/11; 1 July 2014) was another admissibility decision where the court had regard to the period of detention as a whole. 43. We turn to the individual cases, considered in the light of the ancillary obligation under article 5 which we have identified. Whether there has been a breach of the duty is a highly fact sensitive question in each case. Haney article 5 44. In November 2003 Haney was 43 years old. He had previous convictions for robbery, firearms, dishonesty and violence. On 13 November 2003 he was sentenced for a very serious armed bank robbery, carried out by himself and two other masked men armed with sawn off shotguns. He had untruthfully denied he was guilty. At the time he committed this robbery, Haney was on parole from an earlier sentence, also for robbery, having not long been released. In other words, he appears to have been a professional criminal, committing offences for high stakes which carried a grave risk to the public of death or serious injury. 45. He was sentenced to an automatic life sentence, then required (unless such would be unjust) by section 109 of the Powers of Criminal Courts (Sentencing) Act 2000 for a few criminals convicted for a second time of a small number of specified grave offences. The minimum term attached to that sentence was nine years. At that stage, sentencing practice was to set the minimum term associated with a life sentence at between half and two thirds of what the punitive determinate term would have been if a life sentence had not been passed. Generally the proportion adopted was one half. This was to reflect the then prevailing arrangements for early release of long term determinate prisoners, which could be allowed at half of their term and became mandatory at two thirds. Thus, the nine year minimum term represented a determinate term of something like 18 years, which would indeed have been the kind of term to be expected for a recidivist of Haneys history committing a further armed robbery on parole and receiving no credit for admitting what he had done. The nine year minimum term (or tariff) expired on 13 November 2012. In prison, Haneys progress was a great deal better than might have been expected. After some years in HMP Frankland prison he was moved to HMP Blundeston, which has a therapeutic community designed to facilitate rehabilitation. Well before then he had admitted his most recent offence. After about a year there, the reports on him were favourable. He was judged to be confronting his criminal lifestyle. There had been some adjudications for misbehaviour but the last was two to three years previously in July 2008 for possession of drugs, and since then he had achieved enhanced status as a prisoner. A sentence plan formulated in March 2010 foresaw the prospect of onward transfer to an open prison, as an essential stage in assessing whether the risk which Haney presented could be managed, first there and, if successfully there, then afterwards on licence in the community. Critically, a year later, in June 2011, the Secretary of State wrote formally to him approving a transfer to an open prison for this purpose, and indeed without the need for a Parole Board assessment upon that issue. Haney was accepted in principle by a suitable open prison (HMP Kirklevington Grange) in the summer of 2011. 46. 47. The proposed transfer did not, however, then happen. His transfer eventually occurred about a year later on or about 16 July 2012, and thus not long before his tariff was due to expire in November of that year. This was not Haneys fault. The reason lay in the intervening logjam to which the introduction of IPP sentences in April 2005 had led, and which is so clearly chronicled in the judgments of the House of Lords in R (James). Although Haney is not an IPP prisoner, and his sentence pre dated the introduction of the IPP system, he was a life prisoner competing with other life prisoners and, importantly, also with IPP prisoners for resources in the prison service which were, temporarily at least, greatly under supplied. In response to the excess of demand over supply, the prison service had to introduce a new practice in October 2011, under which priority was given, amongst indefinite prisoners of one kind or another, to those whose tariffs had expired, and then to those who were nearest to tariff expiry. A separate common law challenge to the reasonableness and lawfulness of that expedient rightly failed before Lang J in the Administrative Court, for it was a perfectly sensible and lawful response to the unanticipated backlog. The common law claims which then failed are not before this court. A further challenge is, however, mounted to the October 2011 policy in this court, invoking article 14 ECHR (discrimination) but as explained below this must also fail. 48. However, the failure of the challenges to the October 2011 remedial policy adopted by the ministry leaves untouched the question whether there was a failure to meet the requirements set out in James v UK, and thus a breach of the ancillary obligation contained in article 5. This ancillary obligation clearly exists throughout the prisoners detention, and is separate from any obligation to release, whether under domestic law or the Convention. It is geared towards the prisoner having a reasonable opportunity to establish that he is safe to release at or within a reasonable time after the expiry of the tariff period. A failure before tariff expiry may thus constitute a breach if it remains uncorrected so that he is deprived of such reasonable opportunity, which he ought to have had. Such a breach may sound in modest damages if the impact on the prisoner warrants it. It cannot of itself give rise to a duty to release, for whilst the prisoner remains unsafe to the public, there is ample justification under article 5(1)(a) for his continued detention. The question is accordingly this: was Haney afforded a reasonable opportunity to reform himself and (crucially in his case) to demonstrate that he no longer presented an unacceptable risk to the public? 49. The answer to this question is, in Haneys case, given by the letter to him from the Secretary of State of June 2011. By this letter the Secretary of State identified what a reasonable opportunity was for Haney to demonstrate that he was no longer a danger that is to say a transfer to open conditions and adjudged that he should have that opportunity there and then. Unlike the cases of other appellants, there was no other opportunity which could be afforded to him to demonstrate this. That he did not have this reasonable opportunity was the result of the systemic failures identified in R (James) and in James v UK. It is clear that but for those failures, Haney would have been transferred to open conditions in or about late Summer 2011. What he would have made of that opportunity cannot be known, nor can it be known when or whether the Parole Board would have adjudged him safe for release on licence which would endure for the rest of his life. But that he was deprived of the reasonable opportunity which the Secretary of State himself said that he 50. should have is clear. Worrying as his criminal history is, career criminals may change course, and the middle years are ones sometimes characterised by such change. There could have been no reasonable claim to actual release on licence before tariff expiry, even if such is technically possible. But depending on his response, there might have been some prospect of release on licence sometime after tariff expiry in November 2102. It follows that in Haneys case there was a breach of the ancillary obligation in article 5. The delay in transfer was of about a year. He would have known that he could not realistically expect release at least until after his tariff expired, and it would not follow that any postponement of release would follow or, if it did, be of the same period as the delay. But the delay in transfer until just before the expiry of the tariff period is sufficient, applying the principles explained in R (Faulkner and Sturnham) (No 2) set out in para 39 above, to justify the inference of legitimate frustration. An appropriate award is 500. Haney discrimination 51. We turn to Mr Haneys alternative case that he was discriminated against, by the decision taken by the prison authorities in October 2011 to resolve the crisis arising from the shortage of course and facilities to progress prisoners towards release by prioritising the movement to open prisons of those whose tariff periods had already expired. Mr Haneys had not. It is not clear what practical impact this issue could have, particularly in the light of the ancillary duty to afford prisoners a reasonable opportunity to rehabilitate themselves and to demonstrate that they no longer present an unacceptable danger to the public, which we have now recognised. To the extent that there was a continuing systemic failure, which affected Mr Haney because it meant that he could not be transferred to open conditions at a time pre tariff when this should, but for such failure, have occurred, the ancillary duty should afford him a remedy, independently of any case based on discrimination. 52. For completeness, however, we consider his case on discrimination. The question of law is whether the Supreme Court should recognise the difference between those whose tariff periods had and had not expired as a difference of status for the purposes of article 14 of the ECHR. The House in R (Clift) v Secretary of State of the Home Department [2006] UKHL 54, [2007] 1 AC 484 was, in the absence of clear Strasbourg authority, not prepared to accept the difference between prisoners serving determinate sentences over 15 years and life prisoners or prisoners serving determinate sentences of less than 15 years as a difference in status. The ECtHR in Clift v The United Kingdom (Application No 7205/07) took a different view, and expressed itself at one 53. point (at the end of para 60) in terms which might, literally read, eliminate any consideration of status. In the light of the ECtHRs decision, we see some force in the submission that the difference between pre and post tariff prisoners should now be taken to represent a relevant difference in status. But we need not determine that finally. That is because the difference in treatment appears to us to have been clearly justified on the basis of the evidence put before and findings made by the judge. Her findings were in the context of a complaint at common law that the difference in treatment was irrational and unfair, but they appear to us relevant and decisive in the present context also: 69. The defendant's [the Secretary of States] response was that he considered the various options for clearing the backlog and made a rational decision to prioritise the post tariff prisoners, because they were eligible for release and continued detention could only be justified if they represented a risk to the public. It was not feasible to transfer all the ISPs at one go, because of the need to ensure that sufficient resources were in place to manage and support ISPs at open prisons. The defendant denied that he was applying an inflexible policy; there was provision for exceptional cases. The defendant also denied that he was operating an unpublished policy which conflicted with published policy. The published policy related to categorisation and allocation, whereas these were merely arrangements for clearing the backlog of transfers. Rationality, fairness and taking into account relevant considerations 70. In my judgment, the defendant's evidence was cogent and convincing. Mr Mercer said in his first witness statement: Prioritisation criteria 2. A system of prioritisation was required to address the backlog, because it would not be possible or safe, to transfer all the ISPs awaiting transfer at the same time. Whilst NOMS aims to transfer prisoners who are identified as being part of the backlog into open conditions as soon as possible, it is extremely important, given the numbers involved, together with the complexity of individual cases and the risks and needs which offenders concerned present, that transfers are managed with care. Thus it is necessary to consider both the needs of the prisoners and the pace at which transfers are operationally manageable for individual establishments. For these reasons, the process of identifying and allocating suitable establishments and effecting transfers is being phased, with prisoners' cases being dealt with by PMS in tranches, initially of 50 at a time, since increased to 100, and potentially increasing still further. 3. For purposes of clearing the backlog, prisoners whose tariff has expired were considered to be a higher priority than pre tariff prisoners because they have served the punitive part of their sentence and progression through their sentences is now entirely focused on reducing their risk to the point where the Parole Board determines that they may be safety released. The decision was taken to prioritise post tariff prisoners over pre tariff prisoners because the earliest pre tariff prisoners can be released is at tariff expiry. The view was taken that the further away from tariff expiry a prisoners is, the less likely it is that they would be prejudiced by a non immediate transfer to open conditions after the Secretary of State's approval. 4. When considering how to prioritise pre tariff prisoners, considerations included: i. the need to ensure fair treatment between prisoners, including that prisoners who were often difficult to place (such as sex offenders) were not disadvantaged compared to those with less complex needs; ii. to take account of the length of time for which prisoners had waited for transfer; iii. to take account of the amount of time remaining prior to tariff expiry; iv. to provide a transparent system so that prisoners could be given reasonable estimate as to when they were likely to move; vs to set up a system that was straightforward and would avoid complex and resource intensive administration; and vi. to permit exceptional circumstances to be considered on request in individual cases. 5. Among pre tariff prisoners, it was decided, after considering various alternative means of prioritisation, that the fairest solution was to prioritise prisoners in orders of proximity to tariff expiry. This solution also had the benefit of being transparent, straightforward and practical. There were a number of prisoners approaching tariff expiry and we considered these prisoners to be of the highest priority and wanted to ensure that the criteria did not allow them to be leapfrogged by other prisoners. Prisoners who had a year or two to go until their tariff expiry would have plenty of time to utilise open conditions to demonstrate to the Parole Board a reduction in risk even if there was a delay in transferring them. Consideration was given to other way of prioritising pre tariff prisoners, such as proximity to next parole review; individual circumstances; length of tariff; and date of Secretary of State approval; but these options would disadvantage many prisoners who were approaching their tariff expiry date, leading to anomalous and unfair treatment: i. Proximity to parole review date: Once a pre tariff prisoner is approved for open conditions by the Secretary of State their parole review will take place on tariff expiry. Therefore there is not much difference between prioritisation using next parole review or tariff expiry date. However, parole reviews can be subject to delay for a number of reasons including late submission of reports; awaiting completion of offending behaviour work; or availability of panel members or witnesses. Parole reviews may also be deferred whereas tariff expiry dates remain the same. In cases where there is a delay or a deferral, prisoners placement on the list would have to be revised to take account of the new timetable. As parole review dates vary from one prisoner to the next in this manner, a waiting list organised by reference to this would be extremely fluid and the result of this would be that prisoner's positions on the waiting list would be subject to continual change. Re consideration and prioritisation of each case would have to be repeated on an unacceptably frequent basis as ISPs were added to, or removed from the list, or otherwise reprioritised following deferral or delay. It would, therefore, be impossible to give a meaningful estimate of the likely period a prisoner would have to wait for transfer. We therefore believe that this solution would be unfair, as well as lacking in transparency and being difficult to manage. ii. Length of tariff was considered to be irrelevant to the prioritisation process as it has no bearing on the Secretary of State's approval for a transfer to open conditions, which is based on risk pertaining at the time rather than either of these factors. The Secretary of State's decision to allow an ISP to transfer to open conditions is the earliest point at which this progressive move can take place. iii. Considering each case individually on its merits: Consideration was also given to prioritising each prisoner's position on a case by case basis rather than using specific criteria. It was decided that this would have been extremely time consuming and resource intensive, as well as making it hard to ensure fairness. It would have involved very difficult judgments about the relative merits of each case against all other case. In addition, fresh judgments would have been required about each case in the backlog every time a new case came through where a prisoner had been approved for transfer to open prison by the Secretary of State. Having said that, notwithstanding the prioritisation criterion outlined above, exceptional circumstances are considered upon request, and are reviewed on an individual basis. iv. Date of Secretary of State approval: Prioritising pre tariff prisoners in this way would mean that prisoners who were approaching tariff expiry could be leapfrogged by other prisoners who were not approaching tariff expiry but who had been approved by the Secretary of State for transfer earlier. This was considered to be unfair to those prisoners approaching tariff expiry who could potentially be released on tariff. ISPs who had been approved for their transfers earlier but whose tariff expiry date was further away had not yet reached the point where they could be considered for release and would not be disadvantaged by waiting longer for a move. Therefore, although NOMS accepts that the criterion of proximity to tariff expiry is not sensitive to some individual factors it was considered to be the fairest, most transparent and most practical means of establishing an order in which to transfer pre tariff ISPs to open conditions. Implementation of the October 2011 policy . 9. We reviewed the approach we were planning to take with pre tariff prisoners early in 2012 in light of progress made with transferring post tariff prisoners and began the process of referring pre tariff prisoners to PMS for transfer on 3 July. Prioritisation of pre tariff prisoners is determined by proximity to tariff expiry date; the closer to tariff expiry a prisoners is the higher will be the priority to transfer them. We have increased the amount of referrals made to PMS each month and will continue to monitor progress. 10. At the beginning of the new process, there were around 300 post tariff ISPs located in closed conditions awaiting transfer to open. At the beginning of December 2011 this figure had risen to 405 however as at 30 June this figure had fallen to 243. The current list of post tariff prisoners contains those who have been approved by the Secretary of State for a move to open conditions from late May 2012 onwards. The average waiting time for post tariff prisoners was, prior to the implementation of the central process in October 2011, around eight to nine months; this has been reduced to around three to four months now. The original backlog of post tariff prisoners has been virtually cleared and the majority have either now transferred to open conditions or are unable to transfer due to medical reasons, imminent parole hearings, courses or re categorisation to category C. The Secretary of State has approved 927 ISPs (both pre and post tariff) for open conditions between the months of October 2011 and June 2012. The number of ISPs being released continues to rise with 173 releases in the first quarter of 2012. This is in comparison with 543 releases during the whole of 2011, 258 in 2010 and 195 in 2009. 11. Turning to the rate at which ISPs are transferred under this exercise, at present the policy remains to refer a minimum of one tranche per month to PMS for action. The estimate of the rate at which the backlog will be reduced was based on the assumption that PMS would be able to organise a transfer for all prisoners in the tranche within a month of submission. We have been monitoring progress carefully and have reviewed this arrangement on a regular basis; if more that 50 prisoners could be safely transferred per month then more would be referred. That has now been reviewed and, beginning in March 2012, we increased the number of referrals to PMS each month to 100 prisoners; in May 2012, over 200 prisoners were transferred. As at 20 June, 914 post tariff prisoners had transferred under the central process. We will continue to monitor progress carefully and review this arrangement on a regular basis; if more than 100 prisoners can be safely transferred per month, as was the case in May 2012, then more be referred. 71. Mr Read added, at paras 28 and 29 of his statement: 28. In respect of individual prisoners, it is important to progress at the right pace. This means ensuring that any ISP sent to open conditions can be managed safely and given appropriate support to help make the progression from restrictive, closed conditions to relaxed, open conditions, often after a long time in custody. In respect of the overall prison population, our primary responsibility is to protect the public. Any measures which resulted in large waves of ISPs being moved into open conditions in an unmanaged way could result in an increase in prisoners absconding and seriously undermine what we are looking to achieve. In addition, NOMS must be mindful of the needs of determinate sentence prisoners, some of whom benefit from a period in an open prison before release, even though their release is not contingent on the direction of the Parole Board. 29. I believe that NOMS made a good response to the problems associated with the lack of movement for ISPs into the open estate. We have taken back central control of the management for ISPs so that they are moved in a transparent and fair way; we have increased the rate of transfers to from approximately 50 per month approximately 150 per month over the past 5 months and will continue at this rate for the immediate future; and we are increasing capacity significantly to allow more opportunity for ISPs to move. 3. It became clear to us in early 2012 that the initial rate of transfer was not having the desired effect as the rate of movement was not keeping pace with the number of new ISPs being approved for Category D conditions. From February 2012, PMS therefore increased the transfer rate to a target of 100 per month and this was maintained or surpassed through to the end of April 2012. With a view to clearing the backlog as rapidly as could safely be achieved, PMS decided to establish whether there was a tipping point beyond which open establishments found it difficult to manage. We moved a total of 211 prisoners during the course of May 2012. When we did so, however, we began to receive telephone calls from a number of open establishments raising concerns about the 72. Mr Hay, Head of PMS, said in his second witness statement, at paras 3 and 4: increased number of ISPs that they were being required to receive. In particular, concern was raised at the increase in initial Offender Management (OM) work on reception into open prisoners and whether these prisons were able to provide reassurance that all relevant OM work was being undertaken. 4. As a result, we decided to reduce the rate of moves to a target of 150 per month from June onwards. This decision was reached on the basis of the anecdotal evidence available to PMS which indicated that this was the maximum rate at which establishments could safely manage prisoners without putting the public at risk. This rate was maintained through November with the effect that the backlog was cleared by the end of August 2012. 73. I am satisfied, on this evidence, that the Defendant carefully considered all available options, took into account all relevant considerations, and reached a rational conclusion. I consider it is important to bear in mind that this was a temporary arrangement, which lasted for only about 10 months. From the end of August 2012, when the backlog was cleared, the transfers of post tariff and pre tariff prisoners were being processed at the same rate. The strategy achieved the desired result within a reasonable timescale. Prioritisation of post tariff prisoners was rational and fair because they were already eligible for release, and administrative delay might result in a prisoner being detained when he should be free, in breach of both article 5 and arguably his article 8 rights (considered in more detail below). As Buxton LJ said in Noorkoiv, at para 25, the post tariff prisoners were at least presumptively detained unlawfully and the legality of their detention was subject to article 5(4) ECHR. In my view, there was a pressing need for the Defendant to address their position. The way in which the Defendant prioritised pre tariff prisoners, according to their tariff expiry date, was also rational and fair, bearing in mind the significance of the tariff expiry for prisoners. 74. The only other alternative immediately available, namely, ceasing the transfer of determinate prisoners and thus increasing the number of ISPs transferred, would have resulted in unacceptable pressures on the management of the prisoners in open prisons, as described in the evidence. 75. It may well have been desirable for the Defendant to have changed the policy in relation to ROTL at an earlier date, so as to make ISPs eligible for ROTL from closed conditions, but I cannot find any basis upon which to hold that he acted unlawfully in not doing so sooner. The Defendant's decision, and the timescale within which the change of policy was implemented, was a lawful exercise of his discretion. 54. In the light of this evidence and the judges findings, we do not consider that the Secretary of States policy can realistically be regarded as anything other than a proportionate and realistic reaction to the crisis with which the prison system was faced. We would reject Mr Haneys complaint under article 14 accordingly. Kaiyam 55. Kaiyam (formerly Fish) was born in February 1981. By 2006 (aged 25) he had accumulated convictions for a variety of offences, including robbery (four different offences) possession of firearms and several cases of assault. He had been sent to prison and released on licence, but had broken the terms of his licence and so had been recalled. He was a regular abuser of a variety of drugs and of alcohol and an habitual dealer in cannabis. On 20 July 2006 he was sentenced for two groups of offences. First, he hi jacked a valuable car, intending to sell it to finance his drug use. The car was being driven by a young woman alone, whom he ejected, apparently bruising her in the process. He drove dangerously when chased by the police, and repeated this the following day in a different car when en route to try to sell the stolen vehicle. Secondly, and when on bail for these offences, he arranged to supply drugs to others, but was spotted by the police in a car; further dangerous driving followed until he crashed the car; a gun and ammunition were found in it, which it seems had been brought to the meeting by his intended purchasers. 56. For these offences a combination of determinate and IPP sentences were passed, but the lead sentence was IPP for the robbery, with a minimum term of three years. Allowing for time spent on remand, this period expired on either 3 or 5 April 2009. 57. 58. Initially Kaiyam was classified as a category B prisoner in the four level system employed throughout the prison service. In June 2008 (just on two years after sentence) he was reduced in category to C. However, his behaviour in prison was very poor. He was disciplined on no less than 23 occasions for offences which included disobedience, assault, drugs and the possession of mobile telephone parts. The latter is particularly serious in prison, since it not only has security implications but involves the possession of a very important item of prison currency and power. In January 2009, as a result of his misbehaviour, Kaiyam was reverted to the higher security category B. Later, also as a result of his misbehaviour, and following an assessment at HMP Dovegate (which has extensive rehabilitation experience) as being involved in the drug subculture, he was transferred to a high security prison at HMP Long Lartin in January 2010. In the meantime, efforts had been made to provide him with appropriate rehabilitative courses. There were regular sentencing planning meetings at which there was discussion as to how best to progress him. He completed a six week Enhanced Thinking Skills (ETS) course in July 2008. He also completed a drug awareness course in July 2008 and a victim awareness course in October 2008. He was assessed as having made some progress on the ETS course, but there was doubt about his ability to carry the lessons into practice, and about his honesty, self control in prison and drug use. Once he was placed at HMP Long Lartin, he was at a prison where the priority is security and rehabilitative courses are comparatively few. He nevertheless had the benefit of continuing one to one anger management consultations with his Offender Manager, which lasted for more than two years from July 2009 to October 2011, until they came to an end when the officer concerned moved on. Although there were few courses available at HMP Long Lartin, there were regular sentencing planning meetings in May 2010, June 2011, August 2012 and October 2012. His behaviour underwent a significant improvement. The most suitable course for him was considered to be a Prison Addressing Substance Abuse (PASRO) course, with further anger management work. HMP Long Lartin does not offer either kind of course. Efforts were made to find a prison which did have such courses and which could accept him, but without success. At one stage, a transfer was planned and would have taken place but for the fact that he was accused of a further disciplinary offence in May 2011, which as a matter of general practice normally means that the prisoner must remain where he is until the accusation is resolved. In the end, this particular allegation (of assault on an officer) was not proceeded with, but only because the officer who made it fell ill and could not continue. In October 2012 a new managing officer suggested a different course, known as the Self Change Programme (SCP) in addition to PASRO, and by December 2012 the former was begun, being available in HMP Long Lartin. In the meantime, his tariff had expired in April 2009. As at the time of the hearing before this court, he had been transferred to HMP Lindholme, categorised as C, and was undertaking a course which had replaced PASRO, namely the Building Skills for Recovery Programme (BSR). 59. Kaiyam disclaimed any complaint of the systemic failure, such as had been evident in the James cases. There was no question of his being left in limbo without sentencing planning and without any attempt to provide an opportunity to rehabilitate himself. Nor was there any question of his being left for an unconscionable time in a local prison without access to any courses. The logjam which the introduction of IPP sentencing had occasioned after April 2005 was not suggested to have had any impact on him. On the contrary there were courses provided and completed, regular planning meetings throughout and efforts made to find appropriate rehabilitative work for him, and, latterly, to transfer him to that end. The complaint made on his behalf was of delays in applying acceptable systems to him. The principal complaint was that it took the prison authorities too long to think of the SCP course. That course or its predecessor (Cognitive Self Change Programme or CSCP) had been available in HMP Long Lartin throughout his time there. It was further said that time was wasted considering a CALM course when he had been assessed early on as unsuitable for it since, although he had been prone to lose self control in prison, his offences were not characterised by such loss. Similarly it was said that there had been mistakes made in considering him for an intensive drug course (FOCUS) when he was unsuitable for it, rather than for the differently emphasised PASRO targeted on those who misused drugs in prison. Lastly it was said that there was delay and muddle in the efforts which were undoubtedly made to find a prison to which he could be transferred away from HMP Long Lartin. Time spent considering a transfer to HMP Garth was particularly criticised because HMP Garth did not offer SCP. 60. The careful witness statement of Mr Dennehy, the prison service manager who reviewed the history after the issue of proceedings, accepted that there had been regrettable delays at some points in it. It is no doubt the case that the prison system could have achieved what would have been, for Kaiyam, a more extensive provision of courses, for example if the possibility of an SCP course had been identified sooner than it was. However, to say that more extensive coursework could have been made available to him is a very long way from saying that he has not been provided with a reasonable opportunity to rehabilitate himself and to demonstrate that he no longer presented an unacceptable risk of serious harm to the public, and thus that there has occurred a breach of the implied ancillary obligation in article 5. Article 5 does not create an obligation to maximise the coursework or other provision made to the prisoner, nor does it entitle the court to substitute, with hindsight, its own view of the quality of the management of a single prisoner and to characterise as arbitrary detention (in the particular sense of James v UK) any case which it concludes might have been better managed. It requires that an opportunity must be afforded to the prisoner which is reasonable in all the circumstances, taking into account, among all those circumstances, his history and prognosis, the risks he presents, the competing needs of other prisoners, the resources available and the use which has been made of such rehabilitative opportunity as there has been. It is plain that Kaiyam was not denied a fair or reasonable opportunity to rehabilitate himself or to demonstrate that his risk is acceptable. In the three years of his minimum term he was provided with courses in enhanced thinking, drug awareness and victim awareness. Sadly, his response was poor, there was doubt about his honesty, and his behaviour in prison attracted the many disciplinary adjudications mentioned above, all of which demonstrated that the risk he presented was far from removed. The transfer to HMP Long Lartin somewhat reduced the availability of rehabilitative courses, but there will inevitably be differences between prisons which can give emphasis to rehabilitation and those where the priority is security. It was his own misbehaviour which led to his transfer there, over a year after the expiry of his minimum term. The consequence was that PASRO, which was the course judged, plainly bona fide, as that most suitable for him, was not available. Even without PASRO, there was sustained one to one anger management work for over a year after transfer to HMP Long Lartin. Even if, with the benefit of hindsight, consideration of CALM and FOCUS courses involved some misjudgement, it was perfectly understandable. He very plainly had anger problems, whether or not his index offences were the result of loss of temper, and he very plainly had a drug use and drug supply background. The advice to take an SCP course was plainly a sensible expedient, given that transfer to a place where the first choice PASRO was available had proved unavailable despite considerable efforts. Once it was identified, SCP was begun within about two months. The attempts to find a transfer were clearly persisted in; they were complicated by Kaiyams wish to be in a prison near to his family, by the pending adjudication in May 2011 and by a parole window in Spring Summer 2012, quite apart from the competing needs of other prisoners in a large prison population. His case does not begin to approach the kind of failure of provision considered and chronicled in R (James). He was afforded reasonable opportunity to rehabilitate himself and to demonstrate that he was no longer a risk to the public, but did not do either. There was no breach in his case of the ancillary obligation under article 5. Massey 61. Geoffrey Massey is now 55 (born October 1959). He has been convicted from time to time of offences which include robbery with a knife, burglary and benefit fraud. For the first of these offences he was sent to prison at the age of 20 for three years. He appears to have worked from time to time, chiefly as a driver, and latterly as a train guard. He was married for approximately twenty years from the early 1980s until separation in 2001. He has been a heavy abuser of drink for many years and was assessed by a psychiatrist at the time of his most recent sentence as meeting the criteria for alcohol dependence. 62. He also had, before the present convictions, two previous sex related offences. In 1986 he was convicted of indecent assault of an 18 year old male passenger in his taxi. The allegation was that he had lured the young man to a secluded spot by telling him that his girlfriend had been injured, and that he there locked him in the car and masturbated him against his will, afterwards obtaining a signed promise to tell no one. Massey denies that these were the facts. In 2005 he was convicted of using threatening/harassing words. 63. He was then convicted in May 2008 of a total of five sexual assaults on four unrelated young men, committed over an extended period, the first in 1992 and the last in 2005. The first victim was a 12 year old boy who had run away from home. The second offence, in about 1998 2000, involved promising to find a job for a learning disabled 17 year old and engineering an opportunity to persuade him that a test involving masturbation was required. The third and fourth counts involved an attempt to masturbate a work experience boy of 15 when Massey was a train guard. The last offence consisted of an assault over clothing against a 22 year old whom Massey had previously pestered with some hundreds of text messages. All the victims were either young or vulnerable. In each case he manipulated them to create an opportunity to molest them. All were significantly affected by what Massey did. He pleaded guilty to three counts and was convicted of the other two, which he continues to deny. The sentence passed was imprisonment for public protection with a minimum term of two and a half years. Allowing for time on remand to count in the usual way, that minimum term expired in September 2010. 64. Massey gave a detailed self history at the time of his conviction. His account of his own sexuality appears to be confusing. He attributes his offences to alleged multiple homosexual abuse from the age of seven onwards, involving, he has asserted, a family friend, a schoolteacher and later, when he was an adult, two unconnected clergymen. Since the details given have not always been consistent, there may be some room for doubt about what occurred. His own account of his offending against the young men has involved, more than once, the perhaps surprising suggestion that he committed the offences because he wanted to see what his own abusers had got out of the experience. 65. Massey was placed on the Enhanced Thinking Skills (ETS) programme which he completed in April 2009. He then completed the Core Sexual Offender Treatment Programme (CSOTP) in November of the same year. In addition, he has completed an alcohol awareness course, a cognitive skills booster course and a proof reading course with a view to post release employment. He is a well behaved prisoner, and has taken on leadership roles as Activities Co ordinator, organising games and events, and as editor of the Prison Magazine. In July 2010 a long and thoughtful Structured Assessment of Risk and Need (SARN) report was prepared upon him by a forensic psychologist. It recorded some progress in recognising his pattern of sexual thoughts and fantasies and towards a degree of victim empathy. On the other hand, concern was noted that he asserted that he now had no sexual thoughts about teenage males, which was unlikely since sexual interests are hard to change. There had been an apparently dramatic shift in his attitude towards his offending in a very short time as a consequence of the CSOTP, whereas the view was taken that three decades of behaviour and interests were unlikely to be reversed by a single programme. The SARN report recommended assessment to see whether the ESOTP would be suitable, as well as suggesting the likely desirability of a following Better Lives Booster (BLB) programme and a PCL R assessment for psychopathy to inform responsivity. In due course the Offender Manager concurred and offered tight suggested licence terms for release when it occurred. 66. Shortly after the SARN, the National Offender Management Service wrote formally to Massey in October 2010, accepting its recommendations. Whilst cautioning him that the Secretary of State could not guarantee to place him on the specific courses recommended, given the limits on resources, the letter formally set the time for his Parole Board review at 24 months, and set out a timetable on which this was based, namely two months for the PCL R assessment, 10 months to complete ESOTP including assessment and waiting list, six months for the BLB, again including assessment and waiting list, and six months afterwards for post programme testing and the completion of reports. That would have meant a Parole Board hearing in or about June 2012, already nearly two years beyond the expiry of his short minimum term or tariff. 67. Assessment for ESOTP followed in April 2011, and it was at this stage that he completed the Cognitive Skills Booster (CSB) programme. In the meantime the Parole Board had recorded in March 2012 that the ESOTP could only be completed in closed conditions. There was, however, no place on the ESOTP for him until May 2013. It is apparent that the wait for ESOTP was attributable to excess of demand over supply and to the need to make difficult choices about who to prioritise. It was not until September 2013 that he completed the ESOTP and subsequently was afforded further behavioural work known as the Wheel of Life. 68. Has Massey been denied a reasonable opportunity to reform himself and to demonstrate by or within a reasonable time after tariff expiry that he is no longer a danger? It is apparent that the less than two and a half years of his tariff (somewhat shortened, properly, by time spent on remand awaiting trial and sentence) was as well furnished with offender behaviour work as one could reasonably expect. He first completed the ETS course, which is a frequent if not conventional first step, and he was placed on the CSOTP within his comparatively short tariff period. He completed the CSOTP in November 2009, and since it is a six month course it would appear that he must have been placed on it almost immediately after completing the ETS in April of that year. The SARN report which first mooted the ESOTP was in July 2010, so that there could never have been any prospect of his being both assessed for, and completing, the ESOTP by the time of his tariff expiry in September 2010. The chronology illustrates the fact that if standard, intensive, course work such as the CSOTP does not succeed and if lack of risk is not demonstrated at the end of it, it will be inevitable that a prisoner with this kind of tariff period will pass the end of the tariff without being able to be offered every course which the system has. 69. However, it is important to note that, no doubt mindful of the comparative brevity of his tariff, the Secretary of State by the formal letter of October 2010 effectively defined what was regarded as a reasonable opportunity for Massey to build on the partial progress which he had made and to demonstrate (if he could) that he was safe to release, namely over a two year period. Neither this timetable nor anything approximating to it was honoured. Instead, it was not until after that period had come and gone that he was able to begin the ESOTP, and the letter shows that even if this produced a successful outcome, a further year or thereabouts was contemplated. We conclude that in Masseys case there was a failure to provide him with the opportunity to try to demonstrate that he was safe for release which the Secretary of State regarded as reasonable. The assessment for ESOTP was in Spring 2011. If there had been a plentiful supply of places he might have been on it by about Autumn of that year, but no real complaint could have been made merely because this kind of course was not immediately available; if it had been provided in or about Spring 2012, there would we conclude have been no breach. There is thus an unacceptable delay of about a year, and all post tariff. The inference of legitimate frustration is justified and that period calls for an award of damages. Given that it was post tariff we assess it at 600. Robinson 70. There is a difference of opinion between members of the court as to the appropriate disposition of Robinsons appeal. But before explaining the difference in separate judgments, we can set out the facts about which there is no dispute. 71. Andrew Robinson is now 53 (born November 1961). The papers before this court do not include his formal record of convictions, but their gist is reasonably clear. In the background are convictions between 1977 (aged 15 16) and 1981 (aged 19 20) which consist of four offences of arson (two pairs), seven offences of theft and two of criminal damage. Thereafter and from at least his mid twenties, he has been a repetitive sex offender. He says that he has never had a cohabiting relationship with an adult woman. In about 1988 (aged 26 27) he was convicted of unlawful sexual intercourse with a girl of 15 (C). He asserted that he was protecting her from her father whom he said was violent. The sentence was a conditional discharge. The sexual relationship seems to have continued afterwards for a few years during which time he lived with C, now just past 16. 72. 73. When this relationship was ended by the girl, Robinson befriended a mother who was a passenger on a bus he drove, and who had a teenage daughter (K). In due course he committed sexual offences against K when she was 14. Subsequently he befriended a second mother, who was alcoholic, and who had a daughter (L). At around this time he began a sexual relationship with a young woman of 19 who had learning difficulties, and she gave birth to his daughter. Social services became concerned about the relationship and intervened on the young womans behalf. Robinson then abused L, aged 14; subsequently he has said that he did this as an act of revenge against the social workers. In 1998 he was prosecuted for the offences against both K and L and sentenced to 15 months imprisonment. 74. On his release he obtained a job driving schoolchildren to an afterschool club, dishonestly concealing his conviction in order to do so. He indecently assaulted a 12 year old girl whom he met in this way. He was sentenced to six months imprisonment, and it would appear that subsequently a Sexual Offences Prevention Order (SOPO) was made in an effort to restrict his contact with teenage girls. In breach of this Order, he befriended two further vulnerable families. The first consisted of a single mother with three young children. He took on 75. decorating at their house, arranging to be there when the children came home from school. In due course he was found to have made a video recording of one of the little girls in her night clothes. The second family consisted of an alcoholic single father with learning difficulties and his young daughter (N). Robinson was repeatedly warned by the Police to keep away but did not do so. He groomed the family, giving the father money for drink. He committed a series of offences of digital and attempted penile penetration of this girl when she was 13; they were committed in her home while her father slept downstairs. He was found to be in possession of a CS gas canister and of a DVD of teenage girls engaged in ballet and yoga. He was convicted also of breach of the SOPO. On this last occasion he was sentenced, on 2 October 2006, to imprisonment for public protection, with a minimum term of seven years. Allowing for time on remand to count in the usual way, that minimum term (tariff) expired in December 2012. 76. Robinson has never admitted that he committed the offences for which he was last sentenced, which are much the most serious of which he has been convicted. He asserts that he was set up by the police and that N was bullied into giving false evidence against him. Denial of offending is an obvious impediment to therapeutic treatment but need not be a bar to it. Robinson was provided with treatment on the basis of the earlier, albeit less serious, offences, which he admitted. In the first year of his sentence he completed the cognitive behaviour programme ETS, which is designed to confront offenders with what leads to their criminal behaviour and to help them address it. In 2008 he completed the Core Sexual Offenders Treatment Programme (CSOTP). This is a sustained course consisting of some 90 sessions at the rate of three or four per week over a period of six to eight months. Targeted specifically at sexual offending, it is designed to challenge thinking patterns which lead to sex offending and to the offenders justification for it, to help prisoners to see things from the perspective of the victim, and to devise strategies to avoid being in positions of temptation in future. In July 2008 a long psychologists report (Structured Assessement of Risk and Need or SARN) recorded the position after this work had been done. The author was able to identify some encouraging signs. Robinson had begun to see the possible relevance of his own childhood abuse when in care as a teenager, although he described it as affectionate. He was able to suggest not offering to drive teenagers as a way of avoiding temptation. He said that he was now aware of the harm his conduct had caused and that he now realised that he was not in a relationship with his victim, since they were too young. He appeared to have made some progress in self esteem and in recognising his strong desire for intimacy. His behaviour in prison was generally good. On the other hand, there was considerable cause for concern. Although at the conclusion of the CSOTP, his scores on assessment of child abuse supportive 77. beliefs had been adjudged to be below the threshold for treatment, the psychologist found that he continued to harbour such beliefs; for example he believed that whereas rape was a sexual offence, other offences contain more affection and care. He was deeply suspicious of those trying to help him; he reported them as twisting what he said and he said that he would be very wary of any further such course. He remained very angry about the social workers who had dealt with his daughter and offered such resentment as a justification for some of his offences. While he said that the cause of his offending was inability to relate to adults, his history demonstrated that he was adept at gaining the confidence of the parents whose children he abused. Manipulative behaviour and his sense of grievance were reported to have impeded his progress. He continued to deny the more serious offences, and for that matter all or some of the arson offences. The wing staff reported a tendency to manipulative behaviour, surreptitiously encouraging others to complain. The various risk measurement tests applied to him all concluded that the risk to the public remained high. 78. This report concluded with the recommendation that there should be a full psychopathy assessment (PCL R) and that, so long as that did not provide contra indications, he was suitable for the extended sexual offences treatment programme (ESOTP). This latter course is designed for only nine prisoners at a time. It lasts for about six months and involves 74 sessions plus some individual work, at roughly three per week. Each such course needs a staff of four, one supervisor who must be a chartered psychologist, plus three facilitators (officers, group workers or forensic psychologists in training and preferably a mixture of disciplines). Each such team can deliver only one such course per year, no doubt because of the members other commitments. The ESOTP can be provided at only a limited number of prisons specialising in sexual offenders; the judgment of the Divisional Court records at para 7 that over the relevant period it was available at some ten such prisons. 79. The recommendation for consideration of an ESOTP was consistent with published Prison Service indicia of the courses which are likely to be suitable for different prisoners. The prison service runs a variety of programmes for sexual offenders. They include, as well as the CSOTP, a Rolling Sexual Offenders Treatment Programme (for those presenting mild risk), Becoming New Me, Better Lives Booster, Healthy Sexual Functioning (now replaced by the Healthy Sex Programme), Adapted Better Lives Booster (for those with intellectual difficulties), and the ESOTP. Reference to the ESOTP may be justified, inter alia, by an assessment of high or very high risk and, more particularly, by severe grievance thinking, severe sexual entitlement thinking and severe lack of intimacy. Robinson fitted those criteria, although less obviously others, and, since the risk remained after completion of the CSOTP, ESOTP was a justified suggestion. There was and is a substantial waiting list for the ESOTP, as also for other programmes. Apart from life or IPP prisoners, there are numbers of determinate sentence sexual offenders, who are likewise recommended for this programme in the hope that they will not present an unacceptable risk to the public when their release is mandatory, under the Criminal Justice Act 2003, at the half way stage in their sentences. The ESOTP in particular is clearly very resource intensive. 80. Robinson was moved to HMP Whatton, which specialises in sexual offenders, in February 2010. The PCL R psychopathy test, involving nine hours of interviews, was conducted in February/March 2011. Although he was showing limited signs of accepting that the children were victims, the assessment of him was not encouraging. He was found to see himself as a victim, the manipulative behaviour was noted, and he was recorded as asserting that he had not harmed the children but was only seeking a relationship with them. Nevertheless, the foregoing apart, he did not display psychopathic traits; he was comparatively controlled and his offences were planned rather than impulsive. There was no psychopathy based obstacle to participation in the ESOTP. A final assessment of suitability for the ESOTP followed in April 2012, undertaken by the Deputy Treatment Manager for the programme. She pointed out that the ESOTP would not address his sexual interest in teenage girls, but could and would target his feelings of inadequacy, his lack of adult relationships and his marked distrust of others. She observed that he might yet need also a Healthy Sexual Functioning course, which does directly address unsuitable sexual interests. In the end, an ESOTP became available for him only in July 2013, when he was specially transferred to HMP Risley which could provide it earlier than HMP Whatton. By this time, his minimum term of seven years had recently expired in December 2012. 81. The evidence from HMP Whatton, the specialist prison for sexual offenders, makes it clear that the delay was caused by excess of demand over supply. The prison authorities were operating on a budget set by the Ministry in a time of general national financial stringency, although course provision targeted at sexual offending cost just under 1m per year at that prison alone. They were obliged to prioritise amongst those who had been assessed as suitable for the ESOTP. As between them, priority was given to those who were determinate sentence prisoners within six months of release and to those longest past the end of their minimum terms. 82. The Divisional Court examined the national evidence relating to the availability of the ESOTP. It concluded that there was overall under provision of this course and accordingly a breach of the Secretary of States public law duty. There was no appeal against that finding, which must be accepted. It is not, however, to be taken as meaning that the Secretary of State is under an obligation to provide an ESOTP to every prisoner for whom it may be suggested, and the court said no such thing. Nor does it mean that the court took the view that, assuming that James v UK fell to be applied rather than R (James), there had been the kind of breach of article 5 which the Strasbourg court identified; on the contrary, the Divisional Court specifically adverted to the opportunities which Robinson had had to demonstrate his safety and rejected the assertion of breach of article 5. 83. Accepting that there was a national shortfall in the provision of ESOTP courses, the question under article 5 remains: did the Secretary of State afford Robinson a reasonable opportunity to reform himself and to demonstrate to the Parole Board, by the time of tariff expiry or within a reasonable time thereafter, that he no longer presented an unacceptable risk to the public? On the answer to this question, different members of the court take different views, which are therefore set out in separate judgments. Outcome 84. In the result, the appeals of Haney and Massey should be allowed, and there should be awards of 500 for Haney and of 600 for Massey, reflecting in each case the inference of justifiable frustration and anxiety. The appeals of Kaiyam and, and in the light of the opinion of the majority set out in their separate judgment, of Robinson must be dismissed. The findings in the two cases of Haney and Massey of breach of the duty ancillary to article 5 are a further regrettable consequence of the manner in which the seriously flawed system of Imprisonment for Public Protection came to be introduced without sufficient funding to cope with it. It was a system subsequently reformed and it has since been altogether removed from the sentencing regime provided by statute for courts charged with the trial of criminal cases. LORD HUGHES: (with whom Lord Neuberger, Lord Toulson and Lord Hodge agree) 85. This separate judgment addresses the appropriate disposition of appeal by Robinson, the one matter left outstanding by the main judgment delivered by Lord Mance and Lord Hughes. The facts have been set out in paras 70 83 of the main judgment. The critical question identified in para 83 is whether the Secretary of State afforded Robinson a reasonable opportunity to reform himself and to demonstrate to the Parole Board, by the time of tariff expiry or within a reasonable time thereafter, that he no longer presented an unacceptable risk to the public. This critical question must not be transmuted into the different question, namely did the Secretary of State make reasonable provision for a particular course which might have been relevant to Robinson? Once the right question is identified, the answer given by the Divisional Court is plainly correct. It should in passing be made clear that the Divisional Court was not basing its conclusion upon doubts about what was meant in James v UK by characterising the detention as arbitrary. On the contrary, it was assuming for the sake of addressing the question that in the particular sense there used the detention would be arbitrary if a breach of the duty there identified was established, and it was contrasting the kind of wholesale failing found in James with the kind of delays identified in the cases before it. 86. The breach of the ancillary obligation under article 5, which the Strasbourg court identified in James v UK involved a wholesale failure to address rehabilitation. It was of a quite different order from the complaint made by Robinson. Whereas the prisoners James, Lee and Wells in James v UK were left for a long time to languish in local prisons with no sentence planning and no rehabilitative work at all, no little effort was made with Robinson, who was provided with successive courses and had ample opportunity to change himself and to demonstrate that he was no longer a predatory sexual offender. The ETS and CSOTP courses with which he was provided supplied ample reasonable opportunity to do so. The latter in particular lasted six months or more and involved three or four sessions per week. Unfortunately, what was demonstrated was that Robinson remained a serious risk, since the initial scores for child abuse supportive beliefs proved false positives, and he remained manipulative, mistrustful and denying his principal offences, seeing himself as the real victim It was contended on behalf of Robinson that the Parole Board had recommended an ESOTP in March 2010 and again in December 2012. As a matter of accuracy, on neither occasion did it do so, although on both occasions it recorded the extant proposal for such a course which had been made within the Prison Service. The Parole Board decision of March 2010 was that Robinson was not suitable for transfer to an open prison. It included the following: 87. There are a number of risk assessments in the dossier. OGRS 3 assesses the risk of reconviction as 14% at 12 months and 25% at 24 months. OASys assesses the risk of general and violent offending as low with a very high risk of harm to children in the community. RM2000 assesses Mr Robinson as posing a very high risk of sexual reconviction and the SARN concluded that he has a high level of dynamic risk as a result of having strongly characteristic risk factors in the sexual interests, offence supportive attitudes and relationship domains. Specific risk factors include having offence related sexual interests, child abuse supportive beliefs, suspicious, angry and vengeful attitudes and not having an intimate relationship. Mr Robinson's dossier states that he is a standard prisoner on the IEP, although for much of his sentence he has been enhanced. He has completed ETS and the core SOTP, although the latter was on the basis of admissions to previous convictions. Mr Robinson maintains his innocence of the index offences, stating that he was set up by the Police. The post programme report from the SOTP indicates that some progress was made but the report writer notes that Mr Robinson could be manipulative in a group, still held child abuse supportive beliefs and that his suspicious thinking (against staff) had impacted upon his development. It was recommended that Mr Robinson complete the ESOTP in order to address his interest in pubescent girls and that a full psychopathy assessment be completed. The panel noted that whilst he is willing to do further offending behaviour work, denial of the index offences may make it difficult to transfer Mr Robinson to an appropriate establishment to undertake ESOTP and that as a result completion of this sentence plan target remains extant. 88. The Boards written reasons were duly sent to Robinson by the Secretary of State who added that the next reference to the Board would be shortly before tariff expiry, to allow for completion of the ESOTP if assessed as suitable and a full psychopathy assessment [and] to further assess your outstanding risk factors. That was by no means to make completion of the ESOTP a condition of future consideration of release, still less to lay down a timetable for it, as was done in the case of Massey. If a case were to arise in which the Parole Board made it, in effect, a condition of consideration for release that a particular piece of behavioural work be undertaken, that would no doubt be relevant to the question of whether the prisoner was thereafter afforded a reasonable opportunity to rehabilitate himself and to demonstrate absence of risk. Even then, such a Parole Board decision would not mean that the prisoner had not had reasonable opportunity before then, nor would it necessarily justify prioritising that prisoner over others for scarce resource intensive courses. However, this was not in any event Robinsons case. 90. There is a great danger, in considering Robinsons case, of classifying the ESOTP as the acid test by which alone he could demonstrate his safety for release. Even if it were, it would not mean that he had not had reasonable opportunity to demonstrate this already. But it was not. The fact that the psychological recommendation that Robinson should take part in this programme did not have spoken conditions attached to it, does not mean that it was the only way in which he could demonstrate his safety. It was in fact neither a necessary nor a sufficient means of doing so. It was not sufficient since it is not designed to address the offenders sexual interest in pre pubescent girls; even if made available, it would have been only part of the possible programmes which Robinson might have needed in the absence of his accepting that his behaviour, which he continued to characterise as innocent victimhood, was in fact a considerable danger to children, and in the absence of his recognition that it needed to alter. It was not necessary, because by this time he had had ample confrontation with his failings, and if he had recognised them and shown real willingness to change, for example in the course of the nine hours of interviews for the PCL R assessment, then there may well have been no occasion for six months of ESOTP work. 91. The concomitant danger lies in treating Robinsons case as if the ancillary duty under article 5 involves a positive duty on the prison service in England and Wales to furnish an ESOTP course. That is not the law, and there is nothing in James v UK which entitles any court to go so far. Indeed, if it were, it would presumably follow that any other European country which imposes any form of indefinite sentence would be under a similar duty to provide either it or its equivalent. The responsibility for deciding what form of rehabilitative assistance is to be afforded to the prisoner must rest with the individual State, providing that the minimum standard is met of a reasonable opportunity to him to demonstrate his safety. The availability of limited resources, particularly at a time of the kind of national financial stringency which characterised the years of delay in Robinsons case (2008 2013) is an unavoidable factor. The Core Sex Offenders Treatment Programme (CSOTP) administered in the prisons of England and Wales is of considerable intensity and makes extensive psychological demands on those offenders who take part in it. It is very likely that if it stood by itself it would meet the duty contemplated by James v UK and even more likely that it would do so if coupled, as it is, with the EST, BLB, HSP and other programmes, which are available. There is no legal obligation to provide an ESOTP course in the first place. It is simply one possible way of tackling recalcitrant attitudes in some prisoners and a welcome arrow in the quiver for the case of those who prove very difficult to change. To hold that a delay (including an unacceptable delay) in providing it constitutes a breach of article 5, via the ancillary duty recognised, would be likely to have the perverse effect of discouraging the prison service from providing it at all, and/or of discouraging recommendations for courses unless and until they are known to be shortly available, and/or of discouraging the prison service from devising and suggesting new forms of programme, especially if they are extremely expensive, as clearly the ESOTP is. All these effects would be an impediment to individualised prisoner assessment and management, and to eventual rehabilitation of those for whom it is possible. 92. Coursework is important and may succeed, but it holds no guarantees. In order for Robinsons article 5 ancillary duty claim to succeed, that duty would have to go beyond the duty to afford an indeterminate prisoner a reasonable opportunity to reform himself and to demonstrate, by or within a reasonable time after tariff expiry, that he is no longer a danger. It would have to be a duty to provide, or at least to take reasonable steps to provide, within such time frame, any specific coursework for which the prisoner has been judged eligible. That is not the content of the duty. 93. This conclusion is illuminated by the decision of the ECtHR in Hall v UK (Application No 24712/12, referred to at para 42 above). Like Robinson, Hall had completed the ETS and then the CSOTP courses but remained a risk and was recommended for further work in the form of the ESOTP. Halls recommendation was in March 2008, and he experienced the same unavailability as did Robinson, at much the same time and doubtless for the same reasons. The delay in finding a place on the ESOTP in Halls case was certainly not as long as it was in the case of Robinson, but the delay has to be put in the context of his tariff, which at 30 months, was less than a third as long as Robinsons. Halls was a plainer case, as the threshold decision of inadmissibility by the Strasbourg court demonstrates. He had undertaken some other courses, which Robinson had not, such as victim awareness and alcohol awareness and when, after the ESOTP, concerns remained, he had been provided with the Better Lives Booster. But the essential point is that the court was satisfied that he had (beyond argument) been provided with a reasonable opportunity to rehabilitate himself by courses throughout his detention, and this despite the delay in finding space on the ESOTP for some eighteen months after it was recommended, which had had the result that he was not able to complete it until he had served more than a year beyond his tariff of 30 months, that is to say getting on for half as long again (see para 33). Lord Mance 94. I have the misfortune to differ from Lord Hughes and the majority on the disposition of Robinsons appeal. The basic facts are set out in paras 71 83 of the joint judgment written with Lord Hughes. The test is whether Robinson was supplied with a reasonable opportunity to demonstrate that he was no longer a risk. It was of the nature of his offending that he received a sentence involving a relatively long tariff period which expired on 10 December 2012. It was of the nature of his character and propensities that, despite some encouraging signs, he remained in identified respects a high risk after completing the CSOTP in 2008. The psychologists report dated 9 July 2008 made a recommendation in the body of her report, that a full psychopathy assessment [PCL R] is competed prior to Mr Robinson undertaking any further treatment (para 4.6), but ended the report with unqualified recommendations and a conclusion dealing exclusively with the ESOTP as follows: 95. 7. Recommendations for continued risk management My recommendations are as follows: To successfully complete the Extended SOTP in order to address outstanding treatment needs in offence supportive attitudes and suspicious thinking and provide further opportunities to develop his intimacy skills. Upon completion of this, to re assess the extent of Mr Robinsons suspicious thinking and the appropriateness of further treatment for his sexual interest in pubescent girls. Conclusion: I recommend that Mr Robinson is moved to an establishment where he can access the Extended SOTP and continue working on his risk factors for future sexual offending. The psychologists combined recommendations that Robinson undertake a PCL R followed by an ESOTP were both therefore unconditional. 96. The Administrative Court further found (para 6) that The ESOTP became a formal sentence objective by at least February 2009. The psychologists recommendation was referred to without demur in the Parole Boards reports dated 31 March 2010 and 8 November 2012, the latter confirming expressly that it is acknowledged that all parties accept ESOTP to be necessary. 97. The Administrative Court further noted that ESOTP courses are courses which many sex offenders serving an IPP need to complete before they can have any realistic prospect of demonstrating to the Parole Board that they are safe for release. (para 59) This is borne out by the Ministry of Justices publication Suitability for Accredited Interventions (June 2010), which tabulates such a course as a requirement for all high or very high risk offenders, as well as for one category of medium risk offender with three or four domains of strong treatment need (p 42). It adds (p 43): Some offenders, particularly high risk offenders, are likely to attend more than one SOTP so that their combination of dynamic risk factors can be fully addressed. (Eg a high risk offender with both offence supportive attitudes and grievance thinking would likely need to attend both Core and Extended SOTPs). 99. 98. The Administrative Court had no hesitation about finding the Secretary of State in breach of the public law duty accepted in R (James). As Lord Hope there said, it was and is implicit in the legislative scheme for IPPs that the Secretary of State would make provision which allowed IPP prisoners a reasonable opportunity to demonstrate to the Parole Board that they should be released, and that, on the facts of those cases, he failed deplorably in that public law duty in that he failed to provide the systems and resources that prisoners serving those sentences needed to demonstrate to the Parole Board by the time of the expiry of their tariff periods, or reasonably soon thereafter, that it was no longer necessary for the protection of the public that they should remain in detention: [2010] 1 AC 553, para 3. In summary, a legislative scheme like that for IPPs must allow a reasonable opportunity to demonstrate safety, and must be accompanied by reasonable systems and resources to enable offenders to change and develop so as to be able to demonstrate that they are now safe and to achieve release by the tariff expiry date or reasonably soon thereafter. I stress the word reasonable, since it is clear that a realistic and flexible approach should be taken regarding prison resources and the specialist, time intensive and costly nature of some courses provided in prison: see also paras 100 101 below. But, as an element of this duty, there should in my opinion be a reasonable degree of access for IPP prisoners to the ESOTPs which many prisoners will need before they can hope to show that they are now safe. That is the consequence of the scheme itself, under which it was otherwise inevitable (and entirely predictable) that prisoners would (as has happened) languish in gaol long after the tariff periods set by reference to the seriousness of their actual offending. It is a consequence of the rehabilitative purpose which must in this context be accepted as having always attached in the light of the provisions of the ECHR to an IPP sentence: see paras 205 209 of the European Court of Human Rights judgment in James v UK, as well as paras 7 and 36 above. 100. The European Court of Human Rights further observed in James v UK, para 194 that: for reasons linked to the efficient management of public funds, a certain friction between available and required treatment and facilities is inevitable and must be regarded as acceptable and a reasonable balance must be struck between the competing interests involved. But it added that in striking this balance, particular weight should be given to the applicants right to liberty, bearing in mind that a significant delay in access to treatment is likely to result in a prolongation of the detention and noted that in Brand v The Netherlands (Application No 49902/99) (11 May 2004) the court had held (para 66) that even a delay of six months in the admission of the applicant to a custodial clinic could not be regarded as acceptable in the absence of evidence of an exceptional and unforeseen situation on the part of the authorities. 101. In the present case, the Administrative Court also noted that the public law duty was only to make reasonable provision of services and resources for the relevant purpose and was not an absolute one (para 55). It went on: 59. It is clear from the factual circumstances of the claimants' own cases, and from the general evidence we have summarised concerning systems and resources, that a serious problem still exists in relation to the provision of ESOTP courses which many sex offenders serving an IPP need to complete before they can have any realistic prospect of demonstrating to the Parole Board that they are safe for release. The delays experienced by these two claimants are troubling in themselves. Despite pressure over a lengthy period, neither claimant managed to get admitted to an ESOTP course until after the expiry of his tariff period (in Mr Massey's case, almost three years after its expiry); and since, after completion of the course, each of them has to wait for a substantial further period until their next Parole Board review, their first reasonable opportunity to demonstrate to the Parole Board that they are safe to be released will come long after the expiry of their tariffs. 60. It is clear that the claimants' experience is far from exceptional. The evidence summarised at paras 34ff. above shows that the number of IPP prisoners with a requirement for an ESOTP greatly exceeds the number of placements available on ESOTP courses and that many such prisoners are failing to get onto courses until after the expiry of their tariff periods. In some cases the delay can no doubt be explained by reasons specific to the individual prisoner, but the under provision of courses appears to us to be the primary reason for delay and to be accurately described as a systemic problem. Nor is there any immediate prospect of improvement. On the contrary, we have noted at para 45 above that at HMP Whatton demand for places on ESOTP courses is set to rise as the provision of places has fallen. 61. We understand the tight financial situation across the entire prison estate and the difficulty of allocating limited resources between a range of competing demands. But the duty is to make reasonable provision, and that duty plainly requires sufficient resources to be made available for its fulfilment. 62. In conclusion, we are satisfied that there is a continuing failure on the part of the Secretary of State to make reasonable provision of systems and resources, specifically the reasonable provision of ESOTP courses, for the purpose of allowing IPP prisoners a reasonable opportunity to demonstrate to the Parole Board, by the time of the expiry of their tariff periods or reasonably soon thereafter, that they are safe to be released. In this respect the Secretary of State is in continuing breach of the R (James) public law duty. 102. When it came to considering whether there had been a breach of article 5, the Administrative Court was in an odd position. The European Court of Human Rights had in James v UK disagreed with the reasoning and conclusions of the House of Lords in R (James), but the Administrative Court remained bound by R (James) and, moreover, the European Courts own reasoning, based on arbitrariness and consequent unlawfulness, presented obvious problems, which have been addressed in the main judgment written by Lord Hughes and myself. 103. In these circumstances, the Administrative Court reasoned as follows: 78. We have held in relation to issue (1) that the Secretary of State is in continuing breach of the R (James) public law duty. That breach, however, is less serious than the deplorable default that was of such concern to the House of Lords in R (James). Yet even the factual circumstances under consideration in R (James) were regarded by the House of Lords as falling far short of a situation rendering continued detention arbitrary and unlawful under article 5(1). Thus, applying the approach laid down by the House of Lords, it is clear that the circumstances of the present case come nowhere near to rendering the claimants' continued detention arbitrary for the purposes of article 5(1). 79. Although the ECtHR in R (James) (Strasbourg) differed from the House of Lords in finding arbitrariness on the facts of that case, the default in the present case is again less serious. The ECtHR laid stress on the complete failure to progress the applicants through the prison system with a view to providing them with access to appropriate rehabilitative courses. In the case of each of the present claimants, by contrast, a great deal was done to progress them through the system and to provide them with access to appropriate rehabilitative courses. The one real failure was in providing them with timely access to the ESOTP. Whilst that was an important failure, given the practical importance of the ESOTP for their ability to satisfy the Parole Board of their safety for release, it was in our judgment insufficient to render their detention arbitrary even on the approach that the ECtHR took in applying the concept of arbitrariness in R (James) (Strasbourg). 104. The first paragraph, loyally applying R (James), cannot stand in the light of our judgment on the present appeal. The second paragraph appears, clearly and not surprisingly, to have been influenced by the oddity in the present context of reasoning based on arbitrary detention, which, again in the light of our judgment on this appeal, is no longer an issue. 105. In reality, a conclusion that there was no breach of the ancillary duty which we have identified in our judgment on this appeal, cannot stand with a finding clearly correct on the facts of this case that the Secretary of State was in breach of the public law duty to make reasonable provision of systems and resources for the purpose of allowing not merely Massey, but also Robinson a reasonable opportunity to demonstrate to the Parole Board, by the time of the expiry of his tariff period on 10 December 2012 or reasonably soon thereafter that he was safe to be released: see para 62 of the Administrative Courts judgment, quoted above. 106. The majority disagree with this conclusion, and in para 91 (above) advance the following propositions: (a) There is no legal obligation to provide an ESOTP course in the first place; (c) (b) if [there] were, it would presumably follow that any other European country which imposes any form of indefinite sentence would be under a similar duty to provide either it or its equivalent; to hold that a delay in providing it constitutes a breach of article 5, via the ancillary duty recognised, would be likely to have the perverse effect of discouraging the prison service from providing it at all, and/or of discouraging recommendations for courses and/or of discouraging the prison service from devising and suggesting new forms of programme, especially if they are extremely expensive. 107. As to these propositions: (a) No one suggests that there is an absolute obligation to provide an ESOTP course. But it may be identified as appropriate in a particular case by psychiatric or other professionals and then be required in conjunction with a system of indefinite detention which would otherwise mean that a particular prisoner would remain in gaol long past the expiry of his or her tariff date, without hope of release, perhaps for ever. I do not see how a contrary proposition is reconcilable with the ECtHRs approach in James v UK and much other Strasbourg authority, including Hall v UK. Quite apart from this, since the prison service in fact operates a system which provides and holds out the prospect of undertaking ESOTP courses as part of a process of promoting progress towards release, it seems to me incumbent on the state to resource and operate it efficiently, in a way which enables all prisoners who prison service professionals conclude should have such a course to have a fair opportunity of undertaking one within a reasonable time frame. (b) This proposition assumes information about other European countries, which we do not have. It is commonly believed that British sentencing is comparatively more rigorous that that in most other European countries, though that must for present purposes also be regarded as an anecdotal statement. For all that we know, indefinite detention may be a rarity the English experience certainly suggests that other European countries might have been wise to avoid it. Those like Germany (and I believe Austria and Switzerland) which do have a form of indefinite detention (Sicherungsverwahrung) which has at least in its original form, also occupied the time of the ECtHR may well have equivalent courses to ESOTP. We cannot assume the contrary. (c) This is another proposition which I regard as speculative. I question how many of the psychiatrists and other professionals and staff who work in our prison service think in this way. If they do, there may well also be incentives in the form of prisoners ability to complain to the ECtHR if they are detained indefinitely without access to courses which would very likely be required if they are to progress through the system towards release. 108. Turning to the facts of this particular case, as the Administrative Court noted in para 31, and adverted to again in para 59, also quoted above, the successful completion of an ESOTP programme would not itself lead to release. Before any question of release, there would need to be further work, which the Secretary of State in a programme set in April 2012 put as lasting a further 16 months. 109. In the upshot, Robinson only commenced an ESOTP in July 2013, some eight months after expiry of his tariff, the ESOTP would last for some six months, and then he would have to do further work lasting around 16 months. His release was not going to occur for around two and a half years after the expiry of his seven year tariff period. In my opinion, that involved a breach of the ancillary duty. It was far in excess of any delay arising from the inevitable and acceptable friction between available and required treatment which the European Court of Human Rights acknowledged would also exist in James v UK, para 194. This is clear both from the Administrative Courts conclusions on breach of the public law duty in this case and from the European Court of Human Rights reference to Brand v The Netherlands in James v UK, para 194. 110. Each case must turn on its own facts, and the case of Hall v UK, cited by Lord Hughes, involved shorter delays with regard to the provision of an ESOTP, a delay of at most about 18 months from March 2008 when an ESOTP was identified as appropriate to some time, probably, in autumn 2009 when the six to eight month course must have been commenced (judgment, paras 8 and 13). The applicants detention had been coupled over the course of the time spent in detention with regular access to a wide range of courses designed to assist him in addressing his offending behaviour and demonstrating a reduction of his risk to the satisfaction of the Parole Board (Hall v UK, para 33) and it had also been complicated by a continuing series of minor offences committed in prison (Hall v UK, paras 7, 18 and 19). 111. In my opinion, therefore, Robinson is entitled to succeed in his complaint about delays in the Secretary of States performance of the ancillary duty which we have recognised and so to recover a modest award of damages, of at least the same amount as, and probably higher than, Haney has received, to compensate for the inevitable frustration and anxiety which he thereby suffered. 89. The strongest part of Robinsons claim under article 5 is no doubt the passage of time after the psychologists report of July 2008 before the ESOTP was begun in July 2013. But given that his tariff was not due to expire until December 2012, there could have been very little complaint before at least the Secretary of State recognised the course as an objective in August 2010, and perhaps not until well after that. Moreover in the meantime, in March 2011, still well before the expiry of his tariff, there had been the further detailed PCL R sessions. These were of course principally assessment rather than therapy, but they provided ample opportunity over nine hours to demonstrate that there had been a change, or at least encouraging understanding of the true nature of what he had done. Sadly, what those sessions revealed was that he still saw himself as the victim, denied his principal offences, believed that he had not harmed any of the children and remained manipulative. There could be no clearer demonstration of the risk he continued to present. There has certainly been considerably greater delay in putting him onto the even more intensive ESOTP than one would choose to see in an ideal prison management system, but that is not the same as saying that he has not had a fair opportunity to reform himself or to demonstrate that he is no longer a danger. Despite the delay he was able to begin the ESOTP quite shortly after the expiry of his tariff. |
This appeal raises significant issues regarding the procedures whereby, firstly, magistrates may issue warrants to enter and search premises and seize property under section 8 of the Police and Criminal Evidence Act 1984 (PACE), secondly, Crown courts may, under section 59 of the Criminal Justice and Police Act 2001 (CJPA), order the retention by the police of unlawfully seized material on the grounds that, if returned, the material would be immediately susceptible to lawful seizure and, thirdly persons affected may challenge such decisions by judicial review. Central to the issues is whether the relevant judicial authorities are, under the principle in Al Rawi v Security Service [2011] UKSC 34; [2012] 1 AC 531 and in the absence of express Parliamentary authorisation to conduct a closed material procedure, precluded at each or any of these stages from having regard to information which, on public interest grounds, cannot be disclosed to any person affected who wishes to challenge the warrant or any seizure or order for retention under section 59. warrant: Section 8 of PACE sets out conditions for obtaining a search and seizure that an indictable offence has been committed; (1) If on an application made by a constable a justice of the peace is satisfied that there are reasonable grounds for believing (a) and (b) that there is material on premises which is likely to be of substantial value (whether by itself or together with other material) to the investigation of the offence; and (c) and that the material is likely to be relevant evidence; (d) that it does not consist of or include items subject to legal privilege, excluded material or special procedure material; and (e) (3) below applies, that any of the conditions specified in subsection he may issue a warrant authorising a constable to enter and search the premises . (3) The conditions mentioned in subsection (1)(e) above are that it is not practicable to communicate with any (a) person entitled to grant entry to the premises; (b) that it is practicable to communicate with a person entitled to grant entry to the premises but it is not practicable to communicate with any person entitled to grant access to the evidence; (c) unless a warrant is produced; that the purpose of a search may be frustrated or (d) seriously prejudiced unless a constable arriving at the premises can secure immediate entry to them. that entry to the premises will not be granted (1) This section and section 16 below have effect in relation to the issue to constables under any enactment, including an enactment contained in an Act passed after this Act, of warrants to enter and search premises; and an entry on or search of premises under a warrant is unlawful unless it complies with this section and section 16 below. Section 15 of PACE contains safeguards relating to the procedure for obtaining such a warrant: (2) Where a constable applies for any such warrant, it shall be his duty (a) the ground on which he makes the the enactment under which the warrant to state (i) application; (ii) would be issued; and (iii) if the application is for a warrant authorising entry and search on more than one occasion, the ground on which he applies for such a warrant, and whether he seeks a warrant authorising an unlimited number of entries, or (if not) the maximum number of entries desired; to specify the matters set out in subsection (2A) to identify, so far as is practicable, the articles or (b) below; and (c) persons to be sought. (2A) The matters which must be specified pursuant to subsection (2)(b) above are (a) if the application relates to one or more sets of premises specified in the application, each set of premises which it is desired to enter and search; (b) if the application relates to any premises occupied or controlled by a person specified in the application as many sets of premises which it is (i) desired to enter and search as it is reasonably practicable to specify; (ii) the person who is in occupation or control of those premises and any others which it is desired to enter and search; (iii) why it is necessary to search more premises than those specified under sub paragraph (i); and (iv) why it is not reasonably practicable to specify all the premises which it is desired to enter and search. (3) An application for such a warrant shall be made ex parte and supported by an information in writing. (4) The constable shall answer on oath any question that the justice of the peace or judge hearing the application asks him. (5) A warrant shall authorise an entry on one occasion only unless it specifies that it authorises multiple entries. Section 59 of the CJPA provides for circumstances where property seized under a warrant or purported warrant would otherwise fall to be returned as for example where the search and seizure warrant was for some reason invalid but where, if the property were returned, it would immediately become appropriate to issue a fresh warrant in pursuance of which it would be lawful to seize the property. Section 59 provides that in such circumstances the court may order the retention of the property seized. Factual background The appeal arises from the issue on 16 June 2014 by St Albans Magistrates Court (JL Grimsey JP) of two search and seizure warrants in respect of London addresses at 22 Leys Gardens, Barnet and Unit 5, Island Blue Ltd, Overbury Road, Harringay (said to be addresses at which the appellant Mr John Haralambous respectively lived and was suspected to have a business interest) and from their execution on 26 June 2014 by entry and seizure of a number of items. The warrants were issued following an ex parte application by the second respondent, the Chief Constable of the Hertfordshire Constabulary, under section 8 of PACE. The appellant was also arrested on 26 June 2014 and bailed. Any further investigation by the police of any matter to which such warrants and arrest related has been suspended pending the outcome of these proceedings. The appellant sought disclosure of, inter alia, the written application for the warrants, and was on 16 September 2014 provided with what the second respondent informed him on 17 September 2014 was a redacted copy. On 18 September 2014 the appellant applied to the St Albans Magistrates Court for an unredacted version, relying on the procedure in Commissioner of Police of the Metropolis v Bangs [2014] EWHC 546 (Admin). The application was heard in the Luton Magistrates Court on 23 September by District Judge Mellanby. The appellant was provided from the courts file with JL Grimseys written statement dated 16 June 2014 of reasons for issuing the warrants, namely because of the substantial evidence that linked all the subjects together and the addresses, and was informed that the evidence, which was being withheld, consisted of two closely typed pages. On 25 September 2014 District Judge Mellanby issued her open reasons for refusing the application for disclosure of the redacted and withheld information, and on the next day she handed the second respondent a closed judgment. By a first judicial review claim issued on 26 September 2014 (CO/4505/2014), the appellant sought return of the material seized on 26 June 2014 on the basis that the warrants, entries, searches and seizures, were unlawful for a range of reasons. These included alleged deficiencies in the terms in which the application could be seen to have been expressed. They also included the appellants central contention that the information disclosed to him showed no basis on which lawful search warrants could have been issued, and that it had not been and was not permissible for reliance to be placed on the withheld information. By a consent order signed on 27 March and sealed on 6 May 2015, the second respondent agreed that the warrants should be quashed. Prior to so doing the second respondent on 23 March 2015 served a protective application for retention of the seized material under section 59 of the CJPA. On 9 June 2015 HHJ Bright QC sitting in the St Albans Crown Court ruled that the second respondent was entitled to rely on the withheld information in support of its section 59 application, and on 11 June 2015, in the light of this ruling, the parties agreed and HHJ Bright QC made an order authorising retention of the seized material under section 59. By a second judicial review claim issued on 26 June 2015 (CO/3114/2015), the appellant sought the return of the seized material on the grounds that the section 59 order should be quashed, since it was impermissible to rely on the withheld information in its support. In response to an application by the second respondent for directions to allow the Divisional Court, should it wish, to see the withheld information in an ex parte hearing, the appellant accepted that, if HHJ Bright QC had been entitled to have regard to the withheld information, then the lawfulness of his ruling was not in issue; the only issue was whether he was so entitled; and only if he was not, did the section 59 order fall to be quashed. Collins J on 20 January 2016 left it to the Divisional Court to decide at the hearing whether it should see the withheld information. The Divisional Court decided not to hold an ex parte hearing and that it did not need to consider the withheld information. It gave judgment on 22 April 2016 dismissing the appellants claim for judicial review: [2016] 1 WLR 3073. It held that it was open to a magistrate issuing a search and seizure warrant and a court deciding an application under section 59 to consider material which had in the public interest to be withheld from disclosure. It evidently took the same view in relation to a magistrates court hearing an application for disclosure pursuant to the procedure indicated in Bangs (para 6 above), although it wrongly referred to that procedure as one for challenging the issue or execution of a warrant. It is common ground between the parties before the Supreme Court that magistrates court decisions to issue a search and seizure warrant and Crown Court orders under section 59 are challengeable only by judicial review, which is the means the appellant correctly adopted. Finally, the Divisional Court noted that it had been no part of the argument before it that, if HHJ Bright QC had been correct to decide that the appellant should be denied access to the withheld information, his decision should still be quashed. It referred to R (AHK) v Secretary of State for the Home Department [2012] EWHC 1117 (Admin); [2013] EWHC 1426 (Admin) (Ouseley J) as providing possible support by analogy for a rejection of any such argument. The issues should address five issues, which I can slightly rephrase as follows: In the light of the above, the parties have agreed that the Supreme Court (i) How far can a magistrates court, on an ex parte application for a search and seizure warrant under sections 8 and 15(3) of PACE, rely on information which in the public interest cannot be disclosed to the subject of the warrant? (ii) issued ex parte under sections 8 and 15(3) of PACE: In proceedings for judicial review of the legality of a search warrant, (a) is it permissible for the High Court to have regard to evidence (upon which the warrant was issued) which is not disclosed to the subject of the warrant? (b) If a magistrates court is permitted to consider evidence not disclosable to the subject of the warrant, but the High Court is not, does it follow that the warrant must be quashed in circumstances where the disclosable evidence is insufficient, on its own, to justify the warrant? (iii) Is there jurisdiction in a Crown Court to rely on evidence not disclosable to the subject of the warrant in an application made inter partes to retain unlawfully seized material under section 59 of the CJPA? (iv) In proceedings for judicial review of an order, made inter partes, for retention of unlawfully seized material under section 59 of the CJPA, is it permissible for the High Court to have regard to evidence (upon which the warrant was issued) which is not disclosed to the subject of the warrant? (v) Do the principles concerning irreducible minimum disclosure apply to proceedings concerning search warrants? The assumption behind these questions is that no express Parliamentary authorisation exists for the operation of a closed material procedure at any stage. The appellants case was that the Justice and Security Act 2013 has no application, because proceedings relating to a search warrant or under section 59 of the CJPA are criminal in nature, not civil. The second respondent took no issue with this, but the Secretary of State for the Home Department as intervener suggested an alternative basis on which the 2013 Act would not apply (namely that it applies only where disclosure would be damaging to the interests of national security). No detailed submissions were addressed to these points, and the Court is content simply to proceed on the basis of the common ground that, for one reason or another, the 2013 Act does not apply. In the absence of any such express statutory authorisation, the appellants submission is that the common law principle in Al Rawi applies to preclude any form of closed material procedure. Although the agreed issues refer to the person who is the subject of the warrant, this does not reflect the actual language or effect of sections 8 and 15 of PACE. The subject of any warrant under those sections is premises, falling into one of two categories. The first category consists of specific premises, specified in the application. The present warrants fall into that category. The second category consists of any premises occupied or controlled by a person specified in the application. The pre conditions to issue of a warrant set out in section 8(3) also refer to any person entitled to grant entry to the premises as well as to any person entitled to grant access to the evidence who may or may not be the same or different persons. Again that does not mean that the warrant is addressed to any such person. There are, of course, likely to be persons whose interests are affected by the operation of a search and seizure order. Very often they will be persons occupying the relevant premises and in possession of the property seized. Sometimes there may be persons with privacy or confidentiality rights in respect of property seized. But this will not necessarily be the case. A search and seizure warrant may have as its aim and effect to obtain material relating to some third person with no proprietary, possessory or other interest in the material seized at all. The material may assist the investigation, and very possibly provide evidence against the third person. The occupier of the premises or person in possession of the material before its seizure may not make any challenge to the warrant or its execution. It is not clear that the third person would necessarily have any basis for doing so. The appellants primary case, advanced by Mr Mark Summers QC, is that it is not permissible for a magistrate or court, at any of the stages identified in issues (i) to (iv), to have regard to or rely on material which will on public interest grounds have to be withheld from a person affected by the order made. Alternatively, if it is legitimate for a magistrate on a section 8 application and/or a Crown Court judge on a section 59 application to have regard to and rely on material so withheld, there is no basis on which a court can, consistently with Al Rawi, do so on a judicial review challenge to the warrant or the section 59 order. Mr Summers invites the Supreme Court, when considering these issues, to start with the end position as it exists on an application for judicial review. If material has on public interest grounds to be withheld from the applicant then, it cannot, he submits, have been legitimate for it to be deployed at any earlier stage. Finally, if these submissions are not accepted, Mr Summers submits that neither a section 8 nor a section 59 order can withstand challenge by a person affected, unless that person has been supplied with the gist of the information relied upon to obtain it. Mr Martin Chamberlain QC for the second respondent and Mr James Eadie QC for the Secretary of State for the Home Department, as intervener, advance a contrary case at each stage. In their submission, both the magistrate under section 8 and a court under section 59 are entitled to rely on material which will have to be withheld from disclosure to a person affected. A court on judicial review is either entitled to adopt a similar procedure or, if it cannot, must simply assume that the material withheld justified the orders made under section 8 and/or 59. Further, although a search and seizure warrant involves an invasion of private property, the invasion does not, in their submission, equate with the infringements of liberty involved in previous cases, involving for example detention or a control or asset freezing order, where gisting of the substance of the material relied on has been regarded as essential. In considering the issues, Mr Chamberlain and Mr Eadie invite the Court to start with the initial application for a warrant and follow the process through each of the potential subsequent stages. There is in my opinion a logic in this last submission, since it means considering the statutory scheme from the ground up. It also takes the same starting point as the agreed issues. But I agree that it is important to review any conclusions reached about the earlier stages of the process in the light of whatever analysis is adopted of its later stages. Issue (i) the issue of a warrant In order for a magistrate to be able to issue a warrant under section 8(1) read with section 15(3) and (4), all that is required is that he or she be satisfied, from the information contained in the constables application and from the constables answers on oath to any questions put, that there are reasonable grounds for believing the matters set out in section 8(1)(a) to (e). Nothing in the language of these sections suggests that the material giving rise to such grounds must be of any particular nature, or take any particular form, or itself be admissible in evidence at any trial that might be envisaged. In the context of a procedure designed to be operated speedily by a constable at an early stage in a police investigation, that is unsurprising. It is also clear, and common ground, that the statutory scheme of sections 8 and 15 of PACE is designed to operate ex parte. Section 15(3) makes express provision to that effect, and the pre conditions to the operation of the scheme, set out in section 8(3), underline the point. The execution of the warrant for search and seizure may lead to the obtaining of material that may itself either be, or lead in due course to the obtaining of, evidence. Such evidence will only be capable of being deployed at any trial of any person who may be charged with any offence if it is disclosed: R v Davis [2008] AC 1128. But the statutory scheme of sections 8 and 15 operates at a stage preliminary to any trial and before any issue of guilt or innocence is joined with any particular person. The issue and execution of a search and seizure warrant does involve a statutorily authorised invasion and taking by the state of private property. Again not surprisingly, the courts have developed ancillary principles and protections. In R (Cronin) v Sheffield Justices [2002] EWHC 2568 (Admin); [2003] 1 WLR 752, the court addressed a number of issues that had been raised with reference to article 8 of the European Convention on Human Rights, and then noted that a question had also arisen as to whether there was any lawful justification for supplying to a citizen whose home had been entered pursuant to a search warrant a copy of the relevant information on which the warrant was based. As to this, Lord Woolf CJ said (para 29): Information may contain details of an informer which it would be contrary to the public interest to reveal. The information may also contain other statements to which public interest immunity might apply. But, subject to that, if a person who is in the position of this claimant asks perfectly sensibly for a copy of the information, then speaking for myself I can see no objection to a copy of that information being provided. The citizen, in my judgment, should be entitled to be able to assess whether an information contains the material which justifies the issue of a warrant. This information contained the necessary evidence to justify issuing the warrant. In R (Energy Financing Team Ltd) v Bow Street Magistrates Court [2005] EWHC 1626 (Admin); [2006] 1 WLR 1316 (EFT), the court set out ten general conclusions regarding warrants. It described the grant and execution of a search and seizure warrant as a serious infringement of the liberty of the subject, which needs to be clearly justified (para 24(1)). Its last two conclusions were as follows: (9) The remedy which is available to a person or persons affected by a warrant is to seek judicial review. It is an adequate remedy because the statutory provisions have to be read in the light of those articles of the European Convention which are now part of English law. In fact, . if the statutory provisions are satisfied the requirements of article 8 of the Convention will also be satisfied, and at least since the implementation of the Human Rights Act an application for judicial review is not bound to fail if, for example, the applicant cannot show that the Directors decision to seek a warrant in a particular form was irrational, but in deciding whether to grant permission to apply for judicial review the High Court will always bear in mind that the seizure of documents pursuant to a warrant is an investigative step, perhaps best reconsidered either at or even after the trial. (10) Often it may not be appropriate, even after the warrant has been executed, to disclose to the person affected or his legal representatives all of the material laid before the district judge because to do so might alert others or frustrate the purposes of the overall inquiry, but the person affected has a right to be satisfied as to the legality of the procedure which led to the execution of the warrant, and if he or his representatives do ask to see what was laid before the district judge and to be told about what happened at the hearing, there should, so far as possible, be an accommodating response to that request. It is not sufficient to say that the applicant has been adequately protected because discretion has been exercised first by the Director and then by the district judge. In order to respond to the request of an applicant it may be that permission for disclosure has to be sought from an investigating authority abroad, and/or that what was produced or said to the district judge can only be disclosed in an edited form, but judicial control by way of judicial review cannot operate effectively unless the person or persons affected are put in a position to take meaningful advice, and if so advised to seek relief from the court. Furthermore it is no answer to say that there is no general duty of disclosure in proceedings for judicial review. In Gittins v Central Criminal Court [2011] EWHC 131 (Admin), the court had before it claims judicially to review two warrants issued by HHJ Stephens QC on an ex parte application under section 9, read with Schedule 1 paragraph 12 to PACE. The warrants authorised HMRC to search premises occupied by the two claimants and seize documents there. Until the morning of the hearing, HMRC maintained that it could not disclose the information on the basis of which the warrants had been issued, for fear of prejudicing the continuing investigation which was not confined to the claimants. However, on the morning of the hearing HMRC provided a document giving the gist of its case, and a redacted transcript of the hearing before HHJ Stephens QC. Gross LJ made five numbered observations, including these: 27.(2) When an application for judicial review is launched seeking to quash the grant of a search warrant, it is, again, in some respects, akin to the return date for Marevas, Anton Pillers and Restraint Orders. Ordinarily, the expectation will be that the party challenging the grant of the warrant must be entitled to know the basis upon which the warrant was obtained. 28.(3) By their nature, criminal investigations are such that there will be occasions when, for good reason, HMRC (or other authorities as the case may be) will not be able to divulge the full information or the full contents of the discussion before the judge who granted the warrant. There is an important public interest in combating economic crime, and HMRCs proper efforts to do so should not be undermined. 30.(5) Where full disclosure cannot be given (and there will be cases where it cannot be), HMRC should, if at all possible, and again unless there is good reason for not doing so, make available, and in a timely fashion, a redacted copy or at least a note or summary of the information and the hearing before the judge, where appropriate, backed by an affidavit. Davis J addressed the same subject, saying: 77. It must not be overlooked that an order issuing a warrant of the kind sought and granted in this case is, by its very nature, highly intrusive. Hence indeed the stringent pre conditions under the 1984 Act Parliament has stipulated should be fulfilled before such an order may be made. Further, such orders are ordinarily, as here, sought on an ex parte basis: a reversal of course (albeit on well established grounds) of the usual rule that a party is entitled to be heard before any order is granted against him. Those two considerations seem to me to indicate that the prima facie starting point should be for HMRC to give, where requested, to the person who may be aggrieved at the issuing of the warrant and who may wish to challenge it, as much relevant information as practicable, provided it is not prejudicial to the investigation, as to the basis on which the warrant was obtained from the Crown Court. 78. It is of course relatively easy to envisage that there may be many cases where it could indeed be prejudicial to the investigation, prior to any charging decision, to disclose parts of the information and other materials deployed before the Crown Court judge in seeking the warrant. Non disclosure in such circumstances can be justified. In the present case for example, we are told that a 59 page information and three supporting folders of materials were placed before the judge. Those have not thus far, in their full terms, been disclosed to Mr Gittins, and indeed Mr Jones QC did not seek to say they should have been, at all events at this stage. But, to repeat, it is not legitimate to move, without additional justification, from a position whereby it can properly be said that not all the materials placed before the Crown Court judge should be disclosed, to a position whereby it can be said that the recipient of the warrant is to be told nothing at all as to the basis on which the warrant was sought. In my view, therefore, in each case where a request for 79. such information is made by the person the subject of a warrant of the kind made here, HMRC should consider such requests on a individuated basis. Specifically, HMRC should assess what materials and information relied on before the Crown Court can properly be disclosed, with or without editing, and whether by way of summary or otherwise, without prejudicing the criminal investigation. It would be wrong simply to hide behind an asserted general policy as a justification in itself for declining to give any information. Indeed, I suspect that, while there perhaps may be cases where declining to give any information at all may be justified in particular circumstances, such a situation is likely to be an exception. Certainly it should not be taken as a norm. Where such a situation is said by HMRC to arise, then HMRC should be prepared to justify it. It is indeed, as I see it, salutary that that should be so. It is clear (from paras 78 and 79 in particular of his judgment) that Davis J contemplated that there could be put before, and relied on by, the circuit judge information, some or even all of which would have to be withheld on public interest grounds from a person affected by, and wishing by judicial review to challenge, the warrants. In R (Golfrate Property Management Ltd) v Southwark Crown Court [2014] EWHC 840 (Admin); [2014] 2 Cr App R 12, paras 17 18, the court emphasised that a decision to claim on public interest grounds to withhold information placed before a magistrate to obtain a warrant should be taken by a Chief Constable and was required to be sanctioned by the court. Finally, in Bangs (para 6 above), the court held that, where the police were objecting to the disclosure to a person affected of information relied upon before a magistrate to obtain a search and seizure warrant, the magistrates court was not functus officio, and any challenge to the withholding was an issue for the magistrates court (para 28). The court acknowledged that the public interest might demand that some or all of the material relied on to obtain the warrant not be disclosed (para 25). Referring to Bank Mellat v HM Treasury (No 2) [2013] UKSC 38; [2014] AC 700, it also noted that the applicant might have to be excluded from parts, in some cases substantial parts, of the hearing and reasoning given on the disclosure application (para 35). In the authorities cited in paras 15 to 21 above, the procedure, whereby information put before and used by the magistrate is withheld from any person affected, is frequently referred to as a PII (public interest immunity) procedure. Conventionally, a PII procedure exists when a court assesses whether material should be disclosed to the other party, in which case it will be known on all sides, or should in the public interest be withheld from use by anyone, including the court: see Al Rawi v Security Service (para 1 above), paras 100 104; R (British Sky Broadcasting Ltd) v Central Criminal Court [2014] UKSC 17; [2014] AC 885, para 32. The procedure will then include an assessment of the significance of the material in the context of whatever decision is in issue (here, the issue of the warrant) and any challenge to it. However, I understand some of the dicta in the above authorities in a different sense. They contemplate that the magistrate in the case of an ex parte application for a warrant under section 8 of PACE, or the Crown Court judge, in the case of such an ex parte application under section 9 of PACE, will or may have been persuaded by material some, or even all, of which will at the later stage of a claim for disclosure under the principle in Bangs or for judicial review of the issue of the warrant, have to be withheld from the applicant on public interest grounds: see eg EFT, para 10, Gittins, paras 65 66 and Bangs, para 25. The authorities do not directly address the question of what a court hearing a judicial review application can or should do if it appears that the material withheld is likely to be decisive for a consideration of the legitimacy or otherwise of the issue of the warrant. That question was however considered in Competition and Markets Authority v Concordia International RX (UK) Ltd [2017] EWHC 2911 (Ch), in a judgment handed down by Marcus Smith J shortly after the hearing of this appeal in the Supreme Court. The judgment was helpfully sent by him to the Supreme Court, and we invited and received the parties submissions on it. The issue arose in Concordia in the context of a search warrant issued ex parte under section 28 of the Competition Act 1998. Section 28 can itself be regarded for present purposes as broadly paralleling section 8 of PACE. But the relevant Practice Directions provide not only that a warrant under section 28 must be served as soon as possible on the occupier or person appearing to be in charge of the premises (PD paras 7.3 and 8.1), but also that such occupier or person may apply to vary or discharge the warrant to the judge who issued the warrant or, if he is not available, another High Court judge (para 9). Concordia applied accordingly, but the Competition and Markets Authority (CMA) maintained that it could not, for public interest reasons, disclose all the information on the basis of which it had persuaded the judge to issue the warrant in its final form. In the course of a careful analysis of the possibilities, Marcus Smith J: (i) rejected a submission that, if the CMA was to be permitted to resist the challenge, it must disclose the full material; (ii) considered that the Supreme Courts judgment in Al Rawi precluded a closed material procedure, whereby the material withheld could be seen by the court, but not by Concordia; (iii) rejected the CMAs case that some form of confidentiality ring could be established, to allow disclosure to Concordias counsel, without disclosure to Concordia; and (iv) in these circumstances held that Concordias application to vary or partially revoke the warrant must be determined on the basis of such material as is not protected by public interest immunity (para 71). In so concluding, Marcus Smith J recognised that the excluded material may constitute the difference between the section 28 warrant being upheld or varied/revoked (para 70). The question on this appeal is whether the conclusions he reached are correct, at least in the context of a search and seize warrant issued under section 8 of PACE. The current Criminal Procedure Rules, as amended since the events giving rise to the present proceedings, contain provisions reflecting and regulating the procedure contemplated in the authorities discussed in paras 15 to 21 above. They expressly permit information to be placed before a magistrate under section 8 of PACE (rule 47.26(4)), in circumstances to which rule 5.7 (see below) applies, marked to show that it is only for the magistrate or court and not to be supplied to anyone else, and accompanied with an explanation as to why it is withheld. They go on to provide a number of safeguards. An application for a search warrant cannot be dealt with without a hearing (rule 47.25(1)). The applicant officer must confirm on oath or affirmation that the application discloses all information material to the decision the court must make, that the contents of the application are true, and that he has disclosed anything known or reported to him which might reasonably be considered capable of undermining any of the grounds (rules 47.25(4) and (5) and 47.26(3) and (5)). He must also answer any questions on oath or affirmation (rule 47.25(5)). An application must also include a declaration by an officer senior to the applicant that the senior has reviewed and authorised it (rule 47.26(5)(b)). The hearing, however, is required to be in private unless the court otherwise determines, and in the absence of any person affected by the warrant, including any person in occupation or control of the premises (rule 47.25(1)). Rule 5.7 makes detailed provision for circumstances in which information is sought by a party or person about the grounds on which an order was made, or a warrant issued, in his absence, and the person who applied for the order or warrant objects to the supply of the information requested. The notice of objection must in this situation mark the material to the disclosure of which the objection relates to show it is only for the court and give an explanation why it has been withheld (rule 5.7(8)). The hearing which follows may take place, wholly or in part, in the absence of the party or person applying for information, and in the event the general rule (though the court may direct other arrangements) is that the court will consider representations first by the party or person applying for information and then by the objector in the presence of both, and then further representations by the objector, in the absence of that party or person (rule 5.7(9)). Rule 47.39 (introduced by SI 2017/144) also contains in relation to applications under section 59 of the CJPA provisions regarding the marking of information to show that, unless the court otherwise directs, it is only for the court, accompanied with an explanation as to why it has been withheld, together with provisions mirroring those in rule 5.7(9). These provisions contemplate that the magistrate on an application for a warrant under section 8 or for disclosure, or the Crown Court under section 59 of the CJPA, will be able to see and rely on information which in the public interest cannot be disclosed to a person affected by the relevant order who would otherwise be entitled to disclosure of the information. Mr Summers submits that these provisions were in that respect ultra vires. One may surmise that this submission is made on the basis that the general power under section 69 of the Courts Act 2003 to make rules of procedure governing the practice and procedure in the criminal courts cannot tacitly authorise a departure from so fundamental a principle as the administration of open, inter partes justice. I express no view on that submission. It falls away if the statutory scheme of PACE and the CJPA itself permits the relevant magistrate or court to have regard to material which cannot on public interest grounds be disclosed to a person affected by a warrant or order. In my opinion, the statutory scheme of sections 8 and 15 of PACE does so permit. Read in terms, it involves, as indicated in paras 12 and 15 above, a purely ex parte process, directed to premises, rather than any particular person. It is a process designed to be operated speedily and simply, on the basis of information provided by a constable satisfying a magistrate that there are reasonable grounds for believing the matters stated in section 8(1). There is nothing in the statutory scheme which expressly restricts the information on which the magistrate may act. Parliament made no express provision for the information on which the warrant was sought to take any particular form or to be disclosed, even after the issue of the warrant, to any person affected. It would in many cases clearly be impracticable to expect such disclosure, for example where the information came from an informer, and in particular where it came from an informer whose identity could readily be identified from the nature of the information. I note, in parenthesis, that the police may well be under a duty, for example under articles 2 and 3 of the Human Rights Convention, to protect the safety of such an informer. Another area where disclosure to a person affected would clearly be impracticable would be where it would reveal the particular lines or methods of investigation being or proposed to be followed, in a way which would or could undermine their continuing usefulness in relation to other aspects of, or other persons potentially involved in, the investigation. The rules which I have summarised in para 25 above make very clear that the police owe a duty of candour towards the magistrate when seeking a warrant, and may well have to disclose such information, eg because it is material, or if asked by the magistrate. The suggestion that the police should in such a case simply refrain from seeking or further seeking a warrant would limit use by the police of important sources of information and the efficacy of police investigations. It is no doubt sensible practice for applicant officers to adopt, where practicable and where time permits, the permissive rule 47.26(4) procedure and to identify information which they contend ought not to be supplied to anyone but the court. That may reduce the risk of accidental disclosure, and no doubt a magistrate considering an application would, where this is done, bear in mind that there is information which a person affected might never be able to test. But there is no suggestion, or I think likelihood, that the scheme intended the constable or magistrate at this early stage, when speed is often of the essence, to try to form a definitive view as to what the public interest might ultimately prove to require. That is an exercise which in accordance with the rules falls to be undertaken at a later stage by a magistrate under the procedure in Bangs and/or a Crown Court under section 59 of the CJPA. The effect of the statutory scheme and the rules is that an application for a warrant under section 8 can be made and granted on the basis of all the relevant information available to the applicant, even though some of it may not at any stage be capable of being disclosed to a person affected. The courts and the rule makers, in developing ancillary principles and protections for persons affected, have been careful to qualify them, by reference to the public interest, so as not to undermine the efficacy of the scheme. That would be the effect of the appellants case. This conclusion is also consistent with and in my view supported by consideration of authority, decided before PACE, on the operation of a search and seizure warrant issued under section 20C of the Taxes Management Act 1970: Inland Revenue Comrs v Rossminster Ltd [1980] AC 952. Section 20C enabled the appropriate judicial officer (in casu, the Common Serjeant) to issue such a warrant: [i]f satisfied on information on oath given by an officer of the board that there is reasonable ground for suspecting that an offence involving any form of fraud in connection with, or in relation to, tax has been committed and that evidence of it is to be found on premises specified in the information . A warrant was issued and executed in relation to specified premises, including those of Rossminster Ltd, a banking company. No information was given to Rossminster Ltd about the precise nature of the alleged fraud, or when or by whom it was committed. Rossminster Ltd applied for judicial review to have the warrant quashed and the documents which had been seized delivered up. The House recognised the invasive nature of the warrant. Lord Wilberforce said that he could understand very well the perplexity, and indeed indignation, of those present on the premises, when they were searched (p 998H), and suggested that the statutory scheme called for a fresh look by Parliament. But, as the majority pointed out, the House was not concerned with unauthorised executive action, as in Entick v Carrington (1765) 2 Wils 275, but with an issue involving the construction and application of a statutory scheme. As to this, the majority members were agreed that there was no basis either for reading into section 20C or for deriving from the general law any requirement to give particulars of the offences suspected: see eg p 999A C, per Lord Wilberforce, p 1005E, per Viscount Dilhorne, p 1010B C, per Lord Diplock and p 1024A B, per Lord Scarman. (Lord Salmon dissented.) In this connection, Lord Wilberforce said (p 999A C) that: on the plain words of the enactment, the officers are entitled if they can persuade the board and the judge, to enter and search premises regardless of whom they belong to: a warrant which confers this power is strictly and exactly within the parliamentary authority, and the occupier has no answer to it. I accept that some information as regards the person(s) who are alleged to have committed an offence and possibly as to the approximate dates of the offences must almost certainly have been laid before the board and the judge. But the occupier has no right to be told of this at this stage, nor has he the right to be informed of the reasonable grounds of which the judge was satisfied. Both courts agree as to this: all this information is clearly protected by the public interest immunity which covers investigations into possible criminal offences. The reference to a general public interest immunity covering investigations into possible criminal offences may need qualification. Indeed, in the judgment of the Divisional Court in Rossminster, which was approved by the House of Lords, Eveleigh LJ suggested a more focused approach, depending on the particular circumstances: [1980] AC 952, 961D E. A specific public interest is however accepted or assumed to exist in relation to withholding of the material not disclosed to the appellant in this case. As to the words in the passage cited at this stage, Lord Wilberforce went on to note, with reference to a statement by Lord Reid in Conway v Rimmer [1968] AC 910, 953 954, that, after a verdict or a decision not to take proceedings, there is not the same need for secrecy (p 999D E) and the immunity which exists at the stage of initial investigation will lapse (p 1001A). However, where, at the stage which the present investigation has reached (pending the outcome of the present appeal), it is accepted that there is a current and continuing public interest in withholding information relied on for the issue of the warrant, that qualification has no application. The interests of other investigations, current or future, may also require the withholding of information in some circumstances. The analogy between a section 20C warrant and a warrant to search premises and seize stolen goods at common law (later the subject of section 42 of the Larceny Act 1916) was referred to by Lord Diplock and Lord Scarman at pp 1010H and 1023H 1024A in the Rossminster case. The approach to a section 20C warrant can fairly be assumed to have been in the mind of those drafting and enacting section 8 of PACE to crystallise the statutory position relating to ordinary search and seizure warrants. Mr Summers submits that the Rossminster case is the product of an earlier era. It is true that it was decided both before the Convention rights were domesticated by the Human Rights Act 1998 and before the decision in Al Rawi. But PACE itself was also enacted in the same era, not long after the decision in Rossminster. There may be other aspects of the decision in Rossminster which require reconsideration in the light of subsequent developments. But on the present issue whether the scheme of PACE contemplates that a magistrate on an application for a warrant under section 8 or for disclosure under Bangs, or the Crown Court on an application under section 59 of the CJPA, may rely on material which will have to be withheld from a person affected the judgment in Rossminster is in my view very relevant background to a proper understanding of the scheme. As in Rossminster, so under section 8, it must have been envisaged that the warrant might be issued on the basis of information which could not in the public interest be disclosed to persons affected at least until some future date after the investigation was over, or perhaps (as when it relates to an informer) for ever. It is of course the case that the issue and execution of a search and seizure warrant may, to a greater or lesser degree, involve interference with someones real or personal property, possessory or other interests. But there is no change in substantive property or possessory rights and any invasion of privacy interests is limited and in the general public interest; such interference as there is only occurs in the interests of the investigation of serious (indictable) offending. It is also relevant that the statutory procedure under section 8 is subject to a number of protections, expressed or inherent in the statutory language and in the current rules summarised in para 25 above. It only applies when a magistrate is on reasonable grounds satisfied by a constable that an indictable offence has been committed. A constable, when seeking ex parte to satisfy the magistrate that the requirements of section 8 are met, owes a duty of candour, meaning that the information on which he or she relies must constitute a fair and balanced presentation of the circumstances on the basis of which a warrant is sought: compare for example In re Stanford International Bank Ltd [2010] EWCA Civ 137; [2011] Ch 33, esp at paras 82 83 and 88, per Morritt C and para 191, per Hughes LJ. A further point is that the material sought must not consist of or include items subject to legal privilege, excluded material or special procedure material (section 8(1)(d)). Excluded material refers, in summary, to personal records which a person has acquired or created in the course of any trade, business, profession or other occupation or for the purpose of any paid or unpaid office and which he holds in confidence, as well as human tissue taken in a medical context and held in confidence and journalistic material held in confidence (section 11 of PACE). Special procedure material includes other journalistic material (section 14(1)), as well as material in the possession of a person who acquired or created it in the course of any trade, business, profession or other occupation or for the purpose of any paid or unpaid office (section 14(2)). Under Schedule 1 to PACE, only a Crown Court judge can make an order relating to special procedure material. There are two possibilities. One involves seeking a production order under Schedule 1 paragraph 4; such an order can under paragraph 2 be obtained under conditions which include conditions broadly mirroring those applicable under section 8(1)(a) to (d) (Schedule 1 paragraphs 2 and 3); but Schedule 1 paragraph 7 provides that: An application for an order under paragraph 4 above that relates to material that consists of or includes journalistic material shall be made inter partes. The other possibility is to seek a search and seizure warrant, which may be sought ex parte, again under conditions mirroring section 8(1)(a) to (d), provided that one of certain further conditions is satisfied (Schedule 1, paragraphs 12(a)(ii) and 14), namely: that it is not practicable to communicate with any person (a) entitled to grant entry to the premises ; (b) that it is practicable to communicate with a person entitled to grant entry to the premises but it is not practicable to communicate with any person entitled to grant access to the material; [presently irrelevant]; (c) (d) that service of notice of an application for an order under paragraph 4 above may seriously prejudice the investigation. The Supreme Court has determined that, on an inter partes application for a production order in relation to journalistic material under Schedule 1 paragraph 4, a Crown Court judge is not entitled to conduct part of the proceedings ex parte and to hear during that part, and to have regard in his decision to, information withheld from the other party to the application: R (British Sky Broadcasting Ltd) v Central Criminal Court [2014] UKSC 17; [2014] AC 885. But, in the course of a judgment with which the whole Court agreed, Lord Toulson contrasted the case before the Court there with the general position when use is made ex parte of the courts procedural powers to obtain evidence. He said: 28. As a general proposition, I would agree with the Commissioners argument that the court should not apply the Al Rawi principle to an application made by a party to litigation (or prospective litigation) to use the procedural powers of the court to obtain evidence for the purposes of the litigation from somebody who is not a party or intended party to the litigation. This is because such an application will not ordinarily involve the court deciding any question of substantive legal rights as between the applicant and the respondent. Rather it is an ancillary procedure designed to facilitate the attempt of one or other party to see that relevant evidence is made available to the court in determining the substantive dispute. Applications of this kind, such as an application for a witness summons in civil or criminal proceedings, are typically made ex parte. 29. However, the present situation is different. Compulsory disclosure of journalistic material is a highly sensitive and potentially difficult area. It is likely to involve questions of the journalists substantive rights. Parliament has recognised this by establishing the special, indeed unique procedure under section 9 and Schedule 1 for resolving such questions. 30. Ultimately the issue in this appeal is a short one. It turns on the meaning and effect of paragraph 7 of Schedule 1. Parliament recognised the tension between the conflicting public interests in requiring that an application for a production order shall be made inter partes. The Government had originally proposed that a production order might be made ex parte, but that proposal met opposition and was dropped. When an application for a production order is made, there is a lis between the person making the application and the person against whom it is made, which may later arise between the police and the suspected person through a criminal charge. Equal treatment of the parties requires that each should know what material the other is asking the court to take into account in making its decision and should have a fair opportunity to respond to it. That is inherent in the concept of an inter partes hearing. In these paragraphs, Lord Toulson identified two categories of situation. The first, addressed in para 28, was focused on use of the courts procedural powers, typically on an ex parte basis, to obtain evidence for the purposes of the litigation from somebody who is not a party or intended party to the litigation. The second, contrasted in paras 29 and 30, concerned the inter partes procedure which applies under Schedule 1 paragraph 7 when journalistic material is sought. Lord Toulson noted that it had been a deliberate decision by the Government to drop its original proposal for an ex parte procedure, after this had met opposition. In the result there was a lis between the person making the application and the person against whom it is made ie typically the journalist, which may later arise between the police and the suspected person through a criminal charge. An ex parte application for a search warrant under section 8 of PACE falls naturally into an extended conception of the former category, rather than into the second category. There is no necessary proprietary or personal link between premises sought to be searched or material sought to be seized by a warrant under section 8 and any particular individual who may be being investigated. In the present case, there was a factual link, in that the underlying investigation related to, amongst others, the appellant. But the warrant was directed to the premises and material on it, not to the appellant. The procedure did not create any lis between the police or prosecution service and him, even if such a lis might later arise. The search warrant was, in Lord Toulsons terms, an ancillary procedure designed to enable the police to fulfil their role of investigating suspected criminality. For all these reasons, and subject to review in the light of the answers to subsequent issues, the answer to issue (i) is in my opinion that the statutory scheme entitles a magistrates court, on an ex parte application for a search and seizure warrant under sections 8 and 15(3) of PACE, to rely on information which in the public interest cannot be disclosed to the subject of the warrant. Issue (iii) the position under section 59 It is convenient to take issue (iii) before issue (ii). The question under issue (iii) is in substance whether a Crown Court, on an application made inter partes under section 59 of the CJPA to retain unlawfully seized material, can operate a closed procedure to have regard to information which for public interest reasons is not disclosable. This issue involves consideration of the interplay between the ex parte procedure for issue of a search and seizure warrant under section 8 and the inter partes procedure for authorising retention under section 59 of property seized but otherwise falling to be returned. Section 59(7) provides that retention may be authorised on the grounds that: (if the property were returned) it would immediately become appropriate to issue, on the application of the person who is in possession of the property at the time of the application under this section, a warrant in pursuance of which, or of the exercise of which, it would be lawful to seize the property . Section 59(7) accordingly requires the Crown Court, when deciding whether to authorise retention, to put itself in the shoes of a hypothetical magistrates court being asked, immediately after the return of the property, to issue a fresh warrant with a view to seizure of the property. In the light of the answer given to issue (i), such a magistrates court would have been entitled on the hypothetical ex parte application made to it for such seizure to have regard to information placed before it by the constable which on public interest grounds could not be disclosed to others. The Crown Court could not fulfil its role without having regard to such information. But if it did so inter partes that would involve disclosing the information in a way which the public interest would preclude (and which the hypothetical magistrate would not do). The statutory scheme of PACE and the CJPA must have been intended to be coherent, and Parliament must be taken in these circumstances to have contemplated that the Crown Court would, so far as necessary, be able to operate a closed material procedure, to ensure that it could have regard to material which would have been put before the hypothetical magistrates court and withheld from disclosure there, without contravening the public interest by disclosing such material on the section 59 application. In Bank Mellat v HM Treasury (No 2) this court was faced with a situation where there was no express provision for it to operate a closed material procedure on an appeal, although such a procedure had been provided for and applied in the courts below. The Supreme Court, by a majority, held a power to hold a closed material procedure to be implicit in the statutory provisions. These gave it a power to hear appeals against any order or judgment of the Court of Appeal (section 40(2) of the Constitutional Reform Act 2005 CRA) and a power to determine any question necessary for the purposes of doing justice in an appeal to it under any enactment (section 40(5) CRA). The Court also took into account that an appeal to it against a wholly or partially closed judgment could not otherwise be effective. The situation now before the Court presents an analogy. Section 59 postulates that the Crown Court will be able to put itself into the shoes of a hypothetical magistrates court. This will not work, unless the Crown Court can operate, so far as necessary, the same closed procedure as the magistrates court could and would have done. For these reasons, the answer I would, subject to review in the light of the answers to issues (ii) and (iv), give to issue (iii) is that a Crown Court, on an application made inter partes under section 59 of the CJPA to retain unlawfully seized material, can operate a closed procedure to have regard to information which for public interest reasons is not disclosable. Issues (ii) and (iv) the position regarding closed material on judicial review It is convenient to take these two issues together, as they raise essentially the same point. Judicial review is the means by which a person affected may challenge either the issue of a search and seizure warrant or an order under section 59 authorising the retention by the police of property seized which would otherwise fall to be returned. In the light of the conclusions already provisionally reached, the magistrate may issue such a warrant and the Crown Court may make an order under section 59 taking into account material which is closed, ie withheld from by any person affected. What is the position on a judicial review of the magistrates or Crown Courts decision? Mr Summerss answer to this question is that judicial review must on any view be subject to the principle in Al Rawi, that the court on judicial review cannot adopt a closed procedure and, further, that this undermines the conclusions already expressed in respect of issues (i) and (iii) above about the permissibility of a closed procedure by a magistrate issuing a warrant or a Crown Court considering a section 59 application. He also submits that, even if he is wrong on this last point, the inability of the court on judicial review to conduct a closed material procedure and to look at material withheld from the claimant must mean that the warrant or section 59 order is set aside, if the material disclosed does not itself justify the warrant or order. The commencement of judicial review proceedings would, in that situation, ensure the setting aside of a warrant or order which had itself been properly issued. In this connection, Mr Summers relies on and maintains the correctness of the fourth pillar of Marcus Smith Js reasoning in Concordia, set out in para 24(iv) above. Mr Chamberlains and Mr Eadies answers are to the opposite effect. They submit that, whatever the position regarding judicial review, there is no reason to disturb the scheme as it was in their submission intended to operate before a magistrate and the Crown Court. If the court on judicial review is required under Al Rawi to forego any sort of closed material procedure, there will be no basis upon which any person affected can complain that the issue of the warrant, or the making of the section 59 order, was not justified by material before the magistrate or Crown Court. However, their primary case in this situation is that, if the magistrate or Crown Court can rely on material withheld from a person affected, the court on a judicial review can and should fashion its procedures to be able to do so also. The Rossminster case is of relevance to these issues. In Rossminster, the material which had been before the judge when he issued the warrant was not before the courts on judicial review. The Divisional Court held that in these circumstances there was simply not the evidence to enable this court to say that the judge exercised his discretion improperly: p 961F. That conclusion was upheld by the House: see per Lord Wilberforce, p 998F G, Viscount Dilhorne, p 1006H, applying the maxim omnia praesumuntur rite esse acta and Lord Diplock, p 1013F G, stating that: Where Parliament has designated a public officer as decision maker for a particular class of decisions the High Court, acting as a reviewing court under Order 53, is not a court of appeal. It must proceed on the presumption omnia praesumuntur rite esse acta until that presumption can be displaced by the applicant for review upon whom the onus lies of doing so. Since no reasons have been given by the decision maker and no unfavourable inference can be drawn for this fact because there is obvious justification for his failure to do so, the presumption that he acted intra vires can only be displaced by evidence of facts which cannot be reconciled with there having been reasonable cause for his belief that the documents might be required as evidence or alternatively which cannot be reconciled with his having held such belief at all. Lord Scarman also said that there was no reason to suggest, nor was it possible to suggest, that the Common Serjeant had failed in his judicial duty and it was therefore necessary to approach the case on the basis that he did satisfy himself upon the relevant matters: pp 1022H 1023C D. All the members of the majority in the House emphasised the importance attaching to the Common Serjeants fulfilment of this judicial duty, but their decision meant that the prospects of a successful judicial review were much reduced. The approach taken in Rossminster was therefore (i) to treat the onus as being on the applicant for judicial review to establish that the warrant should be quashed and (ii) to treat the applicant as unable to satisfy this onus, in circumstances where the original decision maker had access to material withheld on public interest grounds from the person affected seeking judicial review; (iii) this result followed from the application of the maxim omnia praesumuntur rite esse acta. The same approach was followed and applied by the House in R v Inland Revenue Comrs, Ex p T C Coombs & Co [1991] 2 AC 283, in an application judicially to review a notice served by an inspector of taxes under section 20 of the Taxes Management Act 1970, requiring T C Coombs & Co to deliver or make available for inspection documents in their possession relevant to the tax liability of the taxpayer, their former employee. The notice was given with the consent of a commissioner, who, under section 20(7), was to give such consent only upon being satisfied in all the circumstances that the inspector was justified in proceeding under the section. The Revenue deposed that the information, which had led it to believe that documents in T C Coombs possession might contain information relevant to the taxpayers tax liability, could not be disclosed on grounds of confidentiality, but had been fully laid before the commissioner. The House, taking its guidance from Lord Diplocks approach in Rossminster, held that, as Parliament designated the inspector as the decision maker and the commissioner as the monitor of the decision [a] presumption of regularity applied to both (p 302). The same approach was taken by the Privy Council in Attorney General of Jamaica v Williams [1998] AC 351. The case involved the issue by a magistrate of a search and seizure warrant under a statutory power in section 203 of the Customs Act, where any officer had reasonable cause to suspect that any uncustomed or prohibited goods, or any books or documents relating [thereto] are harboured, kept or concealed in any house or other place in the island. The context was a customs investigation into possible fraudulent importation of motor vehicles by the applicants, a company and its majority shareholder. On the applicants constitutional challenge to the issue of the warrant, no evidence was put before the court showing any such reasonable cause, on the basis that it would have been contrary to the public interest to disclose such evidence to the applicants at that time. Applying the approach in Rossminster, the Board said that it cannot be assumed against the Crown that they did not have reasonable grounds for taking the documents which they did (p 363F G), and that (p 365E F): Although the courts may sometimes feel frustrated by their inability to go behind the curtain of the recital that the justice was duly satisfied and to examine the substance of whether reasonable grounds for suspicion existed (a frustration articulated by Lord Scarman in R v Inland Revenue Comrs, Ex p Rossminster Ltd [1980] AC 952, 1022) their Lordships think that it would be wrong to try to compensate by creating formal requirements for the validity of a warrant which the statute itself does not impose. In so doing, there is a risk of having the worst of both worlds: the intention of the legislature to promote the investigation of crime may be frustrated on technical and arbitrary grounds, while the courts, in cases in which the outward formalities have been observed, remain incapable of protecting the substance of the individual right conferred by the Constitution. Rossminster dates from a period when the principles governing judicial review were at a relatively early stage of development. The line of authority discussed in paras 47 to 49 dates from a period prior to the domestication of the Convention rights and prior to the emergence of the line of cases on disclosure discussed in paras 15 to 20 above. It is clear from the judgment in the first of such later cases, Cronin, that the recently domesticated Convention rights were very much in Lord Woolfs mind. Mr Summers submits that the Supreme Court should now therefore take a very different approach. As noted already, and although this is not their preferred solution, Mr Chamberlain and Mr Eadie invite the Court, if necessary, to follow and apply the Rossminster line of authority under section 8 of PACE. There are also two later decisions which could be said to lend support to its continuing existence. First, in Carnduff v Rock [2001] EWCA Civ 680; [2001] 1 WLR 1786, the Court of Appeal held that a claim by a police informer for payment for information and assistance to the police was un triable because a fair trial of the issues would require the police to disclose, and the court to investigate and adjudicate upon, sensitive information which should in the public interest remain confidential to the police. The public interest in withholding the evidence outweighed the countervailing public interest in having the claim litigated. Although this conclusion was reached on the basis that the case was un triable, rather than on the basis of any assumption as to the correctness of the polices defence, the effect, that the claim failed, was the same. Second, in AHK v Secretary of State for the Home Department [2012] EWHC 1117 (Admin), claims were made against the Home Secretary for refusal to grant the applicants naturalisation on the grounds that they were not of good character. The Home Secretary declined to give further reasons or disclose documents on which she had relied, explaining that to do so would be harmful to national security. Ouseley J held, on applications for judicial review of the refusals, that it was not open to the court to hold a closed material procedure, and that, if the Home Secretary gave evidence that, having considered the applicants representations, there were good reasons and a sound basis for her decision, which she could not disclose, it would be impossible for the court to say that she was wrong on that, and the claims would fail. There was no second possibility that the Home Secretary must lose, or that the court should assume what it knew to be false, viz that no relevant evidence was being withheld. This is an approach effectively identical to that taken in the Rossminster line of authority. On the other hand, in the still more recent judgment in Concordia, para 70, Marcus Smith J considered that the exclusion from consideration by the court of material which had properly been considered ex parte when the warrant was granted, but which had on public interest grounds to be withheld on an inter partes challenge, could well lead to a validly issued warrant being quashed. While the CMA is recorded as having argued to the contrary by reference to the presumption of regularity (para 43), and the Supreme Court is informed that its written case referred to both Rossminster and Ex p T C Coombs, Marcus Smith Js judgment does not specifically address the Rossminster line of authority. The result reached in the Rossminster line of authority is unattractive, in that it is in some circumstances capable of depriving judicial review of any real teeth. For this reason, Mr Chamberlain and Mr Eadie make their primary submission that the court on judicial review of a warrant under section 8 of PACE or of an order under section 59 of the CJPA can adopt a closed material procedure. Such a review would mirror that which, as I have already provisionally concluded, is open to the magistrate for a warrant under section 8 or for disclosure under Bangs or to the Crown Court on an application under section 59 of the CJPA. That is its attraction. Judicial review should be effective and able to address the decision under review on the same basis that the decision was taken. The Rossminster line of authority involves an awkward mismatch between the bases of the original and reviewing decisions. So too does the reverse approach taken by Marcus Smith J in Concordia. However, in Al Rawi the Supreme Court said that a closed material procedure is inadmissible, without Parliamentary authorisation, in judicial review as it is in any ordinary civil claim: see eg paras 39 and 62, per Lord Dyson. The two narrowly defined exceptions which it recognised as existing related to: (i) cases where the whole object of the proceedings is to protect and promote the best interests of a child [and] disclosure of some of the evidence would be so detrimental to the childs welfare as to defeat the whole object of the exercise (para 63, quoting Lady Hale in Secretary of State for the Home Department v MB [2008] 1 AC 440, para 58); and (ii) cases where the whole object of the proceedings is to protect a commercial interest, and where full disclosure would render the proceedings futile (cases in which a confidentiality ring is commonplace) (para 64). The situation in which a court is placed on a claim for judicial review in the present context can be compared with that which the Supreme Court faced in Bank Mellat. In that case, the courts below had express power to conduct a closed material procedure, under Part 6 of the Counter Terrorism Act 2008 (the 2008 Act). The Supreme Court had none. But the majority derived from the statutory language governing appeals to it and a close consideration of the consequences of the various alternative analyses a conclusion that the Supreme Court was also able to conduct a closed material procedure (paras 37 to 44). The statutory language governing appeals consisted of section 40(2) of the CRA, stating that an appeal lies to the court from any order or judgment of the Court of Appeal in England and Wales in civil proceedings, read with section 40(5), giving the Supreme Court power to determine any question necessary to be determined for the purposes of doing justice in an appeal to it under any enactment. If a closed material procedure was not permissible, the alternative analyses were that (a) the appeal could not be entertained (compare Carnduff v Rock) or (b) the Supreme Court could consider the closed material in open court, or (c) the Court could determine the appeal without looking at the closed material (compare Concordia), or (d) the Court would be bound to allow the appeal or (e) the Court would be bound to dismiss the appeal (compare Rossminster). Lord Neuberger, speaking for the majority, said that analysis (a) ran contrary to section 40(2), analysis (b) would wholly undermine Part 6 of the 2008 Act, analysis (c) would be self evidently unsatisfactory and would seriously risk injustice, and in some cases it would be absurd and each of analyses (d) and (e) was self evidently equally unsatisfactory. Each of the alternative possibilities to a closed material procedure identified by Lord Neuberger in Bank Mellat exists by analogy in relation to judicial review (as Marcus Smith Js judgment in Concordia illustrates); and, when so applied, each can be seen to be as unsatisfactory in relation to judicial review as in relation to an appeal in Bank Mellat. Judicial review is not generally an appeal, certainly not in terms or under conditions making it a precise homologue of an appeal to the Supreme Court under section 40(2) of the CRA: see eg the discussion, albeit in a very different context, in General Medical Council v Michalak [2017] UKSC 71; [2017] 1 WLR 4193. It is in origin a development of the common law, to ensure regularity in executive and subordinate legislative activity and so compliance with the rule of law, but it is regulated now by the Senior Courts Act 1981. Section 31(1) of the 1981 Act defines an application for judicial review as an application for a mandatory, prohibiting or quashing order (or for a declaration or injunction in some public law contexts), and section 31 also provides: (5) If, on an application for judicial review, the High Court quashes the decision to which the application relates, it may in addition (a) remit the matter to the court, tribunal or authority which made the decision, with a direction to reconsider the matter and reach a decision in accordance with the findings of the High Court, or (b) substitute its own decision for the decision in question. (5A) But the power conferred by subsection (5)(b) is exercisable only if the decision in question was made by a court or (a) tribunal, (b) has been an error of law, and the decision is quashed on the ground that there (c) without the error, there would have been only one decision which the court or tribunal could have reached. Although there are differences between judicial review and an appeal in the normal sense of that word, many of the considerations which were of weight in Bank Mellat on an appeal from lower courts conducting closed material procedures are also of weight in relation to judicial review of lower courts conducting such procedures. In Bank Mellat, a determination by the Supreme Court on a basis different from that required and adopted in the courts below would have been self evidently unsatisfactory, risk injustice and in some cases be absurd. So too in the present context it would be self evidently unsatisfactory, and productive potentially of injustice and absurdity, if the High Court on judicial review were bound to address the matter on a different basis from the magistrate or Crown Court, and, if it quashed the order, to remit the matter for determination by the lower court on a basis different from that which the lower court had quite rightly adopted and been required to adopt when first considering the matter. Moreover, subsections (5) and (5A), read together, only work on the basis that it is open to the High Court to consider and, where appropriate, itself give effect to the decision which the lower court or tribunal should have reached, if there is only one such decision which it could have reached. If the High Court cannot by a closed material procedure have regard to closed material, those subsections will not work. Since the events giving rise to the present litigation, section 31 has also been amended by the introduction of subsections (2A) and (3C) by section 84(1) and (2) of the Criminal Justice and Courts Act 2015. Subsection (2A) provides that the High Court must refuse relief on an application for judicial review if it appears to the court to be highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred (unless the court considers under subsection (2B) that it is appropriate to disregard this requirement for reasons of exceptional public interest). Subsection (3C) provides that, when considering whether to grant leave for judicial review, the High Court may of its own motion consider whether the outcome for the applicant would have been substantially different if the conduct complained of had not occurred. These subsections again postulate that the High Court will be considering the outcome on the same basis as the lower court or tribunal. In the light of these statutory provisions and of an analysis of the alternative possibilities paralleling that undertaken in Bank Mellat, I consider that the only sensible conclusion is that judicial review can and must accommodate a closed material procedure, where that is the procedure which Parliament has authorised in the lower court or tribunal whose decision is under review. The Supreme Court, when it referred in passing to judicial review in Al Rawi, was not directing its attention to this very special situation. If it had done so, it might also have seen a similarity between this situation and the two exceptions which it did identify, where inability to adopt a closed material procedure would render the whole object of the proceedings futile and where the interests of third parties (such as informers) are potentially engaged. Be that as it may be, I consider that the scheme authorised by Parliament for use in the magistrates court and Crown Court, combined with Parliaments evident understanding and intention as to the basis on which judicial review should operate, lead to a conclusion that the High Court can conduct a closed material procedure on judicial review of a magistrates order for a warrant under section 8 PACE or a magistrates order for disclosure, or a Crown Court judges order under section 59 of the CJPA. I add, for completeness, that, even before judicial review was regulated by statutory underpinning, I would also have considered that parallel considerations pointed strongly to a conclusion that the present situation falls outside the scope of the principle in Al Rawi and that a closed material procedure would have been permissible on a purely common law judicial review. Issue (v) minimum disclosure and gisting Issue (v) is whether the principles concerning minimum disclosure, if necessary by gisting, apply to proceedings concerning search warrants. It is clear that the use of a closed material procedure is not itself contrary to Convention rights: see Tariq v Home Office [2011] UKSC 35; [2012] 1 AC 452. The contrary has not been suggested on the present appeal. The authorities also include dicta suggesting that in some, rare cases no disclosure at all of the relevant closed information may be required at common law (see Gittins, para 79, per Davis J). Is this the case, or does article 6 of the Convention apply to require a person affected by a search warrant or order under section 59 to know at least the gist of the case made out to justify the relevant order? As a matter of principle, open justice should prevail to the maximum extent possible. Any closed material procedure should only ever be contemplated or permitted by a court if satisfied, after inspection and full consideration of the relevant material as well as after hearing the submissions of the special advocate, that it is essential in the particular case: Tariq v Home Office, para 67; and should, of course, be restricted as far as possible. Further, the nature of the issue may require, as a minimum, disclosure of the gist of the closed material, to enable the person from whom it is withheld to address the essence of the case against him: A v United Kingdom (2009) 49 EHRR 625, Secretary of State for the Home Department v AF (No 3) [2010] 2 AC 269 (a control order case). This will be so, where the issue affects the liberty of the person (A v United Kingdom, and Sher v United Kingdom (2015) 63 EHRR 24, para 149) or has an equivalent effect, as a control order or freezing order can do (AF (No 3); Tariq v Home Office, paras 26 27; and see, in the European Court of Justice, Kadi v Commission of the European Communities (Case T 85/09) [2011] 1 CMLR 24, paras 129 177). On the other hand, it is established by decisions of both the European Court of Human Rights and the Supreme Court that there are circumstances where it may in the public interest be legitimate to withhold even the gist of the material relied on for a decision which a person affected wishes to challenge. The relevant caselaw is analysed in Tariq v Home Office, paras 27 37. This approach has been applied in the European Court of Human Rights to material allegedly making a person a security risk unsuitable for permanent employment which would entail him having access to a naval base (Leander v Sweden (1987) 9 EHRR 433), to security material allegedly making a person unsuitable for employment with the central office of information (Esbester v United Kingdom (1994) 18 EHRR CD72), and to material explaining the meaning of a statement by the Investigatory Powers Tribunal that no determination had been made in his favour in relation to a complainant in respect of complaints that his communications were being wrongly intercepted a statement which could mean either that there had been no interceptions or that any interceptions taking place had been lawful (Kennedy v United Kingdom (2010) 52 EHRR 4). The approach in these cases was applied domestically by the Supreme Court in Tariq v Home Office. The complainants security clearance was withdrawn and he was suspended from his work as a Home Office immigration officer, after the arrest of close family members in the course of a suspected terrorism investigation. A closed material procedure was held, with a special advocate, under rule 54 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (SI 2004/1861). The majority concluded that there was no invariable rule that gisting must always occur. It depended on balancing the nature and weight of the circumstances on each side: see in particular para 25. In the cases mentioned in para 62, the courts were well aware that the complaints made involved significant personal interests. Employment and citizenship are undoubtedly important to personal identity and well being; and the withholding of information had a continuing effect on the complainants substantive position. Nonetheless, the circumstances did not give rise to a right to gisting, when important countervailing interests of state security made it impossible to disclose the information without undue prejudice. The circumstances were not regarded as impacting the person affected to the same extent as loss of personal freedom, or a control or freezing order. The issue of a warrant authorising a search of premises and seizure of documents involves a short term invasion of property. Such a warrant is, as I have pointed out, not specifically directed at, or necessarily even linked with, anyone occupying the premises or having any proprietary or possessory interest in the documents. Save that the taking of documents for so long as is required for the limited purposes of an investigation necessarily affects possession, such a warrant does not affect the substantive position of anyone who does occupy the premises or have any proprietary, possessory or other interest in any documents found therein. All it may do is provide information, and maybe direct evidence, of potential use in a current investigation into an indictable offence which the magistrate or Crown Court is satisfied that there are reasonable grounds for believing has been committed. If the investigation leads to criminal proceedings, any person affected will enjoy all the normal safeguards. Subject to any PII ruling in the conventional sense (in which case the material will not be disclosed or used at trial), there will be full disclosure. All material evidence relied on to establish guilt will be before the court openly, without any form of anonymity attaching to the witness or any restriction on questioning which might lead to a witnesss identification, unless under the strict statutory conditions of court ordered anonymity pursuant to Part 3 of the Coroners and Justice Act 2009 introduced subsequent to the House of Lords decision in R v Davis [2008] AC 1128. Any complaint about the propriety of use of any material seized will be capable of being raised and submitted to the courts decision under section 78 PACE. In my judgment, it cannot be axiomatic in this context that even the gist of the relevant information must be supplied to any person (such as the occupier or some other person claiming some proprietary, possessory or other interest in the documents) claiming to be affected by, and wishing to object to, the warrant or the search and seizure. Every case must of course be considered in the light of its particular circumstances. But, as a general proposition, I answer issue (v) in the negative. Conclusions Having addressed the individual issues in turn, I have also stepped back to consider whether the discussion in respect of the issues considered later (particularly (ii) and (iv)) necessitates or gives reason to revise the answers reached in respect of the issues considered earlier. In my opinion it does not. On the contrary, the answers which I reached in respect of each of the issues in turn appear to me to lead to a scheme which is both coherent and workable, as well as corresponding with Parliaments presumed intentions. The issues put before the Supreme Court have ranged wider than those argued or decided below. But it follows from the answers that I have reached that the appellants appeal should be dismissed. |
St Andrews is renowned throughout the world as the home of golf. It is also famous for its university, the third oldest in the English speaking world. It is an attractive town, set between the sea and the rural hinterland of Fife, with many historic buildings and a skyline familiar to millions from television coverage of the Open Championship and from the opening of the film, Chariots of Fire. This appeal has been prompted by concern on the part of the appellant, a resident of St Andrews, about Fife Councils policies for the future development of the town as set out in the Fife Structure Plan 2006 2026. She considers that the policies, if implemented, will cause irreversible damage to the landscape setting of the town. She has objected to these policies at every opportunity during the procedure leading to the finalisation of the structure plan by the Council, and during the subsequent procedure leading to its approval, subject to certain modifications, by the Scottish Ministers. The question raised by the appeal is whether the Ministers have given adequate reasons for their decision to approve the structure plan subject to the modifications which they have made. The appellant submits that the reasons given did not adequately address her objections to the Ministers proposed modifications, and that there has in consequence been a failure to comply with the requirements of the relevant legislation. She contends that she has been substantially prejudiced by that failure, as the reasons given raise a doubt as to whether the Ministers have considered the impact of the structure plan policies upon the landscape setting of St Andrews. The relevant legislation It may be helpful at the outset to explain the nature of a structure plan and its role in the planning system. These were clearly and accurately described by Lord Justice Clerk Gill in his opinion in this case ([2011] CSIH 59; 2012 SC 172, para 23): A structure plan is that part of the statutory development plan that sets out the overall strategy on which development in the relevant area will be based. The plan rests on fundamental strategic objectives adopted by the planning authority in accordance with ministerial guidance. The Scottish Ministers retain the ultimate authority to approve its finalised terms. The strategic objectives are the basis of, and are carried into effect by, the various sectoral policies of the written statement. These policies are carried through in more detailed and site specific ways in local plans and are ultimately implemented in ad hoc decisions on planning applications. It is necessary next to explain the procedure leading to the approval of a structure plan as set out in the legislation in force at the relevant time: that is to say, the Town and Country Planning (Scotland) Act 1997 as amended (the Act), and the Town and Country Planning (Structure and Local Plans) (Scotland) Regulations 1983 (SI 1983/1590) as amended (the Regulations). Under section 4 of the Act, the planning authority have a duty to keep under review the matters which may be expected to affect the development of their district or the planning of its development, and may, if they think fit, institute a survey of those matters. Under section 5, the Ministers may designate areas in respect of which planning authorities are to prepare structure plans; and there is a requirement that the district of every planning authority must be included in a structure plan area. Section 7(1)(a) provides that the structure plan for any district shall be a written statement formulating the planning authoritys policy and general proposals in respect of the development and use of land in that district. The planning authority are required by section 7(2) to secure that their policy and general proposals are justified by the results of the survey and by any other information which they may obtain. They are also required to have regard to current policies with respect to the economic planning and development of the region as a whole. In relation to the form of the structure plan, regulation 6 of the Regulations requires that the policies and general proposals formulated in a structure plan must be set out so as to be readily distinguishable from its other contents. Importantly, in the context of the present appeal, regulation 6 also requires that the plan must include a reasoned justification of the policies and general proposals which it contains. It is therefore for the planning authority to provide reasons justifying the policies and general proposals contained in the plan. In relation to procedure, section 8(1) of the Act requires the planning authority, when preparing a structure plan and before finally determining its content for submission to the Ministers, to take such steps as will in their opinion secure that adequate publicity is given to the report of the survey and to the matters which they propose to include in the plan, and that an adequate opportunity is given for the making of representations with respect to those matters. Under section 8(2), the planning authority are required to consider such representations. When the plan is submitted to the Ministers for approval, the planning authority are required by section 8(4) to make copies of it available for inspection. Section 8(5) requires that those copies must be accompanied by a statement of the time within which objections to the plan may be made to the Ministers. Section 8(7) requires the Ministers, if they are satisfied that the purposes of section 8(1) have been adequately achieved, to proceed to consider whether to approve the plan. Under section 10(1) of the Act, the Ministers may either approve the plan (in whole or in part and with or without modifications or reservations) or reject it. Before determining whether or not to approve it, the Ministers are required by section 10(4) to consider any objections to the plan, so far as they are made in accordance with regulations. The Ministers also have a discretionary power to hold an examination in public. Section 10(10) of the Act, which is the critical provision in the present appeal, provides: On exercising his powers under subsection (1) in relation to a relevant proposal, the Secretary of State shall give such statement as he considers appropriate of the reasons governing his decision. The reference in that provision to the Secretary of State is now to be read as referring to the Ministers. The expression a relevant proposal is defined by section 10(2) as meaning inter alia a structure plan. Further provision in relation to the procedure is made by the Regulations. In particular, regulation 18 provides that where the Secretary of State (now to be read as meaning the Ministers) proposes to modify a structure plan he shall, except as respects any modification which he is satisfied will not materially affect any policy or general proposal of the plan, inter alia give notice by advertisement of the proposed modifications, and consider any objections duly made to the proposed modifications. It follows from these provisions that there are several opportunities for objections to be made during the process leading up to the approval of a structure plan. First, representations may be made to the planning authority, in accordance with section 8(1) of the Act, before the plan is finalised for submission to the Ministers. Secondly, objections to the finalised plan can be made to the Ministers, in accordance with section 8(5). Thirdly, objections can be made to any modifications to the plan which are proposed by the Ministers, in accordance with regulation 18 of the Regulations. It also follows that there are two distinct contexts in which reasons require to be given. First, the planning authority must include in the finalised plan a reasoned justification of their policies and general proposals, in accordance with regulation 6 of the Regulations. Secondly, the Ministers must, when exercising their power to approve the plan (in whole or in part, with or without modifications or reservations) or to reject it, give such statement as they consider appropriate of the reasons governing their decision, in accordance with section 10(10) of the Act. The Act also makes provision for the preparation of local plans. Under section 11(1), every planning authority is required to prepare local plans for all parts of their district. Section 11(5) stipulates that the local plan must conform generally to the structure plan, and under section 17(3) the planning authority must not adopt a plan which does not conform to an approved structure plan. Finally in relation to the legislation, section 238(1) of the Act enables any person aggrieved by a structure plan or a local plan who wishes to question the validity of the plan on the ground (a) that it is not within the powers conferred by Part II [of the Act] or (b) that any requirement of that Part or of any regulations made under it has not been complied with in relation to the approval or adoption of the plan to make an application to the Court of Session. There is no dispute that the appellant is a person aggrieved. Her application was made under section 238(1)(b). Section 238(2) concerns the remedies which may be granted on an application under the section. It provides: On any application under this section the Court of Session (b) if satisfied that the plan is wholly or to any extent outside the powers conferred by Part II, or that the interests of the applicant have been substantially prejudiced by the failure to comply with any requirement of that Part or of any regulations made under it, may wholly or in part quash the plan either generally or in so far as it affects any property of the applicant. The preparation of the plan In January 2003 the Council publicised its intention to prepare a replacement of the Fife Structure Plan 2002. A survey was undertaken in accordance with section 4 of the Act, and the Council also commissioned a report from a landscape architect, Alison Grant, on the capacity of the landscape to accommodate new development adjacent to St Andrews, and on a proposed green belt. The report, Landscape Capacity Assessment and Proposed Green Belt Study of St Andrews, was submitted in March 2003. The Grant report identified a number of relatively small areas of land, totalling less than 25 hectares, where development could be accommodated without damaging the landscape. The remaining land adjacent to St Andrews was reported to be subject to landscape constraints on development. The nature and severity of the constraints varied as between different areas. In some locations, development would impact on the setting of St Andrews. In other locations, development would affect the landscape in other ways: for example, by affecting the open character of the location in question, or by affecting an existing designed landscape, or by affecting views from within the town. In particular, as regards land to the west of St Andrews, referred to in the report as St Andrews West, the report identified areas totalling about 20 hectares which were designated as falling into category 3: that is to say, capable of development without adversely affecting the key characteristics and visual qualities of St Andrews. The remaining land in St Andrews West was designated as falling into category 5: that is to say, land where development was inappropriate because of its potential impact on the landscape character, scenic quality or visual attributes of St Andrews and its setting. In March 2005 the Council published its consultative draft structure plan together with its draft report of survey, a sustainability appraisal and other documents. By letter dated 19 April 2005 the appellant made representations in accordance with section 8(1) of the Act. The Council gave consideration to the representations received from the appellant and others and subsequently finalised the plan. The Councils finalised plan Chapter 1 of the finalised plan provided a summary of the plan. It set out the fundamental strategic objective, namely the economic regeneration of Fife. The plan sought to achieve this objective by a number of means, such as restoring population growth, providing low cost housing as a stimulus to population growth and identifying key economic development areas in various parts of Fife. It explained that the strategy implemented the National Planning Framework published in 2004, which had identified St Andrews University as having the ability to contribute to both the national and the local economy, and had also identified St Andrews as a tourism destination of international renown. The strategy was to increase employment opportunities, taking a positive approach to economic development and directing major new employment creating development to the main towns, including St Andrews. Another aspect of the strategy was to accommodate an increase in the population of Fife through the provision of housing at a number of locations, including St Andrews. A further aspect of the strategy was to protect the landscape setting of the historic core of St Andrews through the introduction of a green belt. Chapter 2 described the settlement strategy. It explained that seven strategic development areas would contribute significantly to developing the Fife economy and enhancing communities. Those areas would be the focus for mixed use developments, largely on greenfield land, containing a minimum of 1,200 houses. One of these areas was to be located in St Andrews. Paragraph 2.4 stated: The strategy is to realise the potential of St Andrews as an economic driver for the whole of Fife in terms of academic development and tourism, whilst reconciling this against the need to protect its internationally important heritage. This strategy has significant implications for land use and expansion of the town and has to be balanced with the need to protect its landscape setting. High quality development and expansion of employment land is required over the longer term. Land for 1200 houses in the period to 2026 will be identified; a large proportion of which will be within a strategic development area to the west of the town and will maximise the use of brownfield sites where possible. A 10ha science park and a 10ha general business park will be identified to provide opportunities for employment growth. The local plan will define the green belt boundaries taking account of the need to provide land for development over, and potentially beyond, the plan period. Contribution to a new link road will be required as part of this development. That aspect of the strategy was reflected in a number of policies and proposals, including Policy SDA1, concerned with strategic development areas, and Proposals PE1 and PH2, concerned with employment and housing respectively. Chapter 4 was concerned with the environment. In relation to St Andrews, paragraph 4.5 stated: The key issue for St Andrews is the extent to which the town should grow over a long timescale. The town needs to accommodate further employment land to grow the economy, deliver affordable housing as part of the settlement, while the landscape setting of the town needs to be protected and enhanced by the identification of robust green belt boundaries. The local plan will set out how, where and the extent to which St Andrews should grow over the next 20 years. That approach was reflected in Policy ENV1. Reading paragraphs 2.4 and 4.5 together, it appears therefore that the Council intended to determine through the local plan process how the strategy described in paragraph 2.4 was to be applied in practice, and in particular how, where and the extent to which St Andrews should grow in order to accommodate the further employment land and housing which were needed while protecting the landscape setting of the town. The submission of the finalised plan to the Ministers In June 2006 the Council submitted the finalised plan to the Ministers for approval, together with the report of survey, a sustainability appraisal and strategic environmental assessment, and other documents. Later in June or July 2006 the appellant submitted to the Ministers her objections to the finalised plan. Altogether, the Ministers received over 2700 objections. During 2007 the Ministers agreed to a reappraisal by the Council of limited aspects of the finalised plan, so as to take account of new household projections which had been published by the General Register Office for Scotland. Following the reappraisal, the Council prepared proposed modifications to the finalised plan, and provided an opportunity for representations to be submitted. The appellant submitted such representations. The Council then finalised its proposed modifications, and submitted them to the Ministers in December 2007. It proposed in particular that the amount of new housing required for St Andrews should be reduced from 1200 to 1000 houses. An opportunity was then given by the Ministers for the lodging of objections to the proposed modifications. It appears that the appellant lodged such an objection. The Ministers proposed modifications In December 2008 the Ministers published their proposed modifications to the finalised plan, in accordance with regulation 18 of the Regulations, together with a strategic environmental assessment. The proposed modifications did not materially alter the strategy summarised in Chapter 1 so far as relating to St Andrews. In Chapter 2, the references to strategic development areas were proposed to be replaced by references to strategic land allocations. The minimum number of houses to be contained in such an area was proposed to be reduced from 1200 to 300. The relevant area was proposed to be described as St Andrews West rather than St Andrews. Land was proposed to be located there for a minimum of 1000 houses. Up to 90 additional houses might be assigned to St Andrews following further assessment. Consequential alterations were also proposed to Policy SLA1 (as the former Policy SDA1 was proposed to be re designated) and Proposals PE1, PH2 and PH3. In relation to the environment, the first two sentences of paragraph 4.5 were proposed to be revised so as to read as follows: The key issue for St Andrews is the careful management of growth. The town needs to accommodate further housing and employment land to grow the economy and deliver affordable housing, while protecting and enhancing the landscape setting by the identification of robust green belt boundaries. A consequential alteration was proposed to Policy ENV1. The Ministers strategic environmental assessment The Ministers strategic environmental assessment focused on the environmental effects of the modifications proposed by the Ministers rather than the effects of the finalised plan, in accordance with the relevant legislation. The assessment was however placed within the broader context of the plan as a whole. Paragraph 3.22 summarised the key findings which emerged from the assessment of housing allocations for St Andrews and North East Fife. They included the following: There is potential for significant adverse effects on landscape, due largely to the value and sensitivity of the receiving environment. Further development of a large scale around St Andrews, without appropriate mitigation, has the potential to adversely affect its landscape setting. Expansion of the town will therefore require careful local level site selection and mitigation at the local plan level. Landscape capacity assessments have concluded that capacity to absorb large scale development around St Andrews is very limited. However, to the south and west of the town, specific areas where smaller scale development could be reasonably accommodated (subject to appropriate landscaping and siting) have been identified and should be prioritised for development at the local level, as appropriate. The existing AGLV [Area of Great Landscape Value] and several cSLAs [candidate Special Landscape Areas] could be directly or indirectly affected by housing development within this HMA [Housing Market Area]. The reference in that passage to landscape capacity assessments referred in particular to the Grant report. That summary reflected a fuller account set out in a table appended to the assessment, which stated: Previous landscape capacity studies have identified major constraints to development around St Andrews arising from its special landscape qualities. Areas where development could be accommodated, if appropriately landscaped were also identified, and these should form a focus for future land allocations within the relevant local plans. The design of new housing, siting and scale should take into account landscape capacity. In particular areas around St Andrews that were noted for their distinctive qualities and role in providing the unique setting of the town should be avoided as far as possible. The previous landscape capacity studies referred to included the Grant report. It is apparent from these passages that the Ministers strategic environmental assessment recognised that large scale development could damage the landscape setting of St Andrews. The conclusion drawn was that expansion of the town will therefore require careful local level site selection and mitigation at the local plan level. The sites identified in the Grant report as suitable for development were to form a focus for future land allocations within the relevant local plan. That conclusion was consistent with the Councils approach in the finalised plan, under which the intention was to determine through the local plan process how, where and the extent to which St Andrews should grow in order to accommodate the further housing and employment land which were needed while protecting the landscape setting of the town. The conclusion drawn in the strategic environmental assessment was therefore consistent also with the Ministers decision to approve, without modification, that aspect of the finalised plan. The appellants letter of objection The Ministers allowed an opportunity for objections to be made to the proposed modifications to the finalised plan, in accordance with regulation 18 of the Regulations. The appellant submitted a letter dated 29 January 2009, which objected, not to any modification proposed, but to the absence of any modification of the strategy that St Andrews should be an economic driver for Fife and should accommodate the houses, science park, business park and bypass proposed. In the course of her letter, about 2000 words in length, the appellant made numerous more specific points in support of this general objection, grouped under the headings Fife Population, General Register Office Figures, Landscape Capacity St Andrews, Population St Andrews, Strategic Land Allocations, Affordable Housing, Green Belt for St Andrews, Objections and Representations and Fife Landscape Study. Under the heading Landscape Capacity St Andrews the appellant made several points. She began: In 1998 Fife Council published the St. Andrews Strategic Study. Two of its conclusions were that 'St Andrews is at its landscape capacity and no major expansion should take place. Major new housing development would result in an unacceptable impact on the quality of the towns environment. In 2003 the Alison Grant Landscape Capacity Assessment and Green Belt Study of St. Andrews was published (following a requirement for a landscape assessment in the 2002 Structure Plan). It concluded that there was very little scope for development round St Andrews. The Council has generally ignored this work, and the Tyldesley Landscape Assessments [a 1997 report by David Tyldesley and Associates entitled A Green Belt for St Andrews]. The appellant then made other points under that heading, relating inter alia to the recent history of development in St Andrews and the trend of visitor numbers. The points made in the appellants letter largely repeated those which she had made in her earlier objections to the finalised plan. The Ministers decision In May 2009 the Ministers approved the finalised plan with modifications. In the letter notifying the Council of their decision, the Ministers stated that they had considered all representations and objections made to them, the matters taken into account in the plan as submitted, and such other matters as they thought relevant. So far as relating to St Andrews, the final modifications referred in paragraph 2.4 to the need for the strategic land allocation in St Andrews West to meet the significantly higher need for affordable housing provision in St Andrews and NE Fife. The final modifications were not otherwise materially different from those which had been earlier proposed. The Ministers statement of reasons The Ministers also published at the same time a schedule of reasons for making modifications to the finalised plan, and a separate schedule of reasons for not making modifications to the finalised plan. The former schedule gave a brief explanation of each of the modifications made. The latter schedule summarised objections made (1) to the plan as submitted to the Ministers in 2006, (2) to the modifications proposed by the Council in 2007 and (3) to the Ministers proposed modifications as published in 2008, in respect of which the Ministers had decided not to make modifications, and gave reasons for the Ministers decision. After an introductory section headed General, the schedule followed the layout of the finalised plan. Under the heading General, the schedule addressed objections relating to the housing land requirement. Reason 4, in particular, stated: The strategic allocation to St Andrews West reflects the housing land required across Fife based on an 8% population growth estimate. Reason 5, addressing objections to the effect that policies on landscape are omitted, stated: The plan takes full account of environmental issues and provides an appropriate level of protection. In relation to Chapter 1 of the plan, reason 6 addressed objections to the effect that the plan includes excessive developer led projects and economic development implications, and stated: Subject to the final modifications, the plan's vision and settlement strategy are consistent with government policies on development planning and sustainable economic growth. In relation to Chapter 2, reason 17 addressed objections to the effect that St Andrews West development will affect landscape and amenity, and that [the] scale of development is too high, and stated: It is appropriate for St Andrews to accommodate a strategic allocation of Fifes housing requirement. The local plan will articulate the strategic land allocation which can be accommodated subject to mitigation and landscape enhancement. In relation to Chapter 3, concerned with the implementation of the strategy, reason 22 addressed objections to the effect that a 10 hectare science park at St Andrews would be better placed [elsewhere], and stated: Business and employment proposals for St Andrews are consistent with its academic and scientific profile. In relation to Chapter 4, reason 33 addressed objections which were summarised and answered as follows: Landscape character and capacity assessments indicate that St Andrews is at its landscape capacity or that development should be steered to Craigtoun (named individuals, Royal Burgh of St Andrews CC, St Andrews Preservation Trust, St Andrews Green Belt Forum). Reason: The 2003 Alison Grant study indicates that some scope for further development to the west of St Andrews exists subject to mitigation. The appellants challenge The appellant challenged the validity of the structure plan under section 238 of the Act on the ground that the Ministers had failed in reason 33 to give adequate reasons for rejecting her objection to the proposed modifications, based on landscape capacity, as set out in her letter dated 29 January 2009. The Ministers had therefore failed to comply with a requirement of the Act. Her interests had been substantially prejudiced. These contentions were rejected by the Lord Ordinary, Lord Uist ([2010] CSOH 105). A reclaiming motion was refused by the Inner House ([2011] CSIH 59; 2012 SC 172). Certain material changes have occurred since the reclaiming motion was refused by the Inner House. First, in June 2012 the Ministers approved a strategic development plan for 2012 2032 covering St Andrews. The structure plan in issue in these proceedings thereupon ceased to have effect. Secondly, in October 2012 the Council adopted a local plan covering St Andrews. The appellant has brought separate proceedings in which she challenges the validity of the strategic development plan, and other proceedings in which she challenges the validity of the local plan. In her appeal to this court, the appellant has essentially repeated the arguments advanced in the lower courts and rejected by them. She maintains that the Ministers misrepresented her objection based on landscape capacity in summarising it, in reason 33, as being that St Andrews was at its landscape capacity. Her argument was not that there was no capacity whatsoever, but that the available capacity was inadequate to accommodate development on the scale proposed. Having set up a straw man, the Ministers then knocked it down in reason 33 by pointing out that, according to the Grant report, some scope for further development exists. That reason however failed to address the point which she was actually making. It was no answer to refer to the Grant report, which supported the point being made. She was substantially prejudiced by the failure to provide adequate reasons, since it was not apparent whether the Ministers had grappled with the landscape issue: that is to say, the impossibility of fitting the proposed developments into the 22 hectares which, according to the Grant report, could be developed without damaging the landscape. There was therefore substantial doubt whether the Ministers decision had been taken within the powers of the Act (cf Save Britains Heritage v Number 1 Poultry Ltd [1991] 1WLR 153, 168). Discussion In considering the adequacy of the reasons given for a decision, it is necessary to take account of a number of matters, including the nature of the decision in question, the context in which it has been made, the purpose for which the reasons are provided and the context in which they are given. Although it is not possible to draw a clear cut distinction between the issues to be determined at the level of a structure plan, and those which should be determined in a local plan, it is apparent from section 7(1) of the Act that a structure plan is intended to be concerned with policy and general proposals, rather than with more detailed matters. It is also apparent from section 7(2) that the policy and general proposals set out in the structure plan are to be justified by the survey and by any other information which the planning authority may obtain. Furthermore, as I have explained, regulation 6 of the Regulations requires the structure plan to include a reasoned justification of the policies and general proposals which it contains. The appellant does not suggest that there has been any failure to comply with any of those requirements. Against that background, the duty of the Ministers under section 10(10) to give reasons for their decision either to approve the plan (in whole or in part and with or without modifications or reservations) or reject it cannot be intended to require them to provide a justification for the policies and proposals in the structure plan: those are the policies and proposals of the planning authority, and it is that bodys responsibility to provide a reasoned justification for them. Furthermore, the adequacy of the reasons given in the present case has to be considered on the basis that they are addressed to persons who are familiar with the background and the issues. These factors are relevant to the Ministers exercise of the discretion allowed to them by section 10(10): the duty of the Secretary of State, to whose functions the Ministers have succeeded, is to give such statement as he considers appropriate of the reasons governing his decision. The equivalent provision in the Town and Country Planning Act 1971 was considered in Edwin H Bradley & Sons Ltd v Secretary of State for the Environment (1982) 47 P & CR 374. Glidewell J observed at p 389 that the reasons given must comply with the test formulated by Megaw J in In re Poyser and Mills Arbitration [1964] 2 QB 467, 478: that is to say, they must be proper, adequate and intelligible, and must deal with the substantive points that have been raised. Glidewell J added that provided the reasons comply with that test, the Secretary of State could not be challenged in that respect. He might decide that short reasons would suffice, or that a point was not substantive and thus needed little or no reasoning in his decision. In Westminster City Council v Great Portland Estates plc [1985] AC 661 Lord Scarman stated at p 673, with the agreement of the other members of the House, that he accepted the guidance given in those two cases. It is in addition important to maintain a sense of proportion when considering the duty to give reasons, and not to impose on decision makers a burden which is unreasonable having regard to the purpose intended to be served. In the present case, the Ministers received a plethora of objections to the plan and to their proposed modifications. To judge from the objections which the court has seen, many will have raised numerous distinct matters. The matters raised are likely to have been expressed by different objectors in different ways, with different nuances. If the Ministers were to be expected to address, line by line, every nuance of every matter raised in every objection, the burden imposed in such circumstances would be unreasonable. In such a situation, where objections can properly be grouped in categories according to their general tenor, it is not unreasonable for the Ministers to respond to them on that basis, summarising in broad terms the gist of a group of objections and the reasons for rejecting them. In the present case, it was reasonable for the Ministers to group the objections according to their subject matter, and to organise them according to the relevant chapters of the finalised plan. The objections contained in the appellants letter dated 29 January 2009, in particular, were relevant to several different chapters of the plan. In relation to Chapter 4, reason 33 in the Ministers schedule addressed objections the general tenor of which was summarised as being that St Andrews was at its landscape capacity. Although the appellant complains that that was a misrepresentation of her objection, that exact phrase appears in her letter, at the forefront of the points made under the heading Landscape Capacity St Andrews. The reason for rejecting objections to that general effect, from her and others, was that the Grant study indicated that some scope existed for further development to the west of St Andrews. That response did not address the broader point made by the appellant to the effect that the scale of development in St Andrews envisaged in the strategy set out in the plan, in respect of housing, a science park and a business park, would damage the landscape setting of the town. Reason 33 did not however stand alone. In relation to the plans general strategy as set out in Chapter 1, reason 5 stated the Ministers view that the plan provided an appropriate level of protection of the environment, and reason 6 explained that the plans vision and settlement strategy were consistent with government policies on development planning and sustainable economic growth. In relation to Chapter 2, which set out the strategy of realising the potential of St Andrews as an economic driver and as the location of a strategic allocation of housing, reason 17 explained that, in the Ministers view, it was appropriate for St Andrews to accommodate a strategic allocation of Fifes housing requirement, and that the local plan would articulate the strategic land allocation which can be accommodated subject to mitigation and landscape enhancement. In other words, the strategic allocation which could be accommodated, having regard to landscape considerations, would have to be determined through the local plan process. Reason 4 also explained that the strategic allocation to St Andrews West reflected the housing land required across Fife on the basis of projected population growth. In relation to the science park and business park proposed in Chapter 3, reason 22 explained that business and employment proposals for St Andrews were consistent with its academic and scientific profile. No doubt the Ministers might have explained in their statement of reasons that there was recognised to be a tension between, on the one hand, the economic and housing strategy of the structure plan, and on the other hand the protection of the landscape setting of the town, and that it was proposed to resolve that tension through the preparation of the local plan. Those matters were however explained in the structure plan itself. The reasons given provided an intelligible explanation, especially to a well informed reader such as the appellant, as to why the Ministers were not persuaded by her objections. There has therefore been no failure to comply with the duty to give reasons. Furthermore, even if the reasons might have addressed the appellants objection more clearly, there is no question of their possibly concealing a flaw in the Ministers reasoning by which she might have been prejudiced. Particularly when considered together with the Ministers strategic environmental assessment, which had acknowledged the risks to the landscape and had envisaged that they would be addressed through the local plan process, and to which the appellant had referred in her letter of objection, the reasons given did not raise any doubt as to whether the Ministers had failed to take account of a material consideration, namely the potential impact of the policy and proposals in the structure plan upon the landscape. I should add that no point was taken on behalf of the Ministers as to whether the appellants letter of 19 January 2009 was in reality an objection to the proposed modifications or was an out of time objection to the finalised plan, which did not require to be taken into consideration. Expenses Finally, the appellant took issue with the decision of the Inner House to find her liable to the second respondent, Fife Council, in the expenses of the appeal in both the Outer House and the Inner House. The appellant complained in particular that the Inner House had rejected her submission that she should be spared a prohibitive burden of expenses, in the spirit of the Aarhus Convention, partly on the basis that she had failed to provide information about her capital, although such information had not been requested by the court, and partly on the basis that she had failed to apply for a protective expenses order, although there was no established procedure for applying for such an order at the relevant time. In his opinion on this matter ([2011] CSIH 77), the Lord Justice Clerk observed that the appellant had not been deterred from bringing her application, or from appealing against the decision of the Lord Ordinary, by the possible extent of her liability should she fail. In the event, she had failed on all material points. She had placed before the court information about her income from pension and investments, but that gave the court an incomplete picture of her means, since it did not include any information about her capital. She could have applied for a protective expenses order in accordance with the guidance given in McArthur v Lord Advocate 2006 SLT 170, but had not done so. Lord Hodge also observed that the possibility of applying for such an order was well known. Although the failure to apply for such an order did not prevent consideration of the issue of prohibitive expense at a later stage in the proceedings, it was a relevant consideration at the end of the proceedings that the possibility of an adverse award of expenses had not prevented the appellant from pursuing the appeal. The appellants criticisms of the significance attached by the Inner House to her failure to apply for a protective expenses order must be rejected. The possibility of applying for such an order was well known at the relevant time. Although the procedure was not then regulated by a rule of court, clear guidance as to the procedure which should be followed had been given by Lord Glennie in the case of McArthur. The Inner House were entitled in the circumstances to treat as relevant the fact that the appellant had pursued the present proceedings without having applied for such an order. In relation to the appellants failure to disclose her capital, the submissions recorded as having been made on her behalf before the Inner House included a submission that she was not a person of great wealth. The adequacy of the information provided about her financial position was a matter for the assessment of the Inner House, which is not open to further argument in this court. Conclusion For these reasons it follows that the appeal must be dismissed. Postscript This appeal turned on the construction of particular documents. Although of importance to those affected by the outcome, the appeal did not on examination raise any arguable point of law of general public importance. It was not an appropriate use of the time of this court. This is not the first occasion in recent months when the court has made observations to this effect in respect of a Scottish appeal: see G Hamilton (Tullochgribban Mains) Ltd v Highland Council [2012] UKSC 31; 2012 SLT 1148, para 29. By virtue of section 40(3) of the Constitutional Reform Act 2005, an appeal lies to this court from any order or judgment of a court in Scotland if an appeal lay from that court to the House of Lords at or immediately before the commencement of that section. The effect of that provision is that, subject to certain statutes under which an appeal from the Court of Session lies only with the permission of the Court of Session or the Supreme Court, the general rule is that an appeal against a judgment on the whole merits of a cause lies to this court from the Inner House of the Court of Session without leave. That is a privilege which is not enjoyed by litigants in any other part of the United Kingdom. Appeals against any order or judgment of the Court of Appeal in England and Wales or in Northern Ireland can be brought only with the permission of the Court of Appeal or of this court. In practice, the Court of Appeal normally refuses permission so as to enable an Appeal Panel of this court to select, from the applications before it for permission to appeal, the cases raising the most important issues. The public interest is served, in relation to appeals from England and Wales and Northern Ireland, by the rule that permission to appeal is granted only for applications that, in the opinion of the Appeal Panel, raise an arguable point of law of general public importance which ought to be considered by the Supreme Court at that time, bearing in mind that the matter will already have been the subject of judicial decision and may have already been reviewed on appeal. An application which in the opinion of the Appeal Panel does not raise such a point of law is refused on that ground: Supreme Court Practice Direction 3.3.3. The reasons for adopting that approach were explained by Lord Bingham of Cornhill, at the time when the final court of appeal was the House of Lords, in R v Secretary of State for Trade and Industry, Ex p Eastaway [2000] 1 WLR 2222, 2228: In its role as a supreme court the House must necessarily concentrate its attention on a relatively small number of cases recognised as raising legal questions of general public importance. It cannot seek to correct errors in the application of settled law, even where such are shown to exist. In the case of appeals from the Inner House, the public interest is secured in part by certain statutory rules which qualify the right of appeal, for example by limiting appeals from judgments which were themselves given on appeal from the sheriff to points of law. The primary mechanism for securing the public interest is however the requirement that the notice of appeal must be signed by two Scottish counsel (an expression which for this purpose includes solicitors with a right of audience in the Supreme Court) who must also certify that the appeal is reasonable: Supreme Court Practice Direction 1.2.25. In Wilson v Jaymarke Estates Ltd 2007 SC (HL) 135 the House of Lords emphasised that it was important that the privilege enjoyed by Scottish litigants should not be abused. Lord Hope of Craighead observed at para 17: It is contrary to the public interest that the time of the House should be taken up with appeals which do not raise an arguable question of general public importance, as this is liable to cause delay in the disposal of appeals which merit its attention. It is also relevant to note what was said by Lord Hope at para 20: The privilege which appeals from the Court of Session to this House still enjoy, if properly used, can work to the advantage of Scottish litigants and to the development of Scots law. But the limits on it must be carefully and jealously respected if it is to continue to be in the public interest, given the amount of appellate business that now comes before the House from all parts of the United Kingdom. Those observations apply equally to appeals brought to this court. It is the responsibility of counsel, when considering whether an appeal is reasonable, to bear them in mind. |
The appellant has been allowed to remain anonymous for the purpose of these proceedings and has been referred to by the initials, I.A. He is a native of Iran, having been born there on 20 September 1976. He arrived in the United Kingdom on 23 August 2007 and applied for asylum the following day. An initial, screening interview of the appellant took place on 24 August 2007 followed by a substantive interview on 20 September 2007. In anticipation of the second of those interviews, he made a statement dated 19 September in which he described his background and the circumstances in which his claim to asylum was made. The account which follows in the next 5 paragraphs is taken from that statement. The appellant stated that he was a member of a Kurdish family. He said that his parents, 3 sisters and 4 brothers continued to live in Iran. While still a young man, the appellant claimed to have witnessed ill treatment of people who visited detainees in a detention centre near his place of work. This experience prompted a desire to join the Kurdistan Democratic Party of Iran (KDPI). Initially thereafter, he had some loose association with that party, largely consisting of the distribution of leaflets and writing political slogans on walls. On one occasion he and another man, who was a member of KDPI, sprayed anti colour paint on a car belonging to the prison authorities of Bukan, his home city in West Azerbaijan. They were seen by a prison guard who shouted at them but they were able to flee the scene without being detained. The appellant was, he alleged, terrified that the authorities would arrest him because of his involvement in this incident, so he decided to leave the country. At that time, the appellant was 16 years old. After the car painting incident, he did not return home. He stayed briefly with an aunt in Saghez and then went to another city. Shortly afterwards he was smuggled from there into Kurdistan in Iraq where he joined the KDPI. He was involved with them for about 6 or 7 years and then separated from them because, he said, the leaders began thinking more of their own interests than the interests of the Kurdish people of Iran. In 1998 the appellant applied for asylum at the United Nations High Commission for Refugees (UNHCR) in Kurdistan and was recognised as a refugee. He was advised that he would be sent to a safe country in due course. He claimed that this did not happen because Saddam Husseins regime refused to offer any assistance to UNHCR refugees. He therefore decided to leave Iraq and go to Turkey. It appears that he arrived in Turkey in May 2002. After he arrived in Turkey the appellant presented himself to the UNHCR in Van city. He was again recognised as a refugee. (From information lately received from UNHCR it is clear that this second recognition occurred in May 2003.) UNHCR again undertook to send him to a safe country. Despite this, the appellant remained in Turkey for a further 3 years. He claimed that after he had been accepted by the UNHCR as a refugee he was sent to Kutahya city in western Turkey and was not permitted to leave. In 2006, frustrated by UNHCRs inaction, the appellant and 20 other refugees protested in front of their offices. The police arrested and detained them. After some 3 months the appellant was served with a court summons to appear in court. He claimed that he was frightened to appear in court and so went into hiding until he managed to leave Turkey and travel to the United Kingdom. After arriving in the United Kingdom the appellant had been in contact with his family in Iran. He learned that the authorities had visited his home on a number of occasions and that his father had been taken to the Intelligence Office in Bukan and had been questioned about the appellants whereabouts. He claimed that his parents had been expelled from Iran to Iraq because of his involvement with KDPI. They remained there for only 2 days, however, and were then permitted to return to Iran. During his interview on 20 September 2007, the appellant said that after joining the KDPI he carried out activities for them in the organising department of the party. He also claimed that he had gone back to Iran in 1993, 1994 and 1995 in order to recruit for KDPI and for propaganda purposes. He and others who accompanied him were attacked by Iranian security forces with rockets and mortars. He said that he was in charge of 15 20 freedom fighters within the KDPI. On their trips to Iran, they would stay about 3 months at a time. They carried weapons in case they were involved in fighting with Iranian troops. In the event they did not engage in fighting although they were on occasions attacked by cannons and mortars. The appellant also told his interviewers that he had discovered in 2002 that his father had been imprisoned by the Iranian authorities but he did not know when. The appellants claim for refugee status was refused by the Secretary of State on 27 September 2007. That initial refusal was withdrawn, however, while further inquiries were made of UNHCR. Before the second decision on his application was made, another statement dated 30 November 2007 was submitted on the appellants behalf. This purported to deal with some of the matters raised in the first refusal letter. In the second statement the appellant said that he had not referred to his having returned to Iran in 1993 1995 because the solicitors who had acted for him at the time that the first statement was compiled had prepared it on the basis of questions that they had put to him and the answers that he had given. The question of his having returned to Iran had not been raised in this exchange. The appellant also said in the second statement that he had been a peshmerga between 1992 and 1994. (A peshmerga or peshmerge (in Kurdish: Pmerge) is the term used by Kurds to refer to armed Kurdish fighters. Literally meaning those who face death the peshmerga forces of Kurdistan have been in existence since the advent of the Kurdish independence movement in the early 1920s.) During this time the appellant also wrote articles and poetry in support of the peshmerga cause, he said. He also described the guns which he had been trained to use and claimed that he had worked as a radio operator and had trained other peshmerga. He alleged that he had been on a mission with one Mohammed Armandzadeh in about 1995. Mr Armandzadeh had been arrested in the course of the mission and had later been executed. Mr Armandzadehs brother, Kamaran, was a friend of the appellant and in his second statement the appellant claimed that he and Kamaran had lived together in Iraq. Kamaran had worked as a paramedic in a hospital run by KDPI. It was claimed that the two had worked together for some years or for 3 4 years. In his second statement the appellant claimed that the only document that he had taken with him when he left Iraq was his certificate of refugee status that had been issued by UNHCR. He said that he had left all other documents with a Dr Maraf Khazadar. Even after he had been refused asylum in the United Kingdom, he did not ask Dr Khazadar to send the documents to him. He explained that he did not do so because, culturally, [Dr Khazadar] is a respected elder gentleman, [and] it would not be appropriate to ask such a favour of him. The appellant claimed that after he had been refused asylum on the second occasion, he knew that one of his sisters was living in Iraq and he asked her to obtain the documents for him. The documents included a card with a photograph of the appellant which, he claimed, showed that he was a security guard at a KDPI Congress; a second card with his photograph purporting to show that he was a trainee in the Political and Military School of the KDPI; and a document which stated that the appellant was a former peshmerga for KDPI. These documents and their late production played an important part in the determination of the appellants appeal against the refusal of asylum for reasons that I will consider below. The second refusal letter was issued on 5 November 2008. The appellants account was deemed to be incredible. It was considered unlikely that the appellant would have been sought by the Iranian authorities as a result of the car spraying incident in Iran. His story was that he had been observed engaging in what was thought to be a low level of vandalism. It was not accepted that this would result in his acquiring a noteworthy profile in Iran or that he would be at significant risk throughout Iran. The claim that the appellant's parents had been expelled from the country 2 years later in 1994 as a result of his activities was considered not to be believable. If the authorities had positively identified the appellant, it would not have taken them 2 years to take action against his parents. Nor would such action have taken the form of such a brief period of exile. Moreover, if they had been exiled while the appellant was active as a peshmerga, it was thought unlikely that they would have returned to Iran. It was also noted that, despite the appellant's claims that the Iranian authorities were aware of his activities as a peshmerga with the KDPI, his family had not received adverse interest from the authorities since 2002. If the appellants claim of repeated armed incursions into Iranian territory with the KDPI was true, it was considered that he would have noticed the omission of such significant evidence from his first statement of 19 September 2007. He would have ensured that these details were included in his submitted statement. Their omission from his statement severely damaged his credibility. A discrepancy was also identified in the accounts which the appellant and Mr Armandzadeh gave of their having worked together. When these accounts were compared it was concluded that the two men could only have been together for something short of a year at most. This was considered to be a significant discrepancy. There was also a divergence in their accounts of how many people had attended the protest In Turkey. In the respondents estimation, these inconsistencies meant that Mr Armandzadeh had failed to offer suitable corroboration of the appellants story. At the time that the appellant had submitted his second statement to the respondent he also sent a statement purporting to come from the KDPI which, he claimed, confirmed that he had been a member of that organisation. This was dismissed by the respondent as being lacking in details that might have supported the appellants account. The respondent did not accept that the appellant had been a member of the KDPI. It was concluded that if he had genuinely been in fear of returning to Iran he would not have left the protection of UNHCR on two occasions. Even if his claims were true, it was considered that he would not have been identified as a KDPI supporter if he was now returned to Iran. The determination of the Asylum and Immigration Tribunal In January 2009 Immigration Judge (IJ) Agnew conducted a hearing of the appellants appeal against the Secretary of States decision under section 82(1) of the Nationality Immigration and Asylum Act 2002. The judge heard testimony from the appellant and Mr Kamaran Armandzadeh. She also received voluminous documentary evidence. This included background evidence relating to the situation in Iran and the Kurdish population in that country. It also included expert evidence submitted on behalf of the appellant and this is fully summarised in the judges written determination. IJ Agnew considered the documents which the appellant claimed had been sent by his sister from Iraq. She noted that a residence card in the bundle of documents disclosed that the appellants sister had permission to reside in Iraq until 11 November 2008 but the postage date on the package containing the documents was 16 November 2008. She found the appellants explanation for failing to obtain the documents before he did to be wholly implausible. She considered therefore that they were to be approached with considerable caution. On that account she attached little weight to them. A letter purporting to come from the KDPI and signed by Khosro or Khostow Abdallahi (said to be the leader or chief representative of the KDPI in Europe) attracted IJ Agnews particular attention. Having reviewed the evidence about this letter and its avowed provenance, the judge declared herself to be not satisfied that the letter was signed or written by the leader of KDPI. The appellants explanation for omitting to mention in his first statement that he had returned to Iran on several occasions was rejected by the judge. This was, she said, most crucial to his case. It was not believable that he would not have been given the opportunity by his solicitors to give an account about these incursions into Iran. The failure to give that account was all the more striking because of the importance attached to it by the experts who provided reports on the appellants behalf. The judge found the account given by the appellant of what had happened to his family, particularly the brief expulsion of his parents to Iraq, to be entirely unconvincing. She also pointed to a number of discrepancies in the statements supplied by Kamaran Armandzadeh, the most significant of which was that in the first statement it was suggested that IA had been with Mr Armandzadehs brother when the latter was captured whereas in the second statement it was stated that he did not know whether IA was with his brother on the mission or not. The judge stated that she did not find IA or Kamaran Armandzadeh to be credible witnesses; the appellant had not established that he was involved with the KDPI or that the Iranian authorities had or would have any interest in him. She therefore dismissed his appeal. In paras 18 26 of her determination IJ Agnew dealt with the argument that the grant of refugee status by UNHCR should be followed by the grant of asylum in the United Kingdom unless there were the most clear and substantial grounds for departing from that decision. The judge referred to the decision in Secretary of State for the Home Department v KK (Congo) (Recognition elsewhere as refugee) [2005] UKIAT 54 and, applying the decision in that case, at para 25 said: As I have noted, independent documentary evidence regarding the procedures used to issue the appellant the refugee certificate in Iraq and refugee status in Turkey by the UNHCR was not before me, nor evidence regarding on what basis the appellant applied for this status and on which it was granted. The appellant's evidence was most vague. Therefore, whilst the granting of refugee status to the appellant should be regarded as a starting point, it is not necessarily a very strong one, on its own, without any helpful evidence as to the basis and procedures for the previous grant. I, however, do bear in mind that it is a starting point, that it is significant and that whilst considering the substantive merits of the case, the most clear and substantial grounds, if they exist, must be provided for coming to a different conclusion The appeal to the Extra Division of the Court of Session The decision of IJ Agnew was challenged in the Court of Session on the basis that she had failed to give any weight to the decision of UNHCR to grant refugee status. That circumstance, counsel argued, should have loomed large in the consideration of the appellants case. It ought to have been taken into account in the assessment of his credibility. Instead it was compartmentalised so that it remained detached from other evidence adduced at the hearing. It was, moreover, wrongly discounted by the judge because she had no information about how or why UNHCR came to its decision. These arguments were rejected by the Extra Division: [2011] CSIH 28; 2011 SC 625. It considered that the immigration judge had approached the effect of the UNHCRs decisions properly and had accorded them appropriate weight. Lord Clarke, who delivered the opinion of the court, said that the tribunal had followed the approach commended by Sullivan LJ in the case of MM (Iran) v SSHD [2011] INLR 206 (in a judgment delivered after the tribunals determination in the present case). Sullivan LJ at para 27 of MM had said: In reality, a decision by the UNHCR as to refugee status will, given the UNHCR's particular expertise and responsibilities under the Refugee Convention, be given considerable weight by the Secretary of State and the tribunal unless in any particular case the decision taker concludes that there are cogent reasons not to do so on the facts of that individual case. It would be just as unrealistic to contend that a decision by the UNHCR as to refugee status must always be given considerable weight regardless of any indications to the contrary as it would be to contend that it could be given less than considerable weight for no good reason. In agreeing with Sullivan LJs judgment on this aspect of the matter, Lord Clarke said at para 15 of the Extra Divisions judgment: While UNHCR decisions as to status have no binding legal effect, they are to be treated with great respect in the interests of legal diplomacy and comity having regard to their source. The mind of the decision maker, in this jurisdiction, where an applicant can lay claim to UNHCR status, as a given datism, must in its decision making process not lose sight of that fact in reaching its disposal of the case before it. A decision of the UNHCR on refugee status will be a very important piece of evidence throughout the decision makers journey. But it has ultimately no greater claim than that and, if the other material before the decision maker leads him/her to considerations that point cogently against the conclusion arrived at by the UNHCR, then the decision maker is fully justified in departing from the latter conclusion. The UNHCR material No information was available to IJ Agnew or the Extra Division as to how UNHCR had arrived at its decisions to grant IA refugee status. In an extremely helpful intervention Ms Carmichael QC on behalf of UNHCR explained why it is not always possible or desirable to respond to requests for information about why a particular decision on refugee status had been taken. At para 35 of its written case, UNHCR said this: UNHCR is not always able [to], nor can it be expected to, respond to every request for documentation and/or information on a particular decision. There are good reasons why UNHCR is not able to provide such information in an individual case, including the observance of confidentiality/data protection principles, capacity or resources, access and/or the security of staff, refugees and/or operations which may be compromised. I recognise the force in these reasons but it was helpful to be informed that UNHCR is currently reviewing the question of the release of documentation on request from individuals who make claims to asylum in particular countries. As I shall discuss in the next paragraph, experience in this case has illustrated how information about the reasons that refugee status has been granted by UNHCR and about its method of assessing claims can be of pivotal importance to an examination of a claim for asylum in this country. It is of particular assistance that the basis on which the decision to accord refugee status be disclosed, even if no further information can be provided. As it happens, in response to a request from the appellants legal advisers and following confirmation from him that he consented to disclosure of documentation about the grant of refugee status for the purposes of this appeal, UNHCR provided redacted notes of an interview and assessment of the appellant by UNHCR staff in Turkey in May 2003. The solicitors acting on behalf of UNHCR have intimated (in the letter to the appellants solicitors which enclosed the material) that they wished to preserve as far as possible the confidentiality of these notes. It would not be appropriate therefore to set out their contents in extenso. It is sufficient for present purposes to say that they contain details of the appellants incursions into Iran, a considerable amount of information concerning the organisation, command structure and areas of operation of KDPI and a rather more believable explanation of the circumstances in which his parents were sent to Iraq. Of particular importance, potentially at least, is that some of the information given by the appellant in the interview ought to be capable of being checked for accuracy. It is eminently possible that a significantly different view about his credibility would have been formed had this information been available to IJ Agnew. The effect of the grant of refugee status by UNHCR By virtue of the Convention relating to the Status of Refugees (the 1951 Convention) and its 1967 Protocol, UNHCR has a supervisory responsibility in relation to the observance and application of the 1951 Convention. Under the 1950 Statute of the Office of the High Commissioner (the Statute), UNHCR is required to provide international protection to refugees. It is also tasked with the duty to work with governments in order to seek permanent solutions to problems presented by refugees. Para 8(a) of the Statute requires UNHCR to fulfil its mandate by, promoting the conclusion and ratification of international conventions for the protection of refugees, supervising their application and proposing amendments thereto. Article 35 of the 1951 Convention and Article II of the 1967 Protocol oblige state parties to cooperate with UNHCR in the exercise of its functions. One aspect of the discharge by UNHCR of its supervisory responsibility is the issuing of interpretative guidelines, including UNHCRs Handbook on Procedures and Criteria for Determining Refugee Status under the 1951 Convention and the 1967 Protocol relating to the Status of Refugees and UNHCRs subsequent Guidelines on International Protection. It is accepted by all that, despite the expertise and experience in dealing with refugees which UNHCR enjoys and despite the responsibilities with which it is charged, its decisions as to refugee status do not oblige countries to accede to applications for asylum by those who have been accorded that status by UNHCR. This is frankly accepted by UNHCR itself. Importantly, it is not only accepted, it is positively asserted by UNHCR, that states have an independent, autonomous responsibility under the 1951 Convention and the 1967 Protocol to determine a persons refugee status when that is claimed. That duty cannot be relinquished to UNHCR. These considerations provide the setting for the examination of the role that a UNHCR decision on refugee status should play in the assessment by a country of a claim to asylum. The Extra Division considered that a decision of the UNHCR on refugee status would constitute an important piece of evidence in the decision makers evaluation of the claim for asylum. But in circumstances where no material as to how or why UNHCR reached its decision is available (as was the case here) it is difficult to see how its conclusion can properly be regarded as evidence other than of the fact that that determination had been made. In Secretary of State for the Home Department v KK (Congo) [2005] UKIAT 54, Ouseley J described an earlier grant of refugee status by another country as a starting point. At para 18 he said: The earlier grant of asylum is not binding, but it is the appropriate starting point for the consideration of the claim; the grant is a very significant matter. There should be some certainty and stability in the position of refugees. The adjudicator must consider whether there are the most clear and substantial grounds for coming to a different conclusion. The adjudicator must be satisfied that the decision was wrong. The language of Babela is that of the burden of proof: their status is prima facie made out but it can be rebutted; the burden of proof in so doing is on the Secretary of State. We do not think that that is entirely satisfactory as a way of expressing it and it leaves uncertain to what standard the burden has to be discharged and what he has to disprove. The same effect without some of the legal difficulties is established by the language which we have used. The statement that the adjudicator must be satisfied that the decision was wrong gives rise to difficulty. Is this a requirement that the adjudicator be satisfied that the decision was wrong when taken, or is wrong in light of the information available at the time that the adjudicators decision is being made? If the former, it is difficult to see how any judgment could be made of its correctness if it is a decision of UNHCR which (as will currently be the position in the majority of cases) is unaccompanied by any information as to the reasons that it was taken. If it means that the decision is not the correct one in light of the information available at the time the adjudicator makes its decision, it is not easy to see what part it plays in influencing the contemporary decision. It appears that Ouseley J contemplated that the wrongness of the original decision could arise from either of the scenarios mooted in the preceding paragraph for in para 19 of his judgment he said: But the important point is that it does not prevent the United Kingdom from challenging the basis of the grant in the first place. It does not require only that there be a significant change in circumstances since the grant was made. Clear and substantial grounds may show that the grant should never have been made by the authorities; it may be relevant to show that the authorities in the country in question lacked relevant information or did not apply the Geneva Convention in the same way. Exclusionary provisions may be relevant. The procedures adopted for examination of the claim may also be relevant. Considerations of international comity may be rather different as between EU member states and those with less honest administrations or effective legal systems. In MMs case Sullivan LJ dealt with the issue in para 27 of his judgment in this way: In reality, a decision by the UNHCR as to refugee status will, given the UNHCR's particular expertise and responsibilities under the Refugee Convention, be given considerable weight by the Secretary of State and the tribunal unless in any particular case the decision taker concludes that there are cogent reasons not to do so on the facts of that individual case. It would be just as unrealistic to contend that a decision by the UNHCR as to refugee status must always be given considerable weight regardless of any indications to the contrary as it would be to contend that it could be given less than considerable weight for no good reason. This formulation is different from the approach in KK. In the latter case, Ouseley J considered that clear and substantial grounds should exist for coming to a different conclusion from the earlier grant of refugee status. It is implicit in his approach that the earlier grant must be given considerable weight in any event. But a different conclusion can be reached if, notwithstanding the considerable weight that should be accorded the earlier grant, substantial grounds for considering that the decision was wrong are established. On Sullivan LJs formulation the weight to be attached to a decision of UNHCR to grant refugee status should initially be regarded as considerable but that can be substantially reduced if the decision maker concludes that there are cogent reasons not to accord it that level of influence on the facts of a particular case. On this approach it would not be necessary to show that the decision of UNHCR was wrong (which is what Ouseley J in KK considered was necessary), merely that there are reasons for diminishing the weight to be applied to it. Sullivan LJs is a much more open textured approach to the part that the UNHCR decision should play. Departure from an earlier decision of UNHCR for the reason that it can be considered to be wrong is inevitably problematical if the basis on which that decision was taken remains unexplained. This is so even if the judgment is that the earlier UNHCR determination is incompatible with what is currently considered to be the right decision. If nothing is known of the basis on which the earlier determination was made, it is difficult to see how it can be condemned as wrong even if the current view is that refusal of asylum is plainly right. On that account, I do not consider that it is helpful to approach the question of the weight to be given to the UNHCR determination by asking whether it was right or wrong. Moreover, if one starts with the proposition that the decision must be given considerable weight unless shown to be wrong, this partakes of the application of a presumption that the UNHCR decision must carry the day unless it is shown to be wrong. Since the circumstances in which the determination of refugee status by UNHCR was made are likely, in most cases, to be unknown when the decision on asylum is reached, the foundation for a presumption and its aptness to play such an important role cannot be assessed. Applying a presumption against a background of such a lack of knowledge cannot be a sound basis for a reliable determination. Although the reasons underlying a decision by UNHCR to grant refugee status will not generally be disclosed before a determination of a claim to asylum is made, the nature and range of the functions undertaken by UNHCR in the matter of refugees and displaced persons should inform the approach of a decision maker in determining whether asylum should be granted to a claimant who has been recognised as a refugee by that organisation. Paragraph 1 of the UNHCR Statute provides that: The United Nations High Commissioner for Refugees, acting under the authority of the General Assembly, shall assume the function of providing international protection, under the auspices of the United Nations, to refugees who fall within the scope of the present Statute and of seeking permanent solutions for the problem of refugees . This mandate has been enlarged by successive UN General Assembly and UN Economic and Social Council resolutions. It extends to situations of forced displacement as the result of conflict or public disorder. Quite apart from its own role in the determination of refugee status of claimants, UNHCR has a supervisory function in monitoring the procedures and criteria applied by states engaged in the same exercise of determining claims for asylum. It also has an obligation to determine and declare whether individuals or groups give rise to particular need of protection, even when a government may have carried out a similar determination and despite any different finding that state institutions may have reached. Indeed, refugee status determinations are considered by UNHCR to be a core protection function. Certain core principles and standards are incorporated into refugee status determinations in every UNHCR office to ensure that all asylum seekers, regardless of where they apply for refugee status can depend on the application of consistent adjudication of their claims. And, in order to ensure a harmonised and dependable approach, in November 2003 UNHCR produced Procedural Standards for Refugee Status Determination under UNHCRs Mandate. These, together with existing guidance on the procedural aspects of refugee status determinations, are designed to establish and promote fundamental principles to enhance the quality, fairness and integrity of UNHCR procedures. Standards are set in relation to case management, training and supervision of those who make decisions on refugee status claims. In addition to the Procedural Standards UNHCR offices are required to follow and implement various other guidelines which are contained in a wide variety of instruction manuals. The organisation seeks to ensure high standards of quality and consistency in decision making on refugee claims by requiring strict adherence to the guidelines. The guidelines themselves are the product of accumulated learning which draws on the jurisprudence of international, regional and national courts and an abundance of other sources. In 2012 UNHCR conducted refugee status determinations in 62 countries; in 49 of those it had sole responsibility for this form of determination and in the remaining 13 countries it carried out these determinations jointly with governments or under a parallel procedure. UNHCRs decisions on refugee status have been accepted as the basis for the departure and recognition in receiving states of over 330,000 refugees from 2008 to 2012 to 24 resettlement countries. These have involved approximately 60 85,000 departures per year. It can be seen, therefore, that UNHCR exerts considerable influence throughout the world in the recognition of and care for refugees. Although little may be known about the actual process of decision making by UNHCR in granting refugee status in an individual case, the accumulated and unrivalled expertise of this organisation, its experience in working with governments throughout the world, the development, promotion and enforcement of procedures of high standard and consistent decision making in the field of refugee status determinations must invest its decisions with considerable authority. But translating respect for that authority into tangible impact on decision making by national authorities is not straightforward. For the reasons given at para 37 above, I do not believe that the application of a presumption that the UNHCR decision should be followed unless shown to be wrong is appropriate. A fortiori, the imposition of a burden of proof on the state authorities to establish that the UNHCR decision was wrong is inapposite. How then, is the prior decision to be treated? In its written submission UNHCR suggested a practical approach to this question in the following passage from para 4(3) of its written case: A state decision maker cannot disregard UNHCRs recognition of refugee status in evaluating the individuals claim unless there are cogent reasons for doing so. A state decision maker may, after an examination of all the evidence available to him or her arrive at a decision regarding an applicants eligibility for refugee status different from the UNHCR recognition where there are cogent reasons for doing so. Cogent reasons would include: a. Where reliable information is available to the state decision maker which supports a finding that the applicant does not meet the definition of a refugee in article 1A(2) of the 1951 Convention, for example where changes have occurred in the circumstances of the applicant or his or her country of origin which directly affect the assessment of the claim for refugee status. Other examples could include where previously unavailable or new information is now before the state decision maker and which directly affects the assessment of the claim for refugee status. Information of this sort will often be information which post dates UNHCRs decision. b. Where reliable information is available to the state decision maker which brings the applicant within the exclusion clauses in article 1F of the 1951 Convention. c. Where reliable information is available to the decision maker which, when considered in the light of all the available information, supports a finding that the applicants statements on material elements of the claim are not credible. As a template of how the matter should be approached by national authorities (provided it is not considered to be wholly exhaustive of the factors that might be taken into account) I consider that this has much to commend it. It is to be observed that the credibility of the applicant is accepted as a basis on which the earlier UNHCR decision may be departed from. But it should also be noticed that this is dependent on the availability of reliable information which calls the believability of the applicants claim into significant question. This suggests that information should be from a source other than the applicants own account and, as a general rule, I would accept that this is a sensible requirement. Of course, where a claimants story is so riddled with inconsistency and implausibility as to render it unbelievable, a national decision maker would not be obliged to accept it simply because it was accompanied by a favourable UNHCR decision on refugee status. Absent such an extreme example, however, it seems to me that where the possible rejection of a claim for asylum rests solely on credibility, if the claimant has UNHCR refugee status, his claim should not be rejected unless his credibility is undermined by information that emanates from a source other than his own account. Fitting the fact of an earlier UNHCR decision in favour of refugee status into (in the case of a determination by the Secretary of State) the quasi judicial and (in the case of the tribunal) the judicial model of determination of a claim to asylum is not easy. It does not supply evidence which can be independently evaluated by the decision maker. Nor does it, in my opinion, raise a presumption by which the adjudicators assessment of the evidence is adjusted. It does not impose a burden of proof on the state authorities who resist the claim. It must be given weight but the manner in which it should be accorded weight does not conform to any conventional trial norm. Unsatisfactory though it may be, it seems to me that the influence that such a decision has on the determination of a claim to asylum must be expressed in general (and consequently, fairly imprecise) terms. The circumstance that the weight to be given to the UNHCR decision cannot be articulated in an exact way must not be allowed to detract from the influence that it wields. Quite apart from the respect that is due to such a decision by reason of the unique and matchless experience and expertise of UNHCR, considerations of comity, legal diplomacy and the need for consistency of approach in international protection of refugees demand no less. The United Kingdoms obligation to cooperate with UNHCR also impels this approach. Moreover, as a general rule, the UNHCR decision will have been taken at a time more proximate to the circumstances which caused the claim to have been made. Frequently, it will have been made with first hand knowledge of and insight into those conditions superior to that which a national adjudicator can be expected to possess. All of these factors require of the national decision maker close attention to the UNHCR decision and considerable pause before arriving at a different conclusion. The approach cannot be more closely prescribed than this, in my opinion. The UNHCR conclusion on refugee status provides a substantial backdrop to the decision to be made by the national authority. A claimant for asylum who has been accorded refugee status by UNHCR starts in a significantly better position than one who does not have that status. But I would be reluctant to subscribe to the notion that this represents a starting point in the inquiry because that also hints at the idea of a presumption. Recognition of refugee status by UNHCR does not create a presumption, does not shift the burden of proof and is not a starting point (if by that one implies that it is presumptively assumed to be conclusive) but substantial countervailing reasons are required to justify a different conclusion. Did the immigration judge give sufficient weight to the UNHCR decision? In para 25 of her determination IJ Agnew said this: whilst the granting of refugee status to the appellant should be regarded as a starting point, it is not necessarily a very strong one, on its own, without any helpful evidence as to the basis and procedures for the previous grant. I, however, do bear in mind that it is a starting point, that it is significant and that whilst considering the substantive merits of the case, the most clear and substantial grounds, if they exist, must be provided for coming to a different conclusion. This discussion might be considered to be internally inconsistent in that the suggestion that the grant of refugee status is not necessarily a very strong one does not rest easily with the later observation that it is significant. Quite apart from this, however, the grant of refugee status should always be regarded as significant. It does not require to be bolstered by helpful evidence as to the basis and procedures on which it was granted for it to amount to an important consideration. Of course, if such information is present the significance of the grant of refugee status may be increased. But it is not diminished by the absence of such material. It is unwise, however, to isolate parts of the determination from its overall treatment of the approach to be taken to the prior grant of refugee status by UNHCR. IJ Agnew was careful to say that clear and substantial grounds were required to justify a different conclusion. It is clear that she conducted a careful analysis of the material which led her to decide that she should not follow the UNHCRs determination. And it is also clear that there was material extraneous to IAs account by which its veracity could be tested. The judge was entitled to have regard to his failure to mention that he had led incursions into Iran in the first statement. Likewise, she could quite properly take into account the discrepancies between IAs and Kamaran Armandzadehs accounts of their time together and the striking inconsistency in the latters versions of whether IA had been on a mission with Mr Armandzadehs brother. The (apparently) unexplained post mark on the package containing the documents said to have been dispatched by the appellants sister was another relevant factor. I find it impossible to say that these matters, taken together with the judges marked reservations about the believability of the appellants own story, were not sufficient to justify her rejection of his appeal. I should say that I consider that the judge was entitled indeed bound to consider the credibility of the appellants account, judged on its own terms, once she had found that there were sufficient reasons from external sources to question its reliability. While his account would not justify the description so riddled with inconsistency and implausibility as to render it utterly unbelievable (see para 46 above), once there was material outside his statements and evidence which challenged it, the judge was right to examine the appellants various versions for any intrinsic lack of trustworthiness. The fresh evidence In E and R v Secretary of State for the Home Department [2004] QB 1044, the Court of Appeal considered the question of when it was appropriate to permit fresh evidence to be introduced in an asylum appeal. It was held that mistake of fact giving rise to unfairness was a separate head of challenge on an appeal on a point of law. Admission of fresh evidence designed to establish misunderstanding or ignorance of an established and relevant fact was subject to Ladd v Marshall principles, which may be departed from where the interests of justice require. In para 66 Carnwath LJ said this about the ordinary requirements for a finding of unfairness: First, there must have been a mistake as to an existing fact, including a mistake as to the availability of evidence on a particular matter. Secondly, the fact or evidence must have been established, in the sense that it was uncontentious and objectively verifiable. Thirdly the appellant (or his advisers) must not been have been [sic] responsible for the mistake. Fourthly, the mistake must have played a material (not necessarily decisive) part in the tribunals reasoning. In the present case it was argued that the evidence of the interview of the appellant by UNHCR in May 2003 established a mistake about an existing fact in that the immigration judge had concluded that the appellant had not been present on incursions into Iran as he had claimed. In my view, evidence of the UNHCR interview does not establish a case of mistake about an existing fact, if indeed, the finding of the immigration judge on this issue can properly be described as a fact. It is certainly evidence of an earlier account which, on one view, adds credence to a number of elements of the account which IA subsequently gave. But it cannot be described as an uncontentious and objectively verifiable fact. The appellant advances an alternative basis on which the evidence should be admitted. This is that it informs consideration of the general issues of principle and it is in the interests of justice that it should be received. While it is open to the appellant to argue that the determination of UNHCR was properly made, it is submitted that it would be artificial to rely on an assertion to that effect when the true facts about why the determination was made are now known. I would admit the evidence in the interests of justice but for somewhat different reasons from those advanced on behalf of the appellant and for a slightly different purpose. The interview record discloses the approach that is taken to the investigation of a claim to refugee status and the range of subjects covered in the interview. As a tangible example of this type of inquiry, it provides useful material on which to make a judgment as to how influential a grant of refugee status should be as a matter of general practice. This stands quite apart from the question whether it rehabilitates the case that the appellant made to the immigration judge. The interview notes should be admitted, in my opinion, therefore, solely for the purpose of assessing the level of influence that a decision by UNHCR on refugee status should have. Disposal Since I have concluded that the judge was entitled, on the information before her, to reject the appellants account and to find that, notwithstanding the grant of refugee status by UNHCR on two occasions, the appellant should be refused asylum, I would dismiss the appeal. It was submitted on the appellants behalf that the matter should be remitted to the immigration judge so that she could consider the new material contained in the UNHCR record of interview with the appellant. I can see the force in that suggestion, not least because of my conclusion (at para 27 above) that, had this information been available to IJ Agnew, it is distinctly possible that she might have reached a different view on his credibility. But it appears to me that the better course is for the appellant to submit a fresh claim under rule 353 of the Immigration Rules (which, we were told, he would do in the event of failure in the appeal). Rule 353 provides: When a human rights or asylum claim has been refused. and any appeal relating to that claim is no longer pending, the decision maker will consider any further submissions and, if rejected, will then determine whether they amount to a fresh claim. The submissions will amount to a fresh claim if they are significantly different from the material that has previously been considered. The submissions will only be significantly different if the content: (i) had not already been considered; and (ii) taken together with the previously considered material, created a realistic prospect of success, notwithstanding its rejection. It will be, of course, a matter for the Secretary of State and, if necessary an immigration judge, to decide whether the new material from UNHCR constitutes a fresh claim. But it appears to me that submissions based on the UNHCR interview record are plainly of a significantly different order from those which have already been submitted on the appellants behalf. It will also be for the Secretary of State to consider if the new material creates a reasonable prospect of success. Given that the rejection of the appellants claim depended so heavily on the conclusion that his account was not believable, and that the new material sounds directly on the question of his credibility, one would have thought that the relatively modest hurdle of reasonable prospect of success would be comfortably overcome. And this is the more so because the interview record appears to reinforce in some material particulars the account that he gave in his second written statement and during the hearing before IJ Agnew. |
As is common knowledge, the whole system of funding higher education was reformed, broadly in accordance with the recommendations of Lord Brownes Report, Securing a Sustainable Future for Higher Education (October 2010), in 2011. The aims were further to widen participation in higher education, so that everyone who had the potential to do so should be able to benefit from it; to increase student choice and therefore competition between institutions; and to produce more investment for higher education. The fees which universities were allowed to charge their students would increase to something closer to what it cost to educate them; the fees paid by the students, and a sum for their maintenance, would be financed by loans from Government (through an arms length entity); these loans would only be repaid when the students could afford to do so and at a rate which they could afford. This case is about the criteria for eligibility for those loans, which exclude young people who have been settled here for many years in the factual sense but are not so settled in the legal sense. In order to qualify for a loan, a student must (a) be resident in England when the academic year begins; (b) have been lawfully ordinarily resident in the United Kingdom for the three years before then; and (c) be settled in the United Kingdom on that day. The issue is whether either criterion (b) or criterion (c) breaches the appellants right to education, under article 2 of the First Protocol to the European Convention on Human Rights, or unjustifiably discriminates against her in the enjoyment of that right. The Facts The appellant is a national of Zambia, born in 1995. She came to this country with her parents in 2001, at the age of six. Her father had a student visa and she and her mother came with him, lawfully, as his dependants. Her father left the UK in 2003, but she and her mother stayed on after their visas had expired. The appellant has lived in the UK since 2001. She has been educated here, through reception, primary, secondary and sixth form studies, has worked hard and has done very well. She was Head Girl of her secondary school and went on to the sixth form at Archbishop Holgates School in York. She has obtained seven GSCEs and the equivalent of three A levels with grades of A*, A, and C. These would have been sufficient to enable her to take up the place she had been offered by Northumbria University to read for a degree in International Business Management in the academic year 2013 2014; but in order to do so she needed a student loan. Hayden J was perfectly satisfied that outside the loan scheme there is no other realistic option for her to fund university education (para 7). Accordingly, on 20 April 2013, she applied on line to Student Finance England (the trading name of the Student Loans Company Ltd, which administers the scheme). They requested further information about her immigration status. She took legal advice and discovered that she was not eligible for a student loan. Her mother had taken no steps to regularise their immigration status after her father had left in 2003, but the appellant states that growing up, I had no idea what my immigration status was, which seems likely. In September 2010, the UK Border Agency (UKBA) served upon her mother and her (as her mothers dependant) forms notifying them that they were over stayers and thus liable to removal from the UK, but at the same time granting them temporary admission to the UK. On 30 January 2012, the UKBA granted them both discretionary leave to remain (DLR) until 29 January 2015. The letter stated that You are free to take a job and do not need the permission of any Government Department before doing so. You are free to use the National Health Service and the social services and other services provided by local authorities as you need them. The grant of DLR was not subject to a condition that she did not have recourse to public funds. Accordingly, she is not excluded from state benefits such as income based job seekers allowance and housing benefit (Immigration and Asylum Act 1999, section 115). On 29 January 2015, the appellant applied for a further grant of DLR, using the correct form for doing so. On 30 April 2015, this was granted until 30 April 2018. Her covering letter asked that the Secretary of State also consider granting her indefinite leave to remain (ILR), but this was subsequently rejected on the ground that she had not shown compelling reasons for dispensing with the normal qualifying period of DLR. Under the terms of a published Home Office policy, which applies to those like the appellant who were granted DLR before 9 July 2012, she will be entitled to apply for ILR after six years of DLR, that is, in 2018. For those granted DLR after that date, however, consecutive periods of ten years of limited leave to remain are required before a person in her position is eligible to apply for ILR. Applications can be made for ILR to be granted outside the Rules, but the current guidance makes it clear that the Home Office does not regard the desire to qualify for a student loan as a good reason for granting ILR (Immigration Directorate Instruction, Family Migration: Appendix FM, section 1.0b, para 11.3.1). These proceedings were launched in June 2013, but delayed while the proceedings in R (Kebede) v Secretary of State for Business, Innovation and Skills [2013] EWHC 2396 (Admin), [2014] PTSR 92, which raised the same issues, were continuing. They were renewed after the appeal against the refusal of relief in that case was withdrawn. Meanwhile, the appellant did not take up the offered place at Northumbria, but applied through clearing for a place closer to her home in York. She was offered a place and started the course at the University of Hull in October 2013, with the aid of a commercial student overdraft facility and her mother, who took a better paid job in London in order to help her. But it soon became apparent that she would not be able to afford the travelling costs and so she withdrew after two weeks. She made another attempt to start a course at Middlesex University in the academic year 2014 2015, again with the help of her mother and her mothers partner, but withdrew from that after the first term, because of her concerns about the financial pressures on her mother and the quality of the course. She still hopes to be able to start again in the academic year 2015 2016 and has unconditional offers from five universities, including Manchester Metropolitan University, her top choice. Whether this is a realistic possibility depends upon the outcome of these proceedings. The appellant is not alone in her predicament. The Coram Childrens Legal Centre and the interveners, Just for Kids Law, are aware of many other young people who have been in this country for years, have studied alongside their British classmates, and have planned and qualified to go on to university when their classmates do. Often they were unaware of their immigration status and the barrier it would pose to achieving their academic potential and ambitions. Save (perhaps) for those who arrived as unaccompanied asylum seeking children, their immigration status is not their fault, but that of their parents or those responsible for their welfare (such as the local authority looking after the claimants in Kebede). Some of these young people have set up their own campaign group, under the auspices of Just for Kids Law, called Let us Learn. Alison East, of the Coram Childrens Legal Centre, describes the impact upon them thus: Our experience suggests that young people find not being able to go to university, when that would be a natural educational progression alongside their peers, incredibly difficult. They have worked hard to do well at school and at college, and aspire to achieve the best they can. Seeing their friends and peers go to university when they cannot, and being aware of being held back for as long as ten years in pursuing qualifications that are essential in a competitive job market, inevitably causes these young people to feel marginalised. They feel that it is deeply unfair as they are not asking for a grant of money but only to be loaned the money which will allow them to progress, alongside their peers, into well paid work so that they can pay that loan back. No one knows how many such young people there are. In his first witness statement on behalf of the Secretary of State, Paul Williams assumed that there might be 2,400 extra applicants for student loans in any one year. In his second witness statement this had come down to around 2000. In fact, the Home Office statistics reveal that in 2013, a total of just over 2000 people aged 16 to 23 were granted either DLR or its replacement, limited leave to remain (LLTR). These grants are, of course, for 30 months or two years. But not all of these young people will aspire to go to university or apply for student loans. It is perhaps fair to say that the numbers affected are not insignificant but a tiny proportion of the student loans which are made each year. It is also relevant to note that the cap on the number of home and EU undergraduate students who may be admitted to read for first degrees has been progressively relaxed and is to be removed completely in the academic year 2015 2016. Professor Ian Walker, of the Department of Economics at Lancaster University, was commissioned by the Department for Business, Innovation and Skills (BIS) to write a report on The Impact of University Degrees on the Life Cycle of Earnings: Some Further Analysis (BIS Research Report No 112, 2013). This concludes that the average net financial benefit of a degree to the individuals concerned is of the order of 168,000 for men and 252,000 for women. The benefit to the government is even larger, of the order of 264,000 from men graduates and 318,000 from women. These calculations take into account the two elements of taxpayers subsidy involved in the student loan scheme: first, the small difference between the interest rate levied on the loans and the cost to the government of borrowing the money; and second, the more important element of forgiveness, in that repayments outstanding after 30 years are written off. This benefits graduates who do not do so well in the labour market and are not required to repay at the rates required of the higher earning graduates. These are purely financial calculations, leaving out all the other benefits of higher education, not only to the individuals but also to society: see The Benefits of Higher Education Participation for Individuals and Society: Key Findings and Reports: The Quadrants (BIS Research Paper No 146, October 2013), where they are graphically displayed with links to the supporting evidence. As Mr Williams accepts, the benefits of higher education have never been in dispute. Professor Walker was asked, for the purpose of these proceedings, to explain the relevance of his research to the group of young people with DLR or LLTR who are currently ineligible for student loans. He points out that the incentives for them to move to another country are likely to be small, that there is no reason to think that they would perform less well, on average, in higher education and the labour market than their eligible peers: The implication is that there would be sizeable gains to the Exchequer in the long run to extending student loans provisions to this relatively small group. It must, however, be borne in mind that gains to the Exchequer do not necessarily translate into gains for BIS, the Department which is responsible for funding the scheme. These proceedings The appellant claimed that both the settlement criterion and the lawful ordinary residence criterion constituted unjustified and discriminatory restrictions on her right to education under both article 2 of the First Protocol and article 14. Her claim was heard in July 2014 by Hayden J who held that her rights had been violated by the application to her of the settlement criterion but not by the application of the lawful ordinary residence criterion: [2014] EWHC 2452 (Admin). He did not grant any specific relief and gave both parties permission to appeal. The appeal was expedited and heard only two weeks later, on the last day of the legal year. The Secretary of States appeal against the judges decision on the settlement criterion was allowed and the appellants appeal against his decision on the lawful ordinary residence criterion was dismissed: [2014] EWCA Civ 1216. Laws LJ (with whom Floyd LJ agreed) held that the Secretary of State was justified in making, and might even be rationally required to make, a bright line rule and he was entitled to adopt a criterion based on settlement as defined from time to time by the Home Office. In the view of Vos LJ, however, what saved the requirement was the possibility that the Home Office might exercise its discretion to grant ILR to children in accordance with the Secretary of States duty under section 55(1) of the Borders, Citizenship and Immigration Act 2009 to ensure that her functions are discharged having regard to the need to safeguard and promote the welfare of children in the United Kingdom. Neither side supports that view on the appeal to this court, not least because the Home Secretary does not regard the need to qualify for a student loan as a reason to make an exception to the Rules. The law on eligibility for student loans The parent statute is the Teaching and Higher Education Act 1998. So far as relevant, section 22 provides that: (1) Regulations shall make provision authorising or requiring the Secretary of State to make grants or loans, for any prescribed purpose, to eligible students in connection with their [undertaking] (a) higher education courses, which are designated for the purposes of this section by or under the regulations. (2) Regulations under this section may, in particular, make provision (a) for determining whether a person is an eligible student in relation to any grant or loan available under this section. The Secretary of State for this purpose is the Secretary of State for Business, Innovation and Skills, and not the Secretary of State for Education, who is responsible for primary and secondary education, or the Secretary of State for the Home Department, who is responsible for immigration. The relevant Regulations are the Education (Student Support) Regulations 2011 (SI 2011/1986) (the Regulations). Regulation 4(2) defines an eligible student as a person whom the Secretary of State determines falls within one of the categories set out in Part 2 of Schedule 1. Part 2 of Schedule 1 has 12 paragraphs, listing some 20 categories of person. Six of these are to observe the UKs obligations in international law towards refugees and people granted humanitarian protection and their family members. Thirteen are to observe the UKs obligations towards people from the European Economic Area, Switzerland and Turkey, and towards people settled in the UK who have exercised their rights of residence within the EEA or Switzerland. That leaves paragraph 2, which contains the basic category: (1) A person who on the first day of the first academic year of the course (a) (b) (c) has been ordinarily resident in the United Kingdom and Islands throughout the three year period preceding the first day of the first academic year of the course; and (d) whose residence in the United Kingdom and Islands has not during any part of the period referred to in para (c) been wholly or mainly for the purpose of receiving full time education. is settled in the United Kingdom ; is ordinarily resident in England; In para 1(1) Part I of Schedule 1, settled is defined as having the meaning given in section 33(2A) of the Immigration Act 1971. This provides that references to a person being settled in the United Kingdom are references to his being ordinarily resident there without being subject under the immigration laws to any restriction on the period for which he may remain. This of course includes UK nationals with the right of abode, but for others it means that they have been granted indefinite leave to remain in the United Kingdom. Other forms of leave to enter or remain in the United Kingdom, including DLR and LLTR, are granted for specific periods. In most cases, a persons immigration status will be readily ascertainable from his passport, if he has one. The persons to whom, and the circumstances in which, ILR will be granted are determined by the Immigration Rules made by the Secretary of State for the Home Department and her policies. Like all immigration policy, they are subject to change, as the facts of this case show: a person like the appellant, who was granted DLR before 9 July 2012, will normally be granted ILR after six years of DLR, whereas a person granted DLR after that date will have to wait for ten years. There is no reason to suppose that the Home Secretary takes the educational rights or aspirations of applicants into account in determining these criteria. By para 1(2A) Part I of Schedule 1 to the Regulations, for the purpose of that Schedule, a person is not to be treated as ordinarily resident in a place unless that person lawfully resides in that place. This was no doubt inserted out of an abundance of caution, despite the observation in R v Barnet London Borough Council, Ex p Shah [1983] 2 AC 309, at p 343, that, at least for educational purposes, ordinary residence did not include a person whose residence in a particular place or country was unlawful. However, there are contexts in which lawfulness is not implied (for example, in relation to habitual residence for the purpose of jurisdiction in matrimonial causes, see Mark v Mark [2006] 1 AC 98), and the implication had been challenged, albeit unsuccessfully, in R (Arogundade) v Secretary of State for Business, Innovation and Skills [2013] EWCA Civ 823, [2013] ELR 466. At an earlier stage in this litigation, it was argued that the grant of temporary admission in 2010 was sufficient to make the appellants residence lawful for this purpose, but that suggestion was rejected by the Court of Appeal (para 60) and is no longer pursued. It is common ground, therefore, that the appellant did not achieve three years lawful ordinary residence until January 2015. It is perhaps worth noting that the three years ordinary residence test dates at least as far back as the University and Other Awards Regulations 1962 (SI 1962/1689), made under the Education Act 1962, which introduced the system of mandatory grants for university education (from which so many of my generation of students benefitted). The settlement criterion, on the other hand, was not introduced until the Education (Mandatory Awards) Regulations 1997 (SI 1997/431). This was not only 35 years after a system of mandatory student finance had been introduced, but also 14 years after the House of Lords decision in Shah, which had defined ordinary residence as a mans abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether of short or of long duration (p 343). This may have been a broader definition than had hitherto been thought, but principally because it included people who had come here wholly or mainly for the purpose of study. It cannot be suggested that before this time, ordinary residence was necessarily equated with ILR or any particular immigration status. For completeness, it should be noted that in 1980, before the introduction of the settlement criterion, the requirement of three years ordinary residence was removed for refugees (SI 1980/1352). For reasons which the Secretary of State is unable now to explain, in 1981, the definition of refugee was enlarged to include a person who enjoys asylum in the United Kingdom in pursuance of a decision of Her Majestys government though not so recognised (that is, recognised as a refugee for the purpose of the 1951 Geneva Convention on the status of refugees). When the settlement criterion was introduced in 1997, a similarly worded category of failed asylum seekers continued to be exempted from both the settlement and the residence requirements. Not surprisingly, when challenged, the Secretary of State conceded that the distinction drawn between those people with DLR who had applied unsuccessfully for asylum and those who had not done so was irrational (see the account given by McCombe LJ in Arogundade at para 10). Thus, for a short time, all persons with DLR/LLTR were treated as eligible for student loans under this category. It was, however, soon abolished (see SI 2011/87). It is fair to say that, just as there is no evidence of the reasons for including failed asylum seekers within the categories of eligible persons, there is also no evidence that thought was given to the impact of removing eligibility from all people with DLR or LLTR, irrespective of the strength of their connections with the United Kingdom. (There is evidence that the Department considered, but rejected, making an exception for unaccompanied asylum seeking children, who are routinely granted DLR/LLTR until the age of 171/2.) An Equality Impact Assessment of Student Funding Policy for Holders of Discretionary Leave to Remain in the UK was completed in 2011, but this was concerned only with the impact of the policy upon people with the characteristics protected by the Equality Act 2010 and not with the impact upon education rights under the European Convention. Finally, it should be emphasised that we are concerned only with the law in relation to students who are ordinarily resident in England on the day when the academic year begins. Financial support for students ordinarily resident in Wales, Scotland and Northern Ireland is a devolved function, and the regulations in each place are different from those in England. Under challenge in these proceedings, therefore, are (a) the settlement criterion, and (b) the lawfulness element in the three year residence criterion. This litigation is concerned only with eligibility for student loans, but such eligibility is also a passport to the right to be charged the fees applicable to home students; without it a university is free to charge the fees applicable to overseas students (often significantly higher), although it does not have to do so. Convention rights Under article 2 of the First Protocol to the European Convention on Human Rights (A2P1), Everyone has the right to education. This does not, however, oblige Member States to provide any particular system of state education. Rather, as was stated in the Belgian Linguistics case (No 2) (1968) 1 EHRR 252, at p 281, it affords people the right in principle to avail themselves of the means of instruction existing at a given time. Hence, in ahin v Turkey (2005) 44 EHRR 99, at para 137, the Grand Chamber explained that [a]lthough [A2P1] does not impose a duty on the contracting states to set up institutions of higher education, any state doing so will be under an obligation to afford an effective right of access to them. So fundamental is the role that education plays in the furtherance of human rights in a democratic society that the article should not be given a restrictive interpretation. The United Kingdom has indeed established a large and flourishing higher education sector, which, although technically consisting of private institutions, is to a large extent supported, either directly or indirectly, from public funds. Furthermore, as the court reiterated, It is of crucial importance that the Convention is interpreted and applied in a manner which renders its rights practical and effective, not theoretical or illusory (para 136). Making it prohibitively expensive for some students to gain access to higher education would make that right theoretical or illusory. Hence the Secretary of States accepts that in certain circumstances eligibility for financial support is capable of coming within A2P1 (and see R (Kebede) v Secretary of State for Business, Innovation and Skills [2013] EWHC 2396 (Admin), [2014] PTSR 92, para 33). The appellant complains that denial of access to a student loan has denied her access to the higher education provided in this country. But her real complaint is that some people get student loans and others do not, in short of discrimination. 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. It is now conceded that immigration status is another status for this purpose. It is therefore unnecessary for us to consider whether, even if it were not, the denial of a student loan to this appellant, when such loans are made available to other university students, would constitute and unjustified denial of her right to education. Whether considered under A2P1 alone or under article 14, taken together with A2P1, the issue is justification. There has been some debate before us as to the approach which we should take to scrutinising a governmental decision in this area. On the one hand, in Strasbourg, a wide margin of appreciation is usually allowed to the state under the Convention when it comes to general measures of political, economic or social strategy, and the court generally respects the legislatures policy choice unless it is manifestly without reasonable foundation: see, for example, Gogitidze v Georgia (Application No 36862/05), (unreported) given 12 May 2015 para 97. This test was first developed when considering whether an interference with the rights of property guaranteed by article 1 of the First Protocol (A1P1) was in the public interest: see James v United Kingdom (1986) 8 EHRR 123. That test has also been employed in Strasbourg and domestically when considering the justification for discrimination in access to cash welfare benefits, themselves a species of property right protected by A1P1: see Humphreys v Revenue and Customs Comrs [2012] UKSC 18, [2012] 1 WLR 1545; R (SG) v Secretary of State for Work and Pensions (Child Poverty Action Group intervening) [2015] UKSC 16, [2015] 1 WLR 1449. On the other hand, education is rather different. Both sides in this case rely upon the language of the Strasbourg court in Ponomaryov v Bulgaria (2011) 59 EHRR 799. This concerned two boys, born to Russian parents in what is now Kazakhstan. After their parents divorce, their mother married a Bulgarian and they all came to live in Bulgaria. The mother was granted a permanent residence permit and the boys were entitled to residence on the basis of her permit. They were educated at Bulgarian primary and secondary schools. There came a time when they should have had permanent residence permits of their own. Although both eventually succeeded in obtaining these, they complained that they had for a while been charged fees for their secondary education, whereas Bulgarian nationals and aliens having permanent residence permits were not. The issue was whether, having decided to provide such education free of charge, the state could deny that benefit to a distinct group of people: the notion of discrimination includes cases where a person or group is treated, without proper justification, less favourably than another, even though the more favourable treatment is not called for by the Convention (para 53). The court started by observing that a state may have legitimate reasons for curtailing the use of resource hungry public services such as welfare programmes, public benefits and health care by short term and illegal immigrants, who, as a rule, do not contribute to their funding. It may also, in certain circumstances, justifiably differentiate between different categories of aliens residing in its territory (para 54). However, Although similar arguments apply to a certain extent in the field of education which is one of the most important public services in a modern state they cannot be transposed there without qualification. It is true that education is an activity that is complex to organise and expensive to run, whereas the resources that the authorities can devote to it are necessarily finite. It is also true that in deciding how to regulate access to education, and in particular whether or not to charge fees for it and to whom, a state must strike a balance between, on the one hand, the educational needs of those under its jurisdiction and, on the other, its limited capacity to accommodate them. However, the court cannot overlook the fact that, unlike some other public services, education is a right that enjoys direct protection under the Convention. It is also a very particular type of public service, which not only directly benefits those using it but also serves broader societal functions. Indeed, the court has already had occasion to point out that [i]n a democratic society, the right to education is indispensable to the furtherance of human rights [and] plays a fundamental role . Moreover, in order to achieve pluralism and thus democracy, society has an interest in the integration of minorities (para 55). The court went on to say that the states margin of appreciation increased with the level of education. University education remained optional and higher fees for aliens seemed to be almost universal and were fully justified. The opposite went for primary education, which provided basic skills and integration into society and was compulsory in most countries (para 56). Secondary education fell between the two extremes, but with more and more countries now moving towards what has been described as a knowledge based society, secondary education plays an ever increasing role in successful personal development and in the social and professional integration of the individuals concerned (para 57). In the particular circumstances of the case, requiring these boys, who had come to Bulgaria lawfully as young children, had no choice in the matter, and were fully integrated into Bulgarian society, to pay fees on account of their nationality and immigration status was not justified. Nowhere in that case do the words manifestly without reasonable foundation appear, nor did the Court of Appeal adopt that test, which Laws LJ described as a blunt instrument (para 30). As the appellant points out, education (unlike other social welfare benefits) is given special protection by A2P1 and is a right constitutive of a democratic society. Nevertheless, we are concerned with the distribution of finite resources at some cost to the taxpayer, and the court must treat the judgments of the Secretary of State, as primary decision maker, with appropriate respect. That respect is, of course, heightened where there is evidence that the decision maker has addressed his mind to the particular issue before us (see, for example, Belfast City Council v Miss Behavin Ltd [2007] UKHL 19, [2007] 1 WLR 1420), or that the issue has received active consideration in Parliament (see R (SG) v Secretary of State for Work and Pensions). Both are lacking in this case: there is no evidence that the Secretary of State addressed his mind to the educational rights of students with DLR/LTTR when making these regulations, which were laid before Parliament subject to the negative resolution procedure. With those considerations in mind, I turn to the issue of justification. It is now well established in a series of cases at this level, beginning with Huang v Secretary of State for the Home Department [2007] UKHL 11, [2007] 2 AC 167, and continuing with R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2011] UKSC 45, [2012] 1 AC 621, and Bank Mellat v HM Treasury (No 2) [2013] UKSC 39, [2014] AC 700, that the test for justification is fourfold: (i) does the measure have an legitimate aim sufficient to justify the limitation of a fundamental right; (ii) is the measure rationally connected to that aim; (iii) could a less intrusive measure have been used; and (iv) bearing in mind the severity of the consequences, the importance of the aim and the extent to which the measure will contribute to that aim, has a fair balance been struck between the rights of the individual and the interests of the community? As to (i), the evidence presented on behalf of the Secretary of State suggests that settled students are in a better position to make a significant economic contribution and have a right to remain and work in the United Kingdom. They are thus regarded as more deserving of the limited funds available. The appellant accepts that it is legitimate to target resources on those students who are not only likely to stay here to complete their education but also to stay on afterwards and contribute to the United Kingdom economy through their enhanced skills and the taxes they pay. If they stay, it will also be simpler and easier to collect the repayments due on the loans through the taxation system. But (ii) are the means chosen rationally connected to those aims? The appellant argues that people in her situation are just as likely to stay here, to complete their education, to contribute to the economy and to repay their loans as are people who are settled here within the meaning of the Regulations. The reality is that even though she does not yet have ILR, her established private life here means that she cannot be removed from the UK unless she commits a serious criminal offence and she will almost inevitably secure ILR in due course. She is just as closely connected with and integrated into UK society as are her settled peers. She has no obvious alternative. As Professor Walker puts it graduate wages in the UK labour market are large, relative to the wages reigning in those countries where DLR/LLRs are likely to have been born so the incentives to move are likely to be small except for high flyers who would face relatively low subsidies (because they would quickly repay) if they remained in the UK. He concluded that it seems unlikely that the overwhelming majority would emigrate which is what it would take to make the net benefits to the UK fall to zero. But even if there is no sufficient rational connection between the aim and the rule, is the Secretary of State nevertheless justified in adopting a bright line rule which enables those administering the scheme quickly and easily to identify those who qualify? The Strasbourg jurisprudence is not altogether clear on this question. On the one hand, it tends to disapprove of a blanket exclusionary rule, such as that on prisoners voting (Hirst v United Kingdom (No 2) (2005) 42 EHRR 849), or a blanket inclusionary rule, such as that governing the retention of DNA profiles (S and Marper v United Kingdom (2008) 48 EHRR 1169). On the other hand, it recognises that sometimes lines have to be drawn, even though there may be hard cases which sit just on the wrong side of it (see, for example, Animal Defenders International v United Kingdom (2013) 57 EHRR 607). The need for bright line rules in administering social security schemes has been recognised domestically, for example in R (RJM) v Secretary of State for Work and Pensions [2008] UKHL 63, [2009] 1 AC 311. Nevertheless, it was the absence of any possibility of taking the particular circumstances of the case into account which led to the finding of a violation in Ponomaryov (para 62). The issue is therefore two fold. First, even if a bright line rule is justified in the particular context, the particular bright line rule chosen has itself to be rationally connected to the aim and a proportionate way of achieving it: see, for example, R (T) v Chief Constable of Greater Manchester Police (Liberty intervening) [2014] UKSC 35, [2015] AC 49. Secondly, however, it is one thing to have an inclusionary bright line rule which defines all those who definitely should be included. This has all the advantages of simplicity, clarity and ease of administration which are claimed for such rules. It is quite another thing to have an exclusionary bright line rule, which allows for no discretion to consider unusual cases falling the wrong side of the line but equally deserving. Hitherto the evidence and discussion in this case has tended to focus on whether there should be a bright line rule or a wholly individualised system. There are obvious intermediate options, such as a more properly tailored bright line rule, with or without the possibility of making exceptions for particularly strong cases which fall outside it. There are plenty of precedents for such an approach, including in immigration control. Could therefore a bright line rule have been chosen which more closely fitted the legitimate aims of the measure? I quite accept that the settlement rule is a good rule of thumb for identifying those who definitely should be eligible for student loans. They are the people with the right to stay and work here for as long as they please. (The risk that high flyers will move abroad applies to the settled and not settled alike.) But there are also people such as the appellant who have lived here for many years and cannot in reality be removed from the country unless they commit a serious crime. The appellant points to the criteria currently used in the Immigration Rules for the grant of leave to remain on grounds of private life. Paragraph 276ADE (1) includes a person who (iv) is under the age of 18 years and has lived continuously in the UK for at least seven years (discounting any period of imprisonment) and it would not be reasonable to expect to leave the UK; or (v) is aged 18 years or above and under 25 years and has spent at least half his life living continuously in the UK (discounting any period of imprisonment). To this might be added an exceptional cases discretion. Given the comparatively small numbers involved, in the total scheme of things, it has not been shown that this would be administratively impracticable. Indeed, in principle, different fees could be charged for processing different applications, based on the administrative costs of doing so. Finally, there is (iv) the fair balance to be struck between the effect upon the person whose rights have been infringed and the interests of the community, or, to put it another way, between the means and the ends. The Secretary of State argues that the effects upon the students denied loans until they have achieved ILR are not so great access is not denied but merely delayed. Nevertheless, the impact upon the appellant and others in her position is clearly very severe. As Vos LJ put it, she will be deprived of higher education at the time in her life when her primary and secondary education has led her reasonably to expect that she will go with her peers to university. She has no intention of leaving the United Kingdom. Her life was made here from the age of six and she is culturally and socially integrated into British society. Moreover, under article 8 her removal is simply not an option. The fact that she falls foul of the twin requirements of the 2011 Regulations is no fault of hers. (paras 74, 75). One does not need to have been a university teacher to appreciate that it is important to keep up the momentum of ones studies, to maintain the habits and skills learned at A level, and in many cases (particularly the sciences) to retain the knowledge gained there. A voluntary gap year is one thing, but an enforced gap of several years is quite different. These young people will also find it hard to understand why they are allowed access to all the public services, including cash welfare benefits, but are denied access to this one benefit, which is a repayable loan. Furthermore, in considering the overall balance, alongside the harm done to the individuals must be set the harm done to the community by such delay. Some of these young people may be lost to higher education forever. Others will not join the productive higher skilled workforce until much later than they otherwise would have done. The overall benefits to the exchequer and the economy, described in Professor Walkers unchallenged evidence, will be reduced. These harms to both the individuals concerned and the community as a whole cannot be outweighed by the administrative benefits of this particular bright line rule, which could be achieved in other ways. Any short term savings to the public purse by denying these students finance, by way of loans, not grants, are just that, as most of them will eventually qualify for loans, and in the meantime the benefit their enhanced qualifications will bring to the exchequer and the economy have been lost. Furthermore, the additional short term cost of enabling these students to have loans pales into insignificance compared with the costs of removing the cap on home student numbers. I conclude, therefore, that the application of the settlement rule to this appellant could not be justified and was incompatible with her Convention rights. The lawful ordinary residence criterion The appellants challenge is directed towards the lawfulness element in the requirement of three years ordinary residence in the United Kingdom. Once again, the Secretary of State has not clearly articulated its aim, but the appellant accepts that it is reasonable to restrict benefits to those who are genuinely integrated into the society and a period of residence can be a reasonable proxy for such belonging: see R (Bidar) v Ealing London Borough Council [2005] QB 812, para 57. The established rationale for insisting that residence cannot be ordinary unless it is lawful is that a person should not be permitted to benefit from his own unlawful conduct: see Shah [1983] 2 AC 309, p 343; Arogundade (No 2), para 37. That being so, it is argued that this appellant (unlike the appellant in Arogundade) is in no way to blame for the fact that her residence was not lawful. That was the result of decisions taken by her parents over which she had no control. The Secretary of State argues that lawful residence is not a status for the purpose of article 14. A fortiori the reason why that residence was not lawful cannot be such a status. Justification therefore does not arise. But even if it does, the rule is fully justified. In Ponomaryov the court said this: the applicants were not in the position of individuals arriving in the country unlawfully and then laying claim to the use of its public services, including free schooling. Any considerations relating to the need to stem or reverse the flow of illegal immigration clearly did not apply to the applicants case (para 60). There are indeed strong public policy reasons for insisting that any period of ordinary residence required before a person becomes entitled to public services be lawful ordinary residence. Furthermore, if the requirement were to be relaxed for people in the position of the appellant it would also have to be relaxed for all the other categories of persons eligible for student loans to whom the requirement of three years ordinary residence (here or in the EEA) applies, who are just as likely as the appellant to be the victims of their parents decisions rather than their own. The administrative burden involved in making the moral judgments required would be intolerable. And the overall balance of harm involved in a delay of up to three years is of a different order from the balance involved in a six or ten year delay. I would therefore prefer not to enter into the knotty problem of whether lawful residence is a status and whether lawful and unlawful residents are in an analogous situation for this purpose (questions which are analytically difficult to separate). There is ample justification for the rule. I conclude therefore that the application of the lawful ordinary residence criterion was compatible with the appellants Convention rights. Conclusion The application of the settlement rule to this particular appellant violated her Convention right to be afforded access to education on equal terms with her peers. What remedy should flow from this? The primary relief sought by the appellant is (i) a declaration that the impugned criteria breach her Convention rights, and (ii) that the Regulations should be read down so as to give effect to this, by inserting into regulation 4(2) (see para 15 above) or where the grant of support is necessary in order to avoid a breach of the persons Convention rights within the meaning of the Human Rights Act 1998. Alternatively, if it is not possible to read down the Regulations in this way, she seeks an order quashing the impugned provision and requiring the Secretary of State to put in place a Convention compatible basic criterion. The problem with quashing the settlement criterion in its entirety is that there must be cases in which it is not incompatible with the Convention rights. The problem with reading down the regulation as suggested is that it would leave the Department with little guidance as to when the refusal of finance would be a breach of the Convention rights. But the appellant is clearly entitled to a declaration that the application of the settlement criterion to her is a breach of her rights under article 14, read with article A2P1, of the Convention. Such a declaration was granted, for example, in In re G (Adoption: Unmarried Couple) [2008] UKHL 38, [2009] AC 173, where it was held that the provision of the Adoption (Northern Ireland) Order 1987 excluding unmarried couples from applying jointly to adopt was incompatible with the appellants Convention rights. A declaration was granted that it is unlawful for the Family Division of the High Court of Justice in Northern Ireland to reject the applicants as prospective adoptive parents on the ground only that they are not married. Such a declaration would leave the department in no doubt that this appellant is entitled to a student loan, while leaving it open to the Secretary of State to devise a more carefully tailored criterion which will avoid breaching the Convention rights of other applicants, now and in the future. LORD HUGHES: I agree with Lady Hale that this appeal should be allowed, but would make what seems to me a significant qualification in granting a declaration that the present settlement rule unlawfully infringes the appellants Convention rights, whilst my reasoning is not exactly the same as hers. This appeal was presented on the basis that there was both an infringement of A2P1 and unlawful discrimination. It was always accepted by the appellant that these two legal arguments went together. On inspection, I agree with Laws LJ in the Court of Appeal that the case depends upon a complaint of unlawful discrimination only. The jurisprudence of the Strasbourg court, and in particular Ponomaryov, makes it quite clear that, whatever may be the uncertain ambit of A2P1, it does not impose on any state an obligation to provide, or to fund, tertiary education. If, therefore, the UK were simply to decline to provide any university funding, that, whilst it would clearly not be acceptable publicly, would not entail any infringement of A2P1. Equally, it follows that A2P1 does not impose a requirement on the UK to fund tertiary education at any particular level or in any particular way, and whether or not it were to be asserted that such education had become prohibitively expensive for some individuals. This is an example of the UKs social and political realities being more exacting upon the state than the ECHR (and the Human Rights Act) require; it is not the only one. The law is not the only, nor even the principal, regulator of the provision of public services. The complaint in this appeal therefore relates not to an infringement of A2P1 but to the fact that funding is provided on a basis which is discriminatory in that it excludes the appellant, and others in a comparable position, on the grounds of their immigration status. It was not disputed that her immigration status is a status for the purposes of article 14 ECHR. It follows that the discrimination must be justified. Certain groups of European Union citizens have separate rights under EU law which are duly recognised in the eligibility rules set out in the Regulations. So also, under international obligations, do those accepted as legitimate refugees. Subject to that, the plain objectives of the government in promulgating the eligibility rules under consideration are: (a) principally, to target the not inconsiderable subsidy represented by the student loan scheme (about 45% of 9 billion per annum) on those who are properly part of the community (in this case of England, for there are separate and different rules for the other parts of the UK); thereby to target the subsidy on those who are likely to remain in (b) England (or at least the UK) indefinitely, so that the general public benefits of their tertiary education will enure to the countrys advantage; (c) thereby to increase the likelihood that, because the recipients of the loans will probably remain here, the public will receive repayment; and (d) to provide a rule which is easy to understand and apply, and inexpensive to operate, so that the minimum part of the available funds are taken up in administration costs. Those are, as it seems to me, plainly legitimate objectives. The course which has been taken in pursuit of these objectives has been to define eligibility for student loans in part in terms of the immigration position of the applicant. This produces the two rules which are in question in the present appeal: (i) the rule which requires the student to have been lawfully resident in the UK for three years immediately preceding the start of the University course; and (ii) by section 33(2A) of the Immigration Act 1971. It is readily understandable why the Secretary of State for Business, Innovation and Skills should have looked to the immigration rules for a convenient definition of those who are sufficiently connected with this country to justify receipt of the subsidy. But if he is to take that course, he needs to consider whether those rules do in fact adequately identify those who are sufficiently connected when it comes to University funding, and exclude those who are not. The purposes served by the immigration rules are not identical to the purposes of the regulations governing eligibility for student loans. In most respects, these two importations of the rule which requires the student to be settled in the UK as defined immigration concepts do sensibly identify those who are to be made eligible for student loan funding. But in one respect they do not, and the framers of the Regulations appear not to have considered the case of such as the appellant, where they do not. I entirely agree with Lady Hale that the rule requiring lawful residence for three years is plainly justified. Special rules for refugees and EU citizens apart, no one queries, nor could they query, a rule requiring a period of UK residence before entitlement to receipt of a loan on advantageous terms from the state. The only challenge is to the additional requirement that such residence be lawful. But that also is plainly justified. It must be open to the state to exclude from its generosity those whose residence here is illegal or has not been legal for a qualifying period. It may be true that young people such as the appellant may become and remain illegal immigrants through the actions of their parents and at a time when they were not personally responsible for their movements. But whilst this is so, it is plainly open to the state to say that a parent cannot obtain for his children subsidised University education by entering or overstaying illegally in this country and choosing to keep quiet about what s/he is doing. Children are inevitably affected in many ways by decisions made for them by their parents when they were young; this is one such. The settlement rule, insofar as it affects the cohort of which this appellant is an example, is different. Those in this cohort do not meet this rule but have these characteristics. They have lived in this country for the majority of their lives. They have passed through the education system, secondary certainly and often primary. Some, such as the present appellant, have done very well, but whether they have or have not, all have been treated throughout as members of UK society and have behaved as such. Their length of residence is such that no one doubts that there could be no question of removing them from the UK, at least in the absence of grave misconduct. They are, in any ordinary language, settled in the UK. They are, however, not settled for the purposes of the immigration legislation, because that defines settlement in terms of indefinite leave to remain (ILR). Increasingly, it is the practice of the Home Secretary to require a longer period of probationary limited leave to remain than was formerly the case, before ILR is granted. Until recently, and for this appellant, it was six years from the time when the unlawful presence is discovered, whilst for the future it will be ten years. At any time, the Home Secretary may alter this practice, whether by requiring a longer period of probation or by shortening it, or by imposing different conditions on grants of limited leave. The merits of this practice from the point of view of immigration administration have, correctly, not been debated in these proceedings, but I see no difficulty in understanding that it may have benefits when considered from that standpoint. For example, the grant of ILR brings other consequences in its train, such as family settlement rights for others. In any event, there is no doubt a case for a probationary period of limited leave. I see no grounds for criticising the Home Secretary for operating this practice. But what it brings with it, when invoked as a criterion for eligibility for student funding, is increasing separation of the immigration concept of settlement from the question of whether the young person is in fact tied by long residence, habit and community membership to UK society. The reality is that young people such as the appellant are members of UK society as much as most others. They have been brought up here in the English system. They are as connected to the UK as most others and, like them, they can be expected to remain here indefinitely. There are therefore the same reasonable prospects of society benefitting from the contribution which tertiary education will equip them to make, and of it obtaining repayment of loans made, as there are in relation to the home grown student population generally. It follows that in respect of this cohort of people, the settlement rule, whilst no doubt intended to serve the first three objectives set out in para 53 above, does not in fact do so. It goes further than is needed to serve those objectives. In consequence, it excludes people who meet the criteria which those objectives are designed to include. It fails to strike a fair balance between the states interests and those of the cohort concerned. There is little sign in the evidence lodged by the Department that this cohort was expressly considered. The adoption of the rule in relation to this cohort creates discrimination which is outside the legitimate range of administrative decisions available to the Secretary of State, and whether the test is correctly characterised as a decision manifestly without reasonable foundation or as some less stringent criterion. There is evidence that the view was taken that a simply stated and applied rule had great merit. To an extent, whenever a rule draws a simple line, there may be hard cases which fall the wrong side of it. The Secretary of States case, fully argued by Mr Kovats QC, is that the exclusion of the cohort of aspiring students of which this appellant is an example is the unavoidable consequence of this truth. If this were so, I would myself have concluded that the settlement rule falls well within the ambit of lawful decisions which are available to the Secretary of State in framing the eligibility rules, and that the discrimination was thus justified. Like Laws LJ in the Court of Appeal in this case, and like Burnett J in the similar case of Kebede [2013] EWHC 2396 (Admin), [2014] PTSR 92, I agree that this is an area in which a rule which is simply stated, readily understood and easily applied is legitimate, and indeed advisable. Such rules tend to be described, when objection is taken to them, as blanket rules, or, when conversely their virtues are recognised, as bright line rules. But these descriptions, one pejorative and the other approving, obscure the reality which is that all rules are blanket rules, in the sense that those who meet them are included and those who are outside them are excluded. All such rules are both inclusionary and exclusionary; if one grafts onto them a residual discretion they cease to be rules based on readily ascertainable facts and become rules based in part on an evaluative exercise. The truth is that clear rules, based on readily ascertainable facts, which are simple to state, to understand and to apply, have a merit of their own. An applicant can see comparatively easily whether she will qualify or not. The administrators can process a very large number of applications (approaching a million and a half in 2013 2014 with an increase to be expected now that the cap on student numbers has been lifted) in the relatively short time available each year for matching applicants to places. Some of the processing can be automated. The cost of administering the scheme can thus be kept down and the maximum possible proportion of the available budget preserved for loans. As Lady Hale observes, the argument in this case has tended to proceed astride the fault line between individualised consideration of every case on the one hand and the existing settlement rule on the other. On behalf of the appellant, the primary submission advanced by Miss Mountfield QC remains that the court should read down the eligibility rule pursuant to section 3 of the Human Rights Act 1998, so as to require individual consideration in every case not plainly within the stated categories. The contention is that words should be added to the parent eligibility regulation 4(2) which directs one towards the several categories of eligibility set out in Schedule 1, Part 2. That would involve reading regulation 4(2) as follows, adding the words shown in bold: Subject to paragraph (3) a person is an eligible student in connection with a designated course if (a) in assessing that persons application for support the Secretary of State determines that the person falls within one of the categories set out in Part 2 of Schedule 1 or (b) where the grant of support is necessary in order to avoid a breach of the persons Convention rights (within the meaning of the Human Rights Act 1998). If applied to regulation 4(2) this qualification would operate upon not only the settlement rule (Schedule 1, Part 2, para 2(1)(a)) but also all the other categories of eligibility, including the three year lawful residence rule (para 2(1)(c) and elsewhere). Even if only para 2(1)(a) were to have these or similar words attached, the problem would still be the same. It would mean that individualised assessment of a persons article 8 rights would have to be made by the Secretary of State in order to determine eligibility for a student loan. Such a determination is highly fact sensitive. It does not depend by any means only on length of residence in the UK. Even if that were the only consideration it would inevitably lead to inconsistent decisions as between apparently similar cases adjudicated upon on different occasions. But it would be likely also to entail consideration of, inter alia, family connections, dependants, community and other ties, employment, commitments and plans. It would require an entirely different skillset for those administrators charged with running the student loan scheme. There would be the unavoidable prospect of challenge to such individualised decisions by way of judicial review, at considerable cost in time and money. Meanwhile, the prospect would be opened up of inconsistent decisions upon article 8 as between on the one hand the Secretary of State for Business, Innovation and Skills and his student loan administrators, and on the other the Secretary of State for the Home Department and the highly sophisticated system of tribunal appeals in the administration of immigration control. It seems to me clear that such a system would have very powerful disadvantages when considered as a matter of public policy. It is impossible to say that the Secretary of State acts unlawfully in not adopting it. If, therefore, this were the inevitable consequence of recognising the position of the appellants cohort of aspiring students, their exclusion from the eligibility criteria could not be held to be unlawful. It is, however, clear to me, as to Lady Hale, that this consequence is not inevitable. There would be no difficulty in formulating a rule, as clear as the existing and as simple to operate, which recognises the position of this cohort of students. It is not for the court to devise such a scheme, but for the Secretary of State. The role of the court is limited to determining whether the justification for the present rule which is advanced is or is not made out. That suggested justification is, as the evidence of Mr Williams and the submissions of Mr Kovats make clear, that any alternative would involve either individual assessment of each applicants ties with the UK, or if not that, at least checks on the length of residence. As to the former, for the reasons already given I agree entirely that the objection is well taken and the justification for the discrimination accordingly made out. As to the latter, Mr Williams draws attention to the possibility that checking whether an applicant had been through the UK school system would result in checks being made with schools or education authorities and might require permission from other Government departments, and possibly changes in the law to allow the SLC to access such information. This protests too much. Whilst it is for the Secretary of State to devise his own rule, one which extended eligibility on the basis of long (although not necessarily lawful) residence would be a simple rule, based on ascertainable fact rather than evaluative assessment. This would be so whether the length of residence were defined by reference to a set period of years, or to a proportion of the applicants life. As it happens, there exists within the immigration rules a possible template which might be adopted, with or without modification. Immigration Rule 276ADE(1) creates just such a long residence rule for entitlement to the grant of limited leave to remain. It does so by reference to readily ascertainable factual criteria of residence, (a) for those under 18, seven years, (b) for those between 18 and 25, half ones life, and (c) in any event 20 years. It is true that if such a rule, modified or otherwise, were to be adopted, the applicant whose passport did not show UK citizenship and who did not have ILR would no doubt have to demonstrate whatever long residence was stipulated. The onus can perfectly well be put upon such an applicant to provide confirmation from an authoritative source, such as a general practitioner or head teacher, rather as at present she is required to submit documentary evidence of household income. She could perfectly properly be required to consent to any confirmatory enquiries with education or health authorities which the student loan administrators might wish to make, and no delicate inter departmental relations or changes in the law ought to be involved. If necessary, one would have thought that it would be very easy to insist on the certifier sending the confirmation direct, to minimise any risk of forgery, but these are details which could be worked out by those framing any new rule. It can no doubt be said that if such a long residence rule were to be adopted, that would not entirely eliminate the risk of hard cases falling on the wrong side of it. Whilst that is true, it is not a justification for the present rule which fails altogether to address the position of those such as this appellant whose long residence is such that they are in reality home grown students. As Lady Hale observes, there is no sign that the Department did address this cohort at any stage, although it has done so since through the evidence of Mr Williams, referred to above. One can understand the difficulties of the Department, which had its eye in part on eliminating the entirely anomalous failed asylum seeker position exposed in Arogundade, but infringement of Convention rights has resulted, even if accidentally. It follows that I agree that the appellant is entitled to the declaration of this court that the settlement rule infringes her Convention rights because the discrimination involved has not been justified. Since it is for the Secretary of State to devise a rule which does not thus infringe, it is of course open to him to adopt one which incorporates an elastic exceptional case discretion. But for my part I am wholly satisfied that if he should elect not to include such a discretion, that decision could not result in any infringement of Convention rights. That is the qualification to which I referred at the outset of this judgment, and which seems to me to be called for. LORD SUMPTION AND LORD REED: (dissenting) The position of persons whose legal right to be in the United Kingdom has not been definitively determined gives rise to difficult problems when it comes to deciding on the conditions of eligibility for state financial support. There are a number of considerations, financial, economic, administrative and political, which can point in different directions. No solution is satisfactory from every point of view or equally appropriate for every kind of support. Under section 22 of the Teaching and Higher Education Act 1998, the conditions of eligibility for student loans are determined by the Secretary of State by regulation. In our opinion the current regulations represent a lawful policy choice by the Secretary of State and a proper exercise of his statutory powers. Other criteria could have been chosen. There is room for argument about which would have been the best choice. But within broad limits, which have not been exceeded in this case, these are matters for the Secretary of State, who is politically responsible for his decisions about them. The Court of Appeal recognised that they were beyond the proper limits of the competence of the courts, and for our part we would have upheld their decision and dismissed the present appeal. Since a majority of the court takes a different view, we will be as brief as we may in explaining our reasons. The English legislative framework In England, direct public financial support to students in higher education has never been dependent upon nationality. But except in the case of refugees and persons entitled under EU law to be treated as favourably as nationals, the criteria for eligibility have always included a sufficient and enduring connection with the United Kingdom. Under the system of discretionary state scholarships introduced by the Education Act 1944, the practice was to treat all persons ordinarily resident in England and Wales as eligible. This principle became statutory when a more comprehensive system of grants was introduced under the Education Act 1962. Regulations under that Act fixed the period of ordinary residence required at three years. A significant change to the criteria was made in 1997, when the Education (Mandatory Awards) Regulations (SI 1997/431) introduced an additional requirement of settlement which depended on the applicants immigration status. The Regulations adopted the definition of settlement in the Immigration Act 1971. Section 33(2A) of that Act defined a person as settled if he was ordinarily resident in [the United Kingdom] without being subject under the immigration laws to any restriction on the period for which he may remain. In other words, he had to have indefinite leave to remain. These criteria were retained when the Teaching and Higher Education Act 1998 introduced tuition fees and began the progressive replacement of student grants with loans. This remains the position today. The current regulations are the Education (Student Support) Regulations 2011 (SI 2011/1986). Schedule 1, paragraph 2 makes it a condition of eligibility that the applicant should be (i) settled in the United Kingdom, within the meaning of section 33(2A) of the Immigration Act 1971; and (ii) ordinarily and lawfully resident in the United Kingdom at the beginning of the academic year and for three years before that. Under Schedule 1, paragraph 2 of the Education (Fees and Awards) (England) Regulations 2007 (SI 2007/779), the same criteria govern eligibility to be charged fees at the controlled rates for home and EU students, with the result that those who are ineligible for a student loan will usually also pay the substantially higher fees. The immigration status of applicants for student loans is not a matter for the Department of Business, Innovation and Skills, which is responsible for higher education, but for the Home Office and the UK Border Agency. The Home Office grants leave to remain in the United Kingdom outside the Immigration Rules for limited periods on a discretionary basis. According to its current guidance document, published in May 2014, this power is used sparingly in limited categories of case, on what can broadly be described as humanitarian grounds. The practice has now been largely incorporated in the Immigration Rules, which provide for the grant of limited leave to remain for standard periods, generally three years until 2013 and thirty months thereafter. Discretionary or limited leave to remain is in principle renewable. Those such as Ms Tigere, who first obtained discretionary leave before 9 July 2012, will become entitled to apply for indefinite leave to remain after six years of discretionary leave. Those who first obtained it after that date must, under the current policy, wait for ten years. The Home Office has a discretion to accelerate the timetable in individual cases, but its policy is not to do so for the purpose of enabling an applicant to qualify for financial support for higher education. Article 14 of the Human Rights Convention Article 2 of the First Protocol to the Human Rights Convention provides that no person shall be denied the right to education. It is well established that the negative formulation of article 2 means that it does not import a right to public financial support: Belgian Linguistics Case (No 2) (1968) 1 EHRR 252, at para B3. But such public support as is available must be offered on a Convention compliant basis. In particular, article 14 of the Convention prohibits discrimination in the enjoyment of the rights within the scope of the Convention on grounds of sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. These rights include the right not to be denied education. The same principle applies as regards nationals of other member states under EU law, by virtue of TFEU article 18. The current eligibility criteria unquestionably discriminate on the ground of immigration status. 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 upon that status is justifiable and proportionate to its objective: The nature of the status upon 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. Furthermore, given that the subject matter of this case the provision of housing to those in need is predominantly socio economic in nature, the margin of appreciation accorded to the Government will be relatively wide (see the Grand Chamber judgment in Stec v United Kingdom (2006) 43 EHRR 1017, para 52). (para 47) 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, 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. 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, at paras 15 21 (Baroness Hale). It has recently been applied by this court in R (SG and others) v Secretary of State for Work and Pensions (Child Poverty Action Group intervening) [2015] 1 WLR 1449, at paras 11, 69 (Lord Reed). Lady Hale suggests that in the context of education, the test is not whether the justification for discrimination in the provision of state financial support was manifestly without foundation but a different and more exacting test. In our opinion, there is no justification for this critical departure from a test which has been consistently endorsed by the Strasbourg court and at the highest level by the courts of the United Kingdom. There is no principled reason why state benefits in the domain of education should be subject to any different test from equally important state benefits in other domains. The problems associated with the judicial scrutiny of criteria for the award of selective benefits are the same. The manifestly without foundation test was adopted in Stec notwithstanding that it was a sex discrimination case, a context in which very weighty reasons have always been required: see para 52. It has been applied by the Strasbourg court to discrimination in other contexts, including the provision of housing, affecting the applicants right under article 8 to respect for her private and family life (Bah v United Kingdom (2012) 24 EHRR 773), and the grant of leave to enter the United Kingdom to the spouses of immigrants, again affecting article 8 rights (Hode and Abdi v United Kingdom (2012) 56 EHRR 960). It was applied by this court to basic subsistence benefits in R (SG and others) v Secretary of State for Work and Pensions [2015] 1 WLR 1449, notwithstanding the indirect effect on the welfare of children of the gender discrimination considered in that case: see paras 81 91. The majority has not advanced a single reason in support of abandoning it in the case of state financial support for education except that the words manifestly without foundation do not appear in the judgment of the Strasbourg court in Ponomaryov v Bulgaria (2011) 59 EHRR 799, a case in which the nature of the test was not discussed and does not appear to have been in issue. We will return to Ponomaryov below. For our part, we would accept that the more fundamental the right which is affected by discrimination in the provision of financial support, the readier a court may be to find that the reasons for discrimination are manifestly without foundation. But to discard the test would go well beyond anything that the Strasbourg jurisprudence requires. The Convention refers generally to education, but the limits of what is justifiable in the distribution of financial support by the state are not necessarily the same at every level of the educational system. In England, full time education is compulsory and available free in state institutions to the age of 17 (18 from September 2015). University education is not compulsory but a matter of choice. And it is not free but fee based. According to the most recent figures published by the Department for Business, Innovation and Skills, in the academic year 2012/13 the Higher Education Initial Participation Rate among English domiciled people aged 17 to 30 was 43%. The corresponding figure is 24% for 18 year olds, Ms Tigeres age at the time of her first application in January 2013. University education is an aspiration for very many young people. It has a high cultural and economic value. But it is not indispensable to social or economic participation, as primary and secondary education are. Still less is it indispensable to social or economic participation that an applicant should be able to go to university at the age of 18 or 19, instead of at the age of 23 when Ms Tigere seems likely to obtain indefinite leave to remain. The same figures suggest that 12%, ie rather more than a quarter of the 43%, are aged between 20 and 30 when they go to university. Considerations of this kind, which apply in many if not all countries of the Council of Europe, were central to the analysis of the European Court of Human Rights in Ponomaryov v Bulgaria 59 EHRR 779. The case concerned a rule of Bulgarian law which limited the provision of free secondary education to Bulgarian nationals and those with Bulgarian residence permits. Others were required to pay. This was held to violate article 14 of the Convention in the particular circumstances of the applicants case. For present purposes, its significance is that the European Court of Human Rights distinguished between discrimination in financial provision on grounds of national origin, according to the level of education involved and its significance for social participation. The court began by observing (para 54) that a state may have legitimate reasons for curtailing the use of resource hungry public services such as welfare programmes, public benefits and health care by short term and illegal immigrants, who, as a rule, do not contribute to their funding. It went on to point out that this principle could not be applied to education without qualifications, partly because education was specifically protected by article 2 of the First Protocol and partly because of its fundamental cultural significance (para 55). However, the force of these considerations was not the same at every level. The court observed, at para 56: at the university level, which to this day remains optional for many people, higher fees for aliens and indeed fees in general seem to be commonplace and can, in the present circumstances, be considered fully justified. The opposite goes for primary schooling, which provides basic literacy and numeracy as well as integration into and first experiences of society and is compulsory in most countries. Accordingly, the margin of appreciation increased with the level of education. That approach was endorsed by the Grand Chamber in Catan v Moldova and Russia (2012) 57 EHRR 99, para 140. It is clear from the decision in Ponomaryov that the present case would have been most unlikely to succeed in Strasbourg. That conclusion is fortified by the decision in Bah v United Kingdom, where the court cited Ponomaryov in support of its conclusion that immigration status was a justifiable basis for differential treatment in the allocation of social housing. Do the eligibility criteria have a legitimate objective? The formulation of criteria for giving financial support to university students raises a classic question of social and financial priorities. It is common ground between the parties to this appeal that university education has very substantial economic advantages not only for graduates but for the society in which they live and work. That cannot, however, be the only relevant consideration in decisions about its funding. Student loans have a substantial element of public subsidy, currently estimated at about 45% of the total annual outlay. This is because the rate of interest is below the market rate, the loan is only conditionally repayable and not all repayable sums are collectable. There are finite funds available for providing this subsidy, and funding for higher education must itself compete with other potential uses of the money which may also have a high social or economic value. As the Strasbourg court put it in Ponomaryov, at para 55, the state must strike a balance between, on the one hand, the educational needs of those under its jurisdiction, and, on the other, its limited capacity to accommodate them. There is no direct evidence of the thought processes of ministers and officials as they resolved upon the current criteria. This is hardly surprising in the case of a policy which has been in place, in the case of the residence test since 1962 and in the case of the settlement test since 1997. Nor is such evidence necessary. In the first place, a challenge to a public authoritys decision under the Convention is not a judicial review of the decision making process. As Lord Bingham put it in R (SB) v Governors of Denbigh High School [2007] 1 AC 100, at para 31, what matters in any case is the practical outcome, not the quality of the decision making process that led to it; cf Lord Hoffmann at para 68. Secondly, the objectives of the current eligibility rules for student loans are tolerably clear from the regulations themselves, and from the two witness statements of Paul Williams, Head of Student Funding Policy at the Department of Business, Innovation and Skills. Leaving aside the special cases of refugees and persons protected by EU and international law, the objectives of the current eligibility criteria are (i) to concentrate finite resources on those who (a) have a lawful and close personal connection with the United Kingdom and are therefore more deserving of assistance, and (b) are most likely to remain here permanently and use their enhanced qualifications to the benefit of the economy; and (ii) to do so according to criteria which are based on rules rather than case by case discretion, in the interests of clarity, consistency and administrative practicality, and in order to maximise the proportion of available funds that goes to support students as opposed to administering the system. In framing the criteria in substantially their current form in 1997, the Secretary of State cannot possibly have been unaware that some of those adversely affected would include some young people who were well integrated in British society. That was the obvious consequence of adding to the existing residence test a settlement test based on indefinite leave to remain, and thereby requiring young people of university age to satisfy the extended residence requirement imposed by the immigration authorities. It is common ground that it is in principle legitimate for the state to prioritise funding to those who can be shown to have a genuine, substantial and enduring connection with British society. The residence test and the settlement test are both approximate measures of the strength of that connection. Although the majority seeks to distinguish between the two tests, both of them in reality depend on a minimum period of past lawful residence, three years in the case of the residence test and six in the case of the settlement test. The settlement test serves in addition as a measure of the connections likely permanence, which not only implies a closer connection with Britain but increases the economic value of the applicants university education to society as a whole. R (Bidar) v Ealing London Borough Council (Case C 209/03) [2005] QB 812 concerned a French national who had had been educated for four years in the UK secondary education system but was refused a maintenance grant to study at university under an earlier version of the same eligibility criteria. The criteria were challenged as constituting unjustifiable discrimination on grounds of nationality, contrary to what was then article 12 EC. The Grand Chamber of the Court of Justice of the European Union held, at paras 56 57, that even in the case of an EU citizen it was permissible for a member state to ensure that the grant of assistance to cover the maintenance costs of students from other member states does not become an unreasonable burden which could have consequences for the overall level of assistance which may be granted by that state. In the case of assistance covering the maintenance costs of students, it is thus legitimate for a member state to grant such assistance only to students who have demonstrated a certain degree of integration into the society of that state. The court accepted that this justified the residence test: para 60. It also accepted (para 61) that the settlement test could admittedly, like the requirement of three years residence referred to in the preceding paragraph, correspond to the legitimate aim of ensuring that an applicant for assistance has demonstrated a certain degree of integration into the society of that state. The only reason why the settlement test was rejected was that applicants were unable to satisfy the residence test if at any time in the three year period the applicant had been here wholly or mainly for the purpose of receiving full time education: see Schedule 1, paragraph 2(1)(d). The effect of this requirement, as the court pointed out (para 18), was that a national of another member state cannot, in his capacity as a student, obtain the status of being settled in the United Kingdom. Bidar was distinguished on this ground in Frster v Hoofddirectie van de Informatie Beheer Groep (Case C 158/07) [2009] 1 CMLR 32. The imposition under Dutch law of a requirement of five years prior residence in the Netherlands was held to be justified because the qualification was attainable by someone who had come to the Netherlands to study. Paragraph 2(1)(d) of Schedule 1 has since been modified to make it inapplicable to students from other EU member states. Whether its continued application to nationals of non EU states is lawful is not a question that arises on this appeal, because Ms Tigere has never been here wholly or mainly for the purpose of receiving full time education. Unlike Mr Bidar, she can acquire settled status, albeit only after six years lawful residence. The qualification that periods of unlawful residence should be excluded from the qualifying period of residence for the purpose of the Immigration Rules was established by the decision of the House of Lords in R v London Borough of Barnet, Ex p Shah [1983] 2 AC 309. The statement of principle in the leading speech of Lord Scarman at 340E, 349C, is obiter, but has always been treated as authoritative and has recently been endorsed by the Court of Appeal in R (Arogundade) v Secretary of State for Business, Innovations and Skills [2013] ELR 466. The reasons were that unlawful residence could not be regarded as ordinary residence, and that a person cannot rely on his own unlawful act to qualify himself for an advantage. These were reasons for having such a rule even at a time when it was not expressly stated in the Regulations. But the justification in Convention terms of applying the rule to the criteria of eligibility for student loans is altogether more straightforward. The financial obligations of the state to those who are not its citizens and ought not to be on its territory cannot be of the same order as those which it owes to others. They are less deserving of support when it comes to claiming on the finite funds available for the purpose. Proportionality and bright line rules In these circumstances, the real issue on this appeal turns on the second of the two objectives which we have summarised at para 81 above, namely the use of a bright line rule to distinguish between those who do and those who do not qualify. The appellants case, which is substantially accepted by the majority, is that many young people who do not satisfy the eligibility criteria, because they have not been lawfully resident in the United Kingdom for the requisite period, or because they have not been granted the right to remain in the United Kingdom indefinitely, nevertheless have a connection with the United Kingdom which is just as strong as that of others who do satisfy them. They may have spent most of their lives here, attending British schools. They may have no subsisting social or cultural connection with any other country. Their connection with the United Kingdom, it is said, is not only just as strong, but is bound to endure after the expiry of their discretionary leave, because article 8 of the Convention would make it impossible to deport them. It follows, so the argument goes, that the distinction fails the test of proportionality. It is disproportionate, first, because it cannot be rationally related to the professed objective of requiring applicants to have a sufficient and enduring connection with the United Kingdom; and, secondly, because a more inclusive rule would not unreasonably compromise that objective. Both of these are integral parts of the test of proportionality: see Bank Mellat v HM Treasury (No 2) [2014] AC 700, at para 20 (Lord Sumption), at para 73 (Lord Reed). In the present context they are in reality different ways of saying the same thing. This argument has been cogently advanced by Ms Mountfield QC, who appeared for the appellant, and is accepted by the majority. But in our opinion it is fallacious. Those who criticise rules of general application commonly refer to them as blanket rules as if that were self evidently bad. However, all rules of general application to some prescribed category are blanket rules as applied to that category. The question is whether the categorisation is justifiable. If, as we think clear, it is legitimate to discriminate between those who do and those who do not have a sufficient connection with the United Kingdom, it may be not only justifiable but necessary to make the distinction by reference to a rule of general application, notwithstanding that this will leave little or no room for the consideration of individual cases. In a case involving the distribution of state benefits, there are generally two main reasons for this. One is a purely practical one. In some contexts, including this one, the circumstances in which people may have a claim on the resources of the state are too varied to be accommodated by a set of rules. There is therefore no realistic half way house between selecting on the basis of general rules and categories, and doing so on the basis of a case by case discretion. The case law of the Strasbourg court is sensitive to considerations of practicality, especially in a case where the Convention confers no right to financial support and the question turns simply on the justification for discrimination. In Carson v United Kingdom (2010) 51 EHRR 369, which concerned discrimination in the provision of pensions according to the pensioners country of residence, the Grand Chamber observed, at para 62: as with all complaints of alleged discrimination in a welfare or pensions system, it is concerned with the compatibility with article 14 of the system, not with the individual facts or circumstances of the particular applicants or of others who are or might be affected by the legislation. Much is made in the applicants submissions and in those of the third party intervener of the extreme financial hardship which may result from the policy However, the court is not in a position to make an assessment of the effects, if any, on the many thousands in the same position as the applicants and nor should it try to do so. Any welfare system, to be workable, may have to use broad categorisations to distinguish between different groups in need the courts role is to determine the question of principle, namely whether the legislation as such unlawfully discriminates between persons who are in an analogous situation. This important statement of principle has since been applied by the European Court of Human Rights to an allegation of discrimination in the distribution of other welfare benefits such as social housing: Bah v United Kingdom at para 49. And by this court to an allegation of discrimination in the formulation of rules governing the benefit cap: R (SG and others) v Secretary of State for Work and Pensions (Child Poverty Action Group intervening) [2015] 1 WLR 1449, at para 15 (Lord Reed). The second reason for proceeding by way of general rules is the principle of legality. There is no single principle for determining when the principle of legality justifies resort to rules of general application and when discretionary exceptions are required. But the case law of the Strasbourg court has always recognised that the certainty associated with rules of general application is in many cases an advantage and may be a decisive one. It serves to promote legal certainty and to avoid the problems of arbitrariness and inconsistency inherent in weighing, on a case by case basis: Evans v United Kingdom (2007) 46 EHRR 728, at para 89. The Court of Justice of the European Union has for many years adopted the same approach to discrimination cases, and has more than once held that where a residence test is appropriate as a test of eligibility for state financial benefits, it must be clear and its application must be capable of being predicted by those affected: Collins v Secretary of State for Work and Pensions (Case C 138/02) [2004] 2 CMLR 8, at para 72, Frster v Hoofddirectie van de Informatie Beheer Groep (Case C 158/07) [2009] 1 CMLR 861, at para 56. As Advocate General Geelhoed acknowledged in considering these very regulations in Bidar (para 61), Obviously a member state must for reasons of legal certainty and transparency lay down formal criteria for determining eligibility for maintenance assistance and to ensure that such assistance is provided to persons proving to have a genuine connection with the national educational system and national society. In that respect, and as the court recognised in Collins, a residence requirement must, in principle, be accepted as being an appropriate way to establish that connection. 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. None of this is seriously disputed by the appellant. Yet once it is accepted, the challenge cannot be to the application of the eligibility criteria to the appellant. It must be to the eligibility criteria themselves. In the last analysis, the appellants case depends on the proposition that even on the footing that a rule is required, this particular rule draws the line in the wrong place. In relation to this type of argument, it was noted in Bank Mellat at para 75 (Lord Reed) that courts must accord a measure of discretion to the primary decision maker, and therefore exercise corresponding self restraint, if there is to be any prospect of legislative and executive choices being respected. As the present case illustrates, it will almost always be possible for the courts to conclude that a more precisely tailored bright line rule might have been devised than the one selected by the body to which the choice has been democratically entrusted and which, unlike the courts, is politically accountable for that choice. But, in the words of Dickson CJ in R v Edwards Books and Art Ltd [1986] 2 SCR 713, pp 781 782, the courts are not called on to substitute judicial opinions for legislative or executive ones as to the place at which to draw a precise line. In a case concerned with the allocation of public expenditure in order to fulfil objectives of social and economic policy, the degree of respect paid by the court to the judgment of the legislature or executive, and the consequent width of the discretion afforded to the primary decision maker, must be substantial. That is reflected in the test of whether the policy choice is manifestly without reasonable foundation. The need to accord a measure of discretion to the legislator when considering the proportionality of general rules has been recognised by the European Court of Human Rights. In its judgment in Animal Defenders International v United Kingdom (2013) 57 EHRR 607, concerned with the prohibition on political advertising in this country, the Grand Chamber rejected the argument that a general prohibition was unduly restrictive of freedom of expression, and that a less restrictive rule should have been adopted. It referred at paras 106 109 to its earlier case law recognising that member states could adopt general measures which applied regardless of the facts of individual cases, even if this might result in individual hard cases; that, in order to determine the proportionality of such a measure, the court must assess the choices underlying it; that it was relevant to take into account the risk of abuse if a general measure were to be relaxed; and that a general measure had been found to be a more feasible means of achieving the legitimate aim than a provision allowing a case by case examination when the latter would give rise to a risk of uncertainty, expense and delay, as well as of discrimination and arbitrariness. It continued (para 110): The central question as regards such measures is not, as the applicant suggested, whether less restrictive rules should have been adopted or, indeed, whether the state could prove that, without the prohibition, the legitimate aim would not be achieved. Rather, the core issue is whether, in adopting the general measure and striking the balance it did, the legislature acted within the margin of appreciation afforded to it. In the circumstances of the present case, the argument that the rule which was chosen fell outside the area of discretionary judgment accorded to the Secretary of State appears to us to be particularly difficult to sustain. Wherever the line is drawn, there will be many young people on the wrong side of it whose connection with the United Kingdom will be just as strong and enduring as that of many others who find themselves on the right side. The point may be tested by taking the illustrative example commended by the appellant herself and adopted by Lady Hale and Lord Hughes. Rule 276ADE(1)(v) of the Immigration Rules draws the line in a different place for the purpose of determining the eligibility of persons aged between 18 and 25 to apply for limited leave to remain under article 8 of the Convention on account of their right to private and family life. It authorises applications by those have continuously resided in the United Kingdom for at least half their lives. It is not subject to the exclusion of periods of unlawful residence which apply to the tests of ordinary residence. The adoption of such a test as a criterion for student loans would mean that the present appellant would qualify. But the Secretary of State has to take a broader view and consider the functioning of the system as a whole. The policy considerations relevant to a decision whether to grant limited leave to remain on account of the applicants article 8 rights are not the same as those which bear on a decision whether to grant financial support for higher education. Moreover, the difficulty, delay and administrative cost of requiring the Student Loan Company to assess evidence of the duration of actual residence, as opposed to the duration of leave to remain, should not be under estimated. We cannot close our eyes to the fact that candour cannot always be assumed in this field. However, the real objection to proposed alternative tests is more fundamental. They do not resolve the problem which is said to justify them. The adoption of a rule like rule 276ADE(v) would put the cut off point for eligibility in a different place, but it would be equally open to the objection that it left many young people on the wrong side of it whose connections with the United Kingdom were just as strong and enduring as those on the right side. This is because characteristics such as the strength and enduring character of a persons connection with the United Kingdom are not absolute values but questions of degree. An element of arbitrariness is inherent in any rule based scheme designed to address that situation. It cannot therefore be a proper objection to say that the line could have been drawn somewhere else where it would have excluded fewer people. The point may be tested by reference to the residence test, which the majority regard as justified. If the sole qualification were the current residence test of three years, some people in the position of the appellant, who is plainly well integrated into British society, would be enabled to qualify; but, correspondingly, eligibility would be extended to many others who were barely integrated at all. There is no one right balance between these competing considerations. If the qualifying period of residence were to be extended to six years, it would be difficult to challenge on the ground that the period of lawful residence should have been shorter (a five year period was accepted in Frster). Both periods would exclude some people with the same characteristics as those who were included. Yet the effect of a six year qualifying period would be substantially the same as the settlement test as far as persons in Ms Tigeres position are concerned, since six years residence would qualify her to apply for indefinite leave to remain. In reality, as Lady Hales judgment implicitly acknowledges, the appellant is driven to argue that there should not be a bright line rule at all. That appears to us to be the implication of the distinction drawn by Lady Hale between inclusionary and exclusionary rules, and of her suggestion that an exceptional cases discretion might be added. As we have explained, and as Lord Hughes acknowledges, a bright line rule, in relation to eligibility for a benefit, is both inclusionary and exclusionary: by defining those who are eligible, it necessarily excludes those who fall outside the definition. A discretion to include persons who fall outside the rule necessitates the consideration of cases on an individual basis in order to determine whether they are exceptional, defeating the purpose of having a bright line rule in the first place. The answer to such arguments is that in a case where a line has to be drawn at some point in a continuous spectrum, proportionality cannot be tested by reference to outlying cases. The Secretary of State estimates that the exclusion of persons with discretionary or limited leave to remain from eligibility for student loans affects about 2,400 people. The appellant suggests that the number is only about 534. Both acknowledge the imprecision of their figures, but on any view it is a small proportion of the cohort of some 1.45m applying for loans annually. In R (Reynolds) v Secretary of State for Work and Pensions (reported sub nom. R (Carson) v Secretary of State for Work and Pensions [2006] 1 AC 173, at para 41 Lord Hoffmann (with whom Lord Nicholls, Lord Rodger and Lord Carswell agreed), put the point very clearly in answer to the argument that that the payment of jobseekers allowances at a lower rate to those under 25 years of age was unjustified, because there was no substantial difference between those just over and just under that age: Mr Gill emphasised that the twenty fifth birthday was a very arbitrary line. There could be no relevant difference between a person the day before and the day after his or her birthday. That is true, but a line must be drawn somewhere. All that is necessary is that it should reflect a difference between the substantial majority of the people on either side of the line. If one wants to analyse the question pedantically, a person one day under 25 is in an analogous, indeed virtually identical, situation to a person aged 25 but there is an objective justification for such discrimination, namely the need for legal certainty and a workable rule. The argument is not fortified, as it seems to us, by suggesting, as Ms Mountfield did, that the appellant is in substance settled in the United Kingdom because even without indefinite leave to remain she could not be removed consistently with article 8 of the Convention. The argument is that this affects the position because it means that she is likely to remain in the United Kingdom and contribute with her enhanced qualification to the national economy. This seems to us to be a point of some, but limited relevance. In the first place, the likelihood that applicants for student loans will contribute in future to the economy is only one of a number of considerations underlying the current eligibility rules. Secondly, there is a world of difference between a person who has a legal right to remain in the United Kingdom and a person with no such right who nevertheless cannot be deported. Thirdly, while it is probably true that the appellant could not be removed consistently with article 8, there is no reason to believe that it is true of the generality of the people denied student loans under the current eligibility criteria. Article 8 does not automatically protect persons resident here from deportation as illegal immigrants. That will depend on a careful analysis of the infinitely variable facts of individual cases. Relevant considerations include, in particular, the duration of the applicants residence, the significance of any family or social relationships that he has formed in the United Kingdom, the circumstances in which those relationships were formed, the availability of any alternative countries of residence where it would be reasonable to expect the applicant to reside, the best interests of any children involved, and the strength of any special justification advanced by the executive. This court has always emphasised that however intensive the judicial scrutiny of a public authoritys decision, it is not open to the courts to take the decision making function out of the hands in which Parliament has placed it and assume that function themselves: see in particular R (Corner House Research) v Director of the Serious Fraud Office [2008] UKHL 60; [2009] AC 756, at para 41 (Lord Bingham), Bank Mellat v HM Treasury (No 2) [2014] UKSC 39, [2014] AC 700, at paras 21 (Lord Sumption), 71, 93 (Lord Reed); R (Lord Carlile of Berriew QC and ors) v Secretary of State for the Home Department [2014] UKSC 60; [2014] 3 WLR 1404, paras 31, 34 (Lord Sumption). In a case where a range of rational and proportionate policy options is open to the decision maker, the decision which provides the best allocation of scarce resources is a question of social and economic evaluation. These are matters of political and administrative judgment, which the law leaves to those who are answerable to Parliament. They are not questions for a court of law. It is enough to justify the Secretary of States choice in this case that discrimination on the basis of residence and settlement are not manifestly without foundation. |
In about December 2005, the claimant commenced employment as a sessional music assistant at X school (the school). On 4 October 2007, the parents of M, a 15 year old boy, who was undergoing a short period of work experience at the School, went to see the head teacher. They complained that the claimant, who was 22 years of age at the time, had kissed M. They also showed the head teacher two text messages which they said the claimant had sent to M and an entry in Ms diary which appeared to indicate that some form of sexual relationship had developed between the two of them. On the same day, the head teacher summoned the claimant and informed him that he was being suspended because of an incident involving a young man. The schools child protection co ordinator later provided a statement to the school in which she said that, after he had been suspended, the claimant admitted to her that he had kissed M and that he had sent a text inviting him to his house, but was concerned that this could be misinterpreted, so he added that they could go for a drive instead. On 1 November, the head teacher wrote to the claimant formally confirming his suspension on the grounds that the allegations, if proved, could constitute gross misconduct of having formed an inappropriate relationship with a child. By a further letter of the same date, she informed the claimant that he was required to attend an investigatory interview on 15 November and that he was entitled to be represented by a trade union representative or work colleague. In fact, he was not a member of a trade union. The interview was postponed several times because the claimants solicitor had advised him that it was not in his interests to attend an interview until the police had completed their investigations. By letter dated 12 December 2007, the head teacher notified the claimant that a disciplinary hearing would be convened in the new year, that the school was required to continue with its investigations and that a report would be submitted to the governing body for its consideration. She added that since the claimant continued to refuse to attend any investigatory meetings, she would be willing to include in her report any written submissions that he wished to make about the allegations. On 18 December, the claimant repeated the legal advice that he had been given that he should not become involved in the disciplinary proceedings until the police investigation was completed. By 1 February, it was known that the Crown Prosecution Service intended to take no further action. On that date, the claimants solicitors wrote to the head teacher stating that the claimant was unable to attend a meeting on 5 February. The letter included a number of written representations to be placed before that meeting denying the allegations and stating that no improper conduct had taken place. By letter dated 6 February, the head teacher informed the claimant that the investigation was complete and an investigation report had been written. A disciplinary hearing was to take place on 21 February before a panel of governors to consider the allegations and the management case would be presented by the head teacher. A copy of the investigation report would be sent within a few days and this would be the evidence presented at the hearing. The claimant was told that he was entitled to be represented at the hearing by a trade union representative or a work colleague. The investigation report was duly provided to the claimant. Attached to it was a report from the local authoritys safeguarding officer, which stated that consideration should be given to referring the matter to the Secretary of State. The head teachers report concluded: there is strong evidence that the allegations against [the claimant] are proven. The panel should therefore fully consider his future employment . and whether a referral to the DFES is required. By letter dated 14 February, the claimants solicitors wrote to the school seeking permission for them to represent him at the hearing. They said that in view of the potential repercussions of an adverse finding, the potential impact on our client is such that it would be a breach of his human rights not to be represented. This request was refused by the school by letter dated 20 February. Prior to the hearing on 21 February, the claimant produced a document entitled Statement regarding M which disputed the allegations in some detail. The panel consisted of three of the schools governors (including the Chair). They were assisted by an HR adviser from the Schools Education Advisory Team (SEAT). The head teacher presented the management case and she was assisted by a SEAT HR adviser. The claimant, who was accompanied by his father, represented himself. Oral evidence was given by the schools child protection co ordinator and one other witness. The claimant refused to answer questions, stating that he believed the proceedings to be unfair for the reasons given in his solicitors letters. Neither the claimant nor his father asked questions of any of the witnesses. By letter dated 27 February, the chair of the governors informed the claimant of the outcome of the hearing. After reciting the evidence, he concluded: The panel gave full and careful consideration to the evidence that was made available to them. The panel are satisfied that inappropriate contact was made with the child whilst the two of you were alone in the church. Further, that you sent a text message to the child inviting him to meet with you alone, during your own time and in doing so had instigated an inappropriate relationshipIn conclusion, the panel believe that, on the balance of probabilities, it was your intention to cultivate a sexual relationship with the child. The panel are satisfied that these actions constitute an abuse of trust implicit in your position at the school and as such constitute gross misconduct. As a result, you are summarily dismissed in accordance with the schools disciplinary procedurethe panel are also concerned that you have behaved in a way which indicates you may be unsuitable for work with children and as such will be reporting your dismissal to the appropriate agencies. On 4 March 2008, the claimants solicitors gave notice of his intention to appeal against the dismissal decision. The head teacher responded that the appeal would be heard by the staff appeal committee and that the claimant had the right to be represented at the appeal by his trade union representative or work colleague. The hearing of the appeal was adjourned and it has never taken place. In the light of the decision to dismiss the claimant, the school were obliged by regulation 4 of the Education (Prohibition from Teaching or Working with Children) Regulations 2003 (SI 2003/1184) (the 2003 Regulations) to report the circumstances of the dismissal to the Secretary of State so that he could consider whether to make a direction under section 142 of the Education Act 2002 (the 2002 Act) prohibiting the claimant from carrying out certain types of work with children (including teaching). A person subject to such a direction was, at the relevant time, placed on a list known as List 99. Accordingly, by letter dated 7 May 2008, the chair of the governors notified the Childrens Safeguarding Operations Unit (POCA) of the claimants dismissal for gross misconduct. The statutory regime applicable to cases referred to the Secretary of State under regulation 4 of the 2003 Regulations ceased to apply to cases where the Secretary of State had not invited representations by 20 January 2009. The claimants case was one such case. A new regime (to which the claimants case applies) was established under the Safeguarding Vulnerable Groups Act 2006 (the 2006 Act) as subsequently amended. On 19 May 2008, the claimant issued judicial review proceedings seeking a declaration that, by reason of the denial of his right to legal representation, the disciplinary hearing before the school governors was in breach of his rights under article 6 of the European Convention on Human Rights (ECHR). He succeeded before Stephen Morris QC (sitting as a deputy High Court judge) who ordered the allegations of misconduct to be heard by a differently constituted disciplinary committee at which the claimant was to be given the right to legal representation. The schools appeal was dismissed by the Court of Appeal (Laws, Wilson, Goldring LJJ) [2010] 1 WLR 2218. The statutory scheme Section 1(1) of the 2006 Act established the Independent Barring Board. The board was renamed the Independent Safeguarding Authority (ISA) by section 81(1) of the Policing and Crime Act 2009 and I shall so refer to it. The ISA is required to establish and maintain the childrens barred list (section 2(1)(a) of the 2006 Act). As from 12 October 2009, a person is barred from a regulated activity relating to children if he is included in the childrens barred list (section 3(2)(a)). Regulated activities relating to children are defined in Schedule 4 to the 2006 Act. They include any form of teaching, training or instruction of children, unless the teaching, training or instruction is merely incidental to teaching, training or instruction of persons who are not children (para 2(1)(a)) and any form of care for or supervision of children, unless the care or supervision is merely incidental to care for or supervision of person who are not children (para 2(1)(b)). Part 1 of Schedule 3 applies for the purpose of determining whether an individual is included in the childrens barred list. It provides: 3(1) This paragraph applies to a person if (a) it appears to [ISA] that the person has (at any time) engaged in relevant conduct, and (b) [ISA] proposes to include him in the childrens barred list. (2) [ISA] must give the person the opportunity to make representations as to why he should not be included in the childrens barred list. (3) [ISA] must include the person in the childrens barred list if (a) it is satisfied that the person has engaged in relevant conduct, and (b) it appears to [ISA] that it is appropriate to include the person in the list. 4(1) For the purposes of paragraph 3 relevant conduct is conduct which endangers a child or is likely to endanger a (a) child; (b) conduct which, if repeated against or in relation to a child, would endanger that child or would be likely to endanger him; (c) (including possession of such material); (d) (e) [ISA] that the conduct is inappropriate. conduct involving sexual material relating to children conduct of a sexual nature involving a child, if it appears to Para 16 of Schedule 3 deals with representations to ISA. A person who is, by virtue of any provision of the 2006 Act, given an opportunity to make representations must have the opportunity to make representations in relation to all of the information on which ISA intends to rely in taking a decision under the Schedule (para 16(1)). The opportunity to make representations does not include the opportunity to make representations that findings of fact made by a competent body were wrongly made (para 16(3)). Findings of fact made by a competent body are findings made in proceedings before one or more of the bodies specified in para 16(4) or any of its committees. Para 19 of Schedule 3 gives ISA the power to require various specified persons to provide relevant information to it. It may require the chief officer of a relevant police force to provide any such relevant information (para 19(1)(c)). Para 19(3) provides that, for the purposes of sub paragraph (c), relevant information relating to a person is information which the chief officer thinks might be relevant in relation to the regulated activity concerned. Section 37 provides that the ISA may require various specified persons to provide any prescribed information that he or it holds in relation to a person ISA is considering whether to include in, or remove from, a barred list. Prescribed information is defined in the Schedule to The Safeguarding Vulnerable Groups Act 2006 (Prescribed Information) Regulations 2008 (SI 2008/3265). It includes information relating to the persons employment and the reasons why permission was withdrawn for him to engage in the regulated or controlled activity in question (para 4(h)); and information relating to the persons conduct and any information other than that relating to [the persons] conduct which is likely to, or may, be relevant in considering whether [the person] should be included in or removed from a barred list including information relating to any previous offences, allegations, incidents, behaviour or other acts or omissions (para 5(f)). Regulated activity providers who hold any prescribed information in relation to a person engaged in regulated activity provided by him must provide the information to the ISA in the circumstances specified in section 35 of the 2006 Act. If the person is included in the list, he has a right of appeal to the Upper Tribunal if the Tribunal gives permission (section 4(1) and (4) of the 2006 Act). An appeal may be made only on the grounds that the ISA has made a mistake (a) on any point of law or (b) in any finding of fact which it has made and on which the decision was based (section 4(2)). For the purpose of subsection (2), the decision whether or not it was appropriate for an individual to be included in a barred list is not a question of law or fact (section 4(3)). The ISA referral guidance The ISA has published referral guidance for use in connection with referrals to it. Annexed to the guidance are extensive Guidance Notes for the Barring Decision Making Process (the barring process). These are public documents. The guidance notes that were in force at the time of the Court of Appeals decision were issued in February 2009. These were superseded in August 2010 by guidance notes which made minor (and immaterial) amendments. I shall refer to the current version. It is necessary to consider these in some detail, because, for reasons that will become clear, they are central to the issues that arise on this appeal. The referral guidance has no statutory force. As is stated in the introduction to the guidance notes, they are intended to be used by case workers in the determination of decisions with regard to whether referred individuals should be barred from working with vulnerable groups. Para 2.1 states that the purpose of the barring process is to ensure that all barring decisions follow a process which affords a fair, rigorous, consistent, transparent and legitimate assessment of whether an individual should be prevented from working with children. based on the information available to the [ISA]. The guidance notes identify five stages of the barring process. The first is the Initial assessment. The ISA can consider information from any source (para 4.1.1). The second stage is Evidence evaluation. This provides: 5.1 The next stage in the process is deciding, on the balance of probabilities, whether the event (or events) happened, and whether or not relevant conduct or risk of harm occurred. It can be taken as a matter of fact that, in some circumstances such as the notification of convictions, cautions and decisions by competent bodies (Appendix C), the event happened. However, in all other circumstances, including allegations, it is the assessment of all the available evidence that will assist in the determination of whether or not, on the balance of probabilities, the event happened 5.2 Referral information 5.2.1 Referral information is received from employers who have dealt with individuals through their internal disciplinary procedures. The conclusions reached by employers are reviewed to establish, on the balance of probabilities, the facts. It is the facts of the case that determine whether the case requires further consideration and not necessarily the conclusions the employer reached. 5.3 Sources of information 5.3.3 Referrals may be received relating to allegations that, if proven, would have amounted to auto bar offences or auto bar with reps offences. Here you must still fully examine the evidence for yourself on the basis of the balance of probabilities despite the lack of a criminal conviction (see also 5.7). 5.3.5 While the ISA does not have an investigatory function, relevant information held by other organisations, agencies and bodies may be sought. 5.5 Further information 5.5.1 The acquisition of as much relevant information as is necessary and reasonably sufficient to make a fair and defensible barring decision is all that is required 5.9 General principles in relation to the assessment of evidence 5.9.1 When case workers have completed the process of receiving and gathering all the information, evidence must be assessed in terms of what reliance may be placed on it for the purposes of making a barring decision. 5.9.2 As mentioned already, in cases of cautions, convictions and findings of fact by competent bodies, case workers will be able to treat the facts as proved. [Lord Brown explains who competent bodies are at para 98 of his judgment]. 5.9.3 In relation to other evidence, case workers will first need to assess each piece of evidence and judge how reliable it is. The judgment as to how reliable a piece of evidence is will determine how much weight can be placed on it. Less reliable evidence will carry less weight in a barring decision than highly reliable evidence. Some evidence will be so unreliable, for example because it is contradicted or called into question by other reliable evidence, that no lawful reliance can be placed on it at all. Such evidence must be disregarded altogether; a failure to do this could give rise to an appeal on the grounds that the ISA had made an error in its findings of fact. 5.9.7 Case workers must always be mindful of the principles that the findings of fact that can or cannot be made in the light of the evidence may mean that case workers must re assess which powers can be relied on to bar. Stage 3 (Case assessment) contains detailed guidance as to the assessment of the gravity of the case and the level of risk of future harm presented by the individual. Para 6.11 states that there may be referral of particularly difficult cases to a specialist for an opinion. Such cases may include those where advice is required about issues of mental health or where the motivation of the applicant or referred person is unclear, for example, in the case of alleged grooming. Stage 4 is entitled Representations. Para 7.1 states that, if the ISA has decided that the evidence supports a bar for the childrens list (that is the minded to bar stage has been reached), the person must be given the opportunity to make representations as to why he or she should not be included in the list. Para 7.3 states that the request for representations that is sent to the person draws attention to findings of fact that are material to the barring decision and the areas of risk identified so that any representation made by the applicant/referred individual can address specific areas to be explored in the case assessment. Para 7.4 is important. It provides: Representations could alter a case workers original conclusions in two areas. Firstly, in relation to the evidence, findings of facts or the value or significance of other evidence being relied on may be genuinely called into question; secondly, the conclusions reached in the structured judgment procedure [ie stage 3] may need to be reviewed in the light of further evidence or things presented in the representations. Para 7.5 provides that the representations are ordinarily expected to be in writing by the individual under consideration. But they may be made by others on behalf of the individual, provided that they are authorised. The final stage of the Process is entitled Final decision. It includes: 8.1 The decision after receiving representations relates to the level of potential future risk of harm to children and/or vulnerable adults taking into consideration, where applicable, any representations that have been made and all pertinent facts and any specialist opinions. The guiding principle is that the assessment of the case is based on a structured judgment regarding an individuals risk of harm to vulnerable groups whether, based on that process, it is appropriate to include any such individual in the list(s). 8.2 The appropriateness test is based on the requirement to ensure children and vulnerable adults are safeguarded and that any barring decision is not tarnished by any desire to act as a sanction or punishment. A key issue is that decisions to include or not on the barred list(s) are only taken after the merits of each case have been fully considered following an assessment of all available, relevant facts and evidence, any specialist opinions and, where appropriate, any representations made. In addition to the published guidance notes, case workers have the benefit of Case Worker Guidance to assist them in making balanced, factually sound and defensible decisions from stages 2 to 5 of the barring process. This guidance is not published. It is intended to supplement the guidance contained in the guidance notes. The version that was provided to the court (which is redacted) is dated April 2011. There is a section headed Assessing the reliability of the evidence. It includes: 2.12 The judgment as to how reliable a piece of evidence is will determine how much weight can be placed on it. Less reliable evidence will carry less weight in a barring decision than highly reliable evidence. Some evidence will be so unreliable, for example, because it is contradicted or called into question by other reliable evidence, that no lawful reliance can be placed on it at all. Such information must be disregarded altogether and the reason for such a decision documented; as failure to disregard such information could give rise to an appeal. 2.13 Consider the credibility of the witnesses and the referred individual and in your assessment take account of any issues that relate to their motivation and their previous conduct. Is there anything in the background to the matter which affects anyones credibility? Is there history of similar problems or issues relating to their honesty? 2.14 The underlying motivation of the person giving the information or the referred individual may be very important in your assessment and the weight you allot to it; especially where you consider that it involves prejudice, financial gain or malice. 2.15 You should be careful in the way you deal with the opinions of those giving information. While it is sometimes helpful to receive an interpretation of a set of circumstances or facts from, for example, a care worker or police officer, it is also important to remember that an opinion is essentially a persons belief; it is a subjective observation of statement which may or may not be supported by evidence. Then at para 2.30, there is a section headed Professional opinions and previous findings. It includes: Can we take at face value the findings of a referring organisations disciplinary process? For the most part, such findings, if supporting evidence is on the file, will be fairly straightforward to confirm as reliable. However, there are plenty of examples where the referring organisations have either made decisions without the full facts available, or come to partial findings that have led to a dismissal We are in a unique position in that we are able to pull together relevant information from a range of agencies and it is therefore essential we make our own findings about the evidence available to us. More fundamentally, in the above example, a headmasters investigatory report to a disciplinary panel may conclude that an allegation is proven; this is not a finding of fact, so we should evaluate the evidence too. Obviously they will have a good contextual knowledge of the case (better in many cases than ourselves) but there could be any number of reasons why that finding is not defensible (they were not privy to all the information; a witness has since retracted/revisited a statement; they simply did not come to a reasoned conclusion, etc) so we should evaluate the evidence ourselves and come to our own conclusions. The only cases in which this is not relevant is when there is a finding of fact made by a competent body. The issue The issue is whether the governors decision not to allow the claimant to have legal representation at the disciplinary hearing violated his rights under article 6 of the ECHR which, so far as material, 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 within a reasonable time by an independent and impartial tribunal established by law. It is common ground that the civil right with which we are concerned is the claimants right to practise his profession as a teaching assistant and to work with children generally. There is no doubt that this right would be directly determined by a decision of the ISA to include him in the childrens barred list. He does not, however, contend that the proceedings before the ISA would violate his article 6(1) rights. His case is that (i) the disciplinary proceedings would have such a powerful influence on the ISA proceedings as to engage article 6(1) in both of them and (ii) the consequences of being placed on the childrens barred list by the ISA would be so grave for him that the right to a fair hearing vouchsafed by article 6(1) meant that he was entitled to legal representation in both proceedings. If there is no connection at all between the disciplinary proceedings and the proceedings before the ISA, it is obvious that article 6 has no role to play in the disciplinary proceedings. Ex hypothesi, they have nothing to do with the civil right in question. The principal question raised on this appeal is what kind of connection is required between proceedings A (in which an individuals civil rights or obligations are not being explicitly determined) and proceedings B (in which his civil rights or obligations are being explicitly determined) for article 6 to apply in proceedings A as well as proceedings B. Does the connection have to be so strong that the decision in proceedings A in effect determines the outcome of proceedings B (as Mr Bowers QC submits). Or is it sufficient that the decision in proceedings A has an effect on proceedings B which is more than merely tenuous or remote (as Mr Drabble QC submits)? Or does the connection lie somewhere between these two positions? Having considered the Strasbourg jurisprudence, Laws LJ (with whom Wilson and Goldring LJJ agreed) adopted a test somewhere along the spectrum between the two extremes. He said [2010] 1 WLR 2218, para 32 that the ECtHR approach was likely to be met where the decision in the relevant proceedings has a substantial influence or effect on the later vindication or denial of the claimants Convention right. He amplified this at para 37 in these terms: In my view the effect of the learning (and I have already foreshadowed this) is that where an individual is subject to two or more sets of proceedings (or two or more phases of a single proceeding), and a civil right [or] obligation enjoyed or owed by him will be determined in one of them, he may (not necessarily will) by force of Article 6 enjoy appropriate procedural rights in relation to any of the others if the outcome of that other will have a substantial influence or effect on the determination of the civil right or obligation. I do not mean any influence or effect which is more than de minimis: it must play a major part in the civil rights determination. I do not intend a hard and fast rule. Principles developed by the Strasbourg court for the interpretation and application of the Convention tend not to have sharp edges; as I have said, the jurisprudence is generally pragmatic and fact sensitive. The nature of the right in question may make a difference. So may the relative authority of courts, tribunals or other bodies playing their respective parts in a case, such as the present, where connected processes touch a Convention right. The Strasbourg jurisprudence Mr Bowers (supported by Miss Lieven QC) submits that there is no support in the Strasbourg jurisprudence for the test propounded by Laws LJ and that we should reject it. It is, therefore, necessary to examine some of the decisions of the ECtHR. In Ringeisen v Austria (No 1) (1971) 1 EHRR 455, the Austrian District and Regional Real Property Transactions Commission refused to approve the sale of a number of plots of land. The applicant challenged the refusal alleging bias and contending that his article 6 rights were violated for that reason. The Austrian statute provided that the refusal of approval rendered the sale null and void. The ECtHR said at para 94 that the French expression contestations sur (des) droits et obligations de caractre civil covers all proceedings the result of which is decisive for private rights and obligations. The English text determination of . civil rights and obligations confirms this interpretation. A little later in the same paragraph, the court said: In the present case, when Ringeisen purchased property from the Roth couple, he had a right to have the contract for sale which they had made with him approved if he fulfilled, as he claimed to do, the conditions laid down in the Act. Although it was applying rules of administrative law, the Regional Commissions decision was to be decisive for the relations in civil law (de caractre civil) between Ringeisen and the Roth couple. This is enough to make it necessary for the court to decide whether or not the proceedings in this case complied with the requirements of article 6(1) of the Convention. It is clear that the refusal of approval by the Commission (a matter of administrative law) was, as a matter of fact in that case, determinative of the private contractual rights of the parties. It did not merely influence the relations in civil law between the parties. It was dispositive of them. But it is not at all clear that the court was saying that this was the test for all cases. The words covers all proceedings the result of which is decisive for private rights and obligations (emphasis added) could mean that the circumstances in which article 6(1) is engaged include, but are not limited to, such cases. It will be seen, however, that the language of para 94 of Ringeisen (proceedings the result of which is decisive for private rights and obligations) has been repeated as a mantra in other cases where the facts were materially different. The next case is Le Compte, Van Leuven and De Meyere v Belgium (1981) 4 EHRR 1. The applicants were suspended from practising medicine for three months by the Provincial Council of the Ordre des mdecins. They appealed unsuccessfully to the Appeal Council and from there (again unsuccessfully) to the Court de Cassation. Dr. Le Compte complained to the ECtHR that his article 6 rights had been violated because the proceedings before the Appeals Council had not been conducted in public. An issue arose as to whether article 6 was engaged at all. The applicants argued that what was in issue before the Provincial and Appeals Councils was their right to continue to practise in their profession (a civil right). The Government argued that the decisions of those bodies had no more than an indirect effect on that right, since they did not review the lawfulness of the earlier suspension from practice, but merely had to decide whether breaches of the rules of professional conduct of a kind justifying disciplinary sanctions had actually occurred (para 46). Following Ringeisen, the court said that it must be shown that the dispute (before the Appeals Council) related to civil rights and obligations, in other words that the result of the proceedings was decisive for such right (para 46). At para 47, the court said: As regards the question whether the dispute related to the above mentioned right, the court considers that a tenuous connection or remote consequences do not suffice for article 6(1), in either of its official versions (contestation sur, determination of): civil rights and obligations must be the objector one of the objectsof the contestation (dispute); the result of the proceedings must be directly decisive for such a right. Whilst the court agrees with the Government on this point, it does not agree that in the present case there was not this kind of direct relationship between the proceedings in question and the right to continue to exercise the medical profession. This seems to be the first case in which the ECtHR contrasted the notion that the result of the proceedings must be directly decisive with the notion of a tenuous connection or remote consequences. On the facts of Le Compte, the issue for the Appeals Council was whether the breaches of the rules of professional conduct on which the decision to suspend was based had actually occurred. But the link between the findings of breach and the decision to suspend could not have been closer. If the appeal failed, the decision to suspend would remain unimpaired. The decision of the Appeals Council was determinative of the applicants civil right to practise their profession during the period of suspension. In my view, the court was not introducing a gloss on the Ringeisen test that any connection more than tenuous or remote would suffice. On the facts of this case (as in Ringeisen itself), the result of the proceedings in question was determinative of the civil rights in issue. The next case is Fayed v United Kingdom (1994) 18 EHRR 393. This is heavily relied on by Mr Bowers as showing that decisive means determinative in the sense of dispositive. The applicants had acquired the House of Fraser (HOF). The takeover had been opposed by Lonrho Plc which pursued a hostile campaign against the applicants through the media, including The Observer, a newspaper that it owned. This led to the issue of libel proceedings by the applicants. Some time later, the Government appointed two inspectors to investigate inter alia the circumstances surrounding the acquisition of HOF. The inspectors provisional conclusions included a finding that the applicants had made material dishonest misrepresentations at the time of the takeover. The Government published the report. Following the publication of the report, the applicants abandoned their libel claims against The Observer newspaper on the grounds that, in the light of the report, it had become impossible to prosecute the claims with any prospects of success. The applicants complained that, in violation of article 6(1), the inspectors had in their report determined their civil rights to honour and reputation (protected as part of their right to respect for private life under article 8) and had denied them effective access to a court to have those rights determined. The first question that the ECtHR had to decide was whether article 6(1) was applicable to the investigation by the inspectors. It was contended by the applicants that the result of the investigation was decisive of their article 8 rights and that the inspectors report effectively determined them without respecting any of the procedural guarantees of article 6(1). The court accepted that the published findings of the inspectors undoubtedly damaged the applicants reputations, but that was not sufficient to lead to the conclusion that the inspectors had determined their civil rights. The court said: 61. However, the court is satisfied that the functions performed by the inspectors were, in practice as well as in theory, essentially investigative. The inspectors did not adjudicate, either in form or in substance. They themselves said in their report that their findings would not be dispositive of anything. They did not make a legal determination as to criminal or civil liability concerning the Fayed brothers, and in particular concerning the latters civil right to honour and reputation. The purpose of their inquiry was to ascertain and record facts which might subsequently be used as the basis for action by other competent authoritiesprosecuting, regulatory, disciplinary or even legislative. Nevertheless, whilst there was a close connection between Lonrhos grievance against the Fayed brothers and the matters investigated by the inspectors, the object of the proceedings before the inspectors was not to resolve any dispute (contestation) between Lonrho and the applicants In short, it cannot be said that the inspectors inquiry determined the applicants civil right to a good reputation, for the purposes of article 6(1), or that its result was directly decisive for that right. 62. Acceptance of the applicants argument [as to the] interpretation of article 6(1) would in practice unduly hamper the effective regulation in the public interest of complex financial and commercial activities. In the courts view, investigative proceedings of the kind in issue in the present case fall outside the ambit and intendment of article 6(1). Thus it can be seen that the court accepted that there was a close connection between the findings of the inspectors and the determination of the civil right which was to be the subject of the libel proceedings, but that was not enough. Fayed shows that in the ECtHR lexicon, decisive is not the antonym of a tenuous connection or remote consequence. The court emphasised the fact that (i) the inspectors themselves said that their findings would not be dispositive of anything, (ii) the object of the proceedings before the inspectors was not to resolve any dispute and (iii) there was an important policy reason for not applying article 6 in investigative proceedings conducted at the instance of regulatory or other authorities. In Balmer Schafroth v Switzerland (1998) 25 EHRR 598 the applicants lodged an objection with the Federal Council requesting that it refuse to extend a licence to operate a power station. The council (which was the authority of first and last instance to deal with the matter) rejected the objection and extended the licence. The applicants invoked articles 6(1) and 13, arguing that they had not had access to a tribunal and that the procedure followed by the council had not been fair. They said that there had been a violation of their civil right to the protection of their physical integrity under articles 2 and 8. The court found that article 6(1) was not engaged. At para 32, it set out the familiar test: the outcome of the proceedings must be directly decisive for the right in question. As the court has consistently held, mere tenuous connections or remote consequences are not sufficient to bring article 6(1) into play. At para 39, it said that the question in particular was whether the link between the councils decision and the applicants article 2 and 8 rights was sufficiently close to bring article 6(1) into play, and was not too tenuous or remote. At para 40, it answered this question saying that the applicants were unable to establish that the operation of the power station exposed them personally to a danger that was not only serious but also specific and, above all, imminent. Consequently neither the dangers nor the remedies were established with a degree of probability that made the outcome of the proceedings directly decisive within the meaning of the courts case law. In the result, the connection between the councils decision and the right invoked by the applicants was too tenuous and remote. This is an example of a case where there is only one set of proceedings in issue (ie the first and last instance authority adjudicating on the same right). In such a case, the question is whether the proceedings are decisive in the ordinary sense of being dispositive of the effective exercise of the applicants rights. Another example of such a case is Slovenske Telekomunikacie (Application No 47097/99) (unreported) given 28 September 2010. There is also a line of Strasbourg decisions on the question whether article 6 is engaged where an issue arising in civil proceedings is referred to a constitutional court. This question arose in particular in relation to the question whether proceedings before the constitutional court were to be taken into account in determining whether the length of the civil proceedings was reasonable within the meaning of article 6(1). Initially, the ECtHR decided that the ECHR did not apply to rights determined by a constitutional court because of their constitutional nature: see Buchholz v Germany (1981) 3 EHRR 597. This approach was, however, rejected in Deumeland v Germany (1986) 8 EHRR 448 where at para 77 the ECtHR held that, although the Constitutional Court had no jurisdiction to rule on the merits of the dispute, its decision was capable of affecting the outcome of the claim. Since then, the Deumeland approach has been followed repeatedly by the ECtHR in cases where questions are referred to a constitutional court. Thus in Poiss v Austria (1987) 10 EHRR 231, in relation to the applicability of article 6(1), the court said: Any decisionwhether favourable or unfavourableby the authorities dealing with the matter subsequently affected, affects or will in future affect their property rights. The outcome of the proceedings complained of is accordingly decisive for private rights and obligations (see Ringeisen), so that article 6(1) applies in the instant case. that Deumeland should not be followed and at para 37 said that: In Bock v Germany (1989) 12 EHRR 247, the ECtHR rejected an argument there are circumstances in which proceedings before the constitutional court must be taken into the reckoning in determining the relevant period. It has to be considered whether the constitutional courts decision was capable of affecting the outcome of the case which has been litigated before the ordinary courts. The question whether article 6(1) is applicable to constitutional complaint proceedings must accordingly be treated on the merits of each case, in the light of all the circumstances (emphasis added). Another case involving constitutional proceedings is Ruiz Mateos v Spain (1993) 16 EHRR 505. This is one of the decisions relied on by Laws LJ in support of his test of substantial influence or effect. The applicants brought a claim for the restitution of shares which had been expropriated by legislative decree of the Spanish Government. An issue arose as to the constitutionality of the decree and this was referred to the Spanish Constitutional Court. The applicants complained of breaches of article 6(1) by reason of (i) the delays occasioned by the proceedings in the Constitutional Court and (ii) the alleged failure to accord them a fair hearing before the Constitutional Court. The Government argued inter alia that article 6(1) was not applicable in the proceedings before the Constitutional Court. The ECtHR rejected this argument. The court said, in relation to the length of the proceedings, that the relevant period included the time taken in the proceedings before the Constitutional Court and was not limited to the duration of the civil proceedings. At para 35, the court said that, according to its well established case law, proceedings in a Constitutional Court are to be taken into account for calculating the relevant period where the result of such proceedings is capable of affecting the outcome of the dispute before the ordinary courts (emphasis added). The Commission explained at para 52 of its Opinion that although the purpose of these constitutional proceedings was not the same as that of the civil proceedings, the length of the constitutional proceedings inevitably contributed to the prolongation of the civil proceedings. As regards the allegation that the applicants had been denied a fair hearing before the Constitutional Court, the court observed that there was a close link between the subject matter of the proceedings before that court and the civil proceedings (para 59). The annulment of the decree by the Constitutional Court would have led the civil courts to allow the applicants claim. For this reason, the ECtHR held that article 6(1) applied to the proceedings before the Constitutional Court. The Commission put the point very clearly at para 87 of its opinion: In effect, therefore, it is as if the applicants case was dealt with in a single set of proceedings before the Spanish courts. Although these proceedings involved a civil stage, in the strict sense, and a constitutional stage, these stages were so closely bound up with each other that to dissociate them would be tantamount to crediting a legal fiction. In the specific circumstances of the case, [to interpret article 6(1) as excluding the constitutional stage of the proceedings] would be excessively formalist and likely to undermine to a considerable extent the guarantees afforded to the applicants by the Convention, whereas, according to case law, the Convention must be interpreted in such a way as to ensure its efficacy and to safeguard the individual in a real and practical way, rather than a fictitious and illusory way, as regards those areas with which it deals. In relation to the question of reasonable period, unsurprisingly the ECtHR has consistently held that, where a constitutional issue arises in civil proceedings and this can only be determined by a Constitutional Court, the time taken before that court must be taken into account in calculating the length of the civil proceedings. The position should be no different from what it would be if the civil court had jurisdiction to decide the constitutional issue for itself. It is as if the proceedings before the Constitutional Court and the civil court were all part of the same proceedings. For the same reason, the guarantee of a fair hearing afforded by article 6(1) should apply to proceedings before the Constitutional Court as it does to proceedings before the civil court. The next case referred to by Laws LJ was Lizarraga v Spain (2004) 45 EHRR 1031. This was a case similar to Ruiz Mateos. At para 47, the ECtHR said that, although the proceedings before the Constitutional Court bore the hallmarks of public law proceedings, they were decisive of the applicants proceedings in the ordinary courts to have a dam project set aside. The court found that the proceedings as a whole may be considered to concern the civil rights of the applicants. The third ECtHR case relied on by Laws LJ was the Grand Chamber decision in Ocalan v Turkey (2005) 41 EHRR 985. This is a criminal case. The applicant was detained and held in police custody where he was questioned by the security forces. He received no legal assistance during this period. Thereafter, he was remanded in custody pending trial and during this period he was allowed restricted access to his lawyers. He made several self incriminating statements which were a major contributing factor to his conviction at trial. It was held by the ECtHR that there had been a violation of article 6(1) in conjunction with article 6(3)(b) and (c). At para 131 the Grand Chamber endorsed the following statement: . in these circumstances, the court is of the view that to deny access to a lawyer for such a long period and in a situation where the rights of the defence might well be irretrievably prejudiced is detrimental to the rights of the defence to which the accused is entitled by virtue of article 6. I agree that in such a case, the requirements of article 6(1) (criminal) and 6(3) are necessarily engaged sooner than in civil cases because of the specific article 6 right to the presumption of innocence and legal representation after charge with which it is inextricably linked. That is why I do not consider that this decision sheds light on the issue that arises in the present appeal. The concept of irretrievable prejudice has, however, been used by the ECtHR in the civil context of claims for interim measures. In Markass Car Hire Ltd v Cyprus (Application No 51591/99) (unreported) given 23 October 2001, the domestic court had made an interim order without notice to the applicant for the delivery up of a fleet of vehicles. An issue arose as to whether article 6 applied to the interim order proceedings. The ECtHR (Third Section) noted that, unless the interim decision was reversed by the appeal court within a short time, it would affect the legal rights of the parties. The court could not overlook the drastic effect of the interim decision. The combined effect of the measure and its duration caused irreversible prejudice to the applicants interests and drained to a substantial extent the final outcome of the proceedings of its significance. In these circumstances, the court considered that the interim decision in effect partially determined the rights of the parties in relation to the final claim against the applicant in [the] civil action. This approach to interim measures was endorsed by the Grand Chamber in Micallef v Malta (2010) 50 EHRR 920. At para 74, the court said that the result of the interim proceedings must be directly decisive for the right in question, mere tenuous connections or remote consequences not being sufficient to bring article 6(1) into play. At para 79, they noted that a judges decision on an injunction will often be tantamount to a decision on the merits of the claim for a substantial period of time, even permanently in exceptional cases. At para 85, they said that the nature of the interim measure, its object and purpose as well as its effects on the rights in question should be scrutinised. Whenever an interim measure can be considered effectively to determine the civil right or obligation at stake, notwithstanding the length of time it is in force, article 6 will apply. Before I attempt to distil the principles that can be derived from these cases which are relevant to this appeal, I need to refer to some recent English cases. The English cases Laws LJ derived support for his test from Kulkarni v Milton Keynes Hospital NHS Trust [2009] EWCA Civ 789, [2010] ICR 101. A doctor claimed that he was entitled to legal representation in disciplinary proceedings brought by his employer. Smith LJ (with whom Wilson LJ and Sir Mark Potter P agreed) said obiter at para 67 that she would have held that article 6 is engaged where an NHS doctor faces charges which are of such gravity that, in the event they are found proved, he will be effectively barred from employment in the NHS. She explained at para 66 why article 6 was engaged on the facts of that case. The NHS is, to all intents and purposes, a single employer of doctors for the whole country. If Dr Kulkarni was found guilty of the charge, he would be unemployable as a doctor and would never complete his training. Thus, the internal disciplinary procedure was, as a matter of fact, dispositive of his right to work in his chosen field. R (Wright) v Secretary of State for Health [2009] 1 AC 739 was concerned with the procedure for provisionally listing a worker on the Protection of Vulnerable Adults (POVA) list under the 2006 Act. The House of Lords held that some interim measures have such a clear and decisive impact upon the exercise of a civil right that article 6(1) does apply (per Baroness Hale of Richmond, at para 21). Provisional listing in the POVA list was a determination of the civil right to work because it had detrimental and often irreversible and incurable effects (para 25). Thus, the procedure was, as a matter of fact, dispositive of the claimants right to work in his chosen field. Neither Kulkarni nor Wright sheds light on the meaning and boundaries of the Ringeisen test. They contain no analysis or discussion of the meaning of what I have called the mantra. They are merely examples of cases where, as a matter of fact, the proceedings determined the civil right in question. We were also shown other domestic decisions where the test has been applied such as Runa Begum v Tower Hamlets London Borough Council (First Secretary of State intervening) [2003] 2 AC 430 (paras 30 and 78); R (A) v Croydon London Borough Council (Secretary of State for the Home Department intervening) [2009] 1 WLR 2557 (paras 37, 59 and 63) and Ali v Birmingham City Council (Secretary of State for Communities and Local Government intervening) [2010] 2 AC 39 (paras 36 and 43). In each of these passages, the mantra of directly decisive is stated, but there is no analysis of precisely what it means. Conclusions on the test for the application of article 6 I have found it necessary to examine the facts of the ECtHR decisions to which I have referred in some detail because, in my view, the jurisprudence contains no clear explanation of what directly decisive means. It is, therefore, necessary to see how the court has applied the Ringeisen test in order to see what light the cases shed on its meaning. I think that the following principles can be derived from the cases. First, it is clear that it is a sufficient condition for the application of article 6(1) in proceedings A that a decision in those proceedings will be truly dispositive of a civil right which is the subject of determination in proceedings B. In Ringeisen 1 EHRR 455 and Le Compte 4 EHRR 1, proceedings A were, on the facts of those cases, dispositive of the outcome of proceedings B. The constitutional cases such as Ruiz Mateos 16 EHRR 505 and Lizarraga 45 EHRR 1031 are further examples of the application of this principle. So too in the interim measures cases of Markass 23 October 2001 and Micallef 50 EHRR 37, the decision to grant interim measures was, on the facts, directly decisive in the sense that they caused irreversible prejudice to the applicants and, in effect, were wholly or at least partly determinative of the civil right in question. Article 6(1) therefore applied in all of these cases. But none of them states in terms that it is a necessary condition for the application of article 6(1) in proceedings A that they are dispositive of proceedings B. Secondly, although the word decisive is contrasted with tenuous connection or remote consequences, no decision was shown to us which states that article 6(1) applies in any case where the connection between the two proceedings is merely more than tenuous or where the consequences of a decision in proceedings A for proceedings B is merely more than remote. There is a spectrum of effect ranging from (i) merely more than tenuous and remote to (ii) dispositive. The fact that the ECtHR contrasted the two ends of the spectrum, for example, in Le Compte does not indicate that the court was saying that article 6(1) applies in any case where the link is merely more than tenuous or the consequences are merely more than remote. Thirdly, in a number of cases the court made it clear that a link that was merely more than tenuous or consequences that were merely more than remote is not sufficient. How close does the link have to be for article 6(1) to apply? In Balmer Schafroth 25 EHRR 598, the court said that there had to be a sufficiently close link. That begs the question: does the link have to be sufficient to be dispositive of the decision or is it enough that it is likely to have some influence on it? In Ruiz Mateos 16 EHRR 505, the court said that the test was whether the decision of the constitutional court was capable of affecting the outcome of the proceedings in which the civil rights were to be determined. In most cases where a constitutional question which arises in the course of a civil dispute is referred to a constitutional court, the decision of that court is likely to be capable of being determinative of the dispute. Ruiz Mateos was one such case. Fayed 18 EHRR 393 shows that, in some cases at least, the link must be very close. That was a strong case on the facts as the findings set out in the inspectors report had a potent impact on the applicants attempt to vindicate his article 8 right to honour and reputation. Nevertheless, the court held that the proceedings before the inspectors were not decisive of his civil rights. Fourthly, the cases show that, despite the apparent simplicity of the mantra, the ECtHR adopts a pragmatic context sensitive approach to the problem. It is not possible to classify all the cases into neat hermetically sealed categories. This may be considered to be unfortunate, since it is desirable to know in advance whether article 6(1) applies to a procedure or not. Anything less gives rise to uncertainty and potential litigation. But the ECtHR has propounded an approach which is not sharp edged and I do not think it is for us to introduce a rigidity which Strasbourg has eschewed. It is pertinent to note that in Ruiz Mateos, the Commission referred at para 87 of its Opinion to the specific circumstances of the case (see para 52 above) and in Bock 12 EHRR 247, para 37, the court said that the question whether article 6(1) was applicable must be treated on the merits of each case, in the light of all the circumstances (see para 49 above). Thus, in deciding whether article 6(1) applies, the ECtHR takes into account a number of factors including (i) whether the decision in proceedings A is capable of being dispositive of the determination of civil rights in proceedings B or at least causing irreversible prejudice, in effect, by partially determining the outcome of proceedings B; (ii) how close the link is between the two sets of proceedings; (iii) whether the object of the two proceedings is the same; and (iv) whether there are any policy reasons for holding that article 6(1) should not apply in proceedings A. This last factor was taken into account by the ECtHR in Fayed 18 EHRR 393 (see para 43 above). So where does this leave the test of substantial influence or effect proposed by Laws LJ? He was careful to say that an applicant may (not necessarily will) by force of article 6 enjoy appropriate procedural rights in relation to any of the others [set of proceedings] if the outcome of that other will have a substantial influence or effect on the determination of the civil right or obligation: [2010] 1 WLR 2218, para 37 (emphasis added). In my view, this is a useful formulation. It captures the idea of the outcome of proceedings A being capable of playing a major part in the civil rights determination in proceedings B. That is what fairness requires. Anything less would be excessively formalist (see para 87 of the Commissions Opinion in Ruiz Mateos 16 EHRR 505) and would give too much weight to the fact that the two sets of proceedings are, as a matter of form, separate. The focus should be on the substance of the matter. The court should always keep in mind the importance of ensuring that the guarantees afforded by article 6(1) are not illusory. It is clearly established that, where a decision in proceedings A is dispositive of proceedings B, article 6(1) applies in proceedings A as well as in proceedings B. That is what the right to a fair hearing in proceedings B requires. Why does fairness not require the same where the decision in proceedings A, although it is not strictly determinative, is likely to have a major influence on the outcome in proceedings B? As a matter of substance, there is not much difference between (i) an outcome of proceedings A which has a major influence on the result in proceedings B and (ii) an outcome of proceedings A which is dispositive of the result in proceedings B. In each case, the civil right of the person concerned is greatly affected by what occurs in proceedings A. If there is to be a difference in the application of article 6(1) between the two cases, it needs to be justified. There may be policy reasons (such as those referred to in Fayed 18 EHRR 393) based on the nature of the body charged with proceedings A which justify a different approach. But absent such policy reasons, it is difficult to see why article 6(1) should not apply in both cases. No such policy reasons have been identified in the present case. I propose, therefore, to consider whether article 6(1) applies in the present case on the basis of the test propounded by Laws LJ. Did article 6(1) apply in the disciplinary proceedings in the present case? At para 47 of his judgment, Laws LJ said: It seems to me that there is every likelihood that the outcome of the disciplinary process in a case like this, where there has been a finding of abuse of trust by virtue of sexual misconduct, will have a profound influence on the decision making procedures relating to the barred list. The governors conclusion comprised both a finding of fact and a judgment as to where the facts lay on the scale of severity that in the particular case fell to be applied. While the ISA may bring an independent mind to bear, it is not I think suggested that it operates a procedure for oral hearings with cross examination. The force of the disciplinary decision lies not only in the governors view of the primary facts, but especially in their judgment as to how those facts should be viewed. Without a de novo hearing and the possibility of oral evidence before the ISA, at the very least the flavour and the emphasis of those conclusions will remain important and influential. I accept at once the gravity of the consequences for the claimant of being placed on the childrens barred list. For that reason, I would agree with the courts below that, if article 6 did apply in the disciplinary proceedings, then the claimant was entitled to the enhanced procedural protection (normally associated with criminal proceedings) of the right to have legal representation at the disciplinary hearing. The more serious the allegation and the graver the consequences if the allegation is proved, the greater the need for enhanced protection: see Albert and Le Compte v Belgium (1983) 5 EHRR 533, para 30, R v Securities and Futures Authority Ltd, Ex p Fleurose [2002] IRLR 297, para 14 (per Schiemann LJ) and International Transport Roth GmbH v Secretary of State for the Home Department [2003] QB 728, para 38 (per Simon Brown LJ) and para 148 (per Jonathan Parker LJ). I agree with Mr Drabble that at the heart of the schools decision to dismiss the claimant were two issues of credibility: (i) whether the claimant should be believed when he denied that he massaged and kissed M when the two of them were alone in the church (the claimants case was that he moved away when M tried to kiss him); and (ii) whether, as alleged by the schools child protection officer (but denied by the claimant), the claimant made detailed damaging admissions including that he had kissed M and massaged his back. As Mr Drabble points out, the school determined both of these issues against the claimant following his disciplinary hearing at which the child protection officer was questioned by the disciplinary panel and their head teachers advisor from the SEAT. The letter of dismissal stated: the panel also heard evidence from the schools child protection officer. who recalled information relayed to her by you about the incident in the church. the information [the officer] recalls corresponds with a diary entry made by the child. In these circumstances, Mr Drabble submits that, even if the ISA had the capacity to make a decision for itself on the balance of probabilities on the papers, it is inevitable that they would adopt the schools credibility findings which had been arrived at after the disciplinary panel had been afforded the opportunity of seeing the claimant and the child protection officer giving oral evidence. The ISA would have had no opportunity to make a similar assessment of their credibility. Laws LJ essentially accepted these submissions at para 47 of his judgment. Central to his reasoning is the conclusion that the findings of the disciplinary panel would be likely to have a profound influence on the decision reached by the ISA without a de novo hearing and the possibility of oral evidence before the ISA. I have already set out in full the principal material statutory provisions and parts of the ISA guidance notes and the case worker guidance. It is necessary to emphasise certain aspects of them. They show that the ISA is required to exercise its own independent judgment both in relation to finding facts and making an assessment of their gravity and significance. So far as findings of fact are concerned, apart from the automatic barring provisions contained in paragraphs 1 and 2 of Schedule 3, the 2006 Act requires the ISA itself to be satisfied that the person has engaged in relevant conduct. The latest version of the guidance notes (August 2010) also makes it clear that the ISA is expected to make its own findings. It can consider information from any source (para 4.1.1). Para 5.1 states that, in all cases except where there has been notification of convictions, cautions and decisions by competent bodies, it is the assessment of all the available evidence that will assist in the determination of whether or not, on the balance of probabilities, the event happened (emphasis added). Para 5.2.1 states that the conclusions reached by employers are reviewed to establish, on the balance of probability, the facts. It is the facts of the case that determine whether the case requires further consideration and not necessarily the conclusions that the employer reached. Mr Drabble emphasised the use of the word reviewed and submits that this shows that the exercise which the ISA performs in relation to the facts is akin to a judicial review, rather than a de novo consideration of the facts. I cannot accept this submission. It is clear that the ISA is expected to form its own assessment of the facts on the basis of all the available evidence: the word review means no more than assess or reconsider. This is supported by the terms of paras 5.9.3 and 5.9.7 which I have set out at para 24 above. No judge would embark on such an exercise when undertaking a judicial review of a decision. Other important provisions in the guidance notes are to be found in paras 5.3.3, 5.3.5, 5.5.1, 7.3, 8.1 and 8.2. It is worth repeating part of para 8.2: A key issue is that decisions to include or not on the barred list(s) are only taken after the merits of each case have been fully considered following an assessment of all available, relevant facts and evidence, any specialist opinions and, where appropriate, any representations made (emphasis added). Mr Drabble draws attention to the fact that para 5.3.5 states that the ISA does not have an investigatory function. But it is clear that it can obtain information held by other organisations and bodies: see the powers referred to at paras 19 and 20 above. Moreover, the referred person is entitled to legal representation before the ISA. It is to be assumed that the legal representative will seek and obtain all relevant information which might advance the referred persons cause and present it to the ISA. Also of importance is para 2.30 of the case worker guidance (see para 31 above). I would emphasise We are in a unique position in that we are able to pull together relevant information from a range of agencies and it is therefore essential we make our own findings about the evidence available to usso we should evaluate the evidence ourselves and come to our own conclusions. The only cases in which this is not relevant is when there is a finding of fact made by a competent body (emphasis added). It is clear from this material that the ISA is required to make its own findings of fact and bring its own independent judgment to bear as to their seriousness and significance before deciding whether it is appropriate to place the person on the barred list. Why did the Court of Appeal conclude that, despite these procedures and, as Miss Lieven QC says, without any evidence to show that they had not been and would not be applied properly, the employers findings and decision would still exert a profound influence on the decision making process? There are two aspects to consider. First, the ISA does not operate a procedure for oral hearings with cross examination. There is nothing in either the statute or the guidance notes to prevent the ISA from operating such a procedure, but there is nothing which sanctions it either. I do not find it necessary to decide whether the ISA could operate such a procedure. There must be very few cases where the lack of an oral hearing (with examination and cross examination of witnesses) would make it unduly difficult for the ISA to make findings of fact applying its own judgment to the material. It is only in very few cases that a decision making body is faced with a conflict of evidence which it resolves solely or even primarily on the basis of the demeanour shown by the witnesses. There is usually something else. It may be that the account given by one person is self contradictory or inconsistent with the account that he or she gave on a different occasion; or doubt may be cast on its accuracy by a document; or one account is supported by the evidence of other apparently credible and reliable witnesses, whereas the other stands on its own; or one account is incredible or at least improbable. In any event, as Lord Bingham said in The Business of Judging (2000) at p 9, the current tendency is (I think) on the whole to distrust the demeanour of a witness as a reliable pointer to his honesty. At pp 9 13, he developed this view and supported it with references to a number of statements by judges and advocates. I accept, however, that there may occasionally be a case where the critical factor which leads an employer to find that there has been gross misconduct by an employee is the demeanour shown by the employee when giving his or her account to the disciplinary panel. But Mr Drabble does not submit that article 6(1) is engaged at the disciplinary proceedings stage only in order to accommodate such cases. His submission is that the Court of Appeal was correct to hold that findings of fact made by an employers disciplinary panel are generally and in most cases likely to exercise a profound influence on the decision making process before the ISA. I do not agree. The guidance notes and case worker guidance have been drafted in meticulous detail. They repeatedly make the point that it is for the ISA to make its own findings of fact on the basis of all the available material. Any case worker who follows the guidance notes and the case worker guidance knows that he or she should not defer to the findings of the referring body. The case worker guidance contains worked examples of evidence evaluation, including examples of both good and bad practice. I see no reason to doubt that case workers do as they are instructed. The lack of an oral hearing does not prevent the ISA from making its own findings of fact. In the present case, it would have to look at all the evidence, including the investigation report and appendices, the notes of the disciplinary hearing, the notes of any appeal hearing before the governors and the representations of the claimant himself. It would also consider any other information which was made available to it. There is no reason to believe that, contrary to its statutory duty and guidance, the ISA would be unable to form its own view of the facts independently of the view formed by the school authorities and governors. The second feature identified by Laws LJ is that the ISA would be influenced especially [by the governors] judgment as to how [the primary] facts should be viewed: [2010] 1 WLR 2218, para 47. In other words, the panels decision that it is appropriate that the employee should be placed on the barred list would profoundly influence the view taken by the ISA as to the appropriateness of that course. But as Miss Lieven points out, it is difficult to see why this should be so. Save where there is a conviction for a specified offence, a person can be included in a barred list only if the ISA is satisfied that he has engaged in the relevant conduct and it appears to the ISA that it is appropriate to include the person in the list (paragraph 3(3) of Schedule 3 to the 2006 Act). Stage 3 of the barring process (the case assessment) requires case workers to apply the ISA structured judgment procedure which contains a list of detailed questions that they must ask. To assist them in the process, they can obtain specialist advice: see para 6.11 of the guidance notes. The schools disciplinary panel reaches its conclusions as part of an inquiry into a question which is different from that which is addressed by the ISA. More fundamentally, the case workers know that they are required to form their own opinion on the gravity and significance of the facts and on whether it is appropriate to include the referred person in the barred list. There is no reason to suppose that the ISA will be influenced profoundly (or at all) by the schools opinion of how the primary facts should be viewed. Conclusion For all these reasons, I would hold that article 6(1) does not apply in the disciplinary proceedings and would allow the appeal. I do not, therefore, find it necessary to decide whether, if there is a breach of article 6(1) at the disciplinary proceedings stage, it is cured by the decision making processes of ISA itself and the right of appeal to the Upper Tribunal. The curative or full jurisdiction principle is well established by authorities such as Bryan v United Kingdom (1995) 21 EHRR 342 and R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2003] 2 AC 295. At paras 40 to 42 of his judgment, Laws LJ held that this line of authority does not apply here. He said that this line of authority is concerned with cases where there is an administrative or executive decision which is not article 6 compliant (because the decision maker is not independent), but it is subject to judicial review, which is article 6 compliant; and the question is whether the judicial review jurisdiction is full enough to satisfy article 6. Laws LJ said that the Bryan/Alconbury line of reasoning has no application here since the barred list procedure before the ISA does not control or correct errors of the disciplinary process and, as Laws LJ put it, it is the claimants case that the latter will drive the former. Mr Bowers submits that this is an artificially narrow view of the full jurisdiction principle. He contends that the principle extends beyond mere administrative or executive decisions by officials and recognises that procedural deficiencies may be cured by a process when viewed as a whole. These are difficult issues on which I prefer to express no opinion. I would allow this appeal for the reasons given by Lord Dyson with which I LORD HOPE am in full agreement, and for the further reasons given by Lord Brown. It is quite clear, as Lord Dysons analysis of the facts shows, that the internal proceedings before the employer and the barring proceedings before the ISA are separate and distinct from each other. Their decisions and procedures are directed to different issues. On the one hand there is the persons right to remain in employment with that employer. If the proceedings result in dismissal, as they did in this case, the decision to dismiss may be challenged in the Employment Tribunal. On the other there is a persons right to engage in activities relating to children more generally. This is the issue which must be determined by the Independent Safeguarding Authority (the ISA). The barring process that the ISA conducts under the Safeguarding Vulnerable Groups Act 2006 may be the result of a decision by the employer to dismiss. But there is no limit to the sources from which information may come that require the ISA to consider whether an individual should be included in the childrens barred list. If the ISA decides that the individual should be included in the list, he has a right of appeal to the Upper Tribunal on the grounds set out in section 4(2). Then there are the factors which may lead to an employers decision to dismiss or not to dismiss. They may range widely. They are not limited to the matters to which the ISA is required to have regard by the statute. We are therefore dealing here with a case where an individual is subject to two distinct sets of proceedings which are not inextricably linked to each other. That is not, of course, an end to the question whether the claimants article 6(1) Convention rights were engaged at the disciplinary hearing that was conducted by his employer. Taken by themselves, those proceedings did not engage the protections afforded by that article. It was not their function to determine the civil right that was in issue at that stage, which was the claimants contractual right to remain in his current employment at the school. Nor did any decision taken in those proceedings determine his civil right to practice his profession as a teaching assistant. It has not been suggested that, if the right to remain in his current employment were the only issue, article 6(1) required that the claimant be allowed the opportunity of legal representation in those proceedings. For that to be the case it would have to be shown, as Laws LJ observed in the Court of Appeal, that there was in some sense at least a close nexus between the disciplinary process and the barred list procedures to be conducted by the ISA: [2010] EWCA Civ 1; [2010] 1 WLR 2218, para 28. The decisions of the Strasbourg court have repeatedly emphasised that a remote or tenuous connection will not do. If its effect is decisive, the nexus will have been established. But clear guidance is lacking as to how a case is to be determined that lies between these extremes. This is such a case, because the connection between the disciplinary proceedings and the proceedings before the ISA cannot be dismissed as remote. Nor can it be said that the disciplinary proceedings are decisive. The ISA must make its own assessment and its own evaluation of the evidence. Like Lord Dyson, I would adopt Laws LJs test, which is that the claimant may enjoy article 6 procedural rights if the decision in the disciplinary proceedings will have a substantial influence or effect on the determination by the ISA of his civil right to practice his profession: [2010] 1 WLR 2218, paras 32, 37. For the school, Mr Bowers QC said that there was no support for that test in the Strasbourg authorities. That is, of course, true in so far as the Strasbourg court has not set it out in so many words. But I think that it is possible to detect the underlying principle to which its decisions give effect. I think that Laws LJs test captures the essence of the principle. The question, then, is whether the test is satisfied in this case. Laws LJ said that his test was satisfied because, as he saw it, there was every likelihood that the outcome of the disciplinary process would have a profound influence on the decision making processes by the ISA: para 47. As he put it, without a de novo hearing and the possibility of an oral hearing before the ISA, at the very least the flavour and the emphasis of the governors view of the facts would remain important and influential. He also said that that result could not be dislodged by the existence of the appellate jurisdiction of the Upper Tribunal, as the critical question was whether on the proved facts the quality of the persons act should be judged severe enough to put him on the barred list: para 49. I am unable to agree with that assessment. As the ISA has not yet considered the claimants case, we do not have before us a concrete set of facts on which to judge whether or not its procedures are fair. But the Guidance Notes and the Case Worker Guidance are there for us to read, and I agree with Lord Dyson that there is no reason to doubt that case workers do as they are instructed. The issues which they must consider under Part 1 of Schedule 3 to the 2006 Act extend well beyond those that were required to be considered by the governors. The guidance that case workers have been given makes it very clear that they must form their own view of the facts independently of the view formed by the governors. They must make their own assessment of the reliability of the evidence. They are not judging the case at second hand. Their concern is with the primary facts of the case, not with any conclusions that the governors may have formed about them. They must give an opportunity to the person to make representations as to why he or she should not be included in the list, which may be made by a lawyer on the persons behalf, and difficult cases may be referred to a specialist for an opinion. I think that we can be confident that the governors view of the facts will have receded far into the background when the time comes for a decision as to whether the person should be included in the childrens barred list. As for the right of appeal to the Upper Tribunal, this is available on the grounds that the ISA has made a mistake on any point of law and in any finding of fact which it has made and on which the decision was based: section 4(2) of the 2006 Act. The final decision whether or not it is appropriate for an individual to be included in a barred list is not a question of law or fact: section 4(3). But I do not see this as a reason for doubting whether, taken as a whole, the procedures that the 2006 Act sets out are compatible with article 6(1). As Miss Lieven QC for the Secretary of State pointed out, the Upper Tribunal would be in no better position to form a judgment on that issue than the expert body which is the ISA. It would be open to the Upper Tribunal to remit that matter for reconsideration if it were to hold after an oral hearing with the benefit of legal representation that the ISA had made a mistake on any finding of fact on which the decision to list was based. The principle, when the question of compliance with article 6(1) of the procedure before professional bodies is being considered, is to see whether they are subject to control by a judicial body that has full jurisdiction and does provide the guarantees of article 6(1): Albert and Le Compte v Belgium (1983) 5 EHRR 533, para 29; Tehrani v United Kingdom Central Council for Nursing, Midwifery and Health Visiting [2001] IRLR 208; R (Thompson) v Law Society [2004] 1 WLR 2522. The Upper Tribunal is such a body, and had it been necessary to do so I would have been inclined to hold that any breach of article 6(1) at the initial stage was cured by the opportunity for an oral hearing that an appeal to the Upper Tribunal provides. Working backwards, as it were, I would also have been inclined to hold that the better way to cure any breach of article 6(1) at the initial stage would have been to require the ISA to adopt procedures which complied with article 6(1) rather to require the employer to adopt these procedures to make good gaps in the regime that is operated by the ISA. Laws LJs conclusion was that article 6(1) required that the claimant should be afforded the opportunity to arrange for legal representation in the disciplinary proceedings should he so choose: [2010] 1 WLR 2218, para 53. But there is a serious risk that, if that course were to be adopted, disciplinary proceedings in the public sector would be turned into a process of litigation, with all the consequences as to expense and delay that that would involve. The burden that this would impose on employers, and its chilling effect on resort to the procedure for fear of its consequences, is not hard to imagine. A good indication that it was Parliaments wish to avoid this is to be found in section 10 of the Employment Relations Act 1999 that the employee has a right to be accompanied by an official of a trade union, not by a lawyer. To require the person to be provided with legal representation before the governors would go against that intention, and it would have been the wrong remedy. Our decision that the necessary nexus has not been established avoids these very unattractive consequences. LORD BROWN Was G entitled to be legally represented before the disciplinary committee of X School which in February 2008 was investigating an allegation of gross misconduct against him? The Court of Appeal (Laws, Wilson, Goldring LJJ) [2010] 1 WLR 2218 held that he was on the basis that the disciplinary proceedings engaged the civil limb of article 6 of the European Convention on Human Rights. In common with the majority of this court I take a contrary view and would allow the governors appeal. In the light of Lord Dysons very full judgment in the case, with which I fully agree, I can state what I want to add really quite shortly. I understand Lord Dysons essential conclusion to be (see paras 74, 82 and 83 of his judgment) that the findings of the disciplinary panel in Gs case are unlikely to have a profound influence on the decision yet to be reached by the Independent Safeguarding Authority (ISA) and it is for this reason that article 6 is not engaged. As Lord Dyson makes plain, once the disciplinary proceedings (including Gs proposed appeal which is presently stayed) have been concluded, the ISAs task will be to decide, by the process described by Lord Dyson at paras 16 31 (and further elaborated at paras 76 78), whether G should be placed on the barred list that being the decision which (subject to any appeal to the Upper Tribunal) will determine Gs relevant right here the right to work with children, not the right to continue employment with X School. As Lord Dysons judgment also makes plain, in reaching that decision initially as to whether the ISA propose to include G in the list and, if so, following whatever representations he or his advisors may then make as to why he should not be included, as to whether or not to include him the ISA are required both to make their own independent findings of fact and to decide whether in the light of those facts he should appropriately be included in the barred list. The only exceptions to such an independent approach (neither exception being applicable here) are, first, where there has been a conviction for a specified offence and, secondly, where findings of fact have been made by a competent body or one of its committees: see paragraph 16(4) of Schedule 3 to the Safeguarding Vulnerable Groups Act 2006 (the 2006 Act). It seems to me instructive to note who these bodies are: (a) the General Teaching Council for England; (b) the General Teaching Council for Wales; (c) the Council of the Pharmaceutical Society of Great Britain; (d) the General Medical Council; (e) the General Dental Council; (f) the General Optical Council; (g) the General Osteopathic Council; (h) the General Chiropractic Council; (i) the Nursing and Midwifery Council; (j) the Health Professions Council (k) the General Social Care Council; (l) the Care Council for Wales. As I need hardly observe, each of them is an independent and impartial tribunal established by law within the meaning of article 6(1) of the Convention and indisputably their proceedings engage that article. One of the more puzzling and to my mind less satisfactory features of the Court of Appeals decision in the present case is that, whereas it requires school disciplinary panels to allow legal representation, it does not require them to be (as, of course, they are not) independent and impartial, notwithstanding that ordinarily this is regarded as an altogether more fundamental requirement (part of the irreducible minimum guaranteed by article 6) than any requirement for legal representation. Why, one wonders, is it not permissible for the ISA to be influenced by findings of fact made without the person concerned having legal representation and yet permissible for them to be influenced by findings of fact made by a partial body such as the school governors? More troubling still, however, is the stark anomaly created by the decision below as between public sector and private sector authorities. X School happens to be a (small) voluntary aided school and thus a public authority. Were a similar situation to arise, however, in a private school which would require a precisely similar report to the ISA pursuant to section 35 of the 2006 Act there could be no question of article 6 applying to the initial disciplinary process. What, then, would be the consequence of a private school acting as X School have acted here ie not allowing legal representation of their disciplinary proceedings? As I see it, G must be saying either that in those circumstances the identical overall process would be fair and involve no breach of article 6 (which would surely be absurd) or that the operation of the ISA scheme must itself in those circumstances necessarily involve a breach of article 6. But this would be effectively to stigmatise and condemn the whole ISA scheme carefully devised as this has been to avoid the fatal defects in the previous scheme revealed in R (Wright) v Secretary of State for Health [2009] AC 739 without any experience whatever of its workings in practice, making assumptions as to how the ISA would treat the findings of an employers disciplinary panel which run counter to its own guidance (both published and internal), without argument being directed specifically to the compatibility of the ISA scheme with article 6 in such cases as are referred to it other than by public authority employers, and without even the Secretary of State being a party at first instance (albeit represented as an intervener before the Court of Appeal and, most helpfully, before us). To my mind it is unthinkable that the ISA scheme should be implicitly condemned in this way. Rather it seems to me that for the purposes of the present challenge we should assume that the scheme is compatible with article 6 with regard to those cases referred to the ISA by non public authority employers and, indeed, by persons acting independently of employers. If, of course, a challenge comes in due course to be made to the operation or legality of the scheme in such a case a challenge necessarily directed against the ISA (in so far as it is said that the scheme is not, but could be, operated lawfully) and/or the Secretary of State (in so far as it is said, as in Wright, that the scheme is inherently incompatible with article 6) the court will have to decide it. In doing so, it will have to consider, amongst other issues, the curative or full jurisdiction principle to which Lord Dyson refers at paras 84 and 85 of his judgment. That challenge, however, I repeat, is not presently before us. If, then, we assume, as for present purposes I suggest we should, that the overall ISA scheme is article 6 compatible in respect of references from the private sector, I fail to see how the initial disciplinary process can be incompatible in the present case. For these reasons, in addition to those given by Lord Dyson, I too would allow this appeal. LORD KERR For the reasons given by Lord Dyson, I agree that the Court of Appeal correctly identified the test to be applied on the nature of the connection that is required between various stages of a process in order to determine whether article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR) is engaged at a point in the process other than that at which the final decision is taken. The premise of the appellants argument was that the decisive influence that the disciplinary hearing in this case had to have on the decision of the Independent Safeguarding Authority (ISA) must be determinative if article 6 was to apply to that disciplinary hearing. In other words, for article 6 of ECHR to be in play, the decision on whether Gs name was placed on the barred list must, the appellants suggested, be dictated by the outcome of the disciplinary proceedings. Lord Dysons authoritative survey of the Strasbourg jurisprudence has effectively demonstrated the fallacy of that argument. The centrepiece of the case made on behalf of both the appellant and the Secretary of State has therefore failed. What the majority of this court has decided, however, is that although the Court of Appeal correctly identified the test, it failed to apply it properly. In the main, this involves forming a different view on the facts (and the inferences to be drawn from them) from that reached by the Court of Appeal. As Lord Dyson has said (at para 76) ISA is expected to form its own assessment of the facts on the basis of all the available evidence and (at para 79) ISA is required to make its own findings of fact and bring its own independent judgment to bear as to their seriousness and significance before deciding whether it is appropriate to place the person on the barred list. The question that these statements raise is whether, because ISA must reach its own view as to whether the facts, as they have found them to be, are sufficient to support the conclusion that an individual should be placed on the barred list, insulates that process from substantial influence by the earlier disciplinary hearing. Supplying an answer to that question does not involve the application of principle. It is an exercise in deduction as to what is likely to happen when the case officers of ISA consider all the available information, including the report on the disciplinary proceedings. On that account alone, I have grave misgivings about the propriety of this court finding that the Court of Appeal was wrong to conclude that it was inevitable that the views of the disciplinary panel and the report of the evidence given to it were likely to have a substantial influence on the decision of ISA. It appears to be implicit in the view of the majority that it would be improper for ISA to allow itself to be heavily influenced by the findings that emerged from the disciplinary proceedings. Regretfully, I cannot subscribe to that view. It seems to me to be entirely open to ISA to pay close attention to the findings of the disciplinary tribunal and indeed to be substantially influenced by them, so long as it keeps faith with the requirement that it reach its own independent view of the facts. There is nothing in the least inconsistent with ISA arriving at its own conclusions while acknowledging, expressly or otherwise, that those conclusions have been heavily influenced by the findings of the disciplinary hearing and by what took place at that hearing. After all, details of the proceedings before the disciplinary panel will be before ISA. Indeed, of all the material considered by ISA, the notes of the hearing are likely to be of the most pivotal importance. Why should the findings of the panel and the account of the evidence given not have a substantial influence on ISAs conclusions? It seems to me to border on the perverse to suggest that they would not have such an influence. The conclusion that they would not hold substantial sway appears to be based on the requirement that ISA must reach its own independent judgment. But a judgment is not robbed of its independent quality simply because it has been heavily influenced by a particular item of evidence or by findings made by another body that considered that evidence. Lord Hope has said that the two sets of proceedings (the internal disciplinary proceedings and what he describes as the barring proceedings) are not inextricably linked and that they are directed to different issues (para 87). This is of course true in the sense that they have a different objective the first to decide what sanction, including dismissal, it is appropriate to impose and the second whether to include the respondents name on the barred list. But both are most certainly concerned with the same factual matrix and the conclusions reached on the factual dispute between the principal protagonists are surely central to the outcome of both sets of proceedings. In those circumstances it seems to me that the conclusions reached by the disciplinary panel and the evidence given to the panel not only could but should have a substantial influence on the decision of ISA. Could it seriously be suggested that ISA would be entitled, for instance, to leave the findings of the disciplinary panel out of account? Of course not. By the same token, it is open to ISA to decide what weight it should give to those findings. In the absence of any other remotely adversarial proceeding in the entire process, it seems to me inevitable that the disciplinary hearing is bound to have a substantial influence or, at least, that the Court of Appeal was perfectly entitled to come to the view that it did and that this court should not interfere with that conclusion. Lord Hope has expressed confidence that the governors view of the facts will have receded far into the background by the time that a decision is taken as to whether the respondent should be included in the barred list (para 92). I am afraid that I do not share that confidence. Of course, as Lord Hope has said, ISA is not limited in the sources of information to which it may have recourse in reaching its decision. But can it realistically be said that the record of the proceedings before the disciplinary panel will be of peripheral importance only? In this connection, it is, I think, important to understand that it is not simply the conclusions of the governors that are in issue on the question of the potential of the disciplinary hearing to have a substantial influence on the findings of ISA. All of the material from that hearing which touches on the truth of the allegations made against the respondent is relevant and, for my part, I would find it surprising, indeed reprehensible, if the case workers of ISA did not pay the closest attention to that material in reaching their conclusions on the facts. I have said that the hearing before the disciplinary panel is the only remotely adversarial stage of the entire process. Whether ISA has power to hold an oral hearing remains imponderable see para 80 of Lord Dysons judgment. What is clear is that it has not in the past held one and it may safely be assumed that it will not convene such a hearing in the present case. One must proceed on the basis, therefore, that the only occasion on which oral evidence was or will be given about the extremely serious allegations which form the case against the respondent both on the disciplinary proceedings and the barring proceedings is during the hearing before the panel. In fact, of course, this was not an adversarial proceeding in any real sense for the respondent did not put any questions to the witnesses who gave evidence against him and refused to answer any questions put to him (because he considered that the proceedings were unfair). Lord Dyson has said that there must be very few cases where the lack of an oral hearing would make it unduly difficult for ISA to make findings of fact and that only in very few cases will the resolution of a conflict of evidence depend on the demeanour of witnesses (para 80). It would be wrong, in my opinion, to assume that the value of an oral hearing in a case such as the present is confined to the opportunity to observe the demeanour of witnesses. Just as legal representation at an early stage is critical to the safeguarding of an accused persons interests, so legal representation for someone such as G is vital at the early stage. Ex post facto contributions from a legal adviser necessarily suffer from the handicap that they must seek to displace adverse findings rather than have the chance to pre emptively nullify them. Legal representation, if it is required in order to achieve an article 6 compliant process, is surely required where it can be deployed not only to best effect but also to achieve a real and effective contribution to the fairness of the proceedings. This is not confined to providing an effective challenge made to the case presented against the person who is the subject of the disciplinary proceedings. It includes advising that person on how to participate in the proceedings, as well as introducing relevant further evidence that may have a crucial impact on the forming of the first views on the factual issues. The present case exemplifies the point. The passive, not to say hostile, attitude of the respondent to the proceedings may well have played a crucial part in their outcome. The lack of an oral hearing before ISA may not, as Lord Dyson has suggested, make it unduly difficult for them to reach findings of fact but the result of the only oral hearing that has taken place in this case may well lead ISA to a different conclusion on the factual dispute from that which would have been the product of a properly conducted disciplinary hearing in which the respondent, with the benefit of legal advice, had fully and meaningfully participated. It has not been disputed that the decision of ISA involves the determination of Gs civil right. The particular species of conduct alleged against him is at least capable of amounting to criminal activity. It is therefore beyond argument that article 6 of ECHR requires that he must at some stage of the process be entitled to legal representation if he wishes to have it. A fair determination of his civil right cannot take place without that vital ingredient, given the gravity of the allegations made against him and the seriousness of the consequences for him. It is important not to concentrate unduly on the various stages of the process in isolation from each other. And it is certainly mistaken to focus exclusively on an individual stage in order to determine whether it by itself meets the requirements of article 6. The process overall must be fair. Although the actual determination takes places at the point when ISA decides whether to include the respondent on the list, the anterior stage of disciplinary proceedings cannot be left out of account in deciding whether the overall process is fair. That does not mean that one must import all the constituent rights of article 6(3)(c) into the disciplinary hearing part of the process. It does not even mean that article 6(1) requirements must be fulfilled for that part of the process considered in isolation from the rest. What it does mean is that the conduct of the disciplinary proceedings part of the process must be examined in order to assess what impact this has had, if any, on the overarching question whether the determination of the civil right, the product of the entire process, has fulfilled the requirement of fairness. It is precisely because the disciplinary proceedings provide the only occasion when the competing cases can be presented in direct opposition to each other that legal advice at that point is so crucial. That is the critical time for the testing of the evidence not merely by observing the demeanour of the witnesses (although that may play its part in the assessment of the reliability of the respective accounts) but by the probing of the allegations against the respondent and the evaluation of the plausibility of his defence to them. It is to be remembered that this young man faced extremely grave accusations. If those were found proved, quite apart from what I consider to be the virtually certain impact that they will have on the barring proceedings, they will place an irretrievable stain on his character and reputation. To recognise his right to be legally represented at that stage, although it may give rise to administrative difficulties for the conduct of disciplinary proceedings, seems to me to be entirely consonant with the proper safeguarding of his article 6 rights. Lord Brown has said that a less than satisfactory feature of the Court of Appeals decision is that while requiring school disciplinary panels to allow legal representation, it does not require them to be independent and impartial. But this is to assume that all the requirements of article 6 must be supplied at the disciplinary proceedings stage of the process. That is not so. The need for an impartial and independent tribunal can be met at the later stage of ISAs decision. At that point a wholly objective view can be formed not only of the panels conclusions but also of the evidence that the panel has heard. Of even greater concern to Lord Brown was what he perceived to be the anomaly that a public authority such as the school in the present case would be subject to the requirement to allow legal representation under article 6 whereas a private school would not be. In the latter case the appellant would have to argue (Lord Brown suggests) either that, despite its shortcomings, the overall process was fair (which, he says, would be absurd and I agree) or that the ISA scheme as a whole must stand condemned as necessarily involving a breach of article 6. Again with much regret, I find myself unable to agree with this analysis. Article 6 applies to the barring process, irrespective of whether the school is public or private. The critical question is whether, at the time the allegations against an individual are heard, he is entitled to legal representation. If he is entitled to that representation then, he must have it. Simply because a private school may assert that it is not subject to the Human Rights Act 1998 (HRA) and that it is therefore not bound to comply with a teachers article 6 rights, it cannot be right to relieve a public authority such as a publicly funded school of the obligations which it owes to a teacher under HRA and ECHR. Quite apart from that, the requirement that a teaching assistant such as the respondent is legally represented at the time that allegations are presented in evidence against him does not necessitate the condemnation of the ISA scheme for inevitable breach of article 6. That scheme does not contemplate the holding of oral hearings. But it does not forbid them. An option available to ISA is to convene an oral hearing at which the person who is the subject of the barring proceedings may be legally represented. This may require a modification of the scheme as it is currently operated but better that than its wholesale condemnation. Moreover, if it is the position that, to comply with article 6, a person subject to barring proceedings should be legally represented when allegations against him are heard, it would be open to, indeed required of, ISA to disregard evidence given and findings made at proceedings where that prerequisite had not been fulfilled. I consider, therefore, that this appeal should be dismissed and that it should be held that if evidence given and findings made at a disciplinary hearing are to be taken into account by ISA in deciding whether a person such as G should be placed on a barred list, he should be legally represented at that disciplinary hearing. For the reasons given by Laws LJ at paras 40 42 of his judgment, I do not consider that this is a case where deficiencies in compliance with article 6 at the disciplinary proceedings can be cured by the availability of a right to appeal to the Upper Tribunal. As Laws LJ said, the reasoning in the Bryan (Bryan v United Kingdom (1995) 21 EHRR 342) and Alconbury (R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2003] 2 AC 295) line of cases, is concerned with the review by a judicial review court of an earlier administrative or executive decision: [2010] 1 WLR 2218, para 40. A lack of impartiality at that stage may be corrected when subject to later review by an impartial tribunal in the form of a court. Here the situation is quite different. The absence of legal representation at a critical time when vital evidence is given and crucial findings are made cannot be rescued by the type of appeal that is available to the Upper Tribunal. |
The over arching issue in this case is the weight to be given to the best interests of children who are affected by the decision to remove or deport one or both of their parents from this country. Within this, however, is a much more specific question: in what circumstances is it permissible to remove or deport a non citizen parent where the effect will be that a child who is a citizen of the United Kingdom will also have to leave? There is, of course, no power to remove or deport a person who is a United Kingdom citizen: see Immigration Act 1971, section 3(5) and (6). They have a right of abode in this country, which means that they are free to live in, and to come and go into and from the United Kingdom without let or hindrance: see 1971 Act, sections 1 and 2. The consistent stance of the Secretary of State is that UK citizens are not compulsorily removed from this country (eg Phil Woolas, Hansard, Written Answers, 15 June 2009). However if a non citizen parent is compulsorily removed and agrees to take her children with her, the effect is that the children have little or no choice in the matter. There is no machinery for consulting them or giving independent consideration to their views. The facts The facts of this case are a good illustration of how these issues can arise. The mother is a national of Tanzania who arrived here in December 1995 at the age of 20. She made three unsuccessful claims for asylum, one in her own identity and two in false identities. In 1997 she met and formed a relationship with a British citizen. They have two children, a daughter, T, born in 1998 (who is now 12 years old) and a son, J, born in 2001 (who is now nine). The children are both British citizens, having been born here to parents, one of whom is a British citizen. They have lived here with their mother all their lives, nearly all of the time at the same address. They attend local schools. Their parents separated in 2005 but their father continues to see them regularly, visiting approximately twice a month for 4 to 5 days at a time. In 2007 he was diagnosed with HIV. He lives on disability living allowance with his parents and his wife and is reported to drink a great deal. The tribunal nevertheless thought that there would not necessarily be any particular practical difficulties if the children were to go to live with him. The Court of Appeal very sensibly considered this open to criticism as having no rational basis. Nevertheless, they upheld the tribunals finding that the children could reasonably be expected to follow their mother to Tanzania: [2009] EWCA Civ 691, para 27. They also declined to hold that there was no evidence to support the tribunals finding that the father would be able to visit them in Tanzania, despite his fragile health and limited means: para 32. As it happens, this Court has seen another illustration of how these issues may arise, in the case of R (WL) (Congo) v Secretary of State for the Home Department [2010] 1 WLR 2168 (Supreme Court judgment pending). Both father and mother are citizens of the Democratic Republic of Congo. Their child, however, is a British citizen. The Secretary of State intends to deport the father under section 3(5) of the 1971 Act and also served notice of intention to deport both mother and child. There is power to deport non citizen family members of those deported under section 3(5) but there is no power to deport citizens under that or any other provision of the 1971 Act. It is easy to see how a mother served with such a notice might think that there was such a power and that she had no choice. Fortunately, it appears that the notice was not followed up with an actual decision to deport in that case. These proceedings This mothers immigration history has rightly been described as appalling. She made a claim for asylum on arrival in her own name which was refused in 1997 and her appeal was dismissed in 1998, shortly after the birth of her daughter. She then made two further asylum applications, pretending to be a Somali, both of which were refused. In 2001, shortly before the birth of her son, she made a human rights application, claiming that her removal would be in breach of article 8 of the European Convention on Human Rights. This was refused in 2004 and her appeal was dismissed later that year. Also in 2004 she and the children applied for leave to remain under the one off family concession which was then in force. This was refused in 2006 because of her fraudulent asylum claims. Meanwhile in 2005 she applied under a different policy known as the seven year child concession. This too was refused, for similar reasons, later in 2006 and her attempts to have this judicially reviewed were unsuccessful. After the fathers diagnosis in 2007, fresh representations were made. The Secretary of State accepted these as a fresh claim but rejected it early in 2008. The mothers appeal was dismissed in March 2008. However an application for reconsideration was successful. In May 2008, Senior Immigration Judge McGeachy held that the immigration judge had not considered the relationship between the children and their father (it being admitted that there was no basis on which he could have found that they could live here with him), the fact that they had been born in Britain and were then aged nine and seven and were British. It was a material error of law for the immigration judge not to have taken into account the rights of the children and the effect of the mothers removal upon them. Nevertheless at the second stage of the reconsideration, the tribunal, having heard the evidence, dismissed the appeal: Appeal Number IA/01284/2008. They found that there was family life between the mother and the children and between the father and the children, although not between the parents, and also that the mother had built up a substantial private life in this country (para 5.3). Removal to Tanzania, if the children accompanied the Appellant, would substantially interfere with the relationship with their father; staying behind would substantially interfere with the relationship with their mother (para 5.4). Removing the mother would be in accordance with the law for the purpose of protecting the rights and freedoms of others. The only question was whether it would be proportionate (para 5.5). The Tribunal found the mother to be seriously lacking in credibility. She had had the children knowing that her immigration status was precarious. Having her second child was demonstrably irresponsible (para 5.8). However, the children were innocent of their parents shortcomings (para 5.9). The parents now had to choose what would be best for their children: We do not consider that it can be regarded as unreasonable for the respondents decision to have that effect, because the eventual need to take such a decision must have been apparent to them ever since they began their relationship and decided to have children together. (para 5.10). The Tribunal found it a distinct and very real possibility that the children might remain here with their father (para 5.11). This might motivate him to overcome his difficulties. People with HIV can lead ordinary lives. The daughter was of an age when many African children were separated from their parents and sent to boarding schools. The son, had he been a Muslim, would have been regarded as old enough to live with his father rather than his mother. Hence the tribunal could not see any particular practical difficulties if the children were to go and live with their father (para 5.15). Equally, it would be a very valid decision for the children to go and live with their mother in Tanzania (para 5.16). It is not an uncivilised or an inherently dangerous place. Their mother must have told them about it. There were no reasons why their father should not from time to time travel to see the children there. They did not accept that either his HIV status or his financial circumstances were an obstacle. Looking at the circumstances in the round, therefore, neither of the potential outcomes of the appellants removal which we have outlined above would represent such an interference with the family life of the children, or either of them, with either their mother on the one hand or their father on the other as to be disproportionate, again having regard to the importance of the removal of the appellant in pursuance of the system of immigration control in this country (para 5.20). They had earlier said that this was of very great importance and considerable weight must be placed upon it (para 5.19). Permission to appeal was initially refused on the basis that, even if the Tribunal had been wrong to think that the children could stay here with their father, they could live in Tanzania with their mother. Ward LJ eventually gave permission to appeal because he was troubled about the effect of their leaving upon their relationship with their father: how are we to approach the family rights of a broken family like this? Before the Court of Appeal, however, it was argued that the British citizenship of the children was a trump card preventing the removal of their mother. This was rejected as inconsistent with the authorities, and in particular with the principle that there is no hard edged or bright line rule, which was enunciated by Lord Bingham of Cornhill in EB (Kosovo) v Secretary of State for the Home Department [2008] UKHL 41, [2009] 1 AC 1159, and is quoted in full at para 15 below. Mr Manjit Gill QC, on behalf of the appellant mother, does not argue in this Court that the citizenship of the children should be dispositive in every case. But he does argue that insufficient weight is given to the welfare of all children affected by decisions to remove their parents and in particular to the welfare of children who are British citizens. This is incompatible with their right to respect for their family and private lives, considered in the light of the obligations of the United Kingdom under the United Nations Convention on the Rights of the Child. Those obligations are now (at least partially) reflected in the duty of the Secretary of State under section 55 of the Borders, Citizenship and Immigration Act 2009. The Secretary of State now concedes that it would be disproportionate to remove the mother in the particular facts of this case. But she is understandably concerned about the general principles which the Border Agency and appellate authorities should apply. The domestic law This is the mothers appeal on the ground that her removal will constitute a disproportionate interference with her right to respect for her private and family life, guaranteed by article 8 of the European Convention on Human Rights: 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. However, in Beoku Betts v Secretary of State for the Home Department [2008] UKHL 39, [2009] AC 115, the House of Lords held that both the Secretary of State and the immigration appellate authorities had to consider the rights to respect for their family life of all the family members who might be affected by the decision and not just those of the claimant or appellant in question. Lord Brown of Eaton under Heywood summarised the argument which the House accepted thus, at para 20: Together these members enjoy a single family life and whether or not the removal would interfere disproportionately with it has to be looked at by reference to the family unit as a whole and the impact of removal upon each member. If overall the removal would be disproportionate, all affected family members are to be regarded as victims. I added this footnote at para 4: To insist that an appeal to the Asylum and Immigration Tribunal consider only the effect upon other family members as it affects the appellant, and that a judicial review brought by other family members considers only the effect upon the appellant as it affects them, is not only artificial and impracticable. It also risks missing the central point about family life, which is that the whole is greater than the sum of its individual parts. The right to respect for the family life of one necessarily encompasses the right to respect for the family life of others, normally a spouse or minor children, with whom that family life is enjoyed. When dealing with the relevant principles in EB (Kosovo) v Secretary of State for the Home Department [2008] UKHL 41, [2009] AC 1159, Lord Bingham of Cornhill said this, at para 12: Thus the appellate immigration authority must make its own judgment and that judgment will be strongly influenced by the particular facts and circumstances of the particular case. The authority will, of course, take note of factors which have, or have not, weighed with the Strasbourg court. It will, for example, recognise that it will rarely be proportionate to uphold an order for removal of a spouse if there is a close and genuine bond with the other spouse and that spouse cannot reasonably be expected to follow the removed spouse to the country of removal, or if the effect of the order is to sever a genuine and subsisting relationship between parent and child. But cases will not ordinarily raise such stark choices, and there is in general no alternative to making a careful and informed evaluation of the facts of the particular case. The search for a hard edged or bright line rule to be applied in the generality of cases is incompatible with the difficult evaluative exercise which article 8 requires. Thus, of particular importance is whether a spouse or, I would add, a child can reasonably be expected to follow the removed parent to the country of removal. Miss Monica Carss Frisk QC, for the Secretary of State, was content with the way I put it in the Privy Council case of Naidike v Attorney General of Trinidad and Tobago [2004] UKPC 49, [2005] 1 AC 538, at para 75: The decision maker has to balance the reason for the expulsion against the impact upon other family members, including any alternative means of preserving family ties. The reason for deporting may be comparatively weak, while the impact on the rest of the family, either of being left behind or of being forced to leave their own country, may be severe. On the other hand, the reason for deporting may be very strong, or it may be entirely reasonable to expect the other family members to leave with the person deported. The Strasbourg cases These questions tend to arise in two rather different sorts of case. The first relates to long settled residents who have committed criminal offences (as it happens, this was the context of WL (Congo) v Secretary of State for the Home Department, above). In such cases, the principal legitimate aims pursued are the prevention of disorder and crime and the protection of the rights and freedoms of others. The Strasbourg court has identified a number of factors which have to be taken into account in conducting the proportionality exercise in this context. The leading case is now ner v The Netherlands (2007) 45 EHRR 421. The starting point is, of course, that states are entitled to control the entry of aliens into their territory and their residence there. Even if the alien has a very strong residence status and a high degree of integration he cannot be equated with a national. Article 8 does not give him an absolute right to remain. However, if expulsion will interfere with the right to respect for family life, it must be necessary in a democratic society and proportionate to the legitimate aim pursued. At para 57, the Grand Chamber repeated the relevant factors which had first been enunciated in Boultif v Switzerland (2001) 33 EHRR 50 (numbers inserted): the length of the applicants stay in the country from which he the time elapsed since the offence was committed and the the nature and seriousness of the offence committed by the [i] applicant; [ii] or she is to be expelled; [iii] applicants conduct during that period; the nationalities of the various persons concerned; [iv] the applicants family situation, such as the length of the [v] marriage, and other factors expressing the effectiveness of a couples family life; [vi] whether the spouse knew about the offence at the time when he or she entered into a family relationship; [vii] whether there are children of the marriage, and if so, their age; and [viii] the seriousness of the difficulties which the spouse is likely to encounter in the country to which the appellant is to be expelled. Significantly for us, however, the Grand Chamber in ner went on, in para 58, to make explicit two criteria which may already be implicit in the above (again, numbers inserted): [ix] the best interests and well being of the children, in particular the seriousness of the difficulties which any children of the applicant are likely to encounter in the country to which the applicant is to be expelled; and the solidity of social, cultural and family ties with the host [x] country and with the country of destination. The importance of these is reinforced in the recent case of Maslov v Austria [2009] INLR 47, para 75 where the Grand Chamber emphasised that for a settled migrant who has lawfully spent all or the major part of his or her childhood and youth in the host country, very serious reasons are required to justify expulsion. This is all the more so where the person concerned committed the offences underlying the expulsion measure as a juvenile. The second sort of case arises in the ordinary immigration context, where a person is to be removed because he or she has no right to be or remain in the country. Once again, the starting point is the right of all states to control the entry and residence of aliens. In these cases, the legitimate aim is likely to be the economic well being of the country in controlling immigration, although the prevention of disorder and crime and the protection of the rights and freedoms of others may also be relevant. Factors (i), (iii), and (vi) identified in Boultif and ner are not relevant when it comes to ordinary immigration cases, although the equivalent of (vi) for a spouse is whether family life was established knowing of the precariousness of the immigration situation. It was long ago established that mixed nationality couples have no right to set up home in whichever country they choose: see Abdulaziz v United Kingdom (1985) 7 EHRR 471. Once they have done so, however, the factors relevant to judging the proportionality of any interference with their right to respect for their family lives have quite recently been rehearsed in the case of Rodrigues da Silva, Hoogkamer v Netherlands (2007) 44 EHRR 729, at para 39: . Article 8 does not entail a general obligation for a state to respect immigrants choice of the country of their residence and to authorise family reunion in its territory. Nevertheless, in a case which concerns family life as well as immigration, the extent of a states obligations to admit to its territory relatives of persons residing there will vary according to the particular circumstances of the person involved and the general interest [the reference is to Gl v Switzerland (1996) 22 EHRR 93, at [38]]. Factors to be taken into account in this context are the extent to which family life is effectively ruptured, the extent of the ties in the contracting state, whether there are insurmountable obstacles in the way of the family living in the country of origin of one or more of them, whether there are factors of immigration control (eg a history of breaches of immigration law) or considerations of public order weighing in favour of exclusion [the reference is to Solomon v The Netherlands, App No 44328/98, 5 September 2000]. Another important consideration will also be whether family life was created at a time when the persons involved were aware that the immigration status of one of them was such that the persistence of that family life within the host state would from the outset be precarious. The Court has previously held that where this is the case it is likely only to be in the most exceptional circumstances that the removal of the non national family member will constitute a violation of Article 8 [the reference is to Mitchell v United Kingdom, App No 40447/98, 24 November 1998; Ajayi v United Kingdom, App No 27663/95, 22 June 1999]. Despite the apparent severity of these words, the Court held that there had been a violation on the facts of the case. A Brazilian mother came to the Netherlands in 1994 and set up home with a Dutch national without ever applying for a residence permit. In 1996 they had a daughter who became a Dutch national. In 1997 they split up and the daughter remained with her father. It was eventually confirmed by the Dutch courts that it was in her best interests to remain with her father and his family in the Netherlands even if this meant that she would have to be separated from her mother. In practice, however, her care was shared between the mother and the paternal grandparents. The court concluded at para 44 that, notwithstanding the mothers cavalier attitude to Dutch immigration rules, In view of the far reaching consequences which an expulsion would have on the responsibilities which the first applicant has as a mother, as well as on her family life with her young daughter, and taking into account that it is clearly in Rachaels best interests for the first applicant to stay in the Netherlands, the Court considers that in the particular circumstances of the case the economic well being of the country does not outweigh the applicants rights under article 8, despite the fact that the first applicant was residing illegally in the Netherlands at the time of Rachaels birth. It is worthwhile quoting at such length from the Courts decision in Rodrigues de Silva because it is a relatively recent case in which the reiteration of the courts earlier approach to immigration cases is tempered by a much clearer acknowledgement of the importance of the best interests of a child caught up in a dilemma which is of her parents and not of her own making. This is in contrast from some earlier admissibility decisions in which the Commission (and on occasion the Court) seems to have concentrated more on the failings of the parents than upon the interests of the child, even if a citizen child might thereby be deprived of the right to grow up in her own country: see, for example, O and OL v United Kingdom, App No 11970/86, 13 July 1987; Sorabjee v United Kingdom, App No 23938/94, 23 October 1995; Jaramillo v United Kingdom, App No 24865/94, 23 October 1995, and Poku v United Kingdom, App No 26985/95, 15 May 1996. In Poku, the Commission repeated that in previous cases, the factor of citizenship has not been considered of particular significance. These were, however, cases in which the whole family did have a real choice about where to live. They may be contrasted with the case of Fadele v United Kingdom, App No 13078/87, in which British children aged 12 and 9 at the date of the decision had lived all their lives in the United Kingdom until they had no choice but to go and live in some hardship in Nigeria after their mother died and their father was refused leave to enter. The Commission found their complaints under articles 3 and 8 admissible and a friendly settlement was later reached (see Report of the Commission, 4 July 1991). The UNCRC and the best interests of the child It is not difficult to understand why the Strasbourg Court has become more sensitive to the welfare of the children who are innocent victims of their parents choices. For example, in Neulinger v Switzerland (2010) 28 BHRC 706, para 131, the Court observed that the Convention cannot be interpreted in a vacuum but must be interpreted in harmony with the general principles of international law. Account should be taken . of any relevant rules of international law applicable in the relations between the parties and in particular the rules concerning the international protection of human rights. The Court went on to note, at para 135, that there is currently a broad consensus including in international law in support of the idea that in all decisions concerning children, their best interests must be paramount. The Court had earlier, in paras 49 to 56, collected references in support of this proposition from several international human rights instruments: from the second principle of the United Nations Declaration on the Rights of the Child 1959; from article 3(1) of the Convention on the Rights of the Child 1989 (UNCRC); from articles 5(b) and 16(d) of the Convention on the Elimination of All Forms of Discrimination against Women 1979; from General Comments 17 and 19 of the Human Rights Committee in relation to the International Covenant on Civil and Political Rights 1966; and from article 24 of the European Unions Charter of Fundamental Rights. All of these refer to the best interests of the child, variously describing these as paramount, or primordial, or a primary consideration. To a United Kingdom lawyer, however, these do not mean the same thing. For our purposes the most relevant national and international obligation of the United Kingdom is contained in article 3(1) of the UNCRC: In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration. This is a binding obligation in international law, and the spirit, if not the precise language, has also been translated into our national law. Section 11 of the Children Act 2004 places a duty upon a wide range of public bodies to carry out their functions having regard to the need to safeguard and promote the welfare of children. The immigration authorities were at first excused from this duty, because the United Kingdom had entered a general reservation to the UNCRC concerning immigration matters. But that reservation was lifted in 2008 and, as a result, section 55 of the Borders, Citizenship and Immigration Act 2009 now provides that, in relation among other things to immigration, asylum or nationality, the Secretary of State must make arrangements for ensuring that those functions are discharged having regard to the need to safeguard and promote the welfare of children who are in the United Kingdom. Miss Carss Frisk acknowledges that this duty applies, not only to how children are looked after in this country while decisions about immigration, asylum, deportation or removal are being made, but also to the decisions themselves. This means that any decision which is taken without having regard to the need to safeguard and promote the welfare of any children involved will not be in accordance with the law for the purpose of article 8(2). Both the Secretary of State and the tribunal will therefore have to address this in their decisions. Further, it is clear from the recent jurisprudence that the Strasbourg Court will expect national authorities to apply article 3(1) of UNCRC and treat the best interests of a child as a primary consideration. Of course, despite the looseness with which these terms are sometimes used, a primary consideration is not the same as the primary consideration, still less as the paramount consideration. Miss Joanna Dodson QC, to whom we are grateful for representing the separate interests of the children in this case, boldly argued that immigration and removal decisions might be covered by section 1(1) of the Children Act 1989: When a court determines any question with respect to (a) the upbringing of a child; or (b) the administration of a childs property or the application of any income arising from it, the childs welfare shall be the courts paramount consideration. However, questions with respect to the upbringing of a child must be distinguished from other decisions which may affect them. The UNHCR, in its Guidelines on Determining the Best Interests of the Child (May 2008), explains the matter neatly, at para 1.1: The term best interests broadly describes the well being of a child. The CRC neither offers a precise definition, nor explicitly outlines common factors of the best interests of the child, but stipulates that: the best interests must be the determining factor for specific actions, notably adoption (Article 21) and separation of a child from parents against their will (Article 9); the best interests must be a primary (but not the sole) consideration for all other actions affecting children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies (Article 3). This seems to me accurately to distinguish between decisions which directly affect the childs upbringing, such as the parent or other person with whom she is to live, and decisions which may affect her more indirectly, such as decisions about where one or both of her parents are to live. Article 9 of UNCRC, for example, draws a distinction between the compulsory separation of a child from her parents, which must be necessary in her best interests, and the separation of a parent from his child, for example, by detention, imprisonment, exile, deportation or even death. Nevertheless, even in those decisions, the best interests of the child must be a primary consideration. As Mason CJ and Deane J put it in the case of Minister for Immigration and Ethnic Affairs v Teoh [1995] HCA 20, (1995) 183 CLR 273, 292 in the High Court of Australia: A decision maker with an eye to the principle enshrined in the Convention would be looking to the best interests of the children as a primary consideration, asking whether the force of any other consideration outweighed it. As the Federal Court of Australia further explained in Wan v Minister for Immigration and Multi cultural Affairs [2001] FCA 568, para 32, [The Tribunal] was required to identify what the best interests of Mr Wans children required with respect to the exercise of its discretion and then to assess whether the strength of any other consideration, or the cumulative effect of other considerations, outweighed the consideration of the best interests of the children understood as a primary consideration. This did not mean (as it would do in other contexts) that identifying their best interests would lead inexorably to a decision in conformity with those interests. Provided that the Tribunal did not treat any other consideration as inherently more significant than the best interests of the children, it could conclude that the strength of the other considerations outweighed them. The important thing, therefore, is to consider those best interests first. That seems, with respect, to be the correct approach to these decisions in this country as well as in Australia. However, our attention was also drawn to General Comment No 6 of the United Nations Committee on the Rights of the Child (2005), on the Treatment of Unaccompanied and Separated Children Outside their Country of Origin. The context, different from ours, was the return of such children to their countries of origin even though they could not be returned to the care of their parents or other family members (para 85). At para 86, the Committee observed: Exceptionally, a return to the home country may be arranged, after careful balancing of the childs best interests and other considerations, if the latter are rights based and override best interests of the child. Such may be the case in situations in which the child constitutes a serious risk to the security of the State or to the society. Non rights based arguments such as those relating to general migration control, cannot override best interests considerations. A similar distinction between rights based and non rights based arguments is drawn in the UNHCR Guidelines (see, para 3.6). With respect, it is difficult to understand this distinction in the context of article 8(2) of the ECHR. Each of the legitimate aims listed there may involve individual as well as community interests. If the prevention of disorder or crime is seen as protecting the rights of other individuals, as it appears that the CRC would do, it is not easy to see why the protection of the economic well being of the country is not also protecting the rights of other individuals. In reality, however, an argument that the continued presence of a particular individual in the country poses a specific risk to others may more easily outweigh the best interests of that or any other child than an argument that his or her continued presence poses a more general threat to the economic well being of the country. It may amount to no more than that. Applying these principles Applying, therefore, the approach in Wan to the assessment of proportionality under article 8(2), together with the factors identified in Strasbourg, what is encompassed in the best interests of the child? As the UNHCR says, it broadly means the well being of the child. Specifically, as Lord Bingham indicated in EB (Kosovo), it will involve asking whether it is reasonable to expect the child to live in another country. Relevant to this will be the level of the childs integration in this country and the length of absence from the other country; where and with whom the child is to live and the arrangements for looking after the child in the other country; and the strength of the childs relationships with parents or other family members which will be severed if the child has to move away. Although nationality is not a trump card it is of particular importance in assessing the best interests of any child. The UNCRC recognises the right of every child to be registered and acquire a nationality (Article 7) and to preserve her identity, including her nationality (Article 8). In Wan, the Federal Court of Australia, pointed out at para 30 that, when considering the possibility of the children accompanying their father to China, the tribunal had not considered any of the following matters, which the Court clearly regarded as important: (a) the fact that the children, as citizens of Australia, would be deprived of the country of their own and their mothers citizenship, and of its protection and support, socially, culturally and medically, and in many other ways evoked by, but not confined to, the broad concept of lifestyle (Vaitaiki v Minister for Immigration and Ethnic Affairs [1998] FCA 5, (1998) 150 ALR 608, 614); (b) the resultant social and linguistic disruption of their childhood as well as the loss of their homeland; (c) the loss of educational opportunities available to the children in Australia; and (d) their resultant isolation from the normal contacts of children with their mother and their mothers family. Substituting father for mother, all of these considerations apply to the children in this case. They are British children; they are British, not just through the accident of being born here, but by descent from a British parent; they have an unqualified right of abode here; they have lived here all their lives; they are being educated here; they have other social links with the community here; they have a good relationship with their father here. It is not enough to say that a young child may readily adapt to life in another country. That may well be so, particularly if she moves with both her parents to a country which they know well and where they can easily re integrate in their own community (as might have been the case, for example, in Poku, para 20, above). But it is very different in the case of children who have lived here all their lives and are being expected to move to a country which they do not know and will be separated from a parent whom they also know well. Nor should the intrinsic importance of citizenship be played down. As citizens these children have rights which they will not be able to exercise if they move to another country. They will lose the advantages of growing up and being educated in their own country, their own culture and their own language. They will have lost all this when they come back as adults. As Jacqueline Bhaba (in The Mere Fortuity of Birth? Children, Mothers, Borders and the Meaning of Citizenship, in Migrations and Mobilities: Citizenship, Borders and Gender (2009), edited by Seyla Benhabib and Judith Resnik, at p 193) has put it: In short, the fact of belonging to a country fundamentally affects the manner of exercise of a childs family and private life, during childhood and well beyond. Yet children, particularly young children, are often considered parcels that are easily movable across borders with their parents and without particular cost to the children. We now have a much greater understanding of the importance of these issues in assessing the overall well being of the child. In making the proportionality assessment under article 8, the best interests of the child must be a primary consideration. This means that they must be considered first. They can, of course, be outweighed by the cumulative effect of other considerations. In this case, the countervailing considerations were the need to maintain firm and fair immigration control, coupled with the mothers appalling immigration history and the precariousness of her position when family life was created. But, as the Tribunal rightly pointed out, the children were not to be blamed for that. And the inevitable result of removing their primary carer would be that they had to leave with her. On the facts, it is as least as strong a case as Edore v Secretary of State for the Home Department [2003] 1 WLR 2979, where Simon Brown LJ held that there really is only room for one view (para 26). In those circumstances, the Secretary of State was clearly right to concede that there could be only one answer. Consulting the children Acknowledging that the best interests of the child must be a primary consideration in these cases immediately raises the question of how these are to be discovered. An important part of this is discovering the childs own views. Article 12 of UNCRC provides: 1. States Parties shall assure to the child who is capable of forming his or her own views the right to express those views freely in all matters affecting the child, the views of the child being given due weight in accordance with the age and maturity of the child. 2. For this purpose, the child shall in particular be provided the opportunity to be heard in any judicial and administrative proceedings affecting the child, either directly, or through a representative or an appropriate body, in a manner consistent with the procedural rules of national law. There are circumstances in which separate representation of a child in legal proceedings about her future is essential: in this country, this is so when a child is to be permanently removed from her family in her own best interests. There are other circumstances in which it may be desirable, as in some disputes between parents about a childs residence or contact. In most cases, however, it will be possible to obtain the necessary information about the childs welfare and views in other ways. As I said in EM (Lebanon) v Secretary of State for the Home Department [2008] UKHL 64, [2009] 1 AC 1198, at para 49: Separate consideration and separate representation are, however, two different things. Questions may have to be asked about the situation of other family members, especially children, and about their views. It cannot be assumed that the interests of all the family members are identical. In particular, a child is not to be held responsible for the moral failures of either of his parents. Sometimes, further information may be required. If the Child and Family Court Advisory and Support Service or, more probably, the local childrens services authority can be persuaded to help in difficult cases, then so much the better. But in most immigration situations, unlike many ordinary abduction cases, the interests of different family members are unlikely to be in conflict with one another. Separate legal (or other) representation will rarely be called for. The important thing is that those conducting and deciding these cases should be alive to the point and prepared to ask the right questions. We have been told about a pilot scheme in the Midlands known as the Early Legal Advice Project (ELAP). This is designed to improve the quality of the initial decision, because the legal representative can assist the caseowner in establishing all the facts of the claim before a decision is made. Thus cases including those involving children will be offered an appointment with a legal representative, who has had time to collect evidence before the interview. The Secretary of State tells us that the pilot is limited to asylum claims and does not apply to pure article 8 claims. However, the two will often go hand in hand. The point, however, is that it is one way of enabling the right questions to be asked and answered at the right time. In this case, the mothers representatives did obtain a letter from the childrens school and a report from a youth worker in the Refugee and Migrant Forum of East London (Ramfel), which runs a Childrens Participation Forum and other activities in which the children had taken part. But the immigration authorities must be prepared at least to consider hearing directly from a child who wishes to express a view and is old enough to do so. While their interests may be the same as their parents this should not be taken for granted in every case. As the Committee on the Rights of the Child said, in General Comment No 12 (2009) on the Right of the Child to be Heard, at para 36: in many cases . there are risks of a conflict of interest between the child and their most obvious representative (parent(s)). If the hearing of the child is undertaken through a representative, it is of utmost importance that the childs views are transmitted correctly to the decision maker by the representative. Children can sometimes surprise one. Conclusion For the reasons given, principally in paragraphs 26 and 30 to 33 above, I would allow this appeal. I am in full agreement with the reasons that Lady Hale has given for LORD HOPE allowing this appeal. It seems to me that the Court of Appeal fell into error in two respects. First, having concluded that the childrens British citizenship did not dispose of the issues arising under article 8 (see [2010] EWCA Civ 691, paras 16 22), they did not appreciate the importance that was nevertheless to be attached to the factor of citizenship in the overall assessment of what was in the childrens best interests. Second, they endorsed the view of the tribunal that the question whether it was reasonable to expect the children to go with their mother to Tanzania, looked at in the light of its effect on the father and the mother and in relation to the children, was to be judged in the light of the fact that both children were conceived in the knowledge that the mothers immigration status was precarious: para 26. The first error may well have been due to the way the mothers case was presented to the Court of Appeal. It was submitted that the fact that the children were British citizens who had never been to Tanzania trumped all other considerations: para 16. That was, as the court recognised, to press the point too far. But there is much more to British citizenship than the status it gives to the children in immigration law. It carries with it a host of other benefits and advantages, all of which Lady Hale has drawn attention to and carefully analysed. They ought never to be left out of account, but they were nowhere considered in the Court of Appeals judgment. The fact of British citizenship does not trump everything else. But it will hardly ever be less than a very significant and weighty factor against moving children who have that status to another country with a parent who has no right to remain here, especially if the effect of doing this is that they will inevitably lose those benefits and advantages for the rest of their childhood. The second error was of a more fundamental kind, which lies at the heart of this appeal. The tribunal found that the mother knew full well that her immigration status was precarious before T was born. On looking at all the evidence in the round, it was not satisfied that her decisions to have her children were not in some measure motivated by a belief that having children in the United Kingdom of a British citizen would make her more difficult to remove. It accepted that the children were innocent of the mothers shortcomings. But it went on to say that the eventual need to take a decision as to where the children were to live must have been apparent both to the father and the mother ever since they began their relationship and decided to have children together. It was upon the importance of maintaining a proper and efficient system of immigration in this respect that in the final analysis the tribunal placed the greatest weight. The best interests of the children melted away into the background. The Court of Appeal endorsed the tribunals approach. When it examined the effect on the family unit of requiring the children to go with the mother to Tanzania, it held that this had to be looked at in the context of the fact that the children were conceived when the mothers immigration status was precarious: para 26. It acknowledged that what was all important was the effect upon the children: para 27. But it agreed with the tribunal that the decision that the children should go with their mother was a very valid decision. The question whether this was in their best interests was not addressed. There is an obvious tension between the need to maintain a proper and efficient system of immigration control and the principle that, where children are involved, the best interests of the children must be a primary consideration. The proper approach, as was explained in Wan v Minister for Immigration and Multicultural Affairs [2001] FCA 568, para 32, is, having taken this as the starting point, to assess whether their best interests are outweighed by the strength of any other considerations. The fact that the mothers immigration status was precarious when they were conceived may lead to a suspicion that the parents saw this as a way of strengthening her case for being allowed to remain here. But considerations of that kind cannot be held against the children in this assessment. It would be wrong in principle to devalue what was in their best interests by something for which they could in no way be held to be responsible. I have read and agree with the judgments of Lady Hale and Lord Hope. LORD KERR the reasons they have given, I too would allow the appeal. It is a universal theme of the various international and domestic instruments to which Lady Hale has referred that, in reaching decisions that will affect a child, a primacy of importance must be accorded to his or her best interests. This is not, it is agreed, a factor of limitless importance in the sense that it will prevail over all other considerations. It is a factor, however, that must rank higher than any other. It is not merely one consideration that weighs in the balance alongside other competing factors. Where the best interests of the child clearly favour a certain course, that course should be followed unless countervailing reasons of considerable force displace them. It is not necessary to express this in terms of a presumption but the primacy of this consideration needs to be made clear in emphatic terms. What is determined to be in a childs best interests should customarily dictate the outcome of cases such as the present, therefore, and it will require considerations of substantial moment to permit a different result. The significance of a childs nationality must be considered in two aspects. The first of these is in its role as a contributor to the debate as to where the childs best interests lie. It seems to me self evident that to diminish a childs right to assert his or her nationality will not normally be in his or her best interests. That consideration must therefore feature in the determination of where the best interests lie. It was also accepted by the respondent, however, (and I think rightly so) that if a child is a British citizen, this has an independent value, freestanding of the debate in relation to best interests, and this must weigh in the balance in any decision that may affect where a child will live. As Lady Hale has said, this is not an inevitably decisive factor but the benefits that British citizenship brings, as so aptly described by Lord Hope and Lady Hale, must not readily be discounted. |
The three appellants in these two appeals were each convicted of murder. Each had his conviction quashed pursuant to a reference to the Court of Appeal by the Criminal Cases Review Commission (CCRC) in the exercise of its powers under Part II of the Criminal Appeal Act 1995 (the 1995 Act). In each case no order was made for a retrial. Each claimed compensation from the Secretary of State pursuant to section 133 of the Criminal Justice Act 1988 (section 133). That section applies to England and Wales, to Northern Ireland and to Scotland. I shall not refer to provisions which cater for differences of procedure in Scotland. The most material part of that section provides: (1)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 In each case the claim for compensation was refused by the Secretary of State, whose decisions were upheld on judicial review both at first instance and on appeal. The common issue that arises in relation to each appeal is the meaning of miscarriage of justice in section 133. In the case of Adams there is a second issue, which is the meaning of a new or newly discovered fact. Lord Hope has set out the background to the statutory right to compensation provided by section 133 and I need not repeat his summary. Lord Kerr has set out in detail the relevant facts in the appeals of Mr MacDermott and Mr McCartney and I gratefully adopt his account of these. It remains for me to summarise the facts relevant to the appeal of Mr Adams. They can be shortly stated. A more detailed summary can be found in the extract of the judgment of Simon J at first instance, annexed to the judgment of the Court of Appeal [2009] EWCA Civ 1291; [2010] QB 460. The facts in Mr Adams appeal On 18 May 1993 Mr Adams was convicted in the Crown Court at Newcastle of the murder of a man called Jack Royal and sentenced to life imprisonment. He appealed to the Court of Appeal and on 16 January 1998 his appeal was dismissed. Some nine years later his case was referred to the Court of Appeal by the CCRC on three grounds. The first, and only material ground, was that incompetent defence representation had deprived him of a fair trial. On 12 January 2007 the Court of Appeal allowed his appeal on this ground. The relevant shortcomings in the conduct of Mr Adams defence were, in large measure, the result of a late change of his counsel. This was made when those originally instructed to represent him had to withdraw from the case because of a conflict of interest. Those instructed to replace them were hard pressed to prepare for the trial and failed to consider relevant unused material. Some of this had been disclosed by the prosecution. Some was available on a computer database known as the Holmes database. The case against Mr Adams was essentially based on the evidence of a single witness, Mr Kevin Thompson. His evidence was supported by that of two police officers. It was the defence case that Mr Thompson was lying, that he had entered into a deal with the police to give evidence against Mr Adams, and that he had been fed with information about Mr Royals murder by the police. The evidence which had been overlooked by defence counsel would have provided valuable assistance in cross examining Mr Thompson and the two police officers. The Court of Appeal concluded that, had it been available and deployed, the jury might not have been satisfied of Mr Adams guilt. Accordingly the court quashed the conviction, but in doing so stated expressly that they were not to be taken as finding that, if the failings on the part of the defence lawyers had not occurred, Mr Adams would inevitably have been acquitted: [2007] 1 Cr App R 449 at para 157. Miscarriage of Justice Section 133(1) reproduces, in almost identical wording, the following provision in article 14(6) of the International Covenant on Civil and Political Rights 1966, which this country ratified in May 1976 (article 14(6) of the ICCPR). I shall emphasise the material differences: 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 The reference to a final decision is accommodated by a provision in section 133(5) which defines reversed as referring to a conviction which has been quashed on an appeal out of time or on a reference under the 1995 Act. The possible meanings of miscarriage of justice The meaning of miscarriage of justice in section 133 received consideration by the House of Lords in R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18; [2005] 1 AC 1, when rejecting a claim for compensation by Mr Mullen. He had been convicted of terrorist offences. His conviction had been quashed by an appeal out of time. This was not because there was any doubt that he had committed the offences of which he was convicted. His conviction was quashed because he had been seized and brought to this country from Zimbabwe in circumstances that had involved a flagrant abuse of power. It was not suggested that there was any defect in the trial process itself. The House held that in these circumstances Mr Mullens conviction had not been quashed on the ground of a miscarriage of justice within the meaning of section 133. Lord Steyn expressed the view that this phrase only extended to the conviction of someone subsequently shown to be innocent. Lord Bingham of Cornhill expressed doubt as to whether this was correct. Both were agreed that section 133 was enacted to give effect to article 14(6) and that the meaning of the latter should govern the interpretation of the section. They were not, however, agreed as to the meaning of article 14(6). Lord Rodger of Earlsferry accepted the interpretation reached by Lord Steyn. Lord Walker of Gestingthorpe considered that Lord Steyn had given powerful reasons for his conclusion, but preferred not to go beyond the limited common ground for allowing the appeal. Lord Scott expressed no view on the difference between Lord Bingham and Lord Steyn. Miscarriage of justice is a phrase that is capable of having a number of different meanings. In giving the judgment of the Court of Appeal in relation to Adams case Dyson LJ divided the circumstances in which convictions may be quashed on the basis of the discovery of fresh evidence into four categories, which I shall summarise in my own words. (1) Where the fresh evidence shows clearly that the defendant is innocent of the crime of which he has been convicted. (2) Where the fresh evidence is such that, had it been available at the time of the trial, no reasonable jury could properly have convicted the defendant. (3) 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. (4) 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. These four categories have provided a useful framework for discussion. There are relatively few domestic authorities that bear on the meaning of miscarriage of justice in section 133 and none which provides a definitive answer. In these circumstances, before considering those authorities, I propose to consider extrinsic sources that might be expected to assist with the interpretation of this phrase. Parliamentary material Mr Bailin QC, appearing for JUSTICE as intervener, submits that a statement made by Earl Ferrers, the Minister of State at the Home Office, throws light on the meaning of miscarriage of justice. The statement was made in the course of debate on the clause that was to become section 133: see Hansard (HL Debates), 22 July 1988, cols 1630 1632. At the outset Earl Ferrers explained that the object of the clause was to give statutory effect to the United Kingdoms obligations under article 14. Lord Hutchinson of Lullington then asked the very question that lies at the heart of these appeals. He contrasted a new fact which resulted in the quashing of a conviction because it raised a lurking doubt in the mind of the Court of Appeal about the safety of the conviction and a new fact which caused the Secretary of State to advise that a defendant should be pardoned because he had been shown to be innocent. Which, he asked, amounted to a miscarriage of justice under the clause? This, he stated, was a crucial point. If it is not contempt of Parliament to observe that Lord Bingham, in his judicial capacity, was uncertain of the answer to this question, after giving it detailed consideration in Mullen, it is not, I hope, contempt of Parliament to suggest that Earl Ferrers, when faced with the question ex improviso in the course of debate, may have had to seek assistance from an official before giving the answer. At all events the answer that he gave was: The normal course is to refer cases to the Court of Appeal and to regard its view as binding. Mr Bailin submits that, in accordance with Lord Hopes observations on the use that can be made of parliamentary material in R v A (No 2) [2002] 1 AC 45 at para 81, this statement binds the Secretary of State to accept that the question of whether there has been a miscarriage of justice must be determined from the judgment of the Court of Appeal in the particular case and that, as the Court of Appeal does not and cannot rule on whether the defendant is innocent, that cannot be the test of whether there has been a miscarriage of justice. I do not accept this submission. The reply given by Earl Ferrers did not answer the question posed by Lord Hutchinson. To be blunt it made no sense. It affords no guidance on the meaning in section 133 of miscarriage of justice. The relevant part of the debate clearly indicates that the intention of Parliament in enacting section 133 was to give effect to the obligation imposed by article 14(6). It does not suggest that Parliament intended that the meaning of section 133 should differ in any way from the meaning of article 14(6). This reinforces the rule of statutory interpretation that raises a presumption that, where a statute is passed in order to give effect to the obligations of the United Kingdom under an international convention, the statute should be given a meaning that conforms to that of the convention: see Salomon v Customs and Excise Commissioners [1967] 2 QB 116, 141 and Bennion on Statutory Interpretation, 5th ed (2008), section 221.6. What then is the meaning of miscarriage of justice in article 14(6)? In answering this question the provisions of the Vienna Convention on the Law of Treaties should be applied: see Fothergill v Monarch Airlines Ltd [1981] AC 251, 283, per Lord Diplock. The interpretation of Article 14(6) As the wording of the English text of article 14(6) is virtually identical to that of section 133, the former throws no light on the meaning of the latter. Article 33 of the Vienna Convention permits reference to the text of a convention in an alternative authenticated language. In Mullen Lord Steyn at para 47 derived assistance from the French text of article 14(6). This uses the phrase une erreur judiciare for miscarriage of justice. Lord Steyn stated that this was a technical expression indicating a miscarriage of justice in the sense of the conviction of someone who was innocent. He did not explain the basis for this assertion and Lord Bingham did not agree with it. He expressed the view at para 9 that erreur judiciare could be understood as equivalent to miscarriage of justice in its broad sense. Lord Binghams interpretation of the French text is to be preferred to that of Lord Steyn. The difference between them received detailed consideration by Girvan LJ in In re Boyles Application [2008] NICA 35 at paras 11 13. He concluded that the French term was as elastic as the English miscarriage of justice. In his written case at para 4.32 Mr Tam QC for the Secretary of State invited the Court to reject Girvan LJs analysis of the French law. In these circumstances the Court allowed Mr Owen to adduce a witness statement from Dr Cristina Mauro, who teaches Criminal Procedure as an Assistant Professor at Universit Panthon Assas at Paris. She confirmed that Girvan LJs interpretation of erreur judiciare was correct, and Mr Tam accepted this to be the case. Had the French text given a more precise meaning to article 14(6) than the English this would have been a legitimate aid to the interpretation of the latter. As it is the French text leaves us no further forward. Article 31(3)(b) of the Vienna Convention also permits one to take into account any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation. Lord Steyn, Girvan LJ and Dr Mauro, in progressively greater detail, have examined articles 622 to 626 of the French Code de Procdure Pnale, which give effect to article 14(6). Once again the analysis of the latter two is to be preferred to that of Lord Steyn. This indicates that in France a conviction will be reviewed where a new element gives rise to serious doubts about guilt and that the reviewing court can then either quash the conviction on the ground that the new element proves that the defendant is not guilty or direct a retrial. Compensation will be recoverable in the former event or, if there is a retrial, if this results in an acquittal. This practice on the part of only one of the many signatories to the ICCPR does not provide a guide to the meaning of article 14(6) but it does demonstrate that proof of innocence has not been universally adopted as the test of entitlement to compensation. It has not been suggested that there is any consistency of practice on the part of the signatories that assists in determining the meaning of article 14(6). If it is not possible to deduce the meaning of article 14(6) from subsequent practice in its application, what of the travaux prparatoires? Article 32 of the Vienna Convention permits recourse to these where necessary to determine the meaning to be attributed to the term of a treaty in the light of its object and purpose see article 31. The Court has been provided with relevant comments on the travaux in The Right to a Fair Trial under the Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights by D Weissbrodt (2001) and Guide to the Travaux Prparatoires of the International Covenant on Civil and Political Rights by M Bossuyt (1987). So far as the precise meaning of miscarriage of justice is concerned the travaux are inconclusive. They disclose that Mrs Roosevelt was opposed to the inclusion of article 14(6) on the ground that its implementation would cause significant technical difficulties because of the diversity of national legislation. They show concern by some, including the British delegate, that the provision should not create an obligation to pay compensation when a conviction was reversed on appeal. Of most significance is the rejection by 22 votes to 11 with 40 abstentions of an amended provision initially proposed by Israel, with input from France and Afghanistan. This reads: The judicial recognition of the innocence of a convicted person shall confer on him the right to request the award of compensation in accordance with the law in respect of any damage caused him by the conviction. While this provides no positive indication of precisely what the state parties intended miscarriage of justice to mean, it makes it difficult to argue that they intended it to mean conviction of the innocent. Lord Bingham suggested at para 9 in Mullen that the phrase miscarriage of justice may have commended itself to the parties because of the latitude of interpretation that it offered and it seems to me that this may well be the case. It is, I believe, possible to make some more positive conclusions about what it was that the states who were involved in the drafting of article 14(6) were trying to achieve. They were concerned with the emergence of a new fact after the completion of the trial process, including review on appeal. Article 14(5) provides that everyone convicted of a crime shall have the right to have his conviction and sentence reviewed by a higher tribunal according to law. Article 14(6) applies to the discovery of a new fact after that final decision. Compensation was only payable where the new fact demonstrated conclusively that there had been a miscarriage of justice. Thus miscarriage of justice had to be the kind of event that one could sensibly require to be proved conclusively. Article 14 is, in general, concerned with the right to a fair trial. Most of its provisions relate to procedure. One might have expected article 14(6) similarly to have been concerned with the consequences of shortcomings in procedure. The travaux do not suggest that this was the primary concern of the delegates. It is perhaps significant that Mrs Roosevelt and Ms Bowie did not consider that the provision belonged in the Covenant and suggested deleting it. What the delegates appear to have been primarily concerned about was not errors of procedure, but the emergence of fresh facts that were inconsistent with the conviction of the defendant. Thus, at the outset, the Philippines suggested that the circumstances in which the provision should apply should be spelt out and that these should be where the true offender had confessed and there were no reasonable grounds to doubt his confession or where the fact or event which was the basis of the conviction was shown beyond reasonable doubt never to have taken place. A comment by Mrs Roosevelt that compensation should be denied to someone who deliberately concealed facts which would have exonerated him if discovered (my emphasis) is a further example of this approach, as is the proposed amendment to which I have referred at para 19 above. The fact remains, however, that this amendment was not carried and that the travaux show concern on the part of some delegates that the provision under discussion would allow compensation to persons who were clearly guilty but whose conviction had been annulled for reasons of form or procedure while others appear to have considered that the provision should provide a guarantee for lawful process. The travaux clearly demonstrate that the parties intended article 14(6) to cover the situation where a newly discovered fact demonstrated conclusively that the defendant was innocent of the crime of which he had been convicted. They were not, however, prepared to agree an interpretation which restricted the ambit of article 14(6) to this situation. In the 14th and final session it is recorded that most of the Committee agreed that only adequate legislation could solve the technical difficulties involved in the problem of compensation for a miscarriage of justice. Thus, while the principle was agreed that there should be compensation for the consequences of a conviction reversed on the ground of conclusive proof of a miscarriage of justice as a result of the discovery of new evidence after the conclusion of the criminal process, and that this would cover the case of a convicted man who was shown to be innocent, it seems to have been left to the individual parties by domestic legislation to identify the precise parameters of the miscarriage of justice that would give rise to a right to compensation. The words according to law were added to the article by a late amendment. It would have been possible for the contracting parties to have agreed that any person whose conviction was reversed by reason of a newly discovered fact should be given compensation for the consequences of the conviction. This could have been justified on the basis that the reversal of the conviction raised a presumption of innocence and that compensation should be paid on the basis of that presumption. The parties did not take that course. The fact that they did not do so, and the requirement that the miscarriage of justice should be established conclusively, indicates so it seems to me, an anxiety not to agree to an entitlement to compensation that would result in compensation being paid to those who had in fact committed the crimes of which they were convicted, at least on a substantial scale. In these circumstances the fact that section 133 is intended to give effect to the obligation imposed by article 14(6) is of limited assistance in interpreting that section. It would not be right, however, when interpreting section 133 to lose sight of the fact that it is giving effect to a convention agreed by parties with varying systems of criminal justice. Article 14(6) is applicable to criminal trials in jurisdictions that have jury trials and jurisdictions that do not, to civil and to common law jurisdictions. The meaning given to miscarriage of justice should be one that is capable of application to the systems of criminal justice of the other parties to the covenant. I have not found any other extrinsic material to be of assistance. In Mullen Lord Bingham at para 9(3) considered the jurisprudence of the United Nations Human Rights Committee and concluded that this did not assist. He reached the same conclusion in relation to the explanatory report of the Steering Committee for Human Rights in relation to article 3 of the Seventh Protocol to the European Convention on Human Rights. I agree with Lord Bingham for the reasons which he gave. Mullen I now turn to consider the decision of the House of Lords in Mullen. This task has been undertaken in a little detail by Lord Hope, which shortens the comments that I wish to make on this decision. The reason why the appeal in Mullen did not succeed was that the House of Lords were unanimous in holding that the abuse of power that had led to the quashing of Mr Mullens conviction did not fall within the definition of miscarriage of justice, whatever the meaning of that phrase. At para 8 Lord Bingham said: It is for failures of the trial process that the Secretary of State is bound, by section 133 and article 14(6), to pay compensation. On that limited ground I would hold that he is not bound to pay compensation under section 133. It was this statement that led Mr Owen to advance, initially, an argument that section 133 was directed at some failure in the trial process. This led him to submit that if, after an impeccably conducted trial, the discovery of DNA evidence demonstrated conclusively that the convicted defendant was innocent, no claim for compensation would lie under section 133. He was right subsequently to acknowledge that this could not be correct, but that acknowledgement raised a question as to the validity of Lord Binghams observation that section 133 applied to failures of the trial process. I also question that statement. It is not the failure of the trial process that constitutes a miscarriage of justice, but the wrongful conviction that may be caused by it. A wrongful conviction is capable of amounting to a miscarriage of justice whether or not it has been caused by a failure of the trial process. I do not believe that Lord Bingham can have intended to exclude from the ambit of section 133 convictions quashed as the result of the discovery of new facts in circumstances where there has been no failure of the trial process. That, I believe, is the situation with which section 133 is, at least primarily, concerned. There is a question as to the assistance that is to be derived from the following earlier comments in para 4 of Lord Binghams judgment: The expression wrongful convictions is not a legal term of art and it has no settled meaning. Plainly the expression includes the conviction of those who are innocent of the crime of which they have been convicted. But in ordinary parlance the expression would, I think, be extended to those who, whether guilty or not, should clearly not have been convicted at their trials. It is impossible and unnecessary to identify the manifold reasons why a defendant may be convicted when he should not have been. It may be because the evidence against him was fabricated or perjured. It may be because flawed expert evidence was relied on to secure conviction. It may be because evidence helpful to the defence was concealed or withheld. It may be because the jury was the subject of malicious interference. It may be because of judicial unfairness or misdirection. In cases of this kind, it may, or more often may not, be possible to say that a defendant is innocent, but it is possible to say that he has been wrongly convicted. The common factor in such cases is that 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. In R (Clibery) v Secretary of State for the Home Department [2007] EWHC 1855 (Admin) at para 25 I stated that in this passage Lord Bingham was identifying the types of miscarriage of justice that would fall within section 133. On reflection I believe that I was wrong. As Lord Hope has pointed out in para 90 Lord Bingham was discussing the meaning of wrongful conviction in the context of the previous ex gratia scheme. There is a further point to be made in relation to para 4 of Lord Binghams speech. He has included in the catalogue of cases resulting in the conviction of someone who should not have been convicted the case of a judicial misdirection. A judicial misdirection could not be a new or newly discovered fact, but if it were it would fall into Dyson LJs third category. So might a conviction based on flawed expert evidence: see R (Allen) (formerly Harris)) v Secretary of State for Justice [2008] EWCA Civ 808; [2009] 2 All ER 1. Thus para 4 would appear to embrace all four of Dyson LJs categories. In para 9 Lord Bingham observed, when considering section 133, that, while miscarriage of justice can be used to describe the conviction of the demonstrably innocent, it can be and has been used to describe cases in which defendants, guilty or not, certainly should not have been convicted. This also has been treated by some as expressing Lord Binghams view of the scope of section 133, but I do not think that it is clear that this was so. In these circumstances, I agree with Lord Hope that Lord Binghams speech does not provide significant positive assistance in interpreting miscarriage of justice in section 133. It is of assistance in respect of his comments on Lord Steyns answer to that question. Lord Steyns conclusion in Mullen that miscarriage of justice was restricted to the conviction of an innocent person was largely founded on his misreading of the French text of article 14(6) and of the position in France. Shorn of that support, his speech does not provide compelling justification for his conclusion. For all these reasons I do not believe that Mullen helps very much in determining the meaning of miscarriage of justice in section 133. The cases that have followed Mullen, including those before this Court, have proceeded on the basis that Lord Bingham had laid down an alternative test to that of Lord Steyn, and concluded, in each case, that neither test was satisfied. In the circumstances there is nothing to be gained by considering those decisions. I agree with Lord Hope that a fresh approach is required. I propose to adopt the four categories identified by Dyson LJ as the framework for discussion. The nature of the exercise The wording of section 133, following that of article 14(6), might suggest that the terms of the judgment of the court that reverses the conviction will establish whether the entitlement to compensation has been made out. It speaks of a conviction being reversed on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice (emphasis added). That is not, however, the test for quashing a conviction in this jurisdiction. The words on the ground that must, if they are to make sense, be read as in circumstances where. Section 133(1) provides that the compensation will be paid by the Secretary of State, and section 133(2) provides for a two year time limit for application for compensation to the Secretary of State. Thus it is for the Secretary of State to decide whether the requirements of section 133 are satisfied, an exercise which is, of course, subject to judicial review. The Secretary of State first has to consider whether a new or newly discovered fact has led to the quashing of a conviction. If it has, he then has to consider whether that fact shows beyond reasonable doubt that there has been a miscarriage of justice, applying the true meaning of that phrase. The Secretary of State will plainly have regard to the terms of the judgment that quashes the conviction, but ultimately he has to form his own conclusion on whether section 133 is satisfied. The object of the exercise I think that the primary object of section 133, as of article 14(6), is clear. It is to provide entitlement to compensation to a person who has been convicted and punished for a crime that he did not commit. But there is a subsidiary object of the section. This is that compensation should not be paid to a person who has been convicted and punished for a crime that he did commit. The problem with achieving both objects is that the quashing of a conviction does not of itself prove that the person whose conviction has been quashed did not commit the crime of which he was convicted. Thus it is not satisfactory to make the mere quashing of a conviction the trigger for the payment of compensation. It was this problem which led to the adoption of the imprecise language of article 14(6), which has been reproduced in section 133. In interpreting section 133 it is right to have in mind the two conflicting objectives. It is necessary to consider whether the wording of the section permits a balance to be struck between these two objectives and, if so, how and where that balance should be struck. I turn to consider Dyson LJs four categories having in mind these considerations. I shall deviate from the order in which he set them out. Category 4: 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 This category is derived from Lord Binghams speech in Mullen. As I have explained, I do not believe that he put it forward as falling within the scope of section 133. As I understand it, the category embraces an abuse of process so egregious that it calls for the quashing of a conviction, even if it does not put in doubt the guilt of the convicted person. I would not interpret miscarriage of justice in section 133 as embracing such a situation. It has no bearing on what I have identified as the primary purpose of the section, which is the compensation of those who have been convicted of a crime which they did not commit. If it were treated as falling within section 133 this would also be likely to defeat the subsidiary object of section 133, for it would result in the payment of compensation to criminals whose guilt was not in doubt. Category 3: Fresh evidence rendering the conviction unsafe Dyson LJ propounded this test as requiring consideration of whether a fair minded jury could properly convict if there were to be a trial which included the fresh evidence. This raises the question, which I shall consider further when I come to category 2, of whether section 133 requires the Secretary of State to consider the reaction to fresh evidence of a fair minded jury. Put another way, the situation under consideration is one where the fresh evidence reduces the strength of the case that led to the claimants conviction, but does not diminish it to the point where there is no longer a significant case against him. I would not place this category within the scope of section 133 for two reasons. The first is that it gives no sensible meaning to the requirement that the miscarriage of justice must be shown beyond reasonable doubt, or conclusively in the wording of article 14(6). It makes no sense to require that the new evidence must show conclusively that the case against the claimant is less compelling. It is tantamount to requiring the Secretary of State to be certain that he is uncertain of the claimants guilt. My second reason is that, if category 3 were adopted as the right definition of miscarriage of justice, it would not strike a fair balance between the two objectives of section 133. The category of those who are convicted on evidence which appears to establish guilt beyond reasonable doubt, but who have their convictions quashed because of fresh evidence that throws into question the safety of their convictions, will include a significant number who in fact committed the offences of which they were convicted. This is the inevitable consequence of a system which requires guilt to be proved beyond reasonable doubt. When these two factors are considered together they lead to the conclusion that section 133 does not, on its true interpretation, apply to category 3. Category 1: Fresh evidence that shows clearly that the defendant is innocent of the crime of which he was convicted Having considered the categories which were at one extremity of Dyson LJs list, I now turn to the category at the other. Plainly section 133 will embrace this category, but does it provide the exclusive definition of miscarriage of justice in that section? There are a number of points to be made in favour of this suggestion. The first is that it gives section 133 a perfectly natural and logical meaning, indeed it is the meaning that the man in the street would be likely to accord to the wording of section 133. More particularly, if miscarriage of justice is read as meaning the conviction of someone who is innocent, it makes perfect sense of the requirement that the new fact should prove this beyond reasonable doubt. Next it gives section 133 a meaning which is eminently practicable. Objection has been made to category 1 on the ground that it is not the role of the Court of Appeal, when reviewing a conviction, to rule whether the defendant is innocent of the crime of which he was convicted. In R v McIlkenny (1991) 93 Cr App R 287, 311 Lloyd LJ observed that the Court of Appeal was neither obliged nor entitled to state that an appellant was innocent. Its task was simply to decide whether the verdict of the jury could stand. He described this as a point of great constitutional importance. I think that he was right. The point was well put by the Court of Appeal for Ontario in R v Mullins Johnson 2007 ONCA 720; 87 OR (3d) 425. The appellant had been convicted of murder of his 4 year old niece and served 12 years in prison. His conviction was based on expert evidence that the autopsy indicated that the young girl had been sexually abused and suffocated. Subsequent medical evidence totally discredited the evidence given at the trial, so that it became clear that there was no reliable pathological evidence either of sexual abuse or of homicidal asphyxia of the child. The case was referred to the Court of Appeal on terms that it should treat it as an appeal on fresh evidence. In a passage which merits citation in full, the Court explained why it would not be proper for it in these circumstances to make a declaration that the appellant was in fact innocent: 22 The fresh evidence shows that the appellants conviction was the result of a rush to judgment based on flawed scientific opinion. With the entering of an acquittal, the appellants legal innocence has been re established. The fresh evidence is compelling in demonstrating that no crime was committed against Valin Johnson and that the appellant did not commit any crime. For that reason an acquittal is the proper result. 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, pp. 342: [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. 25 In addition to the jurisdictional issue, there are important policy reasons for not, in effect, recognizing 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 (p 39). To recognize 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. But the decision whether there has been a miscarriage of justice within section 133 is not for the court but for the Secretary of State. He should have no difficulty in deciding whether new evidence that has led to the quashing of a conviction shows beyond reasonable doubt that the defendant was innocent of the crime of which he was convicted. Where the prosecution has satisfied the jury beyond reasonable doubt that a defendant is guilty, evidence that demonstrates beyond reasonable doubt that he was in fact innocent will not be equivocal. Even though it is not for the Court of Appeal, when quashing the conviction, to express its opinion that the defendant is innocent, the reasons given for quashing the conviction are unlikely to leave any doubt of this, just as was the position in Mullins Johnson. The other obvious point in favour of category 1 is that it precludes all possibility of a defendant who in fact committed the crime of which he was convicted receiving compensation for the consequences of his conviction. If this is to be treated as being of paramount importance, then category 1 is the only satisfactory interpretation of section 133. The Law Commission of New Zealand in its 1998 Report No 49 on Compensating the Wrongly Convicted advised at para 127 A requirement to prove innocence is, however, necessary to prevent the guilty claimant, acquitted on a technicality, from profiting from the crime. It recognises that it is a persons innocence which provides the justification for compensation in the first place. This brings me to the last point that is advanced in favour of category 1. It is argued that it is not in practice possible to draw a line between category 2 and category 3. Unless category 1 is adopted as the correct interpretation of section 133, defendants whose convictions are quashed on technicalities will profit from compensation. I shall consider this argument when I deal with category 2. The first argument against restricting the ambit of section 133 to category 1 is that the parties to article 14(6) voted against an amendment which would have done this. The second is that this will deprive some defendants who are in fact innocent and who succeed in having their convictions quashed on the grounds of fresh evidence from obtaining compensation. It will exclude from entitlement to compensation those who no longer seem likely to be guilty, but whose innocence is not established beyond reasonable doubt. This is a heavy price to pay for ensuring that no guilty person is ever the recipient of compensation. Does category 2, or some similar formulation of miscarriage of justice, provide a more satisfactory approach to the desire to provide compensation to the innocent without rewarding the guilty that both accords with the language of the section and is workable in practice? Category 2: Fresh evidence such that, had it been available at the trial no reasonable jury could convict the defendant This category applies to the evidence, including the fresh evidence, the test that a judge has to apply when considering an application at the end of the prosecution case for dismissal of a charge on the ground that the defendant has no case to answer. It focuses on the evidence before the jury. If the fresh evidence were always evidence of primary fact, or new expert evidence, the test might be satisfactory. The position is not, however, as simple as that. The new evidence that leads to the quashing of a conviction is very often not primary evidence that bears directly on whether the defendant committed the crime of which he was convicted, but evidence that bears on the credibility of those who provided the primary evidence on which he was convicted. Both of the appeals before the Court fall into this category. So does the example of category 2 given by Dyson LJ: fresh evidence which undermines the creditworthiness of the sole witness for the prosecution. Here one can run into a problem that is peculiar to the criminal procedures that apply in common law jurisdictions. Under common law procedures the evidence that is permitted to be placed before the jury is screened by a number of rules that are designed to avoid the risk that the jury will be unfairly prejudiced and to ensure that the trial is fair. Thus section 78 of the Police and Criminal Evidence Act 1984 gives the judge a general jurisdiction to exclude evidence on the grounds of fairness and section 76A of the same Act contains a little code governing the admissibility of a confession. So does section 8(2) of the Northern Ireland (Emergency Provisions) Act 1978, which was applicable to the critical evidence adduced against the defendants in the second appeal. Often it will be appropriate for the judge to hold a voir dire in order to decide whether or not evidence can be admitted. The question of whether there is evidence upon which a jury can properly convict is taken after the judge has screened from the jury evidence which, under the relevant procedural code, he has ruled to be inadmissible. That is often a difficult judicial task. I do not believe that section 133 should be so interpreted as to impose on the Secretary of Sate the task of deciding whether the fresh evidence would have rendered inadmissible the primary evidence to which it related, in order to answer the question whether there would have been a case upon which a reasonable jury could convict. There is a further difficulty with category 2. The question of whether a reasonable jury could properly convict falls to be answered having regard to the fact that a jury must be satisfied of guilt beyond reasonable doubt. Section 133 requires the Secretary of State to be satisfied beyond reasonable doubt that a miscarriage of justice has occurred. Category 2 thus operates as follows: compensation will be payable where the Secretary of State is satisfied beyond reasonable doubt that no reasonable jury could have been satisfied beyond reasonable doubt that the defendant was guilty. This does not seem a very sensible test. The final point to make about category 2 is that it applies a test the result of which depends critically on common law procedural rules. As the test is derived from article 14(6), it would be preferable if it were one more readily applicable in other jurisdictions. For these reasons I do not consider the second category, as formulated by Dyson LJ, provides a satisfactory definition of miscarriage of justice. I would replace it with a more robust test of miscarriage of justice. A new fact will show that a miscarriage of justice has occurred when it so undermines the evidence against the defendant that no conviction could possibly be based upon it. This is a matter to which the test of satisfaction beyond reasonable doubt can readily be applied. This test will not guarantee that all those who are entitled to compensation are in fact innocent. It will, however, ensure that when innocent defendants are convicted on evidence which is subsequently discredited, they are not precluded from obtaining compensation because they cannot prove their innocence beyond reasonable doubt. I find this a more satisfactory outcome than that produced by category 1. I believe that it is a test that is workable in practice and which will readily distinguish those to whom it applies from those in category 3. It is also an interpretation of miscarriage of justice which is capable of universal application. Retrial The provisions in relation to retrial introduced into section 133 in the circumstances described by Lord Hope at paras 103 and 104 of his judgment raise a problem. A retrial will only be ordered where, although it quashes the defendants conviction on the grounds of fresh evidence, the Court of Appeal considers that there remains a case against him that is fit for trial. Assuming that they are correct in that view, the fresh evidence could never fall within the scope of section 133 if it is right to interpret that section as being limited to either category 1 or category 2, as formulated by Dyson LJ or as I have reformulated it. The introduction into the section of the provisions in relation to retrial would make more sense if section 133 embraced category 3. In that case, however, one might have expected compensation to be payable automatically if the retrial ended in an acquittal, but the amended section 133 does not so provide. It does not follow, however, that category 1 or category 2 cannot stand with section 133, as amended. Entitlement to compensation does not turn on the view that the Court of Appeal takes of the new evidence. The defendant may contend, even where a retrial is ordered, that the fresh evidence proves his innocence. Although the Court of Appeal is not persuaded of this, it may become apparent in the course of the retrial that the defendant is correct. Thus the provisions in relation to retrial make sense, even if category 1 or category 2 represents the correct interpretation of miscarriage of justice. Article 6(2) of the European Convention on Human Rights The Strasbourg Court has stated that one of the functions of article 6(2) is to protect an acquitted persons reputation from statements or acts that follow an acquittal which would seem to undermine it see Taliadorou and Stylianou v Cyprus (Application Nos 39627/05 and 39631/05) (unreported) 16 October 2008, at para 26. The Courts expansion of what would seem to be a rule intended to be part of the guarantee of a fair trial into something coming close to a principle of the law of defamation is one of the more remarkable examples of the fact that the Convention is a living instrument. Mr Owen QC for Mr Adams referred the Court to a series of decisions of the Strasbourg Court in which it was held to be a violation of article 6(2) for a state to refuse compensation to which an applicant who had been held in preventative detention was normally entitled on acquittal at the end of a criminal trial on the ground that his acquittal did not establish his innocence. Lord Hope has summarised the details and effect of those authorities. Mr Owen argued that their effect was that, once Mr Adams conviction had been quashed, he was entitled to be treated as innocent in the context of his claim for compensation. A rather different argument based on article 6(2) was rejected by Lord Steyn in Mullen at para 44. Mr Owen first advanced the present argument when appearing for the claimant in R(Allen) (formerly Harris)) v Secretary of State for Justice [2009] 2 All ER 1. In that case the claimants claim for compensation under section 133 was rejected on the grounds that his case satisfied neither Lord Steyns test in Mullen nor the test that Lord Bingham had been thought to advance in that case. Giving the only reasoned judgment, Hughes LJ comprehensively rejected Mr Owens argument based on article 6(2) for a series of ten reasons. On the present appeals Lord Hope has held that reliance on article 6(2) is misplaced for reasons that have much in common with those of Hughes LJ. I agree with both of them. I would add this. The appellants claims are for compensation pursuant to the provisions of section 133. On no view does that section make the right to compensation conditional on proof of innocence by a claimant. The right to compensation depends upon a new or newly discovered fact showing beyond reasonable doubt that a miscarriage of justice has occurred. Whatever the precise meaning of miscarriage of justice the issue in the individual case will be whether it was conclusively demonstrated by the new fact. The issue will not be whether or not the claimant was in fact innocent. The presumption of innocence will not be infringed. Newly discovered fact Mr Adams appeal raises a second issue. Were the facts that led to the quashing of his conviction newly discovered despite the fact that they were contained in documents disclosed to his legal representatives before his trial or available on the Holmes database? The phrase newly discovered raises a further difficult problem of interpretation, for it does not indicate to whom the discovery must be new. Procedure Act 1993. Section 9(6) of that Act provides: Ireland has given effect to article 14(6) by section 9 of the Criminal newly discovered fact means ( a ) where a conviction was quashed by the Court on an application under section 2 or a convicted person was pardoned as a result of a petition under section 7, or has been acquitted in any re trial, a fact which was discovered by him or came to his notice after the relevant appeal proceedings had been finally determined or a fact the significance of which was not appreciated by the convicted person or his advisers during the trial or appeal proceedings. I would adopt this generous interpretation of newly discovered fact. Section 133(1), following the almost identical wording of article 14(6), ends with the proviso : unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted. This proviso is significant in more than one way. First, the use of the word non disclosure would seem to equate the new discovery with disclosure. The latter word has a broad ambit and, in context, suggests to me the bringing of a fact into the public domain and, in particular, the disclosure of that fact to the court. Secondly, I read the provision as excluding a right to compensation where the person convicted has deliberately prevented the disclosure of the relevant fact, or where the non discovery of that fact is otherwise attributable to his own fault. We are envisaging a situation where a claimant has been convicted, and may well have served a lengthy term of imprisonment, in circumstances where it has now been discovered that a fact existed which either demonstrates that he was innocent or, at least, undermines the case that the prosecution brought against him. If he was aware of this fact but did not draw it to the attention of his lawyers, and he did not deliberately conceal it (which would bring the fact within the proviso), this will either be because the significance of the fact was not reasonably apparent or because it was not apparent to him. Many who are brought before the criminal courts are illiterate, ill educated, suffering from one or another form of mental illness or of limited intellectual ability. A person who has been wrongly convicted should not be penalised should this be attributable to any of these matters. It is for those reasons that I would adopt the same interpretation of newly discovered fact as the Irish legislature. Conclusions It has always been common ground that Mr Adams case falls into category 3. The newly discovered facts (as I would hold them to be) in his case do not show that a miscarriage of justice has occurred within the meaning that I would give to that phrase in section 133. Accordingly, I would dismiss his appeal. The newly discovered facts in the case of Mr McCartney and Mr MacDermott, as described by Lord Kerr, so undermine the evidence against them that no conviction could possibly be based upon it. There can be no reasonable doubt of this. Accordingly I would allow their appeal and hold that they are entitled to compensation pursuant to the provisions of section 133. LORD HOPE I accept with gratitude Lord Phillips description of the facts in the case of Andrew Adams and Lord Kerrs description of the facts in the cases of Eamonn MacDermott and Raymond McCartney. With that advantage I can go straight to the issues of principle that these cases have raised. Mention should also be made of Barry George, who was granted permission to intervene in this appeal. On 2 July 2001 he was convicted of the murder on 26 April 1999 of the television presenter Jill Dando, who was killed by a single shot to the head as she was about to enter her home in Fulham. His appeal against conviction was dismissed on 29 July 2002: [2002] EWCA Crim 1923. A major part of the Crowns case against him was that a single particle of firearms discharge, which matched particles found in the cartridge case of the bullet which killed Miss Dando, in her coat and in samples of her hair, had been found nearly 12 months later in the pocket of a coat owned and worn by Mr George. Following a review of his case, the Criminal Cases Review Commission decided to refer his conviction to the Court of Appeal under section 9 of the Criminal Appeal Act 1995 on the ground that new evidence called into question the evidence at the trial about the firearms discharge and the significance that had apparently been attached to that evidence. New reports obtained from the Forensic Science Service had shown that it had no evidential value in the case against Mr George. On 15 November 2007 the Court of Appeal quashed the conviction and ordered a retrial: [2007] EWCA Crim 2722. The evidence of the firearms discharge was not admitted at the trial. On 1 August 2008 the jury by a unanimous verdict found Mr George not guilty. On the day of the acquittal the Crown Prosecution Service issued a press statement in which it was stated that Mr George now had the right to be regarded as an innocent man. On 7 October 2009 Mr George applied for compensation under section 133 of the Criminal Justice Act 1988. By letter dated 15 January 2010 the Secretary of State for Justice told Mr George that he was not prepared to authorise an award of compensation as the new forensic evidence did not prove beyond reasonable doubt that he was innocent. He referred to the fact that in its judgment of 15 November 2007 the Court of Appeal stated that in the absence of the evidence of the firearms discharge there was circumstantial evidence capable of implicating Mr George, and that it had ordered a retrial which defence counsel conceded should take place. Mr George applied for judicial review of that decision on 14 April 2010. On 25 August 2010 Collins J granted permission. But he stayed the proceedings pending the decision of this Court as to the meaning of miscarriage of justice in section 133 of the 1988 Act. Mr Glen QC for Mr George submitted that it was sufficient to entitle a person to an award of compensation under that section that his conviction had been reversed on the ground of a new or newly discovered fact and that, in the event of his being subjected to a retrial, he had been acquitted of the offence. As that was what had happened in his case it should be made clear by this Court in its judgment that, where a person had suffered punishment in such circumstances, compensation should be paid to him under the scheme that had been set up by the statute. With that introduction I can go straight to the issues of principle that these cases have raised. Background The background to the introduction of a statutory right to compensation for miscarriages of justice by section 133 of the Criminal Justice Act 1988 was described in In re McFarland [2004] UKHL 17, [2004] 1 WLR 1289, paras 6 9 by Lord Bingham of Cornhill and R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18, [2005] 1 AC 1, paras 25 28 by Lord Steyn. Lord Bingham drew attention in McFarland, para 6, to the underlying principles. In any liberal democratic state there will be those who are accused of crime and are acquitted at trial, or whose convictions are reversed following an appeal. Those affected will have suffered the stigma of being accused and the trauma of standing trial and of imprisonment before the process is brought to an end. In principle it might seem that the state, which initiated the unsuccessful prosecution, should compensate those who have been acquitted, or at least some of them. How this was to be done and in what circumstances was much debated before the current system was adopted: see David Harris, The Right to a Fair Trial in Criminal Proceedings as a Human Right (1967) 16 ICLQ 352, 372 375. It was, as Lord Steyn said in Mullen, para 52, a process of evolution. First, there was the adoption on 16 December 1966 of the International Covenant on Civil and Political Rights (the ICCPR), article 14(6) of which made provision for what it described as compensation according to law to a person whose conviction had been reversed or had been pardoned in the circumstances to which it referred and who had suffered punishment as a result of such a conviction. The ICCPR was ratified by the United Kingdom on 20 May 1976. On 29 July 1976 the Home Secretary (Mr Roy Jenkins) set out in a written answer the procedure which was being adopted for the making of ex gratia payments in recognition of the hardship caused by what he referred to as a wrongful conviction: Hansard (HC Debates), WA cols 328 330. Three weeks later, on 20 August 1976, the ICCPR entered into force. Thereafter the United Kingdom continued to fulfil its international obligations under article 14(6) under the ex gratia scheme. The scheme was put onto a more formal basis on 29 November 1985: see Hansard (HC Debates), WA cols 689 690. The then Home Secretary (Mr Douglas Hurd) said that he would be prepared to pay compensation where this was required by the international obligations, and that he remained prepared to pay compensation to people who did not fall within the terms of article 14(6) but who had spent a period in custody following a wrongful conviction or charge, where he was satisfied that it had resulted from serious default on the part of a member of a police force or of some other public authority. He said that the Secretary of State for Northern Ireland intended to follow a similar practice. A similar scheme was already in operation in Scotland. There was however international pressure on the United Kingdom to put its obligations under article 14(6) on a statutory footing: see R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18, [2005] 1 AC 1, para 28 by Lord Steyn. The response to it was section 133 of the Criminal Justice Act 1988. The new statutory right superseded in part the existing scheme for ex gratia payments, which remained in being until April 2006, when it was terminated both in England and Wales and Northern Ireland. This has had the inevitable, but unfortunate, consequence that claimants in those jurisdictions are now dependent solely upon the scheme provided by the statute. The ex gratia scheme which has been operated in Scotland by the Scottish Ministers still remains in force there, alongside the system for the payment of compensation in respect of all reversals of convictions that fall within section 133 of the 1988 Act. This enables those against whom criminal proceedings were taken which can properly be regarded with hindsight as wrongful to be compensated even though their cases cannot be brought within the terms of the statute. The way the scheme is currently operated in England and Wales was set out by the Minister of State (Lord McNally) in a written answer which was published on 1 March 2011 (Hansard (HL Debates), WA col 318), in which he said: Compensation is paid under [section 133] where a conviction is quashed following an out of time appeal or following a reference by the Criminal Cases Review Commission to the relevant appeal court on the basis that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice. Section 133 fully meets our international obligations. The Government do not operate a compensation scheme for those who have convictions quashed at in time appeals or those who are acquitted at trial. Figures disclosed by the Ministry of Justice about the number of applications received and the number of applications approved in England and Wales show that there has been a very substantial drop in the number of applications approved since the abolition of the ex gratia scheme in 2006. The system prior to that date was that all applications were considered first under section 133 and then, if not approved, were considered under the ex gratia scheme. The following table shows all applications for compensation received since May 2004 and those which were approved under section 133 : Year 2004 05 2005 06 2006 07 2007 08 2008 09 2009 10 The statutory scheme Article 14(6) of the ICCPR provides: Total Applications Received 88 74 39 40 38 37 Applications Approved Under s 133 39 21 23 7 7 1 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. The wording of section 133(1) of the 1988 Act follows that of article 14(6). It 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 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. Subsection (2) provides that no payment of compensation is to be made unless an application for compensation is made to the Secretary of State, for which a time limit of two years beginning with the date when the persons conviction is reversed or he is pardoned was introduced in relation to England and Wales and Northern Ireland by section 61(3) of the Criminal Justice and Immigration Act 2008. Section 133(5) of the 1988 Act, as amended by paragraph 16(4) of Schedule 2 to the Criminal Appeal Act 1995, provides: In this section reversed shall be construed as referring to a conviction having been quashed or set aside (a) on an appeal out of time; or (b) on a reference (i) (ii) under section 194B of the Criminal Procedure (Scotland) Act under the Criminal Appeal Act 1995; or 1995. Subsection (5A), which was inserted in relation to England and Wales and Northern Ireland by section 61(5) of the Criminal Justice and Immigration Act 2008, provides: (5A) But in a case where (a) a persons conviction for an offence is quashed on an appeal out of time, and (b) the person is to be subject to a retrial, the conviction is not to be treated for the purposes of this section as reversed unless and until the person is acquitted of all offences at the retrial or the prosecution indicates that it has decided not to proceed with the retrial. To be entitled to compensation under section 133(1) the claimant must show that he has been convicted of a criminal offence and that subsequently his conviction has been reversed on an appeal out of time or on a reference by the CCRC, 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 words that I have quoted from the subsection differ from the equivalent part of article 14(6) of the ICCPR in one respect only. The statute uses the phrase beyond reasonable doubt where article 14(6) uses the word conclusively. One might have thought at first sight that, when applications for compensation were made to the Secretary of State, such simple wording could be applied to each case without much difficulty. But that has proved not to be the case, as can be seen from the speeches in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1, where the meaning of the words miscarriage of justice was under scrutiny. Lord Bingham said that he would hesitate to accept the submission of the Secretary of State that section 133 obliged him to pay compensation only when a defendant, finally acquitted in the circumstances satisfying the statutory conditions, is shown beyond reasonable doubt to be innocent of the crime of which he had been convicted: para 9. Lord Steyn, on the other hand, said that the words miscarriage of justice extend only to cases where the person concerned is acknowledged to be clearly innocent: para 56. Then there are the words new or newly discovered fact. What is a fact for this purpose? And to whom does it have to be new or by whom does it have to be newly discovered? The meaning of those words is in issue in the appeal by Adams, whose conviction was reversed because of a failure by his representatives to make themselves aware of and make use of three pieces of important material at his trial which had been made available to them by the prosecution but of which Adams himself was not aware. The issue as to what is meant by the words miscarriage of justice is common to his appeal and the appeals of MacDermott and McCartney. It will be convenient to examine this issue first. Miscarriage of justice Attempts have been made in subsequent cases to reconcile the differing views as to the meaning of miscarriage of justice that were expressed in Mullen: see R (Murphy) v Secretary of State for the Home Department [2005] EWHC 140 (Admin), [2005] 1 WLR 3516; R (Clibery) v Secretary of State for the Home Department [2007] EWHC 1855 (Admin); In re Boyles Application [2008] NICA 35; R (Allen) (formerly Harris) v Secretary of State for Justice [2008] EWCA Civ 808, [2009] 2 All ER 1; R (Siddall) v Secretary of State for Justice [2009] EWHC 482 (Admin). In the Court of Appeal in Adamss case Dyson LJ said that, like Lord Phillips of Worth Matravers CJ in Cliberys case and Richards J in Murphy, he did not propose to express a view as to whether Lord Binghams interpretation was to be preferred to that of Lord Steyn: R (Adams) v Secretary of State for the Home Department [2009] EWCA Civ 1291, [2010] QB 460, para 42. The assumption has been that Lord Binghams reference in para 4 of his speech in Mullen to something having gone seriously wrong in the investigation of the offence or the conduct of the trial could be taken as a test of whether the right to compensation under section 133 was available that could sit alongside that preferred by Lord Steyn. In Allen, para 26 Hughes LJ said that this was made the plainer by Lord Binghams references to a defendant who should clearly not have been convicted in para 4 and who certainly should not have been convicted in para 9(1). Dyson LJ set the scene for a discussion of this issue in these appeals in para 19 of his judgment in R (Adams) v Secretary of State for the Home Department [2009] EWCA Civ 1291, [2010] QB 460, when he said: The question what is meant by miscarriage of justice has not been resolved by the courts. As Toulson LJ said when giving permission to appeal in the present case, there are at least three classes of case where the Court of Appeal allows an appeal against conviction on the basis of fresh evidence. I shall call them category 1, category 2 and category 3 cases. A category 1 case is where the court is sure that the defendant is innocent of the crime of which he has been convicted. An obvious example is where DNA evidence, not obtainable at the trial, shows beyond reasonable doubt that the defendant was not guilty of the offence. A category 2 case is where the fresh evidence shows that he was wrongly convicted in the sense that, had the fresh evidence been available, no reasonable jury could properly have convicted. An example is where the prosecution case rested entirely on the evidence of a witness who was put forward as a witness of truth and fresh evidence undermines the creditworthiness of that witness, so that no fair minded jury could properly have convicted on the evidence of that witness. It does not follow in a category 2 case that the defendant was innocent. A category 3 case is where the fresh evidence is such that the conviction cannot be regarded as safe, but the court cannot say that no fair minded jury could properly convict if there were to be a trial which included the fresh evidence. The court concludes that a fair minded jury might convict or it might acquit. There is a fourth category of case to which Lord Bingham referred in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1. This is where a conviction is quashed because 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. This list of the different types of case where appeals are allowed according to the practice of the Court of Appeal (Criminal Division) was used in argument to focus the positions adopted by either side in these appeals. It was assisted later in the judgment by an acknowledgment that there were two limbs to Lord Binghams interpretation as set out in his speech in Mullen, para 4: [2010] QB 460, para 43. The first limb was where the person was innocent of the crime of which he had been convicted: category 1 according to Toulson LJs analysis. The second limb was where something had gone seriously wrong in the investigation or the conduct of the trial and the person should clearly not have been convicted. For the Secretaries of State it was submitted that only cases falling within category 1 would satisfy the requirements of section 133(1). For Adams Mr Owen QC submitted that it was not possible to draw a clear line between categories 2 and 3, so it was sufficient for him to bring his case within category 3. In any event, he submitted that Lord Binghams interpretation of the phrase in his second limb in Mullen was to be preferred, that proof of innocence was not required and that his case came within category 4. Counsel for the appellants McCartney and MacDermott submitted that Lord Binghams interpretation was to be preferred, and that their cases too fell within his second limb and category 4. It would be wrong to regard the way these categories were identified and described by the Court of Appeal as a substitute for looking at the language of section 133(1) itself and reaching our own view as to its effect. Lord Bingham said in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1, para 2 that he would allow the Secretary of States appeal on a narrow ground which made it unnecessary for him to reach a concluded view as to whether the right to compensation under the statute was available only to those who were innocent of the crime of which they had been convicted. We do not have that luxury in the cases that are before us in these appeals. A choice has to be made. It is time to take a fresh look at the arguments. Our task is made less onerous, although no less difficult, by the fact that the materials that were said to be relevant were discussed so fully by Lord Bingham and Lord Steyn in Mullen. It is striking how little assistance they were able to derive from the materials that were before the House. On many points both Lord Steyn and Lord Bingham were in agreement. They were agreed that the wording of section 133(1) was intended, as Lord Bingham put it in para 9, to reflect article 14(6). In para 5 he said that the parties were rightly agreed that the key to interpretation of section 133 was a correct understanding of article 14(6). They were also agreed that, as Lord Bingham said in para 9(1), the expression miscarriage of justice is not a legal term of article Taken on its own and out of context, it has no settled meaning. Lord Steyn said that the expression had to be looked at in the relevant international context, and that the only relevant context here was the international meaning of the words in article 14(6) on which section 133 is based: para 36. The question then was, what did the materials reveal as to its international meaning? The travaux prparatoires disclosed no consensus of opinion on the meaning to be given to it. Lord Steyn said that they were neutral and did not assist in any way on the proper construction of article 14(6): para 54. Lord Bingham seems to have seen this as a possible pointer towards a more generous interpretation. He said that the expression miscarriage of justice may have commended itself because of the latitude of interpretation that it offered: para 9(2). But this was no more than a straw in the wind. The jurisprudence of the United Nations Human Rights Committee was of little assistance either indeed, Lord Steyn does not mention it at all. And there was no consensus of academic opinion on the issue. In this situation Lord Steyn resorted first to an examination of article 14(6) on its own terms: para 45. Lord Bingham did not undertake this exercise. Instead he took as his starting point the statements that Mr Jenkins and Mr Hurd made when they were explaining the ex gratia scheme to Parliament: para 4. As he said at the outset of this paragraph, they were addressing the subject of wrongful convictions and charges. He observed that, like the expression miscarriage of justice, the expression wrongful convictions is not a legal term of art and it has no settled meaning. He then set out to describe in some detail the situations to which in ordinary parlance, as he put it, the expression would be taken to extend. Here we find the first and second limbs, as Dyson LJ in the Court of Appeal described them at [2010] QB 460, para 43, set out. The first is the conviction of those who are innocent of the crime of which they were convicted. The second embraces cases where those who, whether guilty or not, should not have been convicted. The manifold reasons where this might happen were impossible and unnecessary to identify. The common factor however was that something had gone seriously wrong in the investigation of the offence or the conduct of the trial. It is important not to lose sight of the fact that Lord Bingham was not seeking in para 4 to describe what, in the context of article 14(6), was meant by the expression miscarriage of justice. He was concentrating here on the expression wrongful conviction in the statements about the ex gratia scheme. He did not refer to the fact that it is a precondition of the right to compensation under article 14(6), and in its turn section 133, that the conviction was reversed because of a new or newly discovered fact. The descriptions of the ex gratia scheme did not mention this as a prerequisite. Quite what part this discussion had to play in the interpretation of article 14(6), to which he turned in para 5, is unclear. He took account of the fact that in the course of his statement Mr Hurd recited the terms of, and undertook to observe, article 14(6): para 5. There is an indication in that paragraph that he saw the only difference between that part of Mr Hurds statement and the enactment of section 133 as being that the right to be compensated should more obviously be, as article 14(6) requires, according to law. But, as he said at the end of that paragraph, the task of the House was to interpret section 133. He did not say and it would have been surprising if he had done that the key to this was to be found in Mr Hurds description of the cases where he was willing to pay compensation for a wrongful conviction under the ex gratia scheme. When he said at the end of para 8 that it is for failures of the trial process that the Secretary of State is bound by section 133 and article 14(6) to pay compensation, he was not offering a considered view as to what those provisions actually mean. He was explaining why, because there was no failure in the trial process, he could decide the case against Mullen on that limited ground without forming a concluded view as to what the convicted person had to show to be entitled to compensation. In R (Clibery) v Secretary of State for the Home Department [2007] EWHC 1855 (Admin), para 25, Lord Phillips of Worth Matravers CJ said that in para 4 of his speech in Mullen Lord Bingham considered two different situations, each of which he (that is, Lord Bingham) considered fell within the description of miscarriage of justice in section 133 of the 1988 Act. It is true, as Lord Phillips went on to point out, that in para 6 of his speech Lord Bingham referred to the core right with which article 14(6) is concerned as the right to a fair trial. But I think, with respect, that Lord Phillips was wrong to say that in para 4 of his speech Lord Bingham was considering what was meant by miscarriage of justice in section 133, as he himself has accepted: see para 30, above. Hughes LJ drew attention to this point in R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 2 All ER 1, para 25. He said that it must be remembered that in Mullen both the statutory and the ex gratia schemes were under consideration. In my opinion the value of Lord Binghams speech in Mullen lies not in any attempt on his part to subject section 133 to textual analysis, for he did not do this. It is to be found in the reasons he gave for hesitating to accept the argument for the Secretary of State that section 133 was satisfied only when the defendant was shown beyond reasonable doubt to have been innocent of the crime of which he had been convicted, and in particular in the three points on which he disagreed with Lord Steyn. Lord Steyns textual analysis of article 14(6) begins with a warning that there was no overarching purpose of compensating all who are wrongly convicted. For the reasons he gives in para 45, the fundamental right under article 14(6) is narrowly circumscribed. There was no intention to compensate all those whose convictions were quashed within the ordinary time limits, only those whose convictions were quashed on appeal out of time. And this was only where a new or newly discovered fact showed conclusively that there had been a miscarriage of justice. Having made this point, he then concentrated in para 46 on the requirement that the new or newly discovered fact must show conclusively (or beyond reasonable doubt in the language of section 133) that there has been a miscarriage of justice. He said that this filtered out cases of two kinds, (1) where there may have been a wrongful conviction and (2) where it is only probable that there may have been a wrongful conviction. He concluded that the only relevant context pointed to a narrow interpretation, that is to say the case where innocence is demonstrated. This approach leans very heavily on the use of the word conclusively. That word certainly points towards a narrow interpretation. But it does not point inevitably to the demonstration of innocence as the only case that could qualify for compensation under the article. The fact that a person who has been pardoned is brought within the scheme does not have that effect either. It would plainly have been wrong to exclude those who are pardoned from the scheme when those whose convictions have been reversed are given the benefit of it. But the reversal of a conviction and a pardon are processes which are distinct from each other. It does not follow from the mere fact that they are both covered by the same scheme that the only reversals of convictions that can be contemplated are those which would otherwise have deserved a pardon. Lord Steyn might have examined these points more fully, had he not been persuaded by two considerations to which he then turned that he had found the right answer. The first was the use of the words une erreur judiciaire in the French text of the ICCPR. In para 47 of his speech in Mullen Lord Steyn said that this was a technical expression indicating a miscarriage of justice in the sense of the conviction of the innocent. In para 9(4) of his speech Lord Bingham expressed some unease about this, as he contrasted these words with the reference to un condamn reconnu innocent in article 626 of the French Code de Procdure Pnale. He said that the expression une erreur judiciaire could be understood as equivalent to miscarriage of justice in its broad sense, and that it was not obviously apt to denote proof of innocence. In In re Boyles Application [2008] NICA 35, para 11 Girvan LJ said that he considered that Lord Binghams hesitation in not accepting Lord Steyns stringent requirement of proof of innocence was justified. In para 12 he pointed out that the term erreur judiciaire is defined by Grard Cornu in his Vocabulaire Juridique, 7th ed (1998), as une erreur de fait commise par une juridiction de jugement dans son appreciation de la culpabilit dune personne poursuivie. In para 13 he enlarged on Lord Binghams reference to article 626 of the Code de Procdure Pnale, pointing out that it did not require proof of innocence but rather that, where a defendants conviction is quashed and he is subsequently acquitted, he is reconnu innocent in consequence in other words, the annulment of the conviction itself leads to the establishment of his innocence. Although Mr Tam QC for the Secretary of State sought to defend Lord Steyns interpretation in his written case, he accepted in the course of Mr Owens oral argument that it was probably incorrect. For my part, I think that Girvan LJs researches have shown that Lord Steyns understanding of the words une erreur judiciaire in the French text of article 14(6), for which he gave no authority, was mistaken. The second consideration on which Lord Steyn relied was an observation in para 25 of an explanatory report by the Steering Committee for Human Rights appointed by the Council of Europe which accompanied the Seventh Protocol of the European Convention when it was published in November 1984: Mullen, para 48. It said of article 3, which follows the wording of article 14(6) of the ICCPR, that the intention was that states would be obliged to compensate persons only in clear cases of miscarriage of justice, in the sense that there would be an acknowledgment that the person concerned was clearly innocent. Having noted that in the introduction to the report it was stated that participation in the Protocol would not affect the application of provisions containing obligations under any other international instrument, Lord Steyn said that the explanatory report nevertheless had great persuasive value in the process of interpretation. In para 9(4), on the other hand, Lord Bingham set out five reasons for thinking that this passage does not bear the weight that Lord Steyn attached to it. Among those reasons are two which seem to me to be particularly significant. First, many more states are parties to the ICCPR than to the European Convention or the Seventh Protocol, which the United Kingdom has not signed or ratified. Second, para 25 does not appear to be altogether consistent with para 23, which suggests that a miscarriage of justice occurs where there is a serious failure in the judicial process involving grave prejudice to the convicted person. Furthermore, as Lord Bingham noted in para 9(5), van Dijk and van Hoof, Theory and Practice of the European Convention on Human Rights, 3rd ed (1998), p 689 take a different view, suggesting that the explanatory reports interpretation is too strict and that reversal of the conviction on the ground that new facts have been discovered which introduce a reasonable doubt as to the guilt of the accused is enough. Lord Steyn said in para 48 that the explanatory report had great persuasive value. I think that, for the reasons Lord Bingham gives, this overstates the position. The better view is that it lends some support the Secretary of States argument, but that it must be for the court to work out for itself what the words mean. There was one further difficulty about Lord Steyns interpretation to which Lord Bingham drew attention in para 9(6). This is that courts of appeal, although well used to deciding whether convictions are safe or whether reasonable doubts exist about their safety, are not called upon to decide whether a defendant is innocent and in practice rarely do so. In R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 2 All ER 1, para 40(iii) Hughes LJ said that cases where the innocence of the convicted defendant is genuinely demonstrated beyond reasonable doubt by the new or newly discovered fact will be identifiable in that court and the judgment will, in virtually every case, make this plain. I do not think that this entirely meets Lord Binghams point. I have no doubt that there will be cases of the kind that Hughes LJ describes. But it remains true that courts of appeal are not called upon to say whether or not a defendant was innocent, and it is at least questionable whether restricting the right to compensation to cases where the establishment of innocence is apparent from the courts judgment imposes too severe a test for the entitlement to compensation. A fresh analysis If one accepts, as I would do, Lord Binghams reasons for doubting whether Lord Steyn was right to find support for his reading of article 14(6) in the French text and in para 25 of the explanatory committees report on article 3 of the Seventh Protocol, one is driven back to the language of the article itself as to what the words miscarriage of justice mean. Taken by itself this phrase can have a wide meaning. It is the sole ground on which convictions can be brought under review of the High Court of Justiciary in Scotland: Criminal Procedure (Scotland) Act 1995, section 106(3). But the fact that these words are linked to what is shown conclusively by a new or newly discovered fact clearly excludes cases where there may have been a wrongful conviction and the court is persuaded on this ground only that it is unsafe. It clearly includes cases where the innocence of the defendant is clearly demonstrated. But the article does not state in terms that the only criterion is innocence. Indeed, the test of innocence had appeared in previous drafts but it was not adopted. I would hold, in agreement with Lord Phillips (see para 55 above) that it includes also cases where the new or newly discovered fact shows that the evidence against the defendant has been so undermined that no conviction could possibly be based upon it. In that situation it will have been shown conclusively that the defendant had no case to answer, so the prosecution should not have been brought in the first place. There is an important difference between these two categories. It is one thing to be able to assert that the defendant is clearly innocent. Cases of that kind have become more common and much more easily recognised since the introduction into the criminal courts, long after article 14(6) of the ICCPR was ratified in 1976, of DNA evidence. It seems unlikely that the possibility of demonstrating innocence in this way was contemplated when the test in article 14(6) was being formulated. Watson and Crick published their discovery of the double helix in 1951, but DNA profiling was not developed until 1984 and it was not until 1988 that it was used to convict Colin Pitchfork and to clear the prime suspect in the Enderby Murders case. The state should not, of course, subject those who are clearly innocent to punishment and it is clearly right that they should be compensated if it does so. But it is just as clear that it should not subject to the criminal process those against whom a prosecution would be bound to fail because the evidence was so undermined that no conviction could possibly be based upon it. If the new or newly discovered fact shows conclusively that the case was of that kind, it would seem right in principle that compensation should be payable even though it is not possible to say that the defendant was clearly innocent. I do not think that the wording of article 14(6) excludes this, and it seems to me that its narrowly circumscribed language permits it. The range of cases that will fall into the category that I have just described is limited by the requirement that directs attention only to the evidence which was the basis for the conviction and asks whether the new or newly discovered fact has completely undermined that evidence. It is limited also by the fact that the new or newly discovered fact must be the reason for reversing the conviction. This suggests that it must be the sole reason, but I do not see the fact that the appellate court may have given several reasons for reversing the conviction as presenting a difficulty. All the other reasons that it has given will have to be disregarded. The question will be whether the new or newly discovered fact, taken by itself, was enough to show conclusively that there was a miscarriage of justice because no conviction could possibly have been based on the evidence which was used to obtain it. For these reasons it is plain that category 1 in Dyson LJs list (see para 83, above) falls within the scope of section 133. I think that it is equally plain that category 4 (Lord Binghams second limb) does not, as it is taken from para 4 of Lord Binghams speech in Mullen where he was discussing what was included within the phrase wrongful convictions, not what was meant by section 133. This leaves category 2, where the fresh evidence shows that the defendant was wrongly convicted in the sense that, had the fresh evidence been available, no reasonable jury could properly have convicted; and category 3, where the fresh evidence is such that the conviction cannot be regarded as safe, but the court cannot say that no fair minded jury could properly convict if there were to be a trial which included the fresh evidence. Bearing in mind that we must form our own view as to what section 133 means, can the wording of that section on a correct understanding of article 14(6) include either or both of these categories? I have put the words fresh evidence, which of course echo the wording of section 23 of the Criminal Appeal Act 1968 (see also section 106(3) of the Criminal Procedure (Scotland) Act 1995), into inverted commas because they depart from the words of section 133. The statute, like article 14(6), refers to a new, or newly discovered fact, not to fresh evidence. And it must be a fact which shows beyond reasonable doubt, or conclusively, that there was a miscarriage of justice. Fresh evidence does not attain that status until the matter to which it relates has been proved or has been admitted to be true. Fresh evidence that justifies the conclusion referred to in category 3 will usually not be, and certainly need not be, of that character. If it shows that the conviction is merely unsafe, the court may order a retrial. Under our system of trial by jury there will be no way of knowing, beyond reasonable doubt, whether it was a new or newly discovered fact that led to the acquittal. For these reasons I would exclude category 3 from the scope of section 133. This leaves category 2. As Hughes LJ indicates in R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 2 All ER 1, para 40(iii), we are dealing here with a new or newly discovered fact that is identifiable as such by the Court of Appeal. Category 2, as described in Dyson LJs list, is of course accurate as a description of what happens according to the Court of Appeals practice. But it is too broadly framed for use as a reliable guide to what falls within the scope of section 133 read with article 14(6). It lacks the limiting factors indicated by the words new or newly discovered fact and shows conclusively. It may not be easy in practice to distinguish cases that fall within it from those that fall within category 3. So in my opinion a more precise, and more exacting, formula must be found. I am uneasy too about requiring the Secretary of State, whose function it is to administer the scheme under the statute, to apply a test which refers to what a reasonable jury would do. This is a judgment that is best left to the courts. While he will be guided by what the appellate court said when it reversed the conviction, he is entitled to look at the new or newly discovered fact for himself and draw his own conclusions as to its consequences so long as they are not in conflict with what the court has said in its judgment. This brings me back to what I said in para 94 above. For the reasons I give there I would rephrase category 2, so that it fits with the narrowly circumscribed language of article 14(6) and section 133. I would limit it to cases where the new or newly discovered fact shows conclusively that there was a miscarriage of justice because the evidence that was used to obtain the conviction was so undermined by the new or newly discovered fact that no conviction could possibly be based upon it. This would include cases where the prosecution depended on a confession statement which was later shown by a new or newly discovered fact to have been inadmissible because, as the defendant had maintained all along, it was extracted from him by improper means. It may be quite impossible to say in such a case that he was, beyond reasonable doubt, innocent. But, as the evidence against him has been completely undermined, it can be said that it has been shown beyond reasonable doubt, or conclusively, that there has been a miscarriage of justice in his case which was as great as it would have been if he had in fact been innocent, because in neither case should he have been prosecuted at all. Retrial Section 133(5A), which was inserted by section 61 of the Criminal Justice and Immigration Act 2008, changed the timetable as to when a persons conviction was to be taken to have been reversed in a case where a retrial is ordered. This amendment has to be read with the amendment which was made at the same time to section 133(2) by inserting a time limit for making an application for compensation under section 133. This is a period of two years beginning with the date when the conviction is reversed. Section 133(5A) provides that where the person is to be subject to a new trial the conviction is not to be treated as reversed unless and until the person is acquitted of all offences at the retrial or the prosecution indicates that it has decided not to proceed with the retrial. This provision introduces a feature of the statutory scheme which was not before the House in Mullen. But I do not think that it affects Lord Steyns interpretation of section 133, or the qualification which I would make to it to include cases where the prosecution should never have been brought. It is not to be taken as suggesting that compensation is payable in every case where the appellate court has ordered a new trial because it is satisfied that the conviction was unsafe in the light of fresh evidence. What it does, as it seems to me, is to allow for the possibility that something may emerge either before or during the retrial which would require compensation to be paid. Nor is it to be taken as suggesting that compensation is payable in every case, such as that of Mr George, where the person was acquitted at his retrial. The tests laid down in section 133(1) must still be applied. It is only where a new fact or a newly discovered fact shows conclusively that the person was innocent or that the prosecution should never have been brought that there will be a right to compensation. This will not be the case where a retrial has been ordered, and it may not be apparent from the jurys verdict at the retrial. The fact that it returned a verdict of not guilty will not be enough. But if new facts emerge during the retrial process that have the effect of showing conclusively that the person was innocent or that the prosecution should never have been brought they can be taken into account, even though they emerged after the date when the conviction was reversed by the Court of Appeal. New or newly discovered fact A question that is raised in Adamss case is to whom these words are addressed. His appeal was allowed by the Court of Appeal on the basis that, owing to inadequacies in the conduct of his case by his then legal team, there had been a failure by them to discover and make use at the trial of three pieces of important material which had been made available to them by the prosecution but of which Adams himself was not aware: [2007] 1 Cr App R 449, para 155. In other words, this was material that was available at the trial but not used. Could it be said that these were new or newly discovered facts? His case is that all he needed to show was that he himself was unaware of them. They were new to him because they were not revealed to him by his legal team. They did not have to be new, as the Secretary of State maintains, to everyone involved in the trial. The Divisional Court (Maurice Kay LJ and Simon J) held that the Secretary of State was right to reject Adamss claim for compensation on the ground that his conviction was not quashed because of a new or newly discovered fact: [2009] EWHC 156 (Admin). The Court of Appeal (Waller, Dyson and Lloyd LJJ) disagreed, for three reasons: [2010] QB 460, paras 14 16. First, it was difficult to accept that those who drafted the article intended to deny compensation to a person whose conviction was reversed on the basis of material which was available to his legal team and would have shown that he was innocent. Second, there was no need to interpret the phrase in a way that yielded such an extreme result. Third, the focus of the language was on the convicted person. There was no mention of his legal representatives in the article. So compensation was not to be denied to him if facts emerged that were new to him, although they were known to his legal representatives. I do not think that the language of article 14(6) bears this interpretation. It seems to me that the focus of attention is on what was known or not known to the trial court, not to the convicted person. The assumption is that the trial court did not take the fact into account because it was not known or had not been discovered at the time of the trial. If this was attributable wholly or in part to the convicted person because he deliberately chose not to reveal what he knew to his defence team compensation must be denied to him, as the coda to article 14(6) makes clear. But, leaving that point out of account, the only relevant questions are whether it was not available to the trial court because it was not known then at all or whether, although knowable, it had not been discovered by the time of the trial. Material that has been disclosed to the defence by the time of the trial cannot be said to be new or to have been newly discovered when it is taken into account at the stage of the out of time appeal. To focus on the state of mind of the convicted person goes too far. It ignores the fact that in practice the defendants legal representatives are unlikely to have discussed with him every piece of information that they come across in the course of their preparation for and conduct of the trial. I agree with Lord Judge that a fact is not new or newly discovered for the purposes of section 133 just because the defendant himself, who was previously unaware of that fact, ceases to be ignorant of it. Does denial of compensation infringe the presumption of innocence? Mr Owen submitted that a narrow interpretation of article 14(6) would conflict with the presumption of innocence in article 6(2) of the European Convention. He relied on a series of decisions by the European Court of Human Rights which show that the presumption of innocence may be violated in particular circumstances where, following an acquittal, a court or other authority expresses an opinion of continuing suspicion which amounts in substance to a determination of guilt of the person concerned: Sekanina v Austria (1993) 17 EHRR 221; Leutscher v The Netherlands (1996) 24 EHRR 181; Rushiti v Austria (2000) 33 EHRR 1331; Weixelbraun v Austria (2001) 36 EHRR 799; Orr v Norway (Application No 31283/04) (unreported) 15 May 2008; and Hammern v Norway (Application No 30287/96) (unreported) 11 February 2003. These cases, other than Orr v Norway, were examined in Mullen by Lord Bingham in para 10 and by Lord Steyn in paras 41 44. Mr Owen said that the reasons that Lord Steyn gave for finding these cases of no assistance on the question as to whether article 6(2) requires an expansive interpretation of article 3 of the Seventh Protocol or of article 14(6) of the ICCPR were correct but irrelevant. Lord Bingham on the other hand said in para 10 that they were of no assistance, since Mullens acquittal was based on matters entirely unrelated to the merits of the accusation against him. So it was open to this court to take a fresh look at the issue. As Mr Tam for the Secretary of State pointed out, article 6(2) applies according to its own terms to the criminal process. 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. In Sekanina v Austria (1993) 17 EHRR 221, para 30, for example, the court said that the voicing of suspicions regarding a persons innocence is conceivable as long as the conclusion of criminal proceedings has not resulted in a decision on the merits but that it was no longer admissible to rely on such suspicions once an acquittal has become final. That was a case where the applicant had been charged with murder and remanded in custody but was subsequently acquitted at his trial. His claim for compensation was dismissed on the ground that there were still strong suspicions regarding his guilt. The problem was that Austrian legislation and practice linked 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 seen to be regarded as a consequence and, to some extent, the concomitant of the decision on the former: para 22. The court was careful to point out in para 25, however, that the situation in that case was not comparable to that governed by article 3 of the Seventh Protocol. This distinction shows that a person might properly be refused compensation under that article, and thus under article 14(6) of the ICCPR which marches together with article 3 of the Seventh Protocol, without violating the presumption of innocence under article 6(2). The same approach was taken in Hammern v Norway (Application No 30287/96) 11 February 2003 where the conditions for obtaining compensation were linked to the issue of criminal responsibility in such a manner, by the same court sitting largely in the same formation, so as to bring the proceedings within the scope of article 6(2): para 46. A further example of this line of reasoning is provided by Y v Norway (2003) 41 EHRR 87, where the applicant was acquitted by the High Court which then went on to refuse his claim for compensation the next day on the ground that it was clearly probable that he had committed the offences with which he had been charged. So too in Orr v Norway (Application No 31283/04) 15 May 2008, where the High Court dealt with the acquittal and the payment of compensation to the complainant in two clearly distinct parts of its judgment, but in several places highlighted that the standard of proof for civil liability to pay compensation was less strict than for criminal liability: para 52. This was held in para 53 to cast doubt on the correctness of the acquittal. The principle that is applied is that it is not open to the state to undermine the effect of the acquittal. What article 14(6) does not do is forbid comments on the underlying facts of the case in subsequent proceedings of a different kind, such as a civil claim of damages, when it is necessary to find out what happened. The system that article 14(6) of the ICCPR provides does not cross the forbidden boundary. 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. As Lord Steyn pointed out in Mullen, paras 41 43, in none of the cases from Austria or Norway, nor in Leutscher v The Netherlands 24 EHRR 181, was the court called upon to consider the interaction between article 6(2) and article 3 of the Seventh Protocol. On the contrary, 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. A refusal of compensation under section 133 on the basis that the innocence of the convicted person has not been clearly demonstrated, or that it has not been shown that the proceedings should not have been brought at all, does not have the effect of undermining the acquittal. Conclusions I would dismiss the appeal by Adams on the ground that the phrase new or newly discovered fact does not encompass the material that was available to but not used at the trial by the convicted persons legal representatives. But I would add that the second limb of the test that has been attributed to Lord Bingham because of what he said in para 4 of his speech in Mullen, on which Mr Owen relied, does not meet the requirements of article 14(6). So, even if the material in question could be said to have been newly discovered, his case would not have entitled him to compensation under the statute. I would allow the appeals by McCartney and MacDermott, for the reasons given by Lord Kerr. It is not possible to say in their cases that the newly discovered facts show conclusively that they were innocent of the crimes of which they were convicted. But it is possible to say, in the light of the newly discovered facts, that these were proceedings that ought not to have been brought because the evidence against them has been so completely undermined that no conviction could possibly be based upon it. I would hold that their cases fall within the narrowly circumscribed language of article 14(6) and section 133 of the 1988 Act, and they are entitled to be compensated. LADY HALE I agree that a miscarriage of justice in section 133 of the Criminal Justice Act 1988 (see para 1 above) should be interpreted as proposed by Lord Phillips in para 55 of his judgment. The phrase is clearly capable of bearing a wider meaning than conclusive proof of innocence. Both the inspiration for section 133, in article 14(6) of the ICCPR (see para 6 above) and the meaning of miscarriage of justice in domestic law in 1988 support a wider meaning. The drafters of article 14(6) rejected all attempts to confine it to proof of innocence. In 1988, the Criminal Appeal Act 1968 permitted the Court of Appeal to dismiss an appeal if they considered that no miscarriage of justice has actually occurred (section 2(1) before its amendment by the Criminal Appeal Act 1995). This points strongly to the meaning of miscarriage of justice as the conviction of someone who ought not to have been convicted. The addition in section 133 of the requirement that this be shown beyond reasonable doubt (in substitution for conclusively in article 14(6)) indicates that this refers to someone who definitely should not have been convicted rather than to someone who might or might not have been convicted had we known then what we know now. As I understand it, Lord Phillips formulation, with which both Lord Hope and Lord Kerr agree, would limit the concept to a person who should not have been convicted because the evidence against him has been completely undermined. Unlike Lord Clarke, therefore, he would not include a person who should not have been convicted because the prosecution was an abuse of process. I agree with Lord Phillips that the object of this particular exercise is to compensate people who cannot be shown to be guilty rather than to provide some wider redress for shortcomings in the system. I do sympathise with Lord Browns palpable sense of outrage that Lord Phillips test may result in a few people who are in fact guilty receiving compensation. His approach would of course result in a few people who are in fact innocent receiving no compensation. I say a few because the numbers seeking compensation are in any event very small. But Lord Phillips approach is the more consistent with the fundamental principles upon which our criminal law has been based for centuries. 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. This is, as Viscount Sankey LC so famously put it in Woolmington v Director of Public Prosecutions [1935] AC 462, at p 481, the golden thread which is always to be seen throughout the web of the English criminal law. Only then is the state entitled to punish him. Otherwise he is not guilty, irrespective of whether he is in fact innocent. If it can be conclusively shown that the state was not entitled to punish a person, it seems to me that he should be entitled to compensation for having been punished. He does not have to prove his innocence at his trial and it seems wrong in principle that he should be required to prove his innocence now. Of course, it is not enough that the evidence supporting his conviction has been fatally undermined. This has to be because of a new or newly discovered fact. On this point, I also agree with Lord Phillips, who adopts the definition contained in section 9(6) of the Criminal Procedure Act 1993 in Ireland (see para 60). This means that the person convicted either did not know or did not appreciate the significance of the information in question. It seems difficult to make sense of the proviso to section 133(1) unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted in any other way. For these reasons, in agreement with Lord Phillips, I would dismiss Mr Adams appeal but allow the appeals of Mr MacDermott and Mr McCartney. The evidence against Mr Adams has not been so undermined that no conviction could possibly be based upon it, whereas Lord Kerr has demonstrated that this is indeed the case with Mr MacDermott and Mr McCartney. LORD KERR The appeals of Eamonn MacDermott and Raymond McCartney Introduction On 12 January 1979, after a trial by a judge, sitting without a jury at Belfast City Commission, Raymond Pius McCartney was convicted of two offences of murder and one of membership of the Irish Republican Army. The two murder victims were Geoffrey Agate and Detective Constable Liam Patrick McNulty. Mr McCartney was sentenced to life imprisonment on each of the murder counts and to five years imprisonment for the offence of membership of a proscribed organisation. On the same date and at the same court Eamonn MacDermott was convicted of various offences including the murder of Detective Constable McNulty. He was sentenced to life imprisonment for that offence and to various terms of imprisonment for the other offences. The sole evidence on which Mr McCartney and Mr MacDermott were convicted consisted of written and verbal admissions that they were said to have made during interviews by police. Both contested the admissibility of the statements, alleging that they had either been the product of ill treatment by interviewing police officers or that they had been concocted. The admissibility of the statements was considered by the trial judge after a long voire dire hearing. He rejected the allegations of the appellants and stated that he was satisfied that neither had been ill treated. The judge also considered whether to exercise his residual discretion to exclude the statements from evidence if he considered it proper to do so. He concluded that it would not be proper to do so and the statements were duly admitted. An appeal by Mr MacDermott and Mr McCartney against their convictions was dismissed by the Court of Appeal in Northern Ireland (Jones LJ, Gibson LJ and Kelly J) on 29 September 1982. Both spent several years in prison. On 18 January 2006 the Criminal Cases Review Commission referred the convictions of Mr MacDermott and Mr McCartney to the Court of Appeal. On 15 February 2007 their convictions were quashed, the Court of Appeal declaring that they had a distinct feeling of unease about their safety. Following the quashing of their convictions by the Court of Appeal, Mr McCartney and Mr MacDermott applied to the Secretary of State for Northern Ireland for compensation under section 133 of the Criminal Justice Act 1988 on the basis that they had been victims of a miscarriage of justice. The applications were refused. They then sought judicial review of that decision. The application for judicial review was rejected by Weatherup J on 25 June 2009. An appeal against that decision was dismissed by the Court of Appeal in Northern Ireland (Morgan LCJ, Girvan LJ and Coghlin LJ) on 8 February 2010. The appellants trials Mr McCartney Mr McCartneys case on trial had been that he did not make any verbal admissions and that the two written statements attributed to him had been fabricated by police officers. He claimed that he had been ill treated before each statement had been written out. He had refused to sign them but he had initialled the caution that appeared at the head of the first statement and had drawn a line and had written the words "end of statement" at the concluding part of the second statement. Mr McCartney claimed that his ill treatment began during the second of a series of interviews that took place in Castlereagh Police Office between 3 and 7 February 1977. The ill treatment continued during a number (although not all) of the succeeding interviews. Two police officers in particular were identified by him as having been the most persistent and determined perpetrators. He gave evidence that he had been told that they had been specially chosen in order to extract confessions from him. The suggestion was made by Mr McCartneys counsel that proper supervision of interviews had broken down and that a concerted campaign of abuse had been conducted in order to obtain confessions that would lead to convictions. The interviewing police officers denied that they had been guilty of any form of ill treatment. Superior officers rejected the suggestion that there had been any lack of supervision or that particular officers were chosen in order to extract confessions. It was accepted, however, that a new team of detectives had been selected to continue interviews with Mr McCartney on the second day of interviewing. This new team was chosen, according to one of the senior officers in charge of interviews, because Mr McCartney, despite having shown signs of co operation on the first evening of interviews, had evinced a less co operative attitude the following day. The detectives thus selected were those identified by Mr McCartney as his principal abusers. During the course of Mr McCartneys trial, an application was made on his behalf for leave to call three witnesses who had been arrested at the same time as he and who had been interviewed at Castlereagh Police Office during the same period. In the event, two of the witnesses gave evidence. One of these was a man called John Thomas Pius Donnelly. He had been arrested at the same time as Mr McCartney. He was interviewed about and subsequently charged with one of the murders of which Mr McCartney was later convicted. He was also charged with having caused an explosion. For reasons that will appear presently, the charges against Mr Donnelly were not proceeded with and he did not stand trial. During the trial of Mr McCartney and Mr MacDermott, Mr Donnelly gave evidence that he had been subjected to serious assaults during his interviews and had sustained significant injuries in consequence. Although the detectives who, according to Mr Donnelly, had assaulted him, Detective Constable French and Detective Constable Newell, were not those who were alleged to have ill treated Mr McCartney, they were members of the group of officers who had been conducting interviews into the murders of Mr Agate and Detective Constable McNulty. Detective Constable French had interviewed Mr MacDermott and had recorded the most significant statement of admission from him. Mr MacDermott alleged that he had been assaulted by Detective Constable French and by the officer who accompanied him, Detective Constable Dalton. This second detective had also interviewed Mr McCartney and Mr McCartney claimed to have been assaulted by him also. On 6 February 1977, after he had been interviewed for several days, two doctors carried out a joint examination of Mr Donnelly. One of them was a forensic medical officer, retained by the police. No fewer than ten areas of injury on Mr Donnellys body were recorded. Substantial bruising, particularly in the abdominal area was found. The trial judge observed that both doctors were shocked and horrified by what they found on examination. How Mr Donnellys injuries had been caused was the subject of acute controversy on trial. It was trenchantly put to him by counsel for the prosecution that some had been sustained during a series of struggles while he was being taken to and from interview rooms and that the remaining injuries were self inflicted. This was a highly significant cross examination when seen in the light of the subsequently discovered reasons that the charges against Mr Donnelly had not been proceeded with. The decision not to proceed with the prosecution of Mr Donnelly was itself highly significant for he was alleged to have made verbal and written admissions of murder and causing an explosion. The second witness, Hugh Brady, also gave evidence of having been assaulted during interviews which took place during the same period as those of Mr McCartney and Mr Donnelly. One of the detectives identified by Mr Brady as having assaulted him (Detective Constable Dalton) had also interviewed Mr McCartney and, as noted at para 126 above, Mr McCartney claimed that he too had been assaulted by this officer. Mr Brady was also found on medical examination to have multiple injuries, most notably bruising of the abdomen and a burn to his hand which he claimed had been caused by the hand being forcibly held against a hot radiator. One of the doctors who examined him, Dr Hendron, who had been retained by Mr Bradys solicitors, concluded his medical report by saying that he had no doubt that Mr Brady had been assaulted, although he conceded during cross examination at the trial of Mr McCartney and Mr MacDermott that Mr Brady may have exaggerated. Other doctors who examined Mr Brady believed that he had exaggerated and gave evidence to that effect. Mr Brady did not make admissions and was not charged with any offences. Under cross examination at the trial of Mr McCartney and Mr MacDermott it was also suggested to him that his injuries had been self inflicted. The trial judge, MacDermott J, did not find him an impressive witness for reasons that I will turn to presently. Mr McCartney was examined by two doctors, Dr Henderson, the Force medical officer and Dr Hendron, who attended at the request of Mr McCartneys solicitors. The medical examination took place shortly after the tenth interview which had ended at 5.20 pm on 6 February 1977. A linear abrasion, 1 1/4 inches long was observed in the centre of McCartney's forehead, with two further small abrasions above and below it. Dr Hendron noted that Mr McCartneys right cheek was red and puffy. Dr Henderson had no note of this but on the form used to record the findings on examination he wrote "claimed struck on face no evidence of any bruises". The mark on Mr McCartney's forehead was superficial; it was considered to have been present for a couple of days and was of a type that could be caused by a finger nail. When asked for his conclusions on the evidence, Dr Hendron stated that he had no doubt that Mr McCartney had been assaulted. Mr MacDermott Mr MacDermott had been arrested on 31 January 1977 and his interviews took place in Strand Road Police Station in Derry between the date of his arrest and 2 February. He claimed that he had been beaten before making admissions and had been abused and threatened on his way to the interview room. He also gave evidence that the principal statement of admission had been prepared by a detective officer while he, MacDermott, lay on a bed. It was claimed that his mental resolve had been so eroded by the assaults and threats that by the time the statement was being recorded, he did not care what it contained. Mr MacDermott was examined by a number of doctors, including his own father who was a general medical practitioner. No significant signs of physical injury were found. He was observed to have tenderness of the jaw and ears which, he claimed, had been areas of assault. He also exhibited signs of anxiety tension. Towards the end of the trial, the judge asked counsel for the prosecution about the charges against Donnelly. He said, Am I right in saying that the position is that he was charged and then what happened? The court was informed that no evidence was being offered? Counsel for the prosecution replied, He was never returned for trial. The charges were not proceeded with. In a lengthy judgment the trial judge found that neither Mr McCartney nor Mr MacDermott had been ill treated as they had alleged. Indeed, in relation to Mr McCartney, the judge declared that his certain conclusion [was] that the Crown has satisfied me beyond reasonable doubt that McCartney was not ill treated and in relation to Mr MacDermott that he was absolutely satisfied that he had not been ill treated in any way or threatened. The judge fully accepted the evidence of the police officers denying ill treatment at all times. In relation to Mr Donnelly, the judge said that he was satisfied that the police had not assaulted or ill treated him. Mr Brady was condemned as a dishonest and unreliable witness whose evidence the judge found did not assist in deciding whether Mr McCartney had been ill treated. Dr Hendron had expressed the strong opinion that Mr McCartney, Mr Donnelly and Mr Brady had been assaulted by police officers. MacDermott J said this about the doctors evidence: There is no doubt in my mind that Dr. Hendron believes, I am sure genuinely, that McCartney, Brady, Donnelly and others have been ill treated at Castlereagh, and such a conclusion could be reached by anyone who is prepared to form a conclusion after hearing only what might be described as one side of the case. To my mind, Dr. Hendron's evidence throughout was coloured by this belief and lacked the professional objectivity displayed later by other doctors Robert Barclay On 2 January 1977 Robert Barclay was arrested and taken to Omagh Police Station where he was interviewed over a number of days by Detective Constables French and Newell (the same officers who had interviewed Mr Donnelly approximately one month later). Mr Barclay was said to have made admissions during these interviews. He also complained of ill treatment at the hands of both detective officers. He alleged that they assaulted him by slapping him and punching him and that they had threatened him. On 2 December 1977, after a trial in which he gave evidence that he had been assaulted by the officers, Mr Barclay was convicted on foot of the admissions that he had made during interview. He appealed his convictions. A solicitor had given evidence on his trial that when he saw Mr Barclay in court on 4 January he had a black eye. Two doctors who had examined him while he was at Omagh Police Station found signs of injury. On 12 April 1978, the then Lord Chief Justice of Northern Ireland, Lord Lowry, delivering the judgment of the Court of Appeal, quashed the convictions. Although no written judgment appears to have been given, Lord Lowry was recorded as having said: It is not possible to exclude the conclusion that the injuries found on the accused were inflicted at Omagh Police Station and this renders inadmissible any statement made by him. Subsequently, Mr Barclay brought a private prosecution against Detective Constable French and Detective Constable Newell. In his judgment, which was delivered on 25 April 1979, the trial judge in that case accepted that there was a strong prima facie case that Mr Barclay had been assaulted. He said that Mr Barclay had undoubtedly sustained injuries in Omagh Police Station. He referred, however, to Mr Barclays admission that, on other occasions quite unconnected with the proceedings against the police officers, he had been dishonest. Also, on certain matters relating to his interviews by the detectives (such as, for instance, which of them had taken the notes of the interview) Mr Barclay was found by the judge to have been inaccurate. But the medical evidence that was called on the prosecution of the police officers was found to be consistent with Mr Barclays allegations. The judge said, however, that he could not be certain that the injuries had occurred at the time that Mr Barclay alleged they had been inflicted. The effect of the evidence made it unlikely that they were self inflicted but this was a possibility in the estimation of the judge. Therefore, on the basis that there was a reasonable doubt as to their guilt, he considered that he was left with no alternative but to acquit the officers. Although the private prosecution of Detective Constables French and Newell took place after the trial of Mr McCartney and Mr MacDermott, Mr Barclays appeal against his convictions had succeeded before their trial began. Their trial commenced on 18 September 1978. Of course, no reference to Mr Barclays successful appeal was made during the trial of Mr McCartney and Mr MacDermott. There is no reason to believe that anything was known of that by those involved in their trial. On the contrary, the fact that such a relevant circumstance was not referred to is a clear indication that nothing was known about it. The reasons that the prosecution of John Donnelly did not proceed In a memorandum of 29 June 1977, Mr Roy Junkin, then an assistant director in the Department of the Director of Public Prosecutions, considered the prospects of success for the prosecution of Mr Donnelly. He concluded that a court would not accept that the statement of admission made by Mr Donnelly was voluntary. He therefore recommended that the prosecution should not proceed. That recommendation was accepted by Mr Junkins superior, Mr George McLaughlin, to whom the memorandum had been addressed and a direction of no prosecution was duly issued. Mr Donnelly was interviewed about his complaint of ill treatment after being informed that the prosecution against him was not to proceed. Following the interview, Mr Junkin considered the papers again. In a further memorandum to Mr McLaughlin dated 6 October 1977, Mr Junkin reviewed all the evidence including that obtained from Mr Donnelly during the interview about his complaint. He stated that he had no doubt that Donnelly was assaulted whilst in police custody at Castlereagh. The only detective identified by Mr Donnelly was Detective Constable Newell. He had claimed that this was the only police officer who had disclosed his name. Since this police officer had interviewed Mr Donnelly with Detective Constable French and since Mr Donnelly had said that both Detective Constable Newell and the other officer present had assaulted him, Mr Junkin recommended that both be prosecuted for assault. In his response to Mr Junkins recommendation, Mr McLaughlin, in a memorandum dated 10 March 1978 (6 months before the trial of Mr McCartney and Mr MacDermott began), agreed that there was no doubt that Mr Donnelly had been assaulted while in custody at Castlereagh. But Mr McLaughlin concluded that not all of Mr Donnellys complaints were supported by findings on medical examination. He also considered that because 8 or 9 other police officers had interviewed Mr Donnelly the prosecution would not be able to establish that any particular injury had been inflicted by Detective Constables Newell and French. He therefore declined to accept Mr Junkins recommendation that the officers be prosecuted. The quashing of the appellants convictions On the hearing before the Court of Appeal of the reference by CCRC, Ms McDermott QC, appearing on behalf of Mr McCartney, submitted that if counsel for the prosecution had known the reason that the prosecution of Donnelly had been discontinued, he would not have put to him in cross examination that his injuries were self inflicted. This submission does not appear to have been countered by counsel who appeared for the Crown on the hearing of the reference and it does not feature in the conclusions expressed by the Court of Appeal in its judgment on the reference. At the same hearing, counsel for the appellant Mr MacDermott drew attention to what he suggested was a striking similarity between the manner in which, on Mr Donnellys account, a statement was taken from him by Detective Constable French and the way in which, according to Mr MacDermott, the most important statement of admission had been recorded from him by the same police officer. Generally, it was submitted that if the trial judge had been aware of the reasons that Mr Donnelly had not been prosecuted (viz that an assistant director in the office of the DPP and a senior assistant director considered that he had certainly been assaulted by police officers) he would not have admitted the confession statements. It was suggested that the judge would have formed a more favourable view of the evidence of Mr Donnelly and Mr Brady and would have considered that the police officers credibility was wholly undermined. The Court of Appeal gave its decision on these arguments in the final paragraph of its judgment as follows: We cannot rule out the possibility that the evidence of the police officers may have been discredited by evidence that is now available. The admission in evidence of MacDermott's confessions depended upon the acceptance by the judge of the evidence of DC French. If the judge had known of the finding of a prima facie case in the prosecution brought by Mr Barclay against DC French he may well have reached a different conclusion. To this is to be added the striking similarity between the description given by Donnelly and MacDermott as to the manner in which their admissions were recorded. If the allegations by Donnelly had been supported and strengthened by the new evidence this could have served also to discredit the evidence given by the police officers in McCartney's case. In both cases we are left with a distinct feeling of unease about the safety of their convictions based as they were on admissions and the convictions must therefore be quashed. The challenge to the refusal of compensation On 7 November 2007 a letter in the following terms was sent to Mr McCartneys solicitors in response to the application that they had made on his behalf for compensation under section 133 of the 1988 Act: The Secretary of State has not yet reached a decision about the application; before he does so I would like to give you the opportunity to comment in writing on the views set out below. Under section 133 compensation is payable to an applicant where 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. Mr McCartneys convictions were, we believe, reversed within the meaning of section 133, by the decision of the Court of Appeal on 15 February 2007. We also tend to the view that this reversal was based on a new or newly discovered fact. However, in light of the available case law on these matters, we believe that your client has so far failed to establish that a new or newly discovered fact has shown beyond reasonable doubt that there has been a miscarriage of justice either on the basis that your client is demonstrably innocent or on the basis of a failure of the trial process. Further representations were made on behalf of Mr McCartney. Rejecting these, a letter dated 16 May 2008 sent on behalf of the Secretary of State, communicated his decision that Mr McCartney was not eligible under section 133. It contained the following passage: The reasons for that decision are those as previously set out in my letter of 7 November. In your further representations you made two main points. Firstly, you suggest that there was a comprehensive failure to disclose material critical to Mr McCartney's defence. The Secretary of State does not consider that anything went wrong with the investigation of the offence or in the conduct of the trial so as to result in a failure of the trial process. Secondly, you suggest that the tape of the appeal should be listened to. It is the written judgment of the CoA that sets out the basis for the decision that a conviction was unsafe and therefore the basis on which the Secretary of State decides if the conditions for statutory compensation are fulfilled. Similar letters were sent to solicitors acting for Mr MacDermott. These solicitors also made further representations and on 17 November 2008 a final responding letter was sent in which the following appeared: We have now considered the other points you put to us on 1 August in relation to the Boyle case [In re Boyles Application [2008] NICA 35]. The majority of the Court of Appeal in that case posed the test of whether the claimant should not have been convicted. We do not believe that the terms of the Court of Appeal's judgment in your client's appeal mean that he should not have been convicted. Therefore, the Boyle case does not alter the Secretary of State's decision that your client is not entitled to compensation. Both appellants sought judicial review of the Secretary of States decision. These applications were dismissed by Weatherup J, although it is clear that he felt that they might have succeeded if he had felt able to apply the test which, he considered, had been propounded by Lord Bingham in R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18, [2005] 1 AC 1. Weatherup J considered that there were two types of new or newly discovered fact (necessary as a prerequisite for eligibility under section 133, as explained by Lord Hope in paras 79 and 81 of his judgment). The first was the evidence that it had been accepted by the assistant director and the senior assistant director in the DPPs office that Mr Donnelly had been assaulted and that this would have tended to throw doubt on the credibility of the police witnesses. The second type was described by the judge in paras 23 and 24 of his judgment: 23another part of the new evidence relating to the prosecution of Donnelly concerned the manner in which his evidence was dealt with at the trial. When Donnelly was called as a defence witness, counsel for the DPP, rather than proceeding on the position of the DPP officials dealing with the prosecution of Donnelly, adopted and put to Donnelly in cross examination the police approach rejected by those officials, namely that Donnelly had received injuries after an attack on police officers and that some injuries were also self inflicted. Further, when the trial judge was considering the evidence of Donnelly, he asked counsel for the DPP about the absence of a prosecution of Donnelly and a complete reply was not furnished. It is important to note that this was a non jury Diplock trial. It is apparent that the tria1 Judge was inviting counsel to disclose, as delicately as the situation demanded, whether there was a reason for the decision not to prosecute that related to matters other than the alleged ill treatment of Donnelly, in respect of which the answer of counsel implied that there was. The trial judge was not told that the DPP had concluded that Donnelly had been ill treated, that his confession was not to be considered as being voluntary and there was no other evidence against him. There is no suggestion that counsel in the applicants trial had been made aware of the DPP position relating to the prosecution of Donnelly. Had counsel for the DPP been aware of the DPPs approach to the prosecution of Donnelly two aspects of the trial would have been different. First of all, the cross examination of Donnelly would have taken a different course and counsel would not have put to Donnelly that his injuries had been occasioned by defensive action by the police and by his own hand. Secondly, the submission of counsel for the DPP in relation to the prosecution of Donnelly would not have rested on the bald assertion that the prosecution was not proceeded with but should have indicated the basis of the DPP decision. 24 Thus the issue of the treatment of the Donnelly evidence is not directly a matter about the credibility of the evidence given by the police officers, nor is it directly a matter about withholding disclosure from the defence. Rather it is a matter about the conduct of the prosecution in relation to the evidence of a witness who was central to the defence challenge to the voluntariness of the admissions on which the applicants were convicted. In light of the above discussion of the Donnelly evidence there is a basis for concluding that something had gone seriously wrong with the conduct of the trial. This is a matter that is capable of satisfying the wider interpretation of miscarriage of justice expounded by Lord Bingham. It is evident from these passages that Weatherup J considered that it would have been quite wrong for prosecuting counsel, had he known of the reasons that Mr Donnelly had not been prosecuted, to pursue the line of questioning that he did. On the hearing of the appeal before this court Mr Maguire QC, who appeared on behalf of the Secretary of State for Northern Ireland, was unable to confirm that Crown counsel was unaware of the reasons that the prosecution of Mr Donnelly was not pursued but I share Weatherup Js view that this is the only possible explanation for his having cross examined Mr Donnelly as he did. Mr Junkin and Mr McLaughlin had concluded that Mr Donnelly had been assaulted by police officers. If that view (which was the product of extensive consideration of all the relevant material) had been communicated to prosecuting counsel, it would have been improper for him to advance a case which was quite at odds with the conclusion that had been reached by two experienced officers in the department of the Director of Public Prosecutions. At a more fundamental level, however, it was not open to the prosecuting authority to adopt a different stance in relation to Mr Donnellys evidence according to the context in which it was being considered or, as Lord Rodger so pertinently put it during argument, to face both ways. The decision not to prosecute Mr Donnelly on a charge of murder and one of causing an explosion when, according to police evidence, he had voluntarily admitted to both was a momentous one. It is unsurprising that Mr Junkin and Mr McLaughlin only felt able to take that course because they were convinced that he had been assaulted by police officers. It is simply incompatible with the prosecutions duty of fairness for a different position to be taken thereafter as to the manner in which Mr Donnellys injuries were caused unless there was fresh evidence that warranted a different view. In this instance there was no such evidence. Weatherup J was therefore perfectly right when he said that something had gone seriously wrong with the conduct of the trial. Crown counsel ought to have been aware of the DPPs position on this and, if he had been, cross examination of Mr Donnelly challenging his account of how he sustained his injuries would not have taken place. Although Weatherup J concluded that the circumstances of the reversal of the appellants convictions were capable of satisfying the test that Lord Bingham had propounded for eligibility for compensation under section 133, he felt bound to follow more recent authority in England and Wales, particularly R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 1 Cr App R 36 which had expressed a clear preference for the test advocated by Lord Steyn in Mullen. The appellants appeal against the decision of Weatherup J was dismissed by the Court of Appeal. That court did not share Weatherup Js view that the circumstances revealed by the judgment which had quashed the appellants convictions were sufficient to satisfy Lord Binghams formulation of the correct test. The conclusions of the court are contained in para 15 of the judgment of the Lord Chief Justice: In the second category of cases it is necessary to demonstrate that something has gone seriously wrong in the conduct of the trial resulting in the conviction of someone who should not have been convicted. In this case the new facts upon which the appellants rely raise issues about the credibility of one police officer and one other witness. It is not possible to come to any conclusion as to whether the new facts would have led to a different outcome in respect of the assessment of either witness. The new evidence was sufficient to give rise to unease about the safety of the conviction but this is a case in which at its height it can only be said that the appellants might not have been convicted. Such a case lies outside either of the categories identified by Lord Bingham. That is also the reasoning of the decision in Boyles Application [2008] NICA 35 by which we are bound. Should the appellants have been acquitted? In re Boyles Application [2008] NICA 35 was an appeal in which the appellant claimed entitlement to compensation under section 133 and the ex gratia scheme which was then still extant. Some years after the appellants conviction a note taken of one of a series of interviews had been shown by electrostatic detection apparatus (ESDA) testing techniques to have been made at a time other than that claimed by police officers. Another version of the note for that single interview existed, contrary to the denials of the interviewing police officers. The differences were not substantial and nothing which was inculpatory of the appellant had been written in to the version of the notes that had been presented to the court and which the police officers claimed was the only note of the interview. Nevertheless, because the police officers had firmly denied that a different version had been prepared and because that had been shown to be incorrect, it was considered that doubt had been thrown on their credibility and the appellants conviction could not be regarded as safe. In dismissing Mr Boyles appeal against the finding that he was not eligible to apply for compensation under section 133, the Court of Appeal said at para 22: it is impossible for the appellant to assert that he should not have been convicted. One can certainly say that the police officers should not have given the evidence that they did. One may even say with confidence that the trial judge is bound to have taken an entirely different view of their credibility from the extremely favourable impression that he appears to have formed. But it is impossible to conclude that the appellant would not have been found guilty (much less that he should have been acquitted) if evidence of the other version of the interview notes had been given. The circumstances in the Boyle case were obviously and markedly different from those that arise in the present appeals of Mr McCartney and Mr MacDermott. The most that could be said in Boyle was that the newly discovered fact (that there was a different version of the notes of a single interview) cast doubt on the credibility of the police officers who asserted to the contrary. By contrast, although the Court of Appeal which quashed Mr McCartneys and Mr MacDermotts convictions expressed itself in a restrained fashion, there is simply no doubt that these appellants ought not to have been convicted. For the reasons that I have given, it was not open to prosecuting counsel to challenge Mr Donnellys account that he had been assaulted by police officers. I am satisfied that he would not have done so if he had been aware of the true circumstances in which the decision not to continue with the prosecution of Mr Donnelly had been taken. Mr Donnellys evidence that he had been assaulted would therefore have been received without challenge. That evidence, if uncontradicted, is bound to have changed the entire course of the trial. It could not have done less than establish the reasonable possibility that Detective Constable French had assaulted Mr Donnelly and that he had recorded a statement purporting to come from him but which was not given at Mr Donnellys dictation. When those inevitable findings were brought to bear on Mr MacDermotts case they could not have done other than create a doubt as to the voluntariness of his admissions. Section 8(2) of the Northern Ireland (Emergency Provisions) Act 1978 was in force at the date of the trial. It provided: If, in any such proceedings [ie criminal proceedings for a scheduled offence] where the prosecution proposes to give in evidence a statement made by the accused, prima facie evidence is adduced that the accused was subjected to torture or to inhuman or degrading treatment in order to induce him to make the statement, the court shall, unless the prosecution satisfies it that the statement was not so obtained (a) exclude the statement, or (b) if the statement has been received in evidence, either (i) continue the trial disregarding the statement; or (ii) direct that the trial shall be restarted before a differently constituted court (before which the statement in question shall be inadmissible). The trial judge had reminded himself of this provision at the beginning of his judgment. He said that the appellants had raised a prima facie case as required by the section and that, in those circumstances, the burden passes to the Crown to satisfy me beyond reasonable doubt that the statement, whose admissibility is challenged, was not obtained by ill treatment. In other words, a prima facie case of ill treatment having been established the burden rests squarely on the Crown of satisfying me (and by that I mean satisfying me beyond reasonable doubt) that the accused was not ill treated. In making these observations the trial judge was reflecting the well known statement of the law in this area provided by Lowry LCJ in R v Hetherington [1975] NI 164, 168 where he said: It is not for the defence to prove but for the prosecution to disprove beyond reasonable doubt in relation to each accused that he was not subject even to any degrading treatment in order to induce him to make a statement on which the Crown rely, the decision under section 6(2) [the precursor of section 8(2) of the 1978 Act] must be based solely on how the statement is proved to have been obtained and not on whether it was true. The prosecution would therefore have had to prove beyond reasonable doubt that the statements made by Mr McCartney and Mr MacDermott had not been obtained by any degrading treatment whatever. It can now be seen that this would have been an impossible task had the full facts and circumstances come to light. A person detained at the same time as Mr McCartney had been assaulted while in Castlereagh Police Office during the same period; the police officers who carried out the assaults on Mr Donnelly were part of the group of officers who were investigating the murders with which Mr McCartney was charged; one of the officers who had assaulted Mr Donnelly had been accused by Mr MacDermott of assaulting him; and the other officer who, according to Mr MacDermott, had assaulted him, had also interviewed Mr McCartney and had been accused of assault by him. Quite apart from these considerations, two further factors of substantial importance must be taken into account. Firstly, by the time that Mr McCartney and Mr MacDermott stood trial, Mr Barclays conviction, based on statements of admission allegedly obtained by Detective Constable French and Detective Constable Newell on interview, had been quashed. If the trial judge had been aware that this conviction had been quashed because the possibility that Mr Barclay had been assaulted by these two officers could not be excluded (which was the necessary implication from the finding of the Court of Appeal) he could not have concluded with the same firmness that he did that Detective Constable French had not engaged in ill treatment of Mr MacDermott. Secondly, once it was established, even as a reasonable possibility, that Mr Donnelly had been assaulted, the judges view of Dr Hendrons evidence could not have remained as he had expressed it in his judgment. Dr Hendron had stated unequivocally that he was convinced that Mr McCartney, Mr Donnelly and Mr Brady had been assaulted. The judge found that this opinion was sincerely held but that Dr Hendrons evidence was coloured by his conviction that the men had been attacked and on that account his testimony lacked professional objectivity. If it had become known that the doctors view about Mr Donnelly was shared by an assistant director and a senior assistant director in the department of the Director of Public Prosecutions, it is not likely that his opinion would have been dismissed in the manner that it was by the trial judge. The combined effect of all these factors makes it inevitable, in my opinion, that, had the judge been fully acquainted with all the material information about the reasons for the decision not to continue the prosecution of Mr Donnelly and the circumstances of the quashing of Mr Barclays convictions, he would not have convicted the appellants. Should the appellants have been prosecuted? Not only should the appellants have been acquitted, in my opinion they should not have been put to their trial. If prosecuting counsel had become aware of the shadow that necessarily fell on Detective Constable Frenchs evidence by the decision not to proceed with the prosecution of Mr Donnelly and by the quashing of Mr Barclays conviction, it is, in my view, inevitable that he could not have proffered this officer as a witness of truth on the issue of whether Mr MacDermott had been ill treated. Moreover, the conclusion of Mr Junkin and Mr McLaughlin that Mr Donnelly had been assaulted cast significant doubt on the evidence of the entire interviewing team. Although Mr McLaughlin considered that there was insufficient evidence to charge Detective Constables French and Newell, he was of the clear view that Mr Donnelly had been physically attacked by some police officers. It was therefore the case that the office of the Director of Public Prosecutions had determined that some officers within the team that conducted interviews of Mr Donnelly, Mr Brady and Mr McCartney had been guilty of assault on Mr Donnelly. Mr Brady alleged that he had been assaulted in much the same manner as Mr Donnelly had been. Despite this, he had not made admissions. He had no personal advantage to gain by fabricating his account of the attacks on him. The trial judge found, however, that he was prepared to do so in order to help a friend (Mr McCartney) and because of his animus towards the police. I cannot believe that the judge would have reached that view if he had known that the DPP had concluded that Mr Donnelly had been assaulted and that Mr Barclays conviction had been quashed because of the reasonable possibility that two members of the same interviewing team had also assaulted him. Likewise, I cannot believe that if experienced Crown counsel had been aware of these matters he would have done other than advise that the prosecution of Mr McCartney and Mr MacDermott should not proceed. That prosecution was only viable if there was a realistic prospect of the Crown establishing beyond reasonable doubt that Mr McCartney and Mr MacDermott had not been ill treated. Any objective assessment of all the circumstances as they are now known was bound to have resulted in the conclusion that there was no such prospect. In reaching this view I intend no criticism whatever of counsel who, for the reasons that I have given, must have been wholly unaware of why it had been decided not to prosecute Mr Donnelly. He must also have been ignorant of the fact that Mr Barclays conviction had been quashed and of the circumstances in which that had occurred. A fortiori, no criticism of the trial judge is warranted. On the contrary, he made what in retrospect was an astute and pertinent inquiry as to why Mr Donnelly had not been prosecuted and was not given the information which, if it had been provided, would certainly have led to a completely different outcome. While it might be said that the assistant director and the senior assistant director in the department of the Director of Public Prosecutions ought to have been alive to the impact that their conclusion about the assaults on Mr Donnelly was bound to have on the propriety of proceeding with the prosecution of Mr McCartney and Mr MacDermott, there is no reason to suppose that they were aware of the quashing of Mr Barclays convictions or of the evidence of Mr Brady. Neither is discussed in the exchange of memoranda between Mr Junkin and Mr McLaughlin. These are matters which have played a significant part in leading me to the conclusion that the prosecution of Mr McCartney and Mr MacDermott ought not to have taken place. In deciding that the appellants ought not to have been convicted and, indeed, ought not to have been required to stand trial, I have gone beyond the findings of the Court of Appeal which quashed their convictions. On one reading, the letter of 16 May 2008 sent on behalf of the Secretary of State suggests that the judgment of the Court of Appeal provides the exclusive basis on which the Secretary of State decides if the conditions for statutory compensation are fulfilled. And much was made in the course of argument of an answer given by Earl Ferrers in the course of the passage through the House of Lords of the Bill which ultimately became the 1988 Act. Earl Ferrers answer was to the effect that the Secretary of State would regard the Court of Appeals view as to whether there had been a miscarriage of justice as binding. In my opinion, the decision as to whether the statutory conditions have been fulfilled is one for the Secretary of State to make and he may not relinquish that decision to the Court of Appeal. True, of course, it is that the material on which the decision is taken will derive in most cases from the judgment of the Court of Appeal. True it also is that it would not be appropriate for the Secretary of State to depart from the reasoning that underlies that judgment unless for good reason it is shown to be erroneous but the Secretary of State must make his own decision based on all relevant information touching on the question whether there has been a miscarriage of justice. In the present appeals, Weatherup J considered that it was open to him to examine the question whether there had been a miscarriage of justice not merely by reference to what the Court of Appeal had said but by taking into account the circumstances revealed by its judgment. At para 20 of his judgment he said: Counsel for the respondent contends that there is nothing in the judgment of the Court of Appeal indicating that the applicants should not have been convicted. It should not be expected that a Court of Appeal will state in terms that an appellant should not have been convicted. The approach of the Court of Appeal on an appeal against conviction is concerned with whether that conviction is unsafe. In taking the cue from the Court of Appeal in determining a successful appellants entitlement to compensation it is necessary to have regard to the circumstances set out in the judgment of the Court of Appeal as well as the wording adopted in the judgment in relation to the position of the appellant. I agree with these observations and they appear, implicitly at least, to have been approved by the Court of Appeal. As Weatherup J stated, the task of the Court of Appeal is not to decide whether the appellant should have been convicted, much less to determine whether the appellant is innocent. It is to decide whether the conviction is safe. The decision whether there has been a miscarriage of justice (whatever meaning is to be given to that phrase) of necessity takes place on a different basis and on foot of consideration of issues beyond those which sound only on whether the conviction is safe. Section 133 As Lord Hope has said, it has been possible until now for courts to avoid a final resolution of the question of what is required in order to establish entitlement to compensation under section 133 of the 1988 Act. Must a person whose conviction has been reversed as the result of a new or newly discovered fact show that he was innocent (Lord Steyns view in Mullen) or can eligibility arise in somewhat wider circumstances (Lord Binghams provisional opinion)? These appeals require this court to confront that debate and to resolve that conflict. For the reasons given by Lord Hope and Lord Clarke, with which I agree, the analysis of Lord Bingham in Mullen as to the possible scope of section 133 is to be preferred to that of Lord Steyn. I cannot accept that the section imposes a requirement to prove innocence. In the first place, not only does such a requirement involve an exercise that is alien to our system of criminal justice, that system of justice does not provide a forum in which assertion of innocence may be advanced. An appeal against conviction heard by the Court of Appeal Criminal Division is statutorily required to focus on the question whether the conviction under challenge is safe. In a number of cases, evidence may emerge which conclusively demonstrates that the appellant was wholly innocent of the crime of which he or she was convicted but that will inevitably be incidental to the primary purpose of the appeal. The Court of Appeal has no function or power to make a pronouncement of innocence. It may observe that the effect of the material considered in the course of the appeal is demonstrative of innocence but it has no statutory function to make a finding to that effect: R v McIlkenny (1991) 93 Cr App R 287. It is therefore not surprising that in New Zealand when the Law Commission proposed that a prerequisite of establishing entitlement to compensation for a wrongful conviction was proof of innocence, it was careful to recommend that a tribunal be set up in which that issue could be frankly addressed and confidently determined: see New Zealand Law Commission Report No 49 (1988) Compensating the Wrongly Convicted paras 124 127 and 136 137. In Canada in 1988 Federal/Provincial Guidelines on Compensation for Wrongly Convicted and Imprisoned Persons likewise required that there be proof of innocence in order to qualify under the ex gratia scheme operated there. In the case of Dumont v Canada (Communication 1467/2006, 21 May 2010) the UN Human Rights Committee held that the failure of the state authorities to establish a procedure for conducting an investigation to examine whether the applicant was innocent and to possibly identify the real perpetrator constituted a breach of article 2(3) of ICCPR read in conjunction with article 14(6). Article 2(3)(a) requires that state authorities provide an effective remedy in the form of access to a procedure in which adequate compensation can be claimed. The respondents in this case rely on the experience in New Zealand and Canada in support of their argument that a miscarriage of justice within the meaning of article 14(6) of the Covenant occurs only when the convicted person is in fact innocent of the offence with which he is charged. The Human Rights Committee in Dumont, while recording the states submission to that effect, reached its decision without adjudicating on it. The New Zealand Law Commissions report does not suggest that article 14(6) must be given that meaning. On the contrary para 71 of the report states that article 14(6) while an important normative statement by the international community and a reference point for domestic compensation schemes was not relied on as a model for the Commissions recommended scheme. There was no unanimity as to the meaning to be given to miscarriage of justice among the delegates who were involved in the negotiations which led to the adoption of ICCPR: see para 9(2) of Lord Binghams speech in Mullen. As he observed, it is possible that the expression commended itself because of the latitude in interpretation which it offered. Or, as the New Zealand Law Commission put it, it is a normative statement which provides a general template for domestic provisions in the subscribing states which can vary as to content. Certainly, while the travaux prparatoires may be regarded as neutral on the meaning of the expression, it is unquestionably clear from these that every proposal that its ambit should be confined to compensating those whose innocence was established was roundly defeated. Against that background, it would be a surprising conclusion that article 14(6) had the very effect that a majority of delegates clearly did not intend. The twin theses on which Lord Steyn relied to support his conclusion that proof of innocence was required in order to establish entitlement to compensation under section 133 have been subject to scrupulous examination in paras 93 and 94 of Lord Hopes judgment. For the reasons that appear there, with which I fully agree, these arguments can no longer be regarded as sound. I also agree with Lord Clarkes reasons for rejecting Lord Steyns formulation of the test. As Lord Clarke has pointed out, if Parliament had intended that a proof of innocence test was to be preferred, that could surely have been easily prescribed. The debate as to whether such a test was appropriate had been extensively referred to in the travaux prparatoires and it is to be presumed that Parliament was aware of this when it came to enact section 133. Confining the application of the section to those who could show that they were innocent was, in any event, a perfectly obvious option. The failure to articulate that test in the legislation can only be explained on the basis that Parliament decided not to choose that option. This conclusion is fortified by the consideration that the expression miscarriage of justice, although its meaning may vary according to context, is a very familiar one in our system of law. In no other context has it been used to connote proof of innocence. I am therefore satisfied that proof of innocence cannot be the criterion on which entitlement to compensation under section 133 is to be determined. Rejection of this hypothesis brings with it the need to determine how miscarriage of justice is to be interpreted. As Lord Hope has said, a fresh analysis is required and for the reasons that he gives the answer is not necessarily provided by the speech of Lord Bingham in Mullen. The use of the word conclusively in article 14(6) of ICCPR and the expression beyond reasonable doubt lends support to the view that the section does not contemplate that all whose convictions have been quashed and who satisfy the other requirements of the section will be entitled to compensation. On this there is no dispute between the parties to these appeals. Lord Hope has proposed that the section should be interpreted as targeting those cases where, as a consequence of the state of affairs revealed by the new or newly discovered fact, it can be concluded that no prosecution ought to have taken place. Lord Clarke prefers to define the category of eligibility as extending to those cases where the new or newly discovered fact leads inexorably to the conclusion that no jury, properly directed, would have convicted. As a matter of practical experience, there may be little difference as to which of these tests should be applied. But it is important that, if possible, clear guidance be given by this court as to the circumstances in which the section should be held to apply. Lord Hope has pointed out that requiring the Secretary of State to apply a test which refers to what a reasonable jury would do is not appropriate since this is a matter best left to the courts. Lord Clarke, on the other hand, suggests that a test which requires the Secretary of State to focus on whether the claimant should never have been prosecuted runs the risk of the inquiry wrongly focusing on the propriety of the decision to prosecute by reference to the circumstances that obtained when the decision was taken. There is substance in both concerns. I believe that a simple test can cater for these concerns and will also faithfully reflect the intention of article 14 (6) and section 133 that only truly deserving applicants should be included in the compensatory scheme. The test which I would have proposed was: whether, on the facts as they now stand revealed, it can be concluded beyond reasonable doubt that the applicant should not have been convicted. Lord Phillips has suggested that the test should be worded in the following way: the new fact shows that a miscarriage of justice has occurred when it so undermines the evidence against the defendant that no conviction could possibly be based upon it. This appears to me to achieve the same result as the test which I would have proposed and I am therefore quite content to subscribe to his formulation. The proper application of either test ties entitlement to compensation firmly to the true factual situation. Procedural deficiencies that led to irregularities in the trial or errors in the investigation of offences will not suffice to establish entitlement to compensation. A claimant for compensation will not need to prove that he was innocent of the crime but he will have to show that, on the basis of the facts as they are now known, he should not have been convicted or that conviction could not possibly be based on those facts. Of course, if innocence can be proved, the test, on either formulation, will be amply satisfied. The adoption of a single, simple test dispenses with the need to consider possible categories of entitlement which, I believe, tends more to confuse than to enlighten. As it happens, although it is possible to construct from Lord Binghams observations a fourth category of case beyond the three that were identified by Toulson LJ in giving permission to appeal in the Adams case, I do not believe that Lord Bingham intended that this be considered a freestanding category. New or newly discovered fact I find myself in complete agreement with the reasoning of Dyson LJ on this issue in the judgment of the Court of Appeal in Adams [2010] QB 460, paras 14 16 and with what Lord Phillips has had to say on the matter in paras 59 63 of his judgment. The newly discovered limb of the requirement clearly, to my mind, connotes discovery by the party who prays it in aid to demonstrate that he should not have been convicted. It would be wholly anomalous, as Dyson LJ has pointed out, that a person whose innocence can be conclusively proved, should be deprived of compensation simply because his lawyers failed to communicate the vital information or failed to grasp its significance. Does denial of compensation infringe the presumption of innocence? Lord Hope has dealt comprehensively with the arguments made by the appellants on this issue in paras 108 to 111 of his judgment. I agree with his reasons for rejecting the arguments. There is nothing further that I could usefully say on the topic. Conclusions I would allow the appeals of Mr McCartney and Mr MacDermott. For the reasons that I have given, I am satisfied that, on the facts as they are now known, they should not have been convicted. As it happens, I am also satisfied that they ought not to have been prosecuted and their cases therefore fulfil the requirement that Lord Hope has formulated. Clearly they also satisfy the test preferred by Lord Clarke of being cases in which no reasonable jury, properly directed, could convict. Like Lord Phillips and Lord Hope I consider that both are entitled to be compensated under section 133. Although I would hold that the material on which Mr Adams relied constituted a newly discovered fact, I do not consider that he has demonstrated that, on the facts as they now stand revealed, it can be concluded beyond reasonable doubt that he should not have been convicted. I would dismiss his appeal. LORD CLARKE Introduction I gratefully adopt Lord Hopes description of the background to the introduction of the statutory right to compensation for miscarriages for justice in section 133 of the Criminal Justice Act 1988 in the light of article 14(6) of the ICCPR. He has set out the relevant provisions of section 133 and article 14(6). I shall not therefore repeat them. The principal issues for decision in this appeal are the meaning of the expressions miscarriage of justice and new or newly discovered fact in those provisions. Miscarriage of justice The meaning of this expression has been considered in a number of cases as described by Lord Hope. I agree with him that it is helpful to consider its meaning in the present context by reference to the categories identified by Toulson LJ when giving permission to appeal to the Court of Appeal in the Adams appeal which are described by Dyson LJ [2010] QB 460, at para 19 of his judgment which is quoted in full by Lord Hope. Dyson LJ described the categories of case thus: A category 1 case is where the court is sure that the defendant is innocent of the crime of which he has been convicted. An obvious example is where DNA evidence, not obtainable at the time of trial, shows beyond doubt that the defendant was not guilty of the offence. A category 2 case is where the fresh evidence shows that he was wrongly convicted in the sense that, had the fresh evidence been available at the trial, no reasonable jury could properly have convicted. An example is where the prosecution case rested entirely on the evidence of a witness who was put forward as a witness of truth and fresh evidence undermines the creditworthiness of that witness, so that no fair minded jury could properly have convicted on the evidence of that witness. It does not follow in a category 2 case that the defendant was innocent. A category 3 case is where the fresh evidence is such that the conviction cannot be regarded as safe, but the court cannot say that no fair minded jury could properly convict if there were to be a trial which included the fresh evidence. The court concludes that a fair minded jury might convict or it might acquit. There is a fourth category of case to which Lord Bingham referred in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1. This is where a conviction is quashed because 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. The respondents say that there is only a miscarriage of justice within the meaning of article 14(6) and section 133 in a category 1 case. They say that the provision that the new or newly discovered fact must show conclusively (in article 14(6)) or beyond reasonable doubt (in section 133(1)) that there has been a miscarriage of justice points to the conclusion that it is only where the claimant can prove his innocence that there has been a miscarriage of justice. The appellants say, by contrast, that the words conclusively and beyond reasonable doubt do not inform the meaning of miscarriage of justice but only indicate the standard of proving the miscarriage of justice, once its meaning has been established. They say that if the Court of Appeal allows an appeal in any of the three categories of case there will have been a miscarriage of justice, unless the claimant is convicted at a retrial. Another possibility is, of course, that section 133 applies in a category 1 and a category 2 case, but not to a category 3 case. Category 1 proof of innocence I turn first to the question whether the expression miscarriage of justice is confined to the case where the claimant can prove beyond reasonable doubt that he was innocent. This was of course the view espoused by Lord Steyn in Mullen. Lord Bingham expressed a different view in that case, albeit without reaching a firm conclusion, and Lord Hope has taken a different view in this case. I agree with him. To my mind there is nothing in either the language or the context to limit the meaning of miscarriage of justice to the case where the claimant can prove that he was innocent. If that is so, it is not for the court to limit the meaning because its own view is that it would be desirable to do so as a matter of policy. Such matters of policy are for Parliament and not for the courts. It is common ground that the expression is capable of a broader meaning than that espoused by Lord Steyn. For reasons which I explain below, to my mind the natural meaning is broader, but I will begin with the context because I appreciate that, as has famously been said, context is everything. The context of section 133 is of course article 14(6). Both Lord Steyn and Lord Bingham considered the travaux prparatoires in Mullen. In para 9(2) of his speech Lord Bingham said this: The House was referred to the travaux prparatoires of the negotiations which culminated in adoption of the ICCPR. It is plain that some delegates contended that compensation should not be paid save to those who were shown to be innocent, and such delegates found no difficulty in expressing this very simple principle. But it is equally plain, as Mr Pleming submitted, that every proposal to that effect was voted down. The travaux disclose no consensus of opinion on the meaning to be given to this expression. It may be that the expression commended itself because of the latitude in interpretation which it offered. It is common ground that the expression miscarriage of justice in article 14(6) and therefore section 133(1) should if possible be given an autonomous meaning. Although the travaux are far from conclusive, they do seem to me to point the way because, as Lord Bingham put it, every proposal that innocence should be the test was turned down. So, if the expression is to be given an autonomous meaning, it cannot be limited to cases where innocence can be shown. It follows that I do not agree with Lord Steyns view that the travaux do not assist in any way. On the contrary, they assist on the first question in this appeal, namely whether proof of innocence should be the test. I agree with Lord Steyn (at para 35) that there is no foundation in the language of article 14(6) and section 133, or by reference to any relevant external aids to construction, for the suggestion that Parliament intended to use the words miscarriage of justice in any wider sense than it bears in article 14(6) and that Parliament intended to give effect to the United Kingdoms international obligations in article 14(6) and no more. I would add and no less. Parliament used the same or almost the same language, so that there is to my mind no warrant for holding that it intended to confer narrower rights to compensation than those afforded by article 14(6). As Lord Hope observes at para 91, Lord Steyn correctly said at para 45 that both article 14(6) and section 133 show that there was no overarching purpose of compensating all who are wrongly convicted. This is demonstrated by the fact that compensation only arises at all in the case of appeals out of time and by the indispensable pre condition that a new or newly discovered fact shows conclusively (or beyond reasonable doubt) that there has been a miscarriage of justice. So, for example, in the case of a recognition that an earlier dismissal of an appeal was wrong, the case falls outside article 14(6). That is so, however palpable the error in the first appellate decision may have been, and however severe the punishment that the victim suffered unjustly. As Lord Steyn put it, those considerations demonstrate that the fundamental right under article 14(6) was unquestionably narrowly circumscribed. Para 46 is the only paragraph in which Lord Steyn focuses on the relevant language. In it, as Lord Hope explains at paras 91 and 92, Lord Steyn focused on the language of article 14(6) and section 133, and in particular on the use of conclusively and beyond reasonable doubt respectively. He said that that language filters out cases where it is only established that there may have been a wrongful conviction and cases where it is only probable that there has been a wrongful conviction. He observed that those two categories would include the vast majority of cases where an appeal is allowed out of time. He concluded that those considerations militated against an expansive interpretation of miscarriage of justice and ultimately held that: While accepting that in other contexts a miscarriage of justice is capable of bearing a narrower or wider meaning, the only relevant context points to a narrow interpretation, viz, the case where innocence is demonstrated. I accept that the language points to a narrow construction but not that it is restricted to the case where innocence is demonstrated. Indeed, to my mind Lord Steyn did not point to any reason why the right to compensation should be so confined. There is nothing in the language or the context to lead to the conclusion that cases in category 2 should be excluded. Yet the expression miscarriage of justice naturally includes such a case. Indeed it seems to me to be the paradigm case. A criminal trial is concerned (and concerned only) with the question whether the prosecution has proved beyond reasonable doubt to the satisfaction of the jury that the defendant is guilty of the offence charged. If the new or newly discovered fact shows that, in the light of it, no reasonable jury, properly directed, could have convicted the accused, to my mind his conviction would, in ordinary language, be a miscarriage of justice. I see no reason why such a case should not be a miscarriage of justice within the meaning of article 14(6) or section 133(1). None of Lord Steyns reasoning leads to the conclusion that it is not. He himself did not address this possibility. In paras 91 to 95 Lord Hope has given his reasons for disagreeing with Lord Steyn that innocence must be proved. I agree with them. I would very briefly summarise my own reasons (in addition to those already given) in this way. (a) (b) If Parliament had intended to limit miscarriages of justice to cases where the claimant could prove innocence, it would have been easy to say so. As Lord Bingham put it in Mullen at para 9(2) quoted above, those delegates who wished to limit compensation in that way found no difficulty in expressing this very simple principle. In para 9(1) Lord Bingham noted that when what was to become section 133 was debated in the House of Lords, the minister, Earl Ferrers, was pressed by Lord Hutchinson QC to say whether a miscarriage of justice connoted the innocence of a defendant or the raising of a doubt about his guilt, but the minister said nothing to suggest that compensation would be payable only to the innocent: Hansard (HL Debates), 22 July 1988, cols 1631 1634. (c) Lord Steyns reliance upon the words une erreur judiciaire in the French text of article 14(6) was unsound for the reasons given by Lord Hope at para 93. (d) The five reasons given by Lord Bingham in para 9(4) of Mullen for thinking that reliance upon para 25 of the explanatory report prepared by a committee of experts on human rights with reference to article 3 of the Seventh Protocol was not of the persuasive value which Lord Steyn identified are convincing: see Lord Hope at para 94. (e) Little assistance is to be gained from either the jurisprudence of the United Nations Human Rights Committee or academic opinion. (f) Courts of appeal are not called upon to decide whether defendants are innocent: see Lord Bingham at para 9(6) and Lord Hope at para 95. If, as I believe is the case, Lord Steyns test is too narrow, the question arises what is the correct construction of the expression miscarriage of justice in this context. I will consider the possibilities in turn. Category 2 no reasonable jury properly directed could convict Category 2 would of course include category 1, but not vice versa. Mr Owen QC submitted that cases in this category would involve a miscarriage of justice, although he also sought to include category 3, to which I will return. I have already expressed my view that there is nothing in the language or context of article 14(6) or section 133 to exclude category 2 and that the expression naturally includes it. Absent any clear indication in the language or context, it is to my mind permissible to have regard to the approach to it within the United Kingdom. In 1988 the Court of Appeal in England and Wales determined criminal appeals by reference to the unamended section 2(1) of the Criminal Appeal Act 1968. The proviso to that subsection provided that, notwithstanding that the Court of Appeal were of the opinion that the point raised in the appeal might be decided in favour of the appellant, they may dismiss the appeal if they consider that no miscarriage of justice has actually occurred. In R v Secretary of State for the Home Department, Ex p Bateman (1994) 7 Admin LR 175 the Court of Appeal (Sir Thomas Bingham MR, Farquharson and Simon Brown LJJ) dismissed an appeal from an order of the Divisional Court refusing judicial review of a decision refusing the appellant compensation under section 133. He had been convicted of several counts of receiving stolen goods and sentenced to six years imprisonment. He had appealed to the Court of Appeal on the ground that he had been convicted on the basis of evidence in statement form given by witnesses from New Zealand. His appeal failed. Some time later his case was referred back to the Court of Appeal under section 17 of the Criminal Appeal Act 1968. This time his appeal succeeded on what was essentially the same ground as that which had failed before and his convictions were quashed. In the Court of Appeal he argued inter alia that the second Court of Appeal must have regarded his conviction as a miscarriage of justice because they would otherwise have applied the proviso. Sir Thomas Bingham (with whom the other members of the court agreed) said this: Therefore, it follows, he says, that he is a victim of a miscarriage of justice and from that it follows that he is entitled to compensation. To deny him compensation is, he argues, to undermine his acquittal and the presumption of innocence which flows from the fact that his convictions have been quashed. I am, for my part, unable to accept that argument, although I hasten to assure Mr Bateman that in doing so I have no intention whatever to undermine the effect of the quashing of his convictions. He is entitled to be treated, for all purposes, as if he had never been convicted. Nor do I wish to suggest that Mr Bateman is not the victim of what the man in the street would regard as a miscarriage of justice. He has been imprisoned for three and a half years when he should not have been convicted or imprisoned at all on the second decision of the Court of Appeal (Criminal Division). The man in the street would regard that as a miscarriage of justice and so would I. But that is not, in my judgment, the question. The question is whether the miscarriage of justice from which Mr Bateman has suffered is one that has the characteristics which the Act lays down as a pre condition of the statutory right to demand compensation. That, therefore, is the question to which I now turn. The Master of the Rolls then held that there was no new or newly discovered fact, so that Mr Bateman could not satisfy the relevant criteria under section 133. The relevance of the statement quoted above is that it supports the conclusion that the Master of the Rolls accepted that there had been a miscarriage of justice within the meaning of section 133, which in turn supports the conclusion that that expression is not limited to cases in which the claimant can prove his innocence. It is perhaps the forerunner of Lord Binghams approach in Mullen. A similar conclusion can be drawn from the terms of section 106, of the Criminal Procedure (Scotland) Act 1995, which sets out the test for criminal appeals in Scotland. By subsection (3) it provides: By an appeal under subsection (1) above a person may bring under review of the High Court any alleged miscarriage of justice, which may include such a miscarriage based on (a) subject to subsections 3A to 3D below, the existence and significance of evidence which was not heard at the original proceedings; and (b) the jurys having returned a verdict which no reasonable jury, properly directed, could have returned. It can thus be seen that a miscarriage of justice for the purposes of a fresh evidence appeal in Scotland includes the case where the jurys verdict is one which no reasonable jury, properly directed, could have returned. That is of course a category 2 case. Section 106(3) is thus an example of the expression miscarriage of justice being used in a very similar context to that with which we are concerned. It has been suggested that to include category 2 within the test of miscarriage of justice in section 133 would cause difficulties of application. For my part, I would not accept that suggestion. It is a test used at the end of the prosecution case in countless criminal trials in England and Wales. Moreover, it is used in the Court of Appeal in England and Wales. While it is not the question for decision in an English appeal because the question is now simply whether the conviction is safe, it is plainly relevant when a retrial is sought. The Court of Appeal would not make an order for a retrial if it formed the view that the effect of the new or newly discovered evidence led to the conclusion that no reasonable jury, properly directed, could convict. Moreover, so far as I am aware, this test has caused no difficulty in criminal appeals in Scotland. It is a test which is familiar to the criminal trial and appeal process, which the proposed test of innocence is not. As Lord Hope has observed at para 95, in R (Allen) (formerly Harris) v Secretary of State for Justice [2009] 2 All ER 1 at para 40(iii) Hughes LJ said that cases where the innocence of the convicted defendant is genuinely demonstrated beyond reasonable doubt by the new or newly discovered fact the Court of Appeal will, in virtually every case, make that plain. However, that may not be the case and, as Lord Hope says, the Court of Appeal is not bound to say whether or not a defendant is innocent. In this regard there is authority for the proposition that the Court of Appeal is neither obliged nor entitled to say whether an appellant is innocent: see R v McIlkenny (1991) 93 Cr App R 287 at 310 311. Whether that is correct or not, I agree with Lord Hope that, to put it no higher, it is at least questionable whether it can be right to restrict the entitlement to compensation to cases where the establishment of innocence is apparent from the Court of Appeals judgment. It is of interest in the context of this debate to note that it is common ground that it was only after the decision in Mullen that Secretaries of State have applied an innocence test and that they do not do so in Scotland even now. It was suggested in argument that it is not appropriate for the Secretary of State, and not a court, to make judgments of this kind. However, section 133(3) expressly provides that the question whether there is a right to compensation shall be determined by the Secretary of State. Nobody has suggested that it is not appropriate for the Secretary of State to decide whether the claimant has proved that the new or newly discovered fact shows that he is innocent. It does not seem to me to be any less appropriate for the Secretary of State to decide whether he has proved that it shows that no reasonable jury could have convicted him. In reaching his or her conclusion the Secretary of State is of course bound to have regard to what the Court of Appeal which reverses the conviction has said. In In re McFarland [2004] UKHL 17, [2004] 1 WLR 1289 Lord Bingham said at para 16, albeit in the context of a claim under the ex gratia scheme, that the Secretary of State must properly be guided by the judgment of the Court of Appeal. However, it seems to me that it is for the Secretary of State to have regard to all relevant material when deciding whether the claimant has established beyond reasonable doubt that, in the light of the new or newly discovered fact, no reasonable jury, properly directed, could have convicted him. I see no reason why the Secretary of State could not decide that question, whether on the grounds of innocence or otherwise. As I see it, the matter has to be tested as at the date of the reversal, having regard both to the evidence that was available at the trial and to the new or newly discovered facts. I would include in the evidence available at the trial, all such evidence, not just that adduced on behalf of the prosecution, but also that adduced during the defence case. I would therefore include admissions made by the defendant in cross examination in a case in which the new evidence showed that the case should have been stopped. The question is whether, on that material, he had a case to answer or, put another way, whether a reasonable jury properly directed could have convicted him. If he proves beyond reasonable doubt that the answer to those questions is no, he is in my opinion entitled to compensation under section 133 on the basis that there has been a miscarriage of justice. I entirely accept that the cases in which compensation can be claimed are limited by the necessity to satisfy the criteria in the section and by the need to show beyond reasonable doubt that the new or newly discovered fact demonstrates, in the light of the other material before the court that no reasonable jury, properly directed, could have convicted him. The Secretary of State would of course have to be satisfied that the alleged fact was indeed a fact. I should add by way of postscript that, as I see it, category 2 potentially includes a case where the new or newly discovered fact is such that, if it had been known at the trial, the trial judge would have stopped the trial on the ground of abuse of process. If the Court of Appeal concluded that a new trial could not properly be ordered on the basis that it was not possible to cure the abuse, so that no reasonable jury, properly directed, could convict, there would, in my opinion have been a miscarriage of justice within section 133. It seems to me that this must be within the kind of miscarriage of justice which Lord Bingham had in mind in Mullen, namely where a conviction is quashed because something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who certainly should not have been convicted. Since Mullen, some doubt has been expressed as to whether the basis upon which it was decided is correct. See, for example, R (Siddall) v Secretary of State for Justice [2009] EWHC 482 (Admin) per Leveson LJ at paras 47 48. The basis on which it was decided by the majority, comprising Lord Bingham, Lord Scott, Lord Rodger and Lord Walker was that Mr Mullens conviction had been reversed by the Court of Appeal on the ground that there had been an abuse of executive power and not any failure in the trial process: see per Lord Bingham at para 8, Lord Scott at para 65, Lord Rodger at para 69 and Lord Walker at para 70. In particular, Lord Bingham said that it was for failures in the trial process that the Secretary of State is bound by article 14(6) and section 133 to pay compensation. He distinguished those from abuse of executive power. He did so by reference to R v Horseferry Road Magistrates Court, Ex p Bennett [1994] 1 AC 42 per Lord Griffiths at pp 61 62 and R v Looseley [2001] 1 WLR 2060 at para 40. Lord Scott said that the Court of Appeal had not reversed the conviction because there had been any failure in the trial process but because, prior to the commencement of the trial process, there had been serious abuse of executive power which had led to the removal of the claimant from Zimbabwe to this country and thus enabled the trial to take place. Although Leveson LJ observed that this distinction has its difficulties and noted that Lord Steyn said at para 57 that, if that abuse had been disclosed the trial would have been stopped, and in its written submissions Justice suggested that Mullen might now be decided differently on its facts. There is I think scope for argument in the future as to whether there is a class of cases in which the section would not apply, of which Mullen is an example. They are cases in which it has been held that the trial should not be permitted to proceed, not because of anything related to the case against the defendant, but because to permit it would offend against the rule of law or would seriously affect the integrity of the administration of justice. In quashing Mullens conviction Rose LJ, giving the judgment of the Court of Appeal, said at [2000] QB 520, 535 536: This court recognises the immense degree of public revulsion which has, quite properly, attached to the activities of those who have assisted and furthered the violent operations of the IRA and other terrorist organisations. In the discretionary exercise, great weight must therefore be attached to the nature of the offence involved in this case. Against that, however, the conduct of the security services and police in procuring the unlawful deportation of the defendant in the manner which has been described represents, in the view of this court, a blatant and extremely serious failure to adhere to the rule of law with regard to the production of a defendant for prosecution in the English courts. The need to discourage such conduct on the part of those who are responsible for criminal prosecutions is a matter of public policy to which, as appears from R v Horseferry Road Magistrates' Court, Ex p Bennett [1994] 1 AC 42 and R v Latif [1996] 1 WLR 104, very considerable weight must be attached. It appears to me to be at least arguable that such a case would not fall within section 133. None of the cases before the Court in these appeals is such a case. I recognise that Lord Phillips rejects category 2 as a test and that he has suggested an alternative test. However, section 133 inevitably requires the Secretary of State to consider the effect of the new or newly discovered fact upon the other evidence before the court and thus on the validity of the conviction. This involves the evaluation of the evidence in its legal context. It also expressly requires the Secretary of State to decide whether in the light of all the evidence the claimant has shown beyond reasonable doubt that there has been a miscarriage of justice. In considering all these questions, the Secretary of State can of course always take such advice as is appropriate. I remain of the view that category 2 is an appropriate formulation of the test and that the position is or should be as stated above. Compensation is only payable where, in the light of the new or newly discovered fact, no reasonable jury, properly directed, could have convicted or, subject perhaps to the point made in para 215 above, where the new or newly discovered fact would have led the judge to stop the case on the ground of abuse in the trial process. However, I recognise that Lord Phillips suggests replacing the category 2 test with a more robust test. It is that a new fact will show that a miscarriage of justice has occurred when it so undermines the evidence against the defendant that no conviction could possibly be based upon it. I have assumed that the second it means the evidence against the defendant. To my mind that test is consistent with the category 2 test identified above because, in such a case, no reasonable jury properly directed, could convict the defendant. For that reason and on that basis, I would accept the proposed test, with which Lord Hope, Baroness Hale and Lord Kerr agree. Category 3 unsafe conviction Section 2(1) of the Criminal Appeal Act 1968, as substituted by section 2(1) of the Criminal Appeal Act 1995, provides that the Court of Appeal shall allow an appeal if they think the conviction is unsafe. The proviso in the previous section 2(1) was repealed. Mr Owen submitted that where a qualifying appeal is allowed on the basis that the claimant has shown beyond reasonable doubt that the conviction was unsafe because of a new or newly discovered fact, it follows that there was a miscarriage of justice within the meaning of section 133. It is certainly possible to construe the expression miscarriage of justice as wide enough to include such a case. I do not however think that Parliament can have intended the expression to have such a wide meaning in section 133(1) because it would have been easy for the section to have been drafted in such a way as to include every case where the relevant appeal was allowed on the basis of a new or newly discovered fact. Moreover none of the courts which have considered section 133 have suggested that it might have such a wide meaning: see the cases referred to by Lord Hope at para 82. In particular, the formulation of the test by Lord Bingham in Mullen does not encompass every case where the conviction was held to be unsafe on the basis of new evidence. His formulation was that there is a miscarriage of justice where a conviction is quashed because something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who certainly should not have been convicted. It is not possible to say that, merely because a conviction has been quashed because it was unsafe, the appellant should not have been convicted. A conviction may be unsafe because the Court of Appeal concludes that, but for the successful ground of appeal, the jury might not have convicted. Indeed, this is by far the most common case in which an appeal is allowed. It is a category 3 case in which, as Dyson LJ put it in the passage quoted above, a fair minded jury might convict or might acquit. In such a case I do not think that one can say as a matter of course that the defendant should not have been convicted. It seems to me that it is only in a category 2 case (which of course includes a category 1 case) that it can be said that a person should not have been convicted. It can be so held in such a case because it follows from the conclusion that no reasonable jury, properly directed, could have convicted the defendant that he should not have been convicted. Any lesser test is to my mind too uncertain and would not satisfy the statutory test that, in order to be entitled to compensation, the claimant must prove beyond reasonable doubt that there has been a miscarriage of justice. If he might have been convicted by a jury on all the evidence including the new or newly discovered fact, he cannot show for sure that there has been a miscarriage of justice within section 133(1). Retrial Section 133(5A) was not part of section 133 when Mullen was decided. It makes it clear that, where the claimant succeeds on appeal but is convicted at a retrial, he is not entitled to compensation because his conviction has not been reversed. If his appeal succeeds and the Court of Appeal orders a retrial, but the prosecution decides not to proceed with the retrial, the conviction is treated a reversed when it so indicates. In these circumstances, the position is as described above. If a retrial takes place and the claimant is acquitted of all offences at a retrial, there is scope for debate as to the position. By subsection (5A) the conviction is treated as reversed when he is so acquitted. It is not necessary to decide this question in this appeal but it is my provisional view that the same approach as described above would apply. Thus, in order to be entitled to compensation, he would have to prove beyond reasonable doubt that on the basis of the new or newly discovered fact no reasonable jury would have convicted him. New or newly discovered fact The question is what is meant by a new or newly discovered fact. In particular the question is what is meant by a newly discovered fact. Mr Tam QC submitted that a fact which was known to the prosecution and knowable to the defence because it was available to them, but which they did not know because they did not take the steps they should have taken to examine the evidence was not a newly discovered fact. I would not accept that submission. If the fact was not in fact discovered at or before the trial or at an in time appeal but was discovered thereafter, it follows that it was a newly discovered fact. The question is whether it was discovered earlier, not whether it was discoverable earlier. In my opinion the fact that it was discovered by the prosecution before the appeal is irrelevant. In neither of the appeals before the Supreme Court were the relevant facts discovered by the defendants or their lawyers at or before the trial or the in time appeal. It follows that they were newly discovered facts. The fact that in the Adams case they were discoverable by the defendants lawyers is irrelevant. As I see it, therefore, on the facts of these appeals this part of the test is satisfied. However, there was much debate as to whether it is possible for a fact to be a newly discovered fact if it was known to the defendants lawyers. In my opinion it is. Section 133(1) is subject to the proviso unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted. The proviso does not apply if the non disclosure of the fact was attributable to his lawyers. It could have done so. As Dyson LJ explained at paras 14 16 of his judgment, there is no mention of the convicted persons legal advisers in article 14(6) or section 133, whereas article 14(3) does refer to legal advisers. Moreover, there is no suggestion that the person convicted in section 133(1) includes his lawyers. In my opinion the Court of Appeal correctly held that knowledge of the fact by the defendants lawyers would not prevent it being a newly discovered fact. I note in this regard that in a case where the fact was known to the defendants lawyers and not used at the trial, the failure to use it would be very relevant to the question whether the evidence of the fact would be admissible under section 23 of the Criminal Appeal Act 1968. It might well be held that in the light of the fact that the lawyers failed to deploy it, it was not necessary or expedient in the interests of justice to admit it on an appeal. In that event the appeal would not be allowed or the conviction reversed on the basis of it. The remaining question is whether it is possible for a fact to be a newly discovered fact if it was known to the defendant himself at trial or at an in time appeal. The Court of Appeal held that it was, for the reasons given by Dyson LJ at paras 14 to 18. I agree. Section 133(1) contains the proviso unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted. This proviso would not be necessary if the question whether evidence was new or newly discovered were tested by reference to the knowledge of the convicted person himself. The proviso seems to me to assume that a fact may be newly discovered even though it is known to the defendant at the relevant time. Otherwise it would have very little effect because it would only apply where the defendant did not know the fact but its non disclosure was attributable to him. Such a situation is perhaps theoretically possible but the natural meaning of the proviso is that it covers the case where the defendant is aware of the fact at the relevant time but does not deploy it either personally or through his lawyers. So understood, the proviso seems to me to point to the conclusion that a fact may be a newly discovered fact even if it was known to the defendant himself at trial or at an in time appeal. For these reasons I agree with Lord Hopes conclusion at para 107 and Lord Phillips conclusion at para 62 that the relevant knowledge is that of the trial court, but do not agree with Lord Hopes conclusion, also at para 107, that material disclosed to the defence by the time of the trial cannot be said to have been newly discovered when it is taken into account at the stage of the out of time appeal. For the reasons given earlier, it is my view that material that was not discovered either by the defendant or his lawyers but was discovered only after the in time appeal was newly discovered on the simple basis that, whether or not it ought to have been discovered, it was not in fact discovered. That was the position in both the Adams appeal and the Northern Irish appeals. Article 6(2) of the European Convention of Human Rights Other members of the Court have considered the issues under this head in some detail. The European Court of Human Rights (ECtHR) has applied article 6(2) in cases which are not covered by its language. For my part, I do not think that this is a case in which it is necessary or would be appropriate to analyse that jurisprudence in detail. I will only say that I am not at present persuaded that article 14(6) and section 133 are a form of lex specialis to which article 6(2) can never be relevant. For present purposes I shall simply assume that it is in principle possible for article 6(2) to apply to proceedings under section 133. I can see that it is inappropriate, to put it no higher, to impute criminal liability to a person who has been acquitted. In each of the cases in which a claim for compensation arises under section 133(1) the claimants conviction has been reversed by the Court of Appeal in an out of time appeal. Section 2(3) of the Criminal Appeal Act 1968 (as substituted in 1995) provides: (3) An order of the Court of Appeal quashing a conviction shall, except when under section 7 below the appellant is ordered to be retried, operate as a direction to the court of trial to enter, instead of the record of conviction, a judgment and verdict of acquittal. Thus the effect of the reversal of the conviction by the order of the Court of Appeal quashing it, is that the person concerned is formally acquitted. In these circumstances the court hearing and determining a claim for compensation under section 133(1) must not say or do anything inconsistent with the claimants acquittal. If the analysis set out above is adopted, there is no risk of its doing so. The question in each case is whether the claimant has proved beyond reasonable doubt that the new or newly discovered fact has demonstrated that there was a miscarriage of justice on the basis that no reasonable jury, properly directed, could convict him. The trial of that question does not in any way affect or impugn the acquittal of the claimant as provided by section 2(3) of the Criminal Appeal Act 1968 quoted above. The question at such a trial is different and so is the burden of proof. The position is not unlike a civil process where a claimant seeks damages from a defendant who has been acquitted of, say, causing grievous bodily harm to A at a criminal trial. Under English law it is permissible for A to seek damages from the defendant on the ground that he was unlawfully injured by him, alleging all the same facts as had been relied upon at the criminal trial. The critical difference between the two processes is that at the criminal trial the prosecution has to prove guilt beyond reasonable doubt, whereas at the civil trial A only has to prove liability on the balance of probabilities. The ECtHR has expressly recognised that civil proceedings of that kind do not infringe article 6(2) of the Convention: see eg Y v Norway (2003) 41 EHRR 87, where the court expressly said at para 41 that, while the acquittal from criminal liability ought to be maintained in 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. It did add in para 42 that, 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. See also Bok v The Netherlands, (Application No 45482/06), 18 January 2011. Similarly, here, where, at any rate on the analysis set out above, there is no question of anything said or done in the section 133 proceedings impugning the acquittal in the criminal proceedings, I see nothing in article 6(2) which is in any way inconsistent with the conclusions I have reached. Disposal I agree with Lord Phillips, Lord Hope, Baroness Hale and Lord Kerr that the appeal in the Adams case must be dismissed. Lord Phillips has set out the relevant facts. As Dyson LJ observed at para 59, the Court of Appeal allowed the appeal because the undeployed material was important and might have led the jury to acquit. The decision to quash the conviction was founded on the potential that the undeployed material had for affecting the jurys verdict. It was thus a category 3 case and, for the reasons given earlier, section 133(1) does not cover such a case. I also agree that the appeals in the Northern Irish cases should be allowed. Lord Kerr has set out the facts in some detail. They show, at any rate to my mind, that, in the light of the newly discovered facts, no reasonable jury, properly directed, could have convicted them. DISSENTING JUDGMENTS LORD JUDGE The legislation Section 133(1) of the Criminal Justice Act 1988 (section 133) provides: 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. Reversed refers to a conviction which is quashed on an appeal out of time or following a reference by the Criminal Cases Review Commission (section 133(5)). By section 133(2) compensation is not payable unless the application for compensation has been made: Before the end of the period of 2 years beginning with the date on which the convictionis reversed or he is pardoned. This limitation was inserted by sections 61(1) (3) and (9) of the Criminal Justice and Immigration Act 2008 and came into force on 1 December 2008. Simultaneously, in accordance with section 61(1), (2), (5) and (9) of the 2008 Act, provision was made for the cases where the conviction is quashed on an appeal out of time, and a retrial ordered, so that: The conviction is not to be treatedas reversed unless and until the person is acquitted of all offences at the retrial or the prosecution indicates that it has decided not to proceed with the retrial. (Section 133(5A)) The determination whether there is an entitlement to compensation is vested exclusively in the Secretary of State, (section 133(3)) who in exceptional circumstances may extend the time for making an application. (section 133(2A)) When section 133 was enacted an ex gratia system operated in tandem with it. In England and Wales and Northern Ireland, but not in Scotland, the ex gratia scheme was abolished in 2006. In his article Compensation for Wrongful Imprisonment [2010] Crim LR 805, Professor John Spencer QC convincingly criticised the narrowness of and consequent anomalies which arise from the limitations of the statutory scheme. No alternative remedy is provided unless, perhaps, and subject to limitation periods, where malpractice in the investigative process is established, the victim may pursue a remedy in tort, or when the individual suffered a wrongful conviction as a consequence of negligence by his legal advisors, a claim in damages may be available. In short, the statutory scheme does not preclude any relevant action which may, in theory, be available in tort, but it is in any event unsupported by the ex gratia scheme. Nevertheless we must analyse section 133 and the ambit of the scheme for the payment of compensation without reference to its anomalies and disadvantages. When it was examined by the House of Lords in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1 the meaning and effect of section 133 produced contradictory opinions with no authoritative decision. Lord Steyn concluded that the statutory scheme was confined to cases where the person concerned was clearly innocent. Lord Bingham of Cornhill, while agreeing with the result, for carefully explained reasons, hesitated to accept this restriction on the ambit of the statutory scheme. The differences between their respective approaches to the problem have been considered and examined in a number of subsequent decisions, of which the most recent is R (Allen (formerly Harris) v Secretary of State for Justice [2009] 1 Cr App R 36. They must finally be resolved now. As we are not agreed, without embarking on what would be a repetitious discourse of much of the voluminous material drawn to our attention, I shall briefly explain the reasons why I agree with Lord Steyn. In Mullen the parties were agreed that the interpretation of section 133 required what was described as a correct understanding of article 14(6) of the International Covenant on Civil and Political Rights, dated 16 December 1966. (ICCPR) That view was adopted by the House of Lords and it is unchallenged in the present proceedings. Article 14(6) 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 grounds 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. In short, the enactment of section 133 in virtually identical terms represented the response of the United Kingdom to a Treaty obligation. One further Treaty provision needs immediate attention. In November 1984 article 3 of Protocol 7 to the Convention of Human Rights also made what was effectively an identical provision to article 14(6) of the ICCPR. 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 the law or the practice of the State concerned, unless it is proved that the non disclosure of the unknown fact in time is wholly or partly attributable to him. Article 3, Protocol 7 will become relevant when the jurisprudence of the European Court of Human Rights falls to be considered. In the context of a statutory provision reflecting the international obligations undertaken by the United Kingdom, it would be productive of confusion for the phrase miscarriage of justice to be analysed by reference to the many different ways in which, looking at our own statutes which enable convictions to be quashed, and the language used, sometimes loosely, in the course of numerous judgments bearing on these questions. The phrase reflects an autonomous concept, in which the words miscarriage of justice reflect the international obligations of the United Kingdom under article 14(6). Like article 14(6), section 133 distinguishes the reversal of the conviction (or a pardon) and a miscarriage of justice. Within the section itself, as with article 14(6), these concepts are distinct. Even if the remaining pre conditions to the payment of compensation are established, the reversal of the conviction is an essential prerequisite to but is not conclusive of the entitlement to compensation. In short, for the purposes of section 133 the reversal of the conviction and the consequent revival of the legal presumption of innocence is not synonymous with a miscarriage of justice. Therefore before compensation is payable under the statutory scheme more than the reversal of the conviction is required. The requirement is that a miscarriage of justice must be demonstrated beyond reasonable doubt. In my view the use of this phrase was deliberate and significant. The phrase is not relevant to the evidential question whether the conviction has been reversed and it is not directed to any individual feature or aspect of the investigation or trial processes. If the reversal of the conviction alone were sufficient, that fact would be proved beyond reasonable doubt by the court record, and if any specific feature of the investigation or trial processes were relevant, appropriate provision could readily have been made in section 133 itself. Instead the phrase describes the characteristics or attributes of the miscarriage of justice which must be established. The word conclusively in article 14(6) was not repeated. Rather the familiar description of the standard of proof in criminal cases and, significantly in the context of a claim for the payment of compensation (normally a civil claim), the standard normally applied to the prosecution in the criminal justice process was imposed on the defendant. For this purpose the balance of probabilities was expressly ignored. Accordingly, for section 133 to apply, following a conviction of an offence which was proved beyond reasonable doubt, the emergence of a new or newly discovered fact should demonstrate not only that the conviction was unsafe, or that the investigative or trial processes were defective, but that justice had surely miscarried. In the present context, the ultimate and sure miscarriage of justice is the conviction and incarceration of the truly innocent. This leads me to the conclusion that as a matter of construction the operation of the compensation scheme under section 133 is confined to miscarriages of justice in which the defendant was convicted of an offence of which he was truly innocent. In my judgment nothing less will do, and no alternative or half way house or compromise solution consistent with this clear statutory provision is available. I must therefore address some of the contentions which suggest that this construction is over restrictive. The unsafe conviction Mr Tim Owen QC highlighted the absence of word innocent from section 133. The omission reflects not only the autonomous concept of miscarriage of justice, but more significantly, the absence of an innocent verdict in the criminal justice process. The defendant is either proved to be guilty of the crime alleged, or he is entitled to a not guilty verdict and acquittal. A verdict of innocent is unknown. On acquittal, or the reversal of a conviction, the presumption of innocence revives. It applies when the jury considers that there is a high probability that the defendant is guilty, and indeed to cases like Mullen, whose conviction was quashed notwithstanding the assessment of the court that he was undoubtedly guilty. Just because it is a concept to which the criminal justice process is not directed, the word innocent could have no place in section 133. The only ground for quashing a conviction in the Court of Appeal Criminal Division (the Court) is that it is unsafe. There are however occasions when a new or newly discovered fact may well demonstrate the factual innocence of the appellant. And if it does, the judgment of the court may say so. I respectfully disagree with the observation in R v McIlkenny (1991) 93 Cr App R 287 that the court is not entitled to state that an appellant is innocent. The processes of the Court of Appeal do not allow for a formal declaration of factual innocence, any more than the trial process recognises a verdict of innocent. However there can surely be no stronger case for doubting the safety of a conviction than evidence which unmistakenably demonstrates that the appellant is in truth an innocent man or woman. (See R v Fergus (1994) 98 Cr App R 313: R v Hodgson [2009] EWCA Crim 490.) Although the conviction is quashed not on the ground that the defendant is innocent, but because his conviction is unsafe, the terms of the judgment should conscientiously reflect the true reasons for its decision that the conviction should indeed be quashed as unsafe. At the risk of stating the obvious, the decision whether to quash a conviction is for the Court: so are all features of the trial process, and indeed any order for retrial. If the end of the judicial process is that the conviction is quashed, or if following a retrial, the defendant is acquitted, the administrative decision whether compensation is payable for a miscarriage of justice is vested exclusively in the Secretary of State. The determination is not limited to some kind of administrative assessment of the circumstances in which the judicial process has come to an end. Therefore while the Secretary of State should pay the closest possible attention to the terms of the judgment of the Court, whatever the terms in which the judgment is expressed, when making the decision whether a miscarriage of justice has occurred, he is not confined to the judgment of the Court. Retrial The circumstances in which a retrial will be ordered following the quashing of a conviction vary enormously. The single question is whether in a fact specific context the interests of justice should lead to such an order. Dealing with it generally it is most unusual for an order for retrial to be made many years after conviction, or when the sentence imposed at the original trial has been or is close to being completed. On the other hand, again dealing with it generally, where a conviction is recent, and the sentence substantial, and the evidence relied on the prosecution is likely to be available at the retrial, then a retrial may well be ordered. Exceptions can be found both ways. At the risk of repetition, the decision is fact specific. It can however be confidently stated that it would be inconceivable for the Crown to seek or the Court to order a new trial if it were made clear in the terms of the judgment that the conviction was being quashed on the basis that the fresh evidence demonstrated that the defendant was innocent. This reinforces my view that if that conclusion is justified, the court is entitled to say so in its judgment. These considerations bring me to section 133(5A). This subsection addresses the newly introduced statutory time limit in which an application for compensation may be made in the context of an order for retrial. If for any reason (including the conclusion of the Court that the defendant is truly innocent) no order for retrial is made, time runs from the date when the conviction is quashed. If however (again, for whatever reason) the order quashing the conviction is accompanied by an order for retrial, notwithstanding the presumption of innocence, for the purposes of the scheme for the payment of compensation the conviction is not reversed or quashed and the time for making an application is accordingly postponed until the retrial process is completed. This enables first, the defendant to concentrate his attention on the forthcoming retrial. Second, it is conclusive of the question (adversely to the defendant) if he is convicted, when his position is exactly the same as it would have been if the original conviction had not been quashed. Third, if he is acquitted, the process may provide the Secretary of State with further material on which to base his determination. In my judgment section 133(5A) has no bearing on the proper construction of the words beyond reasonable doubt that there has been a miscarriage of justice, and the entitlement to compensation under the statutory scheme was not expanded with effect from 1 December 2008 when section 133(5A) came into force. That was not the purpose of this new inserted provision which was directed to the consequences of the introduction of the new timetable within which applications should be made. It was procedural only. European Court of Human Rights In my judgment the jurisprudence of the European Court of Human Rights drawn to our attention by Mr Owen does not bear on the issues which arise in this litigation. As already indicated once a conviction has been reversed the presumption of innocence applies. Subject only to the provisions of sections 76 83 of the Criminal Justice Act 2003 the rule against double jeopardy applies and the defendant cannot be prosecuted a second time for an offence of which he has been acquitted, or when his conviction has been reversed and for the purposes of the administration of criminal justice the prosecution process is at an end. Nevertheless the acquittal, or the successful appeal against conviction, does not operate as an absolute bar to litigation. It remains open to any individual to assert that notwithstanding the acquittal or quashing of the conviction, the defendant was guilty. That is what Lord Steyn said about Mullen in his judgment in that case. A defendant who has been acquitted of rape may face proceedings for damages by the complainant and she may successfully establish on the balance of probabilities that he did indeed rape her and is liable in damages. In proceedings for defamation on the basis that the defendants innocence is questioned, the acquittal does not create an irrebuttable presumption that the assertion cannot be justified and must be unjustifiable. Article 3, Protocol 7 forms part of the Convention. It must be read together with the Convention. The jurisprudence of the European Court of Human Rights relied on by Mr Owen was not directed to and did not address the provisions of article 3, Protocol 7. If the decisions he relied on apply in the present case it will in effect mean that the reversal of the conviction carries with it an obligation to pay compensation in accordance with section 133, although such a conclusion would be inconsistent with the wording of article 3, Protocol 7 itself. Bok v The Netherlands (Application No 45482/06) (unreported) 18 January 2011 confirms that it does not. Section 133 therefore provides an individual whose conviction has been reversed with the opportunity (but no obligation) to make a claim for compensation based on a statutory test which is effectively identical to the provisions of the European Convention. The Secretary of State must allow or reject the application in accordance with that test. Conviction Impossible This heading is used to encompass some of the alternative ways of approaching the concept of miscarriage of justice adopted in the majority judgments which have reached the conclusion that the phrase has a rather broader ambit than I do. A newly discovered fact which demonstrates that the prosecution against the defendant is shredded to the extent that no conviction could have been based on it, or that no evidence would properly have been offered or, if there had been a trial, there would have been no case to answer at the close of the prosecution case, is likely to provide powerful material which may lead the Secretary of State to conclude that the defendant is indeed innocent. However that conclusion does not automatically follow, and unless it does, section 133 does not apply. In short, these considerations are of evidential significance, maybe of crucial evidential significance, but not determinative. There are a variety of different circumstances in which the Court may make a decision on appeal in relation to decisions at trial that what appeared to be powerful evidence for the Crown should have been excluded. For example, in the light of some newly discovered fact the Court may conclude that the decision of the trial judge to allow crucial prosecution eye witnesses to give their evidence anonymously was wrong, or no longer tenable: without that evidence there would be no case against the defendant. The Court may order a retrial, but without the protection of an anonymity order, the crucial witnesses may then refuse to give evidence at all. Accordingly no further evidence would be offered against the defendant. In my judgment it should not, and it would not, follow that the defendant would be entitled to compensation. Similar considerations would arise if, on the basis of fresh evidence, the Court concluded that the judge had wrongly admitted crucial hearsay evidence without which there would have been no prosecution. Taking the matter further, R v Smith [1999] 2 Cr App R 238 illustrates the difficulty of equating the no case to answer situation with the concept of miscarriage of justice within section 133. The judge rejected a submission that there was no case to answer. The Court concluded that he was wrong and went on to examine the question, what if a submission is wrongly rejected but the defendant is cross examined into admitting his guilt? It concluded that the conviction would still be unsafe because the defendant was entitled to be acquitted at the close of the prosecution case. It would be surprising if notwithstanding his own sworn admission of guilt, the discovery of a new fact which demonstrated that the decision that there was a case to answer was wrong, should be followed by the payment of compensation. Again, where fresh evidence is advanced on behalf of the appellant which undermines the safety of the conviction, and indeed puts into question a substantial part of the prosecutions case, the prosecution may seek to adduce fresh evidence demonstrative of guilt. The jurisdiction to permit the Crown to do so is available (for example, see R v Hanratty [2002] EWCA Crim 1141; [2002] 3 All ER 534). In the interests of justice the Court may order a new trial to enable all the issues to be resolved by a jury notwithstanding that, standing on its own, the original evidence advanced by the Crown was no longer sufficient to found a case for the appellant to answer. Finally, I must return to Mullen itself, which at [1999] 2 Cr App R 143 sets out the reasons why the conviction was quashed. The matters which constituted the abuse of process occurred before Mullen was returned from Zimbabwe to this jurisdiction. The British authorities procured his deportation by unlawful means, in breach of public international law. The prosecution itself was held to be unlawful. Mullen therefore should not have been charged, let alone prosecuted to trial. Yet the House of Lords was agreed that he was not entitled to compensation, and I wholeheartedly agree. Considerations like these underline some of the practical difficulties with any approach to the construction of section 133 which goes beyond the limits suggested by Lord Steyn in his judgment in Mullen, that compensation within the statutory scheme is payable only when the defendant was convicted of an offence of which he was truly innocent, and therefore beyond reasonable doubt the victim of a miscarriage of justice. In my judgment the principle is that section 133 is concerned with the fact rather than the presumption of innocence in the context of the administrative decision to be made by the Secretary of State. It is not related to different (and if so which?) aspects of the trial processes, or the likely or possible impact which the new or newly discovered fact would have had on the decision to prosecute or on the forensic processes which culminated in conviction. Their practical effect is demonstrated in the case of MacDermott and McCartney. The confessions on which the prosecution relied would have been inadmissible if they had been made not as a result of violence, but rather of inducements. Assuming for present purposes that the newly discovered material demonstrated that Donnelly had been offered identical inducements to those which MacDermott and McCartney had asserted at their trials, their convictions would have been no less liable to be quashed than they were in the light of the fresh evidence relating to police violence. As there was no evidence beyond their inadmissible confession there would have been no basis for any prosecution. And there would, if they were prosecuted, have been no case for either to answer. Yet, in the context of an inducement or inducements, there might, if the confessions were sufficiently detailed, be no reason to doubt that the confessions were true, even if inadmissible. In my judgment their cases would not qualify for compensation. We are here dealing not with inducements which cast doubt on the voluntariliness of the confessions, but with violence. The newly discovered material would have borne on the decision of the trial judge whether the defendants confessions were voluntary or not. The fresh evidence led the Court of Appeal in Northern Ireland to conclude that if it had been available at trial there was a realistic possibility that the evidence of the police officers (who asserted that there had been no intimidation of the defendants, and no grounds for doubting that the confession statements were voluntary) may have been discredited. If so the statements would have been excluded from consideration, and there would then have been no prosecution and no case for either of them to answer. In principle, however, the impact on the admissibility of their confessions would have been the same, whether they responded to inducements to confess or succumbed to violence. Although I share the distinct unease of the Court of Appeal in Northern Ireland about the circumstances in which the confessions were made by the appellants, it does not follow that the Secretary of State was obliged to conclude that they were innocent for the purposes and within the ambit of section 133. New or newly discovered fact In the discussion about the meaning of new or newly discovered fact the rival contentions went too far. It would be unrealistic, and removed from the realities of the conduct of the defence at trial that his legal advisers should inform the defendant personally of each and every fact and matter to which their attention is drawn by the prosecution. When all is said and done, the defence advocate is not a mouthpiece or echo chamber for his client. The responsibility for giving advice and assisting the defendant to make whatever decisions which he must make for himself is one aspect of the responsibilities: the deployment of evidence and argument on his behalf is another. Sometimes the lines overlap, but often they do not. It therefore follows that merely because the defendant himself is personally ignorant of a particular fact, it is not new or newly discovered when the defendant personally ceases to be ignorant of it. On the other hand, when the prosecution has complied with all its obligations in relation to disclosure of material to the defence lawyers, and they, for whatever reason, do not then deploy material which appears to be adverse to the prosecution or which would assist the defendant, that material should not automatically be excluded from the ambit of the section on the basis of prosecutorial compliance with its disclosure obligations. Rather the approach should coincide with the circumstances in which fresh evidence is sought to be deployed before the Court in accordance with section 23 of the Criminal Appeal Act 1968. This normally predicates that there should be a reasonable explanation for the earlier failure to adduce the evidence at the trial. In the present case, it is clear from the judgment of the Court in Adams that the conviction was quashed on the basis of fresh evidence in circumstances in which, notwithstanding that the prosecution had fully performed its responsibilities in relation to disclosure, Adamss legal team had failed adequately to respond and fulfil theirs. In my judgment that failure or omission was a new or newly discovered fact within the ambit of section 133. Conclusion In my judgment the appeal of Adams should be dismissed: as to the appeals of MacDermott and McCartney, I should have agreed with Lord Browns proposal that they should be remitted to the Secretary of State for further consideration. LORD BROWN (with whom Lord Rodger agrees) I have had the advantage of reading in draft the judgment of Lord Judge, the Lord Chief Justice, and, agreeing with it as I do, I shall try not to repeat the bulk of its reasoning. So troubled am I, however, that apparently ours is the minority view on these appeals that I wish to add some additional thoughts of my own. That section 133 of the Criminal Justice Act 1988 was intended to give effect to the United Kingdoms international obligation under article 14(6) of the International Covenant on Civil and Political Rights 1966 is, of course, plain and obvious. Section 133(1) omits the phrase in article 14(6) by a final decision reflecting it instead in the definition of reversal in section 133(5) by referring there to an appeal out of time or on a reference and substitutes for the word conclusively in article 14(6) the hallowed expression beyond reasonable doubt. Otherwise the language of the two provisions is virtually identical. It is clear, therefore, that the right to compensation arises only when each of four conditions is satisfied: (i) the conviction is quashed on an appeal out of time or a reference (not, therefore, when a timeous appeal succeeds, nor, of course, on an acquittal at trial); (ii) the appeal succeeds on the ground of a new or newly discovered fact; (iii) the appellant was in no way responsible for the previous non disclosure of that fact; and (iv) that fact shows beyond reasonable doubt that there has been a miscarriage of justice. The critical question for decision here, of course, is what precisely is meant in this context by a miscarriage of justice. As to this, whilst recognising that the expression has an autonomous meaning, I share the view expressed in several of the judgments that there is no real assistance to be derived here from any of the extrinsic material, for example, the travaux or other states practices. Rather, as Lord Bingham suggested in R (Mullen) v Secretary of State for the Home Department [2005] 1 AC 1, 27, para 9(2): It may be that the expression [miscarriage of justice] commended itself because of the latitude in interpretation which it offered. That being so, it was perfectly open to the UK to introduce legislation intended to compensate only those shown to be clearly innocent of the crime of which they had been convicted and in this connection I see no reason to ignore the explanatory report relating to article 3 of Protocol 7 to the European Convention on Human Rights (an article almost precisely reproducing the language of article 14(6)) which, at para 25, states: 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 acknowledgment that the person concerned was clearly innocent. True, the UK never ratified Protocol 7 and I am far from suggesting that the explanatory report shows plainly that section 133(1) is to be construed in the way para 25 suggests. But it does surely show that this is both a permissible view to take of the extent of the article 14(6) obligation undertaken by the UK and a perfectly possible construction of section 133(1) itself. Before turning more particularly to whether it is the right construction, it is I think worth pointing out too that the provision whereby those benefiting from article 14(6) are entitled to be compensated according to law similarly accords to individual states a wide discretion as to how such compensation is to be assessed. As to this the UKs approach seems to me notably generous. In reaching his assessment, the Secretary of States assessor is directed to apply principles analogous to those governing the assessment of damages for civil wrongs including, therefore, claims for wrongful imprisonment although a deduction may be made on account of the claimants criminal record. An illustration of the size of the awards liable to be made in these cases is provided by R (OBrien) v Independent Assessor [2007] UKHL 10; [2007] 2 AC 312 concerning compensation claims arising out of the wrongful conviction of the Hickey brothers and others for the murder of Carl Bridgewater at Yew Tree Farm. The first instance decision in that case [2003] EWHC 855 (Admin) shows net final compensation assessments there of 990,000 for Michael Hickey and 506,220 for Vincent Hickey (wrongfully detained in prison respectively for just under thirteen years and something under fourteen years see para 8 of Lord Binghams judgment in the House of Lords). What, then, is the correct interpretation of a miscarriage of justice in section 133(1)? More particularly, is it: (i) the conviction of an innocent defendant, or (ii) the conviction of a defendant who, by a new fact, so undermines the evidence against him as to show that, on the undermined evidence, he could not possibly have been convicted essentially Lord Phillips (category 2) formulation (at para 55), apparently now subscribed to by the majority of the court. I mention only those two possible constructions since no member of the court appears to favour any yet wider construction of section 133 so as to embrace also 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 (Lord Phillips category 3 at para 9). Strikingly, and to my mind significantly, it was this wider construction that not just the appellants but also Mr Alex Bailin QC for the Intervener, JUSTICE, were urging upon the court; indeed, both Mr Owen QC for Mr Adams and Mr Bailin expressly submitted that there was no logical or principled dividing line between categories 2 and 3. And to my mind they were right to do so. Of course, innocence as such (factual as opposed to presumptive) is not a concept known to the criminal law. But nor too, in the context of criminal appeals, is the notion of a prosecution case so undermined that no jury could possibly convict. The criminal court deals only in the safety of convictions. On a fresh evidence appeal the sole question the court asks itself is whether the conviction is unsafe (essentially the lurking doubt test). If the case is a difficult one it sometimes finds it helpful to test its view by asking whether the evidence, if given at the trial, might reasonably have affected the decision of the trial jury to convict R v Pendleton [2001] UKHL 66; [2002] 1 WLR 72, 83, para 19. The ultimate and only question, however, is for the court: is the verdict unsafe? The question raised by section 133, by contrast, is not one for the criminal court but rather one entirely for the Secretary of State. Similarly, no member of the court appears to suggest that Mullen itself was wrongly decided. Lord Steyn, of course, reached his decision there (to allow the Secretary of States appeal and reinstate the decision of the Divisional Court) on the ground that section 133 compensates only those who are clearly innocent whereas Lord Bingham reached his on the altogether narrower ground that: It is for failures of the trial process that the Secretary of State is bound . to pay compensation (para 8). Mr Mullens conviction was, of course, quashed not because of anything that had gone wrong in the trial process but because he would not have been on trial at all but for having been unlawfully returned to this country. Certainly Lord Bingham disagreed with Lord Steyns approach. But it cannot be pretended that Lord Binghams own approach supports the particular formulation suggested by the majority in the present case. My own reasoning in the Divisional Court in Mullen [2002] 1 WLR 1857, 1864 was essentially that later to be adopted by Lord Steyn: 25 What was shown beyond reasonable doubt here was that there had been an abuse of process in bringing the claimant to trial. That was the newly discovered fact. But that fact did not itself show beyond reasonable doubt that there had been a miscarriage of justice. All that it showed was that the court needed to conduct a discretionary exercise to decide in effect which of two important public interests should prevail: the public interest in trying, convicting and punishing the guilty or that in discouraging breaches of the rule of law and preserving the integrity of the criminal justice system. It preferred the latter. True, it had no doubt that the balance came down decisively in the defendants favour. But that was by no means to find that he was innocent, still less that he was plainly so. Rather it was a judgment that the lawful administration of justice would be affronted by his remaining convicted and imprisoned. 26 In short, a miscarriage of justice in the context of section 133 means, in my judgment, the wrongful conviction of an innocent accused. Compensation goes only to those ultimately proved innocent, not to all those whose convictions are adjudged unsafe. The quashing of the claimants conviction in this case was a vindication of the rule of law, not the righting of a mistaken verdict. As I shall come to suggest, the quashing of the conviction in many cases which would fall within the majoritys formulation for compensation here is more properly to be characterised as a vindication of the rule of law than as the righting of a mistaken verdict. Par excellence, indeed, this seems to me to be so in cases where confession statements, even though perhaps demonstrably true (by referring, say, to facts known only to the perpetrator of the crime) are excluded because of intimidation or inducement see particularly in this regard paras 264 and 265 of Lord Judges judgment. My reasons for remaining precisely of the view I expressed in the Divisional Court in Mullen are essentially a combination of the considerations in favour of the category 1 test (that of innocence) and the considerations weighing against the category 2 test (that of critical evidence undermined). As for the factors favouring the test of innocence, it is difficult to improve upon those listed by Lord Phillips at paras 43 48 of his judgment. As Lord Phillips there points out, this construction gives section 133 a perfectly natural and logical meaning, indeed it is the meaning that the man in the street would be likely to accord to the wording of section 133 (para 43); it makes perfect sense of the requirement that the new facts should prove this beyond reasonable doubt (para 44); and it gives section 133 a meaning which is eminently practicable (para 45). It seems to me unnecessary to decide whether Lloyd LJ was right to say in R v McIlkenny (1991) 93 Cr App R 287, 311 that the Court of Appeal is not entitled to state that an appellant is innocent a point on which Lord Phillips (at para 45) and Lord Judge (at para 251) disagree. The all important consideration in this respect is, as Lord Phillips says, that it is for the Secretary of State, not the Court of Appeal, to decide whether there has in fact been a miscarriage of justice (and, therefore, on the innocence test, whether the fresh evidence shows beyond reasonable doubt that the defendant was innocent) and the reasons given for quashing the conviction are unlikely to leave any doubt of this (para 46). As, moreover, Lord Phillips observes (at para 47) the innocence test will ensure that a guilty defendant is not compensated for the consequences of his conviction. If I may revert to the man in the street, he would, I think, be appalled at a construction which, on the contrary, would not infrequently result in the compensation of the guilty, sometimes, as already indicated, to the extent of hundreds of thousands of pounds. As for the factors weighing against the category 2 test, prominent amongst these is undoubtedly the converse of the point just made, the fact that it would result in very substantial compensation for many defendants who are in truth guilty. I have already instanced (para 275 above and paras 264 and 265 of Lord Judges judgment) those whose confession statements (even if true) come to be undermined. Equally this is so in cases where it comes to be seen that anonymous or hearsay evidence should not have been allowed (see particularly in this regard para 260 of Lord Judges judgment). This point, indeed, can be illustrated by the facts of R v Secretary of State for the Home Department, Ex p Bateman (1994) 7 Admin LR 175 (where, as Lord Clarke notes at para 199, I was sitting in the Court of Appeal with Sir Thomas Bingham MR and Farquharson LJ). Mr Batemans appeal for compensation failed in the event because the success of his second criminal appeal owed nothing to a new or newly discovered fact. Obiter, however, the Master of the Rolls suggested that he had suffered a miscarriage of justice. On an appeal out of time his conviction had been quashed because certain statements had been wrongly admitted in evidence at trial. These were statements from important New Zealand witnesses whom he had wanted called and cross examined. But why, I am now inclined to ask, should a successful appellant be compensated in those circumstances? The case against him might well have become more, rather than less, damning had the witnesses indeed been called and given their evidence orally (as was held should have happened). One other case I want to mention which to my mind strikingly illustrates the dangers of adopting the category 2 construction is a recent decision of this court. The case concerned the conviction of each of two brothers (A and B) for murder and two robberies following, as later investigations and a reference by the Criminal Cases Review Commission were to show, police misconduct of the gravest kind (most notably by colluding with the main prosecution witness). On a second appeal some twelve years after conviction there was accordingly no dispute but that As and Bs convictions had to be quashed. The only issue for the Court of Appeal had been whether A should be retried, this time not on the basis of the irredeemably tainted evidence given at his original trial but rather based on a series of admissions of guilt he had made following his conviction and the failure of his first appeal. Because the decision upheld by the majority in this court was to order a retrial, the reporting of the detailed judgments both of the Court of Appeal and of this court has had to be delayed. As, however, these judgments make plain, although B could not be retried (he having made no confession of guilt), the guilt of both was in reality plain. True, the most critical evidence in the case against them had been that of a supergrass (without whose evidence, indeed, it was agreed that there could have been no prosecution at all), upon whose evidence the Crown could no longer rely because of the polices misconduct in conferring upon him a whole host of benefits to secure his continuing cooperation in the brothers prosecution at trial. But his evidence had been supported by a jigsaw of other pieces of evidence. That said, however, in the language of the majoritys category 2 test, no conviction could possibly be based upon it. Is it then to be said that B must be compensated for the twelve years or so he spent in prison before being released at his second appeal? And, indeed, that A too would have had to be compensated had the Court of Appeal not decided to order his retrial? Will the Court of Appeal in future, when deciding at the conclusion of an out of time appeal whether the interests of justice require a retrial, have to factor in the consideration that, unless a retrial is ordered, the successful appellant will or may be found entitled to compensation under the majoritys approach to section 133? The other centrally important consideration militating against a category 2 construction of section 133 is the difficulty indeed, to my mind, impossibility of reconciling this with the language of the section as a whole, and most especially with its requirement that the new facts establish a miscarriage of justice beyond reasonable doubt. It seems to me nonsensical to suggest that the category 2 test is one that can sensibly be satisfied (or not) beyond reasonable doubt. For good measure although, I accept, less conclusively the alternative basis of entitlement to compensation provided for by the section, namely a pardon, naturally connotes innocence rather than some less exacting test. Even the language of a new or newly discovered fact (rather than fresh evidence) to my mind tends to suggest the revelation of something clear and certain namely innocence, rather than merely the undermining of the prosecutions overall case. I entirely accept, of course, that a new fact which does so undermine this case as to show that the appellant could not properly have been convicted on the evidence in fact adduced against him may well in many cases suggest actual innocence and duly persuade the Secretary of State of this. Lord Judge expressly recognises this at para 259 of his judgment. But what if, say, as a result of inadmissible intercept evidence or other reliable intelligence the Secretary of State reasonably believes (perhaps, indeed, is convinced) that the appellant is in fact guilty. Must he nevertheless compensate him? I would hope and respectfully maintain not. Naturally I recognise that the application of the innocence test will exclude from compensation a few who are in fact innocent. Even on the majoritys test, of course, some who are innocent will be excluded. That, however, seems to me preferable to compensating a considerable number (although mercifully not so many as would be compensated on the category 3 approach) who are guilty. After all, this whole compensation scheme operates by creating only a narrow and exceptional class who qualify. The claimant qualifies only by producing a new or newly discovered fact. And only if his conviction is quashed on a reference or an appeal out of time. (It will, indeed, often be a matter of chance whether an appeal is out of time the lawyers may simply have missed the time limit.) Why should the state not have a scheme which compensates only the comparatively few who plainly can demonstrate their innocence and, as I have shown, compensate them generously rather than a larger number who may or may not be innocent? That, at all events, is the scheme which in my opinion Parliament enacted here. On certain of the questions raised there is nothing I wish to add to what Lord Judge has said. I agree with him (at para 252) about the material to be considered by the Secretary of State (indeed, as to this, I agree too with what Lord Phillips says at para 36 of his judgment, subject only to applying the correct test). I agree with all that Lord Judge says (at para 254) as to the relevance here of section 133(5A). I agree with him too (at paras 255 and 256) about the relevance of the Strasbourg jurisprudence in this context. (It hardly needs pointing out that, were the Strasbourg cases to present a problem, they would do so no less for the majority than for the minority view.) And I agree with Lord Judges approach (at paras 266 and 267) to a new or newly discovered fact. In common, as I understand it, with every other member of the Court, I too would dismiss Mr Adamss appeal. Had Lord Judges and my view as to the meaning of section 133 prevailed, I would have been inclined to remit Mr MacDermotts and Mr McCartneys compensation claims to the Secretary of State for his further consideration in the light of our judgments and more particularly of Lord Kerrs masterly analysis of the facts of those two cases. LORD WALKER I agree with the judgments of Lord Judge and Lord Brown. |
The United Kingdom operates a points based system (PBS) for the grant of leave to remain to non EU nationals who wish to work or study here. There are five tiers, and for the purposes of this appeal the relevant tier is Tier 2 (General) Migrant. The applicant migrant must be sponsored by an employer which is licensed to sponsor migrants. The guidance relevant to the application makes it clear that his sponsor must be licensed by the Home Office. It also states that an applicant must have a valid certificate of sponsorship (CoS) provided by his sponsor and that, if he does not have a valid CoS, the Home Office will reject his application. There is no discretion about this. The PBS has been described as prescriptive (Kaur v Secretary of State for the Home Department [2015] EWCA Civ 13, para 41 per Burnett LJ). The Secretary of State has a discretion to grant leave outside the PBS in exceptional circumstances (R (Agyarko) v Secretary of State for the Home Department [2017] 1 WLR 4546, para 4 per Lord Reed). Moreover, the Home Office has power to revoke a licence at any time. In this case, Mr Pathan made his application and was sponsored by his employer, Submania Ltd (Submania). It was his second application for Tier 2 leave. Submania held a sponsors licence and provided him with a valid CoS when he put in his application, but he contends that, unbeknown to him, while his application was outstanding, the Home Office revoked his sponsors licence before his application was determined. The Home Office did not inform Mr Pathan of this and simply rejected his application on the basis that his sponsor was no longer licensed, and so he had not fulfilled the conditions for the grant of leave. The principal issue is whether the Secretary of States failure to inform Mr Pathan of the revocation of his sponsors licence is reviewable in public law on the grounds that it amounts to procedural unfairness, that is, a breach of the rules of natural justice. These, so far as relevant, in appropriate circumstances require a person to have an opportunity to be heard on any material information which the decision maker acquires and of which he was unaware. Procedural unfairness is to be contrasted with substantive unfairness, where the challenge is to the merits of the rule under which the decision against him was or is to be challenged. The grounds on which such a challenge can succeed are generally limited to situations where the rule is irrational. Mr Pathan sought an administrative review of the Secretary of States decision to reject his application, but the decision was maintained. He then sought judicial review of that decision in the Upper Tribunal. Mr Pathan contended in the Upper Tribunal (Upper Tribunal Judge Allen) [2017] UKUT 369 (IAC) and in the Court of Appeal (Sir Andrew McFarlane P, Singh and Coulson LJJ) [2018] 4 WLR 161 that the decision of the Secretary of State to reject his application without giving him an opportunity to find another sponsor is reviewable in public law on the grounds of procedural unfairness. Both the Upper Tribunal and the Court of Appeal dismissed Mr Pathans appeal. In the Court of Appeal, Singh LJ gave a full judgment and the other members of the Court agreed (with Coulson LJ expressly agreeing with reservations of Singh LJ about the decision mentioned in the next paragraph). The Court of Appeal held that Mr Pathans appeal raised a question of substantive fairness. As substantive fairness was not a free standing ground for judicial review, Mr Pathan would have to show irrationality. He could not succeed on that ground because the rules for the PBS had been drafted for rational policy reasons. The Court of Appeal expressed doubt about the correctness of another decision of the Upper Tribunal, Patel (Revocation of Sponsor Licence Fairness) India [2011] UKUT 211 (IAC); [2011] Imm AR 5, dealing with the extension of leave to a student under Tier 4 if his colleges licence is revoked, but did not overrule that decision. In Patel, the principal holding of the Upper Tribunal was that, where the college with which a student with Tier 4 leave is enrolled has its licence revoked and the student has acted in good faith, the common law duty of fairness required that the student should generally be given a 60 day extension to find a fresh sponsorship letter to enable them to apply to vary their existing leave to include study at another college which was licenced. As a result of that decision, the practice of the Secretary of State is now to grant all students in that position an extension of 60 days unless the student has not been a bona fide student or has participated in the practices that may have contributed to the sponsors licence being withdrawn. In those cases, the students leave is limited to any existing permission to stay that he has. On this appeal, the Secretary of State does not ask this Court to overrule Patel but submits that the basis of the decision was unsound. For the reasons set out below, I consider that it was a breach of the procedural duty of fairness for the Secretary of State not to have informed Mr Pathan that his sponsors licence had been withdrawn, which meant that his application, as it stood, would be bound to fail. All the members of the Court reach this conclusion and accordingly the appeal succeeds on that issue. I go on to hold that the duty of procedural fairness meant that the Secretary of State had to give Mr Pathan an opportunity to avert that difficulty. Lord Wilson has reached the same conclusion as appears from his judgment, with which as explained below I agree. Lord Kerr and Lady Black in their joint judgment and Lord Briggs in his judgment take a different view. They consider that the grant of an extension of time is a matter of substance and falls outside the duty of procedural fairness. On that issue, the views of Lord Kerr, Lady Black and Lord Briggs as the majority prevail. Why Mr Pathans Tier 2 application failed and the proceedings Mr Pathan then initiated Mr Pathan, his wife and son are Indian nationals living in the UK. The ability of Mr Pathans family to remain in the UK is dependent on Mr Pathans success in the present appeal. Mr Pathan was granted leave to enter the UK as the dependant partner of a Tier 4 (General) Student on 7 September 2009, with leave to remain (LTR) until 31 December 2012. LTR was extended from 1 December 2010 to 30 April 2014. Subsequently, Mr Pathan was given further LTR as a Tier 2 (General) Migrant from 23 March 2013 to 15 October 2015 in order to work as a business development manager for Submania, a food outlet with some seven to ten outlets in London and the South East. Submania held a sponsors licence and provided him with a valid CoS. On 2 September 2015 Mr Pathan made an application for further LTR to enable him to continue working for Submania. The Secretary of States evidence was that Mr Pathans application was put on hold whilst officials visited Submania to investigate whether the vacancy was genuine. On 7 March 2016 (following an initial suspension giving Submania a chance to make representations which it did not take) the Secretary of State revoked Submanias sponsors licence. This invalidated the CoS provided by Mr Pathan in his application for LTR. On 7 June 2016 the Secretary of State, without previously informing Mr Pathan of the revocation, refused his application because his CoS was invalid. Mr Pathans LTR would have expired on 15 October 2015 but for his application for further leave. In those circumstances section 3C of the Immigration Act 1971 (the 1971 Act) (as substituted by section 118 of the Nationality, Immigration and Asylum Act 2002) operated to extend his expiring leave pending his further application and any administrative review or appeal of the decision on that application. I will call this leave section 3C leave. When Mr Pathan applied for administrative review of the decision rejecting his application on 14 June 2016, he sought a 60 day period to enable him to provide a fresh CoS. The Secretary of State maintained the decision to refuse his application, ruling not that no period beyond the 14 days allowed for removal was appropriate but that the 60 day period (curtailment period) would only have been appropriate if Mr Pathan had had 60 days leave remaining. As explained, his LTR had by then expired. When Mr Pathan issued judicial review proceedings, he again sought a period of 60 days to provide a further CoS. The Upper Tribunal dismissed his application, as did the Court of Appeal. Mr Pathan now seeks relief from this Court. Relevant rules and legislation The relevant Immigration Rules are those in force at July 2016. The relevant provisions of these Rules start at paragraph 245H, which states the purpose of Tier 2 (General) is to enable UK employers to recruit workers from outside the EEA [European Economic Area] to fill a particular vacancy that cannot be filled by a British or EEA worker. Paragraph 245HD states: To qualify for leave to remain as a Tier 2 (General) Migrant an applicant must meet the requirements listed below. If the applicant meets these requirements, leave to remain will be granted. If the applicant does not meet these requirements, the application will be refused. It sets out the requirements for leave to remain in this context. requirements include at paragraph (f): If applying as a Tier 2 (General) migrant, the applicant must have a minimum of 50 points under paragraphs 76 to 79D of Appendix A. Appendix A includes a requirement at paragraph 77A that, in order to obtain points for a CoS, the applicant must provide a valid CoS reference number. Paragraph 77C(f) provides that the reference number must not have been withdrawn or cancelled by the Sponsor or by the UK Border Agency since it was assigned . From February 2016, the curtailment of leave was dealt with by paragraphs 323 onwards. Leave could be curtailed if, for example, deception was used to obtain leave to remain or a variation of leave to remain (paragraph 323) or if the migrants sponsor ceases to have a sponsor licence (paragraph 323A(b)(i)). At all material times there was guidance in place for applicants. At the time of Mr Pathans application, version 04/15 of the guidance was in force and applied to applications made on or after 6 April 2015. This had been superseded by version 04/16 by the time of the decision but this does not affect paragraph 190 of 04/15, which stated: A Certificate of Sponsorship can be withdrawn or cancelled at any time by either the Home Office or your Sponsor. Where your application relies on a Certificate of Sponsorship that has been either withdrawn or cancelled, your application will be refused. As to the consequences of revocation of the sponsors licence, the version of the guidance dated 04/16 stated: 9 If we revoke your licence, we will: immediately end (curtail) the permission to stay in the UK, or worker authorisation of any migrants whom we believe were actively and knowingly involved (complicit) in the reasons for the revocation of your licence such as if the migrant agreed that you would arrange a non existent job for them so they could come to the UK shorten the length of the worker authorisation, or permission to stay in the UK of any other migrants who were not actively involved to 60 calendar days if the migrant has fewer than 60 calendar days of their leave or worker authorisation remaining, we will not shorten it 19.10 In the first case above, any migrant with leave in Tiers 2, 4 or 5 will have to leave the UK or face enforced removal. In the second case above, they will also have to leave or face enforced removal if, at the end of the 60 calendar days, they have not made an application for leave in a category for which they qualify. If they were complicit in any abuse of the immigration system, their leave will end (curtailed) with immediate effect. 19. The equivalent passages in the version dated 04/15 were in virtually identical terms. Evidence on behalf of the Secretary of State Mr Richard Jackson, a senior executive officer in the Migration Policy Unit, which is part of the Immigration and Border Policy Directorate of the Home Office, filed a witness statement on behalf of the Secretary of State. This was largely directed to explaining what curtailment period is given to Tier 2 migrants and the reasons for treating Tier 2 and Tier 4 cases differently. Mr Jackson states that an applicant for Tier 2 leave will know that his application is dependent on his sponsor having a valid licence and that he can therefore have no expectation from the Home Offices published guidance that [he] will be given 60 days if their sponsors licence is revoked. (para 18) He also states that the Home Office considered making available to Tier 2 applicants the curtailment granted in the light of Patel to Tier 4 migrants. However, the Home Office concluded that there were differences between the two cases which made it inappropriate to give Tier 2 applicants a similar 60 day period. Migrants already entitled to leave to remain at the time when a sponsors licence was withdrawn in general have the benefit of a similar 60 day period. On revocation, the sponsor would cease to be able to employ the migrants who had obtained leave to remain on the basis of a CoS issued by that sponsor and this group of migrants would be given a 60 day curtailment period, reducing their leave to 60 days (or such lesser number of days as represented their unexpired leave) unless they had been complicit in the conduct which led to the revocation of the licence. But the curtailment period was not extended to applicants essentially for the following reasons: i) The curtailment period was given to Tier 4 migrants in those circumstances to allow them time to sort out their affairs. (This could include submitting another application for leave to remain in Tier 4 or some other category). A Tier 2 applicant was in a different position. They could have no expectation that their stay would continue and could therefore be expected to have put their affairs in order in case their application was refused. ii) The applicants position was protected by his section 3C leave. Under the Immigration Rules they were entitled to stay for a further 14 days (previously 28 days) after the administrative review was completed. iii) To treat the applicant in the same way as a migrant who already has Tier 2 leave would give him an additional 60 days that he would not otherwise have had, while the migrant who already has leave has his leave curtailed to 60 days. If he had less than 60 days remaining, his leave is not curtailed but neither is it extended to allow for 60 days. iv) There was evidence of manipulation as a result of the Patel decision if extra time is given, as there had been found to be students who were exploiting the extra days (this is discussed in the judgment of the Upper Tribunal). v) An application under Tier 2 will not be successful if the sponsor has not complied with the conditions of his licence in hiring the applicant, even if the licence is not revoked. There are a variety of reasons why a Tier 2 application might fail. vi) Tier 2 is different from Tier 4 because it is concerned with filling a particular labour market gap experienced by the sponsor and leave is given to fill a particular vacancy. The migrant will not lose wages as a result of the revocation of a licence and there is no guarantee that there is a gap elsewhere which a resident worker cannot fill. The courses provided to Tier 4 students are more generic, and the higher fees which they pay assist in ensuring the availability of courses for UK students. Tier 2 migrants are expected to know if their sponsor loses or is at risk of losing its licence. Mr Jackson expressed the view that where issues relating to the applicants job is among the reasons for revocation of a licence, it is probable that the employee has been complicit in those issues. In the first of those reasons, Mr Jackson draws no distinction between a Tier 2 applicant who has not yet started his job and a Tier 2 applicant who is currently working for the sponsor and is making an application for leave to extend that existing employment. Some key arguments Mr Michael Biggs appears for Mr Pathan. His primary complaint is that the Court of Appeal was wrong to treat Mr Pathans claim as one of substantive unfairness. He does not dispute the lawfulness of the licence revocation but contends that he should have been informed of it. He argues that this case engages common law unfairness, that is (among other matters) the principle that a person should know important information that might significantly impact the decision and have the opportunity to put in more information which would enable him to satisfy the decision maker. The actions of the Secretary of State were unfair because the rejection of Mr Pathans Tier 2 application radically impacted his and his familys rights and interests. The licence revocation prevented him from continuing his employment. The decision put him at risk of criminal liability and other restrictions as an overstayer. His article 8 rights and those of his family were engaged. Notice of the licence revocation could have made a difference to the outcome of Mr Pathans LTR application. If he was aware of it, he could have varied his application to one relying upon a new CoS, or he could have made a new application. Mr Alan Payne, for the Secretary of State, submits that no case suggests that procedural fairness requires notice to be given for any reason other than giving an individual an opportunity to address the merits of the applicable criteria or proposed decision. No case says an application that is bound to fail must be given a second chance. What Mr Pathan seeks is a substantive benefit (a second chance) and so his complaint is not as to procedural fairness. The Court of Appeal were correct and their decision should be upheld. Discussion The complaint is procedural because establishing a procedural impropriety is a necessary first step The judgment of the Court of Appeal hinges on its conclusion that Mr Pathans complaint was about substantive, and not procedural, fairness. It is easy to see how this conclusion was reached. The overall objective of Mr Pathan in bringing these proceedings is to obtain a 60 day curtailment (see para 10 above). That is effectively to insert an exception into the requirement for a valid CoS, and to qualify the statements made as to the consequences which ensue on licence revocation in the Guidance. However, the preliminary and essential step in Mr Pathans argument is that as a matter of fairness the Secretary of State should have told him that she had revoked his sponsors licence. What Mr Pathan really wants to do is to have the opportunity to respond to the licence revocation by putting forward some other application for leave which would ensure that his application was not refused. Role of section 3C leave Section 3C makes it possible for him to do this because while the application is pending he can make another application for leave to remain on a different basis, and his application will be merged into his original application. Section 3C (as amended) provides: (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) leave expires, and (c) variation having been decided. the leave expires without the application for the application for variation is made before the (2) The leave is extended by virtue of this section during any period when the application for variation is neither decided (a) nor withdrawn, (b) an appeal under section 82(1) of the Nationality, Asylum and Immigration Act 2002 could be brought, while the appellant is in the United Kingdom against the decision on the application for variation (ignoring any possibility of an appeal out of time with permission), [. ] (c) (ca) (cb) an administrative review of the decision on the (d) application for variation (i) (ii) could be sought, or is pending. (3) Leave extended by virtue of this section shall lapse if the applicant leaves the United Kingdom. (3A) Leave extended by virtue of this section may be cancelled if the applicant (a) has failed to comply with a condition attached to the leave, or (b) has used or uses deception in seeking leave to remain (whether successfully or not). (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). The Secretary of States practice on timing is not entirely clear. In the present case there was an interval of three months between the revocation of the sponsors licence and the rejection of Mr Pathans application. It may be that, where a sponsors licence has been revoked, the Secretary of State generally takes no step for three months, ie until the usual period for bringing judicial review proceedings has elapsed. But it seems unlikely that the Secretary of State could wait that long before giving notice to other migrant workers since they would be likely to hear about the revocation at work. While it may be difficult for the Secretary of State to link up completely new applications with a particular sponsor, it may well be easier to identify applicants like Mr Pathan who are already working for the sponsor and are making an application for further leave. Because section 3C of the 1971 Act applies to any application for leave, Tier 2 leave applications are always inherently capable of being varied so that the applicant can rely on a different basis for leave, whether a different sponsor or some other basis altogether. It follows that even if the policy objective of the Secretary of State is that an application for Tier 2 leave should only match a particular employer (the sponsor) and that employer alone, the Secretary of State cannot resist a variation application made during the pendency of a Tier 2 application. Moreover, the fact that the primary purpose of section 3C of the 1971 Act was to prevent the proliferation of multiple claims does not prevent the possibility of its being used for the purpose of making an application which is more likely to succeed, and I venture to suggest that it is regularly used by applicants and practitioners for that purpose. There is an element of substantive unfairness in the complaint It seems to me that there is undeniably also an element of substance in Mr Pathans challenge, but the way I see it is that it is as a consequence of his argument about procedural fairness, not vice versa. If the challenge could only be analysed as one of substantive fairness, it would be impossible to bring a challenge on the grounds of procedural fairness unless the rule under which the decision maker was acting allowed such a challenge. It is not the law that a procedural challenge can be made only if there is no challenge to a substantive provision. In Cooper v Wandsworth Board of Works (1863) 14 CB NS 180, the defendant public board took the view that a landowner had failed to notify it of his intention to build a house as he was required to do by statute, and proceeded to exercise its statutory power to demolish his house without giving the landowner any opportunity to explain. The power to demolish was for public benefit, and the statute did not require the board to give the houseowner the opportunity to make representations. Nonetheless, the owner was held to have a right to be heard in case he could give information that might have caused the board not to demolish his house but to take some other step. (The public board did not assert that it did not know who the owner was.) It was no answer that the challenge also involved a challenge to a substantive provision of the relevant statute. Byles J famously cited an example given by Fortescue J in R v Chancellor, Masters and Scholars of the University of Cambridge (1723) 2 Ld Raym 1334; 1 Stra 557 (Dr Bentleys case): The judgment of Mr Justice Fortescue, in Dr Bentleys case, is somewhat quaint, but it is very applicable, and has been the law from that time to the present. He says, The objection for want of notice can never be got over. 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. Adam (says God), where art thou? Hast thou not eaten of the tree whereof I commanded thee that thou shouldest not eat? And the same question was put to Eve also. (pp 194 195) In the present case, if the Secretary of State had given Mr Pathan notice that Submanias sponsors licence had been revoked, he would have been able to take steps to produce another basis for leave and applied to vary his application. By that means, he would have had the opportunity, equivalent to that of Mr Cooper in the Wandsworth case of persuading the board not to demolish his house, of persuading the Secretary of State not to reject his application. It is common ground that the rules of natural justice apply to decision makers in public law whether or not they are acting judicially. In the Wandsworth case it was argued that the board, as successors to the commissioners for sewers, who were a judicial body, also acted judicially. I need not go into that question as I give an example in para 46 below of the Secretary of State being required to observe the rules of natural justice. The line between procedure and substance Going back to Byles Js famous example of the expulsion of Adam and Eve from the Garden of Eden, that determination was undoubtedly a substantive decision, but the grant to Adam and Eve of an opportunity to provide an explanation was a procedural decision. It might be thought that the distinction between substance and procedure is hard to grasp but that is only because the same substantive decision can give rise to both a claim of procedural unfairness and a claim that a substantive decision is unfair. As stated, both claims in Byles Js example arose out of the same substantive decision of expulsion from the Garden of Eden. This confusing state of affairs also occurs in the common law. For example, in R v Secretary of State for the Home Department, Ex p Venables [1998] AC 407 the Secretary of State increased the tariff for the two young persons convicted of murder beyond that fixed in their case by the Lord Chief Justice. One of the matters which the Secretary of State took into account was the public concern expressed in the media about the nature of their crimes. The House of Lords held that the decision of the Secretary of State was unlawful because (among other matters) this was an irrelevant consideration. The House also decided that it was contrary to the rules of natural justice for the Secretary of State to take these factors into account. The decision should have been made only on the basis of relevant considerations. That case is an example of how the same act of a public body can lead to claims of both procedural unfairness and unlawfulness. Lord Steyn expressly noted the overlap between substance and procedure, which illustrates the point I made in the preceding paragraph: [. ] I have come to the conclusion that the decisions of the Home Secretary as contained in his letters of 22 July 1994, which fixed a 15 year tariff for both Venables and Thompson, were unlawful for substantive reasons as well as a breach of the principles of procedural fairness. There are two separate substantive reasons why I conclude that the Home Secretarys decisions were unlawful. First, the Home Secretary regarded a sentence of detention during Her Majestys pleasure under section 53(1) imposed on a child convicted of murder as in law equivalent to a mandatory sentence of life imprisonment imposed on an adult convicted of murder. His legal premise was wrong: the two sentences are different. A sentence of detention during Her Majestys pleasure requires the Home Secretary to decide from time to time, taking into account the punitive element, whether detention is still justified. The Home Secretary misunderstood his duty. This misdirection by itself renders his decision unlawful. Secondly, the Home Secretary misdirected himself by giving weight to public protestations about the level at which the tariff in the cases of Venables and Thompson should be fixed. In doing so the Home Secretary took into account in aggravation of the appropriate level of punishment legally irrelevant considerations. This was a material defect in the reasoning of the Home Secretary. It rendered his decisions unlawful. On the issues of alleged procedural unfairness, I have concluded that the decisions of the Home Secretary were also procedurally flawed by the credence and weight which he gave to public clamour for an increase in the level of the tariff. This point overlaps with my second substantive conclusion. It may be two sides of the same coin: either way the quality of the decision making was adversely affected in a material way. (pp 518 519) The next section of this judgment develops the question of overlap. Line between procedural and substantive unfairness need not be rigid The closely reasoned decision of the Court of Appeal in the present case drew a rigid line between procedural and substantive fairness. This distinction harks back to the well known passage in the speech of Lord Diplock in Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374. At pp 410 411, Lord Diplock held: Judicial review has I think developed to a stage today when without reiterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads the grounds upon which administrative action is subject to control by judicial review. The first ground I would call illegality, the second irrationality and the third procedural impropriety. That is not to say that further development on a case by case basis may not in course of time add further grounds. I have in mind particularly the possible adoption in the future of the principle of proportionality which is recognised in the administrative law of several of our fellow members of the European Economic Community; but to dispose of the instant case the three already well established heads that I have mentioned will suffice. By illegality as a ground for judicial review I mean that the decision maker must understand correctly the law that regulates his decision making power and must give effect to it. Whether he has or not is par excellence a justiciable question to be decided, in the event of dispute, by those persons, the judges, by whom the judicial power of the state is exercisable. By irrationality I mean what can by now be succinctly referred to as Wednesbury unreasonableness (Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223). It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it. Whether a decision falls within this category is a question that judges by their training and experience should be well equipped to answer, or else there would be something badly wrong with our judicial system. To justify the courts exercise of this role, resort I think is today no longer needed to Viscount Radcliffes ingenious explanation in Edwards v Bairstow [1956] AC 14 of irrationality as a ground for a courts reversal of a decision by ascribing it to an inferred though unidentifiable mistake of law by the decision maker. Irrationality by now can stand upon its own feet as an accepted ground on which a decision may be attacked by judicial review. I have described the third head as procedural impropriety rather than failure to observe basic rules of natural justice or failure to act with procedural fairness towards the person who will be affected by the decision. This is because susceptibility to judicial review under this head covers also failure by an administrative tribunal to observe procedural rules that are expressly laid down in the legislative instrument by which its jurisdiction is conferred, even where such failure does not involve any denial of natural justice. But the instant case is not concerned with the proceedings of an administrative tribunal at all. Lord Diplocks speech is not, however, to be read as excluding the possibility that there may be, as counsel argues, a subset of one of the heads (which Lord Diplock calls procedural propriety) which arises only in particular circumstances and which has different attributes from the circumstances in which other cases under that head arise. In my judgment, Mr Biggs is correct in his submission that there is a subset of procedural fairness. This subset applies where there is a rule for the conduct of applications for some benefit, and the alleged unfairness stems from the fact that that rule does not expressly provide an applicant with the right to be heard or to be informed on a point when a significant event occurs which is brought about (rightly or wrongly) by the actions of the executive and which has grave impact on the applicant, who is not otherwise aware of those actions. Lord Diplocks categorisation of grounds for judicial review is important and I do not suggest otherwise. But the real issue is the level of intensity, or sensitivity, to judicial review given the roles and responsibilities of the judiciary under the British constitution. In R (Talpada) v Secretary of State for the Home Department [2018] EWCA Civ 841, para 63, Singh LJ held that unless kept within clearly defined and predictable boundaries, the doctrine of substantive unfairness risks (even if unconsciously) inviting the court to intrude impermissibly on the province of the executive. I share his overriding concern, but it is in the nature of the common law that the boundaries cannot always be clearly defined in advance or predictable. Examples of procedural unfairness throwing light on this case One of the cases which illustrates the last point is one which was not cited, namely FP (Iran) v Secretary of State for the Home Department [2007] EWCA Civ 13. That was an early decision directed at mitigating some of the hardship brought about when the Immigration Rules are drafted with a view to understandable efficiency, and in absolute terms, without perhaps taking full account of potential procedural unfairness. In some ways the case is close to this one because it too was a case where the Immigration Rules made it impossible for an applicant to make representations to the immigration tribunal rehearing his appeal against a refusal to accept his asylum claim. The rules stipulated that, if an applicant made no representations, the hearing had to proceed in his absence and there was no procedure for reopening that decision to allow the applicant to show a good reason for his absence. The appellants legal representative had failed to give notice of his change of address so that he was not notified of the hearing at which his appeal was to be reheard. Sedley LJ considered that rules could not stand where they were productive of irremediable procedural unfairness (para 48). The Rules deprived the applicant of his right to be heard (para 49). The fact that the rules took the form they did to to eliminate manipulation of the system did not justify the breadth of their effect (para 31). The Rules in question were outside the rule making powers and the purpose for which those powers were given. My judgment was based on the question whether the rules fell within the rule making power and drew on (among other matters) Professor Lon Fullers work, The Morality of Law, revised ed (1969) which is mentioned again at para 50 below. Wall J agreed with Sedley LJ. The breach of the common law principle of unfairness led to the rules being unlawful. A point to note is that the court considered how the rule would operate across the board and not simply in the instant case before them. So too here. Mr Pathans complaint is not peculiar to him. It must apply to anyone who is ignorant of a revocation of his sponsors licence but is working for him in the expectation that he will qualify for a Tier 2 visa. The complaint in this sort of case is about a systemic failure. The particular subset of procedural fairness with which this case is involved is a material systemic failure and the applicant is already in the employment of the sponsor but completely ignorant of the circumstances which led to the revocation of the licence. In my judgment in this subset of procedural fairness, the challenge will inevitably engage the substantive rule as well as procedural unfairness. Once the applicant is through the procedural gateway, the decision has to be set aside and the question of the rationality of the rule is then demonstrably irrelevant. There are many cases which apply the principle of procedural fairness. In the recent case of R (Balajigari) v Secretary of State for the Home Department [2019] EWCA Civ 673; [2019] 1 WLR 4647, the Court of Appeal (Underhill, Hickinbottom and Singh LJJ) held that where the Secretary of State was minded to refuse indefinite leave on the basis of dishonesty, which was likely to be a serious matter, common law procedural fairness required that an indication of that suspicion should be supplied to the applicant to give him an opportunity to respond. Underhill LJ, giving the judgment of the court, stated at para 160: Specifically, we do not believe that it was fair that Mr Kawos should have been expected to give detailed and definitive answers to an accusation of dishonesty without any prior notice. The contrary view seems to us to depend on the assumption that he must have known what the Secretary of State had in mind and should therefore have come prepared to face an interview in which he would have to give a detailed explanation of the original error in order to rebut an allegation of dishonesty; but if he was in fact innocent which is the very question which the Secretary of State had to decide why should he have anticipated any such thing? Another example in the numerous authorities on procedural fairness placed before us is R v Secretary of State for the Home Department, Ex p Fayed [1998] 1 WLR 763 (Lord Woolf MR, Kennedy and Phillips LJJ). Mr Al Fayed and his brother had applied to the Secretary of State for naturalisation as a British citizen. Section 44 of the British Nationality Act 1981 stated that the Secretary of State did not have to give reasons for his decision and his decision was not reviewable in the courts. The Secretary of State made an announcement that the applications were especially difficult and sensitive. Both applications were refused. It was held that procedural fairness applied and that the Secretary of State had to give the applicant an indication of the areas that were causing him concern. Lord Woolf explained that there was a long tradition in administrative law that a person should act fairly before exercising a statutory discretion and that inconvenience to the decision maker was not a bar. This case illustrates the point that the requirements of procedural fairness are affected by issues such as the difficulty for the applicant in identifying the critical matter unless the decision maker gives him some indication as to what it is. Lord Woolf held: I appreciate there is also anxiety as to the administrative burden involved in giving notice of areas of concern. Administrative convenience cannot justify unfairness but I would emphasise that my remarks are limited to cases where an applicant would be in real difficulty in doing himself justice unless the area of concern is identified by notice. In many cases which are less complex than that of the Fayeds the issues may be obvious. If this is the position notice may well be superfluous because what the applicant needs to establish will be clear. If this is the position notice may well not be required. However, in the case of the Fayeds this is not the position because the extensive range of circumstances which could cause the Secretary of State concern mean that it is impractical for them to identify the target at which their representations should be aimed. (p 777) Values served by procedural fairness In R (Osborn) v Parole Board [2014] AC 1115, Lord Reed considered the values served by the requirements about procedural fairness. He mentioned three in particular. The first was that it satisfied a persons intuitive expectations of what a just process involved: The first was described by Lord Hoffmann (ibid) [Secretary of State for the Home Department v AF (No 3) [2010] 2 AC 269, para 72] 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. (para 68) Lord Reeds second point is particularly relevant to this case. Procedural fairness promotes congruence between decision making and the law: 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), ch 6. (para 71) Lord Reeds third value concerned cost. While it might appear that the cost of providing a person with an oral hearing (not in point here) increases the cost of decision making, that may not be the case if the decision reached is a fairer one: 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. (para 72) Procedural fairness is thus an important matter. It makes the law more just and at the same time improves the standards with which decision makers are expected to comply in the 21st century. Substantive unfairness is not in itself a head of judicial review In referring as I do to unfairness, I do not in any way depart from what Lord Carnwath (with whose judgment the other members of this Court agreed) held in R (Gallaher Group Ltd) v Competition and Markets Authority [2019] AC 96, para 41 that substantive unfairness is not a self standing head of judicial review: In summary, procedural unfairness is well established and well understood. Substantive unfairness on the other hand or, in Lord Dyson MRs words whether there has been unfairness on the part of the authority having regard to all the circumstances is not a distinct legal criterion. Nor is it made so by the addition of terms such as conspicuous or abuse of power. Such language adds nothing to the ordinary principles of judicial review, notably in the present context irrationality and legitimate expectation. It is by reference to those principles that cases such as the present must be judged. Lord Sumption made a similar point at para 50 in that case. What does fairness require in this case? Procedural fairness is adaptable to the environment in which it is applied. Procedural unfairness does not entail that the decision maker must comply with a pre designed set of rules. As Lord Mustill held in a very well known passage in R v Secretary of State for the Home Department, Ex p Doody [1994] 1 AC 531, 560, what fairness requires in any particular case will depend on the circumstances and may change over time. Lord Mustill held: What does fairness require in the present case? My Lords, I think it unnecessary to refer by name or to quote from, any of the often cited authorities in which the courts have explained what is essentially an intuitive judgment. They are far too well known. From them, I derive that (1) where an Act of Parliament confers an administrative power there is a presumption that it will be exercised in a manner which is fair in all the circumstances. (2) The standards of fairness are not immutable. They may change with the passage of time, both in the general and in their application to decisions of a particular type. (3) The principles of fairness are not to be applied by rote identically in every situation. What fairness demands is dependent on the context of the decision, and this is to be taken into account in all its aspects. (4) An essential feature of the context is the statute which creates the discretion, as regards both its language and the shape of the legal and administrative system within which the decision is taken. (5) Fairness will very often require that a person who may be adversely affected by the decision will have an opportunity to make representations on his own behalf either before the decision is taken with a view to producing a favourable result; or after it is taken, with a view to procuring its modification; or both. (6) Since the person affected usually cannot make worthwhile representations without knowing what factors may weigh against his interests fairness will very often require that he is informed of the gist of the case which he has to answer. Here what procedural fairness aims to achieve is that a person who, like Mr Pathan, is applying for further leave in order to continue working for his sponsor, and had a valid CoS at the date of his application, should have notice of the communication to the sponsor of the determination of the Secretary of State that the sponsors licence is revoked. Where the Secretary of State has initiated the process for the revocation of the sponsors licence, and revocation is the cause of the invalidation of his application, it is right that the applicant should have that information in order to avert or mitigate the potential fatal blow to his application. This is because, while the applicant can be under no illusion as to the effect of revocation, he is not told in terms that the Secretary of State will take this course without his being informed. In order to give the applicant a meaningful opportunity for the applicant to take averting action if he can, the Secretary of State must give him a further period selected by her (subject of course to any successful challenge to the revocation). The Secretary of State is likely to have to allow three months for a challenge to the revocation in any event and so the reasonable period might be 60 days. Both periods could run together. By the time revocation occurs, an applicant may have no part of their leave left and so he may be relying on the extension to his leave conferred by section 3C of the 1971 Act. But such applicants would have also been expecting to obtain their leave and so it seems to me that the length of the period should be the same for these applicants as it is for those applicants who made their application for Tier 2 (General) leave and continue to have sufficient days remaining to cover the curtailment period. The decision as to the appropriate period will be a matter (subject to any judicial review) for the Secretary of State. It has been represented to us that a shorter period of 28 days would not give the applicant time to find a new sponsor if the new sponsor had to comply with the resident labour market test. Once the Secretary of State has given notice of revocation to Mr Pathan it would be up to him to find out from his original sponsor whether the sponsor proposes to, and does successfully, challenge the revocation. Fairness does not require the Secretary of State to answer questions about that or keep the applicant informed. Averting what I have described as a potential fatal blow to his application may include the applicant seeking to vary his application so that he obtains LTR under the sponsorship of another sponsor; demonstrating that he has other sponsorship to the Secretary of State is but another form of the making of representations to which Lord Mustill refers in his fifth point (point (5)) in the passage which I have set out from Doody. It is not right to say, as Mr Payne submits, that, once his sponsors licence is revoked, his application is doomed and that, because of this, procedural fairness has no role to play and so does not require any steps to be taken. The applicant has a chance (which may be only a small chance) that he may find a new basis for applying for LTR. There is no difficulty in making an application for a variation in these circumstances, as the Upper Tribunal held in Patel [2011] Imm AR 5, para 21. Lord Kerr and Lord Briggs conclude that the duty of fairness extends no further than giving Mr Pathan notice of the revocation. Respectfully, I do not share this view. As De Smith s Judicial Review, 8th ed (2019), states at paras 7 045 and 7 046: 7 045 The Court of Appeal has characterised the principle of natural justice or procedural fairness as requiring that any participant in adversarial proceedings is entitled to know the case which he has to meet and to have a reasonable opportunity to adduce evidence and make submissions in relation to that opposing case. 7 046 Individuals should not be taken unfairly by surprise. In disciplinary and analogous situations, there will often be a further reason why adequate prior notice should be given to the party to be charged to give him the opportunity of offering to resign or (for example) surrender his licence, rather than face the prospect of formal condemnation. The duty to notify also includes the duty to take into consideration any representations made in response to notification. (footnotes omitted) The first sentence of para 7 046 contrast with para 196 of the judgment of Lord Briggs in this matter. In addition, De Smith references at the end of para 7 046 R v North Yorkshire County Council, Ex p M [1989] QB 411. The local authority had failed to disclose to the childs guardian ad litem major changes in the circumstances of the child. Ewbank J held that that the authority had both to notify the guardian of these circumstances and also to listen to the guardians views. For that purpose, the guardian would have to have been given time to formulate views and submit them to the authority. The examples given in para 7 046 of enabling a defendant to disciplinary proceedings to resign or to surrender his licence are interesting examples of situations in which a person should be given the chance not simply to make further representations in the proceedings but also to take steps which are independent of them. There is no case law footnoted as supporting these examples, but the text clearly expresses the view of the learned editors. There is an obvious parallel between those examples and a case such as this where the applicant wishes to find another sponsor so that he can apply to vary his application for Tier 2 (General) leave. Since an applicant is permitted to vary his application, it is moreover foreseeable that an applicant may properly wish to take steps which are not directly related to his then current application. There is no basis therefore why his further pursuit of his application should be disregarded or treated as substantive, as Lord Briggs considers that it should, simply because the original purpose of the application had failed. The PBS will remain a prescriptive scheme, and the requirements of fairness must take that into account. Unless the applicant can produce an alternative basis for LTR, his application will fail. Under the PBS, the Secretary of State will not have to consider statements of intention by the applicant or applications for further extensions of the Secretary of States usual timeframe for dealing with his original application, which will presumably be three months from the date of communication of revocation to allow for challenges by way of judicial review. There will be other cases where fairness does not require the applicant to be informed: obvious examples are where he already knows that there are grounds for revocation and where he is complicit in them. In those circumstances, he already knows that the success of his application is in jeopardy. There is also no need for the Secretary of State to give notice to the applicant if the licence is terminated other than as the result of the Secretary of States actions (see paras 82 to 84 below). Similarly there may be cases where the applicant will be unable to obtain any remedy if the Secretary of State does not give him notice of the revocation, because, for example, it is shown that even if he had had that notice he would still have been unable to find a sponsor (see generally De Smiths Judicial Review, paras 8 065 to 8 072, which cites among other authorities Cinnamond v British Airports Authority [1980] 1 WLR 582, which is cited by Lord Briggs in his judgment in this case. We are also only concerned with a person in the sponsors employment, who is seeking LTR in order to continue working for their sponsor. The Secretary of State has accepted that existing workers are likely to have entered into commitments for which they will need time to sort out their affairs. The difference said to exist between them and migrants like Mr Pathan who, being existing employees of the sponsor, are seeking further LTR is that the latter group is said to have no expectation that their application will be successful. But this somewhat overstates the position. One of the effects of the PBS is that if a person makes an application and calculates that he has the required number of points he will in reality expect his application to succeed. Paragraph 245HD (set out above) states: If the applicant meets these requirements, leave to remain will be granted. Success in obtaining leave under the PBS, as its name suggests, involves earning sufficient points. I have already described the PBS as prescriptive: see para 1 above. By way of further background, under the PBS the Home Office has a large volume of applications each year: Mr Jackson explains that there were about 90,000 applicants in 2016 for Tier 2 leave involving some 28,000 sponsors. The policy aims are very specific: the Home Office has designed Tier 2 around the principle of sponsorship with the sponsor having a specific vacancy that cannot be filled by a resident worker and undertaking certain duties in relation to the applicant. As explained, the applicant is then awarded points for meeting conditions. As Burnett LJ put it in Kaur at [2015] EWCA Civ 13, para 41: 41. The points based system for determining whether to grant leave to enter or remain in the United Kingdom, which applies to students as well as a number of other categories of applicant, is designed to achieve predictability, administrative simplicity and certainty. It does so at the expense of discretion, that is to say it is prescriptive. The consequence is that failure to comply with all its detailed requirements will usually lead to a failure to earn the points in question and thus refusal: see eg Sullivan LJ in Alam v Secretary of State for the Home Department [2012] EWCA Civ 960 at para 44, Davis LJ in Secretary of State for the Home Department v Rodriguez [2014] EWCA Civ 2 at para 100; Sales LJ in EK (Ivory Coast) v Secretary of State for the Home Department [2014] EWCA Civ 1517 at para 28 and Briggs LJ at para 59. It was that important background which informed the decision in EK (Ivory Coast). I have considered with care the whole of the evidence of Mr Jackson. In my judgment, it is unreal to suppose that, as he states, if an applicant who seeks LTR so that he can continue working for his sponsor and puts in an application which is apparently in order when submitted, he is going to put himself in a position where he has no commitments so that he can leave if required to do so. Moreover, if he is kept in ignorance as to his sponsors shortcomings, he will not know about any revocation unless the Secretary of State informs him. There is something deeply unsatisfactory about the Secretary of State being able to take that decision which may have a profound influence on the life of the applicant, without any obligation to tell him. It is after all knowledge which is peculiarly in the Secretary of States possession. The Secretary of State has accepted an obligation to give a window of opportunity to migrant workers who become unemployed when their sponsor loses his licence. It seems to me that fairness demands that the Secretary of State accepts some similar obligation to tell the applicant, who is also an employee of a sponsor, of the revocation to give him too time to sort his affairs out. It is not really an answer to say that his leave had expired. He would have been planning his affairs on the basis that he would be granted a new Tier 2 Migrant visa. He is likely to have engaged the same sort of commitments as other migrant workers of the sponsor. Moreover, employees who have already obtained their Tier 2 leave are allowed to look for other sponsors which suggest that the stated aim of Tier 2 to match migrants to particular vacancies can, as one would expect, equally be satisfied by matching resident labour market shortages to migrants. We are not concerned with a new applicant or an applicant for a new position. It would not be reasonable to expect the Secretary of State to assume that such applicants would have commitments. Lord Kerr, Lady Black and Lord Briggs have reached a different conclusion from me on the question whether the applicant would be entitled to a period of time to amend his application or take other steps if informed that the Secretary of State had revoked his sponsors licence. In my view, the duty of procedural fairness requires the Secretary of State to give a meaningful opportunity to take steps in the light of the information supplied to him. The giving of information to him is largely pointless if this does not happen and the Secretary of State is able to reject his application the very next day as Lord Briggs holds. Likewise the appropriate period of time cannot serendipitously depend on the amount of time which happens to pass in any individual case between the notification by the Secretary of State to the applicant and the rejection of his application, as Lord Kerr and Lady Black hold. However I agree with Lord Kerr and Lady Black that the duty to give notice of a decision to someone who will be adversely affected by it cannot be defined solely by the consideration that it is pointless for that person to make representations with a view to reversing or avoiding the effect of the decision (para 131). That is to confuse the duty with the courts discretion to determine the appropriate remedy. Why the question is not one of substance Singh LJ held that the dispute is about whether the mandatory requirement for a valid CoS is lawful. So put, the question in issue is indeed one of substance but it is not the issue raised by Mr Pathan and for which he was granted leave to bring judicial review proceedings. His case is that the Secretary of State should have given him notice that his sponsors licence was revoked and time to deal with it. In my judgment, and with respect, the distinction between procedure and substance does not justify recharacterising his complaint. Lord Briggs also reaches the conclusion that the issue is one of substance by looking at the reality of the complaint. He calls it a question of substance dressed up as procedure, but I do not read that description as a suggestion that the application was clothed with the label of procedural unfairness but put forward as one of substance, like a wolf in sheeps clothing. Mr Biggs has not sought to challenge either the substantive decision made by the Secretary of State, or the rationality of the rule. Moreover, leave was given for the procedural unfairness argument to be run. As the Venables case [1998] AC 407 (see para 38 above) illustrates, where an applicant relies on procedural fairness, the court looks at the process. It is true that if a decision has been taken and procedural unfairness is found, the decision will be set aside. That may or may not show a defect in the rule. In the present case, the rule that the applicant for Tier 2 must have a valid CoS at the time when the Secretary of State makes his decision on his application, which was the substantive rule identified by Singh LJ, is unaffected by the determination of the procedural unfairness claim in Mr Pathans favour. In other words, that rule is in fact not affected by a conclusion that the process of decision making which involved an omission to give notice as in the Wandsworth case 14 CBNS 180 was unfair. A defect in the decision making process is the hallmark of a procedural dispute. A substantive decision is the decision that determines the application, ie a decision on the merits. As I see it, Mr Pathans case falls within, not beyond, the phrase used by Lord Briggs: the true boundaries of procedural fairness. Question whether rule irrational does not need to be decided Having found that the challenge was one of substantive unfairness Singh LJ went on to conclude that the Tier 2 rules, which meant that Mr Pathan had no time to seek another sponsor, were not irrational. The aim of Tier 2 was to match a migrant to a particular vacancy. The Tier 4 regime was different because the aim was to encourage foreign students to study in the UK. Tier 4 applicants were given notice that their application would fail because the Secretary of State had revoked their sponsors licence. Tier 2 applicants could always renew their application from abroad. In that way they would avoid the risk of criminal liability as an overstayer. Singh LJ considered that the applicant is in a different position from a migrant who is already working for the sponsor. Given that I have found that there was procedural unfairness to a person in Mr Pathans position, these points do not arise on this appeal. Unfairness in this case is not displaced by administrative review or the need not to impose burdens on the executive In my judgment, it is not an answer to Mr Pathans challenge to say that his leave is extended during the administrative review period and for 14 days thereafter. If he wishes to make an application to vary his application for Tier 2 leave because he has a different sponsor, he must do this before his section 3C leave expires. If he makes a variation application before his section 3C leave expires, that application is then automatically merged with his previous application. Making a variation application will hasten the end of his section 3C leave as he will be prevented from continuing with an administrative review if he makes an application for variation. If the applicants section 3C leave comes to an end and no other leave has been put in his place, the applicant becomes an illegal overstayer. Mr Biggs emphasised the hostile environment in which a migrant finds himself if he becomes an illegal overstayer. He may be expelled and prevented from returning to the UK for ten years. Mr Biggs submission to this court is essentially the same that he made in Balajigari, which Underhill LJ helpfully records as follows: 81. Secondly, Mr Biggs relied on the legal consequences for an applicant who remained in the UK without leave, which have been rendered more severe by the so called hostile environment provisions introduced by the Immigration Act 2014. It is, in the first place, a criminal offence to be in the UK without leave to remain: see section 24 of the Immigration Act 1971. As regards practical consequences, a person without leave faces severe restrictions on their right to work (see section 24B of the 1971 Act), to rent accommodation (section 22 of the 2014 Act), to have a bank account (section 40 of the 2014 Act) and to hold a driving licence (sections 97, 97A and 99 of the Road Traffic Act 1988); nor will they be entitled to free treatment from the NHS: section 175 of the National Health Service Act 2006. He submitted that those consequences are bound to have a serious impact on a migrants private life irrespective of any removal action. The Secretary of State recognises that a migrant worker needs 60 days to put his affair in order. It cannot be fair to leave an applicant for LTR who is also working for his sponsor with a shorter period of time. That period may indeed be too short as a new sponsor may have to complete a resident labour market test before issuing him with a CoS, and this may require him to advertise the post twice in order to see if there is a resident worker who would fill the vacancy. I appreciate that the Secretary of State sees the position of the applicant simply as matched to the job vacancy with the original sponsor, but the Secretary of State has also to discharge his duty of procedural fairness to the individual applicant as well. As to imposing burdens on the executive, it is well known that the PBS has been devised to enable the Secretary of State to deal efficiently with the number of cases which Britain attracts. Fairness must take full account of this, but the resultant scheme must not sacrifice fairness in order to achieve efficiency. As Sedley LJ, giving the judgment of the Court, held in R (Refugee Legal Centre) v Secretary of State for the Home Department [2004] EWCA Civ 1481; [2005] 1 WLR 2219, para 8: The choice of an acceptable system is in the first instance a matter for the executive, and in making its choice it is entitled to take into account the perceived political and other imperatives for a speedy turn round of asylum applications. But it is not entitled to sacrifice fairness on the altar of speed and convenience, much less of expediency; and whether it has done so is a question of law for the courts. Where revocation is not the result of the Secretary of States actions Singh LJ considered that Mr Pathans case was analogous to that of Talpada [2018] EWCA Civ 841, mentioned above, but in my judgment that case is distinguishable. The applicants application was for leave to remain as a Tier 2 migrant, and he received a CoS from his employer. Unfortunately, this was a CoS which had been used and so he could not meet the requirement that he should hold a valid CoS. Singh LJ held, at para 62: The reality of the complaint is that, despite what the Immigration Rules require, the respondent should have been prepared to accept something else, namely a COS number which in fact had already been used. That has nothing to do with any duty on the respondent to hear the appellant before taking her decision. In reality it is concerned with a matter of substance, namely whether the requirements in the Rules should be complied with in full or whether the respondent should be prepared to dispense with one of those requirements. In my view, it makes no difference to this analysis to say that the requirement in the Rules is itself concerned with a matter of procedure rather than, for example, whether a person should be granted leave to remain or a work permit. The important point is that this is nothing to do with procedural fairness in the sense outlined above. It is to do with whether a substantive requirement of the rules themselves needs to be complied with in making a relevant application. The officer of the sponsor company who had spoken to an official at the Home Office thought she had got permission to assign a previously used CoS. The Court of Appeal did not accept that there had been unfairness because the reason why the appellant had no valid CoS was not in the system provided by the Home Office. It was due to an error made by the officer of the sponsor company. Likewise, in EK (Ivory Coast) v Secretary of State for the Home Department [2014] EWCA Civ 1517; [2015] INLR 287, the Court of Appeal (Sales and Briggs LJJ; Floyd LJ dissenting) rejected an argument that the Secretary of State should have allowed a Tier 4 applicant further time when her college withdrew sponsorship from her by mistake. Another case where the cause of the failure of the application could not be attributed to the actions of the Secretary of State was R (Raza) v Secretary of State for the Home Department [2016] EWCA Civ 36; [2016] Imm AR 682, where the applicants sponsors licence was withdrawn but the Court of Appeal (Arden, Beatson and Christopher Clarke LJJ) rejected his claim for judicial review as he was already an overstayer when he made his application. Making an application from abroad In his judgment, Singh LJ accepted the Secretary of States argument that a person in Mr Pathans position could always return to their own country and make an application from there. But that course of action may be unreal if the migrant has financial commitments through having already worked for the sponsor. If the applicant went abroad and applied from another country, he would have to pay another fee. Procedural fairness does not of course apply any differently because of this. If the applicant is entitled to receive notification from the Secretary of State that his sponsors licence has been revoked, and if he is then able to apply for a variation of his application for leave, he will not incur that fee. Should this Court rule on the question whether the basis of the Upper Tribunals decision in Patel was unsound? As I have explained, Singh LJ said that he had considerable reservations about the decision of the Upper Tribunal (Blake J, President, and Batiste SIJ) in Patel, which concerned Tier 4 migrants, but he did not consider that the Court of Appeal in this case should overrule it because the Secretary of State had not appealed in that case and the submissions made in Raza to the effect that Patel was wrongly decided had been rejected, albeit obiter. Coulson LJ also expressed his concerns about this decision. As previously explained, this Court is not asked to overrule Patel. Singh LJs concerns arose from observations in Patel about equal treatment. What the tribunal had held in its decision under appeal in Patel to the Upper Tribunal was that the students should have leave but in error did not limit the leave to 60 days leave. One of the reasons of the Upper Tribunal for allowing the appeal was that the students in that case should be treated as other students were. Singh LJ held that as the law stands equal treatment was not as a self standing head of unfairness. However, as I read the decision, the reference to equal treatment was only one basis for the decision. Fairness in that case required 60 days to be given to all students of colleges whose licences the Secretary of State took steps to revoke. The point which the Upper Tribunal was making was that the same 60 days should be given to all Tier 4 applicants even if they did not have 60 days leave left. In the second half of para 23 and in para 24, the Upper Tribunal decided the case on the basis of fairness alone: 23. Although we accept that there is no such policy for refusal cases, fairness requires that such cases be treated in broadly the same way. The applicant must be given an equal opportunity before refusal of application to amend it in the way we have described. This was clearly not done in this case. The Home Office knew that it had suspended the college in January 2010 but no one else did. The applicant could not have known that subsequently the colleges status as an approved sponsor was revoked before his application for an extension of stay was decided. 24. It is obviously unfair for the Secretary of State to revoke the colleges status after the application has been made when it was an approved sponsor and not to inform the applicant of such revocation and not afford him an opportunity to vary the application. Moreover, the Secretary of State in that case had accepted that there was procedural unfairness to that extent. Furthermore, the reality is that the question whether equal treatment was part of the basis for the decision is academic because, as Mr Jackson explains, the Secretary of State accepts (and did accept before the decision in Patel) that as a matter of procedural fairness notice of withdrawal of the licence for their college should in general be given to applicants for Tier 4 leave, and the effect of the decision has been absorbed in the Secretary of States revised practices as regards Tier 4 applications. That was a proper and sensible decision for the Secretary of State to take. In my judgment, it is sufficient to explain Patel as I have done, and I do not consider that this Court should indicate that the basis of the decision in Patel so explained was unsound. I have not had to rely on Patel in reaching my conclusions in this judgment, which of course concerns a different tier of leave for migrants. Lord Wilsons judgment Since preparing this judgment, I have had the privilege of reading in draft the judgment of Lord Wilson, with which I completely agree. Conclusion For the reasons and to the extent summarised in para 6 above I would allow the appeal. LORD KERR AND LADY BLACK: Mr Pathan was granted leave to enter the United Kingdom as the dependant partner of a Tier 4 (general) student on 7 September 2009 with leave to remain until 31 December 2012 (later extended until 30 April 2014). Before the latter date arrived, Mr Pathan applied for and was granted leave to remain as a Tier 2 (general) migrant from 23 March 2013 until 15 October 2015. This was so that he could be employed by a company known as Submania Ltd as a business development manager. The period between March 2013 and October 2015 is known as the period of leave. Before the period of leave was due to expire in October 2015, Mr Pathan applied, on 2 September 2015, for further leave to remain in order to continue to work for Submania in the same capacity as before. The application was made on the basis that he would retain his Tier 2 status. It was made within the time allowed and it was in correct form. His wife and child were named as dependants in the application. It was supported by a certificate of sponsorship (CoS) issued by Submania. Mr Pathans application was put on hold while a Sponsor Compliance Team of the Home Office investigated Submania. As a result of their investigations, Submanias sponsor licence was suspended on 4 February 2016. The licence was subsequently revoked on 7 March 2016. This had the automatic effect of invalidating Mr Pathans CoS. Although, as seen below in para 101, his leave was automatically extended until the Secretary of State considered his individual case, he had no opportunity to take steps to deal with the impending, inevitable determination of his application. Mr Pathan was not informed of the revocation until 7 June 2016. He was therefore unaware of the impact that the decision would have on his status until three months after it had been taken. Mr Pathan applied for judicial review. The nature of the judicial challenge has been the subject of, if not dispute, at least discussion, in the Upper Tribunal (Immigration and Asylum Chamber) (the UT) and in the Court of Appeal. The UT judge who dismissed Mr Pathans judicial review claim characterised the issue in this way at [2017] UKUT 369 (IAC), para 2: Whether an immigration applicant who has applied . for leave to remain under the Tier 2 (General) Migrant Category of the Immigration Rules and has submitted a Certificate of Sponsorship from their sponsoring employer which is valid at the time the application is made is entitled to challenge the respondents decision not to provide [him] with a period of 60 days in which to secure an alternative sponsor, in circumstances where the sponsors Tier 2 Licence was revoked . On the appeal by Mr Pathan from the UT judges dismissal of his claim, it became clear that this formulation went further than the case which the appellants wished to advance. In the course of the hearing before the Court of Appeal ([2018] EWCA Civ 2103; [2018] 4 WLR 161, Sir Andrew McFarlane P, Singh and Coulson LLJ) the issue was framed thus by Singh LJ (who delivered the principal judgment with which McFarlane P and Coulson LJ agreed), at para 5: [the appellants] contend that they were entitled to notice of the fact that the sponsors licence had been revoked and a reasonable opportunity (not necessarily 60 days) to re arrange their affairs, not necessarily to find an alternative sponsor but potentially to do other things, including making an application to the Secretary of State on an alternative basis, for example on human rights grounds or to ask for the exercise of his residual discretion, or even to leave the United Kingdom voluntarily without the risks associated with being found to have been staying here after their leave to remain had expired. (para 5) (there was another appellant besides Mr Pathan who was in a broadly similar situation as he but who plays no part in the appeal to this court.) The difference in the two formulations is significant. As articulated or refined in the Court of Appeal, Mr Pathans case does not specify that he was entitled to a particular defined period between becoming aware of the revocation of the licence and the final decision on his migrant status, the new formulation being that he was entitled to a reasonable period. And the purpose of the time sought is no longer confined to obtaining an alternative sponsor. His case can be seen to have two elements. The primary case that he advances is that he should have been given notice of the revocation when that occurred. The second element is that he should have had a reasonable period thereafter to rearrange his affairs in response to that. If Mr Pathan had been given notice of the revocation of his sponsors licence, a number of options would have opened for him: (i) he could have sought to vary his leave application, other than by making a human rights or asylum claim (eg by making an application relying on a new CoS from a different employer); (ii) he could have made an application to vary the terms on which he was entitled to remain so as to rely on human rights grounds; (iii) he could have made practical plans to remove himself, his wife and his child from the United Kingdom to his native India, thereby avoiding the prospect of their becoming overstayers, with all the negative consequences which that entailed; and (iv) he could have decided to take no steps until formally notified by the Secretary of State that his leave to remain was refused. The possible advantages of early notification By section 3C of the Immigration Act 1971, when a person applies for variation of his leave to remain before that leave expires, if it then expires before a decision is taken, the leave is automatically extended to the point at which the appropriate period for appealing a refusal comes to an end. By virtue of subsection (2), the existing leave will be extended during any period when (a) the application is neither decided nor withdrawn; or (b), if the application has been decided and there is a right of appeal against that decision, an appeal could be brought; or (c), if an appeal has been brought, that appeal is pending, or (d), an administrative review of the decision could be sought or is pending. None of these options was realistically open to Mr Pathan because the first he knew of the problem with his application was when he received the Secretary of States letter of 7 June 2016 refusing it. Before this was communicated to him, Mr Pathan had no occasion to seek leave to remain other than on foot of what he believed was a valid CoS. Although his leave had been extended (by operation of section 3C) while the Secretary of State considered his application, because he was unaware of the virtually certain outcome of that consideration, Mr Pathan took no steps to deal with that inevitability. Why would he? He simply did not know what lay ahead. But what unavoidably lay ahead, while his application for leave to remain depended on a CoS which was of no value, was the end of his leave to remain, as from the conclusion of the administrative review period following refusal of his application. If he had known that this was inevitable, Mr Pathan could have applied to vary the application. Even if the variation constituted a significant departure from the original application, it is recognised as a variation for the purposes of section 3C of the 1971 Act, so long as the original application for leave had not been determined: paragraph 34BB of the Immigration Rules, section 3C(5), and JH (Zimbabwe) v Secretary of State for the Home Department [2009] EWCA Civ 78; [2009] Imm AR 3, para 40. Section 3C(5) has the effect that any new application made by the migrant during the currency of a variation application (VA1), operates as a variation of VA1. If, therefore, the new application succeeds, it is tantamount to VA1 succeeding. This can be regarded as akin to the conventional procedural fairness situation of an applicant being allowed to make further submissions with a view to improving the chances of his application succeeding. As Lord Briggs has said in para 170, in appropriate cases, the rules of natural justice may require a party to be afforded time to amend his case in a way that cures an otherwise fatal defect of which he had, without fault on his part, previously been unaware. Whether this is required is, as Lord Briggs says, heavily context specific, but the question quite obviously arises for consideration where the circumstances are as they were in the present case. A real and distinct advantage would have accrued to Mr Pathan if he had been notified of the revocation of his sponsors licence as soon as that had taken place and rejection of his Tier 2 application occurred some time later. Between those two dates, all of the options adumbrated in para 100 above and explored in paras 113 and 114 below) would have become available. Crucially for present purposes, he would have become aware of the need to vary under section 3C. By contrast, if someone in his position is notified of the revocation of his sponsors licence at the time that it is revoked and his application for a Tier 2 licence is rejected at the same time, that range of options is not available to him. Applying for administrative review is the only course. It was not suggested by the respondent that it was necessary that the revocation and the rejection of the Tier 2 application take place concurrently. Indeed, Mr Pathans case demonstrates that it was not. It was perfectly possible to inform him at the time of revocation and, as appears to be the practice, to consider his application on its merits in due time. The proper discharge of a duty to act in a procedurally fair way recognises the advantage that comes of having notice of a fundamental difficulty in the way of the original application, so that steps can be taken to allow it to be adjusted. Underpinning the duty to act fairly in this context is the notion that a person such as Mr Pathan should be afforded as much opportunity as reasonably possible to accommodate and deal with a decision which potentially has devastating consequences. One only has to envisage how Mr Pathan must have reacted to the news that his Tier 2 application had been rejected because of the revocation of Submanias licence, to understand the fundamental justice in giving him the chance to do something about it. He had every reason to believe that his application would succeed. The reason that it did not had nothing whatever to do with him. But, failure in the application represented a calamitous upheaval for him and his family. To ensure in those circumstances that he had timely notice that, for wholly unanticipated reason his application was bound to fail, so that he could seek to avoid its consequences seems to us to be a self evident aspect of the duty to act fairly. That is not to say that the Secretary of State should be fixed with a positive duty to provide Mr Pathan with that opportunity, much less that he should have allocated a specific period (not already available under the Rules/legislation) within which it might be exploited. The duty to act fairly in these circumstances involves a duty not to deprive, not an obligation to create. It appears to us that requiring of the Secretary of State that he or she should supply a period of time for someone such as Mr Pathan during which to deal with the decision would be to impose a positive duty, and, importantly, a duty that would involve an extra extension of leave beyond that expressly set out in the legislation/Rules. Such an extension is a matter of substance. In contrast, there is nothing incompatible with the legislation or the Rules in allowing the affected person to know, as soon as may be, of the circumstances which imperil their application, so that they may make use of whatever time remains to them under those provisions. This does not confer a substantive benefit. It may be properly characterised as a procedural duty to act fairly. It is not a duty to bestow. It is an obligation not to deprive. Expressed in another way, the Secretary of State did not incur an obligation to give someone such as Mr Pathan an extra period of grace beyond that provided for in the legislation and the Rules but fairness required that she/he did not take steps to frustrate or circumscribe the period during which action might have been taken if timely notice of the revocation of the licence had been given. Thus, the duty to act procedurally fairly comprehends an obligation to tell somebody such as Mr Pathan immediately about circumstances which doomed his current application so that he could avail of the full period which would then have become available to allow him to do something about it. It follows that to contrive to ensure that Mr Pathan was informed of the revocation of Submanias licence at the same time that he was told that his application to renew his Tier 2 status was refused would be procedurally unfair. These decisions are, naturally and conventionally, taken sequentially. To compress them in order to reduce the time available in which to seek to avoid their impact would obviously be procedurally unfair. That is not to say that a decision to revoke a CoS, communicated at the same time as a refusal of an application to renew a Tier 2 status will inevitably and invariably be unfair. Exigencies, as yet unforeseen, may make such a convergence of decisions and their coincident communication unavoidable. It is only where the coincidence of communication of both has been contrived in order purposely to deprive an affected person of the period between learning of the revocation of the CoS and the refusal of the application that procedural unfairness would arise. That theoretical case has nothing to do with the present appeal, however. Here, there was time between the revocation of the sponsors licence and the determination of Mr Pathans application, during which he could have sought to do something about the changed circumstances, but the Secretary of State did not provide him with information about the revocation of the CoS which would have opened that door for him. True it may be, as Lord Briggs states in para 148, that there is no evidence that the Secretary of State decided deliberately [to] keep Mr Pathan in the dark about the revocation of his sponsors licence, or subject him to some kind of ambush. But what the Secretary of State neglected to do was something that lay squarely within her power, namely, to let Mr Pathan know, as soon as the decision on revocation of the licence was made, that the entire basis of his application was undermined. It might be suggested that this too would involve the imposition of a positive duty and the correlative conferral of a substantive benefit. It does not. This is information which he would have had to be given. A decision that it should have been communicated at the time that revocation occurred involves no more than the assertion of a fair procedure. A window would have existed for Mr Pathan, therefore, if he had learned timeously of the revocation of Submanias sponsor licence and before the Secretary of States determination of his application for leave to remain. One way in which he might have used this would have been to apply for a new Tier 2 (general) migrant visa with a new CoS from a new employer. Another was to apply for a variation of leave on the basis of a human rights claim. Even if this was initially rejected, Mr Pathan could have appealed under sections 82(1)(b) and 92 of the Nationality, Immigration and Asylum Act 2002. His leave to remain in the United Kingdom would thereby be extended for: (a) the first 14 day period during which such an appeal may be brought: section 3C(2)(b) of the 1971 Act; and (b) the period during which any such appeal remained pending: section 3C(2)(c) of the 1971 Act; section104 of the 2002 Act. A further option available to Mr Pathan if he had been notified of the revocation of Submanias sponsorship licence was that he could have used the extra time which this afforded him to arrange his affairs so as to make an orderly return for himself and his family to India. The benefit of doing so would have been that he could have avoided the effect on him and his family of becoming overstayers. Acquiring the status of an overstayer carries a number of potentially serious adverse consequences. The consequences of being an overstayer There are two types of effect of becoming an overstayer: immediate and long term. If one is knowingly an overstayer, one automatically commits an offence under section 24(1)(b) of the 1971 Act and becomes liable to imprisonment for a term of up to six months or a fine. Overstaying also tips a person into the Home Offices hostile environment. Since July 2016 it has been illegal for an overstayer to be in employment. That prohibition remains in place even after an overstayer has applied for a visa extension. It persists until (and if) they are granted leave to remain. Overstayers may find it difficult to rent accommodation and may be prevented from driving. Long term consequences may be even more serious. The Home Office would not normally accept an immigration application from an overstayer unless, as was the law in force before November 2016, an overstayers application is made within 28 days of the applicants leave expiring see policy paper, statement of changes to the Immigration Rules HC194, June 2012, and paragraphs 245CD(i) and 245HD(p) of the Rules. (The period of 28 days was reduced to 14 days by Statement of Changes HC 667. This came into force on 24 November 2016.) Individuals who overstay for longer periods may be subject to a re entry ban under rule 320(7B) of the Rules, preventing them from returning to the UK for between 12 months and ten years depending on the particular circumstances. There will be no re entry ban if the person overstayed for less than 90 days and left the UK voluntarily and not at the expense of the Secretary of State. The table below summarises the various consequences: Overstay period If overstay for 28 days or less If overstayed for 90 days or less If overstayed for more than 90 days If overstayed for any period Other circumstances and left UK voluntarily not at expense of Home Office and left UK voluntarily not at expense of the Home Office and left UK voluntarily at expense of Home Office within six months of being given removal notice or within six months of exhausting appeal or administrative review process and left UK voluntarily at expense of Home Office OR was removed from the UK as a condition of a caution If overstayed for any period If removed or deported from the UK OR used deception in an application for entry clearance Consequence No effect No mandatory ban 1 year ban 2 year ban 5 year ban 10 year ban The duty of procedural fairness: the issue of pointlessness We should supplement what we have said already about the duty of procedural fairness by considering a particular question that arises in relation to it. When an administrative body is contemplating a decision which will adversely affect an individual, does the duty to act in a procedurally fair way require the body to inform the individual even though any representations that he or she might make will not affect the outcome? Or, to put it in other words, is the duty to act fairly by giving notice of an impending adverse decision dependent on the existence of the possibility of submissions by the person affected bringing about a change of mind by the decision maker? Before addressing that question, it should be pointed out that the scope of inquiry into the duty to act fairly cannot be confined, in every instance, to circumstances in which the affected person aspires to change the decision makers mind on the precise decision made. Where notice of the decision might prompt a change of direction which would achieve the aim of the person, albeit by a different route, there is an active inquiry to be had as to whether the duty is activated. There is ample authority on the issue of whether the duty to afford the opportunity to make representations arises where any such representations are bound to fail. Thus, as Lord Briggs has pointed out, in Cinnamond v British Airports Authority [1980] 1 WLR 582, 593, it was said that no one could complain of not being given an opportunity to make representations if it would have achieved nothing. A somewhat similar view was expressed in Bank Mellat v HM Treasury (No 2) [2014] AC 700, para 179 in the passage from Lord Neuberger of Abbotsburys judgment cited by Lord Briggs at para 161 below. (It is noteworthy, however, that in that passage Lord Neuberger was at pains to point out that any argument advanced in support of pointlessness should be very closely examined, as a court will be slow to hold that there is no obligation to give the opportunity, when such an obligation is not dispensed with in the relevant statute.) Pointlessness can have two dimensions. The first is that there is no possibility of bringing about a change of mind on the part of the authority on the terms of the decision that has been made. So, for instance, in the present case, Mr Pathans application, so long as it was based on a CoS issued by a company which had ceased to have authority to issue such a certificate, could not succeed in any circumstances. The second dimension is different. It involves an examination of whether, on becoming aware of the decision, there was simply nothing that the affected person could do to achieve his aim. In other words, there was no other avenue which he or she could explore to avoid the impact of the adverse decision. We are here concerned with the second dimension, and it will already be apparent that, in our view, it cannot be said that, even if notified promptly, Mr Pathan would still have been without avenues to pursue in an attempt to alter the outcome of the decision making process. We have outlined above the various options which we believe would have been open to Mr Pathan if he had been alerted earlier to the decision to cancel Submanias sponsor licence. Before turning again to those options, it is necessary to say something of the nature of the duty to act fairly in the context of bringing to the attention of an individual at the earliest time reasonably possible a decision in relation to revocation of the sponsor licence which is likely to affect him or her adversely. In Cinnamond the pointlessness argument was put starkly. Lord Neubergers exposition of it in Bank Mellat (No 2) was more muted. The argument needs to be viewed, however, in the context of other judicial pronouncements where a less stringent view of the requirements of the utility of notice can be discerned. In Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28; [2010] 2 AC 269, para 72, Lord Hoffmann noted that the purpose of the audi alteram partem rule is not merely to improve the chances of the tribunal reaching the right decision but to avoid the subjective sense of injustice which an accused may feel if he knows that the tribunal relied upon material of which he was not told. And in R (Osborn) v Parole Board [2013] UKSC 61; [2014] AC 1115, para 68, Lord Reed endorsed a normative understanding of the duty to act procedurally fairly: [J]ustice 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. In their work Administrative Law: Text and Materials, 5th ed (2016), Elliott and Varuhas at para 10.2.5 discuss this passage from Lord Reeds judgment: Referring to the dictum from R v The Chancellor of Cambridge (1723) 1 Stra 557 set out at 10.1, concerning Gods willingness to grant Adam a hearing, Lord Reed continued (at para 69): The point 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. On this view, the notion of procedural fairness which would make no difference becomes a contradiction in terms, since it rests on an exclusively outcomes oriented view which overlooks the much wider role played by procedural fairness in an administrative state that seeks to build constructive relationships between individuals and public bodies by casting the former as participants in the process of governance. These statements do not, of course, relate directly to Mr Pathans case. But they serve as a useful reminder that utility is not the only yardstick by which to measure the duty to act fairly in communicating to an individual why (and more relevantly in this case when) a decision adverse to their interests has been or is to be taken. It cannot have been lost on those who were involved in the decision in this case that it would have a significant impact on Mr Pathan and his family. The duty to inform him at the earliest reasonable opportunity that this effect was due to accrue seems to us to be obvious. Not only should those concerned with the decision have been aware that Mr Pathan and his family would experience a major disruption to their lives, they must also have been alive to the likelihood that he would want to do something to mitigate the effects of the decision. This reinforces the need to inform him timeously. Of course, as Lord Briggs has said (in para 146 below), the rules provide for a very short time between notification of the decision to reject the Tier 2 application and the requirement to leave the United Kingdom. As Lord Briggs put it, the tight timetable is the consequence of the rules. But the rules are not necessarily comprehensive of the duty to act in a procedurally fair way. They do not inhibit release of information when that can be first provided. True it may be that Mr Pathan would have been taken as much by surprise if he had been notified immediately of the revocation of his sponsors licence as he was when told of it three months later but he would have had a longer period in which to do something about it if he had been told on the earlier date. At para 10.3.2 of their work, Elliott and Varuhas, referring to cases such as Al Rawi v Security Service [2011] UKSC 34; [2012] 1 AC 531 and R (B) v Westminster Magistrates Court [2014] UKSC 59; [2015] AC 1195, suggest that the courts have generally taken the view that unless primary legislation so provides (either explicitly or, as in Bank Mellat v HM Treasury (No 1) [2013] UKSC 38; [2014] AC 700, by necessarily implication), they may not adopt procedures enabling them to take account of evidence to which one of the parties is denied access. This approach they describe as the principle of open justice to which, they say, the common law has a strong commitment. This is not a case of denying Mr Pathan access to evidence relating to the cancellation of Submanias sponsorship licence, nor even to the material which led to the rejection of his Tier 2 application. But, in a telling passage (also at para 10.3.2) Elliott and Varuhas continue: The open justice principle finds its analogue in the administrative context in the duty to give notice. At its lowest, this means that individuals must know that a matter liable to affect them is going to be decided before any final decision is taken. As Lord Sumption put it in Bank Mellat v HM Treasury (No 2) [2013] UKSC 39; [2014] AC 700, at para 29: The duty to give advance notice and an opportunity to be heard to a person against whom a draconian statutory power is to be exercised is one of the oldest principles of what would now be called public law. We freely acknowledge that these observations were made with a different context in mind from that of the present case. The decision to refuse Mr Pathans application was, in a sense, preordained by the Immigration Rules. By contrast, Elliott and Varuhas were discussing circumstances where the decision was at large. The outcome depended on a weighing of evidence. One can readily see how, in such a situation, the person to be affected should be given notice of the prospect of a decision so as to be able to contribute evidence which might influence the outcome. But, if I should be given notice of the prospect of a decision which I might be able to influence by the production of evidence, should I not be given notice of that prospect when I might take steps to avoid its impact on me? Discussion We are of the view that the duty to give notice of a decision to someone who will be adversely affected by it cannot be defined solely by the consideration that it is pointless for that person to make representations with a view to reversing or avoiding the effect of the decision. The duty to give notice is an accepted element of the duty to act fairly. Three months elapsed between Submanias sponsors licence being revoked and the refusal of Mr Pathans application. It cannot be suggested that informing him promptly of the revocation of the licence when it had been cancelled would not have made a difference. The options that would have become available to Mr Pathan have been discussed at paras 100 to 105 and 113 to 114 above. To have the three months extra in which to explore those options that prompt notification would have afforded him would have made a difference. That conclusion does not rest on any estimate of his likely success in pursuing any of the chances that opened up for him. Nor does it depend on a view as to whether he would have sought to follow up on any of them. The cornerstone here is procedural fairness. What was the fair thing to do, procedurally? In our judgment, it was to tell Mr Pathan as soon as reasonably possible after the cancellation of Submanias licence that this had happened. He would then have known that his application in its current form was bound to fail. He could then have tried to get a different sponsor. Lord Briggs has pointed out (in para 151) that Mr Pathan did make a second Tier 2 application after finding a new sponsoring employer and that he made two applications based on human rights grounds all of which failed. This is true. It is also true that their failure was not due to the fact that Mr Pathan had become an overstayer. But, simply because, in the event, the applications were unsuccessful, does not mean that the withholding of the information was fair. It is not possible to know, now, what would have happened had Mr Pathan had the additional time that a timely notification would have afforded him. To take an obvious example, he might have had different opportunities to find an acceptable sponsor which would have enabled him to put in an application on that basis before his original application was determined against him in light of the withdrawal of Submanias licence. Furthermore, the fairness of withholding the information is not to be judged on an ex post facto basis. At the time when it was first possible to inform Mr Pathan of the cancellation of Submanias licence, there was no means of knowing whether he would have been able to obtain a new, acceptable sponsor. But, this is the time that the fairness of withholding the information falls to be judged. If it was not fair then, it cannot be converted to a condition of fairness because of Mr Pathans subsequent failure to put forward an employer who could have provided a CoS acceptable to the Home Office. Quite apart from these considerations, failing to tell Mr Pathan at the time that Submanias licence was cancelled meant that his acquisition of the status of overstayer was accelerated with all the adverse consequences which that entailed. To deny him the greater opportunity to avoid those consequences was in itself unfair. Again, that conclusion does not depend on any judgment as to whether he would have sought to avoid that outcome. Whether he would or not, to deprive him of the chance was unfair. We have concluded, therefore, that the failure to inform Mr Pathan promptly of the revocation of Submanias licence constituted procedural unfairness. It is not a species of the audi alteram partem rule in the classic meaning of that rubric. This was not a case of the Home Office making sure that Mr Pathan had a chance to make representations to it about the correctness of its decision to reject his application as originally formulated. Rather, it is an instance of his being deprived of the enlarged period that timeous information would have provided, during which he might have been able to vary his existing application so as to put it into a form that could succeed. There is, however, no material difference between these two situations. Furthermore, in principle, it can be just as unfair, procedurally, to restrict a persons opportunity to take steps to avoid the effect of the decision as it would be to deny him the opportunity to make representations. The objective of the person affected is the same in both scenarios. It is to avoid the adverse consequences of an unfavourable decision. We must turn then to the debate as to whether the duty to act fairly by providing the information promptly is procedural or substantive. At para 178, Lord Briggs says that time for the applicant to put his best case forward on the facts already available may be procedural, but time to change or improve the underlying facts to make them more favourable is substantive. We acknowledge the force of this argument and its initial attractiveness. But we cannot agree with it. A distinction must be drawn between the duty to act in a procedurally fair way and the use which the beneficiary of the discharge of that duty will avail of it. Leaving aside the pointlessness argument, it is generally accepted that the duty to give a person affected by an adverse decision the opportunity to make representations is procedural. If, by making the representations, the affected person secures a change of mind by the decision maker, the favourable result may be regarded as a substantive benefit. The procedural duty to act fairly by giving the opportunity to make representations exists whether or not that opportunity is availed of. Likewise, in the case of the duty to provide relevant information promptly. In both cases the agency responsible acts in contemplation that the person affected will take a particular course to avoid the impact of the decision and that it is fair that he or she should have the chance to do so. This is what underpins the duty. If the opportunity is taken and a different outcome is obtained, that can be regarded as a substantive benefit. But it does not make the duty to inform or to allow representations to be made any less of a procedural duty. It can be argued that the making of submissions on the decision to be taken is integral to the decision making process, whereas the opportunity to avoid the effect of an adverse outcome by taking a course not directly connected to that process is not. But why should this make a difference to the characterisation of the duty? Again, the notion of what is fair holds the key. If there is a duty to allow representations to be made for the purpose of bringing about a result favourable to the representor, why should it not also be fair to allow the affected person to have the chance by a different means to secure that outcome? In both cases the duty to act fairly involves allowing the opportunity to influence the result. And in both cases, in our opinion, the duty is properly to be regarded as a procedural duty. The answer to this difficult issue lies, we believe, in maintaining a strict segregation between the procedural duty to act fairly at the time when the decision is taken or is imminent and the steps which a person affected might take to achieve a different result. Once the opportunity to make submissions or the chance to take different steps has been provided, the procedural duty has been fulfilled. To deny the chance to make submissions or to fail to inform promptly involves breach of that duty. By contrast, an obligation positively to confer a particular period of grace during which to take action would, as we have explained at para 108 above, amount to the imposition of a substantive rather than a procedural duty. Essentially, the procedural duty extended to the maintaining of a fair procedure. Telling Mr Pathan at the earliest reasonable opportunity that his sponsors licence had been cancelled preserved the fairness of that procedure. Giving him an allotted time thereafter in which to take action would involve a modification of the processes laid down by the Rules and the legislation, rather than conducing to the intrinsic fairness of the stipulated procedure. As Lord Briggs says in para 186, the provisions in the Rules and the legislation which define when migrants have permission to remain, and when they become overstayers are matters of substance implementing immigration policy. Conclusion We would therefore allow the appeal on the basis that the failure promptly to inform Mr Pathan of the cancellation of Submanias licence was a breach of the respondents procedural duty. We would hold, however, that the Secretary of State was not under an obligation to allow him a particular period within which to make an alternative application. Postscript We consider that it is necessary, in a case where all members of the court have provided judgments, to identify the core of the decision of the court. Here, it consists in (1) the decision that the appeal must be allowed (as agreed by us in our joint judgment and by Lord Wilson and Lady Arden in their respective judgments, albeit that there are differences of reasoning), (2) the determination (agreed by at least four members of the court) that there was a duty on the Secretary of State to notify Mr Pathan promptly of the revocation of his sponsors licence, it being procedurally unfair not to do so, and (3) the determination (agreed by us and Lord Briggs) that there is no positive obligation on the Secretary of State to provide a period of time following notification to enable an applicant to make an alternative application or otherwise to react to the revocation of the sponsors licence. LORD BRIGGS: (dissenting) Although I broadly agree with Lord Kerrs and Lady Blacks analysis of this difficult case, I would nonetheless have dismissed this appeal. It is best therefore that I set out my reasons in full. Overview In summary, when the considerable complexity is properly analysed, Mr Pathans entirely understandable perception that he has been treated harshly does not amount to a basis for quashing the rejection of his Tier 2 application on the grounds of procedural unfairness. For the reasons given by Lord Kerr I am inclined to agree that it was procedurally unfair for the Secretary of State not promptly to inform Mr Pathan of the revocation of his sponsors licence rather than, as actually happened, to delay informing him of that important event for three months. But his real grievance is not simply that he should have been informed more quickly than he was. Rather it is that, once his application became bound to fail because of the revocation of his sponsors licence, the Secretary of State should have given him more time after notification of it than allowed by the rules to make alternative arrangements, either to extend his leave to remain by other means (including an amendment of his application) or to bring it to an orderly end, before he and his family incurred the very real disabilities of becoming overstayers. He says that time should have been given to him, as it is given under current departmental policy to Tier 4 students in a similar predicament, by extending the life of his original Tier 2 application after he had been told of the revocation of his sponsors licence, so that he could pursue those arrangements under the protection of the extended leave to remain afforded by his pending Tier 2 application. Many would agree with Mr Pathan that the time to make alternative arrangements, given by the Rules to a Tier 2 applicant who is taken completely by surprise by the rejection of his application, is very short indeed and that it would often be impracticable for him for example to find a new sponsor, or even to pack up and leave the UK, before becoming an overstayer. But that is what the Rules provide for a person in his position. No direct attack is made upon the Rules in these proceedings. But it is said that the discretionary grant of an extended period, say 60 days, after notification of the revocation and before the refusal of his original application would provide the necessary extended time to remain lawfully for him to have a fair chance to make those arrangements. But the tight timetable is the consequence of the Rules, which make no more lenient provision for a person taken by surprise by the rejection of a Tier 2 application than they do for any other unsuccessful applicant for extended leave to remain. Applicants for leave to remain under the PBS system are quite frequently taken by surprise when their application fails, but thus far (subject to two exceptions referred to below) the courts have not treated being taken by surprise as a reason for requiring the Secretary of State to find some discretionary way of giving them some means, outside the Rules, to achieve a recovery of their position, or an extension of their leave to remain, before becoming an overstayer. It was not irrational or Wednesbury unreasonable (see Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223) for the Secretary of State to decline to exercise such a discretion in this case, by giving advance notice of the impending failure of Mr Pathans application. Even if under a fairness duty to give prompt notice of the revocation of his sponsors licence, she could, for example, lawfully have notified him of the revocation on the day it happened, and rejected his Tier 2 application on the same or the following day. There is therefore no basis upon which her not giving him time can be subjected to judicial review. The fact that the Secretary of State provides just that kind of relief to Tier 4 students in a similar situation does not enable a Tier 2 migrant to complain by way of judicial review about being treated differently, because the two classes of permitted immigration are there for different political and economic reasons. Analysis It is necessary to begin by dispelling some myths which have arisen from the way in which this appeal has been presented. The Secretary of State did not deliberately keep Mr Pathan in the dark about the revocation of his sponsors licence, or subject him to some kind of ambush. Nor was the failure of his original Tier 2 application in substance brought about by something done by the Secretary of State. An employing sponsor has to be licenced, and the continuation of its licence depends upon compliance with conditions. In this case the sponsor was warned that its licence was liable to be revoked, invited to make representations why it should continue, and failed to do so. Revocation followed as a matter of course, with unfortunate but inevitable consequences for all its sponsored employees, including Mr Pathan. Although the Secretary of State necessarily played a part in that process, the real cause of the failure of Mr Pathans Tier 2 application was the conduct (or rather misconduct) of his employing sponsor. The limited involvement of the Secretary of State was insufficient, in my view, to serve as the basis for identifying a new sub category of procedural fairness, encapsulated in a requirement to give 60 days advance notice of the revocation of the sponsors licence before refusing any Tier 2 application which had been based upon it. Nor is this case in substance about whether a party to a pending matter is in fairness obliged to give the other party immediate or early notice of some fact of which it is aware which will be fatal to the application when decided at a pre arranged date in the future, like a County Court trial for which a date or a window has already been set. The Secretary of State is in principle entitled to choose the date upon which to determine a Tier 2 application, subject perhaps to the margin permitted by the dictates of good public administration, which may render unreasonable delay unlawful. In principle, the sooner a Tier 2 application is determined (once the relevant examination of the facts has been completed) the better for all concerned. When asked by the Court what would have been Mr Pathans position if the Secretary of State had immediately notified him of the revocation of his sponsors licence, and then, or on the same or the following day, refused his by then hopeless application (rather than three months after the revocation, as actually happened), Mr Biggs submitted that his case would be just the same. The immediate refusal of the Tier 2 application would be unfair, because Mr Pathan would not have a fair opportunity to make alternative arrangements, after being taken by surprise. The resolution of this appeal does not therefore depend in any way upon the mere happenstance that the application was refused three months after the revocation of the licence. Mr Pathan would have been taken just as much by surprise in either case and is in no different a predicament. Nor did Mr Pathan have some legitimate expectation, the denial of which of itself entitles him to the courts assistance by way of judicial review. He had been informed in writing that the success of his Tier 2 application depended, among other things, upon his sponsor maintaining its licenced status. His immigration status as a Tier 2 migrant depended upon him continuing to be employed by his licenced sponsor. The purpose of the written warning in paragraph 190 of the Guidance (quoted in Lady Ardens judgment) was to make it clear that the sponsors licence could be withdrawn or cancelled at any time either by the Home Office or by the sponsor, and that if this occurred it would cause the Tier 2 application to be refused. A Tier 2 migrant can check on the Government website whether his sponsor remains licenced and is encouraged by published Guidance to do so, for example before travelling to the UK to work for a sponsor. Mr Pathan has not shown that not being given prompt notice of the revocation of his sponsors licence, followed by time to respond to it before the determination of his application prevented him from taking any of the steps which he says he would have wished to take to obtain extended leave to remain. Thus in fact he could and did make a further Tier 2 application after finding a new sponsored employer. He could and did make two applications based on human rights grounds. For complicated reasons none of these applications were adversely affected by his having become an overstayer by the time when he made them. They all failed for other reasons. Rather his complaint is that he could not at the same time preserve himself and his family from becoming overstayers while he took those steps, by postponing the determination of his original Tier 2 application in the meantime. The defining feature of this appeal is that the Tier 2 applicant was taken by surprise by the failure of his application, at a time when (because of the expiry of his earlier leave to remain) the lawfulness of his continued stay in the UK depended solely upon his outstanding application, which he understandably expected to succeed, but which failed due to an event for which (on the assumed facts) he was in no way to blame, and of which he was unaware until informed about it by the Secretary of State. The defining nature of the unfair prejudice which he alleges is being unable to postpone becoming an overstayer beyond the time when that would otherwise occur in accordance with the Rules, by obtaining the discretionary grant of time between being told of the revocation of his licence and the determination of his application. For reasons which follow, that is not procedural unfairness. The Law Procedural Unfairness In respectful agreement with the Court of Appeal, and with Lady Arden, I do consider that procedural unfairness (as it is now called) is a distinct ground for judicial review, not a sub set of some general ground of unfairness, and that its boundaries need to be carefully defined if it is not to operate as a gateway through which the courts can pass judgment on the substantive merits, rather than the lawfulness, of administrative action. The parties to this appeal were therefore right to raise, as the first issue to be decided, whether not being given extra time to respond to the revocation of his sponsors licence gives rise to a case of procedural unfairness at all. In my judgment, and largely for the reasons given by Singh LJ in the Court of Appeal, it does not. I put on one side the question whether he should in any event have been given prompt notice of the revocation, and concentrate for the moment on the main question, whether he should have been given further time, after that notification, before the determination of his Tier 2 application. The reason why it is necessary to decide whether an allegation of unfairness is procedural or not is that it is only if it is, that it amounts to a distinct ground for judicial review. If it is not, then the allegation of unfairness is just an aspect of a case based upon irrationality, Wednesbury unreasonableness or denial of a legitimate expectation. In this respect Lady Arden and I are at one: see R (Gallaher Group Ltd) v Competition and Markets Authority [2019] AC 96 per Lord Carnwath at para 41, in a passage cited by Lady Arden at para 53 of her judgment. The ordinary principles of judicial review have been developed over many years to ensure that the courts confine themselves to a review of the lawfulness of administrative decision making, rather than an appeal against its substantive merits. Irrationality and Wednesbury unreasonableness are stern tests. They are by no means satisfied merely because the court thinks that it would have reached a different decision. The legitimate expectation principle has its own internal checks and balances. By contrast, where procedural unfairness is alleged, the court is the final arbiter of what is, or is not, fair. This is because a decision made by a process which is in fact procedurally unfair is for that very reason unlawful. Thus it is necessary for the court to be satisfied that an allegation of unfairness falls squarely within the true boundaries of procedural unfairness, if its dominion over the answer to the unfairness question is not to lead it into an inappropriate role as the final arbiter of an appeal on the merits of administrative action. In R (Osborn) v Parole Board [2014] AC 1115, Lord Reed said, at para 65: 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 [2010] EWHC 580 at para 38 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. In the case of the appellant Reilly, the Court of Appeal in Northern Ireland stated [2012] NI 38, 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: see Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223. 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] 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. Procedural unfairness is a modern title for a form of unlawfulness which used to be called breach of the rules of natural justice. That phrase collected together a number of traditional doctrines, the most important of which were the requirement that a decision should be unaffected by bias (nemo judex in causa sua) and the principle espoused by the Latin tag audi alteram partem or, literally translated, hear the other side. The rules of natural justice served originally to protect the integrity of decision making by courts but have been applied for more than 150 years to maintain the lawfulness of administrative decision making: see eg Cooper v Wandsworth Board of Works (1863) 14 CBNS 180. For present purposes the court is concerned only with the second of those main principles, which enshrines the healthy notion that a matter should not be decided against a party without that person being offered a fair opportunity to present their case to the decision maker. It is to be noted that all but one of the cases referred to by Lady Arden in her elucidation of the principles of procedural fairness are about the audi alteram partem principle: see Cooper v Wandsworth (concerning the right to be heard to stop a building being demolished); FP (Iran) [2007] EWCA Civ 13 (the right to be heard at a substantive asylum hearing); Balajigari [2019] 1 WLR 4647 (the right to reply to dishonesty allegations); and Fayed [1998] 1 WLR 763 (the right to be informed of proposed reasons for rejecting a nationality application in order to reply to them). The right to be heard assumes that there is some case, however weak, that the party might actually advance, and has no application to a situation where the decision is inevitable, whatever the party adversely affected by it may say. Presentation of a case need not, of course, necessarily be oral. The one case relied upon by Lady Arden in which a finding of procedural unfairness was not squarely within the audi alteram partem principle is the Venables case [1998] AC 407. But there the main ground for the quashing of the increased tariff was that the Secretary of State had acted unlawfully in making the decision itself by taking an irrelevant matter into account. That was not itself a procedural ground at all, but a separate ground for review. It was merely described as procedural as well. Here there is no attack on the lawfulness of the refusal of the original Tier 2 application. In Cinnamond v British Airports Authority [1980] 1 WLR 582, 593, Brandon LJ said: no one can complain of not being given an opportunity to make representations if such an opportunity would have availed him nothing. In Bank Mellat v HM Treasury (No 2) [2014] AC 700, para 179 Lord Neuberger said, speaking of the audi alteram partem rule in the administrative context: In my view, the rule is that, before a statutory power is exercised, any person who foreseeably would be significantly detrimentally affected by the exercise should be given the opportunity to make representations in advance, unless (i) the statutory provisions concerned expressly or impliedly provide otherwise or (ii) the circumstances in which the power is to be exercised would render it impossible, impractical or pointless to afford such an opportunity. I would add that any argument advanced in support of impossibility, impracticality or pointlessness should be very closely examined, as a court will be slow to hold that there is no obligation to give the opportunity, when such an obligation is not dispensed with in the relevant statute. (My emphasis) The present case is a perhaps rare example of pointlessness, although one which may well arise quite frequently under the mainly mechanical provisions of the PBS scheme. Mr Pathan had at the outset been fully heard, as contemplated by the rules, on the basis of his on line application for extended leave under Tier 2. It was common ground, and inevitable, that it depended critically upon him continuing to be employed and sponsored by a particular licenced sponsor, namely Submania Ltd. The question is whether he should have been heard further when the central plank of his application was swept away by the revocation of his sponsors licence. It was common ground before this Court that nothing he could have said could have affected the negative outcome of the original application. Audi alteram partem is usually relied upon as a means of challenging the decision made after the alleged departure from fair procedure. Here there is no such challenge. Mr Pathan accepts that, following the revocation of his sponsors licence, there could only have been one outcome to his original Tier 2 application, whatever the procedure subsequently adopted by the Secretary of State. Nor does he complain about having been unable to make representations to the Secretary of State. Rather he complains about not being given a period of time when, knowing of the revocation of the sponsors licence, he could have taken alternative steps to protect (or bring to an orderly end) his status as a lawful migrant, while protected from becoming an overstayer by the continuing pendency of his by then hopeless application. Using Brandon LJs formulation, being told of the revocation of the sponsors licence, together with being given time before the refusal of his Tier 2 application, would have availed Mr Pathan something rather than nothing, just as does the same facility when granted to students who lose their educational sponsor. But this sort of collateral advantage from the adoption of a particular procedural step is not in my view something which the audi alteram partem principle is designed to protect. On the contrary, the integrity of a decision making process is in general damaged rather than preserved by enabling a participant to buy time by the prolongation of a hopeless case. That is why, in the private law sphere, there exists a regime for the grant of summary judgment when there is no real issue needing to be tried. I do not mean by describing the advantage as collateral to imply that it is not a real advantage, or that it might not be usefully deployed, even by the Secretary of State, for the purpose of giving an applicant time to respond to an unexpected failure of his application. It is now something which the Secretary of State does routinely, as a matter of policy, to assist Tier 4 applicant students who lose their educational sponsor. Buying time in that way is a common practice. For example it was common ground between counsel that, under the rules, a disappointed applicant in Mr Pathans position could buy a minimum of an extra 14 days leave to remain, by applying for an administrative review of the refusal of his Tier 2 application, however hopeless that might be. But the question is whether it can be procedurally unfair, in the sense of being a breach of the rules of natural justice, for the Secretary of State not to grant such time, beyond that provided by the Rules, as a matter of discretion. It is plain that this inaction by the Secretary of State did not amount to a breach of the audi alteram partem rule. Mr Pathan was not seeking to be heard in support of his application, after being informed of the revocation of his licence. Further submissions would have been pointless. The integrity of the outcome was in no way affected by the refusal of his original application at a time when he was unaware of the revocation of his sponsors licence. I have searched in vain for some other aspect of the rules of natural justice which might have assisted him, and none were suggested. Rather, the case is put on the broad basis that the boundaries of procedural fairness are not fixed and that the taking, or not taking, of any step which might loosely be described as procedural falls within the purview of procedural fairness, even if it amounts to nothing more than letting the existing rules which apply to a given situation take their course, rather than interfering with them by the exercise of some residual discretion, such as delaying the determination of a pending application. The only authorities which might appear to support such a basis for judicial review are the decisions of the Upper Tribunal in Thakur (PBS decision common law fairness) Bangladesh [2011] UKUT 151 (IAC) and Patel (Revocation of Sponsor licence Fairness) India [2011] UKUT 211 (IAC); [2011] Imm AR 5. In both cases the relevant appellant was a Tier 4 student applicant whose educational sponsor lost its licence while his application was pending, and who (like Mr Pathan) only found out that this had occurred when (or shortly before) his application was refused. The decision in the Thakur case was heavily based on the well known dicta of Lord Mustill about procedural fairness in R v Secretary of State for the Home Department, Ex p Doody [1994] 1 AC 531, 560, cited by Lady Arden at para 55 of her judgment. The decision in both Thakur and Patel was that Tier 4 students in the position summarised above should be informed of the loss of their sponsors licence and (by analogy with departmental policy in a different but related factual situation) given 60 days in which to attempt to find an alternative sponsor with which to complete their education, and vary their application for leave to remain by substituting the new sponsor for the old one. It is convenient to focus on the reasoning in the Patel case, rather than on Thakur, because most of the controversy which has followed those two cases, at Court of Appeal level, has done the same. At para 22, Blake J said: Where the applicant is both innocent of any practice that led to loss of the sponsorship status and ignorant of the fact of such loss of status, it seems to us that common law fairness and the principle of treating applicants equally mean that each should have an equal opportunity to vary their application by affording them a reasonable time with which to find a substitute college on which to base their application for an extension of stay to obtain the relevant qualification. (My emphasis) It is apparent that Blake J relied in combination on what he called common law fairness and the supposed principle of equal treatment. The latter principle was not relied upon before this Court, following cogent criticism of it by Singh LJ in the Court of Appeal, and it is doubtful whether, as a separate principle, it survives the detailed analysis of it in the Gallaher case [2019] AC 96. It appears to have arisen from a misreading by Blake J of the way in which leave to remain is cut down to 60 days upon the failure of an application for Tier 4 extended leave, where (unlike in Mr Pathans case) the applicant still has leave to remain for longer than that. Shorn of equal treatment, Blake Js reliance on common law fairness is not further developed by way of legal analysis. Perhaps the best aspect of Mr Pathans argument that both his and Mr Patels cases were cases of procedural unfairness is because of the way in which the rules deal with the making of a fresh application for extended leave to remain, when an earlier application is pending. Blake J spoke in the quoted passage and elsewhere in his ruling about Mr Patel needing to be given the opportunity to vary or amend his application. Mr Pathan says that he was deprived of the same opportunity, because he was given no time in which to vary or amend his application by substituting a new sponsoring employer, before it was refused. I would readily accept that, in appropriate cases, the rules of natural justice may require a party to be afforded time to amend his case in a way that cures an otherwise fatal defect of which he had, without fault on his part, previously been unaware. Such time is frequently given to a party in civil proceedings, whose statement of case is found to disclose no cause of action, to attempt to amend it to cure that defect, before his claim is struck out. Whether the rules of natural justice do or do not impose that requirement is heavily context specific, and in the sphere of civil proceedings the position has changed significantly in recent years, following changes in the detail of the Overriding Objective governing civil procedure generally. In the immigration context there is (now) a special deeming process whereby a second application for extended leave to remain, made during the pendency of an earlier first application, is treated as if it were a deemed variation of the first application, however completely different it may be in substance. It is designed to avoid an applicant obtaining, in effect, an endless extension of leave to remain by making a series of successive applications, however ill founded on the merits, each new one just before the determination of its predecessor. It applies equally to Tier 2 and Tier 4 applications, and to applications on human rights grounds. Thus for example, a pending Tier 2 application may be deemed to be varied by a fresh Tier 2 application based on employment by a different sponsor, or even by a fresh application based on human rights grounds, and vice versa. Section 3C of the Immigration Act 1971 (as amended) provides, so far as relevant, as follows: (1) This section applies if a person who has limited leave to enter or remain (a) in the United Kingdom applies to the Secretary of State for variation of the leave, (b) leave expires, and (c) variation having been decided. the leave expires without the application for the application for variation is made before the (2) The leave is extended by virtue of this section during any period when the application for variation is neither decided (a) nor withdrawn, (d) application for variation an administrative review of the decision on the (i) (ii) could be sought, or is pending (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). The Immigration Rules provide, in this connection, as follows: Multiple Applications 34BB(1) An applicant may only have one outstanding application for leave to remain at a time. (2) If an application for leave to remain is submitted in circumstances where a previous application for leave to remain has not been decided, it will be treated as a variation of the previous application Variation of Applications or Claims for Leave to Remain 34E If a person wishes to vary the purpose of an application or claim for leave to remain in the United Kingdom and an application form is specified for such new purpose or paragraph A34 applies, the variation must comply with the requirements of paragraph 34A or paragraph A34 (as they apply at the date the variation is made) as if the variation were a new application or claim, or the variation will be invalid and will not be considered. 34F Any valid variation of a leave to remain application will be decided in accordance with the immigration rules in force at the date such variation is made. Paragraph 34BB was not in force at the relevant time, but it merely reflected that which the courts had already worked out: see JH (Zimbabwe) v Secretary of State for the Home Department [2009] EWCA Civ 78; [2009] Imm AR 3, paras 34 46 per Richards LJ. I will call it the deemed variation rule. The result is that, for example, a Tier 2 application which has become hopeless because the employing sponsor has had its licence revoked may nonetheless be saved by the making of what is in substance a fresh Tier 2 application on a completely new form, based upon employment by a new licenced sponsor, because (provided that the new application is made before the previous application has been determined), it will (however artificially) be deemed to be a variation or amendment of the previous application. It is a very artificial form of variation, because the rationale of the Tier 2 process is that each applicant seeks to fill a distinct gap in the labour market identified by their sponsoring employer. Thus if, for example, the original sponsor immediately informs the applicant that its licence has been revoked, and the applicant has time to find employment by a new sponsor before his application is determined, he can make a fresh application based on employment by the new sponsor and it will be deemed to be a variation of his original application. But if the applicant only discovers that his sponsors licence has been revoked from reading the Secretary of States letter refusing his application, he cannot of course save it by a new application which is deemed to be a variation of his original application. This is for two reasons. First, he has no time to complete the new application. But secondly he will not have left the employment of his original sponsor, still less found a new one. And the new employer, once found, may well (if it has not already done so) have to carry out the resident labour market test, which takes a minimum of 28 days. In the present case it must be assumed that Mr Pathan was still employed by his original sponsor when his application was refused, and he discovered that its licence had been revoked. Mr Biggs submitted that he needed time, following that discovery but before the refusal of his Tier 2 application, to take one or more of three alternative steps, in each case with a view to avoiding becoming an overstayer: first, finding employment with a new licenced sponsor and making a fresh Tier 2 application; second, seeking a right to remain on human rights grounds; third, making an orderly departure from the UK. None of these alternatives could, he submitted, realistically be achieved before Mr Pathan became an overstayer, even if he obtained a 14 day (or a little longer) window by making a hopeless application for administrative review. The question whether the failure to provide time for the taking of any of those steps can amount to procedural unfairness, rather than unfairness in any more general sense, does not necessarily admit of a uniform answer. Although the grant or refusal of an adjournment (ie time before an application is determined) is in one sense a question about procedure, it is relevant to ask, what is the giving of time for? If it is for time simply to take a procedural step, such as amending a claim or application, in a way that may affect its outcome, then a refusal may, depending on the facts and the context, amount to procedural unfairness. But if time is sought to do something more, or different, than that, then the question is likely to be about substantive rather than procedural fairness. In short, time for the applicant to put his best case forward on the facts already available may be procedural, but time to change or improve the underlying facts to make them more favourable is substantive. Time before determination to enable an applicant facing a refusal to prepare for an orderly departure from the UK (Mr Pathans third alternative) is in my view clearly substantive. It can have no effect on the outcome of his application and is not sought to give him time to take a procedural step in the process. It is just a way of getting a longer time as a lawful migrant than provided by the Rules, before becoming an overstayer. It is like an occupier of a home seeking the adjournment of a possession application to which he has no defence, in order to give him more time to move out than permitted by the courts limited jurisdiction to postpone enforcement of a possession order once made. It is, at best, substance dressed up as procedure. Time simply to raise an existing human rights ground for an extension of leave to remain, which would presumably require no longer than time to find a lawyer, make the application and pay the fee, may be procedural, so that a refusal might amount to procedural unfairness. If sought by a fresh application before the Tier 2 application was refused, it would amount to a deemed variation of the original application, and therefore be capable of affecting its outcome. Time to seek fresh employment with a new licensed sponsor, and then to make a new Tier 2 application on that basis, again by way of the deemed variation rule, is something of a hybrid. To the extent that it is designed to give Mr Pathan time to alter the available facts by finding new sponsored employment so as to qualify for Tier 2 leave to remain, I consider it to be substantive. If it had merely been to give him time to complete a fresh application based on qualifying employment which had already been begun or offered, it might have been procedural. The former might well require something like the 60 days now afforded to Tier 4 students in a similar predicament, not least because of the employers need to carry out a resident labour market test. The latter would not generally require more than a working week. Both could in fact be done within the period of grace following the refusal of his Tier 2 application, within which a fresh application could be made despite being an overstayer (then a minimum of 42 days, ie 28 days after the end of the minimum 14 days protection afforded by an administrative review). But it would expose him to becoming an overstayer while the fresh application remained pending, whereas the same application made by way of deemed variation, before the determination of his first application, would not. The fact that the Secretary of State did not give Mr Pathan any time at all by way of a breathing space between informing him of the revocation of his sponsors licence and refusing his Tier 2 application may therefore in a strictly limited and rather artificial sense be described as procedural. However, this does not mean that it was therefore procedurally unfair. It is convenient at this point to examine what actually happened following the refusal, and the then legal consequences, in order to identify the prejudice which not being given such a breathing space may have caused him. His Tier 2 application was refused on 7 June 2016. He had 14 days in which to mount an administrative review, which he did, in time. It was refused on 7 July, whereupon he became an overstayer. But the rules then in force gave him a further 28 days grace (now reduced to 14 days) in which to make a further application for leave to remain, without the fact that he was by then an overstayer being taken into account to his disadvantage. On 3 August, within the period of grace, he made an application for leave to remain based on article 8. He made a further application on 29 November, and a further Tier 2 application on 12 December, (presumably having by then found further employment with a licenced sponsor, although there is no evidence about this). They were both treated as successive variations of his 3 August application, to which the period of grace therefore applied, although it had by then expired. He made a further article 8 application on 27 May 2017, again treated as a variation of his 3 August application. That final article 8 application was refused on 11 October 2018 on grounds wholly unrelated to his being by then an overstayer. Two factors clearly emerge from this factual description. The first is that being given no breathing space between discovering that his sponsors licence had been revoked and having his original Tier 2 application refused did not in fact have any adverse effect upon Mr Pathans ability to pursue alternative ways of obtaining extended leave to remain. Secondly the combined effect of the period for administrative review and the (then) 28 day period of grace thereafter within which to make a fresh application (typically 70 days in total if the response to the application to the request for administrative review was in accordance with the 28 day departmental target) was actually ten days longer than the full 60 days now afforded to Tier 4 students in a similar predicament. Even if the Secretary of State conducted the administrative review within a single day it would still be 42 days. In the present case Mr Pathan actually secured 58 days. It was (for good reason) no part of Mr Pathans case before this Court that fairness required nothing less than a full 60 days rather than some other reasonable period. The adverse effect was only that for the period of the pendency of those alternative applications, Mr Pathan would (if he chose to remain in the UK) be an overstayer rather than a migrant with leave to remain. I do not by that description mean thereby to belittle that adverse effect. Being an overstayer has very serious consequences, although leaving is always an alternative to being an overstayer, and Mr Pathan was not an asylum seeker. But the point is that they are consequences of substance rather than procedure. The consequences of being an overstayer had no effect (procedural or otherwise) upon the outcome of his repeated applications for extended leave to remain. They all failed for other reasons. They are also consequences which flow from a statutory framework and from Rules approved by Parliament which (for example by providing for the 28 day period of grace during which being an overstayer is not to prejudice a fresh application) expressly contemplate that migrants whose first application for leave fails may have to pursue alternative applications while an overstayer (or after a return to their country of origin). Parliament has, in short, provided a tough, rigid regime for migrants who wish to pursue multiple applications for leave to remain, and the Rules treat a person taken by surprise by the refusal of an original application in exactly the same way as an applicant who is not taken by surprise. The lawfulness of those Rules (however tough in their effect) is not challenged in these proceedings. Furthermore, the only reason why the giving of time between communicating the revocation of the sponsors licence and the refusal of the Tier 2 application is capable of being viewed as procedural at all is because of the deemed variation rule. But that rule is part of a structure designed, as explained above, to hinder rather than facilitate the obtaining of extended leave to remain by the making of multiple applications. And these are relevant specific details within the context of a PBS scheme which is itself deliberately designed to be operated mechanically, in accordance with strict rules, with minimal scope for discretionary adjustment. They matter because they constitute the contextual framework within which, as Lord Mustill explains in the Doody case, an allegation of procedural unfairness has to be evaluated. I would acknowledge that procedural unfairness might arise from the imposition of hurdles which, while not absolutely preventing the taking of further procedural steps to achieve the original objective, may properly be characterised as designed to render the taking of them impracticable. But the provisions in the Immigration Act 1971 and Rules which define (with great particularity) when migrants have permission to remain, and when (if they do not depart) they become overstayers are matters of substance which implement immigration policy, not (generally at least, and not in the present case) procedural bars in the way of obtaining extended leave to remain by further applications, even if they may have the consequence (although not in this case) that further applications have to be made from abroad. Drawing together the threads of this unavoidably complicated analysis, I reach the following conclusions about the class of case where a Tier 2 migrant, whose status as lawfully present in the UK hangs on the slender thread of an outstanding application for extended leave to remain, learns of the revocation of his sponsors licence only at the same time as his application is refused: i) The migrant will have the opportunity to seek employment with a new licensed sponsor and make a new Tier 2 application within a minimum of (then) 42 days, and typically 70 days, without his having become an overstayer during that period adversely affecting its outcome. He will suffer the disadvantages of becoming an overstayer, but this is not procedurally unfair since both: a) His requirement to find a new sponsored employer is substantive rather than merely procedural, and b) His loss of the status of being entitled to remain while pursuing his fresh application is itself a matter of substance rather than procedure and does not generally render the making of his further application impracticable, although there may be cases, on different facts from those affecting Mr Pathan, where it might do so. ii) It is not therefore procedurally unfair for the Secretary of State not to volunteer to such a migrant a time between the communication of the revocation of the sponsors licence and the refusal of his Tier 2 application. iii) Nor is the absence of the conferral of such a time period otherwise judicially reviewable because: a) There is no wider principle of common law or substantive fairness, outside the rules of natural justice, which supports it, b) It is not irrational or Wednesbury unreasonable for the Secretary of State in such circumstances to allow the Act and the Rules to take their ordinary course, for the purpose of giving effect to an immigration policy approved by Parliament in circumstances where specific provision is made for what is to happen, and c) The migrant is denied no legitimate expectation, because of the written warning about the consequences of the revocation of the sponsors licence in the Guidance, and the migrants ability to check on the Governments website whether his sponsor remains licenced. It remains to check whether this outcome falls within the general thrust of the authorities which address similar apparently hard cases arising under the PBS. With the exception only of the Patel and Thakur cases they present an austere jurisprudence which gives effect to the requirements of a rigid rules based scheme, at considerable cost to individual applicants who, in circumstances demanding at least sympathy, frequently fall foul of it, and often to their surprise. While a full analysis would be beyond the scope of this dissenting judgment, the following cases will serve as sufficient examples. First, the Rules impose very strict requirements on applicants in terms of documentary evidence. Thus where a Tier 1 applicant failed to provide payslips to prove that he had employed the requisite number of workers, but had submitted amply sufficient other forms of proof of the same facts, this gave rise to no obligation on the Secretary of State to give him time to correct the error, otherwise than as very narrowly required by the Rules: see Singh v Secretary of State for the Home Department [2018] EWCA Civ 2861, following Mudiyanselage v Secretary of State for the Home Department [2018] EWCA Civ 65; [2018] 4 WLR 55. Secondly where, through no fault of his own, a Tier 4 student applicant was taken by surprise by the accidental cancellation by her college of her CAS letter due to an administrative error, the Secretary of State was under no obligation of fairness to give the student time to obtain another valid letter from the same college before deciding her application, even though (in sharp contrast with the present case) that would have made her original application good: see EK (Ivory Coast) v Secretary of State for the Home Department [2014] EWCA Civ 1517; [2015] INLR 287. In that case the Court of Appeal recognised a line of authority which justified a different outcome where the Secretary of State bore substantial responsibility for the happening of a mistake which, unless corrected, threatened to undermine an otherwise perfectly well founded PBS application: see Naved v Secretary of State for the Home Department [2012] UKUT 14 (IAC). The Court of Appeal was minded to treat the Patel and Thakur cases as falling within the same category because, in each of them, as in the present case, the Secretary of State had been instrumental, although not in any way at fault, in bringing about the revocation of the Tier 4 sponsors licence. But the Court did so under the clear caveat that the duty to give the applicant an opportunity to respond would not apply where, as here, the relevant defect was obviously irremediable (per Floyd LJ, at para 49, dissenting but not on this point). In my judgment both the Patel and Thakur cases were wrongly decided. This is because: i) The combined use of the twin supposed general principles of common law fairness and equal treatment were shaky foundations, for reasons already given. ii) Mere involvement without fault in the process of the revocation of a licence does not impose on the Secretary of State a fairness duty to go outside the Rules in affording recovery time to an applicant to find another sponsor, still less by enabling the migrant to take advantage of the deemed variation rule to achieve a result which it was not designed to facilitate. Revocation of a sponsors licence is an irremediable defect in any Tier 4 (or Tier 2) application based on a relevant relationship of education or employment with that sponsor. In both those cases (as in the present case) the relevant fault lay squarely with the sponsor, no less than in EK (Ivory Coast). iii) In any event the general unfairness which may be inherent in the applicant being taken by surprise is not procedural in nature, for the reasons already given. iv) The supposed parallel with the curtailment situation (where an existing period of leave is shortened to 60 days where a sponsor loses its licence) is not a true comparable from which a supposed principle of equal treatment could properly be applied. The fact that those two cases were wrongly decided, at least as far as laying down any general principle in a fact and context sensitive field, makes no practical difference in Tier 4 cases on the same facts, since it is now departmental policy to give disappointed applicant students 60 days to find another sponsor. But the elevation of what is in truth a non existent legal duty into an administrative policy provides no alternative means of support for the existence of an equivalent duty in Tier 2 cases. It is not in question whether the Secretary of State could, if she thought fit, now decide to give Tier 2 migrants who unexpectedly lose their licenced sponsor while their application for extended leave is pending further time in which to find another sponsor, without risking becoming overstayers. The question is whether she is obliged to do so, in the sense that any other decision would be irrational. The Court of Appeal thought not, and I agree, for the reasons given by Singh LJ at para 71. In short, the evident policy behind Tier 4 is to provide students with education, whereas the policy behind Tier 2 is to enable specific employers to find suitable employees where (after due enquiry) the local labour market is found to be deficient. Those policy differences are sufficient to prevent a different policy approach to giving time to find another sponsor being stigmatised as irrational, regardless whether others, including the Court, would disagree. Remedy I began this judgment by acknowledging the force of Lord Kerrs and Lady Blacks opinion that it was in any event procedurally unfair for the Secretary of State not to have informed Mr Pathan promptly of the revocation of his sponsors licence. The question then arises whether, if so, that of itself rendered her decision, three months later, to refuse his Tier 2 application unlawful. Mr Pathans claim is to have that decision set aside. If one assumes that (for some unexplained reason to do with internal administrative delay) she would, after giving such prompt notice of revocation, still have done nothing about determining his Tier 2 application for another three months, it is easy to see that, in the events which have happened, Mr Pathan could and probably would have done something to improve his position by making the series of applications which in fact he did make, but earlier, before his original application was determined. Critically, he would have done so by way of successive deemed amendments of his original application, and thereby have avoided becoming an overstayer in the meantime. In theory he might even have improved upon one or more of the applications which he did make, so that he might have succeeded in obtaining Tier 2 permission to remain, although no factual basis for that possibility has ever been suggested. On any view the opportunity to delay becoming an overstayer would have been a solid advantage of which he was deprived, on those assumed facts. But the reality is that, on those assumed facts, the reason why Mr Pathans position would have been improved is not because of the promptness of the notification per se, but because of the time which the Secretary of State did in fact let pass, following the revocation, before refusing his application, even though, for the reasons already given, she was under no duty to give him such a breathing space. I have deliberately described that three months gap as a mere happenstance. Mr Pathan would have obtained no such benefit if, as she was entitled to do, the Secretary of State had followed up a prompt notice of revocation with an equally prompt refusal of his application. That analysis raises the stark question: if the Secretary of State was not obliged to give Mr Pathan time between the notification of the revocation and the determination of his application, so as to avoid him being taken by surprise by the revocation, why should an unfair delay in notification in this case mean that the refusal of his application was unlawful? He had no right not to be taken by surprise, and it was the surprise, not the time lapse between revocation and notification of it, which caused him the detriment which I have described. It is I think no coincidence that, upon enquiry by the court, counsel for Mr Pathan based his appeal squarely upon a right not to be taken by surprise, ie an entitlement to a breathing space, rather than simply upon a right to prompt notification. Like Lord Kerr and Lady Black I have concluded that the case for a right to a time between notification and refusal fails, because it is a matter of substance governed by the Act and the Rules, with solid consequences for his immigration status, rather than a matter of procedure. By contrast the denial of his right to prompt notification of revocation, although procedurally unfair, had no adverse consequence of its own, save when aggregated with the Secretary of States purely voluntary (and probably unconscious) delay in dealing with Mr Pathans application for three months after the revocation. I do not consider that, where causation of detriment rests upon such a happenstance, the court should intervene by striking down the refusal of Mr Pathans Tier 2 application as unlawful. LORD WILSON: (partly dissenting) (with whom Lady Arden agrees) We should with precision identify the issue raised on this appeal. The issue is not whether Mr Pathan should have been notified of the revocation of Submanias licence. For he was notified of it. In the letter dated 7 June 2016, by which she refused his application for extension of leave to remain as of that date, the Secretary of State told him that she had cancelled the CoS reference number which he had provided; and in the letter dated 7 July 2016, by which she determined his application for administrative review, she added that she had cancelled the number because, following investigation, she had revoked his sponsors licence. The issue is whether notification to Mr Pathan of the revocation of the licence should have occurred prior to the determination of his application for extension. The issue is therefore not notification but what, for short, I will call prior notification. Like Lady Arden, I agree with that part of the judgment of Lord Kerr and Lady Black (the joint judgment) in which they explain why the Secretary of State owed to Mr Pathan a duty of what, for short, I will call prompt notification of her revocation of the licence; and, in the light of her delay of three months in notifying him, she was clearly in breach of it. So there is a majority of four members of the court in favour of that conclusion. But, with respect, I disagree with that part of the joint judgment in which they reject Mr Pathans submission that the Secretary of State also owed to him a duty of prior notification. In effect like Lady Arden, I conclude that, concomitant with the duty of prompt notification, the Secretary of State owed to Mr Pathan a duty not to determine his application for extension of leave to remain until a reasonable period had elapsed following notification to him of the revocation of the licence. Irrespective of the precise parameters of a reasonable period, it is clear that the determination of Mr Pathans application on the very day on which he was notified of the revocation falls outside it. A judgment qualifies as a dissenting judgment if it disagrees with any significant part of the actual order to be made by the majority. Lord Kerr, Lady Black and Lord Briggs understandably propose that the actual order of the court should record not only the conclusion of four of its members that the Secretary of State was in breach of her duty to Mr Pathan of prompt notification but also the conclusion of the three of them that she had no duty of prior notification. It follows that the judgments of Lady Arden and myself qualify as partly dissenting judgments. In Lloyd v McMahon [1987] AC 625 Lord Bridge of Harwich said at pp 702 703: it is well established that when a statute has conferred on any body the power to make decisions affecting individuals, the courts will not only require the procedure prescribed by the statute to be followed, but will readily imply so much and no more to be introduced by way of additional procedural safeguards as will ensure the attainment of fairness. Lord Bridges reference to the procedure prescribed by the statute must include the procedure prescribed by a rule made pursuant to a statute. There is no doubt that his statement of principle applies to the rules relating to the points based system in the law of immigration. In SH (Pakistan) v Secretary of State for the Home Department [2016] EWCA Civ 426 Beatson LJ, in the course of addressing the public duty of fairness at common law, said at para 29: It is common ground that this may impose obligations on the Secretary of State in addition to those under the Rules concerning the points based system So in this context the duty of fairness at common law provides additions. It cannot displace a rule unless, as in the joined FP (Iran) and MP (Libya) cases cited by Lady Arden at para 43 above, the rule was made outside the powers given to the rule maker or unless it can be disapplied under the Human Rights Act 1998. Lord Kerr and Lady Black at paras 108 and 141 above and Lord Briggs at paras 146, 164 and 197 above suggest that a duty of prior notification would be inconsistent with statute or the Immigration Rules. I beg to differ. There is no such legislative provision as requires the Secretary of State to determine an application for extension within a specified period. Equally there is no such provision as requires her to determine an application for extension at the same time as she notifies the applicant of an irremediable defect in the application as then framed. There are of course numerous legislative provisions which address the consequences of the ultimate refusal of an application for extension. But Mr Pathans assertion of a duty of prior notification does not relate to the period following refusal. Nor, crucially, does it amount to an attempt to extend his leave to remain beyond the terminal point specified in section 3C(2) of the Immigration Act 1971 (the 1971 Act), namely the refusal of his application and the negative conclusion of any associated appeal or review. In his judgment in the present case Singh LJ relied heavily on observations which he had made in the Talpada case, cited by Lady Arden at para 42 above. In his application for extension Mr Talpada had furnished a Certificate of Sponsorship reference number which he had already furnished in a prior unsuccessful application. Para 77C(e) of the Immigration Rules provided that a reference number could not be re used in such circumstances. So his second application was also refused. The Court of Appeal dismissed his appeal against an order declining to grant him permission to apply for judicial review of the second refusal. The courts decision is, I suggest, readily explained on the basis that, although the requirement of a fresh reference number was procedural, it was contained in a rule and that accordingly there was no room for the duty of procedural fairness at common law to fulfil its auxiliary function. Singh LJ, however, chose to describe the requirement as substantive. Having explained in para 57 that procedural fairness was the modern term for the two hallowed principles of natural justice, he suggested in para 58 that Mr Talpadas complaint had nothing to do with procedural fairness in that sense. It is, he said, to do with whether a substantive requirement of the rules themselves needs to be complied with in making a relevant application. Every observation of Singh LJ on a matter of public law commands particular respect. But how helpful was it for him to have stamped Mr Talpadas complaint as one of substantive rather than procedural unfairness? In his judgment in the present case Singh LJ enlarged the meaning which in the Talpada case he had ascribed to the concept of substantive unfairness. He said, at para 62, that the two cases then before the court were analogous to the Talpada case and, at para 63, that the complaint in the present case is properly to be analysed as one of substantive rather than procedural unfairness. But was a complaint that notice of revocation had not been given prior to the determination of the application analogous to a complaint about a rule which prohibited re use of a reference number? And how, without departure from ordinary meaning, could Mr Pathans complaint be described as not being procedural? In paras 177 to 181 above Lord Briggs addresses in detail the conclusion of Singh LJ that Mr Pathans complaint was one of substantive unfairness and he subjects it to generally favourable analysis. Lord Briggs there draws various distinctions between substance and procedure which, I confess, I find challenging. Then at para 197 he concludes: the case for a right to a time between notification and refusal fails, because it is a matter of substance governed by the Act and the Rules, with solid consequences for his immigration status, rather than a matter of procedure. ceased to be entitled to state benefits; committed a criminal offence punishable with imprisonment; committed a criminal offence if he continued to work for Submania or I have already suggested, with respect, that the matter is not governed by statute or rule. I now suggest, with equal respect, that the matter is not one of substance. What, however, no one can dispute is that the ultimate refusal of Mr Pathans application had, in the almost understated language of Lord Briggs above, solid consequences for his immigration status. Upon the negative determination of his request for administrative review of the decision to refuse his application, Mr Pathan at once became an overstayer. The consequences were that, while he remained in the UK, he (a) (b) became liable to detention pending forcible removal; (c) worked elsewhere; (d) (e) became disqualified from occupying rented accommodation; (f) (g) became subject to the freezing of funds in his bank account; (h) became subject to revocation of his driving licence; and (i) in the various circumstances identified in para 117 of the joint judgment above, became subject to a ban on later re entry into the UK. It follows that, when on 7 July 2016 Mr Pathan became an overstayer, legal disabilities at once precluded his continued pursuit of normal life in the UK. It is in this light that a controversial part of Lord Briggs reasoning falls to be considered. In para 181 of his judgment he sets out a history of applications made by Mr Pathan to the Secretary of State between 3 August 2016 and 11 October 2018; and earlier, became subject to NHS charging provisions; in para 151, Lord Briggs states that none of the applications was adversely affected by the fact that Mr Pathan was an overstayer at the time when he made them. Lord Briggs would be the last person knowingly to pile procedural unfairness on top of procedural unfairness. It must, however, be noted that the history of later applications plays no part in these proceedings issued on 4 August 2016 now before the court. The Court of Appeal did not refer to the history. It is not included in the agreed Statement of Facts and Issues. Lord Briggs has located it in a brief footnote to the Secretary of States written Case, to which neither counsel made reference in their oral argument before the court. So the question arises: in the absence of any invitation to Mr Pathans counsel to address the later applications, is it fair for Lord Briggs to conclude that the disabilities which, as an overstayer, stunted his ability to function in so many respects played no part in his failure to pursue them successfully? In para 166 of his judgment Lord Briggs cites the decisions of the Upper Tribunal in 2011 in the Thakur case (Simon J and Latter SIJ) and in the Patel case (Blake P and Batiste SIJ); and in para 192 he concludes that they were wrongly decided. Mr Thakur and Mr Patel were students rather than employees so the revocations in their cases were of the licences of their colleges to act as sponsors under Tier 4 of the system, rather than of the licence of an employer to act as a sponsor under Tier 2. In every other respect their cases are materially identical to that of Mr Pathan: all three of them had applied for extensions prior to the expiry of their leave and prior to the revocation of the licences. The Thakur and Patel cases have been regarded as good law for more than nine years. In Alam v Secretary of State for the Home Department [2012] EWCA Civ 960 Sullivan LJ, at para 44, cited the Patel case, then recently decided, with apparent approval but distinguished it from the case before him on the basis that Mr Patel had not contributed to the reasons for the revocation of his colleges licence and was unaware of it until informed of the refusal. In the EK (Ivory Coast) case, cited by Lord Briggs (who had been a member of that court) in para 190 above, the decisions in the Thakur and Patel cases were again cited with apparent approval at para 38 and, in relation to the Thakur case, by Lord Briggs himself at para 54. But they were distinguished from the facts of Ms EKs case in which her college had, albeit accidentally, withdrawn its confirmation of her acceptance for studies and in which therefore the Secretary of State had not been instrumental in rendering her application no longer valid. Indeed, in the Raza case, cited by Lady Arden in para 84 above, Christopher Clarke LJ, who gave the only substantive judgment, at para 1 expressly identified one of the issues before the court to be whether the Patel case had been rightly decided. In conclusion, at para 38, he rejected any suggestion that it was not good law; but he held that the case was distinguishable because Mr Razas application had been made following the expiry of his leave. Indeed the standing of the decisions in the Thakur and Patel cases is, in practical terms, even stronger than that which arises from their endorsement by the Court of Appeal. For, within a year of the later decision, the Secretary of State had reflected the effect of the decisions in her Policy Guidance. It is currently reflected in para 11 of Annex 1 to Tier 4 of the Points Based System Policy Guidance for use in respect of applications made on or after 29 October 2019. Many will take the view that, if Lord Briggs now considers that the decisions in the Thakur and Patel cases are wrong, he is right to say so. But some may harbour concern about whether the doubts now cast on them by so authoritative a voice might influence the formulation of future guidance and impair the ability of students and their lawyers confidently to analyse their rights. For my part, I consider that the decisions in the Thakur and Patel cases are correct. I also consider that they help to indicate the proper resolution of the present appeal. I do not understand how the different reasons of policy which lead the UK to admit students to study at particular colleges, on the one hand, and employees to fill particular vacancies, on the other, can affect the level of unfairness which each group suffers when the Secretary of State takes action which renders their subsisting applications for extension no longer valid. There is, however, one factor which, so I acknowledge, increases the level of unfairness upon students in that situation. For they will have come to the UK in order to gain a qualification and, if required to leave prior to the expiry of their course, their work will have yielded nothing for them, whereas employees will at least have been remunerated for the work that they did. But that extra level of unfairness on students does not in my view eradicate the unfairness on employees. If a strong level of unfairness operates on A, it is not diminished when an even stronger level of unfairness is seen to operate on B. Lord Briggs concludes at para 197 above that Mr Pathans appeal should be dismissed. We other four members of the court agree that it should be allowed. But, as already explained, we do not agree about the basis on which it should be allowed. The basis favoured in the joint judgment is a breach of a duty only of prompt notification. The basis favoured by Lady Arden and myself is a breach of duties not only of prompt notification but also of prior notification. It remains for me to address that difference. To hold that the Secretary of State owes a duty to Mr Pathan to give, and therefore that he has a reciprocal right to receive, prompt notification of the revocation is, I respectfully suggest, to give nothing of value to Mr Pathan unless it is accompanied by a duty, and a reciprocal right, of prior notification. The law should not impose a duty nor confer a right if they are of no value. The reasoning in the joint judgment appears to me to be as follows: (a) It was fundamental to the duty of procedural fairness that, prior to the determination of his application, Mr Pathan should be afforded a reasonable opportunity to avoid the consequences of the revocation of his sponsors licence: paras 106 and 107 above. (b) But the Secretary of State had no positive duty to afford that opportunity to him: para 108 above. (c) For the effect of any such positive duty would be to extend Mr Pathans leave beyond that for which the rules provide and any such duty would therefore be substantive rather than procedural: paras 108 and 141 above. (d) The natural and conventional practice of the Secretary of State is to determine an application for extension after she has notified the applicant of revocation of the licence: paras 106 and 110 above. (e) Exceptionally she will determine the application at the same time as she notifies the applicant of the revocation but, were she to contrive to do so in order to deprive him of the above opportunity, she would be in breach of the duty of procedural fairness: para 110 above. In the present case prompt notification would have afforded to Mr (f) Pathan three months extra in which to explore [his] options: para 132 above. With the brevity apt to dissenting observations, I respectfully respond to each stage of the above reasoning as follows: I disagree and question whether this is consistent with (a). I do not accept that Mr Pathan seeks an extension of leave beyond the (a) There are four statements to this effect in paras 106 and 107 above and I entirely agree with them. (b) (c) provisions of section 3C(2) of the 1971 Act. (d) Mr Pathans case belie it. I am unaware of the evidence of the suggested practice. The facts of (e) I disagree with the first proposition and, in relation to the second, question whether enquiry into the Secretary of States motive for taking action is a satisfactory determinant of breach of duty. (f) paragraph. I seek to unpack the reference to three months extra in the following In referring to three months extra Lord Kerr and Lady Black clearly have in mind that revocation of the licence occurred on 7 March 2016 and that refusal of Mr Pathans application occurred on 7 June 2016. So, for convenience, they surely here adopt a hypothesis of notification on the date when the revocation actually occurred; and then they take the hypothetical date of refusal to be the date when the refusal actually occurred. This yields the three months to which they refer. But the question, already posed by Lord Briggs in paras 194 and 195 above, is whether, were the Secretary of State to have had a duty of prompt notification but not also a duty of prior notification, she would, following prompt notification, have delayed for three months before refusing Mr Pathans application. I can see no reason why she would have delayed her refusal to any extent at all. If one adopts the convenient hypothesis that the Secretary of State should have notified Mr Pathan of the revocation on 7 March 2016, then in my view, in the absence of a concomitant duty of prior notification, she would be likely to have refused his application on the same day. He would then no doubt have applied for administrative review, as he later did; it would no doubt have been determined negatively to himself, as it later was; and all this would probably have been concluded within the space of a month from the date of refusal, as it later was. So, instead of his becoming an overstayer on 7 July 2016, Mr Pathan would have become an overstayer on 7 April 2016. The limited duty recognised in the joint judgment is therefore not just valueless to Mr Pathan: it is likely to be prejudicial to him. It is a curious result of his forensic success. In my view counsel for Mr Pathan is right to submit that, in fairness, the duty of prompt notification must be accompanied by a duty of prior notification. This alone would yield to Mr Pathan a reasonable period in which, while not being an overstayer, he could seek to vary his application under section 3C(5) of the 1971 Act by identifying a fresh employer licensed, able and willing to sponsor him, or by asserting a human right not to be removed from the UK, or by seeking leave to remain outside the rules. |
This appeal concerns the assessment of compensation for compulsory acquisition of two parcels of grazing land, amounting in all to 26.85 acres (10.86 ha) (the reference land), formerly owned by the present appellant (the claimants). They were part of a much larger area of some 420 acres (170ha) acquired under the North West Development Agency (Kingsway Business Park, Rochdale) Compulsory Purchase Order 2002 (the CPO), for the development of the so called Kingsway Business Park (KBP). Responsibility for payment of compensation now rests with the Homes and Communities Agency, the respondent to this appeal (the authority). An initial claim was made for 2,593,000 compensation, on the basis that the land had significant hope value for residential development, independently of the scheme of acquisition. The authority contended that the claim should be limited to the existing use value, giving a figure (rounded) of 50,000. The Upper Tribunal agreed with the claimants in part, awarding compensation of 746,000. On the authoritys appeal, the Court of Appeal declined to accept the argument of either party, and remitted the matter to the tribunal to re determine compensation on what it considered to be the correct basis. The valuation date was 4 January 2006, being the date when the reference land vested in the acquiring authority under a general vesting declaration. The facts The facts are set out in detail in the Upper Tribunals decision. A summary will suffice. The order lands lie about one mile east of Rochdale town centre, on the north west side of the M62 motorway, close to Junction 21. The reference land, shown as Plots 13 & 14 on the CPO plan, comprises two adjoining parcels of land towards the north east part of the order lands, close to, but not immediately adjoining, a road to the south east known as Buckley Hill Lane. The claimants relied on the prospect, in the absence of the scheme, of planning permission for residential development being permitted with access from Buckley Hill Lane through an intervening plot known as the Nib (also in their ownership but not subject to the CPO). The area has a long planning history. Its potential for development of some form had been recognised since the 1960s. In 1999 developers published a KBP Development Framework, in support of an application for planning permission. The framework included a master plan within which the reference land was shown for development of various kinds (including some residential) within phase 5. Planning consents linked to the master plan were granted on 19 December 1999. As the tribunal found (para 13) they had been commenced and were extant at the valuation date. At the time the CPO was made (in 2002) the reference land was owned by members of the Nall family. A planning application had been submitted on their behalf for residential development on part of the reference land and the Nib, but it was refused on 18 January 2002 as piecemeal development. The land, together with the Nib, was acquired by the claimants in May 2003 for a total price of 1.3m (para 18). Their objection to the CPO was rejected, principally on the grounds that the land was needed for the comprehensive development of the KBP scheme (para 19). The Statutory Development Plan at the valuation date comprised the regional guidance (RPG13) approved in March 2003 and the Rochdale Unitary Development Plan (the 1999 UDP) adopted in March 1999. The KBP was listed in RPG 13 as one of 11 Strategic Regional Sites. The KBP site was allocated under policy EC/6 of the UDP, subject to certain criteria including provision for vehicular access to be obtained from the A664 Kingsway and from Junction 21 of the M62 Motorway only; for any individual development to be compatible with the overall objective of a strategic business park development; and for limited residential development provided it is part of a comprehensive development scheme for predominantly business uses (para 23). Similar policies were reproduced in policy EC/7 of the draft replacement UDP which was well under way by the valuation date, and was agreed to be material to a hypothetical planning application made at that time (paras 24 30). It was common ground that a limited residential development on the reference land with access from Buckley Hill Lane would not have been recommended for refusal on highway grounds (para 31). In August 2006 the claimants made an application to Rochdale MBC for a Certificate of Appropriate Alternative Development (see para 15 below) in respect of the reference land, for various classes of development including residential development of 74 dwellings. The officers report recommended refusal on the grounds (inter alia) of non compliance with policy EC/6 of the UDP. Following sight of the report, the application was withdrawn before formal determination. The law The no scheme rule The appeal raises questions concerning the so called Pointe Gourde rule (Pointe Gourde Quarrying & Transport Co Ltd v Sub Intendent of Crown Lands [1947] AC 565), or no scheme rule: that is, the rule that compensation for compulsory acquisition is to be assessed disregarding any increase or decrease in value solely attributable to the underlying scheme of the acquiring authority. The law is to be found in the Land Compensation Act 1961 as explained and expanded by judicial interpretation. The particular issue concerns the relationship between the general provisions for the disregard of the scheme, and the more specific provisions relating to planning assumptions. The rule has given rise to substantial controversy and difficulty in practice. In Waters v Welsh Development Agency [2004] 1 WLR 1304; [2004] UKHL 19, para 2 (Waters), Lord Nicholls of Birkenhead spoke of the law as fraught with complexity and obscurity. In a report in 2003 the Law Commission conducted a detailed review of the history of the rule and the relevant jurisprudence, and made recommendations for the replacement of the existing rules by a comprehensive statutory code (Towards a Compulsory Purchase Code (1) Compensation Law Com No 286 (Cm 6071)). Since that report aspects of the rule have been subject to authoritative exposition by the House of Lords in Waters itself, and more recently in Transport for London v Spirerose Ltd [2009] 1 WLR 1797; [2009] UKHL 44 (Spirerose). Although the Law Commissions recommendations for a complete new code were not adopted by government, limited amendments to the 1961 Act in line with their recommendations were made by the Localism Act 2011 section 232 (relating to planning assumptions) Further proposed amendments, dealing with the no scheme principle more generally, are currently before Parliament in the Neighbourhood Planning Bill 2016 17. The purpose of the latter is said to be that of clarify[ing] the principles and assumptions for the noscheme world, taking into account the case law and judicial comment (Explanatory Notes para 70). The present appeal falls to be decided by reference to the 1961 Act as it stood before the 2011 amendments. Section 5 rule 2 established the general principle that the value of land is taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise. In applying this general principle, it is necessary for present purposes to take account of two other groups of provisions, relating first to disregards of actual or prospective development (section 6 and Schedule 1), and secondly to planning assumptions (sections 14 16). Disregards Section 6 (headed disregard of actual or prospective development in certain cases) has been treated by the courts as a statutory but not exhaustive embodiment of the Pointe Gourde principle (see Waters paras 49 54). So far as relevant to this appeal it provides: 1 no account shall be taken of any increase or diminution in the value of the relevant interest which, in the circumstances described in any of the paragraphs in the first column of Part I of the First Schedule to this Act, is attributable to the carrying out or the prospect of so much of the development mentioned in relation thereto in the second column of that Part as would not have been likely to be carried out if (a) (where the acquisition is for purposes involving development of any of the land authorised to be acquired) the acquiring authority had not acquired and did not propose to acquire any of the land; Part I of the First Schedule sets out in tabular form a number of cases with the corresponding development, the prospect of which is to be left out of account. The first case is: Where the acquisition is for purposes involving development of any of the land authorised to be acquired. The corresponding development is: Development of any of the land authorised to be acquired, other than the relevant land, being development for any of the purposes for which any part of the first mentioned land (including any part of the relevant land) is to be acquired. (emphasis added) Although this paragraph in terms applies the statutory disregard to land other than the relevant land, that is the land subject to acquisition, the Pointe Gourde rule has been treated by the court as requiring the same approach to be applied also to the subject land itself (see Camrose v Basingstoke Corpn [1966] 1 WLR 1100, Waters para 52. Note that relevant land is defined by reference to the notice to treat, actual or, in the case of a vesting declaration, constructive: section 39(2); Compulsory Purchase (Vesting Declarations) Act 1981, section 7). Planning assumptions Section 14 is the first of a group of sections headed assumptions as to planning permission. In valuing the relevant interest the valuer must make such one or more of the assumptions mentioned in sections 15 or 16 as are applicable to all or part of the relevant land (section 14(1)). Such assumptions are to be in addition to any planning permission in force at the date of service of the notice to treat (section 14(2)). Although the tribunal noted the existence of extant permissions for the KBP scheme, they do not appear to have been relied on by the parties for valuation purposes. Section 14(3) makes clear that these provisions are not to be construed as requiring it to be assumed that planning permission would necessarily be refused for development not covered by the statutory assumptions. Section 16(3) applies to land forming part of an area shown in the current development plan as an area allocated primarily for a range of two or more uses specified in the plan. It was common ground that the reference land was within such an area. It is to be assumed that planning permission would be granted for development for purposes falling within that range of uses, which is development for which planning permission might reasonably have been expected to be granted in respect of the reference, if no part of that land were proposed to be acquired by any authority possessing compulsory purchase powers (section 16(3)(b), (7)). For the purpose of this exercise it has to be assumed that the scheme of acquisition in respect of the reference land was cancelled on the date of the notice to treat (the cancellation assumption: see (Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment [2000] 2 AC 307). Section 17 (certification of appropriate alternative development) provides a means by which an application can be made to the local planning authority to determine the forms of development if any which would have been permitted if the land had not been proposed for compulsory acquisition. As already noted, such an application was made in the present case, but withdrawn before determination. The scope of the no scheme rule One of the difficulties presented by these two groups of provisions in their unamended form arises from the distinction drawn between the application of the rule, on the one hand to the relevant land alone, that is in this case the reference land itself; and on the other to land comprised in the compulsory purchase order as a whole; or, more broadly still, to land comprised in the same scheme of development, which may for example include land already in the ownership of the authority, or land acquired by agreement. Thus, the rules relating to assumed permissions (sections 14 16) are based on cancellation of the scheme solely in respect of the reference land. In the Court of Appeal, Patten LJ summarised the effect of the cancellation assumption in the present case: It operates to limit the scope of any assumed planning permission to a counter factual scenario in which the KBP scheme has been cancelled in respect of, but only in respect of, the reference land: ie as if the landowner had succeeded at the public inquiry in persuading the Inspector to omit Plots 13 and 14 from the CPO. There is no requirement to assume that the CPO would not have gone ahead in respect of the remainder of the order land or that the development of the KBP would not have proceeded (para 26) By contrast, as noted above, section 6 taken with the Pointe Gourde rule itself requires disregard of the scheme of acquisition in relation to the whole of the order land. The Upper Tribunal spoke of the consequent need for them to consider life in at least two parallel universes: the cancellation assumption universe and the disregard the scheme universe (called no KBP for short) (para 52). As will be seen below, the distinction drawn by the tribunal between these two universes is critical to the understanding of their later reasoning. The proceedings below The Upper Tribunal The tribunal (HH Judge Mole QC and Paul Francis FRICS) began by summarising the law in respect first of planning assumptions and secondly of disregards, in terms which have not been materially challenged. They mentioned the importance of not eliding the two stages (para 46). They noted (following the Upper Tribunal decision in Thomas Newall Ltd v Lancaster City Council [2010] UKUT 2 (LC)) that for the purposes of sections 14 16 the cancellation assumption was to be applied, not to the whole scheme, but to only so much of it as affected the reference land (paras 42 43). Under the heading disregards they set out the statutory provisions, noting that (in the light of Waters) the no scheme principle was to be treated as extending to the subject land as well as to other land within the same acquisition (paras 47 48). Under the heading the nature of the exercise, having identified the two universes which required to be considered, they summarised the respective positions of the parties: 53. Both parties focused in their evidence and submissions upon the prospects of a purchaser obtaining a residential permission on the reference land in those two different situations. The cancellation universe assumed that the compulsory purchase orders on the reference land had been cancelled but that access could be obtained through the KBP. In that situation it was broadly agreed that the reference land might indeed have some potential hope value for residential development. 54. The claimant said it would be substantial. The acquiring authority maintained that any such hope value would be much reduced, probably to nil, because the planning authority would not be prepared to grant a permission that did not conform with the master plan requirements for phasing, which would delay residential development, or make a very substantial financial contribution to the infrastructure of the KBP. Finally, the acquiring authority submitted, any such value that remained should be disregarded as a matter of law. 55. The second situation was postulated in order to consider what value the reference land might have if the law required that the whole of the KBP proposals had to be left out of consideration. That situation was chiefly one where permission was being sought for a development with access from Buckley Hill Lane, although we do not think the claimant completely abandoned the possibility that in the no KBP universe a purchaser would still contemplate the development of a business park by another scheme. There followed a lengthy review and discussion by the tribunal of the evidence and submissions relating to both planning assumptions and the disregards (paras 56 100). For present purposes it is sufficient to refer to the critical findings, first relating to the application of the cancellation assumption under section 16, and secondly to the wider considerations under section 6. As to the former the assumed position on the ground was described as follows: The cancellation assumption requires the Tribunal to imagine all the facts on the ground and all the planning permissions, plans and potentialities as they were at the valuation date but to assume that the compulsory purchase order on the reference land, and only on the reference land, had been cancelled. That, of course, can have a significant effect upon some of the planning assumptions. In the present case it is to be assumed that the KBP had been begun in accordance with the Master Plan. The junction with the motorway, the central spine road and part of the southern loop road were built or in the course of construction, and some development had already begun. Part of the northern loop road at the western end had also been started. It was too late for the developer to pull out of its commitments to build out the KBP according to the master plan. (para 80) 89. We think that simply on the cancellation assumption there would have been a reasonable prospect of some residential development on the reference land with access from a northern loop. However, it would seem that such an increase in the value of the relevant interest would have to be Having reviewed a number of suggested alternatives the tribunal concluded: disregarded. It would be unequivocally attributable to the development of part of the land authorised to be acquired other than the relevant land, and it would not have been likely to be carried out in the absence of the acquiring authoritys proposals to acquire the land for such a road. Turning to section 6 and the Pointe Gourde rule, the tribunal noted that that this was not a case where the latter rule had anything much to add to the statutory code, given that the other land included in the compulsory purchase order encompass(ed) all the land that could be described as the scheme (para 91). They accepted that, even if the KBP scheme itself had failed, the planning policies would have continued to support it, and the authorities would have done their best to bring forward another scheme, but a prospective purchaser of the reference land would have regarded it as a long shot. It would not in itself have added much if anything to the existing use value of the reference land (para 92). They continued: The only development that would produce an increased value on the reference land which would not have to be disregarded under the statute would be a likely development that took no part of the other land. In other words that would have to be a development which took its access from the existing Buckley Hill Lane. (para 93) The statute required to be left out of account any increase or diminution (their emphasis) attributable to the acquisition of the other land for the purposes of the order. For this purpose it was necessary to visualise a no KBP universe (para 94). In such a universe it was necessary to leave out of account both the benefits of the KBP scheme, such as improved access due to its infrastructure, and also any disadvantages, such as potential traffic objections based on over use of existing highway capacity. Broader policy objections based on possible prejudice to a future KBP scheme would also be very different in weight to the situation where the planning authority was relating such objections to a specific scheme which is just starting to get off the ground (para 95). For similar reasons, the tribunal attached little weight to the refusals of the Nall application in 2002 or to the fate of the section 17 application, the reasons for both of which relied on policy EC/6 and the need for a comprehensive KBP scheme. In a no scheme universe those reasons for refusal would have to be very carefully reconsidered and might carry much less weight. Other possible objections would have to balanced against the extensive policy support for residential development on part of the reference land, leading in their view to a reasonable argument in favour of permission (para 96). They concluded on this aspect: 97. It was evident from our site visit that there has been development off Buckley Hill Lane in the comparatively recent past on its eastern side. The long history of the identification of the land of which the reference land forms part for substantial development would weaken a PPG 3 greenfield objection to a residential development on the west side of the lane, incorporating the Nib. It was agreed between the highway witnesses that a substantial number of houses could take an access on to Buckley Hill Lane although the witnesses differed as to whether the maximum would be 60 or 74. For the reasons we have just given we think we should give less weight, in considering the prospects of this hypothetical permission, to an objection based upon policy EC/6 or emerging policy EC/7 and no weight to a highway objection based upon traffic flows from the KBP development. On the other hand the motorway junction itself was a fact on the ground at the valuation date. It was not part of the compulsory purchase order and it does not seem to us that it would be right to extend the definition of the scheme to include it. 98. Taking all those matters into consideration and doing the best we can to make sense of a number of assumptions of varying solidity, in our judgement the hypothetical purchaser would have considered that the reference land would have had some extra hope value of a permission for residential development. However we would not put a percentage better than 50/50 on the chances of success. In summary they considered that there would have been a 50/50 chance of planning permission being obtained on the reference land in a no KBP world, and they thought it realistic to assess the period of deferral at five years (para 117). Having considered the valuation evidence, and taking account of other factors, they arrived at a figure of 746,000, as the amount which a hypothetical purchaser would pay for the reference land, and accordingly determined compensation in that amount (para 123). There is no challenge to the valuation aspects of their decision. The Court of Appeal The authority appealed to the Court of Appeal. They did so principally on the grounds that the tribunal had misapplied the statutory disregards under section 6 and Schedule 1. In the leading judgment Patten LJ summarised their primary submission: 32. HCAs primary submission is that the UT has done the very thing which they had said was to be avoided: namely eliding the identification of the planning status of the reference land with its valuation. They submit that once the planning status is determined by the application of sections 14 16 of the 1961 Act the valuation exercise has to proceed on that basis and that the application of the section 6 disregards does not involve any further alteration in the assumed planning permissions or policies which have previously been determined to apply Having reviewed the tribunals reasoning and the relevant case law, he identified the real issue as whether the Upper Tribunal had struck the balance between the no KBP universe and the planning actualit in the right place. He continued: Mr Kingston QC (for the claimants) submits that the [Upper Tribunal] was right not to assume the total abandonment of policy EC/6 or emerging policy EC/7 but to regard them as modified to the point at which a planning application for an independent development via the Nib would be assessed on its own planning merits relative to location and housing need. Mr Humphries primary position remained that the application of the disregards did not entitle the [Upper Tribunal] to assume any modification of the planning status determined in accordance with sections 14 16. (para 37) Neither argument appeared correct to him (para 38). Having further discussed the respective submissions, he concluded: 40. In my view, the [Upper Tribunal] was right to hold that the planning status of the reference land did have to be modified for the purposes of valuation in accordance with the no KBP universe methodology. But it was wrong to do so by simply downgrading the strict application of the existing and emerging development plan but otherwise leaving the allocation of the land for development in place. What it should have done was to consider the planning potential of the reference land without regard to the development scheme and its underlying policies and therefore its effect on value. In that no scheme world it should have examined what wider no scheme specific policies (including but not necessarily limited to PPG3) would have applied to a planning application at the valuation date had there been no KBP and so struck a fair balance between the public interest and those of the claimant in relation to the valuation of the reference land. The assumption relied on in both parties submissions that policy EC/6 and developing policy EC/7 continued to apply was based on a wrong application of section 6(1) and the valuation calculated on that basis must be set aside. He accordingly held that the assessment of compensation should be remitted to the Upper Tribunal to be decided without regard to the scheme of development as defined in this judgment (para 44). Humphries principal submission that In a concurring judgment, Sales LJ similarly rejected what he took to be Mr once one has gone through the section 14 exercise the question of the planning status of the reference land must be taken to be immutably fixed when calculating the valuation of the land for the purposes of compensation. (para 47) However, he was unable to support the tribunals reasoning: 52. In the present case the [Upper Tribunal] erred by still giving weight to the planning policies in relation to the KBP site, including in particular the part of the historic, current and emerging policies to promote the development of a business park which contemplated that there should be residential development on the site as part of that development (what the [Upper Tribunal] called the extensive policy support for residential development on part of the reference land: para 96). In this respect, the [Upper Tribunal] failed to apply the section 6(1) disregard correctly and appears to have overvalued the reference land for the purposes of compensation. Jackson LJ agreed with both judgments. Issues in the appeal In this court, Mr Kingston for the claimants submits in short that the Court of Appeal was wrong to adopt a line of reasoning which had been supported by neither party; and in doing so to interfere with a matter pre eminently for the judgment of the expert tribunal, that is the assessment of the weight to be given in the no scheme world to the policies in the development plan. Contrary to the understanding of the court, the tribunal had ample evidence of the prospect of development in the absence of the KBP scheme, and properly took it into account. For the authority Mr Humphries renews his primary submission, rejected by the Court of Appeal. That relies on a strict division between two stages of the process: first, the assessment of planning status by reference to the statutory assumptions in sections 14 16 of the Act; and secondly the valuation of the land with the planning status so determined, at which stage the disregards under section 6 come into play. On this approach it is not permissible for the decision maker at the second stage to use the valuation disregards to revisit and revise the planning status of the reference land as determined pursuant to the planning provisions at the first stage. As an alternative submission he supports the reasoning of the Court of Appeal. In particular the tribunal was wrong in effect to allow the claimant to have the benefit of the allocation of the land for development in policy EC/6, while treating the policy as modified so as to allow independent access. Discussion With respect to the Court of Appeal, Mr Kingstons criticisms of their reasoning appear to me well founded. As already noted, it had not been supported by either party in argument before them. As I read Patten LJs judgment (para 31 above) he seems to have treated the required disregard of the KBP scheme as extending also to all the policies, past and present, which supported development on this land. The planning potential of the reference land was to be assessed without regard to the development scheme and its underlying policies. Similarly Sales LJ (para 32 above) thought that the tribunal had erred by taking account of the historic, current and emerging policies promoting a business park, or the extensive policy support for residential development on the reference land. In my view the tribunal were clearly entitled to regard the underlying policies, including the allocation in the development plan, as potentially relevant also to the prospect of development apart from the KBP scheme. The assessment of their significance in the no KBP universe was pre eminently a matter for them. Mr Humphries does not argue otherwise. As the very experienced members of a specialist tribunal, who had also visited the area, they were well equipped for that task. Their approach appears most clearly in their concluding passage at para 96 (see above). There they properly took account of the pattern of development as seen by them on the ground, and the long history of identification of this land for substantial development. They did not ignore potential policy objections, such as under PPG3 or policy EC/6, but took the view that they would not have sufficient weight to rule out the possibility of development in the absence of the KBP scheme. That reasoning discloses no error of law. I turn to Mr Humphries principal submission, that the tribunal erred in not treating the planning status of the land as conclusively fixed by reference to their applications of sections 14 to 16 of the 1961 Act. In my view the Court of Appeal were right to reject this submission, which is supported neither by the statutory provisions nor by authority. Indeed, the principle that the statutory assumptions are not exclusive is confirmed by the 1961 Act itself in section 14(3). That provides in terms that the statutory planning assumptions do not imply any presumption against development which might otherwise fall to be taken into account. The statutory assumptions work only in favour of the claimant, not against him. They do not deprive him of the right to argue for prospective value under other provisions or the general law. The right to claim for potential development value is long established. As Lord Collins of Mapesbury said at the beginning of his leading judgment in Spirerose (para 65), it has been accepted from the earliest days of the law of compensation that the value of the land taken should include not only the present purpose to which the land is applied, but also any other more beneficial purpose to which in the course of events at no remote period it may be applied. (para 65, citing R v Brown (1867) LR 2 QB 630, 631) Since the introduction of general planning control in 1947, and the restoration of market value compensation in the 1950s development value has been an important element in the assessment of compensation, because the value of land in the open market may depend on what planning permission exists or could be obtained for development on the land. In Spirerose itself there was no suggestion that the specific statutory provisions relating to planning assumptions precluded account being taken under the general law of the prospect of permission for valuable development. The only issue was whether such a prospective permission should be valued as a certainty (as the tribunal had held) or merely as a hope, as the House ruled. It is in any event well established that the application of the Pointe Gourde rule itself may result in changes to the assumed planning status of the subject land. Thus in Melwood Units Pty Ltd v Main Roads Comr [1979] AC 426, where land was acquired for an expressway, the Privy Council accepted that compensation should reflect the fact that but for the expressway project permission would have been obtained to develop the whole area for a drive in shopping centre (p 433). That case, although decided under a different statutory code, has long been accepted as authoritative in this jurisdiction. It was cited without criticism in Spirerose (see paras 110ff per Lord Collins). Nor is there anything in section 6 to indicate that a more restrictive approach should be applied under the statutory disregards. In saying that the two stages should not be elided (para 19 above), the tribunal as I understand them were doing no more than emphasising the difference between the statutory tests. It has also long been accepted that application of the general law may produce a more favourable result for the claimant than the statutory planning assumptions. A striking illustration noted by the Law Commission (loc cit p 206 7) is provided by the two Jelson cases, relating to the same strip of land acquired for a road: Jelson Ltd v Minister of Housing and Local Government [1970] 1 QB 243, Jelson Ltd v Blaby District Council [1977] 1 WLR 1020. The refusal in the first case of a section 17 certificate for residential development, was held in the second not to prevent the tribunal taking account of the prospect of residential development under the Pointe Gourde rule (or section 9 of the 1961 Act). The difference lay in the criteria to be applied. Under section 17 attention was directed at the position as at the date of the deemed notice to treat, by which time development on either side of the strip had made further development impossible. Under the Pointe Gourde rule it was possible to look at the matter more broadly. Again this decision was cited without criticism in Spirerose (paras 105ff per Lord Collins). Mr Humphries relies on a passage in the concurring speech of Lord Neuberger of Abbotsbury in Spirerose (para 55), in which he referred to the distinction drawn in some authorities between the effect of the scheme on the value of the owners interest, as opposed to the characterisation of that interest (see Rugby Joint Water Board v Shaw Fox [1973] AC 202, 253, approving a dictum of Russell LJ in Minister of Transport v Pettitt (1968) 67 LGR 449, 462). However, those comments must be read in context. As already noted, Spirerose proceeded on the premise that the prospect of permission for development could be taken into account under the Pointe Gourde rule. The use of the rule for that purpose was not in issue. The question was how it should be valued. The dicta mentioned by Lord Neuberger were directed to the ascertainment of the nature of the relevant interest in land, not its planning status. It is true that in Myers v Milton Keynes Development Corpn [1974] 1 WLR 696, 702 Lord Denning MR (apparently with the agreement of counsel) seems to have equated the two, relying on the same dicta. However, the legal basis for that approach was not discussed in detail, and it was not followed in later cases. As it happens, at an earlier stage of the proceedings in Spirerose, a similar argument had been advanced for the claimant by Mr Barnes QC (who appeared also in the House of Lords), but it was not pursued in the higher courts. The Court of Appeal commented ([2008] EWCA Civ 1230); [2009] 1 P & CR 20): 24. We mention in passing Mr Barnes argument before the tribunal (see para 61), not pressed in this court, that the no scheme rule had nothing to do with planning assumptions, being a principle of valuation and not planning status. This argument was based on some comments of Lord Denning MR in Myers v Milton Keynes Development Corpn [1974] 1 WLR 696, and of Carnwath LJ in Roberts v South Gloucestershire Council [2003] RVR 43. He was right in our view not to pursue the point. The observations in Roberts were certainly not intended to support such an argument. It is also inconsistent with the reasoning of Lord Denning himself in the second Jelson case, and with one of the leading cases in the Privy Council, Melwood Units Pty Ltd v Main Roads Comr [1979] AC 426 (assumed permission for a shopping centre). Conclusion The Upper Tribunals decision in the present case is a powerful illustration of the potential complexities generated by the 1961 Act in its unamended form. It is to be hoped that the amendments currently before Parliament will be approved, and that taken with the 2011 amendments they will have their desired effect of simplifying the exercise for the future. It is no criticism of the tribunal if parts of their reasoning may appear obscure at first sight and require some unpicking. However, once that is done, I am satisfied that the criticisms made by the Court of Appeal and in this court by the respondents are misplaced. Overall, the tribunals application of these difficult provisions to the complex facts of this case is in my view exemplary. I find no error of law. For these reasons I would allow the appeal and set aside the order of the Court of Appeal. In the result, if my colleagues agree, the award of the tribunal will be restored. |
This is an appeal from an order of the Court of Appeal (Longmore, Kitchin and Vos LJJ) dated 4 December 2014, which set aside an order of the Chancellor dated 28 February 2014 staying the present proceedings. The points raised are novel and difficult, and the focus of submissions has shifted at each instance. The proceedings are brought by a Cayman Islands company, Saad Investments Co Ltd, in liquidation, (SICL) and its Joint Official Liquidators (the Liquidators), appointed as such in winding up proceedings commenced in the Cayman Islands on 30 July 2009. The English Companies Court has recognised the Cayman Islands winding up proceedings as a foreign main insolvency proceeding by orders under the Cross Border Insolvency Regulations 2006 (SI 2006/1030). The proceedings are against Samba Financial Group (Samba), which was served as of right within the jurisdiction on 19 August 2013, but which then applied for the proceedings to be stayed. The ground then given was that there exists another forum which is clearly and distinctly more appropriate than England. In the course of the appeals leading to the Supreme Court, the ground has effectively transmuted into a case that SICLs claim has no prospect of success, for a reason or reasons which will appear. The parties have argued the appeal, and the Supreme Court will address it, on that basis. Before the Supreme Court many of the issues which required attention below are no longer relevant. The appeal can as a result be approached on the basis of assumed facts and matters which can be shortly stated. They include the following. Mr Al Sanea, a Saudi Arabian citizen and resident closely involved with SICL, was the legal owner of shares, valued at around US$318m, in five Saudi Arabian banks, one of them Samba itself. He was registered as their owner in the Saudi Arabian Securities Depositary Centre. SICL claims that Mr Al Sanea had agreed to hold these Saudi Arabian shares at all material times on trust for SICL. The trusts arose allegedly as a result of six transactions. In the first transaction in 2002, Mr Al Sanea by share sale agreement agreed to transfer to SICL the beneficial ownership of the relevant shares, but to continue to hold the legal title in order to comply with legal requirements in Saudi Arabia. In a second transaction in 2003, Mr Al Sanea agreed to hold legal ownership of [the relevant] shares as nominee for SICL in order to comply with the legal requirements in Saudi Arabia. In the remaining four transactions, in respectively 2006, 2007 and on two occasions in 2008, Mr Al Sanea made declarations of trust for SICL in respect of the relevant shares. It is now common ground, for the purposes of this appeal, that all six transactions by which Mr Al Sanea purported to constitute himself a trustee for SICL can be treated as subject to Cayman Islands law. It is also common ground that the law of Saudi Arabia, where the shares are sited, does not recognise the institution of trust or a division between legal and equitable proprietary interests, although it does recognise a different institution, amaana, the precise implications of which have not been explored in evidence. On 16 September 2009, Mr Al Sanea transferred all the Saudi Arabian shares to Samba, purporting thereby to discharge personal liabilities which he had towards Samba. The present proceedings are brought by SICL and the Liquidators against Samba in reliance on section 127 of the Insolvency Act 1986, which provides: Avoidance of property dispositions, etc. In a winding up by the court, any disposition of the companys property, and any transfer of shares, or alteration in the status of the companys members, made after the commencement of the winding up is, unless the court otherwise orders, void. By section 436 of the 1986 Act the concept of property is defined in wide terms: property includes money, goods, things in action, land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property; In the courts below, and when the matter first came before the Supreme Court, the critical issue was identified as being whether SICL had equitable proprietary interests in the shares in respect of which Mr Al Sanea had purportedly constituted himself trustee. It appears to have been assumed that, if SICL had such interests, then they were disposed of by Mr Al Saneas transfer of title in the shares to Samba. Sambas submission was that SICL could have no such equitable proprietary interests, since the law of Saudi Arabia, the lex situs of the shares, does not recognise purely equitable proprietary interests. Following the oral hearing before it, the Supreme Court invited and received two sets of supplementary written submissions focusing more precisely on the questions (a) whether there was any disposition within section 127, even if SICL had equitable proprietary interests in the shares, and (b) why, if there was, it could not also be said that there was such a disposition, even if SICL only enjoyed personal rights in respect of the shares. At all instances of this case, detailed submissions have been addressed on the Convention on the Law Applicable to Trusts and on their Recognition, scheduled to the Recognition of Trusts Act 1987. These submissions focused, before the Chancellor, on article 15 and, before the Court of Appeal and Supreme Court, on both articles 4 and 15 of that Convention. The 1987 Act states in section 1(1) that The provisions of the Convention set out in the Schedule shall have the force of law in the United Kingdom. The Convention as scheduled contains the following provisions: CHAPTER I SCOPE Article 1 This Convention specifies the law applicable to trusts and governs their recognition. Article 2 For the purposes of this Convention, the term trust refers to the legal relationship created inter vivos or on death by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose. A trust has the following characteristics the assets constitute a separate fund and are not a (a) part of the trustees own estate; (b) title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee; the trustee has the power and the duty, in respect (c) of which he is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon him by law. The reservation by the settlor of certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust. Article 3 The Convention applies only to trusts created voluntarily and evidenced in writing. Article 4 The Convention does not apply to preliminary issues relating to the validity of wills or of other acts by virtue of which assets are transferred to the trustee. Article 5 The Convention does not apply to the extent that the law specified by Chapter II does not provide for trusts or the category of trusts involved. CHAPTER II APPLICABLE LAW CHAPTER III RECOGNITION Article 11 A trust created in accordance with the law specified by the preceding Chapter shall be recognised as a trust. Such recognition shall imply, as a minimum, that the trust property constitutes a separate fund, that the trustee may sue and be sued in his capacity as trustee, and that he may appear or act in this capacity before a notary or any person acting in an official capacity. In so far as the law applicable to the trust requires or provides, such recognition shall imply in particular that personal creditors of the trustee shall have no (a) recourse against the trust assets; (b) that the trust assets shall not form part of the trustees estate upon his insolvency or bankruptcy; (c) that the trust assets shall not form part of the matrimonial property of the trustee or his spouse nor part of the trustees estate upon his death; (d) that the trust assets may be recovered when the trustee, in breach of trust, has mingled trust assets with his own property or has alienated trust assets. However, the rights and obligations of any third party holder of the assets shall remain subject to the law determined by the choice of law rules of the forum. Article 12 Where the trustee desires to register assets, movable or immovable, or documents of title to them, he shall be entitled, in so far as this is not prohibited by or inconsistent with the law of the state where registration is sought, to do so in his capacity as trustee or in such other way that the existence of the trust is disclosed. Article 14 The Convention shall not prevent the application of rules of law more favourable to the recognition of trusts. CHAPTER IV GENERAL CLAUSES Article 15 The Convention does not prevent the application of provisions of the law designated by the conflicts rules of the forum, in so far as those provisions cannot be derogated from by voluntary act, relating in particular to the following matters the protection of minors and incapable parties; the personal and proprietary effects of marriage; succession rights, testate and intestate, especially (a) (b) (c) the indefeasible shares of spouses and relatives; (d) interests in property; (e) insolvency; (f) acting in good faith. the protection of creditors in matters of the transfer of title to property and security the protection, in other respects, of third parties If recognition of a trust is prevented by application of the preceding paragraph, the court shall try to give effect to the objects of the trust by other means. Article 16 The Convention does not prevent the application of those provisions of the law of the forum which must be applied even to international situations, irrespective of rules of conflict of laws. Article 17 In the Convention the word law means the rules of law in force in a state other than its rules of conflict of laws. Article 18 The provisions of the Convention may be disregarded when their application would be manifestly incompatible with public policy. In the Court of Appeal, the first issue under article 4 was whether this article excludes the application of the Convention to the trusts created or declared by Mr Al Sanea, bearing in mind that Saudi Arabian law does not recognise any division of legal and beneficial interests. Secondly, assuming the Convention to apply, SICL relied on its provisions regarding applicable law in Chapter II in submitting that the trusts were governed by Cayman Islands law. That is an issue that has, for present purposes, disappeared, since the present appeal proceeds on the basis that the transactions creating or declaring the trusts were subject to Cayman Islands law. Thirdly, assuming the Convention otherwise to apply, Samba argued in the courts below that the effect of article 15(d) was to remit the question whether, under the trusts, SICL acquired any equitable proprietary interest in the shares to Saudi Arabian law, being, it submits, the lex situs designated by English common law as the law governing questions of title. Samba succeeded on this point before the Chancellor (para 63), but lost before the Court of Appeal on the basis that there were triable issues whether under Saudi Arabian law the arrangements constituted by the six transactions were valid and whether any rule precluding the separation of legal and equitable title or precluding foreigners from owning Saudi Arabian property was mandatory, in the sense that it could not be derogated from within the meaning of that term in article 15. The first issue, whether or not the Convention applies to the trusts, focuses on the exclusion introduced by article 4. SICL submits that the concept of preliminary issues relating to the validity . of other acts by virtue of which assets are transferred to the trustee goes no further than to exclude issues about the alienability, or transferability, of the assets to the trustee. It submits that article 4 leaves all further issues concerning the capacity of the trustee to declare a trust in respect of the shares or to create a beneficial interest in the shares under such a declaration to be governed under the Convention by the governing law of the trust, ie for present purposes, Cayman Islands law. Samba on the other hand submits, drawing on passages in the travaux prparatoires, that all these issues are excluded from the Convention by article 4, and remitted accordingly to the common law, under which it submits Saudi Arabian law, as the lex situs of the shares, governs them. On this issue, the Court of Appeal accepted SICLs case. It held (para 55) that: Provided that the property that is made the subject of a trust can be alienated at all under the lex situs, questions as to the validity and effect of placing such assets in trust, even though the assets are shares in a civil law jurisdiction, can be determined by the governing law of the trust. To put the matter in the context of this case, the declarations of trust will not be dividing the equitable and legal interests in the shares under Saudi Arabian law. That is not possible. But the declarations of trust may give SICL rights under the trust in respect of those shares that will have to be determined by the governing law of the trust, taking into account that under Saudi Arabian law a division of equitable and legal interests is not possible. All these matters will have to be worked out at the next stage of this litigation when the court comes to consider the effect on the rights granted by the declarations of trust of the transfer to Samba which took effect under Saudi Arabian law. On the present appeal, Samba criticises this passage as obscure, and submits that, in so far as it suggests that an equitable proprietary interest can exist in an asset sited in a jurisdiction which knows no such concept, it is wrong. In the light of the further and more broadly ranging submissions which the Supreme Court has now received, I doubt if it matters for present purposes either whether the Convention applies or even whether SICLs interests in relation to the shares can properly be described as proprietary. The limited focus in the courts below, on the issue whether the trusts gave SICL equitable proprietary interests in the shares, is largely subsumed in a more general question whether, whatever the nature of SICLs interests under the trusts, there was any disposition of property within the meaning of section 127. As to what constitutes property, this is always heavily dependent on context something can be proprietary in one sense while also being non proprietary in another sense: M Conaglen, Thinking about proprietary remedies for breach of confidence (2008) Intellectual Property Quarterly 82, 89, referring to R Nolan, Equitable Property (2006) 122 LQR 232, 256 257. As the Chancellor noted (para 62), there is a school of thought (which can be dated to FW Maitland, Equity a Course of Lectures (1936)) which analyses the equitable interests created by a common law trust not as proprietary, but as personal or obligational, even as against third parties. The issue whether trusts are properly seen as part of the law of property or as an aspect of the law of obligations is described by Swadling in Burrows, English Private Law (3rd ed) (2013) para 4.140 as a difficult question; see also Burrows, The Law of Restitution, (3rd ed) (2011), pp 191 193, Nolan, Equitable Property (2006) 122 LQR 232. Supporters of a personal analysis include B McFarlane, The Structure of Property Law (2008); see also Watt, The Proprietary Effect of a Chattel Lease (2003) Conveyancer and Property Lawyer 61. A recent discussion of the pros and cons of each analysis appears by P Jaffey in Explaining the Trust (2015) 131 LQR 377. Jaffey concludes that, although a trust involves personal rights against the trustee, only a proprietary analysis explains satisfactorily those aspects which concern the beneficiarys position vis vis third parties, such as the trustees creditors and recipients of unauthorised transfers of trust property. As before the Chancellor, so before the Supreme Court, the parties were content to proceed on the basis of the conventional analysis that a trust creates a proprietary interest, at least to the extent that such an interest is capable of existing and being recognised in the relevant asset. In this judgment, I am also content, without expressing any view about the appropriate analysis, to proceed on the same basis. At common law, the nature of the interest intended to be created by a trust depends on the law governing the trust. This law therefore determines whether the intention is to give a beneficiary an equitable proprietary interest in an asset held on trust or a mere right against the trustee to perform whatever functions the trust imposes upon him with regard to the use and disposal of foreign shares and income derived from them: see Dicey, Morris & Collins, The Conflict of Laws (15th ed) (2012), vol 2, para 22 048, citing Archer Shee v Garland [1931] AC 212. Where the intention is to create an equitable proprietary interest, then the common law position is as stated in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, 705F, per Lord Browne Wilkinson: Once a trust is established, as from the date of its establishment the beneficiary has, in equity, a proprietary interest in the trust property, which proprietary interest will be enforceable in equity against any subsequent holder of the property (whether the original property or substituted property into which it can be traced) other than a purchaser for value of the legal interest without notice. The initial inquiry is therefore whether an equity subsists, which it will prima facie do at common law, so long as the relevant property (original or substitute) does not pass into the hands of a transferee for value of the legal interest without notice of the equity. But a further issue may arise under the law of the situs of the relevant property. The situs or location of shares and of any equitable interest in them is in the jurisdiction where the company is incorporated or the shares are registered (which is presently unimportant, since in this case they coincide in Saudi Arabia): Dicey, op cit paras 22 044 and 22 048, Underhill and Hayton, Law of Trusts and Trustees (19th ed) para 100.128, both citing In re Berchtold [1923] 1 Ch 192, Philipson Stow v Inland Revenue Comrs [1961] AC 727, 762, per Lord Denning. It is established by Court of Appeal authority (and was not challenged on this appeal) that, where under the lex situs of the relevant trust property the effect of a transfer of the property by the trustee to a third party is to override any equitable interest which would otherwise subsist, that effect should be recognised as giving the transferee a defence to any claim by the beneficiary, whether proprietary or simply restitutionary: Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1996] 1 WLR 387. In that case, bona fide chargees for value of shares situated in New York and held on trust for Macmillan were thus able, by application of New York law, to take the shares free of Macmillans prior equitable interest of which the chargees had had no notice. As will appear, I do not consider that any different position would result under the Convention. That does not mean that a common law trust cannot or will not exist in respect of shares, simply because the lex situs may treat a disposition of the shares to a third party as overriding any interest of the beneficiary in the shares. A trust existed in respect of the shares in issue in Macmillan v Bishopsgate until they were disposed of under the lex situs by transfer to bona fide purchasers for value without notice. But a common law trust can also exist in respect of shares, such as the Saudi Arabian shares presently in issue, even though Saudi Arabian law does not recognise equitable proprietary interests at all and may not (though this has not been investigated) give any effect at all to a common law trust. A common law court concerned with Cayman Islands trusts in respect of Saudi Arabian shares will give them their intended effect to the greatest extent possible, having regard to the overriding effect of any disposition under their lex situs. This is so both at common law and under the Convention. Thus, as between the immediate parties to the present trusts, Mr Al Sanea and SICL, Mr Al Sanea cannot deny the validity or effect of the trusts, or assert a right to deal with assets subject to a trust or their proceeds as his own, simply because Saudi Arabian law does not recognise the trusts as giving rise to the separate equitable proprietary interest that would exist if the shares were situated in, say, the United Kingdom or Cayman Islands. If Mr Al Sanea were to be the subject of bankruptcy proceedings or a receivership in the United Kingdom or Cayman Islands, it is equally clear that his creditors could not claim that the Saudi Arabian shares formed part of his estate in bankruptcy. The Supreme Court was referred to Attorney General v Jewish Colonization Association [1901] 1 QB 123 and Marlborough (Duke) v Attorney General [1945] 1 Ch 78. In these cases the issue was whether foreign shares held on trust were taxable as on a succession, in the first case on the death of the settlor and the termination of his life interest, and in the second case on the death of the beneficiary of the trust. This issue turned on the application of general words in section 2 of the Succession Duty Act 1853: every past, or future disposition of property shall be deemed to confer a succession. The courts held these general words to be limited to property held on trust under an English law trust, but applied them even though the property consisted of foreign shares. In the former case, a contrary argument raised by the taxpayer was that, under the Austrian law of the domicile of settlor (which may also have been the situs of some or all of the shares), an Austrian father cannot divest himself of property so as to impair the rights of his children to legitim, and any alienation at any time having that effect may on the death of the father be set aside (p 133). It was argued that Austrian law must govern accordingly. Both AL Smith MR and Collins LJ (pp 133 and 137) noted that, if such an event had occurred, then to that extent the settlement might have been ineffective. But, in circumstances where it had not occurred, they held the trust to be an effective English law trust giving rise to a taxable succession on the settlors death, while recognising that the actual implementation of the trust in respect of foreign assets might in some circumstances be affected by foreign law. While these are cases from a different area of the law, their recognition of English law trusts in respect of foreign shares, subject only to any possible qualifications on their implementation arising under foreign law, is generally consistent with the analysis which I have indicated in the preceding paragraphs. The validity and enforceability of English law trusts in respect of foreign assets has also been considered in an instructive series of English authorities. First, the English courts have regularly stated their willingness to enforce in personam trusts in respect of property abroad. As the Earl of Selborne LC said in Ewing v Orr Ewing (1883) LR 9 App Cas 34, 40: The Courts of Equity in England are, and have always been, courts of conscience, operating in personam and not in rem; and in the exercise of this personal jurisdiction they have always been accustomed to compel the performance of contracts and trusts as to subjects which were not either locally or ratione domicilii within their jurisdiction. They have done so as to land, in Scotland, in Ireland, in the Colonies, in foreign countries: Penn v Baltimore (Lord) (1750) 1 Ves Sen 444. Second, they have exercised such jurisdiction, applying the principles of English law to enforce contracts and trusts relating to foreign property, even though the lex situs did not recognise such principles. Thus, in British South Africa Co v De Beers Consolidated Mines Ltd [1910] 2 Ch 502, the Court of Appeal held that the equitable rule against clogging the equity of redemption of a mortgage applied to a contract governed by English law and would be enforced against a contracting party as regards land abroad in a state where the equity of redemption may not be recognised. Cozens Hardy MR stated (pp 513 514): For centuries the Court of Chancery has, by virtue of its jurisdiction in personam, applied against parties to a contract or trust relating to foreign land the principles of English law, although the lex situs did not recognize such principles. He cited in support Lord Cottenhams words in Ex p Pollard Mont & Ch 250: If indeed the law of the country where the land is situate should not permit or not enable the defendant to do what the court might otherwise think it right to decree, it would be useless and unjust to direct him to do the act; but when there is no such impediment the courts of this country, in the exercise of their jurisdiction over contracts made here, or in administering equities between parties residing here, act upon their own rules, and are not influenced by any consideration of what the effect of such contracts might be in the country where the lands are situate, or of the manner in which the courts of such countries might deal with such equities. He continued: To take a simple case, if A by an English contract agreed to give a mortgage to secure an English debt upon land in a foreign country, the law of which country does not recognize the existence of what we call an equity of redemption, which was the case of our common law, and if a mortgage was given and duly perfected according to the lex situs, I feel no doubt that our courts would restrain the mortgagee from exercising the rights given by the foreign law and would treat the transaction as a mortgage in the sense in which that word is used by us. In doing this our courts would not in any way interfere with the lex situs, but would by injunction, and if necessary by process of contempt, restrain the mortgagee from asserting those rights. Similar observations would apply to a trustee, if the lex situs does not recognize trusts. Thirdly, the situation envisaged by the last sentence of this last quotation is directly covered by Court of Appeal authority in Lightning v Lightning Electrical Contractors Ltd (1998) 23(1) Tru LI 35. It concerned a claim by Mr Lightning to be the beneficiary under a resulting trust in respect of land in Scotland, bought by an English company to which he had advanced the purchase price. Scots law, the lex situs of the land, did not recognise any equitable interest. The company having gone into receivership, Mr Lightning obtained a declaration in English proceedings that the property or its proceeds of sale were held on trust for him. Peter Gibson LJ, giving the lead judgment, applied the Earl of Selbornes words in Ewing and endorsed the statement by Parker J in Deschamps v Miller [1908] 1 Ch 856, 863, that the court would act where there was some personal obligation arising out of contract or implied contract, fiduciary relationship or fraud, or other conduct which, in a view of a Court of Equity in this country, would be unconscionable and that whether it would do so did not depend on the law of the locus of the immovable property. Peter Gibson LJ also recognised that the lex situs can, under the principle recognised in Macmillan v Bishopsgate, have a significance in the case of a third party transfer. He said, at p 38, that the English court had not unnaturally regarded English law as applicable to the relationship between the parties before it in the absence of any event governed by the lex situs destructive of the equitable interest being asserted. The English court would thus accept jurisdiction and apply English law as the applicable law, even though the suit relates to foreign land, but: In contrast if the equity which is asserted does not exist between the parties to the English litigation, for example where there has been a transfer of the property to a third party with notice of an equity but by the lex situs governing the transfer, the transfer extinguished the plaintiffs equity, the English court could not then give relief against the third party even though he is within the jurisdiction. In Lightning itself, as Peter Gibson LJ pointed out: No event governed by Scottish law [had] occurred whereby any equity arising under English law was destroyed. Henry and Millett LJJ agreed, the latter putting the position forcefully as follows, at p 40: If A provides money to B, both being resident in England, to purchase landed property in his own name but for and on As behalf, and B does so, the consequences of that transaction are governed by English law. It would be absurd if they were governed by the law of the place where the property in question happened to be located. Such a rule would lead to bizarre results if, for example, As instructions were to buy properties in more than one jurisdiction, for the consequences of the same arrangement might then be different in relation to the different properties acquired. It would also lead to bizarre results if A left it to Bs discretion to choose the property to be acquired, since that would give B the unilateral power to decide on the legal consequences of the transaction which he had entered into with A. Fourthly, all these authorities were recently and instructively examined by Roth J in Luxe Holding Ltd v Midland Resources Holding Ltd [2010] EWHC 1908 (Ch). The case concerned an agreement by Midland to sell to Luxe shares in 20 companies, 17 of which were incorporated in Russia or the Ukraine, with the lex situs of the shares in them being also there. Midland defaulted, sold the shares in the Russian and Ukrainian companies elsewhere and, when sued by Luxe, argued that, since Russian and Ukrainian law did not recognise the concept of a beneficial interest at all, and since questions of ownership and therefore proprietary interests in shares are governed by the lex situs of the companies, it followed that whatever might have been the position if these had been shares in English companies, there were no beneficial interests in the shares which could pass to Luxe under the share sale agreement (para 30). Addressing this argument, Roth J noted that the sort of trust, and thus beneficial interest which arises on the sale of land or of shares in private companies, arises only because the agreement is specifically enforceable and is In a sense, therefore, the corollary of the remedy of specific performance and is not a full trust in the classic sense (para 31). He continued, citing Lake v Bayliss [1974] 1 WLR 1073: It is by reason of this trusteeship that the vendor who breaks his contract of sale by reselling to someone else has been held to be accountable to the first intended purchaser for the proceeds of sale. 32. Roth J then engaged in the following analysis, which is worthwhile quoting in extenso: 35. Is the application of these principles precluded by the fact that the property is held through subsidiaries in a country the law of which does not recognise the concept of a lesser proprietary interest or that it does not recognise a beneficial interest at all? The fact that Midland held the shares through subsidiaries does not in itself preclude the sale and purchase agreement from being specifically enforceable, as Midland for present purposes accepts. The obligation to be enforced would be that Midland must procure that the shares are transferred. I do not see that this in itself would prevent the qualified trust relationship from arising. 36. Does the applicability of the lex situs to questions of ownership alter the position as between the contracting parties? It is trite but nonetheless important to recall that equity acts in personam. The parties here have chosen to govern the relationship as between themselves according to English law. Unless precluded by authority, it seems to me that as a matter of principle where the parties have expressly chosen English law and the exclusive jurisdiction of the English court, they have voluntarily subjected themselves to the English system of remedies. In my judgment, it is at the very least well arguable, and if necessary I would hold, that this includes the qualified trusteeship that applies as the corollary in such a case to the availability of specific performance, unless that gave rise to a situation that was directly contrary to the lex situs in the sense of interfering with the operation of the local law. After considering British South Africa Co v De Beers Consolidated Mines Ltd and Lightning v Lightning Electrical Contractors Ltd, Roth J continued: 41. I do not consider that the reasoning in Lightning is confined to the particular case of a resulting trust. On the contrary, it seems to me of general application. And the observation made by Millett LJ resonates in the present case, since three of the 20 companies of which Midland sold its shareholding were Guernsey or Irish companies, for which as I apprehend the lex situs recognises a beneficial interest. As it happens, those companies are of negligible value, but that obviously cannot affect the principle. If Midlands analysis were correct, the English court would find that Luxe had acquired as against Midland a beneficial interest in those shares but not in the shares of the other companies incorporated under a different system of law, and that it would thus have a very limited proprietary claim. 42. Moreover, it is accepted by Luxe that any beneficial interest in the shares sold to Troika was destroyed or terminated by that sale. Its claim is to the proceeds in Midlands hands. Thus no interference with property transfers under Ukrainian (or Russian) law is involved. There is no reason why equity, acting on the conscience of Midland as a proper defendant to English proceedings, cannot require that Midland holds those moneys for the benefit of Luxe. It is clear therefore, that in the eyes of English law, a trust may be created, exist and be enforceable in respect of assets located in a jurisdiction, the law of which does not recognise trusts in any form. In non common law jurisdictions, a similar approach may also be expected. In Scotland, the civil law concept of patrimony has been developed to explain the protection of trust property held by a trustee against claims by the trustees personal creditors: Glasgow City Council v Board of Managers of Springboig St Johns School [2014] CSOH 76, para 17 per Lord Malcolm. Following Italys ratification of the Convention, Italian courts have also recognised common law trusts as creating a separate patrimony, rather than a new kind of property right: see Italy: The Trust Interno by Alexandra Braun in Haytons The International Trust (3rd ed) (2011). Whether Saudi Arabian law would, in any proceedings before a Saudi Arabian court, adopt a similar approach, by treating the relevant transactions as amounting to amaana, even though Saudi Arabia is not a party to the Convention and its law does not recognise distinct equitable proprietary interests, is, as the Court of Appeal noted (para 75), presently unknown: see also para 5 above. The decision by Lord Hodge sitting in the Outer House in the Scottish case of Joint Administrators of Rangers Football Club Plc, Noters 2012 SLT 599 concerned contracts, made in 2011 and subject to English law, between Rangers and two English limited liability partnerships (collectively Ticketus). Under the contracts, Ticketus had paid Rangers large sums for future tranches of season tickets in respect of a defined number of seats of different types at specified future matches in each of the seasons from 2011 2012 to 2014 2015. Rangers having gone into administration, its administrators applied for directions as to whether they could be prevented from terminating the contracts. Ticketus argued that they had acquired rights which were more than mere personal rights, and which could be enforced by specific performance. Lord Hodge held, first, relying on the travaux prparatoires (in particular paras 55 to 57 of the Explanatory Report prepared by Professor Alfred E von Overbeck), that the concept in article 4 of the Convention of a preliminary issue relating to the validity of an act by which assets were transferred to a trustee included an issue relating to the validity of a declaration of trust. He held, second, that whether the agreements between Rangers and Ticketus in respect of season tickets gave Ticketus more than purely personal rights was such an issue, and, third, that this issue fell accordingly outside the Convention and was to be determined under Scots private international law rules by reference to Scots law, as the lex situs of the future tickets to be issued and the stadium seats to which they related. He went on (para 33): If I am correct in my conclusion that Scots law applies, the difficulty which Ticketus faces in asserting a trust over the proceeds of sale of the season tickets agreement tickets is that the proceeds do not yet exist. On the assumption that the Ticketus agreements are sufficient to amount to a declaration by Rangers of a trust over the STA tickets and the proceeds of their sale, the non existence of both is fatal to the creation of a trust. Where the truster and trustee are the same person it is our law that there must be constructive delivery of the trust subjects to himself as trustee of an irrevocable trust: see Allans Trustees v Lord Advocate 1971 SC (HL) 45, in which Lord Reid at p 64 spoke of the doing of something equivalent to delivery or transfer of the trust fund. The essence of the decision was, therefore, that there was nothing which, at least in Scots law, was capable of giving rise to any form of proprietary interest or as being the subject of any trust, which was what Ticketus were claiming. The decision, under Scots law, to apply Scots law to this question, does not determine the common law position or detract from Roth Js analysis in Luxe. The approach taken in the second and third steps of Lord Hodges reasoning set out above is open to question, at least through English legal eyes (see also the query raised about its correctness by George L Gretton, Lord President Reid Professor at Edinburgh University, in The Laws of the Game [2012] Edinburgh Law Review 414, 418). But it is unnecessary to consider this further on this appeal. On an English appeal relating to common law trusts, it is the approach indicated by Roth J in Luxe and by the Court of Appeal in Lightning that is correct and applicable. In the light of the above, to regard a trust as falling outside the Convention under article 4, simply because its assets consist of assets in a jurisdiction which does not recognise a division between legal and equitable proprietary interests, is wrong. Even if the Court of Appeal was wrong to limit article 4 to the question whether the assets were alienable, in the sense of being capable of transferable to the trustee or anyone else (see paras 12 13 above), an issue on which it is unnecessary to reach any final conclusion, there was nothing invalid about the declarations of trust. There is nothing in the Convention to suggest that it was intended to be inapplicable to a trust simply because the trust was in respect of assets in a jurisdiction which does not recognise some form of separation of legal and equitable interests. Rather, the contrary since one object of the Convention was to provide for the recognition of trusts in jurisdictions which did not themselves know the institution. There must be many common law trusts which have or acquire assets in civil law or other jurisdictions which do not recognise the concept of an equitable proprietary interest in the English common law sense. All that the provisions for recognition of a trust in article 11 of the Convention contemplate, as a minimum is that the trust property constitutes a separate fund. But that does not mean that there must exist a concept of equitable proprietary interest or any separation of legal and equitable proprietary interests under the lex situs of the relevant assets. The further provisions of article 11 remit to the law governing the trust the further consequences of recognition of a trust. But article 11(d) also recognises that third parties may have acquired rights in respect of trust assets under, in particular, the lex situs of the assets, which may prevent the recovery for the benefit of the trust of trust assets which the trustee has, in breach of trust, alienated. The provision in article 15 that, if recognition of a trust is prevented by the application of a provision of the law designated by the conflicts law of the forum which cannot be derogated from by voluntary act, the court shall try to give effect to the objects of the trust by other means is a further pointer towards the Conventions general aim of accommodating the institution of trust, so far as possible, with other systems. Article 15 itself appears as designed to address the impact of relationships or transactions separate from the trust itself. The Explanatory Report by Professor von Overbeck, which is part of the travaux prparatoires, notes (para 136) that the first paragraph of article 15 preserves the mandatory rules of the law designated by the conflicts rules of the forum for matters other than trusts. Paragraph 138 of the Report proceeds to draw a parallel with the last sentence of article 11(d), noting that this is general, whereas article 15 is limited in application to mandatory rules. In the present context, it is in my opinion the last sentence of article 11(d), not article 15(e) or (f), which is primarily applicable when determining what, if any, rights and obligations Samba may have in relation to the shares as a result of their transfer to Samba by Mr Al Sanea. On the face of it, this last sentence of article 11(d) would remit to Saudi Arabian law the question whether Samba acquired free of SICLs interests under the trusts, whether or not those interests can be categorised as proprietary. The existence under Saudi Arabian law of the institution of amaana might in this context prove relevant. That is not however an issue presently before the Supreme Court. The issue before the court in the light of the expanded submissions which it has received is whether SICL has any basis for alleging that there was a disposition of property within the meaning of section 127. Viewing the matter in the light of the common law principles set out in paras 21 to 34 above, I would regard the present trusts not only as intended to create, but also as creating equitable proprietary interests in the Saudi Arabian shares, enforceable at common law at least as between SICL and Mr Al Sanea and anyone else other than a transferee from Mr Al Sanea in circumstances giving the transferee a good title under Saudi Arabian law. But, in the context of the present issues under section 127, there is to my mind a considerable case to be made for saying that it cannot matter. The definition of property in section 436 is wide enough to embrace both equitable proprietary and purely personal interests. Sir Nicholas Browne Wilkinson V C said of section 436 in Bristol Airport Plc v Powdrill [1990] Ch 744, 759D, that It is hard to think of a wider definition of property. The case concerned a chattel lease, which it was argued gave rise only to contractual rights. The Vice Chancellor said (p 759E F): Although a chattel lease is a contract, it does not follow that no property lease is created in the chattel. The basic equitable principle is that if, under a contract, A has certain rights over property as against the legal owner, which rights are specifically enforceable in equity, A has an equitable interest in such property. I have no doubt that a court would order specific performance of a contract to lease an aircraft, since each aircraft has unique features peculiar to itself. Accordingly in my judgment the lessee has at least an equitable right of some kind in that aircraft which falls within the statutory definition as being some description of interest arising out of, or incidental to that aircraft. Any equitable proprietary interest arises out of, or is incidental, to the shares. In my view, a purely personal interest in having the shares dealt with by the trustee and holding the trustee to account in accordance with the trust might equally well be said to be an interest arising out of, or incidental to, property. If so, the appeal could be approached on the basis that SICLs rights under the trust constituted relevant property within section 436, whether they were equitable proprietary or purely personal rights. In either case, the question would arise whether the transfer by Mr Al Sanea of the shares to Samba constituted a disposition within the meaning of section 127, bearing in mind that the disposition would not affect the interests involved, unless they were overridden under Saudi Arabian law by Sambas acquisition of the shares. However, even if it is only equitable proprietary interests that are capable of being regarded as relevant property for present purposes, the key question remains whether there was any disposition of them within the meaning of section 127. I have found this a difficult issue. On the one hand, it can be said that trust assets have been misappropriated, misapplied, dissipated or, in terms of article 11(d) of the Convention, alienated. Such phrases can be found in academic textbooks. Thus, Snells Equity (33rd ed) (2015) para 30 013 reads, under the head Misapplication: Where the breach consists in a misapplication of trust assets, the first question is whether the trustee should specifically restore the assets to the trust or restore their value by making a money payment. If the trustee still has the original assets, he may effect restoration in specie by transferring them back to the trust fund. If the original assets are no longer available, then the beneficiary may elect to assert a proprietary remedy over any traceable proceeds in the hands of the trustee or a third party. Likewise, Swadling in Burrows, English Private Law, para 4.151 reads: The recipient of rights dissipated in breach of trust does not automatically step into the trustees shoes, inheriting the powers and duties of his transferee [sic, this should presumably be transferor]. He is only liable to restore the rights dissipated in breach of trust, either to the former trustee, or, more likely, to other persons nominated by the beneficiaries. This right of the beneficiaries to recover the trust rights is good against all transferees of rights dissipated in breach of trust bar one, the transferee of a common law right who takes in good faith, for value, and without notice, actual, implied, or constructive, of the fact of the dissipation being in breach of trust. If the transferee is such a person, compendiously known as equitys darling, then the effect of the transfer will be to destroy the beneficiarys right to reconveyance. SICL submits that it is misleading to regard a beneficiary as owning only the equitable interest, and that he or it is entitled to the entirety of the interest in the relevant property. They point out that, in other contexts, such as tax, the courts have held trust beneficiaries to be assessable to income tax on trust income on the basis that they owned the trust income: see eg Baker v Archer Shee [1927] AC 844, Corbett v Inland Revenue Comrs [1937] 1 KB 567. Further, although the trustee remains accountable as such, a wrongful disposition by a trustee of trust assets does not give to the beneficiary as against the recipient of trust property the same rights as the beneficiary had under the trust as against the trustee. As explained by Nolan, Equitable Property (2006) 122 LQR 232, 243, 247 and 250 and by Jaffey, Explaining the Trust, above, p 383, the beneficiary has only the right to have the trust assets restored to the original trustee, or, if the trust was a bare trust to which the rule in Saunders v Vautier (1841) 4 Beav 115, applies, to himself; see also the citation from Swadling in Burrows, English Private Law, in the previous paragraph of this judgment. More generally, it can be said that section 127 introduces a prima facie right to recover any property disposed of in which SICL had the legal title, subject only to a power in the court to validate the disposition by order; and that it is well established, in the light of the pari passu principle operating in insolvency, that validation will, save in exceptional circumstances, only be ordered in relation to a disposition occurring after the inception of the winding up if there is some special circumstance which shows that the disposition in question will be (in a prospective application case) or has been (in a retrospective application case) for the benefit of the general body of unsecured creditors : Express Electrical Distributors Ltd v Beavis [2016] 1 WLR 4783, para 56, per Sales LJ. On the other hand, SICLs case can be said to overlook the considerable difference which exists between an unrestricted legal title to an asset, which can normally be disposed of to a third party, and a legal title in relation to which a beneficiary has trust rights, which continue to exist and be enforceable unless and until overridden by a transfer under the lex situs as recognised in Macmillan v Bishopsgate. In Ayerst v C & K (Construction) Ltd [1976] AC 167, 177G H Lord Diplock referred to the legal ownership of property subject to a trust as held by the trustee not for his own benefit but for the benefit of the cestui que trust or beneficiaries, but went on to say that Upon the creation of a trust in the strict sense as it was developed by equity the full ownership in the trust property was split into two constituent elements the legal ownership in the trustee, what came to be called the beneficial ownership in the cestui que trust. The metaphor of a division or split of title needs to be approached with some caution. Swadling in Burrows, English Private Law, para 4.149, speaks of: the falsity of statements which talk in terms of a division or separation of rights when rights are held on trust, or even worse, of legal and equitable titles existing before the creation of the trust. Swadling, citing Australian authority, suggests an analysis according to which an equitable interest is not carved out of a legal estate but impressed or engrafted onto it (para 4.150). Likewise, in Fiduciary Ownership and Trusts in a Comparative Context (2014) ICLQ 901, Daniel Clarry refers to the concept of fiduciary ownership whenever title is held by a person in respect of property that is designated for a purpose protected by law (p 930), and suggests a concerted effort to move away from the use of dual or split ownership metaphors in trusts discourse towards the fiduciary ownership of trust property in both the common and civil law traditions (p 933). Jaffey, op cit, p 386, also notes that one of the difficulties about the proprietary approach (which he advocates) is that it has sometimes been understood in a way that makes it seem paradoxical. That is the dual ownership or split ownership approach. On this approach, it is said that both the trustee and the beneficiary are owners of the trust property, the trustee at law and the beneficiary in equity. Considering the position overall, clearly one cannot say that the trustee and the beneficiary are both separately the owners of the trust property, at least in the ordinary sense of ownership. Rejecting any idea of simultaneous allocation of all the elements of ownership to both the trustee and the beneficiary, he however opts (p 387) for an analysis of distribution according to which the trustee has the right of control over the property, carrying with it the power to manage the property and to deal with it as owner vis vis other parties, signified by legal title, and the beneficiary, where there is a single beneficiary, has the right to all the benefit and enjoyment of the property, which is beneficial ownership. It is unnecessary on this appeal to examine these slightly differing analyses further. What is clear, on any analysis, is that, where a trust exists, the legal and beneficial interests are distinct, and what affects the former does not necessarily affect the latter. Where an asset is held on trust, the legal title remains capable of transfer to a third party, although this undoubted disposition may be in breach of trust. But the trust rights, including the right to have the legal title held and applied in accordance with the terms of the trust, remain. They are not disposed of. They continue to be capable of enforcement unless and until the disposition of the legal title has the effect under the lex situs of the trust asset of overriding the protected trust rights. If the trust rights are overridden, it is not because they have been disposed of by virtue of the transfer of the legal title. It is because they were protected rights that were always limited and in certain circumstances capable of being overridden by virtue of a rule of law governing equitable rights, protecting in particular (under common law) bona fide third party purchasers for value (equitys darling in the terms of para 4.151 in Swadling in Burrows, English Private Law, cited in para 45 above). The position was neatly summarised by Lloyd LJ in Independent Trustee Services Ltd v GP Noble Trustees Ltd [2012] EWCA Civ 195; [2013] Ch 91, para 106: a transferee of the legal title to property under a disposition made in breach of trust, or a successor in title to such a person, does not have the beneficial title to the property, which remains held on the original trusts, unless either the transferee, or a successor in title, was a bona fide purchaser for value without notice. The trustee acting in breach of trust can transfer the legal title, but cannot vest the beneficial interest in the property in a bona fide purchaser for value without notice, since he does not own that title and is not acting in a way which enables him, under the trust, to overreach the beneficiaries equitable interest. Despite that inability, the availability of the bona fide purchaser defence means that a transaction in favour of a bona fide purchaser for value without notice is as effective as it would be if he could vest the beneficial title in the purchaser. Thereafter the purchaser can deal with the asset free from any prior claim of the beneficiaries. In these circumstances, I conclude that section 127 is neither aimed at, nor apt to cover, the present situation. Section 127 addresses cases where assets legally owned by a company in winding up are disposed of. The section is necessary to enable the company to recover them, by treating the disposition as void. The courts power to validate the disposition is a necessary safety valve, to cater for situations in which validation would be appropriate, bearing in mind the position of creditors as well as that of the other party to the transaction. Any such disposition will involve issues which arise directly between the company (embracing in that concept its creditors in liquidation) whose property is disposed of and the other party to the transaction, although the section embraces situations where the companys property is held by, for example, a director or agent and is disposed of by him to a third party: In re J Leslie Engineers Co Ltd [1976] 1 WLR 292. The holder of interests such as SICLs does not need protection on the lines of section 127, in order to protect its property or to protect or enforce its interests. Mr Al Sanea disposed of his legal interest in the shares. That involved him in a breach of trust. But it did not involve any disposition of SICLs property. SICLs property, whether it consisted of an equitable proprietary interest or personal rights to have the shares held for its benefit, continued, despite the disposal of the legal title, unless and until that disposal overrode it. If the disposal overrode SICLs interest as regards a third party transferee of the legal title such as Samba, that was not because of any disposal of SICLs interest. It was because SICLs interest was always limited in this respect. In some circumstances, the term disposition may, as Lord Neuberger demonstrates, embrace destruction or extinction of an interest. In the present context, one might also pray in aid academic descriptions of the wrongful alienation of trust property (even if it did not override any beneficial interest in such property) as a misapplication of trust assets (see Snells Equity (33rd ed), paras 30 013, 30 050 and 30 067) and a disposition in breach of trust (see Swadling in Burrows, English Private Law (3rd ed), para 4.151). But the natural meaning of disposition in the context of section 127 is in my view that it refers to a transfer by a disponor to a disponee of the relevant property (here the beneficial interest), not least when the section goes on to render any disposition void unless the court otherwise orders. I agree with Lord Neubergers and Lord Sumptions further reasoning on this point. I do not, in these circumstances, see any basis for extending, or any need to extend, section 127 to cover three party situations where legal title is held and disposed of to a third party by a trustee, and the beneficiarys beneficial interest either survives or is overridden by virtue of the disposition of the legal title to the third party. The law regulates, protects and circumscribes beneficial interests under a trust in a manner which is separate from and outside the scope of section 127. It follows that I would allow the appeal, set aside the order made by the Court of Appeal, and declare that for the purposes of section 127 of the Insolvency Act 1986 there was no disposition of any rights of SICL in relation to the shares by virtue of their transfer to Samba. On the way the case has been put to date, it would appear to follow that there should be an order either to restore the judges order of a stay of the proceedings brought by SICL and the Liquidators, or to strike out the proceedings. But I would allow the parties 21 days in which to make written submissions inviting any other order, including an order for remission of the matter to the High Court to enable an application to save the proceedings by amendment of the pleadings. LORD NEUBERGER: The assumed facts and the issue can be very shortly summarised. Mr Al Sanea held certain shares on trust for the benefit of Saad Investments Co Ltd (SICL), and, six weeks after the compulsory winding up of SICL commenced, he transferred those shares to Samba Financial Group (Samba) in discharge of some of his liabilities to Samba. The question which arises is whether, if Samba was a bona fide purchaser for value of the shares without notice of SICLs beneficial interest, the transfer, at least in so far as it relates to SICLs beneficial interest, is to be treated as void for the purposes of section 127 of the Insolvency Act 1986. Section 127(1) provides that a disposition of the companys property made after the commencement of the winding up is, unless the court otherwise orders, void. In the case of a compulsory liquidation, the commencement of the winding up is, at least in a domestic case, the date of the presentation of the petition to wind up see section 129 of the 1986 Act. In this case, however, SICL is a Cayman Islands company and the winding up petition was made to, and the winding up order was made by, the Grand Court of the Cayman Islands. The case has accordingly proceeded on the basis that the commencement of the winding up was at the latest, the date of recognition of [those] foreign proceedings by the High Court of England and Wales per Sir Terence Etherton C at first instance, (2014) 16 ITELR 808, para 11. There is no doubt but that SICLs equitable interest in the shares constituted property in the light of the very wide definition of that expression in section 436 of the 1986 Act, which is set out in para 7 of Lord Mances judgment. As Sir Nicolas Browne Wilkinson V C said in Bristol Airport Plc v Powdrill [1990] Ch 744, 759, [i]t is hard to think of a wider definition of property. Having said that, I do not think one actually needs to rely on the width of the statutory definition in section 436: one only has to consider whether section 127 would apply if SICL had purported to transfer its equitable interest in the shares after its winding up had commenced, to realise how inappropriate it would be if the definition in section 436 did not extend to equitable interests. The more difficult question is whether there is in circumstances such as the present a disposition of the equitable interest in the shares, assuming that Samba was a bona fide purchaser for value of the shares without notice of that interest. As Lord Mance says, where a legal estate is sold to a bona fide purchaser for value without notice, any equitable interest is not transferred to the purchaser: it is overridden, or to put it more colloquially, it is lost or disappears. Lloyd LJ accurately summarised the position in Independent Trustee Services Ltd v GP Noble Trustees Ltd [2013] Ch 91, para 106, when he said that a trustee acting in breach of trust cannot vest the beneficial interest in the property in a bona fide purchaser for value without notice, since he does not own that title and is not acting in a way which enables him, under the trust, to overreach the beneficiaries equitable interest; but, nonetheless, the availability of the bona fide purchaser defence means that a transaction in favour of a bona fide purchaser for value without notice is as effective as it would be if he could vest the beneficial title in the purchaser. As Lord Mance also points out, where the legal owner transfers the legal estate to a bona fide purchaser for value with no notice of the beneficial interest in breach of trust, the person who owned the beneficial interest does not by any means lose all its other rights. In particular, it retains all its personal rights against the trustee, ie the party who sold the legal estate. In other words, following the transfer of the shares in this case, SICL retained its personal rights against Mr Al Sanea, but (assuming Samba was a bona fide purchaser for value without notice and subject to section 127), SICL lost any proprietary rights or interest it had in the shares. The fact that SICL retains its personal rights against Mr Al Sanea notwithstanding the loss of its beneficial interest in the shares appears to me to be irrelevant to the issue whether section 127 applies. If a transaction would otherwise be a disposition within the section, there is no reason for disapplying the section merely because the company in question would not be deprived of its personal rights by the disposition. Similarly, the fact that an equitable interest is more precarious than a legal interest appears to me to be nothing to the point. The very purpose of section 127 is to impeach transactions which would otherwise be effective, and it seems to me to be inconsistent with that purpose to exclude from its ambit a transaction which would otherwise be lawful, and to which a particular right or interest is otherwise susceptible of being defeated. There is undoubtedly a powerful argument for saying that a transfer by the legal owner of the legal estate for value in an asset to a bona fide purchaser who has no notice of the existence of an equitable interest in that asset cannot amount to a disposition of that equitable interest. As already mentioned, and as Lord Mance demonstrates, there is no question of Mr Al Sanea having transferred SICLs equitable interest in the shares to Samba: he simply transferred his legal ownership of the shares to Samba, and, on the assumption that Samba was a bona fide purchaser for value without notice, the equitable interest effectively disappeared. In those circumstances, at least on the basis of the meaning which it naturally conveys, section 127 simply does not apply: a disposition normally involves a disponor and a disponee, and so there has simply been no disposition. Indeed, in an Australian first instance decision, In re Mal Bowers Macquarie Electrical Centre Pty Ltd (in liquidation) [1974] 1 NSWLR 254, 258, Street CJ in Eq expressly so stated, albeit in a very different context from the present. However, it is fair to say that the word disposition is linguistically capable of applying to a transaction which involves the destruction or termination of an interest. Etymological analyses can fairly be said to be suspect in this sort of context, but it seems to me to involve a perfectly natural use of language to describe SICLs interest in the shares as having been disposed of by the transfer of those shares to a bona fide purchaser. And it is possible to claim support for such a view in relation to section 127 from respected authors. Thus, Professor Sir Roy Goode in Principles of Corporate Insolvency Law, 4th ed (2011) at para 13 127 states that [s]ection 127 bites on beneficial ownership, not necessarily on the legal title. And at para 13 128, he says that [t]he word disposition must be given a wide meaning if the purpose of the section is to be achieved, particularly in view of the fact that there is no exception in favour of transfers for full value; particularly relevantly for present purposes, this passage continues: [d]isposition should therefore be considered to include not only any dealing in the companys assets by sale, exchange, lease, charge, gift or loan but also any other act which in reducing or extinguishing the companys rights in an asset, transfers value to another person. Sir Roy then explains that on this basis disposition includes an agreement whereby the company surrenders a lease or gives up contractual rights. And McPhersons Law of Company Liquidation, 3rd ed (2013), para 7 015, states that section 127 only [applies to] property which belongs in equity to the company and is confined to the companys beneficial interest in property. There is also some judicial support for the notion that disposition can extend to extinguishment. Thus, Wynn Parry J said in In re Earl Leven, Inland Revenue Comrs v Williams Deacons Bank Ltd [1954] 1 WLR 1228, 1233, that [t]he word disposition, taken by itself, and used in its most extended meaning, is no doubt wide enough to include the act of extinguishment. However, he rejected such a wide interpretation of that word in the Finance Act 1940, partly because it produced a quite unexpected result and partly because in other sections of that Act it is clear that where the legislature intended that disposition should include extinguishment, it was at pains to make express provision. Accordingly, the extinguishment of a liability to pay insurance premiums did not amount to a disposition for the purposes of section 44(1) of the 1940 Act. In another revenue case, Inland Revenue Comrs v Buchanan [1958] Ch 289, the Court of Appeal held that the surrender of a life interest under a will trust in favour of those people entitled in remainder operated as a disposition of that life interest for the purposes of sections 20 and 21 of the Finance Act 1943. At p 298, Jenkins LJ specifically rejected the argument that there was no disposition because a surrender of a life interest destroys the interest and there is nothing left. This again provides support for the notion that the fact that property ceases to exist as a result of a transaction does not prevent the transaction involving a disposition of that property. But, of course, all depends on the statutory context and how they apply to the facts of the particular case. There is also a policy argument for concluding that in a case such as the present, the equitable interest is the subject of a disposition for the purposes of section 127, particularly bearing in mind the fact that the court has a dispensing power. The purpose of section 127 is to ensure that, at least once the winding up procedure has been started, a companys property is retained, in particular for the purpose of being available in order to be distributed pro rata, ie fairly, among its creditors. On the face of it, at any rate, that should apply as much to property which is held for it by a third party as to property which it holds in its own name. It would appear that Mr Al Sanea was a bare trustee of the shares ie the whole of the beneficial interest in the shares was vested in SICL. A transfer of the bare legal estate by the trustee to a purchaser with notice of the trust would not be caught, because he would only acquire the bare legal interest, which would normally be worth nothing, and no disposition of the companys property would have occurred. And a transfer by the company of its equitable interest would undoubtedly be caught by section 127 as it would involve a disposition by the company of that interest. It can therefore be said to be surprising if a transfer by the trustee which involved the transferee effectively obtaining the whole of the equitable interest previously owned by the company was not caught by the section. Nonetheless, I have reached the conclusion, in agreement with Lord Mance, that there is no disposition of an equitable interest within section 127, when there is a transfer by the legal owner of the legal estate, which is subject to that equitable interest, to a bona fide purchaser for value without notice of that equitable interest. As already mentioned, the natural meaning of section 127 appears to me to carry with it the notion of a disponor transferring property to a disponee, and on that basis there was no disposition of SICLs equitable interest in the shares in this case. Although, as explained above, there are arguments for departing from the natural meaning of section 127, I consider that they are outweighed by the arguments the other way. In my view, Sir Roy Goode is right when he says that the surrender of a lease or the giving up of contractual rights by a company would be a disposition within section 127, as would a surrender of a life interest (and a company can no doubt have such an interest, at least if it is contingent on an individuals life) as discussed in Buchanan. However, there are differences between a surrender (whether of a lease, contractual rights, or a life interest) and the loss of a beneficial interest on a transfer of the legal estate to a bona fide purchaser for value without notice of that interest. In the former case, the person who is the disponor is the same as the person who loses the property; whereas in the latter case the disponor is, ex hypothesi, not the person who loses the property. And, in the former case the disponee is well aware of the property which is ceasing to exist: as far as he is concerned, its extinction is the purpose of the transaction; in the latter case, the disponee is, by definition, unaware of the property which is being disposed of. Section 127 can operate harshly so far as people dealing in good faith with a company are concerned. In many cases, a person dealing with a company will be unaware that a petition has been presented (particularly if the presentation occurred very recently), and the section contains no exception for transactions in the ordinary course of business or for transactions for which the company receives full value. The fact that the court will often sanction transactions in the ordinary course of business under its statutory dispensing power is by no means a wholly satisfactory answer to this. As Fox LJ explained in In re SA & D Wright Ltd [1992] BCC 503, 505, when deciding whether to validate a disposition under section 127, the court must always do its best to ensure that the interests of the unsecured creditors will not be prejudiced, and, where there is said to have been a benefit in validating, the court must carry out a balancing exercise. And, as Sales LJ put it more recently in Express Electrical Distributors Ltd v Beavis [2016] 1 WLR 4783, para 56, validation will ordinarily only be granted if there is some special circumstance which shows that the disposition in question has been for the benefit of the general body of unsecured creditors. But it would not merely be harsh, but positively unfair for a bona fide purchaser of a legal estate from a third party to find that, because of section 127, the transaction in question was liable to be held void owing to the existence of an equitable interest held by a company of which he had no notice. As explained in para 74 above, the position is very different from the surrender of a lease or of contractual rights. A person taking a surrender of a lease or contractual rights from a company knows both that he is dealing with the company and that he is dealing in the lease or the rights. A bona fide purchaser for value of an asset without notice of a companys equitable interest in the asset would be unaware both of the company (or at least that it had an equitable interest) and of the equitable interest (as if he knew about it he would be bound by it, as he would not be a bona fide purchaser). So far as the passages in the books quoted in para 67 above are concerned, it seems to me that, read in context, they do not support the view that section 127 applies in a case such as this. The authors were not directing their minds to a case where the disponor was someone other than the company concerned or its agent. As already mentioned, Sir Roys examples all involved the company as disponor, and the passage quoted from McPherson was directed to explaining why completion by a company of a prior contract to sell its property does not fall within section 127. The dicta and decisions in the two cases referred to in paras 68 69 above must, of course, also be assessed by reference to their respective legal and factual contexts. In both Earl Leven and Buchanan, the courts were construing a revenue statute, and, more importantly, the transaction involved disponors transferring property which they owned beneficially. As to the other issues discussed in the judgments of Lord Mance, Lord Sumption and Lord Collins, I agree with what they say and there is nothing I can usefully add. LORD SUMPTION: The facts to be assumed for the purposes of this appeal are that Mr Al Sanea held shares in various Saudi Arabian banks on trusts governed by Cayman Islands law for the claimant Saad Investments Co Ltd (SICL); and that on 16 September 2009, six weeks after SICL went into liquidation, he transferred them to the defendant Samba Financial Group in discharge of personal liabilities which he owed to them. The transfer is said to be void under section 127 of the Insolvency Act 1986 as a disposition of the companys property made after the commencement of the winding up. The appeal arises out of what is, in point of form, an application by Samba to stay the proceedings on the ground of forum non conveniens. But the real ground of the application is that the proceedings are bound to fail. There are four critical steps in Sambas argument: (1) The transmission of property is governed by the lex situs, which in the case of registered shares is the law of the companys incorporation, in this case Saudi Arabia. This proposition is well established and was not seriously disputed: see Macmillan Inc v Bishopsgate Investment Trust Plc (No 3) [1996] 1 WLR 387. It applies as much to the transmission of an equitable as to a legal interest in shares: Underhill & Hayton, The Law Relating to Trusts and Trustees, 18th ed (2010), para 100.128. (2) The law of Saudi Arabia does not recognise trusts or any other distinction between the legal and beneficial interests in property. It treats the registered owner of shares in a Saudi Arabian company as their sole and entire owner. This was found as a fact by the Chancellor of the High Court, and is no longer disputed. (3) It follows that an instrument purporting to create a trust over shares in a Saudi Arabian company was ineffective to do so, even though governed by a law (that of the Cayman Islands) which recognised trusts. (4) Accordingly SICL can have had no equitable interest in the shares capable of being disposed of within the meaning of section 127 of the Act. The real issues raised by this argument have been obscured by the narrow basis on which it was presented in the courts below. The focus of the argument was on point (3). Although point (4) was perhaps the most critical step of all, it was left to one side, and this court was initially told that it was agreed not to be in issue at this stage. This was unfortunate, for it meant that the oral argument proceeded on an artificial basis. There could be no proper analysis of the nature of the proprietary interest said to have been disposed of within the meaning of section 127, or of the way in which that provision operates in relation to such an interest. The omission was ultimately made good after the conclusion of argument by the service of written submissions at the request of the court. This means that it is possible for us to address the issue on a rather broader basis of principle than the courts below. It also means that a number of the issues which featured in argument below can be seen not to arise. As the beneficiary of a trust, SICL had two main legal rights. First, it had a right to have the trust administered according to its terms. This was a personal right against the trustee. The only relevant condition for its enforceability is that Samba should be before the court. Since it has been properly served with the proceedings, that condition is satisfied. Secondly, SICL had a true proprietary right. The proprietary character of an equitable interest in property has sometimes been doubted, but in English law (which is in this respect the same as Cayman Islands law), the position must be regarded as settled. An equitable interest possesses the essential hallmark of any right in rem, namely that it is good against third parties into whose hands the property or its traceable proceeds may have come, subject to the rules of equity for the protection of bona fide purchasers for value without notice: see Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, 705 (Lord Browne Wilkinson). There are a number of reasons why the proprietary interest of the beneficiary may not be effective or enforceable. Obvious examples include cases where the property or its traceable proceeds have been transferred to a bona fide purchaser for value without notice; and cases where the property has been consumed or destroyed, or has ceased to be traceable. But that will not affect the beneficiarys personal rights, if any, against the trustee or his amenability to personal remedies. Those rights will remain enforceable, for example by an action for the restoration of the trust assets or for equitable compensation for their loss. The personal and proprietary rights of the beneficiary exist independently, and neither is dependent on the continued existence of the other. For this reason, the beneficiarys proprietary interest in property is of limited practical importance. It is relevant only as between the beneficiary and a third party, or for the purpose of asserting a prior claim to specific assets in an insolvency. Even then, equity acts in personam by requiring the trustee to perform his trust or a relevant third party to account. The question whether some species of proprietary interest is capable of existing is necessarily a question for the general law. Unless the general law recognises the possibility of such an interest, it is self evident that the parties cannot create or transfer it. That necessarily provokes the question: the general law of which jurisdiction? Normally, it will be the lex situs. This would be obvious in the case of land, but is equally true of shares. Shares in a company are legal rights against that company, dependent on the law of its incorporation. The principle is the same as that which applies where a person assumes a contractual obligation to transfer an interest which is incapable of existing under the lex situs. It is stated in Antons Private International Law, 3rd ed (2011) at para 21.61, in a passage adopted by Lord Hodge in In re Joint Administrators of Rangers Football Club Plc 2012 SLT 599, para 19: while the contractual aspects of a contract to assign corporeal moveables are governed by the law applicable to the contractual obligation, the final question of proprietary right must be determined by the lex situs. None of this, however, means that where a person assumes the liabilities of a trustee under an instrument governed by another law which recognises the concept, that instrument is void or cannot be enforced according to its terms. It remains effective to create personal rights against the trustee, who may be ordered to give effect to the trust, either by specifically performing it where that can be done, or making good his breach of duty financially. The law of Saudi Arabia will treat the trustee as the owner of the entire interest in the shares with all the rights that that entails, but equity will exercise its personal jurisdiction to compel him to deal with the shares in accordance with his trust. The same is true of equitable obligations in respect of property which are imposed by law, where the amenability of the defendant to the personal jurisdiction of the court has always been enough to justify the enforcement of his obligations. In El Ajou v Dollar Land Holdings Plc [1993] BCC 698, 715 716, the question was whether the recipient of trust money was accountable as a constructive trustee on the footing of knowing receipt when before reaching him the property had passed through the hands of persons in a number of civil law jurisdictions where equitable interests were not recognised and the legal owner was treated as having the entire interest in the property. The reason was that as between the alleged constructive trustee and the beneficiary, the formers amenability to personal remedies was unaffected by any issue as to existence of rights in rem: Although equitable rights may found proprietary as well as personal claims, it has long been settled that they are classified as personal rights for the purpose of private international law. The doctrine was stated by Lord Selborne LC in Ewing v Orr Ewing (1883) 9 App Cas 34 at p 40 as follows: The Courts of Equity in England are, and always have been, Courts of conscience, operating in personam and not in rem: and in the exercise of this personal jurisdiction they have always been accustomed to compel the performance of contracts and trusts as to subjects which were not either locally or ratione domicilii within their jurisdiction. They have done so as to land, in Scotland, in Ireland, in the Colonies, in foreign countries In Cook Industries Inc v Galliher [1979] Ch 439, Templeman J entertained an action in which the plaintiff claimed a declaration that the defendants held a flat in Paris together with its contents in trust for the plaintiff, and made an order compelling the defendants to allow the plaintiff to inspect the flat. The fact that the subject matter of the alleged trust was situate in France, a civil law country, was no bar to the jurisdiction. DLH is, therefore, answerable to the courts equitable jurisdiction as regards assets situate abroad, even in a civil law country An English court of equity will compel a defendant who is within the jurisdiction to treat assets in his hands as trust assets if, having regard to their history and his state of knowledge, it would be unconscionable for him to treat them as his own. Where they have passed through many different hands in many different countries, they may be difficult to trace; but in my judgment neither their temporary repose in a civil law country nor their receipt by intermediate recipients outside the jurisdiction should prevent the court from treating assets in the legal ownership of a defendant within the jurisdiction as trust assets. In the present case, any obligation on the part of DLH to restore to their rightful owner assets which it received in England is governed exclusively by English law, and the equitable tracing rules and the trust concept which underlies them are applicable as part of that law. There is no need to consider any other system of law. A similar analysis was applied by the Court of Appeal in Lightning v Lightning Electrical Contractors Ltd [1998] NPC 71 and more recently by Roth J in Luxe Holding Ltd v Midland Resources Holding Ltd [2010] EWHC 1908 (Ch). Section 436 of the Insolvency Act 1986 defines property as including money, goods, things in action, land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property. These are exceptionally wide words. It is plain that an equitable proprietary interest in property under a trust and a personal right to have the trusts of that property administered according to their terms are both property for the purposes of the Act, including section 127. SICLs problem is not that it lacked a beneficial interest in the shares but that Mr Al Sanea did not dispose of that interest by transferring the shares to Samba. Mr Al Sanea purported to transfer the legal interest to Samba. That was the only interest that he had. He did not purport to dispose of SICLs interest. Only SICL could do that, and it did not do so. The disposition of the legal interest did not itself extinguish any equitable interest of SICL in the shares. It only meant that that interest fell to be asserted against Samba, subject to the usual equitable defences. Sambas position in law was that it took the shares on a bare trust to restore them to the beneficial owner, unless it was a bona fide purchaser for value without notice. Since Samba gave value in the form of the discharge of Mr Al Saneas debt, its liability to restore the shares must depend on whether they are accountable on the basis of notice. Section 127 is irrelevant to the disposition of the only interest which matters for present purposes, namely SICLs equitable interest in the shares. It is arguable, as Lord Neuberger observes, that the transfer of the legal interest in movables may constitute a disposition of an equitable interest if its effect is that the equitable interest is extinguished. But the difficulty about the argument, and the reason why I would reject it, is that equitable interests arise from equitys recognition that in some circumstances the conscience of the holder of the legal interest may be affected. When the asset is transferred to a third party, the question becomes whether the conscience of the transferee is affected. On the facts pleaded in the present case, the equitable interest of SICL was defeated not by the act of the transferor (Mr Al Sanea) but by absence of anything affecting the conscience of the transferee (Samba). The rules of equity which protect transferees acquiring in good faith and without notice are among the fundamental conditions on which equitable interests can exist without injustice. The reality is that the transaction of 16 September 2009 was simply a transfer of the shares in breach of trust, and any rights of SICL against Samba depend on the law relating to constructive trusts and not on section 127 of the Insolvency Act. The law relating to constructive trusts has achieved a high level of development, reflecting a careful balance between the competing interests engaged in such cases. Wide as the term disposition is, the coherence of the law in this area would not be assisted by giving it a meaning inconsistent with the basic principles governing the creation and recognition of equitable interests and founded on a very different balance of the relevant interests. There is no claim in this case to make Samba accountable as a constructive trustee, and no allegation of notice. For that reason, the proceedings as presently framed must fail. I arrive at this conclusion without reference to the Convention on the Law Applicable to Trusts and on their Recognition. The purpose of the Convention is to procure the recognition of the main incidents of a trust by contracting parties whose law would not otherwise recognise them. It is therefore of limited significance in jurisdictions such as England and the Cayman Islands which do recognise trusts. It might have modified the law of Saudi Arabia if Saudi Arabia had been party to the Convention, but it is not. The argument before us turned mainly on articles 4 and 15, both of which are set out in the judgment of Lord Mance. But neither of them is in point. Article 4 provides that the Convention does not apply to issues as to the validity of instruments creating a trust. But there is no question as to the validity of the trusts in issue here, since they are certainly valid under the law of the Cayman Islands which governs them. Sambas argument relates not to the validity of the trusts themselves but to the existence of a proprietary interest in the trust assets having regard to the legal characteristics of those assets in Saudi Arabian law. But that is irrelevant given the undoubted validity and legal sufficiency of the trustees personal obligations under Cayman Islands law. As to article 15, that provision is concerned only to preserve the effect of mandatory rules of a relevant law which may be inconsistent with the recognition of some incidents of a trust. It follows that the only potentially relevant provision of the Convention is article 11, which determines the extent to which obligations under a trust are to be effective in England. But as between SICL and Samba it does no more than refer the latters liabilities to the law selected in accordance with the choice of law rules of the forum, in this case the law of the Cayman Islands: see article 11(d). I would accordingly allow the appeal. Subject to argument about the precise form of order, I would declare that for the purpose of section 127 of the Insolvency Act 1986 there was no disposition of any rights of SICL in relation to the shares by virtue of their transfer to Samba. Logically, it follows that the proceedings should be struck out. But I would remit the matter to the High Court to deal with any consequential matters, in case it be contended that they can be saved by an appropriate amendment to the pleadings. LORD COLLINS: I agree with Lord Mance that this case does not raise the interesting and difficult questions on the Hague Convention which were argued, first before the Chancellor and the Court of Appeal, and then in the oral argument in this court before the parties were asked to provide written submissions on the combined effect of sections 127 and 436 of the Insolvency Act 1986. This appeal came to this court as a preliminary issue on a wholly artificial basis, namely that the liability of Samba (which was in fact the whole point of the proceedings) was agreed not to be in issue at this stage (as it was put several times in the oral argument) and that the sole question was whether as between SICL and Mr Al Sanea the declarations of trust by SICL had a proprietary effect. Because the liability of Samba had been expressly and artificially excluded, there was no full analysis in the full context of the question of what is meant by the expression proprietary interest, since both parties proceeded on the basis that there was a prior question as to whether SICL itself ever acquired a proprietary interest from Mr Al Sanea in the light of the assumption that Saudi Arabian law had no trust concept. It is understandable why the original application before the Chancellor was for a stay of the proceedings with the ultimate object of ensuring that, if the proceedings were in Saudi Arabia, they would be bound to fail. It is also understandable why a discretionary jurisdictional route was taken, since the defendant approached it as if it were a case of personal jurisdiction based solely on the presence in London of a branch of Samba, which had nothing to do with the transfer of the shares in Saudi Arabia. As the Chancellor pointed out (at para 54), the claim could have been put on the basis of constructive trust if there were a sufficient factual basis, and the failure to do so emphasises the artificially narrow basis of the claim. But in the light of the way the claim was formulated, the real question was not one of the proper exercise of judicial jurisdiction, but rather a question of legislative jurisdiction, namely the extra territorial scope of section 127 of the Insolvency Act 1986 and its application to the shares. The combined effect of sections 127 and 436 of the Insolvency Act 1986 is that the avoidance provisions of section 127 apply to property wherever situated. If this were a purely domestic case there would be no possible doubt of the effect of the declarations of trust: they give the beneficiary the paradigm of an equitable interest in property: Snells Equity, para 2 002. Once a trust is established, as from the date of its establishment the beneficiary has, in equity, a proprietary interest in the trust property, which proprietary interest will be enforceable in equity against any subsequent holder of the property (whether the original property or substituted property . ): Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, at 705. It was only after further submissions were requested after the hearing of the appeal that there was any exploration of the issues under section 127 of the Insolvency Act 1986. For the reasons given by Lord Mance, I do not consider that there was any disposition of SICLs property. It follows that the scope and effect of the Hague Convention do not fall to be decided. The Hague Convention was promoted by the United Kingdom. It was particularly intended to build bridges between countries of common law and countries of civil law and for common law states the principal interest [was] obviously to have the trusts created under their laws recognized in the countries which do not have this institution (von Overbeck Explanatory Report, January 1985, paras 12, 14). There was exceptional interest in the Convention from states, and its conclusion owed much to the work of the fine scholar Professor Alfred von Overbeck, who died in April 2016, Mr Adair Dyer and Mr Hans van Loon (respectively later Deputy Secretary General and Secretary General of the Hague Conference on Private International Law) and Professor A E Anton and (particularly) Professor David Hayton of the UK delegation. But in the event although 32 member states of the Hague Conference adopted the draft Convention, only 12 states are now parties to the Convention, and it says much about the likely principal uses of the Convention that they include Liechtenstein, Luxembourg, Monaco, San Marino and Switzerland. There was considerable discussion in the travaux of the Hague Conference about whether the Convention was to apply to declarations of trust (because article 2 refers to assets being placed under the control of the trustee). But there can be no doubt that it applies to declarations of trust, not only because the travaux make it clear that it was so intended, but more importantly, that is the clear effect of the Recognition of Trusts Act 1987, section 1(2), which provides that the scheduled provisions of the Hague Convention apply not only to the trusts described in articles 2 and 3, but also to all other trusts under United Kingdom law. There has never been any suggestion in the authorities that an effective declaration of trust could not be made over shares in a company incorporated, or shares registered, in a country which does not recognise the trust concept. Attorney General v Jewish Colonisation Association [1901] 1 QB 123 and Duke of Marlborough v Attorney General [1945] Ch 78 are only indirect authority, but they have been, correctly, regarded as recognising English trusts over foreign shares irrespective of whether the place of incorporation or place of registration recognises the trust concept: cf Luxe Holding Ltd v Midland Resources Holding Ltd [2010] EWHC 1908 (Ch) (Roth J). But for the reasons given by Lord Mance, this is not the occasion for considering the effect on third parties. I would therefore allow the appeal, and I agree with the order which Lord Mance proposes. |
On 23 August 2012 the m v RENOS was seriously damaged by an engine room fire while on a laden voyage in the Red Sea. On the same day, the owners appointed salvors under Lloyds Open Form 2011 (No Cure No Pay). The vessel was towed by the salvors to Adabiya, where her cargo was discharged, and then to Suez, where the salvage services came to an end. A tug was hired to stand by the vessel throughout the time when she was at Suez and to tow her to a place where she could be scrapped or repaired. These proceedings were brought in support of a claim against the hull underwriters for a constructive total loss. Notice of abandonment was served on the insurers on 1 February 2013, while the vessel was at Suez. The RENOS was insured at an agreed value of US$12m under a hull and machinery policy subscribed by the appellants (among others) and incorporating the Institute Time Clauses Hulls (1/10/83). The lead hull and machinery insurer was the first appellant, the Swedish Club. In addition, the Swedish Club alone subscribed an Increased Value Policy against the same risks covering certain charges so far as they exceeded those recoverable under the hull and machinery policy, up to a maximum of US$3m. At the trial of the action before Knowles J, it was common ground that there had been a loss by an insured peril. The sole issue was the measure of indemnity. The insurers acknowledged liability for a partial loss but declined the notice of abandonment and denied that the vessel was a constructive total loss. Knowles J held that there was a constructive total loss. The Court of Appeal agreed with both his conclusions and his reasons. The courts below addressed a number of issues, only two of which are before this court. Section 60(2)(ii) of the Marine Insurance Act 1906 provides that in the case of damage to a ship, there is a constructive total loss where she is so damaged by a peril insured against that the cost of repairing the damage would exceed the value of the ship when repaired. As a matter of practice, the cost of repair has always been treated as including salvage charges, and that is put beyond question by clause 19.2 of the Institute Time Clauses Hulls (1/10/83), which requires account to be taken of the cost of recovery and/or repair. Both of the issues before this court relate to the expenditure to be taken into account in computing that cost. The first issue is whether it includes expenditure already incurred before the service of notice of abandonment. The insurers say that none of this expenditure is to be taken into account. If they are right about that, the whole of the salvors remuneration will be excluded, together with the greater part of the cost of the standby tug and some other miscellaneous costs incurred at Suez. On that footing, the judge found that the cost of repairing the damage would be between US$9,079,533.05 and US$11,248,311.20, as against an insured value of US$12m. It is common ground that on these figures the insurers are liable for a partial loss only. The second issue is whether the relevant costs include charges payable to the salvors under the SCOPIC (Special Compensation, Protection and Indemnity) clause of Lloyds Open Form. The SCOPIC clause is a clause supplementary to the Form which entitles the salvors to additional remuneration for measures taken while performing the salvage services in order to prevent or minimise damage to the environment. The SCOPIC charges, like the rest of the salvors remuneration, were all incurred before the service of notice of abandonment, and will be disregarded if the insurers are right on the first issue. The judge found that if SCOPIC charges are excluded from the computation but other costs incurred before notice of abandonment are included, the cost of repairing the vessel ranged from US$11,820,260.05 to US$13,989,038.20 as against an insured value of US$12m. In that case, she may or may not have been a constructive total loss, depending on where in that range the true figure lay. Both issues were decided in the shipowners favour in the courts below. Costs incurred before notice of abandonment The relevant rules are codified by sections 60 63 of the Marine Insurance Act. They are in the following terms: 60. Constructive total loss defined (1) Subject to any express provision in the policy, there is a constructive total loss where the subject matter insured is reasonably abandoned on account of its actual total loss appearing to be unavoidable, or because it could not be preserved from actual total loss without an expenditure which would exceed its value when the expenditure had been incurred. (2) In particular, there is a constructive total loss (i) Where the assured is deprived of the possession of his ship or goods by a peril insured against, and (a) it is unlikely that he can recover the ship or goods, as the case may be, or (b) the cost of recovering the ship or goods, as the case may be, would exceed their value when recovered; or (ii) In the case of damage to a ship, where she is so damaged by a peril insured against that the cost of repairing the damage would exceed the value of the ship when repaired. In estimating the cost of repairs, no deduction is to be made in respect of general average contributions to those repairs payable by other interests, but account is to be taken of the expense of future salvage operations and of any future general average contributions to which the ship would be liable if repaired; 61. Effect of constructive total loss Where there is a constructive total loss the assured may either treat the loss as a partial loss or abandon the subject matter insured to the insurer and treat the loss as if it were an actual total loss. 62. Notice of abandonment (1) Subject to the provisions of this section, where the assured elects to abandon the subject matter insured to the insurer, he must give notice of abandonment. If he fails to do so the loss can only be treated as a partial loss. (2) Notice of abandonment may be given in writing, or by word of mouth, or partly in writing and partly by word of mouth, and may be given in any terms which indicate the intention of the assured to abandon his insured insured unconditionally to the insurer. (3) Notice of abandonment must be given with reasonable diligence after the receipt of reliable information of the loss, but where the information is of a doubtful character the assured is entitled to a reasonable time to make inquiry. the subject matter interest in (4) Where notice of abandonment is properly given, the rights of the assured are not prejudiced by the fact that the insurer refuses to accept the abandonment. (5) The acceptance of an abandonment may be either express or implied from the conduct of the insurer. The mere silence of the insurer after notice is not an acceptance. (6) Where notice of abandonment is accepted the abandonment is irrevocable. The acceptance of the notice conclusively admits liability for the loss and the sufficiency of the notice. (7) Notice of abandonment is unnecessary where, at the time when the assured receives information of the loss, there would be no possibility of benefit to the insurer if notice were given to him. (8) Notice of abandonment may be waived by the insurer. (9) Where an insurer has re insured his risk, no notice of abandonment need be given by him. 63. Effect of abandonment (1) Where there is a valid abandonment the insurer is entitled to take over the interest of the assured in whatever may remain of the subject matter insured, and all proprietary rights incidental thereto. (2) Upon the abandonment of a ship, the insurer thereof is entitled to any freight in course of being earned, and which is earned by her subsequent to the casualty causing the loss, less the expenses of earning it incurred after the casualty; and, where the ship is carrying the owners goods, the insurer is entitled to a reasonable remuneration for the carriage of them subsequent to the casualty causing the loss. These provisions substantially restate the previous common law. Their effect is that unless notice of abandonment is waived by the insurer or the circumstances are such that there would be no possibility of benefit to the insurer if notice were given to him, it is a condition precedent to the assureds right to claim for a constructive total loss, that he should have given a valid notice of abandonment: see section 62(1). This is a true election, although it has some features which differentiate it from other cases in which the law requires a person to elect between inconsistent rights or remedies. In particular, it becomes irrevocable only if and when the insurer accepts the abandonment, in which case he is taken to admit both the validity of the notice and his own liability to pay on a total loss: section 62(6). He then becomes entitled to take over the assureds interest in the subject matter insured and all incidental proprietary rights: section 63. In practice, insurers hardly ever do accept an abandonment except as part of an overall settlement of the claim. But section 62(4) provides that the insurers refusal to accept the abandonment does not prejudice the assureds rights. The owners case on pre notice expenditure is straightforward. They say that the damage to which section 60(2)(ii) of the Act refers is the entire damage flowing from the casualty, and that the cost of recovery and repair is the entire cost, whenever incurred. The insurers dispute this. Their case is more elaborate. They say that the question whether there has been a constructive total loss falls to be decided as at the time when notice of abandonment is given, and by reference to the facts then existing, because the parties rights are, so to speak, crystallised at that point. This question is, as Mr Ashcroft QC put it, time sensitive, in that a ship may be a constructive total loss at one point of time and not at another, as events occur which alter the prospective cost of reinstatement. The assured has to elect between claiming a total loss or a partial loss on the basis of the options open to him at that time. Those options cannot be said to include the incurring of costs which he has already incurred. They are sunk costs, and his real choice is between incurring further costs in future and abandoning the ship to the insurer. Therefore, only the further costs can count. The financial and practical implications of this disagreement are considerable. It is often impossible to know with any confidence what it would cost to restore the vessel to serviceable condition after a casualty, until the damage has been professionally assessed. This is commonly possible only after salvors have brought her to a place of safety. The insurers argument, if it is correct, will in many cases have the effect of excluding salvage remuneration from the computation of repair costs for the purpose of ascertaining whether there has been a constructive total loss. Although the present question must have arisen in a high proportion of cases where a constructive total loss is alleged, there is very little assistance to be obtained either from the language of the Act or from authority. Dealing first with the language of the Act, I reject the submission that the references in section 60 to expenditure which would be incurred point only to future expenditure to be incurred after abandonment. Notice of abandonment is not mentioned in section 60, and if the section refers to future expenditure there is nothing to show from what point it must be future. More generally, it is clear that the word would reflects the hypothetical character of the whole exercise and not the chronology of the expenditure. I also reject the submission that the reference in the additional paragraph of section 60(2)(ii) to future salvage operations and general average contributions, points to expenditure following abandonment. Again, there is no indication of the point of time from which these costs must be future, except that it is implicitly from the time as at which the estimate is made, whenever that is. I am inclined to think, but do not need to decide, that the additional paragraph is concerned only with the treatment of general average contributions. Its effect is that in computing the owners cost of repairs (i) no account is to be taken of general average contributions receivable by him from other interests such as cargo or freight, whereas (ii) account is to be taken of future general average contributions payable by him to other interests. On that footing future salvage operations are being treated as included in the future general average contributions, and would be estimated looking forward from the general average sacrifice. There is much to be said for the view of the current editors of Arnoulds Law of Marine Insurance and Average, 19th ed (2018), para 29.34 that the result was to overrule the decision of the House of Lords in Kemp v Halliday (1866) LR 1 QB 520 that the owners cost of repairs had to be computed net of any liability of other interests to contribute in general average to salvage charges. But whether that be so or not, it seems to me to be clear that the reference to future liabilities was not intended as an implicit exclusion of past expenditure even for the purpose of general average, let alone more generally for the purpose of determining whether the ship is a constructive total loss. It has been said that the maxim expressio unius, exclusio alterius is often perilous: National Grid Co plc v Mayes [2001] 1 WLR 864, para 55 (Lord Hoffmann). I do not think that it will bear the weight which the appellants seek to place on it in this case. Turning to authority, there appears to have been no case in which the present question was considered before the passing of the Marine Insurance Act 1906, although we were referred to a number of earlier cases in which salvage charges incurred before notice of abandonment were allowed without discussion. They include Bradlie v Maryland Insurance Co (1838) 37 US 378, a decision of the United States Supreme Court in which the opinion of the court carried the considerable authority of Justice Story; and the English decisions in Holdsworth v Wise (1828) 7 B & C 794 and Rosetto v Gurney (1851) 20 LJCP 257. We were also pressed with the observations of Mr Carver QC at an international conference at Buffalo in 1899 in connection with an abortive project to draft common rules for marine insurance, in which he proposed that what happened before the giving of notice of abandonment should be ignored, adding that he was not sure that that has always been done: Report of the 18th Conference of the International Law Association held at Buffalo, USA (1900), 120. Since the passing of the Act, there have been two English decisions lending some support to the insurers case. In Hall v Hayman (1912) 17 Comm Cas 81, 90, Bray J accepted a concession that pre notice expenditure was irrelevant. Half a century later, in Helmville Ltd v Yorkshire Insurance Co Ltd (The MEDINA PRINCESS) [1965] 1 Lloyds Rep 361, 429, Roskill J accepted without discussion a submission in relation to one of a large number of disputed items of expenditure that it was inadmissible for the purposes of the constructive total loss claim because the work was done before the date of notice of abandonment. The lack of reasoning and apparent lack of argument make it difficult to attach much weight to either decision, and they are certainly not beyond controversy. Every edition of Arnoulds Law of Marine Insurance and Average from the 15th ed (1961) onward has taken the contrary view. The editors of the 12th ed of Lowndes & Rudolph, The Law of General Average and the York Antwerp Rules (1997), considered that the concession accepted by Bray J was correct in law, but the (different) editors of the 14th ed (2013) appear to resile from that view. In my opinion, the issue is better approached as a matter of principle than by trying to squeeze more juice from these rather dry lemons. The answer depends on some basic principles of insurance law and on an analysis of how those principles are affected by the requirement for a notice of abandonment. The first point to be made is that as a general rule, the loss under a hull and machinery policy occurs at the time of the casualty and not when the measure of indemnity is ascertained. A claim on an insurance policy is a claim for unliquidated damages. The obligation of the insurer is to hold the assured harmless against an insured loss, from which it follows that where the insurance is against physical damage to property the insurer is in breach of that obligation as soon as the damage occurs: Chandris v Argo Insurance Co Ltd [1963] 2 Lloyds Rep 65, 73 74; Firma C Trade SA v Newcastle Protection and Indemnity Association (The FANTI) [1991] 2 AC 1, para 35 (Lord Goff of Chieveley). As Megaw J pointed out in the former case, at p 74, the result is that it is not a condition precedent it is not a fact which must exist and be pleaded that the plaintiff has quantified the amount of his claim; or even that all the facts exist at the date of the writ which will enable the proper amount of the claim to be determined. These are matters of evidence, not prerequisites of a cause of action. The rule that the loss is suffered at the time of the casualty applies notwithstanding that the loss developed thereafter, unless it developed as a result of something that can be regarded as a second casualty, breaking the chain of causation between the first one and the loss. For that reason, it has been held that the fact that the policy expires before the loss has fully developed will not affect the assureds right to recover under it in full: Knight v Faith (1850) 15 QB 649, 667 (Lord Campbell CJ); Wasa International Insurance Co Ltd v Lexington Insurance Co [2010] 1 AC 180, para 39 (Lord Mance). For the same reason, as the editors of Arnould, 19th ed (2018) point out at para 29.07, if a casualty occurs within the policy period, and the loss develops after its expiry into one which is constructively total, there is still a constructive total loss under the policy. Constructive total loss is a legal device for determining the measure of indemnity. An insured loss is either total or partial, and any loss other than a total loss is a partial loss: see section 56(1) of the Act. A constructive total loss is not a sui generis kind of loss, conceptually distinct from these. It is a partial loss which is financially equivalent to a total loss, and may be treated as either at the election of the assured. The ordinary measure of indemnity under an insurance against damage to property is the depreciation in the value of the property attributable to the operation of the insured peril. Section 69 of the Marine Insurance Act provides that the measure of loss is the reasonable cost of repairs so far as these have been carried out and the reasonable depreciation arising from the unrepaired damage so far as they have not: see section 69. The reasonable cost of repairs which have been carried out is treated as the measure of the depreciation of the ships value. Therefore, if the reasonable cost of repairs exceeds the insured value, as the statutory definition of a constructive total loss envisages, the value of the ship is nil, and in financial though not physical terms the loss is total. Although section 60(1) of the Act refers to an actual total loss appearing to be unavoidable, it is not in doubt that the question whether there has been a constructive total loss depends on the objective facts. So far as they are future or unknown facts, a reasonable assessment of the probabilities must be made. But the test does not depend on the opinion or predictions of the owner, however reasonable. The rule was laid down by Lord Ellenborough in Bainbridge v Neilson (1808) 10 East 329, 341: The effect of an offer to abandon is truly this, that if the offer appear to have been properly made upon certain supposed facts, which turn out to be true, the assured has put himself in a condition to insist upon his abandonment: but it is not enough that it was properly made, upon facts which were supposed to exist at the time, if it turn out that no such facts existed, or that other circumstances had occurred which did not justify such abandonment. It follows from the objective character of the exercise and the fact that the loss is suffered at the time of the casualty notwithstanding its development thereafter, that the damage referred to in section 60(2)(ii) of the Act is in principle the entire damage arising from the casualty from the moment that it happens. The measure of that damage is its effect on the depreciation of the vessel, represented by the entire cost of recovering and repairing it. It cannot make any difference when that cost was incurred. This being the ordinary principle to be applied, the next question is whether it is affected by the legal requirement for a notice of abandonment. It would be surprising if it were. In the first place, a notice of abandonment is not always required, even in the case of a constructive total loss. Section 62 envisages two cases where it is not required: where it is waived by the insurer, and where there is no possibility of benefit to the insurer. Both exceptions reflect the fact that the requirement for notice of abandonment exists wholly for the benefit of the insurer. Its purpose is to enable him to exercise the rights which arise in his favour upon an effective abandonment. Thus where a total loss is constructive as opposed to actual, the insurer is entitled to take over what remains of the hull and to receive the freight in cases where it has been earned notwithstanding the casualty: section 63. Secondly, under section 61 of the Act, there must be a constructive total loss before any question can arise of an election to treat it as a partial or a total loss. For this reason, the House of Lords held in Robertson v Petros M Nomikos Ltd [1939] AC 371, that service of a notice of abandonment was a condition precedent not to the existence of a constructive total loss but only of the right to claim against the hull insurers on that basis. It followed that where recovery under the terms of an insurance on freight depended on the ship having become an actual or constructive total loss, the assured was entitled to recover notwithstanding that the shipowner had elected to treat the loss as partial and had not tendered notice of abandonment. Lord Wright, with whom Lord Atkin, Lord Thankerton and Lord Russell of Killowen agreed, went on to point out, at p 387, that the constructive total loss dated back to the time of the casualty. The freight insurers being liable upon the vessel becoming a constructive total loss: That liability accrues at once when the casualty happens, even if the exact position is not ascertained till later. If the assured has rightly given notice of abandonment of the ship, the loss dates back retrospectively to the date of the casualty. The mainstay of the insurers case is the proposition that the assured may not recover on the basis of a constructive total loss unless the loss is still total at the time of notice of abandonment. The proposition itself is not in doubt. It was established by a series of cases dating back to the decision of Lord Mansfield CJ in Hamilton v Mendes (1761) 2 Bur 1198. It is, however, important to appreciate the basis on which these cases were decided. They do not depart from the orthodoxy that a loss, including a constructive total loss, occurs at the time of the casualty and includes any development of the damage thereafter. Nor do they hold that a constructive total loss may cease to be regarded as one by reference to the facts existing at some later stage. They are concerned with the question what happens if the loss is, as it is put in the older cases, adeemed because something happens after the casualty to reverse it. The ratio of these cases is that even if the vessel is a constructive total loss, the character of the policy as a contract of indemnity requires the assured to be limited to his actual loss at the time when notice of abandonment is given. Exactly the same reasoning underlies the corresponding rule that he is limited to his actual loss at the time when the action is brought. In Hamilton v Mendes itself, the SELBY was captured by a French privateer in the Atlantic during the Seven Years War, and then recaptured from her French prize crew a few weeks later by a British man of war. News of the capture and recapture reached the assured simultaneously. He purported to give notice of abandonment. Lord Mansfield, sitting at Guildhall, held that the ship was never a constructive total loss, because it was never sufficiently clear that the loss arising from the original capture would be permanent. But on the footing that it was a constructive total loss, he held that the assured could recover only for a partial loss, arising from the prize due to the recaptors. His reason appears at p 1210 of the report: The plaintiffs demand is for an indemnity. His action, then, must be founded upon the nature of his damnification, as it really is at the time the action is brought. It is repugnant, upon a contract of indemnity, to recover as for a total loss, when the final event has decided that the damnification, in truth, is an average, or perhaps no loss at all. Whatever undoes the damnification, in whole or in part, must operate upon the indemnity in the same degree. It is a contradiction in terms, to bring an action for indemnity, when, upon the whole event, no damage has been sustained. Lord Mansfield (p 1214) left open the question what would have happened if news of the recapture had arrived after the notice of abandonment. That question was, however, resolved nearly half a century later in Bainbridge v Neilson (1808) 10 East 329, another case of capture and recapture, this time during the Napoleonic wars. In this case news of the recapture arrived between the tender of notice of abandonment and the commencement of the action. I have already referred to it as authority for the objective character of the factual enquiry involved. Lord Ellenborough held (p 344) that the recapture adeemed the loss so that: that which was supposed to be a total loss at the time of the notice of abandonment first given had ceased, and as only a small loss has been incurred in the salvage; that is the real amount of the damnification which the plaintiff is entitled to receive under this contract of indemnity. The leading modern case, which holds that the position was not altered by the Marine Insurance Act 1906, is the decision of the Court of Appeal in Polurrian Steamship Co Ltd v Young [1915] 1 KB 922. In Roura & Forgas v Townend [1919] 1 KB 189, the plaintiffs were the voyage charterers of the IGOTZ MENDI. They insured their anticipated profit on the voyage against the actual or constructive total loss of the vessel. The vessel was captured by a German cruiser in the Indian Ocean, as a result of which the profit was lost. But before action was brought against the insurer, the ship was stranded and abandoned on the coast of Denmark while in the charge of her German prize crew, and recovered by salvors employed by the shipowner. Roche J held that the plaintiffs were entitled to succeed. This was because the rule was that restoration precludes recovery, not because in such a case there never was a constructive total loss, but because an assured cannot, under a contract of indemnity, although he may at one time have suffered a loss, recover in respect of such loss if before action it has already been made good to him. (p 195) The recovery of the ship by her owners did not therefore mean that the vessel was no longer to be regarded as having suffered a constructive total loss. At p 196, he observed: I have already held that there was a constructive total loss of the Igotz Mendi by her capture, and before the ship was restored to the owners such capture resulted in a total loss to the plaintiffs of their rights and profit under the charter. In short, the event agreed upon as necessary to give a right to indemnity had happened, and had irrevocably caused the loss of the subject matter of the insurance. In these circumstances, as the restoration of the vessel itself to its owners did nothing to extinguish or minimise the plaintiffs loss, so also it cannot, in my judgment, operate to extinguish or to bar the plaintiffs claim. This decision was subsequently approved by the House of Lords in Robertson v Petros M Nomikos Ltd [1939] AC 371, 382 383 (Lord Wright), 395 (Lord Porter). If the principle in these cases is that although a constructive total loss has occurred, the assured is limited to his actual loss so far as reduced by subsequent events, it must follow that no expenditure of the owner himself by way of salvage or repair can be regarded as reducing the cost of repairing the damage. It does not reduce his loss. On the contrary, it is part of the measure of loss against which he is entitled to be indemnified, if not as part of the sum insured then as sue and labour charges. This was what the House of Lords decided in the Scottish appeal of Sailing Ship BLAIRMORE Co Ltd v Macredie [1898] AC 593. The BLAIRMORE was sunk by a storm while moored in San Franscisco Bay and abandoned to the insurers by her owner. The assured pleaded that the cost of raising and repairing the ship was such as to make her a constructive total loss at the time of the notice of abandonment. After the notice of abandonment the insurers raised her at their own expense and when sued for a total loss contended that by the time action was brought the loss was only partial: she would no longer have cost more to raise and repair than she was worth, because she had already been raised at their expense. This is substantially what the insurers are saying in the present case, when they argue that the position must be determined by reference to the situation of the vessel at the moment of abandonment, without regard to what has already been spent on reinstating her. The case came to the House on an issue as to relevancy. Lord Halsbury appears to have thought that there had been an actual total loss. But the other members of the Appellate Committee proceeded on the footing that there had been a constructive total loss. They held that the loss could not be reduced to a partial loss by the mere expenditure of money by the insurer. This, as Lord Watson explained at p 607, was because the insurers could not avoid their liability as for a total constructive loss by their intervening gratuitously and taking upon themselves part of the expenses which prim facie fall upon the assured, and would otherwise have been taken into account in estimating whether there has been such a total loss. In other words, if the assured had incurred the expenditure, it would not have reduced the amount of his loss, and it made no difference that instead of the assured incurring the expenditure and recovering it from the insurer, the insurer incurred it directly. In the present case, the cost of repairing the damage for the purpose of determining whether the vessel was a constructive total loss included all the reasonable costs of salving and safeguarding the RENOS from the time of the casualty onwards, together with the prospective cost of repairing her. The cost of repairing the damage was in no way adeemed because part of it had already been incurred at the time when notice of abandonment was given and action brought on the policy. These costs are therefore to be taken into account for the purposes of section 60(2)(ii) of the Act. On this point, I would affirm the decision of the courts below. SCOPIC costs As with the earlier issue concerning pre abandonment expenditure, the financial implications of this question are significant. The SCOPIC charges incurred by the RENOS were found by the judge to amount to about half of the total salvage remuneration, and if included in the calculation it might make the difference between recovery on a partial or total loss basis. In other cases, especially where a casualty involves an oil or chemical tanker, SCOPIC charges may be many times the remuneration attributable to the classic salvage services directed at saving the property. Salvage remuneration is payable under maritime law, independently of contract, but in practice has for many years been payable under Lloyds Open Form (No Cure No Pay) in its successive iterations, which provides for its assessment by arbitration in London. Historically, remuneration was payable only for services supplied for the salvage of property, ie the ship and her cargo. Salvors were not rewarded for any additional services supplied for any other purpose, such as preventing or minimising environmental damage. Indeed they exposed themselves in some cases to liability for such damage. After the grounding of the AMOCO CADIZ on the French Atlantic coast in 1978, special provision was made in the 1980 ed of Lloyds Open Form for an enhanced rate of remuneration to those supplying salvage services to laden oil tankers. But the general law was not modified until the International Convention on Salvage 1989, which has the force of law in the United Kingdom by virtue of section 224(1) of the Merchant Shipping Act 1995. Article 8(1)(b) of the Convention provided that in performing salvage services as traditionally understood, a salvor had a duty to exercise due care to prevent or minimise damage to the environment. Article 13(1) provides for the assessment of the salvors remuneration, and stipulates that it should reflect, inter alia, the skill and efforts of the salvors in preventing or minimising damage to the environment. Article 14(1) entitles the salvors to special compensation from the shipowner equivalent to the expenses incurred in performing the duty under article 8(1)(b). The Convention regime was not initially as successful in its object as had been hoped, mainly because article 14(1) did not provide for a profit element in respect of salvage services provided to safeguard the environment. In 1999, therefore, the SCOPIC clause was added to Lloyds Open Form, which provided for compensation to be based on commercial rates for the service supplied. In its current form, it is an addendum to the 2011 edition of the form, which is in almost universal use for the provision of salvage services. The 2011 Form provides by clause A for the provision of the classic salvage services, ie services to salve the property, being the vessel, her cargo, freight, bunkers and stores together with any property thereon (with specified exceptions), and to take the property to an agreed place or in the absence of agreement on the place, to a place of safety. It provides separately by clause B that while performing the salvage services the Contractors shall also use their best endeavours to prevent or minimise damage to the environment, and by clause C that unless otherwise agreed the SCOPIC clause is to be treated as incorporated. The critical parts of the SCOPIC clause for present purposes are clauses 5 and 6. Clause 5 provides for the assessment of the salvors remuneration for the totality of the services provided, including those required for the protection of the environment, in accordance with an elaborate tariff set out in Appendix A. Clause 6 provides that the salvors basic remuneration shall be assessed in accordance with article 13 of the Convention, but that so far as the remuneration calculated in accordance with clause 5 exceeds the amount payable under article 13, it will be payable in addition by the shipowners alone. In other words, it will not be shared with the other interests salved. This reflects the fact that SCOPIC remuneration is intended to avoid environmental damage which would be a liability of the shipowner, in respect of which he will be insured not under the hull and machinery policy but by the owners Protection and Indemnity insurer. Accordingly, clause 15 of SCOPIC, which deals with general average, provides: SCOPIC remuneration shall not be a General Average expense to the extent that it exceeds the article 13 Award; any liability to pay such SCOPIC remuneration shall be that of the Shipowner alone and no claim whether direct, indirect, by way of indemnity or recourse or otherwise relating to SCOPIC remuneration in excess of the article 13 Award shall be made in General Average or under the vessels Hull and Machinery Policy by the owners of the vessel. The RENOS was entered for these among other risks with the American Club, which ultimately paid the SCOPIC charges in this case. The insurers case is that the test for determining whether some item of expenditure is part of the cost of repairing the damage depends on the characterisation of the expenditure. They say that SCOPIC charges fall to be disregarded because they are not part of the cost of repairing the damage for the purpose of section 60(2)(ii) even on the footing (which is common ground) that that includes the cost of recovering the vessel. The assured, by comparison, say that the SCOPIC charges are part of the cost of repairing the damage because they were an integral part of the salvors remuneration. They had to be paid if the ship was to be salved, and she had to be salved if she was to be repaired. The assured accept that the shipowners could in theory have contracted with the salvors on terms which excluded the SCOPIC clause. But they say that the test is whether a prudent uninsured owner would have contracted on terms that the salvors remuneration included SCOPIC costs. There is no basis in the judges findings for concluding that the prudent uninsured owner would have contracted with the salvors on terms any different from those that these owners agreed. This submission was accepted by Knowles J and the Court of Appeal. I can travel a certain distance down the path favoured by the assured, but not as far as their destination. Although, on the face of it, the words the cost of repairing the damage describe a kind of expenditure, it is well established that they include some costs which are not directly expended on the actual reinstatement of the ship but are preliminary to that reinstatement. Salvage charges are the classic example. They are included in the cost of repairs because the vessel must be salved in order to be repaired. For the same reason, temporary repairs near the site of the casualty and towage to a repair yard are generally allowed if they are reasonable preliminaries to the repairs themselves. As Roskill J put it in The MEDINA PRINCESS [1965] 1 Lloyds Rep 361, 520, temporary repairs and towage to a repair yard may be part of what would have to be expended to put the ship right. This accords with the concept of a constructive total loss. The cost of repairs is the measure of the extent of the damage. The reason why section 60(2)(ii) requires a comparison between the cost of the repairs and the value of the ship when repaired, is to determine whether the ship is financially worth repairing. Expenses for a purpose which is an essential preliminary to repairing her necessarily enter into that comparison. Even if the actual repairs would cost less than the repaired value of the ship, if she cannot be got off the rocks or towed to a place where she can be repaired save at a cost which when added to the cost of the actual repairs will exceed her value, then she is not financially worth saving. For the same reason, the mere fact that the insurer would not, under the policy terms, be liable to indemnify the assured for some item of expenditure on a partial loss basis does not necessarily mean that it cannot be included in the comparison for the purpose of deciding whether there is a constructive total loss. It is still potentially relevant to the question whether the vessel is financially worth saving. The common feature of all the cases where the cost of steps preliminary to repairs have been included in the comparison is that their objective purpose was to enable the ship to be repaired. That will generally be true of salvage charges. The same goes for the cost of temporary repairs, towage, and other steps which are plainly preliminaries to carrying out permanent repairs. The objective purpose of SCOPIC charges was different. It was not to enable the ship to be repaired, but to protect an entirely distinct interest of the shipowner, namely his potential liability for environmental pollution. That purpose has nothing to do with the subject matter insured, namely the hull. It was no part of the measure of the damage to the ship, and had nothing to do with the possibility of repairing her. The point may be tested by asking what the position would have been if the shipowner, instead of making a single agreement with salvors to salve the ship and prevent or minimise environmental damage, had contracted with one enterprise to salve the ship and another to put floating booms around her with a view to preventing or minimising environmental damage. Mr Berry QC was inclined to accept that in that case the cost of the booms would not have entered into the comparison required by section 60(2)(ii). I think that his instinct was right. The money paid to the boom contractor would in no sense have been preliminary to the repairs. By comparison, the cost of temporary repairs or towage to the repair yard would have been preliminary to the repairs whether these tasks were undertaken by the salvors or by some other contractor. What this suggests is that the only reason why the SCOPIC charges are said to be part of the cost of repair is that the charges for environmental protection were owed to the same contractor as the charges for salving the property so that she could be repaired. Yet that is an entirely adventitious factor. Whether the same contractor or different contractors were used has nothing to do with the objective purpose of the expenditure or with the comparison required by section 60(2)(ii). I am prepared to assume that a prudent uninsured owner would have done what these owners did and contracted with the salvors for both the salving of the ship and protecting the environment. But I do not think that that makes any difference. The prudent uninsured owner test was first laid down by Lord Abinger CB in Roux v Salvador (1836) 3 Bing NC 266, 286 and endorsed by the House of Lords, adopting the advice of the judges of the Exchequer Chamber in Irving v Manning (1847) 1 HL Cas 287. It is a test for determining whether the subject matter insured is a constructive total loss in circumstances where the relevant facts are hypothetical or cannot be known. As applied to a damaged ship, the test is whether the prudent uninsured owner would have repaired her and if so how. Before the passing of the Marine Insurance Act 1906, there was a controversy about how far the prudent uninsured owner was assumed to take account of matters other than the cost of repair and the repaired value of the ship, such as the value of the wreck if sold to breakers. In Angel v Merchants Marine Insurance Co [1903] 1 KB 811, the Court of Appeal held that only the comparison between the repaired value of the ship and the cost of repair (including steps preliminary to repair) was relevant. In Macbeth & Co Ltd v Maritime Insurance Co Ltd [1908] AC 144, a case decided after the Act but by reference to the law as it stood before, the House of Lords overruled Angel, holding that the question fell to be decided by reference to whatever other considerations would have been taken into account by a prudent uninsured owner. These might include the financial benefits and detriments of not repairing, which in that case included the benefit of being able to sell the wreck. If that view had prevailed, it would have been relevant to ask whether the prudent uninsured owner would have been induced to repair notwithstanding that the cost of salvage and repair would exceed her repaired value, because of the potential liability for environmental pollution associated with abandoning her. But section 60(2)(ii) resolves that question in favour of the view taken in Angel, which was the leading authority at the time that the Act was drafted. The effect of that provision is that the prudent uninsured owner is assumed to be interested only in the comparison between the cost of repair and the repaired value, and his hypothetical choices are relevant only to the quantum of the repair costs. The statutory solution has sometimes been criticised as illogical, but the world of marine insurance has accommodated it and moved on. The classic division of risks between hull insurers and P&I insurers assigns environmental liabilities and associated sue and labour charges to P&I insurers, a state of affairs which is reflected in clause 15 of the SCOPIC clause. The old controversy about the value of the wreck has for many years been resolved by what is now clause 19.1 of the Institute Time Clauses Hulls (1/10/83), which excludes it from the constructive total loss comparison. The result is that it is necessary to identify the purpose of the expenditure which it is proposed to take into account, and to apply the prudent uninsured owner test only to expenditure for the purpose of repairing the ship in the larger sense which I indicated above. The fact that a prudent uninsured owner might have contracted with the same contractors for both the protection of the property and the prevention of environmental pollution does not show that both are part of the cost of repairing the damage. Neither does the fact that the charges under both heads are secured on the ship. The two heads of expenditure have quite different purposes, only one of which is related to the reinstatement of the vessel. If they were truly indivisible, this might not matter. But the whole scheme of the SCOPIC clause depends on their being separately identifiable, and the very fact that one is for the hull underwriters account and the other for the P&I insurers shows that they cannot be indivisible. In my opinion, SCOPIC charges are not part of the cost of repairing the damage for the purpose of section 60(2)(ii) of the Act or the cost of recovery and/or repair for the purpose of clause 19.2 of the Institute Clauses, because their purpose is unconnected with the damage to the hull or its hypothetical reinstatement. I would therefore allow the appeal on that point. Disposal I would make a declaration accordingly, set aside the order of Knowles J and remit the matter to him to determine in the light of this courts judgment whether the RENOS was a constructive total loss and what financial consequences follow from that. |
The question in this case is whether the appellants BH (Mr H) and his wife KAS or H (Mrs H) should be extradited to the United States of America to face trial in Arizona. The United States has requested their extradition under the Extradition Act 2003 on charges of conspiracy and unlawful importation into the United States of chemicals used to manufacture methamphetamine, knowing or having reasonable cause to believe that they would be used for that purpose. If they were the only persons whose interests had to be taken into account, the answer to be given to this question would have been relatively straightforward. The crimes of which they are accused are very serious, and the public interest in the honouring of extradition arrangements for the prevention and punishment of crime is compelling: Norris v Government of the United States of America (No 2) [2010] UKSC 9, [2010] 2 AC 487. But the persons whose interests must be taken into account include the appellants children too. It is obvious that the childrens interests will be interfered with to at least some degree by the extradition of either parent. If both parents are to be extradited the effect on the family life of the children will be huge. The weight to be given to their best interests lies at the heart of the issue whether the extradition of both parents, or either of them, would be proportionate. The case comes before this court as an appeal against the determination of a devolution issue by the High Court of Justiciary. The appellants had argued both before Sheriff McColl in the Sheriff Court and in the High Court of Justiciary that it would be incompatible with their Convention rights within the meaning of the Human Rights Act 1998 for them to be extradited, as this would interfere with the exercise of their right to respect for their private and family life contrary to article 8 of the European Convention on Human Rights. Mrs H is the mother of six children, of whom the eldest is aged 14 years and the youngest is just one year old. Mr H is the father of the four younger children. In a judgment delivered on 3 April 2008 after a hearing which began on 16 November 2007 the sheriff held that the appellants extradition would be compatible with their Convention rights. So she sent the case of each appellant to the Scottish Ministers in terms of sections 87(3) and 141(1) of the 2003 Act for their decision whether either of the appellants was to be extradited. On 29 May 2008 the Scottish Ministers ordered the appellants to be extradited to the requesting territory. The appellants appealed to the High Court of Justiciary under section 103 read with section 216(9) of the 2003 Act. On 29 July 2011, after proceedings in that court which the court itself acknowledged had been exceptionally protracted, the High Court of Justiciary (Lord Osborne, Lord Reed and Lord Mackay of Drumadoon) held that neither of the appellants was entitled to be discharged under section 87 of the 2003 Act: [2011] HCJAC 77, para 101. There is no appeal to this court from a decision of the High Court of Justiciary under section 103 of the 2003 Act: sections 114(13) and 116. But the question whether the Scottish Ministers had no power in terms of section 57(2) of the Scotland Act 1998 to make an order for the appellants extradition because their extradition would be incompatible with their Convention rights is a devolution issue within the meaning of paragraph 1(d) of Schedule 6 to the Scotland Act. An appeal lies to this court under paragraph 13 of the Schedule against the determination of a devolution issue by a court of two or more judges of the High Court of Justiciary. On 11 August 2011 the High Court of Justiciary granted leave to the appellants to appeal to this court in respect of the devolution issues relating to article 8 that arose during the hearing of the appeal under the 2003 Act. The appellants submit that the public interest in giving effect to the extradition request is outweighed by the consequences that this would have for the best interests of their children. The proper conclusion, they say, is that the proposed interference fails to meet the test of proportionality required by article 8. So the Scottish Ministers had no power to order their extradition, as to extradite them would be incompatible with their rights and those of their children under article 8 of the Convention. The facts Mr H and Mrs H are both British citizens. They are aged 48 and 34 respectively. Mrs H is the mother of six children: A, who was born on 5 August 1997 and is 14; B, who was born on 16 March 1999 and is 13; C, who was born on 15 October 2002 and is nine; D, who was born on 16 February 2006 and is six; E, who was born on 5 May 2009 and is three; and F, who was born on 29 March 2011 and is one. Mr H is the father of C, D, E and F. The father of A never lived with Mrs H (Miss S, as she then was) and has never had contact with that child. The father of B lived in family with Miss S until they separated in 2001. Mr H who was then living in Middlesbrough and had three children by previous relationships, was Miss Ss employer at the time of the separation. He helped Miss S to find accommodation for herself and her children A and B in Middlesbrough. In about 2002 they formed a relationship. They were married in 2008. Mr H spent a period from about 1989 to 1994 or 1995 living in the United States. He and his then partner had a daughter J, who was born in about 1986. When she was aged 6 and they were living in Arkansas she made disclosures to a school teacher which indicated that she had been a victim of sexual abuse by Mr H. This led to a police investigation and she was taken into care. Mr H left Arkansas and moved to Oklahoma where he could not be prosecuted for offences said to have occurred in Arkansas. But he remained in contact with Js mother, with whom he devised a plan for J to be returned to live with them. She persuaded the authorities to return J to her sole care, and then took the child with her to Oklahoma so that she could resume her relationship with Mr H. Following their return to the United Kingdom that relationship came to an end. Mr H formed a relationship with someone else by whom he had a son. While he was living in that family he learned that J had again been taken into care. But he took no steps to offer her a home with him in this new relationship. After the birth of C, who was his first child with Mrs H, Js allegation that she had been sexually abused by Mr H when they were living in Arkansas came to the notice of the local authority in Middlesbrough. It brought proceedings against him under the Children Act 1989 in the Family Division of the High Court for his contact with Miss Ss children to be terminated. Mr H responded by mounting an attack on the local authoritys email system which led to the taking out of an injunction against him. In a judgment which was delivered on 30 January 2004 His Honour Judge Bryant, sitting as a judge of the High Court, found that Mr H had sexually abused J on a number of occasions in Arkansas and Texas in 1993 and 1994. He said that he was satisfied that Mr H remained a real and continuing danger to young girls, and continued the proceedings so that Miss Ss position in relation to his findings could be ascertained. She accepted Judge Bryants findings, and on 6 September 2004 he made an order against Mr H that he was to have no contact whatsoever with Miss Ss children A, B and C. Regrettably, his order was ignored entirely by both Mr H and Miss section On 23 March 2005 search warrants were granted by Teesside Magistrates Court under the Firearms Act 1968 in connection with an investigation into Mr H ordering a handgun through the internet. They were executed at a business address in Stockton on Tees and at residential addresses in Middlesbrough. Two handguns were recovered as well as documents, computers and bank records which contained information relating to the sale of chemicals through a website whose address was kno3.com. The chemicals included red phosphorus and iodine. The information showed that red phosphorus and iodine had been sold to customers around the world including about 400 customers in the United States and that the appellants were aware that it was illegal to sell these substances in that country. In April 2005 the appellants left Middlesbrough and moved with the three children to Scotland where they have remained ever since. Mrs H has relatives in the Bonnybridge area. On 21 June 2006 further search warrants were granted by Teesside Magistrates Court. On 23 June 2006 they were backed by a sheriff at Falkirk Sheriff Court. They were executed on the same day at a business address in Grangemouth and at a residential address nearby. A quantity of red phosphorus and iodine was recovered, as well as documents, computers and bank records indicating that the appellants were still trading in these substances. They were arrested but not at that stage detained in custody. Following a separate investigation which had been conducted by authorities in the United States over the same period, an indictment was filed in the United States District Court for the District of Arizona on 27 September 2006 charging the appellants with various offences relating to the importation into that country and the distribution there of red phosphorus and iodine. This led to the request that they be extradited to the United States so that they could face trial in that court. Warrants for the appellants arrest were issued in the United States on 28 September 2006. On 31 January 2007 the proceedings for the appellants extradition first came before the sheriff and the appellants were remanded in custody. They both were released on bail after seven months in custody on 31 August 2007. Mr Hs bail order was revoked on 21 April 2011 following his failure to attend a hearing of his appeal in the High Court of Justiciary. A warrant was issued for his arrest and he was returned to custody on 26 April 2011. Mrs H was again remanded in custody on 29 July 2011 when the High Court of Justiciary refused the appellants appeals. She was released on bail on 12 August 2011, but Mr H remains in custody. Initially, following her release, Mrs H visited Mr H in prison with all six children. The number of visits then diminished and only the four younger children regularly go to the prison with her. The two elder children are reluctant to take part in these visits. Within a few weeks of her release from custody Mrs H decided that she did not want her relationship with Mr H to continue, and their relationship has broken down. The children were placed on the child protection register in July 2009 as a result of allegations of sexual abuse against Mr H by the nine year old daughter of a neighbour. They were removed from the register after a case hearing on 13 December 2011. But this was on the basis that they would be restored to it if Mr H were to be released from custody and to resume contact with the family. The extradition request On 3 November 2006, by Diplomatic Note No 078, the United States requested the extradition of the appellants in accordance with article VIII of the Extradition Treaty between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America of 8 June 1972 (Cmnd 6723), as amended by the Supplementary Treaty of 25 June 1985. A new treaty, the Extradition Treaty of 2003 (Cm 5821) came into force on 26 April 2007. But as the extradition documents in this case were submitted before that date the new treaty does not apply to it. As is well known, the 1972 Treaty imposed mutual obligations on each party to extradite in respect of offences which carry a sentence of at least 12 months imprisonment in each jurisdiction. These obligations are however subject to specified exceptions. Among them is article V(2), which provides that extradition may be refused on any ground which is specified by the law of the requested party. It follows that the United Kingdom will not be in breach of its treaty obligations if, by reason of section 87 of the 2003 Act or section 57(2) of the Scotland Act 1998, extradition is refused on the ground that to extradite the person whose extradition is requested would be incompatible with any of the Convention rights. The documents submitted in support of the request included a copy of the indictment of the Grand Jury of the United States District Court for the District of Arizona dated 27 September 2006 and warrants for the arrest of the appellants. 82 counts are specified in the indictment. The first is a count of conspiracy in the following terms: Beginning on a date unknown to the Grand Jury but no later than August of 2004, continuing through at least September of 2006, in the District of Arizona, and elsewhere, defendants [the appellants] did knowingly and intentionally conspire and agree with each other and with others known and unknown to the Grand Jury, to commit offenses against the United States including the following: a. to knowingly and intentionally distribute a listed chemical, specifically Red Phosphorus, knowing and having reasonable cause to believe it will be used to manufacture a controlled substance, in violation of Title 21 United States Code, Sections 841(c) (2); b. to knowingly and intentionally import and distribute a chemical, specifically Red Phosphorus, which may be used to manufacture a controlled substance, knowing and having reasonable cause to believe that it will be used to manufacture a controlled substance in violation of the Controlled Substances Act and the Controlled Substances Import and Export Act, in violation of Title 21 United States Code, Sections 843(a)(7); and c. to knowingly and intentionally distribute a List I chemical, specifically Red Phosphorus, without the registration required by the Controlled Substances Act, in violation of Title 21 United States Code, Section 843(a)(9). The indictment then gives details of the manner and means of the conspiracy. It alleges that the appellants are the owners and founders of an internet business which operated under various names but is referred to in the indictment as KN03. At all relevant times they operated a website through which their business solicited customers around the world, including customers in the United States, who were seeking to purchase chemicals. Among the chemicals that they sold were red phosphorus and iodine. It is alleged that the appellants knew that these chemicals could be used to manufacture methamphetamine. This is a central nervous system stimulant drug which has a high potential for abuse. At the relevant time it was listed in the United Kingdom under the name methylamphetamine as a class B drug for the purposes of the Misuse of Drugs Act 1971. It was re classified as a class A drug by the Misuse of Drugs Act 1971 (Amendment) Order 2006 (SI 2006/3331). The indictment states that the website advertised that it offered discreet delivery and that customers often asked for discreet packaging in the comments which they submitted along with their orders for chemicals. It also states that KN03 shipped orders to its customers with incorrect and misleading labelling as to the contents being sent. This included labelling on red phosphorus indicating that it was red metal for iron works and labelling on iodine indicating that it was for medical use. The indictment states that in addition to requests for discreet packaging KN03 received other emails alerting the appellants to the fact that the chemicals sold were being used to manufacture methamphetamine. A website giving a recipe for manufacturing methamphetamine from red phosphorus and iodine was found saved on a KN03 computer. Between August 2004 and August 2006 KN03 sold 296 kg of red phosphorus and 44 kg of iodine to customers in the United States, including customers in Arizona. Numerous examples are given of persons who manufactured methamphetamine in Arizona and ordered chemicals from KN03. At least 70 methamphetamine manufacturing locations are said to have been found in the United States which were supplied with chemicals by KN03. KN03 is said to have received approximately $132,922 between August 2004 and August 2006 from customers in the United States purchasing red phosphorus and iodine. Counts 2 to 17 allege the unlawful distribution by the appellants of red phosphorus knowing and having reasonable cause to believe that it would be used to manufacture a controlled substance in violation of specified provisions of the United States Code. Details are given of 16 specific supplies to customers in Arizona. Counts 18 to 33 allege the unlawful distribution and importation of red phosphorus knowing and having reasonable cause to believe that it would be used to manufacture a controlled substance in violation of another group of specified provisions of the United States Code, in relation to which details are given of the same 16 supplies. Counts 34 to 49 are counts of the distribution of red phosphorus without the required registration. Counts 50 to 65 allege the unlawful use of a communication facility, specifically the internet and United States mail, in committing the felony constituted by the unlawful distribution of red phosphorus to the same 16 customers in Arizona. Counts 66 to 81 are counts of importing red phosphorus into the United States without the required registration. Count 82 is a count of conspiracy to import red phosphorus into the United States without the required registration in violation of the relevant provisions of the United States Code. In an affidavit sworn on 30 October 2006 which was submitted in support of the extradition request Mary Beth Pfister, Assistant US Attorney for the District of Arizona, gave this explanation of the general nature of the evidence to be relied on by the prosecutor: The evidence the government will use to prove all of the allegations contained in the indictment against [Mr H] and [Mrs H] will include the incriminating computer records recovered from KN03 including emails, the admissions by [Mr H] and [Mrs H] regarding their involvement in the operation, the false and misleading statements made on packaging of KN03 products sent to the United States, the undercover sales made to the United States authorities, the fact that KN03 continued to sell red phosphorus to customers in the United States even after being advised that the sales were illegal and after being advised that the products were being used for the manufacture of methamphetamine, and the evidence that KN03 customers were operating clandestine methamphetamine laboratories. The sheriff held that all the counts in the indictment were extradition offences. The High Court of Justiciary held that the conduct alleged in relation to paragraph 12(c) of count 1 and counts 34 to 82 would not constitute an offence under the law of Scotland. It allowed the appellants appeal against the sheriffs decision to that extent, and in relation to these offences only ordered the appellants discharge and quashed the orders for their extradition with respect to them. The appeal against the remaining charges was refused. The number of counts listed in the indictment might suggest, at first sight, that the allegation is of a course of wrongful conduct on a grand scale. As the foregoing summary indicates, its length is attributable to the separate listing of each of the various provisions of the United States Code said to have been violated in relation to each of the specific transactions that have been identified. Nevertheless the allegation is of a sustained and deliberate course of unlawful conduct, during which the appellants are said have sold 296 kg of red phosphorus and 44 kg of iodine to about 400 customers in the United States between August 2004 and August 2006 in return for which they are said to have received approximately $132,922. The High Court of Justiciary noted in para 96 of its judgment that the conduct was said to have persisted even after the execution of the search warrants in England and an undertaking to desist. The appellants are said to have been well aware that these products were being used for the clandestine manufacture of methamphetamine and for this reason to have gone to some lengths to conceal the nature of their activities. The potential for harm to which their alleged conduct is said to have contributed is very great, due to the addictive nature of that drug and its potential for abuse. There is no doubt, even after the subtraction from the indictment of counts 12(c) and 34 to 82 by the High Court of Justiciary, that the offences that have been alleged against the appellants are very serious. All the offences are punishable in the United States, the lowest penalty being four years imprisonment and the maximum 20 years. Conduct of this kind would attract a term of imprisonment well in excess of the minimum period 12 months referred to in section 137(2)(b) of the 2003 Act were the appellants to be prosecuted in Scotland. Is the appeal competent? As has already been noted in para 4 above, there is no appeal to this court from a decision of the High Court of Justiciary under section 103 of the 2003 Act. Section 114(13) provides that the provisions of section 114 relating to appeals to this court from a decision of the High Court do not apply to Scotland. Section 116, read together with section 141(1), provides that a decision of the sheriff or the Scottish Ministers under Part 2 may be questioned in legal proceedings only by means of an appeal under that Part. Section 34 makes similar provision in relation to a decision of the sheriff under Part 1 of the 2003 Act. On the other hand, paragraph 13 of Schedule 6 to the Scotland Act 1998 provides a right of appeal to this court against the determination of a devolution issue by a court of two or more judges of the High Court of Justiciary, with the leave of the court from which the appeal lies or, failing such permission, with leave of the Supreme Court. This is a right of appeal which is separate and distinct from that provided by the 2003 Act. The question is whether the right of appeal to this court under paragraph 13 of Schedule 6 to the Scotland Act can survive the clear and unequivocal direction in section 116 of the 2003 Act that a decision of the sheriff may be questioned only by means of an appeal under Part 2 of that Act and the equivalent direction in section 34 with regard to proceedings under Part 1 which exclude appeals to the Supreme Court against decisions under those Parts of the Act by the High Court of Justiciary. Although no one in these proceedings submits that it cannot and that the Supreme Court does not have jurisdiction to determine this appeal, the question whether it does have jurisdiction is obviously a matter of general public importance. We were invited to consider it as a preliminary issue in the light of written submissions provided by counsel for the Scottish Ministers and the Lord Advocate. Among the issues which the sheriff must consider in his capacity as a judge under Part 2 of the 2003 Act is whether the persons extradition would be compatible with the Convention rights within the meaning of the Human Rights Act 1998: section 87(1). The question whether for the Scottish Ministers to order the person to be extradited to the territory to which his extradition is requested under section 93 of the 2003 Act would be incompatible with his Convention rights for the purposes of the Scotland Act 1998 is just another way of putting the same question. Section 57(2) of the Scotland Act provides that a member of the Scottish Executive has no power to do any act so far as the act is incompatible with any of the Convention rights. That provision is of general application, irrespective of the source of the power that is being exercised. The functions which sections 93 and 141(1) of the 2003 Act confer on the Scottish Ministers are subject to the constraints of section 57(2) of the Scotland Act in just the same way as any other function which they may be called upon to exercise. There can be no doubt that the question whether an order for a persons extradition by the Scottish Ministers would be incompatible with any of the Convention rights falls within the definition of a devolution issue in paragraph 1(d) of Schedule 6 to the Scotland Act and that, as such, it is open to determination by the court under the provisions of that Schedule. But under the system that the 2003 Act lays down the question whether the persons extradition would be compatible with the Convention rights must be determined by the court before the question whether an order for the persons extradition should be made can come before the Scottish Ministers. There are two aspects of the system that Part 2 of the 2003 Act lays down that might be taken as suggesting that the right of appeal in relation to a devolution issue under the Scotland Act has been excluded. The first is to be found in section 118(2), which applies where the effect of the decision of the relevant court on an appeal is that the person is to be extradited to a category 2 territory. A similar provision relating to the system in Part 1 is to be found in section 35. Section 118(2) provides that the person must be extradited to the category 2 territory before the end of the required period, which is 28 days starting with the day on which the decision of the relevant court on the appeal becomes final, or the day on which the proceedings on the appeal are discontinued. The relevant court in the application of this provision to Scotland is the High Court of Justiciary: section 118(8)(a). The remaining provisions of this section, which make detailed provisions as to when the decision becomes final in the event of an appeal to the Supreme Court, do not apply to Scotland: section 118(8)(b). There is no provision which tells us when the 28 day period is to start should there be an appeal against the High Courts determination of a devolution issue under the Scotland Act. The problem could perhaps be cured if the Supreme Court were to remit the case to the High Court to pronounce a final order in the event that it decides that the appeal to it should be dismissed. This would involve reading the words becomes final in section 118(2)(a) as embracing this possibility. But this solution is not without difficulty. In contrast to the situation contemplated by the remaining provisions of section 118, no specific time limit is provided either by the Scotland Act or by an Act of Adjournal for applications for leave to appeal to this court under paragraph 13 of Schedule 6. The second aspect is to be found in section 115A(1) (4), which was inserted by the Police and Justice Act 2006, section 42 and Schedule 13, paragraph 8(13). Its Part 1 equivalent is to be found in section 33A, inserted by paragraph 8(5) of that Schedule. Subsections (1) (4) of section 115A make provision for a person to be remanded in custody where that persons discharge has been ordered on appeal but the court is informed immediately on behalf of the category 2 territory of an intention to appeal to the Supreme Court. Those provisions do not apply to Scotland: section 115A(5). There is no equivalent provision which enables the person to be detained in custody should the Lord Advocate wish to appeal to the Supreme Court on behalf of the category 2 territory against the determination of a devolution issue in that persons favour. This is a significant omission. It puts the Lord Advocate, should he wish to appeal in that event, at a significant disadvantage in comparison with the authorities in the other parts of the United Kingdom. It is reasonably clear that, when the 2003 Act and the Police and Justice Act 2006 which amended it were enacted, Parliament did not contemplate that decisions of the High Court of Justiciary in an appeal under section 87(1) against the sheriffs determination of the question whether the persons extradition would be compatible with the Convention rights would be appealable under the Scotland Act. But this does not lead inevitably to the conclusion that an appeal to the Supreme Court under that Act against the determination of a devolution issue by the High Court as part of an appeal under section 103 of the 2003 Act is incompetent. There are powerful considerations the other way. First, there is the fact that the effect of the Scotland Act is that the Scottish Ministers derive their existence only from that Act. As has been repeatedly pointed out by the court, they have no power to act other than in a way that is consistent with section 57(2) of that Act: see, eg, R v HM Advocate [2002] UKPC D3, 2003 SC (PC) 21, [2004] 1 AC 462, paras 46, 129; McGowan v B [2011] UKSC 54, 2011 SLT 37, [2011] 1 WLR 3121, para 6. The functions that the 2003 Act has conferred on the Scottish Ministers must be seen in that light. It would perhaps have been open to Parliament to override the provisions of section 57(2) so as to confer on them more ample powers than that subsection would permit in the exercise of their functions under the 2003 Act. But in my opinion only an express provision to that effect could be held to lead to such a result. This is because of the fundamental constitutional nature of the settlement that was achieved by the Scotland Act. This in itself must be held to render it incapable of being altered otherwise than by an express enactment. Its provisions cannot be regarded as vulnerable to alteration by implication from some other enactment in which an intention to alter the Scotland Act is not set forth expressly on the face of the statute. In any event, the courts presume that Parliament does not intend an implied repeal: Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd [2001] QB 388, per Arden LJ at p 405. In modern times, when standards of parliamentary draftsmanship are high, the presumption against implied repeal is strong: Nwogbe v Nwogbe [2000] 2 FLR 744, para 19, per Walker LJ. And it is even stronger the more weighty the enactment that is said to have been impliedly repealed: Bennion on Statutory Interpretation, 5th ed (2008), p 305. The provisions of Schedule 6 which enable devolution issues to be brought to the Supreme Court on appeal go hand in hand with the constraints which the Scotland Act imposes on the powers of the Scottish Ministers. They are as much part of the constitutional settlement as the constraints themselves. They were included in the Scotland Act as a means of ensuring that the rule of law and the protection afforded by the Convention rights is respected across the entire range of the activities of the Scottish Government. It permits of no exceptions, and the right of appeal to the Supreme Court under paragraph 13 of Schedule 6 is part of that mechanism. The fact that this right has not been expressly excluded by the 2003 Act is a powerful reason for holding that it is unaffected by sections 34 and 116. Then there is the fact that it has been held, in the context of proceedings under the 2003 Act in England and Wales, that sections 34 and 116 apply only to decisions in respect of which a right of appeal lies under the 2003 Act. As was pointed out in R (Hilali) v Governor of Whitemoor Prison [2008] UKHL 3, [2008] AC 805, para 21, one of the features of the provisions about appeals in the 2003 Act is that not every decision that the judge is required to take can be appealed under the statute: see R (Asliturk) v City of Westminster Magistrates Court [2010] EWHC 2148, [2010] 1 WLR 1139; R (Nikonovs) v Governor of Brixton Prison [2005] EWHC 2405 (Admin), [2006] 1 WLR 1518, para 18 where Scott Baker LJ said that it would require the strongest words in a provision such as section 34 to remove the ancient remedy of habeas corpus where the applicant was able to satisfy the court that he had not been brought before a judge as soon as practicable for the purposes of section 4(5), a decision under which is not appealable. This adds force to the point that, although sections 34 and 116 of the 2003 Act provide that a decision of a judge under the relevant Part of the Act may be questioned by means of an appeal under that Part, they have no application to the system for the determination of devolution issues that the Scotland Act lays down because they do not exclude resort to it expressly. The system under which the present appeal has been brought before this court lies outside the contemplation of those sections of the 2003 Act. The competency of devolution minutes in extradition proceedings was considered in Goatley v HM Advocate [2006] HCJAC 55, 2008 JC 1 and La Torre v HM Advocate [2006] HCJAC 56, 2008 JC 23. In both cases the Lord Advocate conceded that devolution minutes were competent in proceedings under the 2003 Act as the functions carried out by the Lord Advocate and the Scottish Ministers under Part 2 of the 2003 Act were acts that they were performing as members of the Scottish Executive within the meaning of section 57(2) of the Scotland Act. This concession was approved by the High Court: Goatley, paras 13 and 14; La Torre paras 46 and 47. It seems to me, with respect, that it was properly made and the High Court was right to give the concession its approval. If an extradition were to be incompatible with the Convention rights of the person to be extradited the Scottish Ministers would be carrying out an act which they had no power to do. A challenge to their proposed exercise of that function by means of a devolution minute is a parallel remedy to that afforded by section 87(1) of the 2003 Act. The issue which the sheriff and, in its turn the High Court, had to decide under that subsection was just as much a devolution issue as it was an issue arising under the 2003 Act. The effect of the statutes is that the appellants are entitled to exercise the right of appeal which paragraph 13 of Schedule 6 to the Scotland Act provides for, notwithstanding the fact that there is no appeal to this Court against the determination of the High Court under the 2003 Act. For these reasons I would hold that the appeal to this court against the determination of the devolution issue for which the High Court gave permission is not prohibited by section 116 of the 2003 Act and that it is competent. It is to be hoped that the difficulties that the operation of sections 115A and 118 and their equivalents in Part I of the 2003 Act may give rise to will be the subject of an early legislative solution by Parliament. The proceedings below On 15 January 2007 the Scottish Ministers issued a certificate under section 70 of the 2003 Act to the effect that the extradition request was valid. They sent it to the Sheriff Court, as they were required to do by subsection (9) of that section. On 16 January 2007 warrants were granted for the arrest of the appellants. They appeared before the sheriff on 31 January 2007 and were remanded in custody. They remained in custody until they were released on bail in August 2007. When they were on remand their four children (E and F had not yet been born) were looked after by Mrs Hs mother who had had regular contact with them up to that date. Other family members and friends of the family had individual children to stay with them from time to time. The extradition hearing before the sheriff began on 16 November 2007. The children were not separately represented. It was suggested in the written case for Mrs H that it would have been appropriate for submissions to have been entertained on their behalf. But Mr Hugo Keith QC, who appeared for the Official Solicitor in HH and PH v Deputy Prosecutor of the Italian Republic, Genoa [2012] UKSC 25 which was heard together with the cases of Mr and Mrs H in this court, accepted that cases where this is needed will be rare. The court was also shown the product of inquiries made by the Crown Offices International Co operation Unit through the European Judicial Network as to whether children are separately represented in extradition proceedings before the national courts in other Contracting States. The responses that were received indicate that the practice in almost every state is for the children not to be separately represented, although in Malta the parents can ask for the child to be represented. It was not suggested before the sheriff or in the High Court of Justiciary that separate representation was necessary in this case. The court should nevertheless be alive to the information that is needed for it to have regard to the best interests of the child as a primary consideration: HH and PH, para 86, per Lady Hale. The sheriff took the necessary steps in this case. The hearing continued on dates in January and March, and the sheriff issued her judgment on 3 April 2008. In para 66 she said that she did not regard either of the appellants as credible or reliable witnesses. She rejected a submission by Mr Hs counsel that she should disregard the judgment of Judge Bryant in the High Court in Middlesbrough. In her view it was relevant to the appellants credibility and reliability and it was inconceivable that they were not aware of his injunction. In para 67 she said that she did not accept the picture that the appellants had sought to present of themselves and their children as totally united and alone without any support being available if the extradition request were to be granted. In para 68 she said that the bleak scenario of the four children of necessity being taken into care and housed separately and without being able to sustain their relationship with their parents to the extent that it would be extinguished or irreparably damaged was not made out. The sheriff provided her explanation for this assessment in the next two paragraphs. In para 69 she said that she accepted that Mrs Hs mother was at times overwhelmed with the care of the children, who were naturally upset by the removal of their parents. The mother said that she would not be able to cope with caring for them again. But she did not say that she was not prepared to play any part in the childrens care should the need arise, and in her past conduct she had shown great care and support for them. In para 70 the sheriff said that if Mrs Hs mother did not feel able to care for them the local authority might require to accommodate them. In that situation it would look to find accommodation in the first instance within the childrens wider family or close friends. If, as the evidence indicated, there were no friends or family willing or able to take care of the children the local authority would require to place the children in foster care. She accepted evidence from a social services resource team manager that it might prove difficult to find a placement for all the children in one family. But no permanent placement would be considered until the final outcome of any proceedings in the United States was known. She accepted the social workers evidence that however the children were to be placed everything possible would be done to foster their relationship with one another and their parents. In para 76 she said that it seemed to her highly unlikely that Mrs Hs mother would not participate in any efforts by the local authority to maintain those relationships. The sheriff was referred to declarations by two witnesses from the United States which indicated that the United States authorities are committed to encouraging family visits in appropriate circumstances, to allowing visits beyond the confines and security of the prison and to allow family groups to visit where those members had travelled a long distance. She was also referred to the Council of Europe Convention on the Transfer of Sentenced Prisoners of 21 March 1983, Council of Europe Treaty Series No 112, which entered into force in the United States on 1 July 1985 and in the United Kingdom on 1 August 1985. She was told that in evaluating a request that a sentenced person should serve a sentence of imprisonment in the home country the United States authorities include consideration of the presence of close family members in the home country, the strength of their family ties and the likelihood of family reunification. In para 76 she said that the mechanisms operated by the United States authorities to maintain and assist in the fostering of family bonds would assist the appellants to maintain their bond with the children and the children to maintain their bonds with them, even if any such arrangements could not be regarded as ideal. The sheriffs conclusion was, as she said in para 82 of her judgment, that the appellants extradition would be compatible with their Convention rights. She answered the question in section 87(1) of the 2003 Act in the affirmative and sent the case of each appellant to the Scottish Ministers for their decision under section 93 whether the appellants were to be extradited. On 29 May 2008 the Scottish Ministers ordered the appellants to be extradited to the requesting territory. Mr H appealed to the High Court of Justiciary under section 103 of the 2003 Act against the sheriffs decision and under section 108 against the order for his extradition by the Scottish Ministers. Mrs H appealed under section 103 against the sheriffs decision to send her case to the Scottish Ministers. The appeals were set down for hearing on 4 to 6 March 2009. On 4 March 2009 the court was informed that those instructed for Mrs H had withdrawn from acting, and the hearing of her appeal was adjourned to a later date. The hearing of Mr Hs appeal proceeded but it was not completed on 6 March so it was continued for hearing for four more days in May 2009. Mrs Hs appeal was set down for that date also, but it had to be adjourned again having regard to the imminent birth of E, who was born on 5 May 2009. Investigations then had to be made into Mrs Hs mental health. Following the completion of those investigations an application was made on Mrs Hs behalf for her to be discharged under section 91 of the 2003 Act. The Lord Advocate submitted that the court had no jurisdiction to consider that matter so the case had to be continued again for a hearing on jurisdiction. Having held that it did have jurisdiction, the court heard evidence about Mrs Hs mental condition and concluded that her contention that her mental condition was such that it would be unjust or oppressive for her to be extradited had not been established. After various other procedural hearings a further application was made on Mrs Hs behalf in June 2010 in which it was maintained that there had been a material deterioration in her health since the previous application had been considered. She had again become pregnant and had suffered a miscarriage in February 2010. This had been found to be a molar pregnancy which had required monitoring. A further hearing was fixed for 11 August 2010. The court was then informed that, despite advice that she should avoid pregnancy because of risks to her health, Mrs H had become pregnant again. The hearing fixed for that date was discharged. At a procedural hearing on 24 September 2010 the court was informed that Mr H had instructed new solicitors and counsel (his fourth set of representatives). On 7 December 2010 the court refused Mrs Hs second application under section 91. Mrs H then again changed her representatives for the fifth time. A continued hearing of the appeals proceeded on 10 January 2011. It had to be adjourned again on 14 January 2011 when Mr H told the court staff that Mrs H, who was by now seven months pregnant, had been taken to hospital. A further hearing was fixed for 19 April 2011, but it had to be adjourned to 21 April as the court was informed that Mr H had attempted suicide that morning by taking an overdose of paracetamol and had been taken to hospital. Mr H failed to attend court on that date. A letter was produced from a general practitioner saying that, for unspecified reasons, he was unfit to attend court. For this and other reasons the hearing was adjourned to 26 April 2011, when the court was provided with a discharge letter prepared by a consultant psychiatrist who had examined Mr H on 20 April 2011 in Stirling Royal Infirmary. He said that when he saw Mr H that day he had been quite explicit about the fact that he wished to attract a psychiatric diagnosis, as was his wife, to avoid extradition to America. Mr H denied having said any such thing, but the court heard evidence from the consultant psychiatrist whom it found to be an entirely convincing witness. In para 26 of its opinion of 29 July 2011 (see para 44, below) the court said that the evidence relating to this episode supported its conclusion that Mr H was a devious and manipulative individual whose behaviour can be unpredictable and irresponsible. The hearing of the appeals was concluded on 28 April 2011. Mr H, for whose arrest a warrant had been issued on 21 April 2011, was remanded in custody. The opinion of the court was delivered by Lord Reed on 29 July 2011: [2011] HCJAC 77. In para 99 he said that in the case of Mr H it appeared to it to be plain that his extradition could be justified under article 8(2). He was charged with very serious offences, and his case did not come close to meriting his discharge under section 87 of the 2003 Act. In para 101 he said that it had to be recognised that the family life of Mrs H and the children would inevitably be disrupted by her extradition. But he said that, applying the guidance in Norris v Government of the United States of America (No 2) [2010] 2 AC 487 and having regard to the seriousness of the offences charged, the court had come to the conclusion that Mrs H also was not entitled to be discharged under section 87. On 11 August 2011 the court gave leave to the appellants to appeal to the Supreme Court in respect of the devolution issues relating to article 8 that had arisen during its hearing of the appeal. The reasoning of the High Court of Justiciary As has just been noted, Lord Reed said in para 101 of his opinion that the court had applied the guidance in Norris in coming to its conclusion in the case of Mrs H: see paras 72 78. In para 79 he considered the decision in ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4, [2011] 2 AC 166. Having done so, Lord Reed set out his understanding of the approach to be adopted in paras 80 81. In para 81 he said that it was important to note that ZH was concerned not with extradition but with deportation, and that the approach adopted to article 8 rights in extradition cases must be radically different from that adopted in deportation or expulsion cases. He referred to the following passage in the admissibility decision in King v United Kingdom (Application No 9742/07) (unreported) given 26 January 2010, para 29 where the Strasbourg court said: Mindful of the importance of extradition arrangements between states in the fight against crime (and in particular crime with an international or cross border dimension), the court considers that it will only be in exceptional circumstances than an applicants private or family life in a contracting state will outweigh the legitimate aim pursued by his or her extradition. Summing up on this point at the end of para 80 of his opinion, Lord Reed said: Since the factors which are generally of overriding importance in extradition cases are not present in deportation or expulsion cases, it follows that decisions on article 8 rights in cases of the latter kind are of no direct relevance in the context of extradition. In para 81 he referred to passages in paras 15 and 51 of the judgment in Norris, in which Lord Phillips indicated that the distinction between extradition and deportation was fundamental to its reasoning. He also said that it was necessary to bear in mind that Norris was not referred to in the judgments in ZH nor was it cited in argument. He summarised the courts approach to ZH in these words: Against that background, we are not persuaded that anything said in ZH was intended to modify or depart from what had been said in Norris, or indeed was said with extradition in mind. At the same time, in a case where it is necessary to determine whether the extradition of a person with dependent children is justified under article 8(2) of the Convention, the best interests of the children are naturally a primary consideration. As appears from King v United Kingdom, however, that consideration will be outweighed, in all but exceptional circumstances, by the public interest in the application of extradition arrangements. We in this court have the great advantage of being able to develop our own thinking on the issues raised by these two cases, and I would not wish to be too critical of the way the High Court of Justiciary sought to reconcile them. Their task was not made easier by the fact that the focus in Norris was on the state of health of Mr and Mrs Norris and not on Mr Norriss relationship with his two sons, who were grown up, or with his three grandchildren. It was acknowledged that the impact of extradition on family life did not fall to be considered simply from the viewpoint of the extraditee, that the family unit had to be considered as a whole and that each family member had to be regarded as a victim: para 64, per Lord Phillips. But, on the facts of that case, it was only Mr and Mrs Norris who were seen as the victims. The conclusions that can be drawn from Norris are set out by Lady Hale in HH and PH v Deputy Prosecutor of the Italian Republic, Genoa, para 8. ZH on the other hand was entirely different case on its own facts and, as it was concerned with immigration control and not extradition, nothing that was said in Norris was relevant to how it should be decided. So Norris was not referred to in the judgments, nor was it cited in argument. That does not mean, however, that nothing that was said in ZH is relevant to how issues about the rights of children should be dealt with in the context of extradition. On the contrary, the reasoning in that case can have a very real and important part to play in the extradition context too where those affected by a request for extradition include the children of the persons sought to be extradited. The error in the courts reasoning was to see these two cases as dealing with entirely different things. While that was true when the facts in ZHs case were being considered, it would not have been true if ZH had come first and the family unit to which it was necessary to have regard in Norris had included children, as it does in the present case. As I said in Norris, para 89, I do not think that there are any grounds for treating extradition cases as falling into a special category which diminishes the need to examine carefully the way the process will interfere with the individuals right to respect for his family life. The need to do this here is just as great as it was in ZH, although the conclusion that is likely to be reached may not be the same. I cannot agree therefore with the proposition that the approach adopted to article 8 rights in extradition cases must be radically different from that adopted in deportation or expulsion cases. The public interest in giving effect to a request for extradition is a constant factor in cases of that kind. Great weight will always have to be given to it, and the more serious the offence the greater will be that weight. The public interest in immigration control lacks the treaty base which is at the heart of the extradition process. But, the question, so far as the article 8 right is concerned, is the same in both cases. How is one to balance two powerful and competing interests? In Norris, para 91, I said that the question was whether the article 8 right carries enough weight to overcome the public interest in giving effect to the request or in maintaining a proper and efficient system of extradition. I agree with Lord Wilson that the significance of the way one puts the question may be more theoretical than practical: R (HH and PH) v Deputy Prosecutor of the Italian Republic, Genoa [2012] UKSC 25, para 152. But I think that it would be more accurate where the family life of children is involved, as the best interests of children are a primary consideration, to put the question the other way round as I did in ZH, para 44: is the article 8 right outweighed by the strength of any other considerations? The article 8 rights in this case As Ross D Parke and K Alison Clarke Stewart declared in the opening sentence of their paper Effects of Parental Incarceration on Young Children (December 2001), for imprisoned mothers one of the greatest punishments that incarceration carries with it is separation from their children. The same point can be put the other way round. One of its greatest effects is to punish the children too. For those members of the family who were living together before the incarceration, their patterns of contact with each other will be severely disrupted. This may happen at a crucial stage of the childrens development, when the damage done to their well being and development may be irreparable. These effects are likely to be even greater where the parent is to be extradited for trial and likely incarceration in another country. As Lady Hale said in ZH, paras 25 26, article 9 of the UNCRC draws a distinction between separation of children from their parents for reasons connected with their upbringing and separation of parents from their children for deportation, detention or imprisonment. But even in decisions of the latter kind, the best interests of the child must be a primary consideration. The intellectual exercise which this principle requires is not to be seen as dictated to in a mechanistic way without regard to the context. In ZH, para 44, I said that the starting point was to assess whether the childrens best interests were outweighed by the strength of any other considerations. But I agree with Lord Judge that this does not require the decision taker always to examine the interests of the children at the very beginning of the exercise: R (HH and PH) v Deputy Prosecutor of the Italian Republic, Genoa [2012] UKSC 25, para 124. It does not, as Mr Gill QC pointed out in his helpful note for the Coram Childrens Legal Centre, impose a straitjacket. What it does do, by encouraging a temporal approach, of the kind described by Lady Hale in her judgment in that case at para 33, is ensure that the best interests principle will not be seen as having a reduced importance when there are other important compelling considerations which, on the particular facts of the case, must be respected. The place where the best interests and well being of any children takes in the list of factors which the Strasbourg court set out in AA v United Kingdom (Application No 8000/08) (unreported) given 20 September 2011, para 56, supports this approach. As Lady Hale said in ZH, para 26, the strength of those other considerations may outweigh the best interests of the children, provided that those other considerations are not treated as inherently more significant than they are. So it is important to have a clear idea of their circumstances and of what is in their best interests before one asks oneself whether those interests are outweighed by the force of any other consideration. But to begin with the whole exercise must be placed into its proper context. The court was shown an affidavit by William Bryan III, an assistant United States Attorney for the District of Arizona, in which he stated that it is impossible to state with precision how long it would take to bring the appellants to trial following their extradition. While they are awaiting trial the appellants may be released on conditions, but a more realistic assessment is that they will be detained in custody until and throughout the trial. Mail and telephone calls would be permitted during this period, provided those imprisoned have sufficient funds for this. But direct face to face contact with visitors would not be possible. The trial itself can be expected to last about two to four weeks. In view of the dangers involved in the manufacture of methamphetamine and the harm that its use can give rise to, the appellants conviction would be likely to attract very long sentences. The effect of those sentences may be mitigated by the fact that arrangements exist under which the appellants might thereafter be permitted to serve part of their sentences in Scotland under the European Convention on the Transfer of Sentenced Prisoners of 21 March 1983: see para 39, above. But there is no certainty that permission would be given in this case, and is not possible to predict when any such arrangements would be likely to be made even if they are agreed to. The prospect has to be faced that the appellants are likely to be kept apart from their children, and their children apart from them and perhaps from each other, for a very long time. Where do the best interests of the children stand in relation to Mr H? He has been in custody since 26 April 2011. Contact has been maintained by means of prison visits, but the two elder children have made it clear that they no longer wish these visits to continue. Mrs H regards her relationship with Mr H as at an end, so the prospect of his ever living together with her and the children as a family seems remote. Although no regard was paid to it by either of them, one cannot ignore the fact that on 6 September 2004 Judge Bryant ordered that, in the light of his abuse of his daughter J, Mr H was to have no contact whatsoever with Mrs Hs three elder children who are all girls. D and E are also girls, and all six children were placed on the child protection register in July 2009 as a result of another allegation of sexual abuse by Mr H, this time of a neighbours daughter. They were removed from it on 13 December 2011, but they would all be placed on it again if Mr H were to resume contact with the family on his release from custody. The childrens family relationship with Mr H has effectively been brought to an end by these events, at least for the time being. The prospect of their ever resuming family life together is remote. The argument that it would be contrary to their best interests for him to be extradited is, at best, very weak. As against that, the offences of which he is accused are very serious and the treaty obligation that requires effect to be given to the request is compelling. Lord Reed said in para 99 that Mr Hs case did not come close to meriting his discharge under section 87(2). I agree with that assessment, and the devolution issue that Mr H has raised falls to be answered in the same way. I would refuse his appeal. Mrs Hs case is, as Lord Reed said in para 100 of his opinion, more difficult. But, as he explained in para 101, the court based its decision in her case exclusively upon the law as laid down in Norris. The guidance that was to be derived from ZH was ignored. For the reasons already given (see paras 47 49, above), I consider that this was a misdirection. As it was on this basis that the court reached a clear conclusion that, having regard to the seriousness of the offences charged, she was not entitled to be discharged under section 87 of the 2003 Act, it is necessary to look at her case more closely to see whether the equivalent conclusion with regard to the Scottish Ministers powers under the Scotland Act can be regarded as justified. There is no doubt where the childrens best interests lie. Their best interests must be to continue to live with their mother. They will be deprived of her care and guidance if she is taken away from them, and it seems likely that the long term effects of a prolonged separation of the magnitude that is in prospect in this case will be profound. She has, of course, been separated from them before. She has already spent two periods in remand in connection with this case, from 31 January 2007 to 31 August 2007 and from 29 July 2011 to 12 August 2011. On both occasions her mother, with the help of other family members and friends, was able to keep the family together. Whether this will be possible if Mrs H were to be extradited is quite uncertain. The sheriff does not seem to have been unduly troubled on this point: see paras 37 38, above. But there must be a risk that the children will be taken into care and, if that happens, that they will no longer be able to live together. Resuming family life together after a prolonged separation is likely to be very difficult. The gravity of the situation is compounded by the fact that the children are, for all practical purposes, now fatherless. On the other hand there is no escape from the fact that these are criminal proceedings and that the crimes alleged, which were persisted in over a substantial period, are very serious. The interests of justice must be given effect to. The treaty obligation requires that Mrs H be sent for trial in the United States, and it points to the conclusion that it is in that forum that her participation in the alleged crimes must be determined. It is well established that extradition may amount to a justified interference under article 8(2) if it is in accordance with the law, is pursuing the aims of the prevention of disorder and crime and is necessary in a democratic society: Launder v United Kingdom (1997) 25 EHRR CD67, para 3; Aronica v Germany (Application No 72032/01) (unreported) given 18 April 2002; King v United Kingdom, para 29. The treaty obligation points to the conclusion too that if there are grounds for leniency, or for mitigation of sentence on the grounds of her family circumstances, it is for the authorities in the United States, not for this court, to make that assessment. The Strasbourg court has repeatedly said that it will only be in exceptional circumstances that an applicants private or family life in a contracting state will outweigh the legitimate aim pursued by his or her extradition: King v United Kingdom, para 29; Babar Ahmad v United Kingdom (2010) 51 EHRR SE97, para 172. In Nunez v Norway (Application No 55597/09) (unreported) given 28 June 2011, the article 8 right was sufficient to tip the balance in a immigration case. But the fact that the court has not yet decided any extradition case in favour of the applicant, even where those to be extradited are the parents of young children, indicates how high the bar against refusing a request for extradition has been set. The best interests of the children do however suggest that the High Court of Justiciary was wrong to hold, as Lord Reed indicated in para 101 of his opinion, that it was unnecessary to consider the possibility of a prosecution in this country. It will not be necessary to do this in every case. But I would make an exception here. The extradition request extends to both parents, and there are six children, four of whom are under the age of ten. The best interests of the children suggest that we should be satisfied that the interests of justice cannot be served equally well by prosecuting the parents in this country. It is to that issue that I now turn. Prosecution in this country It was submitted for Mr H that, although there is no reported case where this argument has been successful, the logical conclusion is that, where a domestic prosecution is an option, it ought to be the preferred one and that where the best interests of children were involved the obligation to adopt the least onerous means of meeting the legitimate aim should be adhered to. The same points were made on behalf of Mrs H too. Reference was made to R (Bermingham) v Director of the Serious Fraud Office [2006] EWHC 200 (Admin), [2007] QB 727, para 121 where Laws LJ said that there might be an instance where such a possibility might tip the balance of judgment in favour of a conclusion that a persons extradition would amount to a disproportionate interference with his article 8 rights and that this had to be accepted if section 87 of the 2003 Act was to constitute effective protection of the Convention guarantees. In King v United Kingdom, para 29, the Strasbourg court observed that considerations as to whether prosecution exists as an alternative may have a bearing on whether the extradition would be in violation of one of the rights guaranteed by the Convention. But in Babar Ahmad v United Kingdom, para 175 the Court, recalling that there was no right in the Convention not to be extradited and that, by implication, there was no right to be prosecuted in a particular jurisdiction, said that it was not for the Court to adjudicate on the natural forum for prosecution. Its only task was to determine whether that extradition would be compatible with the applicants Convention rights. In Bermingham, para 126 Laws LJ said that he wished to underline the observations of Lord Hardie, sitting in the Outer House, in Wright v The Scottish Ministers 2004 SLT 823, para 28 where he said: Extradition does not and should not depend upon the ability or otherwise of the requested state to undertake its own investigations with a view to prosecuting the case within its own jurisdiction. Such an approach would involve unnecessary duplication of effort, would result in additional delays in the prosecution of suspected criminals and would have an adverse effect upon international relations and international co operation in the prosecution of serious crime. When Wright reached the Inner House the extreme submission that extradition would be proportionate only in circumstances where it was demonstrated that a prosecution in the jurisdiction where the subject lay would be impossible was, not surprisingly, rejected: [2005] CSIH 40, 2005 1 SC 453. The Extra Division also said in para 67 that it found itself in complete agreement with the observations of the Lord Ordinary. In the Bermingham case the Divisional Court had little difficulty in rejecting the argument that the defendants should be tried in this country as the case against them had very substantial connections with the United States and was perfectly properly triable there: para 125. In King too the Strasbourg court was satisfied that the United Kingdom authorities had given convincing reasons as to why they regarded it as appropriate for any prosecution to take place in Australia, not the least that the applicants co accused had all been tried there. In Norris v Government of the United States of America (No 2) [2010] 2 AC 487, para 67, having noted in para 66 that there had recently been a string of cases in which the extraditee had argued that he ought to be prosecuted in this jurisdiction of which Bermingham was one, Lord Phillips said: Extradition proceedings should not become the occasion for a debate about the most convenient forum for criminal proceedings. Rarely, if ever, on an issue of proportionality, could the possibility of bringing criminal proceedings in this jurisdiction be capable of tipping the scales against extradition in accordance with this countrys treaty obligations. Unless the judge reaches the conclusion that the scales are finely balanced he should not enter into an inquiry as to the possibility of prosecution in this country. In a postscript to his judgment which he wrote in the light of the admissibility decision in King he said that he remained of the view that rarely, if ever, was the possibility of prosecution as an alternative to extradition likely in practice to tilt the scales against extradition: para 86. These remarks had the unanimous support of all the other members of the court. On the other hand cases where both parents of young children are at risk of being extradited may be regarded as being of an exceptional character, so as to raise the need to consider the possibility of a prosecution in this country a bit higher than the bar which the observations in Norris have set for it. The issue remains one of proportionality. The more compelling the interests of the children the more important it will be for the alternatives to extradition, if there are any, to be carefully examined and brought into the balance to see if they carry any weight. This is not to diminish the importance to be given to this countrys treaty obligations. Rather it is to recognise that in cases involving the separation of parents from young children there is another powerful factor which is likely to make the scales more finely balanced than they would be if the children were not there. In its Review of the United Kingdoms Extradition Arrangements, 30 September 2011, para 6.17 the Review Panel chaired by Sir Scott Baker said, with regard to the forum bars in sections 19B and 83A inserted into Parts 1 and 2 of the 2003 Act by paragraphs 4(2) and 5(2) of Schedule 13 to the Police and Justice Act 2006 which has not yet been brought into force, that in its view their effect is that in any case where the forum was raised there would be no alternative to the judge conducting a detailed analysis of all relevant circumstances. There is no statutory requirement to go that far in this case, and Mr Wolffe QC for the Lord Advocate said that the case had not been investigated with a view to prosecution in Scotland. But we do not lack information about the view that was taken about the possibility of prosecution in England. Advice on the jurisdictional issues that had arisen in connection with the investigation of the appellants activities wasgiven by the Crown Prosecution Service in 2006 following their move to Scotland earlier that year. Section 20 of the Misuse of Drugs Act 1971 provides that a person commits an offence if in the United Kingdom he assists in or induces the commission in any place outside the United Kingdom of an offence punishable under the provisions of a corresponding law in force in that place. In a note dated 5 May 2006 the CPS advised that, where offending had taken place both in England and Scotland, it would be possible to charge the suspects either with a number offences under section 20 with respect the supply of red phosphorus to the United States or with an over arching conspiracy covering the whole of the period of their operations. In a further note dated 4 April 2007 consideration was given to the possibility of prosecuting for these offences in England leaving it to the Scottish authorities to prosecute offences occurring within their jurisdiction themselves, of prosecuting all the offences in the English courts or of allowing the United States authorities to proceed with their application for extradition. It was pointed out that a large number of witnesses would have to attend from the United States if the complete scale of the appellants involvement in drug making activities there was to be placed before the court, whereas the number of witnesses who would need to travel for a trial in that country would be small. A court in the United States would be best placed to deal with the legal issues, and it was appropriate that the appellants should be dealt with in the jurisdiction where the effect of their crimes was felt. The advice was that the public interest was best served by the police assisting, in so far as it was proper and possible, in the extradition of the appellants to stand trial in the United States. There is no indication that the best interests of the children were taken into account in that assessment, although regard was had to the considerations mentioned in R (Bermingham) v Director of the Serious Fraud Office. I would however accept Mr Wolffes submission that the scales are not finely balanced in this case and that taking account of the best interests of the children does not change the analysis. He accepted, of course, that regard should be had to article 3.1 of the UNCRC, which provides that the best interests of the child shall be a primary consideration. But those interests must be assessed in the context of this countrys treaty obligations in the suppression of trade in narcotic drugs across international borders (UN Convention against Illicit Trading in Narcotic Drugs and Psychotropic Substances 1988). There are good reasons too for looking to the place of the mischief as the place where the prosecution should be brought: Office of the Kings Prosecutor, Brussels v Cando Armas [2005] UKHL 67, [2006] 2 AC 1, para 36 40; Clements v HM Advocate 1991 JC 62, p 71. The United States has a substantial interest in trying the appellants in its own courts and there are strong practical reasons for concluding that that country, where most of the witnesses reside and the degree of the criminality involved is best assessed, is the proper place for them to be tried. As Mr Wolffe points out, the very fact that the basis for a prosecution in this country would appear to be section 20 of the Misuse of Drugs Act 1971 emphasises that the crimes which the appellants are alleged to have committed are really US crimes. I would hold that, taking all these considerations into account, it would not be appropriate for the appellants to be tried here. Nor would it be acceptable for Mrs H not be prosecuted at all for the crimes with which she has been charged. It would not, of course, be sensible to prosecute Mrs H here while sending Mr H to the United States for prosecution in that country. So their cases must stand or fall together on this point. The proper forum in which the prosecution should be brought is in the United States of America. Conclusion As I have already said, I would refuse Mr Hs appeal. I am satisfied that the Scottish Ministers order that he must be extradited was not incompatible with his Convention rights. For obvious reasons the balance is not so easy to strike in the case of Mrs H. But I have come to the conclusion that the best interests of the children, even when weighed together with her own article 8 right to respect for her family life with them, are not strong enough to overcome the overwhelming public interest in giving effect to the request. I would hold that it was not incompatible with her Convention rights for the Scottish Ministers to order her extradition, and I would refuse her appeal also. I would add one further comment. There have been a number of recent cases, to which much publicity has been given, which have tended to shake public confidence in the current arrangements with the United States. I would not regard this case as falling into that category. Although the conduct that has been alleged against the appellants took place in this country, it is plain that it was in the United States that it had its effect. It cannot be said that the appellants have not had proper notice of the crimes with which they have been charged. Nor, in view of the steps that have been taken here to gather evidence with a view to a possible prosecution in England, does it appear that the allegations that have been made against them are entirely without substance. What is happening in this case is a tragedy, especially for the children. But this is not a ground on which the extradition arrangements which must now be put into effect can properly be criticised. LORD BROWN I agree, for the reasons which Lord Hope has given, that this Court is competent to decide these appeals. I also agree, for the reasons given in his judgment and the judgments of Lord Judge and Lord Wilson in F K v Polish Judicial Authority and R (HH and PH) v Deputy Prosecutor of the Italian Republic, Genoa [2012] UKSC 25 delivered today, that these appeals should be dismissed. LORD MANCE Although it could have been desirable to have the point argued adversarially, I agree with Lord Hope for the reasons he gives that this appeal is competent. The considerations involved in extradition and deportation or expulsion cases differ, but the need to treat the article 8 rights of any children who will be thereby affected as a primary consideration, as well as to evaluate and balance all relevant considerations against each other, exists in each context. In the present case, and for the reasons given by Lord Hope in his paras 50 to 72, I also conclude that the article 8 rights of the children are on the facts of this case outweighed by the pressing public interest in giving effect to the extradition requests received from the United States of America in respect of both Mr and Mrs H. LORD JUDGE I have read the judgment of Lord Hope. I agree for the reasons that he has given that this Court is competent to decide these appeals, and for the reasons in his judgment and my own judgment in F K v Polish Judicial Authority and R (HH and PH) v Deputy Prosecutor of the Italian Republic, Genoa delivered today that these appeals should be dismissed. LORD WILSON I agree, for the reasons which Lord Hope has given, that this court is competent to decide these appeals. I also agree, for the reasons given in his judgment and in my own judgment in F K v Polish Judicial Authority and R (HH and PH) v Deputy Prosecutor of the Italian Republic, Genoa delivered today, that these appeals should be dismissed. |
Ms Reyes, a Philippine national, was employed by Mr and Mrs Al Malki as a domestic servant in their residence in London between 19 January and 14 March 2011. Her duties were to clean, to help in the kitchen at mealtimes and to look after the children. At the time, Mr Al Malki was a member of the diplomatic staff of the embassy of Saudi Arabia in London. Ms Reyes alleges that she entered the United Kingdom on a Tier 5 visa which she obtained at the British embassy in Manila by producing documents supplied by Mr Al Malki, including a contract showing that she would be paid 500 per month. She alleges that during her employment the Al Malkis maltreated her by requiring her to work excessive hours, failing to give her proper accommodation, confiscating her passport and preventing her from leaving the house or communicating with others; and that they paid her nothing until after her employment terminated upon her escape on 14 March. The proceedings have been conducted to date on the assumption, which has been neither proved nor challenged, that these allegations are true. I shall also make that assumption. In addition, I shall assume that these allegations amount to trafficking in persons within the meaning of the International Protocol to Prevent, Supress and Punish Trafficking in Persons, Especially Women and Children (Palermo, 2000), although that is very much in dispute. In June 2011, Ms Reyes began the present proceedings in the Employment Tribunal alleging direct and indirect race discrimination, unlawful deduction from wages and failure to pay her the national minimum wage. The Court of Appeal has held that the Employment Tribunal has no jurisdiction because Mr Al Malki was entitled to diplomatic immunity under article 31 of the Vienna Convention on Diplomatic Relations, and Mrs Al Malki was entitled to a derivative immunity under article 37(1) as a member of his family. The main issues on the appeal concern the effect of article 31(1)(c) of the Convention, which contains an exception to the immunity of a diplomat from civil jurisdiction where the proceedings relate to any professional or commercial activity exercised by the diplomatic agent in the receiving state outside his official functions. This raises, among other issues, the question how, if at all, that exception applies to a case of human trafficking. Since there is some evidence that human trafficking under cover of diplomatic status is a recurrent problem, this is a question of some general importance. Its broader significance explains the intervention, by leave of this court, of the Secretary of State for Foreign and Commonwealth Affairs and of Kalayaan, a charity that supports migrant domestic workers, some of whom have been trafficked. For the same reason, I shall deal fully with the issues that were argued in the Court of Appeal and before us, although not all of them arise on the conclusions that I have reached. In my opinion, the employment of a domestic servant to provide purely personal services is not a professional or commercial activity exercised by the diplomatic agent. It is therefore not within the only relevant exception to the immunities. The fact that the employment of Ms Reyes may have come about as a result of human trafficking makes no difference to this. But the appeal should be allowed on a different and narrower ground. On 29 August 2014, Mr Al Malkis posting in London came to an end and he left the United Kingdom. Article 31 confers immunity only while he is in post. A diplomatic agent who is no longer in post and who has left the country is entitled to immunity only on the narrower basis authorised by article 39(2). That immunity applies only so far as the relevant acts were performed while he was in post in the exercise of his diplomatic functions. The employment and maltreatment of Ms Reyes were not acts performed by Mr Al Malki in the exercise of his diplomatic functions. The legal framework The legal immunity of diplomatic agents is one of the oldest principles of customary international law. Its history can be traced back to the practices of the ancient world and to Roman writers of the second century. The rule has been accepted by the nations, wrote Grotius in the 17th century, that the common custom which makes a person who lives in foreign territory subject to that country, admits of an exception in the case of ambassadors: De Jure Belli ac Pacis, ii.18. But, although recognition of diplomatic immunity is all but universal in principle, until relatively recently both states and writers differed on the categories of people to which the immunity applied and its precise ambit in each category. In particular, they differed on the existence and extent of any exceptions. In Britain, the matter was dealt with by the Diplomatic Privileges Act 1708, which conferred absolute immunity on ambassadors and their staff from civil jurisdiction, in accordance with what British authorities regarded as the rule of international law. In Triquet v Bath (1764) 3 Burrow 1478, 1480, Lord Mansfield described the Act as declaratory of the law of nations, and it remained in force until 1964. The United States adopted the British Act in 1790, and France adopted a corresponding rule by legislation in 1794. In other countries, however, exceptions of greater or lesser breadth were recognised, among others for private transactions relating to title to real property, certain employment disputes and liabilities arising out of business activities in the receiving state. There were also differences about the application of the immunity to diplomatic agents of a sending state who were nationals of the receiving state. These differences gave rise to a number of attempts during the 19th and 20th centuries to codify the law of diplomatic relations with a view to achieving a common set of rules and enabling them to operate on a reciprocal basis. The Havana Convention among the states of the Pan American Union (1928) and the influential draft convention drawn up by the Harvard Law School (1932) were notable examples. But there was no universally accepted code before 1961. The Vienna Convention on Diplomatic Relations, which was adopted in that year, has been described by Professor Denza, the leading academic authority on the law of diplomatic relations, as a cornerstone of the modern international order: Diplomatic Law, 4th ed (2016), 1. It has been perhaps the most notable single achievement of the International Law Commission of the United Nations. The text was the result of an intensive process of research, consultation and deliberation extending from 1954 to 1961. Draft articles were submitted to the governments of every member state of the United Nations, and were subject to detailed review and comment. Eighty one states participated in the final conference at Vienna in March and April 1961 which preceded the adoption of the final text. Since its adoption, it has been ratified by 191 states, being every state in the world bar four (Palau, the Solomon Islands, South Sudan and Vanuatu). A number of states ratified subject to declarations or reservations, but none of these related to the articles which are primarily relevant on this appeal. As it stands, the Convention provides a complete framework for the establishment, maintenance and termination of diplomatic relations. It not only codifies pre existing principles of customary international law relating to diplomatic immunity, but resolves points on which differences among states had previously meant that there was no sufficient consensus to found any rule of customary international law. As the International Court of Justice has pointed out (Democratic Republic of the Congo v Belgium (Arrest Warrant of 11 April 2000) [2002] ICJ Rep 3, at paras 59 61), diplomatic immunity is not an immunity from liability. It is a procedural immunity from the jurisdiction of the courts of the receiving state. The receiving state cannot at one and the same time receive a diplomatic agent of a foreign state and subject him to the authority of its own courts in the same way as other persons within its territorial jurisdiction. But the diplomatic agent remains amenable to the jurisdiction of his own countrys courts, and in important respects to the jurisdiction of the courts of the receiving state after his posting has ended. I do not under estimate the practical problems of litigating in a foreign jurisdiction, especially for someone in Ms Reyes position. Nor do I doubt that diplomatic immunity can be abused and may have been abused in this case. A judge can properly regret that it has the effect of putting severe practical obstacles in the way of a claimants pursuit of justice, for what may be truly wicked conduct. But he cannot allow his regret to whittle away an immunity sanctioned by a fundamental principle of national and international law. As the fourth recital of the Vienna Convention points out, the purpose of such privileges and immunities is not to benefit individuals but to ensure the efficient performance of diplomatic missions as representing states. Diplomatic immunity is dealt with at articles 22 and 29 to 40 of the Convention. These provisions confer different degrees of immunity on persons connected with a diplomatic mission, according to their status and function. For present purposes, the provisions primarily relevant are as follows: Article 22 1. The premises of the mission shall be inviolable. The agents of the receiving state may not enter them, except with the consent of the head of the mission. 2. The receiving state is under a special duty to take all appropriate steps to protect the premises of the mission against any intrusion or damage and to prevent any disturbance of the peace of the mission or impairment of its dignity. The person of a diplomatic agent shall be inviolable. He shall not be liable to any form of arrest or detention. The receiving state shall treat him with due respect and shall take all appropriate steps to prevent any attack on his person, freedom or dignity. 1. The private residence of a diplomatic agent shall enjoy the same inviolability and protection as the premises of the mission. Article 29 Article 30 Article 31 1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving state. He shall also enjoy immunity from its civil and administrative jurisdiction, except in the case of: (a) a real action relating to private immovable property situated in the territory of the receiving State, unless he holds it on behalf of the sending State for the purposes of the mission; (b) an action relating to succession in which the diplomatic agent is involved as executor, administrator, heir or legatee as a private person and not on behalf of the sending state; (c) an action relating to any professional or commercial activity exercised by the diplomatic agent in the receiving State outside his official functions. 2. A diplomatic agent is not obliged to give evidence as a witness. 3. No measures of execution may be taken in respect of a diplomatic agent except in the cases coming under sub paragraphs (a), (b) and (c) of paragraph 1 of this article, and provided that the measures concerned can be taken without infringing the inviolability of his person or of his residence. 4. The immunity of a diplomatic agent from the jurisdiction of the receiving state does not exempt him from the jurisdiction of the sending state. Article 32 1. The immunity from jurisdiction of diplomatic agents may be waived by the sending state. Article 37 1. The members of the family of a diplomatic agent forming part of his household shall, if they are not nationals of the receiving state, enjoy the privileges and immunities specified in articles 29 to 36. 1. Except insofar as additional privileges and immunities may be granted by the receiving state, a diplomatic agent who is a national of or permanently resident in that state shall enjoy only immunity from jurisdiction, and inviolability, in respect of official acts performed in the exercise of his functions. 2. When the functions of a person enjoying privileges and immunities have come to an end, such privileges and immunities shall normally cease at the moment when he leaves the country, or on expiry of a reasonable period in which to do so, but shall subsist until that time, even in case of armed conflict. However, with respect to acts performed by such a person in the exercise of his functions as a member of the mission, immunity shall continue to subsist. 1. Without prejudice to their privileges and immunities, it is the duty of all persons enjoying such privileges and immunities to respect the laws and regulations of the receiving state. Article 38 Article 39 Article 41 Article 42 A diplomatic agent shall not in the receiving state practise for personal profit any professional or commercial activity. Section 2(1) of the Diplomatic Privileges Act 1964 provides that the articles of the Vienna Convention annexed in Schedule 1 shall have the force of law in the United Kingdom. Schedule 1 contains articles 1, 22 to 40 and 45 of the Convention. They include all the articles dealing with diplomatic immunities. Principles of interpretation It is not in dispute that so far as an English statute gives effect to an international treaty, it falls to be interpreted by an English court in accordance with the principles of interpretation applicable to treaties as a matter of international law. That is especially the case where the statute gives effect not just to the substance of the treaty but to the text: Fothergill v Monarch Airlines Ltd [1981] AC 251, esp at pp 272E, 276 278 (Lord Wilberforce), 281 282 (Lord Diplock), 290B D (Lord Scarman). The primary rule of interpretation is laid down in article 31(1) of the Vienna Convention on the Law of Treaties (1969): 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. The principle of construction according to the ordinary meaning of terms is mandatory (shall), but that is not to say that a treaty is to be interpreted in a spirit of pedantic literalism. The language must, as the rule itself insists, be read in its context and in the light of its object and purpose. However, the function of context and purpose in the process of interpretation is to enable the instrument to be read as the parties would have read it. It is not an alternative to the text as a source for determining the parties intentions. reasons for adhering to these principles: In the case of the Convention on Diplomatic Relations, there are particular (1) Like other multilateral treaties, the text was the result of an intensely deliberative process in which the language of successive drafts was minutely reviewed and debated, and if necessary amended. The text is the only thing that all of the many states party to the Convention can be said to have agreed. The scope for inexactness of language is limited. (2) The Convention must, in order to work, be capable of applying uniformly to all states. The more loosely a multilateral treaty is interpreted, the greater the scope for damaging divergences between different states in its application. A domestic court should not therefore depart from the natural meaning of the Convention unless the departure plainly reflects the intentions of the other participating states, so that it can be assumed to be equally acceptable to them. As Lord Slynn observed in R v Secretary of State for the Home Department, Ex p Adan [2001] 2 AC 477, 509, an international treaty has only one meaning. The courts cannot simply adopt a list of permissible or legitimate or possible or reasonable meanings and accept that any one of those when applied would be in compliance with the Convention. (3) Although the purpose of stating uniform rules governing diplomatic relations was to ensure the efficient performance of the functions of diplomatic missions as representing states, this is relevant only to explain why the rules laid down in the Convention are as they are. The ambit of each immunity is defined by reference to criteria stated in the articles, which apply generally and to all state parties. The recital does not justify looking at each application of the rules to see whether on the facts of the particular case the recognition of the defendants immunity would or would not impede the efficient performance of the diplomatic functions of the mission. Nor can the requirements of functional efficiency be considered simply in the light of conditions in the United Kingdom. The courts of the United Kingdom are independent and their procedures fair. It is difficult to envisage that exposure to civil claims would materially interfere with the efficient performance of diplomatic missions. But as the Secretary of State for Foreign and Commonwealth Affairs pointed out, the same cannot be assumed of every legal system in every state. The threat to the efficient performance of diplomatic functions arises at least as much from the risk of trumped up or baseless allegations and unsatisfactory tribunals as from justified ones subject to objective forensic appraisal. It may fairly be said that from the United Kingdoms point of view, a significant purpose of conferring diplomatic immunity of foreign diplomatic personnel in Britain is to ensure that British diplomatic personnel enjoy corresponding immunities elsewhere. (4) Every state party to the Convention is both a sending and receiving state. The efficacy of the Convention depends, even more than most treaties do, on its reciprocal operation. Article 47.2 of the Convention authorises any receiving state to restrict the application of a provision to the diplomatic agents of a sending state if that state gives a restrictive application of that provision as applied to the receiving states own mission. In some jurisdictions, such as the United States, the recognition of diplomatic immunities is dependent as a matter of national law on their reciprocity. As Professor Denza observes, op cit, 2 For the most part, failure to accord privileges or immunities to diplomatic missions or their members is immediately apparent and is likely to be met by appropriate countermeasures In the graphic words of her introduction to the Vienna Convention on the United Nations law website, a states own representatives abroad are in a sense hostages who may on a basis of reciprocity suffer if it violates the rules of diplomatic immunity: http://legal.un.org/avl/ha/vcdr/vcdr.html. Service of process A preliminary question arises on this appeal as to whether the claim form was validly served on the Al Malkis. A number of modes of service were attempted, but the only one which is now relied on is service by post to their private residence in accordance with Rule 61(1)(a) of the Employment Tribunal Rules of Procedure. It is said on the Al Malkis behalf that the rule cannot authorise service on a diplomatic agent because this would violate his person contrary to article 29 of the Convention and his residence contrary to article 30. I can deal shortly with this point, because it has failed at every stage below and has been dealt with by the Court of Appeal in terms with which I am in substantial agreement. The starting point is that we are not at this point concerned with the question whether the diplomatic agent is immune from jurisdiction in respect of the particular proceedings. Other articles of the Convention deal with that. Those articles recognise that the jurisdictional immunity of a diplomatic agent will not apply to all proceedings: they may relate to a matter within an exception, or the immunity may have been waived. The present question is whether there is an immunity from service, or from certain modes of service, implicit in the inviolability of a diplomats person and private residence. This immunity is distinct from and additional to his immunity from jurisdiction. If it applies, then articles 29 and 30 of the Convention, being unqualified, must prevent service by post in all proceedings whether or not there is any jurisdictional immunity in respect of them. Indeed, it would also apply to other communications by the state which have nothing to do with legal proceedings, such as demands for rates or tax assessments on a diplomats private income, notwithstanding that these may be properly demanded under article 34 of the Convention. In the case of states, the mode of service is prescribed by section 12 of the State Immunity Act 1978. Service must be effected on a state by the transmission of the document through the Foreign and Commonwealth Office. Article 22 of the United Nations Convention on the Jurisdictional Immunities of States, when it is in force, will require service of process on states to be effected on states through diplomatic channels in the absence of agreement on any other mode of service. There is, however, no corresponding provision relating to service on diplomatic agents either in the Diplomatic Privileges Act 1964 or in the Vienna Convention on Diplomatic Relations. According to the Secretary of State, a practice has become established of serving process on diplomatic agents through diplomatic channels on the foreign state or its mission in the United Kingdom. But there is no statutory basis for this practice. Nor, now that the law on diplomatic immunity has been codified, is there any basis for it in international law, unless service violates the diplomatic agents person or residence. Moreover, in the absence of some basis in domestic law, it is not even a legally effective mode of service, since there is no way that the foreign state can be required to accept service on behalf of the diplomatic agent, if it chooses not to do so. The person of a diplomatic agent is violated if an agent of the receiving state or acting on the authority of the receiving state detains him, impedes his movement or subjects him to any personal restriction or indignity. It is arguable that personal service on a diplomatic agent would do that, although it is not an argument that needs to be considered here. Premises are violated if an agent of the state enters them without consent or impedes access to or from the premises or normal use of them: see article 22 relating to the premises of a mission, which is applied by analogy to a diplomatic agents private residence under article 30(1). The delivery by post of a claim form does not do any of these things. It simply serves to give notice to the defendant that proceedings have been brought against him, so that he can defend his interests, for example by raising his immunity if he has any. The mere conveying of information, however unwelcome, by post to the defendant, is not a violation of the premises to which the letter is delivered. It is not a trespass. It does not affront his dignity or affect his right to enter or leave or use his home. It does of course start time running for subsequent procedural steps and may lead to a default if no action is taken. But so far as this is objectionable, it can only be because there is a relevant immunity from jurisdiction. It is not because the proceedings were brought to the diplomatic agents attention by post. Otherwise the same objection would apply to any mode of service which starts time running, including service through diplomatic channels as proposed by the Secretary of State. Jurisdictional immunity: article 31(1)(c) Articles 31 to 40 of the Convention represent an elaborate scheme which must be examined as a whole. Fundamental to its operation is the distinction, which runs through the whole instrument, between those immunities which are limited to acts performed in the course of a protected persons functions as a member or employee of the mission, and those which are not. The distinction is fundamental because what an agent of a diplomatic mission does in the course of his official functions is done on behalf of the sending state. It is an act of the sending state, even though it may give rise to personal liability on the part of the individual agent. In such a case, the individual agent is entitled to both diplomatic and state immunity, and the two concepts are practically indistinguishable: see Jones v Ministry of Interior for the Kingdom of Saudi Arabia (Secretary of State for Constitutional Affairs intervening) [2007] 1 AC 270, at paras 10 (Lord Bingham), 66 78 (Lord Hoffmann). By comparison, the acts which an agent of a diplomatic mission does in a personal or non official capacity are not acts of the state which employs him. They are acts in respect of which any immunity conferred on him can be justified only on the practical ground that his exposure to civil or criminal proceedings in the receiving state, irrespective of the justice of the underlying allegation, is liable to impede the functions of the mission to which he is attached. The degree of impediment may vary from state to state and from case to case. But the potential problem for the conduct of international relations has been recognised from the earliest days of diplomatic intercourse, and in the United Kingdom ever since the arrest of the Russian ambassador for debt as he returned from an audience with Queen Anne led to the passing of the Diplomatic Privileges Act 1708. The Vienna Convention distinguishes between diplomatic agents (ie ambassadors and members of their diplomatic staff), the administrative and technical staff of the mission, their respective families, and service staff of the mission. The highest degree of protection is conferred on diplomatic agents. In their case, the Convention substantially reproduces the previous rules of customary international law, by which a diplomatic agent was immune from the jurisdiction of the receiving state (i) in respect of things done in the course of his official functions for an unlimited period, and (ii) in respect of things done outside his official functions for the duration of his mission only: see Zoernsch v Waldock [1964] 1 WLR 675, 684 (Willmer LJ), 688 (Danckwerts LJ), 691 692 (Diplock LJ). Thus article 31(1) confers immunity on diplomatic agents currently in post in respect of both private and official acts, subject to specific exceptions for the three designated categories of private act. Under article 39(2), once a diplomatic agents functions have come to an end, his immunities under article 31 will normally cease from the moment when he leaves the territory of the receiving state. Thereafter, he remains immune in the receiving state only with respect to acts performed in the exercise of his functions as a member of the mission. This is commonly known as the residual immunity. It is one of four cases in which, in contrast to the immunity under article 31, a protected persons immunity is limited to official acts, the others being (i) the immunity conferred on a diplomatic agent who is a national of or permanently resident in the receiving state, which is limited to official acts performed in the exercise of his functions (article 38(1)); (ii) the immunity conferred on administrative and technical staff of a mission, which shall not extend to acts performed outside the course of their duties (article 37(2)); and (iii) domestic staff of the mission, whose immunity is confined to acts performed in the course of their duties (article 37(3)). The same distinction applies to consular officers and employees under article 43 of the parallel Vienna Convention on Consular Relations (1963). Their immunity is limited to acts performed in the exercise of consular functions. Article 31(1)(c) is one of three carefully framed exceptions to the general immunity from civil jurisdiction conferred on diplomatic agents in post. The exception applies if both of two conditions are satisfied: (i) that the action relates to a professional or commercial activity exercised by the diplomatic agent, and (ii) that the exercise of that activity was outside his official functions. These are distinct requirements. If the relevant acts were within the scope of the diplomats official functions, the enquiry ends there. He is immune. Moreover, he will retain the residual immunity in respect of them even after his posting comes to an end. But if he is still in post and the relevant activity is outside his official functions, the operation of the exception will depend on whether it amounts to a professional or commercial activity exercised by him. Accordingly, the first question is what are a diplomatic agents official functions. The starting point is the functions of the mission to which he is attached. They are defined in article 3 of the Convention, and comprise all the classic representational and reporting functions of a diplomatic mission. It is, however, clear that the official functions of an individual diplomatic agent are not necessarily limited to participating in the activities defined by article 3. They must in the nature of things extend to a wide variety of incidental functions which are necessary for the performance of the general functions of the mission. But whether incidental or direct, a diplomatic agents official functions are those which he performs for or on behalf of the sending state. The test is whether the relevant activity was part of those functions. That is the basis on which the courts in both England and the United States have approached the residual immunity in article 39(2): see, as to England, Wokuri v Kassam [2012] ICR 1283, at paras 23 26 (Newey J) and Abusabib v Taddese [2013] ICR 603, at paras 29 34 (Employment Appeal Tribunal); and as to the United States, Baoanan v Baja 627 F Supp 2d 155 (2009) at paras 3 5; Swarna v Al Awadi 622 F 3d 123 (2010) (2nd Circuit Court of Appeals) at paras 4 10. I think that it is correct, and equally applicable to the corresponding expression in article 31(1). If the relevant activity was outside the diplomatic agents official functions, the next question is whether it amounts to a professional or commercial activity exercised by him. The following points should be made about this: (1) An activity is not the same as an act. Article 31(1)(c) is concerned with the carrying on of a professional or commercial activity having some continuity and duration, ie with a course of business. (2) But it is not only a question of continuity or duration. It is also a question of status. In the ordinary meaning of the words, the exercise of a professional or commercial activity means practising the profession or carrying on the business. The diplomatic agent must be a person practising the profession or carrying on (or participating in carrying on) the business. He must, so to speak, set up shop. The position is even clearer in the equally authentic French text, where the word exercer means to practise, follow, pursue, carry on (profession, business): J E Mansion, Harraps Standard French and English Dictionary, ed Ledsert, (rev 1980). (3) This is confirmed by article 42, which provides that a diplomatic agent shall not in the receiving state practise for personal profit any professional or commercial activity. Article 42 uses the same phrase, professional or commercial activity, as article 31(1)(c). The difference between the language of the exception in article 31(1)(c) and that of the prohibition in article 42 is simply the use in the latter of the expression for personal profit in place of outside his official functions. The essential point, however, is that in both articles, the reference is to the diplomat carrying on or participating in a professional or commercial business. This is what Laws J decided in the only English case on article 31(1) until this one: Propend Finance Pty Ltd v Sing (1997) 111 ILR 611, 635 636 (the point did not arise in the Court of Appeal). I think that he was right. (4) As I shall demonstrate below, this is precisely what the draftsmen of the Convention and the states who agreed it intended to achieve. (5) There are obvious reasons why an exception such as that in article 31(1)(c) should have been limited to someone participating in a professional or commercial business. It is inherent in the concept of jurisdictional immunity that it will shelter a serving diplomat (and in some circumstances a former diplomat) against legal proceedings in the receiving state. It is not inherent in that concept that the immunity will enable him to exercise a distinct business activity in competition with others while sheltering him from the modes of enforcing the corresponding liabilities which are an ordinary incident of such an activity. (6) A wider scope for exception (c) would expose diplomatic agents in post in the United Kingdom (and potentially British diplomatic agents abroad) to local proceedings not only in respect of their employment of domestic servants but in respect of any transaction in the receiving state for money or moneys worth, save perhaps for those which were isolated or uncharacteristic. The substantial effect would be to limit the immunity to acts done in the exercise of the diplomats official functions, even in the case of a diplomat in post. The immunity in respect of non official acts would mean very little, for every purchase that a diplomat might make in the course of his daily life from a business carried on by someone else would be a commercial activity exercised by the diplomat for the purposes of article 31(1)(c). This would be contrary to the carefully constructed scheme of the Convention for different categories of protected person. The authorities Apart from the decision of Laws J in Propend Finance Pty Ltd v Sing, to which I have just referred, the authorities most directly in point are decisions of the federal courts of the United States. These are a valuable source of law in this area, because of the long standing engagement of the US courts with international law and the existence of a highly developed body of domestic foreign relations law belonging to the same tradition as our own. The statutory background is substantially the same as it is in the United Kingdom. Section 5 of the US Diplomatic Relations Act 1978 provides that any action or proceeding brought against an individual entitled to immunity from such action or proceeding under the Vienna Convention on Diplomatic Relations shall be dismissed. During the passage of the Act, the State Department advised Congress that the exception in article 31(1)(c) merely exposed diplomats to litigation based upon activity expressly prohibited in article 42: Diplomatic Immunity: Hearings on S 476, S 477, S 478, S 1256 S 1257 and HR 7819 (Senate Committee on the Judiciary, Subcommittee on Citizens and Shareholders Rights and Remedies, 95th Cong, 2d Sess 32 (1978). This advice, as I have pointed out above, was in accordance with both the language and purpose of the Convention. It is also endorsed by the American Law Institutes authoritative Restatement (3rd) of the Foreign Relations Law of the United States (1986), para 464, where it is observed (Note 9) that The denial of immunity in cases arising out of private commercial or professional activities has little significance for the United States since the United States forbids its diplomatic officers to engage in commercial or professional activities unrelated to their official functions, and in general does not permit such activities by foreign diplomats in the United States. The leading case is Tabion v Mufti (1996) 107 ILR 452, a decision of the Fourth Circuit Court of Appeals. The plaintiff was employed for two years as a domestic servant in the private residence of a Jordanian diplomat. Her allegations were broadly similar to those of Ms Reyes. They included deception, false imprisonment and persistent underpayment. In response to a claim for diplomatic immunity, her argument was that because commerce is simply the exchange of goods and services, commercial activity necessarily encompasses contracts for goods and services, including employment contracts. The court examined the terms of the Convention and its background and negotiating history, and upheld the claim for immunity on the principal ground that the expression commercial activity relates only to trade or business activity engaged in for personal profit (p 454). In reaching this conclusion, they took account of a statement of interest submitted by the State Department, which asserted that the exception focuses on the pursuit of trade or business activity; it does not encompass contractual relationships for goods and services incidental to the daily life of the diplomat and family in the receiving State (p 455). But they appear to have gone rather further than the State Department in suggesting (pp 455 456) that day to day living services incidental to daily life were also within a diplomatic agents official functions. Since a diplomats acts in obtaining day to day living services are remote from the performance of his official functions and are not done on behalf of the sending state, for my part, I do not find it possible to accept this last point. Even in the United States it appears to have been rejected in cases on the residual immunities conferred by article 39(2) of the Convention, to which I have already referred (para 20). But on their principal ground, I think that the Court was correct. The decision in Tabion v Mufti has consistently been followed in other circuits on materially similar facts: Gonzales Paredes v Vila and Nielsen, 479 F Supp 2d 187 (2007), Sabbithi v Al Saleh, 605 F Supp 2d 122 (2009), vacated in part on other grounds, no 07 Civ 115 (DDC Mar S 2011); Montuya v Chedid, 779 F Supp 2d 60 (2011); Fun v Pulgar, 993 F Supp 2d 470 (2014). It is also endorsed by Professor Denza: Diplomatic Law, 4th ed (2016), at pp 251 253. It is true that the Appeals Courts conclusion on the principal point was influenced by the State Departments statement of interest and that the constitutional division of powers in the United States requires the courts to show substantial deference to the executives views on such matters. But, like Lord Dyson MR in the Court of Appeal, I do not regard this as undermining the authority of the decision. In the first place it is clearly established doctrine in the United States that the views of the executive, although commanding respect, are not determinative: see Sumitomo Shoji America Inc v Avagliano 457 US 176, 184 185 (1982), United States v Stuart 489 US 353, 369 (1989). Secondly, the US Court of Appeals plainly formed its own view on the questions at issue. Thirdly, the Departments statement of interest, a copy of which has been put before us, is concerned mainly to put the negotiating history before the court. Otherwise it simply analyses the relevant legal principles, very much as the submissions of the Secretary of State as intervener have done on this appeal. Diplomatic and state immunity Mr Otty QC, who appeared for Ms Reyes, sought to reinforce his case on article 31(1)(c) by pointing out that under the restrictive theory of state immunity, the immunity of states is limited to acts which they perform as states. He argues that the functional analogies between state immunity and diplomatic immunity mean that a corresponding rule should apply to the latter, ie that any act done in a purely private capacity must be regarded as commercial, or at any rate as lying outside the permissible scope of the immunity. This argument in effect treats the words outside his official functions in article 31(1)(c) of the Convention on Diplomatic Relations as explanatory of the expression professional or commercial activities and deprives the latter of any independent effect. Manifestly, diplomatic and state immunity have a number of points in common. Both are immunities of the state, which can be waived only by the state. Both may extend to individual agents of the state, acting as such. Both are creatures of international law. And, although only diplomatic immunity has been codified by treaty, the embryonic United Nations Convention on Jurisdictional Immunities of States is generally regarded as an authoritative statement of customary international law on the major points which it covers. These factors led Laws J, in Propend Finance Pty Ltd v Sing (1997) 1 ILR 611, 633 634 to suggest that the law relating to diplomatic immunity is not free standing from the law of sovereign or state immunity, but is an aspect of it, and to cite with apparent approval a dictum of Jenkins LJ in Baccus SRL v Servicio National Del Trigo [1957] 1 QB 438, 470 to the effect that the protection accorded to a diplomat under the Diplomatic Privileges Act 1708 (then in force) could not be greater than that accorded to a foreign sovereign. However, the analogy should not be pressed too far. In some significant respects, the immunities of diplomatic agents are wider than those of the state. This is because their purpose is to remove from the jurisdiction of the receiving state persons who are within its territory and under its physical power. Human agents have a corporeal vulnerability not shared by the incorporeal state which sent them. Section 16 of the State Immunity Act 1978, which defines the ambit of state immunity in the United Kingdom, and article 3 of the UN Convention on the Jurisdictional Immunities of States, both provide that the rules relating to state immunity are not to affect diplomatic immunity. These provisions are necessary because, as Professor Denza points out in Diplomatic Law, 4th ed (2016), 1. As international rules on state immunity have developed on more restrictive lines, there has always been a saving for the rules of diplomatic and consular law and an increasing understanding that although these sets of rules overlap they serve different purposes and cannot in any sense be unified. For present purposes, the most significant difference in the ambit of the two categories of immunity concerns the treatment of acts of a private law character. Section 3(1)(a) of the State Immunity Act 1978, which defines the ambit of state immunity in the United Kingdom, provides that a state is not immune in respect of proceedings relating to a commercial transaction entered into by the state. For this purpose, a commercial transaction is a transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a state enters or in which it engages otherwise than in the exercise of sovereign authority: section 3(3)(c). The corresponding provisions of the United Nations Convention on Jurisdictional Immunities of States are in almost identical terms: see articles 2(1)(c) and 10. In Playa Larga (Owners of Cargo lately laden on board) v I Congreso del Partido (Owners) [1983] AC 244, 267, Lord Wilberforce, after reviewing the national and international authorities, held that the section gave statutory effect to the distinction in international law between acts jure imperii and acts jure gestionis. Its application depended on 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. The difficulty about the appellants proposed analogy between state and diplomatic immunity is that the immunity of a diplomat in post, unlike that of a state, unquestionably extends to some transactions which are outside his official functions, and therefore almost inevitably of a private law character. I have drawn attention above (paras 17 18) to the distinction which runs through the Convention on Diplomatic Relations and the parallel Convention on Consular Relations, between those immunities which are limited to acts performed in the course of a protected persons official functions and those enjoyed by diplomatic agents in post, which are not so limited. It is plain from this scheme that the exception for commercial activities exercised by a diplomatic agent is not simply another way of excepting acts in the performance of the diplomats official functions. Moreover, the immunities of a diplomatic agent in post are extended by article 37(1) of the Convention to his family, who will generally have no official functions. It is right to add that contracts of employment are not treated as a commercial transaction for the purposes of the State Immunity Act 1978: see section 3(c). They are subject to a distinct code under section 4, which provides that subject to specified exceptions a state is not immune as respects proceedings relating to a contract of employment made in or to be performed in the United Kingdom. There are broadly corresponding provisions in article 11 of the United Nations Convention. However, although the status of private servants is the subject of a number of provisions of the Convention on Diplomatic Relations, there is no provision in it corresponding to section 4 of the United Kingdom State Immunity Act or article 11 of the United Nations Convention. These differences explain why the authorities on which Mr Otty principally relied for this point are not of much assistance. With one exception (to which I shall return), they were cases about state immunity, in which the court applied the classic distinction between acts jure gestionis and jure imperii to the employment of non diplomatic staff. Thus in In re Canada Labour Code [1992] 2 SCR 50 the question at issue was whether the United States was entitled to state immunity under the Canadian State Immunity Act in proceedings relating to the terms on which it employed Canadian citizens at a US naval base in Canada. In particular, objection was taken to the inclusion of a no strike term. The case had nothing to do with diplomatic immunity. The issue had a superficial resemblance to the present one only because the Canadian State Immunity Act excepted any commercial activity from the scope of the immunity. It is, however, clear from the reasoning of the majority of the Supreme Court of Canada that in the context of a statute designed to give effect to the restrictive doctrine of state immunity in customary international law, a commercial activity meant an act done otherwise than in the exercise by the state of sovereign authority: see pp 71 73 (La Forest J). The Court ultimately held that while some obligations of an employer (for example, to pay wages) were enforceable in the Canadian courts as being of a private law character, a state employers imposition of terms judged appropriate to the military function of the base was an exercise of sovereign authority and as such immune. In the United States, where the Foreign State Immunity Act has an exception in the same terms as the Canadian Act, the same approach has been adopted: see El Hadad v United Arab Emirates and the Embassy of the United Arab Emirates 216 F 3d 29; Park v Shin 313 F 3d 1138 (9th Cir 2002), at paras 27 36. The exception is Fonseca v Larren (30 January 1991), a decision of the Supreme Court of Portugal, reported in State Practice regarding State Immunities (Council of Europe, 2006). This was a true case of diplomatic immunity, in which the Court held that article 31 of the Convention on Diplomatic Relations did not apply to the employment of a domestic servant in the private residence of a French diplomatic agent. The Court did not claim to be applying the exception in article 31(1)(c). Instead they applied to the Convention a principle sanctioned by the Portuguese Civil Code in the case of domestic legislation, which called for what the court regarded as an extensive interpretation of this precept [jurisdictional immunity] in keeping with its spirit, going beyond its letter and the ratio legis that determined it. On that basis, they appear to have recognised an implied additional exception to the immunity for matters within the jurisdiction of the Portuguese Labour Courts, on the ground that such acts would not constitute exercises of sovereign authority under the restrictive doctrine of state immunity. It is apparent that the Portuguese court proceeded on domestic law principles of construction which would not be applied to a treaty in England (or internationally), and on the basis of an analogy with state immunity which is difficult to support on any generally accepted principles of international law. The travaux These conclusions are confirmed by an examination of the travaux prparatoires. Of the three exceptions in article 31(1), only (a), relating to private dealings with immovable property in the receiving state, had been recognised by customary international law before the Convention. Exceptions (b) and (c) were matters on which states had not previously been agreed, and exception (c) was particularly controversial. It had not been included in the draft articles submitted by the Special Rapporteur (Mr Sandstrm) at the outset of the process. It was introduced by amendment by the Austrian Commissioner on 22 May 1957 in the course of the Ninth Session: see Yearbook of the International Law Commission 1957, i, 97, at paras 70 81. As originally introduced, it was confined to professional activities. This was said to be akin to article 24 of the Harvard draft articles of 1932, which referred to a person who engages in a business or who practises a profession. The proposer considered that cases to which the amendment would apply would be comparatively rare, and even those who opposed it agreed with this. They opposed it on the ground that diplomatic agents practically never engaged in such activities, which would be inconsistent with the dignity of their diplomatic status. The Egyptian Commissioner supported the amendment and proposed to add the reference to a commercial activity: If a diplomatic agent engaged in a professional or commercial activity the word commercial should undoubtedly be inserted in the amendment he should enjoy no immunity, but be treated on precisely the same footing as other persons who practised the same profession or engaged in the same commercial activities The dignity itself of a diplomatic agent required that he should not engage in activities outside his official duties. He then proposed the text of what became article 31(1)(c), which was adopted. In May 1958, the Special Rapporteur reported to the Commission on observations received from governments. He reported that the United States had opposed the inclusion of exception (c). But the Special Rapporteur proposed that it should be retained, observing: It would be quite improper if a diplomatic agent, ignoring the restraints which his status ought to have imposed upon him, could, by claiming immunity, force the client to go abroad in order to have the case settled by a foreign court. Commenting on the suggestion of the Australian government that commercial activity appears to require some definition, he observed: the use of the words commercial activity as part of the phrase a professional or commercial activity indicates that it is not a single act of commerce which is meant [but] a continuous activity. The Special Rapporteurs comment was reviewed in the course of the Tenth Session in 1958: Yearbook of the International Law Commission, 1958, i, 244 (paras 26 34). It was suggested by the Czechoslovakian commissioner in response to the commentary on exception (c) that the text might in fact cover an isolated commercial transaction. Sir Gerald Fitzmaurice (Rapporteur for the Session) questioned this: Paragraph 1(c) of the article applied to cases where a diplomatic agent conducted a regular course of business on the side. Such isolated transactions as, for instance, buying or selling a picture, were precisely typical of the transactions not subject to the civil jurisdiction of the receiving State. Annoying as it might be for the other parties to such transactions in the event of a dispute, it was essential not to except such transactions from the general rule for, once any breach was made in the principle, the door would be open to a gradual whittling away of the diplomatic agents immunities from jurisdiction. In the result, the observation in the commentary was deleted, the consensus being that the text was clear and the observation unnecessary. The report on the session to the General Assembly (ibid, ii, 98) commented on exception (c) in the following terms: The third exception arises in the case of proceedings relating to a professional or commercial activity exercised by the diplomatic agent outside his official functions. It was urged that activities of these kinds are normally wholly inconsistent with the position of a diplomatic agent, and that one possible consequence of his engaging in them might be that he would be declared persona non grata. Nevertheless, such cases may occur and should be provided for, and if they do occur the persons with whom the diplomatic agent has had commercial or professional relations cannot be deprived of their ordinary remedies. Article 42 was inserted at a very late stage, by an amendment proposed by the Colombian delegation at the international conference of March and April 1961 which immediately preceded the adoption of the final text: United Nations Conference on Diplomatic Intercourse and Immunities, Official Records, i, 172 (paras 24 27), 211 213 (paras 1 37). The reason advanced by the proposer of the amendment was that otherwise what became article 31(1)(c) might be read as implicitly authorising the exercise of professional or commercial activities, albeit on the basis that it was not immune. Everyone agreed that that would be incompatible with diplomatic status. It was therefore proposed that the Convention should affirm in a separate article the existing understanding that the carrying on of a business or profession by a diplomatic agent in the territory of the receiving state was incompatible with diplomatic status. The proposer considered that it was desirable to limit the occasions on which exception (c) would arise by avoiding a situation in which the diplomatic agent would be acting simultaneously in two different capacities, only one of which was covered by diplomatic privileges and immunities. The discussion which followed showed that the principle was generally accepted, on the footing that the prohibited activities covered what the Ecuadorian delegate called the exercise of an outside gainful activity, and the delegate of Ceylon a regular professional activity from which a permanent income was derived, and not an occasional activity, particularly of a cultural character. There was general agreement that it would not extend to occasional activities such as lecturing, even if paid. All the participants took it for granted that the activity which gave rise to the exception in article 31(1)(c) was the same as the activity which was treated as incompatible with the status of a diplomatic agent in article 42. From this history, three points can be extracted: (1) The activities covered by articles 31(1)(c) and 42 were intended to be the same. (2) They were activities involving the assumption by a diplomatic agent of a dual status, by which incompatible occupations were being pursued by the same person. (3) Occasions for the operation of either provision were expected to be very rare. The trafficking dimension The Protocol to Prevent, Supress and Punish Trafficking in Persons, Especially Women and Children (Palermo, 2000) supplements the United Nations Convention against Transnational Organised Crime. Article 3 defines trafficking in persons as the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation. Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude or the removal of organs. Article 5 requires state parties to establish trafficking as a criminal offence and to ensure that their legal systems afford victims the possibility of obtaining compensation. The Protocol has been ratified by 168 states, including the United Kingdom and Saudi Arabia, and by the European Union. It is in principle possible for a rule of customary international law to be displaced by another rule of a higher order, or for a treaty obligation to be displaced by a peremptory norm (jus cogens) of international law, ie by a conflicting rule of international law permitting no derogation: see, as to treaty obligations, article 53 of the Vienna Convention on the Law of Treaties. But Mr Otty QC expressly disclaimed reliance on any such principle. He was in my view right to do so, for reasons which should be mentioned since they have a bearing on his other arguments. Diplomatic immunity, like state immunity, is an immunity from jurisdiction and not from liability. Its practical effect is to require the diplomatic agent to be sued in his own country, or in respect of non official acts in the receiving state, once his posting has ended. There is therefore no conflict between a rule categorising specified conduct as wrongful, and a rule controlling the jurisdictions in which or the time at which it may properly be enforced. It was for this reason that in Jones v Saudi Arabia [2007] 1 AC 270, Lord Bingham (para 24) and Lord Hoffmann (para 44) both adopted the observation of Hazel Fox in the then current edition of The Law of State Immunity (2002), at p 525, that state immunity does not contradict a prohibition contained in a jus cogens norm but merely diverts any breach of it to a different method of settlement. In Germany v Italy: Greece Intervening (Jurisdictional Immunities of the State) [2012] ICJ Rep 99, the International Court of Justice endorsed the Appellate Committees reasoning on this point, and gave it what is perhaps its clearest expression at paras 92 97. Rejecting an argument based on the peremptory character of the prohibition of war crimes and crimes against humanity, the court put the matter in this way: This argument therefore depends upon the existence of a conflict between a rule, or rules, of jus cogens, and the rule of customary law which requires one State to accord immunity to another. In the opinion of the Court, however, no such conflict exists. Assuming for this purpose that the rules of the law of armed conflict which prohibit the murder of civilians in occupied territory, the deportation of civilian inhabitants to slave labour and the deportation of prisoners of war to slave labour are rules of jus cogens, there is no conflict between those rules and the rules on state immunity. The two sets of rules address different matters. The rules of state immunity are procedural in character and are confined to determining whether or not the courts of one state may exercise jurisdiction in respect of another state. They do not bear upon the question whether or not the conduct in respect of which the proceedings are brought was lawful or unlawful The application of rules of state immunity to determine whether or not the Italian courts have jurisdiction to hear claims arising out of those violations cannot involve any conflict with the rules which were violated. The Court went on to point out that the existence of an international law obligation to provide for the recovery of compensation made no difference to this analysis: Nor is the argument strengthened by focusing upon the duty of the wrongdoing state to make reparation, rather than upon the original wrongful act. The duty to make reparation is a rule which exists independently of those rules which concern the means by which it is to be effected. The law of state immunity concerns only the latter; a decision that a foreign state is immune no more conflicts with the duty to make reparation than it does with the rule prohibiting the original wrongful act 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. In these circumstances, Mr Otty wisely confined his case on this aspect of the appeal to the proposition that the international obligation to recognise a crime and a tort of human trafficking affected the scope of the exception for professional or commercial activities in article 31(1)(c) of the Convention on Diplomatic Relations. The argument is (i) that trafficking is treated by the Palermo Protocol as an inherently commercial activity, in which an employer participates by employing the victim; and (ii) that the profit element, if it is required, is established by the financial benefit which the employer generally obtains by paying less than the going rate or the legal minimum or nothing at all. The fundamental difficulty about this argument is that it involves modifying the concept of a professional or commercial activity in the light of the growing concern of international law with human trafficking subsequent to the Convention on Diplomatic Immunity. There are limited circumstances in which this is a legitimate technique of interpretation, but it is subject to principled limits. Article 31(2) and (3)(a) and (b) of the Vienna Convention on the Law of Treaties envisage that a treaty may in appropriate cases be interpreted in the light of a linked treaty, whether made at the same time or subsequently. Linked treaties are generally interpretative or explanatory of the principal treaty. It is not suggested that the principle applies here. But a broader principle is applied by article 31(3)(c) of the Vienna Convention on the Law of Treaties, which requires account to be taken of any relevant rules of international law applicable in the relations between the parties. The effect is to make limited provision for the interpretation of treaties in the light of subsequent developments of international law. The circumstances in which it applies are that the relevant provision of the principal treaty was ambulatory, in the sense that it envisaged that future changes occurring after it was made would affect its application. The example commonly cited is the International Court of Justices advisory opinion on Legal Consequences for States of the Continued Presence of South Africa in Namibia (South West Africa) [1971] ICJ Rep 16. Article 22(1) of the Covenant of the League of Nations provided for the grant of mandates for the administration of former colonies and territories which are inhabited by peoples not yet able to stand by themselves under the strenuous conditions of the modern world. The mandate territory was to be administered on the principle that the wellbeing and development of such peoples form a sacred trust of civilisation. The Court interpreted article 22 in the light of the subsequent development in international law of the concept of self determination: Mindful as it is of the primary necessity of interpreting an instrument in accordance with the intentions of the parties at the time of its conclusion, the court is bound to take into account the fact that the concepts embodied in article 22 of the Covenant the strenuous conditions of the modern world and the wellbeing and development of the peoples concerned were not static, but were by definition evolutionary, as also, therefore, was the concept of the sacred trust. The parties to the Covenant must consequently be deemed to have accepted them as such. (para 53) The intention that the principal treaty should accommodate future change must therefore be found within the treaty itself. This is fundamental, for article 31(3)(c) of the Vienna Convention on the Law of Treaties is a principle of interpretation. It is not a principle of revision. With respect, I cannot accept that Oil Platforms (Islamic Republic of Iran v United States of America) [2003] ICJ 161, which Lord Wilson cites as illustrative of a wider principle, has any bearing on the point. The International Court of Justice did not in that case interpret the 1955 Treaty of Amity between Iran and the United States in the light of a subsequent and unrelated treaty or any other subsequent developments in international law. It interpreted an exception in the treaty for measures necessary to protect [the] essential security interests of the parties in the light of customary international law relating to the use of force and the right of self defence: see paras 41, 44, 73. The two concepts were clearly closely related and the relevant principles of customary international law were of very long standing. The first objection to the argument in this case is that no such intention can be discerned in article 31(1)(c) of the Convention on Diplomatic Relations. The concept of a professional or commercial activity exercised by a diplomatic agent is not ambulatory. The expression does not express a general value whose content may vary over time. It is a fixed criterion for categorising the facts, whose meaning and effect was extensively discussed during the drafting and negotiation of the text. There is no reason to suppose that it refers today to anything other than what it referred to in 1961. Secondly, the international obligations of states in relation to human trafficking are embodied in treaties, primarily in the Palermo Protocol, which is the only relevant treaty to which both the United Kingdom and Saudi Arabia are parties. The Protocol is not in any way concerned with jurisdictional immunity. Its sole relevance is as a source of international policy against human trafficking. But it does not follow from that policy that diplomatic immunity cannot be available in cases of trafficking. The intention of the parties to the Protocol that trafficking should be unlawful is entirely consistent with the subsistence of rules determining where and when civil claims or criminal charges may properly be determined. For the same reason, international law immunities have been held to be available in cases involving torture (Jones v Saudi Arabia), breach of the laws of armed conflict (Jurisdictional Immunities of the State) or crimes against humanity (Democratic Republic of the Congo v Belgium (Arrest Warrant of 11 April 2000)). Third, nothing in the Palermo Protocol requires that human trafficking must be classified as a commercial activity when it would not otherwise be, whether for the purpose of diplomatic immunity or for any other purpose. The commerciality or otherwise of the activities defined as trafficking are irrelevant to the definition. As defined in article 3 of the Protocol, trafficking may consist in a number of different operations, including the recruitment, transportation, transfer, harbouring and receipt of persons. It may also consist in fraud, deception or the abuse of power or vulnerability. Commonly, a chain of intermediaries will be involved, each participant doing some of these things but not necessarily all of them. It is not inherent in any of these acts that they will necessarily be done in the exercise of a commercial activity. That will depend on the precise circumstances. In particular, it will depend on the nature of each participants involvement. Thus one would expect an intermediary who recruits or transports a trafficked person for money to be exercising a commercial activity. The same is likely to be true of someone who receives a trafficked person for, say, prostitution. These are business operations. But the mere employment of a domestic servant on exploitative terms is not a commercial activity, and the fact that it is unlawful, contrary to international policy and morally repugnant cannot make it into one. One can readily imagine circumstances in which someone who employed a trafficked person as a domestic servant had obtained her through a chain of intermediaries engaged in human trafficking as a business, although that does not appear to have happened in Ms Reyes case. In such a case, the employer may incur criminal or civil liability along with the other participants who brought the victim to his door. But his liability would be for the trafficking. It would not without more make him a joint participant in the intermediaries business. Doubtless, without customers professional traffickers would have no business, but that does not make the customers into practitioners of a commercial activity. By way of analogy, if I knowingly buy stolen property from a professional fence for my personal use, both of us will incur criminal liability for receiving stolen goods and civil liability to the true owner for conversion. The fence will also be engaging in a commercial activity. But it does not follow that the same is true of me. For the same reason, it cannot matter that the trafficking may enable the ultimate employer to pay the victim less than the proper rate or nothing at all. To pursue the analogy, I will no doubt pay the fence less for the stolen goods than I would have had to pay for the same goods to an honest shopkeeper. But that does not alter the characterisation of my purchase, which is no more the exercise by me of a commercial activity in the one case than it is in the other. Likewise, the employment of a domestic servant to provide purely personal services cannot rationally be characterised as the exercise of a commercial activity if she is paid less than the going rate or the national minimum wage, but not if she is paid more. One might perhaps loosely say that the victim is being treated as a commodity. But a figure of speech should not be confused with a legal concept. Finally, the implications of human trafficking for the scope of diplomatic immunity have been considered on a number of occasions by the federal courts of the United States. On its facts, Tabion v Mufti may well have been a case of trafficking, and Gonzales Paredes v Vila and Nielsen, 479 F Supp 2d 187 (2007) almost certainly was. But the point appears to have been raised overtly for the first time in Sabithi v Al Saleh 605 F Supp 2d 122, a decision of the District Court for the District of Columbia. The court rejected the argument that the employers participation in trafficking constituted a commercial activity within article 31(1)(c), essentially because it made no difference to the characterisation of the act of employing or maltreating a domestic servant, even on exploitative terms and at marginal wages. The same view was taken in Montuya v Chedid, 779 F Supp 2d 60 (2011) and Fun v Pulgar, 993 F Supp 2d 470 (2014) where the facts were similar. The rare cases from European jurisdictions point to the same answer. In Pfarr v Anonymous 17 SA 1468/11 (ILDC 1903) (2011), which concerned the exploitation of a domestic servant in circumstances very like those of the present case, the Berlin Brandenburg Court of Appeal declined to recognise an exception for grave violations of human rights. (The appeal was allowed by the Federal Employment Court, NZA 2013, 343, only because by the time that the appeal was heard, the diplomat was no longer in post). The possibility that the commercial activities exception might apply does not seem to have occurred to the court. In Mohamed X v Fettouma Z (17 October 2012), 11/01255 Legifrance, it was considered by the Court of Appeal of Montpellier in a case where the employer had made considerable financial savings by his exploitation of a Moroccan housemaid. The argument was rejected on the ground that the arrangements for the management of a diplomats private residence and family life could not be regarded as a professional or commercial activity outside his official functions. Application to Ms Reyes case The first question is whether the employment or treatment of Ms Reyes by the Al Malkis were acts performed in the course of Mr Al Malkis official functions. In my judgment, it is clear that they were not. Difficult questions of fact may arise when a private servant is employed in a diplomats residence for purposes connected with the work of the mission. But on any view Mr Al Malkis official functions cannot have extended to the employment of domestic staff to do the cleaning, help in the kitchen and look after his children. These things were not done for or on behalf of Saudi Arabia. The Court of Appeal (para 19) thought that such activities were conducive to the performance of his official functions. No doubt they were. But that could be said of almost anything that made the personal life of a diplomatic agent easier. It does not make the employment of Ms Reyes part of Mr Al Malkis official functions as a diplomatic agent. Since Mr Al Malkis functions as a diplomatic agent have now come to an end, he is no longer entitled to any immunity under article 31. The only immunity available to him is the residual immunity under article 39(2). It follows from the fact that the relevant acts were not done in the course of his official functions that that immunity cannot apply. Likewise, Mrs Al Malki is no longer entitled to any immunity at all. Does it matter that Mr and Mrs Al Malki were entitled to immunity under article 31(1) and 37(1) respectively at the time when the present proceedings were commenced? In my opinion it does not. An action brought against persons entitled to diplomatic immunity is not a nullity. It is merely liable to be dismissed. There are therefore valid proceedings currently on foot. Diplomatic immunity is a procedural immunity. The procedural incidents of litigation normally fall to be determined by a court as at the time of the hearing. Thus a waiver of immunity after the commencement of proceedings would dispose of any diplomatic immunity which previously existed. The result of a change in the defendants status is not materially different. A striking illustration is supplied by the decision of the Court of Appeal in Empson v Smith [1966] 1 QB 426. Proceedings were begun against Mr Smith, a member of the administrative staff of the Canadian High Commission in London, claiming damages under a private tenancy agreement. At the time when the proceedings were commenced he enjoyed the same immunity under the Diplomatic Immunities (Commonwealth Countries and Republic of Ireland) Act 1952 as the diplomatic staff of an ambassador. Under the Act of 1708, that immunity was absolute. By the time of the hearing, however, the Acts of 1708 and 1952 had been replaced by the Diplomatic Privileges Act 1964, which conferred immunity on administrative and technical staff only in respect of acts done in the course of their duties. Mr Smith was held to be entitled only to the limited immunity under the Act of 1964. As Diplock LJ point out by way of analogy, at p 439, if the defendant had ceased to be en poste while the plaint was still outstanding the action could then have proceeded against him. Indeed, that was the position in Shaw v Shaw [1979] F 62. The wife filed a petition for a dissolution of her marriage to a diplomat attached to the United States embassy. At the time, he was immune, but the petition was allowed to proceed once the husbands posting came to an end and he left the United Kingdom. The same view has been taken in other jurisdictions where similar issues have arisen: see Denza, op cit, 257 258. The respondents main answer to these points is that Mr Al Malkis official functions extended to the employment of his domestic staff. I have rejected that submission. But they also submit that even on the footing that his official functions did not extend to the acts relied on by Ms Reyes, she did not take the point in the Court of Appeal and should not be allowed to take it here. I reject that submission also. If I thought that any injustice would be done by allowing the point to be taken in this court, I would be in favour of remitting the matter to the courts below. But I do not think so. The point was reserved shortly after judgment in the Court of Appeal and was fairly taken in the appellants printed case in this court. The relationship between articles 31 and 39(2) always was relevant, since it is a fundamental part of the scheme of the Convention. It is not suggested that the answer can turn on any disputed point of fact. There may in due course be implications for costs, but that is another matter. In those circumstances, the question whether the exception in article 31(1)(c) would have applied to Mr Al Malki had he still been in post does not strictly speaking arise. If he had still been in post, I would have held that he was immune, because the employment and treatment of Ms Reyes did not amount to carrying on or participating in carrying on a professional or commercial activity. Her employment, although it continued for about two months, was plainly not an alternative occupation of Mr Al Malkis. Nothing that was done by him or his wife was done by way of business. A person who supplies goods or services by way of business might be said to exercise a commercial activity. But Mr and Mrs Al Malki are not said to have done that. They are merely said to have used Ms Reyes services in a harsh and in some respects unlawful way. There is no sense which can reasonably be given to article 31(1)(c) which would make the consumption of goods and services the exercise a commercial activity. The European Convention on Human Rights It follows from the view that I take of the immunity claim that it is unnecessary to deal with Ms Reyes alternative argument based on the European Convention on Human Rights. Disposal I would allow the appeal. It remains to deal with the consequential orders. The present appeal has been decided on the assumption that the facts stated in Ms Reyes evidence are true. There has been no evidence from Mr and Mrs Al Malki, and no statement of their case on the facts. In those circumstances, the relief sought by Mr Otty is an order remitting the matter to the Employment Tribunal to determine whether on the facts Mr Al Malkis employment and treatment of Ms Reyes were acts done in the exercise of his functions as a member of the mission. However, before inflicting on the parties a further round of argument on the claim to immunity, I would wish to be satisfied that there is a real issue on that point in the light of this Courts judgment. As at present advised, it appears to me that there could be such an issue only if there were a dispute about the nature of the functions which Ms Reyes was employed to perform or, possibly, about the circumstances in which her employment came to an end. Accordingly, unless within 21 days written submissions are received from the parties justifying some other course, I would declare that Mr and Mrs Al Malki are not entitled to diplomatic immunity in respect of the claims made by Ms Reyes in these proceedings and remit the case to the Employment Tribunal to determine those claims on their merits. In the case of Mr and Mrs Al Malki, those submissions would have to identify any subsisting issue of fact going to their claim for immunity. LORD WILSON: (who agrees with Lord Sumption, save that he expresses doubts on one point, and with whom Lady Hale and Lord Clarke agree) I agree that the appeal should be allowed by reference to the apparent loss of immunity on the part of Mr Al Malki (and therefore of Mrs Al Malki) when in August 2014 he ceased to be a member of the Saudi mission in London and when therefore they left the UK. The loss of immunity is no more than apparent because the appeal proceeds only on assumed facts. By reference to the facts alleged by Ms Reyes, one can conclude that none of the actions taken by Mr Al Malki in relation to Ms Reyes were acts performed by [him] in the exercise of his functions as a member of the mission within the meaning of article 39(2) of the 1961 Convention. But, although the court has done no more than to assume these alleged facts to be correct, it may be that Mr and Mrs Al Malki take no real issue with this part of her allegations; and in those circumstances I subscribe to the disposal proposed by Lord Sumption in para 54 above. It follows that this court will not answer in any binding form the central question presented to it in such detail and with such conspicuous ability: does an action instituted in the tribunal against a foreign diplomat in the UK by his former domestic servant brought to the UK to work in his home in (assumed) conditions of modern slavery relate to any commercial activity exercised by [him here] outside his official functions within the meaning of article 31(1)(c) of the 1961 Convention? I am pleased that the court will not answer that question in any binding form. Lord Sumptions emphatic answer to the question is no. His answer is (if he will forgive my saying so) the obvious answer. It may be correct. But my personal experience has been that, the more one thinks about the question, the less obviously correct does his answer become. By reference to five aspects of the background, let me explain myself. First, the UK confronts a significant problem in relation to the exploitation of migrant domestic workers by foreign diplomats. Kalayaan, the Intervener, which is the principal UK charity devoted to advising and supporting migrant domestic workers, gives the following evidence: (1) Between about 200 and 250 domestic workers enter the UK each year under a diplomatic overseas domestic workers visa. (2) The proportion of domestic workers who are the victims of trafficking is considerably higher in diplomatic households than in other households. (3) Thus in one representative period 17 out of 55 referrals to the government agency set up to identify the trafficking of domestic workers related to diplomatic households whereas, had such referrals been in proportion to the number of workers in other households, there would have just been one. (4) The explanation for the high ratio of trafficked workers in diplomatic households is largely because perceived immunity from claims for compensation leads diplomats to consider that they can exploit them with impunity. (5) The perceived immunity makes trafficking with a view to domestic servitude a low risk, high reward activity for diplomats. It was these concerns which led Mr Ewins QC, in his Independent Review of the Overseas Domestic Workers Visa dated 16 December 2015, to recommend at para 165(1) that overseas domestic workers in diplomatic households should be employed by the foreign state, which (see para 63 below) he reasonably understood to have no civil immunity, rather than by the individual diplomats; but the government appears to have rejected the recommendation. Second is the universality of the international communitys determination to combat human trafficking. In para 39 above Lord Sumption refers to the Palermo Protocol 2000 which was the product of a resolution of the UN General Assembly to promote the evolution of an international instrument which addressed the trafficking of women and children. The protocol, ratified both by Saudi Arabia and the UK, contains elaborate commitments by each state party to criminalise trafficking; to make material provision for victims in aid of their physical, psychological and social recovery; by article 6(6), to ensure that its domestic legal system contains measures that offer victims of trafficking in persons the possibility of obtaining compensation for damage suffered; to strengthen border controls; and so on. Then came the Council of Europe Convention on Action against Trafficking in Human Beings, adopted in Warsaw on 16 May 2005. As was noted in the explanatory report which accompanied it, trafficking in human beings was a world wide phenomenon and had become a major scourge in Europe. The preamble to this 2005 Convention described its purpose as being to improve the protections afforded by the Palermo Protocol. Its detailed provisions for strong national mechanisms to identify trafficking and for international cooperation are irrelevant. But it is noteworthy that, by way of expansion of the requirement in article 6(6) of the Palermo Protocol that victims should obtain compensation, the 2005 Convention made clear, in article 15(3) and (4), that the obligation was to provide for victims to obtain compensation from the perpetrators as well as from the state; and also noteworthy that the UK claims to have discharged this obligation by, among other things, providing the facility for application to the tribunal. In my view it is irrelevant that, for obvious reasons, Saudi Arabia was unable to accede (as did the UK) to the 2005 Convention. It is equally irrelevant that, for obvious reasons, the UK was unable to ratify (as did Saudi Arabia) the Arab Charter on Human Rights adopted by the League of Arab States on 22 May 2004, which, by article 10(1) and (2), declared that no one should be held in servitude under any circumstances and that trafficking in human beings for the purposes of any form of exploitation was prohibited. The relevance of these instruments is that they underscore the equal level of determination of the UK, of Saudi Arabia and in effect of every state in the world to stamp out trafficking. Third: what is trafficking and, in particular, who is guilty of it? In para 39 above Lord Sumption quotes the definition of it in article 3 of the Palermo Protocol, repeated in article 4 of the 2005 Convention. It is the definition in accepted use. For present purposes most of the definition can be omitted and what remains is: the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the abuse of power or of a position of vulnerability for the purposes of exploitation. As was said in para 78 of the explanatory report which accompanied the 2005 Convention, the definition endeavours to encompass the whole sequence of actions that leads to the exploitation of the victim. As was observed by the European Court of Human Rights in Rantsev v Cyprus and Russia (2010) 51 EHRR 1 at para 281, the vice of trafficking is that it treats human beings as commodities to be bought and sold and put to forced labour, often for little or no payment How apt (one therefore asks) is the analogy offered by Lord Sumption in paras 45 and 46 above between a purchaser of stolen goods at a cheap price and an employer, such as Mr Al Malki, of a trafficked migrant? Neither, suggests Lord Sumption, engages in the commercial activity of the thief or handler of the goods and of the recruiter or transporter of the migrant. But another rational view is that the relevant activity is not just the so called employment but the trafficking; that the employer of the migrant is an integral part of the chain, who knowingly effects the receipt of the migrant and supplies the specified purpose, namely that of exploiting her, which drives the entire exercise from her recruitment onwards; that the employers exploitation of the migrant has no parallel in the purchasers treatment of the stolen goods; and that, in addition to the physical and emotional cruelty inherent in it, the employers conduct contains a substantial commercial element of obtaining domestic assistance without paying for it properly or at all. Fourth is the fact that, in the words of Laws J at p 633 in the Propend case, cited above at para 27, diplomatic immunity is an aspect of state immunity. The parties to the 1961 Convention therefore recorded in their second recital to it that, in agreeing its terms, they had in mind the sovereign equality of states. So it must be at least relevant to notice that, in accordance with the movement in the doctrine of sovereign immunity in customary international law from being absolute to being restrictive, Parliament enacted sections 3 and 4 of the State Immunity Act 1978. Section 3(1) excludes immunity in respect of a states entry into a commercial transaction, defined in subsection (3) as, among other things, any contract for the supply of goods or services. At the end of that subsection Parliament provided that the section did not apply to a contract of employment between a state and an individual. In the absence of that provision the section clearly would have applied to such a contract. The purpose of excluding a contract of employment from the ambit of section 3 was, so I infer, only that it required fuller treatment in a section of its own. This is section 4, which, by subsection (1), excludes immunity in respect of such a contract where made in the UK or where the work is to be performed here, albeit subject to exceptions provided in later subsections. It is true that subsection (1)(a) of section 16 of the 1978 Act purports to exclude the application of section 4 to proceedings concerning the employment of the members of a mission, including staff in its domestic service. But for present purposes the subsection can be put to one side because today, in Secretary of State for Foreign and Commonwealth Affairs v Benkharbouche, Libya v Janah, UKSC 0062 of 2017, this court dismisses appeals against declarations that, insofar as it bars employment related claims against a foreign state derived from EU law, the subsection should be disapplied and that, insofar as it bars other such claims, it is incompatible with article 6 of the European Convention on Human Rights. Section 5 of the Canadian State Immunity Act analogously excludes immunity from proceedings relating to a foreign states commercial activity; and in the Canada Labour Code case, cited at para 33 above, the Canadian Supreme Court accepted at p 79 that a contract of employment was generally a commercial activity, while holding that the proceedings for recognition of a unions right to represent Canadian employees at the US naval base had a sovereign element sufficient to preserve the immunity. I cannot readily explain why proceedings relating to a contract of employment entered into by a foreign state, for performance in the UK, will not in principle attract immunity in circumstances in which, if the contract is entered into by a diplomat, it will in principle attract immunity. Fifth is the purpose of diplomatic immunity, helpfully defined in the fourth recital to the 1961 Convention as being not to benefit individuals but to ensure the efficient performance of the functions of diplomatic missions as representing States. If a persons duties under a contract of employment made between her and a foreign diplomat relate to the latters official functions, the immunity is appropriately provided, in accordance with its purpose, by the last four words of article 31(1)(c). But in the present case, for reasons explained by Lord Sumption, there is no apparent link between the duties of Ms Reyes and the official functions of Mr Al Malki. And so if, even in that situation, diplomatic immunity were to arise, the question would become: how does that accord with its purpose? The major perceived problem lies, of course, in the words of article 31(1)(c), in particular of three words commercial activity exercised . The interpretation of the article is required by article 31(1) of the Vienna Convention on the Law of Treaties 1969 Cmnd 4140 (the Vienna Convention) to be undertaken in accordance with the ordinary meaning to be given to [its] terms in their context and in the light of its object and purpose. So the focus is on the ordinary meaning of the words; and the purpose of the 1961 Convention is relevant only to the extent that it throws light upon their ordinary meaning. I am persuaded that, when agreeing to the terms of the 1961 Convention, the parties would have rejected any suggestion that the proceedings brought by Ms Reyes related to any commercial activity exercised by Mr Al Malki. I am, with respect to Lord Sumptions contrary opinion expressed in para 42 above, less persuaded that, even if (which is debatable) article 31 of the 1961 Convention does not by its terms contemplate any future development of its meaning, the latter would have been unable to develop over 56 years. Article 31(3)(c) of the Vienna Convention requires the interpretation of an article to take account of any relevant rules of international law applicable in the relations between the parties; and the requirement is not further qualified. The fact that in the Namibia case, which Lord Sumption there cites, the international court discerned the contemplation of development within the terms of the article under scrutiny does not exclude in other circumstances the natural development of the meaning of an article in accordance with the development of international law, in particular the emergence of an international prohibition against trafficking; nor does the absence of an ability to discern it within a term mean that the parties who agreed it intended otherwise. In Oil Platforms (Islamic Republic of Iran v United States of America) [2003] ICJ 161 the International Court of Justice was required to determine whether, in destroying oil platforms belonging to Iran, the US had breached an article of the Treaty of Amity which it had made with Iran in 1955. In interpreting the article the court, at para 41, turned to current rules of international law on the use of force without considering whether the article had expressly contemplated future development of its meaning. It was enough that the parties could not have intended that the article be interpreted without reference to them. The other perceived problem is that an international treaty calls for international interpretation by reference to broad principles of general acceptation (Stag Line, Ltd v Foscolo, Mango and Co, Ltd [1932] AC 328 at 350); and never more obviously than when every state despatches its diplomats abroad in expectation of their protection under it. So it would be a strong thing for this court to diverge from the US jurisprudence set out in the Tabion case, cited in para 23 above, and to adopt the robust interpretation of article 31(1) for which Ms Reyes contends. On the other hand it is difficult for this court to forsake what it perceives to be a legally respectable solution and instead to favour a conclusion that its system cannot provide redress for an apparently serious case of domestic servitude here in our capital city. In the event my colleagues and I are not put to that test today. Far preferable would it be for the International Law Commission, mid wife to the 1961 Convention, to be invited, through the mechanism of article 17 of the statute which created it, to consider, and to consult and to report upon, the international acceptability of an amendment of article 31 which would put beyond doubt the exclusion of immunity in a case such as that of Ms Reyes. LADY HALE AND LORD CLARKE: (who agree with Lord Wilson) We agree, for the reasons given by Lord Sumption in that connection, that if article 39 applies, then Mr and Mrs Al Malki are not entitled to immunity. We also agree with his proposed disposal of the case. It follows that the proper construction of article 31(1)(c) does not arise. However, had it arisen, we would associate ourselves with the doubts expressed by Lord Wilson as to whether the construction adopted by Lord Sumption in this particular context is correct especially in the light of what we would regard as desirable developments in this area of the law. |
There are two appeals before the court: Rubin v Eurofinance SA (Rubin) and New Cap Reinsurance Corpn Ltd v Grant (New Cap). These appeals raise an important and novel issue in international insolvency law. The issue is whether, and if so, in what circumstances, an order or judgment of a foreign court (on these appeals the United States Bankruptcy Court for the Southern District of New York, and the New South Wales Supreme Court) in proceedings to adjust or set aside prior transactions, eg preferences or transactions at an undervalue (avoidance proceedings), will be recognised and enforced in England. The appeals also raise the question whether enforcement may be effected through the international assistance provisions of the UNCITRAL Model Law (implemented by the Cross Border Insolvency Regulations 2006 (SI 2006/1030) (CBIR)), which applies generally, or the assistance provisions of section 426 of the Insolvency Act 1986, which applies to a limited number of countries, including Australia. In Rubin a judgment of the US Federal Bankruptcy Court for the Southern District of New York (the US Bankruptcy Court) in default of appearance for about US$10m under State and Federal law in respect of fraudulent conveyances and transfers was enforced in England at common law. In New Cap (in which the Court of Appeal was bound by the prior decision in Rubin) a default judgment of the New South Wales Supreme Court, Equity Division, for about US$8m in respect of unfair preferences under Australian law was enforced under the Foreign Judgments (Reciprocal Enforcement) Act 1933 (the 1933 Act), and, alternatively, pursuant to powers under section 426 of the Insolvency Act 1986. In each of the appeals it was accepted or found that the party against whom they were given was neither present (nor, for the purposes of the 1933 Act, resident) in the foreign country nor submitted to its jurisdiction (which are the relevant conditions for enforceability at common law and under the 1933 Act), but that those conditions did not apply to judgments or orders in foreign insolvency proceedings. In addition to the arguments on these two appeals, the court has had the great benefit of written submissions on behalf of parties to proceedings pending in Gibraltar. Those proceedings are to enforce default judgments entered by the US Bankruptcy Court for some $247m in respect of alleged preferential payments to companies in the British Virgin Islands and Cayman Islands arising out of the notorious Ponzi scheme operated by Mr Bernard Madoff. It has been necessary to emphasise that the judgments in all three matters were in default of appearance, because if the judgment debtors had appeared and defended the proceedings in the foreign courts, the issues on these appeals would not have arisen. The reason is that the judgments would have been enforceable on the basis of the defendants submission to the jurisdiction of the foreign court. Enforcement would have been at common law, or, in the New Cap case either under the common law, or under the 1933 Act which substantially reproduces the common law principles there is a subsidiary issue on this appeal as to whether the 1933 Act applies to judgments in insolvency proceedings, dealt with in section IX below. Under the common law a court of a foreign country has jurisdiction to give a judgment in personam where (among other cases) the judgment debtor was present in the foreign country when the proceedings were instituted, or submitted to the jurisdiction of the foreign court by voluntarily appearing in the proceedings. In the case of the 1933 Act the foreign court is deemed to have jurisdiction where the judgment debtor submitted to the jurisdiction by voluntarily appearing in the proceedings otherwise than for the purpose (inter alia) of contesting the jurisdiction; or where the judgment debtor was resident at the time when the proceedings were instituted, or being a body corporate had an office or place of business there: section 4(2)(a)(i),(iv). The Dicey Rule The general principle has been referred to on these appeals, by reference to the common law rule set out in Dicey, Morris & Collins, Conflict of Laws (14th edition, 2006), as Diceys Rule 36. This was only by way of shorthand, because the rules in the 1933 Act are not quite identical, and in any event has been purely for convenience, because the Rule has no standing beyond the case law at common law which it seeks to re state. What was Rule 36 now appears (incorporating some changes which are not material on this appeal) as Rule 43 in the new 15th edition, and I shall refer to it as the Dicey Rule. So far as relevant, Rule 43 (Dicey, Morris and Collins, Conflict of Laws, 15th ed, 2012, para 14R 054) states: a court of a foreign country outside the United Kingdom has jurisdiction to give a judgment in personam capable of enforcement or recognition as against the person against whom it was given in the following cases: First CaseIf the person against whom the judgment was given was, at the time the proceedings were instituted, present in the foreign country. Second CaseIf the person against whom the judgment was given was claimant, or counterclaimed, in the proceedings in the foreign court. Third CaseIf the person against whom the judgment was given submitted to the jurisdiction of that court by voluntarily appearing in the proceedings. Fourth CaseIf the person against whom the judgment was given had before the commencement of the proceedings agreed, in respect of the subject matter of the proceedings, to submit to the jurisdiction of that court or of the courts of that country. The first edition of Dicey in 1896 stated (Rule 80) that the foreign court would have jurisdiction if the defendant was resident [or present?] in the foreign country so as to have the benefit, and be under the protection, of the laws thereof. By the 6th edition in 1949 the formula was repeated by Professor Wortley (Rule 68) but without the doubt about presence as a basis of jurisdiction. In the 8th edition in 1958 Dr (later Professor) Clive Parry removed the phrase (then Rule 189) about the benefit and protection of the foreign countrys laws. The Rule, subsequently edited by Dr Morris and then by Professor Kahn Freund, remained in that form until the decision in Adams v Cape Industries plc [1990] Ch 433 (CA), which established that presence in the foreign jurisdiction, as opposed to residence, was a sufficient basis for the recognition of foreign judgments. Then, edited by myself and later by Professor Briggs, the Rule took substantially its present form in the 12th edition in 1993. The theoretical basis for the enforcement of foreign judgments at common law is that they are enforced on the basis of a principle that where a court of competent jurisdiction has adjudicated a certain sum to be due from one person to another, a legal obligation arises to pay that sum, on which an action of debt to enforce the judgment may be maintained: Williams v Jones (1845) 13 M & W 628, 633 per Parke B; Godard v Gray (1870) LR 6 QB 139, 147, per Blackburn J; Adams v Cape Industries plc [1990] Ch 433, 513; Owens Bank Ltd v Bracco [1992] 2 AC 443, 484, per Lord Bridge of Harwich. As Blackburn J said in Godard v Gray, this was based on the mode of pleading an action on a foreign judgment in debt, and not merely as evidence of the obligation to pay the underlying liability: LR 6 QB 139, 150. But this is a purely theoretical and historical basis for the enforcement of foreign judgments at common law. It does not apply to enforcement under statute, and makes no practical difference to the analysis, nor, in my judgment, to the issues on these appeals. Consequently, if the judgments in issue on the appeals are regarded as judgments in personam within the Dicey Rule, then they will only be enforced in England at common law if the judgment debtors were present (or, if the 1933 Act applies, resident) in the foreign country when the proceedings were commenced, or if they submitted to its jurisdiction. It is common ground that the judgment debtors were not present or resident, respectively, in the United States or in Australia, although there is an issue as to whether the New Cap defendants submitted to the jurisdiction of the Australian court, which is dealt with in section VIII below. Insolvency proceedings and the international dimension There are some general remarks to be made. First, from as early as the mid 18th century the English courts have recognised the effect of foreign personal bankruptcies declared under the law of the domicile: Solomons v Ross (1764) 1 H Bl 131n, where Dutch merchants were declared bankrupt in Amsterdam, and the Dutch curator was held entitled to recover an English debt in priority to an English creditor of the merchants who had attached the debt after the bankruptcy: see Nadelmann, Conflict of Laws: International and Interstate (1972), p 273; Blom Cooper, Bankruptcy in Private International Law (1954), pp 107 108. In Galbraith v Grimshaw [1910] AC 508 Lord Dunedin said that there should be only one universal process of the distribution of a bankrupts property and that, where such a process was pending elsewhere, the English courts should not allow steps to be taken in its jurisdiction which would interfere with that process (p 513): Now so far as the general principle is concerned it is quite consistent with the comity of nations that it should be a rule of international law that if the court finds that there is already pending a process of universal distribution of a bankrupts effects it should not allow steps to be taken in its territory which would interfere with that process of universal distribution. Second, in the case of corporations the English courts have exercised a winding up jurisdiction which is wider than that which at common law they have accorded to foreign courts. The court exercises jurisdiction to wind up a foreign company if there is a sufficient connection between the company and England, there are persons who would benefit from the making of a winding up order, and there are persons interested in the distribution of assets of the company who are persons over whom the court can exercise jurisdiction: see Dicey, 15th ed, para 30R 036. But as regards foreign liquidations, the general rule is that the English court recognises at common law only the authority of a liquidator appointed under the law of the place of incorporation (Dicey, 15th ed, para 30R 100). That is in contrast to the modern approach in the primary international and regional instruments, the EC Insolvency Regulation on Insolvency Proceedings (Council Regulation (EC) No 1346/2000) (the EC Insolvency Regulation) and the Model Law, which is that the jurisdiction with international competence is that of the country of the centre of main interests of the debtor (an expression not without its own difficulties). It is ultimately derived from the civil law concept of a traders domicile, and was adopted in substance in the draft EEC Convention of 1980 as a definition of the debtors centre of administration: see Report by M Lemontey on the draft EEC Bankruptcy Convention, Bulletin of the European Communities, Supp 2/82, p 58; American Law Institute, Transnational Insolvency: Global Principles for Co operation in International Insolvency Cases (2012), Principle 13, pp 83 et seq. Third, it is not only in recent times that there have been large insolvency proceedings with significant cross border implications. Even before then there were the Russian Bank cases in the 1930s (arising out of the nationalisation and dissolution of the banks by the Soviet Government) and the Barcelona Traction case in the 1940s and 1950s (see In re Barcelona Traction, Light and Power Co Ltd (second phase) (Belgium v Spain) [1970] ICJ Rep 69), but there is no doubt that today international co operation in cross border insolvencies has become a pressing need. It is only necessary to recall the bankruptcies or liquidations of Bank of Credit and Commerce International, Maxwell Communications, or Lehman Brothers, each with international businesses, assets in many countries, and potentially competing creditors in different countries with different laws. There is not only a need to balance all these interests but also to provide swift and effective remedies to combat the use of cross border transfers of assets to evade and to defraud creditors. Fourth, there is no international unanimity or significant harmonisation on the details of insolvency law, because to a large extent insolvency law reflects national public policy, for example as regards priorities or as regards the conditions for the application of avoidance provisions: the process of collection of assets will include, for example, the use of powers to set aside voidable dispositions, which may differ very considerably from those in the English statutory scheme: In re HIH Casualty and General Insurance Ltd [2008] UKHL 21, [2008] 1 WLR 852, para 19, per Lord Hoffmann. Fifth, there has been a trend, but only a trend, to what is called universalism, that is, the administration of multinational insolvencies by a leading court applying a single bankruptcy law: Westbrook, A Global Solution to Multinational Default (2000) 98 Mich L Rev 2276, 2277. What has emerged is what is called by specialists modified universalism. The meaning of the expression universalism has undergone a change since the time it was first used in the 19th century, and it later came to be contrasted with the doctrine of unity. In 1834 Story referred to the theory that assignments under bankrupt or insolvent laws were, and ought to be, of universal operation to transfer movable property, in whatever country it might be situate, and concluded that there was great wisdom in adopting the rule that an assignment in bankruptcy should operate as a complete and valid transfer of all his movable property abroad, as well as at home, and for a country to prefer an attaching domestic creditor to a foreign assignee or to foreign creditors could hardly be deemed consistent with the general comity of nations [T]he true rule is, to follow out the lead of the general principle that makes the law of the owners domicil conclusive upon the disposition of his personal property, citing Solomons v Ross as supporting that doctrine: Story, Commentaries on the Conflict of Laws, 1st ed (1834), pp 340 341, para 406. Professor Cheshire, in his first edition (Cheshire, Private International Law, 1935, pp 375 376), said that although English law neglects the doctrine of unity it recognizes the doctrine of universality. What he meant was that English law was committed to separate independent bankruptcies in countries where the assets were situate, rather than one bankruptcy in the country of the domicile (the doctrine of unity), but also accepted the title of the foreign trustee to English movables provided that no bankruptcy proceedings had begun within England (universality). He cited Solomons v Ross for this proposition: The English Courts have consistently applied the doctrine of universality, according to which they hold that all movable property, no matter where it may be situated at the time of the assignment by the foreign law, passes to the trustee. In In re HIH Casualty and General Insurance Ltd [2008] UKHL 21, [2008] 1 WLR 852, para 30, Lord Hoffmann said: The primary rule of private international law which seems to me applicable to this case is the principle of (modified) universalism, which has been the golden thread running through English cross border insolvency law since the 18th century. That principle requires that English courts should, so far as is consistent with justice and UK public policy, co operate with the courts in the country of the principal liquidation to ensure that all the companys assets are distributed to its creditors under a single system of distribution. and in Cambridge Gas Transportation Corporation v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26, [2007] 1 AC 508, para 16 he said, speaking for the Privy Council: The English common law has traditionally taken the view that fairness between creditors requires that, ideally, bankruptcy proceedings should have universal application. There should be a single bankruptcy in which all creditors are entitled and required to prove. No one should have an advantage because he happens to live in a jurisdiction where more of the assets or fewer of the creditors are situated The US Bankruptcy Court accepted in Re Maxwell Communication Corp, 170 BR 800 (Bankr SDNY 1994) that the United States courts have adopted modified universalism as the approach to international insolvency: the United States in ancillary bankruptcy cases has embraced an approach to international insolvency which is a modified form of universalism accepting the central premise of universalism, that is, that assets should be collected and distributed on a worldwide basis, but reserving to local courts discretion to evaluate the fairness of home country procedures and to protect the interests of local creditors. International co operation and assistance Jurisdiction in international bankruptcy has been the subject of multilateral international instruments at least since the Montevideo Treaty on International Commercial Law of 1889, Title X, although bilateral treaties go back much further, and the subject of international recognition and co operation in insolvency was the subject of early discussion by the International Law Association (1879), the Institut de droit international (1888 1912) and the Hague Conference on Private International Law (1904): Nadelmann, op. cit. pp 299 et seq. In more modern times, the European Convention on Certain International Aspects of Bankruptcy (the Istanbul Convention) was concluded under the auspices of the Council of Europe in 1990, but never came into force. The European Community/Union initiative took 40 years to come to fruition. In 1960 the European Community embarked on a project for a Bankruptcy Convention, which resulted in a draft Convention in 1980, to which there was significant opposition. But the project was renewed in 1989, and this led to the tabling of a draft Convention in 1995, which provided that it would only come into force when signed by all 15 of the then member states. The United Kingdom, however, alone of the states, did not sign the Convention (for political reasons), and it never came into force. In 1999 the project was re launched as a Council Regulation, which resulted in the EC Insolvency Regulation in 2000. The United Nations Commission on International Trade Law (UNCITRAL) adopted a Model Law on cross border insolvency in 1997. The Model Law was adopted following initiatives in the 1980s by the International Bar Association and later by INSOL International (the International Association of Restructuring, Insolvency and Bankruptcy Professionals). In 1993 UNCITRAL adopted a resolution to investigate the feasibility of harmonised rules of cross border insolvencies. In 1994 an expert committee was assembled consisting of members of INSOL and representatives of the UNCITRAL Secretariat, and following a series of reports and drafts, UNCITRAL adopted the Model Law in May 1997. The Model Law provides for a wide range of assistance to foreign courts and office holders. It has been implemented by 19 countries and territories, including the United States and Great Britain (although by some states only on the basis of reciprocity). It was not enacted into law in Great Britain until 2006, by the CBIR. Apart from the EC Insolvency Regulation, none of these instruments deals expressly with the enforcement of judgments in insolvency proceedings. The question whether the Model Law does so by implication will be considered below in section IV. Consequently, there are four main methods under English law for assisting insolvency proceedings in other jurisdictions, two of which are part of regionally or internationally agreed schemes. First, section 426 of the Insolvency Act 1986 provides a statutory power to assist corporate as well as personal insolvency proceedings in countries specified in the Act or designated for that purpose by the Secretary of State. All the countries to which it currently applies are common law countries or countries sharing a common legal tradition with England. They include Australia: the Co operation of Insolvency Courts (Designation of Relevant Countries and Territories) Order 1986 (SI 1986/2123). Second, the EC Insolvency Regulation applies to insolvency proceedings in respect of debtors with their centres of main interests (COMI) within the European Union (excluding Denmark). The EC Insolvency Regulation has no role in the present appeal because none of the debtors has its centre of main interests in the European Union. Third, the CBIR came into force on 4 April 2006, implementing the Model Law. The CBIR supplement the common law, but do not supersede it. Article 7 of the Model Law provides: Nothing in this Law limits the power of a court or British insolvency officeholder to provide additional assistance to a foreign representative under other laws of Great Britain. Article 23 of the Model Law allows avoidance claims to be made by foreign representatives under the Insolvency Act 1986, and the CBIR apply to preferences after they came into force on 4 April 2006. The UNCITRAL Guide to Enactment (to which resort may be had for the purposes of interpretation of the CBIR) also emphasises that the Model Law enables enacting states to make available to foreign insolvency proceedings the type of relief which would be available in the case of a domestic insolvency (UNCITRAL Legislative Guide on Insolvency Law (2005), Annex III, Ch IV, p 311, para 20(b)): The Model Law presents to enacting states the possibility of aligning the relief resulting from recognition of a foreign proceeding with the relief available in a comparable proceeding in the national law. Fourth, at common law the court has power to recognise and grant assistance to foreign insolvency proceedings. The common law principle is that assistance may be given to foreign officeholders in insolvencies with an international element. The underlying principle has been stated in different ways: recognition carries with it the active assistance of the court: In re African Farms Ltd [1906] TS 373, 377; This court will do its utmost to co operate with the United States Bankruptcy Court and avoid any action which might disturb the orderly administration of [the company] in Texas under ch 11: Banque Indosuez SA v Ferromet Resources Inc [1993] BCLC 112, 117. In Credit Suisse Fides Trust v Cuoghi [1998] QB 818, 827, Millett LJ said: In other areas of law, such as cross border insolvency, commercial necessity has encouraged national courts to provide assistance to each other without waiting for such co operation to be sanctioned by international convention It is becoming widely accepted that comity between the courts of different countries requires mutual respect for the territorial integrity of each others jurisdiction, but that this should not inhibit a court in one jurisdiction from rendering whatever assistance it properly can to a court in another in respect of assets located or persons resident within the territory of the former. The common law assistance cases have been concerned with such matters as the vesting of English assets in a foreign officeholder, or the staying of local proceedings, or orders for examination in support of the foreign proceedings, or orders for the remittal of assets to a foreign liquidation, and have involved cases in which the foreign court was a court of competent jurisdiction in the sense that the bankrupt was domiciled in the foreign country or, if a company, was incorporated there. An early case of recognition was Solomons v Ross 1 H B1 131n, where, as I have said, the bankruptcy was in Holland, and the bankrupts were Dutch merchants declared bankrupt in Amsterdam, and the Dutch curator was held entitled to recover an English debt: see also Bergerem v Marsh (1921) B&CR 195 (English member of Belgian firm submitted to Belgian bankruptcy proceedings: movable property in England vested in Belgian trustee). One group of cases involved local proceedings which were stayed or orders which were discharged because of foreign insolvency proceedings. Thus in Banque Indosuez SA v Ferromet Resources Inc [1993] BCLC 112 an English injunction against a Texas corporation in Chapter 11 proceedings was discharged; cf In re African Farms Ltd [1906] TS 373 (execution in Transvaal by creditor in proceedings against English company in liquidation in England stayed by Transvaal court), applied in Turners & Growers Exporters Ltd v The Ship Cornelis Verolme [1997] 2 NZLR 110 (Belgian shipowner in Belgian bankruptcy: ship released from arrest); Modern Terminals (Berth 5) Ltd v States Steamship Co [1979] HKLR 512 (stay in Hong Kong of execution against Nevada corporation in Chapter 11 proceedings in United States federal court in California), followed in CCIC Finance Ltd v Guangdong International Trust & Investment Corpn [2005] 2 HKC 589 (stay of Hong Kong proceedings against Chinese state owned enterprise in Mainland insolvency). Cases of judicial assistance in the traditional sense include In re Impex Services Worldwide Ltd [2004] BPIR 564, where a Manx order for examination and production of documents was made in aid of the provisional liquidation in England of an English company. Cases involving remittal of assets from England to a foreign office holder include In re Bank of Credit and Commerce International SA (No 10) [1997] Ch 213 (Luxembourg liquidation of Luxembourg company); and In re HIH Casualty and General Insurance Ltd [2008] UKHL 21, [2008] 1 WLR 852 (the view of Lord Hoffmann and Lord Walker) (Australian liquidation of Australian insurance company); and In re SwissAir Schweizerische Luftverkehr Aktiengesellschaft [2009] EWHC 2099 (Ch), [2010] BCC 667 (Swiss liquidation of Swiss company). III The Cambridge Gas and HIH decisions The opinion of Lord Hoffmann, speaking for the Privy Council, in Cambridge Gas Transportation Corpn v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26, [2007] 1 AC 508 (Cambridge Gas) and his speech in the House of Lords in In re HIH Casualty and General Insurance Ltd [2008] UKHL 21, [2008] 1 WLR 852 (HIH) have played such a major role in the decisions of the Court of Appeal and in the arguments of the parties on these appeals that it is appropriate to put them in context at this point. Cambridge Gas The broad facts of Cambridge Gas were these. In 1997 a shipping business was initiated by a Swiss businessman, Mr Giovanni Mahler. The investors borrowed $300m on the New York bond market and the business bought five gas transport vessels. The venture was a failure, and ended with a Chapter 11 proceeding in the US Bankruptcy Court in New York. The question for the Privy Council on appeal from the Isle of Man was whether an order of the New York court was entitled to implementation in the Isle of Man. The corporate structure of the business was that the investors owned, directly or indirectly, a Bahamian company called Vela Energy Holdings Ltd (Vela). Vela owned (through an intermediate Bahamian holding company) Cambridge Gas, a Cayman Islands company. Cambridge Gas owned directly or indirectly about 70% of the shares of Navigator Holdings plc (Navigator), an Isle of Man company. Navigator owned all the shares of an Isle of Man company which in turn owned companies which each owned one ship. In 2003 Navigator petitioned the US Bankruptcy Court for relief under Chapter 11 of the US Bankruptcy Code, which allows insolvent companies, under supervision of the court and under cover of a moratorium, to negotiate a plan of reorganisation with their creditors. The petition was initiated by the investor interests, who proposed a plan to sell the ships nominally by auction but in fact to the previous investors, but the bondholders did not accept this and proposed their own plan under which the assets of Navigator would be vested in the creditors and the equity interests of the previous investors would be extinguished. The judge rejected the investors plan and approved the creditors plan. The mechanism which the plan used to vest the assets in the creditors was to vest the shares in Navigator in their representatives, ie, the creditors committee. That would enable them to control the shipping companies and implement the plan. The plan provided that upon entry of the confirmation order title to all the common stock of Navigator would vest in the creditors committee to enable it to implement the plan. The order of the New York court confirming the plan recorded the intention of the court to send a letter of request to the Manx court asking for assistance in giving effect to the plan and confirmation order and such a letter was sent. The committee of creditors then petitioned the Manx court for an order vesting the shares in their representatives. At this point it is necessary to emphasise two features of the case. The first feature is that Navigator was an Isle of Man company and 70% of its common stock was owned directly or indirectly by Cambridge Gas. Under the normal principles of the conflict of laws the shares would have been situate in the Isle of Man: Dicey, 15th ed, para 22 045. That is why Lord Hoffmann said, at para 6, that the New York court was aware that the order vesting title to the common stock of Navigator in the creditors committee could not automatically have effect under the law of the Isle of Man; and also why he accepted (paras 12 13) that if the judgment were a judgment in rem it could not affect title to shares in the Isle of Man. The second feature which it is necessary to emphasise is that Cambridge Gas was a Cayman Islands company which (as held by the Manx courts) had not submitted to the jurisdiction of the US Bankruptcy Court. Lord Hoffmann said, at para 8, that the position that Cambridge Gas had not submitted to the jurisdiction of the US Bankruptcy Court bore little relation to economic reality since the New York proceedings had been conducted on the basis that the contest was between rival plans put forward by the shareholders and the creditors; Vela, the parent company of Cambridge Gas, participated in the Chapter 11 proceedings; and they had been instituted by Navigator. Consequently the claim by Cambridge Gas that it had not submitted was highly technical, but there was no appeal from the decisions of the Manx courts that it had not submitted. But Lord Hoffmann also accepted that if the order of the US Bankruptcy Court were to be regarded as a judgment in personam it would not be entitled to recognition or enforcement in the Isle of Man because the New York court had no personal jurisdiction over Cambridge [Gas]: para 10. Nevertheless the Privy Council held that the plan could be carried into effect in the Isle of Man. The reasoning was as follows: first, if the judgment had to be classified as in personam or in rem the appeal would have to be allowed, but bankruptcy proceedings did not fall into either category: [13] Judgments in rem and in personam are judicial determinations of the existence of rights: in the one case, rights over property and in the other, rights against a person. When a judgment in rem or in personam is recognised by a foreign court, it is accepted as establishing the right which it purports to have determined, without further inquiry into the grounds upon which it did so. The judgment itself is treated as the source of the right. [14] The purpose of bankruptcy proceedings, on the other hand, is not to determine or establish the existence of rights, but to provide a mechanism of collective execution against the property of the debtor by creditors whose rights are admitted or established. [15] [B]ankruptcy, whether personal or corporate, is a collective proceeding to enforce rights and not to establish them. Of course, as Brightman LJ pointed out in In re Lines Bros Ltd [1983] Ch 1, 20, it may incidentally be necessary in the course of bankruptcy proceedings to establish rights which are challenged: proofs of debt may be rejected; or there may be a dispute over whether or not a particular item of property belonged to the debtor and is available for distribution. There are procedures by which these questions may be tried summarily within the bankruptcy proceedings or directed to be determined by ordinary action. But these again are incidental procedural matters and not central to the purpose of the proceedings. Second, the principle of universality underlay the common law principles of judicial assistance in international insolvency, and those principles were sufficient to confer jurisdiction on the Manx court to assist, by doing whatever it could have done in the case of a domestic insolvency: paras 21 22. Third, exactly the same result could have been achieved by a scheme under the Isle of Man Companies Act 1931. Fourth, it was no objection to implementation of the plan in the Isle of Man that the shares in Navigator belonged to a person (Cambridge Gas) which was not a party to the bankruptcy proceedings for these reasons, at para 26: [A] share is the measure of the shareholders interest in the company: a bundle of rights against the company and the other shareholders. As against the outside world, that bundle of rights is an item of property a chose in action. But as between the shareholder and the company itself, the shareholders rights may be varied or extinguished by the mechanisms provided by the articles of association or the Companies Act. One of those mechanisms is the scheme of arrangement under section 152 [of the Isle of Man Companies Act 1931]. As a shareholder Cambridge is bound by the transactions into which the company has entered, including a plan under Chapter 11 or a scheme under section 152. At this point it is necessary to point out that the opinion in Cambridge Gas does not articulate any reason for holding that, in the eyes of the Manx court, the US Bankruptcy Court had international jurisdiction in either of two relevant senses. The first sense is the jurisdiction of the US Bankruptcy Court in relation to the Chapter 11 proceedings themselves. The entity which was in Chapter 11 was Navigator. The English courts exercise a wider jurisdiction in bankruptcy and (especially) in winding up than they recognise in foreign courts. At common law, the foreign court which is recognised as having jurisdiction in personal bankruptcy is the court of the bankrupts domicile or the court to which the bankrupt submitted (Dicey, 15th ed, para 31R 059) and the foreign court with corresponding jurisdiction over corporations is the court of the place of incorporation (Dicey, 15th ed, para 30R 100). Under United States law the US Bankruptcy Court has jurisdiction over a debtor, and such a debtor must reside or have a domicile or place of business, or property in the United States. From the standpoint of English law, the US Bankruptcy Court had international jurisdiction because although Navigator was not incorporated in the United States, it had submitted to the jurisdiction by initiating the proceedings. The second sense in which international jurisdiction is relevant is the jurisdiction over the third party, Cambridge Gas, and its shares in Navigator. Cambridge Gas was not incorporated in the United States, and it was held by the Isle of Man courts that it had not submitted to the jurisdiction of the US Bankruptcy Court (and this was, as I have said, accepted with evident reluctance by the Privy Council). The property which was the subject of the order of the US Bankruptcy Court was shares in an Isle of Man company. Consequently the property dealt with by the US Bankruptcy Court was situate, by Manx rules of the conflict of laws, in the Isle of Man, and the shareholder relationship was governed by Manx law. Cambridge Gas was the subject of brief comment a few months later by the Privy Council in Pattni v Ali [2006] UKPC 51, [2007] 2 AC 85. The decision in that case was simply that a Kenyan judgment deciding that A was bound to sell shares in a Manx company to B was entitled to recognition in the Isle of Man. It resulted in an order in personam against a person subject to the jurisdiction of the Kenyan court, and was not a judgment in rem against property in the Isle of Man and outside the jurisdiction of the Kenyan court, because the fact that a judicial determination determines or relates to the existence of property rights between parties does not in itself mean that it is in rem. Lord Mance, speaking for the Board, said, at para 23: In Cambridge Gas the Board touched on the concepts of in personam and in rem proceedings, but held that the bankruptcy order with which it was concerned fell into neither category. Its purpose was simply to establish a mechanism of collective execution against the property of the debtor by creditors whose rights were admitted or established. The decision in HIH does not deal with foreign judgments. HIH concerned four Australian insurance companies which were being wound up in Australia and in respect of which provisional liquidators had been appointed in England. The question was whether the English court had power to direct remission of assets collected in England to Australia, notwithstanding that there were differences between the English and Australian statutory regimes for distribution which meant that some creditors would benefit from remission whilst some creditors would be worse off. The House of Lords unanimously directed that remission should take place, but the reasons differed. The reasoning of the majority (Lord Scott of Foscote and Lord Neuberger of Abbotsbury, with Lord Phillips of Worth Matravers agreeing)) was based exclusively on the statutory power to assist foreign insolvency proceedings under section 426 of the Insolvency Act 1986, but Lord Hoffmann (with whom Lord Walker agreed) also considered that such a power existed at common law. Lord Hoffmann characterised the principle of universality as a principle of English private international law that, where possible, there should be a unitary insolvency proceeding in the courts of the insolvents domicile which receives worldwide recognition and which should apply universally to all the bankrupts assets, at para 6: Despite the absence of statutory provision, some degree of international co operation in corporate insolvency had been achieved by judicial practice. This was based upon what English judges have for many years regarded as a general principle of private international law, namely that bankruptcy (whether personal or corporate) should be unitary and universal. There should be a unitary bankruptcy proceeding in the court of the bankrupt's domicile which receives worldwide recognition and it should apply universally to all the bankrupt's assets. Other parts of Lord Hoffmanns speech have already been quoted above, and it is only necessary for present purposes to recall that he said that (a) the process of collection of assets will include, for example, the use of powers to set aside voidable dispositions, which may differ very considerably from those in the English statutory scheme (at para 19) and (b) that the purpose of the principle of universality was to ensure that the debtors assets were distributed under one scheme of distribution, and that the principle required that English courts should co operate with the courts in the country of the principal liquidation to ensure that all the companys assets are distributed to its creditors under a single system of distribution: para 30. Subsequent treatment of Cambridge Gas The decision in Cambridge Gas was not applied by the Supreme Court of Ireland in In re Flightlease (Ireland) Ltd [2012] IESC 12 (to which I shall revert) and has been subject to academic criticism. Professor Briggs has expressed the view ((2006) 77 BYIL 575, 581) that the decision in [Cambridge Gas] is wrong, for it requires a Manx court to give effect to a confiscation order made by a foreign court of property belonging to a person who was not subject to the personal jurisdiction of the foreign court. That a Manx court could have done so itself is nothing to the point. I shall return to the question whether it was correctly decided. IV The cases before the court and the issues Eurofinance SA is a company incorporated in the British Virgin Islands. It was established by Adrian Roman, the second appellant on the Rubin appeal. Eurofinance SA settled The Consumers Trust (TCT) under a deed of trust made in 2002 under English law, with trustees resident in England, of whom two were accountants and two were solicitors. TCT was established to carry on a sales promotion scheme in the USA and Canada. The class of beneficiaries was made up of persons who had successfully participated in the scheme by claiming validly in certain sales promotions owned and operated by Eurofinance SA. The trustees were to hold the capital and income of TCT for the beneficiaries and subject thereto for Eurofinance SA as beneficiary in default. The promotion, known as the Cashable Voucher Programme, was entered into with participating merchants in the United States and Canada who, when they sold products or services to their customers, offered those customers a cashable voucher comprising a rebate of up to 100% of the purchase price for the product or service. Under the terms of the voucher the rebate was to be paid to customers in three years time provided that certain conditions were followed by the customer involving the completion by the customer of both memory and comprehension tests. The participating merchants paid TCT 15% of the face value of each cashable voucher issued by the merchant during a week. TCT retained 40% of the payments received (ie 6% of the face value of each cashable voucher). About one half of the 60% balance received from merchants was paid to Eurofinance SA (and so effectively to Adrian Roman) and the remainder was paid to others involved in the operation of the programme, such as solicitors, accountants and US lawyers. From about 2002 Adrian Romans sons, Nicholas Roman and Justin Roman, each began to receive about 2%. The trustees maintained bank accounts in the USA and Canada where the payments they had received from merchants were kept. Since the trustees only retained 6% of the face value of the issued vouchers, the success of the scheme necessarily involved the consumers either forgetting to redeem the vouchers or being unsuccessful in navigating the process required to be followed in order to obtain payment. When the scheme folded in 2005 the trustees held nearly US$10m in bank accounts in the United States and Canada. By about 2005 TCTs business ceased after the Attorney General of Missouri brought proceedings under Missouris consumer protection legislation which resulted in a settlement involving a payment by the trustees of US$1,650,000 and US$200,000 in costs. When it became clear that further proceedings were likely to be brought by Attorneys General in other states, that the number of consumer claims would increase, and that TCT would not have sufficient funds to meet all the valid claims of its beneficiaries, in November 2005 Adrian Roman caused Eurofinance to apply for the appointment by the High Court of the respondents on the Rubin appeal, David Rubin and Henry Lan, as receivers of TCT for the purposes of causing TCT then to obtain protection under Chapter 11 of Title 11 of the United States Code (Chapter 11). The English court was told that Chapter 11 reorganisation proceedings would result in an automatic stay of proceedings against TCT, would enable the receivers to reject unprofitable or burdensome executory contracts, and might result in the recovery as preferential payments of sums paid to consumers and to the Missouri Attorney General. In November 2005 the respondents were appointed as receivers by order of Lewison J, and in the following month, the respondents and the trustees then caused TCT to present a voluntary petition to the US Bankruptcy Court for relief under Chapter 11. TCT was placed into Chapter 11 proceedings in New York as virtually all of its 60,000 creditors were located in the United States or Canada as were its assets. As a matter of United States bankruptcy law, TCT could be the subject matter of a petition for relief under Chapter 11 as a debtor. This is because a trust such as TCT is treated under Chapter 11 as a separate legal entity under the classification of a business trust. A joint plan of liquidation for TCT was prepared, and in September 2007 Lewison J ordered that the respondents (as receivers) be at liberty to seek approval of the plan from the US Bankruptcy Court. Under the terms of the plan the respondents were appointed legal representatives of TCT and given the power to commence, prosecute and resolve all causes of action against potential defendants including the appellants. The US Bankruptcy Court approved the plan in October 2007, and appointed the respondents as foreign representatives of the debtor to make application to the Chancery Division in London for recognition of the Chapter 11 proceedings as a foreign main proceeding under the CBIR; and to seek aid, assistance and co operation from the High Court in connection with the Chapter 11 proceedings, and, in particular to seek the High Courts assistance and co operation in the prosecution of litigation which might be commenced in the US Bankruptcy Court including the enforcement of judgments of this court that may be obtained against persons and entities residing or owning property in Great Britain In December 2007 proceedings were commenced in the US Bankruptcy Court by the issue of a complaint against a number of defendants including the appellants. These claims fall within the category of adversary proceedings under the US bankruptcy legislation, and I will use this term to refer to them. The adversary proceedings comprised a number of claims including causes of action arising under the US Bankruptcy Code, which related to funds received by TCT from merchants which were paid out to the defendants (including the appellants), or to amounts transferred to the defendants within one year prior to the commencement of the TCT bankruptcy case including the appellants. The defendants were the appellants and other parties involved with the programme. The appellants were served personally with the complaint commencing the adversary proceedings but did not defend, or participate, in the adversary proceedings, although it appears from a judgment of the US Bankruptcy Court that Eurofinance SA had filed a notice of appearance in the main Chapter 11 proceedings (Order of 22 July 2008, paras 42 43). On 22 July 2008 default and summary judgment was entered against the appellants in the adversary proceedings by the US Bankruptcy Court. The US Bankruptcy Court entered a judgment against the appellants on the ten counts of the complaint. In November 2008 the respondents applied as foreign representatives to the Chancery Division for, inter alia, (a) an order that the Chapter 11 proceedings be recognised as a foreign main proceeding (b) an order that the respondents be recognised as foreign representatives within the meaning of article 2(j) of the Model Law in relation to those proceedings; and (c) an order that the US Bankruptcy Courts judgment be enforced as a judgment of the English court in accordance with CPR Pts 70 and 73. Nicholas Strauss QC, sitting as a deputy judge of the Chancery Division, recognised the Chapter 11 proceedings (including the adversary proceedings) as foreign main proceedings, and the respondents as foreign representatives, but refused to enforce the judgments in the adversary proceedings because (a) at common law the English court will not enforce a judgment in personam contrary to the normal jurisdictional rules for foreign judgments; and (b) there was nothing in CBIR, articles 21(e) (realisation of assets) and 25 (judicial co operation), which justified the enforcement of judgments in insolvency proceedings. At first instance the respondents sought to enforce the entirety of the US Bankruptcy Courts judgment, but before the Court of Appeal they sought an order for the enforcement of those parts of the judgment which were based on state or federal avoidance laws, including fraudulent conveyance under State Fraudulent Conveyance Laws, and under federal law, namely fraudulent transfers under section 548(a) of 11 USC; liability of transferees of avoided transfers under section 550; fraudulent transfers under section 548(b) and liability of transferees of avoided transfers under section 550. The Court of Appeal (Ward and Wilson LJJ and Henderson J) allowed an appeal, and held that the judgment was enforceable: [2010] EWCA Civ 895, [2011] Ch 133. New Cap In the New Cap appeal the appellants are members of Lloyds Syndicate Number 991 (the Syndicate) for the 1997 and 1998 years of account. The respondents are a reinsurance company (New Cap) and its liquidator, a partner in Ernst & Young in Sydney. New Cap is an Australian company, which was licensed as an insurance company in Australia under the Australian Corporations Act 2001 (Cth) (the Australian Act). New Cap did not conduct insurance business in any country other than Australia, and the majority of New Cap's business was generated through reinsurance brokers conducting business in Australia and the balance was generated from overseas insurance brokers. New Cap reinsured the Syndicate in relation to losses occurring on risks attaching during the 1997 and 1998 years of account under reinsurance contracts which were subject to English law, and contained London arbitration clauses and also (oddly) English jurisdiction clauses. The reinsurance contracts were placed with New Cap by the Syndicates Australian broker, which was the sub broker for the Syndicates London broker. Each reinsurance contract contained a commutation clause. The Syndicate and New Cap entered into a commutation agreement to commute the reinsurances with effect from 11 December 1998. Under the commutation agreement, New Cap agreed to make a lump sum payment to the Syndicate by 31 December 1998 in consideration for its release from liability under the reinsurance contracts. The payments were calculated on the basis of a 7.5% discount and a deduction from premium. New Cap made payment pursuant to the commutation agreements in two instalments of US$2,000,000 and US$3,980,600 in January 1999. The commutation payments were made from a bank account held by New Cap at the Sydney branch of the Commonwealth Bank of Australia to a bank account in London. The second respondent was appointed the administrator of New Cap by a resolution of its directors in April 1999. In September 1999 the creditors of New Cap resolved that New Cap be wound up and the second respondent (the liquidator) was appointed its liquidator. Under the Australian legislation, the winding up is deemed to have commenced on the day on which the administration began. In April 2002 the liquidator caused proceedings to be commenced against the Syndicate in the Supreme Court of New South Wales alleging that because New Cap was insolvent when the commutation payments were made in January 1999, and because those payments were made within the period of six months ending on the date when the administrator was appointed, they constituted unfair preferences and were thus voidable transactions under Part 5.7B of the Australian Act. The Syndicate (which does not accept that the payments were preferences) refused to accept service of the Australian proceedings. The liquidator obtained leave from the Australian court to serve the Australian proceedings on the Syndicates English solicitors in London. The Syndicate did not enter an appearance to the proceedings, but corresponded with the liquidators solicitors, including commenting on an Independent Expert's Report to be used by the respondents as evidence of New Caps insolvency in all of the avoidance proceedings including the proceedings against the Syndicate. The Australian court (White J in a judgment in September 2008, and Barrett J in a judgment in July 2009) recognised that there had been no submission by the Syndicate to the jurisdiction of the Australian court in that it did not enter an appearance, but White J held that the Australian court had jurisdiction over the Syndicate because a cause of action available under the Australian Act for the recovery of a preferential payment to an overseas party made when the company is insolvent was a cause of action which arose in New South Wales for the purposes of the New South Wales provisions for service out of the jurisdiction. Barrett J gave a reasoned judgment in July 2009 holding the Syndicate liable. After the respondents had been given leave to re open their case so that the orders made by the Australian court would more accurately reflect the differences between those appellants who were members of the Syndicate for the 1997 year of account and those appellants who were members for the 1998 year of account, the Australian court entered final judgment against the Syndicate in its absence on 11 September 2009. The Australian judgment declared that the commutation payments were voidable transactions within the meaning of part 5.7B of the Australian Act and ordered the Syndicate to repay the amount of the commutation payments to the liquidator together with interest. On the liquidators application the Australian court issued, in October 2009, a letter of request to the High Court in England and Wales requesting that the court act in aid of and assist the Australian court and exercise jurisdiction under section 426 of the Insolvency Act 1986 by: (1) ordering the Syndicate to pay the sums specified in the Australian judgment; alternatively (2) allowing the liquidator to commence fresh proceedings under the Australian Act in the English Court; (3) granting such further and other relief as the High Court may consider just; and (4) making such further or other orders as may, in the opinion of the High Court, be necessary or appropriate to give effect to the foregoing orders. On 30 July 2010, the Court of Appeal handed down judgment in Rubin. As a result, the respondents' alternative application for permission to commence fresh proceedings against the Syndicate under the Australian Act in England pursuant to section 426 of the Insolvency Act 1986 was adjourned generally, and the respondents were granted permission to seek relief at common law as an alternative to relief under section 426. In New Cap Lewison J and the Court of Appeal were bound by the decision of the Court of Appeal in Rubin. Lewison J held: (a) the judgment was not enforceable under the Foreign Judgments (Reciprocal Enforcement) Act 1933 because, although it applied to Australian judgments, it did not apply to orders made in insolvency proceedings; but (b) the judgment was enforceable under the assistance provision of section 426 of the Insolvency Act 1986 and also at common law: [2011] EWHC 677 (Ch). The Court of Appeal (Mummery, Lloyd and Macfarlane LJJ) affirmed Lewison Js judgment on these grounds: (a) the 1933 Act applied, and registration would not be set aside for lack of jurisdiction in the foreign court, because of the Rubin decision; (b) section 426 could also be used and was not excluded by section 6 of the 1933 Act; (c) but section 6 would preclude an action at common law; (d) it was not necessary to decide whether the courts power of assistance at common law was exercisable where the statutory power was available: [2011] EWCA Civ 971, [2012] 2 WLR 1095. Picard v Vizcaya Partners Ltd This court gave permission for intervention by a written submission on behalf of Mr Irving Picard (the trustee), the trustee for the liquidation in the United States under the Securities Investor Protection Act of 1970 (SIPA) of Bernard L Madoff Investment Securities LLC (Madoff), which was Bernard Madoffs broking company. The trustee is seeking to enforce at common law in Gibraltar judgments of the US Bankruptcy Court against Vizcaya Partners Ltd (Vizcaya), a BVI company, for $180m, and against Asphalia Fund Ltd (Asphalia), a Cayman Islands company, for $67m, representing alleged preferential payments. He is also seeking to enforce a US Bankruptcy Court default judgment in excess of $1 billion in the Cayman Islands in Picard v Harley International (Cayman) Ltd. The Gibraltar and Cayman Islands proceedings have been adjourned to await the outcome of the present appeals. In Picard v Vizcaya Partners Ltd proceedings have been brought in Gibraltar to enforce the default judgments against Vizcaya and Asphalia because $73m is held there on behalf of Vizcaya which the trustee maintains is available to satisfy the judgments. Vizcaya and Asphalia have also, with the permission of the court, intervened by written submission. There is no agreed statement of facts relating to this aspect of the case, and nothing which is said here about the facts should be taken as representing or reflecting any finding. According to Vizcaya and Asphalia the position is as follows. Between 2002 and 2007, a bank in Europe, acting as a custodian trustee for Vizcaya, sent $327m to Madoff for investment in securities. Unknown to the bank, or to Vizcaya, or its shareholder Asphalia, Madoff had been engaged in a Ponzi scheme for some 30 years, and their money was never invested in securities. In 2008, at the time of the credit crunch and the banking crisis, the custodian trustee withdrew $180m (leaving $147m with Madoff) and $67m of the $180m was paid to Asphalia. In late 2008, the Madoff fraud came to light, and the trustee was appointed. The trustee targeted investors who had withdrawn investments from Madoff in the two years before its collapse in December 2008 as a source for recovery of customer property for the benefit of other investors who had not withdrawn their investments. The trustee commenced adversary proceedings in the US Bankruptcy Court alleging preference and fraudulent conveyance against Vizcaya and Asphalia under SIPA and under the Bankruptcy Code, the effect of which, they say, is that (a) as the trustee argues, a person who, on the basis that he has received customer money has been required to repay a preference, does not necessarily become a customer and thereby entitled to share with other customers in the bankruptcy; and (b) the trustee may avoid a payment made by the bankrupt to a creditor 90 days before the commencement of the bankruptcy, irrespective of the intention with which the payment is made or received. The trustee obtained judgments in default, and Vizcaya and Asphalia say that they took no part in the New York proceedings because they had no connection with New York, and in particular (a) Asphalia was not a customer of Madoff but a shareholder of Vizcaya; (b) arguably Vizcaya was not a customer since it had appointed the bank to act as custodian trustee and it was the bank which entered into contracts with Madoff. The issues The principal issue on these appeals is whether the rules at common law or under the 1933 Act regulating those foreign courts which are to be regarded as being competent for the purposes of enforcement of judgments apply to judgments in avoidance proceedings in insolvency, and, if not, what rules do apply (section V below). The other issues are whether, in the Rubin appeal, enforcement may be effected through the assistance provisions of the Cross Border Insolvency Regulations 2006 (section VI) or, in the New Cap appeal, section 426 of the Insolvency Act 1986 (section VII); whether the judgments are enforceable as a result of the submission by the judgment debtors to the jurisdiction of the foreign courts (section VIII); and, in the New Cap appeal, if the judgment is enforceable, whether enforcement is at common law or under the 1933 Act (section IX). V The first issue: recognition and enforcement of foreign judgments in insolvency proceedings Reasoning of the Court of Appeal in Rubin and the issue on the appeal The Court of Appeal in the Rubin appeal decided that a foreign insolvency judgment could be enforced in England and Wales at common law against a defendant not subject to the jurisdiction of the foreign court under the traditional rule as formulated in the Dicey Rule. As I have already said, on the Rubin appeal in the Court of Appeal the receivers sought only to enforce those parts of the judgment which in effect related to the avoidance causes of action. The Court of Appeal held that the judgment (as narrowed) was enforceable at common law. The reasoning was as follows: (a) the judgment was final and conclusive, and for definite sums of money, and on the face of the orders was a judgment in personam; (b) it was common ground that the judgment debtors were not resident (this was a slip for present since the action was at common law and not under the 1933 Act) when the proceedings were instituted, and did not submit to the jurisdiction, and so at first blush had an impregnable defence; (c) Cambridge Gas decided that the bankruptcy order with which it was concerned was neither in personam nor in rem, and its purpose was simply to establish a mechanism of collective execution against the property of the debtor by creditors whose rights were admitted or established: Pattni v Ali [2006] UKPC 51, [2007] 2 AC 85, para 23; (d) bankruptcy was a collective proceeding to enforce rights and not to establish them: Cambridge Gas [2006] UKPC 26, [2007] 1 AC 508, para 15; (e) the issue was whether avoidance proceedings which could only be brought by the representative of the bankrupt were to be characterised as part of the bankruptcy proceedings, ie part of the collective proceeding to enforce rights and not to establish them; (f) the adversary proceedings were part and parcel of the Chapter 11 proceedings; (g) the ordinary rules for enforcing foreign judgments in personam did not apply to bankruptcy proceedings; (h) avoidance mechanisms were integral to and central to the collective nature of bankruptcy and were not merely incidental procedural matters; (i) the process of collection of assets will include the use of powers to set aside voidable dispositions, which may differ very considerably from those in the English statutory scheme: HIH [2008] UKHL 21, [2008] 1 WLR 852, para 19; (j) the judgment of the US Bankruptcy Court was a judgment in, and for the purposes of, the collective enforcement regime of the insolvency proceedings, and was governed by the sui generis private international law rules relating to insolvency; (k) that was a desirable development of the common law founded on the principles of modified universalism, and did not require the court to enforce anything that it could not do, mutatis mutandis, in a domestic context; (l) there was a principle of private international law that bankruptcy should be unitary and universal, and there should be a unitary insolvency proceeding in the court of the bankrupts domicile which receives worldwide recognition and should apply universally to all the bankrupts assets; (m) there was a further principle that recognition carried with it the active assistance of the court which included assistance by doing whatever the English court could do in the case of a domestic insolvency; (n) there was no unfairness to the appellants in upholding the judgment because they were fully aware of the proceedings, and after taking advice chose not to participate: [2011] Ch 133, paras 38, 41, 43, 45, 48, 50, 61 62, 64. It was unnecessary to decide whether the judgment was enforceable under the CBIR: para 63. In short, Ward LJ accepted that the judgment was an in personam judgment, but he decided that the Dicey Rule did not apply to foreign judgments in avoidance proceedings because they were central to the collective enforcement regime in insolvency and were governed by special rules. The essential questions on this aspect of the appeals are these. Is the judgment in each case to be regarded as a judgment in personam within the scope of the traditional rules embodied in the Dicey Rule, or is it to be characterised as an insolvency order which is part of the bankruptcy proceedings, ie part of the collective proceeding to enforce rights and not to establish them? Is that a distinction which has a role to play? Is there a distinction between claims which are central to the purpose of the proceedings and claims which are incidental procedural matters? As a matter of policy, should the court, in the interests of universality of insolvency proceedings, devise a rule for the recognition and enforcement of judgments in foreign insolvency proceedings which is more expansive, and more favourable to liquidators, trustees in bankruptcy, receivers and other officeholders, than the traditional common law rule embodied in the Dicey Rule, or should it be left to legislation preceded by any necessary consultation? Ward LJs conclusion derives from a careful synthesis of dicta in Lord Hoffmanns brilliantly expressed opinion in Cambridge Gas and his equally brilliant speech in HIH, each of which has on these appeals been subjected to an exceptionally detailed analysis. For reasons which will be developed, I do not agree with the conclusions which Ward LJ draws. But I begin with two matters on which I accept the respondents analysis. The first is that avoidance proceedings have characteristics which distinguish them from ordinary claims such as claims in contract or tort. The second is that, if it were necessary to draw a distinction between insolvency orders and other orders, it would not be difficult to formulate criteria for the distinction, along similar lines to that drawn by the European Court in relation to the Brussels Convention, the Brussels I Regulation (Council Regulation (EC) 44/2001) and the EC Insolvency Regulation. Nature of avoidance proceedings In order to achieve a proper and fair distribution of assets between creditors, it will often be necessary to adjust prior transactions and to recover previous dispositions of property so as to constitute the estate which is available for distribution. The principle of equality among creditors which underlies the pari passu principle may require the adjustment of concluded transactions which but for the winding up of the company would have remained binding on the company, and the return to the company of payments made or property transferred under the transactions or the reversal of their effect. Systems of insolvency law use avoidance proceedings as mechanisms for adjusting prior transactions by the debtor and for recovering property disposed of by the debtor prior to the insolvency. Thus under the Insolvency Act 1986 an administrator, or liquidator, or trustee in bankruptcy may, where there has been a transaction at an undervalue, or amounting to an unlawful preference, apply for an order restoring the position to what it would have been had the transaction not taken place: sections 238 et seq and 339 et seq. Other systems of law have similar mechanisms, but they will differ in matters such as the period during which such transactions are at risk of reversal and the role of good faith of the parties to the transaction. The underlying policy is to protect the general body of creditors against a diminution of the assets by a transaction which confers an unfair or improper advantage on the other party, and it is therefore an essential aspect of the process of liquidation that antecedent transactions whose consequences have been detrimental to the collective interest of the creditors should be amenable to adjustment or avoidance: Fletcher, Law of Insolvency, 4th ed (2009), para 26 002; Goode, Principles of Corporate Insolvency Law, 4th ed (2011), para 13 03. Thus the UNCITRAL Legislative Guide on Insolvency Law (2005) says: 150. Many insolvency laws include provisions that apply retroactively from a particular date (such as the date of application for, or commencement of, insolvency proceedings) for a specified period of time (often referred to as the suspect period) and are designed to overturn those past transactions to which the insolvent debtor was a party or which involved the debtor's assets where they have certain effects. 151. It is a generally accepted principle of insolvency law that collective action is more efficient in maximizing the assets available to creditors than a system that leaves creditors free to pursue their individual remedies and that it requires all like creditors to receive the same treatment. Provisions dealing with avoidance powers are designed to support these collective goals, ensuring that creditors receive a fair allocation of an insolvent debtors assets consistent with established priorities and preserving the integrity of the insolvency estate. In In re Condor Insurance Ltd, 601 F 3d 319, 326 (5th Cir 2010), the Court of Appeals for the Fifth Circuit said that: Avoidance laws have the purpose and effect of re ordering the distribution of a debtors assets in favor of the collective priorities established by the distribution statute [and] must be treated as an integral part of the entire bankruptcy system. In different phases of the Australian proceedings in New Cap Barrett J made similar points. He said that in an action for unfair preference under the Australian legislation the liquidator might obtain an order for the payment of money, but the action did not contemplate recovery in the sense applicable to damages and debts; and the proceedings sought to remedy or counter the effects of that depletion caused by the payment by New Cap: New Cap Reinsurance Corpn v Renaissance Reinsurance Ltd [2002] NSWSC 856, paras 23, 27. The order does not vindicate property rights which the company itself would have had prior to liquidation, but statutory rights which the liquidator has under the statutory scheme in consequence of winding up. The purpose of the order for the payment of money to a company in liquidation is not to compensate the company, but to adjust the rights of creditors among themselves in such a way as to eliminate the effects of favourable treatment afforded to one or more creditors, to the exclusion of others, in the period immediately before an insolvent administration commences: New Cap Reinsurance Corpn v Grant [2009] NSWSC 662, 257 ALR 740, paras 20 21. Difference between insolvency claims and others I also accept that, if there were to be a separate rule for the recognition and enforcement of insolvency orders, it would not normally be difficult to distinguish between judgments in insolvency proceedings which are peculiarly the subject of insolvency law such as avoidance proceedings, and other judgments of the kind which are covered by the Dicey Rule. In the context of the Brussels Convention, the Brussels I Regulation and the EC Insolvency Regulation, the European Court has developed a distinction between claims which derive directly from the bankruptcy or winding up, and which are closely connected with them, on the one hand, and those which do not, on the other hand, and the distinction has been applied by the English court. In my judgment, the distinction is a workable one which could be adapted to other contexts should it be useful or necessary to do so. Claims which were regarded as bankruptcy claims have been held to include a claim under French law by a liquidator against a director to make good a deficiency in the assets of a company (Gourdain v Nadler (Case 133/78) [1979] ECR 733); or a claim under German law to set aside a transaction detrimental to creditors (Seagon v Deko Marty NV (Case C 339/07) [2009] 1 WLR 2168). Claims outside the category of bankruptcy claims have been held to include an action brought by a seller based on a reservation of title against a purchaser who was insolvent (German Graphics Graphische Maschinen GmbH v van der Schee (Case C 292/08) [2009] ECR I 8421) or a claim by a liquidator as to beneficial ownership of an asset (Byers v Yacht Bull Corp [2010] EWHC 133 (Ch), [2010] BCC 368). In Oakley v Ultra Vehicle Design Ltd [2005] EWHC 872 (Ch), [2006] BCC 57, Lloyd LJ (sitting as an additional judge of the Chancery Division) said, at para 42): it has been held that a claim by a liquidator to recover pre liquidation debts, although made in the course of the winding up and so, in a sense, relating to it, does not derive directly from it and is therefore not excluded from the Brussels Convention (and therefore now not from the [Brussels I] Regulation) by article 1.2(b): see In re Hayward decd [1997] Ch 45, and UBS AG v Omni Holding AG [2000] 1 WLR 916. By contrast, proceedings by a liquidator against a director or a third party to set aside a transaction as having been effected at an undervalue or on the basis of wrongful or fraudulent trading would be claims deriving directly from the winding up and therefore excluded from the Brussels Convention and now from the [Brussels I] Regulation. In personam or sui generis? I have already quoted the passage in Cambridge Gas in which Lord Hoffmann distinguished between judgments in rem and in personam, on the one hand, and judgments in bankruptcy proceedings, on the other, but it is necessary to repeat it at this point. He said: 13. Judgments in rem and in personam are judicial determinations of the existence of rights: in the one case, rights over property and in the other, rights against a person. When a judgment in rem or in personam is recognised by a foreign court, it is accepted as establishing the right which it purports to have determined, without further inquiry into the grounds upon which it did so. The judgment itself is treated as the source of the right. 14. The purpose of bankruptcy proceedings, on the other hand, is not to determine or establish the existence of rights, but to provide a mechanism of collective execution against the property of the debtor by creditors whose rights are admitted or established. There is no doubt that the order of the US Bankruptcy Court in Cambridge Gas did not fall into the category of an in personam order. Even though the question whether a foreign judgment is in personam or in rem is sometimes a difficult one (Dicey, 15th ed, para 14 109), that was not a personal order against its shareholders, including Cambridge Gas. The order vested the shares in Navigator in the creditors committee. It did not declare existing property rights. Indeed the whole purpose of what was the functional equivalent of a scheme of arrangement was to alter property rights. But it is not easy to see why it was not an in rem order in relation to property in the Isle of Man in the sense of deciding the status of a thing and purporting to bind the world: see Jowitts Dictionary of English Law, 3rd ed (2010) (ed Greenberg), p 1249. The judgments in the Rubin and New Cap appeals were based on avoidance legislation which, with some differences of substance, performs the same function as the equivalent provisions in the Insolvency Act 1986 and its predecessors. But Ward LJ in Rubin accepted that the judgment was in personam and the Rubin respondents have not sought to argue that it was not an in personam judgment. What they say is that, even if it is in personam, it is within a sui generis category of insolvency orders or judgments subject to special rules. There can be no doubt that the avoidance orders in the present appeals are in personam. In In re Paramount Airways Ltd [1993] Ch. 223, 238, Nicholls LJ said that the remedies under section 238 of the Insolvency Act 1986, (transactions at an undervalue) were primarily of an in personam character, and that accords with the nature of the orders in these appeals. The form of judgment of the US Bankruptcy Court in the Rubin case was that plaintiffs have judgment against the defendants in the sums awarded, and the orders of the New South Wales Supreme Court in the New Cap case included orders that the defendants pay to the first plaintiff the sums due under section 588FF(1) of the Australian Corporations Act. The question of principle and policy Since the judgments are in personam the principles in the Dicey Rule are applicable unless the court holds that there is, or should be, a separate rule for judgments in personam in insolvency proceedings, at any rate where those judgments are not designed to establish the existence of rights, but are central to the purpose of the insolvency proceedings or part of the mechanism of collective execution. Prior to Cambridge Gas and the present cases, there had been no suggestion that there might be a different rule for judgments in personam in insolvency proceedings and other proceedings. There are no cases in England which are helpful. The normal rules for enforcement of foreign judgments were applied to a claim by a liquidator for moneys due to the company (Gavin Gibson & Co Ltd v Gibson [1913] 3 KB 379) and to a claim on a debt ascertained in bankruptcy under German law (Berliner Industriebank Aktiengesellschaft v Jost [1971] 2 QB 463). A judgment of the US Bankruptcy Court in Chapter 11 proceedings for repayment of a preferential transfer was enforced in Ontario on the basis of the judgment debtors submission to the New York court, without any suggestion that the normal rules did not apply: Gourmet Resources International Inc v Paramount Capital Corpn (1991) 3 OR (3d) 286, [1993] ILPr 583, app dismissed (1993) 14 OR (3d) 319 (Ont CA). The principles in the Dicey Rule have never received the express approval of the House of Lords or the UK Supreme Court and the leading decisions remain Adams v Cape Industries plc [1990] Ch 433 and the older Court of Appeal authorities which it re states or re interprets. But there can be no doubt that the references by the House of Lords in the context of foreign judgments to the foreign court of competent jurisdiction are implicit references to the common law rule: eg In re Henderson, Nouvion v Freeman (1890) 15 App Cas 1, 8; Owens Bank Ltd v Bracco [1992] 2 AC 443, 484. The Rubin respondents question whether the rules remain sound in the modern world. It is true that the common law rule was rejected in Canada, at first in the context of the inter provincial recognition of judgments. The Supreme Court of Canada held that the English rules developed in the 19th century for the recognition and enforcement of judgments of foreign countries could not be transposed to the enforcement of judgments from sister provinces in a single country with a common market and a single citizenship. Instead a judgment given against a person outside the jurisdiction should be recognised and enforced if the subject matter of the action had a real and substantial connection with the province in which the judgment was given: Morguard Investments Ltd v De Savoye [1990] 3 SCR 1077, para 45. This approach was applied, by a majority, to foreign country judgments in Beals v Saldanha [2003] 3 SCR 416 (applied to the recognition of an English order convening meetings in a scheme of arrangement in Re Cavell Insurance Co (2006) 269 DLR (4th) 679 (Ont CA)). There is no support in England for such an approach except in the field of family law. In Indyka v Indyka [1969] 1 AC 33 it was held that a foreign decree of divorce would be recognised at common law if there was a real and substantial connection between the petitioner (or the respondent) and the country where the divorce was obtained. This rule (now superseded by the Family Law Act 1986) was in part devised to avoid limping marriages, ie cases where the parties were regarded as divorced in one country but regarded as married in another country. It has never been adopted outside the family law sphere in the context of foreign judgments. The Supreme Court of Ireland in In re Flightlease (Ireland) Ltd [2012] IESC 12 declined to follow Cambridge Gas (and also the decision of the Court of Appeal in Rubin) and also held that the Dicey Rule should not be rejected in favour of a real and substantial connection test. In Flightlease the airline Swissair was in a form of debt restructuring proceeding in Switzerland, where it was incorporated. Flightlease is an Irish company in the same group as Swissair. An application was before the Swiss courts under the Swiss federal statute on debt enforcement and bankruptcy seeking the return of money paid by Swissair to Flightlease. The proceedings had reached the stage of judgment, but the liquidators of Flightlease were concerned to know whether a Swiss judgment would be enforceable in Ireland so that they could decide whether to appear in the Swiss proceedings. The Irish Supreme Court held that the judgment would not be enforceable if Flightlease did not appear in the Swiss proceedings for these reasons: (1) the effect of the Swiss order would be to establish a liability on Flightlease to repay moneys and would therefore result in a judgment in personam; (2) it would be preferable for any change in the rules relating to the enforcement of foreign judgments to take place in the context of international consensus by way of treaty or convention given effect by legislation. In particular, the Irish Supreme Court said that it would not adopt the approach in Cambridge Gas because it had resulted from legislative changes in the United Kingdom (this appears to have been based on a misapprehension), and should not be adopted in Ireland in the absence of consensus among common law jurisdictions. But there is no suggestion on this appeal that the principles embodied in the Dicey Rule should be abandoned. Instead the Rubin respondents suggest that the principles should not apply to foreign insolvency orders. The respondents accept that the Dicey Rule applies to claims which may be of considerable significance by an officeholder in a foreign insolvency, such as a claim for breach of contract, or a tort claim, or a claim to recover debts. It is clear that such claims may affect the size of the insolvent estate just as much, and often more, than avoidance claims. Like claims to recover money due to the insolvent estate such as restitutionary claims not involving avoidance, avoidance claims may establish a liability to pay or repay money to the bankrupt estate (as in the present cases). There is no difference of principle. The question, therefore, is one of policy. Should there be a more liberal rule for avoidance judgments in the interests of the universality of bankruptcy and similar procedures? In my judgment the answer is in the negative for the following reasons. First, although I accept that it is possible to distinguish between avoidance claims and normal claims, for example in contract or tort, it is difficult to see in the present context a difference of principle between a foreign judgment against a debtor on a substantial debt due to a company in liquidation and a foreign judgment against a creditor for repayment of a preferential payment. The respondents suggest that a person who sells goods to a foreign company accepts the risk of the insolvency legislation of the place of incorporation. Quite apart from the fact that the suggestion is wholly unrealistic, why should the seller/creditor be in a worse position than a buyer/debtor? The second reason is that if there is to be a different rule for foreign judgments in such proceedings as avoidance proceedings, the court will have to ascertain (or, more accurately, develop) two jurisdictional rules. There are two aspects of jurisdiction which would have to be satisfied if a foreign insolvency judgment or order is to be outside the scope of the Dicey Rule: the first is the requisite nexus between the insolvency and the foreign court, and the second is the requisite nexus between the judgment debtor and the foreign court. In Cambridge Gas Navigator was an Isle of Man company, and the jurisdiction of the United States Bankruptcy Court depends on whether the debtor resides or has a domicile or place of business, or property, in the United States. The shares in Navigator owned by Cambridge Gas (a Cayman Islands company) were, on ordinary principles of the conflict of laws, situated in the Isle of Man, and the shareholder relationship between Navigator and Cambridge Gas was governed by Manx law. The Privy Council, as noted above, did not articulate any rule for the jurisdiction of the US Bankruptcy Court over Navigator (although it had plainly submitted to its jurisdiction) or over Cambridge Gas (which, the Manx courts had held and the Privy Council accepted, had not submitted) or over Cambridge Gas Manx assets. Nor did the Court of Appeal in Rubin articulate the reasons why the English court recognised the jurisdiction of the US Bankruptcy Court over TCT, or over the appellants. The receivers appear to have proceeded originally on the basis that the United States Bankruptcy Court had jurisdiction under United States bankruptcy law because of TCTs residence and principal place of business in New York (petition, 5 December 2005), but the US Bankruptcy Court, in deciding to appoint the receivers as foreign representatives also noted that TCTs business operations were conducted primarily in the United States, the majority of its creditors, substantially all of its assets, and its centre of main interests, were all in the United States. The basis of jurisdiction of the US Bankruptcy Court under United States law over the individual defendants in Rubin was that they were subject both to the general jurisdiction of the court (ie connection of the defendant with the jurisdiction) and also to the specific jurisdiction of the court (ie connection of the cause of action with the jurisdiction) because they specifically sought out the United States as a place to do business and specifically sought out United States merchants and consumers with whom to do business. Accordingly, the exercise of jurisdiction satisfied the due process requirements of the Fifth Amendment. The basis of jurisdiction in New Cap over New Cap itself was of course that it was incorporated in Australia. The basis of jurisdiction over the Syndicate under New South Wales law was that the cause of action against the Syndicate arose in New South Wales. The respondents do not put forward any principled suggestion for rules which will deal with the two aspects of jurisdiction. They accept, as regards the jurisdictional link between the foreign country and the insolvent estate, that English law has traditionally recognised insolvency proceedings taking place in an individual bankrupts place of domicile, or, in the case of corporations, the place of incorporation, but (because the connection which the trustees of the TCT, or the TCT itself, had with the United States was that the trusts main business was there) they rely on what Lord Hoffmann said in HIH [2008] UKHL 21, [2008] 1 WLR 852, para 31: I have spoken in a rather old fashioned way of the companys domicile because that is the term used in the old cases, but I do not claim it is necessarily the best one. Usually it means the place where the company is incorporated but that may be some offshore island with which the company's business has no real connection. The Council Regulation on insolvency proceedings (Council Regulation (EC) No 1346/2000 of 29 May 2000) uses the concept of the centre of a debtor's main interests as a test, with a presumption that it is the place where the registered office is situated: see article 3.1. That may be more appropriate. They propose that each of these issues be resolved, not by a black letter rule like the common law rule for enforcement of judgments, but instead by an appeal to what was said in oral argument to be the discretion of the English court to assist the foreign court. On the second aspect, the jurisdictional link between the foreign country and the judgment debtor, they accept that it is necessary for there to be an appropriate connection between the foreign insolvency proceeding and the insolvency order in respect of which recognition and enforcement is sought. They propose that, in the exercise of the discretion, the court should adopt an approach similar to that taken by the English court in deciding whether to apply provisions of the Insolvency Act 1986, such as section 238 (transactions at an undervalue), to persons abroad, relying on In re Paramount Airways Ltd [1993] Ch 223. That case decided that there is no implied territorial limitation to the exercise of jurisdiction over any person. The Court of Appeal rejected the argument that the section applied only to British subjects and to persons present in England at the time of the impugned transaction. In particular the physical absence or presence of the party at the time of the transaction bore no necessary relationship to the appropriateness of the remedy. Nor was the test of sufficient connection with England satisfactory because it would hardly be distinguishable from the ambit of the sections being unlimited territorially: p 237. Instead, the approach was to be found in the discretion of the court, first to grant permission to serve the proceedings out of the jurisdiction, and secondly, to make an order under the section. On both aspects the court would take into account whether the defendant was sufficiently connected with England for it to be just and proper to make the order against him despite the foreign element. The Rubin respondents say that In re Paramount Airways Ltd is instructive because, if the facts of the present case were reversed such that TCT had carried on the scheme in England and had been placed into insolvency proceedings here and the appellants were resident in New York, then it can be expected that the English court would have considered that England was the correct forum in which to bring section 238 proceedings to recover payments made to the appellants and would have given permission to serve out of the jurisdiction accordingly. They go on to say that it is implicit in this that the English court would have expected the New York court then to recognise and enforce any judgment of the English court even if the appellants had remained in New York and had not contested the proceedings; and that by the same token that the court seeks and expects the recognition and enforcement abroad of its own insolvency orders, the court should recognise and enforce in England insolvency orders made in insolvency proceedings in other jurisdictions. There is no basis for this line of reasoning. There is no necessary connection between the exercise of jurisdiction by the English court and its recognition of the jurisdiction of foreign courts, or its expectation of the recognition of its judgments abroad. It has frequently been said that the jurisdiction exercised under what used to be RSC Ord 11, r. 1 (and is now CPR Practice Direction 6B, para 3.1) is an exorbitant one, in that it was a wider jurisdiction than was recognised in English law as being possessed by courts of foreign countries in the absence of a treaty providing for recognition: see The Siskina (Owners of cargo lately laden on board) v Distos Cia Naviera SA [1979] AC 210, 254 per Lord Diplock; Amin Rasheed Shipping Corpn v Kuwait Insurance Co [1984] AC 50, 65 per Lord Diplock; Spiliada Maritime Corpn v Cansulex Ltd [1987] AC 460, 481 per Lord Goff of Chieveley. Outside the sphere of matrimonial proceedings (see Travers v Holley [1953] P 246, disapproved on this aspect in Indyka v Indyka [1969] 1 AC 33) reciprocity has not played a part in the recognition and enforcement of foreign judgments at common law. The English court does not concede jurisdiction in personam to a foreign court merely because the English court would, in corresponding circumstances, have power to order service out of the jurisdiction: In re Trepca Mines Ltd [1960] 1 WLR 1273. In my judgment, the dicta in Cambridge Gas and HIH do not justify the result which the Court of Appeal reached. This would not be an incremental development of existing principles, but a radical departure from substantially settled law. There is a reason for the limited scope of the Dicey Rule and that is that there is no expectation of reciprocity on the part of foreign countries. Typically today the introduction of new rules for enforcement of judgments depends on a degree of reciprocity. The EC Insolvency Regulation and the Model Law were the product of lengthy negotiation and consultation. A change in the settled law of the recognition and enforcement of judgments, and in particular the formulation of a rule for the identification of those courts which are to be regarded as courts of competent jurisdiction (such as the country where the insolvent entity has its centre of interests and the country with which the judgment debtor has a sufficient or substantial connection), has all the hallmarks of legislation, and is a matter for the legislature and not for judicial innovation. The law relating to the enforcement of foreign judgments and the law relating to international insolvency are not areas of law which have in recent times been left to be developed by judge made law. As Lord Bridge of Harwich put it in relation to a proposed change in the common law rule relating to fraud as a defence to the enforcement of a foreign judgment, if the law is now in need of reform, it is for the legislature, not the judiciary, to effect it: Owens Bank Ltd v Bracco [1992] 2 AC 443, 489. Furthermore, the introduction of judge made law extending the recognition and enforcement of foreign judgments would be only to the detriment of United Kingdom businesses without any corresponding benefit. I accept the appellants point that if recognition and enforcement were simply left to the discretion of the court, based on a factor like sufficient connection, a person in England who might have connections with a foreign territory which were only arguably sufficient would have to actively defend foreign proceedings which could result in an in personam judgment against him, only because the proceedings are incidental to bankruptcy proceedings in the courts of that territory. Although I say nothing about the facts of the Madoff case, it might suggest that foreigners who have bona fide dealings with the United States might have to face the dilemma of the expense of defending enormous claims in the United States or not defending them and being at risk of having a default judgment enforced abroad. Nor is there likely to be any serious injustice if this court declines to sanction a departure from the traditional rule. It would not be appropriate to express a view on whether the officeholders in the present cases would have, or would have had, a direct remedy in England, because there might be, or might have been, issues as to the governing law, or issues as to time limits or as to good faith. Subject to those reservations, several of the ways in which the claims were put (especially those parts of the judgment which were not the subject of these proceedings) in the United States proceedings in Rubin could have founded proceedings by trustees in England for the benefit of the creditors (as beneficiaries of the express trust). In addition there are several other avenues available to officeholders. Avoidance claims by a liquidator of an Australian company may be the subject of a request by the Australian court pursuant to section 426(4) of the Insolvency Act 1986, applying Australian law under section 426(5). In appropriate cases, article 23 of the Model Law will allow avoidance claims to be made by foreign representatives under the Insolvency Act 1986. In the cases where the insolvent estate has its centre of main interests in the European Union, judgments will be enforceable under Article 25 of the EC Insolvency Regulation. It follows that, in my judgment, Cambridge Gas was wrongly decided. The Privy Council accepted (in view of the conclusion that there had been no submission to the jurisdiction of the court in New York) that Cambridge Gas was not subject to the personal jurisdiction of the US Bankruptcy Court. The property in question, namely the shares in Navigator, was situate in the Isle of Man, and therefore also not subject to the in rem jurisdiction of the US Bankruptcy Court. There was therefore no basis for the recognition of the order of the US Bankruptcy Court in the Isle of Man. Regulations In the Rubin appeal it was argued by the respondents that the judgment should also be enforced through the CBIR, implementing the UNCITRAL Model Law. The order made by the deputy judge recognised the Chapter 11 proceeding including the Adversary Proceedings, because bringing adversary proceedings against debtors of the bankrupt is clearly part of collecting the bankrupts assets with a view to distributing them to creditors and the adversary proceedings are part and parcel of the Chapter 11 insolvency proceedings: [2010] 1 All ER (Comm) 81, paras 46, 47. The Court of Appeal was of the same view: [2011] Ch 133, para 61(2) (3). The appellants no longer maintain that the adversary proceedings should not be recognised under the Model Law. Issue 2: Rubin: Enforcement under the Cross Border Insolvency The issue which still arises in relation to the Model Law as implemented by the CBIR is whether the court has power to grant relief recognising and enforcing the relevant parts of the judgment. Article 21 provides that: 1. Upon recognition of a foreign proceeding, whether main or non main, where necessary to protect the assets of the debtor or the interests of the creditors, the court may, at the request of the foreign representative, grant any appropriate relief, including (a) staying the commencement or continuation of individual actions or individual proceedings concerning the debtor's assets, rights, obligations or liabilities, to the extent they have not been stayed under paragraph l(a) of article 20; (b) staying execution against the debtor's assets to the extent it has not been stayed under paragraph l(b) of article 20; suspending the right to transfer, encumber or otherwise (c) dispose of any assets of the debtor to the extent this right has not been suspended under paragraph 1(c) of article 20; (d) providing for the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor's assets, affairs, rights, obligations or liabilities; (e) entrusting the administration or realisation of all or part of the debtor's assets located in Great Britain to the foreign representative or another person designated by the court; (f) extending relief granted under paragraph 1 of article 19; and (g) granting any additional relief that may be available to a British insolvency officeholder under the law of Great Britain, including any relief provided under paragraph 43 of Schedule B1 to the Insolvency Act 1986. The reference to relief under paragragh 43 of Schedule B1 to the Insolvency Act 1986 is a reference to a moratorium on claims in an administration. The Guide to Enactment states, at paras 154, 156: [154] The types of relief listed in article 21, paragraph 1, are typical or most frequent in insolvency proceedings; however, the list is not exhaustive and the court is not restricted unnecessarily in its ability to grant any type of relief that is available under the law of the enacting state and needed in the circumstances of the case. [156] It is in the nature of discretionary relief that the court may tailor it to the case at hand. This idea is reinforced by article 22, paragraph 2, according to which the court may subject the relief granted to conditions that it considers appropriate. Article 25 provides (under the heading Co operation and direct communication between a court of Great Britain and foreign courts or foreign representatives) that: 1. the court may co operate to the maximum extent possible with foreign courts or foreign representatives, either directly or through a British insolvency officeholder. 2. The court is entitled to communicate directly with, or to request information or assistance directly from, foreign courts or foreign representatives. Article 27 provides that the co operation referred to in article 25 may be implemented by any appropriate means, including (a) appointment of a person to act at the direction of the court; (b) communication of information by any means considered appropriate by the court; (c) coordination of the administration and supervision of the debtor's assets and affairs; (d) approval or implementation by courts of agreements concerning the coordination of proceedings; (e) coordination of concurrent proceedings regarding the same debtor. The respondents say that (a) the power under article 21 is to grant any type of relief that is available under the law of the relevant state, and that the fact that recognition and enforcement of foreign judgments is not specifically mentioned in article 21 as one of the forms of relief available, does not mean that such relief cannot be granted; (b) the recognition and enforcement of the judgments of a foreign court is the paradigm means of co operation with that court; and (c) the examples of co operation in article 27 are merely examples and are not exhaustive. But the CBIR (and the Model Law) say nothing about the enforcement of foreign judgments against third parties. As Lord Mance pointed out in argument, recognition and enforcement are fundamental in international cases. Recognition and enforcement of judgments in civil and commercial matters (but not in insolvency matters) have been the subject of intense international negotiations at the Hague Conference on Private International Law, which ultimately failed because of inability to agree on recognised international bases of jurisdiction. It would be surprising if the Model Law was intended to deal with judgments in insolvency matters by implication. Articles 21, 25 and 27 are concerned with procedural matters. No doubt they should be given a purposive interpretation and should be widely construed in the light of the objects of the Model Law, but there is nothing to suggest that they apply to the recognition and enforcement of foreign judgments against third parties. The respondents rely on United States decisions but the only case involving enforcement of a foreign judgment in fact supports the appellants argument. The Model Law has been implemented into United States law through Chapter 15 of Title 11 of the United States Code, which has in sections 1521, 1525 and 1527 provisions which are, with modifications not relevant for present purposes, equivalent to articles 21, 25 and 27 of the CBIR. In Re Metcalfe & Mansfield Alternative Investments 421 BR 685 (Bankr SDNY 2010) the US Bankruptcy Court ordered that orders made by a Canadian court in relation to a plan of compromise and arrangement under the (Canadian) Companies Creditors Arrangement Act 1985 be enforced. That decision does not assist the respondents because the US Bankruptcy Court applied the normal rules in non bankruptcy cases for enforcement of foreign judgments in the United States: pp 698 700. In my judgment the Model Law is not designed to provide for the reciprocal enforcement of judgments. VII Issue 3: New Cap: Enforcement through assistance under section 426 of the Insolvency Act 1986 In view of my conclusion in the next section (section VIII) that the Syndicate submitted to the jurisdiction of the Australian court, the issues on section 426(4) and (5) of the Insolvency Act 1986, and their relationship with section 6 of the Foreign Judgments (Reciprocal Enforcement) Act 1933 do not arise, but since the matter was fully argued I will express a view on the applicability of section 426(4) to a case such as this. Section 426(4) (5) of the Insolvency Act 1986 provides: (4) The courts having jurisdiction in relation to insolvency law in any part of the United Kingdom shall assist the courts having the corresponding jurisdiction in any other part of the United Kingdom or any relevant country or territory. (5) For the purposes of subsection (4) a request made to a court in any part of the United Kingdom by a court in any other part of the United Kingdom, or in a relevant country or territory is authority for the court to which the request is made to apply, in relation to any matter specified in the request, the insolvency law which is applicable by either court in relation to comparable matters falling within its jurisdiction. In exercising its discretion under this subsection, a court shall have regard in particular to the rules of private international law. The reference to the application of rules of private international law in section 426(5) is difficult and obscure: see Dicey, 15th ed, para 30 119; my discussion in In re Television Trade Rentals [2002] EWHC 211 (Ch), [2002] BCC 807, para 17, and the cases there cited; and Al Sabah v Grupo Torras SA [2005] UKPC 1, [2005] 2 AC 333, para 47. But nothing turns on it on these appeals. The question is whether section 426(4) of the 1986 Act provides a procedure by which a judgment of a court having jurisdiction in relation to insolvency law in a relevant country or territory may be enforced in the United Kingdom. As I have said, Australia is a relevant country. A further question arises if section 426(4) applies to the enforcement of foreign judgments and that is whether section 426 is ousted by section 6 of the Foreign Judgments (Reciprocal Enforcement) Act 1933, which provides: No proceedings for the recovery of a sum payable under a foreign judgment, being a judgment to which this Part of the Act applies, other than proceedings by way of registration of the judgment, shall be entertained by any court in the United Kingdom. Both Lewison J and the Court of Appeal [2012] 2 WLR 1095 held that section 426(4) was available as a tool for the enforcement of the judgment. Section 426(4) has been given a broad interpretation: see Hughes v Hannover Rckversicherungs Aktiengesellschaft [1997] 1 BCLC 497 (CA); England v Smith [2001] Ch 419 (CA); HIH [2008] UKHL 21, [2008] 1 WLR 852. It has been held that the fact that a letter of request has been made is a weighty factor, and public policy and comity favour the giving of assistance: Hughes v Hannover, at pp 517 518; England v Smith, at p 433. Thus in England v Smith the Australian court overseeing the liquidation of the Bond Corporation made an order for the examination of a London partner in Arthur Andersen. It issued a letter of request asking the English court to assist it by making its own order for the examination. The Court of Appeal decided that the order should be made. But, despite the respondents argument to the contrary, England v Smith was not a case of the enforcement of the Australian order, but rather the making of the courts own order in aid of the Australian liquidation. In my judgment, subsections 426(4) and (5) of the 1986 Act are not concerned with enforcement of judgments. Section 426(1) (2), by contrast, deals with enforcement of orders in one part of the United Kingdom in another part, and refer expressly to the enforcement of such orders (shall be enforced in section 426(1)). Section 426(4) deals with assistance not only for foreign designated countries such as Australia but also to intra United Kingdom assistance. If section 426(4) applied to intra United Kingdom enforcement of orders, then section 426(1) would be largely redundant, going beyond what the Court of Appeal [2012] 2 WLR 1095, para 57 described as a degree of overlap. Sections 426(1) and (4) have their origin in sections 121 and 123 of the Bankruptcy Act 1914. Section 121 of the 1914 Act provided that orders of bankruptcy courts in one part of the United Kingdom were to be enforced in other parts. Section 122 provided that the courts exercising bankruptcy and insolvency jurisdiction in the United Kingdom and every British court elsewhere were to act in aid of, and be auxiliary to, each other; and, upon a request by the non English court, could exercise the jurisdiction of either court. The Insolvency Law and Practice Report of the Review Committee (1982) (Cmnd 8558) (the Cork Report) said (paras 1909 1913) that section 122 was the vital section in this context, and recommended that the section should be extended to winding up. But, despite the respondents arguments, I do not discern any recommendation which would suggest that section 426(4) applies to the enforcement of foreign judgments. Consequently the applicability of section 6 of the 1933 Act does not arise for decision, except in a context which makes little practical difference, and to which I will revert. VIII Submission If the Dicey Rule applies the judgments in issue will be enforceable in England if the judgment debtors submitted to the jurisdiction of the foreign court. New Cap The Australian court granted leave to serve these proceedings out of the jurisdiction on the Syndicate: section IV, above. The Syndicate did not enter an appearance, but its solicitors commented in writing on evidence presented to the Australian court about New Caps insolvency and their comments were placed before the Australian judge. More relevant is the fact that from August 1999 the Syndicate submitted proofs of debt (in relation to unsettled claims and outstanding premiums for the 1997, 1998, and 1999 years of account, and not to the reinsurance contracts which are the subject of these proceedings) and attended and participated in creditors meetings. In particular at an adjourned meeting of creditors on 16 September 2009 the Syndicate had given a proxy for that meeting to the chairman, and submitted a proof of debt and proxy form for that meeting. The Syndicate voted at a meeting of creditors in favour of a scheme of arrangement. The liquidator has admitted claims by the Syndicate for the sterling equivalent of more than 650,000, although the liquidator is retaining the dividend in partial settlement of the costs incurred in these proceedings. The general rule in the ordinary case in England is that the party alleged to have submitted to the jurisdiction of the English court must have taken some step which is only necessary or only useful if an objection to jurisdiction has been actually waived, or if the objection has never been entertained at all: Williams & Glyns Bank plc v Astro Dinamico Compania Naviera SA [1984] 1 WLR 438, 444 (HL) approving Rein v Stein (1892) 66 LT 469, 471 (Cave J). The same general rule has been adopted to determine whether there has been a submission to the jurisdiction of a foreign court for the purposes of the rule that a foreign judgment will be enforced on the basis that the judgment debtor has submitted to the jurisdiction of the foreign court: Adams v Cape Industries [1990] Ch 433, 459 (Scott J); Akai Pty Ltd v Peoples Insurance Co Ltd [1998] 1 Lloyds Rep 90, 96 97 (Thomas J); see also Desert Sun Loan Corpn v Hill [1996] 2 All ER 847, 856 (CA); Akande v Balfour Beatty Construction Ltd [1998] ILPr 110; Starlight International Inc v Bruce [2002] EWHC 374 (Ch), [2002] ILPr 617, para 14 (cases of foreign judgments); Industrial Maritime Carriers (Bahamas) Inc v Sinoca International Inc (The Eastern Trader) [1996] 2 Lloyds Rep 585, 601 (a case involving the question whether the party seeking an anti suit injunction in support of an English arbitration clause had waived the agreement by submitting to the jurisdiction of the foreign court). The characterisation of whether there has been a submission for the purposes of the enforcement of foreign judgments in England depends on English law. The court will not simply consider whether the steps taken abroad would have amounted to a submission in English proceedings. The international context requires a broader approach. Nor does it follow from the fact that the foreign court would have regarded steps taken in the foreign proceedings as a submission that the English court will so regard them. Conversely, it does not necessarily follow that because the foreign court would not regard the steps as a submission that they will not be so regarded by the English court as a submission for the purposes of the enforcement of a judgment of the foreign court. The question whether there has been a submission is to be inferred from all the facts. It is in that context that Scott J said at first instance in Adams v Cape Industries plc [1990] 1 Ch 433, 461 (a case in which the submission issue was not before the Court of Appeal): If the steps would not have been regarded by the domestic law of the foreign court as a submission to the jurisdiction, they ought not to be so regarded here, notwithstanding that if they had been steps taken in an English court they might have constituted a submission. The implication of procedural steps taken in foreign proceedings must be assessed in the context of the foreign proceedings. I agree with the way it was put by Thomas J in Akai Pty Ltd v Peoples Insurance Company Ltd [1998] 1 Lloyds Rep 90, 97: The court must consider the matter objectively; it must have regard to the general framework of its own procedural rules, but also to the domestic law of the court where the steps were taken. This is because the significance of those steps can only be understood by reference to that law. If a step taken by a person in a foreign jurisdiction, such as making a counterclaim, might well be regarded by English law as amounting to a submission to the jurisdiction, but would not be regarded by that foreign court as a submission to its jurisdiction, an English court will take into account the position under foreign law. The Syndicate did not take any steps in the avoidance proceedings as such which would be regarded either by the Australian court or by the English court as a submission. Were the steps taken by the Syndicate in the liquidation a submission for the purposes of the rules relating to foreign judgments? In English law there is no doubt that orders may be made against a foreign creditor who proves in an English liquidation or bankruptcy on the footing that by proving the foreign creditor submits to the jurisdiction of the English court. In Ex p Robertson, In re Morton (1875) LR 20 Eq 733 trustees were appointed over the property of bankrupt potato merchants in a liquidation by arrangement. A Scots merchant received payment of 120 after the liquidation petition was presented, and proved for a balance of 247 and received a dividend of what is now 20p in the pound. The trustees served a notice of motion, seeking repayment of the 120 paid out of the insolvent estate, out of the jurisdiction. The respondent objected to the jurisdiction of the English court on the ground that he was a domiciled Scotsman. On appeal from the county court, Sir James Bacon CJ held that the court had jurisdiction. He said, at pp 737 738: what is the consequence of creditors coming in under a liquidation or bankruptcy? They come in under what is as much a compact as if each of them had signed and sealed and sworn to the terms of it that the bankrupt's estate shall be duly administered among the creditors. That being so, the administration of the estate is cast upon the court, and the court has jurisdiction to decide all questions of whatever kind, whether of law, fact, or whatever else the court may think necessary in order to effect complete distribution of the bankrupt's estate. [C]an there be any doubt that the Appellant in this case has agreed that, as far as he is concerned, the law of bankruptcy shall take effect as to him, and under this jurisdiction, to which he is not only subjected, but under which he has become an active party, and of which he has taken the benefit . [The Appellant] is as much bound to perform the conditions of the compact, and to submit to the jurisdiction of the court, as if he had never been out of the limits of England. The Syndicate objected to the jurisdiction of the Australian court. Barrett J in his judgment of 14 July 2009 accepted that it had made it clear that it was not submitting to its jurisdiction, and he also accepted that as a result the judgment of the Australian court would not be enforceable in England. His judgment is concerned exclusively with the preference claims, and he did not deal with the question of submission by reference to the Syndicates participation in the liquidation by way of proof and receipt of dividends. He decided that the court had jurisdiction because the New South Wales rules justified service out of the jurisdiction on the basis that the cause of action arose in New South Wales. I would therefore accept the liquidators submission that, having chosen to submit to New Cap's Australian insolvency proceeding, the Syndicate should be taken to have submitted to the jurisdiction of the Australian court responsible for the supervision of that proceeding. It should not be allowed to benefit from the insolvency proceeding without the burden of complying with the orders made in that proceeding. The position is different in the Rubin appeal. It would certainly have been arguable that Eurofinance SA had submitted to the jurisdiction of the United States District Court, for these reasons: first, it was Eurofinance SA which applied for the appointment by the High Court of Mr Rubin and Mr Lan as receivers of TCT specifically for the purpose of causing TCT then to obtain protection under Chapter 11; second, it was Eurofinance SA which represented to the English court that officeholders appointed by the United States court would be able to pursue claims against third parties; third, the judgment of the US Bankruptcy Court states that the court had personal jurisdiction over Eurofinance SA not only because it did business in the United States but also (as I have mentioned above) because it had filed a notice of appearance in the Chapter 11 proceedings (Order 22 of July 2008, paras 42 43). But the Rubin appellants did not appear in the adversary proceedings, and it was not argued in these proceedings that Eurofinance SA (or Mr Adrian Roman, who caused Eurofinance SA to make the application) had submitted to the jurisdiction of the US Bankruptcy Court in any other way and it is not necessary therefore to explore the matter further. IX New Cap: enforcement at common law or under the 1933 Act In view of my conclusion that the Australian judgment in New Cap is enforceable by reason of the Syndicates submission, a purely technical point arises on the method of enforcement. The point is whether the enforcement is to be under the 1933 Act or at common law. If insolvency proceedings are excluded from the 1933 Act, then enforcement would be at common law. If they are not excluded, then (as I have said) section 6 has the effect of excluding an action at common law on the judgment and making registration under the 1933 Act the only method of enforcement of judgments within Part I of the Act. Section 11(2) of the 1933 Act provides that the expression action in personam shall not be deemed to include (inter alia) proceedings in connection with bankruptcy and winding up of companies. But the effect of section 4(2)(c) is that in the case of a judgment given in an action other than an action in personam or an action in rem, the foreign court shall be deemed to have jurisdiction if its jurisdiction is recognised by the English court, ie at common law. Accordingly, the question whether insolvency proceedings are wholly excluded from the operation of the 1933 Act still arises. There is no other provision in the 1933 Act which throws any light on the point. The main object of the 1933 Act was to facilitate the enforcement of commercial judgments abroad by making reciprocity easier. The only reference to insolvency proceedings in the Report of the Foreign Judgments (Reciprocal Enforcement) Committee (1932) (Cmnd 4213), (the Greer Report), which recommended the legislation, is the statement (para 4): It is not necessary for our present purposes to consider the effect in England of foreign judgments in bankruptcy proceedings. The Report annexed draft Conventions which had been drawn up in consultation with experts from Belgium, France and Germany. The draft Conventions with Belgium (article 4(3), (4)) and Germany (article 4(4)) provided that the jurisdictional rules in the Convention did not apply to judgments in bankruptcy proceedings or proceedings relating to the winding up of companies or other bodies corporate, but that the jurisdiction of the original court would be recognised where such recognition was in accordance with the rules of private international law observed by the court applied to. That provision paralleled what became sections 4(2)(c) and 11(2) of the 1933 Act. The draft Convention with France did not apply to judgments in bankruptcy proceedings etc (article 2(3)), but provided that nothing was deemed to preclude the recognition and enforcement of judgments to which the Convention did not apply: article 2(4). The Conventions concluded with countries to which the 1933 Act applied adopted similar techniques. It is unnecessary to set them out in detail. But there is no reason to suppose that bankruptcy proceedings were not regarded as being civil and commercial matters. Thus the 1961 Convention with the Federal Republic of Germany of 1961 (the Reciprocal Enforcement of Foreign Judgments (Germany) Order) (SI 1961/1199) provided in article I(6) that the expression judgments in civil and commercial matters did not include judgments for fines or penalties, and had a separate provision in article II(2) that the Convention did not apply to judgments in bankruptcy proceedings or proceedings relating to the winding up of companies or other bodies corporate (although, in accordance with the usual technique, it did not rule out recognition and enforcement: Art II(3)). Other Conventions simply excluded bankruptcy proceedings from the specific jurisdictional provisions of the Convention, like the draft Conventions annexed to the Greer Report: article 4(5) of the Reciprocal Enforcement of Foreign Judgments (Austria) Order 1962 (SI 1962/1339), article 4(3) of the Reciprocal Enforcement of Foreign Judgments (Norway) Order 1962 (SI 1962/636), and article IV(3) of the Reciprocal Enforcement of Foreign Judgments (Italy) Order 1963 (SI 1973/1894). The Reciprocal Enforcement of Judgments (Australia) Order 1994 (SI 1994/1901) extended the 1933 Act to Australia, implementing the UK Australia Agreement for the reciprocal enforcement of judgments in civil and commercial matters. The Agreement is expressed in article I(c)(i) to apply to judgments in civil and commercial matters. The Order applies Part I of the Act to judgments in respect of a civil or commercial matter (article 4(a)). There is no reason to conclude that the phrase civil and commercial matters does not include insolvency proceedings, and the history of the 1933 Act and the Conventions shows that it does. The fact that insolvency was expressly excluded from the operation of the Brussels Convention, the original and revised Lugano Conventions and the Brussels I Regulation in fact suggests that otherwise they would have been within their scope. The respondents relied on a passage in the ruling of the European Court of Justice in Gourdain v Nadler (Case 133/78) [1979] ECR 733, paras 3 4, as suggesting that the exclusion of bankruptcy in article 1 of the Brussels Convention was an example of a matter excluded from the concept of civil and commercial matters. But it is clear from the context (and from the opinion of Advocate General Reischl) that the court was simply saying that because the expression civil and commercial matters in Article 1 had to be given an autonomous meaning, so also was the case with the expression bankruptcy. That the exclusion of bankruptcy proceedings does not affect their character as civil or commercial matters is confirmed by the recent ruling in F Tex SIA v Lietuvos Anglijos UAB Jadecloud Vilma (Case C 213/10) 19 April 2012, where the court said that the Brussels I Regulation was intended to apply to all civil and commercial matters apart from certain well defined matters and as a result actions directly deriving from insolvency proceedings and closely connected with them were excluded: para 29. It follows that the 1933 Act applies to the Australian judgment and that enforcement should be by way of registration under the 1933 Act. X Disposition I would therefore allow the appeal in Rubin, but dismiss the appeal in New Cap on the ground that the Syndicate submitted to the jurisdiction of the Australian court. LORD MANCE I agree with Lord Collins reasoning and conclusions in his judgment on these appeals, essentially for the reasons he gives, though without subscribing to his incidental observation (para 132) that the Privy Council decision in Cambridge Gas Transportation Corpn v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26, [2007] 1 AC 508 was necessarily wrongly decided. This was not argued before the Supreme Court, and I would wish to reserve my opinion upon it. Cambridge Gas is, on any view, distinguishable. The common law question central to these appeals is whether the Supreme Court should endorse or introduce a special rule of recognition and enforcement, one falling outside the scope of the Dicey Rule which Lord Collins has identified (Rule 36 in the 14th and Rule 43 in the 15th edition) and applicable to judgments in foreign insolvency proceedings setting aside voidable pre insolvency transactions. For the principal reasons which Lord Collins gives in paras 95 to 131, I agree that we should not do so. Since much weight was placed by the respondents and the Court of Appeal upon the Boards reasoning and decision in Cambridge Gas, I add some observations to indicate why, as the present appellants submitted, it concerned circumstances and proceeded upon factual assumptions and a legal analysis which have no parallel in the present case. Cambridge Gas has attracted both Irish judicial dissent and English academic criticism, to which Lord Collins refers in paras 53 and 111 112. Giving the judgment of the Board in Pattni v Ali [2006] UKPC 51, [2007] 2 AC 85, I said that the purpose of the bankruptcy order with which the Board was concerned in Cambridge Gas was simply to establish a mechanism of collective execution against the property of the debtor [Navigator] by creditors whose rights were admitted or established (para 23). This analysis, admittedly, involved treating the vesting in creditors of shares in Navigator as no different in substance from the vesting in creditors of Navigators shares in its ship owning subsidiaries. But it is clear from paras 8 and 9 and again 24 to 26 of the Boards advice in Cambridge Gas that the Board saw no difference. It did not regard Cambridge Gas as having any interest of value to advance or protect in the shares still held nominally in its name. Their vesting in Navigators creditors was no more than a mechanism for disposing of Navigators assets, which did not affect or concern Cambridge Gas. The Board was therefore, in its view (and rightly or wrongly), concerned with distribution of the insolvent companys assets in a narrow and traditional sense. Amplifying this, the Board approached the situation in Cambridge Gas as follows. The New York court had jurisdiction over Navigators assets, since Navigator had submitted to the New York proceedings. Cambridge Gass shares in Navigator (located in the Isle of Man, Navigators place of incorporation) were completely and utterly worthless: [2007] 1 AC 508, para 9. The transfer to Navigators creditors of Cambridge Gass shares in Navigator had the like effect to a transfer of Navigators assets, since Navigator was an insolvent company, in which the shareholders ha[d] no interest of any value (para 26). Cambridge Gass shares in Navigator were vulnerable in the Isle of Man, under section 152 of the Companies Act 1931, to a similar scheme of arrangement to that which the New York Court intended by its Chapter 11 order. More generally, as I noted in Stone & Rolls Ltd v Moore Stephens [2009] UKHL 39, [2009] AC 1391, paras 236 to 238, in insolvency shareholders interests yield to those of creditors. It was in this limited context that the Board concluded that the New York and Manx courts orders could be regarded as doing no more than facilitating or enabling collective execution against Navigators property. The Court of Appeal believed on the contrary that the answer to the present cases lay in the Boards general statements in Cambridge Gas at paras 19 to 21 regarding the nature of insolvency proceedings. It is true that proceedings to avoid pre insolvency transactions can be related to the process of collection of assets. That is, their general purpose and effect is to ensure a fair allocation of assets between all who are and were within some specified pre insolvency period creditors. A dictum of Lord Hoffmann in In re HIH Casualty and General Insurance Ltd [2008] UKHL 21, [2008] 1 WLR 852, para 19, quoted by Lord Collins in paras 15 and 52, is to that effect, though again uttered in a different context to the present. However, the Board did not see these considerations as answering or eliminating all questions regarding the existence of jurisdiction or at least its exercise in Cambridge Gas. On the contrary, it went on to examine in close detail in paras 22 to 26 the limits of the assistance that a court could properly give. In rejecting the argument that the interference with the shareholding held in Cambridge Gass name was beyond the Manx courts jurisdiction (para 26), the only reason it gave related to the nature of shares in an insolvent company. This meant, according to its advice, that Cambridge Gas had no interest of any value to protect and that registration of the shares in Navigators creditors name was no more than a mechanism for giving creditors access to Navigators assets. On this basis, the decision in Cambridge Gas is, as Professor Adrian Briggs noted in a penetrating case note in The British Year Book of International Law (2006) p575 581, less remarkable (although, as Professor Briggs also notes, it perhaps still poses problems of reconciliation with the Houses decision in Socit Eram Shipping Co Ltd v Hong Kong & Shanghai Banking Corp Ltd [2003] UKHL 30, [2004] AC 260). But, because the actual decision in Cambridge Gas was so narrowly focused on the nature of a shareholders rights in an insolvent company and was not directly challenged, I prefer to leave open its correctness. Whatever view may be taken as to the validity of the Boards reasoning in Cambridge Gas, it is clear that it does not cover or control the present appeal. The present cases are not concerned with shares, with situations in which shares are, or are treated by the court as, no more than a key to the insolvent companys assets or even with situations in which it is clear that those objecting to recognition and enforcement of the foreign courts orders have no interests to protect. There are, on the contrary, substantial issues as to whether there were fraudulent preferences giving rise to in personam liability in large amounts. The persons allegedly benefitting by fraudulent preferences did not appear in the relevant foreign insolvency proceedings in which judgment was given against them. They were (leaving aside any question of submission) outside the international jurisdiction of the relevant foreign courts. Lord Clarke takes a different view from Lord Collins, but does not define either the circumstances in which a foreign court should, under English private international law rules, be recognised as having jurisdiction to entertain bankruptcy proceedings or, if one were (wrongly in my view) to treat the whole area as one of discretion, the factors which might make it either unjust or contrary to public policy to recognise an avoidance order made in such foreign proceedings (see paras 193, 200 and 201 of Lord Clarkes judgment). The scope of the jurisdiction to entertain bankruptcy proceedings which English private international law will recognise a foreign court as having is described in Dicey (in para 31 064 in the 14th and 15th editions) as a vexed and controversial question. But it would include situations in which the bankrupt or insolvent company had simply submitted to the foreign bankruptcy jurisdiction. On Lord Clarkes analysis, in such a case (of which Rubin v Eurofinance is an example), it would be irrelevant that the debtor under the avoidance order had not submitted, and was not on any other basis subject, to the foreign jurisdiction. It would be enough that the judgment debtor had had the chance of appearing and defending before the foreign court. For the reasons given by Lord Collins, I do not accept that this is the common law. In the light of the above, the Court of Appeal was, in my view, in error in seeing the solution to the present appeals as lying in the advice given by the Board in Cambridge Gas. Even on an assumption that the actual decision in Cambridge Gas can be supported, it cannot and should not be treated as supporting the respondents case that fraudulent preference claims and avoidance orders in insolvency proceedings generally escape the common law rules requiring personal or in rem jurisdiction. LORD CLARKE I would like to pay tribute to the learning in Lord Collins comprehensive judgment. However, left to myself, I would dismiss the appeal in the Rubin case. Since I am in a minority of one, little is to be gained by my writing a long dissent. I will therefore try to explain my reasons shortly. In doing so, I adopt the terminology and abbreviations used by Lord Collins. I agree with Lord Collins and Lord Mance that the decision of the Privy Council in Cambridge Gas Transportation Corpn v Official Committee of Unsecured Creditors of Navigator Holdings plc [2007] 1 AC 508 is distinguishable. The facts there were quite different from those here. However, in so far as it is suggested that Cambridge Gas was wrongly decided, I do not agree. Moreover, I do not think that it would be appropriate so to hold because it was not submitted to be wrong in the course of the argument. To my mind the approach which should be adopted is presaged in the speech of Lord Hoffmann in In re HIH Casualty and General Insurance Ltd [2008] 1 WLR 852 and in his judgment in Cambridge Gas. As I see it, the issue is simply whether an avoidance order made by a foreign bankruptcy court made in the course of the bankruptcy proceedings, whether personal or corporate, which the court has jurisdiction to entertain, is unenforceable if it can fairly be said to be an order made either in personam or in rem. I would answer that question in the negative. Put another way, the question is whether the English court has jurisdiction under English rules of private international law to enforce an avoidance order made in foreign bankruptcy proceedings in circumstances where, under those rules, the foreign court has jurisdiction to entertain the bankruptcy proceedings themselves. I would answer that question in the affirmative. It is not, as I understand it, suggested here that the US court did not have jurisdiction to entertain the bankruptcy proceedings themselves. The relevant paragraphs of Lord Hoffmanns judgment in Cambridge Gas are in these terms (as quoted by Lord Collins at para 43 above): 13. Judgments in rem and in personam are judicial determinations of the existence of rights: in the one case, rights over property and in the other, rights against a person. When a judgment in rem or in personam is recognised by a foreign court, it is accepted as establishing the right which it purports to have determined, without further inquiry into the grounds upon which it did so. The judgment itself is treated as the source of the right. 14. The purpose of bankruptcy proceedings, on the other hand, is not to determine or establish the existence of rights, but to provide a mechanism of collective execution against the property of the debtor by creditors whose rights are admitted or established. 15 [B]ankruptcy, whether personal or corporate, is a collective proceeding to enforce rights and not to establish them. Of course, as Brightman LJ pointed out in In re Lines Bros Ltd [1983] Ch 1, 20, it may incidentally be necessary in the course of bankruptcy proceedings to establish rights which are challenged: proofs of debt may be rejected; or there may be a dispute over whether or not a particular item of property belonged to the debtor and is available for distribution. There are procedures by which these questions may be tried summarily within the bankruptcy proceedings or directed to be determined by ordinary action. But these again are incidental procedural matters and not central to the purpose of the proceedings. The critical paragraph is para 15, which seems to me to make it clear that it is possible to have an order which is both in personam or in rem and an order of the kind referred to by Lord Hoffmann in para 14. Thus it may be incidentally necessary to establish substantive rights in the course of the bankruptcy proceedings as part of a collective proceeding to enforce rights. In such a case the order will be doing two things. It will be both establishing the right and enforcing it. This can be seen from the examples given in para 15. Proofs of debt may be rejected, which is a process which may involve determining, for example, the substantive rights of the creditor against the debtor. Or it may be necessary to determine whether or not a particular item of property belongs to the debtor and is available for distribution. As para 15 contemplates, such procedures may be tried either summarily within the bankruptcy proceedings or by ordinary action. In either such case Lord Hoffmann describes them as incidental procedures which are not central to the purpose of the bankruptcy proceedings. As I see it, in such a case, an avoidance order may be both an order in personam or in rem and an order in the bankruptcy proceedings. I agree with Lord Collins at para 103 that it is not easy to see why the order of the US Bankruptcy Court in Cambridge Gas was not an order in rem. However, that does not to my mind show that Cambridge Gas was wrongly decided but demonstrates that it is possible to have an in rem order which is made as incidental to bankruptcy proceedings but which is enforceable at common law, provided that the bankruptcy court has jurisdiction in the bankruptcy. The approach is explained by Lord Hoffmann in HIH at para 30 and in Cambridge Gas at para 16, both of which are quoted by Lord Collins at para 19 above. In HIH he said: The primary rule of private international law which seems to me applicable to this case is the principle of (modified) universalism, which has been the golden thread running through English cross border insolvency law since the 18th century. That principle requires that English courts should, so far as is consistent with justice and UK public policy, co operate with the courts in the country of the principal liquidation to ensure that all the companys assets are distributed to its creditors under a single system of distribution. In Cambridge Gas he said: The English common law has traditionally taken the view that fairness between creditors requires that, ideally, bankruptcy proceedings should have universal application. There should be a single bankruptcy in which all creditors are entitled and required to prove. No one should have an advantage because he happens to live in a jurisdiction where more of the assets or fewer of the creditors are situated. At paras 94 to 98 above Lord Collins discusses the nature of avoidance proceedings. I entirely agree with his analysis. Avoidance provisions requiring the adjustment of prior transactions and the recovery of previous dispositions of property so as to constitute the estate available for distribution are necessary in order to maintain the principle of equality among creditors. At para 15 Lord Collins notes that Lord Hoffmann said at para 19 of HIH that the process of collection of assets will include, for example, the use of powers to set aside voidable dispositions, which may differ very considerably from those in the English statutory scheme. In short, avoidance proceedings, and therefore avoidance orders, are central to the bankruptcy proceedings. As Lord Collins puts it at para 98, avoidance proceedings are peculiarly the subject of insolvency law. I accept that to permit the enforcement of an avoidance order in circumstances of this kind would be a development of the common law. However, it seems to me that it would be a principled development. It would in essence be an application of the principle identified by Lord Hoffmann in the passage quoted above from para 30 of HIH that the principle of modified universalism requires that English courts should, so far as is consistent with justice and United Kingdom public policy, co operate with the courts in the country of the principal liquidation to ensure that all the companys assets are distributed to its creditors under a single system of distribution. The position of the judgment debtor in such a case would be protected by the principle that the English court would only enforce a judgment in a case like this where to do so was consistent with justice and United Kingdom public policy. All would depend upon the facts of the particular case. In the case of Rubin, there would be no injustice in enforcing the judgment against the appellants. Lord Mance notes at para 189 that I do not define either the circumstances in which a foreign court should be recognised as having jurisdiction to entertain bankruptcy proceedings or the factors which would make it unjust or contrary to public policy to recognise an avoidance order made in such foreign proceedings. As I see it, these are matters which would be worked out on a case by case basis in (as Lord Hoffmann put it in HIH at para 30) co operating with the courts in the country of the principal liquidation to ensure that all the companys assets are distributed to its creditors under a single system of distribution. It would not be irrelevant that the debtor under the avoidance order had not submitted. All would depend upon the particular circumstances of the case, including the reasons why the debtor had not submitted. In essence, on the critical question, I prefer the reasoning of the Court of Appeal, which is contained in the judgment of Ward LJ, with whom Wilson LJ and Henderson J agreed. Lord Collins has concisely summarised their reasoning in paras 88 to 90, substantially as follows: (a) the judgment was final and conclusive, and for definite sums of money, and on the face of the orders was a judgment in personam; (b) it was common ground that the judgment debtors were not present when the proceedings were instituted, and did not submit to the jurisdiction, and so at first blush had an impregnable defence; (c) Cambridge Gas decided that the bankruptcy order with which it was concerned was neither in personam nor in rem, and its purpose was simply to establish a mechanism of collective execution against the property of the debtor by creditors whose rights were admitted or established: Pattni v Ali [2007] 2 AC 85, para 23; (d) bankruptcy was a collective proceeding to enforce rights and not to establish them: Cambridge Gas [2007] 1 AC 508, para 15; (e) the issue was whether avoidance proceedings which could only be brought by the representative of the bankrupt were to be characterised as part of the bankruptcy proceedings, ie part of the collective proceeding to enforce rights and not to establish them; (f) the adversary proceedings were part and parcel of the Chapter 11 proceedings; (g) the ordinary rules for enforcing foreign judgments in personam did not apply to bankruptcy proceedings; (h) avoidance mechanisms were integral to and central to the collective nature of bankruptcy and were not merely incidental procedural matters; (i) the process of collection of assets will include the use of powers to set aside voidable dispositions, which may differ very considerably from those in the English statutory scheme: HIH [2008] 1 WLR 852, para 19; (j) the judgment of the US Bankruptcy Court was a judgment in, and for the purposes of, the collective enforcement regime of the insolvency proceedings, and was governed by the sui generis private international law rules relating to insolvency; (k) that was a desirable development of the common law founded on the principles of modified universalism, and did not require the court to enforce anything that it could not do, mutatis mutandis, in a domestic context; (l) there was a principle of private international law that bankruptcy should be unitary and universal, and there should be a unitary insolvency proceeding in the court of the bankrupts domicile which receives worldwide recognition and should apply universally to all the bankrupts assets; (m) there was a further principle that recognition carried with it the active assistance of the court which included assistance by doing whatever the English court could do in the case of a domestic insolvency; (n) there was no unfairness to the appellants in upholding the judgment because they were fully aware of the proceedings, and after taking advice chose not to participate: see [2011] Ch 133, paras 38, 41, 43, 45, 48, 50, 61 62 and 64. That seems to me to be a correct summary of the views of the Court of Appeal. I agree with those views subject to this comment on point (c). I am not sure that in Cambridge Gas the Privy Council decided that the bankruptcy order with which it was concerned was neither in personam nor in rem. It held that the purpose of the order was simply to establish a mechanism of collective execution against the property of the debtor by creditors whose rights were admitted or established. As discussed above, it may well have appreciated that it was also an order in rem. However that may be, I agree with Lord Collins at para 90 that, in short, the Court of Appeal accepted that the judgment sought to be enforced in the instant cases was an in personam judgment, but decided that the Dicey Rule did not apply to foreign judgments in avoidance proceedings because they were central to the collective enforcement regime in insolvency and were governed by special rules. I agree with the reasoning of the Court of Appeal. Put another way, the Dicey Rule should in my opinion be modified to include a fifth case in which a foreign court has jurisdiction to give a judgment in personam capable of enforcement or recognition as against the person against whom it is given. That fifth case would be if the judgment was given in avoidance proceedings as part of foreign bankruptcy proceedings which the foreign court had jurisdiction to entertain. I recognise that there are other ways of achieving such a result, as for example by an equivalent provision to the EC Insolvency Regulation: per Lord Collins at paras 99 101. I also recognise that it would be possible to adopt a more radical approach not limited to avoidance proceedings. However, so limited, I respectfully disagree with the view expressed by Lord Collins at para 128 that this development would not be an incremental development of existing principles but a radical departure from substantially settled law. For the reasons given in para 198, it would in essence be an application of the principle of modified universalism. It seems to me that in these days of global commerce, the step taken by the Court of Appeal was but a small step forward. Judgment debtors are protected by the principle that no order would be made if it were contrary to justice or United Kingdom public policy. Moreover, on the facts here, I can see no basis upon which the order made by the Court of Appeal would be either unjust or contrary to public policy. Finally, I do not think that that conclusion is undermined by any absence of reciprocity. For these reasons, I would dismiss the appeal in the Rubin case on the common law point. On all other issues I agree with the judgment of Lord Collins. |
Ideally, discrimination ought to be an easy concept, although proving it may be harder. But we do not live in an ideal world and the concepts are not easy, as these two cases illustrate all too well. The law prohibits two main kinds of discrimination direct and indirect. Direct discrimination is comparatively simple: it is treating one person less favourably than you would treat another person, because of a particular protected characteristic that the former has. Indirect discrimination, however, is not so simple. It is meant to avoid rules and practices which are not directed at or against people with a particular protected characteristic but have the effect of putting them at a disadvantage. It is one form of trying to level the playing field. The two cases before us are about indirect discrimination on grounds of race and/or age and/or religion. Indirect discrimination is defined in section 19 of the Equality Act 2010 in this way: (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, (c) it puts, or would put, B at that disadvantage, and (d) A cannot show it to be a proportionate means of achieving a legitimate aim. Subsection (3) lists the relevant protected characteristics, which include age, race and religion or belief. Mr Essops case relies upon both age and race; Mr Naeems case relies on both race and religion but primarily religion. Section 9 explains what is meant by race: (1) Race includes (a) colour; (b) nationality; (c) ethnic or national origins. (2) In relation to the protected characteristic of race a reference to a person who has a particular (a) protected characteristic is a reference to a person of a particular racial group; (b) a reference to persons who share a protected characteristic is a reference to persons of the same racial group. (3) A racial group is a group of persons defined by reference to race; and a reference to a persons racial group is a reference to a racial group into which the person falls. (4) The fact that a racial group comprises two or more distinct racial groups does not prevent it from constituting a particular racial group. Section 5(1) and (2) makes provision equivalent to section 9(2) for people who belong to or share a particular age group, which may be defined either by reference to a particular age or an age range. Section 10(3) makes equivalent provision for people of, or who share, a particular religion or belief. The concept of discrimination obviously involves comparisons between groups or individuals. Section 23(1) provides that: On a comparison of cases for the purpose of section 13, 14 or 19 there must be no material difference between the circumstances relating to each case. Having defined what is meant by discrimination, the Act goes on to define the circumstances in which it is unlawful. Relevant to these appeals is section 39(2): An employer (A) must not discriminate against an employee of As (B) (a) as to Bs terms of employment; (b) in the way A affords B access, or by not affording B access, to opportunities for promotion, transfer or training or for receiving any other benefit, facility or service. Finally, the Act deals with the burden of proof in civil proceedings before a court or a list of tribunals which includes an employment tribunal. Relevant to these appeals are section 136(2) and (3): (2) If there are facts from which the court could decide, in the absence of any other explanation, that a person (A) contravened the provisions concerned, the court must hold that the contravention occurred. (3) But subsection (2) does not apply if A shows that A did not contravene the provision. The Essop case Mr Essop is the lead appellant in a group of 49 people, six of whom have been chosen as test cases. They are, or were, all employed by the Home Office. Mr Essop is an immigration officer who has been employed by the Home Office since 1995. It is common ground that the relevant provision, criterion or practice (PCP) in this case is the requirement to pass a Core Skills Assessment (CSA) as a pre requisite to promotion to certain civil service grades. At the relevant times, the Home Office required all employees to take and pass a CSA in order to become eligible for promotion to the grades of Higher Executive Officer (HEO) original, HEO interim or Grade 7. The CSA was a generic test required for each of these grades, irrespective of the particular role. Its stated purpose was to test the core skills required to operate as a civil servant at those grades, rather than the knowledge and skills required for the particular post sought. Candidates who passed the CSA would then be required to sit and pass a Specific Skills Assessment relevant to the particular post. All the appellants have, at some time, failed the CSA and were thus not, at that time, eligible for promotion. In 2010, a report commissioned by the Home Office from a firm of occupational psychologists, Pearn Kandola, revealed that Black and Minority Ethnic (BME) candidates and older candidates had lower pass rates than white and younger candidates. All non white candidates were pooled into a single BME grouping, although a more detailed breakdown of ethnicity was available, in order to maximise the size of the group and thus the reliability of the analysis. (Whether this is an appropriate approach is not in issue before this Court but was left open by the Employment Tribunal.) The BME pass rate was 40.3% of that of the white candidates. The pass rate of candidates aged 35 or older was 37.4% of that of those below that age. In each case, there was a 0.1% likelihood that this could happen by chance. Of course, they did not all fail. No one knows why the proportion of BME or older candidates failing is significantly higher than the proportion of white or younger candidates failing. Proceedings were launched in the London South Employment Tribunal. It was agreed between the parties that a pre hearing review was required to determine whether the claimants were required for the purposes of section 19(2)(b) and/or (c) to prove what the reason for the lower pass rate was. The Home Office argued that they did need to do so. The claimants argued that they did not. The Employment Judge held that they did have to prove the reason. The claimants appealed to the then President of the Employment Appeal Tribunal, Langstaff J, who sat alone on this occasion. He held that they did not have to prove the reason. It was enough to show that the group had suffered, or would suffer, the particular disadvantage of a greater risk of failure and that each individual had in fact suffered the disadvantage of failure: [2014] UKEAT/0480/13; [2014] ICR 871. The Home Office appealed to the Court of Appeal, which held that the claimants had to show why the requirement to pass the CSA put the group at a disadvantage and that he or she had failed the test for that same reason and gave general guidance for the Employment Tribunal handling the claims: [2015] EWCA Civ 609; [2015] ICR 1063. The principal issue of law on appeal to this Court, therefore, is whether section 19(2)(b) and (c) of the 2010 Act requires that the reason for the disadvantage suffered by the group be established and that the reason why the individual has suffered from that disadvantage be the same. Also in issue are how the disadvantage is to be defined in this case and how and by whom the burden of proving the reason for it is to be discharged. The Naeem case Mr Naeem is an imam who works as a chaplain in the Prison Service. Some prison chaplains are employed on a salaried basis under contracts of employment. Some are engaged on a sessional basis as and when required and paid at an hourly rate. Both groups are required to undergo training. Before 2002, Muslim chaplains were engaged on a sessional basis only, because the Prison Service believed that there were not enough Muslim prisoners to justify employing them on a salaried basis. Mr Naeem began working as a prison chaplain at HMP Bullingdon in June 2001, at first on a sessional basis, but in October 2004 he became a salaried employee. It is common ground that the PCP in question is the Prison Service pay scheme for chaplains, which incorporates pay progression over time and thus pay is related to length of service. Like many public sector employers, the Prison Service operates an incremental pay scale, with (usually) annual increments in pay in addition to any cost of living increases until the top of the scale is reached. When Mr Naeem became an employee it would take 17 years to progress from the bottom of the pay scale (where employees normally began) to the top. The Prison Service has since reduced the time taken to climb from the bottom to the top, with the eventual aim of reducing the ladder to six years. This was done gradually, so that a new joiner in 2009 would take only nine years to do so. Existing chaplains were granted accelerated progress up the scale so that they could keep pace. But the whole process was interrupted by government constraints and a pay freeze from 2010/11 onwards. These proceedings were launched in April 2011. On 1 April 2011, the average basic pay for Muslim chaplains was 31,847, whereas the average basic pay for Christian chaplains was 33,811. This was because Muslims had only been employed on a salaried basis since 2002, whereas a substantial number of Christian chaplains had started their employment before that date. Hence their average length of service was longer and they had had more time to climb the ladder. Of course, a Christian chaplain who started in salaried employment on the same date as a Muslim chaplain, and who had the same appraisal record, would be paid the same. Mr Naeem brought proceedings in the Reading Employment Tribunal complaining that the incremental pay scheme was indirectly discriminatory against Muslim or Asian chaplains. It resulted in his being paid less than Christian chaplains in a post where length of service served no useful purpose as a reflection of ability or experience. The Tribunal held that the pay scheme was indirectly discriminatory in relation to both race and religion, but that it was objectively justified as a proportionate means of achieving a legitimate aim. Each side appealed to the Employment Appeal Tribunal, which held that the pay scheme was not indirectly discriminatory at all, because chaplains employed before 2002 should be excluded from the comparison between the two groups. However, if the EAT were wrong about that, the pay scheme had not been shown to be a proportionate means of achieving a legitimate aim. There were various possible ways of modifying the scheme so as to avoid the disadvantage suffered by people such as the claimant, which the tribunal ought to have considered: UKEAT/0215/13/RN; [2014] ICR 472. Mr Naeems appeal to the Court of Appeal was dismissed. It was not enough to show that the length of service criterion had a disparate impact upon Muslim chaplains. It was also necessary to show that the reason for that disparate impact was something peculiar to the protected characteristic in question: [2015] EWCA Civ 1264; [2016] ICR 289. Thus, although the reason for the differential impact of the length of service criterion is known, one issue in Mr Naeems case is whether the reason for the disadvantage which he suffers has also to be related to the protected characteristic of his religion or race. It is also in issue whether the pool for comparison should be all prison chaplains or only those employed since 2002 and whether the EAT was entitled to interfere with the decision of the Employment Tribunal. Direct and indirect discrimination Under the Sex Discrimination Act 1975 and the Race Relations Act 1976, direct discrimination was defined as treating a person less favourably than another on the ground of her sex or on racial grounds. Under section 13(1) of the Equality Act 2010, this has become treating someone less favourably because of a protected characteristic. The characteristic has to be the reason for the treatment. Sometimes this will be obvious, as when the characteristic is the criterion employed for the less favourable treatment: an example is Preddy v Bull [2013] UKSC 73; [2013] I WLR 3741, where reserving double bedded rooms to hetero sexual married couples only was directly discriminatory on grounds of sexual orientation. At other times, it will not be obvious, and the reasons for the less favourable treatment will have to be explored: an example is Nagarajan v London Regional Transport [2000] 1 AC 501, where the tribunals factual finding of conscious or subconscious bias was upheld in the House of Lords, confirming the principle, established in R v Birmingham City Council, Ex p Equal Opportunities Commission [1989] AC 1155 and James v Eastleigh Borough Council [1990] 2 AC 751, that no hostile or malicious motive is required. James v Eastleigh Borough Council also shows that, even if the protected characteristic is not the overt criterion, there will still be direct discrimination if the criterion used (in that case retirement age) exactly corresponds with a protected characteristic (in that case sex) and is thus a proxy for it. The concept of indirect discrimination has proved more difficult to define in statutory terms. The original version in section 1(1)(b) of the Sex Discrimination Act 1975 provided that a person discriminates against a woman if he applies to her a requirement or condition which he applies or would apply equally to a man but (i) which is such that the proportion of women who can comply with it is considerably smaller than the proportion of men who can comply with it, and (ii) which he cannot show to be justifiable irrespective of the sex of the person to whom it is applied, and (iii) which is to her detriment because she cannot comply with it. Essentially the same definition was contained in section 1(1)(b) of the Race Relations Act 1976, as originally enacted. Much, but by no means all, of the Equality Act 2010 is derived from our obligations under European Union law. Those parts which are so derived must be interpreted consistently with EU law (as it is now called) and it is inconceivable that Parliament intended the same concepts to be interpreted differently in different contexts. Although EU law has always recognised both direct and indirect discrimination, the first legislative definition of indirect discrimination was contained in Council Directive 97/80/EC on the burden of proof in cases of discrimination based on sex, article 2(2) of which provided that, for the purposes of the principle of equal treatment, indirect discrimination shall exist where an apparently neutral provision, criterion or practice disadvantages a substantially higher proportion of the members of one sex unless that provision, criterion or practice is appropriate and necessary and can be justified by objective factors unrelated to sex. This introduced the term an apparently neutral provision, criterion or practice (or PCP as it is generally known) and the concept of disproportionate group disadvantage. There was no reference to individual disadvantage, but article 4 required that, where persons who considered themselves wronged by the non application to them of the principle of equal treatment established facts from which it might be presumed that there had been direct or indirect discrimination, it was for the respondent to prove that there had been no breach of the principle of equal treatment. In 2001, a new section 63A was added to the Sex Discrimination Act to cater for this in relation to particular fields of activity covered by European Union law. A new section 54A was added to make equivalent provision in the Race Relations Act, although not yet required by European law (although it soon would be, by article 8 of Council Directive 2000/43/EC, referred to below). Section 136 of the Equality Act 2010 (above, para 6) has extended the shifting burden of proof to all activities covered by the Act (although not to criminal proceedings). The next European definition of indirect discrimination came in Council Directive 2000/43/EC implementing the principle of equal treatment between persons irrespective of racial or ethnic origins (the Race Directive). Article 2(2)(b) provided that: indirect discrimination shall be taken to occur where an apparently neutral provision, criterion or practice would put persons of a racial or ethnic origin at a particular disadvantage compared with other persons, unless that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary. Thus it was sufficient that the PCP would put such persons at a particular disadvantage when compared to others. Article 8 made the same provision for shifting the burden of proof as had the earlier Directive in relation to sex. The same definition of indirect discrimination was adopted in article 2(2)(b) of Council Directive 2000/78/EC establishing a general framework for equal treatment in employment and occupation on grounds other than sex or race, in article 2(b) of Council Directive 2004/113/EC implementing the principle of equal treatment between men and women in the access to and supply of goods and services and article 2(1)(b) of Council Directive 2006/54/EC on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast). In 2003, both the Sex Discrimination Act and the Race Relations Act were amended to apply this new concept of indirect discrimination to specified fields of activity covered by European Union law. Thus a new section 1(2)(b) in the 1975 Act provided that, for those purposes, a person discriminated against a woman if he applies to her a provision, criterion or practice which he applies or would apply equally to a man, but (i) which puts or would put women at a particular disadvantage when compared with men, (ii) which puts her at that disadvantage, and (iii) which he cannot show to be a proportionate means of achieving a legitimate aim. Equivalent provision was made in a new section 1(1A) of the 1976 Act. That is the same concept of indirect discrimination as has now been applied to all the areas of activity covered by the Equality Act 2010. It is instructive to go through the various iterations of the indirect discrimination concept because it is inconceivable that the later versions were seeking to cut it down or to restrict it in ways which the earlier ones did not. The whole trend of equality legislation since it began in the 1970s has been to reinforce the protection given to the principle of equal treatment. All the iterations share certain salient features relevant to the issues before us. The first salient feature is that, in none of the various definitions of indirect discrimination, is there any express requirement for an explanation of the reasons why a particular PCP puts one group at a disadvantage when compared with others. Thus there was no requirement in the 1975 Act that the claimant had to show why the proportion of women who could comply with the requirement was smaller than the proportion of men. It was enough that it was. There is no requirement in the Equality Act 2010 that the claimant show why the PCP puts one group sharing a particular protected characteristic at a particular disadvantage when compared with others. It is enough that it does. Sometimes, perhaps usually, the reason will be obvious: women are on average shorter than men, so a tall minimum height requirement will disadvantage women whereas a short maximum will disadvantage men. But sometimes it will not be obvious: there is no generally accepted explanation for why women have on average achieved lower grades as chess players than men, but a requirement to hold a high chess grade will put them at a disadvantage. A second salient feature is the contrast between the definitions of direct and indirect discrimination. Direct discrimination expressly requires a causal link between the less favourable treatment and the protected characteristic. Indirect discrimination does not. Instead it requires a causal link between the PCP and the particular disadvantage suffered by the group and the individual. The reason for this is that the prohibition of direct discrimination aims to achieve equality of treatment. Indirect discrimination assumes equality of treatment the PCP is applied indiscriminately to all but aims to achieve a level playing field, where people sharing a particular protected characteristic are not subjected to requirements which many of them cannot meet but which cannot be shown to be justified. The prohibition of indirect discrimination thus aims to achieve equality of results in the absence of such justification. It is dealing with hidden barriers which are not easy to anticipate or to spot. A third salient feature is that the reasons why one group may find it harder to comply with the PCP than others are many and various (Mr Sean Jones QC for Mr Naeem called them context factors). They could be genetic, such as strength or height. They could be social, such as the expectation that women will bear the greater responsibility for caring for the home and family than will men. They could be traditional employment practices, such as the division between womens jobs and mens jobs or the practice of starting at the bottom of an incremental pay scale. They could be another PCP, working in combination with the one at issue, as in Homer v Chief Constable of West Yorkshire [2012] UKSC 15; [2012] ICR 704, where the requirement of a law degree operated in combination with normal retirement age to produce the disadvantage suffered by Mr Homer and others in his age group. These various examples show that the reason for the disadvantage need not be unlawful in itself or be under the control of the employer or provider (although sometimes it will be). They also show that both the PCP and the reason for the disadvantage are but for causes of the disadvantage: removing one or the other would solve the problem. A fourth salient feature is that there is no requirement that the PCP in question put every member of the group sharing the particular protected characteristic at a disadvantage. The later definitions cannot have restricted the original definitions, which referred to the proportion who could, or could not, meet the requirement. Obviously, some women are taller or stronger than some men and can meet a height or strength requirement that many women could not. Some women can work full time without difficulty whereas others cannot. Yet these are paradigm examples of a PCP which may be indirectly discriminatory. The fact that some BME or older candidates could pass the test is neither here nor there. The group was at a disadvantage because the proportion of those who could pass it was smaller than the proportion of white or younger candidates. If they had all failed, it would be closer to a case of direct discrimination (because the test requirement would be a proxy for race or age). A fifth salient feature is that it is commonplace for the disparate impact, or particular disadvantage, to be established on the basis of statistical evidence. That was obvious from the way in which the concept was expressed in the 1975 and 1976 Acts: indeed it might be difficult to establish that the proportion of women who could comply with the requirement was smaller than the proportion of men unless there was statistical evidence to that effect. Recital (15) to the Race Directive recognised that indirect discrimination might be proved on the basis of statistical evidence, while at the same time introducing the new definition. It cannot have been contemplated that the particular disadvantage might not be capable of being proved by statistical evidence. Statistical evidence is designed to show correlations between particular variables and particular outcomes and to assess the significance of those correlations. But a correlation is not the same as a causal link. A final salient feature is that it is always open to the respondent to show that his PCP is justified in other words, that there is a good reason for the particular height requirement, or the particular chess grade, or the particular CSA test. Some reluctance to reach this point can be detected in the cases, yet there should not be. There is no finding of unlawful discrimination until all four elements of the definition are met. The requirement to justify a PCP should not be seen as placing an unreasonable burden upon respondents. Nor should it be seen as casting some sort of shadow or stigma upon them. There is no shame in it. There may well be very good reasons for the PCP in question fitness levels in fire fighters or policemen spring to mind. But, as Langstaff J pointed out in the EAT in Essop, a wise employer will monitor how his policies and practices impact upon various groups and, if he finds that they do have a disparate impact, will try and see what can be modified to remove that impact while achieving the desired result. The arguments in Essop All the above salient features of the definition of indirect discrimination support the appellants case that there is no need to prove the reason why the PCP in question puts or would put the affected group at a particular disadvantage. The respondent relies upon two main arguments to counter this. The first is that the individual claimant has to show that he has been put at that disadvantage, that is, the same disadvantage that the group to which he belongs is, or would be, put. How, it is said, can one know what that disadvantage is unless one knows the reason for it? But what is required by the language is correspondence between the disadvantage suffered by the group and the disadvantage suffered by the individual. This will largely depend upon how one defines the particular disadvantage in question. If the disadvantage is that more BME or older candidates fail the test than do white or younger candidates, then failure is the disadvantage and a claimant who fails has suffered that disadvantage. If the disadvantage is that BME and older candidates are more likely to fail than white or younger candidates, then the likelihood of failure is the disadvantage and any BME or older candidate suffers that disadvantage. That leads to the second argument that undeserving claimants, who have failed for reasons that have nothing to do with the disparate impact, may coat tail upon the claims of the deserving ones. This is easier to answer if the disadvantage is defined in terms of actual failure than if it is defined in terms of likelihood of failure (because only some suffer the first whereas all suffer the second). But in any event, it must be open to the respondent to show that the particular claimant was not put at a disadvantage by the requirement. There was no causal link between the PCP and the disadvantage suffered by the individual: he failed because he did not prepare, or did not show up at the right time or in the right place to take the test, or did not finish the task. A second answer is that a candidate who fails for reasons such as that is not in the same position as a candidate who diligently prepares for the test, turns up in the right place at the right time, and finishes the tasks he was set. In such a situation there would be a material difference between the circumstances relating to each case, contrary to section 23(1) (para 4 above). A third answer is that the test may in any event be justified despite its disparate impact. Although justification is aimed at the impact of the PCP on the group as a whole rather than at the impact upon the individual, as Langstaff J pointed out, the less the disadvantage suffered by the group as a whole, the easier it is likely to be to justify the PCP. If, however, the disadvantage is defined in terms of likelihood of rather than actual failure, then it could be said that all do suffer it, whether or not they fail and whatever the reason for their failure. But there still has to be a causal link between the PCP and the individual disadvantage and it is fanciful to suppose that people who do not fail or who fail because of their own conduct have suffered any harm as a result of the PCP. It must be permissible for an employer to show that an employee has not suffered harm as a result of the PCP in question. The appeal has come before us as a matter of principle. In principle, the arguments put forward by the respondent do not justify importing words into the statute (and the Directives which lay behind it) which are simply not there and which, as the Court of Appeal recognised, could lead to the continuation of unlawful discrimination, which would be contrary to the public interest (para 34). In order to succeed in an indirect discrimination claim, it is not necessary to establish the reason for the particular disadvantage to which the group is put. The essential element is a causal connection between the PCP and the disadvantage suffered, not only by the group, but also by the individual. This may be easier to prove if the reason for the group disadvantage is known but that is a matter of fact, not law. Secondly, the parties are not agreed on how the disadvantage should be defined. The case came before the Employment Tribunal on the basis that the disadvantage was the greater likelihood of failure. In the Employment Appeal Tribunal, Langstaff J treated the mere fact of failure of the test as the disadvantage (para 25). The Court of Appeal favoured the approach in the Employment Tribunal. Before this Court the appellants identify the disadvantage in essentially the same terms as did Langstaff J: the disadvantage was that members of the group failed the test disproportionately and the appellants suffered that same disadvantage. In my view, the appellants (and the EAT) are in principle correct. As already noted, it is a typical feature of indirect discrimination that some members of the disadvantaged group will not in fact suffer the disadvantage. At the level of the group the disadvantage may be no more than likely but that does not make it a different disadvantage from the actual disadvantage suffered by those who are affected. The difference is between potential and actual disadvantage but the disadvantage is the same. Thus, in the typical example of a height requirement, women are statistically more likely to fail to meet it, but only some will fail and others will pass. The disadvantage in each case is the same the failure to meet the height requirement. Any other approach would deprive indirect discrimination of much of its content. I would therefore allow the appeal in the Essop case and remit the claims to be determined by the Employment Tribunal in accordance with this judgment. The arguments in Naeem Disadvantage In Mr Naeems case, the reason why the pay scale puts Muslim chaplains at a disadvantage is known: essentially it depends upon length of service and they have, on average, shorter lengths of service than Christian chaplains. But the respondent raises two main arguments. The first argument is that the reason why the PCP puts the group at a disadvantage the context factor has itself to be related to the protected characteristic. This was the view taken by Underhill LJ in the Court of Appeal in this case (and in the EAT in the earlier case of Haq v Audit Commission [2011] UKEAT/0123/10/LA but not upheld by the Court of Appeal at [2012] EWCA Civ 1621; [2013] Eq LR 130). Thus, at para 22, he held that it cannot properly be said that it is the use of the length of service criterion which puts Muslim chaplains at a disadvantage, within the meaning of section 19(2)(b). The concept of putting persons at a disadvantage is causal, and, as in any legal analysis of causation, it is necessary to distinguish the legally relevant cause or causes from other factors in the situation. In my view the only material cause of the disparity in remuneration is the (on average) more recent start dates of the Muslim chaplains. But that does not reflect any characteristic peculiar to them as Muslims: rather, it reflects the fact that there was no need for their services (as employees) at any earlier date. But this cannot be right. The same could be said of almost any reason why a PCP puts one group at a disadvantage. There is nothing peculiar to womanhood in taking the larger share of caring responsibilities in a family. Some do and some do not. But (in the context of equal pay) it has been acknowledged that a length of service criterion can have a disparate impact on women because they tend to have shorter service periods as a result of career breaks or later career starts flowing from their child care responsibilities: see Wilson v Health and Safety Executive [2009] EWCA Civ 1074; [2010] ICR 302, following Cadman v Health and Safety Executive (Case C 17/05) [2006] ICR 1623. Indeed, it could be said that the lack of need for the Muslim chaplains is more peculiar to them as Muslims than are many of the reasons why women may suffer a particular disadvantage. All that this means is that the employer may have to justify the PCP. In principle, a length of service criterion may be justified as a reward for greater experience and skill, but this gets harder to do the longer the time taken to achieve parity with others. The second argument relates to the group or pool with which the comparison is made. Should it be all chaplains, as the Employment Tribunal held, or only those who were employed since 2002? In the equal pay case of Grundy v British Airways plc [2007] EWCA Civ 1020; [2008] IRLR 74, at para 27, Sedley LJ said that the pool chosen should be that which suitably tests the particular discrimination complained of. In relation to the indirect discrimination claim in Allonby v Accrington and Rossendale College [2001] EWCA Civ 529; [2001] ICR 1189, at para 18, he observed that identifying the pool was not a matter of discretion or of fact finding but of logic. Giving permission to appeal to the Court of Appeal in this case, he observed that There is no formula for identifying indirect discrimination pools, but there are some guiding principles. Amongst these is the principle that the pool should not be so drawn as to incorporate the disputed condition. Consistently with these observations, the Statutory Code of Practice (2011), prepared by the Equality and Human Rights Commission under section 14 of the Equality Act 2006, at para 4.18, advises that: In general, the pool should consist of the group which the provision, criterion or practice affects (or would affect) either positively and negatively, while excluding workers who are not affected by it, either positively or negatively. In other words, all the workers affected by the PCP in question should be considered. Then the comparison can be made between the impact of the PCP on the group with the relevant protected characteristic and its impact upon the group without it. This makes sense. It also matches the language of section 19(2)(b) which requires that it ie the PCP in question puts or would put persons with whom B shares the characteristic at a particular disadvantage compared with persons with whom B does not share it. There is no warrant for including only some of the persons affected by the PCP for comparison purposes. In general, therefore, identifying the PCP will also identify the pool for comparison. In this case, the PCP identified was the incremental pay structure which affected all the chaplains employed by the Prison Service. This did put the Muslim chaplains at a particular disadvantage compared with the Christians. The appellant suffered this disadvantage and so section 19(2)(b) and (c) were satisfied. The question, therefore, is whether the respondent can justify it as a proportionate means of achieving a legitimate aim. Justification The Employment Tribunal held that it could. The original pay scale had been intended to reward loyalty and experience. The Prison Service had been trying to move away, as quickly as possible, from the long incremental pay scale to a much shorter one, where increments would depend to a limited extent on experience and a greater extent on assessed performance. The Employment Tribunal identified the objective as the single one of rewarding length of service and increasing experience, while at the same time managing an orderly and structured transition, over a period of time, to the shorter, single pay scale That is clearly a serious objective, which represents a real organisational need (para 27). The EAT agreed that the Employment Tribunal had properly identified a legitimate aim. Mr Naeem does not now challenge that conclusion. The EAT however disagreed that the means adopted to meet that organisational need had been shown to be proportionate. The Employment Tribunal had found as a fact that six years service was the most required for newly appointed chaplains to have attained the professional standards which should entitle them to be rewarded at the top of the scale, as fully trained and experienced in their role (para 10.7). The Prison Service was trying to achieve that in an orderly manner, by agreement with the Trade Union, but the process had been halted by government pay restraint. The Tribunal simply concluded that We accept that the need for orderly management of the process renders the element of particular disadvantage in this case necessary, but having regard to the totality of the circumstances, we find that such disadvantage to the claimant is no more than is necessary to achieve the objective (para 27). They had not considered alternative ways in which the Prison Service could have eliminated the discrimination against Mr Naeem and the other Muslim chaplains affected within the constraints to which they were subject. Not surprisingly, Mr Naeem agrees with the EAT and asks this Court, should we accept his arguments on the earlier issues, as I would do, to remit the claim to the Employment Tribunal for reconsideration of the justification issue. The EAT records that the Employment Tribunal had been offered the example of a larger group of Prison Service employees, psychotherapists, for whom a suitable adjustment had been made to eliminate discriminatory treatment (para 41). The EAT did not place much, if any, weight on this, as it had been done in the context of an equal pay rather than a discrimination claim. But the EAT made other suggestions for alternative ways of continuing to apply the PCP in question without disadvantage to the claimant backdating his length of service, adding an additional increment at the start of his service, or refusing further pay increases for those higher up the scale while improving the position of those lower down the scale. The Tribunal should have thought of these, especially as they had been given an example of a successful search for solutions. Neither the EAT nor any higher court is entitled to disturb the factual findings of an Employment Tribunal. It must detect an error of law. The Tribunal had adopted the no more than necessary test of proportionality from the Homer case and can scarcely be criticised by this Court for doing so. But we are here concerned with a system which is in transition. The question was not whether the original pay scheme could be justified but whether the steps being taken to move towards the new system were proportionate. Where part of the aim is to move towards a system which will reduce or even eliminate the disadvantage suffered by a group sharing a protected characteristic, it is necessary to consider whether there were other ways of proceeding which would eliminate or reduce the disadvantage more quickly. Otherwise it cannot be said that the means used are no more than necessary to meet the employers need for an orderly transition. This is a particular and perhaps unusual category of case. The burden of proof is on the respondent, although it is clearly incumbent upon the claimant to challenge the assertion that there was nothing else the employer could do. Where alternative means are suggested or are obvious, it is incumbent upon the Tribunal to consider them. But this is a question of fact, not of law, and if it was not fully explored before the Employment Tribunal it is not for the EAT or this Court to do so. I would therefore dismiss the appeal in Mr Naeems case. |
The issue in this case is whether the High Court of England and Wales has jurisdiction to order the return to this country of a small child who has never lived or even been here, on the basis either that he is habitually resident here or that he has British nationality. The facts The child, whom I shall call Haroon, was born on 20 October 2010 in Pakistan. His father (born in 1973) is one of five siblings, who were all born in England to parents who came here to live from Pakistan in the 1960s. His mother (born in 1978) is the fathers first cousin. She was born and brought up in Pakistan and entered into an arranged marriage with the father in Pakistan in 1999. She joined the father here the following year and they lived together in a property shared with other members of the fathers family. The mother and father have three children together who were born here: a daughter born in 2001, who is now 12, a second daughter born in 2002, who is now 10, and a son born in 2005, who is now eight. The father and children have dual British and Pakistani nationality and the mother has indefinite leave to remain here. This much is uncontentious. The subsequent history was in dispute at the fact finding hearing before Parker J in the High Court. However, the father had remained in Pakistan throughout, had never made a witness statement, and was neither present nor (by the final day) represented at the hearing. His version of events was put forward by his brother. The judge ordered him to take part by telephone but he could not be reached at the number through which he had previously been reached. The judge had no doubt that the telephone had been deliberately turned off. Nevertheless, she insisted that the mother give evidence and put the fathers version of events to her quite forcefully. She found the mother to be an intelligent, careful and precise witness and accepted her evidence. The following are therefore the facts as found by the judge. The marriage was happy until 2006, when the father began to spend a good deal of time in Pakistan. In 2008, the mother complained of physical abuse by the father and moved with the three children into a refuge. Early in 2009, they moved into a flat owned by the fathers brother, PA, for which the mother paid rent. The mother planned to take the children on a trip to Pakistan in the autumn to visit her father. She obtained Pakistani identity cards for them, was given leave of absence from their school, and travelled out with them on 13 October 2009, with tickets to return early in November. She did not know that the father was going to be in Pakistan at the same time. While they were staying at her fathers home, the father, his mother and another brother arrived and, together with her own father, insisted that the parents reconcile. The mother felt that she had no choice: there was physical and emotional coercion. She returned with the father to his family home in Pakistan and was forced to give up her own and the childrens passports, although she later managed to retrieve her own. But she made it clear that she wanted to return with the children to England. The judge did not find it necessary to make any specific finding about violence. She was quite satisfied that such pressure was put on the mother that she had no choice in her own mind, particularly because she did not want to leave her children and that she was frightened of the consequences. In February 2010, the mother became pregnant with Haroon. The refuge in England confirmed that, from that month, she was making telephone calls to them asking for their help to return with the children to England. After Haroon was born, the father brought proceedings for custody of the children in Pakistan. In December 2010, the mothers father brought proceedings, as the judge termed it, essentially for habeas corpus of the mother and the four children. It appears that both sets of proceedings were dropped. Eventually, in May 2011, the mothers father sent elders round to the fathers family to persuade them to let the mother leave for a few days to stay with relatives. She was thus able to leave the country with their help and return to England, but she had to leave the children behind. These proceedings began on 20 June 2011 with an order made by Peter Jackson J without notice to the father. By that order, the judge made all four children wards of court and ordered that they be returned to England and Wales by the father forthwith. Every person within the jurisdiction who was in a position to do so was ordered to co operate in assisting and securing the childrens immediate return. Any person not within the jurisdiction who was in a position to do so was requested to co operate in assisting and securing their immediate return. The judicial, administrative and law enforcement authorities of the Islamic Republic of Pakistan were requested to use their best endeavours to assist in taking any steps which might appear to them necessary and appropriate in locating, safeguarding and facilitating the return of the children in accordance with the spirit of the UK Pakistan Judicial Protocol on Children Matters signed by the Chief Justice of Pakistan and the President of the Family Division of the High Court of England and Wales on 17 January 2003. That order was served on the father in Pakistan and confirmed by Her Honour Judge Coates on 30 September 2011. On 31 October 2011, the mother obtained a without notice order from Eleanor King J freezing the fathers assets in this country, with a view to sequestration as a means of persuading the father to comply with the courts orders or at least of providing the mother with funds to litigate in Pakistan. This brought the fathers brother, PA, into the proceedings, as he is co owner of one of the properties specifically named in the order. The order was confirmed by Her Honour Judge Cahill QC on 28 November 2011 after a hearing at which the father was represented by counsel, but not present. The matter was listed for determination of the jurisdiction question in February 2012. Despite various manoeuvrings in an attempt to have it postponed, the hearing went ahead before Parker J, with the father playing no part and PA now acting in person with another brother, JA, as his McKenzie friend. PA had also filed two witness statements setting out the case for the father and his family. On 20 February 2012, Parker J determined that all four children were habitually resident in England and Wales: [2012] EWHC 663 (Fam). She was satisfied that the mother never voluntarily sought for the children to live in Pakistan. She rejected the fathers assertion that there was an agreement that the parents should reconcile and live in Pakistan. She accepted that the mother never acquiesced, became resigned or consented to her and the children remaining in Pakistan. The three older children therefore retained their habitual residence in England. Adopting the approach of Charles J in B v H (Habitual Residence: Wardship) [2002] 1 FLR 388, she determined that Haroon, too, was habitually resident here, having been born to a mother who remained habitually resident here and who was kept in Pakistan against her will. She continued both the wardship and the freezing orders and again ordered that the children be returned to this jurisdiction by their father forthwith. The father and his brother applied for permission to appeal out of time to the Court of Appeal, which heard the case in July 2012. The reserved judgment was sent to the parties in October 2012, but the order was not made until 31 January 2013, when a short supplemental judgment was delivered: [2012] EWCA Civ 1396 and [2013] EWCA Civ 232. The Court unanimously dismissed the fathers appeal in respect of the three older children, described by Patten LJ as quite hopeless. But by a majority, Rimer and Patten LJJ, his appeal in relation to Haroon was allowed, on the ground that the acquisition of habitual residence in any country requires the child in question to be physically present there. Habitual residence is a question of fact and a rule that a newly born child is presumed on birth to take the habitual residence of his parents would be a legal construct divorced from actual fact. It would also be inconsistent with the approach of the Court of Justice of the European Union. B v H (Habitual Residence: Wardship) should be overruled. Thorpe LJ dissented. In his view a baby born to a mother resident here while on holiday abroad would be habitually resident here from the moment of birth and not from the time when he entered this country. But he recognised that on its facts this case narrowly falls on the right side of an important boundary. The judgment also invited the parties to make further submissions on whether England and Wales was the right forum in which to determine the future of the older children, given the Courts decision about Haroon. By the time of the hearing in January this year, it was clear that leading counsel now instructed on behalf of the mother would be seeking permission to appeal to this Court and wished to raise nationality as an alternative basis of jurisdiction. The most economical course, therefore, was for him to seek to argue the point in this Court and for the Court of Appeal to defer any consideration of the fathers forum non conveniens argument until the outcome in this Court was known. The legislation Jurisdiction in cases concerning children is governed by two pieces of legislation. The Family Law Act 1986 resulted from recommendations of the Law Commission and Scottish Law Commission: Family Law: Custody of Children Jurisdiction and Enforcement within the United Kingdom (1984, Law Com No 138, Scot Law Com No 91). Its principal purpose was to provide a uniform scheme for jurisdiction, recognition and enforcement of custody and related orders as between the three different jurisdictions within the United Kingdom. But the jurisdictional rules also apply as between England and Wales (and the other jurisdictions in the United Kingdom) and other countries. The rules as originally laid down in the 1986 Act have been modified to take account of Council Regulation (EC) No 2201/2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, otherwise known as the Brussels II revised Regulation (the Regulation), which is of course directly applicable in United Kingdom law. They also now take account of the 1996 Hague Convention on the Protection of Children, but that was not incorporated into United Kingdom law until after the relevant date for our purposes, which all are agreed is 20 June 2011, when the first order was made. The scope of the Act and the Regulation Part I of the 1986 Act applies only to Part I orders, defined for England and Wales in section 1(1). For our purposes, the following are relevant: (a) a section 8 order made by a court in England and Wales under the Children Act 1989, other than an order varying or discharging such an order; . (d) an order made by a court in England and Wales in the exercise of the inherent jurisdiction of the High Court with respect to children (i) so far as it gives care of a child to any person or provides for contact with, or the education of, a child; but (ii) excluding an order varying or revoking such an order; Article 1 of the Regulation defines its scope. By article 1.1(b) it applies to civil matters relating to the attribution, exercise, delegation, restriction or termination of parental responsibility. Article 1.2 gives a non exhaustive list of examples, including (a) rights of custody and rights of access; (b) guardianship, curatorship and similar institutions; (c) the designation and functions of any person or body having charge of the childs person or property, representing or assisting the child; Article 1.3 contains a list of exclusions, none of which is relevant here. Article 2 of the Regulation defines some terms, including: 2.7 the term parental responsibility shall mean all rights and duties relating to the person or the property of a child which are given to a natural or legal person by judgment, by operation of law or by an agreement having legal effect. The term shall include rights of custody and rights of access; . 2.9 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. The first question, therefore, is whether the order first made by Peter Jackson J and repeated by Her Honour Judge Coates and by Parker J is either a Part I order within the meaning of the 1986 Act or an order relating to parental responsibility within the meaning of the Regulation. Jurisdiction under the 1986 Act follows: If it is a Part I order, section 2 of the 1986 Act provides relevantly as (1) A court in England and Wales shall not make a section 1(1)(a) order with respect to a child unless (a) it has jurisdiction under the Council Regulation, or (b) the Council Regulation does not apply but . (ii) the condition in section 3 of this Act is satisfied. (3) A court in England and Wales shall not make a section 1(1)(d) order unless (a) it has jurisdiction under the Council Regulation, or (b) the Council Regulation does not apply, but (i) the condition in section 3 of this Act is satisfied, or (ii) the child concerned is present in England and Wales on the relevant date and the court considers that the immediate exercise of its powers is necessary for his protection. Section 3 relevantly provides: (1) The condition referred to in section 2(1)(b)(ii) of this Act is that on the relevant date the child concerned (a) is habitually resident in England and Wales, or (b) is present in England and Wales and is not habitually resident in any part of the United Kingdom, . The omission of a reference to section 2(3)(b)(i) from section 3(1) appears to be an oversight which does not alter the sense of the provisions. Thus, if the order in question is a Part I order, the first port of call is the Regulation. But if it is not a Part I order, and is an order relating to parental responsibility within the meaning of the Regulation, the first port of call is also the Regulation, because it is directly applicable in United Kingdom law. That, however, raises the prior question of whether the jurisdictional scheme in the Regulation applies not only in cases potentially involving two or more European Union members who are parties to the Regulation (all save Denmark) but also in cases potentially involving third countries such as Pakistan. The jurisdictional scheme in the Regulation The general rule is contained in article 8: 1. The courts of a Member State shall have jurisdiction in matters of parental responsibility over a child who is habitually resident in that Member State at the time the court is seised. 2. Para 1 shall be subject to the provisions of Articles 9, 10 and 12. Article 9 provides for the courts of a childs former habitual residence to retain jurisdiction to modify a judgment about access rights for three months after the child has lawfully moved from one Member State to another. More significantly, Article 10 provides for cases where a child has been wrongfully removed or retained. The courts of the Member State where the child was habitually resident immediately before the wrongful removal or retention retain jurisdiction until the child has acquired a habitual residence in another Member State and either each person with rights of custody has acquiesced in the removal or retention or (to paraphrase) the child lived there for at least a year after the person left behind should have known his whereabouts, the child is settled there and (in effect) there are no extant proceedings for his return. Article 12 gives jurisdiction in relation to parental responsibility if the child has a substantial connection with that Member State, all parties have accepted that jurisdiction, and it is in the best interests of the child: the application of this provision in a case where the child was habitually resident in Pakistan was considered by this Court in Re I (A Child) (Contact Application: Jurisdiction)(Centre for Family Law and Practice intervening) [2009] UKSC 10, [2010] 1 AC 319. Two other articles also give jurisdiction. Article 13 gives jurisdiction to the courts of the Member State where the child is present, if the childs habitual residence cannot be established and article 12 does not determine jurisdiction. More relevantly in this case, article 14 provides for a residual jurisdiction: Where no court of a Member State has jurisdiction pursuant to Articles 8 to 13, jurisdiction shall be determined, in each Member State, by the laws of that State. Finally, reference should be made to articles 15, 19 and 20, all of which address potential conflicts between the courts in different Member States. Article 15 provides, by way of exception, that the courts of the Member State having jurisdiction may transfer the case to another Member State with which the child has a particular connection, if it would be better placed to hear the case, and this is in the best interests of the child. Article 19.2 and 19.3 provide that, where proceedings relating to parental responsibility in respect of the same child are brought in different Member States, the court second seised must stay the proceedings until it is established whether the court first seised has jurisdiction, and if that court does have jurisdiction the second court must decline it. Article 20 allows the courts of a Member State to take provisional measures in urgent cases, even if another has jurisdiction over the substance of the matter. Was this a Part I order? Mr Henry Setright QC argues on behalf of the father and his brother that the order made by Peter Jackson J fell within section 1(1)(a) of the 1986 Act because it was a specific issue order made under section 8 of the Children Act 1989. This is defined as an order giving directions for the purpose of determining a specific question which has arisen, or which may arise, in connection with any aspect of parental responsibility for a child: see s 8(1). Mr James Turner QC argues on behalf of the mother that, because the order was made in proposed proceedings under the inherent jurisdiction of the High Court, it could not be a Children Act order. Neither is completely right. The court has power to make any section 8 order of its own motion in any family proceedings in which a question arises with respect to the welfare of any child: see s 10(1)(b). Proceedings under the inherent jurisdiction of the High Court are family proceedings for this purpose: see s 8(3)(a). So, assuming for the moment that an order to return or bring a child to this jurisdiction falls within the definition of a specific issue order, the judge might have made such an order even though this was not what the mother applied for. But that is not what he did. There are many orders relating to children which may be made either under the Children Act 1989 or under the inherent jurisdiction of the High Court: an order authorising a blood transfusion for a Jehovahs Witness child is a good example. There is no mention of the Children Act 1989 in the order made by Peter Jackson J, which specifically refers to the inherent jurisdiction and moreover also makes the children wards of court, which is not an order available under the Children Act 1989. So does the order fall within section 1(1)(d) of the 1986 Act? Quite clearly it does not fall within the wording of that para. It is not an order giving care of a child to any person or providing for contact with or education of a child. Moreover it is clear from the Law Commissions Report that the Scottish Law Commission had regretfully acknowledged the view of the Law Commission that a review of the wardship jurisdiction beyond the core areas of care and control, access and education would require further consultation and could not now be undertaken in this exercise without causing unacceptable delay: Law Com No 138, para 1.25. I conclude, therefore, that the order made by Peter Jackson J and repeated by Parker J fell neither within section 1(1)(a) or section 1(1)(d) of the 1986 Act and was therefore not covered by the jurisdictional prohibitions in section 2 of that Act. Was this an order relating to parental responsibility within the scope of the Regulation? Parental responsibility is given a wide definition in article 2.7 and must include deciding where the child shall be for the time being. The order to bring the children to this jurisdiction related to the exercise of that power. Furthermore, the order made the children wards of court, which places them in the guardianship of the High Court, and is thus one of the examples expressly referred to in article 1.2(b). I conclude, therefore, that the orders made did fall within the scope of the Regulation. Does the Regulation apply where there is a rival jurisdiction in a non Member State? The Regulation deals with jurisdiction, recognition and enforcement in matrimonial and parental responsibility matters. Chapter III, dealing with recognition and enforcement, expressly deals with the recognition in one Member State of judgments given in another Member State: see article 21.1. But there is nothing in the various attributions of jurisdiction in Chapter II to limit these to cases in which the rival jurisdiction is another Member State. Article 3 merely asserts that in matters relating to divorce, legal separation or marriage annulment jurisdiction shall lie with the courts of the Member State in relation to which the various bases of jurisdiction listed there apply. Article 8 similarly asserts that the courts of a Member State shall have jurisdiction in matters of parental responsibility . Furthermore, article 12.4 deals with a case where the parties have accepted the jurisdiction of a Member State but the child is habitually resident in a non Member State, thus clearly asserting jurisdiction as against the third country in question. Hence in Re I (A Child) (Contact Application: Jurisdiction), this Court held that article 12 did apply in a case where the child was habitually resident in Pakistan. There is no reason to distinguish article 12 from the other bases of jurisdiction in the Regulation. In Owusu v Jackson (Case C 281/02) [2005] QB 801, the Court of Justice of the European Communities held that the rule in article 2 of the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Measures 1968, which required that persons domiciled in a contracting state shall, whatever their nationality, be sued in the courts of that state, meant that the courts of that state had to assume jurisdiction, even though there was a third country which also had jurisdiction and even though that country was, on the face of it, the more appropriate forum in which to bring the action. Thus the English court was not only empowered but obliged to assert and exercise jurisdiction rather than leave the parties to the jurisdiction of a state (Jamaica) which was not party to the Convention. We have not heard detailed argument on whether the courts of a Member State which has jurisdiction in respect of parental responsibility for a child under the Brussels II revised Regulation is obliged to exercise that jurisdiction even though there is a third country which would be better placed to hear the case. The wording of articles 3 and 8 of the Regulation is not the same as that in article 2 of the Brussels Convention. Furthermore, article 19 of the Regulation deals with the position where there are pending proceedings in two Member States and article 15 allows the courts of the Member State having jurisdiction to transfer the case to another Member State in appropriate circumstances (see para 24 above). It might therefore be thought anomalous for this to be precluded in a case where the courts of a non Member State were better placed to hear the case. In the context of matrimonial proceedings, it has twice been held in the High Court that Owusu v Jackson does not prevent the court from invoking the statutory power (in section 5(6) and para 9 of Schedule 1 to the Domicile and Matrimonial Proceedings Act 1973) to stay proceedings here if there are already proceedings in a non Member State: see JKN v JCN (Divorce: Forum) [2010] EWHC 843 (Fam); [2011] 1 FLR 826 and AB v CB [2012] EWHC 3841 (Fam); [2013] 2 FLR 29. We are told that permission to appeal has been granted in the latter case. It would therefore be unwise of us to express a view on the position in childrens cases, which might well require us to make a reference to the Court of Justice. The relevance of Owusu v Jackson is merely to reinforce the conclusion that the jurisdiction provisions of the Regulation do indeed apply regardless of whether there is an alternative jurisdiction in a non Member State. Is there jurisdiction under article 8 of the Regulation? Jurisdiction under article 8 depends upon where the child is habitually resident. It has hitherto been thought (see, for example, Dicey, Morris and Collins on The Conflict of Laws, 15th Edition (2012), Rules 17(2) and 18(2); Clarke Hall and Morrison on Children, paras 234 and 236) that the concept of habitual residence, as developed by the courts of England and Wales for the purposes of both the 1986 Act and the Hague Convention on the Civil Aspects of International Child Abduction 1980 (the Hague Child Abduction Convention), is different from the concept of habitual residence as interpreted by the Court of Justice of the European Union for the purposes of the Regulation. Very recently, in DL v EL [2013] EWCA Civ 865, at para 48, the Court of Appeal has expressed the view that there is now no distinction to be drawn between the test adopted in each of those three contexts. As we are dealing only with habitual residence under the Regulation, it is not strictly necessary for us to resolve that debate. Nevertheless, it is highly desirable that the same test be adopted and that, if there is any difference, it is that adopted by the Court of Justice. There are several reasons for this. First, the Law Commissions recommended the adoption of habitual residence in part because it had been widely used in international conventions, including the Council of Europe Convention on the Recognition and Enforcement of Decisions concerning Custody of Children and on Restoration of Custody of Children (1981) Cmnd 8155 and the Hague Child Abduction Convention, and was likely to be recognised abroad: see Law Com No 138, para 4.15. As Advocate General Kokott pointed out in Proceedings brought by A (Case C 523/07) [2010] Fam 42, various international conventions, in particular the Hague Convention of the Protection of Minors 1961, the Hague Convention on the Protection of Children 1996 which superseded it, and the Hague Convention on the Civil Aspects of International Child Abduction 1980, formed part of the legislative history of the Regulation. In part, the Regulation supersedes them. In part, they operate alongside one another. The fields of application of the various instruments must be consistently demarcated from one another. This presumed a uniform understanding of the concept of habitual residence (para AG23). Thus it would appear that the purpose of both the 1986 Act and the Regulation was to adopt a concept which would apply across the board. Secondly, as both the Law Commissions and the Advocate General pointed out, that concept was to be distinguished from the legalistic concept of domicile (para AG31). As Professor Perez Vera put it in her Explanatory Report on the Hague Child Abduction Convention: 66. We shall not dwell at this point upon the notion of habitual residence, a well established concept in the Hague Conference, which regards it as a question of pure fact, differing in that respect from domicile. To the same effect are the first two of the four well known propositions of Lord Brandon in the leading English case on habitual residence under the Child Abduction Convention, Re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562, 578: The first point is that the expression habitually resident, as used in article 3 of the Convention, is nowhere defined. It follows, I think, that the expression is not to be treated as a term of art with some special meaning, but is rather to be understood according to the ordinary and natural meaning of the two words which it contains. The second point is that the question whether a person is or is not habitually resident in a specified country is a question of fact to be decided by reference to all the circumstances of any particular case. Thirdly, however, as Rhona Schuz has put it Many courts have been unable to resist the temptation to legalise the concept (Habitual residence of children under the Hague Child Abduction Convention theory and practice (2001) 13 CFLQ 1, at 4). In particular, the courts in England and Wales have supplied their own test, derived from the test of ordinary residence regarded by the House of Lords in R v Barnet London Borough Council, ex p Shah [1983] 2 AC 309 as settled law, itself derived from taxation statutes. Lord Scarman defined it thus, at 343: Unless, therefore, it can be shown that the statutory framework or the legal context in which the words are used requires a different meaning, I unhesitatingly subscribe to the view that ordinarily resident refers to a man's abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether of short or of long duration. (See, for example, Re M (Abduction: Habitual Residence) [1996] 1 FLR 887; Al Habtoor v Fotheringham [2001] 1 FLR 951; Re R (Abduction: Habitual Residence) [2004] 1 FLR 216; Re P J (Children) (Abduction: Consent) [2010] 1 WLR 1237; Re H K (Habitual Residence) [2012] 1 FLR 436). This test has at least two disadvantages. In the first place, the Law Commissions deliberately adopted habitual rather than ordinary residence, because the latter frequently occurred in tax and immigration statutes and they thought that its use in the wholly different context of family law was a potential source of confusion (Law Com No 138, para 4.15). Furthermore, the reference to adopting an abode voluntarily and for settled purposes is not readily applicable to a child, who usually has little choice about where he lives and no settled purpose, other than survival, in living there. If this test is adopted, the focus inevitably shifts from the actual situation of the child to the intentions of his parents. Fourthly, and perhaps for that reason, the English courts have been tempted to overlay the factual concept of habitual residence with legal constructs. The most important of these is the rule that where two parents have parental responsibility for a child, one cannot change the childs habitual residence unilaterally: this dates back at least as far as a dictum of Lord Donaldson MR in the Court of Appeal in Re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562, at 572, and the decision of Wall J in In re S (Minors)(Child Abduction: Wrongful Retention) [1994] Fam 70, approved by the Court of Appeal in Re M (Abduction: Habitual Residence) [1996] 1 FLR 887, 892, and taken for granted ever since. It was for this reason that Patten LJ regarded the fathers appeal in relation to the three older children as quite hopeless. Recognising a unilateral fait accompli would be a charter for abduction (para 52). The father has not challenged that conclusion in this Court and so the question is not before us. It is worth noting that the rule has not been universally adopted: see, for example, Mozes v Mozes 239 F 3rd 1067 (9th Circuit 2001); SK v KP [2005] 3 NZLR 590. Nor is there a hint of it in the European jurisprudence. It would not inevitably be a charter for abduction. Both the 1986 Act and the Regulation contain provisions designed to retain jurisdiction in the country where a child was formerly habitually resident for at least a year after his wrongful removal or retention: see 1986 Act, s 41 (albeit that it has been held that this does not apply as between the United Kingdom and other countries: Re S (A Child: Abduction) [2002] EWCA Civ 1941, [2003] 1 FLR 1008) and Regulation, article 10 (see para 22 above). As Lord Hughes points out, article 10 provides a good reason why the courts of England and Wales retain jurisdiction over the three older children in any event. The Hague Child Abduction Convention is concerned with wrongful removal or retention of a child from the country where he was habitually resident immediately before that wrongful removal or retention: see article 3. As Lord Hughes also points out, the rule is more relevant in retention than removal cases, but the answer may lie in treating the unilateral change of habitual residence as the act of wrongful retention, even if it takes place before the child was due to be returned. The matter may therefore require fuller consideration in another case, but it is not necessary for us to express a concluded view. Fifthly, of course, once one adopts concepts of this sort, it becomes tempting to construct another rule, that a childs habitual residence is necessarily that of his primary carer or carers. In Re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562, Lord Brandon continued, at 579C: The fourth point is that, where a young 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. It may then seem a small step to apply this principle to a case in which the child has never even been present, let alone lived, in the country where his primary carer is habitually resident. It is not difficult to think of examples where this would accord with both the underlying reality and the criterion of proximity referred to in Recital 12 to the Regulation. In this case, Thorpe LJ gave the example of an English mother habitually resident in England who gives birth to a child in France. As a result of complications mother and child are hospitalised for an extended period before they are fit to come home (para 29). In his view, the child was habitually resident in England from birth and not just from when she set foot in this country. In In re T (A Child)(Care Proceedings: Request to Assume Jurisdiction [2013] EWHC 521 (Fam), [2013] Fam 253, a pregnant 17 year old Slovakian girl ran away from a childrens home in Slovakia and gave birth to the baby here. While deciding to transfer the case to Slovakia under article 15, Mostyn J would instinctively conclude that an infants habitual residence derives from his mother (para 41) were it not for the Court of Appeals decision in this case. In B v H (Habitual Residence: Wardship) [2002] 1 FLR 388, both parents were habitually resident in England, where the child was conceived, but she was born in Bangladesh, after the father had refused to let the mother and the other children return home from a holiday. Charles J held that all the children, including the new baby, were habitually resident here. He placed some reliance on Re J (above) and also took the view that to erect a positive rule that physical presence was a necessary prerequisite to establishing an habitual residence ran counter to the proposition . that habitual residence is, or is primarily, an issue of fact and is not an artificial concept (para 133). The facts of this case are, of course, very similar to those of B v H. It follows from the requirement that residence be habitual that it is not lost by temporary absences, such as that of the mother giving birth while on holiday in France or the mother on the run from a Slovakian childrens home. Thus one can be habitually resident somewhere where one is not actually present at the relevant time. No one doubts that this mother remained habitually resident in England during her enforced absence in Pakistan. From this too, it can appear artificial to construct a rule that physical presence at some time, however fleeting, is an essential pre requisite. On the other hand, the English jurisprudence recognises that a person may have no country of habitual residence. In Re J, at 578 9, Lord Brandon said this: The third point is that there is a significant difference between a person ceasing to be habitually resident in country A, and his subsequently becoming habitually resident in country B. A person may cease to be habitually resident in country A in a single day if he or she leaves it with a settled intention not to return to it but to take up long term residence in country B instead. Such a person cannot, however, become habitually resident in country B in a single day. An appreciable period of time and a settled intention will be necessary to enable him or her to become so. During that appreciable period of time the person will have ceased to be habitually resident in country A but not yet have become habitually resident in country B. I share Lord Hughes view that the third and fourth points made by Lord Brandon are best seen as helpful generalisations of fact, which will usually but not invariably be true, rather than as propositions of law. There has been a tendency to construe this fourth statement as if it were a statute, and debate the meaning of appreciable time. I would not accept that it is impossible to become habitually resident in a single day. It will all depend upon the circumstances. But I would accept that one may cease to be habitually resident in one country without having yet become habitually resident in another. Finally, as we have seen, in the vast majority of cases jurisdiction will now be governed by the Regulation, which the courts in the United Kingdom will have to construe in accordance with the guidance given by the Court of Justice. How then does the English approach square with that of the Court of Justice of the European Union? That court has considered the matter in two cases. Proceedings brought by A (Case C 523/07) [2010] Fam 42 concerned a family who had originally lived in Finland but then moved to live in Sweden. Some years later, they travelled to Finland in a camper van, originally for the holidays, moving from campsite to campsite and the children did not go to school. But in October the parents applied to the Finnish authorities for social housing. So were the children habitually resident in Finland? Advocate General Kokott stressed that habitual residence had to be distinguished from mere presence (para AG20), and also from the legalistic concept of domicile (para AG31). She proposed that it should correspond to the actual centre of interests of the child (para AG38); the court should take account of all factors present when it was seised of the case (para AG 39); the duration and regularity of residence and the childs familial and social integration may be particularly significant (para 40). The actual centre of interests concept dates back to Professor Steigers Explanatory Report to the 1961 Protection of Children Convention and has been adopted by the Court of Justice in other contexts. But in Proceedings brought by A the Court accepted that the approach under the Regulation should be different from the approach in other areas of European Union law. Their approach was a child centred one: 38. In addition to the physical presence of the child in a member state, other factors must be chosen which are capable of showing that that presence is not in any way temporary or intermittent and that the residence of the child reflects some degree of integration in a social and family environment. (Emphasis supplied) The operative part of the judgment put it this way: 2. The concept of habitual residence under article 8(1) . must be interpreted as meaning that it corresponds to the place which reflects some degree of integration by the child in a social and family environment. To that end, in particular the duration, regularity, conditions and reasons for the stay on the territory of a member state and the familys move to that state, the childs nationality, the place and conditions of attendance at school, linguistic knowledge and the family and social relationships of the child in that state must be taken into consideration. It is for the national court to establish the habitual residence of the child, taking account of all the circumstances specific to each individual case. Mercredi v Chaffe (Case C 497/10 PPU) [2012] Fam 22 concerned a two month old baby born in England to unmarried parents and removed by her French mother to the French island of La Runion. The English court made orders for her return four days later. But proceedings in France under the Hague Child Abduction Convention failed because the father did not have rights of custody. Was the child habitually resident in England and Wales when the orders were first made? The Court of Justice repeated much of the guidance in Proceedings brought by A, including this: 49 . in order to determine where a child is habitually resident, in addition to the physical presence of the child in a member state, other factors must also make it clear that that presence is not in any way temporary or intermittent. (Emphasis supplied) The court went on to point out that the childs age is liable to be of particular importance. Normally it is the social and family environment of the child which is fundamental in determining habitual residence. But where the child concerned is an infant: 55 . An infant necessarily shares the social and family environment of the circle of people on whom he or she is dependent. Consequently, where . the infant is in fact looked after by her mother, it is necessary to assess the mothers integration in her social and family environment. In that regard, the tests stated in the courts case law, such as the reasons for the move by the childs mother to another member state, the languages known to the mother or again her geographic and family origins may become relevant. The operative part of the judgment put it this way: 1 The concept of habitual residence . must be interpreted as meaning that such residence corresponds to the place which reflects some degree of integration by the child in a social and family environment. To that end, where the situation concerned is that of an infant who has been staying with her mother only a few days in a member state other than that of her habitual residence to which she has been removed, the factors which must be taken into consideration include, first, the duration, regularity, conditions and reasons for the stay in the territory of that member state and for the mothers move to that state and second, with particular reference to the childs age, the mothers geographic and family origins and the family and social connections which the mother and child have with that member state. Incidentally, although not directly relevant to the point which we have to decide, concern had been expressed in the English courts at other passages in Mercredi v Chaffe which appeared to import a requirement of permanence for residence to be habitual. At first instance in DL v EL, Sir Peter Singer compared the French and English texts of the judgment, which showed that the French text had almost throughout used stabilit rather than permanence and in the one place where it did use permanence it was as an alternative to habituelle: [2013] 2 FLR 163, paras 71 et seq. It was this comparison which helped the Court of Appeal to conclude that there was no difference between the English and European approaches. Understandably, Mr Setright concentrates on the phrase in addition to the physical presence of the child which appears in both judgments. He can also pray in aid the view previously taken in the English courts that, in order to be habitually resident, one must first be resident, and that in order to be resident once must at least have set foot in a country (see, for example, Re M (Abduction: Habitual Residence) [1996] 1 FLR 887, per Sir John Balcombe at 895, heavily relied upon by Patten LJ in this case). He does, however, accept that a child can acquire the parents habitual residence almost immediately after arriving there. Mr Turner stresses that the point with which we are concerned simply did not arise in either Proceedings brought by A or Mercredi v Chaffe: the question was whether the children were habitually resident in the place where they were. The references to physical presence should be read in the context of the Advocate Generals argument in Proceedings brought by A that habitual residence must be distinguished from mere presence (AG20). In Mercredi the court had regarded the habitual residence of an infant as depending on the social and family integration of the mother, thus implying that the childs habitual residence would be that of the mother, even if the child had never been there. This is consistent with Lord Brandons fourth point in Re J (above), with the undoubted proposition that one can be habitually resident without being physically present at the relevant time, and with the realities of a young childs situation. Drawing the threads together, therefore: i) All are agreed that habitual residence is a question of fact and not a legal concept such as domicile. There is no legal rule akin to that whereby a child automatically takes the domicile of his parents. ii) It was the purpose of the 1986 Act to adopt a concept which was the same as that adopted in the Hague and European Conventions. The Regulation must also be interpreted consistently with those Conventions. iii) The test adopted by the European Court is the place which reflects some degree of integration by the child in a social and family environment in the country concerned. This depends upon numerous factors, including the reasons for the familys stay in the country in question. iv) It is now unlikely that that test would produce any different results from that hitherto adopted in the English courts under the 1986 Act and the Hague Child Abduction Convention. v) In my view, the test adopted by the European Court is preferable to that earlier adopted by the English courts, being focussed on the situation of the child, with the purposes and intentions of the parents being merely one of the relevant factors. The test derived from R v Barnet London Borough Council, ex p Shah should be abandoned when deciding the habitual residence of a child. vi) The social and family environment of an infant or young child is shared with those (whether parents or others) upon 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. vii) The essentially factual and individual nature of the inquiry should not be glossed with legal concepts which would produce a different result from that which the factual inquiry would produce. viii) As the Advocate General pointed out in para AG45 and the court confirmed in para 43 of Proceedings brought by A, it is possible that a child may have no country of habitual residence at a particular point in time. So which approach accords most closely with the factual situation of the child an approach which holds that presence is a necessary pre cursor to residence and thus to habitual residence or an approach which focusses on the relationship between the child and his primary carer? In my view, it is the former. It is one thing to say that a childs integration in the place where he is at present depends upon the degree of integration of his primary carer. It is another thing to say that he can be integrated in a place to which his primary carer has never taken him. It is one thing to say that a person can remain habitually resident in a country from which he is temporarily absent. It is another thing to say that a person can acquire a habitual residence without ever setting foot in a country. It is one thing to say that a child is integrated in the family environment of his primary carer and siblings. It is another thing to say that he is also integrated into the social environment of a country where he has never been. However, I cannot be confident that this is acte clair for the purpose of European Union law, for several reasons. First, the Court of Justice has not so far had to consider a case such as the present, or indeed any of the examples given in para 42 above. Second, the facts are particularly stark. This child would probably not have been conceived, and certainly would not have been born and kept in Pakistan, had his mother not been held there against her will. Without that, the child would undoubtedly have become habitually resident in this country. Third, the European Court would have to consider the implications for the Hague Child Abduction Convention if a child such as this, or a child born on holiday, were held to have no country of habitual residence. The whole Convention, beginning with article 3, is predicated upon there being a state where the child is habitually resident immediately before the wrongful removal or retention. Can it be the case that the Convention would not apply if the child born to an English mother while on holiday abroad were abducted from the hospital? Fourth, there is judicial, expert and academic opinion in favour of the child acquiring his mothers habitual residence in circumstances such as these. Principal amongst those judicial opinions is the conclusion reached by Lord Hughes in this very case. Reunite International Child Abduction Centre, the leading non governmental organisation specialising in advice, assistance, mediation and research in relation to international child abduction and the movement of children across international borders, have intervened in this case in support of the mother. They submitted that, while there should be no rule that a new born child takes the habitual residence of the mother, the childs place of birth should carry little weight where the only reason that the child has been born in a particular place is because the mother has been deprived of her autonomy to choose where to give birth. The Centre for Family Law and Practice, whose co Director has conducted some important research into child abduction, similarly submitted that a person who had used such coercion should not be enabled to deprive the child of the protection of the courts of the country where he would otherwise have been born. More broadly, it has been suggested that, given the inherent vagueness of the concept, the decision in any particular case will inevitably depend upon a balance between the applicable policy considerations: see Rhona Schuz, Policy Considerations in Determining the Habitual Residence of a Child and the Relevance of Context (2001) 11 J Transnational Law and Policy 101. Hence I would not feel able to dispose of this case on the basis that Haroon was not habitually resident in England and Wales on 21 June 2011 without making a reference to the Court of Justice. But we can only refer a question to the Court if it is necessary for us to determine the case before us. For the reasons which will appear below, it is not at present so necessary. Is there another basis of jurisdiction? Article 14 applies where no court of a Member State has jurisdiction under articles 8 to 13. No other Member State is involved in this case. Either the courts of England and Wales have jurisdiction under article 8 or no court of a Member State does so. In that case, the jurisdiction of England and Wales is determined by the laws of England and Wales. We have already established that the prohibition in section 2 of the 1986 Act does not apply to the orders made in this case. The common law rules as to the inherent jurisdiction of the High Court continue to apply. There is no doubt that this jurisdiction can be exercised if the child is a British national. The original basis of the jurisdiction was that the child owed allegiance to the Crown and in return the Crown had a protective or parens patriae jurisdiction over the child wherever he was. As Lord Cranworth LC explained in Hope v Hope (1854) 4 De GM & G 328, at 344 345: The jurisdiction of this Court, which is entrusted to the holder of the Great Seal as the representative of the Crown, with regard to the custody of infants rests upon this ground, that it is the interest of the State and of the Sovereign that children should be properly brought up and educated ; and according to the principle of our law, the Sovereign, as parens patriae, is bound to look to the maintenance and education (as far as it has the means of judging) of all his subjects. The first question then is, whether this principle applies to children born out of the allegiance of the Crown ; and I confess that I do not entertain any doubt upon the point, because the moment that it is established by statute that the children of a natural born father born out of the Queen's allegiance are to all intents and purposes to be treated as British born subjects, of course it is clear that one of the incidents of a British born subject is, that he or she is entitled to the protection of the Crown, as parens patria. The continued existence of this basis of jurisdiction was recognised by the Court of Appeal in Re P (GE) (An Infant) [1965] Ch 568, where Lord Denning MR said this: The court here always retains a jurisdiction over a British subject wherever he may be, though it will only exercise it abroad where the circumstances clearly warrant it: see Hope v Hope (1854) 4 De GM & G 328; In re Willoughby (1885) 30 Ch D 324; R v Sandbach Justices, ex p Smith [1951] 1 KB 62. The Law Commissions in their Report also recognised its continued existence, while pointing out that there appears to be no reported decision in which jurisdiction to make a wardship order has been based on the allegiance of a child who was neither resident nor present in England and Wales (see Law Com No 138, paras 2.9 and 4.41). In fact, Hope was just such a case, as the boys in question had been born in France to British parents, had never lived here (although they had been brought here for a few days by their father), and were in France when the proceedings were begun. However, in Al Habtoor v Fotheringham [2001] 1 FLR 951, para 42 Thorpe LJ advised that the court should be extremely circumspect and must refrain from exhorbitant jurisdictional claims founded on nationality over a child who was neither habitually resident nor present here, because such claims were outdated, eccentric and liable to put at risk the development of understanding and co operation between nations. But in Re B; RB v FB and MA (Forced Marriage: Wardship: Jurisdiction) [2008] 2 FLR 1624, Hogg J did exercise the jurisdiction in respect of a 15 year old girl born and brought up in Pakistan, who had never been here but did have dual Pakistani and British nationality. She had gone to the High Commission in Islamabad asking to be rescued from a forced marriage and helped to come to Scotland to live with her half brother. The High Commission wanted to help her but felt unable to do so without the backing of a court order. Hogg J made the girl a ward of court and ordered that she be brought to this country. The half brother was assessed as offering a suitable home and in fact she went to him. Hogg J explained that she thought the circumstances sufficiently dire and exceptional: para 10. In Re N (Abduction: Appeal) [2013] 1 FLR 457, McFarlane LJ commented that If the jurisdiction exists in the manner described by Hogg J then it exists in cases which are at the very extreme end of the spectrum (para 29). The facts of that case were certainly not such as to require the High Court to assume jurisdiction over the child in question. In my view, there is no doubt that the jurisdiction exists, insofar as it has not been taken away by the provisions of the 1986 Act. The question is whether it is appropriate to exercise it in the particular circumstances of the case. Mr Turner accepts that Parker J did not address herself to this basis of jurisdiction and to whether, if Haroon were not habitually resident here, it would be appropriate to exercise it. He accepts that the case will have to return to her in order for her to do so. Mr Setright, with the able assistance of Mr Manjit Gill QC, has raised a number of important general considerations which may militate against its exercise. It is inconsistent with and potentially disruptive of the modern trend towards habitual residence as the principal basis of jurisdiction; it may encourage conflicting orders in competing jurisdictions; using it to order the child to come here may disrupt the scheme of the 1986 Act by enabling the childs future to be decided in a country other than that where he or she is habitually resident. In a completely different context, there are also rules of public international law for determining which is the effective nationality where a person holds dual nationality. All of these are reasons for, as Thorpe LJ put it in Al Habtoor, extreme circumspection in deciding to exercise the jurisdiction. But all must depend upon the circumstances of the particular case. Among the factors which may be relevant in this case are: i) The father is now estopped from denying that the three older children are habitually resident here. There is no obstacle to their future being decided in this country, which is undoubtedly the country with which they had the closest connection until they were prevented from leaving Pakistan to return here in November 2009. ii) The basis upon which the father proposed to mount a forum non conveniens argument in relation to the older children was that the High Court did not have jurisdiction in relation to Haroon. If it is determined that the High Court should exercise its jurisdiction in relation to Haroon, that argument disappears. The father should not be permitted to raise any other arguments in relation to the older children which he could have raised at first instance. iii) Nevertheless, arguments as to the appropriate forum in which to decide Haroons future will be relevant to whether it would be right for the High Court to exercise its inherent jurisdiction based on nationality in his case. iv) Among those arguments will be the practicability of the mother litigating the childrens future in Pakistan, in the light of the findings already made by the judge. How reasonable is it to expect her to return to that country, given what happened to her there previously? Conversely, how reasonable is it to expect the father to return here, where he was born and has lived for most of his life and has property and other family members? v) The circumstances in which these children came to be in Pakistan, and the coercion to which their mother was subject, while not determinative, are highly relevant factors. vi) It is troubling that these proceedings have been continuing for so long without any inquiry being made about how the children are. Children and Families across Borders (formerly International Social Service) have helpfully intervened to suggest how this might be done, and the judge may wish to consider what they say. We are told that the father wishes to file evidence in relation to the issue which is to be remitted to the judge. However, he must not be permitted to reopen the factual and legal issues which have been decided against him. He must not be permitted to take any advantage from his past refusal to take part in the proceedings, to file or to give evidence, or to obey court orders. The judge has already decided to exercise jurisdiction on the basis that Haroon is habitually resident here. Should she decide not to exercise jurisdiction on the basis of his nationality and allegiance, it will become necessary to decide whether he is indeed habitually resident here. As already explained, this Court cannot resolve that question without referring it to the Court of Justice. The parties should therefore have liberty to apply to this Court for a reference to be made in the event that a decision on the point becomes necessary. Conclusion The appeal is allowed. The case is remitted to Parker J to consider as a matter of urgency whether to exercise the Courts inherent jurisdiction in relation LORD HUGHES I gratefully acknowledge Lady Hales exposition of the facts of this case, and I agree with her about the order which this court should make to dispose of this appeal. I also respectfully agree with much the greater part of her reasoning en route to that proposed order. I do not, however, feel able to leave the case without setting out some observations on the issue of the habitual residence of the youngest child, which is the question on which the appeal came to this court, and on which at present the last word in this jurisdiction is that of the majority of the Court of Appeal. The point is of some importance since although it is unusual for the habitual residence of a newborn baby to fall for consideration when he has not yet reached the shores of his familys established home, both this case and B v H (Habitual Residence: Wardship) [2002] 1 FLR 388 show that it is by no means hypothetical. Moreover, although in the present case there exists another possible basis for the jurisdiction of the English court, similar events to those which have taken place here could very easily occur in a family which was well established and settled here, but which did not have British nationality. As to the several other issues in the case it is enough to set out in the briefest terms my agreement with each of the propositions which follow. i) The order made by the judge for the return of the children to England, including the youngest, was an order . relating tothe exerciseof parental responsibility within the terms of Articles 1(1)(b) and 2(7) of the (directly effective) Council Regulation EC 2201/2003 (Brussels II revised). ii) It follows that the jurisdiction of the English court falls to be exercised on one or more of the bases set out in Articles 8 to 14 of Brussels II revised, and that the primary basis is, as provided for by Article 8, the habitual residence of the child at the time at which the court was seised of the application by Mother. iii) The order made by the judge was not a Part I order within the terms of the Family Law Act 1986, and therefore the jurisdiction of the English court is not confined by that Act to the basis of the habitual residence of the child. iv) The order made by the judge was made in the course of the courts very longstanding wardship jurisdiction over children, which has always been available in the case of a child who is a British national, irrespective of the childs habitual residence or current whereabouts. v) As a matter of English law, this nationality based jurisdiction should be exercised with great caution in a case where the habitual residence of the child in England is not established, but there will be some instances where it is proper to exercise it. vi) If it be the case that the youngest child is not habitually resident in England, he is not habitually resident in any State which is a member of the European Union. In that event, if it is proper under English law for the English court to exercise jurisdiction on the basis of his nationality, such jurisdiction is available to the court within Brussels II Revised through Article 14. vii) The judge has not had the opportunity to consider the exercise of jurisdiction in relation to the youngest child on the basis of his nationality. The case should be remitted to her to address this possibility, and also for her to consider Fathers application to stay the English proceedings on the grounds that Pakistan is on the facts a more convenient and suitable forum for the determination of the childrens future. viii) The factors set out in Lady Hales judgment at paras 64 and 65 will be amongst those potentially relevant to the judges remitted enquiry. I also agree that if Father is to be permitted to adduce further evidence it must be limited to evidence which addresses the remitted issues and does not attempt to re open the factual matters on which the judge has already made findings: see para 66 of Lady Hales judgment. ix) There is no occasion for us to resolve the difficulty presented by Owusu v Jackson nor its impact (if any) on family cases governed by Brussels II revised. Habitual residence: the youngest child This is not the place to attempt a wide ranging analysis of all aspects of habitual residence. Indeed the most commonly troublesome questions, namely those associated with moves from one country to another which one side contends to be temporary and the other to be sufficiently settled, do not arise in this case. What follows is directed only to the decision of the Court of Appeal in the present case that there exists a rule which requires that before a person can be habitually resident in a jurisdiction, he or she must at some time have been physically present there. Some general considerations must, however, be set out if that issue is to be addressed. I agree with Lady Hale who has identified the long standing tension between the generally accepted proposition that habitual residence is a question of fact and the desire to provide some guidance on the approach which courts should adopt when deciding whether it has been demonstrated. A good example is Mozes v Mozes (2001) 239 F 3rd 1067. At times, the guidance offered comes close to being framed as propositions of law, although usually this has not been the intention of the authors. Such intention was disclaimed in Mozes v Mozes and it is absent also, I think, from the locus classicus in England and Wales of Lord Brandon of Oakbrooks speech in Re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562. There Lord Brandon made it clear (at 578G) that the question whether someone was or was not habitually resident in a particular country is a question of fact to be decided by reference to all the circumstances of any particular case. He then went on to offer a number of general guides to the determination of the issue. Immediately after the proposition just cited he said this: The third point is that there is a significant difference between a person ceasing to be habitually resident in country A, and his subsequently becoming habitually resident in country B. A person may cease to be habitually resident in country A in a single day if he or she leaves it with a settled intention not to return to it but to take up long term residence in country B instead. Such a person cannot, however, become habitually resident in country B in a single day. An appreciable period of time and a settled intention will be necessary to enable him or her to become so. During that appreciable period of time the person will have ceased to be habitually resident in country A but not yet have become habitually resident in country B. The fourth point is that, where a child of J's age is in the sole lawful custody of the mother, his situation with regard to habitual residence will necessarily be the same as hers. It will be seen that that immediately following passage offers at least three generally stated propositions, many of which have since been treated in some quarters as amounting to propositions of law. One is that an habitual residence in country A may be abandoned in a single day. A second is that habitual residence in country B cannot be established (or, as English lawyers are prone to say, acquired) in a single day, and a third is that an infant who is in the sole lawful custody of his mother will necessarily have the same habitual residence as she has (or, as English lawyers are prone to say, will derive his habitual residence from hers). Lord Brandons propositions are, as it seems to me, much better regarded as helpful generalisations of fact than as propositions of law. He cannot have intended them to operate as propositions of law without destroying his starting point, namely that habitual residence is a question of fact, to be determined by consideration of all the circumstances. However, whether or not that is the correct analysis of Re J, it is now clear from the jurisdiction of the Court of Justice of the EU that habitual residence is a question of fact: see below. Consistently with treating habitual residence as a question of fact, it seems to me that each of Lord Brandons supplemental propositions will clearly usually be true. An migr flying from Heathrow to a new home in Australia, who has sold every possession in England and intends to make a permanent home in Sydney will surely normally no longer be habitually resident in England from the day of his departure. But it might perhaps be different if he had neglected to obtain permission from Australia to re locate, and decided at Dubai that he would return to England. A person arriving in a foreign country hoping to make his permanent home there will no doubt in many cases not be regarded as habitually resident there until he has established himself, with home, occupation, permission to reside and so on. But if he has pre arranged all of this and is joining his spouse and family, it might well be that his habitual residence would be established more or less immediately on arrival. The same is true of Lord Brandons third generalisation, which is of direct relevance to the present case. One commonly relevant factor in the establishment of habitual residence is clearly the intention of the individual. But an infant of very tender years is in no position to form any independent intention. His or her habitual residence will normally be established by belonging to a family unit which has habitual residence in a particular place, and the infant will thus share it. As a generalisation it is therefore plainly true that the infant will normally share the habitual residence of the person who has lawful custody of him, and this is a valuable aid to courts. But this is not an invariable rule of law, and it is not too difficult to envisage factual situations in which this proposition will not be true. If a young unmarried woman who is habitually resident in State A but whose parents live in State B becomes pregnant and determines to give birth to her child back at the home of her parents, and thereafter by agreement with them to leave the child there to be brought up by them, she will no doubt remain habitually resident in State A. If State A is England she will, by English law, have the sole lawful custody of the child (ie sole parental rights and the right, unless and until a court intervenes, to determine where the child lives). But neither before or after she travels back to England after the birth, leaving the child in State B as planned, will the child will derive his habitual residence from hers as a matter of law, nor will he share it with her as a matter of fact. The trans national movement of children in the course of disputes about their upbringing, and the associated forum shopping by parents and others, is a major international problem. Its incidence has only grown since the 1980 Hague Convention, with the increase in cross border personal relationships and the ever greater ease of international travel. The 1980 Convention may on occasion operate as a relatively blunt instrument, and no one would claim that its necessarily summary procedure is incapable of ever resulting in injustice, but its contribution to controlling this international problem has been immense. As between the large number of party States, it proceeds upon the basis that in the event of wrongful removal or retention of a child there should normally be a summary return to the State of his or her habitual residence and that the necessary, and often finely balanced, merits decisions which fall to be made are to be made in the courts of that country. In turn, wrongful removal or retention is to be ascertained by reference to the rights of the parties under the law of the State in which the child was habitually resident immediately before the event. This has spawned, in England at least, a proposition closer than those above to a rule of law, namely that where two parents have parental responsibility for a child, one of them cannot by unilateral action alter the habitual residence of the child: see Lord Donaldson of Lymington MR in the Court of Appeal in Re J (A Minor) (Abduction: Custody Rights) supra at 572 and Wall J in In re S (Minors) (Abduction: Wrongful Retention) [1994] Fam 70. The occasion for propounding this rule was not so much the case of wrongful removal but that of wrongful retention. In most cases of wrongful removal, the habitual residence of the child immediately before removal will not be put in doubt by the unilateral actions of one parent. But in the case of wrongful retention, it may. If for example the child, hitherto living with parent A in State A, is visiting parent B in State B under an agreement for contact, and whilst there parent B unilaterally makes arrangements for the child to stay permanently, such as by obtaining immigration rights, enrolling at school and taking similar associated steps, it may be contended that such steps cause the child thereafter to be habitually resident in State B. If, additionally, the view is taken that retention does not occur until the time arrives at which the child is due to return to State A, the argument can be advanced that by then the child is habitually resident in State B, where it follows that retention cannot be wrongful. To hold that parent Bs unilateral actions cannot bring about a change of habitual residence is one route to ensuring that the 1980 Convention is not made ineffective in such a case. It seems to me important to note this situation, which is not rare. As Lady Hale explains at paras 39 40, Brussels II revised contains provisions designed for such a case. Article 10 preserves the jurisdiction of State A not only until habitual residence has been established in State B but also until either all relevant persons have acquiesced in the removal/retention or (broadly) a year has passed, the child is settled and there has been unjustified failure to object, or the courts of State A have reached a determination inconsistent with the continued exercise of jurisdiction. But neither under Article 10 nor the 1980 Hague Convention can this continuing jurisdiction in State A operate if by the time of retention (or even removal) habitual residence has already changed. What matters most is that State A can make an effective order for return. This may be either under the 1980 Hague Convention (as chiefly it will be) or outside it, as may well be possible if the person ordered to make the return is present in State A or has property there (as here). So what matters is where the childs habitual residence was immediately before the removal or retention. I agree with Lady Hale that we are not called upon to resolve this question in the present case, which must await another day. I also agree that it is apparent from Article 10 that Brussels II revised contemplates that habitual residence may shift at some stage after a wrongful removal or retention. It may well be that the problem identified can be resolved consistently with the effectiveness of the 1980 Hague Convention. It may well be that the correct view is that unilateral acts designed to make permanent the childs stay in State B are properly to be regarded as acts of wrongful retention, notwithstanding that the scheduled end of the childs visit has not yet arrived. Such a conclusion is not, to my mind, in any way precluded by the decision of the House of Lords in Re H (Minors) (Abduction: Custody Rights) [1991] 2 AC 476, which holds no more than that a specific act of retention must be identified, and it is consistent with the decision of Wall J in In re S (supra). The significance of the point here is simply twofold. First, Brussels II Revised is, notwithstanding that in the event of conflict it prevails over the 1980 Hague Convention (see Article 60), clearly meant to co exist consistently with that Convention remaining effective see for example Articles 10 and 11 and it ought to be construed wherever possible with that very important objective in mind; in particular the concept of habitual residence needs to be construed similarly in each of the two instruments. Second, providing this approach is adopted, it is unlikely that even in this situation it is necessary to formulate a rule of law that a childs habitual residence cannot unilaterally be changed by one parent where two parents both have parental responsibility. The general approach advanced above is, I believe, wholly consistent with the decisions of the CJEU on the approach to habitual residence in Proceedings brought by A (Case C 523/07) [2010] Fam 42 and Mercredi v Chaffe (Case C 497/10PPU) [2012] Fam 22. In accordance with its usual practice when dealing with the same issue in successive cases, the court used substantially the same language in each. The following principal propositions can be extracted from the decisions. The meaning of habitual residence is autonomous, that is to say not i) governed by differing national laws on the topic: As case at para 34. ii) One of the great values of habitual residence as a base for jurisdiction is proximity: As case at para 35; by this the court clearly meant the practical connection between the child and the country concerned. iii) The question is one of fact. At para 37 in As case, repeated at para 47 in Mercredi v Chaffe the court said: The "habitual residence" of a child, within the meaning of article 8(1) of the Regulation, must be established on the basis of all the circumstances specific to each individual case. iv) Simple physical presence is not by itself sufficient. At para 38 in As case the court said: In addition to the physical presence of the child in a member state, other factors must be chosen which are capable of showing that that presence is not in any way temporary or intermittent and that the residence of the child reflects some degree of integration in a social and family environment. Those words were substantially repeated in Mercredi v Chaffe at para 49. v) Those other factors will mainly be, in the case of a child, those which show some degree of integration in a social and family environment: see paras 38 and 44 in As case and identical language at para 47 in Mercredi v Chaffe. Thus, for example, on the facts of As case where the issue was whether the stay was enduring or intermittent, they are likely to include, as the court said at paras 39 and 44: the duration, regularity, conditions and reasons for the stay on the territory of a member state and the family's move to that state, the child's nationality, the place and conditions of attendance at school, linguistic knowledge and the family and social relationships of the child in that state must be taken into consideration. This formulation was preferred by the court to that suggested by the Advocate General in As case, namely the actual centre of interests (see AG at para 38). vi) Similarly, in the case of a child, the intention of the parent or parents will normally be a relevant factor. At para 40 in As case, repeated at para 50 in Mercredi v Chaffe, the court said: the intention of the person with parental responsibility to settle permanently with the child in another member state, manifested by certain tangible steps such as the purchase or rental of accommodation in the host member state, may constitute an indicator of the transfer of the habitual residence On the facts of Mercredi v Chaffe where the child was a babe in arms and the issue was less whether the presence was intermittent than whether there was sufficient endurance to amount to habitual residence, this factor was of greater significance. vii) The duration of the stay is a relevant factor but is not determinative. In Mercredi v Chaffe at para 51 the court said: In that regard, it must be stated that, in order to distinguish habitual residence from mere temporary presence, the former must as a general rule have a certain duration which reflects an adequate degree of permanence. However, the Regulation does not lay down any minimum duration. Before habitual residence can be transferred to the host state, it is of paramount importance that the person concerned has it in mind to establish there the permanent or habitual centre of his interests, with the intention that it should be of a lasting character. Accordingly, the duration of a stay can serve only as an indicator in the assessment of the permanence of the residence, and that assessment must be carried out in the light of all the circumstances of fact specific to the individual case. The use of the word permanence (which did not appear in As case) must, for the reasons explained by Lady Hale at para 51, be read together with the careful analysis of Sir Peter Singer in DL v EL [2013] EWHC 49 (Fam), [2013] 2 FLR 163, endorsed by the Court of Appeal at [2013] EWCA Civ 865. viii) Generally speaking, an infant will share the habitual residence of the parent(s) with whom he or she lives. In Mercredi v Chaffe at paras 54 55 the court said: 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. Consequently, where, as in the main proceedings, the infant is in fact looked after by her mother, it is necessary to assess the mother's integration in her social and family environment. ix) residence: As case at para 43. It follows from the above that I respectfully agree with the helpful summary In exceptional circumstances a person may have no habitual given by Lady Hale at para 54. To the extent that the Court of Appeal in the present case held that the youngest child did not derive his habitual residence from his mother as a matter of law, I agree, for the reasons set out above. But in my view the court was wrong to attribute the argument for Mother to a contention for dependent habitual residence. This is essentially what Patten LJ did at para 61 when he considered and rejected the case for a special rule for newly born children: One could construct a rule by which a newly born child was presumed to take on birth the habitual residence of its parents or custodial parent. But the rule would be a legal construct divorced from actual fact which is what the court in B v H (Habitual Residence: Wardship) said that it was anxious to avoid and which has been rejected in all the earlier decisions of this court. It would also run contrary to this court's acceptance in cases such as Al Habtoor v Fotheringham that a child's habitual residence is not to be treated as necessarily the same as that of his parents. I entirely agree that no such rule exists. But it does not follow that England was not the youngest childs habitual residence and I am unable to see that the application of the approach set out above produces the conclusion to which the majority of the Court of Appeal came, namely that he could not be habitually resident in England simply because he had never been physically present here. Both Patten and Rimer LJJ proceeded on the basis that it is a minimum legal requirement of habitual residence that there has at some time been physical presence. The decision amounts to a rule of law at least to the extent that it propounds a general proposition that factual habitual residence cannot be achieved without physical presence at some time. Rimer LJ put it thus at 38: As regards the youngest child, H, the position is different. He was born in Pakistan and has never set foot in England and Wales. In respectful disagreement with Thorpe LJ, I agree with Patten LJ, for the reasons he gives, that it follows that H cannot be said to have been habitually resident in England and Wales at the date of either order. The decisions of this court in In re M (Abduction: Habitual Residence) [1996] 1 FLR 887 and Al Habtoor v Fotheringham [2001] 1 FLR 951 show that the question of whether a person is habitually resident in a particular country is one of fact. They further show that an essential ingredient in the factual mix justifying an affirmative answer is that the person was at some point resident in that country; and that it is not possible to become so resident save by being physically present there. If there has been no residence there, there can be no habitual residence there. For his part, Patten LJ, at 47, derived from the same cases a boundary to the effect that: The acquisition of habitual residence in any country requires the adult or child in question to be physically present there. He returned to that proposition at 60, saying: As the cases recognise, residence denotes and involves a physical presence. Both judgments thus relied upon passages in In re M (Abduction: Habitual Residence) [1996] 1 FLR 887 and Al Habtoor v Fotheringham [2001] FLR 951. In the former, parents of Indian origin who were living in England agreed on their separation to send their son to India for his minority, to be brought up by his grandparents. Mother subsequently changed her mind and sought to make the child, still in India, a ward of the English court. The issue was whether her decision changed the habitual residence of the boy back to England. The argument was that it did because the continuing assent of both parents was necessary as a matter of law to his continuing habitual residence being in India. That argument was rejected, as it is clear it would be today both in Europe and in England. It is perfectly correct that Sir John Balcombe said this at 895: Before a person, whether a child or an adult, can be said to be habitually resident in a country, it is clear that he must be resident in that country. Of course, residence does not necessarily require physical presence at all times. Temporary absence on holiday, or for educational purposes (as in Re A), will not bring to an end habitual residence. But here the judge found as a fact, and on ample evidence, that K became habitually resident in India. He has never to this day come back to England. As a matter of fact, he has not been resident in England since he went to India in February 1994. Bracewell J held that the mother's change of mind both brought to an end K's habitual residence in India and gave him an habitual residence in England. I have the gravest doubts whether the first proposition is correct. Clearly, the mother's change of mind could not alter the fact that he was, and is, physically resident in India. Whether her change of mind could alone alter the 'habitual' nature of that residence I very much doubt, but in any event it is not necessary finally to decide that point on this appeal, since the one thing about which I am quite clear is that the child's residence in India could not become a residence in England and Wales without his ever having returned to this country. As I said before, the idea that a child's residence can be changed without his ever leaving the country where he is resident is to abandon the factual basis of 'habitual residence' and to clothe it with some metaphysical or abstract basis more appropriate to a legal concept such as domicil. To like effect, Millett LJ said simply at 896: While it is not necessary for a person to remain continuously present in a particular country in order for him to retain residence there, it is not possible for a person to acquire residence in one country while remaining throughout physically present in another. It was sufficient for the decision that that independent habitual residence was not altered simply by the wish of one parent. It is unsurprising that the fact that the boy had remained in India was treated as an additional reason why his habitual residence was still there. He had clearly established an habitual residence independent of his parents. The court did not have before it the case of an infant who has no independence of his parents but is by contrast integrated into the family unit of one of them. In the later case of Al Habtoor v Fotheringham the whole family unit of which the child was part had emigrated to Dubai where the boys father lived. Some months later the mother and stepfather became disenchanted with Dubai, quarelled with father and returned to England without the boy. On the question of habitual residence, the issue was whether the boys had reverted to England because Mothers had. That was an argument for dependent (or legally derived) habitual residence, which the court rightly rejected. In doing so, Thorpe LJ cited the passages above quoted from Re M. They were clearly cited for the rejection of dependent habitual residence. Once again, the fact that the boy remained in Dubai was an additional reason why his habitual residence remained there. Once again, the court did not have to consider the case of an infant who was an integrated member of a family unit which was habitually resident in a particular place and did not change it. In the present case Thorpe LJ clearly did not regard either this decision or Re M as binding the Court of Appeal to hold that the youngest child could not be habitually resident in England because he had not yet physically reached these shores, for he dissented from the decision that it did. Particularly given his unrivalled experience of all aspects of cross border family issues, his views deserve considerable weight. This court is not in any event bound even if the Court of Appeal was, but for my part I agree with him. Next, the majority in the Court of Appeal treated the CJEU cases as inconsistent with the youngest child having an habitual residence in England. Patten LJ (with whom Rimer LJ agreed) said at para 62 that such a proposition would also clearly be inconsistent with the approach set out in Mercredi v Chaffe . which contemplates a detailed examination of whether a child's presence in a particular jurisdiction involves a sufficient engagement with a settled family life in that place as to amount to habitual residence. Of course the enquiry in both As case and Mercredi v Chaffe would involve a detailed examination of the connection or engagement of the child with a settled family life in Finland or France respectively, but that was because the issue in those cases was whether the family unit as a whole had sufficiently settled to be habitually resident in the new country. In neither case did the court have to consider the case of an infant who is an integrated member of a family unit which was habitually resident in State A although currently detained against the will of the adult in State B. Whilst in both cases the court incorporated into its decision, at paras 38 and 49 respectively, the need for other evidence in addition to mere presence it is crystal clear that this was said in order to demonstrate that mere presence was not automatically sufficient. Neither court was concerned with the question whether presence is always necessary. The CJEU emphasised in both cases the importance of examining the degree of integration of the child into a social and family environment. It emphasised in Mercredi v Chaffe at paras 54 55, cited above at para 80(viii), the manner in which an infants environment is essentially a family one. In the present case, the youngest child was born into a family unit which consisted of his mother and siblings; Father had been, when in England, estranged from it and living elsewhere. This family unit had its habitual residence in England. So, in my view, did the youngest child. He similarly would have shared their habitual residence if he had been born unexpectedly whilst mother was on holiday in Spain, or at sea on a cruise or in transit. In any of these situations, if one asked anyone but a lawyer where the newly born child was habitually resident, the answer would, in my view, have been With his mother, brother and sisters of course. The same would be true, as it seems to me, if he was born to his mother at a time when she was running away from home and temporarily abroad, like the mother in flight from Slovakia in In re T (a Child)(Care Proceedings; Request to Assume Jurisdiction) [2013] EWHC 521 (Fam); [2013] Fam 253. The slightly different facts of H v H (Jurisdiction to Grant Wardship) [2011] EWCA Civ 796; [2012] 1 FLR 23, to which we were referred after the hearing, illustrate the factual nature of the enquiry. There the British father, of Afghan origin, travelled back to Afghanistan to marry. His wife, the mother, planned to come to England but had never left Afghanistan when their first child was born. Her subsequent journey (alone) to England may have resulted in her own habitual residence being established in England, but clearly could not affect that of the child, which was understandably conceded by experienced counsel to be in Afghanistan. There was in that case no family unit with an habitual residence in England, into which the child was born. Nor was there any question of Mother being detained in Afghanistan by coercion. There was rightly no suggestion in the Court of Appeal of any rule of law either that the child derived habitual residence from one or other parent, or that the fact that the child had never been present in England was alone enough to resolve the question. Jurisdiction based on the nationality of the child was not advanced in that case. The sole question on this part of this case is whether the factual enquiry required is overlain by a rule which prevents a person from being habitually resident in a place where he has not yet set foot. I see no occasion for any such rule. There is, I entirely agree, also no rule automatically ascribing habitual residence by dependence to a place to which the child has never been. There is a factual enquiry into the integration of the family unit to which he or she belongs, and that may well yield the conclusion that the child shares the habitual residence of that unit even if he has not yet achieved physical presence there, especially if he is being prevented by coercion or other force majeure from doing so. The decision of the Court of Appeal in this case involves a rule or general proposition because it necessarily excludes habitual residence without some past physical presence. The contrary approach, which to my mind is correct, involves no rule or generality at all, save for the advice to look, in the case of an infant, at the position of the family unit of which he is part. This does not involve a rule for dependent habitual residence. It merely asserts the possibility that habitual residence may exist in a State which is the home of the family unit of which the infant is part, and is where he would be but for force majeure. It is true of course that if one focuses on the position after a year or more in Pakistan it is no doubt the case that one will find links and a degree of integration perforce experienced by the youngest child in that country. He has extended family there. He is physically cared for there. But that is, in this case, only because he, as well as his siblings, have been wrongfully detained there by coercion. It is also of course true that in the great majority of cases, habitual residence is characterised by actual residence, that is to say physical presence. But it is well established that although rules of law are generally inappropriate the concept of habitual residence is necessarily to some extent a legal one; as Patten LJ said at para 59, it is a jurisdictional concept. And it is well established that habitual residence can and often does co exist with actual current absence. If current physical presence is not essential, then so also can habitual residence exist without any physical presence yet having occurred, at least if it has only been prevented by some kind of unexpected force majeure. There can be no doubt about the jurisdiction of the English court in relation to the elder siblings. This is not because of any rule of law which prevents one of two parents from unilaterally altering the habitual residence of a child. It is because as the 1980 Hague Convention requires, in the case of abduction, whether removal or, as here, retention, the acid test is habitual residence immediately before the event. They were resident in England. They went to Pakistan only for a three week holiday. There they have been wrongfully retained. For the same reason, Article 10 of Brussels II revised maintains the jurisdiction of the English court. The only difference between the elder children and the youngest is the accidental fact that he has not yet reached the shores of his homeland. The reason why he has not done so is because he has been wrongly detained elsewhere by coercion. In my view he is, like them, a member of a family unit which is firmly based in England and when born into it he was like the rest of its members habitually resident there. His wrongful retention commenced immediately afterwards. Indeed, if the Court of Appeal is right, he could now be removed to another country without the removal being wrongful; such successive transportation of children to avoid enforced return is by no means unknown. There would, in my respectful view, be a serious failure of the protection afforded by the 1980 Hague Convention and Article 10 if a newly born child in this situation is held to have no habitual residence and thus to be incapable of wrongful removal or retention. I am unable to see any sufficient reason for such a conclusion. I accept of course that, this view being a minority one, it cannot be said to be acte clair, so that if this case or some other were to turn on the point, reference to the CJEU would be indicated. At present, this case does not turn on it. |
This is an unusual case. It involves a claim for unjust enrichment and, in the course of the argument, has led to a wide ranging discussion of the principles relevant to an aspect of unjust enrichment which has been the subject of lively debate among academics. It will be necessary to give consideration to at least some of the principles but, as is so often the case, the appeal can be determined on the facts without the necessity for the Court to express a final view on all the legal issues which have been the subject of argument. The parties Mr Benedetti is an Italian citizen resident in Switzerland. Mr Sawiris is an Egyptian and American national and was at all material times the Chairman and CEO of Orascom Telecom Holding SAE (Orascom), an Egyptian company quoted on the Egyptian Stock Exchange and (through Global Depositary Receipts) on the London Stock Exchange, which operates a telecommunications business concentrated in the Middle East, Africa and South East Asia. Cylo Investments Ltd (Cylo) is Mr Sawiris BVI registered company. April Holding (April) and OS Holding (OS) (the Holding Companies) are Cayman Island companies set up by Mr Sawiris brother and father respectively (who had held the shares in Orascom before the two companies were created), and held under discretionary trusts for the benefit of the wider Sawiris family. Immediately before the relevant events, Cylo had a holding of 4.1% in Orascom, April had a holding of 34.6% in Orascom and OS had a holding of 17.7% in Orascom; so that, between them, they held about 56.4% of Orascoms shares, with the remaining 43.6% of the shares being publicly held. The claims, the judgment and the appeals Mr Benedetti issued these proceedings in August 2007. In them he made a very large claim against all the respondents. At its most extravagant it amounted to 3.7 billion. He put his claim in a number of ways. His primary claim was made in contract under an agreement dated 31 January 2004 (the Acquisition Agreement). His alternative claims were variously based on an alleged oral understanding (which he said was enforceable in equity by reason of the principle in Pallant v Morgan [1953] Ch 43), collateral contract, breach of fiduciary duty, unconscionable receipt, estoppel and quantum meruit. All the claims were in the same amount. The trial came before Patten J as he then was (the judge) and lasted for some 31 days in the first half of 2009. In a very impressive judgment of 576 paragraphs, which was handed down on 15 June 2009, the judge dismissed all Mr Benedettis claims except the claim for quantum meruit. He awarded Mr Benedetti 75.1m. The judge rejected the principal ways in which Mr Benedetti had put his claim for quantum meruit but held that he was entitled to the sum of 75.1m on the basis of a proposal first made on behalf of Mr Sawiris in June 2005. Ironically, this alternative claim was only made by Mr Benedetti at a very late stage of the trial. Until closing submissions it had been maintained on his behalf that the offer of 75.1m was irrelevant and inadmissible. This had the effect, which can now perhaps be seen as unfortunate, that the evidential basis for the claim which ultimately succeeded was not as fully explored as might otherwise have been the case. However that may be, the judge rejected the submission made on behalf of Mr Sawiris that it was too late for Mr Benedetti to alter his case to rely upon it. The judge held that all the respondents were jointly and severally liable to Mr Benedetti in that amount. Mr Benedetti appealed to the Court of Appeal on the ground that the amount awarded was calculated on the wrong basis and should have been more. Mr Sawiris and Cylo cross appealed on the basis that the sum should have been nil and, in any event, argued that it should have been less than 75.1m. The Holding Companies cross appealed on the same basis. The Court of Appeal (Arden, Rimer and Etherton LJJ) handed down their judgments on 16 December 2010. So far as relevant in this appeal, Arden LJ identified the issues as being (1) whether the court should use the Acquisition Agreement as a template for determining the award by way of quantum meruit; (2) whether the judge should have taken Mr Sawiris offer of 75.1m into account in valuing Mr Benedettis services; (3) whether any award should have been made given the payment of the sum of 67m brokerage fee and, if so, what; and (4) whether the Holding Companies should be held liable. The Court of Appeal answered the questions raised by issues (1) and (2) in the negative. The Court held that the correct approach was to take, at least as a starting point, the ordinary market value of the services in fact rendered by Mr Benedetti, which the judge held to be 36.3m. However, they held that Mr Sawiris had not been unjustly enriched in that amount because Mr Benedetti had already received a sum of 67m. They rejected the submission that, given that the figure of 36.3m was less than 67m, Mr Benedetti was not entitled to anything. Rather, in relation to issue (3), it was held that he was entitled to 14.52m calculated as follows. The judge had held that the figure of 67m was referable to 60 per cent of the services in respect of which Mr Benedetti was claiming a quantum meruit in this action. The Court of Appeal held that it followed that Mr Benedetti had been paid for 60 per cent of those services and that Mr Benedetti was therefore entitled to receive the market value of the remaining 40 per cent of the services, that is to say 40 per cent of 36.3m, namely 14.52m. The Court of Appeal accordingly reduced the amount which Mr Sawiris was liable to pay Mr Benedetti from the 75.1m ordered by the judge to 14.52m. In relation to issue (4), the Court of Appeal held that the Holding Companies were not liable. There were a number of other issues before the Court of Appeal, including issues of interest and costs, but they are not relevant in this appeal. The issues in this appeal as between Mr Benedetti and Mr Sawiris and his company Cylo are whether the judge and the Court of Appeal were correct to disregard the Acquisition Agreement (the Acquisition Agreement point), whether the judge was correct to have regard to the offer of 75.1m (the 75.1m point), both of which arise on Mr Benedettis appeal, and whether the Court of Appeal were correct to award anything to Mr Benedetti, which arises on Mr Sawiris and Cylos cross appeal. Permission to appeal and cross appeal respectively was in each case given by this Court. Mr Benedetti also appealed against the part of the decision of the Court of Appeal in which they held that the Holding Companies were not liable to him. However, shortly before the hearing of this appeal he abandoned that part of his appeal. The legal principles It is common ground that the correct approach to the amount to be paid by way of a quantum meruit where there is no valid and subsisting contract between the parties is to ask whether the defendant has been unjustly enriched and, if so, to what extent. The position is different if there is a contract between the parties. Thus, if A consults, say, a private doctor or a lawyer for advice there will ordinarily be a contract between them. Often the amount of his or her remuneration is not spelled out. In those circumstances, assuming there is a contract at all, the law will normally imply a term into the agreement that the remuneration will be reasonable in all the circumstances. A claim for such remuneration has sometimes been referred to as a claim for a quantum meruit. In such a case, while it is no doubt relevant to have regard to the benefit to the defendant, the focus is not on the benefit to the defendant in the way in which it is where there is no such contract. In a contractual claim the focus would in principle be on the intentions of the parties (objectively ascertained). This is not such a case. Mr Benedetti did initially argue that Mr Sawiris, Cylo and the Holding Companies were in breach of the Acquisition Agreement, on the basis, inter alia, that an implied variation had taken place (see para 31A of the amended particulars of claim) or that they were in breach of a collateral contract. Those claims did not, however, rely on an implied term requiring the payment of a reasonable sum. In any event, those arguments were rejected by the judge and there has been no appeal against his judgment in that respect. Mr Benedetti does not now rely upon a contractual claim, whether on the basis of a request for the services or otherwise. The focus is only on the law of unjust enrichment. It is now well established that a court must first ask itself four questions when faced with a claim for unjust enrichment as follows. (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 Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221 at 227 per Lord Steyn; Investment Trust Companies v HMRC [2012] EWHC 458 (Ch) at para 38, per Henderson J. On the facts of this case it is common ground that the first three of those questions must be answered in the affirmative. It is not disputed that Mr Benedetti did render services to Mr Sawiris which conferred a benefit on him and thus enriched him. The enrichment was at Mr Benedettis expense and the enrichment was unjust, or would have been if Mr Sawiris did not pay for the relevant services. As to the fourth question, there are no defences available to Mr Sawiris. The question remains what is the value of the unjust enrichment. Market value and subjective devaluation There are essentially two issues which arise. The first is whether Mr Sawiris is liable to pay the market value of the services or something more than the market value and, if so, what. That issue requires consideration of whether it is permissible to have regard to a defendants subjective opinion of the value of services rendered to him in order to: (i) reduce the amount which he would have to pay on a market value basis for those services (sometimes known as subjective devaluation, a phrase first coined by Professor Peter Birks in 1985 in An Introduction to the Law of Restitution at p 109); or (ii) to increase that amount (sometimes known as subjective revaluation). As appears below, the consensus of academic opinion seems to favour the recognition of subjective devaluation. The second issue is whether Mr Benedetti has already been paid all or part of the sum so determined out of the 67m he received as explained in more detail below. The basic principle is that a claim for unjust enrichment is not a claim for compensation for loss, but for recovery of a benefit unjustly gained [by a defendant] . at the expense of the claimant: Boake Allen Ltd v HMRC [2006] EWCA Civ 25, [2006] STC 606 para 175, per Mummery LJ; see also Goff and Jones, The Law of Unjust Enrichment, 8th ed (2011) (Goff and Jones), para 4 01. Given that Mr Benedettis other claims have fallen away, the concern in the present case is not the value of Mr Benedettis loss but of Mr Sawiris gain. The question is whether an objective or subjective approach should be adopted when calculating that gain. Whichever approach is adopted, it is clear that the enrichment is to be valued at the time when it was received by Mr Sawiris: BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 802, per Robert Goff J; see also Goff and Jones, para 4 34. As appears at para 52 below, in the present case, the services rendered were completed for all practical purposes by 26 May 2005, by which time there was no possibility of, or need for, further services from Mr Benedetti. Similarly, it is clear that, whether an objective or a subjective approach is taken to the evaluation of the benefit, the question is what is the value of the services themselves, not of any end product or subsequent profit made by the defendant: see eg Cobbe v Yeomans Row Management Ltd [2008] UKHL 55, [2008] 1 WLR 1752 at paras 41 42, per Lord Scott. In my view, the starting point in valuing the enrichment is the objective market value, or market price, of the services performed by Mr Benedetti. That is consistent with the view taken by Professor Graham Virgo in The Principles of the Law of Restitution, 2nd ed (2006) (Virgo): Much of the uncertainty concerning the definition of enrichment stems from the lack of consensus about where the analysis should start. Essentially there are two options available. Either we start with an objective test, ascertained by asking whether reasonable people would consider the defendant to have received something of value, or we start with a subjective test, by considering whether the defendant considers that he or she has received something of value. Whilst both the objective and subjective tests are relevant to the identification of an enrichment, the better view is that the objective test should always be considered first. (p 64) I agree. Although Professor Virgo is there considering the approach to the question whether a benefit has been conferred on the defendant at all, as opposed to the question how such a benefit should be valued, it is clear that he takes the same view in relation to valuation: see Virgo at p 98, where he says that the general test of valuation which should be adopted is an objective test. Both the editors of Goff and Jones (eg at para 4 08) and Professor Andrew Burrows in The Law of Restitution, 3rd ed (2011) (Burrows), (at p 61) also take this view. The approach is supported by, eg: BP Exploration v Hunt [1979] 1 WLR 783, 840, per Robert Goff J; Cressman v Coys of Kensington (Sales) Ltd [2004] EWCA Civ 47, [2004] 1 WLR 2775, at para 40, per Mance LJ; Cobbe v Yeomans Row at para 42, per Lord Scott; and Sempra Metals Ltd v IRC [2007] UKHL 34, [2008] AC 561, at paras 116 119, per Lord Nicholls. It is to be noted that Professor Virgo, in the passage quoted above, does not list as an available option the value which the claimant considers that he conferred on the defendant. That is because, as he puts it at p 69, it is not the function of the law of restitution to assess relief by reference to the claimants loss . compensation is not a function of the law of restitution. It is to my mind for this reason that Mr Benedettis request for 200 300m in June 2005 has little or no relevance. For these reasons I agree with Lord Neuberger and Lord Reed (whose judgments I have read in draft) that the general test, or prima facie position, is that the court should apply an objective test to the issue of market value. There is a question as to exactly what the objective approach entails. Professor Virgo states the test (at p 98) as the identification of the market value, namely the sum a willing supplier and buyer would have agreed upon. However I agree with Etherton LJ (at para 140) that the test is the price which a reasonable person in the defendants position would have had to pay for the services. On that approach, although a court must ignore a defendants generous or parsimonious personality, it can take into account conditions increasing or decreasing the objective value of the benefit to any reasonable person in the same (unusual) position as the defendant (para 145). The editors of Goff and Jones note that such conditions would seem to include the defendants buying power in a market so that a defendant who can invariably negotiate a better price for a product than any other buyer will be allowed to say that this price reflects the objective value of the product to him, or in effect that there is one market for him and another for everyone else (para. 4 10). Thus far, I detect no difference between my approach and that of Lord Neuberger or Lord Reed. The question then arises whether it is permissible to reduce the objective market value in order to reflect the subjective value of the services to the defendant. In my opinion, it is. The present case does not, of course, concern subjective devaluation, but that is the hook on which Mr Howard seeks to hang the principle of subjective revaluation. It is on the possibility of subjective devaluation that my approach and that of Lord Reed is I think somewhat different. A defendant, in my view, is entitled to prove that he valued the relevant services (or goods) provided by the claimant at less than the market value. That principle is widely accepted by academic commentators and is based on the fundamental need to protect a defendants autonomy. It is important to note that subjective devaluation is not about the defendants intentions or expectations but is an ex post facto analysis of the subjective value of the services to the defendant at the relevant time. The editors of Goff and Jones put it thus at para 4 06: People have different means and spending priorities, and they value benefits differently according to their personal tastes. Consequently, as Lord Nicholls said in Sempra, a benefit is not always worth its market value to a particular defendant, and when it is not it may be unjust to treat the defendant as having received a benefit possessing the value it has to others. The common law places a premium on how to spend ones money [see Peel v Ontario [1992] 3 SCR 762 at para 25, per McLachlin J], and this right might be unfairly compromised if a defendant were forced to make restitution of the market value of a benefit which he would not have bought at all. To avoid this, the court may therefore assess the value of the benefit by reference to the defendants personal value system rather than the market. Professor Andrew Burrows makes the same point at Burrows p 44: The question of whether the defendant has been benefited/has received value is not straightforward because of the need to respect freedom of choice and individuality of value. Even if the defendant has been objectively benefited (i.e. a reasonable man could regard himself as benefited by what has occurred or, put another way, the claimants performance has a market value) he or she may validly argue that benefit has been of no value to him or her. It is clear (from p 61) that Professor Burrows takes the view that subjective devaluation applies to both the identification and the value of a benefit. See also, to the same effect, Virgo at pp 67 and 68, where he noted that, even if the defendant used what had been received it does not necessarily follow that he or she valued it because, as Pollock CB said in his well known dictum in Taylor v Laird (1856) 25 LJ Ex 329 at 332, [if the claimant] cleans anothers shoes, what can the other do but put them on? As Mance LJ said in Cressman v Coys at para 28, [t]he laws general concern is with benefit to the particular defendant, or so called subjective devaluation. I would not accept Mr Rabinowitzs submission that a distinction is to be drawn between the identification of a benefit and the value of the benefit to a defendant and that, while the former can be subjective, the latter is to be objective. He relied upon the approach adopted by Justice James Edelman as to The Meaning of Loss and Enrichment in Philosophical Foundations of the Law of Unjust Enrichment (eds Chambers, Mitchell and Penner, 2008), pp 211 241). In my opinion Professor Burrows is correct to conclude (Burrows at p 61) that a sharp distinction between choice and valuation may . be artificial because a person may choose something but only at a particular price or even on the basis that it is gratuitously rendered. After the claimant has adduced evidence of the objective value of the benefit which the defendant received, the burden of proof falls upon the defendant to prove that he did not subjectively value the benefit at all, or that he valued it at less than the market price: Goff and Jones, para. 4 08; Virgo, pp 64 and 66 67. That principle was established by the majority of the House of Lords in Sempra Metals: see para 48 per Lord Hope, para 116 per Lord Nicholls and para 180 per Lord Walker. The minority took a different view, namely that it was for the claimant to establish the actual benefit obtained by the defendant: see especially per Lord Mance at paras 231 232 and Lord Scott at para 147. As I see it, the difference between them is really no more than a different approach to the burden of proof. In each case the question is what was the value to the defendant. When I first drafted this judgment I thought that Sempra was an example of subjective devaluation in practice. It was held that the claimant could not recover the market interest rate on the sums it had paid to the Revenue by way of unlawfully levied advance corporation tax because the Government was able to borrow money at lower rates than the market rate. The amount saved by the Government was thus less than that which would have been saved by a commercial entity borrowing the same sums of money (see Goff and Jones at para 4 07). However, having read Lord Reeds judgment I can now see that it may be an example of the objective value of the money to a person in the position of the defendant, namely the Government. This perhaps shows the narrowness of the difference between our two approaches. This can I think be seen from an important passage in the speech of Lord Nicholls at para 119: What is ultimately important in the law of restitution is whether, and to what extent, the particular defendant has been benefited: see Burrows, The Law of Restitution, 2nd ed (2002), p 18. A benefit is not always worth its market value to a particular defendant. When it is not, it may be unjust to treat the defendant as having received a benefit possessing the value it has to others. In Professor Birks's language, a benefit received by a defendant may sometimes be subject to subjective devaluation: An Introduction to the Law of Restitution (1985), p 413. Recognising the principle of subjective devaluation raises the question of what a defendant relying on that principle must prove. A defendant can always simply assert that he valued a benefit at less than the market value. However, a court will be very unlikely to accept such an assertion unless there has been some objective manifestation of the defendants subjective views. In principle, this can occur before or after a transaction, although conduct after the transaction is likely to carry little weight. Goff and Jones put it thus at para 4 09: A defendant is unlikely to persuade a court that he attached a low value to a benefit simply by relying on self serving testimony that he has a (previously unexpressed) value system that attributes a low value to such benefits, particularly if this testimony is not borne out by his previous conduct. If a defendant can produce stronger evidence of his personal spending preferences, however, then we believe that he should be able to rely on this evidence consistently with the view expressed in the foregoing authorities that the law is concerned to protect his freedom to make his own spending choices. An example of subjective devaluation in practice is perhaps Ministry of Defence v Ashman (1993) 25 HLR 513, although caution is needed because that was a case about restitution for a wrong (trespass). The Ministry of Defence in that case were awarded, not the market rent for the property, but a rent equivalent to what would have been charged for suitable local authority accommodation because Mr and Mrs Ashman would probably never have occupied the premises in the first place if they had to pay 472 a month [i.e. the market rate] instead of the concessionary licence fee of 95 (see p 520, per Hoffmann LJ). See also Ministry of Defence v Thompson (1993) 25 HLR 552, where, in a differently constituted Court of Appeal, Hoffmann LJ, with whom Glidewell LJ and Sir John Megaw agreed, said this: The principles in Ashman may, in my judgment, be summarised as follows: first, an owner of land which is occupied without his consent may elect whether to claim damages for the loss which he has been caused or restitution of the value of the benefit which the defendant has received. Secondly, the fact that the owner if he had obtained possession would have let the premises at a concessionary rent, or even would not have let them at all, is irrelevant to the calculation of the benefit for the purposes of a restitutionary claim. What matters is the benefit the defendant has received. Thirdly, a benefit may be worth less to an involuntary recipient than to one who has a free choice as to whether to remain in occupation or move elsewhere. Fourthly, the value of the right of occupation to a former licensee who has occupied at a concessionary rent and who has remained in possession only because she could not be rehoused by the local authority until a possession order has been made, would ordinarily be whichever is the higher of the former concessionary rent and what she would have paid for local authority housing suitable for her needs if she had been rehoused at the time when the notice expired. If the principle of subjective devaluation is accepted, it can be defeated by a claimant proving that: (i) the defendant received an incontrovertible benefit (eg if the services saved the defendant necessary expense), or (ii) the defendant requested or freely accepted the benefit: see Goff and Jones, paras 4 12 4 33 and (as to free acceptance) chapter 17; Virgo, pp 72 88; Burrows pp 47 60). These sources show that many different problems may arise, but it is fortunately not necessary in this case to define the circumstances in which the principle of subjective devaluation can be defeated. I agree with Lord Neuberger that the difference between my approach and that of Lord Reed is not likely to lead to a different result in more than very few cases. The only real difference may be this. We agree that in the case where services have been rendered which, viewed objectively, confer a benefit on the defendant, but a benefit which the defendant did not and does not want and would not have paid for, as in the examples of Pollock CBs cleaned shoes or Professor Virgos cleaned windows (at Virgo p 67), the claimant is not entitled to payment for the services because failure to pay would not unjustly enrich the defendant. The question is whether, in such circumstances, where there was no free acceptance of the services before or at the time they are rendered, but the defendant has accepted that he has received some benefit but not that the value of the benefit is as much as its market value, the defendants figure should be accepted. In my opinion it should be open to the court so to conclude on the basis, on the one hand there would be unjust enrichment if the defendant paid nothing but, on the other hand, that it would not be just to award more than the benefit conferred on the defendant so calculated. Such an approach seems to me to respect the principle of freedom of choice or autonomy and to meet the case where the defendant sees the value of the benefit but would not have ordered the services save perhaps at a substantial discount to the market rate. I see no reason why a court should not take into account a defendants subjective opinion of the value of the claimants services in order to reduce the value of them to him, provided of course that the court is satisfied that it is his genuine opinion. If Lord Reeds approach would produce a choice between a nil award and an award of the market value of the services, I would respectfully disagree. I prefer a nuanced approach, which seems to me to be more consistent with principle. However, given Lord Reeds conclusions in para 138 of his judgment, there may be little, if anything, between us, especially since we both recognise the importance of respect for the defendants autonomy or freedom of choice. It is not necessary to reach a final conclusion on these questions on the facts of this case. I certainly agree with Lord Reed that the expression subjective devaluation is somewhat misleading. Market value and subjective revaluation The real issue in the present case is whether a defendant should be required to pay the claimant more than the market value of his services if it can be shown that the defendant subjectively valued the claimants services at a sum in excess of the market value (ie subjective revaluation, sometimes called subjective overvaluation). The editors of Goff and Jones suggest (at para 4 11) that, if one accepts the principle of subjective devaluation, it might be argued that fairness between the parties requires subjective valuation arguments to cut both ways, so that the claimant is entitled to rely upon subjective revaluation. Professor Burrows says at Burrows p 60: It is possible to argue that the law should go even further than subjective devaluation in recognising the subjectivity of value; and that where there is evidence (e.g. using the request test) that the particular defendant overvalues something that has no (or a lower) objective value, it is the defendants own valuation rather than the objective market value that should count. So, for example, if the defendant requests services at a higher rate than the market rate then, in so far as there is a claim for restitution of an unjust enrichment (eg because there is no valid contract) it would seem that the contract price is the best guide to the value of the services to the defendant and that that, therefore, should be central to the measure of restitution. In his recent work Restatement of the English Law of Unjust Enrichment, 2012, (Restatement) p 158, Professor Burrows states that the correct view is probably that, without a valid contract, the claimant should not be entitled to overvaluation. In other words . restitution allows downward subjectivity only so as to protect a defendant. This view is expressed in the light of the decision of the Court of Appeal in the present case and it is possible that Professor Burrows prefers the view expressed at Burrows p 60 quoted above. In relation to the question of whether a defendant has received a benefit at all (because the goods or services had no market value), Professor Virgo, after referring to the principle of subjective devaluation, states: . logically and for reasons of consistency it should be possible to use the defendants own valuation of what has been received to identify an enrichment, even though the reasonable person would not regard the defendant as having received anything of value. (Virgo, pp 68 69) However, in my view, the principle of subjective revaluation should not be recognised. Unlike the principle of subjective devaluation, it is not necessary in order to protect a defendants freedom of choice. It is for this reason, as it seems to me, that it would not be unprincipled to recognise subjective devaluation whilst rejecting the notion of subjective revaluation. In any event, the principle of subjective revaluation seems to be unnecessary in the context of identifying whether a defendant received a benefit at all, that is in cases where the services or goods have no market value. In such a case, the defendant would in most cases be estopped from denying that the service constituted a benefit: see Virgo at pp 90 91. In the present case, it is accepted that Mr Benedettis services had an objective value. The issue is whether subjective revaluation can be relied upon, not in order to identify a benefit, but in order to value the benefit so conferred. In my opinion, that is not permissible. Although there is some academic support for such a solution, there is no authority for the proposition that, in cases where a benefit has an objective market value, the claimant should be entitled to invoke the defendants subjective willingness to pay a higher sum for the benefit as a reason for valuing the benefit at a higher rate. I agree, for the reasons given above, that there should be no subjective revaluation in the two hypothetical examples described by Professor Burrows in his Restatement (at pp 158 159). In example 2, C enters into a contract for the carriage of D's goods by sea. D is most anxious to secure the services of C and therefore agrees to pay twice the market rate. After C completes two thirds of the journey, the contract of carriage is frustrated when war breaks out and the ship is requisitioned. The goods are unloaded and D is able to complete their carriage by a different route at a cheaper rate. Assuming that C is entitled to a restitutionary monetary award (or quantum meruit) for the value of C's services based on unjust enrichment, it seems to me that the assessment should be based on the market rate. C would only be entitled to the agreed higher rate if it could bring a contractual action. In example 3, C mistakenly delivers heating oil to D (rather than D's neighbour) just before Christmas. D's neighbour has plenty of oil and was just topping up out of an abundance of caution. By contrast, D was running on near empty, facing a houseful over Christmas, and would have happily paid double the market rate. Without a valid contract with D, it is hard to see that C should be entitled to restitution for the enhanced value of the oil to D. Rather, in a claim in unjust enrichment, C would be entitled to a restitutionary award against D for the value of the oil assessed at the market rate. (Restatement, p 158). In these examples the enrichment of the defendant is, in my view, only unjust insofar as it represents the market value. The law of restitution, unlike the law of contract, is not primarily concerned with the intentions of the parties. The legal principles summary In summary, in my opinion, in a case of this kind, (i) the starting point for identifying whether a benefit has been conferred on a defendant, and for valuing that benefit, is the market price of the services; (ii) the defendant is entitled to adduce evidence in order subjectively to devalue the benefit, thereby proving either that he in fact received no benefit at all, or that he valued the benefit at less than the market price; but (iii) save perhaps in exceptional circumstances, the principle of subjective revaluation should not be recognised, either for the purpose of identifying a benefit, or for valuing a benefit received. The facts I turn to the facts, so far as they are relevant to the issues identified above. This involves a consideration of the Acquisition Agreement point, the 75.1m point and of what, if anything Mr Benedetti is entitled to. I will focus only on the facts which are directly relevant to the issues in this appeal. The full facts are set out with admirable clarity in the judges judgment. The Acquisition Agreement point The Acquisition Agreement was signed on 31 January 2004. The story however began in 2002 when Mr Benedetti became aware that Enel SpA (Enel), which was the largest energy company in Italy, might be willing to sell its wholly owned subsidiary Wind Telecomunicazioni SpA (Wind). Mr Benedetti and Mr Sawiris met in Cairo in December 2002. The events were explained in detail by the judge at paras 102 117. The judge held that Mr Benedetti sought to persuade Mr Sawiris that it would be possible to acquire control of Wind through a pyramid structure with only a limited equity investment. Mr Sawiris made it clear that he would not be prepared to consider an investment of more than 50m. Between paras 118 and 168 the judge described in detail the events between the meeting in December 2002 and the signing of the Acquisition Agreement in January 2004. He also gave his reasons for rejecting Mr Benedettis case that there was any relevant oral understanding between himself and Mr Sawiris. During that period Mr Benedetti explored alternative deals in connection with Wind. The judge described the events leading up to the signing of the Acquisition Agreement in paras 169 190 and his conclusions as to the true construction of it are at paras 191 225. His findings in this respect are not and could not be challenged. In short, the Acquisition Agreement provided by clause 2 for the establishment, within a limited period, of a special purpose vehicle to be called Rain Investments SpA (Rain), of which Mr Sawiris company would initially own two thirds and Mr Benedettis company would own one third. Each company would provide two of the four directors in Rain, although the chairman would be appointed by Mr Sawiris company and would have the casting vote. The purpose of the Acquisition Agreement was expressed to be the acquisition of Wind. By clause 4 the negotiation was to be handled by Mr Benedetti with the support and advice of Mr Sawiris, both of whom were to use their best endeavours to obtain all finance obtained from third parties for the acquisition and Mr Benedetti was to use his best endeavours to obtain the necessary co operation and approval of the Italian government and the management of Wind. By clause 5, Mr Sawiris company was to subscribe 200,000, of which Mr Sawiris was to subscribe two thirds and Mr Benedetti one third. For that purpose, Mr Sawiris agreed to lend Mr Benedetti his share, namely just under 67,000 which, by clause 5.6, was to be repayable out of dividends when Rain became profitable or was able to declare dividends. By clause 5.4, the companies were to use their best efforts to raise between 1 billion and 1.2 billion to complete the acquisition. The only other provision of the Acquisition Agreement which entitled Mr Benedetti to payment was clause 6, which provided by clause 6.1 that all directors were entitled to receive directors fees and expenses and, by clause 6.2, that in consideration of Mr Benedetti allocating approximately 60 per cent of his working time to Rain and the acquisition, he would be entitled to 5,000 per month until the acquisition was completed. Thus, under the Acquisition Agreement Mr Sawiris was to invest no more than 50m and it was the role of both Mr Benedetti and Mr Sawiris to find third party investors. The remuneration to be paid to Mr Benedetti under it was limited. It was no doubt hoped that both Mr Benedetti and Mr Sawiris would be able to earn very substantial sums as a result of the investments made by others. The judge and the Court of Appeal held that the parties abandoned the Acquisition Agreement and that the transaction which replaced it was very different from it: see in particular the judges judgment at paras 463 to 477 and para 493. As Arden LJ put it in the Court of Appeal at para 3, the parties had an agreement under the Acquisition Agreement for other services but no agreement for the services in issue, namely the services in respect of which the claim in quantum meruit is advanced. In short, their agreement under the Acquisition Agreement was for the provision of services in connection with Wind by a different route from that ultimately adopted. In para 493 the judge held that the parties knew that the Acquisition Agreement had no relevance to the changed circumstances. It did not prove possible for the parties to the Acquisition Agreement to find third party investors, so that it was not possible for Mr Benedetti to receive any payment from that source. It is true that, as the judge held at para 143, Mr Sawiris accepted that at some stage he agreed that Mr Benedetti should have one third of the 50m share capital on the terms of a loan but the judge held that there is no evidence that that arrangement was ever extended to cover the totality of Mr Sawiris eventual investment. The proposed position under the Acquisition Agreement is set out diagrammatically in para 15 of Arden LJs judgment which is reproduced as Annex 1 to this judgment. From para 226 the judge described in detail the events after the signing of the Acquisition Agreement. A critical aspect of the Acquisition Agreement was that third parties would invest in a company controlled by Mr Sawiris and Mr Benedetti, in which Mr Sawiris would have the majority share. When it proved difficult to find investors Mr Benedetti began to look for other ways of proceeding, but they came to nothing. The judge held that Mr Sawiris was at no stage willing to proceed on any basis other than that he would have control of the new company. Under the new arrangement there were no third party investors of the kind anticipated under the Acquisition Agreement, so that the basis upon which Mr Benedetti had hoped to make a substantial profit fell away. The judge held at para 493 that the Acquisition Agreement ceased to have effect. It is not now contended that he was wrong about that but it is said that the Acquisition Agreement continues to have some effect relevant to the assessment of the benefit which Mr Benedetti conferred on Mr Sawiris by his services. I would not accept that submission. As Arden LJ concisely described the position in the Court of Appeal at para 16, in spite of Mr Benedettis best endeavours, by 2005 it had become apparent that there would be no outside investors. Instead of a maximum investment of 50m, Mr Sawiris, Cylo and the Holding Companies invested very substantially more in a new scheme described by the judge in detail at the beginning of his judgment. On 26 May 2005 Enel and its holding company Enel Investment Holding BV entered into a sale and purchase agreement (the SPA) for the disposal of 62.75% of the issued capital of its subsidiary Wind for 2.986 billion. The SPA contained an option enabling Enel to dispose of further shares in Wind for 328m which it subsequently exercised. The transaction was brought into effect by means of two closings, the first on 11 August 2005 and the second on 8 February 2006. The acquisition, as contemplated as at the First and Second Closings, is set out in diagrams at Annexes 2 and 3 of this judgment respectively. Annex 2 is taken from para 17 of the judges judgment and Annex 3 is taken from para 17 of Arden LJs judgment and para 24 of the judges judgment. As can be seen, the new arrangements were radically different from those contemplated under the Acquisition Agreement. In these circumstances, I can see no basis upon which it can be relevant to an assessment of the benefit which Mr Benedetti conferred upon Mr Sawiris. It is wholly irrelevant to the market value of the services rendered. Nor is it relevant to the issue of subjective revaluation. The 75.1m point It is not in dispute that Mr Benedetti rendered services to Mr Sawiris of considerable value. In the course of his judgment, the judge described them in some detail. He summarised them between paras 534 and 571. He correctly rejected the relevance of the Acquisition Agreement at para 550. He then considered (at paras 551 563) in some detail the evidence of two expert witnesses, namely Mr Sottile on behalf of Mr Sawiris and Mr Reynolds on behalf of Mr Benedetti. He preferred the evidence of the former, who said that Mr Benedettis role was essentially that of a broker or adviser, to that of Mr Reynolds, who said that he was a promoter and that, as such, his remuneration package should be that relevant to other types of market participants, such as private equity firms or hedge funds. In essence, the judge concluded at para 560 that equity based awards were only typically available when the person involved would continue to have some part to play in the management of the company or the investment after the transaction completed, that it was clear from the Acquisition Agreement itself that it was never the intention that Mr Benedetti should assume that role and that he did not seek remuneration on that basis. In paras 561 and 562 the judge concluded that all the tasks carried out by Mr Benedetti fell within the agreed scope of a broker or adviser role. He accepted Mr Sottiles evidence that on that basis a fair fee in the market for what Mr Benedetti did would be within the range 0.1% to 0.3% of the transaction value, which would amount to between 12 and 36.3m. The judge concluded that it would in all the circumstances be appropriate to take a figure at the top end of the range. He accordingly held that the market price for the services in fact performed by Mr Benedetti for Mr Sawiris was 36.3m. Those conclusions were not directly challenged on behalf of Mr Benedetti. In any event I see no basis upon which they could be challenged in this Court. In so far as there were or appeared to be suggestions in the course of the argument that the market in which Mr Benedetti was rendering the services was different from that assessed by Mr Sottile, whose evidence the judge accepted, I would not accept them. I therefore proceed on the basis found by the judge, namely that the objective market value of Mr Benedettis services was 36.3m. The judge did not, however, award that sum but the greater sum of 75.1m. He did so on the basis that Mr Benedetti was entitled to more than the market rate because there was evidence that Mr Sawiris himself regarded the benefit of the services to him as being at least 75m. The Court of Appeal disagreed and awarded him only 14.52m on the basis described at para 7 above. Mr Benedetti says that he is entitled to significantly more than 75.1m but that he is in any event entitled to that sum (as the sum awarded by the judge). Mr Sawiris relies upon the fact that Mr Benedetti had already received 67m in support of the submission that, since that is more than the market value of 36.3m, he is not entitled to anything. In the alternative he submits that the maximum to which Mr Benedetti is entitled is 14.52m for the reasons given by the Court of Appeal. In order to resolve these issues it is necessary to consider the findings of the judge as to the circumstances in which Mr Benedetti came to receive 67m, the circumstances in which Mr Sawiris offered to pay 75.1m and the relationship between them. Mr Benedetti continues to assert that he is entitled to more than 75.1m but I can see no possible basis for such a claim given the judges findings of fact. At para 226 et seq the judge described various steps taken by Mr Benedetti in order to protect his position if the Acquisition Agreement did not go ahead. In January 2005 Weather Investments SA (Weather I) was incorporated by Investors in Private Equity (IPE). The shares were held by IPE and a subsidiary of IPE. In March 2005, at a time when one of the potential investors in Rain, Mr Ross, dropped out, Mr Sawiris asked Mr Benedetti to transfer the shares in Weather I to him. On 23 March 2005, Mr Benedetti was appointed a director of Weather I. On 24 March, IPE transferred 99% of the shares in Weather I to Mr Benedetti and the one remaining share to Mr Abdou, who worked for Mr Sawiris. On the next day, Mr Benedetti transferred his shares in Weather I to Mr Sawiris. As of then, the idea of a purchase by an IPE led consortium was effectively a dead letter. On 24 March 2005, Mr Benedetti made two agreements without the prior approval of Mr Sawiris and without, at that stage, disclosing to him or Mr Abdou the fact that he would receive a substantial fee from the transaction. By the first agreement Mr Benedetti signed a Brokerage Agreement on behalf of Weather I (the First Brokerage Agreement), pursuant to which Weather I appointed International Technologies Management Ltd (ITM), an English company owned and controlled by Mr Benedetti, to provide Brokerage Services (as defined in the agreement) on behalf of Weather I in accordance with instructions from the company. In return for the provision of these services ITM was to receive 0.7% of the transaction value as defined in the agreement, which included the total amount paid to acquire Wind at its enterprise value including the amount necessary to refinance its debts. A striking feature of the arrangements was that Mr Benedetti was able to make the agreement on behalf of Weather I because he had just been appointed a director and he was able to procure the agreement of ITM, which was subsequently signed by a Mr Nounou on its behalf, because he controlled it. He did not send a copy of the First Brokerage Agreement to Mr Sawiris or Mr Abdou, and they were not made aware that Mr Benedetti was to receive a brokerage fee until much later. The judge described the creation of the agreement as essentially a piece of opportunism on the part of Mr Benedetti: see paras 334 and 565. Mr Benedetti signed a second agreement on the same day, 24 March 2005 (the Support Agreement), on behalf of Weather I, which provided that Managest Media SA, a company in which Mr Benedetti had a 60% stake, would receive a flat fee of 3.4m plus expenses in return for the provision of support and logistic services to Weather I in connection with the acquisition, in accordance with instructions from Weather I. On 25 March, Mr Benedetti transferred the shares in Weather I to Mr Sawiris. By early to mid April 2005, IPE were forced to pull out of the deal as they were not able to secure or find any other suitable investors. Mr Sawiris, together with his family and companies controlled by his business associates, was left as the only potential investor. By May 2005, when Weather Investments II SARL (Weather II) was incorporated to replace Weather I, the structure of the acquisition had changed to include Weather Italy. Mr Benedetti had no beneficial interest in any of these entities, although, when the SPA was executed on 26 May, he signed the SPA on behalf of Weather Italy, of which he was a director at the time. Also on 26 May the First Brokerage Agreement and the Support Agreement were assigned by Weather I to Weather Italy. The structure of the new deal is set out in Annex 2, as at the first Closing on 11 August 2005. On or shortly after 11 August 2005 Mr Benedetti resigned as a director of Weather Italy. It is important to note that at para 404 the judge found as follows. Mr Benedetti confirmed in his first witness statement that with the signing of the SPA on 26 May 2005 his role in the acquisition was, for all practical purposes, over. Although detailed work remained to be done by the lawyers and the banks in relation to the closing arrangements, these were matters of detail with which Mr Benedetti was not concerned. The judge added that the subsequent history of the transaction was therefore relevant only to two issues: the discussions which took place with Mr Abdou and Mr Sawiris about remuneration and the payment to Mr Benedetti of the 67m brokerage fee. I take the story of the 67m brokerage fee largely from paras 59 63 of the agreed Statement of Facts and Issues, which are based on paras 424 438 of the judges judgment. As of 27 July 2005, Mr Abdou was aware that a brokerage fee of about 87.76m, which had been listed in the costs of the transaction as being payable to ITM, would go to Mr Benedetti personally. He and Mr Nasr (CFO of Orascom) originally understood that the 87m figure was not intended as a payment to Mr Benedetti for his brokerage services but was to be used to discharge his liabilities to third parties. Mr Sawiris was very angry about the scale of the expenses of the transaction; so Mr Benedetti agreed with Mr Sawiris to reduce the payment from 87m to 67m, saying that that was the amount he needed at First Closing. The judge held (at para 432) that Mr Benedetti led Mr Abdou and Mr Sawiris to believe that the money was to be used to pay third parties who had assisted in the transaction. Mr Sawiris doubted this, but because he intended to reward Mr Benedetti for his efforts and owed him money, he was content to allow the 67m to be paid with a view to sorting the position out later. Mr Benedetti then arranged for a new agreement between ITM and Weather Italy to be prepared called the Revised Brokerage Agreement. It was executed in late July or August but backdated to 26 May 2005, which was (as just stated) after Mr Benedettis services had been concluded. It provided for a fee of 67m (0.55% of the transaction value) to be paid to ITM in respect of brokerage services. The agreement was signed by Mr Benedetti on behalf of Weather Italy. Mr Abdou first saw the Revised Brokerage Agreement on or about 3 August 2005, before the fee was paid. The 67m fee was paid to ITM on about 12 August 2005, following the First Closing. The fee was paid as a transaction cost: in other words, it was paid by Weather Italy out of the money raised to finance the transaction. On 13 September 2005, following a meeting in Rome on 12 September 2005 attended by Mr Sawiris and Mr Benedetti, Mr Abdou sent an email to Mrs Shimi (an employee of Orascom) asking her to print off the Revised Brokerage Agreement which he sent as an attachment in readiness for Mr Sawiriss return from Rome, saying that Mr Sawiris was expecting it. Mr Sawiris knowledge of the payment of the 67m is relevant to Mr Benedettis case that, as the judge held, he is entitled to at least 75.1m. It is also relevant to the cross appeal (see below). The judge awarded this sum on the basis that he was entitled to have regard to negotiations between the parties as to the value to be placed on Mr Sawiris services, even though the negotiations took place after the services were completed. He held, in particular, that Mr Sawiris offered to pay the figure of 75.1m and that that offer was evidence of the value which Mr Sawiris, as the paying party, placed on Mr Benedettis services, albeit with the benefit of hindsight: see para 568. The judge held that the reason for the admission of the parties pre service agreements as set out in cases such as Way v Latilla [1937] 3 All ER 759 is that they provide strong evidence of the value which they put on the services and that, subject to appropriate safeguards, post acquisition dealings may do the same. In my opinion, that is not quite correct. It is true that what Lord Atkin called the bargainings of the parties may be of assistance in order to ascertain the market value of the services. They may also be of assistance in establishing whether there is a case for subjective devaluation. However, this is not of course a case of subjective devaluation but, if anything, of subjective revaluation. I have already expressed the view that there is no room in principle for increasing the market value to take account of subjective revaluation in a case of this kind. It follows that, in my opinion, the Court of Appeal were correct to hold that the judge was wrong in principle to award 75.1m. In the light of the detailed submissions that were made, I will however consider the position on the facts. The question is whether the evidence establishes that Mr Sawiris subjectively valued Mr Benedettis services at 75.1m or more. The judge expressed his conclusions concisely in paras 570 571 as follows: 570. The real issue is whether I should increase the fee payable to Mr Benedetti to take account of the 75m which Mr Sawiris offered to pay under the October agreement. Although Mr Benedetti clearly believes that he is entitled to more, it is difficult to ignore the fact that Mr Sawiris was prepared to pay him considerably more for his efforts than a strict application of market rates would produce. Mr Sawiris says in his witness statement that he regarded the 75m figure as generous but that is not inconsistent with it representing what he considered Mr Benedettis services to be worth. These negotiations did not take place under the shadow of threatened litigation and can properly be considered in my view as a genuine attempt by Mr Sawiris to pay to Mr Benedetti a proper value for what he had achieved. 571. The best evidence of Mr Sawiris's thoughts on this matter is contained in the June and September e mails from Mr Abdou quoted in paragraphs 187 189 above. They indicate both the importance which Mr Sawiris attached to Mr Benedettis role and the reasons why his remuneration should be limited to the payment of a fee. I think that it would be wrong to ignore this evidence when considering the value to be attributed to Mr Benedetti's services. He is entitled, in my judgment, to the 75.1m in addition to the brokerage fee which he has already received. There were three emails dated 11 June and 12 and 13 September 2005, all written by Mr Abdou. As the judge found at para 186, they were sent at a time after the signing of the SPA, when Mr Sawiris was seeking an agreement with Mr Benedetti about what he should receive for his role in the transaction. The judge set them out in paras 187 189: 187. In the first of these e mails, Mr Abdou wrote: I had two discussions with Naguib regarding your deal. I will tell you exactly his response. First of all he very much appreciates all what you have done and he acknowledges that without you, there would be no deal. However, he feels he has been clear with you from the beginning that the deal was never meant to be this big and that when you two signed the agreement over one year ago, the deal has totally changed. But even then, he told you and the agreement says, that he will not pay commissions etc. for a deal that merges or has OT as a party and rather the intent and spirit of the deal was that he would lend you your 1/3 of the Euro 50M target capital to be repaid with interest after exit so that you would not have to put in money yourself and that you would look to raise money for a deal that had his investment maximum at 200 to 300m euro. Today, Weather is no longer a passive investment for Naguib but rather a vehicle which he put in all his value that he owns (and a part of his family's wealth). He very much wants you involved in the BOD of the company and to be able to do other deals in the future. He sees the relationship between you two as strong and positive but he asks for you to be reasonable in what you ask. When I told him your request and the logic, he was quite upset as he did not expect you to ask for so much. While of course he sees that the original agreement needs to change, he does not agree with your request. In addition, while positive things happened to improve the deal, a few serious restrictions arose such as the need for Euro 500M cash (vs 200 to 300) and the limited financial partners and the somewhat restrictive IMI loan. The only reason he says this is to make the point that the deal today is totally different than the original and as such what he is prepared to offer you is l% of Weather for free and he can pay it to you in shares or give you a put option to take it in cash. If you choose cash, he wants to agree with you a timetable so that he can plan his cash sourcing. 188. In the second e mail, he said this: I talked to Naguib again. He wanted me to tell you that he feels 1% (which is Euro 75M today and may double if we succeed in Wind), is by far more than what you two had agreed to in the beginning when the deal was simple to lend you Euro 17M in cash to invest. As I mentioned before, he even crossed out all the sections related to OT and fees in the original deal because that was never his intention. He insists that he is being very generous with his offer and again wants to continue the relationship for a long time. He told me that if he really thought that you wanted hundreds of millions compensation, he would not even have done the deal at all. Alessandro, please look at the initial deal and the current offer. We are talking about Euro 75M versus Euro loan plus interest. Think strategically, long term. I am telling you as a friend that Naguib truly believes this is a very generous offer and this is not an attempt to negotiate with you. (Emphasis added) 189. Finally, on 13 September Mr Abdou wrote: Also, have you concluded the issue of the 1% of free shares in Weather? Let me advise you with something and I refer to is what I told you months ago about Naguib. I have talked to him many times on this point and I have succeeded (in my opinion) to get you the 1% free shares even though Naguib has never in his life given free shares to anyone and certainly not an amount of Euro 75M. He had offered this willingly to you because of what you have done and he has repeatedly thanked you for it. But I must tell you, he is quickly getting upset because he does not understand why you are not happy. The original deal was to loan you 1/3 of Euro 50M which was to be repaid. The original deal never included OTH (and in fact he crossed out the reference to paying a success fee on integrating OTH). The deal was to have other financial partners . you know how that ended. In any case, never was the amount paid to you supposed to even get close to 75M. In addition, the fact that they are free and not a loan is a really big deal that you seem to be underestimating. I know Naguib and I am telling you that he will not increase the offer ever and the longer things drag on, the higher the probability that this ends badly. He wants to have a strong relationship with you in the future as he values you highly. However, he can not do anything that will put his family's interests at risk, either financially or otherwise. (Emphasis added) The first of the three emails also contains a statement that Mr Sawiris had asked for a letter saying that Mr Benedetti had received the 67m. At para 437 the judge rejected a submission that that showed that Mr Sawiris knew that Mr Benedetti had received that sum personally. The judge held that it showed that Mr Sawiris had his suspicions on the point. He added that the second part of the email showed that the 75m was to be the total amount paid to Mr Benedetti for his work. Those emails undoubtedly contain an offer to pay 75m, which was approximately the value of the 1% of the shares being referred to. Negotiations continued in 2005 and for much of 2006. They are described by the judge at paras 438 460. They included a meeting in Cairo in January 2006. By that time Mr Sawiris suspected that Mr Benedetti had taken the 67m for himself. He nevertheless offered 75m, which it appears was to be on top of the 67m, and Mr Benedetti agreed in principle to accept it. It was not suggested that there was a binding agreement to that effect. On 3 February 2006, an interview that Mr Sawiris gave to LEspresso about the transaction was published, including the following question and answer: You paid 400m Euro in commissions including banks and the advisor Alessandro Benedetti. LEspresso calculated that Benedetti received 90m, although he denied it. Doesnt that seem like a high price to pay?! When it came to discussing the fee, I went to a bank that wasnt involved in the operation. I paid 50 thousand Euro for them to give me an opinion on the fee structure because I had the same feeling. They told me it was alright. On the other hand Benedetti worked for me for two and a half years without asking for anything, he took costs at his own risk, so the bill at the end wasnt too much. The judge noted at para 439 that, when asked in cross examination based on the article, whether he believed that Mr Benedetti had received the fee, he said that he had always felt that Mr Benedetti was lying about the 67m and that he had received the fee. Mr Sawiris said in his witness statement that by the time of the Cairo meeting he suspected that that was the case. At para 450 the judge referred to a letter which confirmed the basic agreement made in Cairo. Finally, as the judge explained at para 457, on 18 October 2006 Mr Abdou sent Mr Benedetti an email attaching two draft agreements. The first was a draft Supplemental Agreement to the Revised Brokerage Agreement dated 25 May 2005, to be signed by Mr Sawiris and Mr Benedetti, between Weather II and ITM which expressly acknowledged receipt of 67m by ITM and which provided that Weather II would pay a final fixed success fee of 75.1m to ITM. The second was a termination agreement formally bringing the Acquisition Agreement to an end. Mr Benedetti did not reply to the email. He said in his witness statement that he regarded the offer as insulting and proceeded to consult his lawyers. It can readily be seen why the judge said at para 567 that it was clear from the evidence and from the terms of the draft Supplemental Agreement that by October 2006 Mr Sawiris was aware that Mr Benedetti had received the 67m and that the 75.1m success fee was to be an additional payment. Thus, in the end and in spite of the apparent agreement, Mr Benedetti never accepted the offer of 75.1m. It is submitted by Mr Howard that the negotiations between the parties show that both parties took the view that Mr Benedettis services were worth at least 75m and that Mr Sawiris personally valued his services in at least that amount. The judge accepted Mr Sawiris evidence that he regarded the offer as generous, although he said that that was not inconsistent with the conclusion that it represented what he considered the services to be worth. One might think that it was consistent with a lower figure. The passages which I have italicised in the above quotations seem to me to be saying that Mr Sawiris regarded the offer as very generous. They also suggest to me that, in spite of the protestations, and indeed the finding of the judge, these exchanges were indeed part of a negotiation. Etherton LJ has given detailed reasons for the conclusion that, even if it were possible in an appropriate case to increase a restitutionary award above the usual market rate for the services rendered, such an award would not be justified in the present case. I agree and, save perhaps for the last sentence of para 156, I cannot improve on his reasons, which are set out in his paras 155 to 158 and can in essence be summarised as follows. The June emails were written before Mr Benedetti had received the 67m and the Revised Brokerage Agreement was not executed until July or August 2005 and was backdated to 26 May 2005. At the time of the September 2005 email Mr Sawiris was probably unaware that Mr Benedetti had received the money personally, although he had his suspicions. When the sum was paid on 12 August 2005 Mr Benedetti had asked for it to be paid to third parties. Accordingly the emails are no support for the conclusion that at that time Mr Sawiris would have been willing to pay Mr Benedetti both 67m and 75.1m (ie a total of 142.1m), or indeed more than 8.1m, which is the difference between the two figures. Etherton LJ added that if, as the judge thought, the emails are the best evidence of Mr Sawiris state of mind, they are not inconsistent with an outcome whereby Mr Benedetti is entitled to retain the 67m pursuant to the Revised Brokerage Agreement (for which there has been no claim for repayment) and is awarded 14.52m on the basis described above. By the time of the draft October 2006 agreement, litigation was plainly in prospect. Clause 5 of the draft expressly provided for a discharge of liabilities on both sides. As the judge recognised, it is dangerous to rely upon offers made in such circumstances. I would accept the submission made by Mr Rabinowitz that the finding of the judge in para 570 that the negotiations for the draft October agreement did not take place under the shadow of threatened litigation cannot be justified. Mr Benedetti himself said in a witness statement that in Cairo in January 2006 he said to Mr Sawiris that, if he did not agree with Mr Benedetti, they could go to court and see who was right. The judge recorded at para 447 Mr Sawiris evidence at that time as being that the offer of 75m was to finish the matter there and then. In Mr Benedettis closing submissions before the change of tack to rely on the 75.1m point, it was submitted (in support of a submission that the negotiations should not be considered) that those later bargainings [were] in the nature of some kind of settlement discussions. In short Mr Sawiris position varied considerably from time to time. There is little evidence of his true opinion as to the value of Mr Benedettis services. If the point had been taken at the outset, the evidence might have been more coherent but, as I see it, the evidence falls far short of what would be required to establish Mr Sawiris subjective opinion of the value of Mr Benedettis services. Accordingly, even if the principle of subjective revaluation were to be recognised, I would dismiss the appeal on both the Acquisition Agreement point and the 75.1m point. What, if anything, is Mr Benedetti entitled to? It follows from the above that, subject to the cross appeal, I would uphold the decision of the Court of Appeal to award Mr Benedetti 14.52m. It is submitted, however, on behalf of Mr Sawiris that, given that the judge held that the market value of Mr Benedettis services was 36.3m and that he has already received 67m, he has been fully compensated for any unjust enrichment. It is submitted that, if he is entitled to retain 14.52m as well as 67m he will have received 81.52m, which would be manifestly unjust. The judge approached the matter in this way. In para 563 he identified the point being taken by Mr Rabinowitz, namely that credit must be given for the 67m brokerage fee paid to Mr Benedetti through ITM. In para 564 he identified two points made on behalf of Mr Benedetti in support of the conclusion that the award to Mr Benedetti should be in addition to the 67m received under the Revised Brokerage Agreement. The first point was that the agreement was made between different parties and the transaction cost was payable by all investors in Weather Italy. The second was that the agreement covered different services from those contained in the Acquisition Agreement. In particular the definition of brokerage services did not include bringing the investment opportunity to Mr Sawiris or obtaining the co operation of the Italian Government or the management of Wind. The judges conclusions are contained in just two paras of his judgment, paras 565 and 566. In para 565, as I read it, the judge rejected the first point. He noted that the claim for unjust enrichment was based on the premise that Mr Benedetti was entitled to be compensated for the value of the services he performed because it would be unjust for those who have received them to take them without payment. If such compensation has in fact been provided as a cost of the transaction there was no reason in principle why Mr Benedetti should not be required to bring it into account in any determination of what is the fair reward for the services he performed, assuming of course that the payment relates to the same services. The judge added at the end of para 565: It is difficult to see how that conclusion would be unjust. I accept that if it had been agreed between the parties that Mr Benedetti' s remuneration from the Defendants should not take into account the sums received under the brokerage agreement then the position would be different. But that is not this case. There was no agreement with Mr Sawiris that Mr Benedetti should be paid a brokerage fee in addition to what he received under the Acquisition Agreement. As explained earlier, the signing of the First Brokerage Agreement was essentially a piece of opportunism on the part of Mr Benedetti and, in so far as it had any historical justification, that lay in the arrangements between Mr Benedetti and IPE. When the fees schedules were prepared and it became clear that ITM was to receive the brokerage fee the original assumption on the part of Mr Abdou and Mr Sawiris was that the money would be used to pay Mr Benedetti's costs and other liabilities to third parties. As it seems to me, the judge thus rejected the first point on the ground that Mr Benedetti had personally received the sum of 67m. Both Arden and Etherton LJJ disagreed with that approach. Arden LJ said at para 93 that if Mr Benedetti has been wrongly paid the 67m fee to any greater extent than the amount apportioned by the judge, the paying company has or would have had remedies against him, which it can pursue and that it would not be right to short circuit the pursuit of those remedies and give Mr Sawiris all that could be obtained in proceedings brought for that purpose by treating the 67m as a deduction from an award. Etherton LJ made a similar point at paras 161 and 162 where he observed that the Revised Brokerage Agreement was between different legal entities. Mr Rabinowitz submits that those points are irrelevant. He submits that, quite apart from the dubious nature of the Brokerage Agreement and the Revised Brokerage Agreement, in these proceedings the focus is on the monies that Mr Benedetti received personally. He submits that in a claim for unjust enrichment the claimant must show that he rendered services which conferred a benefit for which he has not been paid and it follows that, if Mr Benedetti personally received payment for the totality of the services which conferred the benefit, he is not entitled to anything more. I would accept those submissions. The judge held that Mr Benedetti received the whole sum of 67m personally. The question is whether that sum was in respect of all the services in respect of which this action is brought. As I see it, the judge recognised that that was the question. He said at para 566: The definition of brokerage services in the Revised Brokerage Agreement makes it clear that the 67m was paid in respect of the work carried out by Mr Benedetti in the negotiation of the purchase of Wind from Enel and the raising of the acquisition debt from the banks. Mr Benedetti is not entitled, in my judgment, to seek a quantum meruit for this work when he has already been paid for it. The sum of 36.3m which, on the evidence, would be the market rate for the services he performed ought therefore to be apportioned to take account of this. Being generous to Mr Benedetti, I think that a fair apportionment would be to attribute 60% of the 36.3m fee to the work covered by the brokerage agreement and the remaining 40% to the services not obviously within the agreement. On this basis, Mr Benedetti would be entitled to receive 14.52m in addition to the 67m brokerage fee. It seems to me that the quarrel that Mr Rabinowitz has with that paragraph is not with the first two sentences but with the last sentence. Here all the services were rendered before the 26 May 2005. The judge accepted the evidence of Mr Sottile (at para 552) that brokers or advisers in the position of Mr Benedetti were compensated for their services by transaction fees, (normally success fees), which varied between 0.1% and 0.3% of the transaction value for transactions of the size of the Wind acquisition and included all ancillary services. It was on that basis that the judge assessed the market value of Mr Benedettis services, having taken the top of Mr Sottiles range, namely 0.3%. The point was clearly made in the course of the argument by Lord Reed. He said (Day 3 pp 340 341) that he appreciated that there are factual situations where a clear distinction can be drawn between different services and the way in which they would be remunerated in the market, but in this case we were told that the services as a whole would be remunerated in the market by a unum quid fee calculated as a percentage commission of the value of the entire transaction. That amount would work out at a maximum of 36.3m. Lord Reed posed the question whether, if Mr Benedetti has actually received 67m, one cannot say in that situation that he cannot possibly have a claim in unjust enrichment, even if the agreement was a perfectly regular agreement. The alternative is that he will be remunerated, say, to the tune of 81 or 82m, as the Court of Appeal held, in the name of avoiding unjust enrichment. He suggested that that was to say the least a paradoxical result, if the correct starting point is that appropriate remuneration would have been 36.3m. Mr Rabinowitz naturally accepts that way of putting it. He submits that the market value of 36.3m was in respect of all the services and asks rhetorically how Mr Benedetti can possibly be entitled to more. Mr Howards answer (at Day 3 p 387) to those questions is based on the judges apportionment. As he put it concisely, the 67m was paid in respect of services A but services B were also provided by Mr Benedetti and the unjust enrichment is Mr Sawiris failure to pay for services B. Mr Howard submits that that is in effect what the judge held at para 566. As I see it, the problem with the judges apportionment is that the judge gives no reason for his conclusion and it seems to me to be inconsistent with his conclusions at para 561, where (as stated in para 44 above) the judge concluded that all the tasks carried out by Mr Benedetti fell within the agreed scope of a broker or adviser role. He reached that conclusion on the basis of the evidence of Mr Sottile referred to in para 74 above. Mr Rabinowitz is very critical of the Revised Brokerage Agreement but it is important to note that it was made in July or August and backdated to 26 May 2005, by which time all Mr Benedettis services had been completed. Moreover, taken at its face, its recitals show that it was intended to cover the remuneration for ITMs services (ie Mr Benedettis services) in the past as well as the future. There were no services rendered in the future. By clause 7.2 the Brokers fee was described as a success fee of 0.55% of the Transaction Value. Although the numbers are different, that was precisely the same approach as that advanced by Mr Sottile and accepted by the judge. In these circumstances, even taking the Revised Brokerage Agreement at face value, I cannot see any basis for the apportionment adopted by the judge. It appears to me to be clear that it covered the same services as the services in respect of which compensation is sought in this action. In the course of the argument Lord Wilson drew attention to the third and fourth recitals to the draft agreement of October 2006, which were prepared on behalf of Mr Sawiris, at which time he was willing to settle on the basis that Mr Benedetti could keep the 67m and receive 75.1m in addition. The recitals in the draft agreement accepted that ITM performed a wider scope of services than the Brokerage Services referred to in the Revised Brokerage Agreement and recognised that Weather wished to supplement that agreement in order to compensate Mr Benedetti for those wider services. The suggestion is that these recitals are inconsistent with the conclusion that the services rendered under the Revised Brokerage Agreement were the same as those in respect of which payment is sought in this action. I would not accept that suggestion. The draft was no more than a draft settlement agreement under which Mr Sawiris was willing to pay over 142m to Mr Benedetti in order to bring this whole affair to an end. The draft seems to me to be inconsistent with the basis upon which the services were assessed by Mr Sottile and the judge, namely that there should be a single fee to cover all the services performed by Mr Benedetti and that the market value of all those services was 36.3m. A conclusion which entitles Mr Benedetti to 81.52m does not seem to me to be just. I would add that, as Mr Rabinowitz submits, and as appears above, the figure of 67m was agreed by way of reduction from 87.76m without reference to the Revised Brokerage Agreement, which had not yet been created, or to the First Brokerage Agreement and at a time when Mr Benedetti was claiming that the money was going to third parties. Moreover the first Brokerage Agreement was, as the judge held at para 334, opportunistically created by Mr Benedetti in order to provide a justification for the payments he was intending to draw. In truth the figure of 67m was not arrived at by reference to his remuneration at all and there is no evidence that it was intended to compensate him for some but not all of the services he had provided. In these circumstances, it seems to me that the definition of brokerage services in the Revised Brokerage Agreement relied upon by the judge and the Court of Appeal is not a sound basis for the apportionment exercise carried out by the judge and upheld by the Court of Appeal. For all these reasons I have concluded that the whole of the 67m, which Mr Benedetti received personally, should be taken into account in deciding whether he is entitled to anything further for the services he rendered to Mr Sawiris. Since that figure is significantly greater than the market value of the services rendered, namely 36.3m, it follows that he is not entitled to any further payment. I would therefore allow the cross appeal. CONCLUSION appeal. In all the circumstances I would dismiss the appeal and allow the cross ANNEX 1 THE ACQUISITION AS CONTEMPLATED BY THE ACQUISITION AGREEMENT Mr Benedettis company Mr Sawiris Management Fees Generating Income for Rain 66.6% 33.3% Rain Outside Investors providing virtually all of the funds needed to acquire Wind not covered by any bank borrowings 0 49% votes 51 100% Subsidiary or Subsidiaries of Rain Wind ANNEX 2 FIRST CLOSING on 11 August 2005 OSH 31.4% 60.4% April Cylo 8.2% Middle Eastern Investors Weather II Enel 3.6% 5.2% 91.2% Weather Italy 100% Weather Capital 50.1% 50% +1 share in OTH (pledged to IMI) 100% Pikco (Italy) Wind Acquisition Holding Finance SpA 100% Bidco (Italy) Wind Acquisition Finance SpA 37.25% 62.75% WIND Enel 2.8% 100% 71.1% Weather Italy ANNEX 3 SECOND CLOSING on 8 February 2006 Middle Eastern Weather II Investors Orascom (pledged to IMI) Weather Capital 50.1% 26.1% 100% Wind Acquisition Holdings Finance S.pA. 100% Wind Acquisition Finance S.pA. 100% Wind LORD REED I too would dismiss Mr Benedettis appeal and allow Mr Sawiriss cross appeal, for largely the same reasons as Lord Clarke and Lord Neuberger, although I adopt a different approach to some extent to the subject of subjective devaluation. The case, as advanced on behalf of Mr Benedetti, is concerned with services provided and accepted in the expectation of reward under a contract which in the event was not concluded. A contract, referred to as the acquisition agreement, had been entered into at an early stage in the parties dealings with one another, but it had envisaged a venture of an entirely different character from that subsequently entered into, and the only inference which could be drawn from the parties conduct was that they had tacitly agreed to abandon that agreement. Mr Benedetti nevertheless provided his services to Mr Sawiris and his companies (which can for present purposes be elided with Mr Sawiris) in circumstances where it was understood that Mr Benedetti expected to receive some form of reward, but where there was no agreement, or even a loose understanding, as to the form which such a reward might take or as to its amount. It might perhaps have been possible in those circumstances to argue that there was a contract with an implied term that reasonable remuneration would be paid, and the court would then have determined what, in the whole circumstances, ought to be regarded as reasonable remuneration. The case has not however been brought on that basis. Instead, Mr Benedetti has brought a claim based on unjust enrichment: a claim of a fundamentally different character. There is no doubt that Mr Sawiris was enriched by the provision of Mr Benedettis services; that the enrichment was at the expense of Mr Benedetti, in the sense that he expended his labour to provide those services, and his labour was a marketable commodity; and that, in the absence of some reward for those services, the circumstances called for restitution by Mr Sawiris, since he accepted Mr Benedettis services in the knowledge that Mr Benedetti expected to be rewarded for providing them. There was, on that footing, what is sometimes described as a failure of consideration (not using that term in its strict contractual sense): the services were provided on the basis that arrangements would be agreed for Mr Benedetti to be rewarded, but no such arrangements eventuated. Mr Sawiris however relies on the fact that Mr Benedetti received 67m as remuneration under a contract referred to as the revised brokerage agreement. He maintains that there is no scope for applying the concept of unjust enrichment, or at least that Mr Benedettis receipt of the 67m has to be taken into account. Mr Benedetti on the other hand maintains that the revised brokerage agreement remunerated him for only part of the services which he provided. He therefore claims that he is entitled to a restitutionary award in respect of the remainder of his services. It may be helpful at this stage to note that the revised brokerage agreement and its predecessor, known as the first brokerage agreement, were entered into after Mr Benedettis services had been provided. He entered into the first brokerage agreement as a director of the company which was to be used by Mr Sawiris as the vehicle for the venture, and of which Mr Sawiris was about to become the sole shareholder. The other party to the agreement was Mr Benedettis service company. Mr Benedetti then concealed the true nature of the agreement from Mr Sawiris, maintaining untruthfully that the 87m payable under the agreement was to be used to meet liabilities which he had incurred to third parties in connection with the venture. When Mr Sawiris expressed concern about the amount, Mr Benedetti drew up the revised brokerage agreement, under which the amount payable was reduced to 67m. That amount was then paid to his service company by Mr Sawiriss vehicle company. There is also an issue as to the value to be placed on Mr Benedettis services, so far as he may not already have been remunerated for them. The trial judge, Patten LJ, found that the market value of the whole of the services was 36.3m. Mr Benedetti however maintains that his services were valued by Mr Sawiris at a much higher figure. In response to Mr Benedettis demands for payment for his services, Mr Sawiris offered him 75.1m. He did so initially at a time when he did not know that Mr Benedetti had personally received the 67m, and in circumstances in which there was an awareness of the possibility of legal proceedings. Mr Sawiris subsequently renewed the offer of 75.1m at a time when he knew that Mr Benedetti had personally received the 67m. In those circumstances, Mr Benedetti maintains that a restitutionary award ought to be at least 75.1m. The questions raised by the case can be summarised as follows. First, does Mr Benedetti have any claim under the law of unjust enrichment at all, given that he received 67m under a contract for his remuneration? Secondly, on the assumption that Mr Sawiris was unjustly enriched notwithstanding Mr Benedettis receipt of that contractual remuneration, by how much was he enriched where (1) the services rendered had a market value of 36.3m, (2) Mr Sawiris offered to pay 75.1m for the services after they had been rendered, at a time when Mr Benedetti was maintaining that the 67m payment covered liabilities incurred to third parties and Mr Sawiris did not know that that was untrue, and (3) Mr Sawiris continued to offer 75.1m, in addition to the 67m already paid, after he knew that Mr Benedetti had received the 67m as remuneration? The effect of the contractual remuneration It seems to me that the logical starting point is to consider the effect of the contract under which the 67m was paid. If the contract made provision in respect of Mr Benedettis remuneration for the whole of the services provided, to which Mr Benedetti agreed, then on the unchallenged assumption that the contract was valid, no question of unjust enrichment can in my view arise. The trial judge, in the course of an impressive judgment dealing with a multiplicity of issues, construed the revised brokerage agreement as covering only 60% of the services provided by Mr Benedetti. On that basis, he considered that no remuneration had been paid for the remaining 40%, and that Mr Sawiris had to that extent been unjustly enriched. The market value of the services as a whole was found to be 36.3m. Rather than awarding 40% of that figure, which would be a sum of 14.52m, the judge held that Mr Benedetti was entitled to a further 75.1m, on the basis that that amount had been offered by Mr Sawiris at a time when he knew about Mr Benedettis receipt of the 67m. The Court of Appeal on the other hand considered that no weight could be attached to the offer of 75.1m, for a variety of reasons which I shall discuss. Proceeding like the trial judge on the basis that the revised brokerage agreement covered only 60% of the services provided and that Mr Sawiris had been unjustly enriched in respect of the remaining 40%, the Court of Appeal concluded that he should be ordered to make restitution of 40% of the value of the entire services, which they took to be 36.3m. On that basis, it awarded Mr Benedetti 14.52m. Lord Clarke and Lord Neuberger have explained the circumstances in which the first brokerage agreement was concluded. As the trial judge found, the agreement gave Mr Benedetti the security of a payment for his services which was not dependent on any agreement with Mr Sawiris: Mr Benedetti had taken advantage of his directorship of Mr Sawiriss vehicle company to secure the payment for himself. The revised brokerage agreement between the vehicle company then being used by Mr Sawiris and Mr Benedettis service company merely reduced the amount to 67m, which was then paid. I agree with Lord Clarke and Lord Neuberger that the implication of the judges findings is that the purpose of the brokerage agreements was to ensure that Mr Benedetti received 67m for the services he had provided. No one has questioned the validity of the agreements. Taken at face value and considered in their factual context, agreements under which Mr Benedetti was to be remunerated for his services, which were entered into after the completion of the services between his service company and the vehicle company to be used for the venture, would naturally be expected to cover the entirety of the services, unless their terms clearly indicated otherwise. The terms of the agreements do not appear to me to point clearly away from that construction. I therefore agree with Lord Clarke that the trial judge erred in construing the revised brokerage agreement as relating to only 60% of the services provided. It appears to me to follow that no question of unjust enrichment arises. Mr Benedettis appeal should be dismissed, and Mr Sawiriss cross appeal should be allowed. I also agree with Lord Clarke that, even if the contract related to only part of the services provided by Mr Benedetti, he would be unable on the evidence in this case to maintain a claim for restitution of the value of the remaining services. According to the evidence, services of the kind provided by Mr Benedetti are valued as a whole, rather than being broken down into distinct elements each with its own value. Indeed, even if it were assumed that the elements hypothetically excluded from the scope of the contract might have a value in themselves, there is no evidence as to what that value might be. In those circumstances, if the contractual remuneration exceeded the value of the services as a whole (as I would hold, in agreement with Lord Clarke and Lord Neuberger), then I cannot see how Mr Benedetti can establish a claim to a further payment on the basis of unjust enrichment. The measure of restitution where a person has been unjustly enriched As I have explained, there is no dispute in this case, subject to the questions arising from the payment under the revised brokerage agreement, that Mr Sawiris was enriched by the provision of Mr Benedettis services, that the enrichment was at the expense of Mr Benedetti, and that the circumstances called for restitution by Mr Sawiris, since he accepted Mr Benedettis services on the basis that they were not being provided gratuitously. The issue in dispute is the amount to be paid by way of restitution. That issue has to be considered at this stage on the hypothesis that there was no contract between the parties. In Kingstreet Investments Ltd v New Brunswick (Finance) [2007] 1 SCR 3 Bastarache J, giving the judgment of the Supreme Court of Canada, stated at para 32: Restitution is a tool of corrective justice. When a transfer of value between two parties is normatively defective, restitution functions to correct that transfer by restoring parties to their pre transfer positions. In Peel (Regional Municipality) vs Canada [1992] 3 SCR 762, McLachlin J (as she then was) neatly encapsulated this normative framework: The concept of injustice in the context of the law of restitution harkens back to the Aristotelian notion of correcting a balance or equilibrium that had been disrupted (p 804). That dictum might be related to Lord Wrights observation in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32, 64 65, in the context of unjust enrichment arising from the frustration of a contract after part of the contract price had been paid: There was no intention to enrich [the defendant] in the events which happened The payment was originally conditional. The condition of retaining it is eventual performance. Accordingly, when that condition fails, the right to retain the money must simultaneously fail. Mutatis mutandis, the same might be said where services have been provided on a basis which has not been fulfilled, subject to the qualification that since the services themselves cannot be returned, the remedy must take the form of restitution of their monetary value. The object of the remedy in a case of the present kind is therefore to correct the injustice arising from the defendants receipt of the claimants services on a basis which was not fulfilled. That injustice cannot be corrected by requiring the defendant to provide the claimant with the reward which either party might have been willing to agree. That is because, in the absence of a contract, neither partys intentions or expectations can be determinative of their mutual rights and obligations. Nor can the court make the parties contract for them: a contract which might have included many other terms and conditions besides a price. In such circumstances, the unjust enrichment arising from the defendants receipt of the claimants services can only be corrected by requiring the defendant to pay the claimant the monetary value of those services, thereby restoring both parties, so far as a monetary award can do so, to their previous positions. Prima facie, the monetary value of the services can be fairly ascertained by determining what a reasonable person in the position of the defendant would have agreed to pay for them. That will depend on how much it would have cost a reasonable person in the position of the defendant to acquire the services elsewhere in the market (assuming that a relevant market exists, as will normally be the case). The payment by the defendant of the value of the services to a reasonable person in his position will normally achieve a result which is just to both parties in a case of this kind, since the claimant will receive the amount for which he could have sold his services to another recipient in the same position, and the defendant will pay the amount which the services would have cost a reasonable person in his position to acquire from another supplier in the market. The basis of the valuation is thus consistent with the purpose of the valuation exercise. A question arises as to what is meant by the position of the defendant. The answer can be derived from the purpose of the valuation exercise. In order to arrive at an award which is just to both parties, it is necessary to take account of circumstances which would affect the value placed upon the services by a reasonable person receiving them. Those are also circumstances which would affect the cost to a reasonable person in that position of acquiring the same services in the market, and the amount which the claimant could have received if he had sold his services to another recipient in the same position. Such circumstances will include in particular the availability and cost of similar services provided by alternative suppliers (as in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2007] UKHL 34; [2008] AC 561), and prevailing rates and practices in the relevant market (as in Cobbe v Yeomans Row Management Ltd [2008] UKHL 55; [2008] 1 WLR 1752). They will include any relevant characteristics of the defendant, such as, in the context of borrowing, its credit rating, or whether it belongs to the public or the private sector (as in Sempra Metals). They will include other personal characteristics, such as the defendants age, gender, occupation or state of health, if they bear on the price at which such a person could obtain the services in question in the market. To give one example, a film star may not have to pay the ordinary price for a designer dress, as the fashion house may allow her a discount to reflect the fact that her wearing the dress will enhance its brand image. Her being a film star is thus an objective aspect of her position which affects the cost to her (or anyone else in her position) of obtaining such a dress, and therefore affects the value of the receipt of such a dress to a person in her position. The circumstances which are relevant to determining the value of the services to a reasonable person will not however include the personal preferences of the individual defendant, or any idiosyncratic views which the defendant may hold as to the value of the services, since the preferences or views of the particular recipient do not affect the services value to a reasonable recipient. There may of course be goods or services which are so tailored to the preferences of a particular recipient that the idea of a reasonable recipient (other than the actual recipient) becomes unrealistic: an example might be the costumes designed for the stage performances of some pop artists. Even in such cases, however, the value of the goods or services is not assigned by the recipient, but is likely to be ascertainable on the basis of objective evidence (which may, according to the circumstances, relate to such matters as the cost of obtaining the goods or services from alternative suppliers, or the cost in the market of the materials and services involved and the profit margin which the evidence suggests would be reasonable in the circumstances). The adoption of the objective approach to valuation which I have described, as the normal measure of a restitutionary award, is consistent with the relevant authorities. In particular, in BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783, 840, Robert Goff J said, in relation to restitutionary awards for services, that in making such an award, it is the market value of the services which is taken; and in British Steel Corporation v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504, 511 the same judge held that the defendant should pay a reasonable sum. In Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2007] UKHL 34; [2008] 1 AC 561, para 45 Lord Hope of Craighead stated that questions of this kind are normally approached objectively by reference to what a reasonable person would pay for the benefit that is in question; and Lord Nicholls of Birkenhead said in the same case (para 103) that the measure of a restitutionary award in respect of the use of money was the market value of the benefit the defendant acquired. In Cobbe v Yeomans Row Management Ltd [2008] UKHL 55; [2008] 1 WLR 1752, para 41 Lord Scott of Foscote observed, in relation to his well known example of the locksmith, that the extent of the unjust enrichment was the value of the locksmiths services. In the case at hand, the developers award was to be assessed at the rate appropriate for an experienced developer (para 42), that is to say at the rate ordinarily applicable in the market to a developer comparable to the claimant. In relation to this approach, it may be helpful to say a word about the concept of market value, which has been employed in some of the authorities (eg BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783, 840; Sempra Metals, para 103). It is an expression which can be used in more than one way, but the definition used by the Royal Institution of Chartered Surveyors captures the essence of the concept: The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arms length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. So understood, market value is specific to a given place at a given time. That point can be illustrated by the episode in Vanity Fair in which Becky Sharp sells her horses during the panic which grips the British community in Brussels after the battle of Waterloo, when rumours reach the city that Napoleon has defeated Wellington and that his army is approaching. The circumstances create a market in which horses are exceptionally valuable, and Becky obtains a price which is far in excess of the ordinary value. It is, nevertheless, the value of the horses in the market in which they are sold. That example illustrates the general point that market value depends critically on the identification of the relevant market, since there are different markets for many types of goods and services. That is reflected, for example, in the variability in the price of a haircut, or the cost of a meal in a restaurant, or the fees charged by solicitors, or the salaries of professional footballers, depending on the market in which they are operating. The case of Sempra Metals provides another example. The defendant, as a public body, could purchase the benefit in question (the use of money) at a lower price than commercial enterprises. The benefit arising from the mistaken payment of tax before it was due was therefore valued on the basis of the public sector borrowing rate rather than ordinary market rates of interest. Equally, it is conceivable that money might be paid mistakenly to, and used by, a defendant with a poor credit rating who could borrow money only at rates above ordinary market levels. In such a case the benefit to that defendant, calculated as in Sempra Metals in terms of the rate of interest appropriate to the enrichees circumstances (per Lord Hope at para 46) or the reasonable cost the defendant would have incurred in borrowing the amount in question (per Lord Nicholls at para 103), would exceed that measured according to ordinary market rates of interest. It would still however be an objective value, which had nothing to do with the defendants personal perception of the value of the money. Indeed, it would be a market value: the defendant in such a case would borrow in a different market from ordinary commercial borrowers, just as public sector borrowers constitute a distinct market. The higher rate of interest would reflect the risk of the defendants inability to repay the money, and thus could be said to reflect the value transferred by the claimant, who would be bearing that risk. There may be room for argument in particular circumstances as to whether the variation in the value of a benefit according to the position of the recipient is more aptly described as an aspect of market value or as a departure from it. The fact that the cost of an annuity may depend on the age, gender, state of health and personal habits of the annuitant would probably be regarded by most people as an aspect of market value: the annuity market differentiates between relatively young female non smokers in good health and older male smokers in poor health. An economist might take the same view of the more favourable terms on which a film star may be able to buy a designer dress; but most people would probably say that the film star obtained the dress for less than its market value. I shall refer to ordinary market value to describe the amount which would be agreed in the market in the absence of some unusual characteristic of the particular purchaser. It follows that some other vocabulary has to be found to describe the departure from ordinary market value which will be required where, as in the case of the film star, the value of the benefit to the reasonable person in the position of the defendant will be different from its ordinary market value. I shall refer to the objective value of the benefit, which will usually be its ordinary market value, but may in particular circumstances be either more or less than that amount. Subjective devaluation Counsel for Mr Benedetti argued that there was an established principle of subjective devaluation, according to which the amount of a restitutionary award could be reduced below the objective value of the benefit in order to reflect the defendants personal view of its value, and that by analogy a principle of subjective revaluation (or, perhaps more aptly, subjective over valuation) could justify on the same basis the making of an award in excess of the objective value. It has to be emphasised that this is not an argument for the uncontentious proposition that the objective value of a benefit to the defendant may be less than its ordinary market value (as, for example, in Sempra Metals, or in my example of the film star), or may conceivably be greater than its ordinary market value (as might be said of the example from Vanity Fair, although that might also be regarded as an illustration of how the ordinary market value can vary according to the specific place and time; or as in my example of a mistaken payment made to a recipient who has a poor credit rating). The proposition being advanced is that the value of a benefit received by a defendant is not in principle arrived at objectively, but depends on the defendants personal opinion of its value, or at least that an objective approach to valuation can be displaced by establishing that the defendant did not in fact value the benefit at its objective value. The expression subjective devaluation has appeared occasionally in judgments where references have been made to the work of the late Peter Birks, who employed the expression in some of his writings in relation to the question whether the recipient of a benefit in kind had chosen to accept it and should therefore be taken to have been enriched (see eg Introduction to the Law of Restitution (1985, revised 1989), pp 109 and 413). As used by Birks, subjective devaluation is an argument whose premiss is that where something has not been chosen by its recipient it cannot normally be said to have been of value to him (Introduction to the Law of Restitution p 266; emphasis in original). Accordingly, a defendant who has freely accepted the benefit cannot use that argument (ibid). Whether the recipient of a service can be taken to have assumed responsibility to pay for it is undoubtedly relevant to the question whether he is under a liability to make restitution of its monetary value on the basis of unjust enrichment (but it is important to add that it is not conclusive of that question: there are circumstances in which the receipt of a service may call for restitution of its monetary value even if the receipt was involuntary). Nothing I say about so called subjective devaluation is intended to question that principle. As Pollock CB famously asked (albeit in the context of an analysis based on implied contract), One cleans anothers shoes; what can the other do but put them on? (Taylor v Laird (1856) 25 LJ Ex 329, 332). I am however doubtful of the aptness of the expression subjective devaluation to describe that principle, since it seems to me that the reason for declining to make a restitutionary award based on ordinary market value in such a case is most aptly understood as being, not the defendants idiosyncratic valuation of the service, but the importance of respecting his right to choose whether, and on what basis, to assume responsibility to pay for it. The issue is therefore not at bottom a matter of valuation; and, on one view, it is to be judged objectively. This point has been noted by a number of academic writers. For example, the Canadian academic Mitchell McInnes has written, The important point is not the defendants personal valuation of a benefit, but rather his personal choice to accept the risk of financial responsibility for it (Enrichment Revisited, in Understanding Unjust Enrichment (2004), eds Neyers, McInnes and Pitel, p 175 fn 44 (emphasis in original). See also Edelman and Bant, Unjust Enrichment in Australia (2006), pp 107 108, and Lodder, Enrichment in the Law of Unjust Enrichment and Restitution (2012), chapter 6). Birks himself recognised that the central issue underlying his concept of subjective devaluation was choice: When the argument from the subjectivity of value (subjective devaluation) is available, it does not consist in an appeal to and proof of the tastes and priorities of the particular recipient but, on the contrary, only requires the recipient to show he made no choice to receive the benefit (In Defence of Free Acceptance, in Essays on the Law of Restitution (1991), ed Burrows, p 129). It is of course the benefit by which the recipient has been unjustly enriched which has to be valued for the purpose of making a restitutionary award; but its valuation is conceptually distinct from the identification of the enrichment or the decision whether (or to what extent) it was unjust. The recipients freedom of choice is relevant not only to the all or nothing case where he either did or did not assume responsibility to pay for the service, but also, as Birks recognised (see eg In Defence of Free Acceptance, loc cit, p 129), to the case where the recipient assumed responsibility for payment, but only on a particular basis: for example, that the service was to be provided at half price as an introductory offer, or that the cost of the service would be a specific sum. In practice, most such cases are likely to fall within the scope of the law of contract, but some could fall within the scope of unjust enrichment (eg if a contract were void or unenforceable). The qualified nature of the recipients acceptance of responsibility may then be relevant to limit any liability based on unjust enrichment. On the other hand, although I accept that a contract price in excess of the ordinary market value might be evidence of the objective value in particular circumstances, I have difficulty, like Lord Clarke and Lord Neuberger, in seeing how the recipient could be required, in the absence of a contract, to pay more than the objective value of the benefit on the basis of unjust enrichment. Birkss use of the expression subjective devaluation to describe a principle concerned with issues relating to freedom of choice reflects his view that such issues should be addressed at the stage of determining whether the defendant has been enriched. On that approach, since enrichment involves a transfer of value, and the involuntary nature of the receipt of a benefit does not diminish the objective value transferred, the existence of enrichment must be denied, where necessary to protect the defendants autonomy, by asserting that, subjectively, no (or only a limited) value was transferred. Since the object of this principle is to protect the defendants freedom to choose whether to assume responsibility to pay for a benefit in kind (and if so, on what basis), it seems to me that it might contribute to clarity of analysis if the principle were explicitly concerned with freedom of choice rather than subjective devaluation. I would also comment that, although the expression subjective devaluation reflects Birkss treatment of the question whether and to what extent the defendant assumed financial responsibility for the benefit as part of the inquiry into whether there has been enrichment, it is not self evident that that is the most apt way of addressing the question: indeed, like some other academic authors (eg Goff & Jones, The Law of Unjust Enrichment, 8th ed (2011), eds Mitchell, Mitchell and Watterson, para 17 02), Birks in some of his writings also treats free acceptance as an unjust factor or ground of liability, so that the question whether the imposition of liability would be consistent with respect for the defendants autonomy is taken into account at more than one stage of the analysis. Another possible approach might be to treat enrichment as dependent upon the objectively beneficial nature of the receipt, and to consider at a later stage of the analysis, when determining whether it would be just to impose liability to make restitution (at all, or on a particular basis), the question whether the imposition of such a liability would be compatible with respect for the defendants autonomy or freedom of choice. I note that the Canadian Supreme Court has taken a straightforward economic approach to the questions whether the defendant has been enriched by the plaintiff and whether the plaintiff has suffered a corresponding deprivation, and has dealt with other considerations, including arguments concerning individual autonomy, at the stage of deciding whether the defendants retention of the benefit is unjust: see for example Kerr v Baranow [2011] 1 SCR 269 at paras 37, 41 and 45. That approach appears at first sight to have the virtue of simplicity, in so far as it groups normative issues under an explicitly normative heading, and applies Occams razor to Birkss repeated reliance on the concept of free acceptance. It does not entail a descent into unstructured reasoning about injustice. I should add that, as Lord Nicholls indicated in Sempra Metals at para 119, the defence of change of position may also be relevant in some circumstances to the protection of the defendants autonomy, especially if such a defence may be based on an anticipatory change of position, as the Privy Council accepted in Dextra Bank & Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193, para 38. Interesting and important as these issues as to the conceptual framework of unjust enrichment may be, they do not need to be decided in the present case, where there is no doubt that Mr Sawiris freely accepted Mr Benedettis services on the basis that a reward would be provided. All that need be said is that, at whatever stage in the analysis the defendants freedom of choice is best taken into account, I am inclined to think that it is preferable that it should be done explicitly rather than on the basis of so called subjective devaluation. I would also observe that this area of the law is at an early stage in its development, and that it remains to be seen whether we have yet found the most suitable analytical scheme. Subjective over valuation Some academic writers (eg Burrows, The Law of Restitution, 3rd ed (2011), pp 60 61; Virgo, The Principles of the Law of Restitution, 2nd ed (2006), pp 88 89) have also used the expression subjective revaluation (or over valuation) in relation to the question how the benefit should be valued where services are provided in order to create an end product which has no objective value. Examples sometimes discussed, which illustrate the nature of the issue, are those of a landowner who chooses to have a folly erected on his land, or a person who chooses to have his house decorated in execrable taste, adding nothing to its value. It is argued by Virgo (ibid) that, in such a case, a reasonable person would not regard the claimants work as valuable, and that a restitutionary award is therefore based on the value subjectively attached to the work by the defendant. As Burrows recognises (ibid), however, there is no need in relation to such examples to rely on a notion of subjective over valuation. The claimant benefited the defendant by providing his services. Those services had an objective value in the market: competitive quotations could have been obtained for the erection of the folly or the decoration of the house. A restitutionary award would therefore be based on the market value of the services. Subjectivity and value There is in addition an inherent conceptual difficulty about the notion of subjective valuation. Value, in the economic sense which is relevant in the context of the valuation of services or other non monetary benefits, is not established by individual attribution, but by exchanges between different individuals, usually in a market. It is the cumulative preferences of consumers which are important to the interaction of supply and demand that determines economic value, rather than the preferences of an individual party to a specific transaction. Even in situations where goods or services are tailored to the preferences of an individual party, their value is likely to depend on the supply and demand for the materials and services required, as is illustrated by the examples of the folly and the pop artists costume. If on the other hand a person declares, for example, that coal is more valuable than diamonds, and intends to be understood as describing the relative monetary value of the two commodities, then one would be inclined to suppose that he has taken leave of his senses. He cannot make the monetary value of coal greater than that of diamonds by personal fiat. If a character in a science fiction film says that, on her planet, coal is more valuable than diamonds, one imagines a society where that might be true: where diamonds are plentiful and coal is scarce, where jewellery is made out of coal, and so forth: in other words a society in which market forces and consumer preferences could establish the relative value of coal and diamonds in the opposite sense to that operating in our own society. That is not to say that everyone has the same preferences. A woman who had no interest in fashion might not attach any more importance to a handbag from a fashion house than to one from a chain store, and might be unwilling to spend any more on the one than the other. But she would acknowledge that the former handbag was more valuable than the latter (and would doubtless claim its market value under her insurance policy if it were stolen), unless she was using the word valuable in a sense other than its economic one. In the particular context of making a restitutionary award for unjust enrichment, there is a further reason why it is problematical for the valuation of a benefit to depend on the idiosyncrasies of the recipient. As I have explained, the purpose of restitution, where unjust enrichment has resulted from the receipt of services, is in my view to achieve a just result by restoring to the claimant the monetary value of the services which he has provided to the defendant. That aim will be compromised if the services are valued on a basis which depends on the idiosyncrasies of one party, rather than one which is even handed as between them both. The authorities Three authorities were said to support the existence of a principle of subjective devaluation in the sense for which Mr Benedetti contended: that is to say, that a restitutionary award for unjust enrichment resulting from the receipt of a service should be based on the defendants personal valuation of the service. On examination, none of them appears to me to provide support for it. In the first case, Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2775, Mance LJ referred at para 28 to Birkss discussion of subjective devaluation in the context of the question whether the defendant had been unjustly enriched by his receipt of a personalised number plate, as the result of a mistake. It was held that he had been, as he had chosen to retain the plate in circumstances in which he could easily have returned it but had refused to do so. The context, in other words, was a discussion of whether the recipient of a benefit as the consequence of a mistake had chosen to retain it and should therefore be taken to have been unjustly enriched (or, as it might be put, whether the imposition of liability for unjust enrichment would be consistent with respect for the recipients autonomy): not whether a restitutionary award should be based upon the defendants personal valuation of the benefit. The second case, Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2007] UKHL 34; [2008] 1 AC 561, concerned restitution for unjust enrichment arising from the premature payment of tax as the result of a mistake. The majority of the House of Lords held that the Revenue had obtained a benefit, identified as being the opportunity to turn the money to account (per Lord Hope at para 33) during the period before the payment was due. The claimant sought to value that benefit according to commercial rates of interest. It was held however that the benefit should be valued according to the public sector borrowing rate. That conclusion is consistent with the approach which I have described. The claimant had provided the Revenue with the benefit of the possession of the money for a period of time. The time value of money is assessed by applying a rate of interest. The appropriate rate of interest in the circumstances was one which was applicable to the public sector, since the circumstances involved the provision of money to an organisation in the public sector. A reasonable lender and borrower in the position of the claimant and the Revenue would have agreed on the public sector borrowing rate, since that was the rate at which alternative funds were available to the Revenue. The case is thus an example of the way in which the position of the defendant can affect the objective value of the benefit which he receives. Just as Becky Sharps horses had a higher value to a purchaser in Brussels during the panic than they would have had to a purchaser in ordinary circumstances, so the use of the taxpayers money had a lower value to a public body than it would have had to a commercial enterprise. The reasoning by which the majority of their Lordships arrived at their conclusion, so far as based on restitutionary remedies available at common law, was consistent with this approach. Lord Hope said that questions of this kind were normally approached objectively by reference to what a reasonable person would pay for the benefit (para 45), and explained the importance of focusing on the circumstances of the enrichee in order to determine the extent of the enrichment (para 49). Lord Nicholls stated that the relevant measure was the market value of the benefit the defendant acquired, which was the reasonable cost the defendant would have incurred in borrowing the amount in question for the relevant period (para 103). This was described as an objective measure (paras 116, 117). The third member of the majority, Lord Walker of Gestingthorpe, favoured an approach based on the courts equitable jurisdiction to award interest. Lord Nicholls added, obiter, that in other circumstances it might be unjust to order the recipient of a mistaken payment to pay interest: for example, where the recipient had made no use of the money and had repaid it when the mistake came to light, it might be most unfair to order him to pay interest (para 118). That is evidently correct: in such a case, the recipient had the opportunity to enrich himself through the use of the money, but did not choose to do so. Lord Nicholls continued (para 119): Here, as elsewhere, the law of restitution is sufficiently flexible to achieve a just result. To avoid what would otherwise be an unjust outcome the court can, in an appropriate case, depart from the market value approach when assessing the time value of money or, indeed, when assessing the value of any other benefit gained by a defendant. What is ultimately important in restitution is whether, and to what extent, the particular defendant has been benefited: see Burrows, The Law of Restitution, 2nd ed (2002), p 18. A benefit is not always worth its market value to a particular defendant. When it is not it may be unjust to treat the defendant as having received a benefit possessing the value it has to others. In Professor Birkss language, a benefit received by a defendant may sometimes be subject to subjective devaluation: An Introduction to the Law of Restitution (1985), p 413. An application of this approach is to be found in the Court of Appeal decision in Ministry of Defence v Ashman [1993] 2 EGLR 102.Whether this is to be characterised as part of the change of position defence available in restitution cases is not a matter I need pursue. This reference to subjective devaluation was in turn referred to in the speeches of Lord Walker (at paras 184 and 187) and Lord Mance (at paras 232 233). Lord Walker preferred to adopt an approach to recovery in such cases based on equity, and Lord Mance correctly explained that Birkss concept of subjective devaluation was concerned with the existence of an unjust enrichment rather than the measure of restitution. If, by market value, Lord Nicholls means what I have called ordinary market value, then his observations are consistent with the approach I have described. Lord Nicholls did not in that passage endorse valuation based on the idiosyncrasies of the defendant, and I would not interpret the passage as bearing that implication, given first that the remainder of his speech followed an objective approach, secondly that such an approach would have conflicted with authorities of which Lord Nicholls will have been well aware, and thirdly his citation of the decision of the Court of Appeal in Ministry of Defence v Ashman (1993) 66 P & CR 195. The case of Ashman, followed on similar facts in Ministry of Defence v Thompson (1993) 25 HLR 552, was concerned with the liability of a trespasser for her wrongdoing. The Ministry rented married quarters to the second defendant, who was serving in the RAF, at a concessionary rent. His wife, the first defendant, remained in the premises after they separated, despite a notice to quit, as the local authority would not re house her until an eviction order had been made. Once the necessary proceedings had been taken she moved into local authority accommodation at a higher rent. The Ministry sought to recover mesne profits based on the open market rental value of the premises. An award made on that basis was overturned on appeal, and the court remitted to the court below to reassess the award on the basis that it should be based on the rent which the first defendant would have paid for local authority housing if it had been provided. Hoffmann LJ, with whose judgment neither of the other members of the court expressed agreement, treated the claim as one for restitution. He referred in the course of his judgment to Birkss discussion of subjective devaluation, which he treated as being relevant on the basis that the first defendant had no choice but to stay in the premises. In other words, the involuntary nature of the first defendants continued occupation of the premises, after she had ceased to be entitled to do so at the concessionary rent, supported the conclusion that she was not enriched by her wrongful occupation of the premises to the full extent of their value. If she had been free to choose whether to accept the benefit of continued occupation of the premises, she would not have done so, but would have moved into local authority accommodation and paid the rent of such accommodation. The only enrichment arising from her occupation of the premises was therefore the amount of rent which she had avoided paying on that basis. I would observe that if, as Hoffmann LJ considered, the first defendant had no choice but to occupy the premises, the application of Birkss approach would have led to the conclusion that she had not been unjustly enriched at all. The decision may perhaps be better rationalised, in terms of the law of restitution, as raising a question of change of position, as Lord Nicholls suggested in Sempra Metals. The central point was arguably not whether the first defendant chose the benefit of occupying the premises, but rather that her receipt of that benefit prevented her from receiving the equivalent benefit from the local authority at a lower cost. Her receipt of the benefit thus altered her position in such a way that she would be worse off if she were required to make restitution of the market value of the benefit than if she had never received it. The important point for present purposes however is that the case is not an example of subjective devaluation in the sense in which that expression has been used in the present case. Hoffmann LJs judgment provides no support for the idea that the valuation of a benefit can be based on the recipients personal ideas about its value. On the contrary, Hoffmann LJs approach to the valuation, on the basis of the rental of the alternative accommodation which might reasonably have been available to a person in the first defendants position, was objective. He rejected a subjective approach to that issue, saying that, if the defendants had been occupying the premises at the open market rent before they separated, they could not claim that the premises had become less valuable to them because they could not find anywhere else to go; nor could they say that the premises were worth less to them than suitable accommodation they could realistically obtain. As Simon Brown LJ observed in relation to the case of Ashman in Gondal v Dillon Newspapers Ltd [2001] RLR 221, 228: A restitutionary award, i.e. damages calculated according to the value of the benefit received by the occupier, is rightly decided by an objective determination of what the wrongful occupation was worth to the trespasser. These cases do not therefore appear to me to involve subjectivity: the valuation of the benefit in Sempra Metals or Ashman was not an attempt to discover the price which the individual defendant would in fact have been willing to pay, and therefore did not depend on the defendants personal views. As was said in a Scottish appeal to the House of Lords, in a case where a person had erected a building on land in the mistaken belief that he was the proprietor, it is not according to the fancy of the owner or the builder that the improvement upon the estate is to be estimated (York Buildings Co v Mackenzie (1797) 3 Paton 579, 584 per Lord Loughborough LC). The point illustrated by Sempra Metals is that there are differences between the circumstances of individuals which may affect the objective value to them of a given benefit in kind. The ratio of Ashman is less readily identified, and need not be decided now: views may differ as to whether the case is best understood as a further example of objective value being below the ordinary market value, or as relating to enrichment, or as relating to a defence to the imposition of liability. It appears however to be concerned with the effect of constraints upon the choices made by a defendant in relation to the receipt of a benefit, and with the avoidance of imposing a liability which would leave the defendant worse off than if the benefit had not been received, rather than with a subjective approach to the valuation of benefits. The present case is not one where any issue arises as to freedom of choice, since Mr Sawiris accepted Mr Benedettis services freely, on the basis that Mr Benedetti would be rewarded, and without any cap on the reward. Nor is this a case in which it is said that the recipient of the benefit has particular characteristics which affected its objective value. The authorities cited do not appear to me to support a principle of subjective devaluation in the sense in which that expression is employed in the present case, namely the valuation of a benefit by which the recipient was unjustly enriched according to his personal opinion of its value. In relation to para 26 of Lord Clarkes judgment, I should add, for the avoidance of doubt, that the ideas which I have discussed as possible alternatives to an analysis based on subjective devaluation do not appear to me to be less flexible or more liable to lead to windfalls for defendants. In particular, I entirely accept that there are circumstances in which a defendant may be unjustly enriched by the involuntary receipt of a benefit, and in which a restitutionary award may therefore be appropriate: see para 113. I also accept that a court can make a restitutionary award which is below the market value of the benefit conferred, in particular where that is necessary to respect the defendants autonomy or freedom of choice: see para 115. An approach which explicitly respects freedom of choice, rather than adopting a concept of subjective valuation, can be equally nuanced. Similarly, the adoption of an approach which addresses issues relating to autonomy at the stage of considering whether enrichment was unjust, rather than at the stage of considering whether there was enrichment at all, need not alter the outcome of cases. Finding the most suitable analytical framework to help the courts to reach principled decisions on particular facts and to articulate reasons for their decisions is nevertheless not unimportant. The present case In the present case, the amount which Mr Sawiris offered to pay Mr Benedetti for his services, after they had been provided, is significant only in so far as it provides evidence of the objective value of the services at the time they were provided (as in Cobbe v Yeomans Row Management Ltd [2008] UKHL 55; [2008] 1 WLR 1752, para 44). The fact that the offer was made after the services had been provided does not render it irrelevant, although it is important to bear in mind that the services are to be valued as at the time when they were received (see, amongst other authorities, BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783, 802). Equally, the fact that the amount offered exceeded the amount which, according to other evidence, would be the ordinary market value of those services, does not make it irrelevant: as I have explained, it is possible that the objective value of services in particular circumstances may be more or less than their ordinary market value. These facts may however greatly affect the weight to be placed on the offer as an indication of objective value, in the absence of any identified circumstances which could account for the divergence from the value indicated by other evidence. As is familiar to practitioners in fields such as valuation for rating or rent reviews, the sums agreed in respect of comparable subjects, in comparable circumstances, can vary greatly, and outlying figures, even if relating to the very subjects to be valued, may have to be discarded if they cannot be reconciled with other evidence which is considered to be more reliable. The significance of the sums offered by Mr Sawiris therefore depends upon whether they provide evidence of the objective value of Mr Benedettis services at the time they were provided. In that regard, the fact that Mr Sawiris offered 75.1m for services which would ordinarily be valued at 36.3m plainly calls for an explanation. Was there something exceptional about the circumstances which rendered Mr Benedettis services exceptionally valuable? The judge did not identify anything about the circumstances in which the services were provided which would indicate that they had a higher objective value in those circumstances than their ordinary market value. Or was Mr Sawiriss offer influenced by extraneous factors, such as the desire to settle Mr Benedettis claim in the shadow of potential litigation? If so, the offer would not be reliable evidence of the objective value of the services at the time they were received. Or was Mr Sawiris simply being generous, as Mr Abdou said in the relevant emails, and as Mr Sawiris maintained in his witness statement? If so, the offer would again not be reliable evidence of the objective value of the services: generosity (or parsimony) may influence a persons attitude towards paying a given price, but it does not affect the objective value of what he has received. Or was Mr Sawiris influenced by the success of the venture in connection with which Mr Benedettis services had been provided? If so, the offer would again not be reliable evidence of the objective value of the services, since that value has to be determined as at the time when the services are received, and cannot be quantified with hindsight in the light of their success. The fact that Mr Sawiris renewed his offer of 75.1m after he had discovered that Mr Benedetti had already received 67m under the revised brokerage agreement calls even more strongly for an explanation. Had his valuation of Mr Benedettis services increased to 142.1m? Or can one infer from his successive offers, as counsel for Mr Benedetti argued, that his valuation of Mr Benedettis services was even higher? Or should one infer from the surrounding circumstances that the increased offer was a further attempt to avoid litigation, there being evidence that the possibility of litigation had been discussed by that time? Or was it further evidence of his generosity? These questions were not explored at the trial, where the parties sought to establish the objective value of Mr Benedettis services by leading expert evidence. That evidence, as assessed by the judge, demonstrated that Mr Benedettis services would ordinarily be remunerated by a fee of between 0.1% and 0.3% of the transaction value. Selecting the top end of that range, and applying the scale fee to the value of the transaction in question, the judge assessed the market value of the services at 36.3m. It was only in closing submissions that counsel for Mr Benedetti sought to place any reliance on the offers made by Mr Sawiris, having maintained throughout the trial that they were irrelevant. Even at that stage, it was suggested that they could be used mainly as a check on a valuation based on the expert evidence. In the absence however of any explanation of their being far in excess of the market value established by the expert evidence, other than Mr Sawiriss generosity (a factor which is not relevant to the measurement of the benefit, as I have explained), or his desire to avoid litigation (which would be equally irrelevant), and given the real possibility of their being influenced by extraneous considerations, they could not reasonably be regarded as reliable evidence of value. The approach of the trial judge In dealing with this evidence, the trial judges starting point was that a claim to a quantum meruit gives the court a wide discretion to award what it considers to be a fair and reasonable sum for the services (para 58). That is not the correct approach. As I have explained, the court has to determine the objective value of the services at the time of receipt, that is to say the price which a reasonable person in the defendants position would have paid for the services. That exercise may involve the exercise of judgment, but it does not involve the exercise of discretion (Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548, 578; Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, 385; Sempra Metals at para 46 per Lord Hope). Although in principle evidence of negotiations between the parties might be relevant to that exercise, it is not clear that the judge treated the offers made by Mr Sawiris as evidence of the objective value of Mr Benedettis services. He stated that regard must also be had to any prior negotiations or agreement between the parties which indicate that they put a particular value on the services in question (para 528), and that the evidence relating to the offers was admissible if and so far as that evidence does show the value which the paying party (albeit with the benefit of hindsight) considered that the services were actually worth (para 568). As I have explained, however, the object of the exercise is not to discover what the defendant thought the claimants services were worth, either before or after they were provided, but what they were objectively worth at the time they were received. As I have explained, the offers might in principle have been significant if and in so far as they indicated the objective value of Mr Benedettis services at the time those services were rendered. It was not however established that the offers had been made on that basis. In view of the absence of any explanation of the disparity between the offers and what the judge described as the market rate for the services Mr Benedetti performed, other than Mr Sawiriss generosity or his desire to avoid litigation, the judge could not reasonably have treated the final offer of a further 75.1m, in addition to the 67m already received, as determinative of the value of Mr Benedettis services. In the event, the judge appears to have awarded Mr Benedetti the 75.1m, in addition to the 67m already received, on the basis that it represented what [Mr Sawiris] considered Mr Benedettis services to be worth. As I have explained, however, that is not the proper measure of a restitutionary award. The offers could not be treated as overriding the evidence as to the market rate on the basis that Mr Sawiriss personal scale of values was the proper measure of a restitutionary award. The approach of the Court of Appeal In reaching that conclusion I am in agreement with the Court of Appeal. Arden and Etherton LJJ however differed in the reasoning by which they reached that conclusion, and Rimer LJ agreed with both judgments in relation to the valuation of the services. I am in agreement with the judgment of Etherton LJ, who adopted an objective approach to valuation. I should explain why I do not entirely agree with the thoughtful analysis of Arden LJ. She appears in some parts of her judgment to have proceeded on the basis that an award in restitution should reflect the parties common intention. On that basis, an unaccepted offer could not even in principle be relevant evidence of value. This appears to me to be incorrect in principle, and inconsistent with the significance attached in Cobbe v Yeomans Row Management Ltd [2008] UKHL 55; [2008] 1 WLR 1752, para 44, to an unaccepted offer in settlement, made in the course of the proceedings, as an indication of the amount a quantum meruit might provide. I would not therefore agree with her comment (para 85) that it was an error on the part of the trial judge to take the figure of 75.1m into account because it was not agreed. Nor would I agree with the example she gives of a plumber who charges 10% over the market rate. In her view, if a customer had agreed to that rate in the past, the court, if awarding an amount by way of quantum meruit to the plumber against the customer on a further occasion, would take into account the parties course of dealing in the past in preference to market rates. The point of the example, as stated by Arden LJ, is that the court must look to the outward manifestation of the parties common intentions (para 72). It appears to me that that would be the proper approach if the award were being made on the basis of an implied contract, but not on the basis of unjust enrichment. I would add that it is important to bear in mind that although the term quantum meruit is used both in the context of contract and in the context of unjust enrichment, the basis on which a quantum meruit award is made differs according to which context is relevant. The approach adopted in the passages I have mentioned, which treats the quantification of the benefit in a case of the present kind as resting on some common intention or understanding, has echoes of the old view that a restitutionary claim rests on an implied contract; and Arden LJ appears to have been influenced by Lord Atkins speech in Way v Latilla [1937] 3 All ER 759, which proceeded on the footing that there was in that case an implied contractual term to pay reasonable remuneration. Lord Atkin stated that there existed between the parties a contract of employment under which Mr Way was engaged to do work for Mr Latilla in circumstances which clearly indicated that the work was not to be gratuitous, and that Mr Way was therefore entitled to a reasonable remuneration on the implied contract to pay him quantum meruit (p 763). The present case is not however based on implied contract, and Way v Latilla therefore does not appear to me to be of assistance: the implied contract approach to restitutionary awards for unjust enrichment was decisively rejected in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669. On the other hand, Arden LJ was in my opinion on sounder ground in rejecting the relevance of the offer of 75.1m on the basis that there was nothing in the evidence relating to the offer to shed light on the market value of Mr Benedettis services as opposed to an offer that for whatever reason Mr Sawiris was prepared to make (para 86). Having rejected the relevance of the offer of 75.1m and taken the value of the services to be 36.3m, the Court of Appeal then awarded Mr Benedetti 14.52m on the basis that his contractual remuneration of 67m under the revised brokerage agreement related to only part of the services he had provided. As I have explained, I disagree with that understanding of the effect of the agreement. Conclusion I would therefore dismiss Mr Benedettis appeal against the decision of the Court of Appeal, and allow Mr Sawiriss cross appeal. LORD NEUBERGER The background Introductory Two questions require to be determined. The first, which is raised by Mr Benedettis appeal, is what sum he should be awarded for the services which he carried out for Mr Sawiris and his companies (which, for present purposes, can be elided with Mr Sawiris) in connection with the acquisition of Wind Telecomunicazioni SpA (Wind). The second issue, which is raised by Mr Sawiriss cross appeal, and only arises if the appeal is dismissed, is whether Mr Benedettis entitlement to that sum should be treated as satisfied, because a company which he owns and controls has already received 67m. Each issue raises a point of principle, but is complicated by the very unusual facts of this case. Those facts are set out in the judgment of Lord Clarke in paras 3 8 and 35 66, and, while it is unnecessary to repeat them in any detail, I shall begin by identifying what seem to me to be the salient features in connection with the issues raised in this appeal and cross appeal. A brief summary of the relevant facts In 2002, Mr Benedetti became aware that Wind might be for sale, and he contacted Mr Sawiris, who he believed might be interested in buying it. Following discussions, they entered into an acquisition agreement on 31 January 2004, which envisaged that Wind would be acquired pursuant to the following scheme (the scheme) which can be summarised, on a somewhat simplified basis, as follows: (i) Mr Sawiris would subscribe for two thirds of the 200,000 initial share capital in a new company; (ii) Mr Benedetti would subscribe for the remaining one third (with a loan from Mr Sawiris); (iii) Mr Sawiris would contribute 50m to this new company; (iv) Mr Benedetti would try to find other, third party, investors who would put up most of the money (around 1.2bn) required for the purchase of Wind; but (v) the structure of the new shareholdings in Wind would give Mr Sawiris, through the new company, de facto control of Wind. It was part of Mr Benedettis case at trial that there was an understanding (referred to by the Judge as the alleged understanding) that Mr Sawiris (and other investors) would pay him 1% brokerage in respect of the acquisition of the shares in Wind. The Judge rejected the existence of such an understanding (but I mention it as it has some relevance to the cross appeal). Two promising investors were found by Mr Benedetti, a Mr Ross, who had a large amount of capital at his disposal, and a company called Investors in Private Equity (IPE), which represented potential investors (including, at least in some respects, Mr Ross), and with whom Mr Benedetti entered into a so called collaboration agreement in February 2004. As negotiations with them proceeded, a company called Weather Investments SA (Weather Investments) was formed in January 2005, with a view to putting the scheme into effect. All hundred shares in that company were initially held by a subsidiary of IPE, on behalf of Mr Ross (the reasons do not matter). Mr Ross appeared to have lost interest in the scheme around mid March 2005, so Mr Sawiris required the shares in Weather Investments to be transferred to him. On 24 March 2005, IPE transferred 99 of the shares to Mr Benedetti and the remaining share to Mr Abdou, Mr Sawiriss assistant. The following day, 25 March 2005, Mr Benedetti transferred the 99 shares to Mr Sawiris. Two days before, on 23 March 2005, Mr Benedetti became a director of Weather Investments. On the following day, 24 March 2005, the day before he transferred all the shares in Weather Investments to Mr Sawiris, Mr Benedetti, without Mr Sawiriss knowledge, entered into two contracts, on behalf of Weather Investments, each for the benefit of companies wholly or largely owned and controlled by Mr Benedetti. One of these contracts has been referred to as the first brokerage agreement, under which International Technologies Management Ltd (ITM), a company owned and controlled by Mr Benedetti, was appointed to provide Weather Investments with brokerage services for a 0.7% fee. By mid April 2005, IPE dropped out (and the collaboration agreement accordingly fell away), because it became clear that any potential investors it had represented had lost interest. Despite Mr Benedettis best efforts, no other third party investors could be found, and so it became clear that the scheme could not be progressed. Mr Sawiris, together with his family and some associates, were left as the only potential investors in Wind, and he decided to proceed nonetheless. Negotiations accordingly took place over the next few weeks, in which Mr Benedetti was actively involved. As a result of those negotiations, terms were agreed for the acquisition of Wind, culminating in a sale and purchase agreement on 26 May 2005. Pursuant to the sale and purchase agreement, the great majority of the shares in Wind were acquired by companies ultimately controlled by Mr Sawiris, his family and business associates. This was accomplished in two stages, which were completed on 11 August 2005 (first closing) and 8 February 2006 (second closing). The cost of over 3bn was mostly funded by bank loans, but it also included the introduction of the controlling interest of a company known as Orascom. After second closing, the ownership structure involved (i) (albeit through 100% owned subsidiaries) a company called Weather Investments Srl (Weather Italy) (of which Mr Benedetti was initially a director) owning all the shares in Wind, (ii) companies controlled by Mr Sawiris and his family owning a substantial proportion of the shares in Weather Italy, and (iii) Mr Benedetti having no interest, either directly or indirectly, in Wind or Weather Italy. On the same day as the sale and purchase agreement was entered into, the rights and obligations of Weather Investments (which had ceased to have any part to play in this matter) under the first brokerage agreement were assigned to Weather Italy. This was done by Mr Benedetti, as a director of both companies, without the knowledge of Mr Sawiris. The accounts drawn up for first closing recorded around 87m being payable to ITM, which Mr Sawiris knew was owned by Mr Benedetti. However, Mr Sawiris was led by Mr Benedetti to believe that this sum was attributable to Mr Benedettis expenses and was due to third parties in connection with the negotiating of the sale and purchase agreement. Mr Sawiris was unhappy about the amount, and Mr Benedetti agreed to reduce it to 67m. Mr Benedetti then prepared a revised brokerage agreement between Weather Italy and ITM, which provided for a 0.55%, rather than a 0.7%, fee, and back dated it to 26 May 2005. This agreement was seen by Mr Abdou before first closing, and, on 12 August 2005, 67m was paid to ITM as part of the cost of first closing. Around that time, Mr Benedetti resigned as a director of Weather Italy. Before first closing, discussions were already taking place about Mr Benedettis remuneration. During June 2005, Mr Sawiris offered him 75.1m, in cash or Weather Italy shares, to which Mr Benedetti responded by saying, in effect, that it was far too little. In January 2006, the two men met to discuss the issue. At that time, Mr Sawiris suspected, but did not know, that Mr Benedetti had, through ITM, received the 67m under the revised brokerage agreement for his own use. However, he adhered to his offer, to which Mr Benedetti agreed in principle, but only if a proposal that he acquire some shares in Weather Italy at a good price was realised. That proposal came to nothing, and negotiations continued desultorily. In October 2006, Mr Abdou sent a draft agreement to Mr Benedetti proposing a fee of 75.1m, and acknowledging that Mr Benedetti had received 67m. Mr Benedetti did not reply, and, shortly after, he began the present proceedings, which led to a hearing before Patten J. The decisions of the courts below and the issues before the Supreme Court That hearing lasted over thirty days, as Patten J heard much factual and expert evidence and had to resolve many issues, most of which are no longer live. In his full and careful judgment, [2009] EWHC 1330 (Ch), Patten LJ (as he had become), concluded that: (a) The acquisition agreement was abandoned some time in April 2005, once the parties accepted that virtually no third party interest could be found, and that Mr Sawiris was effectively on his own so far as paying to acquire Wind was concerned; (b) Mr Benedettis contention that he should be paid for his services on the basis of an express contract, a contract supported by equity, fiduciary duty, or estoppel should be rejected; Nonetheless, as Mr Sawiris accepted, he was liable to pay Mr (c) Benedetti a quantum meruit for his services, as otherwise Mr Sawiris would be unjustly enriched; There was a market for the sort of services provided by Mr (d) Benedetti, and, in that market, he would have been paid 36.3m (the top end of the figures provided by the expert called by Mr Sawiris, but far less than the figure suggested by the expert called by Mr Benedetti); In view of the 67m paid to Mr Benedettis company, ITM, under the revised brokerage agreement, the 36.3m should be reduced by 60% to 14.52m, as the revised brokerage agreement covered at least 60% of the work referable to the quantum meruit; However, as Mr Sawiris had been prepared to pay Mr Benedetti 75.1m, and had maintained that position after he knew that ITM had received the 67m, the correct figure to award Mr Benedetti as a quantum meruit was 75.1m. (e) (f) The Court of Appeal, [2010] EWCA Civ 1427, in effect upheld conclusions (a) to (e), but reversed the Judges conclusion (f). More specifically, the Court of Appeal: (a) (b) (c) Rejected Mr Benedettis contention that he should have received more than the 75.1m on the basis that the acquisition agreement supported a larger award; Upheld Mr Sawiriss contention that the Judge should not have awarded more than the market value of Mr Benedettis services by way of a quantum meruit; and Rejected Mr Sawiriss contention that the whole of the 36.3m quantum meruit award had effectively been satisfied by ITMs receipt of the 67m. Accordingly, the Court of Appeal overturned the Judges award of 75.1m in favour of Mr Benedetti, and replaced it with an award of 14.52m (being 40% of the 36.3m quantum meruit award). Mr Benedetti now appeals against the Court of Appeals conclusions (a) and (b), and Mr Sawiris appeals against the Court of Appeals conclusion (c). On the Court of Appeals conclusion (a), there is little to add to what Lord Clarke says in paras 40 41 above. As is now accepted by Mr Benedetti, the Judge was right to conclude that the acquisition agreement had been abandoned by the parties, once it became clear that no independent third party investors could be found and the scheme could not proceed, so that Mr Sawiris would have to proceed effectively on his own (albeit with members of his family and business associates) if he wished to acquire control of Wind. For the same reason, the terms of the acquisition agreement are of no assistance to Mr Benedettis quantum meruit claim, because those terms reflected both the nature and the product of his services being different in nature from that which in fact eventuated. Even if they could, in principle, be of assistance to him in that claim, I find it hard to see how that assistance could be turned to quantitative account. However, the issues raised by the Court of Appeals conclusions (b) and (c) merit more consideration, not least because, according to the arguments developed in this Court and in the courts below, they concern an area of law, unjust enrichment, which has been impressively developed in legal academic circles over the past fifty years, but has not received much attention in the United Kingdom courts. The first issue: the sum to which Mr Benedetti is entitled The unusual factual position The problem thrown up by the appeal in the present case arises from a strikingly wide discrepancy between (i) the figure found by the Judge, on the basis of the expert evidence, to be the market value of the services provided by Mr Benedetti (the Services), namely 36.3m, and (ii) the sum Mr Sawiris, an experienced and successful businessman, was prepared to pay Mr Benedetti for the Services, namely at least 75.1m. The discrepancy is all the more striking once two other factors are appreciated. In relation to point (i), the Judges figure of 36.3m was at the top end of the expert evidence. That is because the dispute between the two experts was about the characterisation of the Services, and, once the Judge had accepted Mr Sawiriss experts characterisation, 36.3m was the highest figure he could have adopted on the evidence. And in relation to point (ii), Mr Sawiriss final offer of 75.1m (a) took into account the fact that Mr Benedetti had, through ITM, pursuant to the revised brokerage agreement, already received 67m, and (b) was rejected by Mr Benedetti as being not enough (at least, unless he received some shares in Weather Italy, effectively at a discount). At any rate, in the absence of any other evidence or any good reason to the contrary, where two parties agree, at arms length, that one of them will pay a certain sum, or at a certain rate, for a type of benefit to be provided by the other, there must be a prima facie presumption that that amount is, or at least is good evidence of, the market value of that type of benefit. Apart from complying with commercial common sense, this approach seems to have been assumed to be correct almost four hundred years ago in Lampleigh v Brathwait (1616) Hob 105, to have found favour with Kelly CB in Scarisbrick v Parkinson (1869) 20 LT 175, and to be in accord with what was said by Lord Atkin and Lord Wright in Way v Latilla [1937] 3 All ER 759, 764 and 766 respectively. The approach is also inherent in the well established practice of invoking comparable transactions in the field of rating and other property valuation disputes. In such cases, arms length lettings or sales of properties similar to the hereditament in dispute are routinely accepted, at least prima facie, as good evidence of the market value of the property the subject of the transaction. A letting or sale at arms length of the hereditament to be valued must, albeit again only prima facie, be very good evidence of that hereditaments value. In the present case, it is true that the 75.1m (i) was offered only after the Services had been provided, and (ii) was not accepted by Mr Benedetti, so there was no actual agreement. However, those points are not that telling. As for point (i), Mr Benedetti was only to be paid if the transaction succeeded, and the figure was proposed shortly after the sale and purchase agreement was signed, and before first closing. So far as point (ii) is concerned, the fact that Mr Benedetti wanted more suggests that 75.1m is, if anything, a low, rather than a high, figure. Nonetheless, the Judge assessed the market value of the Services as being much lower than the sum which Mr Sawiris was prepared to pay for them. While it may appear to be a surprising decision on the bare facts just recited, an appellate court should be wary of overturning decisions of trial judges on fact and on inference from fact. Patten LJs decision on this point, like most findings after a trial with factual and expert evidence, was inevitably, and correctly, heavily influenced by the way in which the parties presented their respective cases, in terms of both the evidence and the argument. It is no doubt for that reason that there was (quite rightly) no real attack in this Court on the Judges finding that the market value of the Services was 36.3m. Both sides called expert evidence on the issue at trial, and the Judges analysis of the effect of that evidence, and his reasons for preferring that tendered by the expert called by Mr Sawiris, were full, careful and rational. Although Mr Benedetti is now heavily relying on Mr Sawiriss offer of 75.1m, he placed no weight on that offer at trial (except at a very late stage, when he placed some, if pretty slight, weight on it), not least because he was seeking much more. Indeed, initially Mr Benedetti contended that Mr Sawiriss offer of 75.1m was inadmissible as evidence of value. When it was admitted into evidence, neither side wished to contend that this was a proper basis for assessing the quantum meruit claimed, as the Judge put it. However, as he immediately went on to explain, counsel for Mr Benedetti has now (which I understand to mean in his closing speech, after the evidence had been given) changed his position on that and suggests that the court can look at it but mainly in order to use it as a check on its assessment of quantum. The Judge considered the offer of 75.1m, and rejected it as being helpful as an indication of market value. There is some background support for that conclusion, quite apart from the general points that can be made, namely (i) that in every field, there are rogue comparables, ie arms length agreements (or offers) which are simply out of line with the rest of the market for no necessarily discernible reason, and (ii) the very fact that the 75.1m was never agreed can be said to cast doubt on it as a reliable guide to value: although the parties got very near to reaching a binding agreement, they did not do so; accordingly, not merely Mr Benedetti, but also Mr Sawiris, were entitled to have second thoughts about it. The fact that Mr Sawiris did not reduce his offer when he discovered that Mr Benedetti had obtained 67m, and misled him about it, either suggests that his original offer was much too low or that he was being very generous to Mr Benedetti. It was open to the Judge to opt for the latter alternative, especially as Mr Sawiris said in evidence that he considered his offer to be generous, and the Judge accepted that as true. Additionally, despite the Judge saying otherwise, it seems likely that the offer of 75.1m was made under the threat of litigation (as was apparently accepted by the Judge elsewhere in his judgment). In principle, then, the offer of 75.1m was a potentially relevant fact for the Judge to take into account when determining what sum to award Mr Benedetti, but it was a piece of evidence which the Judge was entitled to reject as unhelpful. In the end, if the correct figure to be awarded as a matter of law in the light of the Judges assessment of the evidence, was indeed the 36.3m which the Court of Appeal awarded, the fact that Mr Benedetti turned down a much higher offer before issuing proceedings is his misfortune. The issue to be determined The Judge held that Mr Benedetti had a claim in unjust enrichment and that was accepted by the Court of Appeal. The circumstances in which such a claim can arise are multifarious, but they can all be said to involve the conferment of a benefit on a defendant at the expense of a claimant in circumstances where it would be unjust for the defendant not to pay the claimant. Examples of the circumstances in which such a claim can be made include where the benefit has been conferred by or under a mistake, duress, undue influence, incapacity or compulsion. (I express these examples in the most general of terms: in many such cases, the enrichment may not be unjust and so no claim arises). The present claim is in another category, namely, to use a well established if not wholly apt expression, where there has been a failure of consideration. This arises where there was a contract, but, in whole or in part, it was ineffective (eg due to illegality, frustration or unenforceability), or it ceased to apply for some reason. It is, and always has been, accepted by Mr Sawiris that (subject to his argument on the cross appeal) Mr Benedetti has a valid claim in unjust enrichment in respect of the Services. This is because (i) by providing the Services, Mr Benedetti conferred a benefit on Mr Sawiris, (ii) the provision of the Services was at the expense of Mr Benedetti, (iii) because the scheme fell away, this was a case where the consideration failed, (iv) it would be unjust if Mr Benedetti was not paid for the benefit, and (v) save as a result of the receipt of the 67m (which is relevant to the cross appeal), Mr Sawiris has no defence to the claim. The appeal is thus concerned with how the sum to be paid to rectify the injustice of the enrichment is to be assessed. That sum has been described throughout this case as being a quantum meruit. It is, I think, arguable that this is a mischaracterisation. It is true that the original contractual arrangement, which identified Mr Benedettis consideration, fell away. It is also true that the new arrangement which developed did not involve any such identification. However, it seems to me that the new arrangement probably gave rise to a contract, arising from the parties words and conduct in April and May 2005. That contract did not specify Mr Benedettis remuneration, but it must be at least arguable that there would be implied into the contract a term that he should be paid a reasonable sum. I say no more about this possible point of distinction, as (i) the point was not argued, (ii) the point may be wrong, (iii) even if it is right, the point may involve an issue of terminology rather than principle, and (iv) even if there is an issue of principle, I am confident it makes no difference to the outcome of this appeal, given the conclusion I have reached. The term quantum meruit, expressed as it is in the old language of the forms of action, might fairly be said to conceal as much as it reveals about the nature of a claim to quote from Goff & Jones on The Law of Unjust Enrichment, 8th ed (2011), para 1 29. In this appeal, the quantum meruit refers to the value of the services rendered by Mr Benedetti, in circumstances where there was no contract which expressly provided how the price he was to be paid for the Services was to be quantified. In awarding a quantum meruit for a benefit, the court is essentially deciding how much is deserved for the conferment of that benefit (and, as Arden LJ pointed out in the Court of Appeal, the literal translation of quantum meruit is as much as he deserves [2010] EWCA Civ 1427, para 2). The appeal therefore turns on whether the quantum meruit which Mr Benedetti claims for the Services which he performed for Mr Sawiris is (i) the open market value of the Services as assessed, now unchallengeably, by the Judge, 36.3m, or (ii) the higher sum which Mr Sawiris was prepared to pay for the Services, namely (at least) 75.1m. The former figure can be characterised as the objective value in the sense that it does not depend on the particular view or assessment of either party. I am prepared to assume that the latter figure can be characterised as the subjective value, in the sense of being what the Services were assessed by Mr Sawiris to be worth to him. It is true that, on the Judges findings, the offer of 75.1m was substantially over the market value and was seen by Mr Sawiris himself as being generous. However, it was offered by a very experienced and very successful businessman, with access to the best advice. It can therefore, at least arguably, be explained on the basis that it represented what the Services were worth to Mr Sawiris (or, as Mr Benedetti would say, the minimum amount that they were worth to Mr Sawiris, as the figure represents an unaccepted offer). The prima facie position Where, as is agreed to be the position here, a claimant is entitled to a quantum meruit based on the fact that he has enriched the defendant by the provision of benefits, which have an assessable market value, it seems to me pretty clear that the sum prima facie to be awarded is the market value of those benefits. That conclusion is consistent with commercial common sense, the authorities, and the leading academic works on the topic of unjust enrichment. It is hard to identify a rational alternative basis to market value, in the absence of a good reason to the contrary on the particular facts of a particular case. It seems to me that, even to those who might favour a generally subjective approach to the assessment of quantum meruit in unjust enrichment cases, there must be a presumption that the value of a particular benefit to the defendant is its market value. The nearest one can get to the value of a good or service, at least in a capitalist system (which can be said to equate price with value, which has echoes of Oscar Wildes cynic), is its market value, and I agree with Lord Reeds description of that expression in paras 104 108. If a different valuation, in this case a subjective valuation, is said to be appropriate in a particular case, the onus must be on the person seeking to justify the different valuation to establish that it exists and differs from the market value as a matter of fact, and that that different valuation is justified as representing the quantum meruit in that particular case. In his judgment in BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783, 822 and 839 841, Robert Goff J said in terms that any quantum meruit is to be assessed by reference to market value. More recently, Lord Scott in Cobbe v Yeomans Row Management Ltd [2008] 1 WLR 1752, paras 41 42, rejected the suggestion that a quantum meruit was to be assessed by reference to the increase in the value of the defendants property thanks to the claimants services, and held the claimant entitled to what those services would cost in the market. Further, although the issue involved can be said to be slightly different, namely payment under a mistake, the approach of Lord Hope and Lord Nicholls, in the House of Lords decision in Sempra Metals Ltd v Inland Revenue Commissioners [2008] 1 AC 561, paras 45 47 and 113 116 respectively, seems to me, as it did to Etherton LJ at [2010] EWCA Civ 1427, para 144, to indicate that market value is the prima facie basis of valuation in this area of law. Also like Etherton LJ four paragraphs later in his judgment, I do not regard the reasoning of the House in Way v Latilla [1973] 3 All ER 759 as inconsistent with this conclusion, as it was found that there was no open market value assessable for, or to use Lord Atkins words, no trade usage as to, the services which were in issue in that case. The academic support for a prima facie objective valuation includes Professor Burrows, A Restatement of the English Law of Unjust Enrichment (2012) section 34, Goff & Jones op cit, para 6 69, Virgo The Principles of the Law of Restitution, 2nd ed pp 98 and 103, and Birks, Unjust Enrichment, (2nd ed, (2005), pp 52 63. There may be penumbra round this otherwise clear prima facie principle, but I consider that they will normally involve arguments about the precise basis upon which market value is to be assessed in a particular case. Thus, there could be cases where the defendant would, for some reason or another, be able to negotiate an unusually low price for the benefits in the open market eg he could be a particularly active and prestigious client, so the provider of the benefits would hope for repeat business; or the service providers reputation and goodwill would be enhanced by it being known that he had acted for that client. In my view, in such a case, the very fact that the particular defendant would be able to negotiate a lower price in the open market provides the answer: if it was shown that the market would have appreciated that factor and would have been likely to take it into account, then the market value should reflect it. (Lord Reed gives some instructive and colourful examples in paras 101, 102, 105 and 106). One should not ignore objective characteristics of one or both of the parties, which would be known to, and taken into account by, the market, when assessing market value, at least in the instant context. The claimant as a provider of the benefits, would, by the same token, be able to seek more, on a market value basis, if he had a particular expertise or experience, provided that he could show that that was a factor which would have been appreciated by the market and could have been expected to be reflected in the market for the particular benefits in question. Subjective devaluation Having identified the prima facie position, the next stage in the argument involves addressing the proposition that the quantum meruit should be reduced in a case where the defendant establishes that, for one reason or another, the benefits provided by the plaintiff were worth less to him than the open market value; in other words, where the subjective value of the benefits to the defendant in the particular case is less than the objective, market, value. This proposition, known as subjective devaluation, is treated by most academic writers as being correct see eg per Burrows op cit, section 34.2, Goff & Jones op cit, paras 4 06 to 4 11 and 6 69, Virgos Principles op cit, p 98, and Birks, op cit, pp 52 63. However, others, notably Edelman and Bant in Unjust Enrichment in Australia (2006, p. 108), appear to challenge the whole notion of subjective devaluation, primarily on the basis that the enquiry into whether the defendant desired the receipt of the benefit should be objective, referring to Deane Js description of the issue as one of constructive acceptance of a benefit by a defendant: see Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221, 256 257 and Foran v Wight (1989) 168 CLR 385, 438. There is some judicial support for subjective devaluation in Ministry of Defence v Ashman (1993) 25 HLR 513, 519 520, a case concerned with damages for trespass, where Hoffmann LJ (whose reasoning was adopted by a subsequent Court of Appeal in which he sat in Ministry of Defence v Thompson (1993) 25 HLR 552, in a passage cited by Lord Clarke at para 24) specifically referred to subjective devaluation with approval. He explained that a benefit may not be worth as much to the particular defendant as to someone else. In particular to a defendant who has not been free to reject it. To describe a former tenant who remains in occupation of the premises as a trespasser in this way may, I think, be questionable in this context: the former landlord has not voluntarily conferred any benefit on him. I share Lord Reeds view expressed at para 136 that this is not the occasion to consider that question further. The speeches of Lord Hope and Lord Nicholls in Sempra Metals [2008] AC 561, paras 49 and 118 119 respectively, at first sight provide some support for subjective devaluation in an unjust enrichment case, although that case was concerned with payment of money by mistake. However, as Lord Clarke says at para 22, Lord Reeds analysis at paras 126 131 convincingly establishes that the analysis, and indeed the conclusion reached, in those speeches are both consistent with a market valuation approach, in line with what he says in paras 101 106 (and with what I say in para 184). In my view, it may well be that, in some cases of unjust enrichment, subjective devaluation could be invoked by a defendant to justify the award of a smaller sum than that which would be prima facie payable, namely a sum based on the market value of the benefits conferred on him. Lord Clarke discusses the question in paras 18 26, and Lord Reed does so in paras 110 118. Lord Clarke adopts a so called subjective devaluation approach, which involves a two stage process, at the second stage of which the defendant may deny that the benefit conferred on him was worth as much as its market value, and leaves it to the court to decide on the facts whether he can justify such a subjective devaluation, and if so to what figure. Lord Reed, on the other hand, tends to favour a so called choice of benefit approach, which concentrates on whether the defendant was in some way responsible for the conferment of the benefit, and deals with the question of value as part of a holistic question of enrichment. Given that it is unnecessary to do so, I would prefer to express no concluded view as to which approach is correct. I can see attractions and problems in each of the two approaches, and it appears that there are even differing views as to what each approach entails or should entail. Broadly speaking, the subjective devaluation approach has the attraction of making the defendant pay for the benefit in so far as it has improved his position, but it may involve a greater risk of letting the defendant name his price. The choice of benefit approach has the merit of greater simplicity in some cases, but it may be more likely to lead to a defendant receiving what many might regard as a windfall at the expense of the claimant, in circumstances where the defendant would (or, on some views, should) have been prepared to pay for the benefit. I suspect that in the great majority of cases where unjust enrichment is raised these two approaches will lead to the same result. Indeed, the difference between the two approaches may turn out to be one of procedural analysis rather than outcome, particularly given what Lord Clarke says at para 26 and Lord Reed says at para 138. Whether that is right or wrong, where, as in this case, there is no doubt that the benefit was conferred at the defendants request, or with his prior consent, it is hard to see how the two approaches would lead to different results. In particular, on either approach, I do not consider that subjective devaluation would be open to a defendant in a case such as the present, where, in the context of an arms length commercial relationship, he voluntarily accepted the benefits, and said nothing to the claimant, before the benefits were conferred, or even while the benefits were being conferred, to suggest that they would be worth less than their market value to him, or that he expected to pay less than market value. This was a case of a claimant conferring a benefit on a defendant who was not merely free to reject it, but who positively encouraged the claimant to provide it, and who did so without ever suggesting that he would not pay the market value, or that the benefit would have limited value to him. Assuming subjective devaluation is available in some cases, it would, in my view, require a very unusual case indeed before a defendant could rely on subjective devaluation where (i) the services were provided at the defendants request or by agreement between the parties, (ii) either the request or agreement failed in some way to have legal effect, or it had no effective basis for quantifying the remuneration to be paid to the claimant, (iii) the defendant never gave the claimant to understand that the services had a lower than market value to him, or that he was not prepared to pay market value for them, and (iv) the claimant never gave the defendant to understand that he expected to be paid less than the market value. I am not prepared to say that subjective devaluation could never be relied on in such circumstances, but, as presently advised, I find it impossible to conceive of a case which includes these features where it could. Equally, where the defendant can return the benefit, it seems hard to justify a departure from market value, if he chooses not to return it as in Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2775. On the other hand, in some other circumstances, most obviously the classic case of an unreturnable benefit being conferred on a defendant without his prior or contemporaneous consent or knowledge, there is obvious force in the argument that, once he has paid the claimant a sum equal to what the benefit is worth to him, the enrichment he has gained thanks to the claimant cannot be unjust. Equally, in some cases, it may often be unreasonable for a claimant to claim a market based payment, when he has taken the risk of providing benefits to a defendant without the protection of a contract specifying how his remuneration is to be quantified, or where there have been prior discussions and the defendant has indicated that he would not be prepared to pay as much as the market price for the benefit. It would seem wrong, at least in many such cases, for the claimant to be better off as a result of the law coming to his rescue, as it were, by permitting him to invoke unjust enrichment, than he would have been if he had had the benefit of a legally enforceable contractual claim for a quantified sum. However, I would expressly leave open how far the personal tastes, or even the eccentricities and idiosyncrasies, of a defendant can be taken into account when assessing the subjective value a point which would be of some potential relevance in this case if subjective valuation had been a maintainable argument see para 179 above. As a general proposition, I would have thought that the more personal, and in particular the more objectively dependent on personal taste, a particular benefit is, the more powerful the case for giving great weight to the defendants particular priorities and preferences. I should add that, not least for this reason, I agree with Lord Clarke and Lord Reed that the expression subjective devaluation may not be a happy one. Subjective revaluation Of course, Mr Benedetti is not seeking to rely on subjective devaluation in this case. However, it is a step in his argument. Having concluded that (i) the prima facie basis of assessing a quantum meruit payment in an unjust enrichment case is by reference to the market value of the benefits, and (ii) in some cases, it may be open to the defendant to reduce the sum otherwise payable by relying on subjective devaluation, the final question is whether it is open to the claimant in this case to rely on subjective revaluation. In other words, is it open to a claimant, as Mr Benedetti contends it is, to recover more than the market value of the benefits where the value of the benefit to the defendant is greater than the market value of the benefits? There is a seductive simplicity in the contention that, if a defendant can take advantage of subjective devaluation, then a claimant should be able to take advantage of a subjective revaluation. That is a contention which receives a degree of support from some academic writers. Thus, Virgo acknowledges that subjective revaluation could be said to follow logically and for reasons of consistency from subjective devaluation in his Principles op cit p 64. However, in his Restatement, op cit p 158, Professor Burrows says that [t]he correct view is probably that, without a valid contract, the claimant should not be entitled to an overvaluation. The same view appears to be taken in Goff & Jones op cit, para 4 11 (and see paras 6.63 6.74), although the arguability of the contrary view is acknowledged. In my view, while, once again, this is not the occasion to lay down firm rules, I find it difficult to think of circumstances where subjective revaluation would be available to a claimant in an unjust enrichment claim to increase the quantum meruit above the open market value of the benefits he has conferred on the defendant. Even assuming that subjective devaluation is available to a defendant in some cases, it does not follow that subjective revaluation should be available to a claimant, and, if it is, it appears to me that it would be more difficult to establish than subjective devaluation. A closer analysis of the two situations indicates that part of the argument which supports subjective devaluation actually helps negative, rather than support, the case for subjective revaluation. Where a benefit is conferred on a defendant by a claimant, it would, at least in the absence of special circumstances, be hard to describe the defendants consequent enrichment as unjust if he pays the claimant the market value of the benefit. Viewing the matter from the other perspective, if the defendant could have gone into the market and purchased the benefit for the sum which he has to pay the claimant, it is hard to see what injustice there could be to the claimant if he cannot claim any more, whichever of the two approaches briefly summarised in para 187 above one adopts. In many cases where the benefit has a special, higher, value to the defendant, it will by no means be clear that, if the parties had agreed a contractual quantification of the claimants remuneration, that factor would have been taken into account. That is particularly true given that one is considering cases where the reason the benefits would have a special value to the defendant would not be known to the market or would not be reflected in the market value see para 184 above. It would, at least in general, be surprising if a claimant could obtain more by pursuing an unjust enrichment claim, which can be said to involve the law coming to his rescue because, for one reason or another, he does not have the benefit of a contractual claim, than he would have been likely to receive if he had had the benefit of a legally enforceable contractual claim. This argument, which appears to help to undermine subjective revaluation, is the mirror image of an argument which seems to me to help to justify subjective devaluation see para 192 above. A possible exception to the rule that a claimant cannot claim subjective revaluation may be where the defendant has led the claimant to believe that he will be prepared to pay more for the benefits than the market value, and the claimant reasonably and foreseeably relies on that indication. However, the claimants case in such circumstances may, on analysis, be said to involve an overlay of estoppel on top of, or even a contractual claim in lieu of, his claim in unjust enrichment. Even if subjective revaluation is available in some unjust enrichment claims, it seems to me clear that it should not be available in a case such as this, where (i) the Services were provided voluntarily by the claimant with the agreement, or at the request, of the defendant, (ii) the request or the agreement failed in some way to have legal effect, or it had no effective basis for quantifying the remuneration to be paid to the claimant, (iii) prior to the Services being provided, the defendant never gave the claimant to understand that the Services had a higher than market value to him, or that he was prepared to pay more than the market value for them, and (iv) prior to the Services being provided, the claimant never gave the defendant to understand that he expected to be paid more than the market value. Conclusion on the first issue Accordingly, in agreement with Lord Clarke, Lord Reed and the Court of Appeal, I conclude that the sum to which Mr Benedetti is entitled by way of quantum meruit, based on unjust enrichment, is 36.3m, rather than the 75.1m determined by the Judge. I would accordingly dismiss Mr Benedettis appeal. That means that the cross appeal must be addressed. The second issue: the extent to which the quantum meruit should be reduced The nature of the issue Mr Sawiriss case on the cross appeal is simple. It is that (i) Mr Benedetti is entitled to a quantum meruit of 36.3m for the Services which he provided for Mr Sawiris; (ii) following first closing, he was paid far more than that, namely 67m; (iii) accordingly, even before he began these proceedings, he had received more than he was entitled to; and (iv) therefore his claim should have been dismissed. That argument was rejected by the Judge on grounds which the Court of Appeal held were open to him. The Judges reasoning may be summarised in the following propositions: (i) the 67m was paid to ITM, Mr Benedettis company, for brokerage services under the revised brokerage agreement; (ii) the scope of those brokerage services under that agreement, as a matter of construction, only covered (what on a view generous to Mr Benedetti was) 60% of the Services (ie the total Services which he provided); accordingly (iii) the 67m included a payment in respect of 60% of the Services; so that (iv) the quantum meruit of 36.3m should be reduced by 60%; resulting in (v) an award of 14.52m, if the 75.1m were left out of account. Mr Benedettis case is primarily that any attempt on the part of Mr Sawiris to attack the Judges analysis and conclusion is bound to fail because, properly analysed, it is an appeal against a finding of fact, and, indeed, a finding of fact which the Court of Appeal upheld. I would accept that the Judges findings of primary fact should be interfered with only in exceptional circumstances, on the very well established ground that such issues are best left to the trial judge, I especially when his conclusions have been upheld by the Court of Appeal. would also accept that many of the Judges inferences from primary fact should not be interfered with for very similar reasons. Thus, if he was right in his conclusion that the revised brokerage agreement should be accepted at face value and that it covered some, but not all, of the Services which Mr Benedetti provided to Mr Sawiris in terms of introducing Mr Sawiris to the possibility of acquiring Wind and negotiating the sale and purchase agreement, then we should not interfere with the conclusion that it covered 60% of the Services. The very fact that this assessment had to be no more than a rough and ready assessment is a good reason for leaving it to the trial judge: having considered, read and heard oral and documentary expert and factual evidence over more than thirty days, he was in a far better position to make such an assessment than an appellate court. However, that is not the basis on which Mr Sawiris attacks the Judges conclusion. He puts his case in two ways. First, he contends that the Judge should have concluded that the terms of the revised brokerage agreement were irrelevant because the payment of 67m was not really attributable to that agreement. Alternatively, he says that, if, as the Judge found, the revised brokerage agreement did apply, then, properly construed, it covered all aspects of the Services which Mr Benedetti provided to Mr Sawiris. I shall consider those two arguments in turn. Was the 67m attributable to the revised brokerage agreement? Mr Sawiriss basic submission under this head is that (i) the 67m which Mr Benedetti was paid had, in reality, nothing to do with any Services he supposedly provided under the first brokerage agreement or the revised brokerage agreement, but (ii) it was a payment which Mr Benedetti engineered for his own benefit as a result of being involved in the acquisition of Wind, and to which he was not entitled, so in these circumstances (iii) Mr Sawiris is entitled to have it taken into account on the determination of how much is to be paid to Mr Benedetti for the Services, and, accordingly, (iv) as the payment exceeds the quantum meruit to which Mr Benedetti would otherwise be entitled to be paid, he should receive nothing. In this connection, it is necessary to look at the findings which Patten LJ made about the first and revised brokerage agreements and the payment of the 67m in a little more detail. At [2009] EWHC 1330 (Ch), para 334, the Judge described the creation of the first brokerage agreement in this way: On 24 March [2005] Mr Benedetti responded to the prospect of Mr Rosss and IPEs departure from the transaction by using the opportunity presented by his appointment as director of Weather [Investments] and the transfer of shares to procure two agreements for his own benefit without the prior approval of Mr Sawiris and without disclosing to him or Mr Abdou the fact that he would receive a substantial fee from the transaction. [T]he payment of a brokerage fee in addition to the shares received under the acquisition agreement was not a term of that agreement or part of the alleged Understanding and the first brokerage agreement gave Mr Benedetti the security of a payment out of the transaction that was not dependent on any agreement with Mr Sawiris about the terms of his remuneration or on IPE remaining involved in the transaction so as to give him a return under the collaboration agreement. The assignment of the rights and liabilities of Weather Investments under the first brokerage agreement to Weather Italy was effected, without the knowledge of Mr Sawiris or Mr Abdou, by Mr Benedetti two months later, on 26 May 2005, the day on which the sale and purchase agreement was executed. Accordingly, Mr Sawiris and Mr Abdou were unaware of the existence of a potential contractual claim by Mr Benedetti or his companies until after 26 May 2005. The first time Mr Sawiris or Mr Abdou had any sort of notice of such a claim was at the end of July 2005, when Mr Abdou received details of all the fees to be paid in anticipation of first closing. This included 87m payable to ITM, which was reduced to 67m as Mr Sawiris thought it was too high. There was a dispute at trial as to the purpose to which Mr Benedetti led Mr Abdou and Mr Sawiris to understand that this money would be put. The Judge reached this conclusion at [2009] EWHC 1330 (Ch), paras 432 433: It seems clear that Mr Abdou originally understood that the 87m figure was not intended as a payment to Mr Benedetti for his brokerage services but was to be used to discharge his liabilities to third parties. [Mr Benedetti led] Mr Abdou and Mr Sawiris to believe that the money was to be used to pay third parties who had assisted in the transaction. But when Mr Benedetti was asked to identify precisely who was going to receive the money he did not answer. Mr Sawiris said that this caused him to have doubts about the story that the money was needed to pay third party advisers but that as he intended to reward Mr Benedetti for his efforts and owed him money, he was content to let the 67m be paid and to sort it out later. Mr Benedetti says that he therefore agreed to reduce the payment from 0.7% (87m) to 0.55% (67m). He then arranged for the revised brokerage agreement to be prepared which was identical in terms to the first brokerage agreement except for the fee. [T]his Agreement was executed in July or August but backdated to 26 May. Information as to what then happened to the 67m is very limited. At [2009] EWHC 1330 (Ch), para 434, the Judge said that Mr Benedetti was cross examined about [the 67m] and accepted that part of the money was spent on items such as antique candlesticks which were used to furnish his office. He continued by saying that, although this has a certain resonance with other recent events, there is, as [Mr Benedettis counsel] pointed out, no counterclaim for the recovery of these sums on the grounds that they were in some way misappropriated and the issue of expenses is not, I think, ultimately relevant to what I have to decide. In the light of the Judges conclusions in the passages I have set out above, it seems to me that the argument advanced on behalf of Mr Sawiris on this issue is correct. In summary, the position appears to me to be as follows. (i) The 67m was received by Mr Benedetti, or at least a company wholly owned by him, either for nothing or for the very benefits which he had conferred on Mr Sawiris, namely the Services; (ii) I do not consider that anything which passed between Mr Sawiris and Mr Benedetti calls that conclusion into question; (iii) if the 67m was received for nothing, then, particularly as it was obtained as a result of Mr Benedettis involvement with the very transaction for which he provided the Services and for which he claims quantum meruit, it must be set off against that quantum meruit; (iv) if, on the other hand, the sum was received for the Services, then a fortiori it must be set off against the quantum meruit; (v) whether (iii) or (iv) is correct, as the quantum meruit to which he was entitled, according to the Judges analysis (as adjusted by the Court of Appeal), was less than the sum of 67m, his claim must be dismissed. It is appropriate to examine those conclusions in a little more detail. The Judges analysis of the circumstances in which the first brokerage agreement was executed, as quoted in para 207 above, is important not merely because it shows that Mr Benedetti concealed the creation of that agreement from Mr Sawiris. It is also important because it shows that the purpose of the agreement was to enable Mr Benedetti to obtain the security of a payment out of the transaction and a payment which was not dependent on any agreement with Mr Sawiris about the terms of his remuneration or on any other contingency. It seems to me very hard to argue against the proposition that this means that the purpose of the first brokerage agreement was to ensure that Mr Benedetti got at least something for the Services he had agreed to provide. There is nothing in the findings of the Judge to suggest that he was envisaging that he would be paid for something different. It is true that the Judge was saying that Mr Benedetti was seeking to insulate himself against the loss of other possible sources of income, resulting from IPE and Mr Ross pulling out, or under the alleged understanding, but that cannot assist Mr Benedetti. IPE and Mr Ross did pull out, and he therefore had no claim to anything in that connection, and, as the Judge found, the alleged understanding never existed. If the purpose of the first brokerage agreement was not to provide a basis for ensuring that Mr Benedetti was paid something for the Services when a transaction in relation to Wind eventuated, it seems to me that it can only have been a sham document prepared for the purpose of extracting money from the transaction, because, if the brokerage services therein referred to were not the Services for which Mr Benedetti should receive a quantum meruit, there seem to have been no other Services to which they could refer. The next stage is the assignment on 26 May 2005, which was also effected by Mr Benedetti without Mr Sawiris or Mr Abdous knowledge. Other than confirming the secret nature of the whole brokerage arrangement, that takes matters no further. One then gets to late July and early August 2005, when the existence of a possible contractual claim came to light, and the purpose of what was originally the 87m was discussed. It seems to me that Mr Benedetti misled Mr Sawiris as to the purpose of the 87m (which was reduced to 67m in those very discussions). He said that it was to pay third parties, but in my view that cannot be accepted, in the light of the following points, which have particular force, given that the onus must be on Mr Benedetti to establish that the 67m was paid out to third parties: (i) the absence of any reliable evidence from Mr Benedetti as to the identity of the alleged third parties; (ii) the absence of any evidence of any specific payment having been made to any third parties; (iii) the purpose of the agreement as described by the Judge in the passage quoted at para 207 above; (iv) Mr Benedettis rejected contention that there was the alleged understanding, which would have entitled him, not third parties, to brokerage; and (v) the Judges admittedly laconic finding as to what happened to the 67m, as quoted in para 210 above. Even if (which appears unlikely) any significant proportion of the 67m went to third parties, I find it impossible to accept, on the evidence at trial and on the Judges findings, that Mr Benedetti did not retain the lions share ie much more than half, and, crucially, more than the 36.3m to which he was entitled by way of quantum meruit. I do not consider that the fact that Mr Sawiris may have had doubts as to whether the 67m was going to third parties can possibly assist Mr Benedetti on this issue. It has not been suggested that the 67m was intended to be a gift to Mr Benedetti. In so far as it was not going to third parties as Mr Benedetti had said, it seems to me that the 67m was probably viewed by Mr Sawiris as a payment on account for the Services (and hence he was prepared to sort it out later). If that is the right analysis, then one is led straight back to the point raised by the appeal, namely that the correct measure for the quantum meruit is objective market value, not some species of subjectively revalued value. Apart from the actual payment of the 67m, the only other relevant fact was the execution of the revised brokerage agreement. Neither of these events takes the matter much further, save that the fact that Mr Benedetti found it relatively easy to agree to such a significant reduction in the sum payable under the revised brokerage agreement provides mild support for the notion that it was to be retained by him rather than being payable to third parties. The Judge decided that the payment of the 67m under the revised brokerage agreement was, in the light of the definition of brokerage services in that agreement, partly, but only partly, in respect of the Services supplied by Mr Benedetti. The Court of Appeal agreed with the Judge or at least considered that the Judge was entitled to reach that conclusion. But, as I see it, that approach was wrong because it treated the revised brokerage agreement as representing the basis upon which Mr Sawiris agreed that ITM should be paid 67m. However, in the first place, the Judge had already reached his conclusions described and discussed in paras 213 214 above, which amounted to finding that, giving it the explanation that is the most creditable from Mr Benedettis point of view, the revised brokerage agreement, reflecting the first brokerage agreement, was to protect his claim for a quantum meruit. Secondly, although the revised brokerage agreement was a document which, on its face, did justify the payment, the truth is that, as explained and discussed in paras 209 and 213 above, the payment was only authorised and agreed by Mr Sawiris after he had been told by Mr Benedetti that it was to reimburse third parties, whereas Mr Benedetti kept at least most of it, and probably all of it. Thirdly, over and above these two points, I agree with what Lord Clarke says in paras 74 77, namely that, despite the Court of Appeals approval, it was, on analysis, inappropriate and arbitrary to apportion the remuneration in the way that the Judge did. In the Court of Appeal, Arden LJ relied on the fact that there was no counterclaim for the 67m. But I do not see that as a problem. The fact that Mr Sawiris did not allege that Mr Benedetti had been paid too much does not preclude him from contending that Mr Benedetti had, at its lowest, been paid enough to satisfy his quantum meruit claim. Another point touched on by Arden LJ was that the brokerage agreements were between ITM and Weather Italy, whereas the Services were negotiated, and were treated as being provided, as between Mr Benedetti and Mr Sawiris. I accept that a court must be very wary of treating companies as if they were the individuals who own or control them see Salomon v A Salomon and Co Ltd [1897] AC 22 and Prest v Prest [2013] UKSC 34, [2013] 3 WLR 1. However, properly analysed, it seems to me that Mr Benedetti and (in so far as he was aware of the involvement, or even existence, of ITM) Mr Sawiris were treating Mr Benedettis right to compensation from Mr Sawiris as satisfied by the obligation of Weather Italy, a company owned and controlled to a significant extent by Mr Sawiris, to ITM, a company owned and controlled by Mr Benedetti. That would appear to follow from the Judges explanation of Mr Benedettis thinking behind the execution of the first brokerage agreement (see para 207 above), and Mr Sawiriss approach to the payment of the 67m (see para 209 above), as well as being inherent in the 60% reduction to the 36.3m quantum meruit made by the Judge and approved by the Court of Appeal. Etherton LJ also made the point that the fact that Mr Benedetti had executed the first brokerage agreement, the revised brokerage agreement (and the assignment of the first brokerage agreement) for both parties did not invalidate those agreements. While I agree with that as far as it goes, it does not go very far in answering the points which can, for the reasons given above, be validly made by Mr Sawiris in support of his cross appeal. The interpretation of the revised brokerage agreement The alternative argument raised by Mr Sawiris is that, even on the Judges approach, the payment of the 67m was a payment in respect of all the Services which Mr Benedetti had provided. That argument turns on whether the definition of Brokerage Services in the revised brokerage agreement extended to all the Services provided to Mr Sawiris by Mr Benedetti. The expression Brokerage Services is defined as meaning the effecting of transactions of and/or relating to the purchase of and dealing in Securities in the name and for the account of [Weather Italy] as well as the assistance in the negotiation with the prospective seller, raising of acquisition debt and further raising of financial debt for Wind. It is said on behalf of Mr Sawiris that the Judge did not make it quite clear in his judgment which aspect or aspects of the Services provided by Mr Benedetti was or were not included in that definition. However, I think Etherton LJ was right at [2010] EWCA Civ 1427, para 160, to say that the Judge clearly accepted Mr Benedetti's argument that the definition did not include bringing the investment opportunity to Mr Sawiris or obtaining the co operation of the Italian government and the management of Wind. The question is whether Etherton LJ was right to add this was a finding [which] cannot properly be criticised. I accept that, on a literal, relatively narrow, approach to the definition of brokerage services, it would not include introducing Mr Sawiris to the possibility of purchasing Wind, which can fairly be said to be an action which occurred before the activities covered by the definition. However, the revised brokerage agreement must, like any document, be construed contextually, and there obviously is an argument that the definition can and should be interpreted relatively widely to extend to all the Services which Mr Benedetti provided, in the light of the purpose which he had in mind when executing the first brokerage agreement see para 207 above. However, the conclusion I have reached on Mr Sawiriss first argument to support his cross appeal renders it unnecessary to consider this alternative argument, and I do not think that it is right to decide it. First, the extent of the definition under scrutiny is not a point of any general importance. Secondly, given the somewhat artificial circumstances in which the first brokerage agreement was executed, it is not easy to identify the factual matrix. Thirdly, there could be difficult questions to be resolved eg (i) is everything in Mr Benedettis mind at the time of execution admissible, as he signed on behalf of both parties, and (ii) must the meaning of the terms in the revised brokerage agreement be the same as in the first brokerage agreement. Fourthly, the issue was not the subject of much argument before us. Conclusion Accordingly I have reached the conclusion that, in agreement with Lord Clarke and for much the same reasons, I would dismiss Mr Benedettis appeal, and allow Mr Sawiriss cross appeal. It therefore follows that Mr Benedettis claim is dismissed. |
The narrow question raised by this appeal is whether, during the period 1 October 2002 to 5 December 2005, the takings on a particular category of machines (the disputed machines) operated by the appellants (Rank) were subject to VAT. The answer depends on whether the takings resulted from the provision of a gaming machine as defined in Note (3), more particularly whether for the purposes of that definition the element of chance in the game was provided by means of the machine. If not, the takings were exempt. The question comes to this court by a somewhat oblique route. On 21 December 2005 Rank made a substantial claim for repayment of tax (a net figure of more than 25m) for that period. That was on the basis of differences between the treatment between takings from the disputed machines, assuming they were exempt, and those from other similar machines which were taxable, thereby infringing the EU law principle of fiscal neutrality. The long and complex procedural history by which that claim has been litigated in the domestic and European tribunals and courts was sufficiently summarised by Rimer LJ in the Court of Appeal (paras 5 8, 50 52), and need not be repeated. The Court of Appeal answered the present question in favour of HMRC. Rank appeals with permission of this court. The disputed machines The disputed machines were all slot machines used for gaming. Traditionally such machines are coin operated, with three or more mechanical or video reels which spin when a button is pressed or, in the case of older machines, when a handle is pulled. The machine typically pays out according to the patterns or symbols on the machine when it stops. The basic form of the machines is sufficiently described in the agreed statement of facts, based on the findings of the VAT and Duties Tribunal: the hardware of a slot machine consists of a cabinet containing the electronic control board, power supply coin insert and pay out mechanisms, reels and/or video screens and cashboxes. The electronic control board is an embedded microprocessor control system that generates the winning and losing games and displays the results to the player via the reels, lamp displays or video screens. The machines software is a list of instructions that the processor executes in order to generate the winning or losing games. Such software is controlled either by embedded software that is controlled or random or by a remote random number generator. RNG (for random number generator) is used to describe the system for producing numbers for the machine's software, whether the system is embedded in that software or provided by means of another device. As is apparent from that description, and was explained in evidence, modern machines are entirely computerised: In modern slot machines, the reels and lever are present for historical and entertainment reasons only. The positions the reels will come to rest on are chosen by an embedded RNG contained within the machines software. The RNG is constantly generating random numbers, at a rate of hundreds or maybe thousands per second. As soon as the lever is pulled or the Play button is pressed, the most recent random number is used to determine the result. This means that the result varies depending on exactly when the game is played. A fraction of a second earlier or later, and the result would be different. (quoted by Rimer LJ, para 26) Much evidence was given about the development from the 1960s of different forms of gaming equipment, including for example bingo machines and fixed odds betting terminals, and in particular the development of different forms of RNG. This evidence was illustrated by photographs of different types of system from commercial brochures of the time. The evidence was described at some length by Rimer LJ, and again it is unnecessary to repeat it. For present purposes the significant points are the development, and (from the late 1970s) the commercial use, of RNGs in conjunction with different types of gaming equipment; and from about 2003 the development of multi machine products, with a single RNG serving a number of playing terminals. As Rimer LJ noted (para 24) it has always been common ground that the definition of gaming machine in note (3) is satisfied by at least one form of slot machine: that is the type of machine in which the element of chance was provided by an electronic or mechanical component within, and forming an integral part of, the body of the machine. The debate before the tribunal turned on the treatment of different forms of system using RNGs, either single terminal RNGs or multi terminal RNGs. As Rimer LJ explained (paras 31 35) the tribunal made findings on certain forms of single terminal RNGs. They included RNGs hanging by a wire from the terminal, or velcroed to the wall directly behind the machine or screwed to the wall (Rimer LJs category 1); or contained in a separate plinth on which the terminal stood, and linked to the terminal by a wire passing through a hole in the bottom of the terminal cabinet (category 2). The tribunal concluded (paras 54 56; summary of conclusions para 2) that terminals constructed with dedicated RNGs were gaming machines within note (3) where the RNG was used with the machine whether or not the RNG had been detached, although they observed that the position might have been different if the cable could be unplugged, the RNG did have an independent power source and was ordered and supplied separately (para 55). The machines in issue in the present appeal are all multi terminal systems. As Rimer LJ explained (paras 36 39) the evidence referred to three different types of system (his categories 3(a) to (c)), but the differences are not material for present purposes. It seems that in each case the RNG was connected by a wire to the playing terminals, but had its own power supply, and it might be housed in a separate box or hung on the wall. Up to six terminals might be served by a single remote RNG. Further, according to evidence summarised in the agreed statement of facts (para 20), each terminal was designed to be used with the RNG obtained from the manufacturer of the terminal, the terminals and RNGs were sold together, and each RNG was manufacturer specific so that a replacement if needed would have be obtained from the same manufacturer. Though linked to a single RNG, each terminal could be operated independently and could offer the same or different games as the operator wished. The legislation The Finance Act 1972, which introduced VAT to the United Kingdom, provided in Schedule 5 for certain exemptions. They included Group 4 Betting, Gaming and Lotteries, defined in these terms: Item no. 1. The provision of any facilities for the placing of bets or the playing of any games of chance. 2. The granting of a right to take part in a lottery. The general effect of this provision, which remained unamended until 1 November 1975, was to exempt from VAT the takings of all machines used for gaming. Note (1) to item 1 made three exclusions (a), (b) and (c) not relevant to the present dispute. Note (2) provided that game of chance had the same meaning as in the Gaming Act 1968. With effect from 1 November 1975 the notes to item 1 were amended by the Value Added Tax (Betting, Gaming and Lotteries) Order 1975 (the 1975 Order), subsequently consolidated into the Value Added Tax (Consolidation) Order 1976 (SI 1976/128). By a new paragraph (d) to note (1), it was provided that item 1 would not apply to the provision of a gaming machine, that term being defined by note (4): (4) Gaming machine means a machine in respect of which the following conditions are satisfied, namely it is constructed or adapted for playing a game of chance (a) by means of it; and (b) a player pays to play the machine (except where he has an opportunity to play payment free as the result of having previously played successfully), either by inserting a coin or token into the machine or in some other way; and (c) of the machine. the element of chance in the game is provided by means It is common ground that the disputed machines fall within (a) and (b) of the definition, the area of disagreement being confined to (c). Subject to minor amendments, including that what had previously been note (4) became note (3), the exemption and the exclusions remained unchanged until 6 December 2005. With effect from that date, note (3) was amended by article 2 of the Value Added Tax (Betting, Gaming and Lotteries) Order 2005 (SI 2005/3328) in a way which left no doubt that takings from the disputed machines were thenceforth taxable. Gaming Act comparisons The concept of an element of chance provided by means of the machine can be traced back to Part III of the Gaming Act 1968, which applied to Gaming by Means of Machines. For this purpose, section 52 defined machine as including any apparatus. Section 26 provided, so far as material: 26 (1) This Part of this Act applies to any machine which (a) is constructed or adapted for playing a game of chance by means of the machine, and (b) has a slot or other aperture for the insertion of money or moneys worth in the form of cash or tokens. (2) In the preceding subsection the reference to playing a game of chance by means of a machine includes playing a game of chance partly by means of a machine and partly by other means if (but only if) the element of chance in the game is provided by means of the machine. (Emphasis added) The significance of the definition in that context was in identifying the different forms of regulatory control to be applied. Part II of the 1968 Act applied to gaming on licensed premises, other than gaming by means of a machine to which Part III applied. Section 21 provided for the regulation of machines not falling within the Part III definition; hence the expression section 21 machines, used in the evidence and the judgments below. By contrast, the main regulatory provisions for Part III machines were in sections 31 to 34 of the Act. The appellants place reliance in particular on section 31, which contained restrictions on the use of such Part III machines on premises licensed or registered for the purpose. Section 31(2) and (3), as originally enacted, provided: (2) Not more than two machines to which this Part of this Act applies shall be made available for gaming on those premises. (3) The charge for play for playing a game once by means of any such machine on the premises shall be a coin or coins inserted in the machine of an amount not exceeding (or, if more than one, not in the aggregate exceeding) one shilling or such other sum as may be specified in an order made by the Secretary of State for the purposes of this subsection. Reference has also been made to section 37(1) which gives the Secretary of State a general power to impose such restrictions as he may consider necessary or expedient on the sale, supply ,maintenance or use of machines to which Part III applies. There was substantial evidence before the tribunal and the courts discussing the treatment (not always consistent) of various categories of machine by the regulatory authorities under the 1968 Act at different times. There was evidence of guidance issued by HMRC which related the tax treatment of different forms of equipment to its treatment under the 1968 Act. For example, guidance issued in January 2005 proceeded on the basis that section 21 gaming terminals were not gaming machines, as defined for either regulatory or tax purposes, because the element of chance is not provided by the terminals themselves but by a RNG which is outside the machine. That stance is clearly inconsistent with the position taken by HMRC in the present appeal, but it is not suggested that this is in any way determinative. Some help as to the meaning of the critical expression as understood in the mid 1970s, when the exclusion was drafted, can be taken from the well known description by Lord Denning MR of games of prize bingo in R v Herrod, Ex p Leeds City District Council [1976] 1 QB 540, p 558D H: I expect that everybody knows ordinary bingo. It is played at bazaars, sales of work, and so forth, for small prizes and is perfectly lawful. Now prize bingo is like ordinary bingo, but played with sophisticated apparatus. Instead of cards with numbers on them, there are dials facing the players. A player puts in a coin (5p for two cards). Thereupon two dials light up showing numbers corresponding to two cards. When the game starts, instead of someone drawing a number out of a hat, a machine throws a ball into the air. A gaily dressed lady plucks one of them and calls out the number. If it is one of the numbers on the dial, the player crosses it out by pulling a cover over it. If he gets all his numbers crossed out correctly before the other players, he gets a prize. This is obviously a lottery or a game of chance, but it is not a gaming machine because the element of chance is not provided by means of the machine but by means of the gay lady: see section 26(2) of the Gaming Act 1968. 15. In some of these premises there are also some one armed bandits. These are gaming machines. The player puts in a coin. This enables him to pull a handle to forecast a result. Cylinders revolve and give an answer. If he succeeds, he gets the winnings. If he fails, he loses his money. This is undoubtedly a gaming machine because the element of chance is provided by means of a machine: see section 26(1) of the Act of 1968 The contrast there drawn is between an element of chance provided by machinery within the device itself, and one provided by an outside agency of some kind. That approach may have been readily applied to the relatively simple types of equipment then in use. However, it is of little assistance in applying the statutory words to the more sophisticated forms of gaming device later developed. The decisions below and the arguments on the appeal It is not in dispute that in respect of all the potential comparators, whether multi terminal or single terminal, the element of chance was provided by the RNG. In the case of slot machines it is clear that the machine to which Note (3)(b) refers was the terminal into which the coins or tokens were inserted. If the conditions in (b) and (c) were both to be satisfied both the terminal and the RNG had to refer to the same machine. The use of the definite article before the word machine in (b) and (c) makes this clear. Indeed condition (a) had to be satisfied also. Where the RNG was situated inside the terminal so as to be an integral part of it, we have no doubt that the RNG and the terminal formed part of a single machine 53. Where the RNG was situated outside the terminal and served a number of terminals we conclude that the terminals were not gaming machines because the RNG was not part of any terminal and the element of chance was not provided by means of the machine containing the slot. We do not consider that the language of Note (3) was apt to cover a series of terminals linked to one RNG. The result is that by reason of Note (1)(d) to Group 4 the provision of gaming facilities by multi terminal products was exempt as a matter of law. In the High Court Norris J agreed with their approach. He said: The argument proceeded on the footing that the element of chance had to be provided by the machine and the problem lay in identifying the machine. The element of chance is the determining event which governs the outcome of the game being played on the machine which has the slot in it and which the player is playing. Where the determining event is a random number there is I think no difference in principle between a human being selecting a numbered ball, an electric ball shuffler (such as that used in the National Lottery) producing a numbered ball or a microprocessor emitting a stream of numbers. It is a question of fact in each case whether that determining event is produced by the machine, and fine distinctions might have to be drawn. In my judgment the principle by reference to which those judgments have to be made is whether the outcome of the game may sensibly be regarded as determined by an external event which the machine records or is produced by the machine itself. Like the tribunal I would hold that the random generation of a number in a separate unit which serves various player terminals (which may themselves be running different games) is properly regarded as an external event and not one produced by the machine that the player is playing. Like the tribunal I do not think it is possible to elaborate further. (para 67) 16. He had earlier rejected the suggestion that the machine might include both terminals and the RNG as conflicting with the statutory restriction on numbers: The regulatory context helps me to decide that the argument that the machine is the system of terminals linked to a common RNG is wrong (because it would effectively mean that the restrictions on numbers of machines on any given premises for which Part III provides would be meaningless since the restriction would relate to the RNG in each system, to which vast numbers of playing terminals could be linked). (para 63) 17. The Court of Appeal disagreed. Rimer LJ attached weight to considerations related to the scope of Part III of the Gaming Act 1968. It cannot, he thought, have been the purpose of Part III to confine its control to equipment comprised in a self contained single unit or terminal and to exclude from such control two separate, but linked, items of equipment that together perform an identical function (para 76). He had earlier (para 67) noted without comment the argument that a broader construction would cause difficulties for the purpose of the limits on numbers of machines under section 31(2), and the response (given by Mr Peretz for HMRC) that the problem could be met by use of the Secretary of States general regulatory powers under section 37. 18. He concluded that such a narrow, literal construction would lead to absurdity: 77. That cannot be the correct construction of the word machine. The word must, if the language of Part III is to be given a sensible and practical effect that will enable it to achieve its obvious purpose, be interpreted as including equipment ancillary, and connected, to the playing terminal that automatically provides the element of chance that determines the outcome of the game played on the terminal If this is right, it follows in my view, and for like reasons, that 79. a purpose built system comprising a terminal with a separate, but connected, RNG is also properly characterised as a machine. The terminal cannot be used for gaming purposes except by being linked to the RNG; and the RNG is designed to be linked to the terminal in order to enable the game to be played. Again, no doubt they constitute two separate items of equipment; but to treat the terminal as a separate machine in considering the impact or otherwise of Part III is unrealistic. They are being used together for the purpose of playing a game on the terminal and the RNG forms an essential element of the system. If right so far, I also do not understand why the multi terminal 80. systems should be treated any differently. The fact that there is only one RNG serving several terminals cannot make a material difference. In substance, the systems are exactly the same as in both previous configurations. By like reasoning, I cannot see why each terminal and the single RNG do not together constitute a machine within section 26. That is the substance of any such multi terminal system; and it is the substance of the matter that counts. 19. Having reached that view in respect of the Gaming Act definition he saw no reason to take a different view in respect of note (3). There again he rejected a narrow, literal reading which would reduce VAT on gaming machines to a voluntary tax, since tax could be avoided by a simple re design of the playing equipment, whilst leaving its essential function unchanged. (para 82) 20. In this court the appellants have supported the reasoning of the tribunal, which as a multifactorial assessment based on a number of primary facts should have been respected by the appellate courts (Procter & Gamble UK v Revenue and Customs Comrs [2009] EWCA Civ 407, [2009] STC 1990 para 9ff). The Court of Appeal were wrong to think that the narrow construction deprived the definition of sensible meaning, for regulatory or tax purposes, a position never previously taken by the Gaming Board or HMRC. It is not possible to identify any specific regulatory purpose which would justify a departure from the ordinary meaning of the words. Absent an abusive practice (as explained in Halifax plc v Customs & Excise Comrs (Case C 255/02) [2006] Ch 387, [2006] STC 919) the operators were entitled to design their machines in the most tax efficient way. 21. The respondents in turn support the reasoning of the Court of Appeal, relying on a purposive construction, and like them taking account of the Gaming Act regime. In particular they adopt the Court of Appeals conclusion that the word machine in the definition is apt to cover a configuration of separate, but connected, items that together enable the playing of a game of chance at a terminal . For good measure, they seek to turn on its head the appellants reliance on the principle of neutrality. So far as it applies, they argue, it favours an interpretation of note (3) which minimises any difference in treatment of similar items (Marks & Spencer plc v Customs and Excise Comrs (Case C 62/00) [2003] QB 866, [2002] ECR I 6325, para 24). Discussion 22. It is necessary first to dispose of a possible argument suggested by the court during the hearing but not adopted by either party rightly in my view. This would treat the words by means of the machine as requiring no more than that the relevant information be communicated to the player by means of the machine on which he is playing, regardless of where or how that information is generated. Thus when the player pulls a lever or presses a button on the terminal, which in turn triggers the operation of the RNG, whether or not connected to other terminals, the terminal on which he is playing becomes the means by which the element of chance is communicated, and so provided, to the player for the purposes of his game. In my view, that is not the natural sense of the words used. The question is how the element of chance is provided in the game. The definition implies an active function in the game as it is played, rather than the mere passive transfer of information to the player. 23. Secondly, with respect to the Court of Appeal, I do not consider that much help is to be gained from comparisons with the treatment of the various machines at different times under the Gaming Act. Rimer LJ observed (para 74) that much of the argument before the Court of Appeal had been directed to the question whether the disputed machines had been Part III machines for the purpose of the 1968 Act, and thought it logical to start by considering that question. I find that difficult to accept. The sole issue in the appeal concerns the construction of the VAT legislation at the relevant time. The draftsman has not simply applied the definition of gaming machine used in the Gaming Act, as he did when defining game of chance, but has merely adopted some of its elements. It cannot be assumed that he intended precisely the same results. Furthermore, even if one assumes that the policy thinking of the VAT draftsman was guided by that of the 1968 Act, that assumption is of little assistance unless perhaps a proposed interpretation conflicts materially with some aspect of the comparable provisions in the latter legislation, or if it reveals a clear basis for distinguishing in that context between the categories now in issue. With one exception relied on by Norris J (see para 16 above), no such conflict has been identified. On the other hand, it is of some relevance that no one has suggested any convincing policy reason for distinguishing, in either legislative context, between, on the one hand, embedded software or a single terminal RNG, and on the other a multi terminal RNG such as is in issue in this appeal. Unless the language points clearly in a different direction, policy considerations favour treating them in the same way. 24. Much of the argument in the tribunal and the lower courts turned on the meaning of the word machine. The tribunal did not refer to any dictionary definition of the term. However, they seem to have proceeded on the assumption that the word connoted a single item of equipment, which in the context of paragraph (b) of the definition, had to be that which was played by the player, and into which he inserted his coin or token. Accordingly, for both (b) and (c) to be satisfied both the terminal and the RNG had to refer to the same machine, that being made clear by the use of the definite article before the word machine in both. Where the RNG was situated outside the terminal and served a number of terminals, it was a separate item of equipment, so that the element of chance was not provided by means of the machine containing the slot. Norris J took a similar view. He also treated the relevant machine as that which has the slot in it and which the player is playing. It was then a question of fact whether the outcome of the game is determined by an external event which the machine records or is produced by the machine itself. The Court of Appeal interpreted the word machine in a broader sense, as extending to a configuration of separate, but connected, items of equipment that together enable the playing of a game of chance at the terminal. Again they made no reference to any dictionary definition, relying instead on what they deemed the absurdity of a more narrow interpretation, which they thought would deprive the provisions of sensible and practical effect. 25. I see some force in the appellants criticisms of the Court of Appeals reliance on arguments of absurdity, which seem difficult to reconcile with HMRCs own acceptance in the past of a narrow interpretation. However, their approach can arguably be supported by reference to the natural meaning of the word machine in its context. We have not been referred to any dictionary definitions of the word machine, but reference to the standard dictionaries does not indicate any linguistic reason to confine the word to a single item of equipment. It is in some ways a chameleon like word, and the dictionaries contain a variety of meanings. A typical and in my view accurate definition, taken from the Concise Oxford English Dictionary, is: an apparatus using or applying mechanical power, having several parts, each with a definite function and together performing certain kinds of work. 26. This is of interest in the present context for two reasons. First the use of the word apparatus as a synonym suggests that no particular significance is to be attached to the absence in the VAT legislation (as compared to the 1968 Act) of a specific reference to apparatus as part of the definition. Secondly, the emphasis is not so much on the physical nature of the equipment or its parts, as on the functions they are performing together for the purpose of a particular type of work. In the present context the overall purpose or task is the creation for a game of chance for the player, in which purpose both the terminal and the RNG play, and are designed to play, essential and connected functions. It should not matter whether that task is being performed by a single item or a combination of linked items designed for the same task. 27. If that is the correct analysis, the tribunals approach is open to the criticism that it limits its attention to the physical identity of the equipment as viewed by the player, but ignores the necessary components of the task which it is performing. The terminal is useless for the task of playing the game without the RNG. Where the RNG is linked to a single terminal, the tribunal apparently saw nothing unnatural in principle in viewing them as together constituting a single machine for playing the game. On that view, it does not matter that the coin or token is paid into one part, and the element of chance is provided by another; nor that the player may be unaware that the machine which he is playing has more than one component. 28. Similarly, even where the RNG is serving several terminals, it seems no less appropriate to treat the combined set of apparatus as a composite machine, at least where (as here) the combination has been designed and supplied for use together in the same premises, and the RNG functions for all material purposes in exactly the same way as embedded software in each terminal. From the players point of view, it may be less natural to think of him playing, or inserting his coin into, the combined machine. But viewed objectively that is what he is doing, since without the RNG his coin will not achieve its purpose, and the game will not be played. 29. The principal objection to that interpretation is that relied on by Norris J by reference to the limits in section 31 of the Gaming Act 1968. Read naturally and in context, the restriction of the numbers of machines on any premises seems directed at the terminals available to individual players. It can hardly have been intended that it could be satisfied by two multi terminal machines serving an unlimited number of players. As already noted, Mr Peretzs answer is that, even if the draftsman in 1968 may not have had in mind the possibility of multi terminal machines that cannot change the natural meaning of the words; section 37 was available to deal with changes in technology which might call for different or more sophisticated restrictions. 30. In my view, it is not necessary to resolve this debate, since one can arrive at the same practical answer as the Court of Appeal, without departing from the view that the word machine, where it matters, can refer to an individual terminal. The relevant phrase is the element of chance in the game is provided by means of the machine. In the words of Norris J, it is the determining event which governs the outcome of the game being played on the machine which the player is playing. Chance is the possibility of something happening, not in the abstract, but for a particular player in the context of a particular game; in other words, the possibility of that player getting the combination of numbers which wins a prize or conversely a combination which does not. 31. Here what determines the outcome of the game is the pressing of a button (or pulling a lever) on the terminal. The pressing of the lever is a more sophisticated equivalent of a player rolling a dice. In that context, it can fairly be said, the winning number is produced by means of the players action in throwing the dice. So here the RNG produces a pre programmed sequence of numbers which changes very rapidly. The element of chance in any game is provided by means of the action of the particular player in pressing the button and so interrupting that ever changing sequence at a particular moment. The terminal is not simply communicating information from the RNG, but is the active means by which the winning or losing combination is generated. The RNG is a necessary part of that process, but its response (wherever situated) is entirely automatic. In those circumstances, it is a fair use of language in my view, and consistent with the apparent policy of the legislation, to describe the element of chance as provided by means of the terminal. 32. Accordingly, albeit for somewhat different reasons, I agree with the conclusion reached by the Court of Appeal and I would dismiss the appeal. The tribunal concluded that the disputed machines were not gaming machines as defined by note (3). They said: |
The Political Parties, Elections and Referendums Act 2000 (the Act) introduced, for the first time in this country, restrictions on the donations that can be made to registered political parties. All statutory references in this judgment are to the Act. Part IV of the Act specifies those from whom it is permissible for political parties to accept donations. Donations from an individual may only be accepted if the donor is on an electoral register. The Act confers on a magistrates court the power, at the instigation of the Electoral Commission (the Commission), to forfeit from party funds a sum equal to a donation that has been accepted from an impermissible source. This appeal raises the question of the criteria that should properly be applied by a magistrates court when exercising this power. This question is of particular interest to the United Kingdom Independence Party (UKIP), a small registered political party which has yet to succeed in returning a member to Westminster. UKIP has relied for the majority of its funding on a single supporter, Mr Alan Bown. Since 2003 Mr Bown has made donations to the party, in one form or another, amounting to over 1 million. By inadvertence, between 1 December 2004 and 2 February 2006, he ceased to be on any electoral register. During this period his donations to UKIP amounted to 349,216. On 16 March 2007 the Commission made an application to the Senior District Judge in the City of Westminster Magistrates Court for an order forfeiting the whole of this sum. The Senior District Judge ordered the forfeiture of only a small proportion of this sum. The Act gives a political party a right to appeal to the Crown Court against a forfeiture order but no right of appeal is given to the Commission. UKIP did not appeal against the order of the Senior District Judge, but the Commission challenged his decision by an application for judicial review. In a judgment delivered on 22 January 2009 [2009] EWHC 78 (Admin) Walker J identified a wide range of matters to which the Senior District Judge should have had regard when considering the forfeiture application. He held that the Senior District Judge had failed to give adequate reasons for his decision and ordered that the case should be remitted to the magistrates court for further consideration. The Commission appealed to the Court of Appeal, and was successful [2009] EWCA Civ 1078. On 19 October 2009, giving the only reasoned judgment, Sir Paul Kennedy held that, on a true construction of the relevant provisions of the Act, the discretion of the Senior District Judge was very tightly circumscribed. There was a strong presumption in favour of forfeiture. Where a donation was received by a political party from an impermissible source a forfeiture order should follow as a matter of course in the absence of exceptional circumstances. The magistrates court should, on remission, reconsider the matter in accordance with this approach. Before this Court Mr Patrick Lawrence QC for UKIP has sought to uphold the approach of Walker J, whereas Mr Michael Beloff QC for the Commission has urged that the analysis of the Court of Appeal was correct. The difference between the two has been described as the presumption issue. The relevant provisions of the Act Part I of the Act establishes the Commission which is given a wide range of regulatory powers and duties in relation to elections and political parties, including keeping under review the registration of political parties and the regulation of their income and expenditure (section 6(1)(e)). Part IV deals with Control of Donations to Registered Parties and their Members etc. Chapter II imposes restrictions on the receipt of donations. Section 54(1) provides that a donation must not be accepted if the person seeking to make it is not, at the time of its receipt, a permissible donor, or if his identity cannot be ascertained. Section 54(2) identifies those who are permissible donors. These include an individual registered in an electoral register and a company registered under the Companies Act 2006, incorporated within the United Kingdom or another member state, and carrying on business in the United Kingdom. Section 54(3) provides that a donation made in the form of a bequest will have been made by a permissible donor provided that he was registered in an electoral register at any time within the five year period that terminated with his death. Section 56 imposes duties in relation to the acceptance or return of donations and imposes criminal sanctions for breach of those duties. Where section 54 prohibits acceptance of a donation it must be returned within 30 days of receipt. If it is not, both the party and the treasurer of the party are guilty of an offence, albeit that it is a defence to prove that all reasonable steps were taken to verify or ascertain whether the donor was a permissible donor and that, as a result, the treasurer believed that he was a permissible donor. The effect of section 56(5) is that a donation will be deemed to have been accepted, even if it is returned within 30 days, unless a record can be produced of its receipt and its return. Section 58 contains the provision that has given rise to this appeal. It deals with forfeiture of donations that have been made by impermissible or unidentifiable donors. Where these have been accepted, notwithstanding that their acceptance was prohibited, section 58(2) provides: The court may, on an application made by the Commission, order the forfeiture by the party of an amount equal to the value of the donation. Section 58(4) makes it plain that such an order may be made whether or not proceedings are brought against any person for an offence connected with the donation. Section 58(5) provides that in England and Wales the court is a magistrates court. Section 60 provides that proceedings under section 58 shall be brought against the party in its own name and not in the name of any of its members and that any amount forfeited is to be paid out of the funds of the party. It is notable that section 58 does not provide for the automatic forfeiture of any donation that is accepted from an impermissible source. The provision that the court may order its forfeiture confers a discretion on the court. Furthermore it has been common ground, rightly in my view, that the Commission also enjoys a discretion whether or not to make an application for forfeiture to the court. The Act itself gives no indication of the criteria that should govern the exercise of either discretion. It is the former discretion that is critical, but it would be strange if the courts discretion was narrower than that of the Commission. The second issue of interpretation The primary issue is the presumption issue. Does section 58(2) confer a broad discretion on the court whether or not to make a forfeiture order, or is there a strong presumption in favour of forfeiture? But section 58(2) raises a secondary issue of interpretation. It confers on the court a power to order forfeiture of an amount equal to the value of the donation. Where the court exercises this power, does it have to order forfeiture of an amount equal to the total value of the donation, or is it implicit that the court has a discretion to order forfeiture of a lesser sum if it considers this appropriate? This has been described as the all or nothing issue. There is a potential interrelationship between the presumption issue and the all or nothing issue. The Commission argues that Parliament has deliberately chosen a stringent regime in order to ensure that political donations come from acceptable sources. There is no half-way house. Similar policy considerations support both a strong presumption in favour of forfeiture and a requirement that forfeiture should be total. Conversely a wide discretion whether to forfeit or not sits better with a power to order partial forfeiture, so that the court has the flexibility to tailor its order to the particular facts. The approach to interpretation The answer to the all or nothing issue will not, however, determine the presumption issue. This is demonstrated by the fact that both Walker J and the Court of Appeal held that the power conferred on the magistrates court by section 58(2) was an all or nothing power. In these circumstances I have not found it helpful to try to answer the all or nothing issue first. The more helpful approach is to consider the interpretation of section 58(2) having regard to the mischief at which it is aimed. The parties are agreed that the discretion conferred by section 58(2) should be used to promote the policy and objects of the statute. This proposition is supported by high authority see Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 at 1030 per Lord Reid. This principle led Lord Bridge to observe in R v Tower Hamlets London Borough Council, Ex p Chetnik Developments Ltd [1988] AC 858, at p 873: Thus, before deciding whether a discretion has been exercised for good or bad reasons, the court must first construe the enactment by which the discretion is conferred. Some statutory discretions may be so wide that they can, for practical purposes, only be challenged if shown to have been exercised irrationally or in bad faith. But if the purpose for which the discretion is intended to serve is clear, the discretion can only be validly exercised for reasons relevant to the achievement of that purpose. In applying the Padfield principle in this case there are two questions to be asked. The first is: what are the objects of the forfeiture permitted by section 58(2)? The second is: why has Parliament chosen to give the court a discretion whether or not to order forfeiture of a donation that has come from an impermissible source rather than to make such forfeiture automatic? To answer these questions it is necessary to look at the legislative history, which I believe provides the answer to each question. The legislative history The Labour Partys 1997 Election Manifesto announced the following intention: We will oblige parties to declare the source of all donations above a minimum figureForeign funding will be banned. On 12 November 1997, shortly after taking up office, the Prime Minister extended the terms of reference of the Committee on Standards in Public Life to add: To review issues in relation to the funding of political parties, and to make recommendations as to any changes in present arrangements. This led to the Fifth Report of the Committee, under the chair of Lord Neill of Bladen QC, on the Funding of Political Parties in the United Kingdom (the Neill Report), which was published in October 1998. Chapter 4 of the Neill Report dealt with Donations: Transparency and Reporting. It recommended the imposition on political parties of a duty to report the sources of donations, backed by criminal sanctions: 4.61 The reporting obligations of the political parties should be backed by criminal sanctions. These should be so drafted as to distinguish between inadvertent and deliberate failure to report a disclosable donation. In the latter case those responsible could be fined or imprisoned. In both cases the court would have power to order the defaulting political party to forfeit a sum not exceeding the unreported donation. Knowingly to make a false return should also be an offence. Prosecutions would be put in the hands of the Director of Public Prosecutions and should not be the concern of the Election Commission. Private prosecutions should be allowable. Chapter 5 of the Neill Report dealt with Foreign Donations. After setting out the arguments for and against a ban on foreign donations, the Committee reached the following conclusion: 5.16We have, therefore, concluded that, at a time when the whole question of the funding of political parties is being re-examined, it is right to take the opportunity to lay down the principle that those who live, work and carry on business in the United Kingdom should be the persons exclusively entitled to support financially the operation of the political process here. The Report explained that the Committee had found it difficult to produce a definition of foreign donations for the purpose of banning these. Accordingly they decided to approach the problem from the opposite direction by defining permissible sources from which alone donations could be received. The Report explained: 5.20 We begin by considering those individuals from whom the political parties should be able to receive donations. We believe that they come under two headings: those who are registered voters in the United (1) Kingdom; and (2) those who are eligible to be put on an electoral register in the United Kingdom. 5.21 As to the distinction between (1) and (2) above, we think that a donation could be properly received from a person who was eligible to be put on the electoral register because such a person already has, under existing legislation, the right to participate in the electoral process subject to taking the additional step of securing registration. 5.22 Categories (1) and (2) cover not only British subjects resident here, but extend to Commonwealth citizens resident here, citizens of the Republic of Ireland resident here, and citizens of the European Union resident here. The categories also include persons known as overseas voters. The test of entitlement to be entered on an electoral register was a rational basis for discriminating between donors with adequate connections with the United Kingdom and foreign donors. British, Republic of Ireland, Commonwealth and European Union citizens are entitled to register on an electoral register in the electoral area in which they reside section 4 of the Representation of the People Act 1983. If a donor is not qualified to be entered on an electoral register in the United Kingdom it is not unrealistic to treat that donor as lacking sufficient connection with the United Kingdom to be a desirable source of party funding. The following paragraph of the Report dealt with enforcement and penalties in relation to the ban on foreign donations: 5.42 In essence, what we said in Chapter 4 at paras 4.60 and 4.61 should apply here too with necessary modifications. Thus, the Election Commission will have statutory powers to call for information and to institute an investigation into any donation which it suspects has not come from a permissible source. If a party were to be guilty of a deliberate acceptance of a donation from a source outside the definition of a permissible source, criminal sanctions should attach to all responsible, and a sum not less than the donation should be liable to forfeiture from the partys funds; in significant cases of attempted evasion of the rules a penalty of up to ten times the overspend might be levied. A forfeiture power should also apply even if the receipt were innocent or inadvertent, although the courts would clearly take into account the degree of culpability in setting the level of forfeiture. R30 The Election Commission should have wide powers to call for information and to institute investigations into any suspect foreign donations received by a political party or a sub-unit. R31 Criminal sanctions should attach to a deliberate acceptance of a donation from a source falling outside the definition of a permissible source. There should be a power for the court to order a defaulting political party to forfeit a sum of up to ten times the donation wrongfully accepted. There is a contrast between the power of forfeiture recommended in para 4.61, a sum not exceeding the unreported donation, and that in para 5.42, a sum not less than the donation. The reason for this contrast seems likely to be the following. Para 4.61 was providing for a sanction for failure to report a donation from a permissible source. Para 5.42 was dealing with the receipt of a donation from an impermissible and, under the Neill Committees scheme, a foreign source. In the latter case the forfeiture of the entire donation was likely to be desirable, regardless of whether or not the breach of the regulations had been deliberate. It is noteworthy that the Committee recommended that, where acceptance of an impermissible donation was innocent or inadvertent, there should still be a power of forfeiture but that the courts would take into account the degree of culpability when setting the level of forfeiture. The Government published a White Paper (Cm 4413) to which was annexed a draft Bill dealing with the funding of political parties. Clause 51 of the Bill does not differ significantly from section 58 of the Act. At the beginning of Chapter 4, which dealt with the sources of funding, the Government welcomed the Neill Committees endorsement of the manifesto commitment to ban the foreign funding of political parties. Dealing with permissible sources of funding the White Paper commented as follows: Individuals 4.5 The Neill Committee recommended (R26) that political parties should be able to receive donations both from those who are registered voters in the United Kingdom and from those who are entitled to register to vote in the United Kingdom. Clause 50(2)(a) departs from this recommendation by providing that registered political parties may accept donations only from those individuals whose names appear on the electoral register. Entitlement to register, whether as a resident or overseas elector, will not qualify an individual as a permissible source. 4.6 Checking that a particular donor appears on the electoral register offers a test that is both conclusive and simple to administer. It would be far less straightforward for political parties to verify that a donor not appearing on the register was nevertheless entitled to do so. It is in the interests of the parties to have available a test which offers certainty as to the eligibility of a donor. With the introduction of rolling registration it would be open to anyone who was entitled to be registered as an elector, but was not on the register for whatever reason, to take the necessary steps at any time to secure his or her registration. Once registered, it would then be open to a political party to accept a donation from such a person. In practice, therefore, little is lost by the proposed departure from the Neill Committees recommendation. The objects of the legislation The legislative history provides a particularly clear picture of the objects of Chapter II of Part IV of the Act. The primary object is to prevent donations to political parties from foreign sources. From the Labour Party manifesto in 1997 the concern in relation to the source of funds has focussed exclusively on foreign donors. The Neill Committee recommended that the exclusion of foreign funding should, in the case of individual donors, be achieved by prohibiting donations from anyone who was not a registered voter in the United Kingdom or eligible to be put on an electoral register in the United Kingdom. As I have observed this test drew a realistic line between domestic and foreign donors. Eligibility to be placed on an electoral register demonstrated a sufficient connection with the United Kingdom. Ineligibility demonstrated a lack of such connection. Parliament made a significant change in restricting permissible donors to those on an electoral register, excluding those eligible to be put on one. This change was made not because there is anything intrinsically undesirable about parties being funded by those who are not on an electoral register, provided that they are eligible to be placed on one. So far as connection with the United Kingdom is concerned there is no distinction between a person who is on an electoral register and one who is entitled to be placed on an electoral register. The change was made for purely pragmatic reasons. It is much easier to demonstrate that a person is not on an electoral register than it is to demonstrate that he is not entitled to be placed on an electoral register. Two facts demonstrate that Parliament did not consider that entitlement to vote was, of itself, an essential quality in a donor, rather than a convenient test of the donors connection with the United Kingdom. The first is that section 54 permits donations from corporations, trade unions, building societies, limited liability partnerships, friendly societies and unincorporated associations, provided that they have sufficient presence in the United Kingdom, notwithstanding that none of them can vote. The second is that donations by bequest are permissible from anyone who was on an electoral register at any time during the period of five years before his death. Such a person cannot, of course, cast a vote posthumously, but it is significant that it is permissible for his bequest to have been made at a time when he was not on the register, provided that he was registered to vote at some point during the five years before his death. Had Mr Bown bequeathed, rather than bestowed, his donations during the period that he was off the electoral register, and then died, there would have been no objection to UKIP receiving the bequests. The White Papers comments that I have quoted at para 24 above underline the fact that entry on an electoral register is not per se an essential attribute of a donor. The comment that little is lost by the proposed departure from the Neill recommendations appears to recognise that depriving parties of donations from those entitled to be on an electoral register, but not actually registered, involves a degree of sacrifice, albeit one that is justified on grounds of practicality. The secondary object of Chapter II of Part IV of the Act is to provide a scheme for achieving the primary object that is easy to apply, easy to police and that contains adequate sanctions for non-compliance. The purposes of the power to forfeit Mr Beloff submitted in his written case that there were three purposes of the power to forfeit. The first was to deprive a political party of the wrongful gain acquired by accepting a donation from an impermissible source. The second was to deter breaches of the Act. The third was to provide simple and effective sanctions in the form of a rigorous civil enforcement scheme to enforce the prohibition on acceptance of impermissible donations. The third object is, in fact, no more than a more detailed way of describing the second object. I agree that there are two distinct objects of the power to forfeit. As to the first, I do not find the description wrongful gain helpful. The primary object of forfeiture is the direct prevention of the mischief that the legislation is designed to prevent the receipt by a political party of foreign funding. This would normally dictate the forfeiture of the acceptance of any donation received by a party from a foreign source, regardless of whether or not that acceptance had come about as a result of a culpable fault on the part of the party. As I have said, that is probably why the Neill Committee recommended that where a donation was received from a person who was not entitled to be placed on an electoral register, forfeiture from the party funds should be of not less than the amount of the donation. The fact that the donor was not entitled to be placed on the register demonstrated that he had insufficient connection to the United Kingdom to be an acceptable source of funding. The Act has radically changed the Neill Committees scheme. A donor whose connection with the United Kingdom would entitle him to be placed on the electoral register and thus to vote is rendered an impermissible donor by reason of the simple fact that he is not on the register. Under this scheme an unregistered donor may or may not be foreign. If he is foreign, or if he is unable to prove that he is not foreign, then his donation is intrinsically undesirable. It is the type of funding that the Act was designed to prevent. His donation should, barring exceptional circumstances, be automatically subject to forfeiture in its entirety. If it is not forfeited, the very mischief that the Act was designed to prevent will have occurred. Whether or not the party accepting the donation exercised due care should not normally be relevant. This may well be why the Act expressly provides that a forfeiture order may be made, whether or not proceedings have been brought against any person for an offence in connection with the donation. I agree with Mr Beloff that the second object of the power to forfeit is to provide a deterrent or sanction against failure to comply with the requirements of the Act that are designed to make sure that donations are not received from an impermissible donor. Thus the power to forfeit is intended to further both the primary and the secondary object of the legislation. The nature and purpose of the discretion I now come to the interrelated questions of whether the power to forfeit is all or nothing and how the discretion whether or not to exercise that power should be exercised. If Parliament had enacted the Neill Committee scheme there would have been a strong presumption in favour of forfeiting the whole of a donation from an impermissible source. It would, or would be likely to, be a foreign donation and objectionable as such. Indeed there would have been a case for making forfeiture of such donations automatic. But Parliament adopted a scheme under which impermissible donations may or may not be foreign. Under this scheme the significance of an individual impermissible donation may vary widely. At one extreme it may be a donation from a foreign source, accepted by a political party with full knowledge of its provenance. At the other extreme it may be a donation from an individual who is entitled to be on an electoral register and has in the past been on an electoral register, been believed to be on an electoral register, but who, because of some administrative error for which he is not responsible, has been removed from the register at the time when he made his donation. Parliament plainly made the power to forfeit discretionary with the intention that the magistrates court should discriminate between cases where forfeiture was warranted and cases where it was not. It seems to me natural to assume that Parliament intended the court to consider whether forfeiture was a proportionate response to the facts of the particular case. This involves considering whether forfeiture is necessary to achieve either the primary or the secondary object of the Act. The most relevant consideration is whether forfeiture is necessary to prevent the retention of a foreign donation in the individual case. Proof of acceptance of a donation from an impermissible source should raise a presumption that the donation is foreign. If the party cannot rebut that presumption, forfeiture should follow. If the party succeeds in demonstrating that the donor was entitled to be placed on an electoral register, forfeiture should then depend on whether it is an appropriate sanction for such shortcomings as led to the acceptance of the donation. This will require consideration of culpability, the size of the donation and the effect that forfeiture will be likely to have on the political party. Partial forfeiture, if permitted (as to which see below), will enable the court to impose an appropriate sanction where total forfeiture would be disproportionate. The Court of Appeal held that the power to forfeit was all or nothing and that there was a presumption that it should be exercised in the absence of exceptional circumstances. The Courts reasons for holding that there was a strong presumption that the power to forfeit should be exercised were as follows: i) Unless forfeiture was the normal consequence of the acceptance of an impermissible donation, parties would be free to disregard with impunity the obligations not to accept or to return impermissible donations. ii) Forfeiture would never be disproportionate if it was limited to a donation which should never have been accepted. iii) It was irrelevant whether or not the impermissible donor was a foreign donor, because Parliament had not made that the test. Parliament had made being on an electoral register the test. The Court should not re-introduce the Neill Committee test by the back door. iv) The fact that a party might not know that the donation was impermissible was irrelevant. Parliament had not made that a bar to forfeiture. v) The fact that the state of the partys finances might make forfeiture particularly onerous was irrelevant. The receipt of the donation was illegal and the full extent of the donation was an advantage that the party should not have had. vi) Furthermore, if it was necessary to investigate a partys finances before making a forfeiture order, the sanction would be unwieldy. Mr Beloff expanded this to a more general point. If there was a wide discretion, this would give rise to complex factual inquiries that the simple scheme of the Act was designed to avoid. I will deal with each of these points in turn. I do not accept that almost automatic forfeiture of the totality of an impermissible donation is necessary to provide a realistic sanction against non- compliance with the requirements of the Act. In the first place there are criminal sanctions for non-compliance. In the second place, the mere risk of forfeiture of the entirety of a donation might be thought a sufficient incentive to carry out the relatively simple check that a donor is on an electoral register. A party should not need much incentive to check that the position of anyone who wishes to make a donation is regularised. The suggestion that forfeiture of a sum limited to the impermissible donation can never be disproportionate is founded on the premise that the party should never have received the donation in the first place. But where a person within the United Kingdom wishes to make a donation to a party, there is nothing intrinsically wrong about the party receiving that donation. Of course the party and the donor should make sure that the donor complies with the statutory requirement of being placed on an electoral register. But if, by inadvertence, or even negligence, they fail to do so, it does not follow that it cannot be disproportionate for the donation to be forfeited. Proportionality will depend on the degree of culpability, the size of the donation and its importance to the party. I disagree that it is irrelevant whether or not the donor is a foreign donor. If he is, then forfeiture is clearly appropriate. Parliament has made electoral registration the test, but Parliament has also made forfeiture discretionary. To allow the party to show that the donor could have been registered to vote is not to introduce the Neill test by the back door. Parliaments scheme usefully transfers the burden of showing that the donation is not a foreign donation onto the donor and the party. If this burden can be discharged, the primary object of the legislation has not been defeated, and this fact is highly relevant to the issue of whether the power to forfeit should be exercised. The fact that Parliament has not made ignorance of the impermissibility of the donation a defence is no reason why it should not be a relevant extenuating circumstance when considering whether or not to forfeit the donation. Once again the Court of Appeal has ignored the fact that Parliament has chosen to make forfeiture of the donation discretionary. The argument that the effect of forfeiture on a party is irrelevant turns on the proposition that the party should never have had the donation in the first place. This ignores the fact that where the impermissibility of the donation results simply from an inadvertent, or even negligent, failure to register there is nothing intrinsically undesirable about the source of the funding. Finally I must deal with the point that, if there is a general discretion whether or not to forfeit, forfeiture proceedings will involve a lengthy investigation of all the material circumstances. In the first place, this will not normally be true where the donor is, in fact a foreign donor. The party will not be in a position to show that the donor was entitled to be placed on an electoral register. If, where this is the case, forfeiture is virtually automatic, forfeiture proceedings are unlikely to be protracted in those cases where forfeiture is most readily justified. Where, however, the donor is not a foreign donor, the fact that forfeiture is discretionary is likely to involve a significant investigation of the facts, whether the discretion is broad or narrow. However narrow the discretion it will surely be necessary for the party or the donor to show that the donor was not a foreign donor and to demonstrate, insofar as steps were taken to comply with the statutory requirements, what was in fact done. None of these arguments persuades me that where the donor is not foreign, but has for some reason failed to exercise his right to be placed on an electoral register, Parliament intended that forfeiture of the entire donation should be virtually automatic. On the contrary, where the donor is shown not to be foreign, I consider that Parliament would have intended, by conferring a discretion whether or not to forfeit, that there would be a careful evaluation of all the circumstances in order to decide whether the draconian step of forfeiture was justified. The Commissions approach to its discretion My conclusions receive some, if modest, support from the Commissions own approach to the exercise of its discretion. If Parliament had intended that a donation from an impermissible source should be forfeited unless there were exceptional circumstances, the Commission might have been expected automatically to make an application for forfeiture once satisfied that a donation was from an impermissible source. There would seem to be no basis upon which the Commission could properly decide not to make an application in circumstances where Parliament intended that forfeiture should occur. In the course of the hearing the Commission provided the Court with internal guidelines drawn up by the Commission in February 2007 in relation to the forfeiture of impermissible donations. These included the following: 3.1 . . . In all cases where the Commission is clear that section 58 applies the Commission will apply for a forfeiture order, unless there are reasons to conclude that on balance, the public interest is such that would lead us to exercise our discretion in favour of not seeking forfeiture. 3.2 The Commission will have regard to all relevant considerations, which may include: Steps taken by the regulated organisation or individual for the verification of permissibility Steps taken by the regulated organisation or individual in relation to acceptance or return of donations Any other extenuating circumstances that may be relevant. These guidelines do not suggest that the Commission itself applies a strong presumption in favour of forfeiture where a party has accepted a donation from an impermissible source. Conclusions Where it is shown that a political party has accepted a donation from an impermissible source, there should be an initial presumption in favour of forfeiting the donation. In order to prevent parties receiving funding from individuals who have insufficient connection with the United Kingdom, Parliament has chosen to lay down a simple test. Donations must only be accepted from those who are on an electoral register. The onus should be on the party concerned to show why a donation that has been received from an impermissible source should not be forfeited. A first step in discharging this onus will normally be to show that the mischief against which the relevant part of the Act is directed did not occur that the donation in question was not, in fact, a foreign donation. Where an individual is concerned this should require demonstration that the individual was entitled to be entered on an electoral register. If this cannot be demonstrated, forfeiture should normally follow. In such circumstances it can properly be assumed that retention of the funding would defeat the policy underlying the legislation. If it is shown that the donor was in a position to qualify as a permissible donor by registering on an electoral register, the initial presumption in favour of forfeiture will have been rebutted. The question will then be whether there have been failures to comply with those requirements of the Act that are designed to ensure that such donations are not accepted, and the nature of those failures. Once again the onus will be on the party to explain how it was that the donation came to be accepted. If the donation is large, and if the power to forfeit is an all or nothing power, significant shortcomings are likely to be required to make forfeiture of the donation a proportionate response. It is in the light of that conclusion that I turn to consider whether the power to forfeit is all or nothing. Is the power to forfeit all or nothing? Both Walker J and the Court of Appeal concluded that the power to forfeit was an all or nothing power. Walker J concluded that this was the only meaning that could properly be given to a power to forfeit an amount equal to the value of the donation (para 117). This finding was not challenged in the Court of Appeal and was accepted by Sir Paul Kennedy as correct (para 49). My initial inclination was to agree. The language of section 58(2) suggests that there is only one amount that can be forfeited. Furthermore, forfeiture normally relates to a specific fund, or right, not part of one. But in this case, forfeit is used in an unusual way. It was the Neill Committee that first used the word, in recommending that a sum not less than the donation should be liable to forfeiture from the partys funds. It has been common ground that a forfeiture order will create a debt to be met from UKIPs funds, as and when monies are paid into them. So the forfeiture in this case is more akin to a fine. Furthermore, the Neill Committee contemplated that the amount to be forfeited would be variable when commenting that where the receipt was innocent or inadvertent the courts would clearly take into account the degree of culpability in setting the level of forfeiture. Having regard to these considerations I have reached the conclusion that the better interpretation is to treat the power to order forfeiture of an amount equal to the value of an impermissible donation as implicitly including the power to order forfeiture of a lesser sum. Such an interpretation is desirable to cope with the situation where the magistrates court is persuaded that the donor is not foreign. In those circumstances, total forfeiture of the donation may be disproportionate. If so, it should not be ordered, both under the ordinary principles that apply to the imposition of sanctions and having regard to the requirements of article 1 of the First Protocol to the European Convention on Human Rights. The magistrates court should have the power to make a partial forfeiture order that reflects the facts of the particular case. I would interpret section 58(2) as conferring that power. Disposal Walker J rightly held that the reasons given by the Senior District Judge were too brief. He reached, however, decisions on the issues of principle which this Court has endorsed. He concluded that, in circumstances where the donor was entitled to be on the electoral register, no presumption of total forfeiture should be applied, but forfeiture should reflect fault on the part of the party accepting the donation or donations. As to the application of that principle to the facts of this case, he applied a very broad brush that effaced most of the detail of communications between the Commission and UKIP. He allowed UKIP to retain all donations up to the point at which they learned that Mr Bown was not on the electoral register, and ordered forfeiture of all donations from that moment until Mr Bown was again on the register. He erred however in stating that it was on 19 June 2005 that UKIP learned that Mr Bown was not on the register. In fact they did not learn this until 13 December 2005. On this erroneous basis he ordered forfeiture of donations totalling 14,481. The parties were anxious, if possible, to avoid a further hearing before the Senior District Judge. I have reached the conclusion that the amount of the forfeiture that was ordered adequately reflected the facts of this case and, accordingly, I would restore the order of the Senior District Judge. In the 1990s there was considerable public unease about the funding of political parties. The Committee on Standards in Public Life under the chairmanship of Lord Neill of Bladen QC looked into the matter and in 1998 they produced a report (Cm 4057) which contained many recommendations. In particular, they formulated a principle to the effect that those who live, work and carry on business in the United Kingdom should be the persons exclusively entitled to give financial support to the operation of the political process here (para 5.16). In order to create a workable system, they recommended that political parties should be able to receive donations from (1) people who are registered voters in the United Kingdom and (2) those who are eligible to be put on an electoral register in the United Kingdom (para 5.20). In due course the government issued a White Paper giving their considered response to the Neill Committees recommendations (Cm 4413). The government accepted the thrust of the committees recommendation on foreign donors, but they introduced a significant modification: only individuals who were registered voters should be permitted to make donations to political parties. As the White Paper explained in para 4.6, in a very real sense this was in the parties interest: checking whether a particular donor appeared on the electoral register would offer a test of acceptability that was both conclusive and simple for the parties to operate. It would be much less straightforward for parties to verify that a donor who did not appear on the register was nevertheless entitled to be registered. Of course, the downside was that the new test excluded more potential donors than the Neill Committee test: those who were eligible to be registered, but who were not registered. The White Paper pointed out, however, that, with the introduction of rolling registration, people in that position could readily apply to be registered and it would then be open to a political party to accept a donation from them. In practice, therefore, little is lost by the proposed departure from the Neill Committees recommendation. This was the scheme which was encapsulated in clause 50 of the draft Bill and was given effect in section 54 of the Political Parties, Elections and Referendums Act 2000 (the Act). So far as relevant, that section provides: (1) A donation received by a registered party must not be accepted by the party if (a) the person by whom the donation would be made is not, at the time of its receipt by the party, a permissible donor. (2) For the purposes of this Part the following are permissible donors (a) an individual registered in an electoral register. Nothing could be clearer than the language used by Parliament and nothing could be clearer than the intention behind the language: political parties were not to accept donations from any individual who was not registered in an electoral register. In particular, parties were not to accept donations from individuals who were entitled to be registered, but who were not on the register. That situation would be adequately catered for by the simple expedient of the individual concerned getting himself registered: the party could then accept a donation from him. Obviously, the Act envisages that, when they receive a donation, a political party must check the electoral register to ensure that the individual is registered. If, as a result of that check, it appears that he is not on the register, then he is not a permissible donor and the party must return the donation, or a payment of an equivalent amount, within thirty days: section 56(2)(a). The party must keep a record of the receipt of the donation and of its return within the thirty-day period. In addition, the party must include a report of the receipt and return of the impermissible donation in their donation report to the Electoral Commission for the relevant period: section 62(9). If they fail to do so, section 65(6) comes into play: Where the court is satisfied, on an application made by the Commission, that any failure to comply with any such requirements in relation to any donation to a registered party was attributable to an intention on the part of any person to conceal the existence or true amount of the donation, the court may order the forfeiture by the party of an amount equal to the value of the donation. The present case concerns exactly the situation of a donor who was entitled to be registered but was not actually on the register. Although he had previously been registered, Mr Alan Bown was not registered in any electoral register between 1 December 2004 and 2 February 2006. During that period he made a number of donations to UKIP which amounted in total to almost 350,000. Since Mr Bown was not registered to vote, by virtue of section 54(1)(a), UKIP were bound not to accept the donations. In terms of section 56(2)(a), the party should therefore have returned them to Mr Bown within thirty days and pointed out to him that they could not accept the donations until he was on the register again. When the party duly reported the donations to the Electoral Commission, the Commission drew their attention to the fact that Mr Bown did not appear to be on the register. The party none the less retained the donations. So they have made a gain of roughly 350,000 by accepting donations which they were prohibited from accepting under section 54(1)(a). Lord Phillips deprecates the use of the phrase wrongful gain to describe this type of gain. He would apparently confine any such description to gains made from donations by foreign donors who are not entitled to be on the electoral register in this country because the true object of section 54(1)(a) is to prevent parties receiving donations from such persons. But that is to substitute the ultimate aim of the legislation for the means by which the legislation seeks to achieve that aim. The ultimate aim is indeed to catch foreign donors. But the legislature has chosen to pursue that aim by prohibiting parties from accepting donations from all except a narrowly defined class of permissible donors. That class excludes foreign donors who are not entitled to be registered, but quite deliberately it also excludes donors, like Mr Bown, who are entitled to be, but are not, registered. As the White Paper explained, there were good practical reasons for adopting that legislative approach. In these circumstances it is not open to the courts to second- guess Parliament and to proceed on the footing that some impermissible donors are less impermissible than others. Since UKIP kept the donations from Mr Bown which they were prohibited from accepting, the Electoral Commission eventually applied to the City of Westminster Magistrates Court in terms of section 58(1) and (2): (1) This section applies to any donation received by a registered party (a) which, by virtue of section 54(1)(a) or (b), the party are prohibited from accepting, but (b) which has been accepted by the party. (2) The court may, on an application made by the Commission, order the forfeiture by the party of an amount equal to the value of the donation. In the case of England and Wales the court in question is a magistrates court. Where a party have accepted a donation which they are prohibited from accepting and they show no sign of being willing to return it, the starting point must surely be that the court will take steps to ensure that the party are deprived of the gain which they are determined to keep in defiance of the law. In other words, an order will be made for the forfeiture of the whole value of the unlawful donation. And that is exactly what section 58(2) says: the court may order the forfeiture of an amount equal to the value of the donation. Had parliamentary counsel intended to give the court power to order the forfeiture of a lesser sum, as Lord Brown points out, there is a variety of other phrases which could have been used to embody that intention. The same words are to be found in section 65(6) (quoted at para 59 above) and in para 12(4) of Schedule 7 to the Act. Both of these provisions deal with a situation where there has been a deliberate failure to comply with the relevant reporting requirements in order to conceal the existence, or true amount, of a donation. In such a situation, also, it is hard to see why forfeiture of a sum which is less than the donation would be appropriate. So these provisions tend to confirm the straightforward interpretation of the equivalent words in section 58(2). Like Lord Brown, I have no hesitation in agreeing with Walker Js conclusion on this issue. Lord Phillips takes a different view. He goes back to the report of the Neill Committee who first suggested the idea of forfeiture, but described the sum to be forfeited in various ways (a sum not exceeding the unreported donation and a sum not less than the donation). The committee may well have envisaged the court selecting what it regarded as the appropriate sum to be forfeited in the particular circumstances. On this basis, Lord Phillips considers that the better interpretation is to treat the words in section 58(2) as implicitly including the power to order forfeiture of a lesser sum. The Neill Committee report stands, however, at two removes from the text of section 58(2) which embodies the law enacted by Parliament. Moreover, as Lord Phillips himself points out, the Act radically changed the scheme envisaged by the committee. In these circumstances their report cannot displace the plain meaning of Parliaments words. The system is all or nothing: either the court orders the forfeiture of the value of the donation or it makes no order. Having armed the court with a discretion to award a lesser sum, Lord Phillips proceeds to construct an elaborate scheme for the exercise of this discretion. If the donation is not from a permissible donor, the onus will be on the party to show why it should not be forfeited. If the donation is from a foreign donor, then the party will not normally be able to show this, since it can properly be assumed that retention of the funding would defeat the policy underlying the legislation. But if the party can show that the donor was in a position to qualify as a permissible donor by registering on an electoral register, the initial presumption in favour of forfeiture will have been rebutted. In that situation the court will have to see whether there have been failures to comply with the requirements of the Act that are designed to ensure that impermissible donations are not accepted and, if so, the nature of those failures. If the donation is large, significant shortcomings are likely to be required to make forfeiture of the donation a proportionate response. In other words apparently the larger the impermissible donation, the less likely it is that the party will have to give it up. It seems to me unlikely to say the least that Parliament would have intended that a provision, which is designed to ensure compliance with the statutory scheme, should operate so as to make large impermissible donations harder to forfeit than small impermissible donations. That apart, many may admire the scheme outlined by Lord Phillips which might have commended itself to the Neill Committee. Indeed, had it been proposed to Parliament, it might well have been enacted. But there is not the slightest hint of such a scheme in the wording of the provision which Parliament did enact and, in fact, as I have already explained, the wording of section 58(2) is inconsistent with a scheme of that kind. Moreover, it would have been surprising if such a nuanced decision had been left to the magistrates court. For these reasons I would respectfully reject Lord Phillips construction of the subsection. If a party return an impermissible donation after the end of the thirty-day period, under section 56(5) they are treated as having accepted it for the purposes of section 58(2). It might well be, however, that the Electoral Commission would often not make an application to the court in such a case. And if it did, the context for the exercise of the courts discretion would be significantly different from the situation where the party had kept a donation. Similarly, the rationale of any forfeiture order would be to mark some blameworthy failure to comply with the regulations and pour encourager les autres. I would therefore reserve my opinion on whether there is room for the court to exercise its discretion differently in such cases. In a case, like the present, however, where the party have held on to the donations, the real difficulty, as Lord Brown points out, is to see how the court could properly do other than make an order for forfeiture, since forfeiture so clearly promotes the statutory object of preventing parties from accepting donations from individuals who are not permissible donors. Moreover, since the party had no right to the donations in the first place, there is no room for an argument that taking them away infringes article 1 of the First Protocol to the European Convention on Human Rights. Consideration of the exact scope of the courts discretion is not made any easier by the lack of any real indication in the Act of how the forfeiture order takes effect. As Lord Phillips points out, the discussion at the hearing proceeded on the (unexamined) premise that it would create a debt to be met out of the partys funds, as and when monies are paid into them. Although it is tempting to think of the Act as concerned with the major parties, it actually applies to a large number of political parties, many of them very small. Some may well have shaky finances. It is therefore quite conceivable that a forfeiture order would tip a party into insolvency and so cause at least as much prejudice to the partys unsecured creditors as to the party. So the creditors might argue that, for this reason, the court should exercise its discretion not to make an order. In that connexion it may be worth noting that section 60(1)(b) and (c) envisage that rules of court may allow persons affected by any possible forfeiture order to be joined as parties to the proceedings in the magistrates court. Since, however, the point does not arise for decision and was not argued in this case, I merely raise the possibility that such circumstances might have a bearing on the way that the court exercised its discretion under section 58(2). For these reasons, and for those given by Lord Brown, with which I agree, I would dismiss the appeal. I agree with the judgments of Lord Rodger and Lord Brown, and for the reasons which they give I would dismiss this appeal. The funding of political parties has long been the subject of public and parliamentary concern. In October 1998 the Commission on Standards in Public Life under the chairmanship of Lord Neill of Bladen QC reported on the matter to the Prime Minister. The Governments response by way of a White Paper was presented to Parliament in July 1999 with a Draft Bill annexed. There followed the Political Parties, Elections and Referendums Act 2000 (the Act), Part I of which provided for the establishment of the Electoral Commission (the Commission), Part IV for the control of donations to political parties. This appeal centres on Chapter II of Part IV under the heading, Restrictions on Donations to Registered Parties, and more particularly on donations from people not permitted to donate which a party nevertheless accepts (impermissible donations as I shall henceforth refer to them). Section 58 of the Act applies to such donations and by subsection (2) provides: The court may, on an application made by the Commission, order the forfeiture by the party of an amount equal to the value of the donation. At the heart of this appeal is the proper construction and application of that provision. Everyone agrees that it invests the court with a discretion: no one contends that may here means must. There are, however, two core questions arising. First, whether the court has power to forfeit part only rather than the whole of the value of any impermissible donation, i.e. can equal to be construed as up to? Secondly, how wide is the discretion conferred? Is there a presumption that impermissible donations will be forfeited and, if so, how strong is that presumption? I put the two questions in that order because to my mind they are closely related: if the court has no option but to forfeit all or nothing, that seems to me to strengthen the argument for a presumption in favour of forfeiture. That said, it may be noted that Walker J at first instance, despite holding that the courts power is to forfeit all or nothing, nevertheless decided that the discretion whether to order forfeiture is a wide one. Walker Js holding that this is an all or nothing power was not contested before the Court of Appeal. That Court, however, reversed his decision on the width of the discretion to exercise the power, holding that, for the legislative purpose to be served, the power should be exercised to order forfeiture of impermissible donations in all save truly exceptional cases. It is against that decision that UKIP now appeal. With those few introductory paragraphs let me turn next to the other provisions of the Act dealing most directly with impermissible donations received from known individual donors (as opposed to impermissible donations from corporate donors, unidentified donors or, indeed, by way of bequest). Section 54, under the heading Permissible donors, provides that for the purposes of Part IV of the Act an individual registered in an electoral register is a permissible donor (section 54(2)(a)) and that: A donation received by a registered party must not be accepted by the party if - (a) the person by whom the donation would be made is not, at the time of its receipt by the party, a permissible donor (section 54(1)(a)). In short, so far as identified individual donors are concerned, the party is prohibited from accepting any donation unless that donor is registered in an electoral register. Section 56(1), under the heading Acceptance or return of donations: general, provides that where a donation is received and not immediately refused the party must forthwith take all reasonable steps to verify the donors identity and whether he is a permissible donor (and certain other details as to his address for the purpose of providing quarterly reports on donations under section 62). Section 56(2) provides that if the party receives a donation which it is prohibited from accepting, it (or a payment of an equivalent amount) must be sent back to the donor within 30 days of when it was received. (The mention of an equivalent amount is explicable by reference to the wide definition of donation in section 50 to include a variety of benefits such as the provision of property, services or facilities.) Section 56(3) provides that if a party fails to return an impermissible donation within 30 days (as required by section 56(2)) the party and its treasurer are each guilty of an offence. Indeed, until the Act was amended by the Political Parties and Elections Act 2009, this was an absolute offence. Now, by a freshly inserted subsection (3A), it is a defence to prove that (a) all reasonable steps were taken by or on behalf of the party to verify (or ascertain) whether the donor was a permissible donor, and (b) as a result, the treasurer believed the donor to be a permissible donor. Although I have already (at para 74 above) summarised the effect of section 58 of the Act, the provision at the core of this appeal, I should perhaps set out subsection (1): This section applies to any donation received by a registered party - (a) which, by virtue of section 54(1)(a) . . . , the party are prohibited from accepting, but (b) which has been accepted by the party. And I should note that by section 56(5) For the purposes of this Part a donation received by a registered party shall be taken to have been accepted by the party unless - (a) the steps mentioned in paragraph (a) . . . of subsection (2) are taken in relation to the donation within the period of 30 days mentioned in that subsection. Section 58(4) provides that a forfeiture order can be made whether or not criminal proceedings are brought (most obviously under section 56(3)). The one other provision of the Act which I would notice at this stage is section 65(6) which states: Where the court is satisfied, on an application made by the Commission, that any failure to comply with any such requirements in relation to any donation to a registered party was attributable to an intention on the part of any person to conceal the existence or true amount of the donation, the court may order the forfeiture by the party of an amount equal to the value of the donation. The requirements here in question are those placed upon the party by section 62 to prepare quarterly donation reports (or under section 63 to prepare weekly such reports during general election periods) in respect of all relevant donations and benefits, and by section 65 to deliver such reports to the Commission within 30 days of the end of such reporting periods (7 days in the case of section 63 reports). What, then, in the context of these legislative provisions is the nature of the discretion conferred upon the Court by section 58(2)? It is recognised by both parties that it is a discretion which the Court is bound to exercise having proper regard to the policy and objects of the Act. This principle is, of course, established by high authority, most notably the judgments of the House of Lords in Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997. A later illustration of the principle to my mind of some assistance in the present context is the Houses decision in R v Tower Hamlets London Borough Council, Ex p Chetnik Developments Ltd [1988] AC 858 (Chetnik) where (at 873G) Lord Bridge said: . . . before deciding whether a discretion has been exercised for good or bad reasons, the court must first construe the enactment by which the discretion is conferred. Some statutory discretions may be so wide that they can, for practical purposes, only be challenged if shown to have been exercised irrationally or in bad faith. But if the purpose which the discretion is intended to serve is clear, the discretion can only be validly exercised for reasons relevant to the achievement of that purpose. It is necessary, therefore, to consider what is the statutory purpose of Part IV of the Act and more particularly whether there is a clear purpose to be served by conferring on the court a power under section 58(2) to order the forfeiture of impermissible donations. In large measure this purpose is to be discerned from the statutory provisions themselves. To a limited extent, however, I would accept that some light may be thrown upon these by their legislative history, namely the Neill Report and the White Paper which followed it. But it is unnecessary to spend much time on these. So far as individual donations are concerned, the Neill Report recommended and the White Paper agreed that the underlying principle should be that only those with a stake in the United Kingdom should be permitted to donate; foreign donations were to be outlawed. How then should that be achieved? Again, both agreed that this should be done by defining the permissible source of donations. At that point, however, the two documents diverged. Whereas the Neill Report recommended that the permissible source of individual donations should be defined to include not merely registered UK voters but also those who are eligible to be put on an electoral register in the United Kingdom, the White Paper proposed instead what is now section 54(2)(a) of the Act. This provision, the White Paper noted (para 4.5), departs from [the Neill Reports] recommendation by providing that registered political parties may accept donations only from those individuals whose names appear on the electoral register. Entitlement to register, whether as a resident or overseas elector, will not qualify an individual as a permissible source. The White Paper then continued (para 4.6): Checking that a particular donor appears on the electoral register offers a test that is both conclusive and simple to administer. It would be far less straightforward for political parties to verify that a donor not appearing on the register was nevertheless entitled to do so. It is in the interests of the parties to have available a test which offers certainty as to the eligibility of a donor. As for the section 58 forfeiture order itself, the White Paper said this (para 4.15): Clause 51 [enacted as section 58] provides a power for a magistrates court . . . to order the forfeiture of a sum equal to the value of a donation received from other than a permissible source. This will apply whether such a donation was accepted knowingly or not. Under clause 51(2) [section 58(2)] it will be for the Electoral Commission to make an application to the court for a civil forfeiture order. It will readily be seen that the forfeiture power exists in respect of an impermissible donation once the 30 days allowed for its return by section 56(2) are up even, indeed, if the donation was subsequently returned to the donor. This is so, moreover, whether or not the donation was accepted knowingly there is no precondition of forfeiture (as under section 65(6)) that the party intended to conceal something, nor any defence (as now under section 56(3A)) that all reasonable steps were taken to verify that it came from a permissible donor. It will also readily be seen that, unless by the time the court is called upon to exercise its section 58(2) discretion the donation has in fact been returned to the donor, it necessarily follows that the party will have received a donation which by virtue of section 54 it was prohibited from accepting, that it failed to return it within 30 days as section 56 required it to do, and that it continues to retain a benefit to which it is manifestly not entitled. In these circumstances, the sole effect of a forfeiture order in respect of the whole of the donation is no more and no less than to require the party to disgorge that which the law plainly forbids it to have retained. By the same token, were the court to refuse such an order, it would be allowing the party to retain that to which it is plainly not entitled and which the law long since required it to have surrendered. With these considerations in mind let me return to Chetnik for the assistance it seems to me to provide. Chetnik concerned the proper construction and application of section 9 of the General Rate Act 1967 which so far as material provides: . . . where it is shown to the satisfaction of a rating authority that any amount paid in respect of rates . . . could properly be refunded on the ground that . . . (e) the person who made a payment in respect of rates was not liable to make that payment, the rating authority may refund that amount or a part thereof. The Court of Appeal had said of that power ([1987] 1 WLR 593, 602): We think it clear that, in broad terms, the purpose of section 9 and its predecessor was to enable rating authorities to give redress and to remedy the injustice that would (at least prima facie) otherwise ordinarily arise, if they were to retain sums to which they had no right, in cases where persons had paid rates which they were not liable to pay. Holding in the light of that purpose that the discretion to withhold repayment in such a case could only be exercised for some valid reason, the Court of Appeal had quashed the rating authoritys refusal to repay the overpaid rates and had directed them to reconsider the matter. Affirming the Court of Appeals approach, Lord Bridge (with whom the other members of the Committee agreed) said: Parliament must have intended rating authorities to act in the same high principled way expected by the court of its own officers and not to retain rates paid under a mistake of law . . . unless there were, as Parliament must have contemplated there might be in some cases, special circumstances in which a particular overpayment was made such as to justify retention of the whole or part of the amount overpaid. (877D). Later in his speech (880G), having said that the most difficult aspect of the problem was to give guidance as to the positive factors relevant to the exercise of the section 9 discretion which might be considered in whole or in part to displace the prima facie justice of refunding overpayments, and that such factors could only arise from the circumstances in which the overpayment had come to be made in any particular case, Lord Bridge suggested three possible (obviously exceptional) situations in which it might be proper to refuse a refund. He then said (881E-F) that he had not found it an easy case and in particular cannot envisage circumstances which, on the principle I have indicated, would point to a partial refund of overpaid rates as just and appropriate. On the latter point, however, (the express power of partial refund under section 9) Lord Goff drew on general principles of restitution law and wondered whether the fact that the rating authority will have, for example, employed a substantial part of its rate income to meet precepts by other authorities, would provide a good reason for denying, at least in part, a ratepayers claim for refund under section 9. (882G). Let me come, then, to the first of the two questions I posed at the outset: Has the court power under section 58(2) to order forfeiture of part only of an impermissible donation? UKIP contends that it does, essentially on the basis that the greater impliedly includes the lesser unless the context compels a different conclusion. With the best will in the world, this seems to me an impossible contention. Where, as here, the draftsman has explicitly chosen the words an amount equal to the value of the donation (words he then repeats in section 65(6)), it can hardly be thought he intended them to mean an amount up to that value, or an amount not exceeding that value, or (the words used by the draftsman of section 9 of the General Rate Act 1967) that amount or a part thereof. Why would he not have used one of these expressions had he intended to provide a power of partial forfeiture? The words of section 58(2) seem to me clear and unambiguous. I agree with Walker Js conclusion on this issue at first instance and am unsurprised that in the Court of Appeal counsel then appearing for UKIP did not seek to challenge that conclusion. With regard to Mr Lawrence QCs subsidiary submission that such a construction amounts to an impermissible interference with article 1 of the First Protocol to the European Convention on Human Rights (para 69 of his case) I am at a loss to see how the forfeiture of a donation which by definition the party should never have accepted or kept could be said to violate that partys human rights. Even assuming, however, that in certain circumstances it could, the court always has the option and on that hypothesis would be bound to make no forfeiture order at all. These considerations apart, I find myself sharing Lord Bridges difficulty in Chetnik (although there, of course, the power to make partial refund was expressly provided for) in envisaging circumstances which would point to such an order as being just and appropriate at any rate where the party still retains the benefit of the impermissible donation. Recognising, therefore, that the forfeiture power is an all or nothing power, I pass to the second core issue arising: Is there a presumption that impermissible donations should be forfeited and, if so, how strong is that presumption? The Court of Appeal concluded (at para 50) that there was only a narrow discretion not to order forfeiture. As Sir Paul Kennedy put it in the Courts only reasoned judgment: . . . it might assist a party which, for reasons beyond its control, such as illness of staff, was unable to complete its inquiries within 30 days, or a party which was misled by an inaccurate entry in an electoral register [that perhaps refers to a fraudulent entry or an erroneous statement from some apparently responsible authority that the donor was on the register]. Maybe there would also be room for the exercise of discretion if a donation or its value were to be returned to the donor out of time but before any forfeiture was sought, because Parliament clearly did not intend a party to surrender the value of a donation more than once. That essentially is my view too. In most cases, certainly in any case where neither the benefit nor its value has ever been returned, it is difficult to see how the discretion could properly be exercised other than by an order for forfeiture. How, in those circumstances, could a court properly allow a party to retain the value of a donation which Parliament has plainly ordained that it should never have accepted? How could this be thought consistent with the policy of the legislation? To my mind, indeed, given the ease with which electoral registers can be accessed and inspected the whole point of registration as the sole source of permissible individual donations being, as the White Paper said, to create a scheme both conclusive and simple to administer I question whether even staff illness could provide a proper basis for not forfeiting a donation. If on account of staff illness a donation was returned late (after the 30 day limit), that no doubt could justify not making a forfeiture order. But I am here considering cases like that presently before the Court where the donation has never been returned. For my part I would accept that the discretion not to award forfeiture would arise altogether more readily in the final situation envisaged by Sir Paul, where a donation or its value is returned to the donor out of time but before any forfeiture was sought. By the time forfeiture is sought, of course, it is almost inevitable that the party will have had ample opportunity (on the facts of the present case more than a year since the final impermissible donation was accepted) to discover its mistake (here, indeed, it had been several times alerted to it) and return the benefit. Return after that time, therefore, might suggest no more than a naked attempt to escape the forfeiture provision. One should note in this regard an obvious further purpose underlying the forfeiture power (besides its principal purpose of confiscating unlawfully retained benefits), namely as part of the mechanism for policing the control of political donations. To allow the return of the benefit after forfeiture has been sought to save a party from an order, would, except perhaps in very special circumstances, more likely thwart than promote that additional purpose. That question is, however, academic in the present case: quite simply UKIP still retains donations which it should never have accepted. On the Commissions forfeiture application the Senior District Judge allowed UKIP to keep almost all of the 350,000 odd total of impermissible donations it had accepted from Mr Bown. In common with the Court of Appeal although not, as now appears, with the majority of this Court I find that a surprising and unsatisfactory outcome to this regrettable affair. In agreement with Lord Phillips and Lord Kerr, I consider that the appeal should be allowed. Their reasoning and conclusions are broadly consistent, although, like Lord Kerr, I would be inclined to regard the question, whether forfeiture is possible of a sum less than the full amount of a donation, as central to the enquiry whether the discretion to order forfeiture is broad or narrow. The discretion introduced by s.58(2) is on its face an open discretion, capable of responding to different circumstances, in particular the difference - important in the light of the mischief to which this Part of the Act was directed - between foreign donations and donations such as the present made irregularly by a person who was entitled to be on a United Kingdom register of electors but by mistake was not. The words may . order the forfeiture . of an amount equal to the value of the donation are in my view capable of implying discretion to order forfeiture of part as well as all or nothing of the donation, rather than compelling a conclusion that the only discretion involved a blunt choice between all or nothing. The use of the word may in s.58(2) is coupled with provisions in s.59(2) and (3) which permit an appeal by a registered party unhappy with a magistrates court decision under s.58(2) and which provide that any such appeal shall be by way of a rehearing, and the court hearing such an appeal may make such order as it considers appropriate. These provisions to my mind also suggest a flexible power of appreciation in relation to the order made, according to the circumstances. The provisions in s.60(1)(b) and (c) for rules to be made for the giving of notice to and joinder of persons affected also tend to suggest that it was understood that the exercise under s.58 and 59 might be a nuanced one, taking account of others interests. The words any amount in s.60(3) and (5)(c) can of course be read consistently with either partys case. A conclusion that partial forfeiture is possible and that discretion is broad, is in my view more consistent with the policy of the legislation than that adopted by the Court of Appeal or by Lord Rodger and Lord Brown. Parliament preferred the simpler test of registration to a test including entitlement to register for pragmatic reasons: it would be simpler for parties to verify actual registration, simple for persons entitled to register to do so and little is lost by the proposed departure from the Neill Committees recommendation. The underlying aim of the legislation remained to eliminate inappropriate foreign donations. Lord Phillipss and Lord Kerrs analysis is in this light consistent with the principle that legislation should be construed to serve its statutory purpose: R v Tower Hamlets LBC ex parte Chetnik Developments Ltd. [1988] 1 AC 858. The different analyses adopted in that case and the present flow from differences in context and in the nature of the issues. The refunding by a rating authority of overpaid rates to the person paying them and the forfeiture to the state of an irregular donation made by a member of the public, who is eligible for registration but by mistake not registered, do not raise identical considerations. The Commission submitted that, even if the law was as the majority of the Court now holds, any reasonable judge must inevitably order forfeiture of the whole of these donations. I do not agree. In my view and as Lord Phillips explains, it was appropriate for the level of forfeiture to reflect the circumstances. These include the fact that Mr Bown was entitled to be on the electoral register, and would have corrected the position and made the same donations had he been aware of the mistake which led to him not being on the register (or had the donations, after being made, been returned to him, as should have occurred). They also include the circumstances that it appears questionable, from what the Court was told, whether UKIP could find the monies to meet any order or survive, if the total sums donated were forfeited. Walker J observed (in last two sentences of para 121) that the District Judge did not expressly deal with some factual aspects, most significantly for present purposes emails from the Commission dated 19 April and 13 May 2005 asking about Mr Bowns status, following which UKIP did not take steps eliciting and confirming the actual picture. On the other hand, the picture presented by the correspondence between the Commission and UKIP throughout 2005 and into 2006 is not one suggesting any real urgency, still less a risk of any forfeiture; and it is also common ground that the District Judge erred to UKIPs disadvantage in taking 19 June 2005, instead of 13 December 2005, as the date when UKIP became aware that Mr Bown was not on the electoral register and so in ordering forfeiture of a larger sum than he would have done, but for such error. UKIP did not appeal in respect of this error. Both parties agreed before the Supreme Court that there should be no re-hearing of any save the most formal sort before the District Judge, and that the Court should if necessary make up its own mind. On that basis, I agree with Lord Phillipss proposal that the order made by the District Judge should simply be restored. There are three possible outcomes to the debate about the correct interpretation of section 58(2) of the Political Parties, Elections and Referendums Act 2000. The first is that the discretion given to the court as to whether to order forfeiture is wide and that it is open to the court to make an order for forfeiture of less than the full amount of the donation. The second is that the discretion is narrow and that an order of forfeiture, if made, should be for the entire amount of the donation. The third is that the discretion is wide but if an order of forfeiture is made it must be for the total sum. Of these three possible interpretations, the third seems to me to be the least likely. A wide discretion to permit the making of an order that there should be no forfeiture of any sum whatever does not sit comfortably with what can be discerned to be the purpose of the legislation viz to eliminate the receipt by political parties of donations from sources considered to be unsuitable. The debate must focus, therefore, I believe, on the first and second of the mooted interpretations outlined above. Lord Phillips considered that the primary issue was what he described as the presumption issue i.e. whether section 58(2) conferred a broad discretion on the court as to whether it should make a forfeiture order, or whether there was a strong presumption in favour of forfeiture. Although I agree with the outcome that Lord Phillips proposes, I have some reservations as to whether this is the primary issue in this case. It appears to me that the matter of critical importance is whether forfeiture of a sum of less than the full amount of the donation is possible. If it is, it seems to me to follow logically that the discretion should be wide; if it is not, for the reasons that I have given above, it is difficult to see how a broadly based discretion would be appropriate. If one approaches the question whether it is possible under the legislation to order forfeiture of a lesser sum than the actual donation by concentrating exclusively on the language of section 58(2) (and section 65(6)), the answer given by the Court of Appeal and powerfully endorsed by Lord Rodger and Lord Brown is difficult to resist. But, as a matter of general principle, the purpose of an item of legislation should inform ones approach to the interpretation of its constituent parts and I therefore believe that this is a case where it is clearly necessary to be guided in the construction of the relevant provisions not only by the language used but also by the underlying aim of the Act. The central purpose of the legislation was to prohibit donations from those who did not have a stake in this country. I do not accept Mr Beloff QCs argument that its purpose evolved from a desire to ban foreign donors to one of denying the right to give donations to those who could not vote. The Act was the result of the governments commitment in its manifesto to ban foreign donors. An examination of the materials that preceded its enactment reveal, I believe, that this was always the driver for the legislation. Paras 4.5 and 4.6 of the White Paper (on which Mr Beloff relied to advance his evolution thesis) are concerned with devising a convenient and easy-to-apply means of enforcement. They do not represent a change of direction in government thinking on the target for the restriction. The means chosen to achieve the aim of banning foreign donors obviously has the potential to catch more than that category of persons. Individual permissible donors are confined under section 54 to those who are registered in an electoral register and quite clearly this can include persons who have a stake in the country and people such as Mr Bown who are not registered in an electoral register possibly because of an administrative error. A critical issue, therefore, is whether the fact that someone such as he is caught by the breadth of section 54 can affect the way in which section 58 is to be construed. At first sight it does not appear that this should influence the interpretation of section 58(2). The court is given the power to order the forfeiture of an amount equal to the value of the donation. It is not empowered at least not on the face of the subsection to order that an amount up to the value of the donation be forfeit. And Lord Brown has articulated a strong argument to the effect that if this was the intention of Parliament, it could easily have been achieved. One might also recognise that the notion of forfeiture is traditionally the deprivation of a specific amount or object. Forfeiture is defined in the Oxford English Dictionary as the fact of losing or becoming liable to deprivation of (an estate, goods, life, an office, right, etc) in consequence of a crime, offence, or breach of engagement or that which is forfeited; a pecuniary penalty, a fine. One of the definitions of forfeit is something to which the right is lost by the commission of a crime or fault. These definitions indicate, I think, that the use of the word forfeiture is commonly associated with the deprivation of a defined thing. There are strong policy reasons for interpreting section 58(2) in the manner that the appellant contends for, however. The culpability of the offender is more easily reflected in the penalty if one has a calibrated reaction to the gradations of impermissibility that will arise; the impact on the party of the proposed forfeiture order can be assessed; whether it is a foreign donation can be taken into account; and the inaction of the Electoral Commission after it has discovered the impermissible donation can also weigh in the balance. But the strongest and, ultimately, for me, the most convincing - argument in favour of the interpretation advanced by the appellant is that it was never intended that there be forfeiture in the true sense of that term where the donor was someone who was entitled to be on the electoral register but who was not registered because of an administrative error. The sense that one gets from the Neill Report is that what was intended was the devising of a range of penalties to deal with the various types of impermissible donation and that the word forfeiture was not used in the report in its conventional connotation. This much is, I think, clear from para 5.42 of the report where it was proposed that a sum not less than the donation should be liable to forfeiture from the partys funds and that in significant cases a penalty of up to ten times the donation might be levied. Notably, this paragraph also contained the suggestion that, while a forfeiture power should also apply even if the receipt were innocent or inadvertent, the courts would clearly take into account the degree of culpability in setting the level of forfeiture (emphasis added). The use of the phrase level of forfeiture clearly contemplates, in my opinion, a sanction involving the payment of a sum less than the full amount of the donation. There is nothing in the White Paper that signals a movement by the government away from the essential purpose identified by the Neill Report and the reasoning that underlay its recommendations. The changes to the Neill proposals came about as a matter of administrative expediency rather than for reasons of principle. It is therefore possible to hold that, since the primary function of the Act was to ban foreign donors, the legislature must have intended that where others were caught because of the simplicity and breadth of the provision that was actually adopted to achieve that aim, they would not be subject to the same draconian penalty as those to whom the legislation was principally directed. Lord Diplock, in commenting on the decision of the House of Lords in Inland Revenue Comrs v Ayrshire Employers Mutual Insurance Association Ltd [1946] 1 All ER 637, said that if the courts can identify the target of legislation, their proper function is to see that it is hit; not merely to record that it has been missed (Courts and Legislators, Holdsworth Club Presidential Address 1965, referred to in the second footnote on p 955 of Bennion on Statutory Interpretation, 5th ed (2008)). One might adapt that statement slightly to meet the circumstances of the present case by saying that courts should ensure that the target is not subject to greater fire than was intended. Concluding, as I therefore do, that the court has power to make an order of forfeiture for less than the full amount of the donation, I am of the view that the discretion of the court as to the level at which to fix the sanction at less than full forfeiture must be wide. But I agree with Lord Phillips that where it is shown that a donation has come from an impermissible source it should be presumed that this is a foreign donation and that if the presumption is not rebutted, forfeiture should follow. If, however, it can be shown that the donation was not from a foreign donor but came from someone who was entitled to be in an electoral register, the level of forfeiture should reflect the particular circumstances of the case. I would therefore allow the appeal. As to disposal, I agree with the order that Lord Phillips proposes should be made. |
Is it an answer to a refugee claim by an individual who has no political views and who therefore does not support the persecutory regime in his home country to say that he would lie and feign loyalty to that regime in order to avoid the persecutory ill treatment to which he would otherwise be subjected? This is the question of general importance that arises in these appeals which are a sequel to the decision of this court in HJ (Iran) v Secretary of State for the Home Department [2011] 1 AC 596. In that case, it was held that a gay man was entitled to live freely and openly in accordance with his sexual identity under the Refugee Convention (the Convention) and it was no answer to the claim for asylum that he would conceal his sexual identity in order to avoid the persecution that would follow if he did not do so. I shall refer to this as the HJ (Iran) principle. These cases fall to be decided in the light of the latest country guidance for Zimbabwe which is to be found in the decision of the Asylum and Immigration Tribunal (AIT) in RN (Returnees) Zimbabwe CG [2008] UKAIT 00083 to which I shall have to refer in more detail later. At this stage, it is sufficient to refer to para 216: This campaign [of persecution] has been rolled out across the country not by disciplined state forces but by the loose collection of undisciplined militias who have delivered a quite astonishingly brutal wave of violence to whole communities thought to bear responsibility for the wrong outcome of the March 2008 poll. It is precisely because of that that any attempt to target specifically those who have chosen to involve themselves with the [Movement for Democratic Change (MDC)] has been abandoned. In our view, there can be no doubt at all from the evidence now before the Tribunal that those at risk are not simply those who are seen to be supporters of the MDC but anyone who cannot demonstrate positive support for Zanu PF or alignment with the regime. We were referred to the new country guidance issued by the Upper Tribunal in EM and Others (Returnees) Zimbabwe CG [2011] UKUT 98 (IAC) which states that the situation in Zimbabwe has significantly changed. But this decision was quashed by the Court of Appeal on 13 June 2012. It is common ground that it is not material to the present appeals. The facts RT was born on 28 May 1981. She left Zimbabwe legally in February 2002 and arrived in the United Kingdom on 2 March 2002. She was given leave to enter for six months and began to work for a family as a nanny. She overstayed her leave. In 2005, she was refused leave to remain as a student. On 16 February 2009, she claimed asylum. The claim was refused by the Secretary of State and her appeal to the AIT was dismissed on 1 July 2009. IJ Hussain found that she would be able to take any positive steps necessary to show her loyalty to the regime and that there was no real risk of her being subject to ill treatment on return. Reconsideration was ordered on 8 December 2009. On the reconsideration, RTs appeal was dismissed by the Upper Tribunal on 2 March 2010. DIJ Manuell found that she was a credible witness and that she had never been politically active in Zimbabwe or in the United Kingdom. At para 25 he gave his reasons for concluding that she did not have a well founded fear of persecution on a Convention ground. Of particular relevance is the finding that she was in a position to explain that she has never been politically involved at home or abroad, should anyone see fit to enquire. SM was born on 26 September 1982. She left Zimbabwe in April 2008 using a passport issued in another name and claimed asylum in the United Kingdom on 1 May 2008. Following refusal of her claim in November 2008, she appealed to the AIT. Her appeal was dismissed on 29 January 2009. IJ Lawrence found that she was not a credible witness, had given inconsistent accounts of her involvement with the MDC and had lied in a number of other respects. On 17 June 2009, reconsideration was ordered on the single issue of whether SM would be at risk on return in view of the decision in RN. Her appeal was dismissed by IJ Charlton Brown on 3 November 2009. She too found that SM was not a credible witness. She said that SM had no connections with the MDC and that, although her mother had left Zimbabwe in 2002 and had been recognised as a refugee in 2003, she had not had difficulties living in Zimbabwe between 2002 and 2008. On the issue of loyalty to the regime, she said at para 23: Finally, in terms of whether or not this appellant can demonstrate positive support for/loyalty to ZANU PF, it seems clear that she herself has not been linked with the MDC as she has claimed, given her lack of credibility throughout. As previously stated, she appears to have been able to live in Zimbabwe without problems since her mother left the country in 2002 and quite frankly, given this individuals complete lack of credibility and indeed her inclination to lie as and when required, as the original immigration judge pointed out, no doubt she would be prepared to lie again in the future to the authorities on return to Zimbabwe about any political affiliation she might have. AM was born on 16 November 1966. He left Zimbabwe and arrived in the United Kingdom on 25 February 2001 with leave to enter as a visitor. He remained with leave as a student until 30 November 2007. He claimed asylum on 28 April 2009. This was refused. His appeal was dismissed by the AIT on 15 September 2009 and dismissed again (following reconsideration) on 23 March 2010. DIJ Shaerf did not find AM to be a credible witness. Although he was in favour of the MDC (para 46), AM had no political profile and was not politically engaged prior to his departure from Zimbabwe (para 47). He would be able to account for his absence from Zimbabwe by reference to his studies in the United Kingdom and the breakdown of his marriage whilst he was here. He had returned to Zimbabwe in 2003 without difficulty. RT, SM and AM all appealed to the Court of Appeal. The judgment of the court was given by Carnwath LJ: [2010] EWCA Civ 1285; [2011] Imm AR 259. Their appeals were allowed. The court said at para 36 that if individuals are forced to lie about their absence of political beliefs, solely in order to avoid persecution, that seems to us to be covered by the HJ (Iran) principle, and does not defeat their claims to asylum. In the case of RT, the court said (para 42) that the Upper Tribunal did not address the critical issue raised by RN since: It is not enough that she would be able to explain her lack of political activity abroad. The question is whether she would be forced to lie in order to profess loyalty to the regime, and whether she could prove it. Since she was found to be generally credible, there is no other reason to hold that she has failed to prove her case. The court allowed RTs appeal and upheld RTs asylum claim. As for SM, at para 46 the court said of para 23 of the decision of the AIT that: it was not enough to hold that she would be willing to lie as and when required, if the reason for doing so would be to avoid persecution. Nor is willingness to lie the same as ability to prove loyalty to the regime. On the other hand, in view of her lack of credibility overall, it remains open to question whether her case should fail for lack of proof as in [TM (Zimbabwe) v Secretary of State for the Home Department [2010] EWCA Civ 916]. We will therefore allow the appeal and remit the case to the Upper Tribunal for redetermination. In relation to AM, the court said at para 52: As in the first case, the issue was not simply whether the appellant could account for his absence in the UK. The judge failed to address the issue as to his ability to show his loyalty to the regime. Unlike RT, he has not been held to be a credible witness. Accordingly, as in the case of SM, we do not feel able to substitute our own conclusion on this issue. We will therefore allow the appeal and remit the case to the Upper Tribunal. The Secretary of State seeks an order that the decisions of the Tribunal should be restored in all three cases, alternatively that the claims should be remitted for further consideration of the sole issue of whether each claimant would be able to prove loyalty to the regime. KM was born on 5 March 1957. He left Zimbabwe legally and claimed to have arrived in the United Kingdom in January 2003 on a false South African passport. He was given six months leave to enter as a visitor. He claimed asylum on 20 August 2008 and his claim was refused by the Secretary of State. His appeal was dismissed by the AIT on 1 April 2009. A fact of central importance was that his son had been granted asylum in the United Kingdom because he had a well founded fear of persecution in Zimbabwe on the grounds that he was a sympathiser of the MDC. IJ Parkes concluded that KM and his son (on whose evidence he relied) were not reliable witnesses with regard to events in Zimbabwe and that KM could not demonstrate an inability to show loyalty to the regime. On 11 August 2009, Hickinbottom J ordered reconsideration. The appeal was dismissed on reconsideration on 23 October 2009. SIJ Latter said at para 18: In the light of the judges findings of fact I am not satisfied that the appellant established any adequate factual basis to support his claim that he would be at real risk of finding himself in a position where he would be unable to demonstrate loyalty to the regime. The judge found that the appellant had no profile in Zimbabwe and had not been involved in MDC activities. There was no reasonable degree of likelihood that the grant of status to his son would be known to those who might call upon him to show loyalty and he also failed to establish any serious possibility of finding himself in a position that such a call would now be made on him. Finally, he failed to show that his background, his profile or his beliefs were such that he would not be able to demonstrate loyalty. The Court of Appeal allowed his appeal and remitted the case to the Upper Tribunal. The leading judgment was given by Pill LJ: [2011] EWCA Civ 275. The Secretary of State accepted that the appeal should be allowed by the Court of Appeal because it was arguable that the Tribunal had failed to give adequate consideration to the assessment of risk in the light of the guidance in RN. The issue between the parties was whether there should be a remittal to the Tribunal (as the Secretary of State contended) or the appeal should be allowed outright (as the appellant contended). It was conceded by the Secretary of State that there was a real risk that the appellants son having obtained asylum because of his MDCs sympathies would come out on the appellants return (para 6 of Pill LJs judgment); and that the fact that KMs son had been granted asylum may place the appellant in an enhanced risk category by making it more difficult for him to demonstrate his loyalty to the regime (para 12). The primary submission of the Secretary of State to the Court of Appeal was that there should be a further opportunity to examine the circumstances of return, for example, the area to which KM would return and whether he was a person who would be returning to a milieu where loyalty to the regime would be assumed (para 13). At para 15, Pill LJ said that, in the light of the evidence and the guidance in RN, the appellants prospect of demonstrating loyalty to the regime appeared bleak. He concluded, however, that this was not a case which the court could decide on the basis that only one outcome was possible before the Tribunal, although he regarded the appellants case as strong and it was acknowledged by the Secretary of State that there was a risk of his sons status becoming known (para 29). At para 27, he gave two reasons for his conclusion by reference to the decision in RN: First, an applicant found not to have been a witness of truth will not be assumed to be truthful about his inability to demonstrate loyalty (paragraph 246). Secondly, there is recognition, in paragraphs 229 and 230, of categories of people, for example, those returning to more affluent areas and likely to be associated with the regime, who may be returning to a milieu where loyalty to the regime may be assumed and the risk of persecution does not arise. The country guidance in RN In RN the AIT summarised the position at para 258 as follows: The evidence establishes clearly that those at risk on return to Zimbabwe on account of imputed political opinion are no longer restricted to those who are perceived to be members or supporters of the MDC, but include anyone who is unable to demonstrate support for or loyalty to the regime or Zanu PF. To that extent the country guidance in HS (Returning asylum seekers) Zimbabwe CG [2007] UKAIT 00094 is no longer to be followed. The following points of detail are relevant. The risk of persecution resulted in particular from the activities at road blocks of ill disciplined militia gangs and War Veterans. It did not result from the risk of detection at the airport on return to Zimbabwe. The means used by those manning road blocks to establish whether a person was loyal to the ruling Zanu PF party included requiring them to produce a Zanu PF card or sing the latest Zanu PF campaign songs. An inability to do these things would be taken as evidence of disloyalty to the party and therefore of support for the opposition (para 81). In deploying these militia gangs, the regime unleashed against its own citizens a vicious campaign of violence, murder, destruction, rape and displacement designed to ensure that there remains of the MDC nothing capable of mounting a challenge to the continued authority of the ruling party (para 215). Any attempt by the regime to target those who have chosen to involve themselves with the MDC has been abandoned. The risk of not being able to demonstrate loyalty to the regime exists throughout the country, in both urban and rural areas (para 226). The means by which loyalty may be demonstrated will vary depending on who is demanding it. Production of a Zanu PF card is likely to suffice where an individual is confronted with such a demand, for example, at a road block. But even that may not protect the holder from serious harm in rural areas where the adverse interest is in the community as a whole, because the area is one in which the MDC made inroads in the Zanu PF vote at the March 2008 elections (para 227). People living in high density urban areas will face the same risk from militias or War Veterans as those living in rural areas, save that the latter are possibly at greater risk if their area has been designated as a no go area by the militias (para 228). Finally, at paras 229 and 230, points are made about milieu which Pill LJ noted at para 27 of his judgment, to which I have referred above. HJ (Iran) There has been no challenge in these appeals to the correctness of the decision in HJ (Iran) or its essential reasoning. In the light of the submissions that have been advanced in the present appeals, it is necessary to refer to parts of the judgments in HJ (Iran) in a little detail. The court recognised as a refugee a gay man who, if he returned to his country of nationality and lived openly as a homosexual, would face a real risk of persecution on the ground of his sexual orientation, and who, in order to avoid this risk, would carry on any homosexual relationships discreetly. I would accept the analysis of Mr Fordham QC that five principal reasons were given by the court for this conclusion. First, the treatment of those who lived openly as homosexuals in Iran and Cameroon constituted persecution (para 40 42). Secondly, sexual orientation was a protected characteristic within the category of membership of a particular social group (para 42). Thirdly, the underlying rationale of the Convention was 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 (para 53): see also paras 52, 65, 67 and 78. Fourthly, the necessary modification in order to avoid persecution (carrying on any homosexual relationships discreetly) ran contrary to this underlying rationale. It involved surrendering the persons right to live freely and openly in society as who they are, in terms of the protected characteristic, which was the Conventions basic underlying rationale: see per Lord Rodger at paras 75 76, Lord Hope at para 11 and myself at para 110. Fifthly, the modification was a response to the feared persecution because of these dangers of living openly (para 40). There was a difference between a case where the individual would live discreetly because of social pressures (para 61) and the situation where he would behave discreetly in order to avoid persecution because he is gay (para 62). Only the latter would be entitled to refugee protection, assuming, of course, that he would suffer persecution if he were to live openly as a homosexual. In the course of its reasoning, the court rejected three arguments advanced on behalf of the Secretary of State. The first was that it was necessary for a refugee to be able to characterise living discreetly in order to avoid persecution as being itself persecution. The second was that it was appropriate to see living discreetly in such circumstances as analogous to internal relocation, so that the unduly harsh test applied in relation to internal relocation should be applied here too: see per Lord Hope at paras 20 and 21. The third was that the question was whether living discreetly was or was not reasonably tolerable to the asylum seeker. This was the test enunciated by the Court of Appeal in HJ (Iran). In reaching his conclusion, Lord Rodger (para 69) followed the reasoning of the majority in the High Court of Australia in Appellant S395/2002 v Minister of Immigration (2003) 216 CLR 473. At para 72, he also referred to the approach adopted in New Zealand, particularly in Refugee Appeal No 74665/03 [2005] INLR 68 where at para 124 the New Zealand Refugee Status Appeals Authority considered that its own approach and that expressed by the majority 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. Lord Rodger continued: The difference between the High Court and the authoritywhich the authority considered could be important in certain caseswas 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. I shall return to the New Zealand case later in this judgment. At para 113 of my judgment, I said that the emphasis in the New Zealand decision was on the fact that refugee status could not be denied to a person who on return would forfeit a fundamental human right in order to avoid persecution. Like Lord Rodger, I saw the attractions of this approach. At para 114, I said that a particular attraction of the New Zealand approach was that it facilitated a determination of whether the proposed action by the claimant was at the core of the right or at its margins. At para 115, I said: 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. The principal issues that arise in these appeals Two principal issues arise. The first is whether the HJ (Iran) principle can apply to an individual who has no political beliefs and who is obliged to pretend to support a political regime in order to avoid the persecution that he would suffer if his political neutrality were disclosed. Is the position of such a person analogous to that of a homosexual who is obliged to live a discreet life in order to avoid the persecution that he would suffer if he revealed his sexual orientation? The second is whether, in the light of the country guidance given in RN, there is a real risk that such a person would face persecution on the grounds that he would be perceived to be a supporter of MDC. In other words, would he face a risk of persecution on the grounds of imputed political belief? The first issue: can the HJ (Iran) principle apply to individuals who have no political beliefs? The case of the Secretary of State in outline The relevant factual premises for a consideration of these issues are that (i) the claimants do not hold any political beliefs and (ii) in practice, in order to avoid the imputation that they do not support the ruling regime (and consequently to avoid maltreatment), there is a real and substantial risk that they will be required to dissemble political loyalty to that regime. The Court of Appeal were wrong to say at para 36 of their judgment that, if the claimants are forced to lie about their political neutrality or indifference solely in order to avoid persecution, the concealment of their lack of political beliefs would not defeat their claims to asylum. HJ (Iran) does not establish any such rigid principle. Rather, what is required is a fact sensitive analysis and consideration of whether interference with the claimants freedom to hold or not hold political opinions is at the core or the margin of the protected right or requires them to forfeit a fundamental human right. There are two fundamental differences between HJ (Iran) and the present cases. First, the issue in these cases does not relate to a fundamental or immutable part of the individuals identity or a fundamental human right, since the claimants do not have any political views. The right in question is freedom of political thought and/or expression. Since the claimants do not have political views, having to express a particular view which they do not hold is at the margin of the right. They are not being required to forfeit a fundamental human right in order to avoid being persecuted. Secondly, the situation contemplated in HJ (Iran) was one in which a person had to conceal a fundamental and immutable part of his identity at all times (at least when not in private). In these cases, what is contemplated is a situation where a person may on isolated occasions be required to spend a very short amount of time professing a feigned opinion on a matter of politics. Discussion It is well established that there are no hierarchies of protection amongst the Convention reasons for persecution, and the well founded fear of persecution test set out in the Convention does not change according to which Convention reason is engaged: see, for example, per Lord Hope in HJ (Iran) at para 10, per Lord Hoffmann in R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 651B and per Lord Bingham in Fornah v Secretary of State for the Home Department [2007] 1 AC 412, paras 20 22 (approving the reasoning of Laws J in R v Immigration Appeal Tribunal, Ex p De Melo [1997] Imm AR 43, 49 50). Thus the Convention affords no less protection to the right to express political opinion openly than it does to the right to live openly as a homosexual. The Convention reasons reflect characteristics or statuses which either the individual cannot change or cannot be expected to change because they are so closely linked to his identity or are an expression of fundamental rights. The HJ (Iran) principle applies to any person who has political beliefs and is obliged to conceal them in order to avoid the persecution that he would suffer if he were to reveal them. Mr Swift accepted that such a person would have a strong case for Convention protection, but he stopped short of an unqualified acceptance of the point. In my view, there is no basis for such reticence. The joint judgment of Gummow and Hayne JJ in Appellant S395/2002 contains a passage under the heading Discretion and being discreet which includes the following at para 80: 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. I made much the same point in HJ (Iran) at para 110: 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. In the context of religious belief, the United Nations High Commissioner for Refugees has said (in my view, rightly): Applying the same standard as for other Convention grounds, religious belief, identity or way of life can be seen as so fundamental to human identity that one should not be compelled to hide, change or renounce this in order to avoid persecution: Guidelines on International Protection: Religion Based Refugee Claims (2004) para 13 (emphasis added). But what about the person who has no political beliefs and who, in order to avoid persecution, is forced to pretend that he does? Does the right to hold no political beliefs (and say so) attract Convention protection as much as the right to hold and express political beliefs? A useful starting point is the preamble to the Convention, which includes the following: CONSIDERING that the Charter of the United Nations and the Universal Declaration of Human Rights approved on 10 December 1948 by the General Assembly have affirmed the principle that human beings shall enjoy fundamental rights and freedoms without discrimination, CONSIDERING that the United Nations has, on various occasions, manifested its profound concern for refugees and endeavoured to assure refugees the widest possible exercise of these fundamental rights and freedoms. This emphasis on the importance of human rights in the present context is also reflected in Council Directive 2004/83/EC (the Qualification Directive) whose tenth recital states: This Directive respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union. In particular this Directive seeks to ensure full respect for human dignity and the right to asylum of applicants for asylum and their accompanying family members. As Lord Bingham said in Fornah at para 10, 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. Lord Steyn made the same point in R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 638H to 639E. Under both international and European human rights law, the right to freedom of thought, opinion and expression protects non believers as well as believers and extends to the freedom not to hold and not to have to express opinions. The rights to freedom of thought, opinion and expression are proclaimed by articles 18 and 19 of the Universal Declaration of Human Rights 1948. As Lord Hope said in HJ (Iran) at para 15: The guarantees in the Universal Declaration are fundamental to a proper understanding of the Convention. The relevance of that general statement is not diminished by the note of caution sounded by Lord Hope that the Convention has a more limited purpose than the Declaration, in that, for example, persecution is not the same as discrimination simpliciter. Articles 18 and 19 of the Declaration are given effect internationally by articles 18 and 19 of the International Covenant on Civil and Political Rights 1966 (ICCPR). Article 18 of the ICCPR deals with the right to freedom of thought, conscience and religion. Article 19 deals with the right to freedom of opinion and expression. The United Nations Human Rights Committee has commented on these rights. In its General Comment No 22 on article 18 (30 July 1993), it said that the right to freedom of thought, conscience and religion in article 18.1 is far reaching and profound (para 1); the terms belief and religion are to be broadly construed (para 2); and article 18 protects theistic, non theistic and atheistic beliefs, as well as the right not to profess any religion or belief (para 2). In its General Comment No 34 on article 19 (12 September 2011), it said that freedom of opinion and freedom of expression are indispensable conditions for the full development of the person. They are essential for any society. They constitute the foundation stone for every free and democratic society (para 2). All forms of opinion are protected (para 9). At para 10, it said: Any form of effort to coerce the holding or not holding of any opinion is prohibited. Freedom to express ones opinion necessarily includes freedom not to express ones opinion. There is case law in relation to the European Convention on Human Rights to the effect that the guarantee of freedom of thought, conscience and religion under article 9 protects the indifferent or unconcerned, and extends to the right not to hold thoughts or beliefs and not to give expression to them. In Kokkinakis v Greece (1993) 17 EHRR 397, para 31, the European Court of Human Rights said: 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 of 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. In Buscarini and others v San Marino (1999) 30 EHRR 208, at para 34 unanimous Grand Chamber of the ECtHR repeated this passage and added: That freedom entails, inter alia, freedom to hold or not to hold religious beliefs and to practise or not to practise a religion. In Buscarini, the applicants were required, contrary to their wishes, to swear an oath on the Holy Gospels in order to take their seats in the San Marino Parliament. It was held that this requirement was not compatible with article 9. No part of the Grand Chambers reasoning concerned the strength of the applicants convictions that they should not be required to swear the oath. The essential point is that the court held that article 9 protects the right of the non believer as well as that of the believer. I can see no basis in principle for treating the right to hold and not to hold political beliefs differently. Article 10 of the ECHR provides that everyone has the right to freedom of expression and that this right shall include freedom to hold opinions. That must include the freedom not to hold opinions. As Professor Barendt puts it in Freedom of Speech, OUP, 2005 (2nd ed), p 94: The right not to speak, or negative freedom of speech, is closely linked with freedom of belief and conscience and with underlying rights to human dignity, which would be seriously compromised by a legal requirement to enunciate opinions which are not in truth held by the individual. Mr Husain QC has also drawn attention to some comparative jurisprudence. In his celebrated judgment in West Virginia State Board of Education v Barnette (1943) 319 US 624, 642 Justice Jackson said: If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein. If there are any circumstances which permit an exception, they do not now occur to us. The Supreme Court upheld the challenge by Jehovahs Witnesses to the constitutionality of a state requirement that children in public schools salute and pledge loyalty to the US flag. The court held that the freedom not to speak was an integral part of the right to speak. At pp 634 635, Justice Jackson said: Nor does the issue as we see it turn on ones possession of particular religious views or the sincerity with which they are held. While religion supplies the appellees motive for enduring the discomforts of making the issue in this case, many citizens who do not share these religious views hold such a compulsory rite to infringe constitutional liberty. Similarly, Sachs J in the Constitutional Court of South Africa stated in Christian Education South Africa v Minister of Education 2000 (10) BCLR 1051, para 36: There can be no doubt that the right to freedom of religion, belief and opinion in the open and democratic society contemplated by the Constitution is important. The right to believe or not to believe, and to act or not to act according to his or her beliefs or non beliefs, is one of the key ingredients of any persons dignity. It can therefore be seen that under both international and European human rights law, the right to freedom of thought, opinion and expression protects non believers as well as believers and extends to the freedom not to hold and not to express opinions. It is true that much of the case law and commentary is on freedom of belief in the context of religion, rather than other kinds of belief (whether political, philosophical or otherwise). But I see no basis for distinguishing between the freedom to hold and express different kinds of belief here. As Sachs J said, the right to believe or not to believe is a key ingredient of a persons dignity. The right to dignity is the foundation of all the freedoms protected by the Convention. I repeat what I said in HJ (Iran) at para 113: The right to dignity underpins the protections afforded by the Refugee Convention: see Canada (Attorney General) 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. Freedom to hold and express political beliefs is a core or fundamental right. As Mr Husain says, it would be anomalous, given that the purpose of the Convention inter alia is to ensure to refugees the widest possible exercise of their fundamental rights and freedoms, for the right of the unconcerned to be protected under human rights law, but not as a religious or political opinion under the Convention. Mr Swift accepts that political neutrality is an important human right protected by the Convention, but, he submits, only if the individual is a committed political neutral and not one to whom his neutrality is a matter of indifference. This is because there is no entitlement to protection under the Convention where the interference involves matters which are only at the margins of an individuals right to hold or not hold political opinions, and not at the core of that right. There is no entitlement to protection where what is required of the applicant does not oblige him to forfeit a fundamental human right. Mr Swift, therefore, draws a distinction between a person who is a conscientious or committed political neutral (A) and a person who has given no thought to political matters because the subject simply is of no interest to him (B). He accepts that the Convention protects A from persecution, because his political neutrality is a core or fundamental human right. The HJ (Iran) principle is capable of applying to A. Refugee status may not be denied to him simply because he would pretend to support a regime in order to avoid persecution. But Mr Swift says that the HJ (Iran) principle cannot apply to B because, in his case, false support for the regime would cause interference at the margin, rather than the core, of the protected right and would not cause him to forfeit a fundamental human right. Mr Swift seeks support for the distinction, in particular, from paras 72 and 115 of HJ (Iran) to which I have referred at paras 20 and 21 above. I would reject this distinction for a number of reasons. First, the right not to hold the protected beliefs is a fundamental right which is recognised in international and human rights law and, for the reasons that I have given, the Convention too. There is nothing marginal about it. Nobody should be forced to have or express a political opinion in which he does not believe. He should not be required to dissemble on pain of persecution. Refugee law does not require a person to express false support for an oppressive regime, any more than it requires an agnostic to pretend to be a religious believer in order to avoid persecution. A focus on how important the right not to hold a political or religious belief is to the applicant is wrong in principle. The argument advanced by Mr Swift bears a striking resemblance to the Secretary of States contention in HJ (Iran) that the individuals in that case would only have a well founded fear of persecution if the concealment of their sexual orientation would not be reasonably tolerable to them. This contention was rejected on the grounds that (i) it was unprincipled and unfair to determine refugee status by reference to the individuals strength of feeling about his protected characteristic (paras 29 and 121) and (ii) there was no yardstick by which the tolerability of the experience could be measured (paras 80 and 122). As regards the point of principle, it is the badge of a truly democratic society that individuals should be free not to hold opinions. They should not be required to hold any particular religious or political beliefs. This is as important as the freedom to hold and (within certain defined limits) to express such beliefs as they do hold. One of the hallmarks of totalitarian regimes is their insistence on controlling peoples thoughts as well as their behaviour. George Orwell captured the point brilliantly by his creation of the sinister Thought Police in his novel 1984. The idea if you are not with us, you are against us pervades the thinking of dictators. From their perspective, there is no real difference between neutrality and opposition. In Gomez v Secretary of State for the Home Department [2000] INLR 549, a starred decision of the Immigration Appeal Tribunal, Dr Storey put the point well at para 46: It will always be necessary to examine whether or not the normal lines of political and administrative responsibility have become distorted by history and events in that particular country. This perception also explains why refugee law has come to recognise that in certain circumstances neutrality can constitute a political opinion. In certain circumstances, for example where both sides operate simplistic ideas of political loyalty and political treachery, fence sitting can be considered a highly political act. There is no support in any of the human rights jurisprudence for a distinction between the conscientious non believer and the indifferent non believer, any more than there is support for a distinction between the zealous believer and the marginally committed believer. All are equally entitled to human rights protection and to protection against persecution under the Convention. None of them forfeits these rights because he will feel compelled to lie in order to avoid persecution. Secondly, the distinction suggested by Mr Swift is unworkable in practice. On his approach, the question arises: how important to the individual does the right not to hold political beliefs have to be in order to qualify for protection? On a spectrum of political non belief, at one end is the person who has carefully considered matters engaging the machinery of State, government, and policy (Goodwin Gill and McAdam, The Refugee in International Law, 3rd ed (2007) p 87) and conscientiously decided that he is not interested. He may, for example, have concluded that effective political governance is beyond the ability of man and that he cannot therefore support any political party or cause. At the other end is the person who has never given any thought to such matters and has no interest in the subject. There will also be those who lie somewhere between these two extremes. Where is the core/marginal line to be drawn? At what point on the spectrum of non belief does the non belief become a core or fundamental human right? The test suggested by Mr Swift would, to say the least, be difficult to apply. Unless compelled to do so, we should guard against introducing fine and difficult distinctions of this kind. In my view, there is no justification for calling on immigration judges to apply the distinction suggested by Mr Swift. It would be likely to be productive of much uncertainty and potentially inconsistent results. Thirdly, Mr Swifts suggested distinction between core and marginal rights is based on a misunderstanding of what we said in HJ (Iran). In order to understand what Lord Rodger and I said on the issue, it is necessary first to see what was said by the New Zealand Refugee Status Appeals Authority in Refugee Appeal No 74665/03. At para 82, the Authority said that if the right sought to be exercised by the applicant is not a core human right, the being persecuted standard of the Convention is not engaged. But if the right is a fundamental human right, the next stage is to determine the metes and bounds of that right. The Authority continued: If the proposed action in the country of origin falls squarely within the ambit of that right the failure of the state of origin to protect the exercise of that right coupled with the infliction of serious harm should lead to the conclusion that the refugee claimant has established a risk of being persecuted. The same point was made at para 90. For the purpose of refugee determination, the focus must be on the minimum core entitlement conferred by the relevant right. Thus, where the risk of harmful action is only that activity at the margin of a protected interest is prohibited, it is not logically encompassed by the notion of being persecuted. The point was repeated at para 120. At paras 99, 101 and 102, the Authority gave examples of the kind of activity which were at the margin of a protected right. Prohibition on a homosexual from adopting a child on the grounds of his sexual orientation would not be persecution, because adoption of a child was well on the margin of the right enjoyed by homosexuals to live their lives as homosexuals openly and free from persecution. The same point was made in relation to (i) the denial to post operative transsexuals of the right to marry, (ii) the denial to homosexuals of the right to marry and (iii) the prosecution of homosexuals for sado masochistic acts. It was suggested that, whether or not any of these involved breaches of human rights, they could not be said to amount to persecution since the prohibited activities in each case were at the margin of the protected right. In HJ (Iran), Lord Rodger gave as another possible example the applicant who claimed asylum on the ground that he feared persecution if he took part in a gay rights march. If a person would be able to live freely and openly as a gay man provided that he did not take part in gay rights marches, his claim for asylum might well fail. At paras 114 and 115 of my judgment too, I was saying no more than that a determination of whether the applicants proposed or intended action lay at the core of the right or at its margins was useful in deciding whether or not the prohibition of it amounted to persecution. I remain of that view. The distinction is valuable because it focuses attention on the important point that persecution is more than a breach of human rights. What matters for present purposes is that nothing that was said in the Authoritys decision or by us in HJ (Iran) supports the idea that it is relevant to determine how important the right is to the individual. There is no scope for the application of the core/marginal distinction (as explained above) in any of the appeals which are before this court. The situation in Zimbabwe as disclosed by RN is not that the right to hold political beliefs is generally accepted subject only to some arguably peripheral or minor restrictions. It is that anyone who is not thought to be a supporter of the regime is treated harshly. That is persecution. For the reasons that I have given, I would reject the restrictive approach suggested by Mr Swift to the application of the HJ (Iran) principle to these cases and hold that it applies to applicants who claim asylum on the grounds of a fear of persecution on the grounds of lack of political belief regardless of how important their lack of belief is to them. The second issue: imputed political belief The principle is not in doubt that an individual may be at risk of persecution on the grounds of imputed opinion and that it is nothing to the point that he does not in fact hold that opinion. Professor Hathaway, The Law of Refugee Status (1991), pp 155 156 states: The focus is always to be the existence of a de facto political attribution by the state of origin, notwithstanding the objective unimportance of the claimants political acts, her own inability to characterise her actions as flowing from a particular political ideology, or even an explicit disavowal of the views ascribed to her by the state. In Interpreting Article 1 of the 1951 Convention Relating to the Status of Refugees, April 2001, the UNHCR summarised the relevant law well at para 25: It is now generally agreed that imputed or perceived grounds, or mere political neutrality, can form the basis of a refugee claim. For example, a person may not in fact hold any political opinion, or adhere to any particular religion, but may be perceived by the persecutor as holding such an opinion or being a member of a certain religion. In such cases, the imputation or perception which is enough to make the person liable to a risk of persecution is likewise, for that reason, enough to fulfil the Convention ground requirement, because it is the perspective of the persecutor which is determinative in this respect. The application of this principle in any given case raises questions of fact. Persecution on the grounds of imputed opinion will occur if a declared political neutral is treated by the regime (or its agents) as a supporter of its opponents and persecuted on that account. But a claim may also succeed if it is shown that there is a real and substantial risk that, despite the fact that the asylum seeker would assert support for the regime, he would be disbelieved and his political neutrality (and therefore his actual lack of support for the regime) would be discovered. It is well established that the asylum seeker has to do no more than prove that he has a well founded fear that there is a real and substantial risk or a reasonable degree of likelihood of persecution for a Convention reason: R v Secretary of State for the Home Department, Ex p Sivakumaran [1988] AC 958. I do not believe that any of this is controversial. How does it apply to the facts of these cases? The issue that is common to all these cases as regards imputed belief is whether there is a real and substantial risk that the political neutrality of the claimants would be discovered by the militia gangs and War Veterans who man road blocks even if the claimants were to dissemble and say that they support the regime. This raises two questions namely (i) whether the claimants would be likely to be stopped or face serious interrogation at road blocks at all; and (ii) if yes, whether their pretended support for the regime would be disbelieved. As regards the first question, the best evidence as to the likelihood of being stopped and interrogated at a road block is provided by RN. The AITs decision states that the militia groups and War Veterans operate in rural areas and urban districts (para 213) and across the country (para 216). The risk of persecution arises throughout the country (para 225) and people living in high density urban areas face the same risk from militias and War Veterans as those living in rural areas (para 228). But those living in more affluent low density urban areas or suburbs are likely to avoid such difficulties (para 229). If a failed asylum seeker is associated with the regime or is otherwise a person who would be returning to a milieu where loyalty to the regime is assumed, he will not be at risk simply because he spent time in the United Kingdom and sought to extend his stay by making a false asylum claim (para 230). In other words, it is only if an applicant returns to a milieu where loyalty to the regime is assumed that his claim is likely to fail at the first hurdle. As for the second question, the immigration judge would have to consider the kind of questions that the applicant might be asked when interrogated at the road block; how effective a liar the applicant would be when asserting loyalty to the regime; how credulous the interrogators would be in the face of such lies; whether the interrogators might ask the applicant to produce a Zanu PF card or sing the latest Zanu PF campaign songs and whether the applicant would be able to produce a card and sing the songs. It is difficult to see how a judge could provide confident answers to these questions. He or she would almost certainly be unable to avoid concluding that there would be a real and substantial risk that, if a politically neutral claimant were untruthfully to assert loyalty to the regime, his political neutrality would be discovered. To summarise, in the light of RN, it is difficult to see how an asylum claim advanced on the basis of imputed political opinion could be rejected, unless the judge was able to find that the claimant would return to a milieu where political loyalty would be assumed and where, if he was interrogated at all, he would not face the difficulties faced by those who were not loyal to the regime in other parts of the country. If the claimant would return to any other parts of the country, the judge would be likely to conclude that there was a real and substantial risk that a politically neutral person who pretended that he was loyal to the regime would be disbelieved. Disposal I can now turn to the disposal of all four appeals in the light of my conclusion on the two principal issues. The facts relating to RTs case are set out at paras 4 and 5 above. The Secretary of State submits that there is no basis for concluding that, if RT were required to profess loyalty to the regime, she would be forced to lie. There was no record of any evidence as to her political views. The Tribunal merely found that she had never been politically active. Mr Swift submits that she may have been a fervent (albeit inactive) supporter of the regime. But DIJ Manuell found RT to be a credible witness and that she was in a position to explain that she has never been politically involved at home or abroad (para 25). Her evidence before IJ Hussain (which was accepted) was that on her return she would be required to demonstrate loyalty to the regime, which she could not do because she is not a political person and has not supported the party (para 34). Unless she would return to a milieu where loyalty to the regime was assumed, the only way that she could avoid the risk of persecution would be to feign support for the regime. In that event, having regard to my conclusions on the application of the HJ (Iran) principle, the Court of Appeal were right to uphold her claim to asylum. It is not suggested by Mr Swift that RT would return to a milieu where support for the regime would be assumed and where she would therefore not face the risk of hostile interrogation. In these circumstances, there was no case for remitting the case to the Tribunal. I would also reach the same conclusion on the basis of imputed opinion. The facts relating to SM are set out at para 6 above. In addition to taking issue with the way in which the Court of Appeal dealt with the HJ (Iran) principle, Mr Swift submits that they appear to have ignored or misunderstood RN where it was made clear (para 241) that a bare assertion that a person will be unable to prove loyalty is not enough for a successful claim, adding that this is especially so where the applicant has been found to be incredible. At paras 23 and 24 of the decision of IJ Charlton Brown, the judge concluded that, contrary to SMs claim, she had not been linked with the MDC, that she had been able to live in Zimbabwe without problems since 2002, and that she was unable to rely on any of the risk factors identified in RN. As to this, the Court of Appeal said at para 46: At first sight this is a much less meritorious case, and one can understand the judges reaction to her failure to give credible evidence. However, it was not enough to hold that she would be willing to lie as and when required, if the reason for doing so would be to avoid persecution. Nor is willingness to lie the same as ability to prove loyalty to the regime. On the other hand, in view of her lack of credibility overall, it remains open to question whether her case should fail for lack of proof as in TM. We will therefore allow the appeal and remit the case to the Upper Tribunal for redetermination. The Court of Appeal were correct. For all the reasons stated in RN, the fact that SMs claimed support for the MDC was rejected as being incredible was not decisive. The central question is whether there was a real and substantial risk that her loyalty to the regime could not be demonstrated. In view of her lack of credibility throughout, she might have difficulty in demonstrating that she did not have loyalty to the regime. But the case should be remitted to the Tribunal for that issue to be determined in the light of RN and in the light of what I have said about the HJ (Iran) principle and the issue of imputed opinion. There is no cross appeal on behalf of SM that her claim for asylum should be recognised by this court. I would dismiss this appeal. I have set out the findings by the AIT at para 7 above. The Court of Appeal allowed AMs appeal on the ground that the immigration judge had failed to address the issue as to his ability to show his loyalty to the regime (para 52). Like SM, he had not been held to be a credible witness. For that reason, the Court of Appeal did not feel able to substitute their own conclusion for that of the judge and remitted the case to the Tribunal. The Secretary of State advances no reasons particular to AMs case (as distinct from the HJ (Iran) principle) for overturning the decision of the Court of Appeal. There is no cross appeal by AM. I would, therefore, dismiss this appeal too. The facts relating to the case of KM are set out at paras 12 to 14 above. Mr Dove QC submits that the Court of Appeal should have allowed the appeal outright and not remitted the case to the Upper Tribunal for a third hearing. I have referred at para 14 above to the two reasons given by Pill LJ for his conclusion that, although KMs case was strong, it could not be said that it was bound to succeed before the Tribunal. The first was that an applicant who had been found to be an untruthful witness would not be assumed to be truthful about his inability to demonstrate loyalty to the regime. But, as I have already said, the circumstances in Zimbabwe as described in RN mean that the fact that an applicant is lacking in credibility may be a matter of little relevance on the key question of whether he will be able to demonstrate loyalty. As for the second reason, the milieu to which KM would be returned is likely to be of marginal relevance in this case. That is because, as was conceded before the Court of Appeal, there was a real risk that the fact that KMs son had been granted asylum in the United Kingdom on account of his MDC sympathies would come out on his return to Zimbabwe (para 6 Pill LJs judgment) and that this might place him in an enhanced risk category by making it more difficult for him to demonstrate his loyalty to the regime (para 12). I can well understand why the Court of Appeal decided to remit this case to the Tribunal. But it seems to me that, in the light of the concessions to which I have referred and the fact that KMs case was therefore very strong, it would not be just to subject him to a third Tribunal hearing. Overall conclusion For the reasons that I have given, I would dismiss the appeals of the Secretary of State in the cases of RT, SM and AM and allow the appeal of KM. LORD KERR For the reasons given by Lord Dyson, with which I entirely agree, I too would dismiss the appeals of the Secretary of State in the cases of RT, SM and AM and allow the appeal of KM. The starting point in consideration of these appeals must be that the purpose of the Refugee Convention is to protect people from persecution. In the extreme, repressive and anarchic conditions which obtain in Zimbabwe, the risk of being persecuted is all too real and predictable, albeit, on the evidence currently available, the incidence of that persecution is likely to be both random and arbitrary. As a general proposition, the denial of refugee protection on the basis that the person who is liable to be the victim of persecution can avoid it by engaging in mendacity is one that this court should find deeply unattractive, if not indeed totally offensive. Even more unattractive and offensive is the suggestion that a person who would otherwise suffer persecution should be required to take steps to evade it by fabricating a loyalty, which he or she did not hold, to a brutal and despotic regime. As a matter of fundamental principle, refusal of refugee status should not be countenanced where the basis on which that otherwise undeniable status is not accorded is a requirement that the person who claims it should engage in dissimulation. This is especially so in the case of a pernicious and openly oppressive regime such as exists in Zimbabwe. But it is also entirely objectionable on purely practical grounds. The intellectual exercise (if it can be so described) of assessing whether (i) a person would and could reasonably be expected to lie; and (ii) whether that dissembling could be expected to succeed, is not only artificial, it is entirely unreal. To attempt to predict whether an individual on any given day, could convince a group of undisciplined and unpredictable militia of the fervour of his or her support for Zanu PF is an impossible exercise. But all of the foregoing is by way of incidental preamble. The truly critical question in this appeal is whether there is a right in Refugee Convention terms not to have a political opinion. Ultimately, Mr Swift was driven to accept that there is such a right but he suggested that this right can be attenuated according to the disposition of the person who espouses a strictly apolitical stance. I consider that this central proposition is fundamentally flawed. The level of entitlement to protection cannot be calibrated according to the inclination of the individual who claims it. The essential character of the right is inherent to the nature of the right, not to the value that an individual places on it. And the need for a clear insight into that critical aspect of the right is well exemplified by the situation in Zimbabwe. If an apolitical individual fails to demonstrate plausibly that he or she is a sufficiently fervent supporter of Zanu PF, he or she will be deemed to be a political opponent, irrespective of how greatly he or she cherishes the right not to hold a political view. The status of deemed political opponent, whether it is the product of imputation of political opposition or merely the arbitrary decision of those testing the degree of conviction or fervour with which support for Zanu PF is expressed, is the gateway to persecution and that cannot be dependent on whether the lack of political opinion is due to a consciously held conviction or merely due to indifference. That is why the emphasis must be not on the disposition of the individual liable to be the victim of persecution but on the mind of the persecutor. In the present appeals it is clear that the question whether the treatment that the individuals might face if returned to Zimbabwe would amount to persecution is not in issue. Quite clearly it would be. Nor is there any reason to doubt that the motivation for simulating support for the regime on their parts would be because of their desire to avoid that persecution. The only basis, therefore, on which denial of their claim to refugee status can be sustained, is that their right not to hold a political opinion lies at the lower end of the core/marginal spectrum. As Mr Dove submitted, such an argument requires to be treated extremely circumspectly. Those instances where the right was found to lie at the marginal end of the continuum all involved a measure of voluntary control over the situation in which the individual who was claiming protection found himself. That is not the position here. But, in any event, if the core/marginal dichotomy has any relevance whatever, it is in making an assessment as to whether the species of infringement strikes at the essence of the right or merely at a less important aspect of it. For the reasons that Lord Dyson has given, it appears to me that the infringement is quintessentially a violation of the central core of the right not to hold a political opinion. |
This is an appeal concerning a claim for repayment of unduly levied Value Added Tax (VAT) in the context of a VAT group of companies. The question is whether Taylor Clark Leisure PLC (TCL) is to be treated as having made claims for repayment within the time limit set by section 121 of the Finance Act 2008 (FA 2008), namely by 31 March 2009, when another company, which was formerly a member of the VAT group, and not TCL made the relevant claims. As I discuss below, the idea of a VAT group of companies was introduced to simplify the collection of VAT (a) by ignoring intra group transactions and (b) by treating supplies by or to any member of the group in their dealings with entities outside the group as transactions by a single taxable person. Several companies have sought to intervene in this appeal because of concerns that the determination of this appeal would affect their outstanding claims which are due to be heard by the Court of Appeal in January 2019. This court has declined to allow such intervention because this appeal is not directly concerned with questions raised in those appeals as to which company has a right to claim repayment of unduly levied VAT either when a company which has had the economic burden of paying VAT has left a VAT group or where a VAT group has been dissolved. I recognise that, nonetheless, my discussion of the nature of the statutory regime in the United Kingdom (UK) in relation to an extant VAT group will indirectly have a bearing on those issues. Factual background TCL is now a dormant company. It was initially incorporated as Caledonian Associated Cinemas Ltd in 1935 and was reincorporated on change of name on two occasions before it acquired its current name in 1995. Between 1973 and 2009 TCL was the representative member of the Taylor Clark VAT Group (the VAT Group), in accordance with legislation which I discuss under the heading VAT legislation below. From 1973 until 28 February 2009, when the VAT Group was disbanded, the VAT registration number (VRN) of the VAT Group was 265 7918 16. On 16 November 2007, Carlton Clubs Ltd (Carlton) submitted four claims to the Commissioners of HM Revenue and Customs (HMRC) under section 80 of the Value Added Tax Act 1994 (VATA) for repayment of VAT output tax, which TCL as representative member of the VAT Group had accounted for in the years between 1973 and 1998 using its VRN as representative member of the VAT Group. TCL submits that it, as the representative member of the VAT Group, is entitled to rely on Carltons claims because it asserts that those claims are to be regarded as having been submitted on behalf of the VAT Group which EU law treats as a single taxable person entitled to repayment of the unduly levied tax. The dispute has arisen in the following way. In about 1990 TCL undertook a group reorganisation. Part of that reorganisation involved the transfer of its bingo business to Carlton, a member of the VAT Group which had been incorporated for that purpose under the name Leisurebrite Ltd, with effect from 1 April 1990. The transfer was effected by a letter dated 30 March 1990 (the 1990 Asset Transfer Agreement). In 1998 Carlton was sold out of the Taylor Clark group of companies and thus ceased to be part of the VAT Group. Thereafter Carlton accounted under its own VRN for VAT in relation to its bingo hall and other leisure business activities. Until 2005 it had been wrongly assumed that income generated from bingo and gaming machines was to be treated as subject to VAT at the standard rate. But on 17 February 2005 the Court of Justice of the European Union (CJEU) ruled that income from gaming machines was exempt from VAT, whether the machines were operated privately or at licensed public casinos: Finanzamt Gladbeck v Linneweber (Joined Cases C 453/02 and C 462/02) [2005] ECR I 1131; [2008] STC 1069. HMRC initially thought that the Linneweber decision did not apply in the UK as it believed that the UK treatment of gaming machine income did not breach the principle of fiscal neutrality. Nonetheless, HMRC invited claims for the repayment of VAT on income from gaming machines and analogous activities. In 2011 the CJEU decided that, as a result of the application of the principle of fiscal neutrality, bingo was not subject to VAT in the UK: Rank Group PLC v Revenue and Customs Comrs (Joined Cases C 259/10 and C 260/10) [2011] ECR I 10947; [2012] STC 23. In response, HMRC issued a Revenue and Customs Brief 39/11 in which they accepted that claims for repayments relating to bingo would be paid subject to verification. But HMRC, on their interpretation of the Rank Group judgment, continued to contest claims relating to gaming machines. On 23 January 2008 the House of Lords held that UK legislation which imposed a shortened three year time limit on claims for the refund of overpaid VAT in the period from 1973 to 4 December 1996 without providing for an adequate transitional period, which was fixed in advance, was contrary to European law: Fleming (t/a Bodycraft) v Revenue and Customs Comrs [2008] 1 WLR 195. In response to that judgment Parliament enacted section 121 of FA 2008, which disapplied the three year time limit for claims to be made for over declared or overpaid VAT in respect of periods up to 4 December 1996, if a claim was made before 1 April 2009. In anticipation of the judgment of the House of Lords in Fleming, Carlton on 16 November 2007 submitted four protective claims for repayment of output VAT which TCL as representative member of the VAT Group had overpaid in accounting periods between 1973 and the first quarter of 1998. Carlton made the claims, which related to overpaid VAT on (i) mechanised cash bingo takings, (ii) gaming machine takings, (iii) participation fees, and (iv) added prize money and participation fees, on its own letterhead but using the VAT Groups VRN. In claims (i), (ii) and (iv) Carlton headed the claim using TCLs name but in claim (iii) it used its own name in the heading. Carlton submitted the claims without informing TCL. On 8 January 2009 Carlton submitted a revised claim (iv) in which it quoted its own name and VRN as well as TCLs name and the VAT group VRN. In the revised claim, as discussed below, it asserted a right to claim overpaid VAT back to 1973 (ie before its incorporation in 1990) by relying on the 1990 Asset Transfer Agreement, which it claimed had assigned to it the right to make such historic claims. HMRC refused all of Carltons claims and Carlton appealed against the refusal. HMRC then betrayed no little uncertainty as to how to proceed with the claims. Initially, on 27 April 2009 HMRC wrote to TCL as representative member of the VAT Group to confirm that they had processed a repayment of 667,069 together with interest. This was the sum claimed by Carlton in its revised claim (iv), which HMRC paid to TCL on 12 May 2009. HMRC then changed their minds and on 7 July 2009 notified TCL of an assessment for repayment of that sum and interest. HMRC then changed their minds again and withdrew the assessment on 27 October 2009. Thereafter, on 4 May 2010 TCLs advisers wrote to HMRC to assert its right to receive repayment under the other claims. In a lengthy exchange of correspondence, TCL accepted that it had not made the claims but asserted a right to repayment because the claims had been made in respect of VAT for which it, as representative member of the VAT Group, had incorrectly accounted. In a decision letter dated 23 September 2010 HMRC (a) reversed their earlier decision concerning claim (iv) by confirming the assessments which sought repayment of the 667,069 and interest and (b) refused TCLs claim for repayment of the other claims. HMRC gave three reasons for their decision. First, they contended that TCL had not submitted claims before the expiry of the time limit imposed by section 121 of FA 2008. Secondly, HMRC stated that they had taken legal advice and expressed the view that the claims predating 31 March 1990 had been assigned to Carlton by the 1990 Asset Transfer Agreement. Thirdly, they asserted that because the VAT Group had since been disbanded, the claim for over declared output tax must be made by the company whose activities gave rise to the over declaration and Carlton had made that claim. This third reason reflected HMRCs policy at that time; now HMRC assert that the right to repayment remains with the last representative member of a disbanded VAT group. TCL requested a review of the decision and on review HMRC confirmed their decision and maintained their assessments. TCL and Carlton pursued rival appeals against HMRCs refusal to repay the outstanding claims. TCLs appeals, which had been lodged in London, were transferred to Edinburgh so that they could be heard together with Carltons appeals. On 26 January 2012 Carlton withdrew two of its appeals and intimated to the First tier Tribunal (FTT) that HMRC had satisfied those claims. Carltons representative also informed the FTT that Carlton had withdrawn another appeal because HMRC had repaid the claim to Carlton. The remaining appeal remains sisted (stayed). It thus appears that HMRC have paid to Carlton the sums claimed in three of the four appeals. The decisions of the Tribunals and the Inner House The FTT (Judge Gordon Reid QC and Dr Heidi Poon) issued its determination on 19 December 2012, in which it decided three main issues. First, it held that the right to claim repayment of sums due from 1973 to 1990 had been assigned to Carlton by the 1990 Asset Transfer Agreement (the Assignation Issue). Secondly, it held (contrary to the submissions of both parties) that the right to repayment for the claims relating to the period from 1990 to 1996 had been re invested in Carlton when it left the VAT Group in 1998 (the Entitlement Issue). Thirdly, it held that TCL had not made a claim under section 80 of VATA and could not rely on the claims submitted by Carlton, which had not made the claims on TCLs behalf (the Claimant Issue). TCL appealed to the Upper Tribunal (UT) on all three issues. The UT (Lord Doherty) in a determination dated 8 September 2014 dismissed the appeal. On the Claimant Issue he interpreted section 80 of VATA as requiring that the claim be made by or on behalf of the taxpayer seeking repayment. TCL had not made a claim and no claim had been made on its behalf before the end of the limitation period; accordingly TCLs claim was time barred. On the Assignation Issue Lord Doherty reversed the FTTs decision, holding that TCL had not assigned the pre 1990 claims to Carlton in the 1990 Asset Transfer Agreement. On the Entitlement Issue, he recorded that it was common ground between HMRC and TCL that TCL was the appropriate party to seek repayment of tax accounted for between 1990 and 1996, even after the VAT Group had been disbanded on 28 February 2009. TCL sought to appeal only in relation to the Claimant Issue. Lord Doherty refused permission to appeal but on a renewed application to a single judge of the Inner House, Lady Clark of Calton gave permission to appeal on the Claimant Issue by reference to the following question: Can the VAT Group, represented by [TCL], rely on the claims for repayment of VAT overpaid by the VAT Group, when the claims were made in time but were made by another member of the same VAT group? HMRC did not cross appeal on the Assignation or Entitlement Issues. Accordingly the only issue which was before the Inner House and is now before this court is the Claimant Issue. The Extra Division of the Inner House in an opinion dated 14 July 2016 allowed TCLs appeal. The court held that the representative member embodied the VAT group which was a single taxable person, or a quasi persona, so that the acts, rights, powers and liabilities of the individual members of the group were ascribed to the representative member as far as they related to VAT. The Inner House held that, in the context of section 43 of VATA, a claim by an individual member of a VAT group must normally be construed as a claim made on behalf of the representative member embodying the group as otherwise the claims would have no meaning. As a result, by adopting a purposive construction of the letters which Carlton sent to HMRC, the claims made by Carlton fell to be regarded as claims made by TCL as representative member of the VAT Group. The parties contentions HMRCs principal argument is that the Inner House erred in holding that a claim for repayment of VAT by an individual member of a VAT group must normally be construed as a claim made on behalf of the representative member of that group. Carltons claim was made on its own behalf and TCL cannot rely on it to avoid the statutory time bar. TCLs response, in summary, is that Carltons claims sought to vindicate the rights of the single taxable person, which was the VAT Group. Carlton in EU law had no individual fiscal personality in relation to those rights. The claims must be treated as having been submitted on behalf of the VAT Group, which was the only taxable person recognised by EU law, and TCL, as the representative member of the VAT Group, was entitled to rely on those claims. In any event, TCL submits that it validly ratified the claims which Carlton made on its behalf. The VAT legislation The starting point for consideration of the parties submissions is article 11 of the Principal VAT Directive, Council Directive 2006/112/EEC of 28 November 2006 (the Principal Directive) which provides: After consulting the advisory committee on value added tax (hereafter, the VAT committee), each member state may regard as a single taxable person any persons established in the territory of that member state who, while legally independent, are closely bound to one another by financial, economic and organisational links. A member state exercising the option provided for in the first paragraph, may adopt any measures needed to prevent tax evasion or avoidance through the use of this provision. Two points may be made about this provision. First, it is permissive. There is no obligation on a member state to institute such a regime. Secondly, it is not prescriptive. It does not lay down a template as to how a member state will treat a group of persons as a single taxable person. It shares these characteristics with its predecessor, article 4.4 of the Sixth Council Directive of 17 May 1977 (77/388/EEC) (the Sixth Directive). The UK took up the opportunity to establish VAT groups of companies, initially in section 21 of the Finance Act 1972 and later in section 29 of the Value Added Tax Act 1983 (the 1983 Act). The current provision is section 43 of VATA, as amended, which provides, so far as relevant: (1) Where under sections 43A to 43D any bodies corporate are treated as members of a group, any business carried on by a member of the group shall be treated as carried on by the representative member, and any supply of goods or services by a member of (a) the group to another member of the group shall be disregarded; and (b) any supply which is a supply to which paragraph (a) above does not apply and is a supply of goods or services by or to a member of the group shall be treated as a supply by or to the representative member; and all members of the group shall be liable jointly and severally for any VAT due from the representative member. It is clear from the statutory words in section 43(1) of VATA that the UK chose to achieve the end which the Directive authorised not by deeming the group to be a quasi person but by treating the representative member as the person which supplied or received the supply of goods or services. This point was clearly made by the House of Lords in Customs and Excise Comrs v Thorn Materials Supply Ltd [1998] 1 WLR 1106 in their discussion of the predecessor provisions, namely article 4.4 of the Sixth Directive and section 29 of the 1983 Act. Lord Nolan, with whom Lord Browne Wilkinson and Lord Lloyd of Berwick agreed, stated (1113C D) that those provisions were designed to simplify and facilitate the collection of tax by treating the representative member as if it were carrying on all of the businesses of the other members as well as its own, and dealing on behalf of them all with non members. I do not construe Lord Nolans reference to dealing on behalf of the other members of the VAT group as a reference to an agency relationship. Section 43 is not concerned with the intra group legal arrangements of group members. It is concerned with dealings in relation to VAT with entities outside of the VAT group and with HMRC, including the disregard of intra group supplies in relation to liability for VAT. In its dealings with HMRC in relation to VAT the representative member is treated as carrying on the businesses of the other members of the group. Lord Clyde made the same point (1121H) stating that in the UK the single taxable person for which provision was made in article 4.4 of the Directive was the representative member. Lord Hoffmann, while dissenting, agreed on the effect of the provisions. He stated (1118A B): Section 29 does produce a single taxable person, namely, the representative member. But it does so, not by the crude method of deeming all members to be a single person but by the much more limited and specific assumptions which the subsection [now section 43(1)(a) and (b) of VATA] makes. Thus, the single taxable person is the representative member. The joint and several liability of the other members of the group for VAT due by the representative member is the means by which the UK has sought to counter tax evasion and avoidance in accordance with the authority conferred by the second paragraph of article 11 of the Principal Directive. In Ampliscientifica Srl v Ministero dell Economia e delle Finanze (Case C 162/07) [2008] ECR I 4019; [2011] STC 566, the CJEU (paras 19 and 20) explained that article 4.4 of the Sixth Directive, if implemented by a member state, had the effect that companies in a VAT group were no longer treated as separate taxable persons for the purpose of VAT but were to be treated as a single taxable person. This precluded such companies from submitting VAT declarations separately since the single taxable person alone is authorised to submit such declarations. It followed that the national implementing legislation had to provide that the taxable person is a single taxable person and that a single VAT number be allocated to the group. In the UK the model which achieves that result is that of the representative member. The words in section 43(1) are clear beyond question: any business carried on by a member of the group shall be treated as carried on by the representative member. It has not been suggested that the UK failed to consult the VAT committee before adopting this model (as required by Annex A of the Second Council Directive of 11 April 1967 (67/228/EEC) and later by article 4.4 of the Sixth Directive and now by article 11 of the Principal Directive) and no challenge has been made to the effect that the model does not faithfully implement the option which article 11 of the Principal Directive or its predecessor made available to member states. There is no reason to doubt that the model which the UK has adopted is consistent with the EU legislation. Other models have been used to take up the option. Thus, in the Kingdom of Sweden, national legislation, which exercised the option which article 4.4 of the Sixth Directive gave, provided that a VAT group might be regarded as a single operator and the activity in which companies within the group were engaged might be regarded as a single activity. The result was that services supplied to a company within such a VAT group in Sweden were regarded as services supplied to the VAT group: Skandia America Corpn (USA), filial Sverige v Skatteverket (Case C 7/13) [2015] STC 1163, paras 16 and 28 32. Whatever may be the position in the legislation of other member states, there is, in my view, no need to complicate matters by introducing a concept of the VAT group as a quasi persona in an analysis of the UK legislation. While one can, and HMRC does, speak of the registration of a group giving rise to a single taxable person, it is the appointment of a company as representative member of the group which provides the legal person which is the taxable person. The administration of VAT involves giving the representative member of a VAT group a VRN and the establishment of a bank account in its name from which VAT payments may be made to HMRC and into which repayments may be made. A VAT group may change its representative member by applying to HMRC under section 43B(2)(c) of VATA (as inserted by section 16 of, and paragraph 2 of Schedule 2 to, the Finance Act 1999) but the new representative member retains the same VRN and bank account. In Revenue and Customs Comrs v MG Rover Group Ltd [2016] UKUT 434 (TCC); [2017] STC 41, the Upper Tribunal (Warren J and Hellier J) described the position of the representative member in these terms (para 171): [T]he representative member of section 43 must, in our view, be understood as a continuing entity (perhaps akin to a corporation sole whose role is fulfilled by whoever holds the relevant office at any time). Thus actions, liabilities and rights of an old representative member must be ascribed to the new representative member on a change of representative member. In my view that analogy is apt. Section 43 of VATA does not make the group a taxable person but treats the groups supplies and liabilities as those of the representative member for the time being. Section 80 of VATA (as amended by section 3 of the Finance (No 2) Act 2005) provides (so far as relevant): (1) Where a person (a) has accounted to the Commissioners for VAT for a prescribed accounting period (whenever ended), and (b) in doing so, has brought into account as output tax an amount that was not output tax due, the Commissioners shall be liable to credit the person with that amount. (2) The Commissioners shall only be liable to credit or repay an amount under this section on a claim being made for the purpose. It is clear from the words of section 80(1) that HMRCs liability to credit or repay the overpaid output tax is owed to the person who accounted to them for VAT in the relevant accounting period or periods. It is also clear from the concluding words in subsection (2) (for the purpose) that a claim must be made for the credit or repayment to that person before HMRC come under any liability to credit or repay. Other subsections support this view. Section 80(3), which provides HMRC with the defence of unjust enrichment against a claim under subsection (1) or (1A), refers to the enrichment of the claimant and appears to assume that the claimant is the person who has accounted for the VAT. Subsection (4), which imposes a time limit on claims, also is drafted on the basis that the claim will result in the giving of a credit or repayment to the person who accounted for or paid the VAT in the first place. It therefore follows from the operation of section 43 of VATA that where there have been overpayments of VAT by the representative member of a VAT group, the person entitled to submit a claim during the currency of a VAT group, unless the claim has been assigned, is either the current representative member of the VAT group or a person acting as agent of that representative member. I therefore agree with the Extra Division in para 24 of their opinion that it is only the representative member who has any interest in making the claim. My disagreement is simply that one does not need the complication of viewing the group as a quasi persona to reach that conclusion. In this regard I agree with the impressive analysis of the single taxable person in the context of a subsisting VAT group by the FTT (Judge Roger Berner and Mr Nigel Collard) in paras 73 75 of the decision in Standard Chartered plc v Revenue and Customs Comrs [2014] UKFTT 316 (TC); [2014] SFTD 1270. In particular, as Judge Berner stated (para 73): Under UK law, as set out in section 43 VATA, the concept of the single taxable person is properly implemented through the representative member. The representative member is not the agent or trustee of the constituent members of the group. It is the domestic law embodiment of the single taxable person. Mr Scorey on behalf of TCL submits that the only taxable person is the VAT group, which alone has fiscal personality, and that any company within the VAT group can claim repayment of unduly levied VAT on behalf of the group. For the reasons set out above, I do not accept that submission. Nor do I see any basis for the assertion by the Extra Division (para 27) that a claim by an individual member of a VAT group must normally be construed as a claim made on behalf of the representative member, as otherwise the claim would have no meaning. An assignee of the representative member may make a valid claim in its own right (as Carlton purported to do in this case). Alternatively, a party may make a claim to which it is not entitled. I therefore approach the construction of Carltons claims without any such preconception. I also have regard to the limitation of an appeal from the UT to errors of law. In my view, for the following four reasons, the FTT did not err in law in so Applying the law to the facts: Carltons claims The FTT concluded (para 78) that it was clear from the text of each of Carltons letters that it was claiming, in its own right, repayment of sums alleged to have been overpaid by way of VAT, and (para 86) that Carlton did not make the claims in 2007 and the revised claim in 2009 on behalf of TCL. holding. First, when Carlton sent the letters to HMRC under its own letterhead, it had long ceased to be a member of the VAT group. This would have been known to HMRC. Even if Carlton had remained a member of the VAT Group, I would not have construed its letter as one on behalf of TCL, in the absence of an assertion that it was acting as TCLs agent, because the statutory scheme, which it was invoking, envisaged that HMRC would deal only with the representative member. Secondly, it appears from the four letters dated 16 November 2007 that Carlton had already presented claims in respect of each of claims (i) (iv) in relation to its own business activities in the period after it had left the VAT Group and it presented the new claims as serving to extend the scope of the previous disclosure. Thirdly, the use of the VAT Groups VRN was necessary in order to identify the original source of the allegedly overpaid VAT. The use of the VRN did not disclose who was entitled to the repayment as it was possible (and later clarified) that Carlton was claiming as assignee. Fourthly, in each of the claims submitted on 16 November 2007, Carlton was claiming repayment of sums paid from 1973, long before its incorporation in 1990, as well as in the period after 1990 when it was a member of the VAT Group. It clarified the basis on which it made those claims in its letter of 8 January 2009 in which it revised its claim (iv) in respect of cash bingo participation fees. In that letter it founded on the 1990 Asset Transfer Agreement and on a decision of the London VAT Tribunal in Triad Timber Components Ltd v Customs and Excise Comrs [1993] VATTR 384 in support of its right to be paid the overpaid VAT. In relation to the former Carlton claimed that it had obtained legal opinion that TCL had transferred to it the right under section 80 of VATA to claim output tax previously over declared. The Triad decision, on which Carlton relied for its post 1990 claim, was that a trading company had the right, after it left a VAT group and that groups registration had ceased, to reclaim VAT which had been overpaid on its supplies whilst it was a member of that group. Carlton claimed that that decision entitled it to claim overpaid output tax for the period that it had been a member of the VAT Group. HMRC at that time also accepted the Triad decision, as their policy then, in relation to claims after a group registration had ceased, was to repay the trading entity which had suffered the economic burden of the overpaid VAT. Both parties would have readily understood Carlton to be claiming repayment in its own interest. TCL sought to neutralise the effect of the letter of 8 January 2009 by arguing that one could not use a subsequent writing to assist in the construction of the earlier letters. I do not accept that submission in the context of these letters. The four letters of 16 November 2007 were in substantially similar terms. The letter of 8 January 2009 expressly revised the earlier claim for overpaid output tax on cash bingo participation fees, thereby superseding the earlier claim to that extent, and expanded on the reasoning behind that claim. That explanation, contained under the heading The right to deduct, applied equally to the other claims made on 16 November 2007, most obviously in relation to the periods in each claim which pre dated Carltons incorporation. In so far as there was any doubt as to the basis on which Carlton was making the claims in the four letters of 16 November 2007, the clarification provided by the latter letter is admissible and relevant evidence of the nature of Carltons claims. To hold otherwise, and have regard to the letter of 9 January 2009 only to the extent that it revised the earlier claim, would in my view be wholly artificial. I am also satisfied that TCLs case of agency cannot get off the ground. Carlton had no actual authority to send the letters on TCLs behalf. The FTTs findings of fact, which were not challenged, destroyed any such assertion. The FTT held (para 55) that TCL neither instructed nor authorised Carlton to submit any of the claims and (para 57) that TCL was unaware that it had a potential claim under section 80 of VATA and that HMRCs payment of 667,069 to it on 27 April 2009 came out of the blue. Similarly, there is no basis for an argument that TCL ratified Carltons claims which had been made on its behalf, thereby conferring retrospective authority. First, Carltons letters to HMRC did not purport to be written as agent of TCL. On the contrary, they were claims which Carlton pursued for its own benefit. That is fatal to the claim of ratification: Keighley, Maxsted & Co v Durant [1901] AC 240, especially Earl of Halsbury LC 243 244 and Lord Macnaghten 246 247. Secondly, there are no findings of fact that TCL ratified Carltons actions as its agent. This is unsurprising as TCLs case before the FTT and UT had not been based on Carlton having acted as its agent. Further, TCLs counsel in addressing the UT acknowledged that Carlton had submitted the letters on its own behalf and not on behalf of TCL. Instead she based her case on an interpretation of section 80 of VATA which allowed TCL to take over Carltons claims. The UT decided the appeal on that basis. As an appeal from the UT to the Inner House or to this court is available only on a point of law arising from the decision of the UT (Tribunals, Courts and Enforcement Act 2007 sections 13 14C (as inserted by section 64 of the Criminal Justice and Courts Act 2015)), it is not open to the appellate courts to find that there was an agency relationship between Carlton and TCL. Further submissions After the court had released this judgment in draft to counsel to enable them to point out any typographical errors and minor inaccuracies in accordance with Practice Directions 6.8.3 and 6.8.4, TCLs counsel applied to the court to make a reference to the CJEU under article 267 of the Treaty on the Functioning of the European Union. The suggested reference would raise the question whether the interpretation of section 43 of the VATA which I favour is compatible with the concept of the single taxable person in article 11 of the Principal Directive. I am satisfied that it is neither necessary nor appropriate to make such a reference because a ruling by the CJEU on the nature of the single taxable person is not necessary for the determination of this appeal: Srl CILFIT v Ministry of Health (Case C 283/81) [1982] ECR 3415. Whether in United Kingdom law the representative member is seen as the single taxable person or as the representative of a quasi person which is the aggregate of the companies in the VAT group and which itself is to be recognised in domestic law, the outcome of this appeal would be the same. This is because Carlton made its claims in its own interest and not on behalf of either the representative member or the extant VAT group of which it had ceased to be a member. A ruling by the CJEU that a member of a VAT group is a member of a single taxable person would not alter that conclusion. TCL also suggested that Schedule 1 to the VATA, which implements the second paragraph of article 11 of the Principal Directive by creating a single taxable person to counter tax avoidance, was inconsistent with the interpretation of section 43 which I favour. I disagree. Paragraphs 1A and 2 of Schedule 1 implement this part of article 11 by empowering HMRC to make a direction that the persons named in that direction are to be treated as a single taxable person, which is registered in respect of taxable supplies. Paragraph 2 provides that on the making of the direction (i) the persons affected by the direction are to give a name in which the taxable person is to be registered, (ii) provisions which are equivalent to section 43(1)(b) and (c), and the tailpiece of section 43(1) imposing joint and several liability on the constituent members, are applied, (iii) a failure by the taxable person to comply with a requirement imposed by of under the VATA is treated as a failure by each of the members severally and (iv) subject to the foregoing, the constituent members are treated as a partnership carrying on the business of the taxable person. Thus paragraph 2 of Schedule 1 implements the second paragraph of article 11 by treating the persons who are named in the direction as members of a partnership carrying on the business of the taxable person. In other words, in domestic law the partnership is the mechanism by which the persons subjected to the direction are treated as a single taxable person and no separate quasi person is required. I see no inconsistency between these provisions in Schedule 1 and the interpretation of section 43 which I favour. Conclusion I would therefore allow the appeal. |
In our society, a great deal of intellectual effort is devoted to tax avoidance. The most sophisticated attempts of the Houdini taxpayer to escape from the manacles of tax (to borrow a phrase from the judgment of Templeman LJ in W T Ramsay Ltd v Inland Revenue Comrs [1979] 1 WLR 974, 979) generally take the form described in Barclays Mercantile Business Finance Ltd v Mawson [2004] UKHL 51; [2005] 1 AC 684, para 34: . structuring transactions in a form which will have the same or nearly the same economic effect as a taxable transaction but which it is hoped will fall outside the terms of the taxing statute. It is characteristic of these composite transactions that they will include elements which have been inserted without any business or commercial purpose but are intended to have the effect of removing the transaction from the scope of the charge. The present appeals are concerned with composite transactions of this nature, designed to avoid the payment of income tax on bankers bonuses. They are among a number of cases concerning broadly similar schemes. In each case, the scheme was intended to take advantage of Chapter 2 of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), as amended by Schedule 22 to the Finance Act 2003 (Chapter 2). Although the schemes were also designed to avoid the payment of national insurance contributions, it is unnecessary to discuss that aspect, as it is common ground that the position in that regard is the same as in relation to income tax. The background and context of Chapter 2 It may be helpful to begin by considering the relevant legislation. Chapter 2 is best understood against the background of the previous law, and in its context within Part 7 of ITEPA. Under ordinary principles of tax law, where an employee receives shares as part of his remuneration, he is liable to income tax on the value of the shares, less any consideration which he may have given for them, in accordance with the decision of the House of Lords in Weight v Salmon (1935) 19 TC 174. That case concerned a situation where the managing director of a company had been allowed to subscribe for shares at par as a reward for successful performance. The position where an employee is granted a conditional share option was considered by the House of Lords in Abbott v Philbin [1961] AC 352. That was a case where a companys senior employees had been given an option to subscribe for its shares at the then current market price, the option being exercisable at any time within the next ten years. The employees were thus incentivised to increase the companys prosperity. The option was non transferable and would expire on the employees death or retirement. It was held that income tax was chargeable on the realisable monetary value of the option at the date of its acquisition, rather than on the value realised when it was subsequently exercised, as the Revenue had argued. Lord Reid said at p 376: I can sum up my view by saying that conditions and restrictions attached to or inherent in an option may affect its value, but are only relevant on the question whether the option is a perquisite if they would in law or in practice effectively prevent the holder of the option from doing anything when he gets it which would turn it to pecuniary account. The decision in Abbott v Philbin was reversed by section 25 of the Finance Act 1966 (later consolidated as section 186 of the Income and Corporation Taxes Act 1970), which removed any charge to income tax on the grant of employees share options, and instead imposed a charge on the gain realised when the option was exercised, assigned or released. Section 78 of the Finance Act 1972 subsequently conferred an exemption from the charge in relation to approved share option schemes, on the view that such schemes could perform valuable social and economic functions. Those provisions applied only to share option schemes. They did not apply to share incentive schemes under which an employee subscribed for, or was awarded, shares to which restrictions might be attached for a prescribed period, and which might become more valuable on the lifting of the restrictions. An employee might, for example, be awarded shares subject to the condition that they would be forfeited if performance targets were not met. Until 1998, the Revenue took the view that no charge to income tax arose when shares of that type were acquired. Nor, until the 1972 Act, was there any specific charge to income tax when the restrictions attached to the shares were lifted. Section 79 of the 1972 Act, however, imposed a charge to income tax on the value of employment related shares (less any consideration given) when the restrictions were lifted, or the employee ceased to have a beneficial interest in the shares, or a period of seven years elapsed from their acquisition, whichever was the earliest. The timing of the charge reflected the fact that it was at the point when the risk of forfeiture was lifted that the value of the shares could most easily be determined and realised. Approved share option schemes were excluded from the scope of the charge. Another exception related to shares which were not subject to any restrictions other than those applicable to all shares of the same class, where the majority of the shares of that class were acquired otherwise than in pursuance of offers to employees. The latter exception has a counterpart in the modern legislation, in section 429 of ITEPA, to which it will be necessary to refer later. That remained the broad outline of the income tax regime applicable to share options and share incentive schemes until 1998. By then, the Revenue had received legal advice, in relation to remuneration provided in the form of shares subject to forfeiture, that the Abbott v Philbin principle applied, so that a charge to tax arose at the time when the shares were first awarded, on a value reduced by the risk of forfeiture. It appears from contemporaneous documents (a Budget news release issued on 17 March 1998, and the explanatory notes which accompanied the subsequent Bill) that the advice gave rise to two problems. First, it was considered fairer to tax shares which were subject to the risk of forfeiture at the point when the risk was lifted or, if earlier, when the shares were sold, rather than when the shares were acquired. That was because it was at the point when the restriction was lifted that the value of the shares could most easily be determined, and that the employee was often able to realise their value. Secondly, it was considered necessary to prevent tax avoidance schemes involving remuneration in shares subject to forfeiture from being set up in order to exploit the new understanding of the legal position. Parliament addressed those problems by enacting section 50 of the Finance Act 1998, which inserted sections 140A to 140C into the Income and Corporation Taxes Act 1988. The general effect of those provisions was to remove the charge to income tax when an employee received shares on terms which meant that they might later be forfeited, unless the shares could still be subject to the risk of forfeiture more than five years later. Instead, there was a charge to income tax on the market value of the shares when the risk of forfeiture was lifted or, if sooner, when the shares were sold. Sections 140A to 140C of the 1988 Act were re enacted as the original Chapter 2 of ITEPA, but a few months later a new and more complex Chapter 2 was substituted by the Finance Act 2003. The substituted Chapter 2 formed part of an amended Part 7 of ITEPA, introduced to close loopholes, prevent avoidance and deal with other anomalies, according to the explanatory notes. Part 7, as amended, was considered by this court in Grays Timber Products Ltd v Revenue and Customs Comrs [2010] UKSC 4; [2010] 1 WLR 497. That case concerned Chapter 3D of Part 7, but, in a judgment with which the other members of the court agreed, Lord Walker discussed the wider context. As he explained, the provisions of Part 7 reflect three different legislative purposes. Those purposes have already become clear from the discussion of the historical background: . First there is Parliaments recognition that it is good 4. for the economy, and for social cohesion, for employees to own shares in the company for which they work. Various forms of incentive schemes are therefore encouraged by favourable tax treatment . Second, if arrangements of this sort are to act as 5. effective long term incentives, the benefits which they confer have to be made contingent, in one way or another, on satisfactory performance. This creates a problem because it runs counter to the general principle that employee benefits are taxable as emoluments only if they can be converted into money, but that if convertible they should be taxed when first acquired. That principle was stated by Lord Radcliffe in Abbott v Philbin [1961] AC 352, 379 . 6. The principle of taxing an employee as soon as he received a right or opportunity which might or might not prove valuable to him, depending on future events, was an uncertain exercise which might turn out to be unfair either to the individual employee or to the public purse. At first the uncertainty was eased by extra statutory concessions. But Parliament soon recognised that in many cases the only satisfactory solution was to wait and see, and to charge tax on some chargeable event (an expression which recurs throughout Part 7) either instead of, or in addition to, a charge on the employees original acquisition of rights. 7. That inevitably led to opportunities for tax avoidance. The ingenuity of lawyers and accountants made full use of the wait and see principle embodied in these changes in order to find ways of avoiding or reducing the tax charge on a chargeable event, which might be the occasion on which an employees shares became freely disposable (Chapter 2) or the occasion of the exercise of conversion rights (Chapter 3). The third legislative purpose is to eliminate opportunities for unacceptable tax avoidance. Much of the complication of the provisions in Part 7 (and especially Chapters 3A, 3B, 3C and 3D) is directed to counteracting artificial tax avoidance. In the only other judgment delivered in that case, Lord Hope commented at para 56 that if there is any theme in the Act it is one of anti avoidance and the closing down of perceived tax loopholes. The provisions of Chapter 2 As section 417 of ITEPA states, Part 7 contains special rules about cases where securities, interests in securities, or securities options are acquired in connection with an employment. In terms of section 420(1), the following (amongst other things) are securities: (a) shares in any body corporate (wherever incorporated) . (b) debentures, debenture stock, loan stock, bonds, certificates of deposit and other instruments creating or acknowledging indebtedness In terms of section 420(5), the following (amongst other things) are not securities: (b) money and statements showing balances on a current, deposit or savings account Section 421B(8) defines the expression employment related securities as meaning securities or an interest in securities to which Chapters 2 to 4 apply. In terms of section 421B(1), those chapters apply to securities, or an interest in securities, acquired by a person where the right or opportunity to acquire the securities or interest is available by reason of an employment of that person or any other person. In terms of section 421B(2), securities, or an interest in securities, are acquired at the time when the person acquiring the securities or interest becomes beneficially entitled to them. As was explained earlier, the award to an employee of shares in a company by reason of his employment gives rise under ordinary tax rules to a charge to income tax on the market value of the shares at that time, even where the shares are subject to a condition or restriction affecting their value. But Chapter 2 creates a special regime for employment related securities if they are restricted securities or a restricted interest in securities at the time of their acquisition. Those expressions are defined by section 423(1): (1) For the purposes of this Chapter employment related securities are restricted securities or a restricted interest in securities if (a) there is any contract, agreement, arrangement or condition which makes provision to which any of subsections (2) to (4) applies; and (b) the market value of the employment related securities is less than it would be but for that provision. In relation to section 423(1)(a), it is argued on behalf of the banks in the present appeals that the shares in question are restricted securities by virtue of section 423(2). It provides: This subsection applies to provision under which (a) there will be a transfer, reversion or forfeiture of the employment related securities, or (if the employment related securities are an interest in securities) of the interest or the securities, if certain circumstances arise or do not arise; (b) as a result of the transfer, reversion or forfeiture the person by whom the employment related securities are held will cease to be beneficially entitled to the employment related securities, and that person will not be entitled on the transfer, (c) reversion or forfeiture to receive in respect of the employment related securities an amount of at least their market value (determined as if there were no provision for transfer, reversion or forfeiture) at the time of the transfer, reversion or forfeiture. Section 424 sets out a number of exceptions. It is relevant to note subsections (b) and (c): Employment related securities are not restricted securities or a restricted interest in securities by reason only that any one or more of the following is the case that person [ie, the person by whom they are (b) held] may be required to offer for sale or transfer the employment related securities on the employee ceasing, as a result of misconduct, to be employed by the employer or a person connected with the employer, or (c) the employment related securities (or the securities in which they are an interest) may be redeemed on payment of any amount. Section 425(2) confers an exemption from income tax in respect of the acquisition of employment related securities where they are restricted securities by virtue of section 423(2) at the time of the acquisition, and will cease to be restricted securities by virtue of that provision within the next five years. The exemption from tax is optional: the employer and employee may elect that it is not to apply, in which case a charge to income tax will arise in accordance with Abbott v Philbin. Section 426 imposes a tax charge in relation to the securities if a chargeable event occurs. For present purposes, the relevant chargeable event is the securities ceasing to be restricted securities. Section 429, however, allows an exemption from the charge under section 426 where, put shortly, a whole class of shares in a company is affected by the same restriction, all the shares of the class are affected in the same way by the chargeable event, and either (a) the company is employee controlled by virtue of holdings of shares of the class, or (b) the majority of the companys shares of the class are held by persons unrelated to the company. It follows that where section 429 applies (as, for example, where the company is owned by its employees, or where most of the shares of the class awarded to the employees are held by members of the public, and the other requirements of the section are met), the recipient of the shares is given the same favourable income tax treatment as the recipient of shares under an approved share option scheme. Subsequent to the date of the schemes with which these appeals are concerned, section 429 was amended by paragraph 6 of Schedule 2 to the Finance (No 2) Act 2005 so as to exclude its application to tax avoidance schemes. Other Chapters It is also relevant to note Chapter 3A, comprising sections 446A to 446J. As section 446A(1) explains, Chapter 3A applies in certain cases where the market value of employment related securities (or other relevant securities or interests in securities) is reduced by things done otherwise than for genuine commercial purposes. Things done otherwise than for genuine commercial purposes include anything done as part of a scheme or arrangement the main purpose, or one of the main purposes, of which is the avoidance of tax (section 446A(2)). Section 446B applies where the market value of employment related securities at the time of their acquisition has been reduced by at least 10% as a result of things done otherwise than for genuine commercial purposes within the previous seven years. In such circumstances, it imposes a tax charge on the difference between the securities actual market value and the market value which they would have had if it had not been artificially depressed. Section 446B does not apply, however, where section 425(2) applies: section 446B(3). Section 446E has the effect of adjusting the charge under section 426, if such a charge arises, where the market value of the securities is artificially low immediately after the chargeable event, or on 5 April in any year (there being, in those circumstances, a deemed chargeable event on that date). Artificially low is defined as meaning reduced by at least 10% as a result of things done otherwise than for genuine commercial purposes within the seven years preceding the chargeable event (or, if section 425(2) applies, the seven years preceding the acquisition of the securities). Chapter 3B deals in a broadly similar manner with cases where the market value is artificially enhanced; Chapter 3C with securities acquired for less than market value; and Chapter 3D with securities disposed of for more than market value. The schemes in outline Before considering in detail the facts of the individual appeals, it may be helpful to explain briefly how, in broad terms, schemes of the kind in issue were designed to work. The modus operandi can be summarised as follows. The bank decided to award discretionary bonuses to certain of its employees, but to pay the amount of the bonuses into a scheme designed to take advantage of the provisions of Chapter 2, so that the employees would avoid liability to income tax. Rather than paying the bonuses directly to the employees, the bank instead used the amount of the bonuses to pay for redeemable shares in a special purpose offshore company set up solely for the purpose of the scheme. The shares were then awarded to the employees in place of the bonuses. Conditions were attached to the shares which were intended to enable them to benefit from the exemptions from income tax conferred by sections 425(2) and 429. Once the exemptions had accrued, the shares were redeemable by the employees for cash. Employees resident and domiciled in the United Kingdom, who were liable to capital gains tax, could however defer the redemption of their shares until they had held them for two years, by which time the rate of tax chargeable, with the benefit of business taper relief, was only 10%. A typical scheme therefore involved carrying out the following pre ordained steps: (1) The bank decided which of its employees would receive discretionary bonuses, and the amount of those bonuses. (2) Company Z was created in an offshore jurisdiction. Care was taken that Company Z was not an associated company of the bank for the purposes of section 429. (3) A special class of redeemable shares in Company Z was created. As shares, these were securities as defined in section 420(1)(a). The shares were subject to a short term restriction designed to satisfy the requirements of section 423(2). (4) The restriction involved a contingency which was unlikely to occur but might conceivably do so. In cases where the occurrence of the contingency lay beyond the control of those involved in the scheme, hedging arrangements were entered into so that the employees were compensated in the event of the restriction being activated. (5) Directly or indirectly, the bank paid the aggregate amount of the bonuses to Company Z as the price of the shares. (6) The purchaser received the shares and allocated beneficial interests to the employees identified at step (1) in amounts equal to the amounts that the bank had decided to award them as bonuses. Exemption from a charge to income tax on the employees acquisition of the shares was asserted under section 425(2), on the basis that the shares were restricted securities by virtue of section 423(2). (7) A short time later, the restriction was removed from the shares. Exemption from a charge to tax on this event was asserted under section 429. (8) A short time after that, the employees became entitled to redeem their shares, and many did so. No liability to income tax arose by reason of the redemption. (9) Some employees who were resident and domiciled in the UK continued to hold their shares for the two years necessary to mitigate a charge to capital gains tax using taper relief. They then redeemed their shares. (10) In due course Company Z was wound up. It is necessary next to consider in greater detail the facts of each of the present appeals, and the reasoning of the tribunals and courts below on the issues which remain in dispute. In the following summary, some immaterial details have been simplified. The UBS case During the tax year 2003/2004 UBS AG, a well known bank, devised an employee bonus scheme which was designed to take advantage of the provisions of Chapter 2 as explained above. It had no purpose other than tax avoidance, and such consequential advantages as would flow from tax avoidance. The scheme involved the carrying out of a number of pre ordained steps according to a detailed timetable. Once the structure of the scheme had been finalised, a brochure was sent to the employees explaining it in detail and inviting their participation. 426 employees agreed to participate. Some of the documentation required under the scheme, such as board minutes of the vehicle company, was pre drafted. The scheme was then implemented as planned. On 23 January 2004 UBS agreed which of its employees were to be awarded a discretionary bonus for the tax year 2003/2004, and the amount of their bonuses. On 28 January, UBS subscribed 91,880,000 (1,000 per share) for 91,880 non voting shares in a company called ESIP Ltd, incorporated in Jersey a few days earlier for the purposes of the scheme. That sum was the equivalent of the cash payments which the employees would otherwise have received as cash bonuses. The following day UBS awarded 91,856 shares to the employees who had agreed to participate, in amounts corresponding to the amounts of their bonuses, and the remaining shares to trustees of a UBS employee benefit trust. The employees were notified of the face value of their awards. ESIP was required, as a condition of UBSs subscription for the shares, to deposit the subscription price in an interest bearing account until 20 February 2004. Article 2(7) of ESIPs articles of association, as adopted on 26 January 2004, set out the rights of holders of the shares to participate in dividends and surplus assets on a winding up, and also to redeem all or any of their shares on 22 March 2004, 22 March 2006 or 22 June 2006 for the same amount as they would have received if there had been a winding up on the relevant redemption date. Article 2(14) provided for an immediate and automatic sale of the shares to the UBS employee benefit trust if on any date during the three week period from 29 January to 19 February 2004 the closing value of the FTSE 100 Index exceeded a trigger level, defined as 6.5% above its closing value on 28 January. In that event, the shares were to be sold for a price equal to 90% of their market value on the date of the sale if no restrictions (including for the avoidance of doubt under [article 2(14)]) applied to those shares. It was not likely that the FTSE 100 would exceed the trigger level during the relevant period, but there was a genuine possibility that it might: the trigger level was set so as to create a probability of between 6 and 12%. It is a matter of agreement that the forced sale provision had the effect of reducing the market value of the shares when they were acquired by the employees by an amount which was more than de minimis. The forced sale provision had no rationale other than tax avoidance: its only purpose was to make the shares restricted securities by virtue of section 423(2) of ITEPA. The First tier Tribunal (Dr David Williams and Mr David Earle) found that the risk taken as the trigger event had been deliberately chosen as one that a counterparty was prepared to offset entirely, as will shortly be explained. As a condition of UBSs subscription for the shares, ESIP applied about 3% of the 91,880,000 in purchasing call options from UBS relating to the FTSE 100 with an expiry date of 20 February 2004. The effect of the call options was that, if the FTSE 100 exceeded the trigger level, ESIP would make a gain, resulting in an increase of about 10% in its net assets. It followed that, if the forced sale provision were triggered, although the employees would be required to sell their shares for 90% of their unrestricted market value, they would not be materially worse off as a result, since the unrestricted market value of the shares would be equal to approximately 110% of the value they would have had if the trigger event had not occurred. The amount they would receive would thus be approximately equivalent to the original subscription price, which in turn was equal to the cash bonuses which the employees would otherwise have received. The words not be materially worse off are taken from the agreed statement of facts and issues. More precisely, the First tier Tribunal found that the effect of the hedging was that, if the trigger event occurred, the employees would receive 99.2% of the value which their shares would otherwise have had. There was a remote possibility that the employees might even receive slightly more than 100%. The First tier Tribunal noted that there had been a deliberate decision that the call option arrangements should not completely neutralise the effect of any trigger event: The aim was at first that there should be a complete offset between the loss to an employee if the trigger event occurred with the result communicated to senior management that there would be no reduction in value in the payout to the employee. He or she would receive the same whether or not the trigger event occurred. At some point someone thought a deliberate near miss was better than an exact hit in terms of offsetting the loss. As the trigger event did not occur, this was not tested . [T]he reality was that the scheme as a whole was carefully designed so that employees could not suffer any significant loss if the trigger event was realised. The reality of the risk was that an employee stood about a 10% chance of losing 0.8% of the bonus amount to be weighed against the opportunity to remove a 41% tax charge. (para 105) The First tier Tribunal summarised the effect of the scheme as follows, at para 135: The effect was that, at the close of the relevant period, ESIP Ltd would either have shares unaffected by the trigger event, or shares affected by the trigger event plus the benefits from the options. The scheme was originally so constructed that the values of the beneficial interests of individuals in the shares would have been the same under either of those two outcomes. This was then altered to create a small loss. The effect of the trigger event was the reduction in the value of the [shares] by a predetermined amount. The options purchased were of such a value that the sums received under the options if the trigger event occurred totalled slightly less than the loss in the value of the shares, again by a predetermined amount. Both figures were artificial in the sense that neither was determined by, or could be influenced by, any event outside the control of those establishing the scheme, or could alter once the shares and options were purchased. UBS as employer and the individual recipients as employees knew from the start of the scheme that the employees, as shareholders, would receive the money paid in by UBS from one or both of the parallel elements a few weeks later save, in the unlikely occurrence of the trigger event, to a deliberately determined and insignificant extent. In the event, the FTSE 100 did not exceed the trigger level during the relevant period, and so the shares ceased to be subject to the forced sale provision on 19 February 2004, and the call options did not pay out. Once the relevant period had expired without a forced sale taking place, ESIP was required, as a further condition of UBSs subscription for the shares, to buy shares in UBS during the last five days of February 2004, so that the value of each ESIP share was then linked to the performance of the UBS share price. On 26 February 2004 UBS reminded the employees of their entitlement to redeem the shares during the following month, and explained how to do so. On 22 March 2004, about 50% of the shares were redeemed for 977.50 per share. Almost all the remaining shares continued to be held by employees. Dividends were paid on the shares in November 2004 (13 per share) and December 2005 (20 per share). On 22 March 2006 and 22 June 2006, further shares were redeemed, for about 1,519 per share and 1,429 per share respectively, reflecting a large increase in the value of UBS shares. The remaining 44 shares were redeemed in November 2006 when a resolution was passed to wind up ESIP. The case came before the First tier Tribunal as an appeal from a determination made by the Revenue that the sums allocated to the employees as bonuses at the start of the scheme were liable to income tax and national insurance contributions as earnings from their employment. The First tier Tribunal dismissed the appeal. The First tier Tribunal accepted that the shares were securities as defined in the legislation. They were real shares. It was possible for employees to hold them for over two years, and some did so. If they did so, they received dividends. The shares were also employment related securities: the employees acquired the shares by reason of their employment. The arrangements were not a sham in the sense explained by Diplock LJ in Snook v London and West Riding Investments Ltd [1967] 2 QB 786, 802: they were not intended to deceive. In considering whether the shares were restricted securities within the meaning of section 423, the First tier Tribunal initially left to one side what has been described in these proceedings as the Revenues broad Ramsay argument (by reference to the case of W T Ramsay Ltd v Inland Revenue Comrs [1982] AC 300), to the effect that the scheme should be ignored and the employees held liable to income tax as if they had received cash payments directly. On that basis, it accepted that the scheme was an arrangement for the purposes of section 423(1)(a). It accepted that the forced sale provision was not a sham. It also accepted that the effect of that provision was to reduce the market value of the shares at the time of their acquisition by the employees by a small amount, so as to satisfy the requirements of section 423(1)(b). It did not, however, accept that it was an arrangement which made provision to which section 423(2) applied. In forming that view, the First tier Tribunal focused on the requirement in section 423(2)(c) that the employee will not be entitled on the transfer, reversion or forfeiture to receive in respect of the employment related securities an amount of at least their market value (determined as if there were no provision for transfer, reversion or forfeiture) at the time of the transfer, reversion or forfeiture. It considered that that requirement was not satisfied, since the effect of the call options was that the employees were entitled on a forced sale to virtually the same amount as they would have received if there were no forced sale provision. This reasoning assumed that, if there were no provision for transfer, reversion or forfeiture, then there would be no call options: the First tier Tribunal compared the amount which the employees were entitled to receive in respect of their securities on a forced sale, taking account of the triggering of the call options, with the market value of the securities on the hypothesis that neither the forced sale provisions nor the call options existed. On that basis, the First tier Tribunal found that the shares were not restricted securities. The Upper Tribunal (Henderson J and Mr Charles Hellier) took a different view. It considered that section 423(2)(c) required the market value of the shares on the date of the forced sale to be determined as if there were no provision for transfer, reversion or forfeiture, but did not require the call options to be disregarded. In other words, whereas the First tier Tribunal had compared the employees entitlements with a market value determined as if there were neither a forced sale provision nor the call options designed to neutralise its effect, the Upper Tribunal construed section 423(2)(c) as requiring only the first of these to be ignored. The statutory hypothesis, in its view, was a situation in which the shares were not subject to the forced sale provision, but in all other respects including the existence and triggering of the call options was the same as it actually was. On that basis, the Upper Tribunal found that the employees were entitled on a forced sale to receive only 90% of the market value of their shares on that date, determined as if there were no forced sale provision. The requirement laid down in section 423(2)(c) was therefore met. The Court of Appeal (Rimer, Kitchin and Christopher Clarke LJJ) agreed, stating that it was plain that the ordinary and natural sense of the words in question was that they required no more than that the forced sale provision be ignored. This question of statutory construction is no longer in issue. It illustrates, however, the artificial consequences which result if the legislation is applied to a scheme of this nature. Although it is inconceivable that there would in fact have been call options in the absence of the forced sale provision (since their sole rationale was to neutralise the effect of that provision), it is only if section 423(2)(c) is construed as requiring the market value to be assessed on that unreal basis that its requirements can be satisfied. Returning to the decision of the First tier Tribunal, it next considered whether, applying the Ramsay approach and on a realistic appraisal of the facts, the scheme fell outside the intended scope of Chapter 2 altogether. It concluded that it did. It observed that Chapter 2 was intended to deal with a real, practical problem, and that in examining whether the scheme was within Chapter 2 it was necessary, following the speech of Lord Nicholls of Birkenhead in Inland Revenue Comrs v Scottish Provident Institution [2004] UKHL 52; 2005 1 SC (HL) 33; [2004] 1 WLR 3172, to look at the commercial reality of what was happening, and to be alert to a situation where the arrangements, viewed realistically and as a whole, did not create restricted securities. In the view of the First tier Tribunal, the reality was that, had the scheme not been in place, the employees would have received a bonus as part of their pay in February 2004. That bonus would have been earnings, and therefore subject to deduction of income tax and national insurance contributions, leaving in most cases a net sum of 59% of the original entitlement. Under the scheme, the employees instead received beneficial interests in shares with a right to encash those interests. If the rights were encashed without the forced sale provision being triggered, the employees received the same sums as would have been received as earnings, but without any deduction of income tax or national insurance contributions. Alternatively, in the less probable event of a forced sale, the employees might receive slightly less (or, possibly, slightly more) than that sum, but again with no deduction of income tax or national insurance contributions. In short, but for the scheme, an employee would have received 59 from UBS if paid earnings, but under the scheme would probably receive 100, and in any event over 99. The scheme therefore delivered a significant gain in the bonus receivable by employees as compared with the receipt of earnings, whatever the outturn of the scheme arrangements, although there was the possibility of an insignificant difference as between the outturns under the probable and improbable alternatives. Further, if employees so chose, the timetable of the arrangements was much the same as applied to the receipt of earnings. The scheme had no purpose other than tax avoidance. In those circumstances, the scheme could not be regarded as one providing restricted securities within the scope of Chapter 2. It was in reality a mechanism for the payment of cash bonuses, and the employees should therefore be taxed as if they had received cash rather than securities. The Upper Tribunal disagreed with the First tier Tribunals conclusion. It observed that it was incorrect to say that the employees received the same sums when their shares were redeemed as they would have received as earnings: by that time, ESIP had invested its assets in UBS shares, with the result that the sums received reflected the performance of those investments. This had only a limited effect on those who redeemed their shares at the earliest opportunity, because of the short period of time during which the assets had been invested, but it had a greater effect on those who held their shares for longer: see para 36 above. The Upper Tribunal concluded that there was no intellectually coherent way of equating the payment in by the employer with the ultimate payment out to the employee. The scheme could not be treated as merely an artificially contrived method of paying money to employees. The Upper Tribunal therefore allowed UBSs appeal. The Court of Appeal agreed that the argument that the scheme should be treated as merely a mechanism for the payment of cash should be rejected. It also heard argument on a narrower Ramsay argument in respect of which the Revenue sought permission to appeal. That argument, which had been raised before the First tier Tribunal but was not argued before the Upper Tribunal, proceeded on the basis that the ESIP shares were securities, but not restricted securities within the meaning of section 423, with the consequence that a charge to tax arose in respect of the market value of the shares at the time when they were acquired by the employees. The argument centred on UBSs admission that the forfeiture condition had no commercial purpose and had been inserted purely for the purpose of tax avoidance, and on the contention that the hedging provisions rendered the forfeiture condition unreal from a commercial perspective. The argument was rejected, and permission to appeal on that ground was refused. Rimer LJ, with whose judgment the other members of the court agreed, considered that there was no scope for arguing that the shares were other than securities . acquired in connection with an employment within the meaning of sections 417(1) and 420. They were therefore securities for the purposes of Chapter 2; and, provided that they satisfied the conditions of section 423, they were also restricted securities. In relation to section 423, Rimer LJ commented that he did not understand the argument that because the forfeiture provision had no commercial rationale, the shares could not be restricted securities. He did not follow on what basis it could be said that the certain circumstances referred to in section 423(2)(a) could only be circumstances included other than for tax avoidance purposes. There appeared to him to be no justification for any such distinction. The circumstances in which the securities in question might be forfeited were real, even though their inclusion in the scheme was tax motivated. If the shares were restricted securities within the meaning of section 423, from where in Chapter 2, he asked rhetorically, did one derive the conclusion that Chapter 2 could not apply simply because the scheme was driven by considerations of tax avoidance? In forming that view, Rimer LJ was influenced by the inability of all counsel to explain the rationale of the tax exemption conferred by section 429, which he described as the section at the heart of the appeals. The DB case During the tax year 2003/2004 DB Group Services (UK) Ltd (DB), the main employer in the group headed by Deutsche Bank AG, another well known bank, decided to pay discretionary bonuses to employees by means of a scheme designed to take advantage of the provisions of Chapter 2. This was an off the shelf scheme devised by Deloitte and Touche LLP and marketed by them to DB. Deloitte also played a central role in coordinating its implementation by all involved in accordance with a detailed timetable. The scheme was generically similar to the UBS scheme, but differed from it in some respects. Prior to the implementation of the scheme, DB decided which of its employees were to be awarded a discretionary bonus for the tax year 2003/2004, and the amount of their bonuses. The scheme was explained to the relevant employees in advance of its implementation, and they were offered the opportunity to participate. They were informed that the scheme allowed for their bonus to be delivered to them in the form of shares in a vehicle company. Some 300 employees agreed to take part. On 6 February 2004 DB paid 91,300,000 (1,000 per share) in respect of 91,300 redeemable shares in a company, incorporated in the Cayman Islands for the purposes of the scheme, called Dark Blue Investments Ltd (Dark Blue). That company invested its assets in low risk investments. The shares were allocated to the employees the same day, in amounts corresponding to the bonuses which they would otherwise have received. The shares carried voting rights and a right to participate in dividends. They could be redeemed for a price intended to reflect their market value on various dates between 8 July 2004 and 8 December 2006. In order for the shares to qualify as restricted securities by virtue of section 423(2), the memorandum and articles of Dark Blue contained a provision under which the shares were to be forfeited if, before 2 April 2004, the person who held or was beneficially entitled to them ceased to be employed by DB, or notice was given to or by that individual of termination of employment, for any reason other than redundancy, death or disability, or without cause. The shares could not be transferred during that period. For practical purposes, therefore, an employee would forfeit his shares if he voluntarily resigned or was dismissed for misconduct during a period of about eight weeks. Neither contingency was likely to occur, not least because its occurrence lay largely within the control of the employee, for whom it would have significant financial consequences. Furthermore, by virtue of section 424(b) of ITEPA, shares are not restricted securities by reason only of a provision for forfeiture in the event of dismissal for misconduct: see para 17 above. In the event, there was no employee to whom the provision applied. The First tier Tribunal found that the forfeiture provision resulted in a reduction in the market value of the shares on 6 February 2004 which was not negligible. At the highest estimate, the reduction might be of the order of 2 3%. 42% of the Dark Blue shares were redeemed at the first opportunity in July 2004, at a price of 1,003.73 per share. The rest were redeemed between then and December 2006 at prices reflecting the value of the underlying investments at the date of redemption. The case came before the First tier Tribunal as an appeal from a determination that the sums allocated to the employees as bonuses at the start of the scheme were liable to income tax and national insurance contributions as earnings from their employment. The First tier Tribunal heard the appeal immediately before that of UBS, and dismissed it. The First tier Tribunal again considered the case initially by leaving the Revenues broad Ramsay argument out of account. On that basis, it accepted that the shares were securities, on the same grounds as in the UBS case. It accepted that the forfeiture provision satisfied the requirements of section 423(1)(a), being one to which section 423(2) applied. The market value of the securities was less than it would be but for that provision, as required by section 423(1)(b). It followed that, leaving aside the wider challenge to the scheme, the shares met the definition of restricted securities by virtue of section 423(2). Looking at the scheme as a whole, however, the First tier Tribunal described it as a contrived and closely coordinated series of events so that the various individual requirements of Chapter 2 were met but without regard to any other aim or purpose than that of triggering the various exemptions in the Chapter: para 102. DB and the other entities involved merely carried out a predetermined sequence of events, funded entirely by DB, so that its funds were transferred to its employees. The funding of the scheme was derived entirely from the sums which DB had allocated to providing employees with bonuses for the financial year in question. The only purpose of the scheme was to utilise the exemptions in sections 425 and 429 so that the employees paid no income tax or national insurance contributions on the sums transferred to them. All those involved in the scheme played assigned roles undertaken either to achieve the desired reduction in taxation or to receive a fee for facilitating that aim. Dark Blue was purely a vehicle for the scheme. The shares were created solely so that they could be treated as restricted securities within Chapter 2. In the view of the First tier Tribunal, Parliament had not intended to provide the double exemption from income tax under sections 425 and 429 for artificial arrangements with no commercial purpose. It therefore concluded that the scheme was not within Chapter 2. As in the UBS case, it passed directly from that conclusion to a decision that the employees should be taxed as if they had received cash. The Upper Tribunal heard the appeal together with that in the UBS case. It agreed that, leaving the Ramsay argument to one side, the shares were restricted securities qualifying for exemption under section 425. For similar reasons to those which it had given in the UBS case, however, it considered that the First tier Tribunal had pushed the Ramsay principle well beyond permissible bounds. There was in its view no permissible construction of Chapter 2 which could lead to the conclusion that it was inapplicable to the facts of the case. It concluded, however, that notwithstanding the great pains which had been taken to ensure that Dark Blue was not formally controlled by DB, nevertheless actual control existed on the facts. DB was therefore an associated company of Dark Blue, with the consequence that the scheme did not qualify under section 429 for exemption from the charge imposed under section 426 on the lifting of the restrictive condition. The Court of Appeal also heard the appeal together with that in the UBS case. It reversed the Upper Tribunals decision on the question of control, but agreed with it that the Revenues broad Ramsay argument should be rejected. As in the UBS case, it permitted the Revenue to present a narrower Ramsay argument to the effect that the shares were not restricted securities within the meaning of Chapter 2, so that the employees should be taxed on their receipt of the shares. That argument was however rejected for the same reasons as in the UBS case, and permission to appeal on that ground was refused. The Ramsay approach As the House of Lords explained in Barclays Mercantile Business Finance Ltd v Mawson, in a single opinion of the Appellate Committee delivered by Lord Nicholls, the modern approach to statutory construction is to have regard to the purpose of a particular provision and interpret its language, so far as possible, in the way which best gives effect to that purpose. Until the case of W T Ramsay Ltd v Inland Revenue Comrs [1982] AC 300, however, the interpretation of fiscal legislation was based predominantly on a linguistic analysis. Furthermore, the courts treated every element of a composite transaction which had an individual legal identity (such as a payment of money, transfer of property, or creation of a debt) as having its own separate tax consequences, whatever might be the terms of the statute. As Lord Steyn said in Inland Revenue Comrs v McGuckian [1997] 1 WLR 991, p 999, in combination those two features a literal interpretation of tax statutes, and an insistence on applying the legislation separately to the individual steps in composite schemes allowed tax avoidance schemes to flourish to the detriment of the general body of taxpayers. The significance of the Ramsay case was to do away with both those features. First, it extended to tax cases the purposive approach to statutory construction which was orthodox in other areas of the law. Secondly, and equally significantly, it established that the analysis of the facts depended on that purposive construction of the statute. Thus, in Ramsay itself, the terms loss and gain, as used in capital gains tax legislation, were purposively construed as referring to losses and gains having a commercial reality. Since the facts concerned a composite transaction forming a commercial unity, with the consequence that the commercial significance of what had occurred could only be determined by considering the transaction as a whole, the statute was construed as referring to the effect of that composite transaction. As Lord Wilberforce said: The capital gains tax was created to operate in the real world, not that of make belief. As I said in Aberdeen Construction Group Ltd v Inland Revenue Comrs [1978] AC 885, it is a tax on gains (or I might have added gains less losses), it is not a tax on arithmetical differences. To say that a loss (or gain) which appears to arise at one stage in an indivisible process, and which is intended to be and is cancelled out by a later stage, so that at the end of what was bought as, and planned as, a single continuous operation, there is not such a loss (or gain) as the legislation is dealing with, is in my opinion well and indeed essentially within the judicial function. (p 326) Unfortunately, the Committee commented in Barclays Mercantile at para 34, the novelty for tax lawyers of this exposure to ordinary principles of statutory construction produced a tendency to regard Ramsay as establishing a new jurisprudence governed by special rules of its own. In the Barclays Mercantile case the Committee sought to achieve some clarity about basic principles (para 27). It summarised the position at para 32: The essence of the new approach was to give the statutory provision a purposive construction in order to determine the nature of the transaction to which it was intended to apply and then to decide whether the actual transaction (which might involve considering the overall effect of a number of elements intended to operate together) answered to the statutory description. As Lord Nicholls of Birkenhead said in MacNiven v Westmoreland Investments Ltd [2003] 1 AC 311, 320, para 8: The paramount question always is one of interpretation of the particular statutory provision and its application to the facts of the case. As the Committee commented, this is a simple question, however difficult it may be to answer on the facts of a particular case. This approach has proved to be particularly important in relation to tax avoidance schemes as a result of two factors identified in Barclays Mercantile at para 34. First, tax is generally imposed by reference to economic activities or transactions which exist, as Lord Wilberforce said, in the real world. Secondly, tax avoidance schemes commonly include elements which have been inserted without any business or commercial purpose but are intended to have the effect of removing the transaction from the scope of the charge. In other words, as Carnwath LJ said in the Court of Appeal in Barclays Mercantile, [2002] EWCA Civ 1853; [2003] STC 66, para 66, taxing statutes generally draw their life blood from real world transactions with real world economic effects. Where an enactment is of that character, and a transaction, or an element of a composite transaction, has no purpose other than tax avoidance, it can usually be said, as Carnwath LJ stated, that to allow tax treatment to be governed by transactions which have no real world purpose of any kind is inconsistent with that fundamental characteristic. Accordingly, as Ribeiro PJ said in Collector of Stamp Revenue v Arrowtown Assets Ltd [2003] HKCFA 46; (2003) 6 ITLR 454, para 35, where schemes involve intermediate transactions inserted for the sole purpose of tax avoidance, it is quite likely that a purposive interpretation will result in such steps being disregarded for fiscal purposes. But not always. As was noted in Barclays Mercantile at para 35, there have been a number of cases since Ramsay in which it was decided that elements inserted into a transaction without any business or commercial purpose did not prevent the composite transaction from falling within a charge to tax, or bring it within an exemption from tax, as the case might be. Examples include Inland Revenue Comrs v Burmah Oil Co Ltd 1982 SC (HL) 114, Furniss v Dawson [1984] AC 474, Carreras Group Ltd v Stamp Comr [2004] UKPC 16; [2004] STC 1377, Inland Revenue Comrs v Scottish Provident Institution and Tower M Cashback LLP 1 v Revenue and Customs Comrs [2011] UKSC 19; [2011] 2 AC 457. In each case the court considered the overall effect of the composite transaction, and concluded that, on the true construction of the relevant statute, the elements which had been inserted without any purpose other than tax avoidance were of no significance. But it all depends on the construction of the provision in question. Some enactments, properly construed, confer relief from taxation even where the transaction in question forms part of a wider arrangement undertaken solely for the purpose of obtaining the relief. The point is illustrated by the decisions in MacNiven v Westmoreland Investments Ltd [2001] UKHL 6; [2003] 1 AC 311 and Barclays Mercantile itself. The position was summarised by Ribeiro PJ in Arrowtown Assets, para 35, in a passage cited in Barclays Mercantile: The ultimate question is whether the relevant statutory provisions, construed purposively, were intended to apply to the transaction, viewed realistically. References to reality should not, however, be misunderstood. In the first place, the approach described in Barclays Mercantile and the earlier cases in this line of authority has nothing to do with the concept of a sham, as explained in Snook. On the contrary, as Lord Steyn observed in McGuckian at p 1001, tax avoidance is the spur to executing genuine documents and entering into genuine arrangements. Secondly, it might be said that transactions must always be viewed realistically, if the alternative is to view them unrealistically. The point is that the facts must be analysed in the light of the statutory provision being applied. If a fact is of no relevance to the application of the statute, then it can be disregarded for that purpose. If, as in Ramsay, the relevant fact is the overall economic outcome of a series of commercially linked transactions, then that is the fact upon which it is necessary to focus. If, on the other hand, the legislation requires the court to focus on a specific transaction, as in MacNiven and Barclays Mercantile, then other transactions, although related, are unlikely to have any bearing on its application. Scottish Provident On the same date as Barclays Mercantile, Lord Nicholls also delivered the opinion of the Committee, similarly constituted, in the Scottish Provident case. The case concerned a scheme designed to take advantage of a change in the law governing the taxation of gains and losses made by mutual life offices on the grant or disposal of options to buy or sell gilts. Under the scheme, the life office, SPI, granted Citibank the option to buy a quantity of gilts from it at a strike price of 70, well below their anticipated market value at the time the option was exercised, in return for a premium. Under the law then in force, the premium was exempt from tax. After the law had changed, Citibank exercised the option, requiring SPI to sell the gilts to it at a loss. Under the law then in force, the loss was allowable for tax purposes. In order to ensure that no real loss could be suffered by either party, the scheme also provided for Citibank to grant an option to SPI, entitling it to buy a matching quantity of gilts from the bank at a strike price of 90, calculated so that the overall movements of money between the parties were equivalent. It was anticipated that both options would be exercised, but there was a possibility that they might not be. In the event, both options were exercised, and neither gilts nor money changed hands. The question which arose under the relevant statutory provision was whether the option which SPI granted gave Citibank an entitlement to gilts. If the option was considered in isolation, then plainly it did. If, however, the option was viewed as part of a larger scheme by which Citibanks right to buy the gilts from SPI was cancelled by SPIs right to buy the same gilts from Citibank, then in a commercial sense Citibank had no real entitlement to gilts. The special commissioners found in favour of SPI, on the basis that there was a genuine possibility that both options would not be exercised. That was held by the Committee to be an error of law. It stated: 22. the uncertainty arises from the fact that the parties have carefully chosen to fix the strike price for the SPI option at a level which gives rise to an outside chance that the option will not be exercised. There was no commercial reason for choosing a strike price of 90. From the point of view of the money passing (or rather, not passing), the scheme could just as well have fixed it at 80 and achieved the same tax saving by reducing the Citibank strike price to 60. It would all have come out in the wash. Thus the contingency upon which SPI rely for saying that there was no composite transaction was a part of that composite transaction; chosen not for any commercial reason but solely to enable SPI to claim that there was no composite transaction. It is true that it created a real commercial risk, but the odds were favourable enough to make it a risk which the parties were willing to accept in the interests of the scheme. 23. We think that it would destroy the value of the Ramsay principle of construing provisions such as [the provision in question] as referring to the effect of composite transactions if their composite effect had to be disregarded simply because the parties had deliberately included a commercially irrelevant contingency, creating an acceptable risk that the scheme might not work as planned. We would be back in the world of artificial tax schemes, now equipped with anti Ramsay devices. The composite effect of such a scheme should be considered as it was intended to operate and without regard to the possibility that, contrary to the intention and expectations of the parties, it might not work as planned. Thus, on the basis that the statutory provision was properly construed as being concerned with a real and practical entitlement to gilts, it did not apply to a legal entitlement which was intended and expected to be cancelled by an equal and opposite obligation, even if there was a risk that the arrangement might not work as intended. The present appeals It is necessary now to return to the statutory provisions in issue in the present appeals. Rather than dealing with the arguments in the way in which they were presented, in terms of broader and narrower versions of a Ramsay approach, it seems to me to be preferable to begin with the interpretation of the legislation, and the fundamental question whether it can be given a purposive interpretation going beyond its literal terms: that is to say, whether a Ramsay approach is possible at all, and if so, the purposive construction on which it is to be based. If those issues are determined in the Revenues favour, the question next arises how, on its proper interpretation, the legislation is to be applied to the facts. It is at that stage that what have been described as the broad and the narrow approaches require to be considered. Purposive construction As counsel for UBS and DB emphasised, ITEPA contains no explanation of the purpose of Chapter 2 upon which a purposive interpretation might be based. Nor do its provisions anywhere indicate that restrictive conditions attached to securities purely for tax avoidance purposes fall outside the scope of Chapter 2. Furthermore, Parliament dealt with certain kinds of tax avoidance in Chapters 3A to 3D, but made no provision in respect of schemes of the kind with which these appeals are concerned. In the light of these considerations, and bearing in mind that Part 7 generally, and Chapter 2 in particular, are extensive and highly detailed, counsel argued that it was impossible to attribute to Parliament an unexpressed intention to exclude schemes of the present kind from the ambit of Chapter 2. It cannot be denied that these are forceful arguments, and the Court of Appeal found them persuasive. Nevertheless, the context of Chapter 2 provides some indication of what Parliament intended. Part 7 is clearly concerned with particular taxation issues which arise when employees are remunerated in shares and other securities. As was noted in para 12 above, the purposes of Part 7 were identified in broad terms in Grays Timber Products as being threefold: to promote employee share ownership, particularly by encouraging (1) share incentive schemes; (2) since such schemes require benefits to be contingent on future performance, creating a problem if tax is charged on the acquisition of the shares in accordance with Abbott v Philbin, to wait and see in such cases until the contingency has fallen away; and (3) to counteract consequent opportunities for tax avoidance. The background to Chapter 2, explained more fully in paras 3 11 above, supports that view. Fiscal legislation concerning employment related securities had its origins in anomalies which arose where shares awarded to employees as a form of remuneration, for business or commercial reasons, were subject to restrictions designed to incentivise future performance. The taxation of the shares in accordance with general principles of the law of taxation, as established in Weight v Salmon and more particularly in Abbott v Philbin, had the effect that the sum charged to tax failed to reflect the economic gain realised by the employee in the event that the shares increased in value as intended. Parliaments response was to impose a charge to tax when the restrictions were lifted (subject to the exemption of favoured arrangements), rather than when the shares were acquired. Chapter 2, as originally enacted, re enacted provisions introduced in 1988 in order to prevent the application of Abbott v Philbin, and forestall consequent opportunities for tax avoidance. The amended version of Chapter 2 with which these appeals are concerned was enacted shortly afterwards to address aspects of the previous provisions which were considered to leave them vulnerable to avoidance or to create anomalies. The structure of the legislation continued to be based on the exemption of restricted securities from income tax when the shares were acquired, and the imposition of a charge to tax when the restrictive conditions were lifted, subject to a widely drawn exemption from the latter charge. It is in the context explained in para 74, and against the background described in para 75, that it is necessary to consider the scope of the exemption on acquisition conferred by section 425(2), and more specifically the question whether, in section 423(1), the words any contract, agreement, arrangement or condition which makes provision to which any of subsections (2) to (4) applies should be construed as referring to provision with a genuine business or commercial purpose. Approaching the matter initially at a general level, the fact that Chapter 2 was introduced partly for the purpose of forestalling tax avoidance schemes self evidently makes it difficult to attribute to Parliament an intention that it should apply to schemes which were carefully crafted to fall within its scope, purely for the purpose of tax avoidance. Furthermore, it is difficult to accept that Parliament can have intended to encourage by exemption from taxation the award of shares to employees, where the award of the shares has no purpose whatsoever other than the obtaining of the exemption itself: a matter which is reflected in the fact that the shares are in a company which was brought into existence merely for the purposes of the tax avoidance scheme, undertakes no activity beyond its participation in the scheme, and is liquidated upon the termination of the scheme. The encouragement of such schemes, unlike the encouragement of employee share ownership generally, or share incentive schemes in particular, would have no rational purpose, and would indeed be positively contrary to rationality, bearing in mind the general aims of income tax statutes. More specifically, it appears from the background to the legislation that the exemption conferred by section 425(2), in respect of the acquisition of securities which are restricted securities by virtue of section 423(2), was designed to address the practical problem which had arisen of valuing a benefit which was, for business or commercial reasons, subject to a restrictive condition involving a contingency. The context was one of real world transactions having a business or commercial purpose. There is nothing in the background to suggest that Parliament intended that section 423(2) should also apply to transactions having no connection to the real world of business, where a restrictive condition was deliberately contrived with no business or commercial purpose but solely in order to take advantage of the exemption. On the contrary, the general considerations discussed in para 77 above, and the approach to construction explained in paras 64 and 68 above, point towards the opposite conclusion. One answer which counsel for UBS and DB give to that argument is based on the supposed absence of any rationale for the exemption conferred by section 429. This point impressed the Court of Appeal: understandably so, since although these appeals are not directly concerned with section 429, the absence of any rationale for the exemption conferred by that provision would undermine an analysis based on the premise that Parliament possessed some rational intention in enacting sections 423 and 425. As was explained in para 19 above, however, the exemption conferred by section 429 is confined to two specific situations falling within the broader class of cases qualifying for exemption under section 425: namely cases where a class of shares in a company is affected by the same restriction, which is lifted on the occurrence of a similar event, and either (a) the company is employee controlled by virtue of holdings of shares of the class, or (b) the majority of the companys shares of the class are held by persons unrelated to the company. In relation to the first of these situations, it is understandable that Parliament should have intended to encourage employee share ownership in companies which were employee controlled by virtue of such shareholdings. Such an intention would be consistent with the general approach described in paras 74 and 75 above. The second situation is one which has long received special treatment, as was explained in para 7 above. The distinctive feature of that situation, as counsel for the Revenue explained, is that there is only a tenuous link between the increase in the value of the shares, consequent upon the lifting of the restrictive condition, and the employment relationship: a similar increase in value will be enjoyed by all holders of shares of the relevant class in similar circumstances, and most of those shareholders are not employees of the company, or otherwise related to it. The counter argument based on Chapter 3A As explained earlier, in arguing against a construction of Chapter 2 which would exclude tax avoidance schemes of the present kind, counsel for UBS and DB emphasised that Parliament had dealt expressly and in detail with tax avoidance in Chapters 3A to 3D, the first of those chapters being the most directly relevant to the present case. In those circumstances, it was argued, Parliament could not be taken to have had any wider, unexpressed, intention to counter tax avoidance. That argument was accepted by the Court of Appeal. Chapter 3A contains detailed anti avoidance provisions directed at securities with an artificially depressed market value. In some circumstances, the existence of such provisions might support an inference that Parliaments intentions in relation to anti avoidance had been exhaustively expressed. That is not however the position in relation to Chapters 2 and 3A. As explained earlier at para 21, the provision in Chapter 3A concerned with taxation on the acquisition of employment related securities is section 446B. That provision applies where the market value of employment related securities at the time of their acquisition has been reduced by at least 10% as a result of things done otherwise than for genuine commercial purposes (including anything done as part of a tax avoidance scheme) within the period of seven years ending with the acquisition. Section 446B does not apply where section 425(2) applies, that is to say where the securities are restricted securities by virtue of section 423(2): section 446B(3). As was pointed out on behalf of UBS and DB, section 446B(3) presupposes that securities can be restricted securities for the purposes of section 425 even though their value has been reduced by measures taken as part of a tax avoidance scheme. That is indeed obvious. A share incentive scheme with performance related conditions, for example, could fall within section 425, on the basis that the shares were restricted securities, even though the share price on the date of acquisition had been artificially depressed. Whether a condition attached to the shares renders them restricted securities, and whether the share price has been artificially depressed, are two separate questions. In other words, section 446B is concerned with the artificial manipulation of the market value of shares at the time of their acquisition by measures taken during the preceding seven years. It does not entail that all securities whose value has been reduced by tax avoidance measures are necessarily restricted securities. It has nothing to say about the circumstances in which the exemption conferred by section 425(2) should be granted, or specifically about the circumstances in which securities are to be treated as restricted securities as defined in section 423. That question depends on the proper interpretation and application of section 423. Mutatis mutandis, the same applies to the similar argument advanced by UBS and DB on the basis of section 446E, discussed at para 22 above. Conclusion on purposive construction In summary, therefore, the reference in section 423(1) to any contract, agreement, arrangement or condition which makes provision to which any of subsections (2) to (4) applies is to be construed as being limited to provision having a business or commercial purpose, and not to commercially irrelevant conditions whose only purpose is the obtaining of the exemption. Application to the facts In the UBS case, the condition whether the FTSE 100 rose by a specified amount during a three week period was completely arbitrary. It had no business or commercial rationale beyond tax avoidance. Such a condition is simply not relevant to the application of section 423, if, for the reasons already explained, that section is concerned with provision having a genuine business or commercial purpose. Applying section 423 to the facts, viewed from a commercially realistic perspective, it follows that the condition to which the UBS shares were subject should be disregarded, with the consequence that the shares are not restricted securities within the meaning of that section. That conclusion is fortified by another aspect of the facts of the UBS case. The economic effect of the restrictive condition was in any event nullified by the hedging arrangements, except to an insignificant and pre determined extent (namely 0.8% at most see para 32 above). The fact that what the First tier Tribunal described as a deliberate near miss was designed into the scheme, rather than a complete offsetting of the risk, is immaterial. Paras 22 and 23 of the opinion in Scottish Provident, cited at para 70 above, are in point. As the Committee stated, the effect of the scheme should be considered as it was intended to operate. So considered, the benefit to the employee was not truly dependent on the contingency set out in the condition. The restrictive condition in the DB case was simpler but equally artificial. Leaver provisions in employee benefit arrangements often serve a genuine business or commercial purpose. But that cannot be said of the condition attached to the Dark Blue shares. The forfeiture provision operated for only a very short period, during which the possibility that it might be triggered lay largely within the control of the employee who would be adversely affected. It had no business or commercial purpose, and existed solely to bring the securities within the scope of section 423(2). Paras 22 and 23 of the opinion in Scottish Provident are again in point. DB deliberately included a contingency which created a minor risk, but one which the parties were willing to accept in the interests of the scheme. The scheme should therefore be considered as it was intended to operate, without regard to the possibility that it might not work as planned. The appeals thus belong to the line of cases mentioned in Barclays Mercantile, where it was decided that elements which have been inserted into a transaction without any business or commercial purpose did not, as the case might be, prevent the composite transaction from falling within a charge to tax or bring it within an exemption from tax (para 35). That was the approach adopted, for example, in Inland Revenue Comrs v Burmah Oil Co Ltd in relation to what Lord Diplock described as a pre ordained series of transactions . into which there are inserted steps that have no commercial purpose apart from the avoidance of a liability to tax which in the absence of those particular steps would have been payable (p 124). Where a purposive construction so requires, one can proceed in such a case in the manner described by Lord Brightman in Furniss v Dawson at p 527: . the inserted steps are to be disregarded for fiscal purposes. The court must then look at the end result. Precisely how the end result will be taxed will depend on the terms of the taxing statute sought to be applied. The proper basis of taxation: shares or cash? Since the restrictive conditions attached to the shares do not make provision to which section 423 applies, it follows that the shares are not restricted securities within the meaning of that section. Is that the end result, in Lord Brightmans phrase, or is it appropriate to go further and disregard other steps: namely, the use of the bonus funds to buy shares in the vehicle companies, the award of the shares to the employees, and the subsequent redemption of the shares for cash? Those steps were disregarded by the First tier Tribunal, so that the end result was that the employees were treated as though they had been paid in cash. In the broad version of its Ramsay argument, the Revenue invited this court to adopt the same approach. The schemes, it argued, were simply vehicles for passing cash bonuses to employees without paying income tax and national insurance contributions. The shares, although genuine, functioned merely as a cash delivery mechanism. They were not designed or intended to have any other function. In agreement with the Upper Tribunal and the Court of Appeal, I find this argument unpersuasive. In the first place, the employees actually received shares, not cash. Subject to one qualification, the vehicle companies did not hold cash. The qualification is that ESIP held cash during the period prior to 27 February 2004; but the cash was not at the disposal of the employees, since they could not redeem their shares until almost four weeks later. Throughout the intervening period, ESIPs funds were invested in UBS shares. Dark Blues assets were invested in low risk investments. In both cases, therefore, the realisable value of the shares depended on the performance of the assets in which the companies funds were invested, as shares normally do. The amount of cash for which the shares might be redeemed was neither fixed nor ascertainable when the shares were acquired, and was unlikely to be the same as the bonus which had initially been allocated to the employees. In the event, the difference turned out to be modest in the case of the employees who redeemed their shares at the earliest opportunity, but matters could have turned out differently. I would not, however, attach the significance which the Upper Tribunal did to the fact that, in the case of the UBS employees who held their shares for longer, the redemption price diverged more widely from their initial bonus allocation. If the shares were properly treated as equivalent to cash on the first redemption date, that cash was then at the disposal of the employees, and their choice to leave it invested in shares could not affect that position. If the shares were not restricted securities, their recipients therefore fall to be taxed in respect of their receipt of the shares in accordance with ordinary taxation principles. That is broadly as the Revenue contended in the narrower version of their argument, subject to one qualification. The Revenue argued that the shares should be valued for income tax purposes without regard to the restrictive conditions, since those conditions were not intended to be commercially relevant. I am unable to agree. The shares were subject to conditions which, as the First tier Tribunal found, had the effect of reducing their value on the date of acquisition by a small amount (below the 10% threshold which would bring section 446B into play). Applying ordinary taxation principles, as laid down in Abbott v Philbin, the value of the shares has to be assessed as at the date of their acquisition, taking account of those conditions. To disregard the conditions would be to treat the employees as having received a more valuable perquisite than they actually received. It is however also necessary to take account of the call options purchased by ESIP out of the sum paid by UBS for its subscription for the shares. Since the options offset the risk to shareholders arising from the conditions, they presumably enhanced the value of the shares and are therefore relevant to the valuation of the perquisite received by the employees. This point illustrates the need to apply the Ramsay approach with sensitivity to the particular fiscal context which is relevant: the conditions have to be disregarded for the purpose of deciding whether the shares were restricted securities, since that is necessary in order to apply Chapter 2 as Parliament intended; but they do not have to be disregarded for the purpose of assessing the value of the perquisite, since ordinary taxation principles require the tax to be based on its true value. Money? A further argument advanced by the Revenue was that the shares could not be regarded as restricted securities because they were money, and therefore excluded from the definition of securities, for the purposes of Chapter 2, by section 420(5)(b). The shares were said to be money on the basis that the commercial reality of the scheme was the payment of cash: in particular, the shares were always intended to be redeemable for cash. It may well be that, in an appropriate case, the statutory term money, construed purposively, might apply to arrangements which, viewed realistically, were no more than disguised or artificially contrived methods of paying cash to employees. For the reasons explained in para 92, however, that approach cannot be applied on the facts of the present appeals. It is also apparent from some of the examples of securities given in section 420(1)(b), such as debentures, certificates of deposit, and other instruments creating or acknowledging indebtedness, that the ability to redeem an instrument for cash does not render it money. Indeed, the implication of section 424(c) is that redeemable shares are included within the scope of Chapter 2. Conclusion The error of the Court of Appeal in these cases lies, in my opinion, in adopting a literal construction of Chapter 2, and applying it to a correspondingly formal analysis of the facts. Adopting a purposive construction of Chapter 2, the conditions relied upon in order to bring the shares in question within the scope of the exemption conferred by section 425(2) failed to make provision of the kind required by section 423(1)(a): that is to say, provision having a business or commercial purpose, as distinct from provision whose only purpose was the obtaining of the exemption. That does not however mean that the conditions are to be disregarded for all fiscal purposes. Income tax is payable on the value of the shares as at the date of their acquisition in accordance with Abbott v Philbin, account being taken of any effect which the conditions may have had. I would allow the appeals on that basis, subject to such adjustments to the assessments as may be necessary to reflect any effect which the conditions may have had on the value of the shares as at the date of their acquisition. |
The various appellants in each of two appeals, which have been heard together, challenge the lawfulness of provisions relating to what is known as the revised benefit cap. The original benefit cap was introduced by section 96(1) of the Welfare Reform Act 2012 (the 2012 Act). Pursuant to it, the Housing Benefit Regulations 2006, SI 2006/213, (the 2006 Regulations) were amended so as to provide, in regulation 75A, that, if a households total entitlement to specified welfare benefits were otherwise to exceed an annual limit, its entitlement should be capped at that limit. The original cap came into force on 15 April 2013. In R (SG) v Secretary of State for Work and Pensions [2015] UKSC 16, [2015] 1 WLR 1449, this court, by a majority of three to two, dismissed an appeal by three lone mothers and three of their children against a decision that provisions relating to the original cap did not discriminate against women in the enjoyment of their possession of welfare benefits and so were not unlawful. I will refer to the SG case as the first benefit cap case. In its manifesto for the general election which took place on 7 May 2015 the Conservative Party proposed that any Conservative government would introduce legislation for a revised benefit cap which would cap specified benefits at a lower level. Following the partys victory in that election the government introduced, and Parliament enacted, the Welfare Reform and Work Act 2016 (the 2016 Act). By making amendments to the 2012 Act, the 2016 Act introduced the revised cap, which came into force on 7 November 2016. In making provision for the original cap, the earlier version of the 2012 Act had, in section 96(5) to (7), provided for the annual limit, at which the welfare benefits were to be capped, to be specified in regulations and to be determined by reference to the estimated average net earnings of a working household in Britain; and the amended 2006 Regulations had specified that, for couples and lone parents, the annual limit was 26,000, being a figure apparently determined in that way. But the amendments wrought by the 2016 Act have replaced those provisions; and, for the purposes of the revised cap, they identify the annual limits in the 2012 Act itself, namely in a new section 96(5A). The effect of the subsection, when read with a new regulation 75CA inserted into the 2006 Regulations by regulation 2(3) of the Benefit Cap (Housing Benefit and Universal Credit) (Amendment) Regulations 2016 (SI 2016/909) (the 2016 Regulations) is that, for couples and lone parents, the annual limits are reduced to 23,000 if they reside in Greater London and to 20,000 if they reside elsewhere. How were these reduced figures calculated? Clearly the yardstick of average net earnings of a working household was abandoned otherwise the figures would not have come down. The governments Impact Assessment dated August 2016 relating to the 2016 Act (the IA) suggested that the reduced figures were calculated by reference to the fact that 40% of households earn less than them. But, say the appellants, the only arguably relevant figures would relate to the total income of those households, inclusive in particular of benefits. The amendments made in 2016 provide no automatic adjustment of the limits for inflation; and the reduced figures have already lost 5% of their real value. But a new section 96A of the 2012 Act requires the Secretary of State to review them at least once during each Parliament. The welfare benefits subject to the cap, which prior to the amendments to the 2012 Act were left to be specified in regulations, are also now specified in the Act itself, namely in section 96(10). Among others, the benefits there specified include child benefit, child tax credit, housing benefit and income support. Various features of the scheme which applied to the original cap have been retained for application to the revised cap. By regulation 75D of the 2006 Regulations, it is for the local authority to implement the cap by reducing payment of housing benefit accordingly. By regulation 75F, those in receipt of certain benefits (now including, pursuant to amendment by the 2016 Regulations, a carers allowance and a guardians allowance) are exempt from the cap even if they also receive benefits which are specified in section 96(10) as being subject to it. And, most importantly, by regulation 75E(2), those entitled to working tax credit are exempt from the cap. Under regulation 4(1) of the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002 (SI 2002/2005) a single person (which here includes a lone parent) is entitled to working tax credit if, among other things, she or he undertakes work for at least 16 hours each week. A couple, on the other hand, is entitled to it if, among other things, they undertake work for at least 24 hours each week, provided that one of them does so for at least 16 of those hours. three aims: (a) to improve the fairness of the social security system and to increase public confidence in its fairness, particularly in relation to the governments objective not to reward a non working family with an income in the form of welfare benefits which exceeded that of an average working family; In the IA the government stated that its introduction of the revised cap had to make fiscal savings which would enable the government to redirect (b) its limited resources for better deployment elsewhere; and (c) to incentivise the parents or parent in a non working family to obtain work on the basis in particular that an ethic of work within a family inculcated better outcomes for its children. The IA identified the incentivisation of work as the main aim. The ability of parents to escape the cap by undertaking work for not less than the specified number of hours is described by the government as a key exemption and is therefore central to the design of the scheme. The basic argument on behalf of the appellants is that, in introducing the revised cap, the government, through Parliament, has unlawfully discriminated both against the lone parents of young children, whose ability to work is severely curtailed by their childcare obligations, and against the young children of lone parents. In the DA case there are five appellants. Three of them are lone parent mothers. They all care for children of various ages. At the outset of the proceedings the children of two of the mothers included a child aged under two. Those two children then aged under two are the other appellants. Those two mothers had each suffered a reduction in benefits as a result of the revised cap. At the outset of the proceedings the third mother was pregnant. In the DS case there are eleven appellants. Two of them are lone parent mothers. They both care for children of various ages. The first mother cares for five children, each of whom is an appellant. The second cares for four children, each of whom is also an appellant. At the outset of the proceedings none of these nine children was aged under two but three of them were aged under five. Both of the mothers had suffered a reduction in benefits as a result of the revised cap. Both sets of appellants primarily cast their claim of unlawful discrimination under the Human Rights Act 1998 (the 1998 Act). Their secondary challenge to the scheme for the revised cap is that, in its application to them, it is irrational at common law; but, if the primary claim fails, the application of the scheme to them will not be irrational so the secondary challenge will not further be addressed. In the DA case the appellant mothers contend (a) that their entitlement to welfare benefits falls within the ambit of their rights both under article 1 of protocol 1 (article 1 p 1) of the European Convention on Human Rights (the Convention) and under article 8 of the Convention; (b) that, in that they have the status of lone parents of children aged under two, they have the right under article 14 of the Convention to claim that their rights under article 1 p 1 and article 8 have not been secured without discrimination; that under the scheme they are subject to the same treatment as other (c) adults who are in a relevantly different situation from them and that, unless the same treatment of them is justified, the law requires them to have different treatment; and (d) that the government has failed to justify their subjection to the same treatment as those other adults and that therefore it has unlawfully discriminated against them. In the DA case the appellant children contend (a) within the ambit of the childrens own rights under article 8; (b) that, in that they have the status of children aged under two of lone parents, they have the right under article 14 to claim that their rights under article 8 have not been secured without discrimination; (c) that under the scheme they are subject to the same treatment as other children who are in a relevantly different situation from them and that, unless the same treatment of them is justified, the law requires them to have different treatment; and (d) that, in particular in the light of an alleged breach on its part of article 3 of the UN Convention on the Rights of the Child 1989 (Cm 1976) (the UNCRC), the government has failed to justify their subjection to the same treatment as those other children and that therefore it has unlawfully discriminated against them. that their mothers have an entitlement to welfare benefits which falls that their entitlement to welfare benefits falls within the ambit of their In the DS case the appellant mothers contend (a) rights both under article 1 p 1 and under article 8; (b) that, in that they have the status either of lone parents or, as a fall back, of lone parents of children aged under five, they have the right under article 14 to claim that their rights under article 1 p 1 and article 8 have not been secured without discrimination; (c) that under the scheme they are subject to such different treatment in comparison with other adults, particularly with dual care parents or with lone parents all of whose children are aged at least five, that, unless the different treatment of them is justified, the law requires them to have the same treatment; and (d) that the government has failed to justify their subjection to such different treatment and that therefore it has unlawfully discriminated against them, whether directly or indirectly. In the DS case the appellant children contend (a) that they have an interest in the welfare benefits to which their mothers are entitled and that it falls within the ambit of their own rights under article 8 or, if not, under article 1 p 1; (b) that, in that they have the status of children of lone parents or, in the case of three of them and as a fall back, that they have the status of children aged under five of lone parents, they have the right under article 14 to claim that their rights under article 8 or, if not, under article 1 p 1 have not been secured without discrimination; (c) that under the scheme they are subject to such different treatment in comparison with other children, particularly children of dual care parents or children aged at least five of lone parents, that, unless the different treatment of them is justified, the law requires them to have the same treatment; and (d) that, in particular in the light of an alleged breach on its part of article 3 of the UNCRC, the government has failed to justify their subjection to such different treatment and that therefore it has unlawfully discriminated against them, whether directly or indirectly. In response to the above contentions the government concedes only that the entitlement of the two sets of appellant mothers to welfare benefits falls within the ambit of their rights under article 1 p 1. It disputes every other contention. Unlike the DS case, the DA case has been the subject of adjudication on the merits in the lower courts. By an order dated 22 June 2017, [2017] EWHC 1446 (Admin), [2017] PTSR 1266, Collins J upheld the claims of the DA claimants by declaring that the 2006 Regulations, as amended by the 2016 Regulations, unlawfully discriminated against lone parents of children aged under two and against children aged under two of lone parents. But, by an order dated 15 March 2018, [2018] EWCA Civ 504, [2018] PTSR 1606, the Court of Appeal (Sir Patrick Elias who gave the main judgment and Sir Brian Leveson, President of the Queens Bench Division, who gave a short concurring judgment; McCombe LJ dissenting) set aside the order of Collins J. In effect the court dismissed the claims and granted permission to appeal to the Supreme Court. On 26 March 2018, thus 11 days after the order of the Court of Appeal in the DA case, Lang J heard the DS case. Mr Drabble QC, on behalf of the DS claimants, submitted to her that the dismissal of their claims was not strictly mandated by the Court of Appeals decision in the DA case but he conceded that it placed significant hurdles in their way. In light of the fact that the decision in the DA case was to be reviewed in the Supreme Court, he persuaded the judge to dismiss their claims without inquiry into their merits and to grant a leap frog certificate under section 12 of the Administration of Justice Act 1969 to the effect that an application on their part to the Supreme Court for leave to appeal directly to it would be justified. In due course such an application was made to this court and granted. The consequence is that there has been no lower court review of the evidence filed in the DS case. Although the law of discrimination is inherently difficult, it is impossible to avoid the conclusion that, for various reasons, the courts examination of the issues raised in these appeals has been unnecessarily cumbersome and complicated. (a) The judgments of each of the five members of the court in the first benefit cap case, all of alleged relevance, proceed in all for 269 paragraphs and their combined effect has been a matter of acute and protracted debate in this court and elsewhere. (b) The three judgments of the Court of Appeal in the DA case, now before this court, proceed for 184 paragraphs. (c) The written cases presented to this court in the two appeals by the three principal parties and the three interveners, all of high legal quality, proceed across 357 pages. (d) The evidence filed in both appeals proceeds across more than 3,000 pages. (e) 119 authorities are presented to the court for consideration. (f) The oral argument has continued for two and a half days. In the above circumstances the compilation of this judgment has had to be surgical. Reference to all the arguably relevant evidence and submissions would have submerged it. As it is, I am disappointed with myself in having failed to contain it within fewer than 91 paragraphs. Evidence The impact of the revised cap has been broadly as follows: (a) As at August 2017, the benefits of 68,000 households had been reduced by reference to the revised cap. (b) 52,000 (ie 77%) of those households would not have suffered reduction by reference to the original cap; so the revision of the cap has had a substantial effect. (c) Of the 68,000 households which suffered the revised cap, 49,000 (ie 72%) were lone parent households. (d) Since 90% of lone parents are women, 44,000 (ie 65%) of the households which suffered the revised cap were lone female parent households. (e) Of the 68,000 households which suffered the revised cap, 37,000 (ie 54%) were lone parent households with a child aged under five and, of those, 17,000 (ie 25% of the total) were lone parent households with a child aged under two. The cap has therefore had a major impact on the former group, of which the latter are a significant subgroup. (f) Families with multiple children, thus in receipt of higher amounts of child benefit and child tax credits, are more likely to be capped. As at February 2018, 74% of capped households (not here differentiated between dual care and lone parent households) had at least three children. Has the revised cap incentivised those on benefits to work? The government accepts that the statistical evidence is sparse; and it is inappropriate to address it in detail. It suffices to say: (a) In putting forward its expectations for the revised cap in the IA, the government suggested that 41% of those potentially subject to it would be more likely to work in order to escape it than those not potentially subject to it. (b) But the statistic turns out to mean that the number of those more likely to work in order to escape the cap is 41% larger than the already small group, namely only 11% of all capped households, who would have moved into work in any event. Translated into numbers, it means that only about one capped household out of 20 such households (ie 5%) was considered likely to move into work in order to escape it. In relation, however, to that one capped household out of 20, the appeals require the court to consider whether it was more likely to be a dual care household than a lone parent household, in particular a lone parent household with a child aged under five or indeed aged under two. So, in relation to incentivisation, the government relies less on statistics and more on what are said to be the obvious financial advantages of working. These advantages are scarcely in dispute. Evidence on behalf of the appellants in the DS case suggests, by way of example in relation to one of the mothers, that, when capped, her annual household benefits were 20,000 but that, were she to have worked for 16 hours each week earning 17,000 net, her net annual income would have risen to 32,000 because her benefits would have been reduced by only 5,000. Irrespective, however, of the financial advantages for a parent who works hours sufficient to claim working tax credit and thus to escape the cap, how practicable is it for a lone parent, in particular a lone parent of a child aged under five or indeed aged under two, to do so? Is it reasonable to divert the lone parent from caring for such Is it reasonable to take her out of the home if she is a nursing mother? In any event can she find local part time work with set hours at a (a) children? (b) (c) reasonable time during the day? (d) Can she find a carer in a practicable location who can offer care at the necessary times and, if she has to pay the carer, can she afford to do so? (e) As state regulations about minimum staff ratios appear to recognise, do children aged under two need more intensive and therefore more expensive care than older children? (f) less practicable for her to work? If the lone parent also has a number of other, older children, is it even Central to the governments response to these questions is its provision, on certain conditions, of free childcare for 30 hours per week during term time under the Childcare (Early Years Provision Free of Charge) (Extended Entitlement) Regulations 2016 (S1 2016/1257). The IA stressed its availability and estimated it to be worth about 5,000 pa per child. The trouble is that the provision extends to free care only for three and four year olds and also, albeit limited to 15 hours per week, for certain two year olds in families in receipt of specified benefits. This, no doubt, explains why in the DA case the appellants are members of families which include a child aged under two. Mr Wise QC on their behalf therefore points to the grave difficulty which confronts lone parents in that group in accessing care so that they can work. To this the government responds that the financial advantages of escaping the cap by work are so substantial, as explained above, that these lone parents, if in work, can afford to pay for childcare out of their overall income inclusive of benefits and that they are substantially assisted in doing so in the computation of their working tax credit. But Mr Wise draws a wider point from the limited extent of the provision for free childcare: it betokens (he says) a considered governmental conclusion that it is not in the interests of lone parents of children aged under two, nor in particular in the interests of those children, that their parents should be diverted from caring for them. Here Mr Wise and Mr Drabble join in making an allied point. It relates to the conditions attached to the receipt of income support, which is likely to be a major constituent of the welfare benefits paid to a lone parent. The aim of the conditions is to make it easier for her to find work when (but only when) her youngest child has attained the age of five. One condition relates to the period when she has a child aged one or two and it requires her to attend work focussed interviews about every six months. Another relates to the period when she has a child aged three or four and it requires her to engage in some training or other work related activity in preparation for future work. The sanction for failing to comply with a condition is a reduction in income support. Once all her children have attained the age of five, in other words are of school age, the lone parent not in work must claim jobseekers allowance instead of income support and, to that end, must demonstrate that she is available to do a limited amount of work and that she is actively seeking it. The point made on behalf of all the appellants is that at the heart of the carefully calibrated regime of attaching conditions to the receipt by lone parents of income support is a recognition by the government that it is wrong to expect them actually to work until all their children have attained school age; and that to cap their benefits for failure to work before all their children have attained school age flies in the face of that policy decision. The governments defence of its application of the revised cap to lone parents in the circumstances identified in these appeals relates in significant part to the provision for the possible making to them of a Discretionary Housing Payment (a DHP). Provision for DHPs is made in section 69 of the Child Support, Pensions and Social Security Act 2000 and in regulations made under it. A power to make a DHP is conferred on local authorities and, as the title implies, it must relate to housing costs. So, when a cap requires a local authority to reduce housing benefit below, or further below, the level of the recipients rent, there is the facility for it to make a DHP to cover the balance. Central government provides local authorities both with an annual fund out of which to make DHPs and with a guidance manual in relation to their distribution of them. A broad discretion is conferred upon the local authorities. There is no appeal against a refusal to make a DHP but there is, with whatever degree of difficulty, an opportunity to challenge it by way of judicial review. DHPs are intended to cover many more situations of hardship than those created by the cap, including in particular hardship created by the provisions addressed by this court in R (MA) v Secretary of State for Work and Pensions [2016] UKSC 58, [2016] 1 WLR 4550 (the bedroom tax case); and it is clear that they are mainly intended to alleviate temporary hardship and, for those subject to the cap, are intended, in the words of the IA, to manage the transition for various customers whilst they make the necessary changes to adapt to the application of the benefit cap. The manual however now includes within a list of possible recipients a household which contains a child under two years of age where childcare is a barrier to getting work. In the light in particular of the provision within the scheme for the exercise of discretion on the part of local authorities in the making of DHPs, how far should this court rely on them for alleviation of the worst effects of the cap on lone parents within the appellant groups? The government refers powerfully to the fact that five out of the six appellant mothers in these appeals have at one stage been in receipt of DHPs. The problem is that, as the government accepts, there is limited data about the extent to which capped households are rescued by DHPs. Both the appellants in the DA case and Shelter, as an Intervener in the appeals, present evidence of divergence in (a) authorities surround the making of an application for a DHP; (b) the time which they take to process it; (c) the period for which, subject only to some further award, they agree to make a DHP in order to alleviate a cap, awards of indefinite duration being unknown and most being subject to a maximum of 12 weeks; and (d) shortfall in housing benefit imposed by the cap. the degree of complexity, sometimes bewildering, with which local the extent to which any award of a DHP is large enough to cover the Similar concerns led Henderson J in Burnip v Birmingham City Council [2012] EWCA Civ 629, [2013] PTSR 117, at paras 46 and 47, to reject the attempt by local authorities to rely on DHPs as justifying less favourable treatment of the disabled in the computation of housing benefit. Of the other two aims of government in introducing the revised cap, that of making fiscal savings has scarcely been pressed. The IA forecast that in the year just past (2018 19) the revised cap would save the state 110m. But the figure did not include the operational cost of implementing the cap nor the cost of the support, in particular through DHPs, otherwise provided to capped claimants, all now estimated at 68m this year. In context the net figure appears to be 0.03% of the states overall annual expenditure on welfare benefits for those of working age. Does the revised cap inflict poverty on those subject to it? The answer is hotly contested. But since the government cannot sensibly argue that the computation of welfare benefits is intended to provide a family with more than it needs, it follows that a reduction of those benefits will provide it with less than it needs. Of course the concept of needs is to some extent elastic: they can be assessed with somewhat greater or lesser stringency. But the government does not seek to argue that the lower figures set for the revised cap have been reached by reference to any scale of needs. Equally, in a speech in 2016 relied on by the government, Mr Cameron, then the Prime Minister, acknowledged that the effect of welfare benefits was to push peoples incomes just above the poverty line. It follows that a substantial reduction in them pulls their incomes well down below the poverty line. In my view there are sound reasons for accepting the evidence given by the Child Poverty Action Group in the DS case that the effect of the cap is to reduce a family well below the poverty line, judged by the generally accepted measure of less than 60% of median UK income equivalent to the size of the household. There ensues striking evidence adduced on behalf of the DA appellants about the effect on children of an early life of poverty. Professor Atkinson, the former Childrens Commissioner for England, echoing evidence from Jonathan Bradshaw, Professor of Social Policy at York University, offers this summary: Living in poverty has a serious impact on childrens lives, negatively affecting their educational attainment, health, and happiness as well as having long term adverse consequences into adulthood Even a few years of poverty can have negative consequences for a childs development and is especially harmful from the ages of birth to five. Issue 1: The ambit of article 8 AC 91, Lord Nicholls observed in para 14 that In M v Secretary of State for Work and Pensions [2006] UKHL 11, [2006] 2 the more seriously and directly the discriminatory provision or conduct impinges upon the values underlying the particular substantive article, the more readily will it be regarded as within the ambit of that article It cannot seriously be disputed that the values underlying the right of all the appellants to respect for their family life include those of a home life underpinned by a degree of stability, practical as well as emotional, and thus by financial resources adequate to meet basic needs, in particular for accommodation, warmth, food and clothing. In Petrovic v Austria (2001) 33 EHRR 14 the European Court of Human Rights (the ECtHR) held that a refusal to pay a father, as opposed to a mother, a parental leave allowance fell within the ambit of his rights under article 8 because, as explained in para 27, the allowance enabled a parent to stay at home to look after the children and so affected the way in which family life was organised. In Okpisz v Germany (2006) 42 EHRR 32 it held that a decision no longer to pay child benefits to certain aliens fell within the same ambit. In the bedroom tax case, cited at para 30 above, this court held at para 49 and unanimously, that the so called bedroom tax, by which housing benefit was capped by reference to rules about the number of bedrooms which a family needed, fell within the same ambit. Earlier, in the first benefit cap case, the court had no need to consider whether the original cap fell within the ambit of article 8. Nevertheless the government relies on doubts about it which Lord Reed expressed in para 79. The difficulty is that, as the Intervener, Just Fair, suggests, Lord Reed there seems to have equated the ambit of article 8 with interference with rights under it, which, with respect, may not be the usual analysis. In the DA case Collins J and the Court of Appeal both held that the revised cap fell within the ambit of the rights under article 8 of the claimant mothers and children. I have no doubt that they were correct and of course the same applies to the claimants in the DS case. The effect of the provisions for the cap may be that the mother goes to work and escapes it; if so, her children below school age have to be cared for in some other way. Or the effect may be that the cap is imposed, with a variety of possible results: that, as expressly suggested by the government to be an option, the family, no doubt with great difficulty, has to move to cheaper accommodation; or that the mother builds up rent arrears and so risks eviction or otherwise falls into debt; or that, like one of the DA mothers, she has to cease buying meat for the children; or, as in cases recorded by Shelter, that she has to go without food herself in order to feed the children or has to turn off the heating. Whatever their individual effect, provisions for a reduction of benefits to well below the poverty line will strike at family life. Issue 2: Status The government argues, if faintly, that in the DA case the Court of Appeal was wrong to conclude that the claimants, in other words both the lone parents and the children, had a status on the ground of which they might seek to complain under article 14 of discrimination in the enjoyment of their substantive Convention rights. The government submits, for example, that the parents are women, who admittedly enjoy a status under article 14, and that it is therefore inappropriate for them to seek to shoehorn themselves into some other status. The submission is difficult to understand: it is of the essence of the parents case in the DA appeal and of what I regard as a significant part of their case in the DS appeal that they are lone parents of children aged under two or under five, and that the discrimination lies in the difference between their situation and that of others subject to the cap. The government proceeds to submit that the situation of the appellants can be transitory in that a parent may not be a lone parent for ever and that a child will not remain aged under two (or under five) for long. But there is no ground for concluding that a status for the purpose of article 14 has to be permanent. Some of the examples of status given in article 14 itself can change religion, political opinion, even sex. In Mathieson v Secretary of State for Work and Pensions [2015] UKSC 47, [2015] 1 WLR 3250, this court referred in para 21 to previous authority that the concept of status generally comprised personal characteristics and that inquiry into it should concentrate on what somebody is, rather than what he is doing or what is being done to him; it observed in para 22 that, if the complaint of discrimination fell within the ambit of a Convention right, the ECtHR was reluctant to conclude that the complainant had no relevant status; and it held in para 23 that, as a severely disabled child in need of lengthy in patient hospital treatment, the appellants deceased son had had a status within the meaning of article 14. In R (Stott) v Secretary of State for Justice [2018] UKSC 59, [2018] 3 WLR 1831, this court recently conducted a detailed examination of the meaning of other status in article 14. In the event all members of the court other than Lord Carnwath confirmed that its meaning was broad; and they proceeded to hold that a prisoner subject to a particular type of sentence thereby had the status which under article 14 enabled him to allege that its effect had been to discriminate against him in the enjoyment of his rights under article 5 of the Convention. The present appellants assert statuses more obviously composed of personal characteristics than were those recognised in the cases of Mathieson and Stott; and I have no doubt that all of them have the requisite status in the terms set out in paras 13(b), 14(b), 15(b) and 16(b) above. Issue 3: Formulation of the complaints In R (A) v Secretary of State for Health [2017] UKSC 41, [2017] 1 WLR 2492, I noted in para 29 that the claimants complained that they should have been treated in the same way as a specified group but in para 30 that they had turned their argument inside out in complaining alternatively that they should have been treated in a different way from another specified group. I added in para 31 that in that case the alternative presentation added only an extra level of unwelcome complexity. Nevertheless the concept of discrimination is, as Sir Patrick said in para 17 of his judgment in the DA case, underpinned by the fundamental principle not only that like cases should be treated alike but also that different cases should be treated differently. And in some cases, unlike the A case but exemplified by that in the ECtHR of Thlimmenos v Greece (2000) 31 EHRR 12, the natural formulation of the complaint is indeed that the complainants have been treated similarly to those whose situation is relevantly different, with the result that they should have been treated differently. I have sought to describe in paras 13(c), 14(c), 15(c) and 16(c) above the way in which the various appellants before the court formulate their complaints of discrimination. The DA appellants primarily complain that, in applying the revised cap (a) to lone parents of children aged under two and (b) to children aged under two of lone parents (together, the DA cohorts), the government has treated them similarly to others to whom it has applied the cap but whose situation is relevantly different from theirs. So the DA appellants say that, unless the similar treatment can be justified, the government should have treated them differently by exempting them from the cap. But, like the appellants in the A case, the DA appellants can also turn their complaint inside out. They can point to the exemption from the cap granted to those in receipt of a carers allowance (paid to those who for at least 35 hours a week care for an adult on specified benefits) and of a guardians allowance (paid to those who bring up a child of deceased parents). So in the alternative the DA appellants can complain that, in applying the cap to themselves, the government has treated them differently from carers and guardians to whom it has not applied the cap but whose situation is relevantly similar to theirs. So, the DA appellants can say that, unless the different treatment can be justified, the government should have treated them similarly by exempting them from it. Although the alternative formulation of the complaint of the DA appellants has arguable merit, I have no doubt that the natural way of analysing their complaint accords with their primary formulation of it: it is of discrimination of the type explained in the Thlimmenos case, namely that, by subjecting them to the revised cap, the government has treated the DA cohorts similarly to a specified group whose situation is relevantly different from theirs and thus that, subject to justification, it should have treated them differently from it. I confess that I have found it less easy to understand the way in which the DS appellants formulate their complaint. They contend that the revised cap represents discrimination, both direct and indirect, which violates the Convention rights of all lone parents (and/or women because 90% of lone parents are women) and of all children of lone parents. A group of all lone parents would of course include lone parents with children all aged between five and 18, ie all of school age; and so too a group of all children of lone parents would include children of school age. But the evidence of the DS appellants has scarcely been directed to the effect of the cap on households with children all of school age. Mr Drabble is no doubt entitled, by reference to the statistics set out in para 22 above, to complain of the particular effect of the cap on all lone parents and thus on women; but, insofar as they are lone parents of children all of school age, it is already obvious that the government can justify it. In my view the complaint of the DS appellants which the court should proceed to address is their fall back complaint, namely that the cap violates the Convention rights (a) of all lone parents with a child aged under five and (b) of all children aged under five of lone parents (together, the DS cohorts). Although, for reasons unclear, the DS appellants formulate their fall back complaint only reluctantly in accordance with the Thlimmenos case, such seems to me to be, as in the DA case, its natural formulation, namely that, by subjecting them to the revised cap, the government has treated the DS cohorts similarly to a specified group whose situation is relevantly different from theirs and thus that, subject to justification, it should have treated them differently from it. Issue 4: Comparators The question then arises: what is the specified group which the government is said to have treated similarly to the DA and the DS cohorts? As here, the identification of a comparator group can be difficult. In the present case is the proper comparator (a) dual care parents with a child aged under two or under five; or (b) lone parents without a child aged under two or under five; or (c) all others subjected to the revised cap? All three answers are tenable. Collins J favoured comparison with the group at (c); and McCombe LJ found no reason to disagree with him see paras 155, 156 and 173 of his judgment. Sir Patrick and Sir Brian favoured comparison with the group at (b) see paras 115 and 183 of their judgments. Mr Drabble commends comparison with the group at (a). This courts experience is that, of the various tenable comparators in any particular case, adroit advocates will commend the one which would best serve their purpose in relation to the issues which follow. In AL (Serbia) v Secretary of State for the Home Department [2008] UKHL 42, [2008] 1 WLR 1434, Lady Hale said at para 28: so much argument has been devoted in this case, and in too many others, to identifying the precise characteristics of the persons with whom these two young men should be compared. This is an arid exercise. Blessed is simplicity. The complaint made by the appellants is that their cohorts should not have been subjected to the revised cap. The natural corollary is, as Mr Wise contends, that they are comparing their cohorts with all others subjected to the cap: so the natural comparator is the group at (c). Nevertheless, in arguing that there has been an objectionable similarity of treatment between the DA and the DS cohorts, on the one hand, and all others subjected to the cap, on the other, the appellants may seek to highlight their objection by reference to subgroups, such as those at (a) and (b), whose situations are alleged to be relevantly different. Issue 5: Different situations In DH v Czech Republic (2008) 47 EHRR 3 the Grand Chamber of the ECtHR said in para 175 that discrimination means treating differently, without an objective and reasonable justification, persons in relevantly similar situations. Re cast to cover the type of discrimination recognised in the Thlimmenos case, the proposition is that it means treating similarly, without an objective and reasonable justification, persons in relevantly different situations. In Carson v United Kingdom (2010) 51 EHRR 13 the Grand Chamber explained in para 61 what was meant by the absence of 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. Clarity of language aids clarity of thought. It is worthwhile to stress, as the court did in the Mathieson case in para 24, that the frequent reference to justified discrimination in the domestic discussion of the concept is, as a matter of law, the expression of a contradiction in terms. As the terminology long favoured by the Grand Chamber shows, justification negatives the very existence of discrimination. In the DH case the Grand Chamber proceeded to explain in para 177 that, once the applicant had shown a difference in treatment of persons in relevantly similar situations, the burden of proof lay on the state to establish that it was justified; and in para 178 that what shifted the burden on to the state was prima facie evidence. There is clear prima facie evidence that in the terms of the re cast proposition the DA and the DS cohorts are in a relevantly different situation from those others who have been treated similarly to them by their common subjection to the revised cap. For it appears (a) that, in the case of a lone parent of a child below school age, in particular of a child below the age of two, it is contrary to the interests both of herself, of her child and of the family as a whole that she should in effect be constrained to work also outside the home; (b) that, by the conditions which it has attached to the receipt of income support, the government has itself decided that it is contrary to their interests; (c) that, irrespective of whether it is contrary to their interests for her to be so constrained, the extra difficulty, beyond that faced by others subjected to the cap, which confronts such parents in finding not only suitable work but also suitable childcare is plain; (d) childcare further increases that difficulty; (e) that the incidence of failure of those represented by the DA and the DS cohorts to escape the cap, namely in the case of the wider DS cohort 54%, and in the case of the narrower DA cohort 25%, of all those who suffer it, demonstrates its disproportionate impact upon them; and (f) that, while the effect of the cap on all households who suffer it is to reduce their income below the poverty line, poverty has a disproportionate effect on the young children within these cohorts, stunting major aspects of their development in the long term as well as in the short term. that, in the case of a child aged under two, the absence of any free Issue 6: Focus of justification In the first benefit cap case Lord Reed said in para 14: the cap affects a higher number of women than men because of differences in the extent to which the sexes take responsibility for the care of children following the break up of relationships. Whether that differential effect has an objective and reasonable justification depends on whether the legislation governing the cap, which brings about that differential effect, has a legitimate aim and is a proportionate means of realising that aim. May I suggest, with respect, that Lord Reed may there have identified the focus of the justification too widely? He described it as the legislation governing the cap. In A v Secretary of State for the Home Department [2004] UKHL 56, [2005] 2 AC 68, Lord Bingham of Cornhill stated in para 68: What has to be justified is not the measure in issue but the difference in treatment between one person or group and another. In the first benefit cap case Lady Hale in para 188 of her dissenting judgment cited Lord Binghams statement and concluded: It is not enough for the Government to explain why they brought in a benefit cap scheme. That can readily be understood. They have to explain why they brought in the scheme in a way which has disproportionately adverse effects on women. I conclude that what the government has to justify in the present case is its failure to amend the 2006 Regulations so as to provide for exemption of the DA and DS cohorts from the revised cap. The Secretary of State does not appear to challenge this conclusion. Issue 7: Test of justification This court has been proceeding down two different paths in its search for the proper test by which to assess the justification under article 14 for an economic measure introduced by the democratically empowered arms of the state. In retrospect this duality has been unhelpful. I regret having contributed to it. The considerations which have informed the mapping of both paths is best explained by two citations. First, from the judgment of Lord Hope of Craighead in In re G (Adoption: Unmarried Couple) [2008] UKHL 38, [2009] AC 173, para 48: Cases about discrimination in an area of social policy will always be appropriate for judicial scrutiny. The constitutional responsibility in this area of our law resides with the courts. The more contentious the issue is, the greater the risk that some people will be discriminated against in ways that engage their Convention rights. It is for the courts to see that this does not happen. It is with them that the ultimate safeguard against discrimination rests. Second, from the judgment of Lord Reed in the first benefit cap case: 92. Finally, it has been explained many times that the Human Rights Act 1998 entails some adjustment of the respective constitutional roles of the courts, the executive and the legislature, but does not eliminate the differences between them: differences, for example, in relation to their composition, their expertise, their accountability and their legitimacy. It therefore does not alter the fact that certain matters are by their nature more suitable for determination by Government or Parliament than by the courts. In so far as matters of that nature have to be considered by the courts when deciding whether executive action or legislation is compatible with Convention rights, that is something which the courts can and do properly take into account, by giving weight to the determination of those matters by the primary decision maker. 93. That consideration is relevant to these appeals, since the question of proportionality involves controversial issues of social and economic policy, with major implications for public expenditure. The determination of those issues is pre eminently the function of democratically elected institutions. It is therefore necessary for the court to give due weight to the considered assessment made by those institutions . Lord Reed then completed para 93 by adding Unless manifestly without reasonable foundation, their assessment should be respected. The appropriateness of an inquiry into whether the adverse effects of certain measures are manifestly without reasonable foundation is firmly rooted in the jurisprudence of the ECtHR. In James v United Kingdom (1986) 8 EHRR 123, in which it rejected the challenge to the legislation in England and Wales for leasehold enfranchisement, that court, in plenary session, held at para 46 that it should respect the judgment of the national legislature as to what was in the public interest unless it was manifestly without reasonable foundation. And in Stec v United Kingdom (2006) 43 EHRR 47, para 52, which it repeated word for word in Carson v United Kingdom (2010) 51 EHRR 13, para 61, the Grand Chamber, addressing complaints of discrimination arising out of the rules for entitlement to social security benefits, held that it should respect the national legislatures determination of where the public interest lay when devising economic or social measures unless it was manifestly without reasonable foundation. It explained that this more benign approach to the establishment of justification for the adverse effects of a rule flowed from the margin of appreciation which was wide in this area of decision making. I now accept that the weight of authority in our court mandates inquiry into the justification of the adverse effects of rules for entitlement to welfare benefits by reference to whether they are manifestly without reasonable foundation. In Humphreys v Revenue and Customs Comrs [2012] UKSC 18, [2012] 1 WLR 1545, the court rejected a complaint that a rule for entitlement to child tax credit discriminated against men on the basis that the different treatment of men which resulted from the rule was not manifestly without reasonable foundation. In her judgment, with which the other members of the court agreed, Lady Hale said in para 19 that in the context of state benefits the normally strict test for justification of the effect of a rule alleged to be discriminatory on grounds of sex gives way; but she added in para 22 that it did not follow that such a rule should escape careful scrutiny. The possible mapping of a different path emerged in the judgment of Lord Mance in In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] UKSC 3, [2015] AC 1016. But the subject matter was not the entitlement to welfare benefits. It was a proposed bill in the National Assembly of Wales for costs incurred by NHS Wales to be cast upon identified groups. The courts decision was that the bill fell outside the assemblys legislative competence. But Lord Mance proceeded to consider, in passing, whether the bill would have infringed the rights of the groups under article 1 p 1. This required him to consider how the court should assess whether a deprivation of property was justified. In this regard he referred in para 45 to the four stages of a conventional inquiry into justification. In para 52 he held that the first three stages (which require the establishment of a legitimate aim of the measure, of a rational connection of the measure to the aim and of an inability to achieve it less intrusively) could be addressed by whether the contentions in support of the measure were manifestly without reasonable foundation; but that the fourth stage (which requires the establishment of a fair balance between all the interests in play) fell for decision by the court, although it might pay significant respect to the balance favoured by those responsible for the measure. A month after delivery of its judgments in the Wales case the court delivered its judgments in the first benefit cap case. It proceeded on the agreed basis that, if the analysis reached the stage at which the effect of the impugned provisions fell to be justified, the appellants had to establish that it was manifestly without reasonable foundation; and, by a majority, the court held that they had failed to satisfy this agreed criterion. In their dissenting judgments Lady Hale and Lord Kerr duly applied the agreed criterion, albeit with opposite results. But in para 209 of her judgment Lady Hale referred to para 52 of Lord Mances judgment in the Wales case and observed that a benefit cap closely resembled a deprivation of property; and in para 210 she floated the idea that, in the absence of agreement upon the criterion, it might have been possible to limit its application to the stages of the conventional inquiry referable to the aim of the provisions and to exclude its application to the final stage referable to its fair balance and overall proportionality. Almost two years later the court delivered its judgments in the bedroom tax case, cited in para 30 above. Two of the three conjoined appeals concerned claims that the effect of rules for the computation of housing benefit was to discriminate against disabled people in the enjoyment of their rights under article 8 and/or article 1 p 1. Giving the main judgment, Lord Toulson recorded in para 28 the primary contention of the claimants in the first appeal as having been that the Court of Appeal had erred in asking whether the treatment of which they complained was manifestly without reasonable foundation. In paras 29 to 38 he then at length set out reasons in support of his conclusion, in which all the other members of the court concurred, that the Court of Appeal had not erred when, in assessing justification for the effect of the rules on the claimants, it had asked itself that single question. Several months after delivery of the judgments in the bedroom tax case, the court delivered its judgments in the A case cited in para 40 above. The case concerned not welfare benefits but the governments refusal, partly on grounds of cost, to exercise its power to require the NHS in England to provide free abortion services to women usually resident in Northern Ireland. One of the arguments on behalf of the women was that the effect of its refusal was to discriminate against them in the enjoyment of their rights under article 8 of the Convention. I gave a judgment, with which Lord Reed and Lord Hughes agreed, in which I rejected the argument. Lady Hale and Lord Kerr gave judgments in which they upheld it. It was in the course of my judgment, in para 33, that I cited the judgment of Lord Mance in the Wales case and asserted it to have become clear that, of the four aspects of an inquiry into justification under the Convention of the effect of a measure of economic or social policy, the fourth, relating to a fair balance, fell to be answered by the court for itself and not by reference to whether it was manifestly without reasonable foundation. We may put aside consideration of whether the government decision impugned in the A case was of a character, unlike its rules of entitlement to welfare benefits, which made my suggested approach to its justification sound in law. For, even if so, I expressed myself too widely. Even though none of the other members of the court, including those in dissent, took issue with what I said, I take sole responsibility for it. Probably also emboldened by Lady Hales observations in the first benefit cap case, I reached too quickly for the observations of Lord Mance in the Wales case. For by then there was and there still remains clear authority both in the Humphreys case and in the bedroom tax case for the proposition that, at any rate in relation to the governments need to justify what would otherwise be a discriminatory effect of a rule governing entitlement to welfare benefits, the sole question is whether it is manifestly without reasonable foundation. Let there be no future doubt about it. How does the criterion of whether the adverse treatment was manifestly without reasonable foundation fit together with the burden on the state to establish justification, explained in para 50 above? For the phraseology of the criterion demonstrates that it is something for the complainant, rather than for the state, to establish. The rationalisation has to be that, when the state puts forward its reasons for having countenanced the adverse treatment, it establishes justification for it unless the complainant demonstrates that it was manifestly without reasonable foundation. But reference in this context to any burden, in particular to a burden of proof, is more theoretical than real. The court will proactively examine whether the foundation is reasonable; and it is fanciful to contemplate its concluding that, although the state had failed to persuade the court that it was reasonable, the claim failed because the complainant had failed to persuade the court that it was manifestly unreasonable. Issue 8: Content of UNCRC rights Article 3 of the UNCRC provides: 1. In all actions concerning children, whether undertaken by courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration. A move is afoot, exemplified by Lord Kerrs judgment in the first benefit cap case at paras 247 to 257, for UK courts to treat the UNCRC, which the UK has ratified, as being, exceptionally, part of our domestic law. At present, however, it forms no part of it. What does the concept of the best interests of the child in article 3.1 encompass? In the Mathieson case, at para 39, this court approved a suggestion which Lord Carnwath had made in para 105 of the first benefit cap case to the effect that authoritative guidance was to be found in para 6 of General Comment No 14 (2013) of the UN Committee on the Rights of the Child. There the committee had suggested that the concept had three dimensions: (a) a substantive right of the child to have his or her best interests assessed as a primary consideration when different interests are being considered in order to reach a decision on the issue at stake; (b) an interpretative principle, irrelevant to the present appeals; and importantly; (c) a rule of procedure that, whenever a decision is to be made that will affect an identified group of children, the decision making process must include an evaluation of the possible impact of the decision on them. In the light in particular of the Mathieson case, the government cannot deny that the committees analysis is authoritative guidance in relation to the dimensions of the concept in article 3.1. It can submit only, and correctly, that the guidance is not binding even on the international plane and that, while it may influence, it should, as mere guidance, never drive a conclusion that the article has been breached. The UNCRC also provides: (a) under article 26(1) that States Parties shall recognize for every child the right to benefit from social security and shall take the necessary measures to achieve the full realization of this right in accordance with their national law; (b) under article 27(1) that States Parties recognize the right of every child to a standard of living adequate for the childs physical, mental, spiritual, moral and social development; and (c) under article 27(3), having at (2) cast upon parents the primary responsibility for securing living conditions necessary for their childs development, that States Parties, in accordance with national conditions and within their means, shall take appropriate measures to assist parents to implement this right and shall in case of need provide material assistance particularly with regard to nutrition, clothing and housing. Issue 9: Relevance of UNCRC rights The ECtHR has made it clear that, where relevant, the content of another international convention, in particular one relating to human rights such as the UNCRC, should inform interpretation of the Convention: Neulinger v Switzerland (2010) 54 EHRR 1087, paras 131 and 132. It follows that, when relevant, the content of the UNCRC can inform inquiry into the alleged violation of article 14 of the Convention, when taken with one of its substantive rights. But in what circumstances is any breach of article 3.1 of the UNCRC relevant to an alleged violation of article 14? The question was addressed by each of the five members of this court in the first benefit cap case, in which the suggested violation of article 14 lay in the caps alleged discrimination against women in the enjoyment of their right to possession of welfare benefits under article 1 p 1. The answers were as follows: (a) Lord Reed assumed, rather than held, in para 88 that the cap breached article 3.1 of the UNCRC but held at para 89 that such breach was irrelevant to the alleged discrimination against women. (b) Lord Carnwath held in paras 122 to 128 that the cap did breach the article but held in paras 125 to 131 that such breach was irrelevant to the alleged discrimination. (c) Lord Hughes held in para 146 that any such breach was irrelevant to the alleged discrimination and in paras 148 to 155 that in any event the cap did not breach the article. (d) Lady Hale held in para 224 that any breach of the article was relevant to the alleged discrimination and in paras 226 to 229 that the cap did breach it. (e) Lord Kerr, like Lady Hale, held in para 262 that the cap did breach the article and in paras 263 to 268 that the breach was relevant to the alleged discrimination. In the present case the complaint of discrimination differs from the complaint in the first benefit cap case. The adult victims of the alleged discrimination are now cast not merely as women but as lone parents of children below school age. Moreover these children are now cast as further victims of it in their own right. And, although the lone parents repeat their complaint of discrimination in the enjoyment of their rights under article 1 p 1 of the Convention, both they and their children now complain of it in relation to the enjoyment of their respective rights to respect for their family life under article 8. In explaining in the first benefit cap case that a breach, if any, of article 3.1 was irrelevant to the alleged discrimination, Lord Reed, Lord Carnwath and Lord Hughes each stressed in the paragraphs cited above that in their view the alleged discrimination could not be said to be directed against children. It is clear that the government cannot import their reasoning into the present proceedings. Equally it undertakes a mammoth task in maintaining the argument that, in setting the terms of the revised cap, it was not taking an action concerning children within the meaning of article 3.1. If valid in relation to the revised cap, the argument would have been valid in relation to the original cap. But it was rejected by Lord Carnwath, Lady Hale and Lord Kerr; and it was specifically upheld neither by Lord Reed nor by Lord Hughes. In para 107 Lord Carnwath referred further to General Comment No 14, namely to para 19 in which the committee explained that the duty under article 3.1 applies to all decisions on the part of public authorities which directly or indirectly affect children. Insofar as in the present appeals the children themselves claim a violation of rights of their own under article 14, taken with article 8, their rights should be construed in the light of the UNCRC as an international convention which identifies the level of consideration which should have been given to their interests before subjecting their households to the revised cap. But can the lone parents themselves also claim that their own rights under article 14, taken with article 8, must be construed in the light of the provision in the UNCRC for consideration of their childrens interests? The interests of the lone parents in play in the present appeals are indistinguishable from the interests of their children below school age. Their claim is as parents: so, without their children, it would not exist. Indeed their claim is as lone parents: so responsibility for their children in effect rests solely upon them. And their claim is to defend furtherance of their family life from the effects of a cap on benefits specifically computed by reference to the needs of their children and themselves taken together. Never more apt than to the present appeals is the observation of Lady Hale in Beoku Betts v Secretary of State for the Home Department [2008] UKHL 39, [2009] AC 115, in para 4 that: The right to respect for the family life of one necessarily encompasses the right to respect for the family life of others, normally a spouse or minor children, with whom the family life is enjoyed. The claims of all the appellant cohorts under article 14, taken with article 8, therefore require the court to proceed to assess whether, in setting the terms of the revised cap, the government breached article 3.1 of the UNCRC. Were the court to hold that it had done so, what would the effect of it be? The overarching inquiry is whether its decision not to exempt the appellant cohorts from the cap was manifestly without reasonable foundation. As McCombe LJ observed, albeit more forcefully, in para 178 of his dissenting judgment in the DA case, a foundation for the decision not made in substantial compliance with article 3.1 might well be manifestly unreasonable. Issue 10: Breach of UNCRC rights In deciding upon the terms of the revised cap, did the government have regard, as a primary consideration, to the best interests of children below school age of lone parents and did it evaluate the possible impact of its decision upon them? In answering this question within its overarching inquiry into the alleged violation of Convention rights, the court can, without constitutional impropriety, have regard to Parliamentary materials which explain the background to the governments decision and in particular its policy objectives: Wilson v First County Trust Ltd (No 2) [2003] UKHL 40, [2004] 1 AC 816, paras 61 to 66. It is worthwhile to preface an attempted answer to the question by adverting to two features of the Parliamentary discussion of the Bill which introduced the original cap, both briefly noted by Lord Reed in his judgment in the first benefit cap case at paras 29 and 40. (a) In May 2011 Ms Buck MP tabled an amendment before the Public Bill Committee of the House of Commons to the effect that households should be exempt from the cap if childcare costs outweighed earnings. She referred in particular to lone parents with four or five children, of whom one was aged under five. The government opposed the amendment, which Ms Buck withdrew. (b) In November 2011 the Lord Bishop of Ripon tabled an amendment before the Lords Grand Committee that lone parents of children aged under five should be exempt from the cap. He said: The exemption of lone parents with children under five is particularly important. The current system recognise[s] that those additional commitments make it hard for them to move into work and, indeed, recognise[s] that they are not expected to seek work it seems unreasonable to place a cap on the benefits that they should receive when we acknowledge that they should not be put under pressure to seek work. The government opposed the amendment on the basis that encouragement to work did not equate to a requirement to work and that there had to be a limit to the amount of a households benefits. In the end the bishop did not press his amendment. On 8 September 2015, following presentation to Parliament of the Bill which included provision for the revised cap, the government published its Memorandum to the Joint Committee on Human Rights, in which, pursuant to its duty under section 19 of the 1998 Act, it stated that in its view the provision was compatible with Convention rights. In the memorandum the government accepted in para 18 that the provision fell within the ambit of article 1 (a) p 1 and arguably of article 8; (b) noted in para 19 the decision of this court in the first benefit cap case; (c) accepted in para 19 that 60% of those capped under the original scheme had been lone parents; (d) contended in para 21 that, to the extent that the revised cap impacted upon them disproportionately to its impact on others, its impact was justified in the interest of the economic well being of the UK and of incentivising people to work; and (e) claimed in para 77 that, in the light of this courts decision in the first benefit cap case, it had, in relation to the proposed revision of the cap, fully considered what it described as its obligations under the UNCRC because the best interests of children overall were promoted when their parents were in work and because work remained the surest route out of poverty. On 10 September 2015 Gingerbread made representations to the Public Bill Committee of the House of Commons in respect of the proposed revision of the cap. Its policy director said: Over 60% of people capped so far have been single parents; 70% of them have children under five and 34% have children under two the younger the child is when the parent is capped, the harder it is for them to get into work we really also need to be looking at the contradiction between the benefit cap and the conditionality policy that exists. If you are capping up to 20,000 single parents who have children under two, there is no childcare support available for that group at present. There is also a real shortage of childcare available, so there are really clear reasons why that group of single parents will not be able to go into work. [The governments] research, again, has shown that where those people who are capped do not find work, it is likely that 40,000 more children would be pushed into poverty. When we are looking at the benefit cap we need to look at the circumstances of the family and the age of the child. On 17 September 2015 Ms Thornberry MP, then the shadow minister of state for employment, tabled before the same committee an amendment to the Bill to the effect that the revised cap should not apply to persons responsible for the care of a child aged below two. The group proposed to be exempted was therefore close to the DA cohorts. But it was not identical in that Ms Thornberrys amendment appeared to exempt dual care parents as well as lone parents, although at one point in the discussion she seemed to suggest otherwise. In arguing for her amendment Ms Thornberry suggested that the original cap had overwhelmingly applied to people who were recognised within the benefits system itself as being unable to work. She referred to the evidence which the committee had heard a week earlier, including no doubt that of Gingerbread, and she explained that the narrow exemption which she proposed was for a group that was perhaps the most acutely vulnerable and the least able to change its circumstances. But the committee rejected the amendment by ten votes to five. Between November 2015 and February 2016 the House of Lords in debates and in committee considered in detail the provision for the revised cap. In summary (a) Baroness Lister suggested that it was not reasonable to expect a lone parent with a child aged under one to work. She suggested that the government had not properly assessed the best interests of different groups of children pursuant to its obligation under article 3.1 of the UNCRC. that (b) Baroness Manzoor suggested disproportionately affect single parents with a child aged under five. (c) Baroness Hollis suggested that lone parents with children aged under three were effectively out of the labour market. She tabled an amendment to exempt carers of children aged under nine months from the cap. lower cap would the But the amendment proposed by Baroness Hollis failed; and the government did not act on the various suggestions. Lord Freud on its behalf stressed the importance of the message that work pays and that households on benefits should not receive more than working households; and he declared that the way to address hard cases was by DHPs, to which the government would allocate 870m over the following five years. The governments Equality Analysis dated September 2016 in relation to the 2016 Regulations, like its IA dated August 2016, claimed that the government had taken the UNCRC into account. It stated that it was not in the best interests of children to live in workless households and referred to studies which concluded that children in such households exhibited greater behavioural problems from the age of seven and poorer academic attainment. It recognised that lone parents might find it hard to work as a result of childcare responsibilities but pointed out that measures of mitigation, in particular free childcare and DHPs, had been put in place. By a narrow margin I am driven to conclude that, in relation to its refusal to amend the 2006 Regulations so as to exempt the appellant cohorts from the revised cap, the government did not breach article 3.1 of the UNCRC in either of the relevant dimensions of its concept of the best interests of a child. The Parliamentary and other materials to which I have referred demonstrate that it did evaluate the likely impact of the revised cap on lone parents with young children; and that it did assess their best interests at a primary level of its overall consideration. This court must impose on itself the discipline not, from its limited perspective, to address whether the governments evaluation of its impact was questionable; nor whether its assessment of the best interests of young children was unbalanced in favour of perceived long term advantages for them at the expense of obvious short term privation. Issue 11: Conclusion on justification I am also driven to conclude that the governments decision to treat the appellant cohorts similarly to all others subjected to the revised cap was not manifestly without reasonable foundation. In this regard, for reasons which I will not rehearse, the DA cohorts have a stronger case than have the DS cohorts; but, again by a narrow margin, even the stronger case fails. The appellants have not entered any substantial challenge to the governments belief that there are better long term outcomes for children who live in households in which an adult works. The belief may not represent the surest foundation for the similarity of treatment in relation to the cap; but it is a reasonable foundation, in particular when accompanied by provision for DHPs which are intended on a bespoke basis to address, and which on the evidence are just about adequate in addressing, particular hardship which the similarity of treatment may cause. Disposal There has been no Convention related discrimination. The appeals must be dismissed. Had discrimination existed, the court would have proceeded to consider whether to make a declaration that the failure to include the appellant cohorts in the list of exemptions in the 2006 Regulations was incompatible with their Convention rights. A declaration is a discretionary remedy; and to decide whether to exercise the discretion would have precipitated substantial inquiry into the institutional propriety for this court to make a declaration in relation to decisions about entitlement to welfare benefits made by the government in Parliament following protracted debate. But it is this same crucial, if sometimes problematic, concept of institutional propriety which informs the test of justification, generous to the government, of a measure such as that of the revised cap; and it is therefore at that stage that, in relation to such a measure, the concept will usually play its part. Postscript These appeals were rightly brought. The arguments raised in them have been of such weight as to attract this courts most careful and sympathetic consideration; and they have led two members of the court to enter a powerful dissent from the majoritys dismissal of the appeals. On 12 March 2019, shortly prior to the delivery today of these judgments and long after our hearing of the appeals, the Work and Pensions Committee of the House of Commons published its report on The Benefit Cap, 24th Report of Session 2017 19, HC 1477. Although in form a study of the effect of the original as well as of the revised cap, the report inevitably focusses on the current, more severe, effects of the revised cap. It addresses, although in far greater detail, all the factors to which I have referred in paras 22 to 34 above under the heading Evidence; as well, of course, as many more relevant factors. In the report the committee calls on the government urgently to conduct a full audit of the policy behind the benefit cap; to reconsider the limits at which benefits are capped; and in particular to disapply the cap to those who, by reference to the conditions attached to the receipt of income support, are not yet expected to look for work. The fact that a committee of the House of Commons is at this present time calling for urgent review of the provisions of the revised cap would in my view have fortified a decision, had the need to make it been reached, that institutional propriety militated against the grant of a declaration of incompatibility at this stage: R (Nicklinson) v Ministry of Justice [2014] UKSC 38, [2015] AC 657, paras 113 118 (Lord Neuberger of Abbotsbury PSC). LORD CARNWATH: (with whom Lord Reed and Lord Hughes agree) I agree with Lord Wilson that the appeal should be dismissed, for the reason that the approach adopted by the government, even if in other respects meeting the tests for discrimination under article 14, was not, as he says, manifestly without reasonable foundation. However, having been a member of the majority in the related case of SG, I add some comments on the relationship between the two cases, and some remaining points of difference (or difference of emphasis). The benefit cap imposes a cap on the total amount of annual welfare benefits that a given household can receive. The legality of the previous scheme under the Welfare Reform Act 2012 was upheld by this court (by a majority) in R (SG) v Secretary of State for Work and Pensions [2015] 1 WLR 1449. Although the scheme was agreed to be discriminatory against women for the purposes of articles 14 and A1P1, it was held to be justified because (in the words of the headnote): the legislatures policy choice in relation to general measures of economic or social strategy, including welfare benefits, would be respected unless it was manifestly without reasonable foundation; that the view of the Government, endorsed by Parliament, that achieving the legitimate aims of fiscal savings, incentivising work and imposing a reasonable limit on the amount of benefits which a household could receive was sufficiently important to justify making the Regulations despite their differential impact on men and women, had not been manifestly without reasonable foundation. That to my mind is an accurate summary of the leading judgment of Lord Reed, agreed in terms by Lord Hughes, and implicitly by myself. Furthermore the majority held that the case was not strengthened by reference to article 3.1 of the UNCRC. It is convenient again to refer to the summary in the headnote: even on an assumption (per Lord Reed and Lord Hughes JJSC) or an acceptance (per Lord Carnwath JSC) that the Secretary of State had failed to show how the Housing Benefit Regulations 2006 were compatible with the article 3.1 obligation to treat the best interests of children as a primary consideration, such failure did not have any bearing on whether the legislation unjustifiably discriminated between men and women in relation to their enjoyment of A1P1 property rights In this respect also, there was full agreement between the members of the majority on the legal principles to be applied, articulated most fully by Lord Reed (at paras 78 91). In short, while article 3.1 is not a source of substantive rights or duties under the European Convention, it may where appropriate be taken into account as an aid to interpretation of those rights or duties. Although we differed as to whether article 3.1 had been in fact been complied with, we were agreed that it had no relevance to the issue then before us of discrimination under article 14 in relation to the A1/P1 property rights of women. The benefit cap legislation was politically controversial and subject to vigorous debate in Parliament, directed to both the principle and the detail. The difficulty posed by the legal issues in that appeal is apparent from the division of opinion within the court, and from the time taken to reach a decision (almost 11 months). However, it must be taken as settling the issues of principle, absent a challenge to the reasoning of the majority, some material change in the relevant legislation or the circumstances of the individual cases, or some new argument of substance which was not addressed. The present challenge is to the amended scheme under the Welfare Reform and Work Act 2016. By section 8 of the 2016 Act, the applicable cap was reduced from 26,000 per annum for all families to 23,000 for families living in Greater London, and 20,000 for families living outside London (the Revised Benefit Cap). A significant change is that the amount of the cap is embodied in primary legislation, rather than regulations, as is the list of benefits to which it applies, including child benefits and child tax credit (section 96(10)). It is rightly not suggested that these aspects of scheme, as now incorporated in primary legislation, are in themselves open to review or incompatible with the Convention. To that extent the scope for challenge has been reduced. The 2012 Act gave the Secretary of State the power to make detailed provision for the implementation of a benefit cap by way of regulations. Under section 96(4)(c) of the 2012 Act, this includes a discretion to make exceptions to the application of the cap. The Benefit Cap (Housing Benefit) Regulations 2012 (SI 2012/2994) provide, inter alia, that adults who are entitled to working tax credit are not subject to the benefit cap. In the case of a lone parent, receipt of working tax credit requires that he or she engages in work for at least 16 hours per week. It is the regulations which are the focus of the present attack. In summary the appellants argue that their parental responsibilities, combined with the lack of adequate care support, make it in effect impracticable for them to achieve the 16 hours of work necessary to qualify for exemption. It is argued that failure to make an appropriate exception for them under the regulations involved unjustified discrimination contrary to article 14 of the ECHR. Apart from the change in legislation, there appear to be three main differences from the arguments as presented in the earlier cases: i) Article 8 Particular emphasis has been placed on article 8 of the Convention (rather than article 1 of Protocol 1 (A1P1) which was the main focus of attention in SG), and its relevance to the best interests test under the UNCRC; ii) Status The focus has shifted to the so called Thlimmenos principle, and the groups allegedly discriminated against have been recalibrated and re defined in various ways: (DS appellants) (i) lone parents, (ii) lone parents with children under the age of five (iii) children of parents in groups (i) or (ii); (DA appellants) (iv) lone parents with children under two (v) children of such parents. iii) Test for justification It is argued that in the light of more recent Supreme Court authority, the manifestly without reasonable foundation criterion applied in SG, has been superseded by a broader fair balance test. I will consider each of these points in turn before explaining my conclusions in the present appeals. (i) Article 8 As I noted in SG (para 99) article 8 had been mentioned by Mr Wise in his printed case, not as a free standing claim, but as an alternative route into article 14, or as supporting his best interests claim in respect of the children under article 3.1 of the UNCRC. I noted that article 8 was not relied on by Mr Drabble QC, then appearing for the Child Poverty Action Group. I was not at that time persuaded that either of Mr Wises formulations adds anything of substance to the claim based on A1P1. It may be in retrospect that we should have given more attention to this aspect of Mr Wises submissions. In any event, there is no doubt that the main weight of the argument at that time, and the reasoning of the majority, were directed to A1P1 rather than article 8. Lord Hughes in particular drew a clear distinction between the two in the particular context of the best interests principle under article 3.1 of the UNCRC: 146. If the rights in question are the A1P1 property rights of women, and their associated derivative right not to be discriminated against in relation to those rights, it is an impermissible step further to say that there is any interpretation of those rights which article 3 of the UNCRC can inform. In the case of article 8, the childrens interests are part of the substantive right of the parent which is protected, namely respect for her family life. In the case of A1P1 coupled with article 14, the childrens interests may well be affected (as here), but they are not part of the womans substantive right which is protected, namely the right to be free from discrimination in relation to her property. There is no question of interpreting that article 14 right by reference to the childrens interests This approach is also consistent with established authority on the application of the best interest principle in the context of article 8. As Lord Hodge said for the court in Zoumbas v Secretary of State for the Home Department [2013] UKSC 74; [2013] 1 WLR 3690, para 10: The best interests of a child are an integral part of the proportionality assessment under article 8 of the Convention. Accordingly the present appeal has required us to look in more detail at the application of article 8. As to the application of article 14 in connection with article 8, it is unnecessary to repeat Lord Wilsons review of the relevant Strasbourg authorities under his issue 1. In agreement with him I am satisfied that the present claims fall within the ambit of article 8 so as to engage the issue of discrimination under article 14. I also agree with him that in that context the best interests principle under article 3.1 is potentially relevant. I have more difficulty with the issue of status to which I now turn. Identifying the relevant group or status (ii) Although the Thlimmenos principle is now well established, it does not in my view materially change the nature of the inquiry from that undertaken in SG. In particular it does not diminish the need under article 14 to show that the alleged discrimination arose from a relevant status, and to identify a relevant comparator with whose treatment that of the claimant group can be compared (Lord Wilsons issues 2 and 4). In Thlimmenos v Greece the applicant was a Jehovahs Witness who had been convicted of insubordination under the Military Criminal Code for refusing to wear a military uniform at a time of general mobilisation. He was subsequently refused appointment as a Chartered Accountant under rules which excluded those convicted of serious crimes. He argued that the lack of an appropriate exception for those whose conviction was due to religious considerations constituted unlawful discrimination under article 14 taken with article 9 of the Convention. The argument was accepted by the Grand Chamber. Having noted that article 14 had hitherto been applied to differential treatment of persons in analogous situations without objective and reasonable justification, the court continued: However, the court considers that this is not the only facet of the prohibition of discrimination in article 14. The right not to be discriminated against in the enjoyment of the rights guaranteed under the Convention is also violated when states without an objective and reasonable justification fail to treat differently persons whose situations are significantly different. (para 44) Although the courts formulation of the principle does not refer to status as a criterion, it is apparent from the preceding discussion that this point was not in issue. In that respect the applicants argument as recorded by the court relied on his position as a Jehovahs Witness: The class of persons to which the applicant belonged, namely male Jehovahs Witnesses whose religion involved compelling reasons for refusing to serve in the armed forces, was different from the class of most other criminal offenders. The Governments failure to take account of this difference amounted to discrimination not tolerated by article 14 of the Convention taken in conjunction with article 9. (para 34) That aspect of his case was not challenged. It is also clear that an important feature of the case was the close link between the alleged discrimination and the protected religious rights under article 9. The Thlimmenos formulation has been often repeated and is not in doubt. However, there are few illustrations of its practical scope and application. An example is EB v Austria (Application No 31913/07, judgment of November 7, 2013), in which the First Section found that the principle required an exception to the general rule that convictions remained on the persons record even if the offence in question had since been abolished. In that case, there was a violation of article 14 taken with article 8 as convictions for homosexual acts, later found to be incompatible with the ECHR, remained on the applicants criminal records. We were referred to no Strasbourg case in which the principle has been applied in the context of social welfare legislation such as is in issue in this case. Although there is no reason to exclude its operation in this context, the absence of successful cases in Strasbourg may reflect the courts recognition in this context of the need for national rules to be framed in broad terms (SG para 15 per Lord Reed citing Carson v United Kingdom (2010) 51 EHRR 13 para 62), and the consequent difficulty of challenging the treatment of particular groups. I must accept (as Lord Wilson says: para 39) that in R (Stott) v Secretary of State for Justice the majority of this court adopted a relatively broad view of the concept of status. On that basis I would agree that lone parents can properly be regarded as having a status within the Thlimmenos principle. In agreement with Lord Hodge, I am much more doubtful as to the appropriateness of the other narrower forms of status relied on in this case. In particular I find it hard to see any basis for defining the parents and the children as distinct groups; the adverse effects are on the families, in which the interests of parents and children are jointly affected. However, in the absence of any directly relevant Strasbourg authority on these points, it is difficult to reach a concluded view. Like Lord Hodge I am content to assume for present purposes that the status requirement is satisfied in respect of each such group. The relevant issues therefore are whether those groups or sub groups are sufficiently different from other comparable groups to have required separate treatment under the Thlimmenos principle to avoid interference with their article 8 rights, and whether a failure in that regard can be justified. (iii) Test for Justification The argument that a less demanding test should be applied than manifestly without reasonable foundation (or its hard to escape acronym MWRF) was most fully articulated by Mr Wise QC for DA. For the reasons given by Lord Wilson (issue 7) I agree with him that this argument must be rejected, and that the application of the MWRF should be regarded as beyond future doubt. However, since this view is not accepted by all the members of the court, I feel it necessary to add some comments of my own on Mr Wises arguments. He started from the four stage approach as summarised by Lady Hale in R (Tigere) v Secretary of State for Business, Innovation and Skills [2015] UKSC 57; [2015] 1 WLR 3820, para 33: (i) does the measure have an legitimate aim sufficient to justify the limitation of a fundamental right; (ii) is the measure rationally connected to that aim; (iii) could a less intrusive measure have been used; and (iv) bearing in mind the severity of the consequences, the importance of the aim and the extent to which the measure will contribute to that aim, has a fair balance been struck between the rights of the individual and the interests of the community? He accepted that the MWRF test was adopted by this court in Humphreys v Her Majestys Revenue and Customs Comrs [2012] UKSC 18; [2012] 1 WLR 1545 (alleged discrimination in respect of state benefits), following the ECHR decision in Stec v United Kingdom (2006) 43 EHRR 1017, and in other more recent cases. However, in those cases, as he submitted (in his written case) the Supreme Court did not distinguish between the different elements of the justification analysis and, in particular, did not distinguish between the questions whether a discriminatory measure (i) pursued a legitimate aim or aims and (ii) was proportionate in the sense of striking the requisite fair balance. At the latter stage, he argued, MWRF has no application. For this he relied on what was said by Lord Mance, with the agreement of the majority of the court in the Welsh Asbestos case, and repeated in R (A) v Secretary of State for Health (as Lord Wilson has explained: paras 61, 64). With respect to those members of the court who think otherwise, it is clear in my view that the MWRF test remains the appropriate test in the present context. There is nothing in the later cases to support a departure from the position, as accepted by all parties, and adopted by the court in the SG case. It is useful to begin by reference to what was said by Lady Hale (with the agreement of the rest of the court) in the Humphreys case itself: 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 the 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] 1 AC 311, which concerned the denial of income support disability premium to rough sleepers. Having quoted para 52 of the Stec case 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 . 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 As that passage shows, authority at the highest level in this country for the application of the MWRF test goes back at least to the House of Lords in RJM. Also noteworthy is her reference to the distinction drawn by the House of Lords between the core grounds such as race and sex, and other grounds; and her acceptance that, even in the core context of sex discrimination, the normally strict test for justification gives way to the MWRF test in the context of state benefits. In the SG case itself the discrimination was said to be against women, and thus within one of the core grounds. As one moves further away from those concepts to the more distant groups identified in the present case, there is still less reason to depart from the MWRF approach. SG was argued in April 2014 but not decided until March 2015. As already noted, there was no disagreement between the parties as to the application of the MWRF test. By that time the decision in the Welsh Asbestos case had been given (and was mentioned by Lady Hale: para 209); but it was not treated by the majority, or indeed the parties, as requiring any qualification of the MWRF test. Nor was there any such departure or qualification in the Tigere case itself (decided in July 2015). The case concerned discrimination in relation to eligibility for student loans. There was a disagreement between the members of the court over the appropriate test on the facts of that case, but not on the correctness of the MWRF as applied in the cases of Humphreys or SG. Lords Sumption and Reed would have applied the MWRF test. Lord Hughes concluded that the appeal should be allowed whatever the test. Lady Hale (paras 27 29, with the agreement of Lord Kerr) referred to those judgments without adverse comment, saying education is rather different. She went on to cite the Strasbourg decision in Ponomaryov v Bulgaria (2011) 59 EHRR 799, including in particular to observation of the court that unlike some other public services, education is a right that enjoys direct protection under the Convention . As Lord Wilson says (para 63), the issue was in any event put beyond reasonable argument by the seven justice court (including Lady Hale and Lord Mance) in the bedroom tax case (R (MA) v Secretary of State for Work and Pensions). Giving the leading judgment (with the agreement on this point of all members of the court), Lord Toulson noted the submission that, because in Humphreys the unsuccessful appellant had not argued for anything other than the Stec test, it was appropriate to ask whether there was good reason to depart from what Lady Hale had said (para 31). As he then pointed out (para 32): The fundamental reason for applying the manifestly without reasonable foundation test in cases about inequality in welfare systems was given by the Grand Chamber of the European Court of Human Rights in Stec, para 52. Choices about welfare systems involve policy decisions on economic and social matters which are pre eminently matters for national authorities. He quoted the relevant passage from Lady Hales judgment in Humphreys and noted her comment that the less stringent test did not mean that the justifications put forward should escape careful scrutiny. Having commented in detail on the parties submissions, and the more recent Strasbourg authorities, he concluded by simply affirming what had been said in that passage (para 38). In her judgment in the present case, as I understand it, Lady Hale does not seek to question the application of the MWRF principle in these appeals, but suggests that the court may need to return to it in the future. I cannot with respect agree. She accepts that the decision in MA was reached following a wholesale attack on the MWRF principle, but observes that there was no discussion of a more nuanced approach along the lines suggested by Lord Mance in the Welsh Asbestos case. I do not see that this in any way diminishes the authority of the decision. It is to be noted that, in spite of the presence of Lord Mance, and although the Welsh Asbestos case was included in the list of authorities cited, neither he nor anyone else seems to have regarded it as relevant in that context. That may well have been because the context in which the issue was considered was quite different from MA (and from the present case): not social security benefits, but compensation for asbestos related disease; and not article 14 discrimination, but interference with property rights under A1P1. Indeed in Welsh Asbestos there had been no reference to Stec or Humphreys in either the judgment or in the submissions. Lord Kerr goes further and would hold, in agreement with Mr Wises submission, that the MWRF test should not be applied to the final stage of the proportionality analysis. Although he does not in terms explain how he feels able to disregard the authority of MA, he emphasises that the technique applied to that question by the national court is to be distinguished from that applied in Strasbourg at the supra national level. However, the fact that the Strasbourg court uses the MWRF test when applying the margin of appreciation and that the same margin of appreciation does not necessarily apply at the national level does not entail that domestic courts cannot also use the MWRF test. It is being used as a means of allowing the political branches of the constitution an appropriately generous measure of leeway when assessing the proportionality of measures concerning economic and social policy. The seven justice decision in MA surely settled the point for the foreseeable future. Conclusion In conclusion I adopt with respect what was said by Sir Patrick Elias in the Court of Appeal in DA (which related solely to the group said to be constituted by lone parents with children aged under two): No one should underestimate the very real hardships caused by the imposition of the cap, and the particular circumstances of the individual claimants in this case bear witness to the harsh circumstances in which they and those similarly placed live, as does detailed evidence from Shelter. But they are difficulties which have to be borne by all non working households to a greater or lesser extent; they are not unique to this cohort, nor does the cap necessarily bear more harshly on them. There is no linear relationship between the financial impact on families caused by the cap and the age of the children. Indeed, it is obvious that households with a greater number of children will typically suffer more, whatever the age of their children, simply because the parent or parents have more mouths to feed and are likely to need larger accommodation . It follows that the proper focus in this case must be whether the problems faced by the particular cohort of parents in securing effective and affordable child care are sufficiently different from problems facing other lone parents to entitle the court to conclude that it is manifestly without reasonable foundation to fail to exempt them from the operation of the cap (paras 105 106) Although the number of possible groups has been extended in the appeals as they have come to this court, the thrust of that passage remains valid. It is necessary to distinguish between the general impact of the cap, which is undoubtedly harsh, but is inherent in the scheme as approved by Parliament, and particular effects on an identifiable group which can properly be the subject of a distinct claim under article 14. Applying that approach, I ask whether there are factors in the present cases which require the court to reach a different overall conclusion from that reached in SG. I have noted that in some respects the task facing the appellants is more difficult. The amount of the cap, and the benefits to which it applies (including child benefit) are enshrined in primary legislation, which is admittedly not open to challenge. Although I have accepted that the various groups identified by the claimants can be regarded as meeting the status requirement for the purposes of article 14, they are far from the core grounds to which special protection is given under that article, and in relation to which the court should be especially slow to substitute its view for that of the executive (see para 113 above, citing RJM para 57). On the other side, I have accepted that, in contrast to the position in SG, the claimants are able to pray in aid the best interests principle under article 3.1 of the UNCRC. However, in that respect the extracts from the Parliamentary debates quoted by Lord Wilson show that careful consideration was given, not only by the executive, but also by Parliament, to the extent to which further exceptions should be enacted, and in particular to the interests of the children potentially affected. I agree with him that it has not been shown that the failure to enact further exemptions involved any breach of that principle. My contrary conclusion on that issue in SG was narrowly based on the deficiencies in the Secretary of States evidence on this aspect (paras 110 112, 127 128), and has no relevance to the present appeals. Overall I agree with Lord Wilson that the approach ultimately adopted by the executive, with the support of Parliament, was not manifestly without reasonable foundation, and that the appeals must accordingly be dismissed. As a final comment, and without disrespect for the care and skill with which the cases have been presented to the court, I observe that the dangers of departing from the restrictive approach laid down by Lord Toulson in MA are amply demonstrated by the experience of this appeal. We have been faced with detailed submissions based on conflicting factual and statistical evidence, much of it produced for the first time in this court. Some of this evidence has come in support of submissions from interveners. Their experience of the practical implications of the legal issues can be of great value, but the court must be careful to ensure that such interventions do not lead to the introduction of new evidence which has not been fully tested, and which cannot be properly tested within the limitations of this courts proper function. At times it has seemed as though the court were being invited to take on the task of a Parliamentary Select Committee, undertaking a review of the policy and factual basis of the legislation. That is not our role. LORD HODGE: (with whom Lord Hughes agrees) I agree with Lord Wilson that the appeals should be dismissed for the reasons which he gives. I wish to add only one qualification to my agreement and that relates to the question of status. In this regard I share the doubts which Lord Carnwath expresses on this issue in para 108 of his judgment. I also agree with Lord Carnwaths view on justification (the MWRF test) in paras 110 118 of his judgment, which tallies with that of Lord Wilson. As Lord Kerr states, the precise reason why the ECtHR adopted the MWRF test does not apply to the domestic court. But it is open to a domestic court to adopt that test in relation to socio economic policy decisions of the executive in recognition of the institutional constraints on and the constitutional role of the judiciary. That is what both the House of Lords and the Supreme Court have done in the cases of R (RJM), Humphreys, SG and MA, as Lord Carnwath demonstrates in his judgment. For the purposes of these appeals I am content to assume that each of the claimants has the required status to mount a challenge under article 14 of ECHR. But this appeal, like the appeal which this court heard in R (Stott) v Secretary of State for Justice [2018] UKSC 59; [2018] 3 WLR 1831, raises questions on the boundaries of other status in article 14, a subject on which there is, as yet, little clarity. Some may argue that the requirement of status is not an important hurdle for a claimant to overcome and that the Convention requires the state to justify any failure to treat differently people whose situation is relevantly different. But as national rules on social security benefits are required to be expressed in broad terms which will affect different people differently, the lack of clarity as to the entitlement of groups and sub groups to challenge is a mischief. I do not therefore wish to endorse the view that each of the cohorts of claimants has the necessary status. In these appeals, the DA appellants assert a status as lone parents of children aged under two and as children aged under two of lone parents. The adult DS appellants assert a status as either lone parents or, as a fall back, as lone parents with children aged under five. The children who are DS appellants assert a status as children of lone parents or, as a fall back, as children aged under five of lone parents. Thus, the court faces the question whether lone parents of children of any age, lone parents of children aged under five, lone parents with children aged under two, and their respective children each enjoy a separate status under article 14. When one considers an arrangement which requires someone in a household to work for a minimum number of hours per week in order to escape the benefit cap, it is not difficult to see that a lone parent household is in a different situation from a two parent household. Indeed, the government recognizes that difference by setting a lower minimum number of hours of work per week for the lone parent household. But, as Lord Wilson points out, there will be many within this cohort of lone parents whose children are all of school age. It is, as he states (para 45), a simpler task for the government to justify the requirement that a lone parent with children all of school age should work at least 16 hours per week to escape the benefit cap than it is to justify that requirement for lone parents with children under school age. When children are under school age, a lone parents ability to work at least 16 hours per week is dependent on the availability of the support of others in child care. Lone parents with babies and toddlers can be expected to have greater difficulty in working those hours without such childcare support. But where does one draw the line or lines? Is there not a sliding scale? The governments rules on the availability of financial support for childcare supports the view of the policy director of Gingerbread: the younger the child is when the parent is capped, the harder it is for them to get into work (see Lord Wilsons judgment para 83 above). But the age of the youngest child is not the only variable which influences how hard it is for a lone parent to obtain work. The availability of part time work, the proximity of family or friends who can provide child care, and the availability and funding of childcare facilities are equally important variables. Ill health and other adverse circumstances of the parent or children in a large family may militate against a lone parents ability to work, regardless of the age of the youngest child. Looking more broadly, the difficulty in escaping from the benefit cap is only one feature of the cap. Other circumstances are also relevant to the burden which the cap imposes on parents. As Sir Patrick Elias stated in his leading judgment in the Court of Appeal (para 105), there is no linear relationship between the age of the children and the financial impact on families caused by the cap. The greater the number of dependent children of whatever age there is within a household, the more mouths there are to feed and larger is the accommodation that the family needs. I am left with some doubt as to whether the age of a lone parents youngest child is the basis for giving the parent and child a status for the purpose of article 14 in the circumstances of this challenge. The people with the strongest case for having their circumstances recognised as giving rise to a status, it seems to me, are the DA cohort of lone parents with children aged under two and those children, having regard both to the degree of dependence of the child and the manner in which the government recognises that dependence both in the non provision of free child care to most two year olds (para 28 above) and in the conditions set for the receipt of income support which are graduated by reference to the age of the child (para 30 above). But I am content to leave the question of status to future dialogue with the ECtHR. LADY HALE: (dissenting) It is indeed regrettable that there is a variety of opinions among the judges who have considered these cases and accordingly that it has taken this court so long to produce its judgment: regrettable but not at all surprising. These are cases about equality and equality is the most complicated and difficult of all the fundamental rights, even without the delicate context of entitlement to welfare benefits. A professional lifetime of struggling with equality issues has persuaded me that some degree of complexity is inevitable and we should not apologise for it. The law may be complicated and sometimes difficult to apply but for the most part it does not lack clarity. There is no difference of opinion between Lord Wilson and me as to the legal principles applicable: we disagree only on the application of the principle of justification to the facts of these cases. The delicacy arises because these are cases about equality in an area, not principally of social policy, but of economic policy. Constitutionally, economic policies are decided by those organs of government which are directly accountable to the people. The courts cannot make those decisions for them. But that does not mean that the courts have no role to play. In a constitution which respects and protects fundamental rights, it is the role of the courts to protect individuals from unjustified discrimination in the enjoyment of those fundamental rights. There are no no go areas. The courts might very well have declared that denying certain widows benefits to widowers was incompatible with the Convention rights, had the Strasbourg court not got there first: see Willis v United Kingdom (2002) 35 EHRR 547. More recently, this court has declared the denial of widowed parents allowance to a surviving parent who was not married to the deceased parent of their children incompatible with the Convention rights: see In re McLaughlin [2018] 1 WLR 4250. But those examples are more clear cut than these. Nor do they mean that the courts will not recognise that the government is both constitutionally and institutionally more competent than the courts to make the delicate judgments involved: see, for example, R (Hooper) v Secretary of State for Work and Pensions [2005] 1 WLR 1681. The argument before us now is very different from the argument which was before us in R (SG) v Secretary of State for Work and Pensions [2016] 1 WLR 1449, although that too concerned the benefit cap, albeit in its original and less draconian version. In SG the complaint was of indirect discrimination against lone parent women. It was indirect because the benefit cap applied equally to all lone parents, men and women. But the government acknowledged that it had a disproportionate impact upon women because the overwhelming majority of lone parents are women. The debate was about whether it could be justified and about the relevance of the United Kingdoms international obligations under the United Nations Convention on the Rights of the Child (UNCRC) to that question. A majority of this court concluded that the government had not complied with its obligation, under article 3.1 of UNCRC, to treat the best interests of the children concerned as a primary consideration. But a majority also concluded that this was not relevant to whether the indirect discrimination against women was justified. Although I disagreed with that conclusion, I found it completely understandable. The children of lone parents were hit equally hard by the benefit cap whether their parents were men or women. The relevance of their interests to the alleged sex discrimination was therefore questionable. Indeed, as I had said in Humphreys v Revenue and Customs Comrs [2012] 1 WLR 1545, a case alleging indirect sex discrimination in the rules governing entitlement to child benefit, which did not allow the benefit to be split between shared carers (para 20): The reality is that the complaint would be exactly the same if it did not discriminate between the sexes. Mothers who share the care of their children for a shorter period each week while living on subsistence level benefits have exactly the same problem. The real object of the complaint is the discrimination between majority and minority shared carers. The reason why I disagreed with the majority in SG was that, in indirect discrimination, it is the measure itself, rather than its discriminatory impact, which has to be justified. (This is the case in domestic law and I see no reason why it should not also be the case in Convention law. If the discrimination is direct, of course, it is the discriminatory impact which has to be justified.) The best interests of the children affected were, in my view, undoubtedly relevant to the justification for the measure itself. But I agree with McCombe LJ, in the DA case, that SG does not give us the answer to the very different cases we now have to consider. In these cases, the basic complaints are of discrimination between, on the one hand, lone parents and their children and, on the other hand, dual parents and their children. In DA, it is narrowed down to a complaint of discrimination against lone parents with a child or children under the age of two and their children, whether compared with dual parents with children under two or other lone parents. Both complaints are easier to grasp than the complaints in SG. Article 14 of the European Convention on Human Rights (ECHR), as is well known, 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. In deciding complaints under article 14, four questions arise: (i) Does the subject matter of the complaint fall within the ambit of one of the substantive Convention rights? (ii) Does the ground upon which the complainants have been treated differently from others constitute a status? (iii) Have they been treated differently from other people not sharing that status who are similarly situated or, alternatively, have they been treated in the same way as other people not sharing that status whose situation is relevantly different from theirs? (iv) Does that difference or similarity in treatment have an objective and reasonable justification, in other words, does it pursue a legitimate aim and do the means employed bear a reasonable relationship of proportionality to the aims sought to be realised (see Stec v United Kingdom (2006) 43 EHRR 1017, para 51)? There is nowadays no doubt that entitlement to state benefits, even non contributory means tested benefits, is property for the purpose of article 1 of the First Protocol (A1P1), which protects property rights. Indeed, the benefit cap can be seen as a species of deprivation of property, as it takes away rights which the claimants would otherwise have. But, as Lord Wilson explains (para 36), benefits which enable a family to enjoy a home life underpinned by a degree of stability, practical as well as emotional, and thus the financial resources adequate to meet basic needs, in particular for accommodation, warmth, food and clothing are clearly one of the ways (modalities) whereby the state manifests its respect for family life and therefore fall within the ambit of article 8 (see Petrovic v Austria (2001) 33 EHRR 14 and Okpisz v Germany (2006) 42 EHRR 32). That we are concerned here, not only with the right to property, but also with the right to respect for family life is clearly relevant to the issue of justification. Status The governments argument that, because the claimants are women, who already have a status under article 14, they should not seek to shoehorn themselves into some other status (see para 39 above) is clearly unsustainable. Men also have a status under article 14, but they often qualify for some other status, such as being married or unmarried (In re G (Adoption: Unmarried Couple [2009] 1 AC 173), disabled or not disabled (R (RJM) v Secretary of State for Work and Pensions [2009] 1 AC 311) or serving an extended sentence of imprisonment or some other sentence (R (Stott) v Secretary of State for Justice [2018] 3 WLR 1831). In any event, the DA claimants are not complaining of discrimination because they are women. A male lone parent could have brought exactly the same complaint. And that also applies to the DS claimants (although they also revive the indirect sex discrimination claim in SG). Lone parent is clearly a status within the meaning of article 14. And I agree with Lord Wilson and Lord Kerr that it can be sub divided according to the ages of the children, and in particular that having a child or children under compulsory school age is obviously a status for this purpose, just as being a disabled child who needed more than 84 days hospital in patient care was a status in Mathieson v Secretary of State for Work and Pensions [2015] 1 WLR 3250 and indeed being a particular type of prisoner was a status in R (Stott) v Secretary of State for Justice, above. Differences or similarities in treatment I agree with Lord Wilson and Lord Kerr that the natural way to formulate the DA complaint is that these lone parents, and their children, should have been treated differently from other lone parents, and from dual parent families, because their situation is relevantly different from the situation of other families who are subject to the benefit cap: that is, discrimination within the meaning of Thlimmenos v Greece (2000) 31 EHRR 12. I also agree that the natural way to formulate the DS complaint is of Thlimmenos type discrimination, whether it extends to lone parents of children of up to school leaving age or only to lone parents of children under compulsory school age. As already explained, I think that any attempt to formulate the DS complaint as one of indirect discrimination against women would run into the same difficulties as were encountered in SG. In both cases, the natural comparator is a dual parent family with children of the same age. But this is complicated because dual parent families are, in at least two respects, less favourably treated than lone parent families: they are subject to the same cap on their benefits although they have one more adult mouth to feed; and they can only escape if between them they work outside the home for a total of 24 hours a week. Although this does not necessarily present insuperable problems, these do not arise if the DS complaints are limited to those with a child or children under five. Then both the DA and the DS claimants can compare themselves with lone parents who only have older children. It can immediately be seen that the situation of these claimants is relevantly very different from the situation of lone parents with children of school age. Lord Wilson has summarised this with great clarity in para 51 above. I would lay particular stress in what he says at para 51(a), which is worth repeating: that, in the case of a lone parent of a child below school age, in particular of a child below the age of two, it is contrary to the interests both of herself, of her child and of the family as a whole that she should in effect be constrained to work also outside the home. (My emphasis) It is dangerous for a judge to indulge in moral indignation but few mothers (and indeed few lone fathers) who have chosen to work also outside the home while their children are very young can have escaped being made to feel guilty that they may have been harming their childrens healthy development by doing so. We were brought up on John Bowlbys classic work, Child Care and the Growth of Love, the foundation of modern attachment theory. Children need to form stable and healthy attachments early in life in order to be able to lead healthy lives and form stable attachments of their own in the future. The foundation for this is stable, consistent and loving care from a parent or parents (or parent substitutes) who have bonded early with the child. No one who has sat as a judge in the family courts can have escaped hearing constant evidence about the risks of significant harm to children who are denied such healthy attachments. This is not to say that children cannot also thrive if their parents do go out to work. Such work may bring psychological as well as financial benefits to their parents, as well as to society, and this may also benefit their children. But for this the children need good, stable and consistent alternative care arrangements, preferably in familiar surroundings: children develop attachments to places as well as people. Such arrangements are in short supply and very expensive. The availability of help towards the cost of up to 15 hours child care for some of these children does not necessarily fit this bill. The government itself has recognised that parents of very young children should not be obliged to seek work outside the home, both by the conditions they have set for eligibility for state benefits and by the limits they have set for free child care. The psychological risks to children whose lone parents are obliged to work outside the home in order that their children may have enough to live on, whether or not this is in their childrens best interests, have to be set against the psychological risks to children who grow up in benefit claiming families, risks to which the government has attached so much importance. Of course, those risks will be less if the parent can find suitable work as well as suitable child care. She may be lucky enough, for example, to find some evening shifts in a very local supermarket and have a willing grandparent or neighbour to look after the children while she does so. But any lone parent who has small children will face considerable difficulties in finding suitable work which will fit in with her child care arrangements and also, in many cases, with her commitments to her other children. Justification The one matter on which the law may be open to debate relates to the standard by which the governments justification for discriminatory measures such as this is to be judged. In Humphreys v Revenue and Customs Comrs [2012] 1 WLR 1545, this court, in a judgment of mine with which the other Justices agreed, adopted the manifestly without reasonable foundation standard derived from the Strasbourg Grand Chamber decision in Stec v United Kingdom (2006) 43 EHRR 47, albeit with the qualification that this did not mean that the justification advanced should escape careful scrutiny (para 22). But that test was not disputed in Humphreys, any more than it had been in R (RJM) v Secretary of State for Work and Pensions [2009] 1 AC 311. However, Lord Kerr is surely right to question whether the test which the Strasbourg court will apply in matters of socio economic policy should also be applied by a domestic court. The Strasbourg court applies that test, not because it is necessarily the proper test of proportionality in this area, but because it will accord a wide margin of appreciation to the national authorities in deciding what is in the public interest on social or economic grounds. The national authorities are better able to judge this because of their direct knowledge of their society and its needs (see Stec, para 52). It does not follow that national courts should accord a similarly wide discretion to national governments (or even Parliaments). The margin of appreciation is a concept applied by the Strasbourg court as part of the doctrine of subsidiarity. The standard by which national courts should judge the measures taken by national governments is a matter for their own constitutional arrangements. Not only that, it has been noted that, in Stec, the Grand Chamber cited James v United Kingdom (1986) 8 EHRR 123 as authority for its manifestly without reasonable foundation standard. But in James, it is fairly clear that the Strasbourg court drew a distinction between two questions: first, was the measure in the public interest for the purpose of A1P1 (or, in article 8 terms, does it pursue a legitimate aim); and second, was there a reasonable relationship of proportionality between the means employed and the aim sought to be realised. This latter requirement had been expressed in Sporrong and Lnnroth v Sweden (1982) 5 EHRR 35, at para 69, as whether a fair balance was struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights (see James, para 50). The manifestly without reasonable foundation standard was applied to the first but not the second question. When discussing (albeit strictly obiter) whether the imposition of charges for NHS treatment for asbestos related diseases caused by employers breach of duty was compatible with the A1P1 rights of employers and their insurers, in In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] AC 1016, para 51, Lord Mance noted that our domestic law had also drawn a distinction between whether the aims are legitimate and whether a fair balance had been struck. Both Lord Hope and Lord Reed had adopted this approach in AXA General Insurance Ltd v HM Advocate [2012] 1 AC 868. Even in relation to the fair balance question, of course, domestic courts cannot act as primary decision makers and principles of institutional competence and respect indicate that they must attach appropriate weight to the informed legislative choices at each stage of the Convention analysis: see the AXA case, para 131 (Asbestos, para 54). I pause only to note that if Lord Hope, Lord Mance and Lord Reed were correct in separating the issues of legitimate aim and fair balance in A1P1 cases, and applying a different standard to each, it would be wrong to apply a different approach to those same questions when they come up in the context of discrimination in the enjoyment of the right to respect for family life. The principles applicable when, say, insurance companies challenge interferences with their property rights should not be more favourable to them than the principles applicable when children challenge discrimination in their right to respect for their family lives. In R (MA) v Secretary of State for Work and Pensions [2016] 1 WLR 4550, the so called bedroom tax case, a wholesale attack was mounted upon the manifestly without reasonable foundation test. The attack was rejected in favour of the continued application of the Humphreys approach (para 38). There was no discussion of a more nuanced approach along the lines suggested by Lord Mance in Asbestos. Even applying Humphreys the removal of the spare room subsidy was found to be without justification in two respects. I agreed with that judgment (para 81). It seems to me that the court may well have to return to this difficult question in another context at some point in the future. But this is neither the case nor the context to do so. Nor is it necessary. The government has put forward three aims for the revised benefit cap: (i) fairness as between those in work and those on benefits, in that those in work should always be better off than those who are not, and with it the maintenance of public confidence in the benefits system; (ii) fiscal savings; and (iii) incentivising work outside the home. These are indeed legitimate aims, whatever the standard by which they are judged. However, it is also an essential element in justification that the measures adopted should be rationally related to their legitimate aims (see, among many, Lord Reed in Bank Mellat v HM Treasury (No 2) [2014] AC 700, para 76). This is another way of putting the requirement in European Union law that a measure be suitable to achieving its aims. It seems to me that it has been comprehensively demonstrated by the mass of evidence before the trial judge in DA, Collins J, and summarised by Lord Wilson and Lord Kerr, that the revised benefit cap is not suitable to achieving any of its declared aims. It does not achieve fairness as between those in work and those on benefits, because those in work will always be better off than those who are not. The fiscal savings are very small and liable to be offset by increased costs in other budgets. These include discretionary housing payments and the cost of housing and rehousing families made homeless as a result of the cap, as well as the costs resulting from the harm done to children by the disruption to their lives and education, as well as by living in poverty, in their early years: the fact that these costs will mainly fall upon local authorities rather than central government makes no difference in principle. There will be other costs if the lone parent is driven to take work outside the home, but it has not been shown that the benefit cap has this effect on this particular group of lone parents. But even if it could be shown that the benefit cap does have some effect in fiscal savings overall and inducing lone parents of young children to work outside the home, the question of a fair balance between the benefits to the community and the detriment to the children and their parents would still arise. The government is under an obligation in international law to treat the best interests of the children concerned as a first priority. It has been held on several occasions that whether it has fulfilled that obligation is relevant to whether it has acted compatibly with the Convention rights of the children concerned: see ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166, H (H) v Deputy Prosecutor of the Italian Republic, Genoa [2013] 1 AC 338, Zoumbas v Secretary of State for the Home Department [2013] 1 WLR 3690. In showing that a fair balance has been struck, it is not enough for the government to show that it was aware of the concerns raised by many in and outside Parliament about the effect of the revised benefit cap on the welfare of children in lone parent families. Awareness is not the same as taking the best interests of those children seriously into account. Even taking them into account is not the same as giving them first priority which is an intrinsic part of striking a fair balance where childrens rights are concerned. Striking a fair balance would have set the very limited benefits to the public interest against the damage done to the family lives of young children and their lone parents if either their parents are forced to work outside the home in order to have enough for themselves and their children to live on or they are unable or unwilling to work outside the home and are thus forced to attempt to live on less than the state has decided that they need. In particular, there is little or no evidence that proper account has been taken of the risks of psychological harm to very young children if they are separated from their primary carers, or the multiple risks to the health, development and life chances of children living in poverty in their early years. There is little or no evidence that these very real and well documented risks have been fairly balanced against the much more speculative risks of spending those very early years in a household dependent on welfare benefits we are talking here of children who are below compulsory school age, whose understanding of where the money to live on comes from will be limited, although of course there may be older children in the same household. Once all the children are of school age, there will be ample incentive for their parents to try and find work outside the home if they can. Therefore, with the greatest respect for the institutional competence of the government as primary decision maker in these matters, this seems to me a clear case where the weight of the evidence shows that a fair balance has not been struck between the interests of the community and the interests of the children concerned and their parents. I would therefore allow the appeals and make the declaration made by Collins J in DA, amended to include families with children under compulsory school age in DS, as follows: The Housing Benefit Regulations 2006, as amended by the Benefit Cap (Housing Benefit and Universal Credit) (Amendment) Regulations 2016, are unlawful insofar as they apply to lone parents with a child or children under the age of five, in that: a. They involve unjustified discrimination against lone parents of children under the age of five, contrary to article 14 of the ECHR read with (i) article 1 of the First Protocol and (ii) article 8 of the ECHR; b. They involve unjustified discrimination against children under the age of five with lone parents, contrary to article 14 of the ECHR read with article 8 of the ECHR in the light of article 3 of the United Nations Convention on the Rights of the Child. LORD KERR: (dissenting) There is much in the judgment of Lord Wilson with which I completely agree. Indeed, the areas of disagreement between us, although important, are relatively few. It is right that I should express my admiration for his judgment and my indebtedness to Lord Wilson for his distillation of the many complex issues that arise in this difficult appeal. In particular, I agree with Lord Wilson, for the reasons which he gives in paras 35 and 36 of his judgment, that the appellants claims fall within the ambit of article 8 of ECHR; that all the appellants have the requisite status to advance claims under article 14 paras 38 and 39; and that the natural way to analyse the complaints of the DA appellants is as discrimination of the type explained in the Thlimmenos case para 40. I also agree that, in relation to the DS appellants, the court should address the fall back complaint (ie that relating to lone parents of children under five) and should again do so as a Thlimmenos complaint paras 44 and 45. In paras 46 and 47 of his judgment, Lord Wilson explains why he considers that the natural comparators to the cohorts whom the appellants represent are all others subject to the revised benefit cap. I agree with his analysis, and I also agree with his conclusion that it is open to the appellants, in advancing the argument that there has been an objectionable similarity of treatment of the DA and DS cohorts and all who have been subject to the cap, to draw particular attention to the marked difference between their situation and those in sub groups (a) and (b), namely dual care parents with a child under two or under five, and lone parents without a child under two or under five. Treating the DA and DS cohorts in precisely the same way as the members of those groups when there are significant differences in their respective circumstances sounds directly on the issue of justification. It follows from what I have said in the previous paragraph that I agree with Lord Wilson that there is clear prima facie evidence that the appellants are in a relevantly different situation from others who are subject to the revised benefit cap para 51 of his judgment. The factors identified in sub paras (e) and (f) of para 51 are of especial significance. Justification As Lord Wilson has pointed out in para 53 of his judgment, the authoritative statement on what requires to be justified is found in the speech of Lord Bingham in A v Secretary of State for the Home Department [2004] UKHL 56; [2005] 2 AC 68, para 68. What requires to be justified is the difference in treatment between one group and another. That requirement translates in the present case to justification of the same treatment to two disparate groups where their circumstances differ to the extent that they plainly call for differential treatment. Specifically, what must be justified here is the decision not to make provision for exemption of the DA and DS cohorts by amending the 2006 Regulations. In para 55, Lord Wilson adverts to two different paths which this court has followed in its pursuit of the proper test against which justification is to be measured where what is involved is an economic measure introduced by the democratically empowered arms of the state. Lord Wilson considers that this duality has been unhelpful and expresses regret for having contributed to it. In my view, there is no reason for regret and, while the divergence of opinion on this issue might be considered unfortunate, it is, I am afraid, unavoidable and cannot be swept away. The divergence centres on the question of the use of the formula commonly known as manifestly without reasonable foundation, when examining the proportionality of measures devised by government or the legislature in the fields of economic or social policy. This principle, if it is appropriate to describe it as such, is the creature of the European Court of Human Rights (ECtHR). Its provenance is the margin of appreciation which ECtHR accords to decisions of national authorities in the fields of economic and social policy particularly. Thus, as Lord Wilson observed in para 58, in the cases of James and Carson the Strasbourg court held that respect should be shown to the national legislatures decision on matters of public interest when devising economic or social measures unless it was manifestly without reasonable foundation. It is significant that, as Lord Wilson explained, what he described as this more benign approach flowed from the margin of appreciation. The manifestly without reasonable foundation formula should be recognised as a fundamental element of the margin of appreciation doctrine, therefore. This much is clear from the decision of the Grand Chamber in Stec v United Kingdom (2006) 43 EHRR 47. In that case ECtHR endorsed the manifestly without reasonable foundation approach in assessing whether a measure of economic policy, said to offend article 14 of the Convention, was justified. But this was expressly linked to the application of the margin of appreciation principle. At para 52 the court explained the reason for its reluctance to interfere in this way: 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 . The interconnectedness between the manifestly without reasonable foundation rubric and the margin of appreciation doctrine is therefore clear. On that account, a failure to acknowledge that rubric as an element or sub set of the margin of appreciation principle can lead to an unwitting importation of a quasi margin of appreciation approach into the national courts consideration of the proportionality of a measure. This is impermissible even in the fields of economic or social policy. There may have been a tendency to do precisely that, however, in some earlier decisions of this court. Thus, for instance, in MA [2016] UKSC 58; [2016] 1 WLR 4550, para 32, Lord Toulson adopted for the purposes of national courts review the standard prescribed by Strasbourg when he said: The fundamental reason for applying the manifestly without reasonable foundation test in cases about inequality in welfare systems was given by the Grand Chamber of the European Court of Human Rights in Stec, para 52. Choices about welfare systems involve policy decisions on economic and social matters which are pre eminently matters for national authorities. But there is plenty of authority which acknowledges that measures falling within the United Kingdoms margin of appreciation, when viewed from the supra national perspective of ECtHR, will not necessarily survive judicial scrutiny on the national stage. In In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] UKSC 3; [2015] AC 1016, para 54 Lord Mance said: 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) [2009] AC 173; R (Nicklinson) v Ministry of Justice (CNK Alliance Ltd intervening) [2015] AC 675, per Lord Neuberger PSC at p 781, para 71, Lord Mance JSC at p 805, para 163 and Lord Sumption JSC at pp 833 834, para 230. 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 the AXA case, para 131, per Lord Reed JSC, and R (Huitson) v Revenue and Customs Comrs [2012] QB 489, 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. Lord Neuberger picked up this theme in Nicklinson [2014] UKSC 38; [2015] AC 657 where, at para 74, he said: In an interesting passage in para 229 below, Lord Sumption suggests that, where an issue has been held by the Strasbourg court to be within the margin of appreciation, the extent to which it is appropriate for a UK court to consider for itself whether the Convention is infringed by the domestic law may depend on the reason why the Strasbourg court has concluded that the issue is within the margin. I agree that the reasoning of the Strasbourg court must be taken into account and accorded respect by a national court when considering whether the national law infringes the Convention domestically, in a case which is within the margin of appreciation just as in any other case as section 2(1)(a) of the 1998 Act recognises. However, both the terms of the 1998 Act (in particular sections 2(1) and 4) and the principle of subsidiarity (as expounded for instance in Greens and MT v United Kingdom [2010] ECHR 710, para 113) require United Kingdom judges ultimately to form their own view as to whether or not there is an infringement of Convention right for domestic purposes. (Emphasis added) The importation of the test manifestly without reasonable foundation to all aspects of the national courts consideration of proportionality imperils the proper discharge of its duty. This was a technique devised by the Strasbourg court in order to promote the proper application of the margin of appreciation. In my view, it has no place in the national courts consideration of whether a measure which interferes with a Convention right is proportionate, since, as Lord Mance observed in the In re Recovery of Medical Costs case, at the domestic level, the margin of appreciation is not applicable. Indeed, in the national setting, this court, in a number of cases, has articulated an approach to examination of the proportionality of the interference where consideration of the question whether it was manifestly without reasonable foundation is conspicuously absent. As Lord Reed said in Bank Mellat (No 1) [2013] UKSC 39; [2014] AC 700, pp 789 790, para 71: One important factor in relation to the Convention is that the Strasbourg court recognises that it may be less well placed than a national court to decide whether an appropriate balance has been struck in the particular national context. For that reason, in the Convention case law the principle of proportionality is indissolubly linked to the concept of the margin of appreciation. That concept does not apply in the same way 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, will depend upon the context, and will in part reflect national traditions and institutional culture. For these reasons, the approach adopted to proportionality at the national level cannot simply mirror that of the Strasbourg court. (Emphasis added) This is an important statement. It emphasises that not only is the technique adopted by the national court to the question of the proportionality of a measure different from that of the Strasbourg court but the basis on which there should be reticence on the part of a national court to interfere is also different. In Strasbourg it is recognised that the court may be less well placed than a national court to decide whether an appropriate balance has been struck. By contrast, the national court may consider itself constrained by national traditions and institutional culture. One can quite see how the concept of manifestly without reasonable foundation assists in the examination by the Strasbourg court of the proportionality of a measure. Very different considerations arise when the national court examines proportionality. The steps in the proportionality analysis at the national level are well settled. When considering whether legislative measures which interfere with a Convention right satisfy the requirements of proportionality, four questions generally arise, as Lord Wilson explained in R (Aguilar Quila) v Secretary of State for the Home Department [2012] 1 AC 621, para 45. These were discussed by Lord Reed in Bank Mellat at paras 20ff: (a) is the legislative 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? Has the manifestly without reasonable foundation formula any part to play in the answer to be given to any of these questions? In R (SG (previously JS)) v Secretary of State for Work and Pensions [2015] UKSC 16; [2015] 1 WLR 1449, paras 209 and 210, Lady Hale addressed this issue: 209. The references cited for the manifestly without reasonable foundation test were James v United Kingdom (1986) 8 EHRR 123, para 46, and National & Provincial Building Society v United Kingdom (1997) 25 EHRR 127, para 80, both cases complaining of a violation of article 1 of the First Protocol. In AXA General Insurance Ltd v HM Advocate [2011] UKSC 46; [2012] 1 AC 868, both Lord Hope of Craighead DPSC at para 31, and Lord Reed JSC at para 124, treated this test as directed towards whether the measure is in the public interest, in other words to whether it has a legitimate aim. They dealt separately with whether the interference with property rights was proportionate. They relied upon cases such as Pressos Compania Naviera SA v Belgium (1995) 21 EHRR 301, para 38, where the Strasbourg court appears to have regarded this as a separate question: An interference with the peaceful enjoyment of possessions must strike a fair balance between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights. In particular, there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised by any measure depriving a person of his possessions. (p 75) (See also In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] 2 WLR 481, para 52). In this case, the complaint is of discrimination in interfering with the peaceful enjoyment of possessions rather than of deprivation of possessions as such. Nevertheless, the benefit cap does come close to a deprivation of possessions, given that it removes, by reference to a fixed limit, benefit to which the claimants would otherwise be entitled by virtue of their needs and, more importantly, the needs of their children. 210. When it comes to justifying the discriminatory impact of an interference with property rights, a distinction might similarly be drawn between the aims of the interference and the proportionality of the discriminatory means employed. However, it has been accepted throughout this case that the manifestly without reasonable foundation test applies to both parts of the analysis; but that, as this court said in Humphreys v Revenue and Customs Comrs [2012] 1 WLR 1545, para 22, the fact that the test is less stringent than the weighty reasons normally required to justify sex discrimination does not mean that the justifications put forward for the rule should escape careful scrutiny. I was one of those who accepted in the SG case that the manifestly without reasonable foundation test applied to all of the stages in the proportionality analysis. I was wrong to have done so. In the In re Recovery of Medical Costs case Lord Mance in para 46 had drawn a distinction between the first three stages of the proportionality assessment and the final stage: 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 Fordham 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 Fordham 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 Fordham 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. At para 51 Lord Mance referred to the Axa case and pointed out that both Lord Hope and Lord Reed had treated the questions of legitimate aim and whether the measure was proportionate separately. The question of whether the measure pursued a legitimate aim was to be determined on the basis that it should be considered to have done so unless the claim that it did was manifestly unreasonable. But in relation to proportionality, as Lord Mance observed, Lord Hope applied the fair balance test, citing Sporrong and Lnnroth v Sweden (1982) 5 EHRR 35 and Pressos Compania Naviera SA v Belgium (1995) 21 EHRR 301. It is clear from this that, even in the supra national context of Strasbourg review, a distinction is to be drawn between, on the one hand, the pursuit of a legitimate aim for the measure and, on the other, the balancing of the interests of the state against the impact which a measure interfering with a Convention right has on those affected by it. The inaptness of applying the manifestly without reasonable foundation standard when the matter of where the balance lies is being considered by a national court is all the more obvious. I have concluded, therefore, that, certainly so far as concerns the final stage in the proportionality analysis, the manifestly without reasonable foundation standard should not be applied. Quite apart from the imperative provided by the authorities, I consider that to impose on the appellants the obligation of showing that a measure is manifestly without reasonable foundation is objectionable for two reasons: firstly, it requires proof of a negative; secondly, and more importantly, much, if not all, of the material on which a judgment as to whether there is a reasonable foundation for the measure will customarily be in the hands of the decision maker and not readily accessible to the person who seeks to challenge the proportionality of the measure which interferes with their Convention rights. The proper test to apply in relation to the final stage of the proportionality assessment is whether the government has established that there is a reasonable foundation for its conclusion that a fair balance has been struck. In para 67 of his judgment, Lord Wilson says that a move is afoot, as exemplified by observations made by me in the SG case, for UK courts to treat the UNCRC as part of our domestic law. So far as I am aware, the statements that I made there have not been taken up by any court and I make clear that, for the purposes of this case, I do not rely on the view that I there expressed, nor do I wish to reopen a debate on that issue. I am content to adopt Lord Wilsons approach to the significance of UNCRC in the resolution of this case. In particular, I agree with his description (in para 68) of the elements of the concept of the best interests of the child in article 3.1. As Lord Wilson says, authoritative guidance is to be found in para 6 of General Comment No 14 (2013) of the UN Committee on the Rights of the Child. This was recognised by Lord Carnwath in the SG case and endorsed by this court in the Mathieson case. Lord Wilson has suggested, and I agree, that the concept has three dimensions. The most important of these, so far as concerns the present case, is the third, namely, that, whenever a decision is to be made that will affect an identified group of children, the decision making process must include an evaluation of the possible impact of the decision on them. That obligation, when allied to the duty of the government to reach a decision which is proportionate, according to the principles earlier discussed, means that the respondent must assess the impact on the children in a way that balances their interests against the interests of the community. It must, moreover, be satisfied that the decision strikes a fair balance and must be in a position, when challenged, to establish that it has a reasonable foundation. The provisions in articles 26 and 27 of UNCRC, set out by Lord Wilson in para 70 of his judgment, provide an essential backdrop to that exercise. Thus, the states duty is to take necessary measures to ensure that childrens right to social security benefits is fully realised; to recognise childrens entitlement to an adequate standard of living; and to take measures to assist parents to implement the right to a proper standard of living, particularly with regard to nutrition, clothing and housing. Even if these provisions are not directly binding on the government (which is the premise on which I am prepared to proceed in the present case), they are central to the judgment which the state must make in introducing social security measures which will affect the living conditions of children. Moreover, they provide an indispensable yardstick against which the proportionality of the measures under attack in this appeal falls to be examined. For the reasons given by Lord Wilson in paras 75 and 76, the government cannot assert that the measures under attack are not directed at children. And I agree with his conclusion in para 78 that the interests of the lone parents in the present appeals are indistinguishable from the interests of their children below school age. The issue which is then starkly exposed as critical to the outcome of this appeal is the effect of article 3.1 on the proportionality of the governments decision not to exempt from the revised benefit cap the cohorts whom the appellants represent. I say the effect of article 3.1 on proportionality advisedly. Lord Wilson has carried out (in paras 81 86) a comprehensive review of the Parliamentary materials and other policy documents which disclose the background to the governments decision and its objectives. I have nothing to add to that review. Where I part company with Lord Wilson, however, is in his concentration on the question whether the government has acted in breach of article 3 of UNCRC. Lord Wilson concludes by a narrow margin that the government did not breach article 3.1 by its refusal to amend the 2006 Regulations so as to exempt the appellant cohorts from the revised cap. As I understand his judgment, largely on that account, he considers that the appeal must be dismissed. In a telling sentence in para 87 he says: This court must impose on itself the discipline not, from its limited perspective, to address whether the governments evaluation of its impact was questionable; nor whether its assessment of the best interests of young children was unbalanced in favour of perceived long term advantages for them at the expense of obvious short term privation. I do not agree that the questionability of the governments decision or its avowed lack of balance should not be addressed by this court. Conclusions on those matters will not at least, not necessarily be determinative of the appeal. But, inasmuch as they sound on the question of the proportionality of the governments decision, they are matters to be taken into account. I will return to this theme in paras 188 190 of this judgment. In the meantime, it is important to deal with the significance to be attached to a finding that the government has not acted in breach of article 3 of UNCRC. One may begin by recognising that, of course, if the government was found to have acted in breach of that provision, this would go a long way towards showing that the decision not to exempt the appellant cohorts from the revised cap was disproportionate, if indeed it would not be conclusive on that issue. But a finding that no breach of article 3 arose does not establish the converse. But I query the premise (which I believe to be implicit in Lord Wilsons judgment) that the question of whether the government was in breach of the article is pivotal to the issue of proportionality. UNCRC contains a number of enjoinders to those countries which subscribe to it. Some of these are expressed in imperative terms. The duty of the state is to keep faith with the spirit of the Convention. Whether it has discharged that duty is not to be answered solely on whether it can be said to be in technical breach of its terms. The proportionality of a government measure which has an impact on the best interests of children is not to be judged by a mechanistic approach to the question whether there has been technical compliance with article 3. It must be assessed on the basis of whether, given the injunctions in UNCRC, the governments decision, taking into account where the best interests of children lie, represents a balanced reaction to those interests and the aims which a particular measure seeks to achieve. I should say, however, if the proportionality of the governments decision not to exempt the appellants from the benefit cap depended on whether there was a failure to comply with it, I would have held that the government was in breach of article 3. I will discuss the reasons for that conclusion later in this judgment. Article 3 (and articles 26 and 27) provide a context as well as a backdrop to the governments decision as to those who should be covered by the cap. That decision is not insulated from challenge on proportionality grounds by the governments claim that it took representations into account, nor even that it carried out an evaluation of their weight and persuasiveness. The government must show that it reached a balanced conclusion, taking into account the impact which the refusal to exempt the cohorts whom DA and DS represent has had upon them, when weighed against the interests of society which the conclusion is said to protect. The impact of the decision not to exempt the DA and DS groups is well described in the submissions of Gingerbread made to the Public Bill Committee of the House of Commons in September 2015, referred to in para 83 of Lord Wilsons judgment. No real answer to the criticisms of the scheme has been provided by the government. Its principal defence is its reliance on the DHP scheme. The shortcomings of that scheme have been vividly described in paras 30 and 31 of Lord Wilsons judgment. Quite apart from the myriad of difficulties to which he there refers, the fundamental point to be made is that DHPs are not tailored to deal with the spectrum of difficulties which the appellants face, merely one aspect of them: housing costs. They do nothing to alleviate problems with childcare costs and complications in obtaining childcare, even if it could be afforded. And, of course, there is, as Lord Wilson pointed out in para 31, scant, indeed, virtually no, information as to the extent by which the difficulties encountered by the DA and DS cohorts are mitigated by DHPs. There is simply no warrant for the claim that refusal to extend exemption from the cap to the DA and DS cohorts will improve the fairness of the social security system or increase public confidence in its fairness. That sweeping statement partakes of a declamation for which no tangible evidence is proffered. To the contrary, a proper understanding of the impact on those whom the appellants represent, so far from increasing public confidence in the social security system, is likely to lead any right thinking person to the opposite conclusion. The other two professed aims of government, to incentivise parents in a non working family to obtain work and to achieve fiscal savings have been decisively refuted by the evidence. One can only incentivise parents to obtain work if that is a viable option. The evidence in this case overwhelmingly shows that in most cases in the DA and DS cohorts, this is simply not feasible. In particular, lone parents are placed in an impossible dilemma. If they go out to work, they must find the resources for childcare. Those in the DA and DS groups will routinely find it impossible to obtain employment which will remunerate them sufficiently to make this a sensible choice. They also face the difficulty of obtaining suitable childcare, irrespective of whether they can afford it. As to the fiscal savings that might be achieved, Lord Wilson has dealt summarily and conclusively with that argument in para 32 of his judgment. I agree entirely with what he has had to say there and need not repeat it. The application of the proportionality test to this case The enjoinder in article 3.1 of UNCRC that, in all actions concerning children undertaken by administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration sets the scene for an examination of whether the failure to exempt the DA and DS cohorts from the cap is a proportionate interference with their ECHR rights. It is to be noted that the best interests of the child must be a primary consideration. Where those interests conflict with other considerations, although they will not inevitably prevail, their primary status must be respected. Ephemeral aspirations, however high sounding or apparently noble, will not suffice to displace them. The entitlement of children, enshrined in articles 26 and 27 of UNCRC, to have the state take necessary measures to ensure that their right to social security benefits is fully realised; and that this comprises an adequate standard of living; and that measures must be taken to assist parents to implement that right all contribute to the importance that UNCRC places on the welfare of children. Where measures are adopted by a state which have a demonstrable adverse effect on children, the hurdle faced by government in showing that these factors have been properly taken into account is correspondingly heightened. Government, if it is to adhere to its obligations under UNCRC, must have a clear sighted understanding of the impact on children that a proposed measure curtailing their entitlement to social security benefits will have. It must also carry out a defensible weighing of their interests against the objectives which it proposes will be achieved by a curtailment of the rights. The preponderance of evidence in this case strongly supports the conclusion that this is not the way in which the respondent approached the decision under challenge in this appeal. True it is that it considered the representations made. But I do not conclude that a proper weighing of the particular interests of the DA and DS cohorts against what was likely to be achieved in their case was carried out. It is not enough that notice was taken of the various submissions made, or that the amendments proposed to the scheme came to the attention of the government. There must be a frank and objective assessment of whether depriving these particular individuals of the benefit of exemption from the cap would conduce in a material way to the realisation of the avowed aims of the scheme. For the reasons that I have given, I do not consider that such an exercise was undertaken. Further, I believe that, if it had been, the case for the inclusion of the DA and DS cohorts in the exemption should have been found to be irresistible. As I have said, I do not consider that breach of article 3 of UNCRC is an essential prerequisite to a finding that there has been a disproportionate interference with the appellants ECHR rights. But, if such a breach required to be found, I would have concluded that it was present. The evidence in this case unmistakably points to the inference that, while the impact on childrens rights was considered, it was not given a primacy of importance which article 3 requires. Had it been, the conclusion that the exemption should not be extended to the DA and DS cohorts would not have been reached. Lord Wilson has amply demonstrated that government and Parliament were alive to the states obligation under article 3 of UNCRC. Where, regretfully, I must disagree with him is on his conclusion that taking into account the representations made amounted to a discharge of that obligation. Conclusion I would allow the appeal and make a declaration that the regulations represent an unjustifiable interference with the appellants article 1, Protocol 1 and article 8 rights, taken in combination with article 14 of ECHR. |
These two appeals raise an issue which has not been considered by the Supreme Court or by the House of Lords for a century, namely the principles underlying the law relating to contractual penalty clauses, or, as we will call it, the penalty rule. The first appeal, Cavendish Square Holding BV v Talal El Makdessi, raises the issue in relation to two clauses in a substantial commercial contract. The second appeal, ParkingEye Ltd v Beavis, raises the issue at a consumer level, and it also raises a separate issue under the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) (the 1999 Regulations). We shall start by addressing the law on the penalty rule generally, and will then discuss the two appeals in turn. The law in relation to penalties The penalty rule in England is an ancient, haphazardly constructed edifice which has not weathered well, and which in the opinion of some should simply be demolished, and in the opinion of others should be reconstructed and extended. For many years, the courts have struggled to apply standard tests formulated more than a century ago for relatively simple transactions to altogether more complex situations. The application of the rule is often adventitious. The test for distinguishing penal from other principles is unclear. As early as 1801, in Astley v Weldon (1801) 2 Bos & Pul 346, 350 Lord Eldon confessed himself, not for the first time, much embarrassed in ascertaining the principle on which [the rule was] founded. Eighty years later, in Wallis v Smith (1882) 21 Ch D 243, 256, Sir George Jessel MR, not a judge noted for confessing ignorance, observed that The ground of that doctrine I do not know. In 1966 Diplock LJ, not a judge given to recognising defeat, declared that he could make no attempt, where so many others have failed, to rationalise this common law rule: Robophone Facilities Ltd v Blank [1966] 1 WLR 1428, 1446. The task is no easier today. But unless the rule is to be abolished or substantially extended, its application to any but the clearest cases requires some underlying principle to be identified. Equitable origins The penalty rule originated in the equitable jurisdiction to relieve from defeasible bonds. These were promises under seal to pay a specified sum of money, subject to a proviso that they should cease to have effect on the satisfaction of a condition, usually performance of some other (primary) obligation. By the beginning of the 16th century, the practice had grown up of taking defeasible bonds to secure the performance obligations sounding in damages. This enabled the holder of the bond to bring his action in debt, which made it unnecessary for him to prove his loss and made it possible to stipulate for substantially more than his loss. The common law enforced the bonds according to their letter. But equity regarded the real intention of the parties as being that the bond should stand as security only, and restrained its enforcement at common law on terms that the debtor paid damages, interest and costs. The classic statement of this approach is that of Lord Thurlow LC in Sloman v Walter (1783) 1 Bro CC 418, 419: where a penalty is inserted merely to secure the enjoyment of a collateral object, the enjoyment of the object is considered as the principal intent of the deed, and the penalty only as accessional, and, therefore, only to secure the damage really incurred . The essential conditions for the exercise of the jurisdiction were (i) that the penal provision was intended as a security for the recovery of the true amount of a debt or damages, and (ii) that that objective could be achieved by restraining proceedings on the bond in the courts of common law, on terms that the defendant paid damages. As Lord Macclesfield observed in Peachy v Duke of Somerset (1720) 1 Strange 447, 453: The true ground of relief against penalties is from the original intent of the case, where the penalty is designed only to secure money, and the court gives him all that he expected or desired: but it is quite otherwise in the present case. These penalties or forfeitures were never intended by way of compensation, for there can be none. This last reservation remained an important feature of the equitable jurisdiction to relieve. As Baggallay LJ put it in Protector Endowment Loan and Annuity Company v Grice (1880) 5 QBD 592, 595, where the intent is not simply to secure a sum of money, or the enjoyment of a collateral object, equity does not relieve. The common law rule The process by which the equitable rule was adopted by the common law is traced by Professor Simpson in his article The penal bond with conditional defeasance (1966) 82 LQR 392, 418 419. Towards the end of the 17th century, the courts of common law tentatively began to stay proceedings on a penal bond to secure a debt, unless the plaintiff was willing to accept a tender of the money, together with interest and costs. The rule was regularised and extended by two statutes of 1696 and 1705. Section 8 of the Administration of Justice Act 1696 (8 & 9 Will 3 c 11) is a prolix provision whose effect was that the plaintiff suing in the common law courts on a defeasible bond to secure the performance of covenants (not just debts) was permitted to plead the breaches and have his actual damages assessed. Judgment was entered on the bond, but execution was stayed upon payment of the assessed damages. The Administration of Justice Act 1705 (4 & 5 Anne c 16) allowed the defendant in an action on the bond to pay the amount of the actual loss, together with interest and costs, into court, and rely on the payment as a defence. These statutes were originally framed as facilities for plaintiffs suing on bonds. But by the end of the 18th century the common law courts had begun to treat the statutory procedures as mandatory, requiring damages to be pleaded and proved and staying all further proceedings on the bond: see Roles v Rosewell (1794) 5 TR 538, Hardy v Bern (1794) 5 TR 636. The effect of this legislation was thus to make it unnecessary to proceed separately in chancery for relief from the penalty and in the courts of common law for the true loss. As a result, the equitable jurisdiction was rarely invoked, and the further development of the penalty rule was entirely the work of the courts of common law. It developed, however, on wholly different lines. The equitable jurisdiction to relieve from penalties had been closely associated with the jurisdiction to relieve from forfeitures which developed at the same time. Both were directed to contractual provisions which on their face created primary obligations, but which during the 17th and 18th centuries the courts of equity treated as secondary obligations on the ground that the real intention was that they should stand as a mere security for performance. The court then intervened to grant relief from the rigours of the secondary obligation in order to secure performance in another, less penal or (in modern language) more proportionate, way. In contrast, the penalty rule as it was developed by the common law courts in the course of the 19th and 20th centuries proceeded on the basis that although penalties were secondary obligations, the parties meant what they said. They intended the provision to be applied according to the letter with a view to penalising breach. The law relieved the contract breaker of the consequences not because the objective could be secured in another way but because the objective was contrary to public policy and should not therefore be given effect at all. The difference in approach to penalties of the courts of equity and the common law courts is in many ways a classic example of the contrast between the flexible if sometimes unpredictable approach of equity and the clear if relatively strict approach of the common law. With the gradual decline of the use of penal defeasible bonds, the common law on penalties was developed almost entirely in the context of damages clauses ie clauses which provided for payment of a specified sum in place of common law damages. Because they were a contractual substitute for common law damages, they could not in any meaningful sense be regarded as a mere security for their payment. If the agreed sum was a penalty, it was treated as unenforceable. Starting with the decisions in Astley in 1801 and Kemble v Farren (1829) 6 Bing 141, the common law courts introduced the now familiar distinction between a provision for the payment of a sum representing a genuine pre estimate of damages and a penalty clause in which the sum was out of all proportion to any damages liable to be suffered. By the middle of the 19th century, this rule was well established. In Betts v Burch (1859) 4 H & N 506, 509, Martin B regretted that he was bound by the cases and prevented from holding that parties are at liberty to enter into any bargain they please so that if they have made an improvident bargain they must take the consequences. But Bramwell B (at p 511) appeared to have no such reservations. The distinction between a clause providing for a genuine pre estimate of damages and a penalty clause has remained fundamental to the modern law, as it is currently understood. The question whether a damages clause is a penalty falls to be decided as a matter of construction, therefore as at the time that it is agreed: Public Works Comr v Hills [1906] AC 368, 376; Webster v Bosanquet [1912] AC 394; Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79, at pp 86 87 (Lord Dunedin); and Cooden Engineering Co Ltd v Stanford [1953] 1 QB 86, 94 (Somervell LJ). This is because it depends on the character of the provision, not on the circumstances in which it falls to be enforced. It is a species of agreement which the common law considers to be by its nature contrary to the policy of the law. One consequence of this is that relief from the effects of a penalty is, as Hoffmann LJ put it in Else (1982) Ltd v Parkland Holdings Ltd [1994] 1 BCLC 130, 144, mechanical in effect and involves no exercise of discretion at all. Another is that the penalty clause is wholly unenforceable: Clydebank Engineering & Shipbuilding Co Ltd v Don Jose Ramos Yzquierdo y Castaneda [1905] AC 6, 9, 10 (Lord Halsbury LC); Gilbert Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689, 698 (Lord Reid), 703 (Lord Morris of Borth y Gest) and 723 724 (Lord Salmon); Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 2 AC 694, 702 (Lord Diplock); AMEV UDC Finance Ltd v Austin (1986) 162 CLR 170, 191 193 (Mason and Wilson JJ). Deprived of the benefit of the provision, the innocent party is left to his remedy in damages under the general law. As Lord Diplock put it in The Scaptrade at p 702: The classic form of penalty clause is one which provides that upon breach of a primary obligation under the contract a secondary obligation shall arise on the part of the party in breach to pay to the other party a sum of money which does not represent a genuine pre estimate of any loss likely to be sustained by him as the result of the breach of primary obligation but is substantially in excess of that sum. The classic form of relief against such a penalty clause has been to refuse to give effect to it, but to award the common law measure of damages for the breach of primary obligation instead. Equity, on the other hand, relieves against forfeitures where the primary object of the bargain is to secure a stated result which can effectively be attained when the matter comes before the court, and where the forfeiture provision is added by way of security for the production of that result: Shiloh Spinners Ltd v Harding [1973] AC 691, 723 (Lord Wilberforce). As Lord Wilberforce said at p 722, the paradigm cases are the jurisdiction to relieve from a right of re entry in a lease of land and the mortgagors equity of redemption (and the associated equitable right to redeem) in relation to mortgages. Save in relation to non payment of rent, the power to grant relief from forfeiture to lessees is now contained in section 146 of the Law of Property Act 1925, and probably exclusively so (see Official Custodian for Charities v Parway Estates Departments Ltd [1985] Ch 151). Relief for mortgagors through the equitable right to redeem is (save in relation to most residential properties) largely still based on judge made law. However, neither by statute nor on general principles of equity is a lessors right of re entry or a mortgagees right of sale or foreclosure treated as being by its nature contrary to the policy of the law. What equity (and, where it applies, statute) typically considers to be contrary to the policy of the law is the enforcement of such rights in circumstances where their purpose, namely the performance of the obligations in the lease or the mortgage, can be achieved in other ways normally by late substantive compliance and payment of appropriate compensation. The forfeiture or foreclosure/power of sale is therefore enforceable, equity intervening only to impose terms. These will generally require the lessee or mortgagor to rectify the breach and make good any loss suffered by the lessor or mortgagee. If the lessee or mortgagee cannot or will not do so, the forfeiture will be unconditionally enforced although perhaps not invariably (see per Lord Templeman in Associated British Ports v CH Bailey plc [1990] 2 AC 703, 707 708 in the context of section 146, and, more generally, the judgments in Cukurova Finance International Ltd v Alfa Telecom Turkey Ltd (No 3) [2013] UKPC 20, [2015] 2 WLR 875). The penalty rule as it has been developed by the judges gives rise to two questions, both of which have a considerable bearing on the questions which arise on these appeals. In what circumstances is the rule engaged at all? And what makes a contractual provision penal? In what circumstances is the penalty rule engaged? In England, it has always been considered that a provision could not be a penalty unless it provided an exorbitant alternative to common law damages. This meant that it had to be a provision operating upon a breach of contract. In Moss Empires Ltd v Olympia (Liverpool) Ltd [1939] AC 544, this was taken for granted by Lord Atkin (p 551) and Lord Porter (p 558). As a matter of authority the question is settled in England by the decision of the House of Lords in Export Credits Guarantee Department v Universal Oil Products Co [1983] 1 WLR 399 (ECGD). Lord Roskill, with whom the rest of the committee agreed, said at p 403: [P]erhaps the main purpose, of the law relating to penalty clauses is to prevent a plaintiff recovering a sum of money in respect of a breach of contract committed by a defendant which bears little or no relationship to the loss actually suffered by the plaintiff as a result of the breach by the defendant. But it is not and never has been for the courts to relieve a party from the consequences of what may in the event prove to be an onerous or possibly even a commercially imprudent bargain. As Lord Hodge points out in his judgment, the Scottish authorities are to the same effect. This principle is worth restating at the outset of any analysis of the penalty rule, because it explains much about the way in which it has developed. There is a fundamental difference between a jurisdiction to review the fairness of a contractual obligation and a jurisdiction to regulate the remedy for its breach. Leaving aside challenges going to the reality of consent, such as those based on fraud, duress or undue influence, the courts do not review the fairness of mens bargains either at law or in equity. The penalty rule regulates only the remedies available for breach of a partys primary obligations, not the primary obligations themselves. This was not a new concept in 1983, when ECGD was decided. It had been the foundation of the equitable jurisdiction, which depended on the treatment of penal defeasible bonds as secondary obligations or, as Lord Thurlow LC put it in 1783 in Sloman as collateral or accessional to the primary obligation. And it provided the whole basis of the classic distinction made at law between a penalty and a genuine pre estimate of loss, the former being essentially a way of punishing the contract breaker rather than compensating the innocent party for his breach. We shall return to that distinction below. This means that in some cases the application of the penalty rule may depend on how the relevant obligation is framed in the instrument, ie whether as a conditional primary obligation or a secondary obligation providing a contractual alternative to damages at law. Thus, where a contract contains an obligation on one party to perform an act, and also provides that, if he does not perform it, he will pay the other party a specified sum of money, the obligation to pay the specified sum is a secondary obligation which is capable of being a penalty; but if the contract does not impose (expressly or impliedly) an obligation to perform the act, but simply provides that, if one party does not perform, he will pay the other party a specified sum, the obligation to pay the specified sum is a conditional primary obligation and cannot be a penalty. However, the capricious consequences of this state of affairs are mitigated by the fact that, as the equitable jurisdiction shows, the classification of terms for the purpose of the penalty rule depends on the substance of the term and not on its form or on the label which the parties have chosen to attach to it. As Lord Radcliffe said in Campbell Discount Co Ltd v Bridge [1962] AC 600, 622, [t]he intention of the parties themselves, by which he clearly meant the intention as expressed in the agreement, is never conclusive and may be overruled or ignored if the court considers that even its clear expression does not represent the real nature of the transaction or what in truth it is taken to be (and cf per Lord Templeman in Street v Mountford [1985] AC 809, 819). This aspect of the equitable jurisdiction was inherited by the courts of common law, and has been firmly established since the earliest common law cases. Payment of a sum of money is the classic obligation under a penalty clause and, in almost every reported case involving a damages clause, the provision stipulates for the payment of money. However, it seems to us that there is no reason why an obligation to transfer assets (either for nothing or at an undervalue) should not be capable of constituting a penalty. While the penalty rule may be somewhat artificial, it would heighten its artificiality to no evident purpose if it were otherwise. Similarly, the fact that a sum is paid over by one party to the other party as a deposit, in the sense of some sort of surety for the first partys contractual performance, does not prevent the sum being a penalty, if the second party in due course forfeits the deposit in accordance with the contractual terms, following the first partys breach of contract see the Privy Council decisions in Public Works Comr v Hills [1906] AC 368, 375 376, and Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573. By contrast, in Else (1982) at p 146, Hoffmann LJ, citing Stockloser v Johnson [1954] 1 QB 476 in support, said that, unlike a case where money has been deposited as security for due performance of [a] partys obligation, retention of instalments which have been paid under contract so as to become the absolute property of the vendor does not fall within the penalty rule, although, he added that it was subject to the jurisdiction for relief against forfeiture. The relationship between penalty clauses and forfeiture clauses is not entirely easy. Given that they had the same origin in equity, but that the law on penalties was then developed through common law while the law on forfeitures was not, this is unsurprising. Some things appear to be clear. Where a proprietary interest or a proprietary or possessory right (such as a patent or a lease) is granted or transferred subject to revocation or determination on breach, the clause providing for determination or revocation is a forfeiture and cannot be a penalty, and, while it is enforceable, relief from forfeiture may be granted: see BICC plc v Burndy Corpn [1985] Ch 232, 246 247 and 252 (Dillon LJ) and The Scaptrade, pp 701 703, (Lord Diplock). But this does not mean that relief from forfeiture is unavailable in cases not involving land see Cukurova Finance International Ltd v Alfa Telecom Turkey Ltd (No 2) [2013] UKPC 2, [2015] 2 WLR 875, especially at paras 92 97, and the cases cited there. What is less clear is whether a provision is capable of being both a penalty clause and a forfeiture clause. It is inappropriate to consider that issue in any detail in this judgment, as we have heard very little argument on forfeitures unsurprisingly because in neither appeal has it been alleged that any provision in issue is a forfeiture from which relief could be granted. But it is right to mention the possibility that, in some circumstances, a provision could, at least potentially, be a penalty clause as well as a forfeiture clause. We see the force of the arguments to that effect advanced by Lord Mance and Lord Hodge in their judgments. What makes a contractual provision penal? As we have already observed, until relatively recently this question was answered almost entirely by reference to straightforward liquidated damages clauses. It was in that context that the House of Lords sought to restate the law in two seminal decisions at the beginning of the 20th century, Clydebank in 1904 and Dunlop in 1915. Clydebank was a Scottish appeal about a shipbuilding contract with a provision (described as a penalty) for the payment of 500 per week for delayed delivery. The provision was held to be a valid liquidated damages clause, not a penalty. Lord Halsbury (p 10) said that the distinction between the two depended on whether it is, what I think gave the jurisdiction to the courts in both countries to interfere at all in an agreement between the parties, unconscionable and extravagant, and one which no court ought to allow to be enforced. Lord Halsbury declined to lay down any abstract rule for determining what was unconscionable or extravagant, saying only that it must depend on the nature of the transaction the thing to be done, the loss likely to accrue to the person who is endeavouring to enforce the performance of the contract, and so forth. Lord Halsburys formulation has proved influential, and the two other members of the Appellate Committee both delivered concurring judgments agreeing with it. It is, however, worth drawing attention to an observation of Lord Robertson (pp 19 20) which points to the principle underlying the contrasting expressions liquidated damages and penalty: Now, all such agreements, whether the thing be called penalty or be called liquidate damage, are in intention and effect what Professor Bell calls instruments of restraint, and in that sense penal. But the clear presence of this does not in the least degree invalidate the stipulation. The question remains, had the respondents no interest to protect by that clause, or was that interest palpably incommensurate with the sums agreed on? It seems to me that to put this question, in the present instance, is to answer it. Dunlop arose out of a contract for the supply of tyres, covers and tubes by a manufacturer to a garage. The contract contained a number of terms designed to protect the manufacturers brand, including prohibitions on tampering with the marks, restrictions on the unauthorised export or exhibition of the goods, and on resales to unapproved persons. There was also a resale price maintenance clause, which would now be unlawful but was a legitimate restriction of competition according to the notions prevailing in 1914. It was this clause which the purchaser had broken. The contract provided for the payment of 5 for every tyre, cover or tube sold in breach of any provision of the agreement. Once again, the provision was held to be a valid liquidated damages clause. In his speech, Lord Dunedin formulated four tests which, if applicable to the case under consideration, may prove helpful, or even conclusive (p 87). They were (a) that the provision would be penal if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach; (b) that the provision would be penal if the breach consisted only in the non payment of money and it provided for the payment of a larger sum; (c) that there was a presumption (but no more) that it would be penal if it was payable in a number of events of varying gravity; and (d) that it would not be treated as penal by reason only of the impossibility of precisely pre estimating the true loss. Lord Dunedins speech in Dunlop achieved the status of a quasi statutory code in the subsequent case law. Some of the many decisions on the validity of damages clauses are little more than a detailed exegesis or application of his four tests with a view to discovering whether the clause in issue can be brought within one or more of them. In our view, this is unfortunate. In the first place, Lord Dunedin proposed his four tests not as rules but only as considerations which might prove helpful or even conclusive if applicable to the case under consideration. He did not suggest that they were applicable to every case in which the law of penalties was engaged. Second, as Lord Dunedin himself acknowledged, the essential question was whether the clause impugned was unconscionable or extravagant. The four tests are a useful tool for deciding whether these expressions can properly be applied to simple damages clauses in standard contracts. But they are not easily applied to more complex cases. To deal with those, it is necessary to consider the rationale of the penalty rule at a more fundamental level. What is it that makes a provision for the consequences of breach unconscionable? And by comparison with what is a penalty clause said to be extravagant? Third, none of the other three Law Lords expressly agreed with Lord Dunedins reasoning, and the four tests do not all feature in any of their speeches. Indeed, it appears that, in his analysis at pp 101 102, Lord Parmoor may have taken a more restrictive view of what constituted a penalty than did Lord Dunedin. More generally, the other members of the Appellate Committee gave their own reasons for concurring in the result, and they also repay consideration. For present purposes, the most instructive is that of Lord Atkinson, who approached the matter on an altogether broader basis. Lord Atkinson pointed (pp 90 91) to the critical importance to Dunlop of the protection of their brand, reputation and goodwill, and their authorised distribution network. Against this background, he observed (pp 91 92): It has been urged that as the sum of 5 becomes payable on the sale of even one tube at a shilling less than the listed price, and as it was impossible that the appellant company should lose that sum on such a transaction, the sum fixed must be a penalty. In the sense of direct and immediate loss the appellants lose nothing by such a sale. It is the agent or dealer who loses by selling at a price less than that at which he buys, but the appellants have to look at their trade in globo, and to prevent the setting up, in reference to all their goods anywhere and everywhere, a system of injurious undercutting. The object of the appellants in making this agreement, if the substance and reality of the thing and the real nature of the transaction be looked at, would appear to be a single one, namely, to prevent the disorganization of their trading system and the consequent injury to their trade in many directions. The means of effecting this is by keeping up their price to the public to the level of their price list, this last being secured by contracting that a sum of 5 shall be paid for every one of the three classes of articles named sold or offered for sale at prices below those named on the list. The very fact that this sum is to be paid if a tyre cover or tube be merely offered for sale, though not sold, shows that it was the consequential injury to their trade due to undercutting that they had in view. They had an obvious interest to prevent this undercutting, and on the evidence it would appear to me impossible to say that that interest was incommensurate with the sum agreed to be paid. Lord Atkinson went on to draw an analogy, which has particular resonance in the Cavendish appeal, with a clause dealing with damages for breach of a restrictive covenant on the canvassing of business by a former employee. In this context, he said (pp 92 93): It is, I think, quite misleading to concentrate ones attention upon the particular act or acts by which, in such cases as this, the rivalry in trade is set up, and the repute acquired by the former employee that he works cheaper and charges less than his old master, and to lose sight of the risk to the latter that old customers, once tempted to leave him, may never return to deal with him, or that business that might otherwise have come to him may be captured by his rival. The consequential injuries to the traders business arising from each breach by the employee of his covenant cannot be measured by the direct loss in a monetary point of view on the particular transaction constituting the breach. Lord Atkinson was making substantially the same point as Lord Robertson had made in Clydebank. The question was: what was the nature and extent of the innocent partys interest in the performance of the relevant obligation. That interest was not necessarily limited to the mere recovery of compensation for the breach. Lord Atkinson considered that the underlying purpose of the resale price maintenance clause gave Dunlop a wider interest in enforcing the damages clause than pecuniary compensation. 5 per item was not incommensurate with that interest even if it was incommensurate with the loss occasioned by the wrongful sale of a single item. Although the other members of the Appellate Committee did not express themselves in the same terms as Lord Atkinson, their approach was entirely consistent with his. Lord Parker at p 97 said that whether the sum agreed to be paid on the breach is really a penalty must depend on the circumstances of each particular case, and at p 99, echoing Lord Atkinsons fuller treatment of the point, as just set out, he described the damage which would result from any breach as consist[ing] in the disturbance or derangement of the system of distribution by means of which [Dunlops] goods reach the ultimate consumer. In their speeches, Lord Dunedin (p 87), Lord Parker (p 98) and Lord Parmoor (p 103) ultimately were content to rest their decision that the 5 was not a penalty on the ground that an exact pre estimate of loss was impossible, whereas, in the passages quoted above, Lord Atkinson analysed why that was so. It seems clear that the actual result of the case was strongly influenced by Lord Atkinsons reasoning. The clause was upheld although, on the face of it, it failed all but the last of Lord Dunedins tests. The 5 per item applied to breaches of very variable significance and it was impossible to relate the loss attributable to the sale of that item. It was justifiable only by reference to the wider interests identified by Lord Atkinson. The great majority of cases decided in England since Dunlop have concerned more or less standard damages clauses in consumer contracts, and Lord Dunedins four tests have proved perfectly adequate for dealing with those. More recently, however, the courts have returned to the possibility of a broader test in less straightforward cases, in the context of the supposed commercial justification for clauses which might otherwise be regarded as penal. An early example is the decision of the House of Lords in The Scaptrade, where at p 702, Lord Diplock, with whom the rest of the Appellate Committee agreed, observed that a right to withdraw a time chartered vessel for non payment of advance hire was not a penalty because its commercial purpose was to create a fund from which the cost of providing the chartered service could be funded. In Lordsvale Finance plc v Bank of Zambia [1996] QB 752, Colman J was concerned with a common form provision in a syndicated loan agreement for interest to be payable at a higher rate during any period when the borrower was in default. There was authority that such provisions were penal: Lady Holles v Wyse (1693) 2 Vern 289; Strode v Parker (1694) 2 Vern 316, Wallingford v Mutual Society (1880) 5 App Cas 685, 702 (Lord Hatherley). But Colman J held that the clause was valid because its predominant purpose was not to deter default but to reflect the greater credit risk associated with a borrower in default. At pp 763 764, he observed that a provision for the payment of money upon breach could not be categorised as a penalty simply because it was not a genuine pre estimate of damages, saying that there would seem to be: no reason in principle why a contractual provision the effect of which was to increase the consideration payable under an executory contract upon the happening of a default should be struck down as a penalty if the increase could in the circumstances be explained as commercially justifiable, provided always that its dominant purpose was not to deter the other party from breach. Colman Js approach was approved by Mance LJ, delivering the leading judgment in the Court of Appeal in Cine Bes Filmcilik ve Yapimcilik v United International Pictures [2004] 1 CLC 401, para 13. A similar view was taken by Arden LJ in Murray v Leisureplay plc [2005] IRLR 946, para 54, where she posed the question Has the party who seeks to establish that the clause is a penalty shown that the amount payable under the clause was imposed in terrorem, or that it does not constitute a genuine pre estimate of loss for the purposes of the Dunlop case, and, if he has shown the latter, is there some other reason which justifies the discrepancy between [the amount payable under the clause and the amount payable by way of damages in common law]? (emphasis added). She considered that the clause in question had advantages for both sides, and pointed out that no evidence had been adduced to show that the clause lacked commercial justification: see paras 70 76. But Buxton LJ put the matter on a wider basis for which Clarke LJ (para 105) expressed a preference. He referred to the speech of Lord Atkinson in Dunlop and suggested that the ratio of the actual decision in that case had been that an explanation of the clause in commercial rather than deterrent terms was available. All three members of the court endorsed the approach of Colman J in Lordsvale and Mance LJ in Cine Bes. Colman J in Lordsvale and Arden LJ in Murray were inclined to rationalise the introduction of commercial justification as part of the test, by treating it as evidence that the impugned clause was not intended to deter. Later decisions in which a commercial rationale has been held inconsistent with the application of the penalty rule, have tended to follow that approach: see, for example, Euro London Appointments Ltd v Claessens International Ltd [2006] 2 Lloyds Rep 436, General Trading Company (Holdings) Ltd v Richmond Corpn Ltd [2008] 2 Lloyds Rep 475. It had the advantage of enabling them to reconcile the concept of commercial justification with Lord Dunedins four tests. But we have some misgivings about it. The assumption that a provision cannot have a deterrent purpose if there is a commercial justification, seems to us to be questionable. By the same token, we agree with Lord Radcliffes observations in Campbell Discount at p 622, where he said: I do not myself think that it helps to identify a penalty, to describe it as in the nature of a threat to be enforced in terrorem (to use Lord Halsburys phrase in Elphinstone v Monkland Iron & Coal Co Ltd (1886) 11 App Cas 332, 348). I do not find that that description adds anything of substance to the idea conveyed by the word penalty itself, and it obscures the fact that penalties may quite readily be undertaken by parties who are not in the least terrorised by the prospect of having to pay them and yet are, as I understand it, entitled to claim the protection of the court when they are called upon to make good their promises. Moreover, the penal character of a clause depends on its purpose, which is ordinarily an inference from its effect. As we have already explained, this is a question of construction, to which evidence of the commercial background is of course relevant in the ordinary way. But, for the same reason, the answer cannot depend on evidence of actual intention: see Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101, paras 28 47 (Lord Hoffmann). However, while we have misgivings about some aspects of their reasoning, these aspects are peripheral to the essential point which Colman J and Buxton LJ were making, and we consider that their emphasis on justification provides a valuable insight into the real basis of the penalty rule. It is the same insight as that of Lord Robertson in Clydebank and Lord Atkinson in Dunlop. A damages clause may properly be justified by some other consideration than the desire to recover compensation for a breach. This must depend on whether the innocent party has a legitimate interest in performance extending beyond the prospect of pecuniary compensation flowing directly from the breach in question. The availability of remedies for a breach of duty is not simply a question of providing a financial substitute for performance. It engages broader social and economic considerations, one of which is that the law will not generally make a remedy available to a party, the adverse impact of which on the defaulter significantly exceeds any legitimate interest of the innocent party. In the famous case of White & Carter (Councils) Ltd v McGregor [1962] AC 413, Lord Reid observed, at p 431: It may well be that, if it can be shown that a person has no legitimate interest, financial or otherwise, in performing the contract rather than claiming damages, he ought not to be allowed to saddle the other party with an additional burden with no benefit to himself. If a party has no interest to enforce a stipulation, he cannot in general enforce it: so it might be said that, if a party has no interest to insist on a particular remedy, he ought not to be allowed to insist on it. And, just as a party is not allowed to enforce a penalty, so he ought not to be allowed to penalise the other party by taking one course when another is equally advantageous to him. Here the respondent did not set out to prove that the appellants had no legitimate interest in completing the contract and claiming the contract price rather than claiming damages. Parliament has on many occasions relieved parties from certain kinds of improvident or oppressive contracts, but the common law can only do that in very limited circumstances. In White & Carter the innocent party was entitled to ignore the repudiation of the contract breaker and proceed to perform, claiming his remuneration in debt rather than limiting himself to damages, notwithstanding that this course might be a great deal more expensive for the contract breaker. This, according to Lord Reid (p 431), was because the contract breaker did not set out to prove that the appellants had no legitimate interest in completing the contract and claiming the contract price rather than claiming damages. More generally, the attitude of the courts, reflecting that of the Court of Chancery, is that specific performance of contractual obligations should ordinarily be refused where damages would be an adequate remedy. This is because the minimum condition for an order of specific performance is that the innocent party should have a legitimate interest extending beyond pecuniary compensation for the breach. The paradigm case is the purchase of land or certain chattels such as ships, which the law recognises as unique. Because of their uniqueness the purchasers interest extends beyond the mere award of damages as a substitute for performance. As Lord Hoffmann put it in addressing a very similar issue the purpose of the law of contract is not to punish wrongdoing but to satisfy the expectations of the party entitled to performance: Co operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1, 15. In our opinion, the law relating to penalties has become the prisoner of artificial categorisation, itself the result of unsatisfactory distinctions: between a penalty and genuine pre estimate of loss, and between a genuine pre estimate of loss and a deterrent. These distinctions originate in an over literal reading of Lord Dunedins four tests and a tendency to treat them as almost immutable rules of general application which exhaust the field. In Legione v Hateley (1983) 152 CLR 406, 445, Mason and Deane JJ defined a penalty as follows: A penalty, as its name suggests, is in the nature of a punishment for non observance of a contractual stipulation; it consists of the imposition of an additional or different liability upon breach of the contractual stipulation . All definition is treacherous as applied to such a protean concept. This one can fairly be said to be too wide in the sense that it appears to be apt to cover many provisions which would not be penalties (for example most, if not all, forfeiture clauses). However, in so far as it refers to punishment and an additional or different liability as opposed to in terrorem and genuine pre estimate of loss, this definition seems to us to get closer to the concept of a penalty than any other definition we have seen. The real question when a contractual provision is challenged as a penalty is whether it is penal, not whether it is a pre estimate of loss. These are not natural opposites or mutually exclusive categories. A damages clause may be neither or both. The fact that the clause is not a pre estimate of loss does not therefore, at any rate without more, mean that it is penal. To describe it as a deterrent (or, to use the Latin equivalent, in terrorem) does not add anything. A deterrent provision in a contract is simply one species of provision designed to influence the conduct of the party potentially affected. It is no different in this respect from a contractual inducement. Neither is it inherently penal or contrary to the policy of the law. The question whether it is enforceable should depend on whether the means by which the contracting partys conduct is to be influenced are unconscionable or (which will usually amount to the same thing) extravagant by reference to some norm. The true test is whether the impugned provision is a secondary obligation which imposes a detriment on the contract breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation. The innocent party can have no proper interest in simply punishing the defaulter. His interest is in performance or in some appropriate alternative to performance. In the case of a straightforward damages clause, that interest will rarely extend beyond compensation for the breach, and we therefore expect that Lord Dunedins four tests would usually be perfectly adequate to determine its validity. But compensation is not necessarily the only legitimate interest that the innocent party may have in the performance of the defaulters primary obligations. This was recognised in the early days of the penalty rule, when it was still the creature of equity, and is reflected in Lord Macclesfields observation in Peachy (quoted in para 5 above) about the application of the penalty rule to provisions which were never intended by way of compensation, for which equity would not relieve. It was reflected in the result in Dunlop. And it is recognised in the more recent decisions about commercial justification. And, as Lord Hodge shows, it is the principle underlying the Scottish authorities. The penalty rule is an interference with freedom of contract. It undermines the certainty which parties are entitled to expect of the law. Diplock LJ was neither the first nor the last to observe that The court should not be astute to descry a penalty clause: Robophone at p 1447. As Lord Woolf said, speaking for the Privy Council in Philips Hong Kong Ltd v Attorney General of Hong Kong (1993) 61 BLR 41, 59, the court has to be careful not to set too stringent a standard and bear in mind that what the parties have agreed should normally be upheld, not least because [a]ny other approach will lead to undesirable uncertainty especially in commercial contracts. Although the penalty rule originates in the concern of the courts to prevent exploitation in an age when credit was scarce and borrowers were particularly vulnerable, the modern rule is substantive, not procedural. It does not normally depend for its operation on a finding that advantage was taken of one party. As Lord Wright MR observed in Imperial Tobacco Company (of Great Britain) and Ireland v Parslay [1936] 2 All ER 515, 523: A millionaire may enter into a contract in which he is to pay liquidated damages, or a poor man may enter into a similar contract with a millionaire, but in each case the question is exactly the same, namely, whether the sum stipulated as damages for the breach was exorbitant or extravagant . But for all that, the circumstances in which the contract was made are not entirely irrelevant. In a negotiated contract between properly advised parties of comparable bargaining power, the strong initial presumption must be that the parties themselves are the best judges of what is legitimate in a provision dealing with the consequences of breach. In that connection, it is worth noting that in Philips Hong Kong at pp 57 59, Lord Woolf specifically referred to the possibility of taking into account the fact that one of the parties to the contract is able to dominate the other as to the choice of the terms of a contract when deciding whether a damages clause was a penalty. In doing so, he reflected the view expressed by Mason and Wilson JJ in AMEV UDC at p 194 that the courts were thereby able to strike a balance between the competing interests of freedom of contract and protection of weak contracting parties (citing Atiyah, The Rise and Fall of Freedom of Contract (1979), Chapter 22). However, Lord Woolf was rightly at pains to point out that this did not mean that the courts could thereby adopt some broader discretionary approach. The notion that the bargaining position of the parties may be relevant is also supported by Lord Browne Wilkinson giving the judgment of the Privy Council in Workers Bank. At p 580, he rejected the notion that the test of reasonableness [could] depend upon the practice of one class of vendor, which exercises considerable financial muscle as it would allow such people to evade the law against penalties by adopting practices of their own. In his judgment, he decided that, in contracts for sale of land, a clause providing for a forfeitable deposit of 10% of the purchase price was valid, although it was an anomalous exception to the penalty rule. However, he held that the clause providing for a forfeitable 25% deposit in that case was invalid because in Jamaica, the customary deposit has been 10% and [a] vendor who seeks to obtain a larger amount by way of forfeitable deposit must show special circumstances which justify such a deposit, which the appellant vendor in that case failed to do. Should the penalty rule be abrogated? The primary case of Miss Smith QC, who appeared for Cavendish in the first appeal, was that the penalty rule should now be regarded as antiquated, anomalous and unnecessary, especially in the light of the growing importance of statutory regulation in this field. It is the creation of the judges, and, she argued, the judges should now take the opportunity to abolish it. There is a case to be made for taking this course. It was expounded with considerable forensic skill by Miss Smith, and has some powerful academic support: see Sarah Worthington, Common Law Values: the Role of Party Autonomy in Private Law, in The Common Law of Obligations: Divergence and Unity (ed A Robertson and M Tilbury (2015)), pp 18 26. We rather doubt that the courts would have invented the rule today if their predecessors had not done so three centuries ago. But this is not the way in which English law develops, and we do not consider that judicial abolition would be a proper course for this court to take. The first point to be made is that the penalty rule is not only a long standing principle of English law, but is common to almost all major systems of law, at any rate in the western world. It has existed in England since the 16th century and can be traced back to the same period in Scotland: McBryde, The Law of Contract in Scotland, 3rd ed (2007), paras 22 148. The researches of counsel have shown that it has been adopted with some variants in all common law jurisdictions, including those of the United States. A corresponding rule was derived from Roman law by Pothier, Trait des Obligations, No 346, which is to be found in the Civil Codes of France (article 1152), Germany (for non commercial contracts only) (sections 343, 348), Switzerland (article 163.3), Belgium (article 1231) and Italy (article 1384). It is included in influential attempts to codify the law of contracts internationally, including the Unidroit Principles of International Commercial Contracts (2010) (article 7.4.13), and the UNCITRAL Uniform Rules on Contract Clauses for an Agreed Sum Due upon Failure of Performance (article 6). In January 1978 the Committee of Ministers of the Council of Europe recommended a number of common principles relating to penal clauses, including (article 7) that a stipulated sum payable on breach may be reduced by the court when it is manifestly excessive. It is true that statutory regulation, which hardly existed at the time that the penalty rule was developed, is now a significant feature of the law of contract. In England, the landmark legislation was the Unfair Contract Terms Act 1977. For most purposes, the Act was superseded by the Unfair Terms in Consumer Contracts Regulations 1994 (SI 1994/3159), which was in turn replaced by the 1999 Regulations, both of which give effect to European Directives. The 1999 Regulations contain an indicative and non exhaustive list of the terms which may be regarded as unfair, including terms which have the object or effect of requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation. Nonetheless, statutory regulation is very far from covering the whole field. Penalty clauses are controlled by the 1999 Regulations, but the Regulations apply only to consumer contracts and the control of unfair terms under regulations 3 and 5 is limited to those which have not been individually negotiated. There are major areas, notably non consumer contracts, which are not regulated by statute. Some of those who enter into such contracts, for example professionals and small businesses, may share many of the characteristics of consumers which are thought to make the latter worthy of legal protection. The English Law Commission considered penalty clauses in 1975 (Working Paper No 61, Penalty Clauses and Forfeiture of Monies Paid, April 1975), at a time when there was no relevant statutory regulation, and the Scottish Law Commission reported on them in May 1999 (Report No 171). Neither of these Reports recommended abolition of the rule. On the contrary, both recommended legislation which would have expanded its scope. Further, although there are justified criticisms that can be made of the penalty rule, it is consistent with other well established principles which have been developed by judges (albeit mostly in the Chancery courts) and which involve the court in declining to give full force to contractual provisions, such as relief from forfeiture, the equity of redemption, and refusal to grant specific performance, as discussed in paras 10 11 and 29 30 above. Finally, the case for abolishing the rule depends heavily on anomalies in the operation of the law as it has traditionally been understood. Many, though not all of these are better addressed (i) by a realistic appraisal of the substance of contractual provisions operating upon breach, and (ii) by taking a more principled approach to the interests that may properly be protected by the terms of the parties agreement. Should the penalty rule be extended? In the course of his cogent submissions, Mr Bloch QC, who appeared for Mr Makdessi on the first appeal, suggested that, as an alternative to confirming or abrogating the penalty rule, this court could extend it, so that it applied more generally. As he pointed out, this was the course taken by the High Court of Australia, and it would have the advantage of rendering the penalty rule less formalistic in its application, and, which may be putting the point in a different way, less capable of avoidance by ingenious drafting. This step has recently been taken in Australia. Until recently, the law in Australia was the same as it is in England: see IAC Leasing Ltd v Humphrey (1972) 126 CLR 131, 143 (Walsh J); ODea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359, 390 (Brennan J); AMEV UDC at p 184 (Mason and Wilson JJ, citing ECGD among other authorities), 211 (Dawson J); Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656, 662. However, a radical departure from the previous understanding of the law occurred with the decision of the High Court of Australia in Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205. The background to this case was very similar to that in Office of Fair Trading v Abbey National plc [2010] 1 AC 696. It concerned the application of the penalty rule to contractual bank charges payable when the bank bounced a cheque or allowed the customer to draw in excess of his available funds or agreed overdraft limit. These might in a loose sense be regarded as banking irregularities, but they did not involve any breach of contract on the part of the customer. On that ground Andrew Smith J had held in the Abbey National case that the charges were incapable of being penalties: [2008] 2 All ER (Comm) 625, paras 295 299 (the point was not appealed). In Andrews, the High Court of Australia disagreed. They engaged in a detailed historical examination of the equitable origin of the rule and concluded that there subsisted, independently of the common law rule, an equitable jurisdiction to relieve against any sufficiently onerous provision which was conditional upon a failure to observe some other provision, whether or not that failure was a breach of contract. At para 10, they defined a penalty as follows: In general terms, a stipulation prima facie imposes a penalty on a party (the first party) if, as a matter of substance, it is collateral (or accessory) to a primary stipulation in favour of a second party and this collateral stipulation, upon the failure of the primary stipulation, imposes upon the first party an additional detriment, the penalty, to the benefit of the second party. In that sense, the collateral or accessory stipulation is described as being in the nature of a security for and in terrorem of the satisfaction of the primary stipulation. If compensation can be made to the second party for the prejudice suffered by failure of the primary stipulation, the collateral stipulation and the penalty are enforced only to the extent of that compensation. The first party is relieved to that degree from liability to satisfy the collateral stipulation. Any decision of the High Court of Australia has strong persuasive force in this court. But we cannot accept that English law should take the same path, quite apart from its inconsistency with established and unchallenged House of Lords authority. In the first place, although the reasoning in Andrews was entirely historical, it is not in fact consistent with the equitable rule as it developed historically. The equitable jurisdiction to relieve from penalties arose wholly in the context of bonds defeasible in the event of the performance of a contractual obligation. It necessarily posited a breach of that obligation. Secondly, if there is a distinct and still subsisting equitable jurisdiction to relieve against penalties which is wider than the common law jurisdiction, with three possible exceptions it appears to have left no trace in the authorities since the fusion of law and equity in 1873. The first arguable exception is in In re Dagenham (Thames) Dock Co; Ex p Hulse (1873) LR 8 Ch App 1022 (followed by the Privy Council in Kilmer v British Columbia Orchard Lands Ltd [1913] AC 319), where the Court of Appeal granted a purchaser, who had been in possession for five years and carried out improvements, further time to pay the second and final instalment of a purchase price on the ground that the clause requiring him to vacate and to forfeit the first instalment for not having paid the second instalment on time, was a penalty. However, James and Mellish LJJ may have been treating the clause as a forfeiture (as they both also used that expression in their brief judgments), and in any event they treated the purchaser in the same way as a mortgagor in possession asking for more time to pay. Further, as Romer LJ pointed out in Stockloser at pp 497 498, the decision could be justified by the fact that time had already been extended twice by agreement, and in any event there was no question of the vendor being required to repay the first instalment. The second arguable exception is no more than an unsupported throw away line in the judgment of Diplock LJ in Robophone at p 1446, where he said it was by no means clear whether penalty clauses are simply void, but, on analysis, he was dealing with a rather different point (namely that discussed by Lord Atkin in the passage that follows). The third exception is the unsatisfactory decision in Jobson v Johnson [1989] 1 WLR 1026, to which we shall return in paras 84 87 below. It is relevant to add in this connection that the law of penalties has been held to be the same in England and Scotland: Stair Memorial Encyclopaedia of the Laws of Scotland, vol 15, paras 783 801, and see Clydebank. Yet equity, although influential, has never been a distinct branch of Scots law. In the modern law of both countries, the penalty rule is an aspect of the law of contract. Thirdly, the High Courts redefinition of a penalty is, with respect, difficult to apply to the case to which it is supposedly directed, namely where there is no breach of contract. It treats as a potential penalty any clause which is in the nature of a security for and in terrorem of the satisfaction of the primary stipulation. By a security it means a provision to secure compensation for the prejudice suffered by the failure of the primary stipulation. This analysis assumes that the primary stipulation is some kind of promise, in which case its failure is necessarily a breach of that promise. If, for example, there is no duty not to draw cheques against insufficient funds, it is difficult to see where compensation comes into it, or how bank charges for bouncing a cheque or allowing the customer to overdraw can be regarded as securing a right of compensation. Finally, the High Courts decision does not address the major legal and commercial implications of transforming a rule for controlling remedies for breach of contract into a jurisdiction to review the content of the substantive obligations which the parties have agreed. Modern contracts contain a very great variety of contingent obligations. Many of them are contingent on the way that the parties choose to perform the contract. There are provisions for termination upon insolvency, contractual payments due on the exercise of an option to terminate, break fees chargeable on the early repayment of a loan or the closing out of futures contracts in the financial or commodity markets, provisions for variable payments dependent on the standard or speed of performance and take or pay provisions in long term oil and gas purchase contracts, to take only some of the more familiar types of clause. The potential assimilation of all of these to clauses imposing penal remedies for breach of contract would represent the expansion of the courts supervisory jurisdiction into a new territory of uncertain boundaries, which has hitherto been treated as wholly governed by mutual agreement. We would accept that the application of the penalty rule can still turn on questions of drafting, even where a realistic approach is taken to the substance of the transaction and not just its form. But we agree with what Hoffmann LJ said in Else (1982) at p 145, namely that, while it is true that the question whether the penalty rule applies may sometimes turn on somewhat formal distinction[s], this can be justified by the fact that the rule being an inroad upon freedom of contract which is inflexible ought not to be extended, at least by judicial, as opposed to legislative, decision making. The first appeal: Cavendish v El Makdessi The factual and procedural history Mr Makdessi founded a group of companies (the Group) which by 2008 had become the largest advertising and marketing communications group in the Middle East, and operated through a network of around 20 companies with more than 30 offices in over 15 countries. At that time, Mr Makdessi was one of the most influential Lebanese business leaders, his name was closely identified with the business of the Group, and he had very strong relationships with its clients and senior employees. In 2008, the holding company of the Group was Team Y & R Holdings Hong Kong Ltd (the Company). The Company had 1,000 issued shares, which were owned by Mr Makdessi and Mr Joseph Ghossoub, with the exception of 126 shares which were held by Young & Rubicam International Group BV (Y & RIG), a company in the WPP group of companies (WPP), the worlds largest market communications services group. By an agreement of 28 February 2008 (the Agreement) Mr Makdessi and Mr Ghossoub (described as the Sellers) agreed to sell to Y & RIG (described as the Purchaser) 474 shares (described as the Sale Shares) in the Company. Y & RIG then transferred those shares to Cavendish Square Holdings BV (Cavendish), another WPP company, and by a novation agreement of 29 February 2008, Cavendish was substituted for Y & RIG as a party to the Agreement. Thus Cavendish came to hold 60% of the Company while the Sellers retained 40%. For present purposes, Y & RIG can be ignored and the Purchaser can be treated as Cavendish. The Agreement had been the subject of extensive negotiations over six months, and both sides were represented by highly experienced and respected commercial lawyers: Allen & Overy acting for Cavendish, and Lewis Silkin for the Sellers, Mr Makdessi and Mr Ghossoub. By clause 3.1, the price payable by Cavendish [i]n consideration of the sale of the Sale Shares and the obligations of the Sellers herein (and which was to be apportioned 53.88% to Mr Makdessi and 46.12% to Mr Ghossoub) was to be paid by Cavendish in the following way: i) A Completion Payment of US$34m to be paid on completion of the Agreement; ii) A Second Payment of US$31.5m to be paid into escrow on completion, and to be released in four instalments, as restructuring of the Group companies took effect; iii) An Interim Payment, to be paid 30 days after agreement of the group operating profits (OPAT) for 2007 2009, and to be the amount by which the product of eight, 0.474 and the average annual OPAT 2007 2009 exceeded US$63m (being the sum of the earlier payments less US$ 2.5m representing interest); iv) A Final Payment, to be paid 30 days after agreement of the OPAT for 2007 2011, and to be the amount by which the product of a figure between seven and ten (depending on the level of profit), 0.474 and the annual average annual OPAT for 2009 2011 exceeded the aggregate of US$63m and the Interim Payment. Clause 6 contained provisions relating to the calculation of OPAT and payment of the consideration. Clause 3.2 of the Agreement provided that, if the Interim Payment and/or the Final Payment turned out to be a negative figure, it or they should be treated as zero, but there was to be no claw back of the earlier payments. Clause 3.3 of the Agreement provided that the maximum of all payments would be US$147.5m. By clause 9.1 of, and paragraph 2.15(c) of Schedule 7 to, the Agreement, the Sellers warranted that the Net Asset Value (NAV) of the Company at 31 December 2007 was just over US$69.74m. Clause 15 contained a put option which entitled each of the Sellers to require Cavendish, by a Notice served at any time between 1 January and 31 March in 2011 or any subsequent year (in the case of Mr Makdessi) and any time between 1 January and 31 March in 2017 or in any subsequent year (in the case of Mr Ghossoub), to buy all their remaining shares in the Company. The price payable on the exercise of this option was (subject to a cap of US$75m in the case of each Seller) to be the relevant sellers proportion of a sum eight times the average OPAT for a reference period of seven years (the year in which the notice was served, the previous year and the two subsequent years). It was to be payable by instalments. Clause 11 was concerned with the protection of goodwill. Clause 11.1 provided as follows: 11.1. Each Seller recognises the importance of the goodwill of the Group to [Cavendish] and the WPP Group which is reflected in the price to be paid by the Purchaser for the Sale Shares. Accordingly, each Seller commits as set out in this clause 11 to ensure that the interest of each of [Cavendish] and the WPP Group in that goodwill is properly protected. Clause 11.2 provided that, in Mr Makdessis case, until two years after he ceased to hold any shares in the Company or the date of the final instalment of any payment under clause 15, and in Mr Ghossoubs case, until two years after he ceased employment with the Company, the Sellers would not (a) carry on, or be engaged or interested in Restricted Activities (ie the provision of goods or services which competed with the Group companies) in Prohibited Areas (ie in countries in which any of the Group companies carried on business); (b) solicit or accept orders, enquiries or business in respect of Restricted Activities in the Prohibited Areas; (c) divert orders, enquiries or business from any Group company; or (d) employ or solicit any senior employee or consultant of any Group company. Clause 11.7 started by recording that Cavendish recognises the importance of the goodwill of the Group to the Sellers and to the value of the Interim Payment and the Final Payment. It then contained a covenant by Cavendish that neither it nor any other WPP company would without the Sellers prior written consent other than within the Group companies, trade in any of the [23 identified] countries using [specified] names [including Adrenalin]. Under clause 7.5, Messrs El Makdessi and Ghossoub agreed that, within four months of completion, they would dispose of any shares in Carat Middle East Sarl (Carat), and procure the termination of a joint venture agreement which another Carat company had entered into with a member of the Aegis group of companies. Carat describes itself on its website as the worlds leading independent media planning and buying specialist [o]wned by global media group Aegis Group plc [with] more than 5,000 people in 70 countries worldwide. It is a competitor of WPP, including Cavendish and the Company. The two provisions of central relevance for present purposes were included in clause 5, which was headed Default. Clauses 5.1 and 5.6 provided: 5.1 If a Seller becomes a Defaulting Shareholder [which is defined as including a Seller who is in breach of clause 11.2] he shall not be entitled to receive the Interim Payment and/or the Final Payment which would other than for his having become a Defaulting Shareholder have been paid to him and [Cavendish]s obligations to make such payment shall cease. 5.6. Each Seller hereby grants an option to [Cavendish] pursuant to which, in the event that such Seller becomes a Defaulting Shareholder, [Cavendish] may require such Seller to sell to [Cavendish] all of the Shares held by that Seller (the Defaulting Shareholder Shares). [Cavendish] shall buy and such Seller shall sell the Defaulting Shareholder Shares within 30 days of receipt by such Seller of a notice from [Cavendish] exercising such option in consideration for the payment by [Cavendish] to such Seller of the Defaulting Shareholder Option Price [defined as an amount equal to the [NAV] on the date that the relevant Seller becomes a Defaulting Shareholder multiplied by [the percentage which represents the proportion of the total shares the relevant Seller holds]. Mr Ghossoub signed an agreement by which he agreed to remain an employee and director of the Company. During the negotiations, Mr Makdessi had made it clear that he did not wish to remain an employee. However, he signed an agreement, by which he became a non executive director of the Company (as well as other companies in the Group) and non executive chairman, for an initial term of 18 months which was renewable. Under this he agreed to certain specific obligations by way of ongoing support of the Company. Mr Makdessi resigned as non executive chairman of the Company in April 2009. On 1 July 2009, at the Companys request, he resigned as non executive director of all companies in the Group, save the Company itself. He was removed from the board of the Company on 27 April 2011, after the commencement of these proceedings. Mr Makdessi has been paid his share of the first two payments stipulated by clause 3.1, namely the Completion Payment and the Second Payment, together with some additional interest. However, he has not yet been paid the remaining payments under clause 3.1, namely the Interim Payment or the Final Payment, or any part thereof. His remaining shares represent just over 21.5% of the whole issued share capital of the Company. By December 2010, Cavendish and the Company concluded that Mr Makdessi had acted in breach of his duties to the Company as a director and in breach of his obligations to Cavendish under clause 11.2 of the Agreement. On 13 December 2010 Cavendish gave notice of the exercise of its Call Option under clause 5.6. In December 2010, these proceedings were commenced against Mr Makdessi, with Cavendish suing for breach of the Agreement, and the Company suing for breach of fiduciary duty. Their re amended particulars allege that in breach of his fiduciary duties and the restrictive covenants Mr Makdessi had throughout 2008 and 2009 in Lebanon and Saudi Arabia (both of which were within the Prohibited Area), in breach of clause 11.2, engaged in Restricted Activities, solicited clients and employees away from Group companies and accepted orders in respect of Restricted Activities. The essence of the complaints was that Mr Makdessi had (i) continued to provide services to Carat, including assisting it to generate business, diverting business to it and soliciting clients and diverting their business to it; and (ii) set up rival advertising agencies in Lebanon and Saudi Arabia with Adrenalin in their name and that those agencies had poached or tried to poach a number of the Companys customers and employees. Mr Makdessi subsequently admitted that from February 2008 he had had an ongoing, unpaid involvement in the affairs of Carat pending the appointment of a replacement CEO and that such involvement placed him in breach of fiduciary duty to the Company with effect from 1 July 2008, and that, if the covenants in clause 11.2 were valid and enforceable (as they have been held to be) his involvement in the affairs of Carat rendered him a Defaulting Shareholder within the meaning of the Agreement. The Companys claim for breach of fiduciary duty was settled by its acceptance of a payment into court made by Mr Makdessi in the sum of US$500,000. Cavendish claimed to have suffered loss and damage in the form of a loss of value of its shareholding in the Company, but it subsequently accepted that such loss was irrecoverable as it was merely reflective of the loss which could be claimed, indeed had been claimed, by the Company. More importantly for present purposes, Cavendish claimed that Mr Makdessis admissions of breach of fiduciary duty demonstrated that he was in breach of clause 11.2 in relation to (at least) his continued involvement in Carat. Cavendish accordingly sought a declaration that he was a Defaulting Shareholder, was not entitled to the Interim Payment or the Final Payment as a result of clause 5.1, and was obliged, as of the date 30 days after the service of its notice exercising the Call Option, namely 14 January 2011, to sell to Cavendish all his shares in the Company at the Defaulting Shareholder Option Price, and it sought specific performance of the latter obligation. The case was tried by Burton J and the appeal was heard in the Court of Appeal by Patten, Tomlinson and Christopher Clarke LJJ. The issue at both stages was the same, namely whether clauses 5.1 and 5.6 were valid and enforceable as Cavendish contended, or whether as Mr Makdessi argued they both were void and unenforceable because they constituted penalties. The courts below were naturally constrained by the perceived need to fit any analysis into the framework set by Lord Dunedins four principles. Burton J felt able to escape those constraints, and concluded that the two provisions were valid and enforceable. However, Christopher Clarke LJ, giving the leading judgment in the Court of Appeal, held that the two provisions were unenforceable penalties under the penalty rule as traditionally understood. No short summary can do justice to Christopher Clarke LJs thoughtful and careful analysis, but essentially he felt unable to uphold Burton Js decision because he felt bound by the traditional explanation of the rule as being directed against deterrent clauses as such: see [2012] EWHC 3582 (Comm) and [2013] EWCA Civ 1539 respectively. Cavendish now appeals to this court. The implications of the Agreement Clause 5 deals with the obligations of a Defaulting Shareholder. So far as Mr Makdessi was concerned, that meant a Seller in breach of the restrictive covenants at clause 11.2. In the case of Mr Ghossoub, who remained an employee of the Company, it meant a Seller who was either in breach of the restrictive covenants or else had been summarily dismissed on any of a number of specified grounds, all of them serious and potentially discreditable to the Company. The background to clause 5 is of some importance. Burton J found that the Agreement was negotiated in detail over a considerable period by parties dealing on equal terms with professional assistance of a high order. Cavendish was acquiring 47.4% of the Company so as to bring its holding up to 60%. It is common ground that a large proportion of the purchase price represented goodwill. The NAV (without goodwill) of the Company was warranted by the Sellers at over US$69.7m as at 31 December 2007, whereas the maximum consideration for 47.4% of the Company, including the profit related element, was US$147.5m, implying a maximum value of more than US$300m for the whole Group. Clause 11.1 recorded the Sellers recognition that the restrictive covenants reflected the importance of the goodwill, and Burton J found that its value was heavily dependent on the continuing loyalty of Mr Makdessi and Mr Ghossoub. Subject to various options, they retained a 40% shareholding between them and were expected to maintain their connection with the business for a minimum period, Mr Ghossoub as an employee and director, and Mr Makdessi as a non executive director and chairman. The following summary in the agreed Statement of Facts and Issues is based on the unchallenged evidence given at the trial: The structure of the Agreement was typical of acquisition agreements in the marketing sector. As in this case, the vendor is typically the founder or operator of the business, and has important relationships with clients and key staff. If they decide to turn against the business, its success can be significantly affected, and provisions are therefore included to protect the value of the investment, and in particular the value of the goodwill represented by the vendors existing personal relationships. The respondent fell into that category; the importance of personal relationships with clients is even stronger in the Middle East than the UK, and he had very strong relationships with clients and senior employees, and he was such a well known figure that if he acted against the Group, it would inevitably cause it to lose value. Clause 3.1 provided that the first two instalments of the purchase price amounted to US$65.5m, which would be received by the Sellers in any event. The effect of clause 5.1 was that in the event that a Seller acted in breach of the restrictive covenants, he would not be entitled to receive the last two instalments of the purchase price, the Interim Payment and the Final Payment, both of which were calculated by reference to the audited consolidated profit of the Company for years after completion of the Agreement (2007 2009 for the Interim Payment, and 2007 2011 for the Final Payment). The result of Cavendishs exercise of its rights under clause 5.1 according to its terms was to reduce the consideration for the Defaulting Shareholders shares from his proportion of the maximum of US$147.5m to his proportion of US$65.5m. In Mr Makdessis case, he would receive up to US$44,181,600 less. Under clause 15, the Sellers had a put option to require Cavendish to buy their remaining shareholdings, which in Mr Makdessis case was first exercisable during the first three months of 2011. The provisions determining the option price have been summarised in para 50 above. It was a multiple of average audited consolidated profit over a reference period, a formula which would reflect the value of goodwill. The effect of clause 5.6 was that if before the exercise of the clause 15 put option a Seller was in breach of the restrictive covenants, Cavendish acquired an option to acquire his retained shareholding at a lower price, namely the relevant proportion of the net asset value at the time of the default. The result of Cavendishs implementation of clause 5.6, according to its terms, was that insofar as, at the date of default, Mr Makdessis shareholding had a value attributable to goodwill, he would not receive it and would not be able to exercise the clause 15 put option in 2011. Was clause 5.1 contrary to the penalty rule? Clause 5.1 disentitles a Defaulting Shareholder from receiving money which would otherwise have been due to him as his proportion of the price of the transferred shares. If this constitutes a forfeiture, it would appear that, at least on the current state of the authorities, there would be no jurisdiction to relieve against it, because a contractual right to be paid money is not a proprietary or possessory interest in property: The Scaptrade and BICC (see para 17 above). But there is some, albeit rather unsatisfactory, authority that such a clause may be a penalty. Gilbert Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 concerned a provision in a building subcontract entitling the contractor to suspend or withhold the payment of money due to the subcontractor upon any breach of contract. Four members of the Appellate Committee accepted, obiter, a concession by counsel that this was a penalty: see p 698 (Lord Reid), pp 703 704 (Lord Morris of Borth y Gest), p 711 (Viscount Dilhorne), pp 723 724 (Lord Salmon). This was because it allowed the contractor to withhold all sums due, and not just the estimated damages flowing from the sub contractors breach. The result was to put intolerable pressures on the latters cash flow which was calculated to force him into submission. The only other English decision directly in point is Socony Mobil Oil Co Inc v West of England Ship Owners Mutual Insurance Association Ltd (The Padre Island) [1987] 2 Lloyds Rep 529 (Saville J), [1989] 1 Lloyds Rep 239 (CA); [1991] 2 AC 1, a case notable for the multiplicity of arguments and the diversity of judicial opinions. It was a claim under the Third Parties (Rights Against Insurers) Act 1930 by cargo claimants who had obtained judgment for damages against an insolvent ship owner entered with the defendant P & I Club. Saville J dismissed the claim on the ground that under the standard pay to be paid clause in the rules recovery from the club was conditional on the ship owner having first paid the judgment creditor. Since this had not happened there was no claim to be transferred under the 1930 Act. The Court of Appeal allowed the appeal on this point. They were wrong to do so, as the House of Lords subsequently held. But on the footing that the pay to be paid clause did not bar the claim, the Court of Appeal went on to consider an alternative argument on behalf of the club, based on a provision in its rules that cover should retrospectively cease upon the insureds failure to pay a call. The judgment creditors answer to this argument was that the provision was unenforceable as a penalty. Saville J had held (i) that this last question did not arise because on the facts the retrospective cesser clause would not have applied anyway, but (ii) that the penalty rule was not engaged because it applied only to provisions which required the contract breaker to pay money. The Court of Appeal upheld him on (i), as a result of which (ii) did not arise. But Stuart Smith LJ considered point (ii), obiter. He thought, on the basis of Gilbert Ash, that the penalty rule could apply to a provision disentitling the contract breaker from receiving a sum of money. He could see no distinction between withholding or disentitling a person to a sum of money which is due to him and requiring him to pay a sum of money (p 262). OConnor LJ said (p 265) that if the point had arisen he would have been of the same view as Stuart Smith LJ. Bingham LJ disagreed, and would have held that the penalty rule was not engaged. These two cases thus provide some support for the contention that clause 5.1 is capable of engaging the penalty rule. On the other hand, it has been held that a clause which renders instalments irrecoverable by a defaulting purchaser is a forfeiture but not a penalty: see Else (1982) and Stockloser, cited in para 16 above. If that is so, then there is a powerful argument for saying that a clause which renders instalments of payment irrecoverable by a defaulting vendor should, by the same token, not be a penalty, but at best a forfeiture. We are, however, prepared to assume, without deciding, that a contractual provision may in some circumstances be a penalty if it disentitles the contract breaker from receiving a sum of money which would otherwise have been due to him. But even on that assumption, it will not always be a penalty. That must depend on the nature of the right of which the contract breaker is being deprived and the basis on which he is being deprived of it. The provision thought to be penal in Gilbert Ash was a good example of a secondary provision operating upon a breach of the subcontractors primary obligations. It authorised the contractor to withhold all remuneration due to the subcontractor if the latter had committed any breach of contract until the contractors claim had been resolved. It was a security, albeit an exorbitant one, for the contractors claim. The retrospective cesser clause in the West of England Clubs rules in The Padre Island was very different. It forfeited an accrued right to indemnity permanently. Clauses of this kind are potentially harsher than those which operate simply as a security. But they may define the primary obligations of the parties, in which case the penalty rule will not apply to them. It is not a proper function of the penalty rule to empower the courts to review the fairness of the parties primary obligations, such as the consideration promised for a given standard of performance. For example, the consideration due to one party may be variable according to one or more contingencies, including the contingency of his breach of the contract. There is no reason in principle why a contract should not provide for a party to earn his remuneration, or part of it, by performing his obligations. If as a result his remuneration is reduced upon his non performance, there is no reason to regard that outcome as penal. Suppose that a contract of insurance provided that it should be cancelled ab initio if the insured failed to pay the premium within three months of inception. The effect would be to forfeit any claim upon a casualty occurring in the first three months but it would be difficult to regard the provision as penal on that account. One reason why Bingham LJ disagreed with Stuart Smith LJ was that he considered the retrospective cesser clause to be no different. I do not myself think it unreasonable, he said (p 254), that a member should lose his cover in respect of a period for which he fails to pay his premium. He may well have been right to analyse the clause in that way, but it is a fair criticism of Stuart Smith LJs approach that he did not consider this aspect of the matter at all. Where, against this background, does clause 5.1 stand? It is plainly not a liquidated damages clause. It is not concerned with regulating the measure of compensation for breach of the restrictive covenants. It is not a contractual alternative to damages at law. Indeed in principle a claim for common law damages remains open in addition, if any could be proved. The clause is in reality a price adjustment clause. Although the occasion for its operation is a breach of contract, it is in no sense a secondary provision. The consideration fixed by clause 3.1 is said to be payable [i]n consideration of the sale of the Sale Shares and the obligations of the Sellers herein. Those obligations of the Sellers herein include the restrictive covenants. Clause 5.1 belongs with clauses 3 and 6, among the provisions which determine Cavendishs primary obligations, ie those which fix the price, the manner in which the price is calculated and the conditions on which different parts of the price are payable. Its effect is that the Sellers earn the consideration for their shares not only by transferring them to Cavendish, but by observing the restrictive covenants. As Burton J said at para 59 of his judgment, [t]he juxtaposition on the one hand of substantial delayed payment for goodwill and on the other hand a series of covenants which is intended to safeguard and protect that goodwill is of particular significance. Although clause 5.1 has no relationship, even approximate, with the measure of loss attributable to the breach, Cavendish had a legitimate interest in the observance of the restrictive covenants which extended beyond the recovery of that loss. It had an interest in measuring the price of the business to its value. The goodwill of this business was critical to its value to Cavendish, and the loyalty of Mr Makdessi and Mr Ghossoub was critical to the goodwill. The fact that some breaches of the restrictive covenants would cause very little in the way of recoverable loss to Cavendish is therefore beside the point. As Burton J graphically observed in para 43 of his judgment, once Cavendish could no longer trust the Sellers to observe the restrictive covenants, the wolf was in the fold. Loyalty is indivisible. Its absence in a business like this introduces a very significant business risk whose impact cannot be measured simply by reference to the known and provable consequences of particular breaches. It is clear that this business was worth considerably less to Cavendish if that risk existed than if it did not. How much less? There are no juridical standards by which to answer that question satisfactorily. We cannot know what Cavendish would have paid without the assurance of the Sellers loyalty, even assuming that they would have bought the business at all. We cannot know whether the basic price or the maximum price fixed by clause 3.1 would have been the same if they were not adjustable in the event of breach of the restrictive covenants. We cannot know what other provisions of the agreement would have been different, or what additional provisions would have been included on that hypothesis. These are matters for negotiation, not forensic assessment (save in the rare cases where the contract or the law requires it). They were matters for the parties, who were, on both sides, sophisticated, successful and experienced commercial people bargaining on equal terms over a long period with expert legal advice and were the best judges of the degree to which each of them should recognise the proper commercial interests of the other. We have already drawn attention to the fact that damages are in principle recoverable in addition to the price reduction achieved by clause 5.1. In this case, the Company recovered US$500,000 from Mr Makdessi. Cavendish has abandoned any claim of their own for damages, because any loss of theirs would simply reflect the Companys loss. But it would not always be so. There are hypotheses, for example that the restrictive covenants had been broken after he ceased to be a director, in which Cavendishs loss by his breach of the restrictive covenants would not have been reflective and might in principle have been recovered in addition to the reduction of the price under clause 5.1. Does any of this matter? We do not think so. Clause 5.1 is not concerned with the measure of compensation for the breach. It cannot be regarded as penal simply because damages are recoverable in addition. The real question is whether any damages have been suffered on account of the breach in circumstances where the price has been adjusted downwards on account of the same breach. As between Mr Makdessi and the Company, the right of Cavendish to a price reduction cannot affect the measure or recoverability of the Companys loss. It is res inter alios acta. It is an open question whether the right to a price reduction would go to abate any loss recoverable by Cavendish themselves if they had suffered any. We do not propose to resolve it on this appeal: the issue does not arise and was not argued. It is enough to note that if Cavendishs loss is not abated, that would be because the law regards Cavendish as having suffered it notwithstanding its right to the reduction. That can hardly make clause 5.1 a penalty. We do not doubt that price adjustment clauses are open to abuse, and if clause 5.1 were a disguised punishment for the Sellers breach, it would make no difference that it was expressed as part of the formula for determining the consideration. But before a court can reach that conclusion, it must have some reason to do so. In this case, there is none. On the contrary, all the considerations summarised above point the other way. We conclude, in agreement with Burton J, that clause 5.1 was not a penalty. Was clause 5.6 contrary to the penalty rule? Clause 5.6 gives rise to more difficult questions, but the analysis is essentially the same. The purpose of requiring a Defaulting Shareholder to sell his retained shares was to sever the connection between the Company and a major shareholder if he were to compete against it (and also, in the case of Mr Ghossoub, if he were to be dismissed for discreditable conduct). The severance of the connection is completed by clause 14.2, which provides that upon ceasing to be a shareholder he will no longer be entitled to a seat on the board or to appoint a nominee in his place. In itself, this is not said to be objectionable. The objection is to the formula which excludes the value of goodwill from the calculation of the price. It is not and could not be suggested that the exclusion of goodwill serves to compensate for the estimated loss attributable to the breach. Any recoverable damages for the breach of the restrictive covenants will be recoverable on top of the forced sale of the Defaulting Shareholders retained shares. Indeed, the effect of excluding the value of goodwill is to achieve what Mr Bloch called a reverse sliding scale. The more trivial the effect of the breach on the value of the goodwill, the greater will be the Defaulting Shareholders loss in being deprived of any goodwill element in the price. The logic of the price formula for the sale of the retained shares under clause 5.6 is similar to that of the price adjustment achieved by clause 5.1 for the sale of the transferred shares. It reflects the reduced price which Cavendish was prepared to pay for the acquisition of the business in circumstances where it could not count on the loyalty of Mr Makdessi and/or Mr Ghossoub. We have dealt with this point in the context of clause 5.1. It also reflects the fact that with the severance of the connection between the Defaulting Shareholder and the Company, no goodwill will in future be attributable to his role in the business. Indeed, the assumption must be that a Seller in breach of the restrictive covenants may be actively engaged in undermining the goodwill attributable to his former role in the business. It is true that the severance of the connection between a Defaulting Shareholder and the Group will not necessarily destroy the whole of the goodwill of the business which was sold to Cavendish, especially if the other Seller remains loyal. But so far as the Group is able to retain some or all of the goodwill built up by the Defaulting Shareholder in the past, that will presumably be due to the efforts of others. In our view, the same legitimate interest which justifies clause 5.1 justifies clause 5.6 also. It was an interest in matching the price of the retained shares to the value that the Sellers were contributing to the business. There is a perfectly respectable commercial case for saying that Cavendish should not be required to pay the value of goodwill in circumstances where the Defaulting Shareholders efforts and connections are no longer available to the Company, and indeed are being deployed to the benefit of the Companys competitors, and where goodwill going forward would be attributable to the efforts and connections of others. It seems likely that clause 5.6 was expected to influence the conduct of the Sellers after Cavendishs acquisition of control in a way that would benefit the Companys business and its proprietors during the period when they were yoked together. To that extent it may be described as a deterrent. But that is only objectionable if it is penal, ie if the object was to punish. But the price formula in clause 5.6 had a legitimate function which had nothing to do with punishment and everything to do with achieving Cavendishs commercial objective in acquiring the business. And, like clause 5.1, it was part of a carefully constructed contract which had been the subject of detailed negotiations over many months between two sophisticated commercial parties, dealing with each other on an equal basis with specialist, experienced and expert legal advice. More fundamentally, a contractual provision conferring an option to acquire shares, not by way of compensation for a breach of contract but for distinct commercial reasons, belongs as it seems to us among the parties primary obligations, even if the occasion for its operation is a breach of contract. This may be tested by asking how the penalty rule could be applied to it without making a new contract for the parties. The Court of Appeal simply treated clause 5.6 as unenforceable, and declared that Mr Makdessi was not obliged to sell his shares whether at the specified price or at all. That cannot be right, since the severance of the shareholding connection was in itself entirely legitimate, and indeed commercially sensible. If the option to acquire the retained shares is to stand, the price formula cannot be excised without substituting something else. Yet there is no juridical basis on which a different pricing formula can be imposed. There is no fall back position at common law, as there is in the case of a damages clause. Mr Bloch argued that this difficulty can be surmounted by granting Mr Makdessi a remedy corresponding to the one ordered by the Court of Appeal in Jobson v Johnson. We do not accept this. Jobson arose out of a contract for the sale of a substantial shareholding in a football club for a consideration payable by instalments. The contract provided that in the event of default in the payment of any instalment, the purchaser would be obliged to transfer the shareholding back to the vendors at a price which was said to represent a substantial undervalue. This was a forfeiture. The purchaser would have been entitled to relief in equity if he had been in a position to pay, albeit late. The purchaser had in fact counterclaimed for such relief, but the counterclaim had been struck out on account of his failure to comply with his disclosure obligations. That left only a contention, advanced by way of defence, that the obligation to transfer back the shares was also a penalty. As briefly discussed in para 17 above, that may or may not have been an argument which was open to him, and it is unnecessary to decide that issue on this appeal. The Court of Appeal accepted the argument and held that the penalty rule could apply not only to an obligation to pay money upon a breach of contract, but also to an obligation to transfer assets in that event. This gives rise to no difficulty at least in principle, in a case where the court could simply decline to enforce the penalty, leaving the innocent party to his ordinary remedies at law. That was the position in Jobson, because the Court of Appeal construed the share transfer clause as a purely secondary obligation which was intended simply to secure the payment of the price: see pp 1031 1032, 1037 (Dillon LJ), pp 1043 1044, 1045 (Nicholls LJ). On that basis, Mr Johnson could in theory have been left to obtain judgment for the amount of the outstanding instalments and if necessary levy execution against the shares. However, we are bound to observe that this would appear to be a somewhat peculiar outcome. If the purchaser had been able to argue that he was entitled to relief from forfeiture, the court would presumably have dealt with his case on that basis and would not have considered the penalty argument at all. Accordingly, on the Court of Appeals reasoning, as a result of his default in giving disclosure, he was able to achieve a better result than he would have done if he had given disclosure and been able to seek relief from forfeiture. In terms of achieving a fair commercial result, it is perhaps understandable that the Court of Appeal took the course that they did. Rather than applying the well established principles relating to penalties, they invoked the authorities on relief from forfeiture, which Mr Johnson had been prevented from claiming, and applied them to the penalty rule. They held that in equity a penalty was enforceable pro tanto, or on what Nicholls LJ called a scaled down basis, ie only to the extent of any actual loss suffered by the breach. The court achieved this by offering the vendor the choice of (i) taking an order for specific performance of the retransfer, conditional upon its being ascertained that this would not overcompensate him for the non payment of the outstanding instalments, or (ii) taking an order for the sale of the shares by the court, the outstanding instalment and interest to be paid to him out of the proceeds and the balance to be paid to the defaulting purchaser. A somewhat similar approach was later taken by the High Court of Australia in Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205, which also adopted the concept of partial enforcement. The difficulty about this approach was pointed out by Mason and Wilson JJ in the High Court of Australia in AMEV UDC at pp 192 193: At least since the advent of the Judicature system a penalty provision has been regarded as unenforceable or, perhaps void, ab initio: Citicorp Australia Ltd v Hendry (1985) 4 NSWLR 1. In all that time it has been thought that no action could be brought on such a clause, no doubt because the courts should not lend their aid to the enforcement in any way of a provision which is oppressive. However, this is not the only reason why the courts would refuse to lend their aid. In the majority of cases involving penalties, the courts, if called upon to assist in partial enforcement of the kind suggested by the appellant, would be required to undertake an unfamiliar role. They would need to rewrite the clause so as to permit the plaintiff to recover the loss he has actually sustained. Penalty clauses are not, generally speaking, so expressed as to entitle the plaintiff to recover his actual loss. Instead they prescribe the payment of a sum which is exorbitant or a sum to be ascertained by reference to a formula which is not an acceptable pre estimate of damage. In either case the court, if it were to enforce the clause, would be performing a function very different from that which it undertakes when it severs or reads down an unenforceable covenant, such as a covenant in restraint of trade. In the ultimate analysis, in whatever form it be expressed, the appellants argument amounts to an invitation to the court to develop a new law of compensation, distinct from common law damages, which would govern the entitlement of plaintiffs who insist on the inclusion of penalty clauses in their contracts. Even if the course taken by the Court of Appeal in Jobson had been right, it would not be available to Mr Makdessi because clause 5.6 cannot sensibly be analysed as a mere security for the performance of the restrictive covenants. But in our opinion the analysis of Mason and Wilson JJ was correct, and so far as it related to the form of relief, Jobson was wrongly decided. In the first place, the treatment of a penalty clause as partly enforceable, although supported by some turns of phrase in old cases concerned with other issues, is contrary to consistent modern authority. So, with respect, is the treatment of its enforcement as discretionary according to the circumstances at the time of the breach. If, as the authorities show, the penal consequences of a contractual provision fall to be determined as at the time of the agreement, and a provision found to be a penalty is unenforceable, it is impossible to see how it can be enforceable on terms. Secondly, the Court of Appeal accepted that the court could not rewrite the parties contract by specifically enforcing the retransfer of the shares to the vendors at a higher price or enforcing the retransfer of some only of the shares: see p 1037 (Dillon LJ), p 1042 (Nicholls LJ). Yet that is in reality what they did, by refusing to enforce the retransfer unless the vendor agreed to vary its effect. Third, the Court of Appeal interpreted the provision for the retransfer of the shares as a security for the payment of the outstanding instalments. They placed the word security in inverted commas because the obligation was purely personal. But the Court of Appeals order treated it as if it was an equitable mortgage of the shares, which it manifestly was not. It appears to us that the Court of Appeal were, as a matter of legal analysis, treating the clause in question as a forfeiture and not a penalty, and granting relief from forfeiture on appropriate terms, although in doing so they purported to be treating it as a penalty clause, because they were constrained to do so in the light of the pleadings. So far as the relief granted in Jobson is concerned, the decision was entirely orthodox if it is treated as a forfeiture case, but it was wrong in principle if it is treated as a penalty case. The Court of Appeal in this case thought clauses 5.1 and 5.6 should both be treated in the same way when it came to applying the penalty rule, and we take the same view, but, in agreement with Burton J at first instance, we consider that neither clause is avoided by the penalty rule. The second appeal: ParkingEye v Beavis The factual and procedural history British Airways Pension Fund (the Fund) owns the Riverside Retail Park in Chelmsford. The Fund leases sites on the Retail Park to various multiple retailers, but retains overall control of the site. There is a car park located at the Retail Park, and, on 25 August 2011, the Fund entered into a contract with ParkingEye Ltd in respect of management services at that car park. At all material times since then, ParkingEye has displayed about 20 signs at the entrance to the car park and at frequent intervals throughout it. The signs are large, prominent and legible, so that any reasonable user of the car park would be aware of their existence and nature, and would have a fair opportunity to read them if he or she wished to do so. The upper 80% or so of the signs are worded and laid out substantially as follows (mostly in black print on an orange background): ParkingEye car park management 2 hour max stay Customer only car park 4 hour maximum stay for Fitness Centre Members Failure to comply with the following will result in a Parking Charge of 85 Parking limited to 2 hours (no return within 1 hour) Park only within marked bays Blue badge holders only in marked bays. Below this main part of the signs in small, but legible black print on the same orange background is the following information: ParkingEye Ltd is solely engaged to provide a traffic space maximisation scheme. We are not responsible for the car park surface, other motor vehicles, damage or loss to or from motor vehicles or users safety. The parking regulations for this car park apply 24 hours a day, all year round, irrespective of the site opening hours. Parking is at the absolute discretion of the site. By parking within the car park, motorists agree to comply with the car park regulations. Should a motorist fail to comply with the car park regulations, the motorist accepts that they are liable to pay a Parking Charge and that their name and address will be requested from the DVLA. Parking charge Information: A reduction of the Parking Charge is available for a period, as detailed in the Parking Charge Notice. The reduced amount payable will not exceed 75, and the overall amount will not exceed 150 prior to any court action, after which additional costs will be incurred. Below that information, in somewhat larger print are the words: This car park is private property. At the very bottom of the signs on a black background is ParkingEyes name, telephone number and address in orange, and a drawing of a padlock, a drawing of a surveillance camera with the words car park monitored by ANPR systems in small letters underneath, and two logos recording that ParkingEye was a member of the British Parking Association (BPA) and that it was a BPA approved operator. At 2.29 on the afternoon of 15 April 2013, Mr Beavis drove his motor car into the car park and parked it there. He did not leave until two hours 56 minutes later, thereby overstaying the two hour limit by nearly an hour. ParkingEye obtained Mr Beaviss name and address from the Driver and Vehicle Licensing Agency (DVLA), and sent him a standard First Parking Charge Notice which demanded that he pay the 85 charge within 28 days, but stated that, if he paid within 14 days, the charge would be reduced to 50. The Notice also informed him of an appeals procedure. Mr Beavis ignored this demand, as well as a subsequent standard form reminder notice and warning letter. ParkingEye then began proceedings in the County Court to recover the 85 alleged to be due. A claim of this size would normally have been dealt with by a District Judge under the small claims procedure, but it was recognised that the case raised some points of principle which were likely to affect many other similar claims, so it was heard by the Designated Civil Judge for East Anglia. Before Judge Moloney QC and before the Court of Appeal, Mr Beavis raised two arguments as to why he should not have to pay the 85 charge, namely that it was (i) unenforceable at common law because it is a penalty, and/or (ii) unfair and therefore unenforceable by virtue of the 1999 Regulations. The Court of Appeal (Moore Bick and Patten LJJ and Sir Timothy Lloyd) upheld Judge Moloney QCs decision rejecting each of his arguments see [2015] EWCA Civ 402. Mr Beavis now appeals to this court, maintaining both his arguments. Introductory It was common ground before the Court of Appeal, and is common ground in this court, that on the facts which we have just summarised there was a contract between Mr Beavis and ParkingEye. Mr Beavis had a contractual licence to park his car in the retail park on the terms of the notice posted at the entrance, which he accepted by entering the site. Those terms were that he would stay for not more than two hours, that he would park only within the marked bays, that he would not park in bays reserved for blue badge holders, and that on breach of any of those terms he would pay 85. Moore Bick LJ in the Court of Appeal was inclined to doubt this analysis, and at one stage so were we. But, on reflection, we think that it is correct. The 85 is described in the notice as a parking charge, but no one suggests that that label is conclusive. In our view it was not, as a matter of contractual analysis, a charge for the right to park, nor was it a charge for the right to overstay the two hour limit. Not only is the 85 payable upon certain breaches which may occur within the two hour free parking period, but there is no fixed period of time for which the motorist is permitted to stay after the two hours have expired, for which the 85 could be regarded as consideration. The licence having been terminated under its terms after two hours, the presence of the car would have constituted a trespass from that point on. In the circumstances, the 85 can only be regarded as a charge for contravening the terms of the contractual licence. Schemes of this kind (including a significant discount on prompt payment after the first demand) are common in the United Kingdom. Some are operated by private landowners, some by parking management companies like ParkingEye, and some by local authorities. They are subject to a measure of indirect regulation. Under section 54 of the Protection of Freedoms Act 2012, parked cars may not be immobilised or towed away by a private operator, but section 56 and Schedule 4 provide for the recovery of parking charges. Where a motorist becomes liable by contract for a sum in the nature of a fee or charge or in tort for a sum in the nature of damages, there is a right under certain conditions to recover it: Schedule 4, paragraph 4. One of those conditions is that the keepers details must have been supplied by the Secretary of State in response to an application for the information: ibid, para 11. The Secretary of States functions in relation to the provision of this information are performed by the DVLA. Under article 27(1)(e) of the Road Vehicles (Registration and Licensing) Regulations 2002 (SI 2002/2742), the Secretary of State is empowered to make available particulars in the vehicle register to anyone who has reasonable cause for wanting the particulars to be made available to him. Since 2007, the policy of the Secretary of State has been to disclose the information for parking enforcement purposes only to members of an accredited trade association. The criteria for accreditation were stated in Parliament to include the existence of a clear and enforced code of conduct (for example relating to conduct, parking charge signage, charge levels, appeals procedure, approval of ticket wording and appropriate pursuit of penalties (Hansard (HC Debates), 24 July 2006, col 95WS). As at April 2013, there was only one relevant accredited trade association, the BPA, to which reference was made on the Notice, and to which ParkingEye still belongs. The BPA Code of Practice is a detailed code of regulation governing signs, charges and enforcement procedures. Clause 13 deals with grace periods. Clause 13.4 provides: 13.4 You should allow the driver a reasonable period to leave the private car park after the parking contract has ended, before you take enforcement action. Clause 19 provides: 19.5 If the parking charge that the driver is being asked to pay is for a breach of contract or act of trespass, this charge must be based on the genuine pre estimate of loss that you suffer. We would not expect this amount to be more than 100. If the charge is more than this, operators must be able to justify the amount in advance. 19.6 If your parking charge is based on a contractually agreed sum, that charge cannot be punitive or unreasonable. If it is more than the recommended amount in 19.5 and is not justified in advance, it could lead to an investigation by the Office of Fair Trading. The maximum of 100 recommended by the BPA may be compared with the penalties charged by local authorities, which are regulated by statute. The Civil Enforcement of Parking Contraventions (Guidelines on Levels of Charges) (England) Order 2007 (SI 2007/3487) lays down guidelines for the level of penalties outside Greater London. For higher level contraventions (essentially unauthorised on street parking), the recommended penalty is capped at 70 and for other contraventions at 50. The corresponding figures for Greater London are 130 and 80. Parking charges and the penalty rule ParkingEye concedes that the 85 is payable upon a breach of contract, and that it is not a pre estimate of damages. As it was not the owner of the car park, ParkingEye could not recover damages, unless it was in possession, in which case it may be able to recover a small amount of damages for trespass. This is because it lost nothing by the unauthorised use resulting from Mr Beavis overstaying. On the contrary, at least if the 85 is payable, it gains by the unauthorised use, since its revenues are wholly derived from the charges for breach of the terms. The notice at the entrance describes ParkingEye as being engaged to provide a traffic space maximisation scheme, which is an exact description of its function. In the agreed Statement of Facts and Issues, the parties state that the predominant purpose of the parking charge was to deter motorists from overstaying, and that the landowners objectives include the following: a. The need to provide parking spaces for their commercial tenants prospective customers; b. The desirability of that parking being free so as to attract customers; c. The need to ensure a reasonable turnover of that parking so as to increase the potential number of such customers; d. The related need to prevent misuse of the parking for purposes unconnected with the tenants business, for example by commuters going to work or shoppers going to off park premises; and e. cost, or ideally some profit, to themselves. The desirability of running that parking scheme at no Against this background, it can be seen that the 85 charge had two main objects. One was to manage the efficient use of parking space in the interests of the retail outlets, and of the users of those outlets who wish to find spaces in which to park their cars. This was to be achieved by deterring commuters or other long stay motorists from occupying parking spaces for long periods or engaging in other inconsiderate parking practices, thereby reducing the space available to other members of the public, in particular the customers of the retail outlets. The other purpose was to provide an income stream to enable ParkingEye to meet the costs of operating the scheme and make a profit from its services, without which those services would not be available. These two objectives appear to us to be perfectly reasonable in themselves. Subject to the penalty rule and the Regulations, the imposition of a charge to deter overstayers is a reasonable mode of achieving them. Indeed, once it is resolved to allow up to two hours free parking, it is difficult to see how else those objectives could be achieved. In our opinion, while the penalty rule is plainly engaged, the 85 charge is not a penalty. The reason is that although ParkingEye was not liable to suffer loss as a result of overstaying motorists, it had a legitimate interest in charging them which extended beyond the recovery of any loss. The scheme in operation here (and in many similar car parks) is that the landowner authorises ParkingEye to control access to the car park and to impose the agreed charges, with a view to managing the car park in the interests of the retail outlets, their customers and the public at large. That is an interest of the landowners because (i) they receive a fee from ParkingEye for the right to operate the scheme, and (ii) they lease sites on the retail park to various retailers, for whom the availability of customer parking was a valuable facility. It is an interest of ParkingEye, because it sells its services as the managers of such schemes and meets the costs of doing so from charges for breach of the terms (and if the scheme was run directly by the landowners, the analysis would be no different). As we have pointed out, deterrence is not penal if there is a legitimate interest in influencing the conduct of the contracting party which is not satisfied by the mere right to recover damages for breach of contract. Mr Butcher QC, who appeared for the Consumers Association (interveners), submitted that because ParkingEye was the contracting party its interest was the only one which could count. For the reason which we have given, ParkingEye had a sufficient interest even if that submission be correct. But in our opinion it is not correct. The penal character of this scheme cannot depend on whether the landowner operates it himself or employs a contractor like ParkingEye to operate it. The motorist would not know or care what if any interest the operator has in the land, or what relationship it has with the landowner if it has no interest. This conclusion is reinforced when one bears in mind that the question whether a contractual provision is a penalty turns on the construction of the contract, which cannot normally turn on facts not recorded in the contract unless they are known, or could reasonably be known, to both parties. None of this means that ParkingEye could charge overstayers whatever it liked. It could not charge a sum which would be out of all proportion to its interest or that of the landowner for whom it is providing the service. But there is no reason to suppose that 85 is out of all proportion to its interests. The trial judge, Judge Moloney QC, found that the 85 charge was neither extravagant nor unconscionable having regard to the level of charges imposed by local authorities for overstaying in car parks on public land. The Court of Appeal agreed and so do we. It is higher than the penalty that a motorist would have had to pay for overstaying in an on street parking space or a local authority car park. But a local authority would not necessarily allow two hours of free parking, and in any event the difference is not substantial. The charge is less than the maximum above which members of the BPA must justify their charges under their code of practice. The charge is prominently displayed in large letters at the entrance to the car park and at frequent intervals within it. The mere fact that many motorists regularly use the car park knowing of the charge is some evidence of its reasonableness. They are not constrained to use this car park as opposed to other parking facilities provided by local authorities, Network Rail, commercial car park contractors or other private landowners. They must regard the risk of having to pay 85 for overstaying as an acceptable price for the convenience of parking there. The observations of Lord Browne Wilkinson in Workers Bank at p 580 referred to in para 35 above are in point. While not necessarily conclusive, the fact that ParkingEyes payment structure in its car parks (free for two hours and then a relatively substantial sum for overstaying) and the actual level of charge for overstaying (85) are common in the UK provides support for the proposition that the charge in question is not a penalty. No other evidence was furnished by Mr Beavis to show that the charge was excessive. We conclude, in agreement with the courts below, that the charge imposed on Mr Beavis was not a penalty. Parking charges and the Unfair Terms in Consumer Contracts Regulations The 1999 Regulations subject the terms of consumer contracts to a fairness test. An unfair term is not binding on a consumer: regulation 8(1). The fairness test is not applicable to all terms in consumer contracts. It does not apply to certain core terms, namely those which define the main subject matter of the contract nor to the adequacy of the price or remuneration for the goods or services supplied: regulation 6(2). But it follows from the fact that the 85 charge is a charge for acting in breach of the primary terms that it is not excluded from the fairness test under either of these heads. The issue is therefore whether the test is satisfied. Under regulation 5(1), a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties rights and obligations arising under the contract, to the detriment of the consumer. Regulation 6(1) provides that the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent. An indicative and non exhaustive list of terms which may be regarded as unfair by this test is contained in Schedule 2. This includes at paragraph 1(e) a term requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation. In our opinion, the same considerations which show that the 85 charge is not a penalty, demonstrate that it is not unfair for the purpose of the Regulations. The reason is that although it arguably falls within the illustrative description of potentially unfair terms at paragraph 1(e) of Schedule 2 to the Regulations, it is not within the basic test for unfairness in regulations 5(1) and 6(1). The Regulations give effect to Council Directive 93/13/EEC on unfair terms in consumer contracts, and these rather opaque provisions are lifted word for word from articles 3 and 4 of the Directive. The effect of the Regulations was considered by the House of Lords in Director General of Fair Trading v First National Bank plc [2001] 1 AC 481. But it is sufficient now to refer to Aziz v Caixa dEstalvis de Catalunya, Tarragona i Manresa (Case C 415/11) [2013] 3 CMLR 89, which is the leading case on the topic in the Court of Justice of the European Union. Aziz was a reference from a Spanish court seeking guidance on the criteria for determining the fairness of three provisions in a loan agreement. They provided for (i) the acceleration of the repayment schedule in the event of the borrowers default, (ii) the charging of default interest, and (iii) the unilateral certification by the lender of the amount due for the purpose of legal proceedings. The judgment of the Court of Justice is authority for the following propositions: 1) The test of significant imbalance and good faith in article 3 of the Directive (regulation 5(1) of the 1999 Regulations) merely defines in a general way the factors that render unfair a contractual term that has not been individually negotiated (para 67). A significant element of judgment is left to the national court, to exercise in the light of the circumstances of each case. 2) The question whether there is a significant imbalance in the parties rights depends mainly on whether the consumer is being deprived of an advantage which he would enjoy under national law in the absence of the contractual provision (paras 68, 75). In other words, this element of the test is concerned with provisions derogating from the legal position of the consumer under national law. 3) However, a provision derogating from the legal position of the consumer under national law will not necessarily be treated as unfair. The imbalance must arise contrary to the requirements of good faith. That will depend on whether the seller or supplier, dealing fairly and equitably with the consumer, could reasonably assume that the consumer would have agreed to such a term in individual contract negotiations (para 69). 4) The national court is required by article 4 of the Directive (regulation 6(1) of the 1999 Regulations) to take account of, among other things, the nature of the goods or services supplied under the contract. This includes the significance, purpose and practical effect of the term in question, and whether it is appropriate for securing the attainment of the objectives pursued by it in the member state concerned and does not go beyond what is necessary to achieve them (paras 71 74). In the case of a provision whose operation is conditional upon the consumers breach of another term of the contract, it is necessary to assess the importance of the latter term in the contractual relationship. In its judgment, the Court of Justice drew heavily on the opinion of Advocate General Kokott, specifically endorsing her analysis at a number of points. That analysis, which is in the nature of things more expansive than the courts, repays careful study. In the Advocate Generals view, the requirement that the significant imbalance should be contrary to good faith was included in order to limit the Directives inroads into the principle of freedom of contract. [I]t is recognised, she said, that in many cases parties have a legitimate interest in organising their contractual relations in a manner which derogates from the [rules of national law] (para AG73). In determining whether the seller could reasonably assume that the consumer would have agreed to the relevant term in a negotiation, it is important to consider a number of matters. These include whether such contractual terms are common, that is to say they are used regularly in legal relations in similar contracts, or are surprising, whether there is an objective reason for the term and whether, despite the shift in the contractual balance in favour of the user of the term in relation to the substance of the term in question, the consumer is not left without protection (para AG75). Advocate General Kokott returned to the question of legitimate interest when addressing default interest. She observed that a provision requiring the payment upon default of a sum exceeding the damage caused, may be justified if it serves to encourage compliance with the borrowers obligations: If default interest is intended merely as flat rate compensation for damage caused by default, a default interest rate will be substantially excessive if it is much higher than the accepted actual damage caused by default. It is clear, however, that a high default interest rate motivates the debtor not to default on his contractual obligations and to rectify quickly any default which has already occurred. If default interest under national law is intended to encourage observance of the agreement and thus the maintenance of payment behaviour, it should be regarded as unfair only if it is much higher than is necessary to achieve that aim (para AG87). Finally, the Advocate General observes that the impact of a term alleged to be unfair must be examined broadly and from both sides. Provisions favouring the lender may indirectly serve the interest of the borrower also, for example by making loans more readily available (para AG94). In our opinion the term imposing the 85 charge was not unfair. The term does not exclude any right which the consumer may be said to enjoy under the general law or by statute. But it may fairly be said that in the absence of agreement on the charge, Mr Beavis would not have been liable to ParkingEye. He would have been liable to the landowner in tort for trespass, but that liability would have been limited to the occupation value of the parking space. To that extent there was an imbalance in the parties rights. But it did not arise contrary to the requirement of good faith, because ParkingEye and the landlord to whom ParkingEye was providing the service had a legitimate interest in imposing a liability on Mr Beavis in excess of the damages that would have been recoverable at common law. ParkingEye had an interest in inducing him to observe the two hour limit in order to enable customers of the retail outlets and other members of the public to use the available parking space. To echo the observations of the Advocate General at para AG94 of her opinion, charging overstayers 85 underpinned a business model which enabled members of the public to park free of charge for two hours. This was fundamental to the contractual relationship created by Mr Beaviss acceptance of the terms of the notice, whose whole object was the efficient management of the car park. It was an interest of exactly the kind envisaged by the Advocate General at para AG87 of her opinion and by the Court of Justice at para 74 of the judgment. There is no reason to regard the amount of the charge as any higher than was necessary to achieve that objective. Could ParkingEye, dealing fairly and equitably with the consumer, reasonably assume that the consumer would have agreed to such a term in individual contract negotiations? The concept of a negotiated agreement to enter a car park is somewhat artificial, but it is perfectly workable provided that one bears in mind that the test, as Advocate General Kokott pointed out in Aziz at para AG75, is objective. The question is not whether Mr Beavis himself would in fact have agreed to the term imposing the 85 charge in a negotiation, but whether a reasonable motorist in his position would have done so. In our view a reasonable motorist would have agreed. In the first place, motorists generally and Mr Beavis in particular did accept it. In the case of non negotiated standard terms that would not ordinarily be entitled to much weight. But although the terms, like all standard contracts, were presented to motorists on a take it or leave it basis, they could not have been briefer, simpler or more prominently proclaimed. If you park here and stay more than two hours, you will pay 85. Motorists could hardly avoid reading the notice and were under no pressure to accept its terms. Objectively, they had every reason to do so. They were being allowed two hours of free parking. In return they had to accept the risk of being charged 85 if they overstayed. Overstaying penalties are, as we have mentioned, both a normal feature of parking contracts on public and on private land, and important for the efficient management of the space in the interests of the general body of users and the neighbouring outlets which they may frequent. They are beneficial not just to ParkingEye, the landowner and the retail outlets, but to the motorists themselves, because they make parking space available to them which might otherwise be clogged up with commuters and other long stay users. The amount of the charge was not exorbitant in comparison to the general level of penalties imposed for parking infractions. Nor is there any reason to think that it was higher than necessary to ensure considerate use by motorists of the available space. And, while we accept Mr Butchers submission that the fact that the 85 charge is broadly comparable to charges levied by local authorities for parking in public car parks is not enough to show that it was levied in good faith, it is nonetheless a factor which assists ParkingEye in that connection. The risk of having to pay it was wholly under the motorists own control. All that he needed was a watch. In our opinion, a hypothetical reasonable motorist would have agreed to objectively reasonable terms, and these terms are objectively reasonable. It is right to mention three further arguments which were raised by Mr de Waal QC on behalf of Mr Beavis to support his case that the 85 charge was unfair, and which we have not so far specifically addressed. First, Mr de Waal relied on the fact that it was payable by a motorist who overstayed even by a minute. The Consumers Association expanded on this point by observing that there are many reasons why a motorist may overstay, some of which may be due to unforeseen circumstances. We cannot accept this. ParkingEyes business model could have had a graduated charge for overstayers based on how long they overstayed, but the fact that it did not do so does not render it unfair. Even if it had done, it would presumably have involved a specific sum for each hour or part of an hour, in which case the same complaint could be made. More fundamentally, as we have explained, the 85 charge for overstayers was not a payment for being permitted to park after the two hours had expired: it was a sum imposed for staying for more than two hours. The notion of a single sum between 50 and 100 for overstaying even by a minute, appears to be a very common practice, in that it is adopted by many, probably the majority of, public and private car park operators. As for the suggestion that the overstay may have arisen from unforeseen circumstances, we find it hard to regard that as relevant. The object of the 85 charge is simply to influence the behaviour of motorists by causing them to leave within two hours. It is reasonable that the risk of exceeding it should rest with the motorist, who is in a position to organise his time as he sees fit. There are many circumstances in life when the only way of being on time is to allow for contingency and arrive early. This is accepted by every motorist who uses metered on street parking while shopping. The legal basis on which he is made liable for overstaying penalties is of course different in that case. It is statutory and not contractual. But the underlying rationale and justification is precisely the same, namely to ration scarce parking space. It is right to add that, as communicated to any overstayer from whom the charge is demanded, ParkingEye has an appeals procedure, and the BPA Code of Practice provides at paragraph 13.4 for a reasonable grace period after the expiry of the fixed parking period. The appeals procedure provides a degree of protection for any overstayer, who would be able to cite any special circumstances as a reason for avoiding the charge. And, while the Code of Practice is not a contractual document, it is in practice binding on the operator since its existence and observance is a condition of his ability to obtain details of the registered keeper from the DVLA. In assessing the fairness of a term, it cannot be right to ignore the regulatory framework which determines how and in what circumstances it may be enforced. The second argument which should be mentioned is that the 85 charge for overstayers takes advantage of the consumers requirement to park in that particular place to shop or visit a particular location. If this car park is unusually attractively located for shoppers and others, the evidence shows that the 85 charge has not been fixed at a particularly high level to reflect that fact. Further, as Mr Kirk QC pointed out on behalf of ParkingEye, it is equally true that the consumer gets the benefit of free parking in that unusually attractively located car park for two hours, and, save in unusual circumstances, it is entirely within his or her control whether the two hour limit is exceeded. And if the consumer considers that the circumstances are unusual, he or she can invoke the appeals procedure. Finally, Mr de Waal submitted that it was unfair to make the minority who contravene the parking rules bear the whole cost of running the car park. In our view, if the 85 charge is itself such as a reasonable motorist would accept, the mere imbalance between the position of those who comply and those who do not cannot possibly make the charge unfair. It arises only because both categories are allowed two hours of free parking, and because the great majority of users of the car park (more than 99.5%, we were told) observe the rules. Accordingly, we agree with the courts below that the 85 charge in this case does not infringe the 1999 Regulations. Conclusion on the two appeals For these reasons, we would allow the appeal in Cavendish v El Makdessi and dismiss the appeal in ParkingEye v Beavis, and we would declare that none of the terms impugned on the two appeals contravenes the penalty rule, and that the charge in issue in ParkingEye v Beavis does not infringe the 1999 Regulations. LORD MANCE: Introduction These two appeals raise wide ranging and difficult questions about the current law governing contractual penalties. The cases lie at opposite ends of a financial spectrum. In the first, the appellant, Cavendish Square Holding BV (Cavendish), is part of the worlds leading marketing communications group (WPP), while the respondent, Mr Talal El Makdessi, was co founder and co owner with Mr Joseph Ghossoub of the Middle Easts largest advertising and marketing communications group (the Group). Prior to 2008 WPP held 12.6% of the shares of the Group. In 2008 Mr El Makdessi and Mr Ghoussoub agreed to sell to Cavendish a further 47.4% of the Groups shares (in the form of an interest in Team Y & R Holdings Hong Kong Ltd (Team), a holding company set up to facilitate the transaction). The transaction was effected by a sale and purchase agreement dated 28 February 2008, whereby Mr El Makdessi and Mr Ghoussoub agreed to make the 47.4% shareholding available in the ratio of 53.88% to 46.12%. The price was payable in stages: US$65.5m (Mr El Makdessis share being 53.88%) was payable on completion of the sale and Group reorganisation. Thereafter, there were to be Interim and Final Payments derived from a multiple of the Groups audited consolidated operating profit (OPAT) between respectively 2007 and 2009 and 2007 and 2011. Clause 11.2 was a clause prohibiting Mr El Makdessi from various competitive or potentially competitive activity. Clauses 5.1 and 5.6 provided that, if he breached clause 11.2, he would not be entitled to receive the Interim and/or Final Payments, and could be required to sell Cavendish the rest of his shares at a Defaulting Shareholder Option Price, based on asset value and so ignoring any goodwill value. Mr El Makdessi also became non executive chair of Team with a service agreement binding him to remain in position for at least 18 months. It is accepted by Mr El Makdessi that he did subsequently breach clause 11.2, and was thereby also in breach of fiduciary duty towards Team. The present proceedings were initiated by both Cavendish and Team. Teams claim was settled in October 2012 when it accepted a Part 36 payment of US$500,000 made by Mr El Makdessi. Cavendishs claim is for declarations that Mr El Makdessis breach of clause 11.2 means that clauses 5.1 and 5.6 now have the effect stated in the previous paragraph. Mr El Makdessi maintains that they are unenforceable penalty clauses. In the second case, the appellant, Mr Beavis, was the owner and driver of a vehicle which he parked in a retail shopping car park adjacent to Chelmsford railway station. The owner of the retail site and car park, British Airways Pension Fund (BAPF), had engaged ParkingEye Ltd, the respondent, to provide a traffic space maximisation scheme. The scheme involved the erection at the entrance to and throughout the car part of prominent notices, including the injunctions 2 hour max stay and Parking limited to 2 hours, coupled with the further notice Failure to comply will result in a Parking Charge of 85. Underneath, it also stated: By parking within the car park, motorists agree to comply with the car park regulations. Mr Beavis left his car parked for 56 minutes over a permitted two hour period. He maintains that the 85 charge demanded of him by ParkingEye (reducible to 50 if he had paid within 14 days) is an unenforceable penalty. Further or alternatively, he maintains that it is unfair and invalid within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999. Cavendish succeeded before Burton J on 14 December 2012, although only on condition that it agreed to credit Mr El Makdessi with the US$500,000 recovered from him by Team. The Court of Appeal (Patten, Tomlinson and Christopher Clarke LJJ), [2013] EWCA Civ 1539, over ruled Burton J, [2012] EWHC 3582 (Comm), on 26 November 2013, holding both clauses to be unenforceable penalties. The court held however that the judge had had, on his view of the case, no basis to impose a condition that Cavendish agree to credit Mr El Makdessi with the US$500,000 (and the contrary has not been suggested before the Supreme Court). Mr Beavis has so far failed at both instances, before Judge Moloney QC on 19 May 2014 and the Court of Appeal (Moore Bick and Patten LJJ and Sir Timothy Lloyd) on 23 April 2015, [2015] EWCA Civ 402. The appellants in both cases now appeal with the permission of the Supreme Court in the case of Mr El Makdessi and of the Court of Appeal in the case of Mr Beavis. Cavendish v Mr El Makdessi facts I can summarise and take the relevant terms of the sale and purchase agreement to which Cavendish and Mr El Makdessi were parties from the agreed Statement of Facts and Issues (SFI): 10. By clause 2.1 of the Agreement, Joe and the respondent (defined as the Sellers) agreed to sell 47.4% of the shareholding in the Company. Clause 3 set out the consideration for that sale, which pursuant to Schedule 1 was to be shared between the respondent and Joe in shares of 53.88% and 46.12% respectively. The consideration, payment of which was not expressed to be subject to any condition, was as follows: (1) A payment of US$34,000,000 on completion; (2) A second payment of US$31,500,000 to be paid into escrow on completion and released to Joe and the respondent in accordance with clauses 3.6 to 3.12 (which in short provided for the sum to become payable in stages as the various restructurings provided for in the Agreement took effect). (3) A further payment (the Interim Payment) was to become payable on its Due Date and was to be calculated as follows: 8 x Average 2007 2009 OPAT x 47.4% minus US$63,000,000 (4) A final payment (the Final Payment) was to become payable on its Due Date, and was to be calculated as follows: M x Average 2007 2011 OPAT x 47.4% minus US$63,000,000 and the Interim Payment. 11. OPAT was defined in Schedule 12 as meaning the audited consolidated operating profit of the Group, and Due Date was defined as meaning 30 days after the relevant OPAT was agreed or determined. The figure M in the definition of Final Payment was a figure varying between seven and ten depending on the growth of OPAT over the period 2007 to 2011. 12. Thus the Interim and Final Payments in essence obliged the purchaser to make further payments to Joe and the respondent calculated by reference to the Groups profitability in the years 2007 to 2011. 13. Clause 3.2 provided that if the calculation of the Interim Payment or the Final Payment resulted in a negative figure, it was to be treated as zero and Joe and the respondent would not be required to repay any sum already paid. 14. Clause 3.3 capped the total amount of all payments at US$147,500,000. 15. By clause 9.1, paragraph 2.15 of Schedule 7, and Schedule 11, Joe and the respondent warranted that the net assets of the entire Group, not just their share, as at 31 December 2007 were US$69,744,340. 16. Under the Agreement, therefore, a substantial part of the purchase consideration comprised goodwill: a. The Completion and Second Payments totalled $65.5m and were for 47.4% of the equity (47.4% of the warranted 2007 NAV being $33,058,817); b. At its highest (assuming no decrease in NAV) some US$114.44m would be payable for goodwill ($147,500,000 $33,058,817), representing 77% of the aggregate purchase consideration. 17. Clause 11 was entitled Protection of Goodwill, and provided that: 11 PROTECTION OF GOODWILL 11.1 Each Seller recognises the importance of the goodwill of the Group to the Purchaser and the WPP Group which is reflected in the price to be paid by the Purchaser for [the shares]. Accordingly, each Seller commits as set out in this clause 11 to ensure that the interest of each of the Purchaser and the WPP Group in that goodwill is properly protected. 18. Clause 11.2 then set out various restrictive covenants (the Restrictive Covenants) entered into by Joe and the respondent: 11.2 Until the date 24 months after the Relevant Date, no Seller will directly or indirectly without the Purchasers prior consent: (a) carry on or be engaged, concerned, or interested, in competition with the Group, in the Restricted Activities within the Prohibited Area; (b) solicit or knowingly accept any orders, enquiries or business in respect of the Restricted Activities in the Prohibited Area from any Client; (c) divert away from any Group Company any orders, enquiries or business in respect of the Restricted Activities from any Client; or (d) employ, solicit or entice away from or endeavour to employ, solicit, or entice away from any Group Company any senior employee or consultant employed or engaged by that Group Company. 19. By virtue of the definitions in Schedule 12 of the Agreement, Restricted Activities meant the provision of products and/or services of a competitive nature to those being provided by the Group, Prohibited Area meant any countries in which the Group carried on the business of marketing communications and ancillary services, and Client meant any client or potential client of the Group who had placed an order with the Group during the past 12 months or been in discussions with the Group during that period. 20. As to the several covenants: (a) the effect of any breach of the covenant against employing or soliciting senior employees could be less than a breach of the covenants against competitive activity; the respondents position is that it was likely, in many circumstances, to be markedly less; and (b) Losses attributable to breaches of the covenant against solicitation could vary, the respondent says were likely to vary widely, according to the nature, extent, duration and success of the solicitation. 21. By clause 7.5, the respondent agreed that within four months after completion he would dispose of any shares held by him in Carat Middle East Sarl (Carat) and procure that a joint venture agreement of 19 December 2003 to which Group Carat (Nederland) BV and Aegis International BV, on the one hand, and the respondent, on the other, were parties, would be terminated. 22. By the time of trial, the respondent had conceded that (if the Restrictive Covenants were enforceable) he was in breach thereof by reason of his ongoing, unpaid involvement in the affairs of Carat (the Breach). 23. It is the provisions providing for the consequences of breach which are in issue in this appeal. By reason of the Breach, the respondent became a Defaulting Shareholder within the meaning of the definition in Schedule 12. Clause 5.1 is headed DEFAULT and includes two relevant provisions. 24. First, clause 5.1 provides that on becoming a Defaulting Shareholder, the respondent would not be entitled to receive the Interim Payment or the Final Payment: If a Seller becomes a Defaulting Shareholder he shall not be entitled to receive the Interim Payment and/or the Final Payment which would other than for his having become a Defaulting Shareholder have been paid to him and the Purchasers obligation to make such payments shall cease. 25. In money terms, the effect of this provision is that in the event of a default by the respondent, he could receive up to $44,181,600 less than would have been the case had he not acted in breach. If both Sellers were to default, they could lose up to US$82m ($147.5 $65.5) between them. 26. Second, clause 5.6 grants an option over the respondents remaining shares in the Group whereby in the event that he became a Defaulting Shareholder, the appellant could require him to sell those remaining shares: Each Seller hereby grants an option to the Purchaser pursuant to which, in the event that such Seller becomes a Defaulting Shareholder, the Purchaser may require such Seller to sell to the Purchaser (or its nominee) all (and not some only) of the Shares held by that Seller (the Defaulting Shareholder Shares). The Purchaser (or its nominee) shall buy and such Seller shall sell with full title guarantee the Defaulting Shareholder Shares . within 30 days of receipt by such Seller of a notice from the Purchaser exercising such option in consideration for the payment by the Purchaser to such Seller of the Defaulting Shareholder Option Price. 27. The Defaulting Shareholder Option Price is defined in Schedule 12 as meaning the proportion of the Net Asset Value of the company equal to the proportion of shares sold by the Defaulting Shareholder, a formula which excludes the value of goodwill. By clause 5.7, this could be satisfied either in cash or by issuing shares in WPP, at the absolute discretion of the appellant. 28. Clause 15.1 granted the Sellers a put option by which they could require the appellant to purchase all their remaining shares in the Company: Each Seller is hereby granted an option by the Purchaser pursuant to which such Seller may, subject to clause 15.2, by service of an Option Notice in the form set out in Schedule 10 (the Option Notice) require the Purchaser (or its nominee) to purchase from him all (and not some only) of the Shares held by that Seller (the Option Shares). The Purchaser (or its nominee) shall buy and the Seller shall sell with full title guarantee the Option Shares . within 30 days of receipt of the Option Notice in consideration for the payment when due of the price determined in accordance with clause 15.3 (the Option Price). 29. In money terms, the effect of clause 5.6 is that insofar as the retained shares of a Defaulting Shareholder have, at the date when he becomes a Defaulting Shareholder, a value which is attributable to goodwill, he will not receive it. He will not be able to exercise the put option otherwise available in 2011 and subsequent years, which would give him a price, not exceeding $75m, which reflected goodwill. 30. As of the date of the Agreement, the respondent was, and was bound to remain, a director for at least 18 months and was entitled to remain thereafter as long as he was a shareholder unless Cavendish considered that his outside business interests were likely to result in a material ongoing conflict with his duties as a director. For so long as he did remain a director, any breach of clause 11.2 would give rise to a cause of action for breach of fiduciary duty to the Company. 31. The Agreement contained no provision which precluded the Company from bringing a claim for damages for conduct rendering the respondent a Defaulting Shareholder. 32. As with the agreement as a whole, these provisions were subject to negotiation and amendment between the parties. 33. The structure of the Agreement was typical of acquisition agreements in the marketing sector. As in this case, the vendor is typically the founder or operator of the business, and has important relationships with clients and key staff. If they decide to turn against the business, its success can be significantly affected, and provisions are therefore included to protect the value of the investment, and in particular the value of the goodwill represented by the vendors existing personal relationships. The respondent fell into that category; the importance of personal relationships with clients is even stronger in the Middle East than the UK, and he had very strong relationships with clients and senior employees, and he was such a well known figure that if he acted against the Group, it would inevitably cause it to lose value. Paragraphs 25 and 29 of this agreed summary outline the effect of clauses 5.1 and 5.6 of the sale and purchase agreement, on which Cavendish relies but which Mr El Makdessi submits to be penal and unenforceable. Since clauses 5.1 and 5.6 operate because Mr El Makdessi became a Defaulting Shareholder by reason of breach of clause 11.2, both clauses need to be considered with reference to the nature, scope and duration of the restrictive covenants in favour of Cavendish which clause 11.2 contains. As para 33 of the agreed summary records, the restrictive covenants represented very significant protections of the value of the goodwill which Cavendish was to acquire. Clause 11.2 provides for such protection to continue until 24 months after the Relevant Date. By Schedule 12: Relevant Date means in respect of a Seller the later of the date of termination of his employment by the Group, the date that he no longer holds any Shares or the date of payment of the final instalment of the Option Price pursuant to clause 15.5(b). Clause 16.1 provided that: Save as otherwise expressly provided by this agreement no Seller shall transfer, sell, charge, Encumber or otherwise dispose of all or part of his interest in any Shares. The put option referred to in para 28 of the agreed summary was only exercisable by Mr El Makdessi by option notice served at any time between 1 January and 31 March in 2011 or in any subsequent year (clause 15.2). Upon its exercise, the Option Price was payable in two instalments, the second or final instalment being due within 30 days of the agreement or final determination of OPAT for N+2 (clause 15.5(b)). OPAT means under Schedule 12 the audited consolidated operating profit in any 12 month accounting period ending 31 December. N means the financial year in which the Option Notice is served (clause 15.3). N+2 thus means the year 2013, and the earliest date of full payment of any Option Price under clause 15 would be some date in 2014, once the OPAT for N+2 was agreed or finally determined. That would be the (earliest) Relevant Date, assuming that Mr El Makdessi had previously determined his employment by the Group which he was only committed to maintain for 18 months from the date of the agreement (para 30 of the agreed summary). Under the terms of the sale and purchase agreement dated 28 February 2008, Mr El Makdessi was bound by the restrictive covenants for a further 24 months, ie until a date in 2016, some eight years after the sale and purchase agreement. There has been no challenge in this court to the reasonableness of this lengthy restriction, and it underlines the importance of goodwill to the agreement and to the buyers, Cavendish, in particular. ParkingEye Limited v Beavis facts The signs exhibited at the entrance and throughout the car park are large, prominent and legible. They are worded as follows (the words down to marked bays all being given especial prominence): 4 hour maximum stay for Fitness Centre Members Failure to comply with the following will result in a Parking Charge of: ParkingEye car park management 2 hour max stay Customer only car park 85 Parking limited to 2 hours (no return within 1 hour) Park only within marked bays Blue badge holders only in marked bays ParkingEye Ltd is solely engaged to provide a traffic space maximisation scheme. We are not responsible for the car park surface, other motor vehicles, damage or loss to or from motor vehicles or users safety. The parking regulations for this car park apply 24 hours a day, all year round, irrespective of the site opening hours. Parking is at the absolute discretion of the site. By parking within the car park, motorists agree to comply with the car park regulations. Should a motorist fail to comply with the car park regulations, the motorist accepts that they are liable to pay a Parking Charge and that their name and address will be requested from the DVLA. Parking charge Information: A reduction of the Parking Charge is available for a period, as detailed in the Parking Charge Notice. The reduced amount payable will not exceed 75, and the overall amount will not exceed 150 prior to any court action, after which additional costs will be incurred. This car park is private property. ParkingEye operated the arrangements at the Chelmsford car park under a Supply Agreement for Car Park Management made with BAPF on 25 August 2011. ParkingEye guarantees BAPF an undisclosed minimum weekly amount for the privilege, for which it appears, in practice, to have been paying BAPF about 1,000 per week. Neither BAPF nor ParkingEye makes any charge for parking by motorists who comply with the two hour maximum stay and other regulations. So ParkingEyes only income is from those required to pay the 85 (or reduced) charge. ParkingEye operates a number of other car parks on a similar basis. Its annual accounts for the year ended 31 August 2013 show an operating profit of over 1.6m, and a net profit after tax of about 1m, on a turnover of over 14m. Parking at the site is monitored by ParkingEye by automatic number plate recognition cameras to monitor the entry into and departure of vehicles from the car park. The cameras showed Mr Beaviss vehicle driving into the car park at 14.29 pm on 15 April 2013 and leaving at 17.26 pm, a stay of two hours and 56 minutes. Mr Beavis admits having been the driver. ParkingEye obtained the vehicles registered keepers details from the DVLA, and sent a First Parking Charge Notice which included statements to the effect that the parking charge of 85 was payable within 28 days of the date of the notice, but would be discounted to 50 if paid within 14 days, and that there was an appeals procedure (which did not however include any power to grant discretionary relief). Mr Beavis did not pay or appeal, and the present proceedings were begun against him. The issues This section of the judgment concerns the doctrine of penalties. I deal later with the issues arising under the Unfair Terms in Consumer Contracts Regulations 1999: see paras 200 213 below. Miss Joanna Smith QC for Cavendish invites the Supreme Court to undertake a fundamental review of the law regarding penalties. In her submission it is outdated, incoherent and unnecessary, and should be abolished. Alternatively, it should have no place in relation to commercial contracts, by which I understand her to mean contracts at arms length between equally balanced parties, like Cavendish and Mr El Makdessi. In the further alternative, she submits that it is or should be held to be inapplicable to any clauses other than those requiring payment of money on breach, and/or to clauses not aimed at compensating for the breach, but for which some other valid commercial reason exists. Mr Bloch QC for Mr El Makdessi resists these submissions. In his submission, the doctrine fulfils a tried and well established role, there is no impetus, let alone one based on any research or review, for its abolition or restriction and it is, on principle and authority, applicable to the types of clause in issue in this case. He submits that the law governing penalties enables and requires account to be taken of the interests intended to be protected by the relevant clause a proposition that Miss Smith was in reply at first inclined to dispute, but after questioning and reflection later herself endorsed. But protection of such interests is, in Mr Blochs submission, subject to the over riding control that it must not be extravagant, oppressive or manifestly excessive. In his submission the present clauses are precisely that, since their effect is in the case of clause 5.1 to deprive Mr El Makdessi of part of the agreed consideration, and to do so in a way which bears no resemblance to any loss which his breach may have caused Cavendish or the Group. On the contrary, the smaller the loss it has caused, the larger the penalty effect, and vice versa. As to clause 5.6, its effect is to give Cavendish a right on any default by Mr El Makdessi to force him to part with his remaining shareholding, at a price likely to be well below its actual value, again in circumstances where the difference in value in no way reflects any loss which the default may have caused Cavendish or the Group, and where the smaller the loss caused to the Group, the larger the difference in value of which Mr El Makdessi is deprived. Mr John de Waal QC for Mr Beavis, and Mr Christopher Butcher QC for the Consumers Association, interveners, submit that there is a dichotomy between a genuine pre estimate and a deterrent clause, that the focus must be on the particular contractual relationship in issue, and general commercial or other considerations cannot detract from that focus or justify what would otherwise amount to a penalty. Mr Jonathan Kirk QC for ParkingEye does not challenge the existing law of penalties, but, like Miss Smith, submits that it is inapplicable to clauses not aimed at compensating for the breach, but for which some other valid (not necessarily commercial) reason exists. That, he submits, is the present case. The law of penalties in this jurisdiction currently applies to contractual clauses operating on a breach of contract by the other party to the contract: see the statements to that effect by Lord Roskill in Export Credits Guarantee Department v Universal Oil Products Co [1983] 1 WLR 399 at pp 402H and 404C (although the facts of that case were quite special). This limitation has on occasion been seen as a weakness or even as an indication of inherent fragility in the doctrines underpinning. The High Court of Australia has quite recently addressed this aspect head on, holding that breach is not an essential aspect of the doctrine; the essential question is whether the contract imposes a restriction from doing the particular act, reserving a payment if it is done, or whether it confers a right to do the act in return for payment of an equivalent: Andrews v Australia and New Zealand Banking Group Ltd [2012] HCA 30, 247 CLR 205, Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50, para 95. The present appeals do not raise for consideration whether there should be any such extension of the doctrine, but rather whether it should be abolished or restricted, in English law. For my part, if the doctrine survives in English law, I do not see the distinction between situations of breach and non breach as being without rational or logical underpinning. It is true that clever drafting may create apparent incongruities in particular cases. But in most cases parties know and reflect in their contracts a real distinction, legal and psychological, between what, on the one hand, a party can permissibly do and what, on the other hand, constitutes a breach and may attract a liability to damages for or even to an injunction to restrain the breach. In Mr Beaviss appeal, Mr de Waal also suggested that ParkingEye could have economic reasons for formulating the liability to pay 85 (or a reduced 50) as a liability for breach, rather than as a consideration payable for parking for longer than two hours. As a consideration, he suggested, it would have attracted VAT and ParkingEye could furthermore have incurred liability for rates as a person in beneficial occupation of the car park. The concept of a penalty The doctrine of penalties is commonly expressed as involving a dichotomy between compensatory and deterrent clauses. In Robophone Facilities Ltd v Blank [1966] 1 WLR 1428, 1446H 1447A, Diplock LJ even expressed the doctrine in terms of a rule of public policy that did not permit a party to a contract to recover in an action a sum greater than the measure of damages to which he would be entitled at common law. All three of the early 20th century decisions of highest jurisdictions which together constitute the origin of the modern doctrine contain dicta suggestive of a mutually exclusive dichotomy. But all three show that there is no requirement that the measure of damages at common law should be ascertainable indeed that an inability to ascertain this can justify an agreement to pay a fixed sum on breach. In this connection, they point to a broad understanding of the interests which can justify such an agreement. All three decisions must also be read in context, which involved interests different from those relevant on the present appeals. In the first decision, the Scottish appeal of Clydebank Engineering and Shipbuilding Co v Don Jose Ramos Yzquierdo y Castaneda [1905] AC 6, the House was concerned with an expressed penalty of 500 per week for late delivery of four torpedo boats to the Spanish Government. The Earl of Halsbury LC distinguished at p 10 between an agreed sum for damages and a penalty to be held over the other party in terrorem and Lord Davey at p 15 between a clause providing for liquidate damages or for a punishment irrespective of the damage caused. But the Earl of Halsbury went on to stress how extremely complex, difficult, and expensive any proof of damages would have been, how it would involve before ones mind the whole administration of the Spanish Navy and how absolutely idle and impossible [it would be] to enter into a question of that sort unless you had some kind of agreement between the parties as to what was the real measure of damages which ought to be applied (pp 11 12). He also rejected out of hand submissions that a warship has no value at all, and that, had the torpedo boats been delivered on time, they would have been sunk, like much else of the Spanish fleet, in the Spanish American war (of 1898, after the United States intervened in support of Cuban independence). Lord Davey and Lord Robertson indicated that they saw the ultimate question as being whether the shipbuilders had shown that the clause was exorbitant, extravagant or unconscionable to the point where it could not be regarded as commensurate with the interest protected: see pp 16 and 20. Lord Robertson encapsulated his view of the issue as follows: The question remains, had the respondents no interest to protect by that clause, or was that interest palpably incommensurate with the sums agreed on? It seems to me that to put this question, in the present instance, is to answer it. Unless injury to a state is as matter of law inexpressible in money, Spain was or might be deeply interested in the early delivery of these ships and deeply injured by delay. To my thinking, Lord Moncreiff has, in two sentences, admirably stated the case: The subject matter of the contracts, and the purposes for which the torpedo boat destroyers were required, make it extremely improbable that the Spanish Government ever intended or would have agreed that there should be inquiry into, and detailed proof of, damage resulting from delay in delivery. The loss sustained by a belligerent, or an intending belligerent, owing to a contractors failure to furnish timeously warships or munitions of war, does not admit of precise proof or calculation; and it would be preposterous to expect that conflicting evidence of naval or military experts should be taken as to the probable effect on the suppression of the rebellion in Cuba or on the war with America of the defenders delay in completing and delivering those torpedo boat destroyers. At p 19, Lord Robertson also described a penalty as a sum merely stipulated in terrorem [which] could not possibly have formed a genuine pre estimate of the creditors probable or possible interest in the due performance of the principal obligation. Lord Robertsons last words were quoted by the Judicial Committee of the Privy Council (which included the Lord Chancellor, Lord Davy and Lord Dunedin) in the second decision, Public Works Comr v Hills [1906] AC 368, 375 376. The Boards advice was that the clause in that case was a penalty. The clause, contained in one railway construction contract, provided for the forfeiture, on non completion of the railway within the stipulated time, of whatever retention moneys were held as a result of two separate railway construction contracts together with a further 10,000. The determining factor was in the Boards advice that the sum was not a definite sum, but is liable to great fluctuation in amount dependent on events not connected with the fulfilment of this contract (p 376). The third decision is the English appeal in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79. Under Dunlops standard terms, distributors undertook not to sell or offer the goods to any private customers or to any co operative society at less than Dunlops current list prices, not to sell to persons whose supplies Dunlop had decided to suspend, and not to exhibit or export without Dunlops consent. The terms stipulated for payment of 5 for every tyre, cover, or tube sold or offered in breach of such undertakings. Dunlops unchallenged evidence was price cutting would indirectly damage their business as a whole (p 88). On this basis the House held that the stipulation was not a penalty. Lord Dunedin said: But though damage as a whole from such a practice would be certain, yet damage from any one sale would be impossible to forecast. It is just, therefore, one of those cases where it seems quite reasonable for parties to contract that they should estimate that damage at a certain figure, and provided that figure is not extravagant there would seem no reason to suspect that it is not truly a bargain to assess damages, but rather a penalty to be held in terrorem. Lord Atkinson spelled the point out at pp 91 93 (italics added): In the sense of direct and immediate loss the appellants lose nothing by such a sale. It is the agent or dealer who loses by selling at a price less than that at which he buys, but the appellants have to look at their trade in globo, and to prevent the setting up, in reference to all their goods anywhere and everywhere, a system of injurious undercutting. The object of the appellants in making this agreement, if the substance and reality of the thing and the real nature of the transaction be looked at, would appear to be a single one, namely, to prevent the disorganization of their trading system and the consequent injury to their trade in many directions. The means of effecting this is by keeping up their price to the public to the level of their price list, this last being secured by contracting that a sum of 5l shall be paid for every one of the three classes of articles named sold or offered for sale at prices below those named on the list. The very fact that this sum is to be paid if a tyre cover or tube be merely offered for sale, though not sold, shows that it was the consequential injury to their trade due to undercutting that they had in view. They had an obvious interest to prevent this undercutting, and on the evidence it would appear to me impossible to say that that interest was incommensurate with the sum agreed to be paid. Their object is akin in some respects to that which a trader has in binding a former employee not to set up, or carry on, a rival business within a certain area. The traders object is to prevent competition, and especially to prevent his old customers whom the employee knows from being enticed away from him. If one takes for example the case of a plumber, the carrying on of the trade of a plumber may mean anything from mending gas pipes for a few pence apiece up to doing all the plumbing work of a big hotel. If the employee should mend one hundred of such pipes for twenty old customers at 6d apiece, for which the employer would charge 1s apiece, could it possibly be contended that the traders loss was only one hundred sixpences, 21 10s? It is, I think, quite misleading to concentrate ones attention upon the particular act or acts by which, in such cases as this, the rivalry in trade is set up, and the repute acquired by the former employee that he works cheaper and charges less than his old master, and to lose sight of the risk to the latter that old customers, once tempted to leave him, may never return to deal with him, or that business that might otherwise have come to him may be captured by his rival. The consequential injuries to the traders business arising from each breach by the employee of his covenant cannot be measured by the direct loss in a monetary point of view on the particular transaction constituting the breach. An old customer may be as effectively enticed away from him through the medium of a 10s job done at a cheap rate as by a 50l job done at a cheap rate, or a reputation for cheap workmanship may be acquired possibly as effectively in one case as in the other. Lord Parker was to like effect. After concluding that the damage likely to accrue from the breach of every stipulation to which the clause applied was the same in kind, he said (p 99): Such damage will in every case consist in the disturbance or derangement of the system of distribution by means of which the appellants goods reach the ultimate consumer. Lord Dunedins is the first and most cited speech in Dunlop. But Miss Smith is right to emphasise the importance of the other speeches. The second of four main propositions which Lord Dunedin thought deducible from authoritative decisions was that: 2. The essence of a penalty is a payment of money stipulated as in terrorem of the offending party; the essence of liquidated damages is a genuine covenanted pre estimate of damage (Clydebank Engineering and Shipbuilding Co v Don Jose Ramos Yzquierdo y Castaneda [1905] AC 6). Later authority has found the phrase in terrorem to be unhelpful. Lord Radcliffe commented in Campbell Discount Co Ltd v Bridge [1962] AC 600, 622: I do not find that that description adds anything of substance to the idea conveyed by the word penalty itself, and it obscures the fact that penalties may quite readily be undertaken by parties who are not in the least terrorised by the prospect of having to pay them . Lord Radcliffes comment has been quoted with approval in the Court of Appeal in Cine Bes Filmcilik ve Yapimcilik v United International Pictures [2004] 1 CLC 401 and again in Murray v Leisureplay plc [2005] EWCA Civ 963, [2005] IRLR 946, paras 47 and 109, per Arden LJ and Buxton LJ. In Cine Bes, para 13, I regarded as a more accessible paraphrase of the concept of penalty that adopted by Colman J in Lordsvale Finance plc v Bank of Zambia [1996] QB 752, 762G. Colman J there said that the Dunlop Pneumatic Tyre case showed that: whether a provision is to be treated as a penalty is a matter of construction to be resolved by asking whether at the time the contract was entered into the predominant contractual function of the provision was to deter a party from breaking the contract or to compensate the innocent party for breach. That the contractual function is deterrent rather than compensatory can be deduced by comparing the amount that would be payable on breach with the loss that might be sustained if breach occurred. Lord Dunedins first and third propositions were that, while the language used may be a prima facie indication as to whether a sum stipulated is a penalty, it is not conclusive; the question is one of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of [its] making. His fourth proposition had four sub heads, identifying various tests which have been suggested to assist this task of construction and which may prove helpful, or even conclusive. Briefly summarised, the tests were: a. A sum is a penalty if extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach. b. If the breach consists only in not paying a sum of money, a sum stipulated as payable on the breach greater than any that ought to have been paid will be a penalty. There is a presumption (but no more) that it is penalty when a single c. lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage. d. On the other hand, it is no obstacle to the sum stipulated being a genuine pre estimate of damage, that the consequences of the breach are such as to make precise pre estimation almost an impossibility. On the contrary, that is just the situation when it is probable that pre estimated damage was the true bargain between the parties (Clydebank Case, Lord Halsbury, at p 11). It is clear from these three decisions that a concern can protect a system which it operates across its whole business by imposing an undertaking on all its counterparties to respect the system, coupled with a provision requiring payment of an agreed sum in the event of any breach of such undertaking. The impossibility of measuring loss from any particular breach is a reason for upholding, not for striking down, such a provision. The qualification and safeguard is that the agreed sum must not have been extravagant, unconscionable or incommensurate with any possible interest in the maintenance of the system, this being for the party in breach to show. In 1986 the High Court of Australia thought, when examining recent English authority, that the underlying test of extravagance, exorbitance or unconscionability to be derived from the Clydebank Engineering and Dunlop cases had been eroded by decisions in which the focus had been more narrowly on a comparison between the agreed sum and any possible loss which could be awarded for the breach of contract in question: AMEV UDC Finance Ltd v Austin [1986] HCA 63, 162 CLR 170, 190. It advocated a return to the original concept. This was taken up by the Privy Council in Philips Hong Kong Ltd v Attorney General of Hong Kong (1993) 61 BLR 41, where Lord Woolf emphasised the interest that parties have in being able to know with a reasonable degree of certainty the extent of their liability and the risks that they run (p 54). But both these cases accept a basic dichotomy between penal and compensatory provisions. More recent authority suggests that this dichotomy may not be exclusive and that there may be clauses which operate on breach and which are commercially justifiable although they fall into neither category. In short, commercial interests may justify the imposition upon a breach of contract of a financial burden which cannot either be related directly to loss caused by the breach or justified by reference to the impossibility of assessing such loss. In Lordsvale Finance Colman J was concerned with a loan agreement providing that the rate of interest would increase prospectively from the time of default in payment. He noted, at pp 763 764 (italics added): the borrower in default is not the same credit risk as the prospective borrower with whom the loan agreement was first negotiated. Merely for the pre existing rate of interest to continue to accrue on the outstanding amount of the debt would not reflect the fact that the borrower no longer has a clean record. Given that money is more expensive for a less good credit risk than for a good credit risk, there would in principle seem to be no reason to deduce that a small rateable increase in interest charged prospectively upon default would have the dominant purpose of deterring default. That is not because there is in any real sense a genuine pre estimate of loss, but because there is a good commercial reason for deducing that deterrence of breach is not the dominant contractual purpose of the term. It is perfectly true that for upwards of a century the courts have been at pains to define penalties by means of distinguishing them for liquidated damages clauses. The question that has always had to be addressed is therefore whether the alleged penalty clause can pass muster as a genuine pre estimate of loss. That is because the payment of liquidated damages is the most prevalent purpose for which an additional payment on breach might be required under a contract. However, the jurisdiction in relation to penalty clauses is concerned not primarily with the enforcement of inoffensive liquidated damages clauses but rather with protection against the effect of penalty clauses. There would therefore seem to be no reason in principle why a contractual provision the effect of which was to increase the consideration payable under an executory contract upon the happening of a default should be struck down as a penalty if the increase could in the circumstances be explained as commercially justifiable, provided always that its dominant purpose was not to deter the other party from breach. In a whole series of cases across the world, courts have taken their cue from Lordsvale and held that provisions in loan agreements for uplifting the interest rate for the future after a default should not be regarded as penalties, save where the uplift is evidently extravagant: see eg Hong Leuong Finance Ltd v Tan Gin Huay [1999] 2 SLR 153, Beil v Mansell (No 2) (2006) 2 Qd R 499, PSAL Ltd v Kellas Sharpe [2012] QSC 31, Elberg v Fraval [2012] VSC 342, Place Concorde East Ltd Partnership v Shelter Corp of Canada Ltd (2003) 43 BLR (3d) 54 and In re Mandarin Container [2004] 3 HKLRD 554. The rationale of these cases is that the default bears on the credit risk (and, as Beil v Mansell identifies, may also bear on the cost of administering the loan). The uplift is conditioned on the breach, but the breach reflects directly upon the continuing appropriateness of the originally agreed interest terms. In substance, the uplift amounts to a variation of the original terms. If on the other hand, it is evident from the size of the uplift that it is in its nature a punishment for or deterrent to breach, rather than an ordinary commercial re rating to reflect a change in risk (or administration cost), then it will still be disallowed as a penalty as the actual decisions in Hong Leuong, Beil v Mansell and Elberg v Fraval illustrate. In Cine Bes the Court of Appeal was concerned, inter alia, with an agreement settling litigation and granting a new licence on terms that, if the new licence was subsequently terminated for breach by the licensee, the licensor would be entitled, inter alia, to recover the costs incurred in the litigation. The court held that this was not penal. It was an understandable and reasonable commercial condition upon which [the licensor] was prepared to dispose of the prior litigation and to enter into the fresh licence (para 33). If that licence had to be terminated for breach, there was, in short, no reason why the settlement terms should not be revisited. In the course of my judgment, I said (para 15): I have also found valuable Colman Js further observation[s] in Lordsvale at pp 763g 764a, which indicate that a dichotomy between a genuine pre estimate of damages and a penalty does not necessarily cover all the possibilities. There are clauses which may operate on breach, but which fall into neither category, and they may be commercially perfectly justifiable. In Murray v Leisureplay plc [2005] EWCA Civ 963, [2005] IRLR 946, a later Court of Appeal (Arden, Clarke and Buxton LJJ) agreed with the approach taken in Lordsvale and Cine Bes, with Clarke and Buxton LJJ stressing the importance of the commercial context, even in cases where there would be no difficulty about assessing damages (at respectively paras 105 and 118). The case concerned a clause in a chief executives employment contract entitling him to payment of a years gross salary in the event of wrongful termination of his employment without a years notice. The dicta in para 15 in Cine Bes were considered recently by the Federal Court of Australia in Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50, at para 99. The case concerned fees charged by banks for late payment, for honour and over limit payments and for non payments. Allsop CJ thought that any difficulties about accepting a dichotomy could be avoided by a different analysis, which he expressed at para 103 as follows: The object and purpose of the doctrine of penalties is vindicated if one considers whether the agreed sum is commensurate with the interest protected by the bargain: Andrews (HC) at para 75; Dunlop at pp 91 93; Clydebank at pp 15 17, 19 and 20; Public Works Comr v Hills at pp 375 376. This is not to say that the inquiry is unconnected with recoverable damages, but the question of extravagance and unconscionability by reference, as Lord Dunedin said in Dunlop, to the greatest loss that could conceivably be proved to have followed from the breach, is to be understood as reflecting the obligees interest in the due performance of the obligation: Public Works Comr v Hills at pp 375 376. One only needs to reflect on the facts of Dunlop and the justification for the payment that was found to be legitimate to appreciate these matters. In my opinion, the development of the law indicated by the authorities discussed in paras 145 to 151 above is a sound one. It is most easily explained on the basis that the dichotomy between the compensatory and the penal is not exclusive. There may be interests beyond the compensatory which justify the imposition on a party in breach of an additional financial burden. The maintenance of a system of trade, which only functions if all trading partners adhere to it (Dunlop), may itself be viewed in this light; so can terms of settlement which provide on default for payment of costs which a party was prepared to forego if the settlement was honoured (Cine Bes); likewise, also the revision of financial terms to match circumstances disclosed or brought about by a breach (Lordsvale and other cases). What is necessary in each case is to consider, first, whether any (and if so what) legitimate business interest is served and protected by the clause, and, second, whether, assuming such an interest to exist, the provision made for the interest is nevertheless in the circumstances extravagant, exorbitant or unconscionable. In judging what is extravagant, exorbitant or unconscionable, I consider (despite contrary expressions of view) that the extent to which the parties were negotiating at arms length on the basis of legal advice and had every opportunity to appreciate what they were agreeing must at least be a relevant factor. The Federal Court of Australia in Paciocco (para 151 above) preferred to maintain the dichotomy between the penal and compensatory, while at the same time focusing on the interest protected by the bargain or the interest in the due performance of the obligation and on whether the sum stipulated as payable on breach is commensurate with, or extravagant or unconscionable by reference to, that interest. Provided that interest protected or in due performance is understood widely enough to cover an interest in renegotiating the original contractual bargain in the light of the situation after or revealed by the breach, that formulation would appear to lead to the same result as reached in the cases discussed in paras 145 to 151. Can the penalty doctrine apply to clauses withholding payments? In the cases so far discussed, the provision in issue required payment of money. A number of authorities have considered whether and how far the doctrine extends beyond provisions for payment of money. First, the penalty doctrine has been applied to provisions not requiring the payment of money by, but authorising the withholding of moneys otherwise due to, the party in breach. Although the point was apparently conceded (p 693H), several members of the House accepted this in Gilbert Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689. The clause there provided that, in the event that a sub contractor failed to comply with any of the provisions of this sub contract, the contractor might suspend or withhold payment of any moneys due. Lord Reid said (p 698C F) that, read literally, this would entitle the contractor to withhold sums far in excess of any fair estimate of the value of his claims and was an unenforceable penalty, and Lord Morris, Viscount Dilhorne and Lord Salmon spoke to similar effect (pp 703G, 711D and 723H). Hunter J adopted and applied their statements in Hong Kong in the building contract case of Hsin Chong Construction Co Ltd v Hong Kong and Kowloon Wharf and Godown Co Ltd [1984] HKCFI 212, paras 22 23. In Firma C Trade SA v Newcastle Protection and Indemnity Association (The Fanti and The Padre Island) (No 2) [1989] 1 Lloyds Rep 239, the majority (OConnor and Stuart Smith LJJ; Bingham LJ dissenting) would have held that, if (contrary to their holding) the mutual associations membership rules had provided for retrospective cesser of cover on non payment of a release call, they would have involved an unenforceable penalty. Bingham LJs reasoning does not rest unequivocally on a view that a withholding clause cannot constitute a penalty. He invoked considerations special to membership of a mutual insurer, namely that any loss of cover was for a period in respect of which the member was failing to pay the premium, so casting the burden of indemnity on other members (p 254). While he also relied on Daff v Midland Colliery Owners Mutual Indemnity Co Ltd (1913) 109 LT 418, the question whether a similar clause could, if retroactive, be invalid as a penalty was not apparently addressed by anyone in that case, and it can in those circumstances hardly suggest that the deliberate statements in Gilbert Ash were per incuriam. In Public Works Comr v Hills the Privy Council applied the penalty doctrine to a clause forfeiting, on a termination for non completion of works, sums lodged by a contractor with the Cape Agent General as security for its performance and for release back to it in three stages as it progressed the works. Since the sums were only lodged by way of security and were to be returned if the works progressed, the contractor could be seen to have a continuing interest in them, which the clause forfeited. More recently in Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573, the Privy Council treated Public Works Comr v Hills as authority that the doctrine applies to the forfeiture of a deposit exceeding the sum of 10% of the contract price customarily paid in respect of the sale of land. It left open the unresolved question discussed in Stockloser v Johnson [1954] 1 QB 476, whether the doctrine applies, or the court has any other equitable power, to address a situation where a party is given possession of property on terms that he will pay for property by instalments, in default of which he will forfeit any interest in the property and the instalments already paid. However, still more recently, Eder J in Cadogan Petroleum Holdings Ltd v Global Process Systems LLC [2013] 2 Lloyds Rep 26 held the doctrine inapplicable to forfeiture of prepayments made towards the acquisition of property in the form of two gas plants. The contract provided for a series of such pre payments, not all of which GPS completed making. It never therefore acquired the gas plants, and Cadogan relied on a contractual clause forfeiting all pre payments which GPS had made. It appears that there may be Scots authority to like effect: see Zemhunt (Holdings) Ltd v Control Securities [1991] Scot CS CSIH 6, 1992 SC 58, 1992 SCLR 151, although that case itself only concerned a 10% deposit. Can the penalty doctrine apply to transfers of moneys worth? Second, the doctrine has been applied to provisions requiring the transfer, upon a breach, of money or moneys worth in the form of property belonging to the party in breach. In Watson v Noble (1885) 13 R 347, a ship owner sold seven shares in a trawler to its master for 100, and agreed to hold them on trust for him, but only for so long as he fulfil obligations as skipper which included being sober and attentive to his duties. The master was later dismissed for alleged drunkenness, the owner refused to transfer the shares and the master sued to recover their price. The master succeeded on the basis that the provision for forfeiture of the shares was an unenforceable penalty. In Jobson v Johnson [1989] 1 WLR 1026 the English Court of Appeal reached the same conclusion, where shares in Southend United Football Club were transferred with part of the price payable by deferred instalments and the contract provided for their retransfer in the event of a failure to pay any instalment for a sum equivalent only to the first instalment, however many and whatever the value of the instalments in fact paid. Evans LJ also accepted the application of the penalty doctrine to transfers of property in Else (1982) Ltd v Parkland Holdings Ltd [1994] 1 BCLC 130, 138e f. There is substantial Australian authority in the same sense. In Bysouth v Shire of Blackburn and Mitcham (No 2) [1928] VLR 562, Irvine CJ held at pp 574 575 with Mann and Lowe JJ agreeing at p 579 that a provision for forfeiture by the council of its contractors property in and upon the works in the event of breach was penal. In Forestry Commission of New South Wales v Stefanetto (1976) 133 CLR 507, Mason and Jacobs JJ took the same view in the High Court. In Wollondilly Shire Council v Picton Power Lines Pty Ltd (1994) 33 NSWLR 551, 555G, the doctrine was applied to a provision requiring the defaulting contractor to sell back property to the council at its original sale price, with Handley JA observing that, since equity looks to substance not form, the doctrine must apply to the transfer of moneys worth as well as money. In Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656, the High Court of Australia cited Jobson v Johnson for the same proposition in relation to a clause requiring a petrol station to be sold back to BP at a price excluding goodwill. The argument failed on the facts, because of expert evidence, which the trial judge accepted, that in the context of this particular station there was no monetary value attaching to any goodwill. Finally, the High Court in Andrews again cited Jobson v Johnson for the proposition that the doctrine applied to the transfer of property. In Else (para 157 above), the Court of Appeal was however concerned with a contract under which the seller retained the shares agreed to be sold in Sheffield United Football Club and the terms of which permitted the seller to retain half of any instalments already paid in the event that the contract was terminated for failure to pay any instalment. The court, distinguishing Jobson v Johnson as a case where property in the shares had passed, refused to extend the penalty doctrine to cover the situation before it. There would have been discretion to relieve against forfeiture in equity, but this too was refused on the ground that it was not unconscionable in the circumstances for the seller to insist on the strict terms: the purchaser had under the contract in fact already enjoyed two years as club chairman and the agreement was itself a compromise to avoid argument whether the terms of the agreement which it replaced constituted a penalty. The relationship between the penalty doctrine and relief against forfeiture Jobson v Johnson proceeds on the basis that a case may raise for consideration both the penalty doctrine and the power of the court to relieve against forfeiture. In my opinion, that is both logical and correct in principle under the current law. A penalty clause imposes a sanction for breach which is extravagant to the point where the court will in no circumstances enforce it according to its terms. The power to relieve against forfeiture relates to clauses which do not have that character, but which nonetheless operate on breach to deprive a party of an interest in a manner which would not be penal. That it would not be penal is evident from the fact that the court will only grant relief on the basis that the breach is rectified by performance. [I]n the ordinary course, as the Privy Council said in Cukurova Finance International Ltd v Alfa Telecom Turkey Ltd [2013] UKPC 20, [2015] 2 WLR 875, para 13, relief in equity will only be granted on the basis of conditions requiring performance, albeit late, of the contract in accordance with its terms as to principal, interest and costs: see eg per Lord Parker of Waddington in Kreglinger v New Patagonia Meat and Cold Storage Co Ltd [1914] AC 25, at pp 49 50 and per Lord Wilberforce in Shiloh Spinners Ltd v Harding [1973] AC 691, at pp 722C and 723H. The two doctrines, both originating in equity, therefore operate at different points and with different effects. Consideration whether a clause is penal occurs necessarily as a preliminary to considering whether it should be enforced, or whether relief should be granted against forfeiture. This same inter relationship between the penalty doctrine and relief against forfeiture was also assumed in BICC plc v Burndy Corpn [1985] Ch 232, where Dillon LJ, with whom Ackner LJ agreed, considered first whether the clause was a penalty, before moving to the issue of relief against forfeiture. The clause was a provision in an agreement dissolving a joint relationship, whereby certain joint patent rights would continue to be held by BICC, with Burndy paying its share of the costs of their maintenance and processing by BICC, and with a clause providing that, if either party failed to fulfil its obligations in that regard, the party not in default could require an assignment of the guilty partys interests in the joint rights. Burndy failed to meet certain costs due, BICC claimed an assignment of Burndys share in the joint rights, to which Burndys first response was that the clause was in the nature of a penalty, since the value of Burndys share would be worth many times more than the sums unpaid or any actual loss to BICC (pp 236H 237C). The submission failed on the basis that it was commercial sense or a sensible purpose that a party failing to pay its share of the costs of processing or keeping alive a patent may be required to give up its interest (pp 246G and 247C), and that the clause was no more a penalty clause than is the ordinary power of re entry in a lease or the ordinary provision in a patent licence to enable the patentee to determine the licence, however valuable, in the event of non payment of royalties (p 247C D). The reasoning has some of the flavour of Bingham LJs observations in The Fanti about the mutuality existing between members of a mutual insurance association. But how far the analogies on which Dillon LJ relied are reliable in a context of forced transfer of property is a question for another case. The position regarding re entry under a lease has long been regulated by statute, and a contractual licence raises different considerations to a requirement to transfer a proprietary share in joint rights. Be that as it may be, the case does not suggest that a forced transfer of property rights can never attract the operation of the penalty doctrine. It turned on the existence of joint rights, in the maintenance and processing of which both parties agreed to play their part. Should the penalty doctrine be abolished or restricted? This being the current state of authority, I come to Cavendishs primary and secondary cases, that the penalty doctrine should be abolished, or, that failing, that it should be restricted to non commercial cases or to cases involving payment of money. I am unable to accept either proposition. As to abolition, there would have to be shown the strongest reasons for so radical a reversal of jurisprudence which goes back over a century in its current definition and much longer in its antecedents. It has long been recognised that the situations in which the doctrine may and may not apply can involve making distinctions which can appear narrow and which follow lines which can be difficult to define. But that has never hitherto been regarded as a reason for abandoning the whole doctrine, which in its core exists to restrain exorbitant or unconscionable consequences following from breach. In 1966 Diplock LJ, after referring in Robophone to the public policy behind the rule in the passage which I have already quoted (para 131 above), said that in these days when so often one party cannot satisfy his contractual hunger la carte but only at the table dhte of a standard printed contract, it has certainly not outlived its usefulness. In 1975 the Law Commission in its Working Paper No 61, Penalty Clauses and Forfeiture of Monies Paid, far from suggesting abolition proposed that the doctrine should be expanded, along lines now accepted in Australia by Andrews, to cover any situation where the object of the disputed contractual obligation is to secure the act or result which is the true result of the contract (pp 18 19). In 1999, the Scottish Law Commission in its Report on Penalty Clauses (Scot Law Com No 171) recommended that there should continue to be judicial control over contractual penalties, whatever form they take whether payment of money or forfeiture of money or transfer or forfeiture of property. It suggested as the criterion for such control whether the penalty was manifestly excessive in all the circumstances when the contract was entered into. It further recommended a test of substance for determining whether a clause was a penalty and an extension along the same lines as the English Law Commission recommended in 1975. Cavendishs submission that this court should abolish or rewrite radically the penalty doctrine is made without the benefit of the sort of research into the consequences and merits of such a step, which the Law Commission or Parliament would undertake before venturing upon it. There is therefore an unpromising background to Cavendishs submission that the doctrine should be either abolished or restricted. Further, the Scottish Law Commission pointed out (para 1.8) that there has been a general convergence of approaches in European civil codes and soft law proposals towards a recognition of the utility and desirability of judicial control of disproportionately, excessively, manifestly or grossly high or unreasonable penalties. The Council of Europes Resolution 78(3) of 20 January 1978 on Penal Clauses in Civil Law (article 7), the Principles of European Contract Law (article 9:509), the Uncitral Texts on Liquidated Damages and Penalty Clauses (article 8) and the Unidroit Principles of International Commercial Contracts (article 7.4.13) all contain provisions for such control along such lines. I note in parenthesis that many national European legal systems already appear to contain similar provisions, even if only introduced legislatively as appears to be the case in France by laws of 9 July 1975 and 11 October 1985 amending article 1152 of the Code civil (and reversing the effect of the Cour de cassation decision in Paris frres c Dame Juillard Civ 14 February 1866). Germany in contrast takes a broad view of the interests which may be protected by a clause imposing a financial liability on breach (Vertragsstrafe), including among them not merely compensation, but also deterrence. But in non business cases, the court has the power to reduce any penalty to an appropriate level under BGB (the Civil Code), section 343. However, HGB (the Commercial Code) para 248 exempts contracts between businessmen from the scope of BGB section 343, although such contracts appear still to be susceptible to control if they are standard form contracts (not the case with that between Cavendish and Mr El Makdessi) or in terms so abusive as to infringe other principles applicable generally, although only in extreme cases, such as those governing Guten Sitten, Wucher or Treu und Glauben (BGB sections 138 and 242). At the courts request, Cavendish also included as an appendix to its case a valuable examination of the law of, and relevant academic commentary from, other common law countries: Australia, Canada, New York and other United States states and sources, Scotland, New Zealand, Singapore and Hong Kong. It is sufficient to say that all these countries retain a doctrine broadly on the same lines as the current English doctrine. In both Australia and Canada, emphasis has been placed on the root principles of extravagance, exorbitance or unconscionability, to be found in the Clydebank Engineering and Dunlop cases: AMEV UDC Finance Ltd v Austin [1986] HCA 63, 162 CLR 170 and Elsley v J G Collins Insurance Agencies Ltd [1978] 2 SCR 916 and Waddams, The Law of Damages (Nov 2014), para 8 340. In Australia, the doctrine has been extended, as I have noted, to cover situations falling short of breach: Andrews. In both Singapore and Hong Kong, the approach in Philips Hong Kong has been followed. In Australia, it is established that the penalty doctrine applies to clauses calling for the transfer of property (para 158 above) as well as to the withholding of sums due, and there is also Hong Kong authority for the latter (para 154 above). Waddams, The Law of Contracts, 6th ed (2010), para 461 cites Jobson v Johnson for the proposition that it applies to clauses requiring transfer of property at an undervalue in Canada, and there is no suggestion of disagreement on either of these points in any other common law country. It would be odd, to say the least, if the United Kingdom separated itself from so general a consensus. It is true that, in a European Union context measures now exist which carry some of the burden which might previously have been borne by the penalty doctrine: the Unfair Terms in Consumer Contracts Regulations 1999, giving effect to Directive 93/13/EEC, and the Consumer Protection from Unfair Trading Regulations 2008, giving effect to Directive 2005/29/EC. These are confined to consumer situations, and in the case of the former at present to contract terms which are not individually negotiated. That limitation has disappeared, with the coming into force of the Consumer Rights Act 2015 on 1 October 2015 to replace the Unfair Terms in Consumer Contracts Regulations 1999, the Unfair Contract Terms Act 1977 (in relation to consumer contracts), most of the Sale of Goods Act 1979, and the Supply of Goods and Services Act 1982 (in relation to consumer contracts). It would be unsafe to assume that any of these measures makes or will make the penalty doctrine redundant. The fact that Parliament has not sought to abolish or amend the doctrine, despite their existence, is just as capable of being invoked in its favour. In any event, the doctrine protects businesses, including small businesses, which may well have a need for it. I would reject Miss Smiths submission that the doctrine should be limited so as not to apply to commercial cases for similar reasons. There is no basis in authority or principle for such a limitation. It would strike at an existing protection in an area where the doctrine has been frequently invoked, including in the cases on exorbitant uplifts of loan interest upon breach of loan agreements. The concept of a commercial case is also undefined and obscure, in the absence of any applicable statutory definition. Miss Smiths further submission that the doctrine should be limited by confining unconscionability to circumstances of procedural misconduct, involving duress, undue influence, misrepresentation, or something similar would appear effectively to deprive the doctrine of any role at all, and again has no basis in authority or principle. I am equally unable to accept that the doctrine should be confined to cases of payment of money. It would be absurd to draw a rigid distinction between a requirement to transfer money and property. It would also be absurd to draw such a distinction between them and the withholding of moneys due. Such uncertainties as may exist regarding the doctrines applicability to deposits or to clauses forfeiting pre payments must await decision in due course. Application of the penalty doctrine Cavendish The relevant trigger to the operation of both clauses 5.1 and 5.6 is the definition of Defaulting Shareholder, to include a Seller who is in breach of clause 11.2 hereof. Clause 11.2 contains various restrictive covenants. It is common ground (SFI para 20: para 121 above) that the breach of the covenant against employing or soliciting senior employees could be less than a breach of the covenants against competitive activity, and that losses from breaches of the covenant against solicitation could vary, according to the nature, extent, duration and success of the solicitation. Mr El Makdessi would say markedly less and vary widely. Two points may be made here. First, the covenants must be seen as a package designed to protect against activities, all of them aimed at competitive activity and all of them likely to be conducted in a manner difficult to detect and to be, if detected, difficult to evaluate with regard to their extent or impact. In this situation, Lord Atkinsons words in Dunlop appear to me to have resonance here: The object of the appellants in making this agreement, if the substance and reality of the thing and the real nature of the transaction be looked at, would appear to be a single one, namely, to prevent the disorganization of their trading system and the consequent injury to their trade in many directions. It is, I think, quite misleading to concentrate ones attention upon the particular act or acts by which, in such cases as this, the rivalry in trade is set up, The consequential injuries to the traders business arising from each breach by the employee of his covenant cannot be measured by the direct loss in a monetary point of view on the particular transaction constituting the breach. This was said in a context where Dunlop was protecting the whole of its business, involving many actual and potential transactions with many different purchasers, by imposing trading restrictions on every purchaser. In the present case, Cavendish is protecting the whole of the business, of which it was to be majority shareholder, involving many actual and potential transactions with many different customers, by imposing a competitive restriction on the sellers from whom it was buying the majority control. In each case, the focus should be on the overall picture, not on the individual breaches. Second, so far as it is said, obviously correctly, that breach of clause 11.2(d) may have consequences different from those of clauses 11.2(a) to (c), the speeches in Dunlop may be seen as open to different interpretations. On the one hand, the situation may be argued to fall within Lord Dunedins fourth proposition, para (c). On the other hand, the whole of clause 11.2 may be regarded as doing (in Lord Atkinsons further words at p 93) little, if anything, more than impose a single obligation here refraining from any potentially competitive activity. Lord Parker exposed the problems in this area to particularly detailed examination at p 98, when he described the position as more complicated when the stipulation, though still a single stipulation, is capable of being broken more than once, and in more ways than one, such as a stipulation not to solicit the customers of a firm. A solicitation which is unsuccessful, can give rise to only nominal damages, and even if it be successful the actual damage may vary greatly according to the value of the custom which is thereby directly or indirectly lost to the firm. Still, whatever damage there is must be the same in kind for every possible breach, and the fact that it may vary in amount for each particular breach has never been held to raise any presumption or inference that the sum agreed to be paid is a penalty, at any rate in cases where the parties have referred to it as agreed or liquidated damages. The question becomes still more complicated where a single sum is agreed to be paid on the breach of a number of stipulations of varying importance. It is said that in such a case there arises an inference or presumption against the sum in question being in the nature of agreed damages, even though the parties have referred to it as such. My Lords, in this respect I think a distinction should be drawn between cases in which the damage likely to accrue from each stipulation is the same in kind and cases in which the damage likely to accrue varies in kind with each stipulation. Cases of the former class seem to me to be completely analogous to those of a single stipulation, which can be broken in various ways and with varying damage; but probably it would be difficult for the court to hold that the parties had pre estimated the damage if they have referred to the sum payable as a penalty. In cases, however, of the latter class, I am inclined to think that the prima facie presumption or inference is against the parties having pre estimated the damage, even though the sum payable is referred to as agreed or liquidated damages. The damage likely to accrue from breaches of the various stipulations being in kind different, a separate pre estimate in the case of each stipulation would be necessary, and it would not be very likely that the same result would be arrived at in respect of each kind of damage. Applying this passage, on the assumption that clause 11.2 should be regarded as containing, in Lord Parkers words, a number of stipulations of varying importance I would consider that the damage likely to accrue from each such stipulation was the same in kind being damage from competitive activity. On that basis, Lord Parkers approach would lead to the conclusion that there was no penal presumption. It is submitted, however, by Mr Bloch that clause 5.1 is penal for a different reason, because of the size and haphazard nature of its potential impact in forfeiting entitlement to receive the Interim and/or Final Payments, so far as not yet paid at the time of its breach. Taking the size of impact, it is common ground that a substantial part of the purchase price comprised goodwill (SFI, para 16). This is clear from the terms of the agreement alone (especially clauses 11.1 and 11.7), but is further confirmed by the evidence of Mr Scott for Cavendish and by the figures alone. The net assets of the entire Group were, by the terms of the sale and purchase agreement, warranted by Mr El Makdessi to be US$69.7m as at 31 December 2007. That indicates that in broad terms around US$33m of the US$65.5m paid to Mr El Makdessi and Mr Ghoussoub by way of Completion and Second Payments was seen as attributable to the Groups net asset value. Their total entitlement was capped under clause 3.3 at US$147.5m. Deducting the net asset value element of the Completion and Second Payments, the anticipated goodwill value must have been up to US$114.5m, of which US$32.5m (about 26%) was covered by the Completion and Second Payments, meaning that up to US$82m was anticipated to come by way of the Interim and Final Payments, of which Mr El Makdessis 53.88% share would be some US$44m. On Cavendishs case, Mr El Makdessis breach of clause 11.2 deprives him of any claim to this or any other goodwill element of the value of his shares over and above that already covered by the Completion and Second Payments. Mr Bloch submits that this arrangement self evidently lacks any rational connection between the severity of the breach or of its consequences and the impact of clause 5.1. A partial response to this submission is that there may be a connection as a result of the timing of the Interim and/or Final Payments. Clause 5.1 will only result in the loss of either Payment, if the breach occurs before the payment is due. The Due Date for each such Payment is 30 days after determination of the relevant OPAT for all financial periods to which the Payment relates. That would normally mean at some point in the first half of 2010 in the case of the Interim Period, and in the first half of 2012 in the case of the Final Payment. The later the breach in time, the less its impact on the Group and the less likely that it would occur in time for clause 5.1 to bite. That, however, amounts to a very crude link, at best. And it means that clause 5.1 is only capable of operating as any form of protection for Cavendish against breaches occurring for something over four years from the date of agreement, while clause 11.2 is capable of continuing and being broken for a much longer period of years (24 months after the Relevant Date, itself potentially postponed until whenever Mr El Makdessi exercises the put option provided by clause 15). Further, Mr Bloch can point to a respect in which the mechanism of clause 5.1 is likely to work in a quite opposite direction to any that would be expected: that is, in inverse ratio to any loss caused to the Group by the breach. The earlier and greater the breach, the more likely that Mr El Makdessi would be profiting by it at the expense of the Group, in a way affecting the Groups OPAT and so reducing the Interim and Final Payments and the impact of their loss under clause 5.1. In contrast, a small breach with small consequences for the Group at an early stage would leave the Groups OPAT unaffected, and would mean that clause 5.1 had the maximum possible impact on Mr El Makdessi. Cavendishs response to such points is in essence that they focus too narrowly on the consequences of breach. In line with Lord Atkinsons approach in Dunlop (paras 142 and 172 above), the focus should be not on any particular possible breach or its timing or consequences, but on the general interest being protected, and the question whether the protection which the parties agreed can be condemned as unconscionable or manifestly excessive. In this connection, Miss Smith submits that what was in substance agreed was a price formula, which reverted, understandably, in the event of breach of clause 11.2 to a basis of valuation omitting any further goodwill element. In this connection, Miss Smith drew attention to the provision in clause 3.1 stating that the agreed payments were all in consideration of the sale of the Sale Shares and the obligations of the Sellers herein. However, I do not regard that as assisting the argument. The same could be said of any obligation triggering a penalty clause, and one might add that neither the Interim nor the Final Payment is expressly tied to clause 11.2, although each is expressly made subject to the provisions of clause 6, dealing with Calculation of OPAT and payment of the consideration. Cavendishs general response nonetheless appears to me to have substantial force. The essence of what the parties were agreeing was that goodwill was crucial, and that there could be no further question of paying for any goodwill element of Mr El Makdessis shares if he committed a breach of his non competitive obligations under clause 11.2. It is true that, in the circumstances existing for at least the first 18 months after the agreement, any such breach would be actionable in damages by Team, with the result that Cavendishs loss would in theory be made good and it could itself have had no contractual claim for damages because of the rule precluding recovery of reflective loss. But after 18 months this would not necessarily be the case, and even during the 18 month period, it is understandable that Cavendish should no longer be prepared to pay any further goodwill element, once competitive activity by Mr El Makdessi had cast a doubt over the current and future value of the Groups goodwill. As with a bank loan, so here, on a much larger scale, it can be said that any such breach could and would change in a fundamental respect the risk element involved in Cavendishs purchase of a large block of shares in the Group. On this basis, the question still remains whether clause 5.1 can and should be condemned as penal, on the grounds that it is extravagant, exorbitant or unconscionable in its nature and impact. Not without initial hesitation, and despite the powerful points made by Mr Bloch, I have come to the conclusion that, in this particular agreement made deliberately and advisedly between informed and sophisticated parties, the court should answer this question in the negative, and hold that clause 5.1 is enforceable. Its effect was to revise the basic price calculation for the shares which had been agreed to be sold, and, so viewed in the context of a carefully negotiated agreement between informed and legally advised parties at arms length, I do not consider it can or should be regarded as extravagant, exorbitant or unconscionable. I turn to clause 5.6. This raises somewhat different considerations. It is a provision requiring Mr El Makdessi as the party in breach to transfer property in his remaining shares against his will at a price based on net asset value alone. It is explained in terms of a desire to sever all interest from someone who has breached his contract. But it does so, first by imposing on the contract breaker a forced deprivation of property which was not otherwise agreed to be sold under the contract broken, and second by doing this at a price which (unlike clause 5.1 which leaves the contract breaker with a substantial element of goodwill value, under the Completion and Second Payments) deprives him of the whole of any goodwill value attaching to such property. I accept that a forced transfer for no consideration or for a consideration which does not reflect the value of the asset transferred may constitute a penalty within the scope of the penalty doctrine. But clause 5.6 must be viewed in nature and impact as a composite whole as well as in context. It operates as an element in a mechanism provided by clauses 5 and 11.2 for bringing to an end the continuing relationship between WPP and a defaulting shareholder. Although triggered by default, it amounts, like clause 5.1, to a reshaping of the parties primary relationship. Had their relationship as common shareholders in the Group continued, Mr El Makdessi would have continued to be bound by the restrictions contained in clause 11.2, until 2016 (para 122 above), and would have had the benefit of the put option contained in clause 15. The Relevant Option Price which Mr El Makdessi could receive upon his exercise of the Put Option provided by clause 15 would have been based again on eight times average OPAT over four years (starting with the year preceding the exercise of the Option) capped at US$75m. As with the price of the shares which Mr El Makdessi agreed to sell, so with the Option Price, the parties clearly envisaged that a price calculated on such a basis would exceed by a multiple a net asset based price. Clause 5.6 would not have made any real sense otherwise. However, once Mr El Makdessi breached clause 11.2, the position changed radically. It is accepted that, once such a breach occurred, it was in principle understandable that he should be required to sever any shareholding relationship completely by selling his remaining shares. But that would at the same time release him from his restrictive covenants, in view of the definition of the Relevant Date, set out in para 122 above. The Group without the protective benefit of the restrictive covenants would be vulnerable (potentially for many years during which it could legitimately have expected to be protected by the covenants) in a way which would clearly justify revisiting the basis on which any price for the purchase of Mr El Makdessis remaining shareholding was set. What the fortunes of the Group would be, following premature severance of relations, in circumstances where it was now open to Mr El Makdessi to compete as much as he wished, would be difficult, if not impossible, to predict. Again, Mr Bloch submits that the clause is likely to operate in a highly random manner. A small breach committed at an early stage but of little consequence for the Groups OPAT will deprive the Defaulting Shareholder of a large goodwill value; a large breach committed at an early stage to the Defaulting Shareholders benefit will depress the goodwill value of the Option Shares, and cost the Defaulting Shareholder less. But the ultimate question is in my view whether this carefully negotiated clause, attributing a nil value to goodwill on a forced severance of shareholding relationships triggered by a breach of basic restrictive covenants, can be regarded as exorbitant or unconscionable, having regard to the completely new scenario created by any breach of the restrictive covenants. Once it is accepted, I think inevitably, that complete severance of relationships was a natural provision to include as a consequence of any such breach, I do not consider that an agreement that this should take place on a basis ignoring any goodwill which might subsist can or should be regarded as being either exorbitant or unconscionable. That makes it unnecessary to consider Mr Blochs further submissions that, if clause 5.6 was a penalty but it was in principle understandable that the parties should have agreed on severance of their shareholding relationship, Cavendish could have invited, but has not invited, any offer of the type which Dillon and Nicholls LJJ in Jobson v Johnson considered that a contract breaker such as Mr El Makdessi could be required to make. In the present case, that would (presumably) be an offer to sell the remaining shares at a fair or market price. That would go further than anything that Dillon and Nicholls LJJ specifically endorsed in that case. It is unnecessary to say more about this aspect of the decision in Jobson v Johnson, on which I would in an appropriate case have wished to hear further and fuller submissions. It follows that I would allow the appeal in respect of both clauses 5.1 and 5.6. Application of the penalty doctrine ParkingEye Limited v Beavis There is common ground between all before the court that the relationship between ParkingEye and Mr Beavis was a contractual relationship, whereby Mr Beavis undertook not to park for more two hours and, upon any breach of that obligation, incurred a liability of 85, reducible, in this case, to 50 if he had paid within 14 days of ParkingEyes demand. The Court of Appeal raised a question about this analysis, which the Supreme Court also took up. But I am satisfied that it is correct in law. The terms of the signs which Mr Beavis must be taken to have accepted by conduct in entering and parking in the car park are to that effect. Mr Beavis thereby expressly agreed to stay for two hours maximum, and to comply with the other parking restrictions, such as parking within a marked bay and not using a blue badge holders bay, and to pay the stipulated sum if he failed so to comply. It may be suggested that Mr Beavis thereby promised nothing which can in law constitute valuable consideration. He was being given a licence, on conditions, and he would have been a trespasser if he overstayed or failed to comply with its other conditions. But ParkingEye was not in possession of the car park, or capable of bringing proceedings in trespass. It had a mere right to control parking at the site the right to permit or refuse others to park there on such conditions as it might stipulate. By promising ParkingEye not to overstay and to comply with its other conditions, Mr Beavis gave ParkingEye a right, which it would not otherwise have had, to enforce such conditions against him in contract. Even if no Parking Charge had been stipulated, enforcement would still have been possible in law, even if a claim for damages or for an injunction might not in practice have been likely. With the stipulated Parking Charge, the nature of the intended contract is even clearer, although the question arises whether the Parking Charge is an unenforceable penalty. The quid pro quo provided by ParkingEye in return for Mr Beaviss promise was the grant of permission to park for up to two hours in its discretion free of charge, on conditions. Each party thus gave the other valuable consideration. ParkingEye argued that Parliament has, by the Protection of Freedoms Act 2012, effectively recognised the legitimacy of a scheme such as theirs, in a way precluding or at least militating against any application of the penalty doctrine. The judge and Court of Appeal (para 28) also found some support in this Act for the view that charges of this kind are not to be regarded as unenforceable. In my view, that is a misreading of the Act. The Act merely makes provision for the recovery of unpaid parking charges from the keeper or hirer of a vehicle (section 56), in circumstances where (a) the driver of a vehicle is required by virtue of a relevant obligation to pay parking charges in respect of the parking of the vehicle on relevant land; and (b) those charges have not been paid in full (Schedule 4, paragraph 1). The reference to a relevant obligation does not exclude the penalty doctrine. On the contrary, if a charge stipulated contractually is a penalty, there will be no obligation. There is nothing in the detailed definitions to affect this straightforward conclusion. Schedule 4, paragraph 2(1) provides that: parking charge (a) in the case of a relevant obligation arising under the terms of a relevant contract, means a sum in the nature of a fee or charge, and (b) in the case of a relevant obligation arising as a result of a trespass or other tort, means a sum in the nature of damages. Relevant contract is defined in wide terms including a contract which arises only on parking and is made either with the owner or occupier of the land or with someone like ParkingEye authorised by the owner or occupier to enter into a contract requiring the payment of parking charges: Schedule 4, paragraph 2(1). Relevant obligation means (a) an obligation arising under the terms of a relevant contract or, (b) where there is no relevant contract, as a result of a trespass or other tort committed by the parking: Schedule 4, paragraph 2(1). The reference to a sum in the nature of damages is to a sum of which adequate notice was given to drivers of vehicles (when the vehicle was parked ): Schedule 4, paragraph 2(2). The position in tort may one day merit closer examination, since it is not clear to me on what basis, other than contractual, the driver of a vehicle can incur any obligation to pay a sum in the nature of damages as a result of a trespass or other tort, however much notice was given to him or her when the vehicle was parked. If there is such a basis, however, I have little doubt that the law would also extend the penalty doctrine to cover it. The penalty doctrine is therefore potentially applicable to the present scheme. It is necessary to identify the interests which it serves. They are in my view clear. Mr Beavis obtained an (admittedly revocable) permission to park and, importantly, agreement that if and so far as he took advantage of this it would be free of charge. ParkingEye was able to fulfil its role of providing a traffic management maximisation scheme for BAPF. The scheme met, so far as appears, BAPFs aim of providing its retail park lessees with spaces in which their customers could park. All three conditions imposed were directed to this aim, and all were on their face reasonable. (The only comment that one might make, is that, although the signs made clear that it was a Customer only car park, the Parking Charge of 85 did not apply to this limitation, which might be important in central Chelmsford. The explanation is, no doubt, that, unlike a barrier operated scheme where exit can be made conditional upon showing or using a ticket or bill obtained from a local shop, a camera operated scheme allows no such control.) The scheme gave BAPF through ParkingEyes weekly payments some income to cover the costs of providing and maintaining the car park. Judging by ParkingEyes accounts, and unless the Chelmsford car park was out of the ordinary, the scheme also covered ParkingEyes costs of operation and gave their shareholders a healthy annual profit. Mr de Waal for Mr Beavis and Mr Butcher for the Consumers Association submit that this is to look at matters too broadly and that the focus should be on the individual contract. They also submit that it is imbalanced and unfair in its operation as regards Mr Beavis or any other individual user of the car park. Mr de Waal goes so far as to suggest that the scheme contains a concealed pitfall, since it actually operates not by reference to length of time spent parking, but by length of time spent between entry into and exit from the car park. That to my mind is an a contextual understanding of the signs. Whether or not ParkingEyes cameras at the entry and exit are clearly visible, I do not believe that customers think that individual car parking spaces are monitored or a period spent driving around such a car park looking for a space is likely to fall outside the 2 hour max stay or period of Parking limited to 2 hours specified in the signs. More significantly, Mr de Waal and Mr Butcher observe that the scheme only works by taking advantage of human fallibility or unforeseen circumstances. Deliberate overstayers can leave their cars for days and only pay 85 (or the reduced sum if they pay promptly on demand). That is evidently not a problem or the scheme would provide for some form of gradated payment. Other shoppers believe that they will complete their shopping expedition within two hours and intend to do so. The scheme therefore relies on human (over)optimism, that the relevant shopping expedition will be over within two hours, or that the shopper will not find him or herself detained in a queue at the last minute in the last shop. Those who overstay do not incur the 85 or reduced liability in any real sense by agreement, but by misfortune. Mr de Waal and Mr Butcher point out that the sum of 85 or 50 could well represent a large part of a car drivers or owners weekly income, eg in the case of a pensioner, and that, even adjacently to Chelmsford Station it is likely well to exceed any sum that would be payable for parking for say three hours in a car park charging according to time stayed. They also submit that ParkingEyes level of charging compares unfavourably with that authorised under the Civil Enforcement of Parking Contraventions (England) General Regulations 2007 (SI 2007/3483) and the Civil Enforcement of Parking Contraventions (Guidelines on Levels of Charges) (England) Order (SI 2007/3487). These authorise a penalty charge of 50, reducible, if paid within 21 days, in the case of a contravention detected by an approved device (such as CCTV) or 14 days in other cases, to 25 for parking in contravention of one of the statutory or regulatory provisions listed in Schedule 7, paragraph 4 of the Traffic Management Act 2004. But a scheme relating to the enforcement of parking and parking charges by public authorities in public places is in no way analogous to that in issue on this appeal. Further, merely because statute sets a lower level does not mean that a higher level would not have been reasonable. In judging whether ParkingEyes parking charges fall foul of the penalty doctrine, the scheme it operates has to be seen as a whole, bearing in mind all the interests obviously involved. This follows from what I have said in earlier parts of this judgment in relation to the penalty doctrine generally and in relation to its application to clause 5.1 of the agreement in the Cavendish appeal in particular. A useful starting point is that BAPF might have decided to operate such a scheme itself. In that case, its interest in providing for its retail lessees requirements for parking for their customers would be both clear and clearly relevant. It does not cease to be relevant, because BAPF chose to contract out the operation of the scheme to ParkingEye. The signs disclose that ParkingEye has been engaged as car park manager to provide a traffic space maximisation scheme. The provision of free parking for up to two hours is an obvious benefit and attraction for customers and so also for retail lessees and for BAPF, which has a clear interest in the retail parks success. The 85 charge for overstaying is certainly set at a level which no ordinary customer (as opposed to someone deliberately overstaying for days) would wish to incur. It has to have, and is intended to have, a deterrent element, as Judge Moloney QC recognised in his careful judgment (para 7.14). Otherwise, a significant number of customers could all too easily decide to overstay, limiting the shopping possibilities of other customers. Turnover of customers is obviously important for a retail park. A scheme which imposed a much smaller charge for short overstaying or operated with fine gradations according to the period of overstay would be likely to be unenforceable and ineffective. It would also not be worth taking customers to court for a few pounds. But the scheme is transparent, and the risk which the customer accepts is clear. The fact that, human nature being what it is, some customers under estimate or over look the time required or taken for shopping, a break or whatever else they may do, does not make the scheme excessive or unconscionable. The charge has to be and is set at a level which enables the managers to recover the costs of operating the scheme. It is here also set at a level enabling ParkingEye to make a profit. Unless BAPF was itself prepared to pay ParkingEye, which would have meant, in effect, that it was subsidising customers to park on its own site, this was inevitable. If BAPF had attempted itself to operate such a scheme, one may speculate that the charge might even have had to be set at a higher level to cover its costs without profit, since ParkingEye is evidently a specialist in the area. In these circumstances, the fact that no individual episode of overstaying, or of mis parking, could be said to involve ParkingEye or BAPF in any ascertainable damage is irrelevant. What matters is that a charge of the order of 85 (reducible on prompt payment) is an understandable ingredient of a scheme serving legitimate interests. Customers using the car park agree to the scheme by doing so. The position was well summed up by Judge Moloney QC (para 7.16), when he said that: although there is a sense in which this contractual parking charge has the characteristics of a deterrent penalty, it is neither improper in its purpose nor manifestly excessive in its amount. It is commercially justifiable, not only from the viewpoints of the landowner and ParkingEye, but also from that of the great majority of motorists who enjoy the benefit of free parking at the site, effectively paid for by the minority of defaulters, who have been given clear notice of the consequences of overstaying. ParkingEye Limited v Beavis Unfair Terms in Consumer Contracts Regulations The 1999 Regulations address the problem of unfair terms in contracts concluded between a seller or supplier and a consumer. They implement Directive 93/13/EEC. By virtue of regulation 3(1) (Interpretation), ParkingEye is a supplier and Mr Beavis a consumer. Regulation 8(1) provides that An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer. Regulation 5(1) specifies what is to be understood by an unfair term. It provides that: A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties rights and obligations arising under the contract, to the detriment of the consumer. This repeats, exactly, the terms of article 3(1) of the Directive. The terms of the parking contract made between ParkingEye and Mr Beavis were not of course individually negotiated. Regulation 6 provides: (l) Without prejudice to regulation 12, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent. (2) In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate (a) to the definition of the main subject matter of the contract, or (b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange. This, although subsection (2) is differently worded, gives effect to article 4 of the Directive. It is not suggested in the present case that the term requiring payment of 85 (reducible) in the event of non compliance with ParkingEyes regulations falls within either limb of regulation 6(2). Directive 93/13/EEC indicates in its 16th preamble that: the assessment, according to the general criteria chosen, of the unfair character of terms must be supplemented by a means of making an overall evaluation of the different interests involved; whereas this constitutes the requirement of good faith; whereas, in making an assessment of good faith, particular regard shall be had to the strength of the bargaining positions of the parties, whether the consumer had an inducement to agree to the term and whether the goods or services were sold or supplied to the special order of the consumer; whereas the requirement of good faith may be satisfied by the seller or supplier where he deals fairly and equitably with the other party whose legitimate interests he has to take into account. The Court of Justice has in Mohamed Aziz v Caixa dEstalvis de Catalunya, Tarragona i Manresa (Catalunyacaixa) (Case C 415/11) given guidance as to article 3(1) of the Directive, holding that: Article 3(1) of Directive 93/13 must be interpreted as meaning that: the concept of significant imbalance to the detriment of the consumer must be assessed in the light of an analysis of the rules of national law applicable in the absence of any agreement between the parties, in order to determine whether, and if so to what extent, the contract places the consumer in a less favourable legal situation than that provided for by the national law in force. To that end, an assessment of the legal situation of that consumer having regard to the means at his disposal, under national law, to prevent continued use of unfair terms, should also be carried out; in order to assess whether the imbalance arises contrary to the requirement of good faith, it must be determined whether the seller or supplier, dealing fairly and equitably with the consumer, could reasonably assume that the consumer would have agreed to the term concerned in individual contract negotiations. Domestically, the position was considered by the House of Lords in Director General of Fair Trading v First National Bank plc [2002] 1 AC 481 where Lord Bingham said (para 17) that: The requirement of significant imbalance is met if a term is so weighted in favour of the supplier as to tilt the parties rights and obligations under the contract significantly in his favour. This may be by the granting to the supplier of a beneficial option or discretion or power, or by the imposing on the consumer of a disadvantageous burden or risk or duty. The illustrative terms set out in Schedule 3 to the Regulations provide very good examples of terms which may be regarded as unfair; whether a given term is or is not to be so regarded depends on whether it causes a significant imbalance in the parties rights and obligations under the contract. This involves looking at the contract as a whole. But the imbalance must be to the detriment of the consumer; The requirement of good faith in this context is one of fair and open dealing. Openness requires that the terms should be expressed fully, clearly and legibly, containing no concealed pitfalls or traps. Appropriate prominence should be given to terms which might operate disadvantageously to the customer. Fair dealing requires that a supplier should not, whether deliberately or unconsciously, take advantage of the consumers necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position or any other factor listed in or analogous to those listed in Schedule 2 to the Regulations. Good faith in this context is not an artificial or technical concept; nor, since Lord Mansfield was its champion, is it a concept wholly unfamiliar to British lawyers. It looks to good standards of commercial morality and practice. Regulation 4(1) lays down a composite test, covering both the making and the substance of the contract, and must be applied bearing clearly in mind the objective which the Regulations are designed to promote. In the same case, Lord Millett said of regulation 5(1) (para 54): There can be no one single test of this. It is obviously useful to assess the impact of an impugned term on the parties rights and obligations by comparing the effect of the contract with the term and the effect it would have without it. But the inquiry cannot stop there. It may also be necessary to consider the effect of the inclusion of the term on the substance or core of the transaction; whether if it were drawn to his attention the consumer would be likely to be surprised by it; whether the term is a standard term, not merely in similar non negotiable consumer contracts, but in commercial contracts freely negotiated between parties acting on level terms and at arms length; and whether, in such cases, the party adversely affected by the inclusion of the term or his lawyer might reasonably be expected to object to its inclusion and press for its deletion. The list is not necessarily exhaustive; other approaches may sometimes be more appropriate. Many of the submissions under the 1999 Regulations overlap as a matter of fact with submissions already considered in the context of the penalty doctrine. The legal test is of course different. It is however relevant and necessary in the present context as in relation to the penalty doctrine to consider the different interests involved (16th recital to the Directive), which brings in all the factors discussed in paras 193 199 above. Again, reliance is placed on the fact that the charge of 85 (reducible) is incurred by overstaying for the shortest of periods, and does not vary according to the length of overstay. But that, for reasons already indicated, is an integral element of the scheme. Reliance is also placed on the Court of Justices emphasis in Aziz on the need to consider, first, what the position would have been under national law apart from the challenged term and, second, on whether the supplier could reasonably assume that the consumer would have agreed such a term in individual contract negotiations. Bearing in mind the need under the Directive and Regulations to consider all the circumstances, the Court of Justice cannot be taken to have been identifying considerations that would by themselves be conclusive, rather than relevant. That also reflects what Lord Millett said in the passage just quoted. It is clear that, but for the agreement made when parking, Mr Beavis would not have had any right to park at all, and would have been liable to damages in trespass, for which it would, almost certainly, not have been worth BAPFs while to pursue him. That would not have achieved any of BAPFs aims, and cannot here be an appropriate comparator when assessing the legitimacy or fairness of the scheme put in place by BAPF and ParkingEye. In reality, BAPF would have had to make some entirely different arrangement, involving perhaps barriers with either machines to take payments or a car park attendant to cater for overstayers. But that would not mean that BAPF or ParkingEye could or would have lowered the charge for overstaying, which, as stated, had to be set at a deterrent level if their aim of encouraging a regular turnover of customers was to be achieved. The submission that ParkingEye could not reasonably assume that customers in Mr Beaviss position would have agreed to the scheme in individual contract negotiations is less easy to address. A customer in Mr Beaviss position, if asked about the terms on which he would wish to park, would no doubt have been very satisfied with a proposal of two hours free parking, but would very probably have asked for some form of gradated payment in the event of overstaying. Confronted with the other interests involved and the considerations making that unacceptable from BAPFs and ParkingEyes viewpoint, I am not at all confident that he or she would have refused to accept the risk of having to pay 85 (reducible on prompt payment) in the event of overstaying. Mr de Waal and Mr Butcher submit that this would only have been because the customer would have under estimated the risk, and, at this point, again suggest that the scheme trades off the weakness of well meaning customers. They point to Office of Fair Trading v Ashbourne Management Services Ltd [2011] EWHC 1237 (Ch), [2011] CTLC 237, where Kitchin J held that the minimum membership term provisions in a number of standard form gym membership contracts were unfair and invalid, because: The defendants business model was designed and calculated to take advantage of the naivety and inexperience of the average consumer using gym and health clubs at the lower end of the market. The defendants knew that the average consumer overestimates the use he will make of the gym and health clubs and exploited this fact. The problem in this respect was that the defendants, who operated gym membership schemes, themselves accepted that it was a notorious fact that many people join such gym clubs having resolved to exercise regularly but fail to attend at all after two or three months. A reading of Kitchin Js judgment indicates how fact sensitive his conclusions were, differing according to his analysis of the particular terms of different contracts before him. In particular, because contracts 11 to 13 before him allowed early termination in a wider range of circumstances (eg medical, change of employment or a move of more than 15 miles: para 50), he was prepared to accept a minimum term not exceeding 12 months this, even though the identified problem related to members joining enthusiastically without thinking that they might well be leaving after only two or three months; and he added that he might well have been prepared to accept up to 24 or 36 months, had the contracts given an option to terminate after 12 months, coupled with a requirement to reimburse the differential between the agreed subscription and a shorter term subscription in respect of the period up to termination (para 174). There was therefore a balancing of all the interests involved at each stage. Although the submissions that the scheme was unfair within the meaning of the 1999 Regulations were forcefully presented, I cannot ultimately accept them. Judge Moloney QC summarised his conclusions as follows (para 7.18): a. It is difficult to categorise as not in good faith a simple and familiar provision of this sort of which very clear notice was given to the consumer in advance. b. There is not a significant imbalance between the parties rights and obligations, when the motorist is given a valuable privilege (two hours free parking) in return for a promise to pay a specified sum in the event of overstaying, provided that sum is not disproportionately high. c. The charge in question is not disproportionately high, and insofar as it exceeds compensation its amount is justifiable, and not in bad faith or detrimental to the consumer. I agree with the way Judge Moloney QC put it, as did the Court of Appeal. In the result, I would dismiss Mr Beaviss appeal. Conclusion It follows that in the Cavendish case, I would allow Cavendishs appeal in relation to both clause 5.1 and clause 5.6; and that I would also dismiss Mr Beaviss appeal in the second case brought by ParkingEye. LORD HODGE: I adopt with gratitude the summary of the facts and the procedural history of the two appeals in the joint judgment of Lord Neuberger and Lord Sumption (at paras 44 68 in relation to the Cavendish appeal and paras 89 96 in relation to Mr Beaviss appeal). Like them, I would allow the Cavendish appeal and dismiss the appeal by Mr Beavis. Cavendishs primary submission was that this court should abolish the rule that the courts do not enforce penalty clauses. This issue affects Scots law as well as English law as the rule is essentially the same in each jurisdiction, although the Scottish courts have in certain circumstances a power to abate the penalty which the English courts do not. Scots law has used English authorities in its development see Bells Principles of the Law of Scotland (10th ed) section 34 and has, through the case of Clydebank Engineering and Shipbuilding Co Ltd v Castaneda [1905] AC 6, (1905) 7 F (HL) 77, had a significant influence on the development of English law. I therefore focus on authorities from both jurisdictions in this judgment but also refer to authorities from other common law jurisdictions. The Cavendish appeal raises three principal issues: i) What is the scope of the rule against penalties? ii) Whether that rule should be abrogated or at least altered so as not to apply in commercial transactions where the contracting parties are of equal bargaining power and each acts on skilled legal advice? And if not, iii) Whether and, if so, how the rule should be applied in the circumstances of the appeal? I have come to the conclusion that the rule, which in each jurisdiction is now a rule of the law of contract, should not be abrogated. I have also concluded that its application in the circumstances of the Cavendish contract does not require the court to refuse to give effect to the parties agreement. I set out my reasoning below before turning more briefly to Mr Beaviss appeal. The scope of the rule against penalties The modern law in relation to penalty clauses was laid down by the House of Lords and the Judicial Committee of the Privy Council in a quartet of cases over 100 years ago. First, the House of Lords examined a liquidated damages clause in the Clydebank Engineering case in 1904. Then the Privy Council applied the decision in Clydebank to a retention clause in Public Works Comr v Hills [1906] AC 368 and to a liquidated damages clause in Webster v Bosanquet [1912] AC 394. Finally, in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79, which again concerned a liquidated damages clause, the House of Lords, in the speech of Lord Dunedin, set out an approach to the rule which has dominated judicial discussion ever since. In that case at pp 86 88 Lord Dunedin drew various propositions of law from the earlier three cases of the quartet. To assist later discussion I set out those propositions so far as necessary: 1. Though the parties to a contract who use the words penalty or liquidated damages may prima facie be supposed to mean what they say, yet the expression used is not conclusive. The court must find out whether the payment stipulated is in truth a penalty or liquidated damages. This doctrine may be said to be found passim in nearly every case. 2. The essence of a penalty is a payment of money stipulated as in terrorem of the offending party; the essence of liquidated damages is a genuine covenanted pre estimate of damage (Clydebank Engineering ). 3. The question whether a sum stipulated is penalty or liquidated damages is a question of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of the making of the contract, not as at the time of the breach (Public Works Comr v Hills and Webster v Bosanquet). 4. To assist this task of construction various tests have been suggested, which if applicable to the case under consideration may prove helpful, or even conclusive. Such are: (a) It will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach. (Illustration given by Lord Halsbury in Clydebank case.) (b) It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid (Kemble v Farren 6 Bing 141). This though one of the most ancient instances is truly a corollary to the last test. (c) There is a presumption (but no more) that it is a penalty when a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage (Lord Watson in Elphinstone v Monkland Iron and Coal Co 11 App Cas 332). On the other hand: (d) It is no obstacle to the sum stipulated being a genuine pre estimate of damage, that the consequences of the breach are such as to make precise pre estimation almost an impossibility. On the contrary, that is just the situation when it is probable that pre estimated damage was the true bargain between the parties (Clydebank Case, Lord Halsbury at p 11; Webster v Bosanquet, Lord Mersey at p 398). I observe that Lord Dunedin stated the first three propositions without qualification. The first and the third have caused no difficulty: the court looks to the substance of the transaction and approaches the matter as a question of construing the particular contract at the time when it was made. The second has caused difficulty when it has been treated as creating in all cases a dichotomy between a genuine pre estimate of damage on the one hand and a deterrent against breach on the other, if the former is understood to be a calculation of what common law damages would be. Indeed, in the Dunlop case itself the clause was upheld not because an individual discounted sale would cause loss of the stipulated magnitude but because of the danger of repeated undercutting of the appellants prices for their products, which would disrupt their trading system see in particular Lord Atkinson at pp 92 93. I will return to that proposition. Lord Dunedin prefaced the tests in the fourth proposition with a recognition that they might be neither helpful nor conclusive in a particular case. That is important, but, as I shall seek to explain, I take issue with that approach in relation to proposition 4(a), which in my view contains the essence of the test, where the contractual provisions seek to fix a sum payable as damages, and an adapted form of that test applies where the clause is protecting other interests of the innocent party. (a) The clauses to which the rule against penalties applies One of the reasons for the problem with the second proposition has been that the penalty doctrine applies not only to clauses which seek to set the damages to be paid on breach of contract but also to clauses which set out other consequences of a breach of contract. Thus in Lordsvale Finance plc v Bank of Zambia [1996] QB 752 Colman J, in a celebrated judgment dealing with a contractual provision to increase the rate of interest on a loan during a period of default, did not ask himself whether the provision was a genuine pre estimate of damage. He considered whether it was commercially justifiable to increase the consideration payable under an executory contract upon the happening of default. He concluded that the 1% prospective increase in the interest rate was commercially justifiable so long as the dominant purpose was not to deter the borrower from breach. In my view, that decision was clearly correct as a default affected the credit risk that the lender undertook. The Court of Appeal in Cine Bes Filmcilik Ve Yapimcilik v United International Pictures [2004] 1 CLC 401 supported Colman Js approach. Mance LJ, who produced the leading judgment, recognised (at para 15) that there were clauses which might operate on breach and which were commercially justifiable but which did not fall into either category of a dichotomy between a genuine pre estimate of damages and a penalty. In that case UIP had granted a licence to Cine Bes to show films on its movie channel. There were disputes over the licence agreement which resulted in litigation which the parties compromised in an agreement to grant a fresh licence. UIP later terminated the fresh licence on the ground of Cine Bess breach of contract. One of the provisions that Cine Bes challenged as a penalty was that it should pay to UIP not only its enforcement costs for the default on the fresh licence but also its litigation costs in the prior litigation. The Court of Appeal rejected this challenge, Mance LJ stating (at para 33): The agreement regarding past litigation costs was understandable in the overall context of the settlement of the prior litigation. It would be wrong to treat it as if it were there to deter [Cine Bes] from, or to penalise or punish [Cine Bes] for, any default. It was an understandable and reasonable commercial condition upon which UIP was prepared to dispose of the prior litigation, and to enter into the fresh licence. Mance LJ, drawing on Colman Js analysis, drew a distinction between a reasonable commercial condition on the one hand and a punishment on the other. As I shall seek to show, there is support for this dichotomy in the older case law. The Court of Appeal again considered the penalty doctrine in Murray v Leisureplay plc [2005] IRLR 946, which concerned a provision in the employment contract of a chief executive that entitled him to one years gross salary in the event of the termination of his employment without one years notice. The company challenged this entitlement as a penalty because common law damages would have given the director a sum after deduction of tax and national insurance contributions and he would have been under an obligation to mitigate his loss. The court rejected this challenge, accepting that the provision, which provided the director with generous reassurance against dismissal and could result in greater recovery than the amount of his actual loss which he could recover at common law, was commercially justified. In my view, this broader approach of Colman J and the Court of Appeal involves a correct analysis of the law and escapes the straightjacket into which the law risked being placed by an over rigorous emphasis on a dichotomy between a genuine pre estimate of damages on the one hand and a penalty on the other. To justify that view I will have to look briefly at the law before Dunlop. Before doing so, it is necessary to look at other provisions relating to breach of contract to which the rule against penalties has been applied or may apply and in particular (i) clauses withholding payments which were otherwise due, (ii) clauses requiring the party in breach to transfer property to the innocent party and (iii) clauses providing for the payment of a non refundable deposit in a contract of sale. Clauses withholding payments on breach: I see no principled reason why the law on penalties should be confined to clauses that require the contract breaker to pay money in the event of breach and not extend to clauses that in the same circumstance allow the innocent party to withhold moneys which are otherwise due. Indeed, there is ample authority to support the view that clauses which allow the innocent party to withhold payments on breach may be unenforceable as penalties where the sums retained are, or may be, wholly disproportionate to the loss suffered by the withholding party. One of the quartet of cases to which I referred in para 219 above Public Works Comr v Hills is an example of the application of the rule against penalties to a clause seeking in the event of a breach of contract to withhold money otherwise due to a contractor. In English law the House of Lords in Gilbert Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 considered a clause in a construction sub contract that allowed the main contractor to suspend or withhold payment of any moneys due to the sub contractor if the sub contractor failed to comply with any of its conditions. While the contractor conceded that this part of the contractual clause was a penalty, it is clear from the speeches of their Lordships that they agreed with the concession: see Lord Reid at p 698D F, Lord Morris of Borth y Gest at p 703G, Viscount Dilhorne at p 711D and Lord Salmon at p 723H. The majority of the Court of Appeal (Stuart Smith and OConnor LJJ) followed that approach in The Fanti and the Padre Island (No 2) [1989] 1 Lloyds Rep 239. Cavendish has argued that such clauses should be seen as forfeiture clauses to which the law of penalties should not apply. Ms Smith urged that it would be a recipe for confusion if a single clause were to be classified in two different ways. I disagree. There is no reason in principle why a contractual provision, which involves forfeiture of sums otherwise due, should not be subjected to the rule against penalties, if the forfeiture is wholly disproportionate either to the loss suffered by the innocent party or to another justifiable commercial interest which that party has sought to protect by the clause. If the forfeiture is not so exorbitant and therefore is enforceable under the rule against penalties, the court can then consider whether under English law it should grant equitable relief from forfeiture, looking at the position of the parties after the breach and the circumstances in which the contract was broken. This was the approach which Dillon LJ adopted in BICC plc v Burndy Corpn [1985] Ch 232 and in which Ackner LJ concurred. The court risks no confusion if it asks first whether, as a matter of construction, the clause is a penalty and, if it answers that question in the negative, considers whether relief in equity should be granted having regard to the position of the parties after the breach. I therefore conclude that clauses that authorise the withholding of sums otherwise due to the contract breaker may fall within the scope of the rule against penalties. Different considerations may arise when, on its rescission of a contract of sale, the vendor seeks to retain instalments of the price which the purchaser has made; in English law the equitable remedy against forfeiture may be available to preserve the purchasers claim for restitution of the instalments: Stockloser v Johnson [1954] 1 QB 476; Else (1982) Ltd v Parkland Holdings Ltd [1994] 1 BCLC 130. But we are not concerned with such circumstances in this appeal. Clauses requiring the transfer of property on breach: Again I see no reason in principle why the rule against penalties should not extend to clauses that require the contract breaker to transfer property to the innocent party on breach. There is authority in both English law and Scots law supporting this approach. In Jobson v Johnson [1989] 1 WLR 1026 the Court of Appeal considered a clause that required a purchaser of shares to re transfer shares to the vendor for a fixed consideration if he defaulted on payment of instalments of the price. The clause was treated as a penalty because it fixed the re transfer price at a modest figure regardless of the number of the much larger instalments which the purchaser had paid before his default. The case was an unusual one and the approach of the court to a remedy was influenced by the absence of a counterclaim for relief from forfeiture. I do not accept the conclusion in that case that the court had power in English law to modify a penalty (see para 283 below). But that does not, in my view, call into question the courts unanimous conclusion that the clause was caught by the rule against penalties. See also Else (1982) Ltd (above) Evans LJ at pp 137h and 138e. As I have said in para 227 above I see no confusion resulting from an assessment first, whether a clause is a penalty and, if it is not, considering whether to grant relief from forfeiture. In the Scottish case of Watson v Noble (1885) 13 R 347 a ship owner sold seven shares in a trawler to the appellant and was paid 100 for them. In a subsequent agreement the owner agreed to employ the appellant as captain of the vessel and to hold the shares in trust for him. The ship owner imposed an obligation on the captain to remain sober and attentive to his duties on pain of dismissal and forfeiture of both his shares and the right to claim repayment of the 100 which he had paid for the shares. In an application by the appellant for repayment of the 100 after his dismissal, the Second Division treated the forfeiture of the shares as a penalty which could not be enforced and, because the ship owner refused to transfer the shares, required him to repay the 100 which he had received for them. There is also considerable support in Australian authority for the application of the rule against penalties to clauses requiring a party in breach to transfer property to the innocent party. See, for example, Bysouth v Shire of Blackburn and Mitcham (No 2) [1928] VLR 562, Irvine CJ at pp 574 575; Forestry Commission of New South Wales v Stefanetto (1976) 133 CLR 507, Mason J at p 521; Wollondilly Shire Council v Picton Power Lines Pty Ltd (1994) 33 NSWLR 551, Handley JA at p 555F G; Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656 in which the point was conceded (p 665); and Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd [2008] NSWCA 310, Allsop P at paras 101 102. The Court of Appeal in New Zealand has taken a similar view: Amaltal Corpn Ltd v Maruha (NZ) Corpn Ltd [2004] 2 NZLR 614, Blanchard J at para 61. I am satisfied therefore that the rule against penalties can be applied to a contractual term that provides for the transfer on breach of contract of property from the contract breaker to the innocent party. Clauses requiring the purchaser to pay an extravagant non refundable deposit: In English law a non refundable deposit is a guarantee by a purchaser that the contract will be performed: Howe v Smith (1884) 27 Ch D 89, Cotton LJ at p 95; Soper v Arnold (1889) 14 App Cas 429, 435 per Lord MacNaghten. It provides the vendor with some assurance of performance while the property is taken off the market during the period from the date of the contract to the completion of performance. If the contract is performed, the deposit forms part of the purchase price. If the purchaser breaks the contract, the vendor keeps the deposit. As Fry LJ stated in Howe v Smith (at p 101): It is not merely a part payment, but is then also an earnest to bind the bargain so entered into, and creates by the fear of its forfeiture a motive in the payer to perform the rest of the contract. Where the deposit was fixed at a reasonable figure, its forfeiture on breach of contract does not bring into play the rule against penalties, its purpose not being related to any loss that the vendor may have suffered and that he may seek to recover in damages: Wallis v Smith (1882) 21 Ch D 243, Jessel MR at p 258. But in Stockloser v Johnson [1954] 1 QB 476, Denning LJ suggested (at p 491) that a party could not call a stipulation for an initial payment of 50% of the purchase price a deposit and thereby achieve a forfeiture from which equity could give no relief. He said (at p 492) that the equity of restitution was to be tested not at the time of the contract but by the conditions existing when it was invoked. This suggests that he was considering relief from forfeiture rather than the rule against penalties. More directly relevant is Lord Radcliffes statement in Campbell Discount Co Ltd v Bridge [1962] AC 600, when discussing deposits (at p 624): I do not see any sufficient reason why in the right setting a sum of money may not be treated as a penalty, even though it arises from an obligation that is essentially a guarantee. The Judicial Committee of the Privy Council has developed the idea that an extravagant deposit should not be forfeited on breach of contract. In Linggi Plantations Ltd v Jagatheesan [1972] 1 MLJ 89, Lord Hailsham (at p 94) suggested that where, on investigation, the real nature of an initial payment, which was termed a deposit, was shown to be the imposition of a penalty, it might be recovered by the purchaser, and that it was only a reasonable deposit that was irrecoverable. More recently, in Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573, the Board addressed the question whether a deposit of 25% of the purchase price in the contract for the purchase of land from a bank at auction in Jamaica (where 10% deposits were customary) could be forfeited. Lord Browne Wilkinson, who gave the Boards advice, spoke (at p 579) of the risk that the special treatment which the law gives to deposits being abused if the contracting parties attach the label deposit to a penalty. The Privy Council made the validity of a deposit conditional upon whether it was reasonable as earnest money. Lord Browne Wilkinson stated (at p 580): In order to be reasonable a true deposit must be objectively operating as earnest money and not as a penalty. To allow the test of reasonableness to depend upon the practice of one class of vendor, which exercises considerable financial muscle, would be to allow them to evade the law against penalties by adopting practices of their own. The Board therefore took as a norm the long established practice both in Jamaica and the United Kingdom of a deposit of 10% and required a vendor who sought a larger percentage to show special circumstances to justify that deposit. In effect, the Board applied a test of commercial justification akin to the test which Colman J later applied in Lordsvale Finance plc. In Polyset Ltd v Panhandat Ltd (2002) 5 HKCFAR 234 the Hong Kong Court of Final Appeal carried out a thorough review of the law relating to deposits. The court considered the cases which I have mentioned and concluded that the court would intervene to prevent forfeiture where parties abused the concept of deposit. The forfeiture of a deposit would be enforced only if it were reasonable as earnest money. Where the deposit exceeded the conventional amount, the court would permit forfeiture only if the party seeking to forfeit could show that exceptional circumstances justified the higher amount (Ribeiro PJ at para 90, Bokhary PJ at paras 10 18, Chan PJ at paras 40 42; Lord Millett NPJ at para 165). Because Bokhary PJ and Ribeiro PJ considered that the test of genuine pre estimate of loss applied in the rule against penalties when considering whether a sum was liquidated damages, they did not view the reasonable as earnest money test as part of the law of penalties. But if, as I think correct, the true test for penalties is wider than the genuine pre estimate of loss test (see paras 242 255 below), the Hong Kong courts conclusions were wholly consistent with Lord Browne Wilkinsons approach in Workers Trust. Historically, Scots law has followed English law in treating deposits as outside the rule against penalties, citing English authorities in support of the view that a deposit was a guarantee of or security for performance: Commercial Bank of Scotland Ltd v Beal (1890) 18 R 80; Roberts & Cooper v Salvesen & Co 1918 SC 794; Zemhunt (Holdings) Ltd v Control Securities plc 1992 SC 58. There has been no discussion whether that exclusion is confined to reasonable deposits. But in none of those cases was there a question whether the deposit was extravagant. In Roberts & Cooper, in which the First Division upheld the forfeiture of a 3,000 deposit on the purchase of a ship for 30,000 when the purchaser repudiated the contract, Lord Skerrington (at p 814) suggested that there was no reason why in a proper case a clause for the forfeiture of a purchasers deposit should not be construed as a penalty and be unenforceable. I agree. As Scots law has followed English law in relation to the law of deposits, I see no reason why it should not adopt the modern approach of excluding only reasonable deposits from the rule against penalties. I conclude therefore that in both English law and Scots law (a) a deposit which is not reasonable as earnest money may be challenged as a penalty and (b) where the stipulated deposit exceeds the percentage set by long established practice the vendor must show special circumstances to justify that deposit if it is not to be treated as an unenforceable penalty. Circumstances other than breach of contract: The rule against penalties applies only in the context of a breach of contract. In English law the House of Lords has so held in Export Credits Guarantee Department v Universal Oil Products Co [1983] 1 WLR 399, 403 per Lord Roskill. In Scots law the question has not reached the House of Lords or the Supreme Court. But in Granor Finance Ltd v Liquidator of Eastore Ltd 1974 SLT 296, Lord Keith, when a Lord Ordinary, held (p 298) that the rule against penalties had no application in a case which was not a case of breach of contract, and more recently, in EFT Commercial Ltd v Security Change Ltd 1992 SC 414, the First Division has re asserted that position. Mr Bloch, counsel for Mr Makdessi, suggested in the course of debate that the court could extend the rule against penalties. He referred to the controversial decision of the High Court of Australia in Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205, in which the court held that bank charges, which were imposed on customers on the occurrence of events which were not breaches of contract, could be characterised as penalties and thus be unenforceable. As this suggestion is peripheral to the main arguments in this appeal, I deal with it shortly. I am satisfied that the rule against penalties in both English and Scots law has applied only in relation to secondary obligations penal remedies for breach of contract. In Scotland, the courts administer an equitable as well as a common law jurisdiction without having two branches of jurisdiction. There is no freestanding equitable jurisdiction to render unenforceable as penalties stipulations operative as a result of events which do not entail a breach of contract. Such an innovation would, if desirable, require legislation. (b) The true test for a penalty In para 221 above I suggested (a) that there was a problem in the way in which the courts had read Lord Dunedins second proposition and (b) that his proposition 4(a) contained the essence of the test: that is, whether the secondary obligation was exorbitant and unconscionable. The rule against penalties is a rule of contract law based on public policy. It is a question of construction of the parties contract judged by reference to the circumstances at the time of contracting; the public policy is that the courts will not enforce a stipulation for punishment for breach of contract. In the first of the quartet of cases, Clydebank Engineering, the House of Lords held that the courts would not enforce a measure that was extravagant and unconscionable: Earl of Halsbury LC at p 10, Lord Davey at p 16 and Lord Robertson at p 20. Different expressions were used to describe the manifestly excessive nature of the measure in comparison with the interest which the challenged clause protected. But at its heart was the idea of exorbitance or gross excessiveness. The phrase in Lord Dunedins second proposition appears to have come from the opinion of Lord Kyllachy as Lord Ordinary in the Clydebank Engineering case ((1903) 5 F 1016 at p 1022) where he contrasted a measure which was reasonable and moderate and one which was exorbitant and unconscionable and said of the latter that: the amount stipulated might be such as to make it plain that it was merely stipulated in terrorem, and could not possibly have formed a genuine pre estimate of the creditors probable or possible interest in the due performance of the principal obligation. While Lord Kyllachys emphasis on a genuine pre estimate suggests that he was considering clauses which are intended to fix the level of damages paid on breach of contract, the overriding test of exorbitance fits the wider range of circumstances in which the rule against penalties has been applied, including enhanced interest charges (Lordsvale Finance), the agreement to pay an employee sums in excess of common law damages (Murray), and deposits (Workers Trust & Merchant Bank Ltd). Lord Robertsons focus in the Clydebank Engineering case on the innocent partys interest in the due performance of the principal obligation and his posing of the question had the respondents no interest to protect by that clause, or was that interest palpably incommensurate with the sums agreed on? provide the framework for the application of the exorbitance test to those wider circumstances. Lord Dunedins propositions were his summary of existing authorities. In his second proposition he drew on Lord Kyllachys phrase to state the paradigms of a penalty on the one hand and liquidated damages on the other. Exorbitance featured in his proposition 4(a) and also in the speeches of Lord Atkinson (p 97: unreasonable, unconscionable or extravagant) and Lord Parmoor (p 101: extravagant or unconscionable; extravagant disproportion between the agreed sum and the amount of any damage capable of pre estimate). The focus on the disproportion between the specified sum and damage capable of pre estimation makes sense in the context of a damages clause but is an artificial concept if applied to clauses which have another commercial justification. Similarly, I doubt whether it is helpful to rely on the concept of deterrence. Many contractual provisions are coercive in nature, encouraging a contracting party to perform his or her obligations; the prospect of liability in common law damages itself is a spur to performance. Similarly, a deposit provides a motive for performance (para 234 above). Instead, the broader test of exorbitance or manifest excess compared with the innocent partys commercial interests fits the various applications of the rule against penalties and is consistent with the repeated warnings by the courts against imposing too stringent a standard. Thus in Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 (CA) Diplock LJ warned (at p 1447E), The court should not be astute to descry a penalty clause. In Philips Hong Kong Ltd v Attorney General of Hong Kong (1993) 61 BLR 41, Lord Woolf (at p 59) said: [T]he court has to be careful not to set too stringent a standard and bear in mind that what the parties have agreed should normally be upheld. Any other approach will lead to undesirable uncertainty especially in commercial contracts. In Murray (above) Arden LJ expressed a similar view when she said (at para 43), The parties are allowed a generous margin. When the court makes a value judgment on whether a provision is exorbitant or unconscionable, it has regard to the legitimate interests, commercial or otherwise, which the innocent party has sought to protect. Where the obligation which has been breached is to pay money on a certain date, the innocent partys interests are normally fully served by the payment of the stipulated sum together with interest and the costs of recovery. More complex questions arise where there is an obligation to perform by a certain date, such as the construction of the torpedo boats in Clydebank Engineering, as the assessment of the loss suffered by the innocent party may often be difficult and parties may have an interest in fixing the level of compensation in advance to avoid the necessity of an expensive trial. In Scots law a distinction has also been drawn between the breach of an obligation to perform some act and the wilful breach of a prohibition; in the latter circumstance the court is less inclined to treat a harsh contractual remedy as unconscionable. Thus in Forrest & Barr v Henderson, Coulbourn & Co (1869) 8 M 187, Lord Neaves (at p 202) stated: There are great differences in the stipulations themselves that are so made, and, in particular, there is a great difference according as the breach of contract consists in faciendo and in non faciendo. If a man wilfully goes against what he has promised not to do, that is an unfavourable case for restriction. Lord Deas expressed a similar view at p 196. As the rule against penalties is based on public policy and has developed over time, its current form is of more significance than its historical development. Lord Neuberger and Lord Sumption have discussed the origins and development of the rule in English law in paras 4 11 of their judgment. Professor David Ibbetson in A Historical Introduction to the Law of Obligations (1999) (pp 255 256) records how Scots law and South Africas Roman Dutch law came to influence the modern English rule in Dunlop. It may therefore be helpful to say something about the development of the rule in Scots law. In early Scots law penalties were associated with usury. While there are examples of the Court of Session enforcing penalties in the early 16th century, in Home v Hepburn (1549) Mor 10033 the Court of Session prohibited the imposition of punishments for breach of contract. In the abbreviated report of that case the court held: de practica regni, poenae conventionales non possunt exigi, nisi quatenus interest actores, quia sapiunt quendam usuram et inhonestum questum Balfours Practicks (1579) gives a vernacular account of the case in these terms (Stair Society vol I, p 151): Be the law of this realme, poena conventionales, sic as ane soume of money adjectit, with consent of parties, in ony contract or obligatioun, in name of pane, may not be askit be ony persoun bot in sa far as he is interestit, hurt or skaithit; because all sic painis are in ane maner usuraris, and dishonest, made for lucre or gane. It is of note that the judgment referred to the innocent partys interest in performance (interesse to have an interest) as well his injury or damage (skaith), foreshadowing Lord Robertsons formulation in Clydebank Engineering. Viscount Stair in his Institutions of the Law of Scotland regarded the power to modify exorbitant bonds and contracts as part of the nobile officium of the Court of Session, recognising that necessitous debtors yield to exorbitant penalties (Stair, IV.3.2). A penalty clause was seen as a secondary obligation, an additional means of enforcement; tendering the penalty did not release the contract breaker from his primary obligation: University of Glasgow v Faculty of Physicians and Surgeons (1840) 1 Rob 397, 415. The Court of Session, as the supreme court of law and equity, exercised an equitable power of mitigation (Bell, Commentaries on the Law of Scotland, 7th ed (1870) vol I, 700). Many of the cases concerned the imposition of additional rent on an agricultural tenant who departed from the agreed cropping cycle of the land (as in Stration v Graham (1789) 3 Pat 119). In relation to penalty clauses in bonds, the courts enforced the penalty only to the extent of recovering the principal sum due, interest and expenses. The power to modify a penalty was placed on a statutory basis and the extant provision is section 5 of the Debts Securities (Scotland) Act 1856: [A]nd in all cases where penalties for non payment, over and above performance, are contained in bonds or other obligations for sums of money, and are made the subject of adjudication, or of demand in any other shape, it shall be in the power of the court to modify and restrict such penalties, so as not to exceed the real and necessary expenses incurred in making the debt effectual. More recently, in Wirral Borough Council v Currys Group plc 1998 SLT 463, Lord Hamilton (at p 467) confirmed that the statutory power to modify extends to money obligations other than bonds. Although the Scottish Parliament has enacted legislation to abolish the remedy of adjudication as a means of debt recovery (the Bankruptcy and Diligence etc (Scotland) Act 2007), the court retains a power to modify such penalties for failure to fulfil monetary obligations. By the mid 19th century, case law on penalty clauses had moved to contracts for the supply of goods and services and construction contracts. Three cases, in which Lord Inglis participated, provided the backdrop for the Clydebank Engineering decision, the first of the quartet of cases which set out the modern law. In Johnston v Robertson (1861) 23 D 646, the Second Division held that a charge of 5 per week for the late completion of a poor house was liquidated damages and not a penalty; Lord Justice Clerk Inglis (at p 655) posed the question whether the stipulation was a reasonable and appropriate mode of enforcing the obligation to complete the work by the specified date and whether the sum was proportionate to the loss suffered by the innocent party. In Craig v McBeath (1863) 1 M 1020, 1022, Lord Justice Clerk Inglis cited Home v Hepburn in support of the proposition that Parties cannot lawfully enter into an agreement that the one party shall be punished at the suit of the other. Lord Young enunciated a similar principle in Robertson v Drivers Trs (1881) 8 R 555, 562, stating that the law will not let people punish each other. In Forrest & Barr (above), which concerned the purchase and erection of a crane in a shipyard by a specified date and a penalty of 20 per day for delay, Lord President Inglis stated (at p 193) that equity would interfere to prevent a claim being maintained to an exorbitant and unconscionable amount. Lord Deas, Lord Ardmillan and Lord Neaves used the same expressions (at pp 198, 199 and 203 respectively); Lord Kinloch (at p 201) spoke of a claim being so utterly extravagant and unreasonable that the court could infer that it was a penalty or punishment. This approach to penalty clauses is consistent with the judgments of the House of Lords in Dunlop in which an extravagant disproportion between an agreed sum and the innocent partys interest in the due performance of the contract would amount to what Lord Parmoor described (p 100) as: a penal sum inserted as a punishment on the defaulter irrespective of the amount of any loss which could at the time have been in contemplation of the parties . I therefore conclude that the correct test for a penalty is whether the sum or remedy stipulated as a consequence of a breach of contract is exorbitant or unconscionable when regard is had to the innocent partys interest in the performance of the contract. Where the test is to be applied to a clause fixing the level of damages to be paid on breach, an extravagant disproportion between the stipulated sum and the highest level of damages that could possibly arise from the breach would amount to a penalty and thus be unenforceable. In other circumstances the contractual provision that applies on breach is measured against the interest of the innocent party which is protected by the contract and the court asks whether the remedy is exorbitant or unconscionable. (ii) Whether the rule against penalties should be abrogated or altered? I am not persuaded that there is any proper basis for abrogating the rule against penalties or restricting its application to commercial transactions where the parties are unequal in their bargaining power and there is a risk of oppression. The rule against penalties is an exception to the general approach of the common law that parties are free to contract as they please and that the courts will enforce their agreements pacta sunt servanda. The rule against penalties may have been motivated in part by a desire to prevent oppression of the weaker party by the more powerful party to a contractual negotiation. As I have said, Viscount Stair spoke of this danger when he spoke of necessitous debtors having to yield to exorbitant penalties (IV.3.2). Diplock LJ in Robophone (p 1447A) recognised the reality that many contracting parties could not contract la carte but had to accept the table dhte of the standard term contract. In AMEVUDC Finance Ltd v Austin (1986) 162 CLR 170, Mason and Wilson JJ (at pp 193 194) suggested that the rule was aimed at preventing oppression and that the nature of the relationship between the contracting parties was a factor relevant to unconscionableness. In Philips v Hong Kong (pp 58 59) Lord Woolf suggested that in some cases the fact that one of the contracting parties was able to dominate the other as to the choice of the contract terms was relevant to the application of the rule. But the application of the rule does not depend on any disparity of power of the contracting parties: Imperial Tobacco Co (of Great Britain and Ireland) Ltd v Parslay [1936] 2 All ER 515 (CA), Lord Wright MR at p 523. Because the rule is not so limited, Ms Joanna Smith QC argued that the rule interferes with freedom of contract in circumstances in which it is not needed. The rule may also be criticised because it can be circumvented by careful drafting. Indeed one of Cavendishs arguments was that clause 5.1 could have been removed from the scope of the rule if it had been worded so as to make the payment of the instalments conditional upon performance of the clause 11 obligations. This is a consequence of the rule applying only in the context of breach of contract. But where it is clear that the parties have so circumvented the rule and that the substance of the contractual arrangement is the imposition of punishment for breach of contract, the concept of a disguised penalty may enable a court to intervene: see Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433, Bingham LJ at pp 445 446 and, more directly, the American Law Institutes Restatement of the Law, Second, Contracts section 356 on liquidated damages and penalties, in which the commentary suggests that the courts focus on the substance of the contractual term would enable it in an appropriate case to identify disguised penalties. It may also be said against the rule that it promotes uncertainty in commercial dealings as the contracting parties may not be able to foresee the judges value judgment on whether a particular provision is exorbitant or unconscionable. There is beyond doubt real benefit in parties being able to agree the consequences of a breach of contract, particularly where there would be difficulty in ascertaining the sum in damages which was appropriate to compensate the innocent party for loss caused by the breach. Parties save on transaction costs where they can avoid expensive litigation on the consequences of breach of contract. It has also been said that judges should be modest in their assumptions that they know about business: Wallis v Smith (1882) 21 Ch D 243, Jessel MR at p 266. Legislative measures have been introduced to control unfair terms in contracts. In recent years, the Unfair Terms in Consumer Contracts Regulations 1999 and the Consumer Protection from Unfair Trading Regulations 2008 have given effect to European Directives and more recently the Consumer Rights Act 2015 has been brought into force. But while this legislation may have reduced the need for the rule against penalties in consumer contracts, it has no bearing on commercial contracts. There are therefore arguments that can be made against the rule against penalties, or at least against its scope. But I am persuaded that the rule against penalties should remain part of our law, principally for three reasons. First, there remain significant imbalances in negotiating power in the commercial world. Small businesses often contract with large commercial entities and have little say as to the terms of their contracts. Examples such as the relationship between a main contractor and a sub contractor in the construction industry and that between a large retail chain and a small supplier spring to mind. Secondly, abolition of the rule against penalties would go against the flow of legal developments both nationally and internationally. Both the Law Commission of England and Wales and the Scottish Law Commission have looked at the rule against penalties and neither has recommended its abolition. The Law Commissions Working Paper No 61 on Penalty Clauses and Forfeiture of Monies Paid in 1975 proposed the extension of judicial control to embrace penalty clauses that come into operation without any breach of contract. More recently, the Scottish Law Commissions Report on Penalty Clauses in 1999 recommended the retention of judicial control over penalties whether they took the form of a payment of money, a forfeiture of money, a transfer of property or a forfeiture of property. It recommended a criterion of manifestly excessive and the abolition of any requirement that the clause be founded in a pre estimate of damages. It also recommended that judicial control should not be confined to cases where the promisor is in breach of contract. As counsels very helpful researches showed, other common law countries such as Australia, Canada, New Zealand, Singapore and Hong Kong have rules against penalties, as has the commercially important law of New York, the Uniform Commercial Code and, as I have mentioned, the American Law Institutes Restatement of the Law, Second, Contracts. In the civil law tradition, which has had a profound influence on Scots law and which under Lord Mansfield influenced the development of English commercial law, the modern civil codes of Belgium (article 1231), France (article 1152), Germany (section 343), and Italy (article 1384) and the Swiss Code of Obligations (article 163) all provide for the modification of contractual penalties using tests such as manifestly excessive, disproportionately high, or excessive. Further, in what Mr Bloch described as soft law, recent international instruments prepared by expert lawyers, such as the Council of Europes Resolution (78) 3 on Penal Clauses in Civil Law (1978) (article 7), the Principles of European Contract Law (1995) (article 9.509), the Unidroit Principles of International Commercial Contracts (1994) (article 7.4.13) and Uncitral texts on liquidated damages and penalty clauses (1983) (article 8) also provide for the restriction of grossly excessive or manifestly excessive or substantially disproportionate penalty clauses. The Draft Common Frame of Reference (III 3:712) also provides for the reduction of stipulated payments for non performance if they are grossly excessive. Thirdly, I am not persuaded that the rule against penalties prevents parties from reaching sensible arrangements to fix the consequences of a breach of contract and thus avoid expensive disputes. The criterion of exorbitance or unconscionableness should prevent the enforcement of only egregious contractual provisions. Ms Smiths alternative proposal, that the rule should not extend to commercial transactions in which the parties are of equal bargaining power and each acts on skilled legal advice, does not appeal to me. Creating such a gateway to the application of the rule would risk adding to the expense of commercial disputes by requiring the court to rule on issues of fact about the bargaining power of the parties and the calibre of their respective legal advisers. I therefore turn to the application of the rule against penalties in the two appeals. The application of the rule against penalties: (a) in the Cavendish appeal Clause 5.1, which removes a sellers valuable rights to receive the interim payment and final payment if he is in breach of clause 11.2, was likely to deprive the defaulting shareholder of a substantial sum of money. The parties have agreed that the enforcement of the clause would deprive Mr El Makdessi of up to $44,181,600. Breach of clause 11.2 therefore comes at a high price. There is clearly a strong argument, which Lord Neuberger and Lord Sumption favour, that in substance clause 5.1 is a primary obligation which made payment of the interim and final payments conditional upon the sellers performance of his clause 11.2 obligations. But even if it were correct to analyse clause 5.1 as a secondary provision operating on breach of the sellers primary obligation, I am satisfied that it is not an unenforceable penalty clause for the following six reasons. First, it is important to consider the nature of the obligations of the sellers which could trigger the withholding of the instalments under clause 5.1. Clause 11.2 imposed restrictive covenants on the sellers, prohibiting them from competing with the company. Having sold substantial blocks of shares in the company for a price which attributed a high value to its goodwill, the sellers were prohibited from derogating from what they had sold. Secondly, the factual matrix in the uncontested evidence of Mr Andrew Scott, WPPs director of corporate development, and Mr Ghossoub and recorded in the agreed statement of facts and issues showed the importance of personal relationships in the marketing sector and particularly in the Middle East. The statement of facts and issues recorded (at para 5) that the success of the Groups business depended on the personal relationships which Mr Ghossoub and Mr El Makdessi had built up with their key clients and in para 33, which Lord Neuberger and Lord Sumption quote at para 66 of their judgment, it explained that the agreement was structured to protect the goodwill of the Group. The continued loyalty of the sellers was critically important to preserving the value of the Groups goodwill. Thirdly, that evidence and the agreement itself showed that a large proportion of the agreed purchase price was attributable to that goodwill. Extrapolating from the maximum consideration which the sellers could have received for the shares which they sold, the company had a maximum value of $300m which compares with its certified NAV (without goodwill) of $69.7m. Cavendish therefore needed to be assured of the sellers loyalty. It had a very substantial and legitimate interest in protecting the value of the companys goodwill. It did so by giving the sellers a strong financial incentive to remain loyal to the company by complying with the restrictions set out in clause 11.2. The sellers, who, like Cavendish, had access to expert legal advice and negotiated the contract over several months, agreed to peril their entitlement to the deferred consideration on their continued loyalty. Fourthly, I am not persuaded by Mr Blochs argument that clause 5.1 was exorbitant because it could be triggered by a minor breach of clause 11.2, such as an unsuccessful solicitation of a senior employee. That appears to me to be unrealistic. Clause 5.1 was not addressing the loss which Cavendish might suffer from breach of the restrictive covenant, whether an isolated and minor breach or repeated and fundamental breaches. It was addressing the disloyalty of a seller who was prepared in any way to attack the companys goodwill. No question therefore arises of a presumption of a penalty where the same sum is payable on the occurrence of several events which may cause serious or trifling damages as in Lord Dunedins proposition 4(c) in Dunlop. In any event, that presumption would not apply because the losses arising from any breach of clause 11.2 were generically the same see Lord Parker of Waddington in Dunlop at p 98. As Lord Neuberger and Lord Sumption have said (para 75), loyalty is indivisible. Fifthly, Mr Bloch submitted that clause 5.1 might operate perversely as far as Mr El Makdessi was concerned because a minor breach of clause 11.2, which did not harm the companys goodwill, would result in his losing more by the loss of the interim and final payments than a major breach which diminished the profits of the company and thus the deferred consideration. Similarly, he submitted that a breach that was detected before the interim payment or the final payment would have more serious consequences for the seller than one detected later. But again clause 5.1 is not addressing the loss which Cavendish may incur from a particular breach. The relevant questions are broader, namely (i) whether Cavendish had a legitimate interest in the circumstances to protect its investment in the company and (ii) whether the making of its later instalments of price depend upon each sellers performance of his clause 11.2 obligations was a manifestly excessive means of protecting that interest. Finally, I am not persuaded that the companys entitlement to seek a disgorgement of Mr El Makdessis profits arising from his breach of fiduciary duty and the possibility that Cavendish itself might have a claim in damages if Mr El Makdessi breached clause 11.2 after he ceased to be a director make the operation of clause 5.1 exorbitant or unconscionable. The former is res inter alios acta as each of Cavendish and the company have separate legal personality. Any award of damages to Cavendish would be designed to place it in the same position financially as if the contract had been performed. If an award of damages together with the price reduction which clause 5.1 effects involved double counting, I would expect the price reduction to be credited against the claim for damages. In summary, I am persuaded that in the circumstances of this share purchase, Cavendish had a very substantial legitimate interest to protect by making the deferred consideration depend upon the continued loyalty of the sellers through their compliance with the prohibitions in clause 11.2. I do not construe clause 5.1 as a stipulation for punishment for breach; it is neither exorbitant nor unconscionable but is commensurate with Cavendishs legitimate interests. It may therefore be enforced. Clause 5.6, which provides for the compulsory transfer of the defaulting shareholders retained shareholding, is more difficult. But I have come to the view that it also may be enforced. Mr El Makdessi does not contest the obligation placed on the defaulting shareholder to transfer his shares on breach of contract. But he challenges the price at which the compulsory transfer is to be effected, as the formula for the calculation of the price excludes the value of goodwill. There is again a strong argument, which Lord Neuberger and Lord Sumption favour, that clause 5.6 is a primary obligation to which the rule against penalties does not apply. But if all such clauses were treated as primary obligations, there would be considerable scope for abuse. I construe the clause as a secondary obligation, which is designed to deter (a) the sellers from breaching their clause 11.2 obligations and (b) a seller who is an employee from misconduct which damages the interests of the Group and leads to summary dismissal (viz the Schedule 12 definition of defaulting shareholder). Clause 5.6, like clause 5.1, is not a provision which fixes the damages payable for a breach of contract. It seeks to regulate the terms on which a defaulting shareholder severs his connection with the company. It falls to be construed in the context of the agreement as a whole, in which Cavendish agreed to pay a price for the shares which it purchased on the basis that the sellers remained involved in the company for transitional periods and complied with their clause 11.2 duties for at least two years after they had exercised their put options under clause 15 or had otherwise ceased to hold shares in the company. I think that Mr El Makdessi was correct in accepting that, if a seller acted in breach of clause 11.2 by competing with the company in any of the ways listed in that clause, Cavendish would act reasonably in seeking to remove him from any involvement in the company, including by the compulsory transfer of his shareholding. On the departure of the defaulting shareholder, the company would lose both his work on its behalf and also his valuable personal connections. It was readily foreseeable at the time of contracting that the departure on default of either of the sellers would cause significant damage to the companys goodwill and thus materially reduce its value. Against that background, the question for the court is whether the defaulting shareholder option price, which was the net asset value of the company excluding any goodwill value, was an exorbitant or unconscionable undervaluation when measured against Cavendishs legitimate interest in protecting its investment from the risk of either of the sellers acting against the companys interests. In my view, the terms were harsh; but they were not exorbitant. They were not a punishment but, in the particular context of the purchase of a marketing business in the Middle East, were a legitimate means of encouraging the sellers to comply with their clause 11.2 obligations which were critical to Cavendishs investment. Nor were the terms unconscionable for any broader reason. The contract was negotiated in detail by parties of relatively equal bargaining power and with skilled legal advice; a seller could readily comply with the obligations in clause 11.2, which were, in Lord Neavess words in Forrest & Barr (para 249 above), obligations in non faciendo, or prohibitions. For completeness, I comment on Mr Blochs suggestion that the court has a power to modify the terms on which clause 5.6 would operate. In English law a penalty clause cannot be enforced. For the reasons given by Lord Neuberger and Lord Sumption in their judgment (at paras 84 87) I think that the decision of the Court of Appeal in Jobson v Johnston was incorrect in so far as it modified a penalty clause and should be overruled. In Scots law the statutory power of the court to modify a penalty (para 252 above) does not extend to a penalty in support of a primary obligation other than for payment of a sum of money. If there is in Scots law a residual common law power of modification of penalties in support of primary obligations such as to supply goods or services as in Craig v McBeath (above), I do not see how the power of abatement can extend to modifying the price of a compulsorily transferred asset. (b) in Mr Beaviss appeal I agree (a) that the relationship between ParkingEye and Mr Beavis was a contractual relationship in the form of a licence and (b) that the parking charge incurred on breach of the obligation to park for no more than two hours engages the rule against penalties. If my analysis of the rule against penalties is correct, the only relevant questions are (i) did ParkingEye have a legitimate interest to protect by the imposition of the parking charge (ii) whether the level of the charge is exorbitant or unconscionable. This is because, first, the charge was not and did not purport to be a claim for damages for any loss that ParkingEye would suffer as a result of a motorist exceeding the two hour maximum parking time. ParkingEye suffered no loss. Secondly, the fact that the charge encouraged the motorist to comply with the terms of the licence and deterred him or her from overstaying or parking irresponsibly outside the marked parking bays did not make it a penalty. Deterrence in that sense is not the test for a penalty. ParkingEye had a legitimate interest to protect. It provided a service to its clients, the owners of the retail park which leased units to retailers. It undertook to manage the car park in a way which benefitted the owners and the retailers and also the public seeking to visit units within the retail park by encouraging the public to remain in the car park for no longer than two hours. ParkingEye imposed the parking charge in order to encourage the prompt turnover of car parking spaces and also to fund its own business activities and make a profit. That legitimate interest would not justify the parking charge if it were out of all proportion to that interest, or, in other words, exorbitant. In deciding whether the charge was exorbitant, I think that the court can look at the statutorily authorised practice of local authorities in England and Wales and also the recommendations of the accredited trade association, the BPA. Neither is conclusive and the question is ultimately a value judgment by the court. But local authority practice, the BPA guidance, and also the evidence that it is common practice in the United Kingdom to allow motorists to stay for two hours in such private car parks and then to impose a charge of 85, support the view that such a charge was not manifestly excessive. There was no other evidence that suggested otherwise. In so far as the criterion of unconscionableness allows the court to address considerations other than the size of the penalty in relation to the protected interest, the fact that motorists entering the car park were given ample warning of both the time limit of their licence and the amount of the charge also supports the view that the parking charge was not unconscionable. I therefore conclude that the rule against penalties is no bar against the enforcement of the parking charge imposed on Mr Beavis. Mr Beaviss other ground of appeal: the Unfair Terms in Consumer Contracts Regulations 1999 I was initially in some doubt about the correct answer to this challenge. But on further consideration I am persuaded for the reasons given by Lord Neuberger and Lord Sumption and also by Lord Mance that the 85 charge did not infringe the 1999 Regulations. Conclusion I would therefore allow the appeal in Cavendish v El Makdessi and dismiss the appeal in ParkingEye v Beavis and make the declarations that Lord Neuberger and Lord Sumption propose in para 115 of their joint judgment. LORD CLARKE: I agree that the appeal in Cavendish should be allowed, that that in Beavis should be dismissed and that we should make the declarations proposed by Lord Neuberger and Lord Sumption. In reaching those conclusions I agree with the reasoning of Lord Neuberger and Lord Sumption, Lord Mance and Lord Hodge, save that on the question whether clauses 5.1 and 5.6 are capable of constituting penalties, I agree with Lord Hodge in having an open mind about clause 5.1, and in concluding that clause 5.6 is a secondary obligation see paras 270 and 280 respectively. As to the relationship between penalties and forfeiture, my present inclination is to agree with Lord Hodge (in para 227) and with Lord Mance (in paras 160 and 161) that in an appropriate case the court should ask first whether, as a matter of construction, the clause is a penalty and, if it answers that question in the negative, it should ask (where relevant) whether relief against forfeiture should be granted in equity having regard to the position of each of the parties after the breach. LORD TOULSON: (dissenting in part on ParkingEye Limited) I agree with paras 116 to 187 of the judgment of Lord Mance and paras 216 to 283 of the judgment of Lord Hodge. In short, I agree with them on all points of general principle about the doctrine of penalties, its interrelationship with forfeiture and the application of the principles in the Cavendish case. On the essential nature of a penalty clause, I would highlight and endorse Lord Hodges succinct statement at para 255 that the correct test for a penalty is whether the sum or remedy stipulated as a consequence of a breach of contract is exorbitant or unconscionable when regard is had to the innocent partys interest in the performance of the contract. Parties and courts should focus on that test, bearing in mind a) that it is impossible to lay down abstract rules about what may or may not be extravagant or unconscionable, because it depends on the particular facts and circumstances established in the individual case (as Lord Halsbury said in the Clydebank case, [1905] AC 6, 10, and Lord Parmoor said in the Dunlop case, [1915] AC 79, 101), and b) that exorbitant or unconscionable are strong words. I agree with Lord Mance (para 152) that the word unconscionable in this context means much the same as extravagant. On the inter relationship between the law relating to penalties and forfeiture clauses, I agree specifically with paras 160 161 of Lord Mances judgment and paras 227 230 of Lord Hodges judgment. Ms Smith argued in her written case and orally that if relief were to be granted at all to Mr El Makedessi it should be pursuant to the relief against forfeiture, because clauses such as 5.1 were properly to be regarded as forfeiture clauses and the penalty doctrine was therefore not capable of being applied. I would reject that argument for the reasons given by Lord Mance and Lord Hodge. I agree with them that the proper approach is to consider first whether the clause was an exorbitant provision to have included in the contract at the time when it was made; and, if not, to consider next whether any relief should properly be granted under the equitable doctrine of relief against forfeiture in the circumstances at and after the time of the breach. As Lord Mance and Lord Hodge have noted, this approach was followed by the Court of Appeal (Ackner, Kerr and Dillon LJJ) in BICC plc v Bundy Corpn [1985] Ch 232. It is logical and just. I disagree with the other members of the court in the parking case. Since I am a lone voice of dissent and the judgments are already exceedingly long, I will state my reasons briefly. Everyone agrees that there was a contract between Mr Beavis and ParkingEye, but I begin by looking at what was the consideration for, and essential content of, the contract. The parties were content to argue the case, as they had in the Court of Appeal, on the basis that by using the car park Mr Beavis entered into a contract by which he agreed to leave it within two hours; and that his failure to do so was a breach of contract for which he agreed to pay 85 (subject to a discount for prompt payment). Moore Bick LJ expressed doubt whether this was the correct analysis, and since this is a test case it is right to consider the matter. Where parties intend to enter into legal relations, it does not require much to constitute consideration. Some benefit must be conferred both ways; but the benefit provided by the promisor does not have to be for the promisee personally; it may be for some third party whom the promisee wishes to benefit. (This has nothing to do with the doctrine of privity.) Any act or promise in exchange for an act or promise can constitute consideration. In this case we are concerned with a car park forming an integral part of a retail park occupied by a number of well known chains. The use of the car park was not merely a benefit to the user. It was of obvious benefit to the freeholder (and the lessees of the retail outlets) that members of the public should be attracted to the retail park by its availability, and that was no doubt why it was provided. As Mr Christopher Butcher QC correctly submitted, the use of the car park by Mr Beavis was sufficient consideration for a contract governing the terms of its usage. The form of notice stated that Parking is at the absolute discretion of the site, but once a motorist had parked he would obviously have to be given reasonable notice of a requirement to leave. The most important term of the contract was that the user was permitted to stay for a maximum of two hours. That requirement was displayed in bigger and bolder letters than anything else. There were subsidiary requirements; that the user should not return within one hour after leaving; that parking should be within the bays marked; and that certain bays were restricted to use by blue badge holders (ie persons with mobility problems). The contract further stated, although this was not legally necessary, that By parking within the car park, motorists agree to comply with the car park regulations, meaning the provisions stated in the notice (since there were no other regulations). Overstaying would therefore be a breach of contract (as, for example, would be parking except within the lines of an appropriate marked bay). In the case of a breach of any description, the user agree to pay the sum of 85. This was therefore, as the parties rightly accepted, an agreement to pay a specified figure for a breach of contract. It was not an agreement allowing a motorist to overstay in consideration of a payment of 85. On overstaying (or for that matter on returning within one hour after leaving the car park) the user would be a trespasser. We are not concerned in this case whether the agreement to pay 85 would leave the landowner free to sue the user for damages for trespass, although he would no doubt in theory be entitled to seek injunctive relief. It is convenient to consider the effect of the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations) before considering the effect of the common law on penalty clauses. Regulation 8(1) provides that an unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer. An unfair term is defined in regulation 5(1): A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties rights and obligations arising under the contract, to the detriment of the consumer. Regulation 6(1) requires the question of unfairness to be assessed, taking into account the nature of the goods or services, and by referring to all the circumstances at the time of the conclusion of the contract and to all the other terms of the contract. Regulation 6(2) excludes from the assessment of fairness terms (provided that they are in plain intelligible language) relating to the definition of the main subject matter of the contract or to the adequacy of the price or remuneration, as against the goods or services supplied in exchange. The term which levies 85 on a user of the car park who overstays, or returns within an hour or parks badly, does not provide remuneration for the services of ParkingEye, nor does it relate to the definition of the subject matter of the contract. It is simply a penalty for doing one of the things prohibited. Its enforceability depends on whether it satisfies the requirement of fairness within the meaning of the Regulations. Schedule 2 to the Regulations provides an indicative list of terms which may be considered unfair, including a term requiring a consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation. The Regulations give effect to the European Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (the Directive). Article 3(1) of the Directive is the counterpart to regulation 5(1) and is identically worded. In Director General of Fair Trading v First National Bank plc [2001] UKHL 52, [2002] 1 AC 481, para 17, Lord Bingham described this provision as laying down a composite test, covering both the making and the substance of the contract, which must be applied bearing in mind the object which the Regulations are designed to promote. He said that fair dealing requires that the supplier should not, deliberately or unconsciously, take advantage of the consumers necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position or any factor listed in or analogous to those listed in the Schedule. In the same case Lord Millett, at para 54, suggested as a matter for consideration whether, as between parties negotiating freely a contract on level terms, the party adversely affected by the term or his lawyer might reasonably be expected to object to it. More recently in Aziz v Caixa dEstalvis de Catalunya, Tarragona i Manresa (Case C 415/11) [2013] 3 CMLR 89, the Court of Justice of the European Union has addressed the interpretation of article 3(1) of the Directive. It observed (at para 44) that the system of protection introduced by the Directive is based on the idea that the consumer is in a weak position vis vis the seller or supplier. In agreement with the opinion of Advocate General Kokott, the court held that the reference in article 3(1) to a significant imbalance in the parties rights and obligations under the contract must be interpreted as requiring the court to evaluate to what extent the term places the consumer in a worse position than would have been the situation under the relevant national law in the absence of that term. Applying that test, it follows that the 85 penalty clause created a significant imbalance within the meaning of the regulation, because it far exceeded any amount which was otherwise likely to be recoverable as damages for breach of contract or trespass. As to whether the imbalance was contrary to the requirement of good faith, the court, at para 76 in agreement with the Advocate General held that in order to assess whether the imbalance arises contrary to the requirement of good faith, it must be determined whether the seller or supplier, dealing fairly and equitably with the consumer, could reasonably assume that the consumer would have agreed to the term concerned in individual contract negotiations. That test is significantly more favourable to the consumer than would be applied by a court in this country under the penalty doctrine. Whereas the starting point at common law is that parties should be kept to their bargains, and it is for those objecting that a clause is penal to establish its exorbitant nature, the starting point of the Directive is that the consumer needs special protection, and it is for the supplier to show that a non core term which is significantly disadvantageous to the consumer, as compared with the ordinary operation of the law without that term, is one which the supplier can fairly assume that the consumer would have agreed in individual negotiations on level terms. The burden is on the supplier to adduce the evidence necessary to justify that conclusion. I do not consider that such an assumption could fairly be made in the present case. The Consumers Association through Mr Butcher advanced a number of telling points. By most peoples standards 85 is a substantial sum of money. Mr Butcher reminded the court by way of comparison that the basic state pension is 115 per week. There may be many reasons why the user of a car park in a retail park may unintentionally overstay by a short period. There may be congestion in the shops or the user may be held up for any number of reasons. There may be congestion trying to get out of the car park. In short there may be numerous unforeseen circumstances. No allowance is made for disabilities (other than the provision of bays for blue badge holders). Similarly there may be good reasons for a person to return to the car park within two hours, for example because the shopper has left something behind (and the car park may incidentally be half empty). There may be reasons why a user parks with his wheels outside the marked bay (for example because of the way the adjacent vehicle is parked or because he is a wheelchair user and none of the blue bays are available). Examples could be multiplied. The point is that the penalty clause makes no allowance for circumstances, allows no period of grace and provides no room for adjustment. The court was referred to a code of practice published by the British Parking Association which addresses some of these matters, but the significant fact is that it is not a contractual document. A competent lawyer representing a user in individual negotiation might be expected, among other things, to argue that the supplier should at least commit to following the code of practice. More broadly the penalty clause places the whole cost of running the car park on the shoulders of those who overstay by possibly a very short time, although their contribution to the cost will have been very small. The trial judge and the Court of Appeal were impressed by a comparison with the charges at local authority car parks. The comparison is seductive but superficial. Apart from the fact that local authorities operate under a different statutory scheme, a large amount of the cost is raised from all users by hourly charges, as distinct from placing the entire burden on the minority of overstayers; and there is not the same feature in the case of a municipal car park as there is in a supermarket car park, where the car park is ancillary to the use of the retail units some of whose customers are then required to underwrite the entire cost as a result of overstaying. There is of course an artificiality in postulating a hypothetical negotiation between the supplier and an individual customer with the same access to legal advice, but because it is a consumer contract, and because the supplier is inserting a term which alters the legal effect under the core terms in the suppliers favour, the supplier requires as it were to put itself in the customers shoes and consider whether it can reasonably assume that the customer would have agreed to it. I am not persuaded that it would be reasonable to make that assumption in this case and I would therefore have allowed the appeal. It has been suggested that managing the effective use of parking space in the interests of the retailer and the users of those outlets who wished to find spaces to park could only work by deterring people from occupying space for a long time. But that is a guess. It may be so; it may not. ParkingEye called no evidence on the point. But it is common knowledge that many supermarket car parks make no such charge. I return to the point that it was for ParkingEye to show the factual grounds on which it could reasonably assume that a customer using that car park would have agreed, in individual negotiations, to pay 85 if he overstayed for a minute, or parked with his wheels not entirely within a marked bay, or for whatever reason returned to the car park in less than one hour (perhaps because he had left something behind). On the bare information which was placed before the court, I am not persuaded that ParkingEye has shown grounds for assuming that a party who was in a position to bargain individually, and who was advised by a competent lawyer, would have agreed to the penalty clause as it stood. Lord Neuberger and Lord Sumption in para 107 have substituted their judgment of reasonableness of the clause for the question whether the supplier could reasonably have assumed that the customer would have agreed with the term, and on that approach there is not much, if any, difference in substance from the test whether it offended the penalty doctrine at common law. That approach is consistent with their statement in para 104 that the considerations which show that it is not a penalty demonstrate also that it does not offend the Regulations. I consider that the approach waters down the test adopted by the CJEU and at the very least that the point is not acte clair. Mr Beaviss argument that the clause was a penalty at common law is more questionable, but in the circumstances nothing would be gained by discussing that matter further. |
This appeal is concerned with the interpretation of article 24(2) of the Brussels I Recast Regulation (Parliament and Council Regulation (EU) No 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Recast Regulation)), which sets out a special regime to determine jurisdiction in relation to certain matters regarding the governance of corporations. Although the issue in the present case relates to where a Turkish company and certain Turkish domiciled individuals may be sued, and Turkey is of course not an EU member state, it is common ground that article 24(2) of the Recast Regulation applies to determine the question of jurisdiction which arises in this case. Article 24 is in Section 6 of the Recast Regulation, entitled Exclusive jurisdiction. Article 24(2) provides as follows: The following courts of a member state shall have exclusive jurisdiction, regardless of the domicile of the parties: (2) in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or the validity of the decisions of their organs, the courts of the member state in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law; The sixth appellant (Koza Altin) is a publicly listed company incorporated in Turkey. It carries on a business specialising in gold mining. It is part of a group of Turkish companies known as the Koza Ipek Group (the Group) which were formerly controlled by the second respondent (Mr Ipek) and members of his family. Amongst other things, the Group has media interests in Turkey. The first respondent (Koza Ltd) is a private company incorporated in England in March 2014. It is a wholly owned subsidiary of Koza Altin. Mr Ipek says that he and the Group have been targeted unfairly by a hostile government in Turkey, including by making them the subject of an investigation into alleged criminal activity and taking steps against them in conjunction with that investigation. In order to defend himself as regards control of Koza Ltd, in September 2015 Mr Ipek caused a number of changes to be made to Koza Ltds constitution and share structure. A new class of A shares was created and Koza Ltds articles of association were amended to introduce a new article 26 (article 26), which purported to preclude any further changes to the articles of association or any change of directors save with the prior written consent of the holders of the A shares. Two A shares were issued, one to Mr Ipek and one to his brother. The validity and effect of these changes is in issue in these proceedings. The respondents contend that they are valid and lawful. The appellants contend that they are invalid and unlawful attempts to entrench Mr Ipek and his associates in control of Koza Ltd. In proceedings in Turkey relating to the criminal investigation in respect of Mr Ipek and the Group, on 26 October 2015 pursuant to article 133 of the Turkish Criminal Procedure Code the Fifth Ankara Criminal Peace Judge appointed certain individuals as trustees of Koza Altin and other companies in the Group, with power to control the affairs of those companies in place of the existing management. Pursuant to further decisions of the judge dated 13 January and 3 March 2016, the first to fifth appellants were appointed as the trustees in relation to Koza Altin. I refer to them together as the trustees, although in further proceedings in Turkey in September 2016 they were replaced by the Tasarruf Mevduati Sigorta Fonu (the Savings Deposit Insurance Fund of Turkey) as trustee of Koza Altin. The trustees, with Koza Altin itself, are the relevant parties in the present proceedings in England and for this appeal. On 19 July 2016, the trustees caused Koza Altin to serve a notice on the directors of Koza Ltd under section 303 of the Companies Act 2006, requiring them to call a general meeting to consider resolutions for their removal and replacement with three of the trustees. The directors of Koza Ltd did not call such a meeting, so on 10 August 2016 Koza Altin served a notice pursuant to section 305 of the 2006 Act to convene a meeting on 17 August 2016 to consider those resolutions. The service of this notice prompted Mr Ipek and Koza Ltd to make an urgent without notice application on 16 August seeking an injunction to prevent the meeting taking place and, so far as required, orders for service out of the jurisdiction and for alternative service. Injunctive relief as set out in the application was sought on two bases. It was contended that (i) the notices of 19 July and 10 August 2016 (the notices) were void under section 303(5)(a) of the 2006 Act because at least one of the holders of the A shares (Mr Ipek) did not consent to the proposed resolutions and so, if passed, they would be ineffective as being passed in breach of article 26 (I refer to this claim as the English company law claim); and (ii) the notices were void on the basis that the English courts should not recognise the authority of the trustees to cause Koza Altin to do anything as a shareholder of Koza Ltd, because they were appointed on an interim basis only and in breach of Turkish law, the European Convention on Human Rights and natural justice, so that it would be contrary to public policy for the English courts to recognise the appointment (I refer to this claim as the authority claim). As regards jurisdiction, the primary submission for Mr Ipek and Koza Ltd was that permission to serve out of the jurisdiction was not required because the English courts had exclusive jurisdiction to deal with the whole claim pursuant to article 24(2) of the Recast Regulation. At the without notice hearing before Snowden J on 16 August 2016, the judge accepted this submission. He granted interim injunctive relief as sought by Mr Ipek and Koza Ltd and gave permission for alternative service at the offices of Mishcon de Reya LLP, the solicitors acting for Koza Altin and the trustees. Mr Ipek and Koza Ltd issued their claim form on 18 August 2016 seeking a declaration that the notices were ineffective, an injunction to restrain Koza Altin and the trustees from holding any meeting pursuant to the notices and from taking any steps to remove the current board of Koza Ltd, a declaration that the English courts do not recognise any authority of the trustees to cause Koza Altin to call any general meetings of Koza Ltd or to do or permit the doing of anything else as a shareholder of Koza Ltd and an injunction to restrain the trustees from holding themselves out as having any authority to act for or bind Koza Altin as a shareholder of Koza Ltd and from causing Koza Altin to do anything or permit the doing of anything as a shareholder of Koza Ltd. Koza Altin and the trustees filed an acknowledgement of service indicating their intention to contest jurisdiction and then issued an application to do that. At the same time, Koza Altin filed a Defence and Counterclaim to the English company law claim, impugning the validity and enforceability of article 26 and also impugning the validity and effectiveness of the board resolution of Koza Ltd pursuant to which the two A shares were issued. In turn, Mr Ipek and Koza Ltd issued an application to strike out the acknowledgment of service, Koza Altins Defence and Counterclaim and all other steps taken by Mishcon de Reya LLP purportedly on behalf of Koza Altin in the proceedings, on the basis that the authority of those who had caused Koza Altin to take these steps should not be recognised in this jurisdiction. The application of Koza Altin and the trustees to challenge jurisdiction was heard by Asplin J in December 2016. Their position was that (i) the English courts have no jurisdiction under article 24(2) of the Recast Regulation over the trustees in relation to any part of the claims; (ii) the English courts do have jurisdiction under that provision over Koza Altin in respect of the English company law claim, which relates to the affairs of Koza Ltd; and (iii) the English courts have no jurisdiction under that provision over Koza Altin in respect of the authority claim, which relates to the conduct of the business of Koza Altin. Asplin J dismissed the application by order made on 17 January 2017. It was common ground that the English company law claim fell within article 24(2) of the Recast Regulation so that the English courts had jurisdiction in relation to it and in the judges assessment the authority claim was inextricably linked with that claim, which she considered was the principal subject matter of the proceedings viewed as a whole. Koza Altin and the trustees appealed on the grounds that Asplin J had erred in holding that article 24(2) conferred jurisdiction on the English courts to determine the authority claim and had erred in holding that article 24(2) conferred jurisdiction on the English courts to determine any of the claims against the trustees. The Court of Appeal dismissed the appeal. Like Asplin J, it held that the authority claim is inextricably linked with the English company law claim and it held that article 24(2) required the court to form an overall evaluative judgment as to what the proceedings are principally concerned with, which in this case is a challenge to the ability of Koza Altin to act as a shareholder of Koza Ltd in relation to Koza Ltds internal affairs (see, in particular, paras 45 46 and 49 51). That was so even if certain parts of the relief sought, if viewed in isolation, appeared to go further than that, in that they related to the validity of decisions taken by the organs of Koza Altin. In the view of the Court of Appeal, therefore, by virtue of article 24(2) the English courts have jurisdiction in relation to the authority claim as well as in relation to the English company law claim. In addition, the Court of Appeal dismissed a distinct submission for the trustees that the English courts have no jurisdiction in relation to them under article 24(2), based on the fact that they are not necessary parties in the proceedings. Despite the court accepting that they are not necessary parties, it held that jurisdiction was established under article 24(2) in relation to the trustees because the subject matter of the proceedings involving them remained the same and the rationale of avoiding conflicting decisions in relation to the same subject matter applied, as did the rationale of ensuring that the proceedings are tried in the courts best placed to do so (paras 52 54). The trustees and Koza Altin now appeal with permission granted by this court. They submit that in holding that the English courts have jurisdiction under article 24(2) in relation to the authority claim, which is concerned with the validity of decisions of the organs of Koza Altin, a Turkish company, the Court of Appeal has given that provision an impermissibly wide interpretation. On proper construction of article 24(2), it is the courts of Turkey which have the relevant close connection with the authority claim and the English courts could not be regarded as having relevant (putatively exclusive) jurisdiction under that provision in relation to that claim. The issues on the appeal are (i) whether article 24(2) confers jurisdiction on the English courts to determine the authority claim as against Koza Altin and (ii) whether article 24(2) confers exclusive jurisdiction on the English courts to determine either the authority claim or the English company law claim as against the trustees. Each side maintains that the proper interpretation of article 24(2) is acte clair in their favour, but if it is not then a reference to the Court of Justice of the European Union is sought. The Recast Regulation The Recast Regulation is intended to lay down common rules governing jurisdiction assumed by member states. Insofar as relevant for present purposes, the basic scheme is encapsulated as relevant for present purposes in recitals (13) (16) and (19): (13) There must be a connection between proceedings to which this Regulation applies and the territory of the member states. Accordingly, common rules of jurisdiction should, in principle, apply when the defendant is domiciled in a member state. (14) A defendant not domiciled in a member state should in general be subject to the national rules of jurisdiction applicable in the territory of the member state of the court seised. However, in order to ensure the protection of consumers and employees, to safeguard the jurisdiction of the courts of the member states in situations where they have exclusive jurisdiction and to respect the autonomy of the parties, certain rules of jurisdiction in this Regulation should apply regardless of the defendants domicile. (15) The rules of jurisdiction should be highly predictable and founded on the principle that jurisdiction is generally based on the defendants domicile. Jurisdiction should always be available on this ground save in a few well defined situations in which the subject matter of the dispute or the autonomy of the parties warrants a different connecting factor. The domicile of a legal person must be defined autonomously so as to make the common rules more transparent and avoid conflicts of jurisdiction. (16) In addition to the defendants domicile, there should be alternative grounds of jurisdiction based on a close connection between the court and the action or in order to facilitate the sound administration of justice. The existence of a close connection should ensure legal certainty and avoid the possibility of the defendant being sued in a court of a member state which he could not reasonably have foreseen (19) 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, should be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation. The scheme for allocation of jurisdiction under the Recast Regulation, therefore, is that persons domiciled in a member state should generally be sued in that member state (article 4), but pursuant to article 5 may also be sued in the courts of another member state in certain cases specified in sections 2 to 7 of Chapter II of the Recast Regulation. Section 2 is entitled Special jurisdiction. Within it, article 7 sets out rules applicable in particular kinds of case, including contract, tort, unjust enrichment and certain other cases; and article 8 provides, among other things, that a person domiciled in a member state who is one of a number of related defendants may be sued in the courts of the place where any one of them is domiciled, provided the claims are closely connected. Section 3 deals with jurisdiction in matters relating to insurance; section 4 with jurisdiction over consumer contracts; and section 5 with jurisdiction over individual contracts of employment. Section 6 comprises article 24, dealing with cases of exclusive jurisdiction. Section 7, comprising articles 25 and 26, deals with prorogation of jurisdiction. I set out here the full text of article 24: The following courts of a member state shall have exclusive jurisdiction, regardless of the domicile of the parties: (1) in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property, the courts of the member state in which the property is situated. However, in proceedings which have as their object tenancies of immovable property concluded for temporary private use for a maximum period of six consecutive months, the courts of the member state in which the defendant is domiciled shall also have jurisdiction, provided that the tenant is a natural person and that the landlord and the tenant are domiciled in the same member state; (2) in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or the validity of the decisions of their organs, the courts of the member state in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law; (3) in proceedings which have as their object the validity of entries in public registers, the courts of the member state in which the register is kept; in proceedings concerned with the registration or (4) validity of patents, trademarks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the member state in which the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place. Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each member state shall have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that member state; (5) in proceedings concerned with the enforcement of judgments, the courts of the member state in which the judgment has been or is to be enforced. Article 25 provides in material part as follows: If the parties, regardless of their domicile, have agreed 1. that a court or the courts of a member state are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that member state. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. 3. The court or courts of a member state on which a trust instrument has conferred jurisdiction shall have exclusive jurisdiction in any proceedings brought against a settlor, trustee or beneficiary, if relations between those persons or their rights or obligations under the trust are involved. 4. Agreements or provisions of a trust instrument conferring jurisdiction shall have no legal force if they are contrary to articles 15, 19 or 23, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of article 24. 1. Apart from jurisdiction derived from other provisions of this Regulation, a court of a member state before which a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered to contest the jurisdiction, or where another court has exclusive jurisdiction by virtue of article 24. Article 26(1) provides: These provisions indicate the priority given under the scheme of the Recast Regulation to the jurisdiction of the courts of a member state which have exclusive jurisdiction under article 24. The cases of exclusive jurisdiction within article 24 comprise situations where reasons exist to recognise an especially strong and fixed connection between the subject matter of a dispute and the courts of a particular member state. For the cases falling within article 24, the principle of exclusive jurisdiction cuts across and takes priority over the other principles underlying the Recast Regulation, including the principle of jurisdiction for the courts of the member state where the defendant is domiciled and the principle of respect for party autonomy referred to in recital (19) and reflected in various provisions of the Regulation. The priority given to the jurisdiction of a member state within article 24 is underlined by departures from other general rules set out in the Recast Regulation. In particular, in section 8 of Chapter II, entitled Examination as to jurisdiction and admissibility, article 27 provides for an exception to the usual rule in section 9 of Chapter II that it is the courts in a member state which are first seised with a matter which shall have jurisdiction in relation to it, so that the courts of other member states should decline jurisdiction accordingly. Article 27 provides: Where a court of a member state is seised of a claim which is principally concerned with a matter over which the courts of another member state have exclusive jurisdiction by virtue of article 24, it shall declare of its own motion that it has no jurisdiction. Also, in Chapter III, in section 3 (entitled Refusal of recognition and enforcement), article 45(1)(e) provides that the recognition of a judgment shall be refused if the judgment conflicts with Section 6 of Chapter II (ie with the provision for exclusive jurisdiction contained in article 24) and article 46 states that enforcement of a judgment shall be refused in cases falling within article 45. Discussion Issue (i): claim The application of article 24(2) in relation to the authority Since article 24(2) of the Recast Regulation is a provision which creates exclusive jurisdiction for the courts of a member state in the circumstances specified, its proper interpretation can be tested on the hypothesis that Turkey stands in the position of a member state. If Koza Altin were a company which had its seat in a member state, say Greece, article 24(2) would apply to allocate exclusive jurisdiction in relation to the authority claim either to Greece or to England. They could not both have exclusive jurisdiction under the Recast Regulation, since that would be contrary to the very idea of the jurisdiction being exclusive. The interpretation of article 24(2) does not change in the present case just because the other state in question (Turkey) happens not to be a member state. The position in relation to article 24(2) is to be contrasted with that in relation to the general rule of jurisdiction in article 4 and the provisions contained in section 2 of Chapter II of the Recast Regulation. Under article 4 and those provisions, it is quite possible that the courts of two or more member states might have jurisdiction in relation to the same claim. This causes no difficulty under the scheme of the Recast Regulation. In all such cases it is the priority rules in section 9 of Chapter II which determine the jurisdiction where the claim should proceed, which generally depends on which court is first seised. But as noted above, those rules are disapplied where a claim falls within the exclusive jurisdiction provision in article 24. Accordingly, it is clear from the scheme of the Regulation that the interpretation and application of that provision cannot depend on the type of evaluative judgment in relation to which different courts could reasonably take different views. In principle, there should be only one correct application of article 24 in relation to a given claim. This tells strongly against the broad evaluative approach to the interpretation and application of article 24(2) adopted by the courts below. As stated in recital (15) of the Recast Regulation, the objective of the Regulation is to set out rules governing the allocation of jurisdiction which are highly predictable. The desirability of having clear rules for allocation of jurisdiction is obvious, since parties who wish to bring claims and to defend them need to have a clear idea of which courts have jurisdiction so that they can decide how to proceed effectively and so as to minimise costs. Also, rules which are highly predictable in their effects serve the purpose of enabling different courts to determine with a minimum of effort whether they have jurisdiction in respect of any given claim. As is clear from the recitals and scheme of the Recast Regulation, a further objective of the regime is to avoid inconsistent judgments on the same issue being produced by the courts of different member states. The case law of the Court of Justice of the European Union (the Court of Justice, formerly called the European Court of Justice) regarding the interpretation of article 24 has reached an advanced stage. In my view it shows clearly that the interpretation of article 24(2) adopted by the courts below in these proceedings cannot be sustained. An important early judgment was given in Hassett v South Eastern Health Board (Case C 372/07) [2008] ECR I 7403 regarding article 22(2) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, the predecessor of article 24(2) in the Recast Regulation. In proceedings in Ireland relating to a medical negligence claim against the Health Board, two doctors who had been involved in the incident in question were joined in a claim for contribution brought by the Health Board. The doctors in turn sought an indemnity or contribution from the Medical Defence Union in England (the MDU), of which they were members, to which they claimed they had an entitlement under the MDUs articles of association. The MDUs board decided to reject their claim, so the doctors sought to join the MDU in the Irish proceedings to claim in those proceedings the indemnity or contribution to which they maintained they were entitled. The MDU resisted this on the basis that the doctors claim concerned the validity of the boards decision and so fell within article 22(2), with the result that the English courts had exclusive jurisdiction in relation to that claim. This issue was referred to the Court of Justice, which disagreed with the MDU. The court held that article 22(2) had to be interpreted strictly (that is to say, narrowly), since it was an exception to the general rule of jurisdiction under the Regulation based on domicile, and that it should not be given an interpretation broader than is required by [its] objective (paras 18 19); accordingly, the provision must be interpreted as covering only disputes in which a party is challenging the validity of a decision of an organ of a company under the company law applicable or under the provisions governing the functioning of its organs, as laid down in its Articles of Association (para 26). Since the doctors were not challenging the fact that the MDUs board was empowered under the articles to take the decision it did, but were challenging the manner in which that power was exercised, the dispute between the doctors and the MDU did not fall within article 22(2) (paras 27 30). The court did not approach the application of article 22(2) by making an evaluative judgment about how the doctors claim related to the proceedings in Ireland, but instead focused its analysis on the specific nature of the claim against the particular defendant, the MDU. In view of its strict approach to the interpretation of article 22(2), it held that it could not be said that, in order for that provision to apply, it is sufficient that a legal action involve merely some link with a decision adopted by an organ of a company (paras 22 25). The Court of Justice adopted the same approach to the interpretation and application of article 22(2) of Regulation No 44/2001 in Berliner Verkehrsbetriebe (BVG), Anstalt des ffentlichen Rechts v JP Morgan Chase Bank NA (Case C 144/10) EU:C:2011:300; [2011] 1 WLR 2087 (the BVG case). JP Morgan and BVG, a local authority in Germany, entered into an interest rate swap contract which contained an English exclusive jurisdiction clause. JP Morgan brought proceedings in England claiming payments which it maintained were due under the contract. BVG argued that the swap contract was not valid because it had acted ultra vires in entering into it so that the decisions of its organs approving the making of the contract were null and void, with the result that the German courts had exclusive jurisdiction by virtue of article 22(2) of the Regulation. BVG also commenced proceedings in Germany for a declaration that the contract was void because the decision to enter into it had been ultra vires. The German court referred the question of jurisdiction to the Court of Justice. The Court of Justice held that the German courts did not have exclusive jurisdiction under article 22(2). The court followed its judgment in the Hassett case to the effect that article 22(2) had to be given a strict interpretation (paras 30 32). It emphasised that a strict interpretation of article 22(2) which did not go beyond what was required by the objectives pursued by it was particularly necessary precisely because article 22(2) is a rule of exclusive jurisdiction which cuts across the usual expectation that parties to a contract have autonomy to choose their forum (para 32). It further observed that one of the aims of article 22(2) was to confer exclusive jurisdiction on the courts of a member state in specific circumstances where, having regard to the matter at issue, those courts are best placed to adjudicate upon the disputes falling to them, because there is a particularly close link between those disputes and the member state (para 36). Having identified a divergence between different language versions of article 22(2), the court held that this was to be resolved by interpreting that provision as covering only proceedings whose principal subject matter comprises the validity of the constitution, the nullity or the dissolution of the company, legal person or association or the validity of the decisions of its organs (para 44). It also held that in a dispute of a contractual nature, questions relating to the contracts validity, interpretation or enforceability are at the heart of the dispute and form its subject matter, with the result that [a]ny question concerning the validity of the decision to conclude the contract, taken previously by the organs of one of the companies party to it, must be considered ancillary (para 38 and also paras 39 42). In other words, in relation to a claim based on a contract and brought in England pursuant to an exclusive jurisdiction clause in which an ultra vires defence was advanced, which was inextricably bound up with and hence ancillary to the underlying claim, a narrow interpretation of article 22(2) meant that the ultra vires defence did not have the effect of pulling the whole proceedings or any part thereof into the exclusive jurisdiction of the German courts. In that context it could not be said that the principal subject matter of the proceedings comprised the validity of the decisions of [BVGs] organs as would be required if article 22(2) was to have any application (para 44 of the judgment). This point deserves emphasis, in light of the very different way in which the Court of Appeal in the present proceedings sought to draw guidance from the BVG case. Relying on the judgment in that case, the Court of Appeal held that article 24(2) of the Recast Regulation required the court to form an overall evaluative judgment as to what the proceedings are principally concerned with (para 46). But this approach had the effect of expanding the application of article 24(2) (ex article 22(2) of Regulation No 44/2001), contrary to the guidance in the Hassett case and the BVG case, rather than narrowing its application, as the Court of Justice had been at pains to do in its judgments in those cases. According to the Court of Appeal, article 24(2) of the Recast Regulation is to be read as having the effect of allowing a party which is able to bring one claim within that article (the English company law claim) to add on another claim (the authority claim) which is conceptually distinct and is not inextricably bound up with the former claim, so that the latter claim is to be taken to fall within the scope of article 24(2) as regards the jurisdiction of the English courts as well. In my view, Mr Crow QC for Koza Altin and the trustees was right to criticise this step in the Court of Appeals analysis as an illegitimate reversal of the approach indicated in the judgment of the Court of Justice in the BVG case. Putting it another way, an evaluative assessment of proceedings relating to a specific claim, taken as a whole, may show that a particular aspect of the claim which involves an assessment of the validity of the decisions of a companys organs is so bound up with other features of the claim that it cannot be said that this is the principal subject matter of those proceedings, as would be required to bring the proceedings within the scope of article 24(2). This was the effect of the ruling of the Court of Justice in the BVG case. It does not follow from this that one can say the reverse, namely that where there are two distinct claims one, taken by itself, falling within article 24(2) as regards the exclusive jurisdiction of the English courts and the other, taken by itself, not falling within article 24(2) as regards such jurisdiction it is legitimate to maintain that by virtue of an overall evaluative judgment in relation to both claims taken together the second claim should be found also to fall within article 24(2) so that the English courts have exclusive jurisdiction in relation to it. In this sort of situation, it is the guidance in paras 22 25 of the Hassett judgment which is relevant, to the effect that a mere link between a claim which engages article 24(2) and one which does not is not sufficient to bring the latter within the scope of that provision. In the present case the English company law claim and the authority claim can be said to be connected in a certain sense, but they are distinct claims which are not inextricably bound up together. Koza Altin is a shareholder in Koza Ltd and may act as such. The issue, so far as the authority claim is concerned, is whether it has done so validly, acting by relevant organs authorised according to the law of its seat. The English company law claim can be brought and made good on its own terms without any need to get into the merits of the authority claim. The authority claim likewise can be brought and made good on its own terms without any need to get into the merits of the English company law claim. Assessing the authority claim as a distinct set of proceedings, clearly their principal subject matter does not comprise the validity of the decisions of the organs of a company which has its seat in England. In fact, it is clear that their principal subject matter comprises the validity of the decisions of the organs of a company which has its seat in another country, so that if Koza Altin had had its seat in Greece (as a hypothesis to test the validity of the respondents submissions) then, far from allocating exclusive jurisdiction to the English courts, article 24(2) of the Recast Regulation would have allocated exclusive jurisdiction to the Greek courts. It would not be tenable to suggest that the English courts had exclusive jurisdiction under article 24(2) in such a case. This analysis fits with and is supported by the scheme and underlying objectives of the Recast Regulation. First, in such a hypothetical case, Koza Altin might have had subsidiaries in several EU member states all of which might potentially have been affected by actions taken by the trustees on its behalf as occurred with the decision to send the notices concerning Koza Ltd in the present case. The relevant issues regarding the validity of the decisions of the trustees acting on behalf, and as an organ, of Koza Altin would fall to be assessed in the light of circumstances in the place of its seat and would be governed by the law of that place (in the hypothetical example, Greece), which would indicate clearly that it should be sued there. Secondly, requiring that Koza Altin and the trustees should be sued in the jurisdiction where it had its seat would ensure that one single authoritative judgment from the courts there would resolve the relevant disputes affecting subsidiary companies in all the other member states without any risk of inconsistent judgments based on evidence of Greek law (in the hypothetical example) being produced by the courts of each of those other member states. These two points reflect the primary reasons for the introduction of what is now article 24(2) of the Recast Regulation in the 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, as set out in the report dated 27 September 1968 on that Convention by Mr P Jenard. Mr Jenard explained the reasons for providing for exclusive jurisdiction in the form of what is now article 24(2) as follows: It is important, in the interests of legal certainty, to avoid conflicting judgments being given as regards the existence of a company or association or as regards the validity of the decisions of its organs. For this reason, it is obviously preferable that all proceedings should take place in the courts of the state in which the company or association has its seat. It is in that state that information about the company or association will have been notified and made public These reasons underlying what is now article 24(2) of the Recast Regulation have been treated by the Court of Justice as significant factors relevant to the interpretation of that provision. The Court of Justice emphasised the importance of arriving at an interpretation of the provision so as to avoid the risk of inconsistent decisions in its judgment in the Hassett case at para 20 and again in its judgment in the BVG case at para 40. In the Hassett judgment at para 21 the court drew on Mr Jenards report to explain that it is the courts of the member state in which the company has its seat which are regarded as best placed to deal with disputes regarding the validity of decisions of its organs, inter alia because it is in that state that information about the company will have been notified and made public, hence [e]xclusive jurisdiction is attributed to those courts in the interests of the sound administration of justice. The interpretation of article 24(2) above is further supported by the judgment of the Court of Justice in Schmidt v Schmidt (Case C 417/15) EU:C:2016:881; [2017] I L Pr 6. That case concerned the ground of exclusive jurisdiction set out in article 24(1) of the Recast Regulation, as regards rights in rem in immovable property. In reliance on article 24(1) the claimant brought proceedings in Austria seeking rescission of a gift of land located there and, in consequence, an order for rectification of the Austrian land register. The Court of Justice held that whilst the latter aspect of the proceedings fell within article 24(1), the rescission claim did not. The court rejected the claimants contention that since there was plainly a link between the two claims, the whole proceedings should be regarded as falling within article 24(1) (paras 33 to 43). Contrary to that contention, article 24(1) had to be read narrowly and with a precise focus on each distinct claim in the proceedings to which it was said to apply. This was in line with the opinion of the Advocate General, in particular at paras 47 to 49. At para 48 of her opinion, Advocate General Kokott said that as article 24 is an exception to the general principles underlying the Recast Regulation, the provision is to be interpreted narrowly, and the concept of proceedings restricted to the claim that specifically has as its object a right in rem. The approach of the Advocate General and of the court is not compatible with the overall classification approach to the application of article 24(2) adopted by the Court of Appeal in the present case, according to which it concluded that the provision was applicable to the authority claim by reason of its being linked with the English company law claim. The Court of Justice has recently reviewed the position regarding the interpretation and application of article 22(2) of Regulation No 44/2001, the predecessor of article 24(2) of the Recast Regulation, in EON Czech Holding AG v Ddouch (Case C 560/16) EU:C:2018:167; [2018] 4 WLR 94. The case concerned a resolution by the general meeting of a Czech company to transfer all the securities in the company, including minority shareholdings, to its principal shareholder, the defendant, a German company. The minority shareholders brought proceedings in the Czech courts seeking to review the reasonableness of the consideration for their shares set by that resolution. Under Czech law, a ruling that the consideration was unreasonable would not result in the resolution being declared invalid (but presumably could result in an order that additional consideration should be paid). The defendant raised a jurisdictional objection in those proceedings, maintaining that by reason of its seat the German courts alone had jurisdiction. The Czech Supreme Court referred to the Court of Justice the question whether the Czech courts had exclusive jurisdiction in relation to the dispute by virtue of article 22(2) of Regulation No 44/2001. The Court of Justice answered that question in the affirmative. It reiterated and emphasised the key points which had emerged from its previous jurisprudence. The relevant passage merits being set out in full: 26. As regards the general scheme and context of Regulation No 44/2001, it should be recalled that the jurisdiction provided for in article 2 of that Regulation, namely that the courts of the member state in which the defendant is domiciled are to have jurisdiction, constitutes the general rule. It is only by way of derogation from that general rule that the Regulation provides for special and exclusive rules of jurisdiction for cases, which are exhaustively listed, in which the defendant may or must, depending on the case, be sued in the courts of another member state: the Reisch Montage case, para 22 and Berliner Verkehrsbetriebe (BVG), Anstalt des ffentlichen Rechts v JP Morgan Chase Bank NA (Case C 144/10) EU:C:2011:300; [2011] 1 WLR 2087; [2011] ECR I 3961, para 30. 27. Those rules of special and exclusive jurisdiction must accordingly be interpreted strictly. As the provisions of article 22 of Regulation No 44/2001 introduce an exception to the general rule governing the attribution of jurisdiction, they must not be given an interpretation broader than that which is required by their objective: Hassetts case, paras 18 and 19 and the BVG case, para 30. 28. As regards the objectives and the purpose of Regulation No 44/2001, it should be recalled that, as is apparent from recitals (2) and (11) thereof [which correspond with recitals (4) and (15) of the Recast Regulation], that Regulation seeks to unify the rules on conflict of jurisdiction in civil and commercial matters by way of rules of jurisdiction which are highly predictable. That Regulation thus pursues an objective of legal certainty which consists in strengthening the legal protection of persons established in the European Union, by enabling the applicant easily to identify the court in which he may sue and the defendant reasonably to foresee before which court he may be sued: Falco Privatstiftung v Weller Lindhorst (Case C 533/07) EU:C:2009:257; [2010] Bus LR 210; [2009] ECR I 3327, paras 21 22, Taser International Inc v SC Gate 4 Business SRL (Case C 175/15) EU:C:2016:176; [2016] QB 887, para 32 and Granarolo SpA v Ambrosi Emmi France SA (Case C 196/15) EU:C:2016:559; [2017] CEC 473, para 16. 29. Furthermore, as is apparent from recital (12) of that Regulation [which corresponds with recital (16) of the Recast Regulation], the rules of jurisdiction derogating from the general rule of jurisdiction of the courts of the member state in which the defendant is domiciled supplement the general rule where there is a close link between the court designated by those rules and the action or in order to facilitate the sound administration of justice. 30. In particular, the rules of exclusive jurisdiction laid down in article 22 of Regulation No 44/2001 seek to ensure that jurisdiction rests with courts closely linked to the proceedings in fact and law (see, with regard to article 16 of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (OJ 1972 L299, p 32), the provisions of which are essentially identical to those of article 22 of Regulation No 44/2001, Gesellschaft fur Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (Case C 4/03) EU:C:2006:457; [2006] ECR I 6509; [2007] ILPr 34, para 21), in other words, to confer exclusive jurisdiction on the courts of a member state in specific circumstances where, having regard to the matter at issue, those courts are best placed to adjudicate upon the disputes falling to them by reason of a particularly close link between those disputes and that member state: the BVG case, para 36. 31. Thus, the essential objective pursued by article 22(2) of Regulation No 44/2001 is that of centralising jurisdiction in order to avoid conflicting judgments being given as regards the existence of a company or as regards the validity of the decisions of its organs: Hassetts case [2008] ECR I 7403, para 20. 32. The courts of the member state in which the company has its seat appear to be those best placed to deal with such disputes, inter alia because it is in that state that information about the company will have been notified and made public. Exclusive jurisdiction is thus attributed to those courts in the interests of the sound administration of justice: Hassetts case, para 21. lidosta Rga VAS 33. However, the court has held that it cannot be inferred from this that, in order for article 22(2) of Regulation No 44/2001 to apply, it is sufficient that a legal action involve some link with a decision adopted by an organ of a company (Hassetts case, para 22), and that the scope of that provision covers only disputes in which a party is challenging the validity of a decision of an organ of a company under the company law applicable or the provisions of its article of association governing the functioning of its organs: Hassetts case, para 26 and flyLAL Lithuanian Airlines AS (in liquidation) v Starptautisk (Case C 302/13) EU:C:2014:2319; [2014] 5 CMLR 1277, para 40. 34. In the present case, while it is true that, under Czech law, proceedings such as those at issue in the main proceedings may not lead formally to a decision which has the effect of invalidating a resolution of the general assembly of a company concerning the compulsory transfer of the minority shareholders shares in that company to the majority shareholder, the fact none the less remains that, in accordance with the requirements of the autonomous interpretation and uniform application of the provisions of Regulation No 44/2001, the scope of article 22(2) thereof cannot depend on the choices made in national law by member states or vary depending on them. 35. On the one hand, the origin of those proceedings lies in a challenge to the amount of the consideration relating to such a transfer and, on the other, their purpose is to secure a review of the reasonableness of that amount. 36. It follows that, having regard to article 22(2) of Regulation No 44/2001, legal proceedings such as those at issue in the main proceedings concern the review of the partial validity of a decision of an organ of a company and that such proceedings are, as a result, capable of coming within the scope of that provision, as envisaged by its wording. 37. Thus, in those circumstances, a court hearing such an application for review must examine the validity of a decision of an organ of a company in so far as that decision concerns the determination of the amount of the consideration, decide whether that amount is reasonable and, where necessary, annul that decision in that respect and determine a different amount of consideration. 38. Furthermore, an interpretation of article 22(2) of Regulation No 44/2001 according to which that provision applies to proceedings such as those at issue in the main proceedings is consistent with the essential objective pursued by that provision and does not have the effect of extending its scope beyond what is required by that objective. In that regard, the existence of a close link between the 39. courts of the member state in which [the Czech company] is established, in the present case the Czech courts, and the dispute in the main proceedings is clear. 40. In addition to the fact that [the Czech company] is a company incorporated under Czech law, it is apparent from the file submitted to the court that the resolution of the general meeting that determined the amount of the consideration forming the subject of the main proceedings and the acts and formalities relating to it were carried out in accordance with Czech law and in the Czech language. 41. Likewise, it is not disputed that the court with jurisdiction must apply Czech substantive law to the dispute in the main proceedings. Consequently, bearing in mind the close link between the dispute in the main proceedings and the Czech courts, the latter are best placed to hear that dispute relating to the review of the partial validity of that resolution and the attribution, pursuant to article 22(2) of Regulation No 44/2001, of exclusive jurisdiction to those courts is such as to facilitate the sound administration of justice. The attribution of that jurisdiction to the Czech courts is also consistent with the objectives of predictability of the rules of jurisdiction and legal certainty pursued by Regulation No 44/2001, since, as Advocate General Wathelet observed in point 35 of his opinion, the shareholders in a company, especially the principal shareholder, must expect that the courts of the member state in which that company is established will be the courts having jurisdiction to decide any internal dispute within that company relating to the review of the partial validity of a decision taken by an organ of a company. 42. This reasoning again is not compatible with the decisions of the courts below in the present case. If one tests the application of article 24(2) of the Recast Regulation by reference to the hypothetical Greek case referred to above, it is clear by reference to the factors identified by the Court of Justice that it would be the courts in Greece which had exclusive jurisdiction under that provision in relation to the authority claim, not the courts in England. The non applicability of article 24(2) according to its proper interpretation does not alter when one asks whether the English courts have jurisdiction under that provision in the present case. Article 24(2) does not apply in the present case by reason of the strict (ie narrow) interpretation to be given to that provision (para 27 of the EON judgment, above). It is not sufficient that there is a link between the authority claim and the English company law claim (para 33 of the EON judgment, above). There is an absence of any particularly close link between the authority claim and the English courts as would be required to bring the case within article 24(2) (para 30 of the EON judgment, above); on the contrary, the relevant particularly close link as regards the authority claim is with the courts in Turkey. 43. In my view, the EU law regarding the interpretation and application of article 24(2) of the Recast Regulation, as reiterated in the EON judgment, is clear. It is acte clair that this provision does not cover the authority claim in the present proceedings. This means that the English courts cannot assert jurisdiction over Koza Altin and the trustees in relation to that claim in the present proceedings on the basis of that provision, and their appeal in that regard should be allowed. Before leaving this part of the case, however, it should be pointed out that there is an important consequence which flows from the fact that Turkey is not a member state of the EU. It means that the courts in Turkey do not enjoy exclusive jurisdiction in respect of the authority claim by virtue of the Recast Regulation. Therefore, even though the authority claim does not fall within the exclusive jurisdiction provision in article 24(2) as regards the courts in England, that does not prevent those courts from assuming jurisdiction in relation to the authority claim on some other basis, if one exists under the general English regime in the Civil Procedure Rules governing service of proceedings on persons outside the jurisdiction. It is not necessary to examine this possibility further, because in the present case it is solely on the basis of article 24(2) that the English courts have assumed jurisdiction over Koza Altin and the trustees in these proceedings in relation to the authority claim. Issue (ii): The application of article 24(2) in relation to the trustees Since on its proper interpretation article 24(2) of the Recast Regulation does not cover the authority claim, the English courts have no jurisdiction in relation to the trustees under that provision with respect to that claim. The proceedings against the trustees are principally concerned with the authority claim. It cannot be said that the fact that the English courts have jurisdiction under article 24(2) in relation to the English company law claim, as it concerns Koza Ltd, means that such jurisdiction extends to cover the trustees, who are not necessary parties to that claim and are more removed from it than they are in relation to the authority claim. Once it is appreciated that the application of article 24(2) to the authority claim and its application to the English company law claim are to be considered separately, a strict interpretation of article 24(2) as explained by the Court of Justice leads to the conclusion that it does not cover the trustees in relation to the latter claim. Further, the rationale underlying article 24(2) of avoiding conflicting decisions in relation to the relevant subject matter of each respective claim and the rationale that each respective claim should be tried in the courts best placed to do so both support that view. Conclusion I would allow the appeals by Koza Altin and the trustees and would accept their case that (i) the English courts have no jurisdiction under article 24(2) of the Recast Regulation over the trustees in relation to any part of the claims; (ii) the English courts have jurisdiction under that provision over Koza Altin in respect of the English company law claim, which is principally concerned with the affairs of Koza Ltd; and (iii) the English courts have no jurisdiction under that provision over Koza Altin in respect of the authority claim, which is principally concerned with the conduct of the business of Koza Altin. |
This appeal concerns what is sometimes called a fully qualified covenant in a lease of real property. Leases commonly contain a series of covenants by the tenant not to do things, typically relating to assignment, sub-letting and the use of the demised premises. By what is called a qualified covenant, the tenant promises not to do something without the landlords consent. By a fully qualified covenant, the tenant promises not to do something without the landlords consent, not to be unreasonably withheld. In the present case, the tenant promised not to apply for any planning permission without the consent of the landlord, not to be unreasonably withheld. The tenant wished to apply for planning permission for a change of use of part of the demised premises, from business to residential use, but the landlord refused consent on the ground that this would substantially increase the risk that the tenant could compulsorily acquire the freehold reversion under the Leasehold Reform Act 1967. The tenant claimed that the landlord was unreasonably withholding consent. Both the judge and the Court of Appeal agreed. This was in their view because, although the premises were in mixed use at the time of its grant, the lease permitted the tenant to use the whole of the premises for residential purposes. Since this inevitably exposed the landlord to the risk of a compulsory purchase of the freehold (enfranchisement), to refuse permission to the tenant to seek planning permission for a change of use of part of the premises to residential use was to seek to obtain an uncovenanted advantage falling outside the purpose of the fully qualified covenant against seeking planning permission. The landlord appeals to this court, upon the basis that protection against an increased risk of enfranchisement is a well-recognised and legitimate reason for refusing consent under a fully qualified covenant, within the general purposes of restrictive covenants in leases, namely the protection of the value of the reversion and, a fortiori, its very existence. The Facts The leasehold property in question is a terraced building at 51 Brewer Street London W1, being part of the appellants Soho estate which includes numbers 39- 61 (odd numbers) Brewer Street. No 51 is constructed over six floors including a basement. The basement and ground floor are, in area, much greater than any of the upper floors. By a lease dated 4 April 1986 (the Lease) the whole of No 51 was let by Standard Wharf (No 2) to Burgess & Galer Ltd for a 100 year term from 25 December 1985, for a premium of 200,000 and a peppercorn rent. The respondent has been the tenant under the Lease since 1998. The appellant is now the successor in title to the reversion under the Lease, as freeholder of No 51. The whole of No 51 has since October 1998 been sublet, initially to Cusdens (Victoria) Ltd and, following an assignment, since 2008 to Romanys Ltd, under two successive sub- leases, the second of which will expire in September 2023. The Lease contains the following relevant tenants covenants. Clause 3(11) contained a general user covenant in the following terms: Not to use the Demised Premises otherwise than for one or more of the following purposes (a) retail shop (b) offices (c) residential purposes (d) storage (e) studio PROVIDED however that nothing herein contained shall imply or be deemed to be a warranty that the Demised Premises may in accordance with all Town Planning Laws and Regulations now or from time to time in force be used for the purpose above mentioned. By clause 3(15) the Lease contained further specific user covenants prohibiting, for example, noxious noisy or offensive trades, illegal or immoral acts, use as a sex shop, use for an auction, for holding of public meetings or entertainments or use as a betting shop, public house, restaurant, off-license or wine bar. By clause 3(19) the tenant covenanted as follows: To perform and observe all the provisions and requirements of all statutes and regulations relating to Town and Country Planning and not to apply for any planning permission without the prior written consent of the Landlord such consent not to be unreasonably withheld This is the fully qualified covenant in issue on this appeal. The Lease permitted assignment of the whole (but not part) of the premises and a sub-letting of the whole or part of the premises otherwise than during the last seven years of the term, in relation to which there was a fully qualified covenant. At the time of the grant of the Lease in 1986, the ground floor and basement of No 51 were in retail use. The first and second floors were used for storage and as a staff area in connection with the retail use on the lower floors. The top two floors were in occasional residential use. At all material times the permitted use of No 51 in planning terms has been as follows: for the ground floor and basement it is retail; for the first and second floors it is office/ancillary; for the top two floors it is residential. Between 2013 and 2015 Romanys carried out, and the respondent paid for, building works on the four upper floors of No 51 by which each floor was converted into a self-contained flat. Although this was carried out with knowledge of the landlord, it reserved its rights to refuse an application for permission to apply for a change of use under clause 3(19) of the Lease, in respect of the first and second floors. Following the completion of those works, the top two floors of No 51 have been let to residential tenants but, pending the obtaining of planning permission for consent to a change of use, the first and second floors remain vacant. At the time of the grant of the Lease in 1986, the freeholder faced no immediate risk of enfranchisement because the 1967 Act imposed a residence qualification on a tenant which could not be satisfied by a limited company. That qualification was however removed by the Commonhold and Leasehold Reform Act 2002. Nonetheless the proportion of No 51 in residential use did not, for as long as it was confined to the top two floors, amount to a sufficient proportion of the whole building to give rise to a real risk of enfranchisement, because the building could not, in that state of occupation, be described as a house reasonably so called within the meaning of section 2(1) of the 1967 Act. It is common ground that it was for that reason that, having served a notice of claim to acquire the freehold under the 1967 Act in October 2012, the respondent abandoned it in January 2013. But the judge (Judge Collender QC) found, and it is not now in dispute, that if (as he thought likely) the respondent were to obtain planning permission for a change of the use of the first and second floor to residential, this would, in his words, substantially enhance the respondents prospects of obtaining enfranchisement. On 17 April 2015 the respondent applied under clause 3(19) of the Lease for permission from the appellants predecessor in title (Tuesday One) to apply for planning permission to change the use of the first and second floors of No 51 to residential, on the basis that residential use of those two floors was permitted by clause 3(11). In its reply refusing consent dated 30 April 2015, Tuesday One identified the increased risk of a successful claim to enfranchise under the 1967 Act as its reason for refusal. Without admitting that an enfranchisement claim would then necessarily succeed, the refusal letter continued: The effect of a successful claim to enfranchise would not merely damage the reversion; it would deprive our client of its reversion in the Premises entirely. Furthermore, it would deprive our client of control for estate management purposes of the block containing the Premises, which would have an adverse impact on the value of our clients investment in the block. It is common ground on the pleadings in the litigation which ensued that one purpose of the respondents contemplated planning application was indeed to improve its prospects of a successful claim for enfranchisement. Tuesday Ones refusal of consent under clause 3(19) was the casus belli for this litigation. The respondent was successful, both at trial and in the Court of Appeal, in its contention that consent to its intended planning application had been unreasonably withheld. The respondents success turned upon a perception by both the courts below (although for slightly different reasons) about what was and was not, as a matter of construction of the Lease, the purpose of clause 3(19). In his careful and comprehensive judgment Judge Collender put it this way: I accept that the purpose of the covenant at clause 3(19) of the lease is to protect the lessor from the possible effect of an application for planning permission, because as the owner of the land, it could be subject to enforcement action if there were a breach of a planning obligation. I accept the argument that it is not to enable the lessor to restrict or limit the permitted use under clause 3(11). In my judgment, the lessors refusal of consent under clause 3(19) is unreasonable because thereby they are seeking to achieve a collateral purpose, ie the imposition of a restriction on use that was not negotiated and is not included within clause 3(11). Giving the leading judgment in the Court of Appeal ([2018] Ch 603) Sir Terence Etherton MR agreed generally with the judges reasoning. In his view, the key reason why clause 3(19) could not be construed as having been intended to permit the landlord to refuse to consent to an application for planning permission for a use authorised by clause 3(11) which increased the risk of enfranchisement was because any third party, other than the tenant, could apply for the same planning permission, which the landlord would be powerless to oppose, and which would give rise to the same increased risk of enfranchisement. At para 49 he put it this way: If Rotrust were correct in its argument, Hautford would be precluded from applying for planning permission to enable Hautford to use the first and second floors for residential purposes for the 70 or so years remaining of the original 100- year term so long as Rotrust was the landlord or any assignee of the freehold held the same views as Rotrust. Hautford would be precluded from doing so, even though any third party would be free at any time to make such an application and, if made and successful, Hautford could take advantage of the planning permission. Indeed, that would have been the position from the first day of the 100-year term. It seems inconceivable that this was the intention of the original parties to the lease. Both the courts below regarded the appellants additional estate management reason for refusing consent as insufficient to render that refusal reasonable. The judge held that the effect of the loss of one freehold within the terrace upon enfranchisement could largely be remedied by the imposition of freehold covenants under section 10(4) of the 1967 Act, and the Court of Appeal upheld that analysis. In this court it was sensibly conceded by the appellant that, regardless whether section 10 afforded a complete remedy for the loss of this one freehold within the terrace in estate management terms, this could not on its own be a sufficient ground for a reasonable refusal of consent. The Law The substantial body of case law which assists the court in determining whether a particular refusal of consent under a fully qualified covenant is unreasonable is not, subject only to one matter, significantly in issue on this appeal. Rather, the outcome turns on whether the courts below were correct in their identification of the limited purpose behind clause 3(19) of this particular Lease. It is therefore appropriate to set out the relevant principles relatively briefly. The only contentious question of principle is whether the cases (and there are several) which suggest that a landlord may reasonably refuse consent under a fully qualified covenant to the doing of something by the tenant which increases the risk of enfranchisement are limited to covenants in leases granted before the passing of the 1967 Act. Both the courts below considered that this was so: see para 63 of the judges judgment and para 53 of the judgment of the Master of the Rolls. The summary of the relevant principles which best combines completeness with conciseness is to be found in the judgment of Balcombe LJ in International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513, at 519H- 521E. Although the seven principles there set out are directed to the reasonableness of a refusal of consent to an assignment, the substance of them is equally applicable to refusal of consent to the making of a planning application. It is unnecessary to set them out here because, in Ashworth Frazer Ltd v Gloucester City Council [2001] 1 WLR 2180 they were, without being disapproved, helpfully condensed by the House of Lords into three overriding principles. At paras 3 to 5 (on pp 2182-2183) Lord Bingham of Cornhill said as follows: The first (Balcombe LJs second principle) is that a landlord is not entitled to refuse his consent to an assignment on grounds which have nothing whatever to do with the relationship of landlord and tenant in regard to the subject matter of the lease Thirdly: The landlords obligation is to show that his conduct was reasonable, not that it was right or justifiable. As Danckwerts LJ held in Pimms Ltd v Tallow Chandlers Co [1964] 2 QB 547, 564: it is not necessary for the landlords to prove that the conclusions which led them to refuse consent were justified, if they were conclusions which might be reached by a reasonable man in the circumstances .... Subject always to the first principle outlined above, I would respectfully endorse the observation of Viscount Dunedin in Viscount Tredegar v Harwood [1929] AC 72, 78 that one should read reasonableness in the general sense. There are few expressions more routinely used by British lawyers than reasonable and the expression should be given a broad, common sense meaning in this context as in others. At para 67, (on p 2201), Lord Rodger of Earlsferry said this: The test of reasonableness is to be found in many areas of the law and the concept has been found useful precisely because it prevents the law becoming unduly rigid. In effect, it allows the law to respond appropriately to different situations as they arise. This has to be remembered when a court is considering whether a landlord has unreasonably withheld consent to the assignment of a lease. He continued by endorsing the passage from Tredegar v Harwood to which Lord Bingham had earlier referred. Both Lord Bingham and Lord Rodger placed particular emphasis upon the following dicta of Lord Denning MR in Bickel v Duke of Westminster [1977] QB 517, at 524: The words of the contract are perfectly clear English words: such licence shall not be unreasonably withheld. When those words come to be applied in any particular case, I do not think the court can, or should, determine by strict rules the grounds on which a landlord may, or may not, reasonably refuse his consent. He is not limited by the contract to any particular grounds. Nor should the courts limit him. Not even under the guise of construing the words. (Emphasis added) The Ashworth Frazer case is, again, about refusal of consent to an assignment. Nonetheless, the general statements of principle which it contains are equally applicable to a refusal of consent to an application for planning permission, and need no further refinement or elucidation as general principles. The Bickel case was one of those in which it was held reasonable for a landlord to refuse consent to the doing of something by the tenant which would cause or increase a risk of enfranchisement. Another, referred to by the Court of Appeal, is Norfolk Capital Group Ltd v Kitway Ltd [1977] QB 506. In both cases the relevant lease was granted before the passing of the 1967 Act, and the judgments were handed down by differently constituted Courts of Appeal within ten days of each other in mid-1976. Taking the (slightly earlier) Kitway case first, the issue was whether the landlord could reasonably refuse consent to an assignment by a limited company (which could not enfranchise) to a private individual (who could after five years residence). All three members of the court gave judgments, and it is impossible to discern in any of them a process of reasoning along the lines that it was only because the lease was granted prior to the coming into force of the 1967 Act that it was reasonable for a landlord to have regard to the risk of enfranchisement in refusing consent. On the contrary, all three members of the court appeared to have regarded such a reason for refusal as eminently reasonable, subject only to authorities in Rent Act cases about normal and abnormal assignments which, in the event, they held not to be applicable. At p 511 Megaw LJ said: If one were asked, without having been taken into any legal authorities relating to the matter, whether or not, in the circumstances which I have outlined, it was unreasonable for the landlords to refuse their consent when the consequences of giving that consent and of the assignment being made were likely to be that they would be deprived of their freehold interest in the property in five years time, I find it very difficult to think that anyone would find it possible to say that the landlords refusal was unreasonable. At p 515 Brown LJ said: If there were no authorities, I think, like Megaw LJ, that there could be no doubt that the landlords refusal here was entirely reasonable. Geoffrey Lane LJ added, at p 516: Now, what are the facts here? Mr Barnes concedes that the value of the landlords reversion is less if there is a possibility of any of the mews houses being enfranchised. There is clearly such a possibility, and accordingly the value of the landlords reversion is less. That being so, it would be a strange landlord indeed who gave his consent to the proposed assignments. The refusal of the landlords in the present circumstances was eminently reasonable. In the Bickel case the tenants, a friendly society not in occupation, requested consent to assign the lease to their sub-tenant, who was. This gave rise to the likelihood that, five years later, the assignee would be entitled to enfranchise. In a later part of the passage approved by Lord Bingham and Lord Rodger in the Ashworth Frazer case (quoted above), Lord Denning continued, at [1977] QB 517, 524D: The landlord has to exercise his judgment in all sorts of circumstances. It is impossible for him, or for the court, to envisage them all. When this lease was granted in 1947 no one could have foreseen that 20 years later Parliament would give a tenant a right to buy up the freehold. Seeing that the circumstances are infinitely various, it is impossible to formulate strict rules as to how a landlord should exercise his power of refusal. This passage from Lord Dennings judgment is not to be read as meaning that it was only because the lease was granted prior to the coming into force of the 1967 Act that the landlord could reasonably refuse consent to an assignment, on the grounds of an increased risk of enfranchisement. On the contrary, Lord Denning was simply saying that the landlord could do so in spite of the fact that such a risk could not have been within the contemplation of the parties at the time of the grant of the lease, so that it could not have been a purpose for which the covenant against assignment had originally been sought and given. He used the risk of enfranchisement as an example of the infinitely variable circumstances in which the landlord has a choice to consent or refuse consent, illustrative of the need to address the reasonableness of a refusal by reference to the facts as they are at the date of the tenants request. It was a warning against addressing the reasonableness of a refusal by reference to an over-refined construction of the lease as at the time of its grant, something which Lord Denning called the guise of construing the words. The thinking that a fully qualified covenant may not entitle a landlord to refuse consent because of an increased risk of enfranchisement where the covenant is contained in a lease granted after the passing of the 1967 Act may be based upon the notion that, if the lease itself gives rise to such a risk, then the landlord (who must be taken to be cognisant of the 1967 Act) must be assumed to have undertaken that risk by granting the lease, so that to seek to fend off that risk by the refusal of consent would be to obtain a collateral or uncovenanted advantage. The lease in the present case was granted after the passing of the 1967 Act, but to a limited company tenant which could not (then) enfranchise. But, as the judge observed, there was no sufficient restriction upon an assignment to a private individual, and that would increase the risk. Furthermore, the permission to the tenant under clause 3(11) to use the whole of the premises for residential purposes might be thought to invite it. It is over-simplistic, and contrary to the principles as laid down in the Ashworth Frazer case, to approach this question in any rigid or doctrinaire way, still less solely by reference to original purposes of the covenant in clause 3(19) which may have been within the contemplation of the parties when the lease was granted. It will in every case be a question of fact and degree measured as at the date upon which the relevant consent is sought by the tenant. There will no doubt be some leases granted after the passing of the 1967 Act which render the risk of enfranchisement so great and so obvious that the risk is not materially increased by the tenant doing that for which he seeks the landlords consent. There will be other cases where the alteration in the risk attributable to the giving of consent is substantial. Likewise there will be cases where the landlords reversion is of only nominal value (such as the reversion on a 999 year lease) and others where, notwithstanding reforms to the enfranchisement legislation, the landlord nonetheless reasonably anticipates a real diminution in the value of his reversion occasioned by the increase in the risk of enfranchisement, which a statutory right to compensation will not sufficiently eradicate. In the present case, it is not in dispute either that the risk of enfranchisement would be substantially increased by the grant of the proposed planning permission, or that the appellants reversionary interest is of real value which would be adversely affected by enfranchisement, notwithstanding a statutory right to compensation. Analysis This appeal does not turn upon any refined analysis of the general principles relating to the reasonableness or otherwise of the refusal of consent under a fully qualified covenant. Indeed, the reasoning in the Ashworth Frazer case is antipathetic to the carrying out of any such process of refinement. Nor is there any real dispute about the relevant facts, applicable as at the date when the respondent requested consent to apply for planning permission. The real issue is whether the courts below were correct in construing the Lease in such a way as to exclude resisting an increased risk of enfranchisement as a legitimate purpose of the right to refuse consent under clause 3(19). In my opinion none of those three strands of reasoning supports the conclusion reached by the courts below. All of them seek to address the question whether the landlords consent was unreasonably withheld by reference to an over- refined attempt to identify a limited original purpose behind clause 3(19), contrary to Lord Dennings dictum in the Bickel case, approved in the Ashworth Frazer case, that it is wrong in principle to address the question under the guise of construing the words. Mr Philip Rainey QC for the appellant submitted that nothing in clause 3 and in particular clause 3(11) of the Lease could be treated as a grant because they were all parts of a comprehensive series of interlocking covenants restrictive of use. That may be formally correct, but it misses the substance of Miss Scotts point. Nonetheless, looking at the question as a matter of substance, it cannot be said that the Lease, read as a whole, conferred an unqualified right on the tenant to use the whole, or any particular part, of No 51 for residential purposes. Clause 3(11) must be read with clause 3(19), which required the tenant to perform and observe all the provisions and requirements of the planning legislation. Read together, the effect of those two clauses was to permit the tenant to use for residential purposes only such parts of No 51 as were from time to time permitted by the planning regime to be used for residential purposes. This might be either because of an established use when the Lease was granted, or because the tenant obtained, with the landlords consent, permission for residential use, or because such permission was obtained by a third party or, by some change in the legislation, residential use became lawful without the need for planning permission. At the time of the grant of the Lease, the tenant could not without breach of covenant use the first and second floors for residential purposes. At the time when it sought consent to apply for planning permission for that purpose, residential use of those two floors was still prohibited by the planning legislation, and therefore by clause 3(19). As to the judges reasoning, it may well be that one purpose of clause 3(19) was to protect the landlord from liability for compliance with conditions upon which a planning permission requested by the tenant might be granted. But the identification of that specific purpose by no means excludes other purposes for the existence of clause 3(19), or for the use of the landlords right (not unreasonably) to refuse consent. Nothing in the language of clause 3(19) supports the judges identification of a single purpose for its existence within the Lease, and it is simply a non sequitur to say that, because one specific purpose can be identified, no other purpose is permissible. On the contrary the correct approach is to construe clause 3(19) so as to discover what, upon its express terms, it permits the landlord to do and then to decide the question of unreasonableness by asking whether the landlords refusal serves a purpose sufficiently connected with the landlord and tenant relationship, as at the time when consent is requested, in accordance with the first of Lord Binghams three principles in the Ashworth Frazer case, set out above. Turning finally to the Court of Appeals reasoning, it is undoubtedly true that the combination of clause 3(11) and the ability of a third party to seek planning permission for the residential use of the first and second floors of No 51 together created a vulnerability of the freehold to enfranchisement which would not have existed if clause 3(11) had itself contained provision requiring the tenant to seek the landlords consent for an increased level of residential use within the building. But the fact that the Lease by its terms rendered the freehold vulnerable to enfranchisement does not mean that a clause like 3(19), which provided a measure of protection against that risk, should be treated as incapable of being used reasonably for that purpose. The fact is that, by the time when the respondent sought consent under clause 3(19), no third party had applied for planning permission for a change of the use of the first and second floors to residential and, so far as this court is aware, no such third party application has been made to date. The result is that, looking at the matter as a question of fact as at the time when the respondent sought consent, the landlords ability to refuse that consent continued to afford a real measure of protection against enfranchisement of the freehold. It follows that the courts below treated the question whether consent had been unreasonably refused as effectively determined by an erroneous construction of the Lease, contrary to Lord Dennings guidance in the Bickel case. They therefore made an error of law which requires this court to consider the matter afresh, upon the same undisputed facts. By April 2015 (when consent was sought) it remained unlawful in planning terms for the first and second floors of No 51 to be used for residential purposes. There was, as at that date, no real risk of enfranchisement. On the judges findings, planning permission, if requested, was likely to be granted, and the consequence would significantly increase the risk of enfranchisement which would, in turn, have a real rather than purely theoretical adverse consequence in terms of the value of the freehold reversion to the appellant. No third party had applied, or was threatening to apply, for similar planning permission for change of use. Applying Lord Binghams first principle in the Ashworth Frazer case, it cannot possibly be said that seeking to avoid a significant increase in the risk of enfranchisement, with consequential damage to the reversion, was something extraneous to or dissociated with the landlord and tenant relationship created by the Lease. On the contrary, damage to the reversion is the quintessential type of consideration rendering reasonable the refusal of consent, as is illustrated in particular by the dicta (quoted above) in the Kitway case. Applying the second principle, a down to earth factual analysis of the economic consequences to the landlord of giving or refusing the requested consent in the present case plainly suggests that a refusal is reasonable. Applying the third principle, the appellant did not need to show that a refusal was right or justifiable, but merely that it was reasonable. In my opinion it clearly was. For those reasons I would allow this appeal. I have come to the conclusion that this appeal should be dismissed effectively for the reasons given by the Court of Appeal and the judge. The first step is to examine the scope of the power of the lessor to refuse its consent to a planning application and this can only be done by interpreting clause 3(19) in the context of the lease in the usual way. The most relevant circumstances to take into account are the other provisions of the lease, including the lessees unrestricted right to use the whole of the premises if he wishes to do so for residential purposes. I do not agree that this sub-clause must be read subject to the lessee first obtaining the lessors consent to a planning application for a change of use (where that is required) or that, as Lord Briggs has concluded, the right to use the premises for residential purposes was limited to those parts for which planning consent had already been obtained. That would involve writing words into the user clause as opposed to treating the lessors power reasonably to refuse its consent in clause 3(19) as impliedly limited to other aspects of a planning application. The lessor would have been ill-advised to rely on his power to withhold his consent to a planning application as a means of preventing the lessee from improving his chances of obtaining leasehold enfranchisement because a third party, such as a developer, could obtain that consent free from the restrictions in the lease. It is not a point which is ultimately in the lessors favour that at the date of the lease the lessee could not apply for leasehold enfranchisement though he could have done if he had been an individual. It was only possible for a company to apply as a result of a subsequent amendment. The lessee was, however, from the date of the lease free under clause 3(13) to assign the whole of the premises to an individual who would have been free to apply for leasehold enfranchisement when he met the conditions as from the date of the lease. The lessor must be taken to have been aware of this. The key point in Lord Briggs judgment is that the lessor was entitled to protect the value of his reversion against a substantial increase in the chances of the lessee achieving leasehold enfranchisement and thus destroying the lessors interest in the reversion. I have no doubt that the lessor can seek to protect his own interests when exercising power to refuse consent in this way, but only when that is within the purposes for which the lease permits him to use the power to refuse consent. On my interpretation of the lease, the power to refuse consent to a planning application was not granted to enable the landlord to cut down the user clause. Lord Briggs considers that in Bickel v Duke of Westminster [1977] QB 517, 524 (which was approved by the House of Lords in Ashworth Frazer) Lord Denning MR held that the landlord could reasonably refuse consent to an assignment on the grounds that it gave rise to an increased risk of enfranchisement in spite of the fact that such a risk could not have been within the contemplation of the parties at the time of the grant of the lease. I do not agree that that is the way to read Lord Denning MRs judgment. In my judgment, it is clear that Lord Denning MR attached considerable weight to the fact that the parties had not known about the possibility of enfranchisement when they entered into the lease. Enfranchisement was something of a windfall for the tenant. Lord Denning MR held, at pp 524-525: I have studied all the previous cases and find little guidance in any of them to solve our present problems. The reason is simply because it is a new situation, consequent on the Leasehold Reform Act 1967, which was never envisaged before. I would test it by considering first the position of the landlords - the Grosvenor Estate. They hold a large estate which they desire to keep in their hands so as to develop it in the best possible way. This would be much impeded if one house after another is bought up by sitting tenants. Further, if they are compelled to sell under the Leasehold Reform Act, they will suffer much financial loss, because the price is much less than the value of the house. Test it next by considering the position of the tenants - the Foresters. They hold the premises as an investment and want to sell it. It matters not to them whether they sell to the landlord or to sub-tenants, so long as they receive a fair price for it. The landlords say they are willing to negotiate a fair price for it. They will give the Foresters a sum equivalent to that offered by the sub-tenants. Test it next by considering the position of the sub-tenant herself. When she took her sub-lease, she had no possible claim to enfranchisement. It was at a high rent, outside the Act of 1967. She is quite well protected by the Rent Acts so far as her own occupation is concerned. She will not be evicted at the end of her term. The only result on her of a refusal will be that she will not be able to buy up the freehold for a very low figure. Lord Denning MRs insight was that it was not appropriate to decide the unreasonableness of consent to assignment, as Orr and Waller LJJ did, by reference to whether the circumstances of the proposed assignment were abnormal. They based their conclusion on the availability of enfranchisement following assignment, when that was not available at the date of the lease. Lord Denning MR considered that the court should make an assessment of all the relevant considerations to determine whether the consent was unreasonably refused. In Ashworth Frazer v Gloucester City Council [2001] 1 WLR 2180 at p 2183, Lord Bingham held that Lord Denning MRs approach was the correct one. The other members of the House of Lords agreed with Lord Bingham or, in the case of Lord Rodger of Earlsferry, that Lord Denning MR was correct to hold that the question whether the refusal of consent was reasonable was one of the circumstances of the case, and not of law (see para 74 of Lord Rodgers speech). Here the parties cannot have intended that the lessor should be able to protect itself against the increased risk of leasehold enfranchisement, resulting from an increased use of the premises for residential purposes, by using the power to refuse consent to a planning application when the lessee could assign to an individual who, even at the date of the lease, would have the right to apply for enfranchisement, and when any necessary planning permission for a change of user could be obtained by the prospective assignee without any involvement of the lessee. This would be so even if the circumstances at the date of the application were that the risk stood to be substantially increased and the lessor might lose his right to the reversion completely. In those particular circumstances, I consider that the judge and the Court of Appeal were entitled to conclude, and right to conclude, that it would be unreasonable for the lessor to use clause 3(19) for such purpose. Like Lady Arden, I would have dismissed this appeal. Clause 3(11) of the Lease is crucial. I would therefore dismiss the appeal essentially for the reasons given by the Court of Appeal and the judge. In the letter dated 17 April 2015 by which, through its solicitors, the leaseholder sought the freeholders consent under clause 3(19), it suggested that clause 3(11) was crucial. So did the trial judge and the Court of Appeal. The subclause bears recital again. It is a covenant by the leaseholder (11) Not to use the Demised Premises otherwise than for one or more of the following purposes (a) retail shop (b) offices (c) residential purposes (d) storage (e) studio PROVIDED however that nothing herein contained shall imply or be deemed to be a warranty that the Demised Premises may in accordance with all Town Planning Laws and Regulations now or from time to time in force be used for the purpose above mentioned. Clause 3(11) is not a common form, or boilerplate, subclause. It is a bespoke subclause of singular generosity to the leaseholder. One result of it is that the Lease goes further than to omit to prohibit the use of any part of the premises for residential use. Its effect is specifically to permit residential use of every part of them. Indeed the permission is unqualified by any requirement to secure the freeholders prior consent to the proposed use. The proviso which excludes any warranty on the part of the freeholder about accordance with planning laws in no way detracts from the width of its permission. The trial judge was right to note another subclause which, albeit of some triviality, addresses the prospect of residential use of the premises, not limited to the third and fourth floors. It is part of clause 3(15)(c), by which the leaseholder covenanted not to permit animals of any kind to be kept [on the demised premises] except that (1) domestic animals may be kept with the consent of the Lessor and (2) this provision regarding animals shall not apply to the existing residential sub-tenants of the upper floors of the premises. The generosity of clause 3(11) to the leaseholder was no doubt a feature of the Lease which was reflected in the premium paid to the freeholder by the initial leaseholder for it and in the premiums paid for the later assignments of the lease and of the freehold reversion respectively. In Soho, unlike in many parts of England and Wales, a change in the use of premises from office use or use ancillary to retail to residential use represents unlawful development unless it has been the subject of planning permission. Unlike clause 3(11), clause 3(19) is a boilerplate clause. The leaseholders usual covenant not to apply for any planning permission without the prior written consent of the Landlord such consent not to be unreasonably withheld generates this litigation. I agree with Lord Briggs that the meaning of the leaseholders covenant in clause 3(19) is clear and generates no issue of construction. I also acknowledge that, within their overarching inquiry into the reasonableness of the freeholders withholding of consent, the judges in the lower courts found it helpful to consider the purpose of the covenant. For my part, I find that perspective less helpful than they did. I prefer to go straight to that one word: unreasonably. Were it reasonable for the freeholder not to consent to an application by the leaseholder to apply for permission to make residential use of the first and second floors, the provisions of clause 3(11) would be deprived of substantial effect. Instead of the unqualified permission for residential use there given, the permission, in so far as it relates to the first and second floors, would become a fully qualified permission. I agree with Sir Terence Etherton MR, at para 47, that, to that extent, any permissible withholding of consent in such circumstances would in effect rewrite clause 3(11). Like the courts below, I cannot accept that an express grant of permission for residential use can - reasonably - be overridden by the freeholders deployment of an entirely unfocussed provision in relation to applications for planning permission. However legitimate its concern about the prospect of enfranchisement, the freeholder cannot - reasonably - withhold its consent if the effect of doing so is to negate the permission for residential use which it granted and for which it received valuable consideration. Our duty is to appraise the trial judges determination that the leaseholder had established that the freeholder was unreasonably withholding its consent to the application. I happen to agree with the judges determination. But, more importantly, I see no significant flaw in the manner in which he approached it. The Court of Appeal was in my view right to conclude that his determination ought to be upheld. In my respectful view the contrary conclusion of the majority falls foul of the second overriding principle articulated by Lord Bingham in the Ashworth Frazer case, set out in para 22 of the judgment of Lord Briggs. |
The Leasehold Reform Act 1967 is on its face a statute about houses, not commercial buildings. The buildings with which we are concerned were originally designed and used as houses, but at the relevant date were used entirely for commercial purposes, one for offices, the other (in the judges words) as a self catering hotel. In both cases the courts below felt constrained to hold that they were houses within the meaning of the 1967 Act, with the consequence that the lessees were entitled to enfranchise, that is, to acquire the freeholds compulsorily from their lessors on the terms fixed by the Act. In the Court of Appeal [2010] EWCA Civ 748; [2010] 1 WLR 2317 Lord Neuberger of Abbotsbury MR regretted this result. He saw it as the probably unintended consequence of amendments made by the Commonhold and Leasehold Reform Act 2002, removing the previous residence requirements. However, he felt bound to apply his view of the relevant provisions as they stood after those amendments, rather than to decide what the legislature would have said if it had fully appreciated the consequences (para 57). From the material we have been shown, he was clearly right to think that his interpretation did not reflect Parliaments intentions. The thinking behind the 2002 legislation is apparent from the preceding Draft Bill and Consultation Paper Commonhold and Leasehold Reform (Cm 4843), published by the Lord Chancellor in 2000. It included proposals for the introduction of an entirely new form of tenure, known as Commonhold, and for amendment of the existing provisions relating to leases of flats (under the Leasehold Reform, Housing and Urban Development Act 1993) and of houses (under the 1967 Act). The first paragraph of the Introduction leaves no doubt that its purpose was to address perceived flaws in the residential leasehold system (p 107), not in the leasehold system more generally. In relation to flats, the governments view was that the residence tests under the 1993 Act were too restrictive, for example, in excluding someone subletting a flat, or occupying a flat as a second home. The residence requirement would therefore be abolished; but, to restrict the scope for short term speculative gains, it would be replaced by a rule requiring the qualifying tenant to have held the lease for at least two years (pp 155 6). A similar approach was proposed for leases of houses under the 1967 Act: This would bring the residence test for houses in line with the proposals for flats. It would allow long leaseholders of second homes to benefit and would also enable leaseholders who lease houses through a company to enfranchise. Furthermore, as in the case of flats, it would restrict the scope for short term speculative gains (p 189). There is no evidence then or thereafter of any ministerial or parliamentary intention to extend the scope of the Act more generally, or in particular to confer statutory rights on lessees of buildings used for purely non residential purposes. Although the 1967 Act like the 1993 Act is in a sense expropriatory, in that it confers rights on lessees to acquire rights compulsorily from their lessors, this has been held not to give rise to any interpretative presumption in favour of the latter. As Millett LJ said of the 1993 Act: It would, in my opinion, be wrong to disregard the fact that, while the Act may to some extent be regarded as expropriatory of the landlord's interest, nevertheless it was passed for the benefit of tenants. It is the duty of the court to construe the 1993 Act fairly and with a view, if possible, to making it effective to confer on tenants those advantages which Parliament must have intended them to enjoy. (Cadogan v McGirk [1996] 4 All ER 643, 648) By the same token, the court should avoid as far as possible an interpretation which has the effect of conferring rights going beyond those which Parliament intended. Statutory definition Section 2(1) defines house in the following terms: 'house' includes any building designed or adapted for living in and reasonably so called, notwithstanding that the building is not structurally detached, or was or is not solely designed or adapted for living in, or is divided horizontally into flats or maisonettes; and (a) where a building is divided horizontally, the flats or other units into which it is so divided are not separate 'houses', though the building as a whole may be; and (b) where a building is divided vertically the building as a whole is not a 'house' though any of the units into which it is divided may be. In the present cases, nothing turns directly on the qualifications introduced by the word notwithstanding (which I shall refer to as the proviso). We are concerned with the main part of the definition, which raises two separate but overlapping questions: (i) is the building one designed or adapted for living in? (ii) is it a house reasonably so called? Both questions remain live in Hosebay; in Lexgorge the first has been conceded in favour of the lessees. The two parts of the definition are in a sense belt and braces: complementary and overlapping, but both needing to be satisfied. The first looks to the identity or function of the building based on its physical characteristics. The second ties the definition to the primary meaning of house as a single residence, as opposed to say a hostel or a block of flats; but that in turn is qualified by the specific provision relating to houses divided horizontally. Both parts need to be read in the context of a statute which is about houses as places to live in, not about houses as pieces of architecture, or features in a street scene, or names in an address book. The facts The first case (Hosebay) concerns three properties, 29, 31, and 39 Rosary Gardens, South Kensington, London SW7. They were originally built as separate houses as part of a late Victorian terrace forming the west side of Rosary Gardens. The current leases of Nos 29 and 39 were granted in 1966 for terms expiring in December 2020, subject to covenants for their use as 16 high class self contained private residential flatlets. The current lease for No 31 was granted in 1971 for a term expiring in December 2030, subject to a covenant restricting its use to that of a single family residence or a high class furnished property for accommodating not more than 20 persons. It was common ground that the current use, which had begun some time before 1981, was not in accordance with the covenants. It was unclear from the evidence when the premises had been converted to their present layout. The judge (para 83) proceeded on the basis that the conversions may well have been carried out substantially before the current leases were granted in 1966 and 1971. Although there was no evidence as to the actual purpose of the conversions, the Master of the Rolls on the balance of probabilities inferred (principally from the lack of documentation in the hands of the landlords to indicate otherwise) that they had been for the uses described in the leases (para 37). Hosebay Ltd acquired all three leases in 1996. On 23 April 2007 it served notices on its landlords under section 8 of the 1967 Act to acquire the freeholds of the three properties. Judge Marshall QC found that the three properties were at the relevant date being used together to provide short term accommodation for tourists and other visitors to London, or what she described as a self catering hotel (paras 8 and 19). Each of the three properties had been fully adapted to provide individual rooms for letting out (para 9), with the exception of two rooms in No 31, one of which was used for office and reception purposes, and the other for storage. The great majority of the rooms could be described as rooms with self catering facilities. Each room had between one and four beds, furniture, and limited storage space, cooking facilities, and small wet rooms with shower, basin and WC. Fresh bed linen and room cleaning, but no other services, were provided to those staying in the rooms. On these facts, the judge concluded that each of the three properties was physically adapted for living in even though the current use was itself too transient to qualify as such. The Court of Appeal agreed. I quote the Master of the Rolls: 33. My primary reason for that conclusion is that, in order to determine whether premises are adapted for living in, one looks at the most recent works of adaptation, and assesses objectively, whether they resulted in the property being adapted for living in 36. In this case, I consider that the effect of the most recent works of conversion to the three properties, if they were works of adaptation, adapted those properties for living in. Ignoring one or two rooms, each room in the three properties is a self contained unit of accommodation, with its own basic small shower room/WC, and its own even smaller and more basic cooking facilities. As Moore Bick LJ pointed out in argument, the rooms are entirely appropriate for letting to students on three year degree courses, and, as Mr Johnson rightly accepted, if they had been, all the rooms, and therefore the three buildings, would have been used for living in. Even if, as Mr Johnson argued and I am prepared to assume without deciding, the current use of the three properties is not for living in, that certainly does not mean that, viewed objectively, the three properties were not adapted for living in. The judge and the Court of Appeal held also that the properties were houses reasonably so called, as the Master of the Rolls explained: externally, each of the three properties has the appearance of being a relatively large town house; internally, each of the three properties has been converted so that almost every room can be used as a self contained unit for one or more individuals, with cooking and toilet facilities. I find it hard to see how the judge could be faulted for concluding that, even if each of the three properties might be called something else as well, they could each reasonably be called a house. (para 38) The other case (Lexgorge) relates to 48 Queen Anne Street, in Marylebone, London W1. It was built in the early 18th century as a house comprising five floors including basement, in a terrace of substantial houses. It was occupied for that purpose for many years until 1888, when it began to be used for commercial purposes. Coming to more recent times, planning permission was granted in December 1949 for conversion of the second and third floors into a self contained maisonette, and there is some evidence that it was implemented. However, from about 1961, all four upper floors were used as offices, and they were so used when the notice was served under the Act on 4 March 2005. The whole building was still in office use in June 2005. However, by the time of the trial in October 2009, when the judge inspected the property, the upper two floors were in use for residential purposes. The office use of the lower floors continued. The current lease was granted in 1951 for a term of 110 years. The lease described the property as a messuage or residential and professional premises, and restricted its use (subject to landlords' consent) to self contained flats or maisonettes on the upper two floors, professional offices on the first and ground floors, and in the basement storage and lavatory in connection with other parts of the demised premises. In 1978, the lease was acquired by Lexgorge Ltd. At the time of the notice the office use of all floors had become established, and therefore lawful for planning purposes, although in breach of the lease as respects the upper floors. The building is listed as a building of special architectural or historic interest (grade 2); English Heritages records describe it as a Terraced House. In this case, as already noted, it is conceded by the lessors that at the material date the premises, although used for offices, were still at least in part designed or adapted for living in. It was held by the judge (Judge Dight) and by the Court of Appeal that it was a house reasonably so called, and therefore within the definition. The Master of the Rolls said: 53. If the upper two floors of the property had been empty, I have little doubt but that the property could reasonably have been called a house, bearing in mind its external character and appearance (a classic town house in London's West End), its internal character and appearance at least on the upper two floors (which were, as I understand it, substantially as constructed), the description of the property in the lease as messuage or residential or professional premises, and, to the extent that it is relevant, the terms of the lease (restricting the use of the upper two floors to residential). I find it hard to see why the fact that the upper two floors had been used (even for many years) as offices (in contravention of the terms of the lease) should wreak such a change that the property could no longer reasonably be called a house. The authorities The first relevant case under the Act was Lake v Bennett [1970] 1 QB 663. However, I find it helpful to start from an authority in a different statutory context, Lord Denning MRs judgment in Ashbridge Investments Ltd v Minister of Housing and Local Government [1965] 1 WLR 1320. The case related to compulsory acquisition of two properties for the purpose of slum clearance under the Housing Acts. The level of compensation would vary significantly depending on whether the property was or was not a house. In the absence of a statutory definition of house, Lord Denning adopted the following formula: a building which is constructed or adapted for use as, or for the purposes of, a dwelling (p 1324). In Lake v Bennett he suggested that the draftsman of the 1967 Act definition had adopted these words, but added the limitation reasonably so called (p 670). Ashbridge itself concerned two adjoining buildings in the same terrace, which had been designated for compulsory purchase, the first (No 17) as an unfit house, the second (No 19) as a building other than a house. The buildings were very similar in appearance; both had been designed as shops with rear living rooms and living quarters above, but neither was in current use for living purposes. No 17, which had undergone no structural alterations, was held by the Minister to have retained its identity as a dwelling. No 19, by contrast, was held to have lost its identity as a dwelling, following structural alterations involving the extension of the shop into the rear living area (p 1325). The latter decision was described in the Court of Appeal as extraordinary (p 1327, per Harman LJ), but that did not undermine the validity of the decision in relation to No 17. Lord Dennings formula can be seen as his way of expressing the present identity (in the inspectors words), or perhaps function, of a building not currently in use, defined by reference to the purpose of its construction or subsequent adaptation. Lake v Bennett itself concerned a three storey house, the ground floor of which had been converted into a shop. There was no issue as to the first part of the definition, as it was clear that the building was at least in part adapted for use for living in. The Court of Appeal held that notwithstanding the commercial element, the building as a whole was a house reasonably so called and was therefore within the scope of the 1967 Act. The reasoning of Lake v Bennett was adopted and extended by the House of Lords in Tandon v Trustees of Spurgeons Homes [1982] AC 755, which remains the leading House of Lords authority on this part of the definition. Unfortunately the reasoning of the single majority speech of Lord Roskill, although carrying the unqualified support of Lord Scarman and Lord Bridge, is not without difficulty. Further, the case needs to be read in its factual context. As in Lake v Bennett, the main problem was to reconcile the statutory recognition (under the proviso) that the building need not be solely designed or adapted for living in, with the need for the building as a whole to be a house reasonably so called. This is not a problem in the present cases. At the end of his judgment Lord Roskill referred with approval to Lake v Bennett, which he welcomed as stating a principle and [confining] the question of fact to a narrow area , and from which he deduced the following three propositions of law : (1) as long as a building of mixed use can reasonably be called a house, it is within the statutory meaning of house, even though it may also reasonably be called something else; (2) it is a question of law whether it is reasonable to call a building a house; (3) if the building is designed or adapted for living in, by which, as is plain from section 1(1) of the Act of 1967, is meant designed or adapted for occupation as a residence, only exceptional circumstances, which I find it hard to envisage, would justify a judge in holding that it could not reasonably be called a house. They would have to be such that nobody could reasonably call the building a house. (p 767) Although expressed as propositions of law, they do not in my view offer much assistance as such, at least beyond the facts of the case. The first proposition was in terms directed to a building in mixed residential and commercial use. Such a building could plausibly be described either as a house with a shop below, or as a shop with a dwelling above. That was enough to show that it could reasonably be called a house. That proposition cannot in my view be applied more generally. The mere fact that a building may be described as a house for other purposes (for example, in the English Heritage list) is not enough to bring it within this part of the definition. The second proposition, that what is a house reasonably so called is a question of law, is not easy to extract from the judgments in Lake v Bennett. Lord Denning described the judges negative answer to that question as an inference from primary facts depending in part at least on the true interpretation of the words reasonably so called, and one with which the court could interfere if it was a conclusion to which the judge could not reasonably come ([1970] 1 QB 663, 671). Salmon LJ described it as partly a question of fact but also a question of law as to the true construction of the meaning of the word house in this Act. (p 672). Elsewhere Lord Roskill himself had accepted counsels submission that the definition of house was a mixed question of fact and law ([1982] AC 755, 765), but he saw it as one in which, in the interests of consistency, the question of fact should be confined within narrow limits: p 767. More modern authorities have leant against such conceptual debates (see, for example, Lord Hoffmann, in Moyna v Secretary of State for Work and Pensions [2003] UKHL 44, [2003] 1 WLR 1929, paras 25 27). In any event, none of these formulations throws much light on how the question should be answered in any particular case. The third proposition is again in terms hard to extract from Lake v Bennett. Lord Denning described the case before them as a typical case, but thought that difficult issues might arise in other cases: [1970] 1 QB 663, 671. He did not suggest that, in such cases, an affirmative answer to the first question would lead to any presumption in respect of the second. The examples given in the judgments (pp 671, 672) of cases that would not satisfy the second test a block of flats, the Ritz Hotel or Rowton House (a working mens hostel) can hardly be described as exceptional. Rather than a free standing proposition of law, deduced from Lake v Bennett, this proposition seems more an expression of Lord Roskills own view as to the correct policy approach to a building of the kind before him, which was adapted at least in part for occupation as a residence. It may be that the real difference between the majority and the minority in Tandon came down to one of policy. Lord Wilberforce (in the minority) thought it clear that the building could not reasonably be called a house; it was rather a mixed unit consisting in part of a shop and in part of a dwelling, and as such was not within the policy of the Act: [1982] AC 755, 760. For Lord Roskill (in the majority) Parliament had made clear that such mixed units were not in principle to be excluded. He noted that such small shops combined with living accommodation were a familiar feature of towns and villages across the country (p 766). In this he echoed the view of Salmon LJ (Lake v Bennett [1970] 1 QB 663, 672), who thought that a tenant living above a shop in the circumstances of that case was obviously the sort of person to whom the legislature intended to give security of tenure. Such policy considerations do not assist the lessees in this case. For the reasons already given, policy if anything points the other way. Of more significance for present purposes is the relative lack of weight given by the majority to the appearance of the buildings as a factor in answering the second question. Lord Fraser of Tullybelton (in the minority) had regarded appearance as the main element in the character of a building: [1982] AC 755, 762. He attached particular weight to the photograph which showed a shop in a row of shops, in contrast with the converted house in Lake v Bennett; to him it was obvious from the photograph that the building could not reasonably be called a house (p 763). That, however, was not the approach of the majority. Lord Roskill had apparently accepted that in determining the character of the building for these purposes, physical appearance could be relevant, as also its history and the terms of the lease (p 766). However, those factors played no detectable part in the final decision. The determinative points were that the proportion of residential use, even if only 25%, was substantial (p 766), and that a tenant occupying such a building as his residence was within what was perceived to be the scope of the protection intended by Parliament (p 766). Those factors were enough to bring the case within the principle established by Lake v Bennett notwithstanding the differences from that case in relation to the original design and physical appearance of the respective buildings. The only other relevant authority at the highest level is the much more recent decision in Boss Holdings Ltd v Grosvenor West End Properties Ltd [2008] UKHL 5; [2008] 1 WLR 289. The House of Lords held that a building previously designed or adapted for living in remained a house, even though at the material time it was not only disused but in parts stripped out to the basic structural shell (para 24). In contrast to Tandon this case was concerned solely with the first question. It was not in dispute that if that question was answered in the affirmative the building qualified as a house reasonably so called. As will be seen I do not regard the case as determinative in either of the present appeals. However, some comment is desirable, in view of the change of view of Lord Neuberger on one aspect of his leading speech. He had proposed the following grammatical analysis of the relevant words of the statutory definition: 18. In my judgment, the words designed or adapted for living in, as a matter of ordinary English, require one first to consider the property as it was initially built: for what purpose was it originally designed? That is the natural meaning of the word designed, which is a past participle. One then goes on to consider whether work has subsequently been done to the property so that the original design has been changed: has it been adapted for another purpose, and if so what purpose? When asking either question, one is ultimately concerned to decide whether the purpose for which the property has been designed or adapted, was for living in. 19. The notion that the word designed in section 2(1) is concerned with the past is reinforced by the later words in the same section was or is [not] solely designed or adapted. The use of the past tense is striking in a section which contains a number of verbs only in the present tense. In my judgment, the expression is to be construed distributively: thus, the word was governs designed, and the word is governs adapted. The present tense is appropriate for adapted because, as Lord Scott of Foscote pointed out in argument, there could have been several successive adaptations, and it is only the most recent which is relevant. The word was is in any event difficult to reconcile with Grosvenor's case (as accepted by the judge and the Court of Appeal), as it would be irrelevant whether the property could have been fit for residential occupation at any time in the past. Later in his speech, he considered the implications of this analysis for other cases, including how the definition should apply to a property which had been designed for living in, but had subsequently been adapted to another use. As a matter of literal language, he thought such a property would be within the definition. If, as appeared, designed and adapted were alternative qualifying requirements, a building which had been designed as a house would remain within the definition in spite of its adaptation to other uses. Such a conclusion, he accepted, might seem surprising, but it could have been more readily understandable when taken with the residence requirement in the original Act (para 26). It was on this latter point that, as Master of the Rolls in the present case, he has had second thoughts. It had been put directly in issue by the tenants in Hosebay, who argued (as they have in this court) that because the buildings were originally designed for living in, that was sufficient to bring them within the definition, regardless of any subsequent adaptation to other uses. On reconsideration, Lord Neuberger felt bound to reject the argument. Although the literalist meaning of designed or adapted was that either alternative would do, that was not by any means what the words naturally convey. His earlier thoughts had been based on an over literalist approach to the language used by the legislature: [2010] 1 WLR 2317, para 31. In his revised view, a building originally designed for living in, but adapted for some other purpose, was not designed or adapted for living in, unless subsequently re adapted for that purpose (para 40). I have no doubt, with respect, that Lord Neubergers second thoughts on this point were correct. Context and common sense argue strongly against a definition turning principally on historic design, if that has long since been superseded by adaptation to some other use. However, that approach may also have implications for the earlier part of his grammatical analysis in Boss Holdings (see para 31 above). The expression was or is designed or adapted is, as he says, to be read distributively: that is, as equivalent to was designed or is adapted. While that may support the view that the word designed is directed to the past, the same cannot be said of the expression is adapted. Nor (pace Lord Scott) is that grammatically the same as was most recently adapted. Logically that expression can only be taken as directed to the present state of the building. Once it is accepted that a literalist approach to the definition is inappropriate, I find myself drawn back to a reading which accords more closely to what I have suggested was in Lord Dennings mind in Ashbridge [1965] 1 WLR 1320, that is a simple way of defining the present identity or function of a building as a house, by reference to its current physical character, whether derived from its original design or from subsequent adaptation. Furthermore, I would not give any special weight in that context to the word adapted. In ordinary language it means no more than made suitable. It is true that the word is applied to the building, rather than its contents, so that a mere change of furniture is not enough. However, the word does not imply any particular degree of structural change. Where a building is in active and settled use for a particular purpose, the likelihood is that it has undergone at least some physical adaptation to make it suitable for that purpose. That in most cases can be taken as the use for which it is currently adapted, and in most cases it will be unnecessary to look further. That interpretation does not of course call into question the actual decision in Boss Holdings. The basis of the decision, as I understand it, was that the upper floors, which had been designed or last adapted for residential purposes, and had not been put to any other use, had not lost their identity as such, merely because at the material time they were disused and dilapidated. It was enough that the building was partially adapted for living in, and it was unnecessary to look beyond that: see [2008] 1 WLR 289, para 25. That reasoning cannot be extended to a building in which the residential use has not merely ceased, but has been wholly replaced by a new, non residential use. Finally I must refer to Prospect Estates Ltd v Grosvenor Estate Belgravia [2008] EWCA Civ 1281; [2009] 1 WLR 1313. The Court of Appeal held that a building which had been designed and built as a house, but which for many years had been used almost wholly as offices, was not a house within the definition. As in Tandon the case turned ultimately only on the second question, whether the building was a house reasonably so called. The facts were much closer to those of the present cases. The leading judgment was given by Mummery LJ. The building had been built in the 1850s as a house for residential occupation, but since 1958 it had been used substantially (88.5% of the floorspace) for office purposes. Under the most recent lease granted in 1972 the use was restricted to offices on all floors, except the top floor which was limited to use as a flat for a director or senior employee of a business occupying the offices below. It was accepted by the lessors that there had been insufficient works of adaptation to conclude that it had ceased to be designed for living in (Mummery LJ, para 9), but they challenged the judges conclusion that it was a house reasonably so called. That had been based, as the overwhelmingly significant factor, on the fact that the building was designed for living in and that its structure and appearance have (largely) remained unchanged (para 8). Mummery LJ held that the judge had given too much weight to those factors, and insufficient weight to the prescriptive terms of the lease, the actual uses of the building and the relative proportions of the mixed use at the relevant date (para 20). Goldring LJ, agreeing, found it impossible to accept that a building can reasonably be called a house although no one can lawfully live in virtually 90% of it (para 23). In the present case, the Master of the Rolls ([2010] 1 WLR 2317, para 43) questioned the weight placed on that case by counsel for the present appellants in Hosebay: There can be no doubt that the external and internal appearance of the properties are highly relevant factors on this issue, and it is clear from the Prospect Estates case [2009] 1 WLR 1313 that, in so far as user is significant, the permitted use under the lease is a relevant factor. In those circumstances, even assuming that actual use is also relevant, I find it hard to see how it can be sensibly said that each of the three properties cannot reasonably [be] called a house. To hold otherwise would involve concluding that the actual user, even where it involved people occupying virtually all the rooms in the building for relaxing, sleeping, cooking and washing, albeit on a short term basis, trumped all the other factors to the extent of disabling the building from being able to be a house . reasonably so called. He also doubted the decisive weight placed by Goldring LJ on the terms of the lease. He thought the thrust of the judgments in Lake v Bennett [1970] 1 QB 663 and the opinion of Lord Roskill in Tandon [1982] AC 755 was that the question was to be determined essentially by reference to [the buildings] external and internal physical character and appearance (para 46). He was not convinced that it would occur to most people, asked whether a building could reasonably be called a house, to ask about the permitted use under any lease, or that they would be influenced if told what the permitted use was (para 47). He suggested that the ratio of Prospect Estates should be treated as being limited to a case where residential use is either prohibited entirely, or restricted to a very small part of the building, and the actual use accords with that (para 49). As will be apparent from my earlier analysis of Tandon, I cannot agree that Lord Roskill regarded external and internal physical character and appearance as the determining factors. I agree with the Master of the Rolls that the terms of the lease as such should not have been treated as the major factor. However, in so far as Mummery LJ treated the use of the building, rather than its physical appearance, as determinative, his approach was in my view entirely consistent with the reasoning of the majority in Tandon as I have explained it. I consider that Prospect Estates [2009] 1 WLR 1313 was rightly decided, and that the ratio need not be limited in the way the Master of the Rolls proposed. The present cases which I can deal with briefly. I would allow the appeal in Hosebay on the grounds that a building which is wholly used as a self catering hotel is not a house reasonably so called within the meaning of this statute. As appears from para 38 of their judgment (quoted above), the contrary view of the Court of Appeal turned on two main points: (i) the external appearance of each property as a town house; (ii) the internal conversion to self contained units, with cooking and toilet facilities. I find it difficult with respect to see the relevance of the second point to this part of the definition, which only arises in relation to a building which is in some sense adapted for living in under the first part. It is not suggested that the building is divided in a way which comes within the proviso. The first point, for the reasons given in my analysis of Tandon, should not have been given determinative weight. The fact that the buildings might look like houses, and might be referred to as houses for some purposes, is not in my view sufficient to displace the fact that their use was entirely commercial. I turn to consider the application of these principles to the present appeals, In these circumstances I find it unnecessary to reach a concluded view on the application of the first part of the definition in this appeal. I agree with the appellants (and the judge) that living in means something more settled than staying in; and that the present use does not qualify as such. There is more room for debate, however, whether the premises are to be taken as adapted solely for such use, to the exclusion of longer term occupation. The Court of Appeal, as I understand it, were influenced not only by the consideration that the rooms might be used (for example) for longer term student occupation, but also that their current layout probably dates from earlier adaptation to the uses described in the leases, which could well be regarded as sufficiently settled to qualify as living in. One of the values of the two part definition is that it becomes unnecessary to resolve such narrow factual issues. In Lexgorge I would also allow the appeal on similar grounds. A building wholly used for offices, whatever its original design or current appearance, is not a house reasonably so called. The fact that it was designed as a house, and is still described as a house for many purposes, including in architectural histories, is beside the point. In this case no issue arises under the first part of the definition. It is unnecessary to consider whether the concession in that respect was rightly made, although it is possible that it was based on a wider interpretation of Boss Holdings [2008] 1 WLR 289 than my own analysis would have supported. In summary, I would allow both appeals, and hold that neither building was on the relevant date a house within the meaning of section 2 of the 1967 Act. |
From time to time over many years the Secretary of State for the Home Department has been concerned to deport a foreign national on the grounds of national security. Sometimes, indeed with increasing frequency, those facing such deportation decisions have wished to contest them, either by challenging that they present a national security risk, or by invoking the European Convention on Human Rights and contending that they would be at risk of article 3 ill treatment if returned to their home country. To enable such cases to be properly heard, Parliament, by the Special Immigration Appeals Commission Act 1997 (the 1997 Act) established SIAC and, as will be very familiar to all with any interest in this area of the law, provided for an appeal system which allows where necessary for closed material procedures and the appointment of special advocates. All this has been rehearsed time and again in a succession of judgments not least, indeed, in paras 4 15 of the judgment below and no useful purpose would be served by my repeating it all here. Put very shortly, if the Secretary of State wishes to adduce evidence which, for reasons of national security or other sufficient public interest reasons, cannot safely be communicated to the appellant, SIACs rules and procedures provide for this to be done just how satisfactorily being a matter of continuing debate into which, happily, there is on this appeal no need to enter. The difficulty raised by the present case is a very different one and, it should be recognised at once, one that faces the court with what can only be regarded as the most unpalatable of choices. It is lesser evils which the court is searching for here, not perfect solutions. The difficulty and dilemma now before us can most easily be illustrated by my immediately sketching out a notional set of facts. Suppose that an appellant before SIAC (A) is a suspected terrorist whom it is proposed to return to Algeria. Such, indeed, is the position of each of the appellants now before us. Suppose this, too, is no mere supposition; it has been common ground before SIAC in a number of cases that Algeria is a country where torture is systematically practised by the DRS (Information and Security Department) and that no DRS officer has ever been prosecuted for it; and that: in the absence of [certain assurances from the Algerian Government] there would be a real risk that on his return to Algeria A (and persons in a similar position) would be tortured or subject to other ill treatment (SIACs judgment of 8 February 2007 in G v Secretary of State for the Home Department: Appeal No SC/02/05 G being one of the appellants now before us). Suppose that the Algerian authorities are hostile to any independent scrutiny of their actions in the human rights sphere: human rights organisations such as Amnesty and Human Rights Watch are not permitted to operate there; even the International Red Cross is denied access to DRS facilities. And suppose, as is also here the case, that the Secretary of State obtains assurances from the Algerian Government that As rights will be respected on return, the value of these assurances being the principal question at issue on As SIAC appeal. Suppose, then, that A wishes to adduce evidence from someone with inside knowledge of the position in Algeria asserting that, notwithstanding the Algerian Governments official assurances, those in As position on return to Algeria are in fact likely to be subject to torture or other article 3 ill treatment. Perhaps this prospective witness (W) was himself ill treated on return. Perhaps W is a whistleblower working within the Algerian prison service: an official or an interrogator or a medical practitioner. Perhaps he is a journalist or other outsider who has obtained particular information as to the fate of those like A on their return. Suppose that W (whether or not himself still in Algeria) is in a vulnerable position: he fears future torture or ill treatment either of himself or of someone near and dear to him. Perhaps at an earlier stage he had raised his concerns internally and been threatened that if ever he voiced them abroad his wife or children would suffer for it. Suppose finally that, such being the circumstances, W is not prepared to give evidence in As appeal to SIAC save only on one unalterable condition, namely that his identity and evidence will forever remain confidential to SIAC and the parties to the appeal (A and the Secretary of State). He is concerned in particular that the Secretary of State might seek to communicate something at least of his evidence to the Algerian authorities (or indeed to others in such a way as may bring him to the attention of the Algerian authorities) if only to seek to assess its veracity and reliability, and that her doing so might place him or his family in peril, something he is simply not prepared to risk. W, therefore, requires an absolute and irreversible guarantee of total confidentiality before he will permit his identity and evidence to be disclosed to the Secretary of State. Is it open to SIAC to make an order providing for such a guarantee? That, as will shortly appear, is the central question now before us. It is not, I should make clear at this stage, the appellants case that, SIAC having made an absolute and irreversible order giving W the guarantee he seeks, Ws evidence will necessarily then have to be regarded by SIAC as properly before them when finally it comes to their determining the disputed issue as to As safety on return. Rather the appellants propose an intermediate, inter partes hearing, by which time the Secretary of State must have been provided with full information as to Ws identity and intended evidence, and at which she will be able to contend that, for whatever reason, it would be wrong for SIAC to admit Ws evidence on the substantive appeal. She may suggest that in reality W has advanced no coherent case for saying that he is at risk of reprisals. Or she may say that Ws proposed evidence is inherently implausible and that, without her being afforded the least opportunity to check its authenticity or credibility or reliability it would simply not be right to afford it any weight whatever. Or she may have other arguments to advance. If, having heard them, SIAC then chooses to shut the evidence out, so be it. If, however, SIAC admits the evidence, then, reluctant though doubtless they will be to give it the weight it might have been expected to carry had the Secretary of State been permitted to check it, at least it will be before them (when ex hypothesi it would otherwise not have been) and in the result SIAC will have the benefit of the fullest possible picture on a critically important issue in the appeal: the question of As safety on return. It is on this basis and in this context that the question now arises: in such circumstances can SIAC ever properly make an absolute and irreversible order (necessarily on an ex parte application by A without the Secretary of State having an opportunity to resist it), prohibiting the Secretary of State from ever disclosing to anyone anything of Ws identity or evidence? This question the Court of Appeal on 29 July 2010 answered in the negative: [2010] EWCA Civ 898. Giving the only reasoned judgment (with which Jacob and Sullivan LJJ simply agreed), Sir David Keene (at para 27) concluded that: [I]t is not open to SIAC to make an order giving the absolute and irrevocable guarantee which is sought by the appellants. This may create a difficulty for the appellants, because of the reluctance of their potential witnesses, but it is inescapable. The adverse effect on them can be mitigated by such steps as anonymity orders and hearings in private, but irrevocable orders preventing the Secretary of State from disclosing material to a foreign state in any circumstances cannot properly be made by SIAC in advance of the Secretary of State seeing that material. As counsel for the Secretary of State said at the SIAC hearing, such a proposal is unworkable and in my view falls outside the scope of SIACs powers to give directions, broad though those powers are. Before turning to the Secretary of States objections I should observe that, although Sir David there spoke of the appellants proposals fall[ing] outside the scope of SIACs powers, he had earlier, at para 20, recorded that: Mr Tam QC, on behalf of the Secretary of State, accepts that SIAC could give directions under the Procedure Rules preventing the Secretary of State from disclosing such material to any other person, including the Algerian authorities. He acknowledges that SIACs power under rule 39 (1) to give directions relating to the conduct of any proceedings is expressed in wide and unlimited terms and could be used in conjunction with the rule 43(2) power to conduct a hearing in private for any good reason so as to prevent disclosure to other persons, including the authorities of the appellants country of origin. And that, indeed, I understand to remain the Secretary of States position. It is not for want of jurisdiction that SIAC should never make an order of the sort here contended for; rather it is because, so the Secretary of State submits, such an order could never properly be made; it can never be appropriate. Such being the case, I shall not burden this judgment with an exposition and analysis of all the various rules which arguably bear upon SIACs powers but instead shall turn at once to the Secretary of States principal reasons for saying that no order of the kind here sought should ever be made, notwithstanding that, for want of it, evidence directly going to the issue of As safety on return will on occasion not be available to SIAC when otherwise it would have been. Essentially, it seems clear, the Secretary of States fundamental objection to an order of the sort proposed is this: such an order having been made, the Secretary of State may then find herself in possession of information which (whether or not appreciated by SIAC, A or even W himself) might in one way or another suggest the existence of a terrorist threat abroad or some other risk to national security. Viewed in the context of myriad other pieces of information, it may be seen to form part of a jigsaw or mosaic (one is well familiar with the concept) whereby such risks come to be recognised. Because, however, of SIACs order, the Secretary of State will be unable to alert the foreign state to the risk, thereby gravely imperilling future diplomatic relations. True, but for the order, the Secretary of State would never have been put in possession of the information in the first place. But, runs the argument, the Secretary of State is in fact worse off with it than without it. Without it she cannot be criticised. But with it, yet bound by SIACs order to keep it to herself, she may become deeply embarrassed if the risk were then to eventuate. The court below, at paras 24 and 25 of Sir David Keenes judgment, accepted this argument: SIAC cannot, it seems to me, tie its hands in advance and say that, whatever the fresh slant on the material provided by the Secretary of State, it will in no circumstances allow disclosure to the authorities of a foreign state. How could it? It might be that the appellants material, innocuous when seen in isolation, becomes of vital diplomatic importance once combined with material in the possession of the Secretary of State. As was explored in argument, it might reveal a potential terrorist risk within the foreign state. It might indicate that, instead of the appellant having been the perpetrator of a terrorist outrage, as suspected hitherto, the true culprit remains at large in a foreign state and presents a real and immediate threat to that state. It is no answer for Mr Fordham to argue that, without the cast iron and irrevocable guarantee of non disclosure, the British Government would not even come into possession of the information. That is true, but the consequences for the United Kingdoms diplomatic relations differ radically between the two scenarios. If this countrys government is in possession of information indicating the existence of a risk of a terrorist outrage in a foreign state with which we have friendly relations and it does not warn that state, the potential impact on the United Kingdoms diplomatic relations with that state could be very serious indeed if it ever became known that our government knew of the risk. If, however, the government does not possess such information, then while the terrorist risk to the foreign state may remain the same, this country could not be accused of withholding vital information, and our diplomatic relations would not be affected. I confess to finding the argument a good deal less persuasive than did the Court of Appeal. Nor to my mind was it made good by a post hearing note submitted by the Secretary of State at our invitation giving five examples of prospective scenarios (understandably at a high level of generality) suggested to illustrate the problem. In all five examples, as it happens, the Home Secretarys stated concern is at her inability to communicate not with the country to which she proposes deporting A (here Algeria) but rather with some other foreign country (country C) to which, let us suppose, W, a known terrorist mastermind who trains suicide operatives, now says that he has moved (following torture on his return to Algeria), something about which the Secretary of State would wish to inform country C (an example in fact suggested by Lord Kerr during the hearing). Even, however, were such a scenario to play out and culminate in a terrorist atrocity in country C and it were later to emerge that the Secretary of State had known, but failed to warn country C, about Ws move there, it must surely be a substantial defence to any diplomatic complaint by country C that the Secretary of State was subject to a final and absolute court order prohibiting her from acting differently. After all, as the appellants point out, a number of recent international instruments are replete with statements urging states to ensure that witnesses are protected against ill treatment or intimidation, particularly in a human rights context see, for example, article 13 of the UN Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment; Principle 3(b) of Annex I to the Istanbul Protocol Principles on the Effective Investigation and Documentation of Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment; paras 3, 7, 12, 13 and 20 of the 28 July 2010 Report of the United Nations High Commissioner for Human Rights on the Right to the truth; and para 3.2.8 (under the heading, Handling reluctant Sources) of the November 2010 EU common guidelines on (Joint) Fact Finding Missions. In short, I regard the Secretary of States concerns at learning more than she is permitted to divulge as an insufficient ground on which to deny A and SIAC the possible benefits of Ws evidence. That said, I do not overlook the radical nature of orders of the sort proposed here, nor, indeed, the kinds of difficulty they may bring in their wake. In the first place, such orders could be thought to come perilously close to offending against basic principles of open justice. There is nothing novel, of course, in the making of ex parte orders. But it is difficult to think of any other situation in which a respondent would be unable to seek release from a permanent injunction in this case, not to communicate his knowledge to others. The respondent can, as indicated, object at the inter partes hearing to the material being used at the eventual substantive hearing. But that is by no means the same thing as seeking to overturn the original order. There is, moreover, as the respondent points out, the further difficulty that, even though theoretically it will be open to SIAC at the inter partes hearing to rule out Ws evidence, it may be difficult for them to ignore it entirely. SIAC are, after all, required by section 5(6)(a) of the 1997 Act and by rule 4(3) of their 2003 Rules to ensure that on the material before them they can properly determine the proceedings. And there could hardly be a more important issue in those proceedings than that of As safety on return. It is that consideration, indeed, which weighs so very heavily in As favour in justifying the making of these proposed orders in the first place, given that without them SIAC will by definition never see the material. There is the obvious further problem with regard to evidence adduced on the basis proposed that the Secretary of State will be largely unable to investigate it and will find it difficult, therefore, to explain or refute it. Accordingly, the very making of the initial order must to a degree undermine the likely weight of the evidence and devalue its overall worth. In the last analysis, however, none of these considerations to my mind outweighs the imperative need to maximise SIACs chances of arriving at the correct decision on the article 3 issue before them and their need, therefore, to obtain all such evidence as may contribute to this task. I would rule, therefore, that it is open to SIAC to make such absolute and irreversible ex parte orders as are here contended for and that on occasion it may be appropriate to do so. This is, I conclude, the least worst option open to us the lesser of two evils as I put it at the outset. But at the same time I should make plain that I am far from enthusiastic about such orders and would certainly not expect a rash of them. Rather it would seem to me that the power to make them should be most sparingly used. There is, of course, the risk that the very availability of such orders may be exploited by the unscrupulous in the hope that SIAC may thereby be induced to receive untruthful evidence which, had it in the ordinary way been subject to full investigation, would have been exposed as such. I would advocate that before making one of these proposed ex parte orders, SIAC should require the very fullest disclosure from A of (a) Ws proposed evidence (namely a detailed final statement or proof of evidence depending upon whether it is proposed to adduce the evidence orally or in writing, and if the latter why in writing), (b) the particular circumstances in which W claims to fear reprisals, and (c) how A and his legal advisers came to hear about Ws proposed evidence and what if any steps they have taken to encourage him to give that evidence in the usual way subject to the usual steps generally taken to safeguard witnesses in these circumstances, namely by anonymity orders and hearings in private. If, moreover, one of these orders is made and it does then come to appear to the Secretary of State that the information disclosed may indeed be of some importance with regard to national security concerns, whether here or abroad, it should be open to the Secretary of State to try to persuade SIAC either to seek from A and W a sufficient waiver of the ex parte order forbidding any further communication of the information to enable these national security concerns to be met or, if such waiver, unreasonably in SIACs view despite their recognition of Ws fears, proves unobtainable, to shut out (or regard with additional scepticism) the evidence submitted. This power, in other words, should be exercised sensibly as well as sensitively, there being ample room for flexibility in its operation notwithstanding the absolute and irreversible nature of whatever order may initially be made. I should perhaps add this. In striking the balance in this way, I am in no way influenced by the consideration that, as earlier stated, there are circumstances in which the Secretary of State for her part is on occasion entitled to adduce evidence in closed proceedings divulged only to a special advocate and not to A. I do not see the scope for orders of the sort contended for here as, so to speak, levelling the playing field or providing equality of arms between the parties. The plain fact is that the Secretary of State is acting in these cases in the wider public interest, not as an interested party. She is, for example, obliged (now under the rules) to search for and disclose material, both open and closed, which may possibly assist As case. (He, of course, is under no corresponding duty towards the Secretary of State.) And the special advocate will to the best of his ability serve As interests, procuring on occasion rulings which may preclude the Secretary of State from relying on material however apparently damning to As cause. As Sir David Keene observed below (at para 26): The reality is that the position of an appellant and the position of the Secretary of State are not comparable, because of the public responsibilities of the latter. Since completing this judgment I have seen in draft the judgment of Lord Dyson and agree with him also. I would accordingly allow these appeals to the extent indicated. It must, of course, now be for SIAC to consider what, if any, impact our decision has upon the outcome of these appellants individual appeals: whether there is a need now to reopen them and what, if any, orders should now be made. It is to be hoped that no further order (save as to costs as to which the parties may have 28 days for written submissions) is required from this court. LORD DYSON National security issues continue to present difficult challenges to the courts. Lord Brown has explained the problem that is raised by the facts of the present case. The appellants are all Algerian nationals whom the Secretary of State for the Home Department decided under section 3(5)(a) of the Immigration Act 1971 to deport to Algeria on the basis that their presence in the United Kingdom is not conducive to the public good on grounds of national security. They appealed to the Special Immigration Appeals Commission (SIAC) who held that they posed a risk to national security and that the decisions to deport them were lawful and compatible with the European Convention on Human Rights (the Convention). Their appeals were dismissed by the Court of Appeal. The issue in all these cases is whether, if returned to Algeria, there is a real risk that the appellants would be subjected to ill treatment at the hands of the Algerian Authorities (AAs) contrary to article 3 of the Convention. One of the appellants (Z) was in a position to put forward material from a source or sources in Algeria which was relevant to safety on return. But the source(s) feared reprisals in Algeria if there were to be any disclosure of their identity to the AAs. They were willing to tell their story to SIAC (and indeed to the Secretary of State), but only on an absolute and irrevocable assurance that there would be no onward disclosure to the AAs. Rule 4(1) of the Special Immigration Appeals Commission (Procedure) Rules 2003 (SI 2003/1034) (the SIAC Rules) provides that, when exercising its functions, SIAC shall secure that information is not disclosed in any other circumstances where disclosure is likely to harm the public interest. Rule 39(1) confers on SIAC the power to give directions relating to the conduct of any proceedings. Subrule (2) provides that the power to give directions is to be exercised subject to the obligation in rule 4(1); and subrule (5) provides that directions under rule 39(1) may in particular (e) relate to any matter concerning the preparation for a hearing. Rule 43(2) enables SIAC to conduct a hearing or part of a hearing in private for any good reason (in addition to the reason identified in rule 43(1) which is not material to the appeal). It is common ground that these rules are wide enough to give SIAC the jurisdiction to make an absolute and irrevocable order prohibiting the Secretary of State from disclosing material to any person and to do so at or after a hearing from which the Secretary of State is excluded. The question is in what circumstances (if any) it may be appropriate to make such an order (which I shall refer to as an irrevocable non disclosure order). For the appellants, Mr Fordham QC submits that SIAC has the power to make such an order although it has not received informed representations from the Secretary of State as to whether the order should be made. It is able subsequently to hear informed representations from the Secretary of State as to the admission of the material in evidence. For the Secretary of State, Mr Tam QC accepts that there may be cases where an appellant is found to have good reasons for wishing to keep certain material confidential and this might provide a sound basis for SIAC to exercise its power to hold a private hearing under rule 43 and make an irrevocable non disclosure order. But he submits that it is never appropriate to make such an order on the basis of a hearing from which the Secretary of State is excluded and she should always be given the opportunity to apply subsequently to vary or discharge the order. In testing these submissions, it should be borne in mind that, as is illustrated by the circumstances of the present appeals, two conflicting considerations are in play here. On the one hand, the appellants say that, unless the order that they seek is made, they will be unable to place material before SIAC which may be crucial to their case that, if returned to Algeria, they face a real risk of ill treatment by the AAs contrary to article 3 of the Convention. If they are able to persuade SIAC of this risk, their appeals will succeed. Thus, the appellants say that it is essential to their case that they are able to place this evidence before SIAC: the stakes could hardly be higher for them (short of a risk to life itself). They also rely on rule 4(3) of the SIAC Rules which provides that subject to paragraphs (1) and (2), SIAC must satisfy itself that the material available to it enables it properly to determine proceedings. In other words, it has a duty to ascertain all relevant facts. On the other hand, it is said on behalf of the Secretary of State that there are important countervailing considerations both in relation to the conduct of the appeals and more generally. So far as the conduct of the appeals is concerned, the ability of the Secretary of State to participate in them effectively may be seriously undermined by an irrevocable non disclosure order. There are two aspects to consider. First, the cogency and validity of the reasons asserted by the source(s) in support of the claimed need for confidentiality may be open to question, but the Secretary of State will be denied the ability to test the reasons or to obtain information and/or adduce evidence from or with the assistance of the AAs to demonstrate that the asserted reasons for the claim to confidentiality are groundless. Secondly (and of perhaps even greater importance) is the fact that the Secretary of State may be seriously disadvantaged in her ability to test and challenge the substance of the evidence of the witness(es). The effect of the order may be to deprive the Secretary of State of the ability to place before SIAC relevant evidence which it should properly consider in deciding the substantive issues arising in the appeals. This would occur, for example, if the AAs were able to provide information bearing on the issue of safety on return of the appellants, but could not do so unless the identity of the witness(es) and what they have to say are disclosed to them. Once the authorities know the identity of the witness(es) and the substance of their evidence, the authorities might be able to demonstrate that what is said about the risk to the appellants on return to Algeria is false. I should add that the SIAC Rules do not make provision for the appointment of special advocates to represent the interests of the Secretary of State and it is (rightly) not suggested that SIAC could appoint special advocates under any of the powers conferred by the general rules. It follows that the difficulties to which the Secretary of State draws attention cannot be overcome or even mitigated by the appointment of a special advocate. In addition to the problems that are likely to be suffered by the Secretary of State in relation to the appeals, she says that irrevocable non disclosure orders may also cause collateral prejudice. It became clear during the course of the argument that this prejudice is the potential risk of harm to future diplomatic relations with a friendly foreign state. This is a factor which carried considerable weight with the Court of Appeal and which Lord Brown deals with at paras 11 to 15. In weighing these competing considerations, I have no doubt that the scales come down in favour of making an irrevocable non disclosure order where SIAC is satisfied that such an order is necessary in the interests of justice. I agree entirely with what Lord Brown says at paras 19 to 21 as to how the power to make an order should be exercised. SIAC should be astute to guard against the danger of abuse and should scrutinise with great care and test rigorously the claimed need for an order. But if SIAC (i) is satisfied that a witness can give evidence which appears to be capable of belief and which could be decisive or at least highly material on the issue of safety of return and (ii) has no reason to doubt that the witness genuinely and reasonably fears that he and/or others close to him would face reprisals in Algeria if his identity and the evidence that he is willing to give were disclosed to the AAs, then in my view an irrevocable non disclosure order should be made. I accept that to make such an order is a striking step for any court to take and is contrary to the instincts of any common lawyer. It is inimical to the fundamental principles which we rightly cherish of open justice and, above all, procedural fairness. To make an order without giving the Secretary of State an opportunity to be heard is a clear breach of the principles of natural justice. Any such order requires compelling justification. Regrettably, however, the circumstances of a case sometimes call for unusual and undesirable remedies. Ultimately, the court has to decide what is demanded by the interests of justice. In weighing the prejudice that the Secretary of State may suffer in the appeal process as a result of an irrevocable non disclosure order, it should not be overlooked that the appeals themselves will be conducted entirely inter partes. In particular, no material that is placed before SIAC by the appellants will be withheld from the Secretary of State. She may be able to demonstrate that the claimed need for confidentiality is without foundation and to persuade SIAC to give the evidence little or no weight for that reason alone. She may also be able to test the evidence of the witness(es) effectively even though she has been unable to discuss it with the AAs. For example, she may be able to show on the basis of objective general material about the conditions in Algeria that the evidence of the witness is unlikely to be true; and even where the evidence is more specific, she may be able to obtain information from the AAs which will enable her to rebut the evidence without divulging the name or identity of the witness or saying anything which might lead to his or her identification. It will, of course, depend on the nature of the evidence to be given by the witness. I do not wish to suggest that the effect of an irrevocable non disclosure order may not inhibit the ability of the Secretary of State to resist the appeals. In some cases, such an order will undoubtedly have that effect. But it cannot safely be said that it is bound to do so in every case. As regards the collateral prejudice claimed by the Secretary of State, like Lord Brown I consider that this has relatively little weight for the reasons that he gives. In my view, if SIAC concludes that the two conditions to which I have referred at para 34 above are satisfied, then the countervailing considerations relied on by the Secretary of State should not outweigh the need to ensure that the appellants are able to deploy any material which might show that, on return to Algeria, they would face a real risk of treatment contrary to article 3 of the Convention. The same considerations and the same result would follow if the case raised a question under article 2 of the Convention. But if the ground on which an appellant is resisting deportation is an alleged risk of breach of some other article of the Convention, the balance will almost certainly be struck the other way. For example, in many appeals against orders for deportation, the ground of appeal is that to deport the appellant would involve a breach of his or her article 8 rights. I find it difficult to conceive of a case in which it would be appropriate to make an order in order to protect the wish for confidentiality of a witness in those circumstances. For these reasons as well as those given by Lord Brown (with which I am in entire agreement), these appeals should be allowed to the extent indicated. LORD PHILLIPS, LORD KERR AND LORD WILSON We agree with both the judgments of Lord Brown and Lord Dyson. |
This appeal is concerned with the interpretation of a solicitors professional indemnity insurance policy (the Policy) written by AIG Europe Ltd (AIG). It raises a legal question of general public importance both because it concerns a term of an insurance policy, which is, or is similar to, terms in all professional indemnity insurance policies for solicitors in England and Wales, and also because it is important to the business model by which many solicitors have funded litigation since state funded legal aid for civil cases was significantly reduced. As described more fully below, the respondent, Impact Funding Solutions Ltd (Impact) entered into an arrangement with solicitors, Barrington Support Services Ltd (Barrington), by which Impact, by entering into loan agreements with Barringtons clients, provided funds to Barrington to hold on behalf of its clients and to use to make disbursements in the conduct of its clients litigation in pursuit of damages for industrial deafness. Barrington failed to perform its professional duties towards its clients in the conduct of litigation, both through its failure adequately and timeously to investigate the merits of their claims and also through the misapplication of funds provided by Impact, and so breached its duty of care to them. Barrington thereby put itself in breach of a warranty in its contract with Impact that it would perform its professional duties towards its clients. Barringtons clients were not able to repay their loans. Impact sought to recover from Barrington the losses which it suffered on those loans by seeking damages for the breach of the warranty. In an admirable judgment dated 30 May 2013, His Honour Judge Waksman QC awarded Impact damages of 581,353.80, which represented the principal elements of the loans which would not have been made if Barrington had not breached its contract with Impact. On Barringtons insolvency, Impact seeks in this action to recover those losses from Barringtons professional indemnity insurers, AIG, under the Third Parties (Rights against Insurers) Act 1930. In another impressive judgment dated 13 December 2013 His Honour Judge Waksman QC analysed the nature of the arrangements between Impact and Barrington and, construing the words of the Policy, held that Impacts claim against AIG for an indemnity failed. Impact appealed to the Court of Appeal. In a judgment dated 3 February 2015 the Court of Appeal, [2015] 4 All ER 319; [2016] Bus LR 91 allowed the appeal. The Court of Appeal, by standing back from the detail and asking itself what was the essential purpose of the exclusion clause in question, concluded that the loans which Impact gave to cover disbursements in intended litigation were inherently part of the solicitors professional practice and that the liabilities which Barrington incurred under its warranties to Impact were liabilities professionally incurred which came within the cover of the Policy. AIG appeals to this court. Impact supports the conclusion which the Court of Appeal reached. It refers to the wide terms of the cover (para 8 below) and submits that the subsequent exclusions (para 10 below) should be construed strictly. In particular, the fact that Barrington obtained a commercial benefit from its agreement with Impact did not mean that Impact was providing services to Barrington within the terms of the exclusion. I do not accept that this is the correct way to read the exclusion clause in this insurance contract and set out my reasons below. Questions of construction In determining the appeal, the court has, first, to construe the relevant terms of the Policy against its factual matrix and, secondly, to construe the relevant terms of the disbursements funding master agreement (DFMA) between Impact and Barrington once again against its factual matrix. This approach to construction is well established. The court looks to the meaning of the relevant words in their documentary, factual and commercial context: Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900, para 21 per Lord Clarke of Stone cum Ebony; Arnold v Britton [2015] AC 1619, para 15 per Lord Neuberger of Abbotsbury. As I see no ambiguity in the way that the Policy defined its cover and as the exclusion clause reflected what The Law Society of England and Wales as the regulator of the solicitors profession had authorised as a limitation of professional indemnity cover, I see no role in this case for the doctrine of interpretation contra proferentem. As Lindley LJ stated in Cornish v Accident Insurance Co Ltd (1889) 23 QBD 453, 456: in a case of real doubt, the policy ought to be construed most strongly against the insurers; they frame the policy and insert the exceptions. But this principle ought only to be applied for the purpose of removing a doubt, not for the purpose of creating a doubt, or magnifying an ambiguity, when the circumstances of the case raise no real difficulty. The extent of AIGs liability is a matter of contract and is ascertained by reading together the statement of cover and the exclusions in the Policy. An exclusion clause must be read in the context of the contract of insurance as a whole. It must be construed in a manner which is consistent with and not repugnant to the purpose of the insurance contract. There may be circumstances in which in order to achieve that end, the court may construe the exclusions in an insurance contract narrowly. The judgment of Carnwath LJ in Tektrol Ltd (formerly Atto Power Controls Ltd) v International Insurance Co of Hanover Ltd [2006] 1 All ER (Comm) 780, to which counsel for Impact referred, is an example of that approach. But the general doctrine, to which counsel also referred, that exemption clauses should be construed narrowly, has no application to the relevant exclusion in this Policy. An exemption clause, to which that doctrine applies, excludes or limits a legal liability which arises by operation of law, such as liability for negligence or liability in contract arising by implication of law: Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, 850 per Lord Diplock. The relevant exclusion clause in this Policy is not of that nature. The extent of the cover in the Policy is therefore ascertained by construction of all its relevant terms without recourse to a doctrine relating to exemption clauses. The insurance policy AIG wrote the Policy for Barrington for the period from 1 October 2009 to 30 September 2010. The cover was stated in broad terms. It provided: The Insurer will pay on behalf of any Insured all Loss resulting from any Claim for any civil liability of the Insured which arises from the performance of or failure to perform Legal Services. Legal Services were defined broadly to include the provision of services in private practice as a solicitor or Registered European Lawyer . On p 6 of the Policy there is a clause which sets out what is excluded from cover. It provides so far as relevant: This policy shall not cover Loss in connection with any Claim or any loss: arising out of, based upon, or attributable to any: (i) trading or personal debt incurred by an Insured, (ii) breach by any Insured of terms of any contract or arrangement for the supply to, or use by, any Insured of goods or services in the course of providing Legal Services; and (iii) guarantee, indemnity or undertaking by any Insured in connection with the provision of finance, property, assistance or other benefit or advantage directly or indirectly to that Insured. (emphasis added) Solicitors in England and Wales were required to take out and maintain professional indemnity insurance in accordance with the Solicitors Indemnity Insurance Rules 2009 (the 2009 Rules), which were made by The Law Society in exercise of a statutory power under section 37 of the Solicitors Act 1974. There was thus a scheme of compulsory professional indemnity insurance which Parliament had authorised. The Law Society in Appendix 1 of the 2009 Rules laid down the minimum terms and conditions of professional indemnity insurance for solicitors and registered European Lawyers in England and Wales (the Minimum Terms). The Minimum Terms defined the scope of cover, so far as relevant, in these terms: The insurance must indemnify each Insured against civil liability to the extent that it arises from Private Legal Practice in connection with the Insured Firms Practice Clause 6 provided: trading or personal debt of any Insured; or The insurance must not exclude or limit the liability of the Insurer except to the extent that any Claim or related Defence Costs arise from the matters set out in this clause 6. 6.6 Any: (a) (b) breach by any Insured of the terms of any contract or arrangement for the supply to, or use by, any Insured of goods or services in the course of the Insured Firms Practice; or (c) guarantee, indemnity or undertaking by any particular Insured in connection with the provision of finance, property, assistance or other benefit or advantage directly or indirectly to that insured. The Policy provides that: In any dispute in connection with the terms, conditions, exclusion or limitations it is agreed and understood that the Minimum Terms and Conditions will take precedence over any terms, conditions, exclusions or limitations contained herein. But, as can be seen by comparing the texts in paras 8 and 10 above, the exclusion is substantially the same in the Policy and in the Minimum Terms and the minor differences in drafting are of no significance. Lord Brightman in Swain v The Law Society [1983] 1 AC 598, 618 described the context of the statutory scheme of compulsory insurance: In exercising its power under section 37 The Law Society is performing a public duty, a duty which is designed to benefit, not only solicitor principals and their staff, but also solicitors clients. The scheme is not only for the protection of the premium paying solicitor against the financial consequences of his own mistakes, the mistakes of his partners and the mistakes of his staff, but also, and far more importantly, to secure that the solicitor is financially able to compensate his client. Indeed, I think it is clear that the principal purpose of section 37 was to confer on The Law Society the power to safeguard the lay public and not professional practitioners, since the latter can look after themselves. Thomas J took the same view in Kumar v AGF Insurance Ltd [1999] 1 WLR 1747, 1752A C, where he said that one must approach the construction of this sort of professional indemnity policy against the regulatory background which aimed to make sure that protection was provided to the clients of solicitors. As a general rule, solicitors, when performing work on behalf of their clients, owe no duty of care to third parties whose interests are affected by that work: White v Jones [1995] 2 AC 207, 256C D per Lord Goff of Chieveley. It is, nonetheless, well known and not disputed in this case that the professional indemnity policy protected not only clients of the solicitors but also those third parties to whom solicitors have been held to owe duties of care in their performance of legal services and to whom they have incurred liability in negligence, such as those who have acted in reliance on negligent misstatements or beneficiaries disappointed as a result of negligence in the preparation or execution of a will. In addition, as Lord Toulson points out (para 42), solicitors professional liability may include undertakings given to third parties in the course of acting for their clients. A reader of the Policy ascertains the boundaries of AIGs liability by construing the broad statement of cover (para 8 above) and also the broad exclusions (para 10 above) in the context of the regulatory background. The exclusion in para 10 above requires the reader to look to the category of the claim and, in this case, ask whether the claim or loss arises out of, is based upon, or is attributable to a breach by Barrington of a term or terms of a contract or arrangement for the supply of services to it in the course of its provision of legal services. Prima facie, if Impacts cause of action was a breach of a term of a contract or arrangement by which Impact supplied such services to Barrington, the clause would exclude cover, notwithstanding that Impacts loss could be said to have arisen from Barringtons failure to perform legal services for its clients. Two questions therefore arise: the first is whether the contract between Impact and Barrington was of such a nature; the second is whether it is necessary to imply a restriction into the relevant exclusion clause limiting its effect in order to make it consistent with the purpose of the Policy. The Disbursements Funding Master Agreement Barrington entered into two successive DFMAs with Impact, dated 8 June 2007 and 10 March 2008. The relevant terms of the two agreements were in substance the same. Like Judge Waksman and the Court of Appeal, I refer in my discussion below to the 2008 DFMA. In order to understand the provisions of the DFMA it is necessary to present that contract in its commercial context. It formed part of a scheme by which clients who did not qualify for legal aid and who could not otherwise afford to litigate were provided with access to legal services to pursue claims without exposing them to financial risk. Normally a client who has not got legal aid has to pay (a) fees to the instructed solicitor for legal services, (b) that solicitors disbursements, and (c) in the event that the claim fails, the other sides recoverable legal costs. A significant proportion of (a) and (b) may be recovered from the other side if the claim succeeds. But the failure of the claim is a serious financial risk. Under the scheme, the instructed solicitors fees were covered by a conditional fee agreement (CFA), which was authorised initially by section 58 of the Courts and Legal Services Act 1990, by which the client paid for the lawyers work only if the case was won and the client received compensation. The client, by taking out a legal expenses insurance policy, obtained indemnity against the other sides legal costs, his or her own solicitors disbursements and the premium paid on the policy in the event that the claim failed. While the claim was being pursued, the solicitor would have to disburse funds, for example to obtain GP records and medical reports. Unless otherwise funded, the solicitor had either to obtain funds in advance from the client or spend his or her own funds and later obtain reimbursement from the client. Impact provided funding for such disbursements through the DFMA. Judge Waksman described how the funding scheme operated in paras 5 to 18 of his judgment dated 13 December 2013. I can therefore summarise the arrangements briefly. Claims management companies identified potential claimants. A company, which was associated with Impact, operated a data management and administration system called Veracity. Claims management companies put details of potential claims onto Veracity and solicitors, including Barrington, would access Veracity to assess particular claims and either accept or reject a claim. Before accepting a claim, solicitors ought to have verified the information provided through Veracity and investigated the merits of the claim so as to enable them to enter into a CFA and to enable legal expenses insurance to be obtained. If the solicitors provisionally accepted a claim, Veracity required them to indicate whether they required Impact to provide a loan to the client to cover disbursements and the premium on the legal expenses insurance. The solicitors provided the relevant details so that Veracity could calculate the amount of the loan. Veracity then automatically generated a draft loan agreement and sent an email to the relevant claims management company instructing them to progress the matter. The claims management company, as the solicitors agent, took a package of documents for the lay client to sign. The pack included an engagement letter, the CFA release forms, data protection documentation, the loan agreement with Impact and the proposal for the legal expenses insurance. Once executed, the documents would be sent to the solicitors who would forward the executed loan agreement to Impact. Once the solicitors confirmed that they accepted the claim, the legal expenses insurers were notified that the claim should be put on cover. On obtaining the insurers confirmation, the solicitors would draw down Impacts loan to pay disbursements and to pay the balance into the solicitors client account to fund future disbursements. The legal expenses insurance policies required (a) that the claim had to be assessed as having a reasonable prospect of success, which in one policy was stated as 55%, and (b) that there remained in force a valid CFA. This arrangement was reflected in the first recital of the DFMA which stated: [Impact] facilitates the presentation of PI claims to A. solicitors through its online claims introduction and tracking service, Veracity and provides funding for disbursements under Credit Agreements in respect of those PI Claims. In clause 2.1 Impact offered credit facilities to clients selected by Barrington in its discretion, up to a specified aggregate sum, but, being a framework agreement, did not commit Impact to advance any sums. If Impact advanced sums to a client, Barrington was obliged by clause 2.2 to pay an administration fee to Impact on Impacts execution of each credit agreement and also a quarterly monitoring fee. The Administration Fee was defined in the DFMA (clause 1) as: a fee in respect of each Credit Agreement in the sum as notified by [Impact] to the Firm from time to time and payable by the Firm, together with Value Added Tax (if applicable) by way of remuneration for the services of [Impact]. The DFMA contained undertakings by each party about how each would behave during the currency of the agreement. Impact founds its claim against Barrington on clauses 6.1 and 13.1 of the DFMA. In clause 6.1 each party undertook that: it shall comply with all applicable laws, regulations and codes of practice from time to time in force and each party indemnifies the other against all loss, damages, claims, costs and expenses which the other party may suffer or incur as a result of any breach by it of this undertaking. In clause 13.1 Barrington represented and warranted to Impact that: the services provided or to be provided by the Firm to the Customer shall be provided to the Customer in accordance with their agreement with the Customer as set out in the relevant Conditional Fee Agreement. Judge Waksman held that Barrington, by failing to give advice and properly to assess the merits of the compensation claims, breached those provisions of the DFMA. That finding has not been challenged. Barrington also undertook personal liability to repay the loans which Impact made to its clients. In clause 7.1 Barrington undertook to pay to Impact the sums due by the client under the credit agreement out of the clients damages under the claim or (in the event of the claim failing) out of the legal expenses insurance. More onerously, in clause 7.2 Barrington undertook to pay to Impact all sums due by the customer under the credit agreement (ie the client) if the customer breached the credit agreement, if circumstances arose that entitled Impact to terminate the credit agreement or if the credit agreement was unenforceable as a result of an act or omission by Barrington. The provision of loans to Barringtons clients as envisaged by the DFMA was undoubtedly the provision of financial services to the clients. But were the DFMA and the resulting loans to clients also a service which Impact provided to Barrington? In my view they were, for the following four reasons. First, Barrington contracted as a principal with Impact and not as agent for its clients. A contract between two principals might have provided for a service to be given to a third party alone. But that is not what happened in this contract. This is because, secondly, Barrington clearly obtained a benefit from the funding of its disbursements. Solicitors are personally responsible for paying the persons whom they instruct to do work or provide services in relation to a particular case, whether or not they receive funds from their clients. But for that funding from Impact, Barrington would have had to obtain funds from its clients, who might not have been able to afford to pay, thus making pursuit of the claim impossible, unless Barrington itself funded the disbursements in the hope of recovering its outlays through success in the claim. Impacts loans were available to fund not only the disbursements but also the premiums on the legal expenses insurance, thereby enabling the litigation to be fully funded. Thirdly, this was not an incidental or collateral benefit to Barrington derived from a service provided to its clients but was part of a wider arrangement which I have described in paras 20 22 above, by which solicitors were able to take up claims, which their clients could not otherwise fund, and earn fees and success fees if the claim succeeded. Fourthly, it was a service for which Barrington paid the administration fee under clause 2 of the DFMA, undertook the onerous obligation to repay Impact if a client breached the credit agreement (clause 7.2), and entered into the obligation under clause 6.1 and gave the warranty in clause 13.1, on which Impact won its claim for damages against Barrington. I therefore conclude that the DFMA was a contract for the supply of services to Barrington. Impact contracted to supply those services to Barrington in the course of Barringtons provision of legal services. Impacts claim against Barrington arose out of the latters breach of that contract. Prima facie, therefore, the exclusion which I have set out in para 10 above applies to defeat Impacts claim against AIG, unless there is a basis for implying a restriction into that exclusion. I turn then to that question. Can one imply a restriction on the exclusion? I see no basis for implying additional words into the exclusion in order to limit its scope. In Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742 this court confirmed that a term would be implied into a detailed contract only if, on an objective assessment of the terms of the contract, the term to be implied was necessary to give the contract business efficacy or was so obvious that it went without saying (paras 15 31 per Lord Neuberger). This court also held that the express terms of the contract must be interpreted before one can consider any question of implication (para 28). In my view, it cannot be said that the Policy would lack commercial or practical coherence if a term restricting the scope of the exclusion were not implied. I would allow the appeal. In the present case it is fairly said that the breach of duty in the warranty on which Impact relies is a breach of duty by Barrington to its clients. But Impacts claim is not a claim which is derived from the clients claims. Defences which Barrington might be able to plead against its clients cannot be advanced against Impact. For example, if a client were careless in informing Barrington of the circumstances of the injury on which his or her claim was based, and Barrington also was negligent in failing properly to investigate and prosecute the claim, which then failed, the clients claim might be met with a defence of contributory negligence. No such defence would arise out of those circumstances in relation to a claim by Impact against Barrington. Thus Impacts entitlement under the warranty would not be the same as the clients claim in all cases and might be larger in some cases. In short, Impacts cause of action under the DFMA is an independent cause of action. Excluding such a claim creates no incoherence in the Policy, as it is the combination of the opening clause and the exclusions that delimits AIGs contractual liability. Indeed, it would be consistent with the purpose of the Policy suggested by the context, which I discussed in paras 16 and 17 above, if such a claim were excluded from that liability. Conclusion LORD TOULSON: (with whom Lord Mance, Lord Sumption and Lord Hodge agree) Under the Third Parties (Rights against Insurers) Act 1930, Impact is entitled to enforce any right of indemnity which Barrington had against AIG in respect of the judgment which Impact obtained against Barrington. Impacts argument that Barrington was entitled to such indemnity under its professional liability policy, which AIG underwrote, is founded on two propositions. First, it is argued that the clause relied on by AIG to deny liability is an exclusion clause, which must be narrowly construed in accordance with ordinary principles of contract law. Secondly, it is argued that the exclusion is well capable of being interpreted in a way which does not exclude cover under the policy. Both points are important. The first raises a point of general importance about the proper approach to the interpretation of a professional liability policy which is of a familiar kind. The second is important because the particular clause is a standard form of wording in solicitors professional liability policies. I take the points in turn. The fact that a provision in a contract is expressed as an exception does not necessarily mean that it should be approached with a pre disposition to construe it narrowly. Like any other provision in a contract, words of exception or exemption must be read in the context of the contract as a whole and with due regard for its purpose. As a matter of general principle, it is well established that that if one party, otherwise liable, wishes to exclude or limit his liability to the other party, he must do so in clear words; and that the contract should be given the meaning it would convey to a reasonable person having all the background knowledge which is reasonably available to the person or class of persons to whom the document is addressed. (See, among many authorities, Dairy Containers Ltd v Tasman Orient Line CV [2005] 1 WLR 215, para 12, per Lord Bingham.) This applies not only where the words of exception remove a remedy for breach, but where they seek to prevent a liability from arising by removing, through a subsidiary provision, part of the benefit which it appears to have been the purpose of the contract to provide. The vice of a clause of that kind is that it can have a propensity to mislead, unless its language is sufficiently plain. All that said, words of exception may be simply a way of delineating the scope of the primary obligation. The Law Commission and the Scottish Law Commission gave a homely illustration in their joint report on Exemption Clauses, 1975, Law Com No 69, para 143: If a decorator agrees to paint the outside woodwork of a house except the garage doors, no one can seriously regard the words of exception as anything but a convenient way of defining the obligation; it would surely make no difference if the promise were to paint the outside woodwork with a clear proviso that the contractor was not obliged to paint the garage doors, or if there were a definition clause brought to the promisees attention saying that outside woodwork did not include the garage doors. Such provisions do not deprive the promisee of a right of a kind which social policy requires that he should enjoy, nor do they give the promisor the advantage of appearing to promise more than he is in fact promising. This approach was reflected in the Law Commissions Bill which passed into law as the Unfair Contract Terms Act 1977. Section 3 brought under statutory control, in cases where one party deals with the other as a consumer or on the others standard terms of business, a term which excludes or restricts the others liability for breach, or a term which entitles the other to render a contractual performance substantially different from that which was reasonably expected of him. The Act does not apply to insurance contracts (Schedule 1, paragraph 1), but it is nonetheless instructive to note the types of exemption clause which the Law Commissions saw as potentially suspect in consumer contracts. In the case a non consumer contract (with which we are concerned, albeit that consumer protection was an important end purpose), Photo Production Ltd v Securicor Transport Ltd is authority that business people capable of looking after their own affairs should be free between themselves to apportion risks as they choose: [1980] AC 827, 843 (Lord Wilberforce) and 851 (Lord Diplock). That brings me to the contract in the present case. The policy schedule and the policy wording are both headed in large letters Solicitors Professional Liability. Lord Hodge has set out its material terms, but it is convenient to repeat the key parts. Under the heading Cover appear the words: The Insurer will pay on behalf of any Insured all Loss resulting from any Claim for any civil liability of the Insured which arises from the performance or failure to perform Legal Services (which are themselves broadly defined). Under the heading Exclusions a number of heads of claims or loss are excluded: bodily/psychological injury; directors and officers liability; employment breaches and discrimination; fines and penalties; fraud or dishonesty; partnership disputes; prior claims; property damage; trade debts; and war/terrorism. We are concerned with the clause 6.6, which in the minimum terms is headed Debts and Trading Liabilities. These are defined to include any claim or loss arising out of: breach by any Insured of the terms of any contract or arrangement for the supply to, or use by, any Insured of goods or services in the course of providing Legal Services. There are two points to highlight about the nature and purpose of the policy. One is that the relevant terms replicate the minimum terms of the cover which Barrington was required to maintain under the Solicitors Indemnity Insurance Rules 2009. As the House of Lords recognised in Swain v The Law Society [1983] 1 AC 598, 610, the paramount purpose of The Law Society being given statutory power to require solicitors to maintain insurance cover against professional liability was the protection of that section of the public that makes use of the services of solicitors (Lord Diplock). The second, and related point, is that the policy describes itself as a professional liability policy. These matters are important when considering its scope. What sort of liabilities are commonly understood as professional liabilities of solicitors or, in Lord Diplocks language, what is the sector of the public that makes use of their services? First, and most obviously, there are the liabilities which solicitors may incur to their clients as a result of their professional retainer. Secondly, in connection with acting for their clients, they may give undertakings to third parties. As officers of the court solicitors are expected to abide by undertakings given by them professionally, and if they do not do so they may be called upon summarily to make good their defaults (John Fox v Bannister, King & Rigbeys (Note) [1988] 1 QB 925, 928, per Nicholls LJ). That is plainly a form of professional liability. Exceptionally, there are also other cases where a solicitor has been held liable to a quasi client, as in White v Jones (the disappointed beneficiary under a will) [1995] 2 AC 207. There is a detailed treatment of the scope of solicitors professional liability to third parties in Jackson & Powell on Professional Liability, 2011, 7th ed, paras 11 043 & ff. It is a developing topic and the boundaries are not entirely clear. In laying down the minimum terms of professional liability cover required to be maintained by solicitors, it would have been possible for the drafting committee to have attempted to structure them by defining in positive terms the scope of a solicitors professional liability for which indemnity cover was required, but it opted to delineate the liability against which solicitors should be required to maintain cover for public protection by a process of elimination, which involved combining an insuring clause far broader than any ordinary understanding of a solicitors professional liability with a list of exclusions. It is important to recognise that list for what it is, namely an attempt to identify the types of liability against which solicitors are not required by law to be covered by way of professional liability insurance. I would reject the first stage of Impacts argument about the way in which this policy and the list of exceptions are to be approached. It treats the minimum terms set by the Law Society as requiring, through the opening clause, a far broader scope of cover than would have been necessary for the protection of clients and third parties to whom they may undertake professional responsibilities, subject only to exceptions which (it is argued) are to be construed as narrowly as possible. That involves a misapprehension of the true nature and purpose of the minimum terms. This brings me to the second point, which is the meaning of the language of clause 6.6. The Court of Appeal approached the clause by saying that it was necessary to stand back from it and consider its essential purpose. I do not disagree, but I would make two further comments. First, the essential purpose of the clause has to be seen in the context of the essential purpose of the policy, as to which I have expressed my view. Secondly, there is substance in AIGs complaint that the court omitted to grapple with the language of the clause. I agree with Lord Hodge that the DFMA was a contract for the provision of services to Barrington, for the reasons given by him and by Judge Waksman QC in his impressive judgment. I would add that this conclusion to my mind accords well with the essential purpose of clause 6.6. Barrington and Impact made a commercial agreement as principals for their mutual benefit, as well as for the benefit of Barringtons clients. Impact was not a client or quasi client of Barrington, and the promise by Barrington which led to the judgment obtained by Impact was part of the commercial bargain struck by them. It did not resemble a solicitors professional undertaking as ordinarily understood, and it falls aptly within the description of a trading liability which the minimum terms were not intended to cover. For those reasons, as well as the reasons given by Lord Hodge with which I fully agree, I too would allow the appeal and restore the judgment of Judge Waksman QC. LORD CARNWATH: (dissenting) The issue in this appeal is a narrow issue of construction of an exclusion clause in a solicitors professional indemnity policy. The facts have been set out by Lord Hodge. As he explains, the arrangements between the funder (Impact) and the solicitors (Barrington) were governed by two Disbursement Funding Master Agreements (DFMAs). The DFMAs were in effect framework agreements providing the machinery for the making of loans to clients of Barrington to meet disbursements in litigation to be funded by CFAs. In breach of its duties to its clients, and consequently also to Impact under the DFMAs, Barrington failed to exercise proper care in selecting cases, with the result that the disbursements were irrecoverable, either from the defendants or the ATE or LEI insurers. Barrington is now in liquidation. Having obtained judgment against it for 581,353.80, Impact has brought proceedings against Barringtons insurers, AIG Europe Ltd (AIG) under the Third Parties (Rights Against Insurers) Act 1930. The short question is whether the DFMAs fell within the expression any contract or arrangement for the supply to, or use by, any insured of goods or services in the course of (Barringtons) Practice under the exclusion clauses in the AIG policy. It is common ground that Barringtons liability to repay the loans made by Impact by way of disbursements fell in principle within the general cover provided by clause 1 of that policy. The question is whether that liability is excluded by sub clause 6 of clause 6 of the Minimum Terms applicable to the policy: 6. The insurance must not exclude or limit the liability of the insurer except to the extent that any claim or related Defence Costs arise from the matters set out in this clause 6 6.6 Debts and Trading Liabilities Any trading or personal debt of any insured, or (a) (b) breach by any insured of the terms of any contract or arrangement for the supply to, or use by, any insured of goods or services in the course of the Insured Firms Practice (c) guarantee, indemnity or undertaking by any particular Insured in connection with the provision of finance, property, assistance or other benefit or advantage directly or indirectly to that Insured. There is a similar exclusion clause in the policy itself under the heading Trade Debts. Nothing turns on any difference between the two clauses. In the High Court, His Honour Judge Waksman QC, held that the exclusion applied. He accepted that Impact did not provide financial services to Barrington: A loan might properly be described as a kind of financial service. But it cannot be said that by the Funding Agreement Impact made, or agreed to make, loans to Barrington, for the borrowers were the lay clients even if Barrington agreed to guarantee repayment by them. Nor can it be said that the loan moneys were for the use of Barrington in any real sense. The fact that Barrington was the conduit for the moneys and distributed them for the purpose of paying disbursements and insurance premiums on behalf of the clients does not mean that the moneys were for its use in any beneficial sense. (para 49) However, he thought that the overall facility provided to the firm could properly be described as a service within the meaning of the clause: Impact was making available to Barrington a valuable facility at Barringtons option, namely claims whose disbursement element (including the all important ATE insurance) was fully funded leaving the solicitors to provide their services under the CFA. The fact that the funding is made by way of loans to the clients does not affect the fact that the overall facility is provided to Barrington and it is properly described as a service and one which, if used, enables it to trade by bringing in more cases. (para 54) Longmore LJ (with the agreement of the other members of the Court of Appeal) took a different view. He held that the purpose of the exclusion was more limited: To my mind the essential purpose of the exclusion is to prevent insurers from being liable for what one might call liabilities of a solicitor in respect of those aspects of his practice which affect him or her personally as opposed to liabilities arising from his professional obligations to his or her clients. Thus if a solicitor incurs liability to the supplier of, for example, a photocopier, insurers do not cover that liability nor would they cover obligations to a company providing cleaning services for the solicitors offices. If the office premises are leased by the partnership or held subject to a mortgage to a bank, the obligations under such lease or mortgage (or any guarantee of such lease or mortgage) would not be covered either. It is these sort of personal obligations (which may nevertheless be part of a solicitors practice as a solicitor) which are not intended to be covered. These obligations are to be distinguished from the obligations which are incurred in connection with the solicitors duty to his clients which are intended to be covered. (para 19) The obligations arising out of the loans made to cover disbursements in intended litigation were essentially part and parcel of the obligations assumed by a solicitor in respect of his professional duties to his client rather than obligations personal to the solicitor (para 21), and not therefore within the scope of the exclusion. Mr Cannon QC for AIG submits that Longmore LJ was wrong to depart from the reasoning of the trial judge. He asked himself the wrong question. The key question was whether Barrington received services under the DFMAs, not the nature of their obligations to Impact or to their clients. He adopted an intuitive approach to what he thought to be the purpose of the agreement, rather than interpreting and applying the words of the agreement itself. Mr Cannon points to the following valuable benefits, or services, received by Barrington each time a loan was made to a client: (i) payment of such part of the loan as it directed Impact to pay to third party suppliers (ie to persons who were owed money in respect of disbursements which had already been incurred) (clause 3.1); (ii) payment of the balance into Barringtons client account where it was to be used to fund disbursements (clauses 3.2 and 4.l(a)); and (iii) the ability to take on the clients case and so to earn fees. He emphasises that a solicitor is liable to pay disbursements whether or not he is put in funds by his client. Part of the service provided to Barrington was the ability to take on the case without having to fund the disbursements or take the financial risk that they would not be recovered. For Impact, Mr Dutton QC submits that an exclusion clause is to be construed strictly (citing Lewison Interpretation of Contracts 6th ed (2015), para 12.04, and, in relation to insurance exclusion clauses, Tektrol Ltd (formerly Atto Power Controls Ltd) v International Insurance Co of Hanover Ltd [2005] EWCA Civ 845; [2006] 1 All ER (Comm) 780). Longmore LJ was right to treat the exclusion as directed to liabilities arising out of contracts in respect of goods or services utilised by Barrington in the course of its practice, that is for the purpose of carrying out legal work for its client. Typical examples would be contracts for supply of photocopiers or office cleaning services. The mere fact that Barrington derived a commercial benefit from the DFMA was not enough to bring it within the exclusion. Of the three categories identified by Mr Cannon, the first two were funds provided to the clients not beneficially to Barrington. As Judge Waksman rightly held, this was not affected by the fact that Barrington was the conduit for the money (para 49). The third, Barringtons ability to take on the cases, was an incidental benefit of the DFMAs but not their purpose, and too general to come within the words of the exclusion. Discussion Interpretation of a contract turns on the meaning of the relevant words in their documentary, factual and commercial context (per Lord Neuberger, Arnold v Britton [2015] AC 1619, para 15). It is a fair criticism of Longmore LJs judgment, with respect, that having stood back from the detail of the contract (para 19) he never returned to the actual words of the exclusion clause. On the other hand, those words seen in context do in my view support a narrower approach than that taken by the judge. The clause directs attention to the purpose of the contract or arrangement: what was it for, not what were its by products or its consequences. Furthermore the word services does not stand alone. The composite phrase goods or services implies that the services will be supplied to or used in the practice in a way comparable to that in which goods are supplied or used. It is not enough that they are of benefit to the firm. That view is reinforced by the contrast with the much wider words in the following sub clause: other benefit or advantage directly or indirectly to that Insured. As to the three services identified by Mr Cannon, I agree with Mr Duttons response. The essential service provided by the DFMA, as the judge found, was the provision of loans to Barringtons clients, not to Barrington. No doubt, as Mr Cannon submits, it had the incidental benefits to Barrington of enabling it to take on cases and so earn fees, and of protecting it against potential default by its clients. To that extent perhaps it can be seen, in the judges words, as a facility for Barrington, which can loosely be described as a service. But that was not the essential purpose of the contract, nor was it a service comparable in any way to the supply of goods or services for use in the practice. There is a helpful parallel with Tektrol, relied on by Mr Dutton, in which the Court of Appeal had to interpret an exclusion clause referring to erasure loss distortion or corruption of information on computer systems caused deliberately by malicious persons. It was held that the words did not cover loss of a software code as a result of the theft of the only computer on which it was stored. Although the word loss taken on its own might have been wide enough to cover that event, the context, and the other words with which it was associated, showed that it was limited to loss due to interference by electronic means (noscitur a sociis: see paras 28 29, per Sir Martin Nourse). In the same way in this clause the juxtaposition of goods and services, taken with the references to supply and use in the practice, suggests something more specific than a general facility or benefit such as that identified by the judge. For completeness, I should mention to dismiss three points which were raised in oral argument: i) Whether the liabilities incurred by Barrington to Impact were different in kind from those incurred to the clients. While the two are inevitably related, they are in principle separate causes of action. In any event this issue throw no light on the issue in the appeal which is concerned with the purpose of the contract, rather than the characterisation of the liabilities which may arise under it. ii) The administration fee. Under clause 2.2, on the signing of a credit agreement with a client, Barrington was required to pay an administration fee to Impact. This was defined as a fee by way of remuneration for the services of (Impact) (clause 1.1). It was faintly suggested that this might throw some light on whether the contract was for supply of a service under the exclusion. This point was not raised in argument below, and the judge made no findings on it. We were told by Mr Dutton that the administration fee was, as appears from the context, no more than a fee connected with the particular service of drawing up of the credit agreements. In any event, it throws no light on the purpose of the contract as a whole, or whether the benefits enjoyed under it fell within the words of the exclusion. iii) Comparisons with the treatment of goods and services under VAT law. The Court of Appeal invited submissions on whether any useful guidance could be drawn from cases concerning services to third parties under VAT law, (see now in Airtours Holidays Transport Ltd v Commissioners for Her Majestys Revenue and Customs [2016] 4 WLR 87). That seems to me to introduce a further complication without any countervailing illumination. Longmore LJ was right to conclude that, given the very different legal context, no assistance could be gained from that source. In conclusion, in respectful disagreement with my colleagues, I would uphold the decision of the Court of Appeal and dismiss the appeal. |
This appeal concerns the statutory right of appeal against decisions by the Secretary of State for the Home Department (the Secretary of State) to refuse protection claims and human rights claims under Part 5 of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act) as amended. The particular question for decision is as follows: Where a person has already had a protection claim or a human rights claim refused and there is no pending appeal, do further submissions which rely on protection or human rights grounds have to be accepted by the Secretary of State as a fresh claim in accordance with rule 353 of the Immigration Rules if a decision in response to those representations is to attract a right of appeal under section 82 of the 2002 Act? It is a conspicuous feature of litigation in the field of immigration and asylum in this jurisdiction that those whose protection claims or human rights claims have already been refused seek to make further applications adducing further submissions or evidence in support. It is necessary that provision be made for such renewed applications for which there is a sound basis, not least because circumstances may change significantly and unforeseeably following the rejection of a claim. In R v Secretary of State for the Home Department, Ex p Onibiyo [1996] QB 768 Sir Thomas Bingham MR noted (at pp 781 782) that, for example, it is not hard to imagine cases in which an initial claim for asylum might be made on insubstantial, or even bogus, grounds, and be rightly rejected, but in which circumstances would subsequently arise or come to light showing a threat of a kind requiring the grant of asylum. As he observed, a scheme of legal protection which could not accommodate that possibility would be seriously defective. In appropriate cases, it will be necessary to afford access to the statutory system of appeals when a second or subsequent submission is rejected. Nevertheless, it is necessary to protect such a scheme of legal protection from abuse. There is, therefore, a need to exclude from the statutory system of appeals second or successive applications which are made on grounds which have previously been rejected or which have no realistic prospect of success, and which are often advanced simply in order to delay removal from the United Kingdom. The challenge is to provide a system which can deal fairly and effectively with all such applications while also complying with the United Kingdoms international obligations. The facts The appellant, Mr Jamar Robinson, is a national of Jamaica who was born on 14 May 1991. He arrived in the United Kingdom on 9 October 1998 when he was seven years old. He was given leave to enter until 9 April 1999 and then remained in the United Kingdom without leave. In 2005, at the age of 13, he applied for indefinite leave to remain in the United Kingdom as a dependant of his aunt who had made an application under a one off exercise to allow families who have been in the United Kingdom for three years or more to stay. His aunt was granted indefinite leave to remain on 13 May 2011. The appellants application was refused as part of later deportation proceedings. The appellant has a number of criminal convictions. The index offences which triggered deportation proceedings were two robberies for each of which he was sentenced on 20 April 2011 to 18 months detention, to run concurrently. At sentence he was 19 years of age. On the same occasion he was convicted of failing to comply with the requirements of a previous community order. On 31 August 2011, aged 20, he was convicted of an offence of robbery and an offence of theft, in respect of which he was sentenced to terms of 40 months detention and 16 months detention respectively, to run concurrently. On 12 October 2012, aged 21, he was convicted of an offence of violent disorder, committed while he was an inmate at HMP Feltham, for which he was sentenced to 12 months imprisonment. On 10 June 2011 he was notified by the Secretary of State of his liability to deportation. His previous legal representatives responded on 16 August 2011. On 17 July 2013 a deportation order was signed in respect of the appellant. He appealed to the First tier Tribunal (Immigration and Asylum Chamber) (FTT) against his proposed deportation. His appeal was based on his claimed right to respect for his private life in the United Kingdom. It was accepted that at that time there was no family life in play. His appeal was dismissed and he was refused permission to appeal to the Upper Tribunal (Immigration and Asylum Chamber) (UT) by the FTT and by the UT. He exhausted his rights of appeal on 1 May 2015. On 13 May 2015 the appellants previous solicitors made brief further submissions to the Secretary of State on his behalf. The focus of these submissions was that the appellants then partner was pregnant and due to give birth on 28 July 2015. The application did not explicitly request that the deportation order be revoked, nor did it explicitly make reference to human rights. The Secretary of State treated the further representations as an application to revoke the appellants deportation order on the basis that deportation would breach article 8 of the European Convention on Human Rights. She responded to those submissions in a letter of 23 June 2015. She concluded that deportation would not breach article 8. She refused to revoke the deportation order, and she decided that his submissions did not amount to a fresh human rights claim under rule 353 of the Immigration Rules. The appellants son was born on 26 July 2015. He is a British citizen by birth because his mother is British. The appellant then made further submissions to the Secretary of State on 28 July 2015 regarding the birth of his son and providing some documentation from the hospital. The Secretary of State responded to these further submissions in a letter dated 31 July 2015. Once again, the Secretary of State concluded that deportation of the appellant would not breach article 8 and that his further submissions did not amount to a fresh claim under rule 353 of the Immigration Rules. On 18 July 2015 the Secretary of State gave directions for the appellants removal to Jamaica on 9 August 2015. A request for temporary admission was made on 30 July 2015 in order to enable the appellant to visit his son. The enclosed documents included a statutory declaration from the appellant declaring that he is the childs father. The appellant was subsequently named as the father on the childs birth certificate. On 5 August 2015 the appellants solicitors gave notice of appeal to the FTT against the Secretary of States decision of 31 July 2015. In a decision dated 7 August 2015, promulgated on 10 August 2015, the FTT declined jurisdiction on the basis that there was no right of appeal against the decision of 31 July 2015. On 7 August 2015 the appellant made an application for permission to apply for judicial review of the Secretary of States decisions of 23 June 2015 and 31 July 2015 not to accept the further representations as fresh claims and the removal directions given on 18 July 2015. After the proceedings were lodged the Secretary of State confirmed that removal of the appellant would be deferred. The appellant applied to amend his grounds to include the FTT as second respondent and to challenge its decision of 7 August 2015 that the appellant had no right to appeal against the decision of 31 July 2015. UT Judge Allen granted the appellant permission to join the FTT and to amend his grounds. On 19 November 2015 UT Judge Eshun granted the appellant permission to apply for judicial review. The application for judicial review was heard by UT Judge Southern on 16 February 2016 who held that: the decisions of 23 June 2015 and 31 July 2015 were lawful with the Secretary of States letters were not refusals to revoke the the FTT had correctly decided that the appellant had no right of appeal (1) to the FTT; (2) appellants deportation order; and (3) regard to rule 353 of the Immigration Rules. He refused permission to appeal to the Court of Appeal. On 9 March 2016 the appellant applied to the Court of Appeal for permission to appeal. The Secretary of State sought to deport the appellant to Jamaica on 13 April 2016. On 12 April 2016 Rafferty LJ granted the appellant a stay on removal. On 2 December 2016 Underhill LJ, on consideration of the papers, granted permission to appeal to the Court of Appeal. On 4 May 2017 the Court of Appeal (Jackson, Hamblen and Flaux LJJ) dismissed the appellants appeal and refused permission to appeal to the Supreme Court. The appellant was granted a stay on removal pending final determination of his appeal. The Supreme Court granted permission to appeal by order dated 10 April 2018. The relevant legislation Part 5 of the 2002 Act in force immediately prior to the commencement of the Immigration Act 2014 (the 2014 Act) ie prior to 20 October 2014, provided in relevant part: 82. Right of appeal: general (1) Where an immigration decision is made in respect of a person he may appeal to the Tribunal. (2) refusal of entry clearance, refusal of a certificate of entitlement In this Part immigration decision means refusal of leave to enter the United (a) Kingdom, (b) (c) 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 (c 33) (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 (c 77) (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 (c 77) (seamen and aircrews), (ib) a decision to make an order under section 2A of that Act (deprivation of right of abode), a decision to make a deportation order (j) under section 5(1) of that Act, and (k) under section 5(2) of that Act. refusal to revoke a deportation order 84. Grounds of appeal (1) An appeal under section 82(1) against an immigration decision must be brought on one or more of the following grounds (c) that the decision is unlawful under section 6 of the Human Rights Act 1998 (c 42) (public authority not to act contrary to Human Rights Convention) as being incompatible with the appellants Convention rights; that removal of the appellant from the (g) 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. 92. Appeal from within United Kingdom: general (1) A person may not appeal under section 82(1) while he is in the United Kingdom unless his appeal is of a kind to which this section applies. (4) This section also applies to an appeal against an immigration decision if the appellant (a) has made an asylum claim, or a human rights claim, while in the United Kingdom, or 94. Appeal from within United Kingdom: unfounded human rights or asylum claim (1) This section applies to an appeal under section 82(1) where the appellant has made an asylum claim or human rights claim (or both). (2) A person may not bring an appeal to which this section applies in reliance on section 92(4)(a) if the Secretary of State certifies that the claim or claims mentioned in subsection (1) is or are clearly unfounded. 96. Earlier right of appeal (1) An appeal under section 82(1) against an immigration decision (the new decision) in respect of a person may not be brought if the Secretary of State or an immigration officer certifies (a) that the person was notified of a right of appeal under that section against another immigration decision (the old decision) (whether or not an appeal was brought and whether or not any appeal brought has been determined), (b) that the claim or application to which the new decision relates relies on a matter that could have been raised in an appeal against the old decision, and (c) that, in the opinion of the Secretary of State or the immigration officer, there is no satisfactory reason for that matter not having been raised in an appeal against the old decision. (2) An appeal under section 82(1) against an immigration decision (the new decision) in respect of a person may not be brought if the Secretary of State or an immigration officer certifies (a) that the person received a notice under section 120 by virtue of an application other than that to which the new decision relates or by virtue of a decision other than the new decision, (b) that the new decision relates to an application or claim which relies on a matter that should have been, but has not been, raised in a statement made in response to that notice, and that, in the opinion of the Secretary of (c) State or the immigration officer, there is no satisfactory reason for that matter not having been raised in a statement made in response to that notice. 113. Interpretation (1) In this Part, unless a contrary intention appears asylum claim means a claim made by a person to the Secretary of State at a place designated by the Secretary of State that to remove the person from or require him to leave the United Kingdom would breach the United Kingdoms obligations under the Refugee Convention, human rights claim means a claim made by a person to the Secretary of State at a place designated by the Secretary of State that to remove the person from or require him to leave the United Kingdom would be unlawful under section 6 of the Human Rights Act 1998 (c 42) (public authority not to act contrary to Convention) as being incompatible with his Convention rights, the Refugee Convention means the Convention relating to the Status of Refugees done at Geneva on 28 July 1951 and its Protocol, Part 5 of the 2002 Act was amended with effect from 20 October 2014 in a number of respects. Section 82(1) now provides: 82. Right of appeal to Tribunal (1) A person (P) may appeal to the Tribunal where the Secretary of State has decided to the Secretary of State has decided to (a) refuse a protection claim made by P, (b) refuse a human rights claim made by P, or (c) revoke Ps protection status. the Secretary of State has decided to (1) An appeal under section 82(1)(a) (refusal of protection claim) must be brought under one or more of the following grounds (a) that removal of the appellant from the United Kingdom would breach the United Kingdoms obligations under the Refugee Convention; Section 84 of the 2002 Act now provides: 84. Grounds of appeal (b) that removal of the appellant from the United Kingdom would breach the United Kingdoms obligations in relation to persons eligible for a grant of humanitarian protection; (c) that removal of the appellant from the United Kingdom would be unlawful under section 6 of the Human Rights Act 1998 (public authority not to act contrary to Human Rights Convention). (2) An appeal under section 82(1)(b) (refusal of human rights claim) must be brought on the ground that the decision is unlawful under section 6 of the Human Rights Act 1998. There were consequential amendments to sections 85, 86, 92, 94 and 96. Substantive changes were made to section 92 which now provides: 92. Place from which an appeal may be brought or continued (1) This section applies to determine the place from which an appeal under section 82(1) may be brought or continued. (2) In the case of an appeal under section 82(1)(a) (protection claim appeal), the appeal must be brought from outside the United Kingdom if (a) the claim to which the appeal relates has been certified under section 94(1) or (7) (claim clearly unfounded or removal to safe third country), or (b) Otherwise the appeal must be brought from within the United Kingdom. (3) In the case of an appeal under section 82(1)(b) (human rights claim appeal) where the claim to which the appeal relates was made while the appellant was in the United Kingdom, the appeal must be brought from outside the United Kingdom if (a) the claim to which the appeal relates has been certified under section 94(1) or (7) (claim clearly unfounded or removal to safe third country) or section 94B (certification of human rights claims made by persons liable to deportation), or Otherwise, the appeal must be brought from within the United Kingdom. In the case of an appeal under section 82(1)(b) (4) (human rights claim appeal) where the claim to which the appeal relates was made while the appellant was outside the United Kingdom, the appeal must be brought from outside the United Kingdom. Section 94 now provides in relevant part: 94. Appeal from within United Kingdom: unfounded human rights or protection claim (1) The Secretary of State may certify a protection claim or a human rights claim as clearly unfounded. The definition of human rights claim in section 113 was amended by the 2014 Act and now provides as follows: human rights claim means a claim made by a person to the Secretary of State at a place designated by the Secretary of State that to remove the person from or require him to leave the United Kingdom or to refuse him entry to the United Kingdom would be unlawful under section 6 of the Human Rights Act 1998 (c 42) (public authority not to act contrary to Convention). Immigration Rules, rule 353 The Immigration Rules have contained provisions in respect of previously refused applications since May 1994 (HC 395, rule 346). A rule in substantially the same form as the current rule 353 has been in force since it was introduced by HC 1112 in October 2004. (See para 36, below.) The current rule 353 of the Immigration Rules HC 1025, which has been in force since February 2015, provides: 353. When a human rights or protection claim has been refused or withdrawn or treated as withdrawn under paragraph 333C of these Rules and any appeal relating to that claim is no longer pending, the decision maker will consider any further submissions and, if rejected, will then determine whether they amount to a fresh claim. The submissions will amount to a fresh claim if they are significantly different from the material that has previously been considered. The submissions will only be significantly different if the content: had not already been considered; and (i) taken together with the previously considered (ii) material, created a realistic prospect of success, notwithstanding its rejection. This paragraph does not apply to claims made overseas. The decision of the Court of Appeal In the Court of Appeal Jackson LJ, with whom the other members of the court agreed, rejected a submission on behalf of the appellant that human rights claim in section 82(1)(b) of the 2002 Act as amended means any human rights claim and that its meaning is not confined to an original claim or a subsequent claim which constitutes a fresh claim within rule 353 of the Immigration Rules. He also rejected a submission that the Supreme Court considered precisely the same question in R (BA (Nigeria)) v Secretary of State for the Home Department [2009] UKSC 7; [2010] 1 AC 444 when construing the phrase a human rights claim in section 92(4)(a) of the 2002 Act as it then stood. The decision of the Supreme Court on the meaning of human rights claim in BA (Nigeria) did not apply to statutory provisions which determine whether a right of appeal exists at all. In his view, it would be an absurd reading of section 82, in either its previous or current form, to interpret it as permitting an applicant to make the same human rights claim over and over again, each time appealing to the FTT against the rejection of that claim. He concluded that a human rights claim in section 82(1)(b) of the 2002 Act must mean an original human rights claim or a fresh human rights claim which falls within rule 353 of the Immigration Rules. Submissions of the parties On this appeal the parties have made very detailed submissions orally and in writing for which the court is grateful. It seems to me, however, that Mr Michael Fordham QC on behalf of the appellant makes two essential submissions which lie at the heart of his case. (1) First, he submits that the Onibiyo line of authority which established that in the case of a second or successive submission it was for the Secretary of State to decide whether this constituted a fresh claim giving rise to a right to appeal did not survive the decision of the Supreme Court in BA (Nigeria), and that, accordingly, there is no longer any role for rule 353 of the Immigration Rules. In this regard he submits that this court should reject the reading of BA (Nigeria) favoured by Lord Neuberger of Abbotsbury MR in the Court of Appeal in R (ZA (Nigeria)) v Secretary of State for the Home Department [2010] EWCA Civ 926; [2011] QB 722. (2) Secondly, he submits that the amendments to Part 5 of the 2002 Act effected by the 2014 Act abrogate the control mechanism established by the Onibiyo line of authority and rule 353 of the Immigration Rules and that the words human rights claim as they appear in section 82(1)(b) of the 2002 Act following amendment by the 2014 Act are to be interpreted without reference to rule 353. On this basis he submits that any second or subsequent submission which is a human rights claim under section 113(1) attracts a right of appeal under section 82, notwithstanding that the individual has made a previous claim that removal would breach a relevant obligation, whether the same relevant obligation or a different one, whether on the same basis or a different one, whether with the same or different submissions and evidence, but subject however to the certification provisions in sections 94 and 96. In response on behalf of the Secretary of State, Sir James Eadie QC submits: (1) BA (Nigeria) does not establish that the words human rights claim as they appear in Part 5 of the 2002 Act are to be interpreted without reference to the Onibiyo line of authority or rule 353 of the Immigration Rules. The actual decision in BA (Nigeria) was that rule 353 had no further part to play for the purposes of section 92(4)(a) once there was an appeal against an immigration decision. It did not determine that the Secretary of State was no longer entitled to decide the prior question as to whether a second or subsequent submission constituted a claim at all. In his support he relies on the analysis of BA (Nigeria) by Lord Neuberger MR in ZA (Nigeria). (2) The amendments to the 2002 Act effected by the 2014 Act have not changed the position. It remains the case that there will only be an asylum or human rights claim to be determined if, in relevant cases, further submissions are considered to amount to a fresh claim. The Onibiyo line of authority In order to address the issues raised by this appeal it is necessary to consider in some detail the way in which a line of authority concerning second or subsequent submissions to the Secretary of State has developed. It starts in 1996 with the decision of the Court of Appeal (Sir Thomas Bingham MR, Roch and Swinton Thomas LJJ) in Onibiyo. The applicant had made an application for asylum under the Asylum and Immigration Appeals Act 1993 (1993 Act), based on the political activities of his father. The Secretary of State refused his application and his appeal under section 8(3)(b) of the 1993 Act was dismissed. The applicant then indicated that he was making a fresh claim for asylum based on his own association with the opposition in Nigeria. Rule 346, Statement of Changes in Immigration Rules (1994) (HC 395), which was then current, provided: When an asylum applicant has previously been refused asylum in the United Kingdom and can demonstrate no relevant and substantial change in his circumstances since that date, his application will be refused. The Home Office stated in a letter that it was of the view that the representations did not constitute a fresh claim for asylum and had been treated as further information to the original claim. The request for revocation of the deportation order against him was refused on the ground that there had not been any material change in circumstances since the previous refusal decision sufficient to justify revocation. The applicants solicitors took issue with this letter and submitted a notice of appeal to a special adjudicator under section 8(3)(b) of the 1993 Act. The Secretary of State maintained his position and in a subsequent letter explained that the first letter had not constituted a refusal of asylum but a consideration and dismissal of the further information provided. In the circumstances the Secretary of State had not made a fresh decision and the appeal was invalid. The applicant applied for judicial review. A preliminary question was whether a person may during a single uninterrupted stay in the United Kingdom make more than one claim for asylum within the 1993 Act. The Master of the Rolls, with whom the other members of the court agreed, rejected the submission of the Secretary of State that once a person had made a claim for asylum, been refused by the Secretary of State and unsuccessfully exercised his rights of appeal, that exhausted his legal rights. The obligation of the United Kingdom under the Refugee Convention not to return a refugee to a county where his life or freedom would be threatened for a Convention reason remained binding until the moment of return. Accordingly, three questions arose for consideration. First, what constitutes a fresh claim? Secondly, how and by whom is it decided whether a claim is a fresh claim or not? Thirdly, what are the procedural consequences of a decision that a claim is or is not a fresh claim? In response to the first question, it was not controversial that there had to be a significant change from the claim as previously presented, such as might reasonably lead a special adjudicator to take a different view. The acid test must always be whether, comparing the new claim with that earlier rejected, and excluding material on which the claimant could reasonably have been expected to rely in the earlier claim, the new claim is sufficiently different from the earlier claim to admit of a realistic prospect that a favourable view could be taken of the new claim despite the unfavourable conclusion reached on the earlier claim. (at pp 783H 784B) In response to the second question, rule 328 of the Statement of Changes in Immigration Rules made clear that all asylum applications would be determined by the Secretary of State in the first instance. In response to the third question, no particular difficulty arose where the Secretary of State treated the submission as a fresh claim, whether asylum was then granted or refused. In the latter case, the same consequences should follow as on a refusal of an initial claim. A problematic situation arose, however, where, as on the facts of that case, the Secretary of State did not recognise the submission as a fresh claim and, therefore, declined to take or omit to take any action which would trigger a right of appeal. It would clearly be open to the asylum seeker, in those circumstances, to have resort to the court to challenge that decision. However, a question of considerable difficulty was whether the court should approach this as a question of precedent fact or whether the decision should be susceptible to challenge only on Wednesbury principles. As the answer to the question was not determinative of the appeal, the Master of the Rolls proffered a tentative answer in favour of the latter view. (at pp 784D 785D) Following the decision in Onibiyo, rule 346 was amended to reflect the judgment in that case. The amended version provided: Where an asylum applicant has previously been refused asylum the Secretary of State will determine whether any further representations should be treated as a fresh application for asylum. The Secretary of State will treat representations as a fresh application for asylum if the claim advanced in the representations is sufficiently different from the earlier claim that there is a realistic prospect that the conditions set out in para 334 will be satisfied. In considering whether to treat the representations as a fresh claim, the Secretary of State will disregard any material which: is not significant; or is not credible; or (i) (ii) (iii) was available to the applicant at the time when the previous application was refused or when any appeal was determined. (CM 3365) In Cakabay v Secretary of State for the Home Department (Nos 2 and 3) [1999] Imm AR 176, after the appellants appeals against the refusal of asylum had been dismissed, he had submitted further evidence which the Secretary of State concluded did not constitute a fresh claim. The appellant purported to appeal against this decision. The Secretary of State successfully applied for a declaration that the appellate authorities had no jurisdiction in the matter. The judge, reviewing the decision on Wednesbury principles, also concluded that the Secretary of States decision could not be held to be unreasonable. The Court of Appeal (Peter Gibson, Schiemann and Potter LJJ) upheld the decision. Schiemann LJ explained that the statute made no express provision as to what is to be done in the case of repeated claims for asylum by the same person. Nevertheless, there was a need for categorisation and to distinguish between what he termed a repetitious claim and a fresh claim: In the case of a repetitious claim no more is required to be done: the first decision has ensured that the United Kingdom has complied with its obligations under the Convention. Section 6 of the 1993 Act creates no inhibition on the claimants removal: the Secretary of State has on the occasion of his decision on the first claim decided the repetitious claim. So far as the decision on the claimants repetitious application for leave to enter is concerned, the claimant will be told that leave has already been refused and that there is no need for any new decision. (at p 181) Despite the focus on repetitious claims, it is clear that the reasoning of Schiemann LJ applies equally to any further submissions that failed to meet the test in rule 346. Similarly, Peter Gibson LJ (at p 193) considered that if the representations amounted to no more than the same claim as that which had already failed, or if the criteria of rule 346 were not met, there would be no claim for asylum within the statute and therefore no appeal would lie under section 8(1) of the 1993 Act against a determination adverse to the asylum seeker that there had been no fresh claim. Consistently with what the Court of Appeal in Onibiyo had assumed to be correct, the court went on to hold that no appeal lay under section 8(1) of the 1993 Act from the determination of the Secretary of State that fresh representations do not amount to a claim for asylum. Schiemann LJ accepted that a categorisation decision has potentially severe consequences and that, in such a context, arguments based on the possibilities of abuse should not weigh heavily in matters of construction. Nevertheless, Parliament had not provided for an appeal on the merits against a categorisation decision (at p 185 186). (See also Peter Gibson LJ at p 194.) In this way the courts imposed a gloss on the operation of the statutory scheme which made no express provision for the handling of second or successive submissions. The effect of these decisions was that it was for the Secretary of State to decide whether further submissions amounted to a fresh claim. Where the Secretary of State had taken a rational decision that further submissions did not amount to a fresh claim for asylum under rule 346 of the Immigration Rules, there was no asylum claim to determine and therefore no need to make any decision to refuse leave to enter. In these circumstances, no right of appeal arose under section 8 of the 1993 Act. A categorisation decision was, however, open to challenge by judicial review. On 7 November 2002 Parliament enacted the 2002 Act, which effectively replaced the 1993 Act. The 2002 Act itself has subsequently been amended on a number of occasions. Part 5 of the 2002 Act concerns immigration and asylum appeals. Section 82 conferred a statutory right of appeal against an immigration decision and listed what constituted an immigration decision. The grounds of appeal included in section 84(1)(g) that removal 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 92 required an appeal to be out of country unless it concerned one of five of the immigration decisions listed in section 82(2) or the individual had made an asylum or human rights claim. Section 94 empowered the Secretary of State to issue a certificate that an asylum or human rights claim was clearly unfounded, in which case an appeal would be limited to an out of country appeal. Section 96 empowered the Secretary of State to issue a certificate relating to an earlier right of appeal in which a matter now relied upon could and should have been raised, in which case an appeal could not be brought at all. In October 2004 rule 353 was introduced (HC 1112). 353. When a human rights or asylum claim has been refused and any appeal relating to that claim is no longer pending, the decision maker will consider any further submissions and, if rejected, will then determine whether they amount to a fresh claim. The submissions will amount to a fresh claim if they are significantly different from the material that has previously been considered. The submissions will only be significantly different if the content: had not already been considered; and (i) taken together with the previously considered (ii) material, created a realistic prospect of success, notwithstanding its rejection. This paragraph does not apply to claims made overseas. Rule 353A was inserted by HC 82/2007. 353A. Consideration of further submissions shall be subject to the procedures set out in these Rules. An applicant who has made further submissions shall not be removed before the Secretary of State has considered the submissions under paragraph 353 or otherwise. This paragraph does not apply to submissions made overseas. In WM (DRC) v Secretary of State for the Home Department [2006] EWCA Civ 1495; [2007] Imm AR 337 the Court of Appeal (Buxton, Parker and Moore Bick LJJ) confirmed (per Buxton LJ at paras 8 10) that there is no provision for appeal from a decision of the Secretary of State as to the existence of a fresh claim and, accordingly, the court was engaged only through the medium of judicial review. The Secretary of States decision as to whether there was a fresh claim was not a fact, nor precedent to any other decision, but was the decision itself. The court could not take that decision out of the hands of the decision maker. The decision remained that of the Secretary of State, subject only to review on a Wednesbury basis, albeit applying anxious scrutiny. In ZT (Kosovo) v Secretary of State for the Home Department [2009] UKHL 6; [2009] 1 WLR 348 the House of Lords by a majority extended the applicability of the Onibiyo approach. The Secretary of State had rejected the applicants claims for asylum and protection on human right grounds and certified the claims as clearly unfounded under section 94(2) of the 2002 Act. As a result, the applicant had no in country right of appeal and he was served with a decision to remove him as an illegal immigrant. He made two further submissions, but the Secretary of State maintained her certification of the claims as clearly unfounded. The House of Lords held by a majority (Lord Hope dissenting) that the Secretary of State had erred in applying section 94(2) of the 2002 Act rather than rule 353 to the further submissions. The words any appeal relating to that claim is no longer pending in rule 353 should be interpreted in accordance with the definition of a pending appeal in section 104 of the 2002 Act. If there was no appeal pending, the qualifying words had no application. Furthermore, it made sense that the rule should be disapplied during, and only during, the currency of an appeal since if an appeal was pending further submissions could be made to the appeal tribunal. As Lord Neuberger observed (at para 86), it would seem silly if rule 353 only applied after an appeal had been brought and concluded but did not apply before an appeal was brought and could never apply in a case where no appeal had been brought. BA (Nigeria) Some nine months after the House of Lords delivered its decision in ZT (Kosovo) on 4 February 2009, the Supreme Court delivered its decision in BA (Nigeria) on 26 November 2009. Mr Fordhams primary submission is that the Onibiyo line of authority did not survive the decision of the Supreme Court in BA (Nigeria) and that, accordingly, there is no longer any role for rule 353 of the Immigration Rules. BA (Nigeria) concerned two separate cases. BA, who had previously been granted indefinite leave to remain, was served with a decision that he would be deported on his release from prison on licence from a sentence of imprisonment of ten years. He appealed on human rights grounds against that decision and his appeal failed. He was served with a deportation order. BA then made further submissions as to why he should not be deported. The Secretary of State agreed to consider his reasons for seeking revocation of the deportation order but declined to revoke it. Directions were then given for his removal. The other case was that of PE who had entered the United Kingdom clandestinely. His application for asylum was rejected by the Secretary of State. It was decided that directions were to be given for his removal to Cameroon. He did not appeal against that decision. Before it was put into effect, however, he was convicted and sentenced to imprisonment for having a forged passport and using it to obtain work. The Secretary of State decided to make a deportation order against him. PE appealed unsuccessfully against that decision on asylum and human rights grounds. The deportation order was signed and served on him, following which his representatives made written representations for the decision to be reconsidered. In particular, it was claimed that he would be persecuted in Cameroon on account of his homosexuality. The Secretary of State declined to reconsider her decision; in her view the representations did not amount to a fresh claim within rule 353. PE purported to appeal against that decision but the tribunal held that it was not an appealable decision. Both BA and PE applied for judicial review. In each of these cases the refusal of the Secretary of State to revoke the deportation order following further representations was accepted to be an immigration decision within section 82(2)(k). It was common ground, accordingly, that each applicant had a right of appeal under section 82(1). It was also common ground that neither of the claims would have been certifiable under section 94 or section 96 (although it appears that the Secretary of State took this position solely because, so far as section 94 was concerned, it applied only where the appellant has made an asylum claim or a human rights claim (or both)). The issue was whether the right of appeal could be exercised from within the United Kingdom. (See Lord Hope DPSC at para 14.) Section 92(1) precluded an appeal under section 82(1) by a person while he is in the United Kingdom, unless his appeal was of a kind to which section 92 applied. Section 92, by virtue of section 92(4)(a), applied to an appeal against an immigration decision if the appellant has made an asylum claim, or a human rights claim, while in the United Kingdom so that in such a case there would be a right to an in country appeal. Lord Hope encapsulated the issue (at para 2): The question is whether the expression an asylum claim, or a human rights claim, in section 92(4)(a) of the 2002 Act includes any second or subsequent claim that the asylum seeker may make, or only a second or subsequent claim which has been accepted as a fresh claim by the Secretary of State under rule 353 of the Statement of Changes in Immigration Rules (1994) (HC 395). The Supreme Court (Baroness Hale JSC dissenting) held that it was not open to the Secretary of State to rely on rule 353 and the Onibiyo reasoning to deny an in country right of appeal in those circumstances. As Lord Neuberger MR observed in ZA (Nigeria) at para 52, the actual decision in BA (Nigeria) was that rule 353 had no further part to play for the purposes of section 92(4)(a) once there was an appeal against an immigration decision. However, the reasoning by which the Supreme Court reached that conclusion is open to different interpretations which were formulated by Lord Neuberger in ZA (Nigeria) in the following terms (at para 51). Like the Administrative Court, I have not found it entirely easy to resolve the issue of whether the Supreme Court was saying (a) as the claimants contend, that rule 353 has no part to play at all following the introduction of Part 5 of the 2002 Act, or (b) as the Secretary of State argues, that rule 353 has no part to play where there has been an appealable immigration decision and the only issue is whether the appeal is of a kind to which section 92 applies. Ultimately, however, again like the Administrative Court, I have come to the conclusion that the Secretary of States more limited interpretation is to be preferred. In the present appeal, Mr Fordham has sought to persuade us that the broader reading of BA (Nigeria) is correct and that the narrower reading favoured by Lord Neuberger in ZA (Nigeria) is incorrect. Mr Fordham is able to point to certain passages in the judgment of Lord Hope in BA (Nigeria) (with which Lord Scott, Lord Rodger and Lord Brown agreed) which certainly lend support to the view that the new scheme introduced by the 2002 Act has rendered the reasoning in Onibiyo and rule 353 redundant. I draw attention, in particular, to the following passages. (1) Lord Hope (at para 29), referring to section 94(2) and section 96, noted that the new system introduced by Part 5 of the 2002 Act contains a range of powers that enable the Secretary of State or an immigration officer to deal with the problem of repeat claims. It was common ground that the present cases were not certifiable under either of these two sections. Why then, he asked rhetorically, should they be subjected to a further requirement which is not mentioned anywhere in the 2002 Act. He continued: It can only be read into the Act by, as Sedley LJ in the Court of Appeal put it, glossing the meaning of the words a claim so as to exclude a further claim which has not been held under rule 353 to be a fresh claim The court had to do this in Ex p Onibiyo But there is no need to do this now. It is not just that there is no need now to read those words into the statute. As Mr Husain pointed out, the two systems for excluding repeat claims are not compatible. (at paras 29, 30) (2) At para 31 Lord Hope observed: The ground of appeal referred to in section 84(1)(g) has been designed to honour the international obligations of the United Kingdom. To exclude claims which the Secretary of State considers not to be fresh claims from this ground of appeal, when claims which he certifies as clearly unfounded are given the benefit of it, can serve no good purpose. On the contrary, it risks undermining the beneficial objects of the Refugee Convention which the court in Ex p Onibiyo , under a legislative system which had no equivalent to section 95, was careful to avoid. (3) At para 33 Lord Hope observed: There is no doubt, as I indicated in ZT (Kosovo) v Secretary of State for the Home Department , para 33, that rule 353 was drafted on the assumption that a claimant who made further submissions would be at risk of being removed or required to leave immediately if he does not have a fresh claim. That was indeed the case when this rule was originally drafted, as there was no equivalent of section 92(4) of the 2002 Act. But Mr Husains analysis has persuaded me that the legislative scheme that Parliament has now put in place does not have that effect. Its carefully interlocking provisions, when read as a whole, set out the complete code for dealing with repeat claims. Rule 353, as presently drafted, has no part to play in the legislative scheme. As an expression of the will of Parliament, it must take priority over the rules formulated by the executive. Rule 353A on the other hand remains in place as necessary protection against premature removal until the further submissions have been considered by the Secretary of State. Similarly, Lord Rodger (at para 37), rejecting the submission that the expression an asylum claim in section 92(4)(a) should be given the same meaning as Sir Thomas Bingham MR gave to the expression a claim for asylum in section 6 of the 1993 Act, noted that the contexts were significantly different since the 2002 Act contains a new scheme for dealing with abusive claims. Given that new scheme, there is no longer the same need to adopt the former interpretation and, indeed, the one now adopted fits the new context better. Lord Brown (at para 44) explained that he had reached his conclusion only on the basis that: the statutory solution to the problem of abuse created by the making of repeat asylum claims lies not in construing an asylum claim in section 92(4)(a) of the Nationality, Immigration and Asylum Act 2002 as the Court of Appeal in R v Secretary of State for the Home Department, Ex p Onibiyo construed a claim for asylum in section 6 of the Asylum and Immigration Appeals Act 1993 but rather in the Secretary of State issuing certificates where appropriate under sections 94 or 96 of the 2002 Act (no equivalent provisions having been available under the 1993 Act). Nevertheless, there are to my mind major difficulties inherent in this reading of BA (Nigeria). Here I find myself in total agreement with the reasoning of Lord Neuberger on this point in ZA (Nigeria) which I gratefully acknowledge. First, in principle there is no conflict between Onibiyo and rule 353 on the one hand and the statutory scheme in Part 5 of the 2002 Act on the other. I note that when Onibiyo was decided in 1996 there was in force a system of certification under paragraph 5 of Schedule 2 to the 1993 Act which established special appeal procedures for claims without foundation. With respect to Lord Hope, I do not consider that there is any incompatibility between what he described as the two systems for excluding repeat claims. They operate at different stages of the response to a purported renewed claim. BA (Nigeria) establishes that, as the statutory provisions then stood, where the Secretary of State receives further submissions on which he makes an immigration decision within section 82 there will, in the absence of certification, be an in country right of appeal. It decides that in those circumstances it is not then open to the Secretary of State to rely on the Onibiyo reasoning or rule 353 in order to contend that the submissions did not amount to a claim and that, as a result, there is no need for a decision and no entitlement to a statutory appeal. It is entirely understandable that in such a case there is no room for the operation of rule 353. Onibiyo and rule 353, by contrast, address a prior issue, namely whether there is a claim which requires a decision at all. Secondly, I do not consider that the effect of the machinery introduced by Part 5 of the 2002 Act, in particular the powers of certification under sections 94 and 96, is to render the Onibiyo reasoning and rule 353 redundant. As Lord Neuberger observed in ZA (Nigeria) (at para 24), the issue should not be decided simply by seeing whether sections 94 and 96 can be interpreted so as to cover every application falling within rule 353, as it is equally valid to consider whether they can be construed consistently with rule 353 having an independent effect. In my view, rule 353 continues to perform a useful role notwithstanding the machinery introduced by Part 5 of the 2002 Act. (1) Section 94 applies to claims which are clearly unfounded, whether they are original claims or purported renewed claims. By contrast, rule 353 applies only to supplemental submissions which purport to be claims. (2) The effect of certification under section 94 is to limit an appeal to an out of country appeal. Certification under section 96 has the effect that an appeal under section 82(1) may not be brought. The effect of rule 353 is that no right of appeal ever arises. (3) As indicated above, where it applies rule 353 operates at a prior stage to section 94. In the case of a purported renewed claim there is a legitimate preliminary issue as to whether it constitutes a claim requiring a decision on the merits at all. Rule 353 addresses that issue. Section 94, on the other hand, proceeds on the basis that there is a valid claim which requires consideration on the merits and a decision. It creates a machinery of certification of the claim as clearly unfounded so as to prevent an in country appeal. (4) The fact that section 94 applies to both original and purported renewed claims does not deprive rule 353 of its utility in relation to the latter category. In appropriate cases, rule 353 relieves the Secretary of State from taking a decision on the merits of the application and refusing it. It operates by enabling him to reject the submissions as not constituting a claim requiring decision. Section 94, however, comes into play only when the Secretary of State has considered a claim on its merits and refused it. At that stage, certification operates to block a right to an in country appeal which would otherwise arise. Thus rule 353 can be operated as a sort of gatekeeper by the Secretary of State to prevent further submissions amounting to, or being treated as, a claim, thereby not getting into Part 5 territory at all. (ZA (Nigeria) per Lord Neuberger MR at para 26) With respect to Mr Fordham, it is not the case that this interposing function arose only because of the additional requirement of an immigration decision in the pre 2014 statutory list in section 82(1) of the 2002 Act. On the contrary, it is founded on the need to identify what constitutes a claim for this purpose. (5) Section 96(1) addresses a different aspect of renewed claims from rule 353. Section 96(1) applies where a person seeks to rely on a matter that could have been raised in an earlier appeal against an immigration decision and the Secretary of State or the immigration officer considers that there is no satisfactory reason for the failure to do so. It is, in a sense, the converse of the situation addressed by rule 353. (6) Part 5 as originally enacted included a subsection 96(3) which provided: (3) A person may not rely on any ground in an appeal under section 82(1) if the Secretary of State or an immigration officer certifies that the ground was considered in another appeal under that section brought by that person. This provision was much closer to rule 353 than is section 96(1) as both rule 353 and section 96(3) address similar situations. However, section 96(3) did not achieve its effect by denying the existence of a claim requiring a decision on the merits, but by requiring such a renewed claim to be treated as a fresh claim and enabling the Secretary of State to block an appeal on the particular ground which had been raised previously. In any event, section 96(3) is no longer in force, having been repealed by section 30 of the Asylum and Immigration (Treatment of Claimants, etc) Act 2004 with effect from 1 October 2004. Thirdly, there are features of the regulatory scheme which are difficult to reconcile with an intention on the part of Parliament that provisions in Part 5 of the 2002 Act should provide a comprehensive and exclusive code for dealing with repeat claims and that rule 353 should no longer be effective. (1) When the 2002 Act was enacted there was no attempt to repeal or amend rule 346, the predecessor to rule 353. (2) Parliament has approved subsequent amendments to the Immigration Rules which have not included the deletion of rule 353 which remains in force. (3) Section 53 of the Borders, Citizenship and Immigration Act 2009 (the 2009 Act) amended section 31A of the Senior Courts Act 1981 to permit transfer from the High Court to the Upper Tribunal of judicial review applications where: the application calls into question a decision of the Secretary of State not to treat submissions as an asylum claim or a human rights claim wholly or partly on the basis that they are not significantly different from material that has previously been considered As Lord Neuberger observed in ZA (Nigeria) (at para 19), here Parliament has plainly legislated on the basis that rule 353 is still in force and section 53 of the 2009 Act would have been positively meaningless if rule 353 had no further function. (4) Following the amendment of the 2002 Act by the 2014 Act, rule 353 was amended so as to ensure that it applies to human rights claims and protection claims (HC 1025). Once again, this is inconsistent with the suggestion that rule 353 had become ineffective. These features strongly suggest that rule 353 continues to perform an important function. Fourthly, I am persuaded that the broad reading of BA (Nigeria) for which the appellant contends is inconsistent with ZT (Kosovo) where the House of Lords held (Lord Hope dissenting) that the Secretary of State had erred in applying section 94(2) of the 2002 Act rather than rule 353 in considering the applicants further submissions. By contrast, there is no difficulty in reconciling the two decisions if the ratio decidendi of BA (Nigeria) is merely that rule 353 has no part to play where there is an appealable immigration decision. If the Supreme Court did decide in BA (Nigeria) that rule 353 is entirely redundant following the introduction of Part 5 of the 2002 Act, it must have intended to overrule or to depart from the decision of the House of Lords some nine months earlier in ZT (Kosovo). However, BA (Nigeria) contains no express statement to that effect. Moreover, while an earlier decision may be impliedly overruled, it is extremely improbable that this was the intention here, for reasons summarised by Lord Neuberger in ZA (Nigeria) as follows (at para 53): I have great difficulty with the notion that the later case relied on by the claimants overruled the earlier case. (i) Both decisions relate to a much litigated issue, and the earlier decision was given less than a year before the later decision; (ii) the point at issue was directly addressed and decided in all five reasoned judgments in the earlier decision, and even the reasoning of the dissenter would have to be treated as overruled; (iii) the earlier decision is expressly referred to three times in the leading judgment, and once in the only other reasoned judgment, in the later decision without apparent disapproval, and both judgments were given by judges involved in the earlier decision; (iv) the actual outcome in the later decision can perfectly easily be reconciled with the earlier decision, namely on the basis that the later decision is limited to further submissions which have been treated as a fresh claim; (v) this more limited interpretation of the later decision is consistent with the Court of Appeals reasoning and conclusion in that case, which was specifically approved by the Supreme Court; (vi) this more limited interpretation of the later decision is also consistent with a recent statute, whereas the wider interpretation, which would involve overruling the earlier decision, is not. For these reasons I agree with the Court of Appeal in ZA (Nigeria) that what is said in BA (Nigeria) is limited to cases where there is an appealable decision. As Lord Neuberger explained: Once there is such a decision, the complete code contained in the legislative scheme applies and rule 353 has no part to play. However, as decided in ZT (Kosovo) , rule 353 still has a part to play: the Secretary of State can decide that the further submissions are not a fresh claim, in which case one does not enter the territory governed by the complete code of the legislative scheme. (ZA (Nigeria) at para 59) For these reasons, I consider that Mr Fordhams primary case is not made out. The 2014 amendments to the 2002 Act Part 5 of the 2002 Act was substantially amended by the 2014 Act which restructured rights of appeal. The most relevant provisions as amended are set out at paras 19 to 23 above. Section 82 no longer restricts a right of appeal to an appeal against an immigration decision as formerly listed in section 82(2). In particular, there is no longer any right of appeal in respect of a decision to make a deportation order or a refusal to revoke such an order per se. Instead a person may appeal where the Secretary of State has decided to refuse a protection claim or a human rights claim made by that person or has decided to revoke that persons protection status. Post 2014 authority Before drawing conclusions as to the impact of the 2014 amendments to the 2002 Act on the present proceedings, it is convenient to consider the more recent decisions on this point. In Waqar v Secretary of State for the Home Department [2015] UKUT 169 (IAC) the appellant contended that the Secretary of States decision not to treat his further submissions as amounting to a fresh claim for the purposes of rule 353 amounted to a refusal of a human rights claim under section 82 as amended. The appellant maintained that rule 353 is now subsumed within the statutory provisions and that a right of appeal under section 82 as amended arises in all refused human rights claims, subject only to certification under sections 94 or 96. It was submitted that there is no longer a requirement for a categorisation step because the statutory framework now provides all necessary safeguards against repetitious or unmeritorious claims. In rejecting the submission, the Upper Tribunal (UTJ Coker, UTJ Kebede) held (at paras 18, 19, 20) that BA (Nigeria) is not authority for the proposition that submissions amount to a claim and that the response to those submissions is a decision within the meaning of Part 5. Submissions that purport to be a human rights claim do not without more trigger a right of appeal. There has to be an intermediate categorisation in which rule 353 provides the mechanism to determine whether they amount to a claim. If they do not, the decision is not a decision to refuse a human rights claim. In R (MG) v First tier Tribunal (Immigration and Asylum Chamber) [2016] UKUT 283 (IAC) the applicant had made a claim for asylum which had been rejected and his appeal had been dismissed. Further submissions on his behalf were rejected by the Secretary of State who maintained the earlier decision that he did not qualify for asylum and concluded that the further representations were not a fresh claim. The applicant lodged a notice of appeal with the First tier Tribunal which rejected it because no notice of an appealable decision had been issued. On a challenge to that decision by way of judicial review it was submitted, without taking issue with the decision of the Upper Tribunal in Waqar, that as a result of Parliaments decision to grant a right of appeal from a refusal of a protection claim the judge in the First tier Tribunal has jurisdiction to decide whether there had been a decision to refuse a protection claim. The Upper Tribunal (Blake J and UTJ Grubb) rejected the submission. In our view, notwithstanding the significant change in section 82 from a right of appeal against an immigration decision on a protection ground to a right of appeal against a protection decision itself, Parliament can be presumed to have legislated against the background of satisfaction with the previous law as declared in ZA (Nigeria). There is no indication in the amendments made, that it was intended to transfer responsibility for the categorisation decision of whether a claim is a fresh claim to the FtT. Indeed, the general purpose of the 2014 amendments was to reduce the appellate jurisdiction of the FtT. (at para 14) They further held that an assessment of whether a protection claim is a fresh claim is not a question of jurisdictional fact but a matter of assessment and evaluation for the Secretary of State subject to supervision by judicial review. Furthermore, when the Secretary of State concludes that the claim before her is not a fresh claim she does not refuse a protection claim. In R (Sharif Hussein) v First Tier Tribunal (para 353: present scope and effect) IJR [2016] UKUT 409 (IAC); [2017] Imm AR 84 the applicants appeal against a deportation order had been dismissed. He made further submissions in support of a request to revoke the order which were rejected by the Secretary of State who also concluded that they did not amount to a fresh claim within rule 353. The First tier Tribunal held that there was no exercisable right of appeal. The issue in the judicial review which followed was to what extent, if at all, the Secretary of State could utilise rule 353 to preclude the applicant from appealing to the First tier Tribunal under section 82. The applicant, first, relied on the judgment of Lord Hope in BA (Nigeria) in support of the proposition that rule 353 had no part to play following the introduction of Part 5 of the 2002 Act. Secondly, he submitted that the effect of the 2014 amendments to the 2002 Act was that rule 353 no longer applied to the categorisation issue as to whether submissions were a claim within section 82 and was now relevant only to certification issues. The Upper Tribunal (Dove J and Peter Lane UTJ) rejected both submissions. It was bound by ZA (Nigeria) to reject the first submission. With regard to the second submission it considered that despite the changes made by the 2014 Act the concept of a claim remained central to the new section 82. It also noted that if Parliament had intended to limit rule 353 to certification decisions, it would have been amended to make that clear. In fact, the amendment to rule 353 made following the 2014 Act to ensure that it applies to human rights claims and protection claims demonstrated that it was intended to have continuing effect. These matters have been considered recently by the Court of Appeal (Arden and Sales LJJ) in Secretary of State for the Home Department v VM (Jamaica) [2017] EWCA Civ 225; [2017] Imm AR 1237, a judgment delivered shortly before that of the Court of Appeal in the present case. Sales LJ described the relationship of section 82(1) and rule 353 in the clearest terms (at para 28): Section 82(1) and paragraph 353 of the Immigration Rules operate in combination. If the Secretary of State decides that new representations in relation to some earlier decision (whether of her own or by the tribunal) which is now final and closed do not amount to a fresh claim under paragraph 353 she will simply reject the representations as matters which do not affect the position of the applicant within the regime of immigration law. In that sort of case, on the assessment of the Secretary of State the representations do not amount to a claim by the applicant, so her decision is not a decision to refuse a human rights claim (or any other sort of claim) within the scope of section 82(1). No right of appeal arises in relation to her decision that the new representations do not amount to a fresh claim. Such a decision can only be challenged by way of judicial review. On this point I agree with the decision of the UT in Waqar v Secretary of State for the Home Department (Statutory Appeals/paragraph 353) [2015] UKUT 169 (IAC) at paras 19 20. The effect of the 2014 amendments The second principal submission on behalf of the appellant is that the amendments made in 2014 to Part 5 of the 2002 Act have effected a fundamental change in the operation of the statutory scheme with the result that, whatever may have been the position after BA (Nigeria), rule 353 no longer applies and accordingly no longer performs a gatekeeper function. First, on behalf of the appellant, Mr Fordham points to the fact that section 82, as amended, now confers a right of appeal where the Secretary of State has decided to refuse a human rights claim (section 82(1)(b)). Human rights claim is defined by section 113(1) for the purposes of Part 5 unless a contrary intention appears. Mr Fordham submits that this is striking because the question of the Part 5 meaning of human rights claim is the same question that previously arose for decision in the Supreme Court in BA (Nigeria) which established that those words, as they appear in Part 5 of the 2002 Act, are to be interpreted without reference to rule 353. Thus, he submits, a second or subsequent human rights claim is a human rights claim for the purpose of those statutory provisions regardless of whether the Secretary of State accepts or refuses to accept that the claim is a fresh claim within rule 353. I am unable to accept this submission. In BA (Nigeria) the Supreme Court considered that there was, in each of the cases, a human rights claim within section 92(4)(a) and, therefore, an appeal would be an in country right of appeal, subject to the possibility of certification which did not arise in that case. However, the reason there was an entitlement to appeal there was because the human rights claims had resulted, in each case, in a refusal to revoke a deportation order which was a qualifying immigration decision under section 82(2)(k). It was this which excluded the operation of rule 353. Consequently, the present issue is not the same issue that previously arose for consideration in BA (Nigeria). The issue in the present case, as previously explained, is the prior question of whether there is a claim at all. For the same reason, it is not the case that rejection of Mr Fordhams submission results in the same words bearing different meanings in different sections within Part 5 of the 2002 Act. Secondly, Mr Fordham relies on the fact that the 2014 amendments remove the former requirement of an immigration decision to which the human rights claim and its rejection needed to have a nexus. He submits that the effect of the simplified scheme is that any submission that removal would breach a relevant obligation will amount to a human rights or protection claim, the rejection of which will give rise to a right of appeal. Once again, I am unable to accept this submission. The appellant is not assisted by the fact that under the amended section 82 there is no longer a requirement to establish an immigration decision within the list previously set out in section 82(2). In fact, the contrary is the case. A decision to refuse to revoke a deportation order was formerly an immigration decision under section 82(2)(k) and therefore gave rise to an in country right of appeal, subject to the possibility of certification, but this is no longer the case. The 2014 amendments limit immigration appeals to circumstances in which there has been a refusal of a protection claim or a human rights claim, or where protection status has been revoked. (For present purposes I will concentrate on human rights claims.) However, the structure and operation of section 82 remain unchanged. Under the amended section 82(1) a person may appeal to the tribunal where the Secretary of State has decided to refuse a human rights claim made by him, but this does not relieve that person of the burden of establishing that the refusal was in response to a valid claim. The definitions in Part 5 do not address this question and the answer will depend on the application of the Onibiyo line of authority. Onibiyo, Cakabay, ZA (Nigeria) and VM (Jamaica) establish that there will only be a human rights claim to be determined if further submissions are considered to amount to a fresh claim. Rule 353, in turn, is directed at the manner in which a court should approach that prior question. Under the post 2014 provisions it remains the case that if there is no claim, there is no appealable decision. Thirdly, Mr Fordham makes a series of submissions relating to the intention of Parliament in enacting the 2014 amendments. In his submission, Parliament used straightforward language for the purposes of the section 82 statutory right of appeal. If, he submits, it had been the intention to maintain the structure for which the Secretary of State contends, Parliament would be expected to make that clear, but the contrary is the case. Parliament did not introduce Sir Thomas Binghams acid test into the definition of asylum claim in Part 5 of the 2002 Act. Parliament did not provide that claim was to be construed in accordance with the Immigration Rules, as it did in the case of humanitarian protection in section 82(2)(d) of the 2002 Act introduced by amendment in 2014. It did not say that claim involved an act by the Secretary of State, giving the Secretary of State a gatekeeper function as to what constitutes a claim. It did not impose an exclusion by reference to the Immigration Rules in any statutory provision which is in force. Here Mr Fordham draws attention to the fact that section 12 of the Immigration, Asylum and Nationality Act 2006 (the 2006 Act) has never been brought into force. It provides that human rights claim does not include a claim which, having regard to a former claim, falls to be disregarded for the purposes of this Part in accordance with immigration rules. Parliament did not say that the Part 5 right of appeal is subject to exceptions or limitations specified in the Immigration Rules. Rather section 82(3) states that the right of appeal under subsection (1) is subject to the exceptions and limitations specified in this Part. Mr Fordham submits that such clarification might have been expected in the light of BA (Nigeria). The difficulty with these submissions is that they fail to take account of the principle of informed interpretation and the judicial authorities on Part 5 as they stood at the date of the 2014 amendments. Parliament is normally presumed to legislate in the knowledge of and having regard to relevant judicial decisions. (See, generally, Bennion on Statutory Interpretation, 7th ed, (2017) section 24.6.) In the present context, the Court of Appeal in ZA (Nigeria) had provided an authoritative explanation of the effect of BA (Nigeria). As Sir James Eadie put it in his submissions, Parliament can therefore be assumed to have legislated in the light of a consistent line of authority which established that a purported human rights claim that did not meet the threshold of a fresh claim under rule 353 was not a claim at all. Had Parliament intended to depart from this approach, it would surely have made express provision to that effect. On the contrary, there is nothing in the amendments made in 2014 which supports the view that Parliament intended to open the door so as to enable repeated claims raising human rights issues to generate multiple appeals. (See, in this regard, Hussein per Dove J and UTJ Lane at para 42.) I should, for the sake of completeness, address two further matters arising from Mr Fordhams submissions in this regard. First, it would not be appropriate to speculate as to why section 12(3) of the 2006 Act has not been brought into force but, in any event, in seeking to ascertain the intention of Parliament the court must have regard to the legislation as enacted. (See ZA (Nigeria) per Lord Neuberger MR at para 57.) Secondly, the explanatory notes to the 2006 Act state that the amendments to the definition of human rights claim and asylum claim in section 113 of the 2002 Act were made to clarify that further submissions which follow the refusal of an asylum or human rights claim but which do not amount to a fresh claim will not carry a further right of appeal. Conclusion For these reasons I consider that the Court of Appeal was correct to conclude that a human rights claim in section 82(1)(b) of the 2002 Act as amended means an original human rights claim or a fresh human rights claim within rule 353. More generally, where a person has already had a protection claim or a human rights claim refused and there is no pending appeal, further submissions which rely on protection or human rights grounds must first be accepted by the Secretary of State as a fresh claim in accordance with rule 353 of the Immigration Rules if a decision in response to those representations is to attract a right of appeal under section 82 of the 2002 Act. For these reasons I would dismiss the appeal. Finally, I draw attention to two recent developments. First, in July 2018 Justice published a report on Immigration and Asylum Appeals by a Working Party chaired by Professor Sir Ross Cranston which highlights the pressures facing the current appeals system. Secondly, since the oral hearing on this appeal the Law Commission has published a consultation paper on the Immigration Rules which seeks to identify the underlying causes of their complexity, and to identify principles under which they can be redrafted to make them simpler and more accessible (Law Commission: Simplification of the Immigration Rules; CP 242, 21 January 2019). The Law Commissions initiative is timely and welcome. As will be apparent from this judgment, the structure of both primary and secondary legislation in this field has reached such a degree of complexity that there is an urgent need to make the law and procedure clear and comprehensible. |
On Saturday 15 June 1974, in the late morning, an army patrol consisting of two military vehicles was travelling towards Benburb, County Tyrone. The vehicles contained members of the Life Guards regiment. The lead vehicle had six men on board. The commander of the patrol, who was travelling in that vehicle, was Dennis Hutchings, the appellant in this case. As the patrol rounded a left hand bend near a village called Eglish on what was a winding road, a young man came into view, standing on the left hand side of the road. He appeared to be looking into the hedge at the side of the road. His name was John Paul Cunningham. Mr Cunningham appeared startled and confused. He ran across the road in front of the lead vehicle and climbed a gate into a neighbouring field. He then ran towards a metal fence which bordered the field. The patrol came to a halt on the appellants command. Most of the soldiers dismounted from the vehicles and took up defensive positions. Three members of the patrol, the appellant and two others, who have been referred to as B and E, pursued Mr Cunningham. Mr Hutchings and soldier E went towards the same gate that Mr Cunningham had climbed over. Soldier B went to a gateway further down the road. A number of shouted commands to Mr Cunningham to stop went unheeded. It later transpired that he had limited intellectual capacity. His mental age was judged to be between six and ten years. In a report by the Historical Enquiries Team (HET) (of which more below at para 9) it was said that he was easily confused and may have had an inherent fear of men in uniform and armoured vehicles. The case made by the prosecution is that when Mr Cunningham failed to stop, shots were discharged by the appellant and the soldier referred to as B. Mr Cunningham was hit and died at the scene. At the time that he fell, he was close to the metal fence. It has been established that he was running towards his home. HET concluded, after investigation, that he was unarmed; that he was shot while running away from the soldiers; and that there was no evidence that he presented a threat to them or to anyone else. Background In 1974 there was much terrorist activity in Northern Ireland. A large part of that activity was generated by the Provisional Irish Republican Army (PIRA). There were regular attacks on the security forces, including the British Army. The attacks frequently involved the use of firearms and explosives. The Life Guards regiment was responsible in 1974 for security force operations in Cookstown, Dungannon and Armagh and surrounding districts. Cookstown and Dungannon are in County Tyrone, as are Benburb and Eglish. Benburb is some 18 miles from Cookstown and about eight miles from Dungannon. Eglish is a small village that lies between Dungannon and Benburb. It is about five miles from Dungannon to Eglish and approximately the same distance from Eglish to Benburb. An army report about the time that Mr Cunningham was killed stated that the threat level in these areas was particularly high. There were frequent army patrols of the roads between these various locations. Indeed, in the first two weeks of June 1974 some 38% of shooting incidents in the Life Guards operational zone occurred in the area of Eglish. One of those attacks resulted in the death of a soldier in the Life Guards regiment. Two days before Mr Cunningham was killed, members of the Life Guards, under the command of Mr Hutchings, came upon a group of men loading material into a vehicle. A firefight, as it was described in the reports of the incident, ensued. Arms and explosives were discovered in the vehicle. This had occurred about three and a half miles from where Mr Cunningham was killed. Following the killing of Mr Cunningham, a joint inquiry by the Royal Ulster Constabulary (RUC) and the Royal Military Police took place. The then Director of Public Prosecutions reviewed the statements that this inquiry generated and decided that there should be no prosecution of any of the military personnel involved. HET was a body created in 2005 to examine historical offences that were committed during the period of terrorist violence in Northern Ireland and the states reaction to it. It conducted an inquiry into Mr Cunninghams death. It concluded that this was an absolute tragedy that should not have happened. It recommended, however, that no further action be taken in relation to the incident. In 2015 a new body, the Legacy Investigation Branch, conducted a new investigation into Mr Cunninghams death. As a result of this, the appellant was arrested and taken to a police station in Northern Ireland where he was interviewed. He answered no comment to all questions put to him. He was subsequently charged with two offences: the attempted murder of Mr Cunningham and attempting to cause him grievous bodily harm. On 20 April 2016, the Director of Public Prosecutions issued a certificate pursuant to section 1 of the Justice and Security (Northern Ireland) Act 2007 directing that the appellant stand trial on these charges by a judge sitting without a jury. It is accepted that the certificate was issued without prior notice to the appellant. He was not given an opportunity to make representations as to whether it should be issued. The material and information which led to the issue of the certificate have not been disclosed to him. He was not informed of its having been issued until 5 May 2017. The statutory provisions relating to the issue of certificates and challenges to their The relevant parts of section 1 of the 2007 Act are these: Issue of certificate (1) This section applies in relation to a person charged with one or more indictable offences (the defendant). (2) The Director of Public Prosecutions for Northern Ireland may issue a certificate that any trial on indictment of the defendant (and of any person committed for trial with the defendant) is to be conducted without a jury if (a) he suspects that any of the following conditions is met, and (b) he is satisfied that in view of this there is a risk that the administration of justice might be impaired if the trial were to be conducted with a jury. (6) Condition 4 is that the offence or any of the offences was committed to any extent (whether directly or indirectly) as a result of, in connection with or in response to religious or political hostility of one person or group of persons towards another person or group of persons. (7) means hostility based to any extent on In subsection (6) religious or political hostility religious belief or political opinion, supposed religious belief or political (a) (b) opinion, or (c) the absence or supposed absence of any, or any particular, religious belief or political opinion. (8) In subsection (6) the references to persons and groups of persons need not include a reference to the defendant or to any victim of the offence or offences. The breadth of the power to direct that a trial be before a judge without a jury is immediately apparent from these provisions. The Director need only suspect that one of the stipulated conditions (in this case condition 4) is met and that there is a risk that the administration of justice might be impaired if there was a jury trial. The circumstances in which such a risk might materialise and the specific nature of the risk or the impairment to the administration of justice which might be occasioned are not specified. It can only be supposed that these matters were deliberately left open ended. The type of decision which the Director must take can be of the instinctual, impressionistic kind. Whilst the Director must of course be able to point to reasons for his decision, one can readily envisage that it may frequently not be based on hard evidence but on unverified intelligence or suspicions, or on general experience. It may partake of supposition and prediction of a possible outcome, rather than a firm conclusion drawn from established facts. The need, on occasions, for the Directors decision to depend on intuitive belief rather than studied analysis of evidence is also reflected in the fact that the circumstances covered by condition 4 are extremely wide. Offences committed to any extent (even if indirectly) in connection with or in response to religious or political hostility of one person or group of persons are covered. The PIRA campaign in Northern Ireland in the 1970s was based on that organisations political hostility to continuing British rule in that country. The incident that occurred a few days before Mr Cunningham was killed bore all the hallmarks of a PIRA operation. When this is considered with the incidence of terrorist activity in the area at the time, it is entirely unsurprising that the Director should have concluded that the offences with which the appellant is charged were connected (directly or indirectly) with or in response to the political hostility of members of PIRA against, as the Director put it in an affidavit, those who believed that Northern Ireland should remain a part of the United Kingdom. That the soldiers who fired on Mr Cunningham suspected that he was a member of PIRA seems inescapable. (I shall have more to say presently about the Directors reasons for issuing the certificate.) Section 7 of the Act provides: Limitation on challenge of issue of certificate (1) No court may entertain proceedings for questioning (whether by way of judicial review or otherwise) any decision or purported decision of the Director of Public Prosecutions for Northern Ireland in relation to the issue of a certificate under section 1, except on the grounds of (a) dishonesty, (b) bad faith, or (c) other circumstances (including exceptional circumstances relating to lack of jurisdiction or error of law). exceptional in particular (2) Subsection (1) is subject to section 7(1) of the Human Rights Act 1998 (claim that a public authority has infringed [a] Convention right). The other exceptional circumstances referred to in sub paragraph (c) of subsection (1) are not specified but they must take their flavour from the preceding provisions to the effect that challenges will be entertained on the grounds of bad faith and dishonesty and from the succeeding words of the sub paragraph, which particularise lack of jurisdiction or error of law. These are clear indications that, what has been described as the full panoply of judicial review superintendence (see In re Shukers and others applications for judicial review [2004] NIQB 20; [2004] NI 367 at para 25), is generally not available to challenge decisions by the Attorney General or the Director of Public Prosecutions as to the mode of trial for particular cases. By virtue of section 8(3) of the Act the provisions in sections 1 7 are applied to offences committed before the Act came into force. The offences with which the appellant has been charged are therefore covered by those provisions. Counsel for the appellant, Mr Lewis QC, drew our attention to the Explanatory Notes which accompany the 2007 Act. He pointed out that paragraph 7 of the Notes made it clear that it was anticipated that non jury trial would be ordered in a small number of exceptional cases and claimed that paragraphs 22 and 23, which dealt with condition 4 in section 1(6), indicated that that provision should be construed narrowly. These paragraphs read: 22. Condition 4 is set out in subsection (6). This covers circumstances where the offence occurred as a result of, or in connection with, sectarianism (ie in connection with religious belief or political opinion). Subsection (7) clarifies that religious belief and political opinion includes their absence and any assumptions made about religious beliefs or political opinions. Subsection (8) provides that the persons and groups of persons referred to in subsection (6) need not include the defendant or victim. 23. A case that falls within one of the conditions will not automatically be tried without a jury non jury trial will only happen if the DPP(NI) issues a certificate because he is satisfied that there is a risk that the administration of justice might be impaired. The judgment of the Divisional Court in the present case (Stephens LJ and Sir John Gillen [2017] NIQB 121) quoted from the Explanatory Notes see para 14. But at para 34 the court observed that reliance on the Notes had to be approached with some caution, quoting Lord Steyn in R (Westminster City Council) v National Asylum Support Service [2002] 1 WLR 2956 at para 6 where he said that it was impermissible to treat the wishes and desires of the government about the scope of the statutory language as reflecting the will of Parliament. Mr Lewis criticised this passage of the Divisional Courts judgment, suggesting that it unwarrantably abbreviated the relevant reasoning to be found in the speech of Lord Steyn. In particular, he focused on statements in para 5 of the speech where Lord Steyn said: In so far as the Explanatory Notes cast light on the objective setting or contextual scene of the statute, and the mischief at which it is aimed, such materials are therefore always admissible aids to construction. They may be admitted for what logical value they have. Used for this purpose Explanatory Notes will sometimes be more informative and valuable than reports of the Law Commission or advisory committees, Government green or white papers, and the like. After all, the connection of Explanatory Notes with the shape of the proposed legislation is closer than pre parliamentary aids which in principle are already treated as admissible: see Cross, Statutory Interpretation, 3rd ed (1995), pp 160 161. I find it unnecessary to embark on a discussion about the use to which the Explanatory Notes might be put in this instance because I consider that the language of the relevant statutory provisions is perfectly clear. Those provisions invest the Director of Public Prosecutions with wide powers for the reasons earlier discussed. If anything, the actual provisions are more precise in their formulation than the Explanatory Notes. Recourse to the latter is unnecessary for the proper interpretation and application of the pertinent parts of the statute. As it happens, of course, nothing in the Explanatory Notes detracts from the interpretation to be placed on the statutory provisions, if they are analysed on a purely textual basis. Mr Lewis suggested that the reference to sectarianism in paragraph 22 of the Notes indicated that condition 4 was designed to cover situations of strife between the different communities in Northern Ireland. I do not accept that argument. Sectarianism can, of course, have the connotation of bigoted adherence to a particular sect but that is by no means its only possible meaning. The qualifying words in paragraph 22 of the Notes, ie in connection with religious belief or political opinion, make it clear that sectarianism, as it is used in the Notes, is sufficiently wide to embrace the circumstances in which Mr Cunningham was killed. If Mr Hutchings and soldier B fired on Mr Cunningham, believing him to be a member of PIRA, that would be sufficient to satisfy the requirement that the offences which are alleged to be constituted by that shooting were in connection with or in response to political hostility of one person towards another group of persons, namely the British Army. And if the Director suspected that this was so (as, realistically, he was bound to, and indeed avers that he did), then the first requirement of section 1(2), in so far as it related to condition 4, was met. Furthermore, if the Director was satisfied that, by reason of this circumstance, there was a risk that the administration of justice might be impaired if the trial were to be conducted with a jury, the second requirement of the subsection would likewise be fulfilled. Mr Lewis invited this court to consider the legislative history of the 2007 Act, although he accepted that the conditions necessary for admission of ministerial statements, prescribed by the House of Lords in Pepper v Hart [1993] AC 593 were not fulfilled. It was permissible, indeed necessary, Mr Lewis argued, to look at ministerial statements in order to ascertain the legislative intent of the 2007 Act. He then took us to a number of statements made by the Parliamentary Under Secretary of State for Northern Ireland, Paul Goggins MP, during the passage through the House of Commons of the Bill that ultimately became the 2007 Act. The purpose of this exercise was to promote the theory that the powers of the Director of Public Prosecutions under section 1 were confined to cases involving sectarianism in the connotation which Mr Lewis sought to place on it. I find it unnecessary to set out the passages from Mr Goggins statements to which Mr Lewis referred us. It is quite clear that the minister was responding to particular issues on which other members of the House had expressed concern. He did not attempt to outline a comprehensive charter of all the circumstances in which the Directors powers might be invoked. True it may be that the examples cited by Mr Goggins were of situations that might be described as sectarian in the connotation which Mr Lewis suggested was the correct one, but the minister did not at any point suggest that they were exhaustive of the circumstances in which the Director might exercise his powers under section 1. In any event, for the reasons given earlier, the legislative intent of the provisions of that section is abundantly clear from its terms. It is not open to the appellant to put a gloss on that intent by reference to Parliamentary statements which might appear to be at odds with that clear intent. As to the second requirement of section 1, the Director of Public Prosecutions, Barra McGrory QC, deposed in his first affidavit that, in reaching his decision on that issue, he had taken into account judicial observations in In re Jordans Application and in In re McParlands Application. On the basis of his consideration of those cases, he pronounced himself satisfied that there was a risk such as is provided for in section 1(2)(b). The decision in the Court of Appeal in the Jordan case referred to by Mr McGrory is reported at [2014] NICA 76; [2016] NI 116 as In re Jordans Applications for Judicial Review. Mr McGrory also mentioned the decision of the High Court in that case but it is sufficient, I believe, for present purposes to focus on the judgment of the Court of Appeal delivered by Sir Declan Morgan LCJ. The case concerned (among other things) the risk of jury bias in an inquest into the shooting of Pearse Jordan by a member of the RUC in 1992. At para 90 of the judgment the following passage appears: There are formidable difficulties in being satisfied that the insidious nature of bias has been removed in security and terrorist type cases. It is necessary to confront directly the need to ensure that jury verdicts emerge unconstrained by tribal loyalties. A coroner must be satisfied that there will be a sensitively constructed distance between prejudice and justice. The existence of a real risk of a biased juror or jury will outweigh any other factor. Mere reduction of the risk is insufficient. The coroner must be satisfied that the steps taken have reduced that risk to a remote or fanciful possibility. Other factors which, the court considered, should be taken into account by a coroner in seeking to eliminate the risk of bias on the part of the inquest jury were mentioned in the Court of Appeal judgment but they are not directly relevant to the present case. The important point to be drawn from that decision, in relation to the present case, is that three Court of Appeal judges, all highly experienced in the administration of justice in Northern Ireland, stated unequivocally and unanimously that formidable difficulties attended the need to be satisfied that the risk of bias has been removed in security and terrorist type cases; that the reality that tribal loyalties could imperil the chances of a proper verdict had to be confronted; that the risk of a biased juror was the most important factor to be considered by the coroner; and that the real (as opposed to the remote or fanciful) possibility of jury bias should govern the coroners decision on the question. Mr Lewis suggested that an inquest and a criminal trial were not analogous in relation to the need to avoid jury bias. In the former, he suggested, a unanimous verdict was required, whereas a majority verdict could be returned in a criminal trial. Moreover, the system of empanelling juries introduced by the 2007 Act which abolished the right to peremptory challenge to possible jurors and disclosure of their names and addresses reduced the risk of jury tampering and partisanship. I do not accept these arguments. The fact that a majority verdict can be delivered in a criminal trial might reduce the risk of partisan verdicts; there is no reason to suppose that it will eliminate it. Likewise, the abolition of peremptory challenges and disclosure of jury panel members names and addresses. On the question of jury tampering (to which, more obviously, these measures were primarily directed) it is right to record that Mr Gerald Simpson QC, who appeared for the Director, confirmed that the possibility of jury tampering was not a concern in this case. It was the prospect of a partisan outcome to the case which underlay the Directors decision. The McParland case to which the Director referred is In re an application by Patrick McParland and John McParland for Judicial Review [2008] NIQB 1. It concerned a challenge to section 10 of the 2007 Act which had inserted a new provision (article 26A) into the Juries (Northern Ireland) Order 1996 (SI 1996/1141) restricting the disclosure of information about jurors. It was argued that the new arrangements in effect brought about trial of defendants by a secret tribunal and that this constituted a breach of article 6 of the European Convention on Human Rights and Fundamental Freedoms (ECHR) since it infringed the guarantees of a public hearing and of trial within a system containing sufficient guarantees of impartiality. The Divisional Court rejected that argument. At para 37, it observed, [t]he existence of the risks identified by the juries sub group of juror intimidation, of partisan juries and of perverse jury verdicts has not been seriously disputed by most commentators . Discussion of the statutory provisions relating to the issue of certificates The powers available to the Director of Public Prosecutions are unquestionably far reaching. It is unsurprising that this should be so. When one has regard to the difficulties described by the Court of Appeal in Jordan in eliminating the risk of bias and of being confident of having done so, the need for wide ranging powers is obvious. What were described by that court as tribal loyalties present a particular problem. These are often difficult to detect and may routinely be disavowed by most of the population. But experience has shown that they can operate to bring about unexpected, partisan outcomes. The dangers that they present to the achievement of a scrupulously fair trial are undeniable. Taking effective precautions against jury bias presents, as the Court of Appeal in Jordan said, formidable difficulties. These difficulties are particularly acute in cases which involve attacks on the security forces or where members of the security forces have fired on individuals. Such cases are almost invariably highly charged, and they give rise to strong feelings in both sides of the community. Apprehension that jury trial in such cases might put the goal of a fair trial in peril is unavoidable. It is important to focus on the need for a fair trial. Trial by jury is, of course, the traditional mode of trial for serious criminal offences in the United Kingdom. It should not be assumed, however, that this is the unique means of achieving fairness in the criminal process. Indeed, as the Court of Appeals statements in Jordan show, trial by jury can in certain circumstances be antithetical to a fair trial and the only assured means where those circumstances obtain of ensuring that the trial is fair is that it be conducted by a judge sitting without a jury. So called Diplock trials took place in Northern Ireland between 1973 and 2007. No one suggests that this mode of trial failed to deliver fairness of process, by reason of the fact that the trial took place before a judge sitting without a jury. Although article 6 of ECHR (which guarantees a right to a fair trial) is not prayed in aid by the appellant in this case, it is interesting to reflect that it has been held that this article does not require trial by jury. As the European Commission of Human Rights observed in X and Y v Ireland (Application No 8299/78) (1980) 22 DR 51, para 19, article 6 does not specify trial by jury as one of the elements of a fair hearing in the determination of a criminal charge. It is, of course, to be remembered that the system of trial introduced as a result of Lord Diplocks report (Report of the Commission to consider legal procedures to deal with terrorist activities in Northern Ireland (1972) (Cmnd 5185)), required the trial judge to give a reasoned judgment if the defendant was convicted. And that a defendant, upon conviction, was entitled to an automatic right of appeal, not only on points of law but on the factual conclusions reached and inferences drawn by the trial judge. These remain features of trials without a jury since the 2007 Act section 5(6) and (7). The statement made by Lord Judge CJ in R v Twomey [2010] 1 WLR 630 at para 10 (relied on by the appellant) that, [i]n this country trial by jury is a hallowed principle of the administration of criminal justice . properly identified as a right, available to be exercised by a defendant unless and until the right is amended or circumscribed by express legislation must be viewed against this background. In the first place, although the Lord Chief Justice described entitlement to trial by jury as a right, he did not suggest that this was an absolute right; indeed, he accepted that it could be constrained in certain circumstances. Secondly, and self evidently, the right has in fact been restricted by the express provisions of the 2007 Act. Finally, where trial by jury would place the fairness of the criminal justice process at risk, the right must yield to the imperative of ensuring that the trial is fair. In this context, the triangulation of interests identified by Lord Steyn in Attorney Generals Reference (No 3 of 1999) [2001] 2 AC 91, at p 118 is pertinent. He said this about the various interests which are served by a criminal trial: The purpose of the criminal law is to permit everyone to go about their daily lives without fear of harm to person or property. And it is in the interests of everyone that serious crime should be effectively investigated and prosecuted. There must be fairness to all sides. In a criminal case this requires the court to consider a triangulation of interests. It involves taking into account the position of the accused, the victim and his or her family, and the public. The requirements of a fair trial are not determined by having regard to a defendants interests exclusively. As Lord Steyn said, it is in the interests of everyone that serious crime be properly investigated and effectively prosecuted. Notably, of course, the appellant has not claimed that his trial for the offences with which he is charged will not be fair, if conducted by a judge sitting without a jury. Such a claim could not be sustained in light of the experience of trials before Diplock courts and of the safeguards which are in place by reason of section 5(6) and (7) of the 2007 Act. Consideration of the appellants claim that he should not be denied the right to a jury trial must therefore proceed on the basis that he will receive a fair trial or, at least, that if he does not, he will have an automatic right of appeal to the Court of Appeal where any suggestion that there has been unfairness can be fully ventilated and examined. This incontestable reality influences the approach to be taken, not only to the proper interpretation of section 1 of the 2007 Act, but also to the appellants argument that he was entitled to be given reasons for the issue of the certificate and to be consulted about the Directors proposed course of action before it was decided to issue the certificate. That is an argument to which I shall turn in paras 53 and following. The appellant argued that the Director of Public Prosecutions had been wrong in the claim that he made in his first affidavit, that it was the intention of Parliament that section 1(6) of the 2007 Act should be interpreted broadly. Mr Lewis pointed out that this was at odds with the judgment of the Divisional Court in an earlier Northern Ireland case, Arthurs (Brian and Paula) Application [2010] NIQB 75 where at para 31, Girvan LJ had said, [t]he strong presumption that a right to jury trial is not intended to be taken away will lead to a strict construction of any statutory restriction or limitation on the right to a jury trial. That statement appears to have been based on an argument addressed to the court by Raza Husain QC, appearing for applicants who challenged the issue by the Director of Public Prosecutions of a certificate that their trial on a series of fraud charges be conducted by a judge without a jury. Mr Husain had relied on the statement by Lord Judge CJ in a passage in the case of Twomey which appeared later in his judgment from that quoted at para 37 above. At para 16 of Twomey, Lord Judge CJ had said: The right to trial by jury is so deeply entrenched in our constitution that, unless express statutory language indicates otherwise, the highest possible forensic standard of proof is required to be established before the right is removed. That is the criminal standard. Of course, in Twomey the court was dealing with a case where the prosecution was seeking trial without a jury where it was claimed that there was a real danger of jury tampering and that is not the position here. But, if one proceeds on the premise that section 1(1) of the 2007 Act requires to be strictly or narrowly construed, this does not affect the interpretation which I consider the provision must be given. The Divisional Court in the present case dealt with this issue at para 41 of its judgment: In our view the assertion of the Director that it was the intention of Parliament to provide that the subsection should be broadly interpreted, whilst it could have been more felicitously worded, does not necessarily contradict the proposition put forward in Arthurs case that it is necessary to construe section 1 narrowly and strictly. The wording of condition 4 is such that Parliament clearly intended to include a broad reach of circumstances whilst at the same time recognising that any legislation removing jury trial needs to be tightly construed. There is certainly an argument that, contrary to the Divisional Courts view, the Directors assertion was at odds with what Girvan LJ said in Arthurs. But whether the Director erred is neither here nor there, provided he acted within the powers actually available to him and provided that, if he did indeed misapprehend the proper approach to the interpretation of section 1, that misapprehension was, in the event, immaterial to the decision that he took. On the true ambit of the Directors powers, what matters is the interpretation placed on the section by the courts. And the Divisional Court is unquestionably right that the wording of condition 4 invests the Director with a wide range of powers. Whether the section requires to be construed narrowly or broadly, the intrinsic breadth of the powers remains intact. Even if, therefore, the Director was wrong in his assertion that Parliament intended that the section should be interpreted broadly, there is no reason automatically to assume that this led to him exercising his powers in a manner that was not available to him on a proper construction of the provision. On the facts of this case, it is clear from the reasons that the Director has given for issuing the certificate that he was bound to have made the same decision if he had considered that section 1 required to be construed narrowly. If, indeed, it was an error on the part of the Director to consider that section 1 should be given a broad interpretation (on which I do not feel it necessary to express an opinion) it cannot be said that such an error would vitiate his decision for the reason that he was certain to reach the same decision, whatever view he took of the appropriate mode of interpretation of section 1. As to the reasons that he decided to issue the certificate, these were first conveyed to the appellants solicitors in a letter dated 10 May 2017 from the Directors office. It contained the following passages: I can advise you that the Director suspected that condition 4 in section 1 of the 2007 Act was satisfied on the basis of information provided by the police coupled with a commentary and assessment of that information, an analysis of the facts and circumstances of this case and the advice of senior counsel. In this way the Director formed the requisite suspicion. In view of the suspicion which he formed in relation to condition 4, the Director was satisfied that there was a risk that the administration of justice might be impaired if the trial were to be conducted with a jury. This risk arises from the possibility of a biased juror or jury, having regard to the particular circumstances of this case. The Director further considered whether the risk to the administration of justice could be mitigated by application to the court to screen the jury, sequester the jury or transfer the trial to a different venue. The Director was satisfied that there remained a risk that the administration of justice might be impaired on the basis that, even if granted, these measures might not be sufficiently effective in preventing or significantly reducing the potential risk posed to the administration of justice in this case. One may observe that it is extremely unfortunate that more than a year was allowed to pass before the issue of the certificate was brought to the attention of the appellant and his advisers. Quite apart from the obvious desirability of informing any defendant promptly of such a significant decision as to the mode of his trial, the challenge to his decision would, presumably, have materialised much sooner and the delay in the trial would have been greatly reduced. Mr Lewis suggested that the reference in the final paragraph of this letter to sequestration of the jury suggested that the possibility of jury tampering was present to the Directors mind but was not fully articulated. He argued that this, among other reasons, illustrated the inadequacy of the explanation given as to the basis on which the decision to issue the certificate was taken. This argument is more germane to the claim that the appellant should have been provided with reasons and been consulted before the decision was made to issue the certificate, an argument which I shall consider in the next section of the judgment. I should say, however, that I do not accept the argument. The nature of the risk is plainly stated in the second paragraph quoted above. It is that the possibility of a biased juror or jury existed. It might seem unusual to consider the question whether such a risk could be mitigated by sequestering the jury, but it is to be expected that the Director felt it prudent to examine every possibility before deciding to issue the certificate. It is certainly not untoward that he should advert to this before deciding that the only way in which to avert the risk that the administration of justice would be impaired was by issuing the certificate. On the question whether the Director acted within his powers, the letter sets out a clear basis on which to conclude that he did. He formed the necessary suspicion on the basis of information received from the police and commentary on that information. He also took the advice of senior counsel. These are all entirely conventional steps to allow him to consider the question whether he suspected that condition 4 was met. Likewise, the risk that the administration of justice would be impaired was directly addressed by the Director and a clear conclusion was arrived at. For the reasons given earlier, that conclusion was entirely unsurprising, in light of the circumstances described in the Jordan and McParland cases. Indeed, it is difficult to envisage how any other view could have been formed. The reasons for reaching his decision were again set out in two affidavits filed by the Director in the proceedings. In the first of these, he said that, in arriving at his conclusion, he recognised that there could be no suggestion that a soldier was any part of the sectarian divide in Northern Ireland, nor that he was involved in any proscribed organisation. He pointed out that the legislative framework makes it clear that references to persons and groups of persons need not include the defendant. He stated that he suspected that the offence was committed as a result of or in connection with or in response to the political hostility of one person or group of persons towards another person or group of persons; namely in connection with or in response to the political hostility of members (or suspected members) of PIRA towards those who believed that Northern Ireland should remain a part of the United Kingdom. In other words, the Director followed faithfully the wording and essence of the legislative provisions. This is completely in keeping with the terms of section 1 of the Act. On the second limb of section 1(2), the Director deposed that he had taken into account what had been said in the cases of Jordan and McParland and, having considered all the material with which he had been provided and having carefully analysed the facts, and having obtained senior counsels opinion, he was satisfied that there was a risk that the administration of justice might be impaired if the trial were to be conducted with a jury. All of this is unexceptionable and in compliance with the legislation. There is no reason to suppose that the Directors approach to the question whether the certificate should be issued was other than as prescribed by the statute. (The second affidavit filed by the Director relates to evidence which, he understood, was to be adduced by the prosecution on the trial of the appellant. It is not germane to the issues which arise on the appeal.) I have concluded, therefore that the Director acted within the powers conferred on him by the 2007 Act and that the appellants contention to the contrary must fail. The procedural argument The principal argument made on behalf of the appellant was that he ought to have been provided with the reasons that the Director of Public Prosecutions was minded to issue a certificate and with the material on which his consideration of that question was based. Further, it was claimed that the appellant should have been given the opportunity to make representations on whether a certificate should be issued, in advance of any decision on the matter. Section 7 of the 2007 Act sets the scene for any discussion of this argument. The exceptionality of a permissible challenge to the decision of the Director is prominent in the terms of the section. A curtailment of the full spectrum of judicial review challenge was obviously intended. It was expressly provided that a challenge was only admissible on grounds of bad faith, dishonesty or other exceptional circumstances. Bad faith and dishonesty clearly do not arise here. Where, then, does the appellants challenge find its place in the exceptional circumstances category? Mr Lewis seeks to place it there by reference to what he claims is the fundamental right to a jury trial. But, for the reasons earlier discussed, this will not do. The fundamental right is to a fair trial. There is a right to trial by jury, as Lord Judge CJ said in Twomey, but that alone is not enough to shift the appellants case into a condition of exceptionality particularly in the context of a statute whose very purpose is to prescribe the circumstances in which someone can be denied the right to a jury trial. This is pre eminently a situation where something is required beyond a claim that there is a right to a jury trial, if the circumstances of the individual case are to be regarded as exceptional. This point is reinforced by the examples of exceptional circumstances given in section 7(1)(c) of lack of jurisdiction or error of law. There is no question of lack of jurisdiction here, much less an error of law by the Director in having recourse to the powers that were available to him under section 1. To come within the rubric exceptional circumstances, it behoves the appellant to be able to point to something which truly distinguishes his case from the general. I consider that he has failed to do that. Quite apart from the statutory imperative requiring that there be exceptional circumstances in the absence of bad faith or dishonesty, the decision whether to issue a certificate is obviously one which should not be subject to the full spectrum of conventional judicial review challenge. Unlike most decisions taken in the public law arena, it is not founded exclusively on the evaluation and weighing of hard evidence. It will usually be motivated by sensitive information which cannot be disclosed. It is a decision which the Director of Public Prosecutions must take according to his personal reaction to the material with which he has been presented and his own estimation of the matters at stake. In sum, a decision to issue a certificate does not readily admit of scrutiny of the reasoning underlying it because it will usually be of the impressionistic and instinctual variety, for the reasons earlier explained. Many of these factors were in play in the Arthurs and Shuker cases. Arthurs was a case in which a challenge similar to that involved in the present appeal had been made. Girvan LJ, delivering the judgment of the Divisional Court, drew an analogy between this species of decisions and decisions whether to prosecute. At para 25 he brought together various authorities touching on this subject: In its reasoning [in Shuker] the court was heavily influenced by well established limitations on the review of the prosecutorial decisions by the DPP emerging from the authorities such as In re Adams [2001] NI 1, R v Director of Public Prosecutions, Ex p Treadaway The Times 31 October 1997 and R v Director of Public Prosecutions, Ex p Manning [2001] QB 330. The approach to the judicial review of prosecutorial decisions was subsequently succinctly stated by Lord Bingham and Lord Walker in Sharma v Brown Antoine [2007] 1 WLR 780, 788: It is . well established that judicial review of a prosecutorial decision, although available in principle, is a highly exceptional remedy. The language of the cases shows a uniform approach: rare in the extreme (R v Inland Revenue Comrs, Ex p Mead [1993] 1 All ER 772, 782); sparingly exercised (R v Director of Public Prosecutions, Ex p C [1995] 1 Cr App R 136, 140); very hesitant (Kostuch v Attorney General of Alberta (1995) 128 DLR (4th) 440, 449); very rare indeed (R (Pepushi) v Crown Prosecution Service [2004] Imm App R 549, para 49); very rarely: R (Bermingham v Director of the Serious Fraud Office [2007] 2 WLR 635, para 63.) In R v Director of Public Prosecutions, Ex p Kebilene [2000] 2 AC 326, 371 Lord Steyn said: My Lords, I would rule that absent dishonesty or mala fides or exceptional circumstances, the decision of the Director to consent to the prosecution of the applicants is not amenable to judicial review. It is apparent that the statutory language in section 7 is inspired by the principle of exceptionality applicable in the context of prosecutorial decisions. Section 7 gives statutory recognition to the common law reticence in the scrutiny of decisions made in the field of prosecutorial decision making. The wording lends support to the contention put forward by Mr Maguire and Mr Perry [counsel for the Director of Public Prosecutions] that a decision made by the Director under section 1 of the 2007 Act is intended to fall within the band of prosecutorial decision making. The appellant contends that there is a fundamental difference between a decision whether to prosecute and a decision whether to issue a certificate under section 1 of the 2007 Act. It is submitted that there is no right not to be prosecuted unlike the right to be tried by a jury; that a person facing a decision as to whether he will be charged has not had legal machinery or process instigated against him whereas the decision to remove the right to trial by jury occurs when a person has already been charged and is under the jurisdiction of the court; that an individual under charge has a fundamental right to trial by jury, which the opposing party, the Director of Public Prosecutions, unilaterally changes without recourse to the court; that before a decision to prosecute is made the prosecutor will have given the putative defendant the opportunity on arrest (by way of caution), or at interview (by way of caution and questioning), of making representations as to why he should not be charged; that the decision whether to issue a certificate is statutory whereas a decision to prosecute is non statutory; that the difficult area of public interest is evaluated by the prosecutor when deciding to charge but there is no public interest component to the issue of a certificate under the 2007 Act; and that a decision to prosecute is a procedural step which is not adjudicatory of rights, while the decision to remove the right to a jury trial is adjudicatory. While some, at least, of these matters point up the differences between the mechanics of a decision whether to prosecute and a determination that the trial should take place before a judge sitting without a jury, they do not signify when one concentrates on the nature of the decision making process. A prosecutor faced with the task of deciding whether to initiate a prosecution must evaluate material not disclosable to the person who might be charged; similarly, the Director, in deciding whether to issue a certificate, will have recourse to materials which are not revealed to the person who will be affected by it. A decision whether to prosecute is dependent on an individuals reaction to and judgment on the material available as to the possible outcome of proceeding; likewise, the Directors decision on the possible consequences of proceeding with a trial with a jury. Both decisions may involve consideration of material which is not only non disclosable but which may be of a highly sensitive nature. As Girvan LJ said in para 24 of Arthurs, the parallels between the two species of decision are obvious. Moreover, it can be no coincidence that the 2007 Act, in imposing restrictions on the availability of judicial review adopted the language of Lord Steyn in R v Director of Public Prosecutions, Ex p Kebilene [2000] 2 AC 326, a decision relating to the permissibility of challenge to a decision to prosecute. In any event, I should say that at least three of the appellants vaunted points of distinction are not, in my view, valid. First, the question of whether the decision is made on foot of a statutory provision or on a non statutory basis is irrelevant. Secondly, it is plainly wrong to suggest that there is no public interest in the determination of whether the trial should proceed before a judge without a jury. To the contrary, it is a critical part of the decision about the issue of a certificate that the Director consider whether the administration of justice would be impaired. This may have a different focus from the public interest at stake in deciding whether to prosecute but both decisions plainly call on the prosecutors judgment as to where the public interest lies. Finally, the decision whether to issue a certificate is no more adjudicatory in nature than is the decision to prosecute. Neither involves a weighing of competing interests in the sense that an individuals wish not to be prosecuted or his wish to be tried by a judge and jury are pitted against the public interest in ensuring that the administration of justice is maintained. In this case, I can conceive of no circumstances which could be said to be exceptional coming within the use of that term in section 7(1)(c) of the 2007 Act. This is especially so since it is open to the appellant even now to make representations to the Director of Public Prosecutions. Mr Simpson, on behalf of the Director, confirmed to this court that if representations were received, these would be considered. Of course, the appellant complains that effective representations cannot be made in the absence of information about the material on which the Director made his decision and the reasons that he decided as he did. Quite apart from the statutory prohibition on a challenge to the failure to disclose explanations other than on the limited grounds contained in section 7(1)(c), there are two sound reasons that the appellant should not succeed in this argument. First, in many cases involving the issue of a certificate, information will have been received by the Director from the police or other members of the security services which must, for obvious reasons, remain confidential. Secondly, the nature of the decision that the Director takes, as I have already explained, will usually be of an instinctual or impressionistic character, not susceptible of ready articulation. But the truly important point to make here is that section 1 qualifies, if not indeed removes, the right to trial by a jury. Hence, the issue of a certificate does not itself remove the right (it is the statute which has done that). In reality the issue of a certificate under section 1 partakes of a case management decision aimed at ensuring the relevant end result of a fair trial. Viewed from this perspective, it is of obvious importance that elaborate, protracted challenges to the issue of a certificate under section 1 are wholly to be avoided, where possible. It is, no doubt, with this consideration in mind that section 7 circumscribed the opportunity for judicial review challenge. Such challenges have the potential to undermine the objective of the legislation to ensure that trials take place in accordance with the requirements of article 6 of ECHR (both as to fairness and to promptness). That is not to say that there will never be occasion where some information can be provided which would assist in the making of representations by a person affected by the issue of a certificate. I refrain from speculation as to how or when such an occasion might arise. I am entirely satisfied, however, that it does not arise in the present case. Conclusion The Divisional Court certified the following question for the opinion of this court: Does a true construction of section 4 of the 2007 Act [this should be condition 4 in section 1(1) of the Act], namely an offence or offences committed to any extent (whether directly or indirectly) as a result of, in connection with or in response to religious or political hostility of one person or group of persons towards another person or group of persons, include a member of the armed forces shooting a person he suspected of being a member of the IRA? The arguments on the appeal before this court have ranged well beyond the single issue raised in the certified question and, perhaps inevitably, this judgment has also dealt with matters outside its scope. But, for the reasons that I have given, I would answer the certified question, yes and dismiss the appeal. |
By notice dated 3 November 2010 the Secretary of State for Work and Pensions, in accordance with regulations, suspended payment to Cameron Mathieson, then a boy aged three, of Disability Living Allowance (DLA) on the ground that he had by then been an in patient in an NHS hospital for more than 84 days (12 weeks). Did the Secretary of State thereby violate Camerons human rights? Proceedings On 10 January 2012 the First tier Tribunal (Social Security and Child Support) dismissed Camerons appeal against the Secretary of States decision to suspend payment of the DLA. On 15 January 2013 the Upper Tribunal (Administrative Appeals Chamber) determined a further appeal which Cameron had brought and with which, following his sad death on 12 October 2012, his father, Mr Craig Mathieson, had proceeded pursuant to an appointment under regulation 30(1) of the Social Security (Claims and Payments) Regulations 1987 (SI 1987/1968). The Upper Tribunal set aside the decision of the First tier Tribunal on the ground of an error of law but, in the event, it likewise dismissed the appeal. On 5 February 2014, by a judgment delivered by Laws LJ with which Ryder and Underhill LJJ agreed, the Court of Appeal dismissed Mr Mathiesons further appeal: [2014] EWCA Civ 286. Mr Mathieson now appeals to the Supreme Court. Cameron was born on 19 June 2007. He lived in Warrington with his parents, together with his sister and two brothers who, at the time of his birth, were aged about ten, nine and two. At his birth, part of his bowel had to be removed. Shortly afterwards he was diagnosed with cystic fibrosis and, later, also with Duchenne muscular dystrophy. The conjunction of both conditions in Cameron was one of profound misfortune and grim prognosis which at that time befell only one other child in the UK. The muscular dystrophy precipitated severe developmental delay. One area of it was in Camerons ability to communicate; so Mr Mathieson learnt the signs and symbols of Makaton in order better to communicate with him. Other conditions, including a clotting disorder and deep vein thrombosis in his left leg, made his needs even more complex. Mr and Mrs Mathieson had to learn how to administer chest physiotherapy to him, entailing chest percussion and postural drainage, for 20 minutes twice a day. Thereafter they had to prepare and administer nebulised antibiotics to him through special equipment, as well as a host of other medications and supplements. Mr and Mrs Mathieson found that Camerons need for exceptional and sophisticated care and attention, together with the ordinary care needs of the three older children, required them to relinquish their business and, once they had spent their savings, to fall back on state benefits. The First tier Tribunal described Cameron as having the most severe and profound disabilities likely to come before a tribunal and added that he was blessed with loving and caring parents who were utterly devoted to his care. On 4 July 2010 Cameron, who was showing symptoms of chronic bowel obstruction, was admitted to Ward C2 in the specialist respiratory unit at Alder Hey Hospital, Liverpool. He was to remain there until 4 August 2011. The doctors considered that he had needs for an even more complex package of care, including intravenous feeding, which could not easily be set up for delivery to him by Mr and Mrs Mathieson at home. It is important to note the role played by Mr and Mrs Mathieson at Alder Hey during the 13 months of Camerons treatment there. In this connection Nurse Burrows, an advanced nurse specialist attached to the cystic fibrosis team at the unit, wrote a report dated 28 October 2010, which, as the fact finder, the First tier Tribunal unsurprisingly accepted as accurate. The nurse reported that: (a) Camerons care needs far exceeded those of any other child in the clinic; the clinic relied heavily on Mr and Mrs Mathieson to undertake his daily care in the clinic; (c) one or other of Mr and Mrs Mathieson was resident in the hospital at all times; they remain[ed] his primary caregivers; the clinic relied on them to monitor his condition daily and on several occasions they were the first to notice deterioration in it; they participated in all discussions and decisions about his care; (b) (d) (e) (f) (g) (h) (i) (j) as they had done at home, they administered chest physiotherapy to Cameron at the clinic twice a day and thereafter the nebulised antibiotics; they prepared and administered his feeding by nasogastric tube; they administered warfarin to him in order to combat the clotting; and they changed his stoma bags up to eight times a day. Mr Mathieson supplemented the evidence of the nurse. He said that Ward C2 had 13 beds for children in individual rooms; that most of the children there needed constant care; that the nurses were capable and dedicated but that there were never more than three of them at any one time; that parental care of the children was recognised as essential; that the result of the need for him or Mrs Mathieson to be at the hospital meant that during those 13 months they in effect spent no time together; that each of them had at first made numerous journeys from Warrington to Alder Hey (25 miles) and back in the family car but had been constrained to reduce them because of the cost of petrol; that, until it became too expensive, they had also regularly brought the older children to see Cameron at weekends; that, on days when he was well enough and with the encouragement of the clinic, they had taken Cameron back to his nursery school in Warrington for a short time and had then returned him to Alder Hey (ie another 50 mile journey); that, although he and Mrs Mathieson had been able to sleep free of charge either on camp beds alongside Cameron or in the Ronald McDonald house for parents at Alder Hey, they had incurred further expenditure in respect of food and drink for themselves, of parking and of Camerons laundry; and that in his estimate (which the Upper Tribunal accepted) the extra expense caused by the need for Cameron to be moved to Alder Hey had been about 8,000 over the 13 months. DLA was introduced by the Disability Living Allowance and Disability Working Allowance Act 1991 (the 1991 Act). The favoured mechanism was to insert sections about it into the Social Security Act 1975 (the 1975 Act). One section, namely section 37ZA, provided, at subsection (1), that DLA was to consist of a care component and a mobility component. Prior to 1991 the benefit analogous to the care component had been the attendance allowance, which, by section 2(1) of the 1991 Act, was from then onwards restricted to those aged at least 65; and the benefit analogous to the mobility component had been the mobility allowance, which, by section 2(3) of the 1991 Act, was abolished. In 1992 the 1975 Act was repealed and the provisions for DLA were incorporated into sections 71 to 76 of the Social Security Contributions and Benefits Act 1992 (the Benefits Act). These sections remain in force. Under Part 4 of the Welfare Reform Act 2012 (the 2012 Act), DLA is to be replaced by the personal independence payment; and, once the scheme for making such payments is fully operable, the provision in section 90 of the 2012 Act for the repeal of sections 71 to 76 of the Benefits Act will come into force. To date, however, the personal independence payment has been introduced only for persons aged at least 16: regulation 5 of the Personal Independence Payment (Transitional Provisions) Regulation (SI 2013/387). Section 72 of the Benefits Act governs entitlement to the care component. Camerons entitlement derived from the second and third, labelled (b) and (c), of the three conditions set in subsection (1), which requires the person to be so severely disabled physically or mentally that (b) by day, he requires from another person frequent attention throughout the day in connection with his bodily functions and (c) at night, he requires from another person prolonged or repeated attention in connection with his bodily functions. In Cockburn v Chief Adjudication Officer; Secretary of State for Social Security v Fairey (aka Halliday) [1997] 1 WLR 799 the House of Lords held that the phrase bodily functions relates primarily to activities which the fit person normally performs for himself and which involve a high degree of physical intimacy; and Lord Hope of Craighead, at p 821, offered examples, namely getting into and out of bed, eating, drinking, bathing, washing hair and going to the lavatory. Subsection (1A) of section 72 of the Benefits Act adds that, in relation to a person under the age of 16, the conditions in subsection (1)(b) and (c) are satisfied only if his requirements are substantially in excess of the normal requirements of persons of his age. Section 72(3) and (4) of the Benefits Act specifies three rates of the care component the highest rate, the middle rate, and the lowest rate and provides that a person who satisfies the conditions set in both (b) and (c) of subsection (1) is entitled to the highest rate. Section 73 of the Benefits Act governs entitlement to the mobility component. Camerons entitlement derived from the conditions set in subsection (1)(a), which requires the person to be aged at least three and to be suffering from physical disablement such that he is either unable to walk or virtually unable to do so. Section 73(10) and (11) specifies two rates of the mobility component the higher rate and the lower rate and provides that a person who satisfies the conditions set in subsection (1)(a) is entitled to the higher rate. Section 73 of the Social Security Administration Act 1992 (the Administration Act) is entitled Overlapping benefits general. Section 73(1)(b) states that regulations may provide for adjusting benefit, including DLA, payable to a person who is undergoing medical or other treatment as an in patient in a hospital. The precursor to section 73(1)(b) was section 85(1) of the 1975 Act, which was in similar terms and was entitled Overlapping benefits. The regulations in issue in this appeal are regulations 8, 10, 12A and 12B of the Social Security (Disability Living Allowance) Regulations 1991 (SI 1991/2890) (the 1991 Regulations). They were made pursuant, in particular, to section 85(1) of the 1975 Act and to section 5(1) of the 1991 Act, following Parliaments affirmative resolution pursuant to section 12(1) of the later Act. Regulation 8(1) provides that, subject to regulation 10, a person is not entitled to receive such DLA as is referable to the care component for any period during which he is maintained free of charge while undergoing medical or other treatment as an in patient in an NHS hospital. But para 2 of regulation 10 provides that, in the case of a person aged under 16, regulation 8 shall not apply for the first 84 days of any such period; and para 1 provides that, in the case of any other person, regulation 8 shall not apply for the first 28 days of any such period. Regulations 12A and 12B make provision identical to regulations 8 and 10 in respect of receipt of such DLA as is referable to the mobility component. The regulations in force prior to 1991 in relation to payment of attendance allowance and mobility allowance had also provided for its suspension once the recipient had been in hospital for more than 28 days. But they had made no distinction between adults and children: the extension for children aged under 16 from 28 days to 84 days was therefore introduced in the 1991 Regulations. Camerons DLA It is important to note that, notwithstanding that he was a child, it was Cameron, not either or both of his parents, who was entitled to DLA. There were changes, which it is unnecessary to record, in the rates of his entitlement. By 3 November 2010 the Secretary of State had decided that he was entitled to the highest rate of the care component and to the higher rate of the mobility component. But on 3 November 2010 he also decided to suspend payment of both components with effect from 6 October 2010 on the ground that by then Cameron had been an in patient at Alder Hey for more than 84 days. By 6 October he had in fact been an in patient there for 94 days. The DLA had of course been payable to Mr Mathieson on Camerons behalf. As such, it had no doubt to be deployed for Camerons benefit but otherwise it had been deployable without restriction, whether in facilitating the performance of his bodily functions or otherwise. It had been a valuable component of the familys income. Mr Mathiesons estimate (accepted by the Upper Tribunal) was that its suspension between October 2010 and August 2011 caused the family to suffer a loss of about 7,000. His evidence was that, in order to help meet the shortfall, he had to borrow 4,000 from friends. The Secretary of State is concerned to place the 84 day rule referable to DLA in the context of other state benefits payable to families generally and to the Mathieson family in particular. Prior to Camerons removal to Alder Hey, the family received child benefit for all four children, child tax credit, carers allowance and income support as well, apparently, as housing benefit and council tax benefit. Even after the first 84 days of Camerons stay there, the familys child benefit continued to be payable in full, even the part referable to him, because Mr and Mrs Mathieson were still regularly [incurring] expenditure in respect of him: section 143(4) of the Benefits Act. Their child tax credit included an extra element because Cameron was in receipt of DLA and a further element because its care component was at the highest rate. But neither element fell to be withdrawn when, pursuant to the 84 day rule, DLA was suspended: regulation 8(3)(b) of the Child Tax Credit Regulations 2002 (SI 2002/2007). It was a condition of Mr Mathiesons entitlement to the carers allowance that Cameron should be in receipt of the care component of DLA at either the highest or the middle rate; and the carers allowance, as such, did indeed fall away upon suspension of his DLA. But it made little difference to Mr and Mrs Mathieson because their income support was thereupon increased proportionately. Thus, argues the Secretary of State, considerable benefits continued to be payable to the family, including in respect of Cameron, even after his 84th day at Alder Hey. But, with respect, to where does his argument lead? Prior to Camerons removal to Alder Hey income support, which was means tested, brought the familys economy up to, but not beyond, subsistence level. The Secretary of State concedes that there would have been no surplus available to meet such extra expenditure as the family might incur as a result of Camerons removal. The fact that a number of benefits continued to be paid, even after his 84th day at Alder Hey, does not address the difficulty that, when the family was facing an increase in its expenditure of about 8,000, application of the 84 day rule caused it to suffer a decrease in its income of about 7,000. Article 14 Article 14 of the European Convention on Human Rights (the Convention), entitled Prohibition of discrimination, 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. It is enjoyment only of the rights and freedoms set out in the Convention which the article requires to be secured without discrimination on any of the identified grounds. The framers of the article did not wish the prohibition of discrimination to extend beyond the four corners of the other articles. A free standing prohibition of discrimination in the enjoyment of any right set forth by law and indeed generally, on any of the identified grounds, was introduced much later in the Twelfth Protocol; but the UK has not signed it. (a) Scope In his invocation of article 14, Mr Mathieson therefore needs first to establish a link with one or more of the Conventions other articles. He alleges a link with either or both of Camerons rights to the peaceful enjoyment of his possessions under article 1 of Protocol 1 (A1P1) and to respect for his family life under article 8. For the purposes of article 14, Mr Mathieson does not need to establish that the suspension of DLA amounted to a violation of Camerons rights under either of those articles: otherwise article 14 would be redundant. He does not even need to establish that it amounted to an interference with his rights under either of them. He needs to establish only that the suspension is linked to, or (as it is usually described) within the scope or ambit of, one or other of them. How can a public authoritys action be within the scope of an article without amounting to an interference with rights under it? The case of Carson v United Kingdom (2010) 51 EHRR 369 provides an example. There the Grand Chamber of the European Court of Human Rights (the ECtHR) explained at paras 63 65 that A1P1 did not require a contracting state to establish a retirement pension scheme but that, if it did so, the scheme fell within the scope of A1P1 and so had to be administered without discrimination on any of the grounds identified in article 14. The case of Hode and Abdi v United Kingdom (2012) 56 EHRR 960 provides another example. There the ECtHR explained at para 43 that article 8 did not require the state to grant admission to a refugees non national spouse but that, if it introduced a scheme for doing so, it fell within the scope of article 8 and so had to be administered without discrimination on any of the identified grounds. The Secretary of State concedes that the provision of DLA falls within the scope of A1P1 but disputes that it falls within the scope of article 8. So I will proceed at first on the basis of the concession; later, and only if necessary, I will address the dispute. (b) Status On which of the grounds of discrimination prohibited by article 14 does Mr Mathieson rely? He relies on the concluding reference to other status. The premise of his argument is that payment of the care component of DLA is expressly limited, and that the mobility component is in effect limited, to the severely disabled: see sections 72 and 73 of the Benefits Act. Mr Mathieson argues that Camerons status on 6 October 2010 was that of a severely disabled child who was in need of lengthy in patient hospital treatment and that, in comparison with a severely disabled child who was not in need of lengthy in patient hospital treatment, application to Cameron of the 84 day rule discriminated against him contrary to article 14. Any such comparator would need to be a severely disabled child because otherwise he would not be entitled to DLA at all. But disability has degrees of severity and the suggested comparator could presumably be a child with a disability of severity either equal to, or indeed lesser than, that of the child in need of lengthy in patient hospital treatment. At first sight Mr Mathiesons contention appears contrived. Does it pass muster? The Upper Tribunal concluded that it did. Before the Court of Appeal the Secretary of State, without conceding that the Upper Tribunals conclusion was correct, did not actively contest it; and so, not without some misgivings, that court proceeded on the basis that, had there been discrimination, it would have been on the ground of the status identified by Mr Mathieson. In this court, however, the Secretary of State actively contests that Cameron had any status on which the decision to suspend his DLA was based. In AL (Serbia) v Secretary of State for the Home Department [2008] UKHL 42, [2008] 1 WLR 1434, Lady Hale addressed at para 26 the list of prohibited grounds in article 14 and suggested that [i]n general, the list concentrates on personal characteristics which the complainant did not choose and either cannot or should not be expected to change. In R (RJM) v Secretary of State for Work and Pensions [2008] UKHL 63, [2009] AC 311, Lord Neuberger of Abbotsbury expanded at para 45 upon Lady Hales analysis of the nature of the prohibited grounds by suggesting that they generally required concentration on what somebody is, rather than what he is doing or what is being done to him. But, by its very decision in the RJM case, namely that the appellants homelessness conferred on him a status prohibited by article 14, the House of Lords demonstrated that the prohibited grounds extended well beyond innate characteristics. The House held that they included not only the suspect grounds, or, to use a less ambiguous word, the core grounds, which, according to Lord Walker of Gestingthorpe at para 5, included gender, sexual orientation, pigmentation of skin and congenital disabilities. Lord Walker offered the simile of a series of concentric circles and suggested that these core grounds fell within the circle of the narrowest diameter. But then there was a wider circle which included acquired characteristics, such as nationality, language, religion and politics. Indeed, so Lord Walker suggested, there was an even wider circle which included, for example, the homeless appellant then before the House; which also included the complainant in the Carson case, who had chosen a particular country of residence; and which even included the complainant in Sidabras and Dziautas v Lithuania (2004) 42 EHRR 104, who had previously been employed by the KGB. The value of Lord Walkers simile lies in what he then added: The more peripheral or debateable any suggested personal characteristic is, the less likely it is to come within the most sensitive area where discrimination is particularly difficult to justify. The RJM case in the House of Lords was soon followed by the Clift case in the ECtHR. Mr Clift had been sentenced in England to a term of imprisonment of 18 years for crimes including attempted murder. The Parole Board recommended his release on licence once he had served half of his sentence. The Secretary of State rejected its recommendation. Had the recommendation been made in relation to a prisoner serving a sentence of a term of less than 15 years or a life sentence, the Secretary of State would have had no power to reject it. Mr Clift alleged that in such circumstances the Secretary of States rejection of the Boards recommendation discriminated against him, contrary to article 14, in the enjoyment of his right to liberty under article 5 of the Convention. He contended that the discrimination was on the ground of his status as a person sentenced to a term of at least 15 years. In the domestic courts his contention had failed: R (Clift) v Secretary of State for the Home Department [2006] UKHL 54, [2007] 1 AC 484. The House of Lords had articulated an inhibition, less keenly felt by this court nowadays, about extending the meaning of convention terms beyond what the ECtHR had authorised: see Lord Bingham of Cornhill at para 28 and also Lord Hope at para 49. In the ECtHR, however, Mr Clifts claim to have had a status within in the meaning of article 14 (and to have suffered discrimination on that ground) prevailed: Clift v United Kingdom (Application No 7205/07), The Times, 21 July 2010. The court said: 60 The question whether there is a difference of treatment based on a personal or identifiable characteristic is to be assessed taking into consideration all of the circumstances of the case and bearing in mind that the aim of the Convention is to guarantee not rights that are theoretical or illusory but rights that are practical and effective (emphasis supplied). It is clear that, if the alleged discrimination falls within the scope of a Convention right, the ECtHR is reluctant to conclude that nevertheless the applicant has no relevant status, with the result that the inquiry into discrimination cannot proceed. Decisions both in our courts and in the ECtHR therefore combine to lead me to the confident conclusion that, as a severely disabled child in need of lengthy in patient hospital treatment, Cameron had a status falling within the grounds of discrimination prohibited by article 14. Disability is a prohibited ground (Burnip v Birmingham City Council [2012] EWCA Civ 629, [2013] PTSR 117). Why should discrimination (if such it be) between disabled persons with different needs engage article 14 any less than discrimination between a disabled person and an able bodied person? Whether, as in Camerons case, the person is born disabled or whether he becomes disabled, his disability is or becomes innate; and insofar as in the RJM case Lord Walker seems to have had three circles in mind, Camerons case falls either within the narrowest of them or at least within the one in the middle. (c) Justification In Stec v United Kingdom (2006) 43 EHRR 1017 the ECtHR determined challenges to social security provisions which linked compensation for the financial effects of an accident at work to the different state retirement ages for men and women. So the argument was that, taken with A1P1, article 14 had been violated by discrimination on ground of sex. The Grand Chamber observed at para 51 that [a] difference of treatment is 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. It is worthwhile to note, in parenthesis, a terminological difference between the ECtHR and the House of Lords. In the RJM case, cited at para 21 above, Lord Neuberger considered at para 22, as did Lord Walker at para 5 and Lord Mance at para 7, whether the discrimination can be justified. I confess that I prefer the approach of the ECtHR. If justification is established, the result is not justified discrimination. For justification will negative the existence of discrimination at all. In the Stec case the Grand Chamber proceeded at para 52 to address the margin of appreciation which it should afford to the UK in relation to its social security provisions and held that it should generally respect its policy choices in that area unless they were manifestly without reasonable foundation; by application of that principle, it concluded that the challenges failed. Of course it does not necessarily follow that the domestic judiciary should afford a margin of equal generosity to the domestic legislature: In re G (Adoption: Unmarried Couple) [2008] UKHL 38, [2009] AC 173, para 37 (Lord Hoffmann). Indeed this court has at last helpfully recognised that the very concept of a margin of appreciation is inapt to describe the measure of respect which, albeit of differing width, will always be due from the UK judiciary to the UK legislature: In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] UKSC 3, [2015] 2 WLR 481, paras 44 and 54 (Lord Mance). Nevertheless, in the RJM case, Lord Neuberger cited para 52 of the judgment in the Stec case and concluded at para 56 that the provision of state benefits to the homeless was an area where the court should be very slow to substitute its view for that of the executive. In Humphreys v Revenue and Customs Comrs [2012] UKSC 18, [2012] 1 WLR 1545, this court went further. There a father in receipt of means tested benefits who cared for his children for three days each week challenged a rule that child tax credit should be paid entirely to their mother because she had the main responsibility for them. He alleged indirect discrimination on grounds of sex because the rule prejudiced more fathers than mothers. Having considered the Stec case and the RJM case, Lady Hale (with whose judgment all other members of the court agreed) held at paras 19 and 20 that the court should determine the fathers challenge by reference to whether the rule was manifestly without reasonable foundation; but she added at para 22 that it did not follow that the rule should escape careful scrutiny. Applying those principles, she rejected his challenge. She considered that the rule makers had been entitled to conclude that some of a childs needs, such as for clothes and shoes, would be more likely to be met if the entire benefit was paid to the primary carer: para 29; and that there were costly administrative complexities in any apportionment of some of the benefit to the secondary carer while he remained in receipt of means tested benefits: para 30. It is noteworthy that, in a table of policy issues which Lady Hale annexed to her judgment, the makers of that rule, when resolving not to amend it so as to permit the benefit to be shared, had carefully set out the rival advantages and disadvantages of so doing. One of the rule makers arguments in the Humphreys case, as in the present case, was that a bright line rule has intrinsic merits in particular in the saving of administrative costs. The courts accept this argument but only within reason. In R (Animal Defenders International) v Secretary of State for Culture, Media and Sport [2008] UKHL 15, [2008] 1 AC 1312, Lord Bingham accepted at para 33 that hard cases which fell on the wrong side of a general rule should not invalidate it provided that it was beneficial overall. And when the Carson case had been considered, with another case, by the House of Lords, in R (Carson) v Secretary of State for Work and Pensions [2005] UKHL 37, [2006] 1 AC 173, Lord Hoffmann had observed at para 41 that a line had to be drawn somewhere. He had added: All that is necessary is that it should reflect a difference between the substantial majority of the people on either side of the line. The Secretary of State has placed in evidence an extract from Hansard (HC Debates), 25 March 2003, col 26WH, in which Ms Maria Eagle, the Parliamentary Under Secretary of State for Work and Pensions, responded to a complaint about the suspension of payment of DLA to an adult in hospital after 28 days. She pointed out that the suspension was pursuant to the rule against overlapping provision. As I have explained, the 1991 Regulations were indeed made pursuant to section 85 of the 1975 Act, entitled Overlapping benefits. Ms Eagle continued as follows, at cols 27WH 28WH: All in patients disability related needs are met by the national health service. That is where the rule against overlapping provision comes in, and that is why DLA [is] withdrawn after a shorter period namely, once an adult has been in hospital for 28 days. For children under 16, the rule is 84 days. Those arrangements are based on the principle that double provision in this case, NHS in patient care and payment of DLA for the same need should not be made from public funds. The difference between the arrangements for adults and for children is recognition of the therapeutic value of visits and treats for a disabled child who is adjusting to life in hospital. But are all the disability related needs of children in hospital met by the NHS? And does Ms Eagles reference to the value for the child that the family should make visits to him and bring him treats bear any relation to the demands, personal and financial, which are made of parents when their severely disabled child is in hospital? The evidence of Mr Mathieson gives a negative answer to both questions. But is the case of Mr and Mrs Mathieson a hard case, unreflective of the position of most parents in their situation? In the only, short, witness statement filed on behalf of the Secretary of State in these proceedings his policy officer referred to an article by Dr Ruth Davies in the Journal of Child Health Care, vol 14(1) (2010) at p 6, entitled Marking the 50th anniversary of the Platt Report: from exclusion, to toleration and parental participation in the care of the hospitalised child. Dr Davies explains that in Victorian times parents were not allowed to visit their children in hospital more than a few hours a week; that with the rise of behaviourism, with its rejection of the importance for a child of a parents emotional support, there was little change in the approach to parental visits during the first half of the 20th century; that in 1959 a committee chaired by Sir Harry Platt wrote a report published by the Ministry of Health, entitled The Welfare of Children in Hospital, in which it recommended that parents be allowed to visit their children whenever they could and to help as much as possible with their care and that consideration be given to the admission of mothers with their children, especially if aged under five; that for the next 20 years the nursing profession largely resisted the recommendation for unrestricted parental visiting; that after about 1980 changes occurred at an accelerated pace; that, in line with studies in the UK and elsewhere, hospitals increasingly recognised that there were both humanitarian and cost saving advantages in encouraging parents to care for their children in hospital and indeed to reside with them there; and that, as the title of the article suggests, parental participation in the care of a child in hospital has ultimately become the norm. The Childrens Trust Tadworth, a charity devoted to the interests of children with multiple disabilities, and Contact a Family, a charity devoted to the support of families with disabled children, have been spear heading a campaign designed to persuade the Secretary of State to abrogate the rule whereby, after 84 days in hospital, a childs DLA is suspended. Their first report, entitled Stop the DLA Takeaway was published in 2010 and was placed in evidence before the Upper Tribunal. Subsequently they sought to strengthen their case by conducting an online survey, which was completed by 104 families across the UK with disabled children who had spent significant periods of time in hospital. This led to the charities second report, entitled Stop the DLA Takeaway Survey Report, which was published in 2013. Mr Mathieson sought to place it in evidence before the Court of Appeal, which put it aside on the basis that it added little to the first report. In their first report the charities asserted: The law as it stands suggests that families are getting some form of respite when their child is in a hospital or other medical setting. It suggests that a parents responsibilities and costs are reduced. This could not be further from the truth. It alleged that the level of care provided by parents either remained the same or increased when their children were in hospital. It asserted: Research shows that there are extra costs for a family when their child is in hospital or another medical setting: loss of earnings travel for family members parking costs meals at hospital childcare for siblings. In their second report the charities were able to strengthen the assertions in their first report by reference to striking results of their survey. The results were as follows: Almost all carers (99%) provide more (68%) or the same (31%) level of care when their child is in hospital compared to when their child is at home. disability when they are staying in hospital. 93% have increased costs relating to their childs The survey confirmed that the families faced the types of increased costs identified in the first report, together with other costs relating to telephones, internet access and toys intended to keep the child occupied. In the second report the charities estimated that each year about 400 to 500 families suffered the suspension of DLA after their childs 84th day in hospital and that the annual costs to the state of abrogating the suspension would be about 2.7m to 3.4m. By consent, this court gave Mr Mathieson leave to place before it a letter from the Citizens Advice Bureau attached to Great Ormond Street Hospital (the CAB). It wrote: It can be devastating for families when payments of Disability Living Allowance stop. The caring responsibilities of parents of child in patients are enormous. It is often not realised that parents are required to attend hospital when their children are in patients and to take an active part in their medical management. If they fail to attend, the hospitals social workers are informed. Many carers live either in make shift beds on the wards or in nearby hospital provided accommodation. The CAB added that the caring responsibilities of parents may increase once their child becomes an in patient; that they need to be trained to administer treatments, such as feeding through a gastrostomy; that the hospital relies on them to communicate with it on behalf of a non verbal child; that their increased costs include costs of travel, of meals at the hospital and of childcare for siblings; and that their financial difficulties can be compounded by loss of earnings. The CAB concluded: Our view is that the 84 day rule unfairly and unjustifiably restricts benefit entitlement. When the 84 day rule was introduced, it may have been the case that families were discouraged or not permitted to stay with their children in hospital. However, it ignores the modern reality of paediatric in patient healthcare and it removes necessary support from under the feet of the countrys most vulnerable people. In that the person centrally affected by the suspension will be (a) a child under 16, (b) who is severely disabled and (c) whose medical problems are so profound as to necessitate his remaining in hospital for more than 84 days, it is hard to disagree with the CABs reference to the countrys most vulnerable people. The Secretary of States policy officer responds that by 1991 parental presence in hospital was no longer discouraged; but she does not adequately grapple with its evidence about an increase in family expenditure. More significantly the Secretary of State has adduced no evidence in response to the charities two reports. The court must bear in mind that, although both charities are highly reputable, they have launched a campaign and that the purpose of the reports is to support it. The court must therefore look critically at the reports but it has nothing to set against them. The surveys conclusion that 99% of parents provide no lesser level of care when their child is in hospital and that 93% of them suffer an increase in costs demonstrates: (a) (b) that the case of Mr and Mrs Mathieson is not a hard case, unreflective of the position of most parents in their situation; that the personal and financial demands made on the substantial majority of parents who help to care for their disabled children in hospital are, to put it at its lowest, no less than when they care for them at home. The conclusion of the survey conducted by the charities also suggests that, with respect to Ms Eagle and always to whatever is said in Parliament, her reference in 2003 to visits and treats for a child in hospital betrayed her departments insufficient understanding of the role of parents with a child in hospital. The Secretary of State responds that any insufficiency in her parenthetical explanation of the reasons for the 84 day rule for children does not betoken his departments inability then to have given (or, more relevantly, now to give) a sufficient explanation of the reasons for it; that the very extension of the benefit for children in hospital from 28 days to 84 days, introduced in 1991, has demonstrated the sensitivity of his department to the different situation of adults and children in hospital; and, above all, that what matters is not how the reasons for a provision may have been presented but whether good reasons for it exist. Nevertheless there is nothing before the court to indicate that, whether in 1991 or at any time thereafter, the Secretary of State has asked himself: are benefits nowadays overlapping to an extent which justifies the suspension of a childs DLA following his 84th day in hospital? In this regard Mr Mathieson invites the court to approach the Secretary of States need to justify the 84 day rule through the prism of international conventions. They are not part of our law so our courts will not ordinarily reach for them. Courts sometimes find, however, that the law which they are required to apply demands reference to them. Article 3.1 of the UN Convention on the Rights of the Child (1989) (Cm 1976), ratified by the UK, provides: In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration. The UN Committee on the Rights of the Child, in its General Comment No 14 (2013) on article 3.1, analysed a childs best interests in terms of a three fold concept. In R (SG) v Secretary of State for Work and Pensions [2015] UKSC 16, [2015] 1 WLR 1449, at paras 105 106, Lord Carnwath described the committees analysis as authoritative guidance. The first aspect of the concept is the childs substantive right to have his best interests assessed as a primary consideration whenever a decision is made concerning him. The second is an interpretative principle that, where a legal provision is open to more than one interpretation, that which more effectively serves his best interests should be adopted. The third is a rule of procedure, described as follows: Whenever a decision is to be made that will affect a specific child, an identified group of children or children in general, the decision making process must include an evaluation of the possible impact (positive or negative) of the decision on the child or children concerned Furthermore, the justification of a decision must show that the right has been explicitly taken into account Article 7.2 of the UN Convention on the Rights of Persons with Disabilities, also ratified by the UK, provides: In all actions concerning children with disabilities, the best interests of the child shall be a primary consideration. It is impossible to conceive that the UN Committees analysis of a childs best interests for the purposes of article 3.1 of the Convention on the Rights of the Child does not equally apply to the best interests of a disabled child for the purposes of article 7.2 of the Convention on the Rights of Persons with Disabilities. There can be no doubt that the Secretary of States decision to suspend payment of DLA to children following their 84th day in hospital has been an action concerning children and children with disabilities, undertaken by an administrative authority with delegated legislative powers, within the meaning of both conventions. On the evidence before the court, however, the Secretary of State has never conducted an evaluation of the possible impact of the decision on the children concerned, with the result that he has perpetrated a breach of the procedural rule which constitutes the third aspect of the concept of the best interests of children. Unsurprisingly might one say inevitably? breach of the procedural rule has generated a violation of the substantive right of disabled children to have their best interests assessed as a primary consideration, which constitutes the first aspect of the same concept. So the Secretary of State is in breach of international law. But does this conclusion affect Camerons human rights? In ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4, [2011] 2 AC 166, Lady Hale at para 21 quoted with approval the observation of the Grand Chamber of the ECtHR in Neulinger v Switzerland (2010) 28 BHRC 706, para 131, that the Convention cannot be interpreted in a vacuum but must be interpreted in harmony with the general principles of international law. The Court of Appeal concluded, however, that the circumstances of the present case left no room for either of the international conventions to give a steer to the proper interpretation of Camerons rights. Consistently with that conclusion, the Secretary of State proceeds to submit that it is in principle illegitimate to have regard to the conventions and in this regard he relies upon the recent decision of this court in the SG case cited at para 39 above. It is clear that in the SG case the Secretary of State submitted that, while an international covenant might inform interpretation of a substantive right conferred by the Convention, it had no role in the interpretation of the parasitic right conferred by article 14 and thus, specifically, no role in any inquiry into justification for any difference of treatment in the enjoyment of the substantive rights. But his submission was not upheld. While Lord Reed did not expressly rule upon it, it was rejected by Lord Carnwath (paras 113 119), by Lord Hughes (paras 142 144), by Lady Hale (paras 211 218) and by Lord Kerr (paras 258 262). Lord Carnwath, for example, pointed out at paras 117 119 that the Secretary of States submission ran counter to observations in the Court of Appeal in the Burnip case, cited at para 23 above, and indeed to the decision of the Grand Chamber in X v Austria (2013) 57 EHRR 405. The decision of the majority in the SG case was not that international conventions were irrelevant to the interpretation of article 14 but that the UN Convention on the Rights of the Child was irrelevant to the justification of a difference of treatment visited upon women rather than directly upon children: para 89 (Lord Reed), paras 129 131 (Lord Carnwath) and para 146 (Lord Hughes). The noun adopted by the Grand Chamber in the Neulinger case, cited above, is harmony. A conclusion, reached without reference to international conventions, that the Secretary of State has failed to establish justification for the difference in his treatment of those severely disabled children who are required to remain in hospital for a lengthy period would harmonise with a conclusion that his different treatment of them violates their rights under two international conventions. Were this court to allow Mr Mathiesons appeal, it would, however, be disagreeing with the conclusion not only of the Court of Appeal but also, and in particular, of the Upper Tribunal. There is powerful authority which underlines the hesitation with which appellate courts should interfere with the conclusion of a specialist tribunal within the area of its expertise. In AH (Sudan) v Secretary of State for the Home Department [2007] UKHL 49, [2008] AC 678, the House of Lords restored a conclusion by the Asylum and Immigration Tribunal (the AIT) that it was reasonable to expect Sudanese asylum seekers from Darfur to relocate to Khartoum. Lady Hale at para 30, in a passage with which Lord Hope agreed at para 19, observed that it was probable that, in understanding and applying the law in their specialised field, expert tribunals will have got it right. In MA (Somalia) v Secretary of State for the Home Department [2010] UKSC 49, [2011] 2 All ER 65, this court, adopting Lady Hales observation, restored a conclusion by the AIT that a Somali asylum seeker had failed to establish that, if returned to Mogadishu, he would be at real risk of inhuman or degrading treatment. Furthermore, in R (Jones) v First tier Tribunal (Social Entitlement Chamber) [2013] UKSC 19, [2013] 2 AC 48, this court upheld the validity of a tribunal decision that there had been no crime of violence for the purposes of the Criminal Injuries Compensation Scheme; and Lord Carnwath observed at para 47 that the development of a consistent approach to that expression was primarily a task for the tribunal. In this regard the Secretary of State relies in particular upon the recent decision of the Court of Appeal in Obrey v Secretary of State for Work and Pensions [2013] EWCA Civ 1584, [2014] HLR 133. A superficial reading suggests considerable similarities between the Obrey case and the present case. Under challenge was the rule whereby, after 52 weeks as an in patient in hospital, a person was no longer to be treated as occupying his home for the purposes of entitlement to housing benefit. The claim was that, in breach of article 14 of the Convention when taken with A1P1, the rule indirectly discriminated against mental patients because they were more likely than other patients to remain in hospital for more than 52 weeks. The Court of Appeal dismissed the challenge of three claimants to the Upper Tribunals conclusion that the 52 week rule was justified. Sullivan LJ at paras 17 18, in passages with which Laws LJ specifically agreed at para 30, rejected a submission that the issue of justification under article 14 fell outside the specialist competence of the Upper Tribunal; and Sullivan LJ proceeded at paras 19 to 28 to explain that, in reaching its conclusion, the Upper Tribunal had made no error of law. I agree that, albeit perhaps less obviously than, for example, in relation to circumstances in Khartoum or Mogadishu, the relevant chamber of the Upper Tribunal is likely to have particular insight into the existence or otherwise of justification for a social security provision. That said, I consider that there was an error of law in the tribunals analysis of Mr Mathiesons case. First, it focussed upon the sort of attention which Cameron had received, or might have received, at Alder Hey in connection with bodily functions. His need for attention in connection with bodily functions had indeed been the threshold to his entitlement to the care component of DLA. But, as explained in para 14 above, there is no restriction on how DLA, once awarded, may, on his behalf and for his benefit, be deployed; and so it by no means followed that the inquiry into justification for the suspension should so narrowly be focussed. The focus should be upon whether the disability related needs which Cameron exhibited at home continued to exist throughout his stay at Alder Hey and whether to a substantial extent Mr and Mrs Mathieson continued to attend to them there. In any event, however, the catalogue of care provided by them to Cameron at Alder Hey suggests that they there attended no less to his bodily functions than when he had been at home. Second, it observed that the staff at Alder Hey would if necessary have provided for Cameron the care which Mr and Mrs Mathieson provided for him there. As long, said the tribunal, as the general position is that the NHS will meet all in patients disability related needs (in the sense of those that might otherwise found an entitlement to DLA), the position has a rational foundation. But what nursing staff need to do in the event that parents fail to perform the role expected of them is irrelevant. The tribunal also held: even if there are a small number of children at the extreme end of the spectrum whose needs for attention in connection with their bodily functions cannot fully be met by the NHS and whose families may, as here, incur additional costs as a result, that is merely one facet of how adopting a bright line rule operates in practice. Even if the number of such children has increased since the early 1990s, there is no suggestion that the number represents more than a small minority even now. With respect to the tribunal, and putting to one side its continued focus upon bodily functions, there was a suggestion in the charities first report that the number of families which incurred additional costs as a result of their childs admission to hospital was more than a small minority. But that it is indeed far from being a small minority has now been amply established in their second report, which was not before the tribunal. Answer I conclude therefore that: (a) by his decision dated 3 November 2010 to suspend payment of DLA to Cameron, the Secretary of State violated his human rights under article 14 of the Convention when taken with A1P1; there is therefore no need to consider whether he also violated Camerons human rights under article 14 when taken with article 8; in that the Secretary of State was not obliged by any provision of primary legislation to suspend the payment, he acted unlawfully in making the decision dated 3 November 2010: section 6(1) and (2) of the Human Rights Act 1998 (the 1998 Act); (b) (c) (d) accordingly the First tier Tribunal should have allowed Camerons appeal against that decision; should have set it aside; and, if only for the sake of clarity, should have substituted a decision that Cameron was entitled to continued payment of DLA with effect from 6 October 2010 to the date from which payment of it was reinstated; and this court should allow Camerons appeal and make the orders at (d) which the First tier Tribunal should have made. (e) Mr Mathieson seeks further relief which the Secretary of State energetically opposes. First, he seeks a formal declaration that the Secretary of State violated Camerons human rights. The First tier Tribunal had no power to make a formal declaration and it appears that, by virtue of sections 12(4) and 14(4) of the Tribunals, Courts and Enforcement Act 2007, the jurisdiction of the Upper Tribunal and of the Court of Appeal in relation to Mr Mathiesons successive appeals was no wider than that of the First tier Tribunal. It may well be that this court is not similarly confined but a formal declaration would seem to add nothing to the conclusions articulated in (a) and (c) of para 48 above. Second, more controversially, Mr Mathieson asks this court to discharge its interpretative obligation under section 3 of the 1998 Act by somehow reading the provisions for suspension of payment of DLA in regulations 8(1) and 12A(1) of the 1991 Regulations so as not to apply to children. In my view however it is impossible to read them in that way. Anyway, as the Secretary of State points out, it may not always follow that the suspension of payment of a childs DLA following his 84th day in hospital will violate his human rights. Decisions founded on human rights are essentially individual; and my judgment is an attempted analysis of Camerons rights, undertaken in the light, among other things, of the extent of the care given to him by Mr and Mrs Mathieson at Alder Hey. Although the courts decision will no doubt enable many other disabled children to establish an equal entitlement, the Secretary of State must at any rate be afforded the opportunity to consider whether there are adjustments, otherwise than in the form of abrogation of the provisions for suspension, by which he can avoid violation of the rights of disabled children following their 84th day in hospital. LORD MANCE: (with whom Lord Clarke and Lord Reed agree) I have had the benefit of reading Lord Wilsons judgment. I have found this appeal more finely balanced than he has done, although I have come ultimately to the same conclusion. Courts should not be over ready to criticise legislation in the area of social benefits which depends necessarily upon lines drawn broadly between situations which can be distinguished relatively easily and objectively. I would emphasise this as an important principle in terms rather more forceful than I think para 27 of Lord Wilsons judgment conveys. In R (Animal Defenders International) v Secretary of State for Culture, Media and Sport [2008] UKHL 15, [2008] AC 1312, Lord Binghams speech on this point read more fully at para 33 as follows: Thirdly, legislation cannot be framed so as to address particular cases. It must lay down general rules: James v United Kingdom (1986) 8 EHRR 123, para 68; Mellacher v Austria (1989) 12 EHRR 391, paras 52 53; R (Pretty) v Director of Public Prosecutions (Secretary of State for the Home Department intervening), [2002] 1 AC 800, para 29; Wilson v First County Trust Ltd (No 2) [2004] 1 AC 816, paras 72 74; R (Carson) v Secretary of State for Work and Pensions [2005] UKHL 37, [2006] 1 AC 173, paras 41, 91. A general rule means that a line must be drawn, and it is for Parliament to decide where. The drawing of a line inevitably means that hard cases will arise falling on the wrong side of it, but that should not be held to invalidate the rule if, judged in the round, it is beneficial. In the present case, a line has been drawn in secondary legislation, the Social Security (Disability Living Allowance) Regulations 1991, regulations 8 and 10, according to which the receipt of a disability living allowance attributable to entitlement to the care component (which I shall for simplicity call DLA) is made conditional in any period upon the person not being maintained free of charge while undergoing medical or other treatment as an in patient, except as regards the first 28 days or, in the case of a person under 16, the first 84 days during which he or she is so maintained. That is a bright line, operating by reference to hospitalisation free of charge after defined periods. Inevitably, it is capable of being criticised as arbitrary. The length of the specified periods cannot be expected to correspond precisely with the extent of actual needs. They must have been seen as some form of broad allowance in respect of the initial period of adaptation from normal life to a substantial spell in hospital. There must be patients in hospital for more and less than the specified periods of 28 and 84 days who in practice have precisely the same needs. But the courts cannot expect the legislator to assess the appropriate length of any such period of adaptation on an individual basis or at any more precise level. By the same token, the Secretary of State submits here that the basic criterion of hospitalisation free of charge represents a broad test, which draws a rational and readily applicable line, reflecting a view that in a National Health Service hospital the patients disability related needs will be met by the hospital. The difficulty with that view is that it fails to reflect the modern emphasis on the importance of parents, in particular, continuing to provide assistance in connection with bodily functions while their child is undergoing long term hospitalisation. Lord Wilson has drawn attention to this point in his paras 30 and 35. The Upper Tribunal was, in my view, in error (in para 46) in seeing it as an answer to the point that the National Health Service would itself have had to act, if the parents had not done so. The Upper Tribunal went on to say that: even if there are a small number of children whose needs are at the extreme end of the spectrum whose needs for attention in connection with their bodily functions cannot fully be met by the NHS and whose families may, as here, incur additional costs as a result, that is merely one facet of how adopting a bright line rule operates in practice. Even if the number of such children has increased since the early 1990s, there is no suggestion that the number represents more than a small minority even now. It is not evident from this passage what larger group the Upper Tribunal had in mind when speaking of a small number and a small minority. On the evidence before us, a significant group of children with severe disability needs is adversely affected by the present regulations, and continues to receive in hospital attendance in respect of disability by home carers such as parents no less than when at home. Again, I can refer to Lord Wilsons judgment, paras 31 to 36 and to his conclusion to that effect in para 47. The absence of any restriction on the use of DLA, once awarded, cannot of itself bear on, or support, Mr Mathiesons case that the withdrawal of DLA during any period of hospitalisation extending beyond 84 days was unjustified. The grant of DLA is linked to the existence of disability related needs. It is plainly legitimate to make its continuation or withdrawal conditional upon the continuation of the same needs. Here, however, the evidence indicates that the same needs, in terms of parental attention, existed and were met during Camerons hospitalisation after, as before, the expiry of the 84 day period. But, in order to continue to provide this parental attention, the parents had, necessarily, to incur ancillary expenses and loss, such as extra travel and meal costs and loss of earnings. The Secretary of State points out that other social benefits, in particular child benefit and child tax credit, remained in payment throughout Camerons hospitalisation, and submits that they would not be required in the same way during hospitalisation. In particular, the childs meals would be provided in hospital. The Upper Tribunal made the same point in its para 48. Bearing in mind that this appeal is about disability related needs, and the payments made in respect of them, this argument, essentially one of swings and roundabouts, is not to my mind particularly attractive. Had it been fully developed and been shown to be significant on the facts, I might nevertheless have given it more weight. As it is, I do not consider that it can counterbalance the prima facie conclusion that the withdrawal of DLA after 84 days was not justified in Camerons case by any matching reduction in his needs for disability related attention by his parents. In the light of the above, I turn to consider whether Cameron was discriminated against on grounds of status within the meaning of article 14 of the Convention. To my mind, a child hospitalised free of charge (essentially in a NHS, rather than private, hospital) for a period longer than 84 days can be regarded as having a different status to that of a child not so hospitalised. The focus shifts on that basis to the issue of justification for the difference in treatment, and that I have already effectively covered. The difference in treatment was not justified, because on the evidence Cameron continued to have disability related needs to which his parents were expected to continue to attend, and to meet which substantial expenditure was also necessarily incurred. With regard to the appropriate remedy to give effect to these conclusions, I agree that this should be tailor made and limited to Camerons particular position, by simply deciding that the decision in his case cannot stand and that he was entitled to continued payment of DLA after 84 days. The Secretary of State may be able to refine the criteria for the receipt or cessation of DLA in other cases in a manner which avoids the inequity involved in its withdrawal in respect of those in Camerons position. We cannot address in general declaratory terms the position of children receiving DLA and hospitalised for longer than 84 days, as Mr Mathieson invites us to do. |
This appeal is about an elaborate scheme designed and marketed by KPMG relating to demonstrator cars used by retail distributors for test drives and other internal purposes. In the ordinary course, a car distributor will buy new cars for use as demonstrators, paying VAT on the full amount of the sale price. This will in due course be recoverable as input tax by being set off against the output tax for which the distributor was accountable on its taxable supplies. The object of the KPMG scheme was to ensure that companies in the distributors group were able to recover input tax paid on the price of new cars acquired as demonstrators from manufacturers, while avoiding the payment of output tax on the price at which the car was ultimately sold second hand to a consumer. The Pendragon Group, to which all the respondents belong, are the largest car sales group in Europe. They purchased the Scheme and used it on two occasions, once in November and December 2000 and again in February and March 2001. Further use of the scheme was then abandoned when its efficacy was challenged by the Commissioners. In this litigation, the Commissioners seek to recover the VAT which the Pendragon Group thereby avoided. The KPMG scheme The KPMG scheme was designed to exploit three exceptions to the normal incidence of VAT. The first was an exception for assignments by an owner of goods comprised in a hire purchase or conditional sale agreement of his rights and interests thereunder and the goods comprised therein to a bank or other financial institution. Such transactions were de supplied by article 5(4) of the Value Added Tax (Special Provisions) Order 1995, SI 1995/1268. In other words, they were to be treated as neither a supply of goods nor a supply of services, and were thereby taken out of the VAT legislation altogether. The second exception was an exception for the supply by a person of assets of his business as part of the transfer of that business (or some discrete part of it) as a going concern, to be used by the transferee in carrying on the same kind of business. Such transactions were de supplied by article 5(1) of the same Order. The third exception was the margin scheme under which dealers in second hand goods are allowed to charge VAT not on the whole consideration for the sale of the goods but on their profit margin only. Margin schemes apply to the sale of second hand goods, works of art, collectors items and antiques. They are authorised by article 26a of the Sixth Council Directive on the Harmonisation of the Laws of member states relating to Turnover Taxes 77/388/EEC (as amended). Article 26a was inserted by amendment by Council Directive 94/5/EC in 1994. In the United Kingdom, effect was given to the amendment so far as concerned used cars by article 8 of the Value Added Tax (Cars) Order 1992, SI 1992/3122, as amended by the Value Added Tax (Cars) (Amendment) Order 1997, SI 1997/1615. The KPMG scheme involved five prearranged steps. I gratefully adopt the summary by Lloyd LJ in the Court of Appeal of these steps, and their normal consequences for the incidence of VAT [2013] EWCA Civ 868; [2014] STC 844: 21. Step 1. Pendragon plc, having bought new cars from, say, Ford, sold new cars which were destined for use as demonstrator cars, before sale to a consumer, to Captive Cos 1, 2, 3 and 4 (the Captive Leasing Companies or CLCs). (In fact only three companies were used, but I use the language which has been used elsewhere to describe the Scheme, in order not to generate unnecessary confusion.) Pendragon plc's sale of the cars to a CLC was a taxable supply of goods for VAT purposes. Therefore, Pendragon plc accounted for output tax on the sale of the cars; and reclaimed input tax, including the tax incurred on the purchase from Ford. 22. Step 2. On the same day as Step 1, the Captive Leasing Companies leased the cars pursuant to hybrid HP/lease agreements to dealership companies in the Pendragon Group (the Dealerships). Each of the Captive Leasing Companies entered into a Vehicle Demonstrator Hire Agreement (referred to as a hybrid lease) in favour of the Dealerships. Paragraph 8(c) of Second Schedule to the hybrid leases (generally referred to as clause 8(c), as I will refer to it hereafter, so as to avoid confusion) conferred on the Dealership an option to purchase the hired vehicles. The option was exercisable seven days after the end of the hire agreement, and not earlier. 23. The services provided by the Captive Leasing Companies to the Dealerships under the Vehicle Demonstrator Hire Agreement were taxable supplies at the standard rate of VAT. Input tax incurred by the Captive Leasing Companies on the purchase of the vehicles from Pendragon plc at Step 1 was therefore fully recoverable, being attributable to the making of those taxable supplies of leasing to the Dealerships. The Dealerships incurred VAT on the rental payments but recovered that VAT in full, being attributable to their taxable sale activities. 24. Step 3. On the day following Steps 1 and 2, the Captive Leasing Companies began assigning the hybrid lease agreements and title in the cars to SG Hambros Bank and Trust (Jersey) Ltd, known in the case as Soc Gen Jersey (SGJ), which was resident in Jersey, not in the UK. Each of the Captive Leasing Companies entered into a Deed of Assignment with SGJ. SGJ paid the Captive Leasing Companies the sum of approximately 20m. On the same date, SGJ had entered into a facility agreement with its parent company in the UK, SG London, in relation to the facility of 20m to finance the assignments. SGJ granted SG London an assignment of the assets to be assigned to it, as a form of security. 25. This step was critical to the success of the Scheme. It depended on the assignment of a lease, granted by a Captive Leasing Company to a Pendragon dealership, to a bank; according to HMRC this had to be an offshore bank, as it in fact was. No VAT was due on this transaction. The assignment by the Captive Leasing Companies to SGJ was not a supply for VAT purposes, by virtue of article 5(4) of the Special Provisions Order, which de supplied it, ie treated it as neither a supply of goods nor a supply of services. 26. Step 4. On a date envisaged as being some 30 to 45 days later, SGJ transferred as a going concern the lease agreements and title in the cars to Captive Co 5. Captive Co 5 resolved to purchase the relevant hire business carried on by SGJ. On the same day, SGJ contracted with Captive Co 5 to sell to it the business of the hire of cars said to have been carried on by SGJ. The consideration was in excess of 18m and was apportioned as to 100,000 for the sale of goodwill and as to the balance (save for 2) for the sale of the motor vehicles. That agreement was completed on the same date, and Captive Co 5 paid the agreed price to SGJ. 27. The sale by SGJ to Captive Co 5 of its hire business was the transfer of a business as a going concern (TOGC). As such the transaction was neither a supply of goods nor a supply of services; therefore no VAT was due on this transaction. 28. Step 5. On various dates thereafter, the cars were sold to customers by the Dealerships, acting as undisclosed agents for Captive Co 5 in which title to the vehicles was vested. VAT was charged to the purchasers on the seller's profit margin on the sale, rather than on the total sale price, Captive Co 5 having opted to apply the margin scheme. 29. When Captive Co 5 sold the vehicles to the retail customer, the Cars Order applied. The tax relief provided for by article 8 of that Order applied only where the taxable person making the sale had come into possession of the car in the circumstances set out in article 8(2), which I will set out below. If those requirements were met, and if the option was exercised that the margin scheme should apply, then VAT was due only on the profit margin on the supply, rather than on the whole value received for the supply. This meant that Captive Co 5 accounted for VAT on the difference between the cost of the car on the purchase from SGJ, and the price at which it sold the car to the consumer. By means of the de supplied assignment of the leases to SGJ at Step 3, and the TOGC from SGJ at Step 4, the Scheme was designed to meet the taxation requirements of the Cars Order. Abuse of law It is common ground that at a purely technical level, the KPMG scheme worked. That is to say, the transactions envisaged at Steps 3 and 4 satisfied all the statutory conditions for exemption from VAT, and the transaction envisaged at Step 5 satisfied all the statutory conditions for the application of the margin scheme. But that is not the end of the matter. Value Added Tax is an EU tax imposed pursuant to successive Directives of the European Union, at the relevant time the Sixth Directive. The Directives are subject to the principle of abuse of law. By virtue of section 2(1) of the European Communities Act 1972 the same principle must apply to domestic legislation implementing the Directives. Abuse of law is a concept derived from civil law jurisprudence, which is unknown to English common law but has been adopted by the law of the European Union. In its simplest form, it confines the exercise of legal rights to the purpose for which they exist, and precludes their use for a collateral purpose. For present purposes, the expression dtournement de droit adopted by some French writers is probably a better description of its content. The application of the principle to tax avoidance schemes calls for a difficult balance to be drawn. It is traditional, at any rate in this jurisdiction, to distinguish between avoidance, which involves the lawful arrangement of a taxpayers affairs so as to minimise his tax bill, and evasion, which is an unlawful failure to account for tax due, generally by suppressing or falsifying information. Sophisticated avoidance schemes do not so much undermine this distinction as challenge its usefulness. By artificially reclassifying transactions so as to produce a more favourable tax outcome than commercially comparable normal transactions, they frustrate the objective of the taxing provision without necessarily falling foul of its language. The result is arbitrarily to depress tax receipts, producing inequity between taxpayers and potentially distorting competition between firms who are otherwise similarly placed. This gives rise to social costs which are significant and increasingly controversial. On the other hand, legal certainty is an important principle of both English and EU law, particularly when it comes to justifying the financial demands of the state. Artificiality, if it is to be deployed as a workable legal concept, has to be tested against some standard of transactional normality, and the search for such a standard is far from straightforward. Taxpayers faced with a choice between alternative ways of achieving some commercial objective are in principle entitled to select the one with the more tax efficient statutory outcome. In particular, they are entitled to choose between exempt and taxable transactions in their own financial interest. Like any other tax, VAT is due only in so far as its imposition is authorised by statute. It follows that although the courts may examine the commercial reality of transactions without being unduly hidebound by labels, they do not as a general rule enlarge the scope of a taxing provision by reference to considerations which affect neither the construction of its language nor the characterisation of transactions to which it is said to apply. These dilemmas are particularly acute in the United Kingdom, where the drafting of tax legislation has traditionally depended not on the formulation of general principles but on the definition of taxable occasions with a high degree of specificity. The main task of any court seeking to apply a principle of abuse of law is to reconcile these competing considerations. In the case law of the Court of Justice of the European Union, the concept of abuse of law was first applied to fiscal rights and obligations in Emsland Strke GmbH v Hauptzollamt Hamburg Jonas (Case C 110/99) [2000] ECR I 11569. An exporter was refused a rebate of duty to which he was entitled on the face of the relevant Commission Regulation upon the export of his goods, because he had abused the law by claiming it in respect of goods which had been exported to a third country only to be at once re imported into the country of origin. The court held at para 59 that: a finding that there has been an abuse presupposes an intention on the part of the Community exporter to benefit from an advantage as a result of the application of the Community rules by artificially creating the conditions for obtaining it. The essential reason why the trading scheme failed in that case was that the choice of a circular supply route did not involve a choice between different methods of achieving the traders commercial purpose. It had no commercial purpose other than the avoidance of tax. The ambit of the principle was more fully defined in what is now the leading case, the decision of the Grand Chamber in Halifax plc v Customs and Excise Commissioners (Case C 255/02) [2006] STC 919. This decision concerned a scheme for claiming input tax on the construction costs of four call centres, notwithstanding that as a bank Halifaxs business consisted mainly in making exempt supplies which generated no output tax against which to set it off. The scheme involved a series of prearranged transactions, whose combined effect was to substitute for Halifax two of its subsidiaries which generated larger volumes of output tax, as the parties to whom the construction services were supplied. In this case, there was clearly an underlying commercial purpose, namely the provision of the call centres. The issue arose out of the particular contractual method used to bring the project to fruition. It was found that there was no commercial rationale for interposing the two subsidiaries, who had been involved for the sole purpose of avoiding tax. The court accepted that the concept of abuse of law applied to VAT. Preventing possible tax evasion, avoidance and abuse is an objective recognised and encouraged by the Sixth Directive (para 71). It held that Community law cannot be relied on for abusive or fraudulent ends (para 68), and that application of Community legislation cannot be extended to cover abusive practices by economic operators, that is to say transactions carried out not in the context of normal commercial operations, but solely for the purpose of wrongfully obtaining advantages provided for by Community law (para 69). These principles had, however, to be reconciled with the fundamental principle of legal certainty in the Community legal order, especially in the case of rules imposing financial liabilities. The court continued: 73. it is clear from the case law that a trader's choice between exempt transactions and taxable transactions may be based on a range of factors, including tax considerations relating to the VAT system (see, in particular, BLP Group [1995] STC 424, [1996] 1 WLR 174, para 26, and Customs and Excise Comrs v Cantor Fitzgerald International (Case C 108/99) [2001] STC 1453, [2002] QB 546, para 33). Where the taxable person chooses one of two transactions, the Sixth Directive does not require him to choose the one which involves paying the highest amount of VAT. On the contrary, as the Advocate General observed in para 85 of his opinion, taxpayers may choose to structure their business so as to limit their tax liability. 74. In view of the foregoing considerations, it would appear that, in the sphere of VAT, an abusive practice can be found to exist only if, first, the transactions concerned, notwithstanding formal application of the conditions laid down by the relevant provisions of the Sixth Directive and the national legislation transposing it, result in the accrual of a tax advantage the grant of which would be contrary to the purpose of those provisions. 75. Second, it must also be apparent from a number of objective factors that the essential aim of the transactions concerned is to obtain a tax advantage. As the Advocate General observed in para 89 of his opinion, the prohibition of abuse is not relevant where the economic activity carried out may have some explanation other than the mere attainment of tax advantages. 76. It is for the national court to verify in accordance with the rules of evidence of national law, provided that the effectiveness of Community law is not undermined, whether action constituting such an abusive practice has taken place in the case before it (see Eichsfelder Schalchtbetrieb (Case C 515/03) [2005] All ER (D) 306 (Jul), para 40). 81. As regards the second element, whereby the transactions concerned must essentially seek to obtain a tax advantage, it must be borne in mind that it is the responsibility of the national court to determine the real substance and significance of the transactions concerned. In so doing, it may take account of the purely artificial nature of those transactions and the links of a legal, economic and/or personal nature between the operators involved in the scheme for reduction of the tax burden (see, to that effect, Emsland Starke [2000] ECR I 11569, para 58). The court dealt with the consequences of a finding of abuse as follows: 93. It must also be borne in mind that a finding of abusive practice must not lead to a penalty, for which a clear and unambiguous legal basis would be necessary, but rather to an obligation to repay, simply as a consequence of that finding, which rendered undue all or part of the deductions of input VAT (see, to that effect, Emsland Starke [2000] ECR I 11569, para 56). 94. It follows that transactions involved in an abusive practice must be redefined so as to re establish the situation that would have prevailed in the absence of the transactions constituting that abusive practice. 9. It is clear that in arriving at these conclusions the court was strongly influenced by the penetrating analysis of the limits of a taxpayers legitimate choices by Advocate General Poiares Maduro. That Opinion provides a valuable discussion of the highly condensed statement of the test in paras 74 75 of the judgment. In particular, it addresses more fully the problem of concurrent purposes: Definition of the scope of this Community law principle, as applicable to the common VAT system, is ultimately a problem of determining the limits applicable to the interpretation of the provisions of the VAT directives that confer certain rights on taxable persons. In this regard, the objective analysis of the prohibition of abuse has to be balanced against the principles of legal certainty and protection of legitimate expectations that also form part of the Community legal order and in the light of which the provisions of the Sixth Directive must be interpreted. From those principles it follows that taxpayers must be entitled to know in advance what their tax position will be and, for that purpose, to rely on the plain meaning of the words of the VAT legislation. 85. Furthermore, the court has consistently held, in consonance with the position generally accepted by member states in the tax domain, that taxpayers may choose to structure their business so as to limit their tax liability. In BLP Group plc v Customs and Excise Comrs (Case C 4/94) [1995] STC 424, [1996] 1 WLR 174, the court ruled that a trader's choice between exempt transactions and taxable transactions may be based on a range of factors, including tax considerations relating to the VAT system. There is no legal obligation to run a business in such a way as to maximise tax revenue for the State. The basic principle is that of the freedom to opt for the least taxed route to conduct business in order to minimise costs. On the other hand, such freedom of choice exists only within the scope of the legal possibilities provided for by the VAT regime. The normative goal of the principle of prohibition of abuse within the VAT system is precisely that of defining the realm of choices that the common VAT rules have left open to taxable persons. Such a definition must take into account the principles of legal certainty and of the protection of taxpayers legitimate expectations. 86. By virtue of those principles, the scope of the Community law interpretative principle prohibiting abuse of the VAT rules must be defined in such a way as not to affect legitimate trade. Such potential negative impact is, however, prevented if the prohibition of abuse is construed as meaning that the right claimed by a taxable person is excluded only when the relevant economic activity carried out has no other objective explanation than to create that claim against the tax authorities and recognition of the right would conflict with the purposes and results envisaged by the relevant provisions of the common system of VAT. Economic activity of that kind, even if not unlawful, deserves no protection from the Community law principles of legal certainty and protection of legitimate expectations because its only likely purpose is that of subverting the aims of the legal system itself. 87. I am of the view therefore that the Community law notion of abuse, applicable to the VAT system, operates on the basis of a test comprising two elements. Both elements must be present in order to establish the existence of an abuse of Community law in this area. The first corresponds to the subjective element mentioned by the court in Emsland [2000] ECR I 11569, but it is subjective only in so far as it aims at ascertaining the purpose of the activities in question. That purpose which must not be confused with the subjective intention of the participants in those activities is to be objectively determined on the basis of the absence of any other economic justification for the activity than that of creating a tax advantage. Accordingly, this element can be regarded as an element of autonomy. In fact, when applying it, the national authorities must determine whether the activity at issue has some autonomous basis which, if tax considerations are left aside, is capable of endowing it with some economic justification in the circumstances of the case. 88. The second element of the proposed test corresponds to the so called objective element mentioned in Emsland [2000] ECR I 11569. It is in fact a teleological element whereby the purpose and objectives of the Community rules allegedly being abused are compared with the purpose and results achieved by the activity at issue. This second element is important, not only because it provides the standard upon which the purpose and results of the activity in question are to be assessed. It also provides a safeguard for those instances where the sole purpose of the activity might be to diminish tax liability but where that purpose is actually a result of a choice between different tax regimes that the Community legislature intended to leave open. Therefore, where there is no contradiction between recognition of the claim made by the taxable person and the aims and results pursued by the legal provision invoked, no abuse can be asserted. 89. The prohibition of abuse, as a principle of interpretation, is no longer relevant where the economic activity carried out may have some explanation other than the mere attainment of tax advantages against tax authorities. In such circumstances, to interpret a legal provision as not conferring such an advantage on the basis of an unwritten general principle would grant an excessively broad discretion to tax authorities in deciding which of the purposes of a given transaction ought to be considered predominant. It would introduce a high degree of uncertainty regarding legitimate choices made by economic operators and would affect economic activities which clearly deserve protection, provided that they are, at least to some extent, accounted for by ordinary business aims. 91. On the basis of the foregoing analysis I am therefore of the opinion that there is a Community law principle of interpretation prohibiting the abuse of Community provisions, which is also applicable to the Sixth Directive. According to that principle, the provisions of the Sixth Directive must be interpreted as not conferring the rights that might appear to be available by virtue of their literal meaning, when two objective elements are found to be present. First, that the aims and results pursued by the legal provisions formally giving rise to the tax advantage invoked would be frustrated if that right were conferred. Second, that the right invoked derives from economic activities for which there is objectively no other explanation than the creation of the right claimed. 10. Two main difficulties arise where the principle of abuse of law is applied to tax avoidance schemes. 11. The first arises from the assumption made by the Court of Justice in Halifax that the principle will not apply to what it called normal commercial operations (para 69). Subsequent case law has established that this means those that are normal in the context of the relevant line of business, not necessarily normal for the particular taxpayer: Revenue and Customs Commissioners v Weald Leasing Ltd (Case C 103/09) [2011] STC 596. I do not think that the court can have intended to set up a third distinct test, in addition to the two which are set out in paras 74 75 and repeated in its order. The normality of a transaction is relevant to the question posed in the courts first test, about the purpose of the relevant provision of the VAT Directives. Normal commercial operations will not as a general rule be regarded as contrary to the purpose of the Directives, since these must be assumed to have been designed to accommodate them. Thus in Weald Leasing the taxpayers decision to take equipment on lease from an intermediate company rather than buy it outright was an ordinary commercial transaction. It was not abusive even though it was unusual for the taxpayer in question and was designed to obtain a tax advantage by spreading the liability to tax over a longer period. The choice between leasing and outright purchase was a choice accommodated by the scheme of the VAT legislation. The tax treatment of lease payments being a facility available under the legislation itself, resort to it could not be regarded as contrary to its purpose. For the same reason, a transaction is not abusive merely because it falls within an exception or derogation from ordinary principles of EU law governing the incidence of VAT, such as the right enshrined in the Sixth Directive to deduct input tax generated by transactions in another member state. It follows that the sourcing of goods or services from a country in which the VAT regime is more favourable is not in itself abusive, even though the object and effect is to allow the deduction of input tax without the payment of output tax (Revenue and Customs Commissioners v RBS Deutschland Holding GmbH (Case C 277/09) [2011] STC 345). The reason, as the court explained in that case at paras 51 52, is that this is a choice inherent in a scheme of taxation that is designed to be fiscally neutral as between different member states while allowing for some differences between their implementing laws. Likewise, the conduct of a genuine business activity through a subsidiary incorporated in another member state is not abusive, although the sole reason for the choice is that it has a lower rate of corporation tax: Cadbury Schweppes Plc v Inland Revenue Commissioners (Case C 196/04) [2006] STC 1908. Precisely the same considerations must apply to a decision to source goods or services from outside the European Union, an option which is inherent in the territorial limits of the EU VAT regime and the assignment of economic relations with third countries to other policies of the Union. 12. The second difficulty which arises from the application of the principle of abuse of law to tax avoidance is that of concurrent purposes. Tax avoidance schemes are rarely directed exclusively to tax avoidance. It is difficult to conceive of a scheme, other than a fraudulent one, which achieved absolutely nothing but a tax advantage. They are usually directed to achieving a commercial purpose, such as the provision of the call centres in Halifax, in a way which avoids a tax liability that would otherwise be associated with it. The potential for abuse consists in the method chosen to achieve the commercial purpose. In Ministero dellEconomia e delle Finanze v Part Service Srl (Case C 425/06) [2008] STC 3132, the consideration payable by the lessee under a leasing transaction was artificially split between two contracts, one with the lessor and the other with an associated company of the lessor. The latter contract was structured so as to qualify as an exempt financial contract under Italian law, so as to reduce the amount chargeable to VAT. The transactions had a legitimate commercial purpose, namely the leasing of the cars, but the method of achieving that purpose was held to be open to challenge if the accrual of a tax advantage constitutes the principal aim of the transaction or transactions at issue (para 45). This conclusion seems to me to do no more than make explicit something which is implicit in the Halifax tests. Identifying the essential aim in a case of concurrent fiscal and commercial purposes depends on an objective analysis of the method used to achieve the commercial purpose. As Advocate General Maduro observed in a passage from (para 89) of his opinion which was in terms approved by the court (para 75), the taxpayers choices must be at least to some extent, accounted for by ordinary business aims. The question is therefore whether the commercial objective is enough to explain the particular features of the contractual arrangements which produce the tax advantage. 13. These considerations effectively answer a question which is likely to arise in most cases involving prearranged sequences of transactions. Is the relevant aim that of the scheme as a whole or of its component parts? The answer is that it may be either or both. Because the principle of abuse of law is, in this context, directed mainly to the method by which a commercial purpose is achieved, it is necessary to analyse each transaction by which it is achieved. Because the purpose of each step will generally be to contribute to the working of the whole scheme, the effect of the whole scheme has also to be considered. In WHA Ltd v Customs and Excise Commissioners [2007] STC 1695, para 22, Lord Neuberger, delivering the leading judgment in the Court of Appeal, rejected the submission that the court was confined to considering the artificiality or purpose of each individual step, since these will commonly be individually unassailable but designed to produce the tax advantage in combination. I agree with this observation. The first Halifax test: contrary to the purpose of the legislation 14. Value Added Tax is a tax on consumption. As far as the end user of goods or services is concerned it is a tax on the whole consideration provided for the goods or services in question. But as far as each taxable participant in the chain of production or distribution is concerned, it is a tax on the value which he has added to the product. Each taxable participant accounts for tax on the amount realised (output tax), less the cost of the materials and other taxable inputs (input tax). The broad principle is that tax on the ultimate value of the product is levied only once, albeit that it may be collected at different stages of the process of manufacture and distribution. In Elida Gibbs Ltd v Customs and Excise Commissioners (Case C 317/94) [1996] STC 1387, the Court of Justice summarised the position at paras 18 22 in this way: 18. Before replying to these questions it is appropriate to describe briefly the basic principle of the VAT system and how it operates. 19. The basic principle of the VAT system is that it is intended to tax only the final consumer. Consequently the taxable amount serving as a basis for the VAT to be collected by the tax authorities cannot exceed the consideration actually paid by the final consumer which is the basis for calculating the VAT ultimately borne by him. 20. Thus in Staatssecretaris van Financie v Hong Kong Trade Development Council (Case 89/81) [1982] ECR 1277 at 1285, para 6 the court held that it was apparent from EC Council Directive 67/227 of 11 April 1967 on the harmonisation of the legislation of the member states concerning turnover tax (the First Directive) (JO 71 14.4.67 p 1301 (S Edn 1967 p 14)) that one of the principles on which the VAT system was based was neutrality, in the sense that within each country similar goods should bear the same tax burden whatever the length of the production and distribution chain. 21. That basic principle clarifies the role and obligations of taxable persons within the machinery established for the collection of VAT. 22. It is not, in fact, the taxable persons who themselves bear the burden of VAT. The sole requirement imposed on them, when they take part in the production and distribution process prior to the stage of final taxation, regardless of the number of transactions involved, is that, at each stage of the process, they collect the tax on behalf of the tax authorities and account for it to them. It follows, as the court pointed out at para 24, that the tax authorities may not in any circumstances charge an amount exceeding the tax paid by the final consumer. 15. The Commissioners objection to the KPMG scheme under this head is that it is contrary to the purpose of the margin scheme. The margin scheme is an exception to the general principle that VAT is charged on the full consideration for a sale. It applies where a vehicle, having previously left the supply chain when sold new to a consumer, then re enters it upon being acquired and resold by a taxable person. The object is to allow partial relief from VAT to traders selling goods which have already been the subject of a net tax charge at some earlier stage in their history. The effect of the KPMG scheme, by comparison, is to enable the Pendragon Group to avail itself of the margin scheme in a quite different situation, where there has been no net charge to VAT because the input tax suffered by Pendragon plc on the purchase from the manufacturer has been recovered by being netted off against output tax chargeable on the sale by Pendragon plc to the Captive Leasing Companies. 16. The Sixth Directive made no specific provision for second hand goods. Article 32 provided for the Council to make provision for them by the end of 1977, but until they had done so member states were to be entitled to retain any special schemes of their own. That state of affairs subsisted until 1994, when Council Directive 94/5/EC of 14 February 1994 finally introduced a number of amendments to the Sixth Directive. These sought to harmonise the VAT regimes of member states relating to second hand goods, works of art, antiques and collectors items. The amendments included the new article 26a, which required member states to introduce a margin scheme for these goods in these categories, and to allow dealers the option of being taxed under it. It is clear from the recitals that the purpose of the amendments, apart from reducing distortions of competition arising from the different treatment of comparable transactions, was to avoid double taxation. The third and fifth recitals record: Whereas the Court of Justice has, in a number of judgments, noted the need to attain a degree of harmonization which allows double taxation in intra Community trade to be avoided. Whereas, within the internal market, the satisfactory operation of the value added tax mechanisms means that Community rules with the purpose of avoiding double taxation and distortion of competition between taxable persons must be adopted. In Forvaltnings AB Stenhoven v Riksskatteverket (Case C 320/02) [2004] STC 1041, paras 8 and 25 and Jyske Finans A/S v Skatteministeriet (Case C 280/04), paras 32 and 37, the Court of Justice treated these recitals as correctly stating the purpose of the amendment introducing the margin scheme. 17. Article 26aB was entitled Special arrangements for taxable dealers. Taxable dealers for this purpose are defined as taxable persons who in the course of business acquired second hand goods, works of art, antiques or collectors items: see article 26aA. Article 26aB provided that a taxable dealer was entitled to account for VAT on his profit margin if he had obtained the goods within the Community from one of four categories of person, namely: (i) a non taxable person; (ii) a taxable person if the supply by him was pursuant to an exempt activity under article 13B(c) of the Sixth Directive, ie it did not give rise to any right to deduct input tax; (iii) in the case of capital assets, a taxable person who was exempt under article 24 of the Sixth Directive as a small undertaking; or (iv) another taxable dealer who was himself operating under the margin scheme. 18. Leaving aside the question of distortion of competition, which is a marginal factor in this case, the terms of Part B of article 26a, read in conjunction with the recitals, disclose two related purposes of the margin scheme, one direct and the other indirect. The direct purpose is apparent from the fact that the common feature of all four categories of anterior supplier is that they will all have supplied the goods to the taxable dealer in circumstances where they will have had no right to deduct input tax. In case (iv) no such right will have arisen in respect of the acquisition by the anterior suppliers own supplier either. The indirect purpose is the one referred to in the recitals, namely the avoidance of double taxation, which would have occurred if the taxable dealer were accountable for VAT on the entire resale price of goods which had already suffered a net charge to VAT at some earlier stage. 19. As regards cars, article 26a was, as I have said, transposed into English law with effect from 1995 by article 8 of the Value Added Tax (Cars) Order 1992, SI 1992/3122 (as amended). Omitting references to transactions chargeable under Manx law, article 8(1) and (2) of the Order provide: (1) Subject to complying with such conditions (including the keeping of such records and accounts) as the Commissioners may direct in a notice published by them for the purposes of this Order or may otherwise direct, and subject to paragraph (3) below, where a person supplies a used motor car which he took possession of in any of the circumstances set out in paragraph (2) below, he may opt to account for the VAT chargeable on the supply on the profit margin on the supply instead of by reference to its value. (2) The circumstances referred to in para (1) above are that the taxable person took possession of the motor car pursuant to (a) a supply in respect of which no VAT was chargeable under the Act ; (b) a supply on which VAT was chargeable on the profit margin in accordance with para (1) above, or a corresponding provision of the law of another member state; (bb) a supply received before 1 March 2000 to which the provisions of article 7(4) of the Value Added Tax (Input Tax) Order 1992 applied; (c) a transaction except one relating to the transfer of the assets of a business or part of a business as a going concern which was treated by virtue of any Order made or having effect as if made under section 5(3) of the Act as being neither a supply of goods nor a supply of services; (d) a transaction relating to the transfer of the assets of a business or part of a business as a going concern which was treated as neither a supply of goods nor a supply of services if the transferor took possession of the goods in any of the circumstances described in this paragraph. Paragraphs (c) and (d) of article 8(2) refer to transactions treated as neither a supply of goods nor a supply of services. This is a reference to article 5 of the Value Added Tax (Special Provisions) Order 1995, SI 1995/1268, made under powers conferred on the Treasury by section 5(3) of the Value Added Tax Act 1994. It provides (omitting irrelevant subsections and references to Manx legislation): (1) Subject to para (2) below, there shall be treated as neither a supply of goods nor a supply of services the following supplies by a person of assets of his business (a) their supply to a person to whom he transfers his business as a going concern where (i) the assets are to be used by the transferee in carrying on the same kind of business, whether or not as part of any existing business, as that carried on by the transferor, and (ii) in a case where the transferor is a taxable person, the transferee is already, or immediately becomes as a result of the transfer, a taxable person ; (b) their supply to a person to whom he transfers part of his business as a going concern where (i) that part is capable of separate operation, (ii) the assets are to be used by the transferee in carrying on the same kind of business, whether or not as part of any existing business, as that carried on by the transferor in relation to that part, and (iii) in a case where the transferor is a taxable person, the transferee is already, or immediately becomes as a result of the transfer, a taxable person 20. It will be apparent that article 8(2) of the Cars Order is not an exact reproduction of article 26a of the Sixth Directive. It applies the margin scheme in five cases. The first (para 2(a)) is that the taxable reseller acquired the car under a transaction in respect of which no VAT was chargeable. The second (para 2(b)) is that he has acquired it from a taxable person who is himself operating under the margin scheme. The third (para 2(bb)) is that the car was acquired by the reseller before 1 March 2000 in circumstances where under the law as it then stood input tax in respect of cars was disallowed altogether: see article 7(1) and (4) of the Value Added Tax (Input Tax) Order 1992, SI 1992/3222. The fourth (para 2(c)) is that the car was acquired as part of the assets of a business transferred as a going concern which was de supplied by article 5(1) of the Special Provisions Order (quoted above). The fifth is that it was acquired under some transaction other than the transfer of the assets of a business, but which is also de supplied by an order made under section 5(3) of the Value Added Tax Act 1994. This includes the assignment by an owner of goods comprised in a hire purchase or conditional sale agreement of his rights and interests under that agreement: see article 5(4) of the Special Provisions Order. The first two of these cases substantially correspond to the cases specified in article 26aB(2) of the Sixth Directive. The third is of purely historic importance. It is essentially a transitional provision reflecting an earlier United Kingdom VAT regime for cars. The fourth and fifth are not foreshadowed in article 26aB(2) of the Directive unless (as the Commissioners submit) they are covered by the exemption for goods sourced from a non taxable person. All five cases, however, manifestly have the same underlying purpose as article 26a. This is because in all five cases, the reseller seeking to avail himself of the margin scheme will have acquired the goods from someone with no right to recover input tax in respect of their own acquisition of them, and in the second case the same will also be true of the anterior suppliers own supplier. In those cases falling within the five categories where the goods originate from a person who was charged VAT on the cost of acquisition, the object and effect is to avoid double taxation. As with article 26a of the Directive, there is an element of overkill, in that article 8(2) captures dealings in which goods may not have given rise to a full charge to tax at any stage. 21. Mr Cordara QC, who appeared for the taxpayer, puts forward two main arguments about this. 22. His first argument challenges the view that the margin scheme legislation is based upon a policy of avoiding double taxation or trapped VAT. He accepts that there is such a policy. But he submits that neither the EU nor the UK legislation can be regarded as being based on it, because double taxation was not their exclusive targets. This is because it is not a precondition to the application of the margin scheme that an earlier owner should have paid VAT on the car. Some goods covered by article 26a of the Sixth Directive will never have suffered a full charge to VAT. Thus, to take the simplest (and probably the commonest) case, where the taxable dealer has acquired the goods from a non taxable person, say a householder selling furniture otherwise than in the course of a business, and the householder himself acquired them new from a taxable person, then VAT will have been paid on the cost of acquisition, assuming that no exemptions apply. That VAT will not be recoverable by the householder on the subsequent sale to the taxable dealer. It will, in the jargon of VAT specialists, be trapped. Most second hand goods which are not works of art, antiques or collectors items will have suffered a charge to VAT on the full price when they were first sold new. On the other hand, antiques, which are defined as objects more than a hundred years old other than works of art or collectors items, will not have been subject to a charge to VAT on the full price unless (unusually) the householder acquired them from a dealer who elected not to be taxed under the margin scheme, or they were subject to VAT on the full price in another member state at a time when the VAT treatment of second hand goods (including antiques) was unharmonised. Works of art or collectors items may or may not have been subject to a charge to VAT on the full price at some stage, depending on their age, their whereabouts at earlier stages of their history and the taxable status of their creator or any other intermediary through whose hands they have passed. Mr Cordara submits that it would, he says, have been difficult to design a workable system which required one to ascertain whether VAT had in fact been paid in every case on some historic transfer of the goods. So it was decided as a matter of policy to expand the scope of the margin scheme to make it more generous and at the same time easier to administer. In the process, the connection with double taxation and trapped VAT was diluted. 23. I do not accept this argument. Both article 26a of the Directive and article 8(2) of the Cars Order apply the margin scheme to cases where if VAT was charged, it will not have been recoverable, even though that will include some cases where VAT was never charged. I have no doubt that Mr Cordara is right to say that this was done because of the difficulty of designing a workable legislative scheme for second hand goods which depended on whether at some stage the particular goods passed through the hands of someone who had actually charged VAT on the full price. But none of this affects the purpose of the margin scheme. Sometimes the only practicable way of capturing a particular category of transactions which is hard to define is to capture a larger category which is easier to define. This means that the result is an imperfect legislative scheme but not an aimless one. Its purpose is still to capture the smaller category. The element of overkill in this legislative scheme will be larger for some classes of goods than for others. But it is worth pointing out that we are concerned with cars, a class of goods in which the element of overkill is likely to be small. Apart from a small number of cars still in existence which were sold new before 1973, and certain special purpose vehicles which are zero rated (such as vehicles designed or adapted for the disabled), all used cars will originally have been sold as new cars under transactions attracting a full charge to VAT. 24. I turn to Mr Cordaras second argument, which focusses on the application of the margin scheme to cars acquired under de supplied transactions, namely (i) pursuant to the assignment of rights and interests under a hire purchase or conditional sale agreement, or (ii) as part of the assets of a business transferred as a going concern. These cases, which depend on article 8(2)(c) and (d) of the Cars Order, are the fourth and fifth cases which I have identified above. They are critical to steps 2, 3 and 4 of the KPMG scheme. Mr Cordara argues that even on the footing that the exemption of such transfers from VAT by article 5 of the Special Provisions Order is based on the Sixth Directive, their treatment as gateways to the margin scheme is not. This, he says, is because the only relevant gateway in article 26aB of the Sixth Directive is that the goods were acquired from a non taxable person, whereas article 8(2)(c) and (d) of the Cars Order apply it to taxable persons in respect of specific categories of transaction. He submits that these are additional statutory tax concessions, creatures of the domestic law of the United Kingdom, which have nothing to do with EU law. He says that the same is true of other special UK schemes (such as the Motability scheme for disabled vehicles) which have applied the margin scheme even more widely. Not being applications of EU law, he submits, the underlying purpose of article 26a cannot be said to apply to them. The point, if correct, has more radical implications, as Mr Cordara recognised. It would mean that the principle of abuse of law had no application to these particular exemptions at all. 25. I reject this argument also. I am prepared to assume, without deciding, that the application of the margin scheme to de supplied transactions by article 8(2)(c) and (d) of the Cars Order is not derived from article 26a of the Sixth Directive. On that assumption, these particular features of the United Kingdom margin scheme were creatures of United Kingdom law only. It does not follow that the underlying purpose of applying the margin scheme to de supplied transactions is any different from the underlying purpose of applying it to other cases covered by article 8(2) of the Cars Order which are unquestionably authorised by article 26a. They all have the same essential feature in common, namely that if VAT has been charged on the goods at some earlier stage, it will not have been recoverable. It is that feature which accounts for the application to them of the margin scheme. By de supplying certain transactions by article 5 of the Special Provisions Order, the United Kingdom has in effect added further occasions on which, if VAT has at some stage been charged, it will not be recoverable. In extending the margin scheme to cover these transaction by article 8(2) of the Cars Order, it has simply applied the policy underlying article 26a of the Directive to further categories of transactions which are in the relevant respects comparable. It is still the same policy. 26. If, therefore, this argument is to succeed, it must be on the more radical basis that because the application of the margin scheme to de supplied transactions is not derived from article 26a, the EU principle of abuse of law cannot apply to article 8(2)(c) and (d) of the Cars Order at all. A very similar suggestion was rejected by the Court of Appeal in WHA Ltd v Revenue and Customs Commissioners, paras 43 47 (Lord Neuberger). 27. In my view they were right to reject it. VAT is a largely but not entirely harmonised tax which depends for its application to taxpayers on its implementation in the domestic law of member states but is part of the legal order of the European Union. The domestic VAT regime of member states will include provisions directly transposing the relevant Directives into national law. Depending on the drafting tradition of the relevant member state, the general principles of its tax law and its rules of private (especially contract) law, this may involve adapting or supplementing the language of the Directive to accommodate its requirements to the domestic context. In addition, there may be national provisions dealing with matters which the Directives leave to member states, either expressly or because they relate to matters such as procedure and civil remedies which are left to member states under the general distribution of functions between EU and national institutions. These features of national implementing laws are nonetheless part of a scheme for implementing an EU tax. National VAT regimes fall to be applied not just according to the letter of the national law, but in accordance with a number of general principles of EU law whose origin is the jurisprudence of the Union rather than the constitutive treaties or legislation made under them. These include the principle of respect for fundamental rights, the principle of proportionality, the principle of legal certainty with its concomitant doctrines of legitimate expectation and good faith, and the principle of abuse of law. Their application is not excluded because some particular feature of the national legal regime applying an EU tax has its origin in a domestic legislative choice rather than in a member states obligation to implement a Directive. 28. Thus, although remedies for breach of an EU obligation are a matter for domestic law, in Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners (Case C 362/12) [2014] AC 1161, the principle of legal certainty and the doctrine of legitimate expectations were applied to the United Kingdoms legislative choices about remedies for recovering overpaid VAT: see paras 44 49. This court had previously reached the same conclusion, rejecting the submission (see pp 348 349) that these principles did not apply to a feature of English law which was not the result of a Union obligation: [2012] 2 AC 337. In Revenue and Customs Commissioners v Weald Leasing Ltd (Case C 103/09) [2011] STC 596, it was argued that the abuse of law principle only applies to tax advantages which are contrary to Community law provisions and not to attempts to circumvent domestic law (para 23). Rejecting this submission, Advocate General Mazak said, at para 24: I consider that Weald Leasing's submission cannot be accepted. It would appear from the file before the court, and subject to verification by the referring court, that paragraph 1, Schedule 6, of the VAT Act 1994 was enacted pursuant to a derogation under article 27 of the Sixth Directive. In my view, provisions of national legislation which were adopted in accordance with the derogations laid down in article 27 of the Sixth Directive form an integral part of the national VAT system, are binding on a taxable person under national law and may be relied upon by the tax authorities of a member state before the national courts against that person. For the purposes of the application by the national courts of the abuse principle as laid down in Halifax, any distinction between national provisions which implement the provisions of the Sixth Directive and those which were adopted in full compliance with a derogation permitted under that directive is, in my view, contrived and tends to undermine the integrity of the national VAT system and indirectly the EU VAT system. Agreeing with its Advocate General, the court held (para 42): In that context, Weald Leasing's argument that the principle of prohibiting abusive practices does not apply to breach of paragraph 1 in Schedule 6 to the VAT Act 1994 because that provision is purely a question of national law cannot be accepted, because that provision was adopted on the basis of article 27 of the Sixth Directive and forms part of the national legislation implementing that directive. Weald Leasing was, as both of these citations show, a case in which the relevant provision of United Kingdom law was authorised by an express derogation in the Directive. But logically that can make no difference. The point is that no rule of EU law was being circumvented. What was being circumvented was a rule of domestic law which had been incorporated domestically in an EU scheme. 29. I would reach the same conclusion as a matter of English domestic law. The Cars Order was made with the intention of applying article 26a of the Sixth Directive to the used car market. All domestic VAT implementing legislation is made against the background of EU law, including its general principles, and on the footing that these will apply to it. It would be irrational and unworkable for the principle of abuse of law to apply to some steps in a concerted scheme of transactions but not others, depending on the degree to which the legislators intention to transpose the Directive was successfully achieved. For these reasons, I think that Lord Neuberger was right in WHA Ltd v Revenue and Customs Commissioners, at para 44, to say that if the domestic legislation in question has been enacted with the intention of giving effect to the Directive, the fact that it imperfectly transposes it should not justify non application of the abuse principle. 30. The effect of the KPMG scheme was to enable the Pendragon Group to sell demonstrator cars second hand under the margin scheme in circumstances where VAT had not only been previously charged but fully recovered. The result was that no net charge to VAT was ever suffered, except on the small or non existent profits realised on the resale. A system designed to prevent double taxation on the consideration for goods has been exploited so as to prevent any taxation on the consideration at all. I conclude that in that respect the KPMG scheme was contrary to the EU policy underlying the margin scheme, and that the first Halifax test was satisfied. The second Halifax test: transactions with the essential aim of obtaining a tax advantage 31. The first question which arises under this head is the nature of the evidence which may be relevant or admissible to prove the transactions essential aim. Both parties sought to rely, in different ways, on extrinsic evidence. The Commissioners sought to rely on the advantages claimed for the scheme by KPMG when selling it, and Pendragon relied on the evidence of its group finance director Mr Forsyth about the companys reasons for entering into the scheme. Since the purpose of a contract is not necessarily the same as its meaning, the evidence which is admissible to prove it cannot be limited to what would be admissible as an aid to construction. It may in an appropriate case include evidence not just of the background knowledge available to the parties, but of the financial position and objective commercial requirements of the party obtaining the tax advantage, the relationship between the participants, the reasonableness of the consideration, the mechanics of the performance, the normal course of the relevant business and potentially other matters. But the Halifax test requires the essential aim of a transaction is to be determined by reference to objective factors. As Advocate General Maduro put it at para 87 of his opinion, this must not be confused with the subjective intention of the participants in those activities. Much of the evidence which the parties deployed before the First Tier Tribunal could go only to Pendragons subjective intention or motive, or KPMGs assumptions about the attractions of their scheme to their client. Much of the rest was of no assistance in a case where tax planning was admitted to be part of the rationale of the scheme and transactions comprising it spoke for themselves. 32. The First Tier Tribunals findings show that the overall result of the KPMG scheme was to achieve five rational commercial objectives other than obtaining a tax advantage: (i) cars were acquired from the manufacturer for use within the group as demonstrator cars; (ii) Pendragon diversified their sources of credit by adding the Socit Gnrale Group to their circle of funders; (iii) the carrying cost of the cars was financed by credit provided for a period of up to 45 days by SGJ; (iv) SGJ was secured during that period by holding the assigned leases and title to the cars; and (v) the cars were resold second hand to consumers at some stage thereafter when Pendragon had finished with them. 33. The selection as the funding bank of an offshore institution which was not a taxable person cannot in itself be regarded as objectionable. It is no part of the policy of the legislation that a party should be restricted in its freedom to select as its commercial partners firms whose place of residence gives dealings with them a tax advantage, even if that is the only reason for their selection. But it is not just the non resident status of SGJ which enabled the tax advantage to be obtained. The particular method by which SGJ was brought into the chain of contracts, involving successive transactions by which Pendragon navigated its way from one VAT exemption to another, was an unnecessary and artificial way of involving them. Taking the scheme as a whole, its economic substance was that it was a sale and lease back, which is a perfectly ordinary commercial financing arrangement. But it had two special features. One was that instead of Pendragon plc or a dealership company transferring the cars to the funding bank SGJ and taking them back on lease, a Captive Leasing Company was interposed at Step 2 as the lessor, which then leased the cars to the dealership companies and assigned the leases and title to the cars to SGJ at Step 3. The other special feature was that instead of the leases being brought to an end by the exercise of an option to purchase or by some other mode of termination, another captive company (Captive Co 5) was interposed at Step 4 to take a transfer of SGJs leasing business (or a discrete part of it) comprising the leases, title to the cars and the associated goodwill. Each of these two features was essential to the tax efficacy of the KPMG scheme. The second was essential in order to bring Captive Co 5s acquisition of possession within the gateway for assets acquired as part of a business transferred as a going concern. The first was essential because under article 8(2)(d) of the Cars Order the use of that gateway was available only if the transferor of the business had himself taken possession of the cars under one of the other gateways at paras (a), (b) or (c). The relevant one was (c), which included the assignment of rights under a hire purchase or conditional sale agreement. However, neither of these two special features of the scheme had any commercial rationale other than the achievement of a tax advantage. They were manifestly included not for the purpose of facilitating the obtaining of credit from SGJ but for the sole purpose of legally recharacterising a transfer of cars without incurring net liability on the price. 34. The decisions below 35. That is not, however, the end of the matter, because the First Tier Tribunal concluded that neither of the two requirements laid down in Halifax was satisfied and that the KPMG scheme was not abusive: [2009] UKFTT 192 (TC). Under sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007, an appeal lies from the First Tier Tribunal to the Upper Tribunal and from the Upper Tribunal to the Court of Appeal on points of law only. In addition, such an appeal is circumscribed by the ordinary principles applicable to any exercise of appellate I conclude that the second Halifax test was also satisfied. jurisdiction. One of these is that unless vitiated by some error of principle a decision based on the evaluation of competing factors will generally be respected. The Upper Tribunal considered that the scheme was abusive and that the First Tier Tribunal had gone wrong in law. The Court of Appeal restored the decision of the First Tier Tribunal: [2014] STC 844. The leading judgment was given by Lloyd LJ, with whom Lewison and Gloster LJJ agreed. He carefully examined the KPMG scheme and its component transactions, without expressing any concluded view of his own on the difference between the two tribunals conclusions about it. He considered that the First Tier Tribunals conclusion depended on an essentially evaluative exercise and that it had been entitled to find as it did. 36. As far as the first requirement was concerned the First Tier Tribunal did not accept that the rationale of article 26A was the avoidance of double taxation. This was because they considered, adopting Pendragons submission, that that analysis was inconsistent with the articles definition of eligible transactions, which captured cases in which VAT would not previously have been charged on the goods as well as cases in which it had been. The First Tier Tribunal did not therefore accept that the use of the margin scheme in this case was inconsistent with its purpose. Turning to the second Halifax requirement, they found that the KPMG scheme satisfied a genuine need to obtain secured finance from SGJ and to diversify Pendragons sources of credit. On that basis, the Tribunal concluded (para 51) that the obtaining of finance in all the circumstances of the case was the predominant, principal or a central aim of the transactions, and we so find as a primary fact on the basis of objective factors. 37. The Upper Tribunal held that both Halifax tests were satisfied: [2012] UKUT In my opinion the KPMG scheme was an abuse of law. 42. The simplest redefinition which corrects the abusive features of the scheme is to strip out the four Captive Leasing Companies (which leased the cars to the dealership companies at Step 2 and assigned the leases to SGJ at Step 3), and Captive Co 5 (which took the transfer of SGJs leasing business at step 4 and sold the used cars to the consumer at Step 5). Instead, it will be assumed (i) that the cars were sold by Pendragon plc to the dealership companies; (ii) that the dealership companies sold them to SGJ and then took them back from SGJ on lease; (iii) that the lease term was 45 days (the maximum period for which finance was provided under the actual arrangements); (iv) that the final payment repaid the capital amount of the SGJs advance with interest; (v) that title in the cars passed back to the dealership companies seven days thereafter (the interval after the termination of the leases actually agreed for the exercise of the option to purchase); and (vi) that the dealership companies then sold them as used cars to consumers. On that footing, the Dealership Companies should have accounted for output tax on a sale to SGJ, and reclaimed input tax including the tax incurred on the purchase from Pendragon. Article 8(2) of the Cars Order will not apply, and the Dealership Companies will be accountable for VAT on the full second hand price. Conclusion 43. I would allow the appeal. Any other VAT consequences of the redefined transaction which cannot be agreed between the parties should be referred to the First Tier Tribunal for determination. I would invite the parties to agree an appropriate form of declaration, or in default of agreement to make submissions on the form of declaration in writing within two weeks. LORD CARNWATH: (with whom Lord Neuberger, Lord Sumption, Lord Reed and Lord Hodge agree) 44. I agree that the appeal should be allowed for the reasons given by Lord Sumption. I add a brief comment only in respect of Lloyd LJs comments on the role of the Upper Tribunal in an appeal of this kind: [2013] EWCA Civ 868. 45. He identified the principal question on the appeal as being whether, in reversing the decision of the First Tier Tribunal the Upper Tribunal went beyond what is properly open to an appellate court or tribunal where facts have been found and evaluated by the court or tribunal from which the appeal is brought (para 6) Later in his judgment, in a passage headed the proper approach of the appellate body (para 70ff), he referred to the often cited observations of Lord Radcliffe in Edwards v Bairstow [1956] AC 14, 33, on the role of the court when reviewing decisions on issues of fact by a lower tribunal. In the context of VAT he found guidance in the judgments in Procter & Gamble v HMRC [2009] EWCA Civ 407; [2009] STC 1990, in which, as he put it, there had been an evaluative task on the evidence which was entrusted to the VAT and Duties Tribunal, predecessor of the First Tier Tribunal in the present case, subject to an appeal on a point of law from there to the High Court as now to the Upper Tribunal . (para 75) He quoted the words of Jacob LJ, who in the leading judgment had recorded the agreement of counsel that the focus of the debate should be on the decision of the tribunal, rather than that of the High Court: For it is the tribunal which is the primary fact finder. It is also the primary maker of a value judgment based on those primary facts. Unless it has made a legal error in that in so doing (eg reached a perverse finding or failed to make a relevant finding or has misconstrued the statutory test) it is not for an appeal court to interfere. (para 7) 46. Applying the same approach to the present case, Lloyd LJ said: 77. Accordingly, the first issue for us is whether the First Tier Tribunal erred in law in reaching the conclusion that the essential aim of the transactions was not to achieve the tax advantage. Was that a conclusion to which it was entitled to come? The Upper Tribunal held that it had so erred. Of course we need to look at the basis for the Upper Tribunal's decision but in the end our decision is as to whether the First Tier Tribunal went wrong, not (directly) whether the Upper Tribunal went wrong 47. Mr Pleming QC did not question the courts reliance on the Proctor & Gamble principles, in its consideration of whether the decision of the First Tier Tribunal disclosed an error of law. But he submitted that at the next stage, in looking at the consequences of such an error if found, the court failed to take account of the extended jurisdiction conferred on the Upper Tribunal by the Tribunal, Courts and Enforcement Act 2007, as compared to that of the High Court on an appeal under the previous law. By section 12, where the Upper Tribunal finds that the making of the decision concerned involved the making of an error on a point of law, it is not obliged to remit the matter for redetermination by the First Tier Tribunal. Instead it may itself remake the decision (section 12(2)(b)(ii)), and in doing so it may (a) may make any decision which the First Tier Tribunal could make if the First Tier Tribunal were re making the decision, and (b) may make such findings of fact as it considers appropriate. (section 12(4)). 48. This extended jurisdiction recognises that under the new tribunal system, established by the 2007 Act, the Upper Tribunal is itself a specialist tribunal, with the function of ensuring that First Tier Tribunals adopt a consistent approach to the determination of questions of principle which arise under the particular statutory scheme in question. 49. In R (Jones) v First Tier Tribunal (Social Entitlement Chamber) [2013] UKSC 19; [2013] 2 AC 48 (in a judgment agreed by the majority of the court), I spoke of the role of the Upper Tribunal in the new system: Where, as here, the interpretation and application of a specialised statutory scheme has been entrusted by Parliament to the new tribunal system, an important function of the Upper Tribunal is to develop structured guidance on the use of expressions which are central to the scheme, and so as to reduce the risk of inconsistent results by different panels at the First Tier level. (para 41) This was consistent with the approach of the preceding White Paper (paras 7.14 21), which had spoken of the intended role of the new appellate tier in achieving consistency in the application of the law, law for this purpose being widely interpreted to include issues of general principle affecting the jurisdiction in question. Such a flexible approach was supported also by recent statements in the House of Lords, in cases such as Moyna v Secretary of State for Work and Pensions [2003] 1 WLR 1929 and Lawson v Serco [2006] ICR 250. In the latter case (para 34), Lord Hoffmann had contrasted findings of primary facts with the an evaluation of those facts to decide a question posed by the interpretation of the legislation in question: Whether one characterises this as a question of fact depends upon whether as a matter of policy one thinks that it is a decision which an appellate body with jurisdiction limited to errors of law should be able to review. 50. The difficult concept of abuse of law as developed by the European court, though not strictly one of statutory construction, is a general principle of central importance to the operation of the VAT scheme. It matters little whether it is described as involving an issue of mixed law and fact, or of the evaluation of facts in accordance with legal principle. However it is described, it was clearly one which was particularly well suited to detailed consideration by the Upper Tribunal, with a view to giving guidance for future cases. Having found errors of approach in the consideration by the First Tier Tribunal, it was appropriate for them to exercise their power to remake the decision, making such factual and legal judgments as were necessary for the purpose, thereby giving full scope for detailed discussion of the principle and its practical application. Although no doubt paying respect to the factual findings of the First Tier Tribunal, they were not bound by them. They had all the documentation before the First Tier Tribunal, including witness statements, and transcripts of the evidence and submissions, and detailed written and oral submissions. It is clear that they undertook a thorough exercise involving a hearing lasting six days. 51. Against this background, it was unhelpful, in my view for the Court of Appeal to identify the main issue as to whether the Upper Tribunal went beyond its proper appellate role. The appeal to the Court of Appeal (under section 13) was from the decision of the Upper Tribunal, not from the First Tier, and their function was to determine whether the Upper Tribunal had erred in law. That was best approached by looking primarily at the merits of the Upper Tribunals reasoning in its own terms, rather than by reference to their evaluation of the First Tiers decision. True it is that the Upper Tribunals jurisdiction to intervene had to begin from a finding of an error of law. But that was not the main issue in the appeal, which was one of more general principle. Indeed, given the difficulties of drawing a clear division between fact and law, discussed by Lord Hoffmann, it may not be productive for the higher courts to spend time inquiring whether a difference between the two tribunals was one of law or fact, or a mixture of the two. There may in theory be a case, where it can be shown that the sole disagreement between the two tribunals related to an issue of pure fact, but such a case is likely to be exceptional. In the present case, as Lord Sumption has shown, there were no significant issues of primary fact. The differences between the two tribunals related to the understanding of the abuse of law principle, and their evaluation of the facts in the light of that understanding. The Upper Tribunal reached a carefully reasoned conclusion on law and fact. The task of the Court of Appeal was to determine whether that conclusion disclosed any error of law. 90 (TCC). On the first Halifax test, they considered that as a matter of construction and on the CJEU authorities, the purposes of the amendment which introduced article 26a into the Sixth Directive were the avoidance of double taxation and of distortion of competition, and that this was a proposition of law on which the First Tier Tribunal were wrong. It follows from what I have said that in my view the Upper Tribunal were right about this. 38. But that will not justify the Upper Tribunals conclusion unless they were also right about the second test. They overruled the First Tier Tribunal on that point for four reasons. First, they considered that the First Tier Tribunal had been too much influenced by inadmissible evidence of Pendragons subjective intentions and had thereby departed from the objective test laid down in Halifax. Second, applying an objective test, the Upper Tribunal concluded that, prima facie, tax avoidance was the real reason why Pendragon entered into the KPMG scheme, and the admissible evidence was insufficient to displace that conclusion. In particular, they regarded the use of an offshore bank as the source of finance as an artificial element of the scheme which served no commercial purpose. Third, they considered that they were entitled to substitute their own view for that of the First Tier Tribunal because the essential aim of the KPMG scheme was at least partly a question of law. Fourth, they considered that so far as it was a question of fact, the First Tier Tribunal was plainly wrong. In particular, they had not had regard to the scale of the tax advantage or the cost of the finance, or analysed in detail the component transactions. 39. In my opinion, the First Tier Tribunals conclusion on the second Halifax test was wrong in law. My reasons overlap with those of the Upper Tribunal but do not wholly correspond with them. I think that while the First Tier Tribunals discussion of the evidence does not sufficiently distinguish between purpose and motive, it is difficult to demonstrate that this had a decisive effect on their reasoning. I have the strongest doubts about whether the scale of the tax advantage had the significance which the Upper Tribunal apparently attached to it. And for reasons which I have given, I do not consider that the choice of an offshore bank was in itself abusive. To my mind, the objection to the reasoning of the First Tier Tribunal is more fundamental. They approached their task at too high a level of generality. They observed, quite correctly, that the secured financing of carrying costs through a bank was an ordinary commercial arrangement. They identified a number of commercial objectives which they regarded as explaining why Pendragon entered into the scheme. But they did not ask themselves whether Pendragons commercial objectives explained the particular features of the transactions which produced the tax advantage. In particular, they did not ask themselves whether they explained the particular method by which the bank was involved at Steps 2, 3 and 4. This meant that they did not answer the critical question on which, in point of law, the identification of the essential aim depended. If they had done, they would have been bound to conclude that the features which produced the tax advantage had no other rationale. 40. Redefinition 41. It follows that the transactions fall to be redefined so as to re establish the situation that would have prevailed in the absence of the transactions constituting that abusive practice: Halifax, para 98. The redefinition is purely notional. Its effect is not to alter retrospectively the terms of the transactions, but simply to entitle the Commissioners, as between themselves and the taxpayer, to treat them for the purpose of assessing VAT as if their abusive features had not been present: see Revenue and Customs Commissioners v Newey (Case C 653/11) [2013] STC 2432, paras 50 51. The object of any redefinition in this case must be to deprive the taxpayer of the illegitimate advantage of paying VAT only on their profit margin on the resale of the cars to the consumer. |
This appeal concerns an application made by the appellant, Professor Shanks OBE FRS FREng, for compensation under section 40 of the Patents Act 1977 (the 1977 Act) on the basis that the patents for an invention which he made in 1982 have been of outstanding benefit to his employer, the third respondent, Unilever UK Central Resources Ltd (CRL), and that he is entitled to a fair share of that benefit. The appeal raises important issues concerning the circumstances in which such compensation may be awarded and how the amount of that compensation is to be determined. The facts Professor Shanks was employed by CRL from May 1982 to October 1986 and was assigned to its Colworth research laboratories in Bedfordshire. He initially received a salary of 18,000 per annum and a Volvo car. His brief was to develop biosensors for use in process control and process engineering. In July 1982 Professor Shanks visited Professor Anthony Turner and Professor John Higgins at Cranfield University and there he learned of the work they were carrying out into the use of biosensors for monitoring diabetes. As a result of this visit Professor Shanks became interested in the possibility of using re-usable or disposable devices incorporating biosensors for diagnostic applications and in a report dated 1 August 1982 entitled Report on new opportunities afforded by electronic sensors he identified a number of new product opportunities, one of which was a limited re-use or disposable sensor for monitoring glucose, insulin or immunoglobulin levels in diabetics. It was at about this time that Professor Shanks conceived his invention. He had often observed how a droplet of liquid placed on the edge of the glass plates of a liquid crystal display (LCD) was drawn by capillary action into the 10-micron gap between them, and he realised the same phenomenon would occur with other liquids such as blood or urine. He also appreciated how it could be used with etched or printed planar electrodes and enzyme electrochemical techniques he had seen at Cranfield, and in this way provide a system for measuring the glucose concentration in blood, serum or urine. In October 1982 Professor Shanks built the first prototype of his invention at home using Mylar film and slides from his daughters toy microscope kit, and bulldog clips to hold the assembly together. It has since become known as the Electrochemical Capillary Fill Device or ECFD. He also developed a similar system which uses fluorescence rather than conductivity and this has become known as the Fluorescent Capillary Fill Device or FCFD. CRL at that time employed all of the Unilever groups UK-based research staff. It was not a trading company and was a wholly owned subsidiary of Unilever plc. Unilever plc and Unilever NV were parallel parent companies of the Unilever group and were listed on the London and Amsterdam stock exchanges respectively, but the business of the group was run as a single entity. Save where from the context otherwise appears, I will refer to the Unilever group as Unilever. It is accepted by Professor Shanks that the rights to his inventions belonged to CRL from the outset pursuant to section 39(1) of the 1977 Act. CRL assigned all these rights to Unilever plc for 100. Unilever plc retained the rights for the UK, Australia and Canada but assigned the rights for elsewhere in Europe, Japan and the USA to Unilever NV, again for 100. Unilever NV later assigned the rights for the USA to a company which later became Unilever Patent Holdings BV. On 13 June 1984 Unilever plc filed UK patent application 8415018 (the priority application). It was entitled Devices for Use in Chemical Test Procedures and was directed to both the ECFD and the FCFD technologies. Professor Shanks was named as inventor. On 12 June 1985 European patent application 0170375 was filed claiming priority from the priority application. It related only to the ECFD technology and was filed by Unilever plc for the UK and by Unilever NV for various other contracting states. Corresponding patent applications were filed in Australia, Canada, Japan and the USA. It was in relation to the patents which were granted on all of these applications (the Shanks patents) that Professor Shanks made the application for compensation which is the subject of these proceedings. Unilever was not itself interested in developing a business in the field of glucose testing for this would have required it to compete with companies which were established in this therapeutic sector. Consequently, relatively little was done to develop the ECFD technology after the end of 1984. Indeed, it was regarded by Unilever as far from a key technology. Instead, until 1986, Unilever and Professor Shanks focused on the FCFD technology which had potential application in areas of relevance to Unilevers existing businesses. Professor Shanks left Unilever in October 1986 and in October 1987 Unilever sold the FCFD technology, and the patents it held relating to it, to Ares-Serono Inc. Ares-Serono also took an option on the ECFD technology but did not exercise it. In the years that followed Unilever carried out a good deal of work in the field of pregnancy and fertility testing where it developed commercially successful products. Nevertheless, some research into glucose testing was carried out from 1987 to 1994 and, based primarily upon the work of Professor Brian Birch, Unilever applied for and was granted further patents (the Birch patents). It also maintained the Shanks patents. The glucose testing market expanded considerably in the late 1990s and 2000s, however; and biosensors incorporating the ECFD technology played an important role in this. Indeed, the ECFD technology eventually appeared in most glucose testing products. It also became apparent that, although not vital, it was a technology that most of the significant companies in the field were willing to pay millions of pounds to use. Unilever never considered licensing of patent rights to be a key part of its business. Its main purpose in having patents was to use them to protect its existing commercial activities. Cross-licensing of unexploited patents was of secondary importance and out-licensing was of even less interest. Consequently, the resources it devoted to the activity of out-licensing were relatively limited and, in most cases, the prospective licensees of the Shanks patents contacted Unilever and initiated licensing discussions themselves. However, as I have mentioned, Unilever did keep the Shanks patents in force and it needed significant effort and skill to conduct the licensing negotiations, albeit not to the extent a dedicated licensing team would have provided. In the end seven licences (or sets of licences) of the Shanks patents were granted by Unilever for a total consideration of about 20.3m. The hearing officer thought this figure should be discounted to reflect the inclusion of the Birch patents in all but one of the licences, producing a net figure attributable to the Shanks patents of about 19.55m. In 1994 management responsibility for the Shanks and Birch patents (and various other patents) was transferred to Unipath, another Unilever company. In addition, Unipath took on the bulk of Unilevers medical diagnostics business, including its commercially successful products in the fields of pregnancy and fertility testing. In 2001 Unipath and the Shanks and the Birch patents (and the benefit of the licences under these patents) were sold to Inverness Medical Innovations, Inc (IMI). The hearing officer found that, of the price paid by IMI, about 5m was attributable to the Shanks patents. Unilevers total earnings from the Shanks patents therefore amounted to around 24.55m. The hearing officer estimated that Unilever had incurred costs in prosecuting, maintaining and licensing the patents of about 250,000. It followed that Unilevers net benefit from the patents was about 24.3m which the hearing officer rounded down to 24m. The history of the proceedings Professor Shanks made his application for compensation on 9 June 2006. It came on for hearing before Mr Julyan Elbro, the hearing officer acting for the Comptroller General of Patents (the Comptroller), in March 2012. The hearing lasted for nine days between March and May of that year. On 21 June 2013 the hearing officer issued his decision: BL O/259/13. He found that, having regard to the size and nature of Unilevers business, the benefit provided by the Shanks patents fell short of being outstanding. The hearing officer went on to consider what a fair share of the benefit would have been had he considered it to be outstanding. He had regard to the various matters set out in section 41 of the 1977 Act and concluded that 5% would have been appropriate, amounting to about 1.2m. He declined to increase this figure to take into account the time value of money. Professor Shanks appealed to the High Court against the hearing officers decision. The appeal was heard by Arnold J and he gave judgment on 23 May 2014: [2014] EWHC 1647 (Pat); [2014] RPC 29. He dismissed the appeal, holding that the hearing officer had made no error of principle in finding that the Shanks patents were not of outstanding benefit to Unilever. However, he continued, had he come to the opposite conclusion, he would have found that a fair share of the benefit would have been only 3%. He also held that it was not appropriate to take into account the time value of money and that in assessing the benefit of the Shanks patents to Unilever, the sums it had received should be discounted to reflect the payment of corporation tax. An appeal to the Court of Appeal was also dismissed: Shanks v Unilever plc (No 2) [2017] EWCA Civ 2; [2017] Bus LR 883; [2017] RPC 15. The court (Patten, Briggs and Sales LJJ) agreed with Arnold J that the hearing officer had made no error of principle in considering the issue of outstanding benefit. However, the court unanimously overturned Arnold Js finding in relation to the deduction of corporation tax and, by a majority (Briggs and Sales LJJ), held that there would be cases where the change in the value of money over time would have to be recognised in determining whether the benefit was outstanding, and that it was likely to be relevant in assessing what amounted to a fair share of that benefit. The issues This further appeal now gives rise to the following issues: i) What are the principles governing the assessment of outstanding benefit to an employer and did the hearing officer apply them correctly? ii) How should a fair share of an outstanding benefit be assessed and were the hearing officer and Arnold J wrong in their assessment? I must also consider whether, in assessing what amounts to a fair share of an outstanding benefit, it is appropriate to take into account the time value of money and any liability of the employer for tax. The legal framework Employees inventions are addressed in sections 39 to 43 of the 1977 Act. These provisions have been amended by the Patents Act 2004 but only in relation to patents applied for after 1 January 2005. We are therefore concerned in this appeal with these sections in their form prior to their amendment by the Patents Act 2004. Section 39 deals with the right to an invention made by an employee: 39(1) Notwithstanding anything in any rule of law, an invention made by an employee shall, as between him and his employer, be taken to belong to his employer for the purposes of this Act and all other purposes if - (a) it was made in the course of the normal duties of the employee or in the course of duties falling outside his normal duties, but specifically assigned to him, and the circumstances in either case were such that an invention might reasonably be expected to result from the carrying out of his duties; or (b) the invention was made in the course of the duties of the employee and, at the time of making the invention, because of the nature of his duties and the particular responsibilities arising from the nature of his duties he had a special obligation to further the interests of the employers undertaking. (2) Any other invention made by an employee shall, as between him and his employer, be taken for those purposes to belong to the employee. There have been cases where it has been difficult to decide whether an invention belongs to an inventor or his employer, but this is not one of them. As I have mentioned, there has never been any dispute between the parties that the invention described in European patent application 0170375 belonged to CRL, as Professor Shanks employer, from the outset, whether under paragraph (a) or (b) of subsection (1) of section 39. He was, as the hearing officer held, employed to invent. Section 40 then makes provision for the payment of compensation to an employee in particular circumstances. In its unamended form it reads, so far as relevant: 40(1) Where it appears to the court or the comptroller on an application made by an employee within the prescribed period that the employee has made an invention belonging to the employer for which a patent has been granted, that the patent is (having regard among other things to the size and nature of the employers undertaking) of outstanding benefit to the employer and that by reason of those facts it is just that the employee should be awarded compensation to be paid by the employer, the court or the comptroller may award him such compensation of an amount determined under section 41 below. (2) Where it appears to the court or the comptroller on an application made by an employee within the prescribed period that - a patent has been granted for an invention made (a) by and belonging to the employee; (b) his rights in the invention, or in any patent or application for a patent for the invention, have since the appointed day been assigned to the employer or an exclusive licence under the patent or application has since the appointed day been granted to the employer; (c) the benefit derived by the employee from the contract of assignment, assignation or grant or any ancillary contract (the relevant contract) is inadequate in relation to the benefit derived by the employer from the patent; and (d) by reason of those facts it is just that the employee should be awarded compensation to be paid by the employer in addition to the benefit derived from the relevant contract; the court or the comptroller may award him such compensation of an amount determined under section 41 below. Section 40 therefore deals with two different cases. In the first, the invention belongs to the employer from the outset. In the second, the invention belongs initially to the employee but his or her rights in the invention or any patent or patent application for the invention are subsequently assigned or exclusively licensed to the employer. In this appeal we are concerned with the first and so section 40(1). In such a case the employee may be awarded compensation if the invention is of outstanding benefit to the employer. Of relevance to both cases are section 43(4) which provides that references to a patent and to a patent being granted are references to a patent and its being granted whether under the law of the United Kingdom or the law in force in any other country or under any treaty or international convention; and section 43(7) which provides that benefit means benefit in money or moneys worth. The key amendment introduced by the Patents Act 2004 makes compensation payable when the invention (and not just the patent) has been of outstanding benefit. The amount of compensation is to be determined in accordance with section 41. In its unamended form this reads, so far as relevant: 41(1) An award of compensation to an employee under section 40(1) or (2) above in relation to a patent for an invention shall be such as will secure for the employee a fair share (having regard to all the circumstances) of the benefit which the employer has derived, or may reasonably be expected to derive, from the patent or from the assignment, assignation or grant to a person connected with the employer of the property or any right in the invention or the property in, or any right in or under, an application for that patent. (2) For the purposes of subsection (1) above the amount of any benefit derived or expected to be derived by an employer from the assignment, assignation or grant of - (a) the property in, or any right in or under, a patent for the invention or an application for such a patent; or (b) the property or any right in the invention; to a person connected with him shall be taken to be the amount which could reasonably be expected to be so derived by the employer if that person had not been connected with him. (4) In determining the fair share of the benefit to be secured for an employee in respect of a patent for an invention which has always belonged to an employer, the court or the comptroller shall, among other things, take the following matters into account, that is to say - (a) the nature of the employees duties, his remuneration and the other advantages he derives or has derived from his employment or has derived in relation to the invention under this Act; (b) devoted to making the invention; the effort and skill which the employee has (c) the effort and skill which any other person has devoted to making the invention jointly with the employee concerned, and the advice and other assistance contributed by any other employee who is not a joint inventor of the invention; and (d) the contribution made by the employer to the making, developing and working of the invention by the provision of advice, facilities and other assistance, by the provision of opportunities and by his managerial and commercial skill and activities. Section 43(8) provides that section 533 of the Income and Corporation Taxes Act 1970 is to apply for determining for the purpose of section 41(2) whether one person is connected with another. Entitlement to compensation An employee who makes an invention which belongs to his employer from the outset and for which a patent has been granted is therefore entitled to compensation if he or she establishes: first, that the patent is, having regard among other things to the size and nature of the employers undertaking, of outstanding benefit to the employer; and secondly, that, by reason of these matters, it is just that he or she be awarded compensation. Who is the employer? The starting point for the assessment of whether an employee is entitled to compensation is therefore the identification of the employer. There can be no doubt that, at least in the ordinary case, Parliament intended the term employer to mean the inventors actual employer. Section 39 deals with the ownership of the invention as between the inventor and his or her employer and requires a consideration of the employees duties; section 40 provides for the compensation of employees for certain inventions which may belong initially either to the employer or to the employee and, in an appropriate case, the payment of that compensation by the employer to the employee; and section 41 deals with the assessment of the compensation. In all three cases the employer is the inventors actual employer. What is the benefit? The next task is to identify the benefit in the hands of the employer. This is not explained in section 40(1) which deals with an invention which has always belonged to the employer; nor is it explained in section 40(2) which deals with an invention which initially belonged to the employee. But section 41(1) makes clear that in both cases it is the benefit which the inventors actual employer has derived or may reasonably be expected to derive from the patent, or from the assignment or grant to a person connected with him of any right in the invention or patent or patent application for the invention. Section 41(1) is complemented by section 41(2) which deals further with a disposal to a connected person. This was considered by the Court of Appeal at an earlier stage of these proceedings on an appeal from a decision of Mann J: [2009] EWHC 3164 (Ch); [2010] RPC 11. The Court of Appeal (Longmore LJ, Jacob LJ and Kitchin J) held ([2010] EWCA Civ 1283; [2011] RPC 12) that, in assessing the benefit derived or expected to be derived by an employer from an assignment of the patent to a person connected with him, the court must consider the position of the actual employer and the benefit which the assignee has in fact gained or is expected to gain. There is also one curious feature of section 41(2) which it is convenient to mention at this point. It says it has effect for the purposes of section 41(1) but makes no mention of section 40. Nevertheless, for the legislative scheme to operate effectively, section 41(2) must also have effect for the purposes of section 40 and, in my opinion, it is to be interpreted in that way. As for the assessment of the benefit of the patent, there is no dispute that it means the benefit in the hands of the employer after deduction of any costs to the employer of securing that benefit. Is the benefit outstanding? I now turn to the meaning of the word outstanding in the expression outstanding benefit. In GEC Avionics Ltds Patent [1992] RPC 107, 115, Mr Vivian, for the Comptroller, noted that the statute did not use words such as significant or substantial and said the benefit must be something out of the ordinary and not such as one would normally expect to arise from the results of the duties that the employee is paid for. The employee failed to establish the patent was of outstanding benefit because the employer had received substantial orders for equipment not employing the invention well after its merits were known. In British Steel PLCs Patent [1992] RPC 117, 122, Dr Ferdinando, for the Comptroller, thought the word outstanding implied a superlative. The patent related to an improved valve for controlling the flow of molten metal which was used by the employer at only one site and on one machine. The claim for compensation was rejected because the employee failed to establish a number of the benefits for which he contended, and because the hearing officer felt constrained by the way the case was presented to assess the proven benefit against all of the profits and the whole turnover of the employer, of which it represented only a very small percentage. In Memco-Med Ltds Patent [1992] RPC 403, 414, Aldous J indicated that he did not disagree with the approaches of these hearing officers and said that the word outstanding denoted something special and required the benefit to be more than substantial or good. The case concerned a patent relating to an improved unit for preventing the doors from closing on a person getting into or out of a lift. Sales of the improved unit were of great importance but were all made to one customer and the evidence suggested that the business relationship between the employer and that customer would have been the same whether or not a patent had been granted. So, once again, the claim failed. In Kelly and Chiu v GE Healthcare Ltd [2009] EWHC 181 (Pat); [2009] RPC 12 Floyd J reviewed all of these authorities and, at para 60(iv), summarised the position as he saw it in these terms: Outstanding means something special or out of the ordinary and more than substantial, significant or good. The benefit must be something more than one would normally expect to arise from the duties for which the employee is paid. The Kelly case is of particular interest because the patents in issue were found to be of outstanding benefit to the claimants employer, Amersham, which was subsequently taken over by GE Healthcare Ltd, the defendant. The facts were striking in that, had the patents not existed, Amersham would have faced a financial crisis whereas, with the patents, its business was transformed. The commercial embodiment of the invention of the patents was an imaging agent which cost a little under 2.5m to develop but, with the protection afforded by the patents, achieved sales between 1993 and 2007 having a total value in excess of 1.3 billion. In my view these cases are all helpful to a point as illustrations of circumstances which were found to fall each side of the line. But at the end of the day they provide no substitute for the statutory test which requires the benefit to be outstanding. This is an ordinary English word meaning exceptional or such as to stand out and it refers here to the benefit (in terms of money or moneys worth) of the patent to the employer rather than the degree of inventiveness of the employee. It is, however, both a relative and qualitative term and so I must now consider the context in which the question is to be asked and answered. Put another way, in relation to what must the benefit from the patent be outstanding? Which factors may be taken into account in making that assessment? Here the 1977 Act provides some guidance. It says that the court must have regard among other things to the size and nature of the employers undertaking. But this gives rise to two further questions which were the subject of a good deal of argument before us. What is the employers undertaking for this purpose? And what is the relevance of that undertakings size and nature? The employers undertaking In this context I understand the word undertaking to mean simply a unit or entity which carries on a business activity, and here the undertaking of interest is that of the company or other entity which employs the inventor. In many cases the identification of that undertaking will be comparatively straightforward. It will be the whole or, if it is divided into economic units, the relevant unit of the employers business. So, as Aldous J observed in Memco-Med at p 414 and I agree, the undertaking may be the whole or a division of the employers business. We are concerned in this appeal with a different and more difficult case, however. It is one in which CRL is part of a larger group of companies and where the work carried out by CRLs researchers was exploited by that larger group as a whole. This gives rise to the question whether the relevant undertaking is CRL or the whole or a part of the larger group of which it forms a part, Unilever. The hearing officer rejected the submission made on behalf of Professor Shanks that the employers undertaking was CRL. He said at para 196: In the event, on the facts of this case I find that the reality of the situation is that described by the defendants: regardless of how the various companies in the Unilever group have been structured, researchers at Colworth (employed by CRL) were doing work which was going to be exploited by the group as a whole. Indeed, it is notable that the whole benefit from the Shanks patents was generated by licensing activity operated out of the central Unilever companies. Having regard to the size and nature of the employers undertaking therefore requires me to have regard to whether the benefit from the patents is outstanding in the context of the Unilever group as a whole. Arnold J and the Court of Appeal agreed with the hearing officer. Patten LJ explained at paras 33 and 34 that an assessment of what constituted the undertaking based upon the economic and business realities of the employers organisation was the correct approach. He continued that if one took what he described as a strictly legal approach to the interpretation of the statute it could be said that the employer was CRL but he rejected this as a possible conclusion for two reasons: first, that if what he called the strict legal approach were to govern section 40(1) then it must also apply to section 41(1) with the consequence that the benefit derived from the patents would be limited to the nominal payments CRL received upon their assignment and would not include the sums subsequently received by other companies in the group from licence fees and the sale of Unipath. Secondly, the earlier decision of the Court of Appeal in this case was, in his opinion, only consistent with treating CRLs undertaking as including the other group companies that received these payments. He pointed out that the work carried out by the employees of CRL was intended to enure for the benefit of Unilever as a whole and that he could see no answer to the reasoning of the hearing officer and his conclusion that the relevant undertaking in this case was or included Unilever plc and Unilever NV. Upon this further appeal Mr Patrick Green QC, for Professor Shanks, submits that the hearing officer and the courts below lost sight of the fact that CRL was Professor Shanks employer and that the entire Unilever group could not sensibly be described as CRLs undertaking. Mr Daniel Alexander QC, for Unilever, commends the hearing officers reasoning. He submits that it is unreal to treat CRL as the relevant undertaking because it never generated any material revenues, was not the beneficiary of the royalties in question and is and was simply a service company for the Unilever group. Neither of these interpretations is without difficulty. The submission for Professor Shanks faces the problem that CRL has in reality received no more than a nominal benefit from the patents and certainly nothing that could be described as outstanding. As Mr Alexander fairly says, the real benefits have been received by other Unilever companies. A partial answer to this is provided by section 41(2) which deems the benefit derived from the assignment of a patent to a connected person to be the benefit which could reasonably be expected to be derived if that person had not been connected. True it is that section 41(2) does not in terms apply to section 40(1) but, as I have said, I think it must be interpreted in that way. This is still not a complete answer, however, for the deeming provision does not, on the face of it, apply to the benefit from other patents arising from the work at CRL against which the benefits from the patents in issue may be judged. Mr Green embraces this result, arguing that CRLs actual profits were at most about 2m per year and that judged against this figure, the 24.3m earned from the Shanks patents is plainly outstanding. But that, so it seems to me, is not comparing like with like. It would artificially and unfairly elevate the benefit to CRL from the Shanks patents in relation to any benefit it derived in other ways. The interpretation for which Unilever contends and which was accepted by the hearing officer and on appeal focuses on the phrase the employers undertaking in section 40(1). This, so it is said, is perfectly apt to describe the larger entity of which CRL is a part, that is to say, the whole Unilever group. But the problem with this interpretation is that it strips the phrase from its context. The subsection as a whole is concerned with the benefit of the patent to the employer and the assessment of whether that benefit is, in the hands of the employer, outstanding. Consideration of the size and nature of the employers undertaking is therefore tethered to this assessment. It is not, on the face of it, an inquiry into the value of the benefit to the group of which the employer is a part relative to other unrelated aspects of the groups business. In my judgement the correct approach to the application of section 40 and the one that does least violence to its language lies between these extremes. It is to look at the commercial reality of the situation but to do so, in a case such as the present, from the perspective of the inventors employer. Where, as here, a group company operates a research facility for the benefit of the whole group and the work results in patents which are assigned to other group members for their benefit, the focus of the inquiry into whether any one of those patents is of outstanding benefit to the company must be the extent of the benefit of that patent to the group and how that compares with the benefits derived by the group from other patents for inventions arising from the research carried out by that company. This gives practical and commercial effect to the language of section 41 and involves a comparison of like with like. Furthermore, it is, in my opinion, the approach which sits most comfortably with the next aspect of the analysis, namely the relevance of the size and nature of the employers undertaking. The relevance of size and nature of the employers undertaking Before the Court of Appeal, Unilevers central argument on the issue of outstanding benefit was that 24.3m, though not inconsiderable, was dwarfed by the turnover and profits of Unilever as a whole. As Patten LJ recorded at para 26 of his judgment, Unilever makes a wide range of products from Viennetta ice-cream to deodorants which generate billions of pounds in sales and hundreds of millions of pounds in profits over the life of the patents which relate to them. It was accepted that the rate of return on many if not most of these patents was much lower than on the Shanks patents but that was said not to be enough to make the benefit of the Shanks patents outstanding when regard was had to the size and nature of Unilevers business. This submission found an echo in Mr Alexanders submissions to this court for he took us to a graph of Unilevers profits between 1984 and 2004 against which a plot of the royalty income from the Shanks and Birch patents, displayed on the same scale, was so close to the base line as to be indistinguishable from it. Mr Green characterised this submission before the courts below and in this court as too big to pay. He argued that, were it to be accepted, it would be all but impossible for an employee to establish that the benefit from a patent to a business such as that of Unilever was outstanding and this would be manifestly unjust to employee inventors. This found favour with the Court of Appeal to a point. As Patten LJ explained at para 28, outstanding benefit cannot be determined simply by comparing the income derived from a patent with the overall turnover and profitability of the employers undertaking. But it raises the more fundamental question as to the relevance of the size and nature of an undertaking to the assessment of whether the benefit to it from a patent is outstanding and how these factors should be taken into account. In my judgement there is no single answer to this question. Many different aspects of the size and nature of the employers business may be relevant to the enquiry. For example, the benefit may be more than would normally have been expected to arise from the duties for which the employee was paid; it may have been arrived at without any risk to the business; it may represent an extraordinarily high rate of return; or it may have been the opportunity to develop a new line of business or to engage in unforeseen licensing opportunities. In the circumstances of this case and for the reasons I have given, a highly material consideration must be the extent of the benefit of the Shanks patents to the Unilever group and how that compares with the benefits the group derived from other patents resulting from the work carried out at CRL. In some cases it may be possible to see that a patent has been of outstanding benefit to an employer by looking at the size and profitability of the whole business. In the Kelly case (see paras 37-38 above), for example, the benefits of patent protection went far beyond anything which one would normally expect to arise from the sort of work the employees were doing. The patents protected Amershams business from generic competition and allowed it to make major deals; and sales of the patented product accounted for a large proportion of its profits. In short, the patents transformed its business. Similarly, as Patten LJ explained at para 28, a straightforward comparison of profitability may be sufficient, in the case of a smaller company, to show an outstanding benefit without recourse to wider considerations of the scope of an employees duties or the expectations the employer may have had about the anticipated level of return. I also recognise that a large undertaking may be able to exert greater leverage than a smaller undertaking when negotiating licence fees. This was a matter to which the hearing officer referred in para 207 of his judgment. There he explained and I agree that a particular sum might represent an excellent return for a small undertaking but might not be so regarded by a large undertaking which was in a position to spend substantial sums on litigation to enforce its rights. Much the same might apply to sales of a patented product. A large undertaking might be able to harness its goodwill and sales force in a way that a smaller undertaking could not do. These would be appropriate matters to take into account. On the other hand, I think a tribunal should be very cautious before accepting a submission that a patent has not been of outstanding benefit to an employer simply because it has had no significant impact on its overall profitability or the value of all of its sales. Those profits and sales may have been generated by a range of different products which have nothing to do with the technology the subject of the patent; the parts of the business responsible for them may not have contributed to any commercial success of the patented invention; and they may be a very poor guide to whether the benefit the employer has derived from the patent is out of the ordinary. Indeed, I find it very hard to see how a failure materially to affect the aggregated sales value or overall profitability of the business could, in and of itself, justify a finding that the benefit of a patent has not been outstanding. Tax and the assessment of benefit Arnold J accepted a submission by Unilever that in assessing the benefit it received from the Shanks patents, it was necessary to take into account the amount of tax which it had to pay, and in doing so he placed some reliance on the decision in Celanese International Corpn v BP Chemicals Ltd [1999] RPC 203. There Laddie J held that, in the context of an account of profits derived by a defendant from infringement of a patent, the defendant could only be required to pay over its net profits after payment of corporation tax. The Court of Appeal disagreed with Arnold Js approach and so do I. Section 40(1) is concerned with the assessment of the benefit of the patent to the employer and whether that benefit is outstanding. This exercise is quite different from an assessment of the profits which a defendant has made from its infringing activities and which it has been ordered to disgorge. In this case Dr Osborn, Unilevers expert on this issue, quantified the appropriate reduction to be applied to the benefit Unilever had derived from the patents at 30% on the basis that this was the average rate of corporation tax which it had to pay in the relevant period, as calculated from its accounts. Mr Alexander, for Unilever, submitted that Dr Osborns analysis was reasonable and proportionate and that revenues which had to be paid over in tax, such that they could not be enjoyed by Unilever, could not count as a benefit. I find myself unable to accept Mr Alexanders submission for it seems to me artificially to reduce the size of the benefit before deciding how much compensation should be paid to the employee. In my judgement the first step is to quantify the benefit and the next is to decide how much compensation would secure for the employee a fair share of it. The employee must account for any tax due on that share and the employer must account for any tax due on the balance. The approach for which Mr Alexander contends, on the other hand, would mean that the employer has only to pay to the employee a share of the benefit net of tax but can take the benefit of any available relief from tax in respect of the moneys he has paid, whilst the employee will be liable to account for tax on the moneys that he or she has received. In my judgement the former approach is both fairer and consonant with the legislative purpose of these provisions. It follows that Patten LJ was right to say at para 43 of his judgment that the incidence of tax is a consequence of the benefit rather than a part of it. Assessment of the benefit net of tax would require in every case an investigation of the employers tax position including, among other things, any losses rolled forward. The time value of money Unilever received payments of licence fees under the Shanks patents over the period from 1996 to 2004 and it received the part of the purchase price of Unipath attributable to the Shanks patents in 2001. Professor Shanks made his application for compensation on 9 June 2006. Professor Shanks contends and, indeed, has always contended that Unilever has had the use of the moneys it derived from the Shanks patents ever since it received them and that this should be taken into account. As Arnold J noted, Professor Shanks did not rely upon this contention before him as a basis for challenging the hearing officers decision as to whether the benefit was outstanding. In my judgement he was right to take that course. The mere passage of time cannot turn a patent which was not an outstanding benefit into one which was. However, he did rely on it to increase the size of the benefit of which he should receive a fair share or, to put it another way, to increase the size of his share if he was successful in overturning the hearing officers decision on the issue of outstanding benefit. That remains the position on this appeal and it is convenient to address it now. The hearing officer rejected Professor Shanks argument on the basis that there was not enough evidence before him to justify an increase. The evidence was in his view too speculative. On appeal, Arnold J held that the time value of the money which Unilever had received was not a benefit derived from the Shanks patents within the meaning of section 41(1). He reasoned that the definition of benefit in section 43(7) coupled with the terms of section 41(1) pointed to the assessment being made as of the date the money was received; that the time value of money was not a benefit Unilever derived from the Shanks patents; that if the time value of money were treated as a relevant benefit the enquiry would have no temporal end; that Professor Shanks could have brought the claim earlier than he did; and that, it being common ground that the Comptroller could not award interest, an award reflecting the time value of money would be inconsistent with the statutory scheme. On further appeal to the Court of Appeal, Patten LJ held, like Arnold J, that the benefit under section 41(1) was limited to direct receipts from the exploitation of the patent rights and did not include any allowance for the fact that the employer had had the benefit of those receipts for a period of time prior to an award under that section. However, Briggs LJ, with whom Sales LJ agreed on this issue, came to the contrary conclusion. He explained, at para 73, that he would expect the time value of money (or its change in real value over time due to inflation) to be relevant in the quantification of the inventors fair share under section 41(1) because of the deleterious effect on the real value of money of the likely substantial time between the employers receipt of the benefit and the making of the order for payment at the end of the proceedings. Mr Alexander, for Unilever, now submits that the approach taken by Patten LJ and Arnold J is the correct one for the reasons they gave and because it is clear, simple and practical, and that the alternative, though theoretically attractive in some respects, would introduce disproportionate complexity, would drive up the costs of proceedings and would actively reward an inventor who delays in bringing a claim, just as Professor Shanks did in this case. In my judgement Mr Alexander was correct to describe the approach contended for by Professor Shanks as attractive, though I would not for my part characterise that attraction as theoretical. To the contrary, it seems to me to be the approach which accords with justice and common sense. Professor Shanks seeks an award which reflects the fact that, on the assumption he prevails on the other limbs of his appeal, he has for many years been kept out of a fair share of the benefit Unilever has derived from the Shanks patents. Nor, with great respect, am I persuaded by the reasoning of Arnold J or that of Patten LJ on appeal. That reasoning has at its heart the proposition that the time value of the money that Unilever has received is neither a benefit nor derived from the Shanks patents. I disagree. I see no reason why the time value of money cannot be a benefit derived from a patent within the meaning of section 41(1). Unilever has had the benefit of the licence fees and other moneys derived from the Shanks patents ever since they were paid. Another legitimate approach, which amounts to the same thing, is that of the majority in the Court of Appeal. On the assumption that he wins on the issue of outstanding benefit, Professor Shanks is entitled to an uplift because the fair share of the benefit should in this case reflect the deleterious effect on the real value of money of the substantial time between Unilevers receipt of the licence fees and other moneys and its making of any payment of compensation. Turning now to Arnold Js other reasons for rejecting this part of Professor Shanks case, the inquiry under section 41(1) will in this case end at the time the order for payment is made. In other cases, in assessing benefit, it may be necessary to look forward. But that is specifically contemplated by section 41(1) which makes clear that, in an appropriate case, an award must be such as to secure for the employee a fair share of the benefit which the employer may reasonably be expected to derive from the patent. I also reject the suggestion that the approach Professor Shanks contends for would cut across the statutory scheme. It is true that the Comptroller has no power to award interest. But that is not what Professor Shanks seeks and in my opinion there is nothing in the scheme which bars the Comptroller from having regard to the impact of inflation in assessing the benefit or what amounts to a fair share of it. As for complexity and delay, there is nothing unduly complex about an assessment of the impact of time on the real value of money; nor should the possibility of an uplift encourage delay, for if in any case the employee has delayed unduly, the Comptroller would no doubt take that into account in carrying out his assessment. In this case there is no finding by the hearing officer that Professor Shanks was unreasonably slow to make his application; nor can he be criticised for his conduct of the proceedings. In my judgement, and on the assumption he is otherwise successful on his appeal, fairness demands that his award of compensation should reflect the detrimental effect of time on the value of money. Was the benefit outstanding? The hearing officer carried out his assessment of the appropriate characterisation of the benefit of the Shanks patents to Unilever by considering that benefit in a number of ways. He looked at it in the light of Unilevers overall profits and turnover, by reference to patents in general, in the context of Unilevers licensing activities, in the light of Unilevers patent activities and finally, as compared to Unilevers activities in general. In the course of this analysis the hearing officer made a series of findings and observations which are to my mind rather striking. He held that there was an extreme disparity in numerical terms between the benefit Unilever received and the regular salary and 100 assignment fee that Professor Shanks was paid. He observed that there was scant evidence before him of Unilevers other licensing activities and that he had been provided with no example of another licensing deal which had provided Unilever with an income at or above the level of the Shanks patents. He found that the Shanks patents had produced a very high rate of return; that Unilever had made a very small effort to commercialise Professor Shanks invention; that Unilevers licensing efforts were serious but not exceptional; and that Unilever had generated the benefit it derived from the Shanks patents at no significant risk. In drawing his conclusions, he held that the benefit was a substantial and significant one in monetary terms, and that in comparison with the benefit to Unilever of other patents, it did stand out. In my opinion all of these matters point strongly to the conclusion that the Shanks patents were an outstanding benefit to CRL having regard to the size and nature of its undertaking as I would hold these features must be understood. How then did the hearing officer arrive at his conclusion that they were not? I think the key aspects of his reasoning may be summarised as follows. Looking first at Unilevers profits and turnover, the hearing officer agreed with Professor Shanks that it was simplistic to look simply at the figures for the overall turnover or profits of the undertaking and to say that a given benefit was only a small percentage of that. He explained that a relatively modest sum might represent an excellent return for a small company but would not do so for a larger entity, such as Unilever, which by its nature, for example being able to contemplate greater expenditure on litigation, could secure a higher return in a negotiation. Ultimately, he continued, it was a matter of considering the benefit in the overall context and making an assessment as to whether it was outstanding. Turning next to the benefit of the Shanks patents in relation to patents in general, the hearing officer explained that there was expert evidence before him on this issue but he found none of it of much assistance. Instead he reasoned that the assessment had to be carried out in the context of the employers undertaking and that he found it hard to see how a benefit of a relatively modest sum of, say, 50,000 could be considered an outstanding benefit in the context of Unilevers overall budget. This was followed by a consideration of the benefit to Unilever of the Shanks patents in the context of its licensing activities. Here the hearing officer recognised that the Shanks patents did stand out in terms of the licensing income they generated but thought that it did not follow that the benefit was outstanding. How the benefit was obtained was, in his view, irrelevant. What mattered was whether the benefit was outstanding in the context of the undertaking as a whole. The hearing officer then considered the benefit to Unilever of the Shanks patents in light of Unilevers broader patent activities. Here he referred to the evidence of Dr Mulder who held the position of Vice President Patents at Unilever. Some years earlier Dr Mulder had attempted to value Unilevers patents but he accepted in the course of his cross examination that his analysis did not produce a value of the patents in monetary terms but rather in terms of the value of product sales to which they related. He was therefore unable to identify any other patent which was more beneficial to Unilever than the Shanks patents. Finally, the hearing officer compared the benefits from the Shanks patents with the benefits generated by its other activities and referred in this connection to the unchallenged evidence of Dr Mulder that Unilever had a number of highly successful products, such as Viennetta ice cream, spreads and deodorants, and that these generated an income of many billions of pounds and many hundreds of millions of pounds of profit over the lifetime of the patents which protected them. He said this gave some indication of the sorts of sums that could be of great benefit to Unilever and they were an order of magnitude greater than the benefit derived from the Shanks patents. The hearing officer expressed his conclusions in these terms: 222. Considering the totality of the evidence, I was left with a clear impression. The benefit provided by the Shanks patents was a substantial and significant one in money terms - the sort of sum that Unilever would, on the evidence, worry about Furthermore, in comparison to the benefit from other patents to Unilever, from the evidence before me it does, in Mr Emanuels words stand out. But Unilever makes profits at an order of magnitude greater on other inventions - albeit primarily by manufacture and at a much lower rate of return than was provided by the Shanks patents. Further, this is not such a case as Kelly, where Floyd J held that without the patents in that case, Amersham would have faced a crisis. There was no suggestion from either party that the Shanks patents were crucial to Unilevers success. 223. In my view, taking account of the size and nature of Unilevers business, the benefit provided by the Shanks patents falls short of being outstanding. Did the hearing officer make an error of principle in assessing the benefit? It is apparent from the summary in the immediately foregoing section that a central and essential part of the hearing officers reasoning was that Unilever generated a vast income and commensurate profits from the manufacture and sale of products such as ice cream, spreads and deodorants which had the benefit of patent protection, and that this income and these profits were an order of magnitude greater than the benefits Unilever derived from the Shanks patents. The hearing officer clearly thought that this was highly relevant because he said in terms that it gave an indication of the sorts of benefits generated by highly successful products and so the sorts of sums which could be considered of great benefit to Unilever. This is also apparent from his conclusion, for in referring to profits an order of magnitude greater on other inventions, the hearing officer was referring to the overall profits made by Unilever from the manufacture and sale of these products. There are in my view a number of problems with these aspects of the hearing officers analysis. First, he adopted the wrong starting point. Professor Shanks was employed by CRL, and CRL operated a research facility for the Unilever group. CRLs undertaking for the purposes of section 40 of the 1977 Act was the business of generating inventions and providing those inventions and the patents which protected them to Unilever for use in connection with its business. It was to the size and nature of this undertaking, among other things, that the hearing officer was required by section 40 to have regard in assessing the nature of the benefit to CRL and Unilever of any such patent. Instead the hearing officer took CRLs undertaking to be the whole of the Unilever group and this pervaded the whole of his evaluation. In my judgement that was wrong in principle. Secondly and irrespective of his starting point and the extent of CRLs undertaking, the hearing officers particular focus upon the overall turnover and profits generated by Unilever, as illustrated by the size of its business in making and selling ice cream, spreads and deodorants, was in my view misdirected. The success of these products could no doubt be attributed to a range of factors including quality, branding and pricing. It is also true that they were protected at least to some degree by patent families which related to the processes by which they were made or aspects of the technology which they contained. But, as the hearing officer himself acknowledged, only a proportion of the sale price of any product could be attributed to any patent protection, and Unilevers attempts to assess the value of these other patents failed. Indeed, the hearing officer recognised that, in terms of the benefit which Unilevers patents had generated, the Shanks patents stood out. Thirdly, it cannot be said that the size and success of Unilevers business as a whole played any material part in securing the benefit it has enjoyed from the Shanks patents. That benefit was generated by licensing or selling its patent rights, not by harnessing its manufacturing capacity, its sales and distribution facilities or its goodwill. The licence fees, which constituted the main part of the benefit, were paid by licensees who, with one exception, approached Unilever. It is true that Unilevers licensing personnel negotiated those licences with skill and serious effort but its costs of doing so were modest and taken into account, and the hearing officer made no finding to the effect that the royalty rates were boosted by the application of Unilevers financial muscle or the threat of legal proceedings. These were matters he failed properly to take into account. Fourthly, the hearing officer appeared rightly to disavow an approach which involved assessing the extent and nature of the benefit derived from a patent simply by comparing it to the patent owners overall turnover or profits. But he also indicated these matters might be relevant if, for example, an undertakings size enabled it to exert greater leverage. Yet, having apparently rejected such an approach, he then adopted it. There was no justification here for simply weighing the sums Unilever generated from the Shanks patents against the size of its turnover and overall profitability in products such as Viennetta ice cream, spreads and deodorants and yet this formed an important part of his assessment. I am conscious that the decision of the hearing officer on this issue necessarily involved an evaluation and it is of course well established that an appellate court should be very cautious in differing from such an evaluation unless it involves an error of principle: see, for example, Biogen Inc v Medeva plc [1997] RPC 1, 45 per Lord Hoffmann. That is particularly so where the decision is that of a specialist tribunal. What constitutes an error of principle was considered most recently by Lord Hodge in Actavis Group PTC EHF v ICOS Corpn [2019] UKSC 15; [2019] Bus LR 1318, paras 80-81. As he there explained, such an error is not confined to an error as to the law but extends to certain types of error in the application of a legal standard to the facts in an evaluation of those facts. A legal error might involve asking the wrong question, failing to take into account relevant matters or taking into account irrelevant matters. In the absence of such an error, the appeal court would be justified in differing from a tribunals assessment if it were to reach the view that the tribunals conclusion was outside the bounds within which reasonable disagreement was possible. I am satisfied that, for the reasons given in paras 79-82 above, the hearing officer was wrong in principle and that Arnold J on appeal and the Court of Appeal on further appeal wrongly failed so to hold. Further, having regard to the fundamental nature of these errors, the decision of the hearing officer must be set aside. I have considered whether it is necessary to remit this appeal for a rehearing but I have concluded it is not, for it seems to me to be clear how the hearing officer would or ought to have decided this issue had he directed himself correctly. I would add that this is a conclusion at which I am relieved to arrive in the light of the time these proceedings have taken and the costs that must have been incurred. In summary and as I have foreshadowed, Professor Shanks made his invention using his own initiative for his brief was to work in the area of biosensors for process control and process engineering and he was made to understand that he should not stray too far from it. He built the first prototype of his invention in October 1982, some five months after he had joined CRL. This would have been a new product area for Unilever but it was a development which the group did not, in the hearing officers terminology, get behind and push. It was regarded as far from a key technology and it was one into which Unilever made only a modest investment. It is true that Unilever patented and maintained a patent portfolio which protected it and in due course expended significant effort and skill in the licensing negotiations. But the rewards it enjoyed were substantial and significant, were generated at no significant risk, reflected a very high rate of return, and stood out in comparison with the benefit Unilever derived from other patents. What was more, they could not be attributed to the deployment or application of Unilevers wider business assets or infrastructure; nor were they found to be the consequence of any leverage Unilever could exert because of its size. In short, the benefit Unilever enjoyed from the Shanks patents was outstanding within the meaning of section 40 of the 1977 Act. Fair share Section 41 of the 1977 Act says that an award of compensation to an employee under section 40(1) or (2) shall be such as will secure for the employee a fair share, having regard to all the circumstances, of the benefit which the employer has derived or may be reasonably expected to derive from the patent. Section 41(4) then specifies that various matters must be taken into account. In assessing what would have been a fair share of the benefit Unilever had derived from the Shanks patents, the hearing officer duly addressed each of the matters set out in section 41(4). In so doing he had regard to the nature of Professor Shanks duties and that he was employed to invent; Professor Shanks remuneration, which was commensurate with his level of responsibility; the effort and skill Professor Shanks expended in making the invention; the contribution made by Unilever to the making, developing and working of the invention; and Unilevers licensing effort which, the hearing officer observed, was serious but not exceptional. The hearing officer also had regard to the evidence before him about the percentage award rates in company and university employee compensation schemes. Having regard to all of these matters, the results of a literature review and the parties submissions, he held that 5% would have been the appropriate fair share of the benefit, had it been outstanding. On appeal, Arnold J came to the conclusion that an important factor in Unilevers ability to extract licence fees was the fact that it could afford to bring proceedings for patent infringement and pursue them to a conclusion, and that the hearing officer had wrongly failed to take this into account. In these circumstances he thought that it would not be right to award to Professor Shanks a percentage of the benefit which was higher than the 3% awarded to the inventors in the Kelly case, and that this would have been the fair share of the benefit to award to Professor Shanks, had that benefit been outstanding. On further appeal, the Court of Appeal did not need to address this issue and did not do so. Professor Shanks now contends that Arnold J had no proper basis for reducing the share of the benefit to 3% and that even 5% is too low, for it fails properly to take into account that he conceived the invention outside and in addition to his assigned role; that the licence fees generated by the patent represented an entirely new income stream for Unilever; and that he made the invention and the patent was exploited at no risk to Unilever. He argues that between 10% and 20% of the benefit would represent a fair share. In my judgement Arnold J was wrong to find that 3% represented a fair share of the benefit Unilever enjoyed from the Shanks patents. The hearing officer had well in mind the size of Unilevers business and the nature of the licensing negotiations yet he did not make a finding that it secured the licence rates it did because it could afford to bring and pursue infringement proceedings against the prospective licensees. The absence of such a finding is not at all surprising. Unilever had no manufacturing business it needed to protect and, with one exception, the discussions were initiated by the prospective licensees. In substance, these were negotiations between willing licensors and willing licensees. Arnold J therefore had no basis for reducing the percentage from 5% to 3%. I am not persuaded by Professor Shanks other arguments, however. The hearing officer found that the invention was made in the course of his contractual duties, although its subject matter was not the main focus of his work. Moreover, as the hearing officer also found, Professor Shanks was employed to invent and, in making the invention, did what he was employed to do. I accept that the patent generated a new stream of income for Unilever, but it did not do so without its input. To the contrary, it was brought to fruition by Unilevers negotiation of the licences, and that is something in which Professor Shanks played no part. Finally, it is true that Unilever made only a relatively small effort to commercialise the invention and exploited the Shanks patents at no real risk to itself, but these were matters which the hearing officer took into account in arriving at his figure of 5%. I am satisfied that the hearing officer made no error in the way he approached this issue and it would not be appropriate to interfere with the conclusion to which he came. It only remains to apply to the 5% share of the 24m an uplift to reflect the impact of time on the value of money. Professor Shanks invites us to take 1999 as the median year in which Unilever received the benefit and then to take into account the effect of inflation using the Bank of England calculator. I did not detect any substantive objection from Unilever to this methodology and I think it is a reasonable and fair way to proceed. This produces a figure of about 2m at an average inflation rate of 2.8%. In my judgement the fair share of that benefit to which Professor Shanks is entitled is therefore 2m. Conclusion For these reasons I would allow Professor Shanks appeal. In my judgement the Shanks patents were of outstanding benefit to Unilever and CRL and Professor Shanks is entitled to a fair share of that benefit amounting to 2m. |
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. |
Local authority rates are the oldest tax in continuous existence in England, having originally been introduced in the reign of Queen Elizabeth I by the Poor Relief Act 1601 (43 Eliz 1, c 2). Historically, they were payable in respect of the rateable occupation of hereditaments, and that continues to shape the law in this area even though non domestic rates are today imposed on unoccupied hereditaments also. The core concepts underlying the assessment of rates are that they are a tax on property and not on persons or businesses, and that the hereditament is the unit of assessment. Each hereditament is separately identified in the rating list and separately assessed, notwithstanding that the same occupier may have more than one. The question at issue on this appeal is how different storeys under common occupation in the same block are to be entered in the rating list for the purpose of non domestic rating. Tower Bridge House is an eight storey office block in St Katherines Way in the London Borough of Tower Hamlets. In plan it is a U shaped building. The open space between the three wings is filled by a covered atrium, with a central lift shaft containing six high speed lifts serving the first to seventh floors of the building. There is a common reception area on the first floor serving the entire building. Mazars is a firm of chartered accountants which occupies the non common areas of the second and sixth floors under separate leases. The first, third, fourth and fifth floors are occupied by the solicitors Reynolds Porter Chamberlain. The seventh floor is divided between two other occupants. Where different parts of an office building are occupied by the same occupier, the ordinary practice of the valuer, and apparently of valuers generally, is to enter them as a single hereditament if they are contiguous, but as separate hereditaments if they are not. In accordance with this practice, in the 2005 rating list, the non common parts of the two storeys occupied by Mazars were entered as separate hereditaments. The non common parts of the first storey occupied by Reynolds Porter Chamberlain were entered as one hereditament, and the non common parts of the third, fourth and fifth floors occupied by the same firm were together entered as another hereditament. Each of the spaces separately occupied on the seventh floor was also entered as one hereditament. In February 2010, Mazars applied to merge the two entries for the spaces demised to them to form a single hereditament, with an allowance for fragmentation of 10%. They proposed that the merger should take effect from 26 November 2007, when they had begun to occupy the two floors, and contended that although physically separate, they were functionally inter dependent. The Valuation Tribunal for England agreed that the two entries should be merged, and allowed 5% for fragmentation. The Valuation Officer appealed to the Upper Tribunal (Lands Chamber). The case came before the President of the Chamber, who affirmed the Valuation Tribunals decision as to merger, but held that there should be no fragmentation allowance. The Valuation Officer has appealed to this court on the merger issue, but the disallowance of Mazars claim to a fragmentation allowance has left them with no financial interest in the outcome. They have not therefore appeared on the further appeal of the Valuation Officer to this court. We have, however, been assisted by Mr Forsdick QC, who appeared as the Advocate of the Court, and whose submissions have been of great value in elucidating a novel and difficult point. Hereditament is a somewhat archaic conveyancing term which as a matter of ordinary legal terminology refers to any species of real property which would descend upon intestacy to the heirs at law: see section 205(1)(ix) of the Law of Property Act 1925. In a conveyance, there is no problem about its bounds. They will be identified by the deed. But notwithstanding more than four centuries of experience, the question how a hereditament is to be identified for rating purposes remains in important respects unclear. Section 64(1) of the Local Government Finance Act 1988 defines a hereditament as anything which would before the passing of the Act have been a hereditament for the purposes of section 115(1) of the General Rate Act 1967. That means a 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. The result, in the absence of further statutory definition, is that the meaning of hereditament is left to be elucidated by the courts in accordance with the principles underlying the rating Acts. The question which arises in a case like this is a very simple one. Given that non domestic rates are a tax on individual properties, what is the property in question? In principle, the fact that the same occupier holds two or more properties is irrelevant to the rateable status of any of them. He must pay rates separately on each. If the law is to be rational and consistent, the circumstances in which a continuous territorial block is to be treated as several separate properties or in which geographically separate properties are to be treated as one for rating purposes, must be determined according to some ascertainable and defensible principle. There are two principles on which these questions might be decided. One is geographical and depends simply on whether the premises said to constitute a hereditament constitute a single unit on a plan. The other is functional and depends on the use that is or might be made of it. The distinction was first applied in a series of rating cases in Scotland, where the question was essentially the same as the one which arises on this appeal, namely whether property should be assessed for local rates as a number of distinct heritable subjects or as unum quid (one thing). These cases establish that the primary test is geographical, but that a functional test may in certain cases be relevant either to break up a geographical unit into several subjects for rating purposes or to unite geographically dispersed units in unum quid. By far the commonest application of the functional test is in derating cases. In these cases, the functional test serves to divide a single territorial block into different hereditaments where severable parts of it are used for quite different purposes. Thus a garage used in conjunction with a residence within the same curtilage will readily be treated as part of the same hereditament, whereas a factory within the same curtilage which is operated by the same occupier may not be. There are, however, rare cases in which function may also serve to aggregate geographically distinct subjects. It is with this latter question that the present appeal is concerned. In Bank of Scotland v Assessor for Edinburgh (1890) 17 R 839, the Lands Valuation Appeal Court dealt with a number of rating appeals involving banks with office premises used in conjunction with nearby residential premises occupied by bank employees. There were three categories of residential premises: (i) dwellings which were in buildings separate from the banks offices; (ii) dwellings which were under the same roof as the commercial offices with internal communication between them; and (iii) dwellings which were under the same roof but with no internal communication between them, or none that was in use. Lord Trayner held that in case (i) the dwellings fell to be valued separately while those in cases (ii) and (iii) were unum quid with the commercial offices. Lord Wellwood agreed with him on cases (i) and (ii), but not on case (iii) which he would have directed to be separately valued. However, the underlying principle applied by both judges was the same. They applied the geographical principle, distinguishing cases where the various bank buildings formed a continuous territorial block from cases where they did not. In those cases where the different buildings did not form a continuous territorial block, they could be treated as unum quid only where there was a necessary functional connection between them. Lord Trayner said at p 843: In the case of the Commercial Bank I think the assessor has gone wrong in including the messengers houses as part of the bank. These houses form no part of the bank buildings; they are separate houses in the adjoining street, no doubt sufficiently near to the bank to be convenient and suitable for the bank servants, but still no part of the bank buildings, and therefore no part of the unum quid. The assessor in support of the view he has adopted referred to the case of MJannet, 10 R 32, but I do not think that that case has any application here. It was decided in that case that the conservatory, stables, and outhouses connected with a dwelling house were not to be separately valued, but were to be regarded and valued as a unum quid. I agree entirely with that decision. The different parts of the subject to be valued lay together, and were within the one enclosure; they were the different parts which together went to make up the establishment. But although the stables, for example, were held in that case to be part of the residence and to be so valued, it does not follow that stables are in every case to be valued as part of the residence to which they are an accessory. The stables of a gentleman in town are as much a convenience or accessory to his town residence as they are in the case of a country house. They are not, however, valued along with the town residence, although situated in the adjoining street or mews. They are not so connected as they were in the case of a country mansion or residence as to make it impossible or difficult to let them separately. In the same way the Commercial Bank could not well retain their bank premises, and let the part thereof devoted to official residence, but they could quite well and conveniently let the messengers houses in the street to persons entirely unconnected with the bank. I think these houses therefore should be separately entered and valued in the Valuation roll. Lord Wellwood, at p 844, divided the residential buildings into three categories: First Those which are entirely detached from the bank buildings, as in the case of the messengers houses of the Commercial Bank of Scotland. I agree with Lord Trayner that the yearly value of those houses should be separately entered in the roll. Second The houses which form part of the main building, but have no internal communication with the business premises. I am of opinion that the yearly value of those dwelling houses also should be separately entered. The fact that they form part of the same building with the business premises is not I think in this question material, and was not much relied on by the respondent. Structurally they are self contained premises, and could be let separately if this were desired. The respondent relied mainly upon the consideration that the houses form necessary adjuncts to the bank premises, and together with them fell to be valued as a unum quid. Dwelling houses for bank officials connected with the bank premises are no doubt usual and useful additions to banking premises, but it is not indispensable that they should form part of the bank buildings, as is shewn in the case of the messengers houses of the Commercial Bank of Scotland. If, as is sometimes the case, it did not suit any of the officials to reside in the dwelling houses, they could be let to a tenant with no more danger to the bank than if they were under a different roof. The case seems to me to be precisely the same as that with which we are familiar of the lower flat of a dwelling house being converted into a shop with a separate entrance. The upper flats may or may not be occupied by the shopkeeper himself as a dwelling house, but I take it that in any case the dwelling house and the shop are valued separately. Third Dwelling houses which are connected by internal communication with the business premises. In regard to those I have more doubt. In their actual state they are at present connected with the business premises by an internal door of communication, which is used not merely as a convenient short cut by the occupant of the dwelling house, but also by other bank officials and servants for the purpose of locking the outer door of the bank and other purposes. This means of communication could be easily cut off by building up or even locking the door. But that is not the present state of matters, and the question being doubtful, I am not prepared to differ from the opinion of Lord Trayner and the Valuation Committee as to those dwelling houses. The point on which Lord Traynor and Lord Wellwood differed, concerning premises which were contiguous but did not interconnect arose for decision a year later in Bank of Scotland v Assessor for Edinburgh (1891) 18 R 936. Lord Wellwood, sitting with Lord Kyllachy, repeated his view that they fell to be separately valued. Lord Kyllachy, said, at p 938: The test I think here is whether the houses in question are capable, not merely physically but, all conditions being considered, of being separately let, and having a separate rent or value attached to them. As regards the house occupied by the messenger, and which has no internal communication with the rest of the bank, I agree with the opinion of Lord Wellwood at the last court. I see no reason, at least none appears in the case, why, if the bank chose, this house should not be separately let to a suitable tenant, or assigned by way of pension to an old servant, or otherwise dealt with as a separate and independent dwelling. In University of Glasgow v Assessor for Glasgow 1952 SC 504, the Lands Valuation Appeal Court held that various buildings of the University which were physically separate from the main buildings, capable of being separately let and dispersed among buildings belonging to other proprietors, were properly entered on the valuation roll as separate subjects. Lord Keith, delivering the judgment of the court, treated the first Bank of Scotland case as authority for the geographical principle (p 509). He said at p 510: The common enclosure in many cases supplies a useful basis, or test, for a unum quid entry. It is the reason why a villa with its garden ground, or a mansion house with its policies, and any ancillary buildings are entered as a unum quid. The geographical conception has never been lost sight of in making up entries in the Valuation Roll, and in the case of John Leng & Co v Assessor for Dundee Lord Sands took occasion twice to refer to the ordinary geographical arrangement followed in making up the Valuation Roll. There may be cases where geographical unity has to be departed from, as where premises within what would otherwise be a single entity are separately let, or lands or buildings within a common enclosure are used for separate purposes. It is not perhaps possible to lay down general rules for all cases. Something must depend on particular circumstances. But the broad general principles are as stated. Midlothian Assessor v Buccleuch Estates Ltd [1962] RA 257 concerned geographically separate parcels of woodland and sawmills on separate sites, which were operated as a single business. Lord Kilbrandon, sitting in the Lands Valuation Appeal Court, observed at p 268: It has never yet been admitted that you can have a unit of valuation consisting of widely scattered heritable subjects connected only by some functional or commercial nexus, and I do not see why it should be. I do not think one is being merely old fashioned or obscurantist in insisting, in the conception of unum quid, on a fairly close physical relationship between what might be considered as parts of a commercial unit; one is, after all, attempting to value not a business but heritable subjects, and it may be that the precedents, which all insist on such a physical relationship, indicate a determination to preserve that essential distinction. Not only do I know of no precedent in valuation practice which could justify a functional approach to the problem such as is here sought to be made, but I am still of opinion that no such approach can in this case give a proper content to the whole words of the statute. This statement was cited with approval by Lord Slynn of Hadley, delivering the only reasoned speech in the English valuation case of Hambleton District Council v Buxted Poultry Ltd [1993] AC 369, 378. More recently, in Burn Stewart Distillers plc v Lanarkshire Valuation Joint Board [2001] RA 110, the Lands Tribunal for Scotland held that premises under common occupation but situated on opposite sides of a main road constituted two hereditaments. The tribunal observed, at pp 140 141: We consider that the emphasis on the geographical test is an aspect of recognition that lands and heritages are physical subjects. The underlying purpose is to provide a proper basis for a tax on property, not a tax on persons or businesses. Where the subjects share characteristics of function which, in a robust practical sense, support the use of a single term to describe the physical subjects, they can be treated as one unit. On the other hand, we are satisfied that the fact that certain heritable subjects function together as one business will, by itself, be insufficient to demonstrate that they are to be regarded as a unum quid in any physical sense. A business is not a concept based on physical or heritable factors. Entry in the roll is based on identification of heritable subjects. The fact that one business may need to occupy two separate physical subjects does not change the character of the subjects. It is clear that undue emphasis on a business connection as evidence of functional connection between subjects could lead to a distinction for rating purposes between a business whose operating units were in close proximity and those whose operating units were, perhaps only slightly, more remote. There is no basis in legislation for such a distinction. We see no basis in fairness for it. We are not persuaded that there is a consistent practice which would lead to that result. If there is, we see no need to follow it. In the present case there is a clear physical separation of the two subjects. They each have a clear curtilage and these curtilages are separated by a public road and pavements. Although, in a sense, little different from the interposition of a public road, the fact that the ratepayers do not have exclusive occupation of the land which provides their access to that public road and the intermittent presence at their gate of large, slow moving vehicles belonging to another occupier, tends to enhance the impression of separation of the two subjects. A test based on appearance and impression may properly be treated as part of the geographical test. The two subjects have no unifying visual characteristics. There is nothing to indicate that they are operated together, far less that the physical presence of one is essential to the function of the other. Their physical characteristic as two distinct subjects is supported by the consideration that there is no real doubt that the subjects could be let separately. I derive from these decisions three broad principles relevant to cases like this one where the question is whether distinct spaces under common occupation form a single hereditament. First, the primary test is, as I have said, geographical. It is based on visual or cartographic unity. Contiguous spaces will normally possess this characteristic, but unity is not simply a question of contiguity, as the second Bank of Scotland case illustrates. If adjoining houses in a terrace or vertically contiguous units in an office block do not intercommunicate and can be accessed only via other property (such as a public street or the common parts of the building) of which the common occupier is not in exclusive possession, this will be a strong indication that they are separate hereditaments. If direct communication were to be established, by piercing a door or a staircase, the occupier would usually be said to create a new and larger hereditament in place of the two which previously existed. Secondly, where in accordance with this principle two spaces are geographically distinct, a functional test may nevertheless enable them to be treated as a single hereditament, but only where the use of the one is necessary to the effectual enjoyment of the other. This last point may commonly be tested by asking whether the two sections could reasonably be let separately. Third, the question whether the use of one section is necessary to the effectual enjoyment of the other depends not on the business needs of the ratepayer but on the objectively ascertainable character of the subjects. The application of these principles cannot be a mere mechanical exercise. They will commonly call for a factual judgment on the part of the valuer and the exercise of a large measure of professional common sense. But in my opinion they correctly summarise the relevant law. They are also rationally founded on the nature of a tax on individual properties. If the functional test were to be applied in any other than the limited category of cases envisaged in the second and third principles, a subject (or in English terms a hereditament) would fall to be identified not by reference to the physical characteristics of the property, but by reference to the business needs of a particular occupier and the use which, for his own purposes, he chose to make of it. One would not expect the law to be any different when the identical questions arise for decision in England. However, confusion has been caused by the leading English case, which is the decision of the Court of Appeal in Gilbert v S Hickinbottom and Sons Ltd [1956] 2 QB 40. The facts in this case were very similar to those in Burn Stewart Distillers. A large industrial bakery comprised a number of buildings in two blocks separated by a street. The Lands Tribunal held, overruling the valuation officer, that they constituted a single hereditament, and its decision was affirmed by the Court of Appeal. Denning LJ held that geographically contiguous spaces were normally to be treated as one hereditament and geographically separate spaces as distinct, but that there were exceptional cases where their function required a different treatment. He gave as examples of the treatment of separate premises as one hereditament, the case where a road bisected a noblemans park, or agricultural land (in the days when agricultural land was rateable) or a golf course. The common feature of these cases, he thought (pp 49 50), was that the two properties on either side of the road are so essentially one whole by which I mean, so essential in use the one to another that they should be regarded as one single hereditament. Denning LJ appears to have derived this test from the decision in the University of Glasgow case, which he cited with approval. In my opinion his statement of the law was correct, although I would not necessarily endorse his examples, at any rate without more facts. The reason why Denning LJ nevertheless felt bound to dismiss the appeal was that the application of the test was a question of degree and therefore of fact (p 50), and if the Lands Tribunal thought that it was one hereditament they must have had their reasons. This seems a surprising conclusion on the facts recited in the report, but it has no bearing on the principle. Denning LJ was manifestly not suggesting that the Lands Tribunal was free to apply the test or not as they thought fit. The views of the other two judges are less clear. Morris LJ regarded it as undesirable to lay down general principles to govern what he regarded as a common sense assessment (p 52). The closest that he came to indicating in what circumstances geographically separate spaces might be regarded as a single hereditament was in the following passage, at p 52: buildings which, though not actually enclosed together or actually contiguous, are very near together and are not separated by the presence of other buildings and are being put to one common use may be regarded as comprising one hereditament. There can be no doubt that ordinarily very great weight will be placed upon what may be termed the geographical test. But the question is always one of fact and degree. The case before him he regarded as an exceptional one which depended on its particular facts (p 53), although it is not clear which particular facts made the difference, nor why. The third member of the court, Parker LJ, offered the following guidance, at pp 53 54: Whether or not premises in one occupation fall to be entered in the valuation list as one or more hereditaments depends upon a number of considerations. Without attempting an exhaustive list, the following considerations can be mentioned: (1) Whether the premises are in more than one rating area. If so, they must be divided into at least the same number of hereditaments as the rating areas in which the premises are situated. (2) Whether two or more parts of the premises are capable of being separately let. If not, then the premises must be entered as a single hereditament. (3) Whether the premises form a single geographical unit. (4) Whether though forming a single geographical unit the premises by their structure and layout consist of two or more separate parts. (5) Whether the occupier finds it necessary or convenient to use the premises as a whole for one purpose, or whether he uses different parts of the premises for different purposes. Whereas a consideration of questions (1) and (2) will in certain events conclude the matter one way or the other, the same does not, I think, result from a consideration of any one of the other questions alone. The conclusion, where the considerations of (1) and (2) are not decisive, must depend on the weight to be attached on the facts of each case to the other considerations. No doubt the most important of these other considerations is whether the premises form a geographical unit. Can they be ringed round on a map? Later, after citing the University of Glasgow case, he addressed the geographical and functional tests in the following terms, at pp 54 55: [The geographical test] is so often decisive that it is a convenient starting point to the inquiry, but it is not decisive in all cases. Thus, though the premises may form a geographical unit, the manner in which different parts are used may justify the premises being treated as several hereditaments; cf North Eastern Railway Co v Guardians of York Union [1900] 1 QB 733, 739 per Channell J. The appellants contention, however, is that though the functional test may justify treating a geographical unit as two hereditaments, it is wholly inapplicable where the premises occupied are geographically and structurally separate. There is no doubt, I think, that in the latter case little weight will ordinarily be given to any functional connexion, but it is another thing to say that it is irrelevant. If, as is admitted, a functional connexion is a relevant consideration when considering a geographical and structural unit, I fail to see why as a matter of law it cannot be considered at all when there are separate geographical and structural units. Each case must be considered on its particular facts, due weight being given to the degree and nature of the separation on the one hand and the importance of the functional connexion on the other. In these passages, Parker LJ clearly rejected the submission that function was irrelevant where premises were geographically separate. He was right to do so, because function may be relevant to the question whether separate premises must necessarily be enjoyed together, or are incapable of being reasonably let as separate units: see his proposition (2). Whether Parker LJ would have recognised the relevance of function to a case of geographically separate premises for any wider purpose is not clear. His proposition (5) suggests that he might have done, although he considered that even in such a case function was of little weight. In my opinion, the decision in Gilbert cannot be supported, at any rate on the grounds given, and the reasoning cannot be regarded as authority for very much. The only clear statement of principle is that of Denning LJ, which he does not appear to have applied. Mr Forsdick QC, the Advocate of the Court, submitted that the effect of the judgments of Morris LJ and Parker LJ was that it was for the tribunal of fact to determine not just the functional connection between separate premises, but the relevance of its conclusion on that point. I do not think that that clearly emerges from either judgment, but if it was indeed their view, then I respectfully disagree. Both the geographical and the functional principle require an evaluation of the facts by the tribunal of fact. However, the relationship between them is not itself a question of fact but a question of principle. The relevant principle is in my opinion summed up in the three propositions which I have extracted from the Scottish cases. The geographical test and the functional test are different and in some respects inconsistent. They cannot both operate in parallel unless there is some rational framework of principle for distinguishing their respective spheres. The English and the Scottish cases are agreed that the potential inconsistency is to be resolved by acknowledging the primacy of the geographical test and the subordinate character of the functional test. But what does this mean? The answer to the question must surely be supplied by the tribunal of law which posed it. To treat the relationship between these two incommensurate tests as no more than a question of fact and degree is to leave to the tribunal of fact what amounts to a discretion to give the functional test such weight as they choose as against the geographical one, and to allow the business choices of the occupier to determine the bounds of the hereditament. This would in turn make the basis of assessment more opaque and less consistent as between different occupiers. It would be a poor substitute for clear and principled rules, capable of uniform application. Until the present case came before the Valuation Tribunal and the President of the Lands Chamber, there had been no decision on how these principles were to be applied to cases in which the same occupier occupied different storeys within the same building. The only case which was arguably in point was British Railways Board v Hopkins (Valuation Officer) [1981] RA 328, in which the Lands Tribunal treated different storeys under common occupation as constituting a single hereditament, whether they were contiguous or not. But the decision turned on other issues and there was no discussion of this particular point. On the other hand, valuation officers had for some years adopted the practice of treating contiguous storeys under common occupation as one hereditament, but non contiguous storeys as distinct hereditaments. As far as the case law is concerned, this was therefore an unresolved question when the present case came before the Valuation Tribunal and then the President of the Lands Chamber. The President accepted Denning LJs formulation in Gilbert as applied to premises which were horizontally separated, in the sense that they were in different buildings or different territorial blocks. It will be apparent from what I have already said that I agree with him about this. But he thought that premises which were in the same building but were vertically separated were different. At para 20, he observed: I agree with Mr Woolway, and with the submissions made by Mr Kolinsky on the point, that in identifying hereditaments within a modern office building the concept of the curtilage has no useful part to play, and is far removed from what Denning LJ had in mind when formulating his general rules in Gilbert v Hickinbottom. The Valuation Tribunal, having concluded that the two floors were within the same curtilage, then explored whether there was an essential: functional link between them. In so doing it was clearly misapplying Denning LJs general rules, where the question of the essential functional link only arose in the case of premises that were not within the same curtilage but were separated by a highway, and I do not think that an essential connection should be treated as a criterion in the present case. I agree in any event with the Valuation Officer that a detailed inquiry into the functional relationship between parts of a building in the same occupation is of no assistance in the present case and is positively undesirable. It seems to me inappropriate to explore the degree of functional interaction between two floors in common occupation. Any such process would tend to be detailed and time consuming (as it was in the present case) and always liable to reassessment as the occupier made changes in the way that the space was utilised. The fact that the floors of office premises are in the same occupation for the purposes He concluded, at para 29: of the occupying firm is by itself; in my judgment, a significant pointer. The proper approach in a case such as this, therefore, in my judgment, is to treat the floors occupied within the building by the same occupier as a single hereditament. Since the occupier will be occupying the floors as offices for the purposes of his business, it is not in my view necessary to investigate the functional interrelationship between the floors at any particular time. In the present case, therefore, floors two and six are properly to be entered as a single hereditament, as the Valuation Tribunal determined; and the Valuation Officers appeal on this point fails. In effect, therefore, the President applied neither a geographical test nor a functional one. He declined to ask himself whether the possession of both storeys was necessary to the enjoyment of either, nor whether they could be let separately, nor whether they intercommunicated (the answers would clearly have been No, Yes and No respectively). He quite rightly regarded the way in which a particular occupier chose to use the premises together as irrelevant. Yet at the same time he considered that when separate premises were located in the same building, it was wrong to apply a geographical test either. He therefore declined to ask himself Parker LJs question, whether the alleged single hereditament could be ringed round on a plan (the answer would have been No). The President of the Lands Chamber was labouring under the difficulty that he was bound by Gilbert, and therefore obliged to make more sense of it than the judgments really permit. At any rate, I am unable to accept his reasoning. It introduces an arbitrary distinction between horizontal and vertical separation which responds to no discernible principle. In order to pass from level 2 to level 6, it is necessary to leave the demised premises on level 2, enter the common parts over which Mazars had a licence but no right of possession, and to ascend in a lift to the common parts on level 6 before entering the other premises. This is no different, either geographically or functionally, from leaving a building which is exclusively occupied by the ratepayer, crossing land belonging to someone else and entering another building under the same occupation. The President remarks that the lifts were fast and the move from one level to the other simple, but why should that be any more relevant than the fact that the separate building was only a short distance away or could be reached at high speed by car? In my opinion there is no rational reason to regard Denning LJs test as any less applicable to distinct premises within the same building than it is to different buildings within the same urban park. It is clear that the President was strongly influenced by the Valuation Officers acceptance that vertically or horizontally contiguous spaces in the same building fall to be treated as one hereditament, so that if Mazars had occupied levels 2 and 3, instead of levels 2 and 6, the result would have been different. This concession, as I have pointed out, is not necessarily correct unless the two spaces directly intercommunicate. For present purposes, however, it is enough to note that there is nothing anomalous about the notion that the result is different when the spaces are not contiguous and do not directly intercommunicate. It simply shows that the same occupier has two distinct taxable properties, just as he would have if they were on opposite sides of the street. For these reasons I would allow the Valuation Officers appeal, set aside the orders of the Valuation Tribunal and the Upper Tribunal and declare that the premises demised to Mazars on the second and sixth storeys of Tower Bridge House are to be entered in the rating lists as separate hereditaments. LORD GILL: (who agrees with Lord Sumption) I agree that this appeal should be allowed. It seems that in this case the decision whether the ratepayers premises constitute one hereditament or two does not affect the overall value of them; but in other cases the effect of the decision may be significant (eg Trunkfield (Valuation Officer) v Camden London Borough Council [2011] RA 1). The appeal is important from that practical point of view; but its principal importance is that it requires us to examine, in a modern context, the principles by which the hereditament is to be identified, and to do so in a case that does not involve de rating. The Valuation Tribunal for England (VTE) held that the premises were a single hereditament on the view that the two floors were within a single curtilage and that the integrated use of them was essential to the efficiency of the ratepayers business as a whole. In the Upper Tribunal (Lands Chamber) the President (Mr George Bartlett QC) agreed with the decision of the VTE, subject to a reduction of the valuation; but he took a different approach. He was not persuaded that the essential functional link between the two parts, on which the VTE had relied, should be the criterion. He considered that a detailed inquiry into such a question would be positively undesirable (para 20). He considered it significant that the two floors were in single occupation, and that in the context of a modern office building the concept of the curtilage had no place. His decision turned on the facts relating to the physical nature of the premises and the purposes for which the ratepayer occupied them, there being no significant difference from the occupiers point of view between floors that were adjoining and floors that were separated. The Court of Appeal dismissed an appeal against that decision, essentially for the reasons given by the President of the Tribunal. The decision of the Court of Appeal in Gilbert v S Hickinbottom and Sons Ltd [1956] 2 QB 40 has been central to this case. It has stood for nearly 60 years. The effect of it was that premises of different kinds situated on opposite sides of a highway were to be regarded as one hereditament where the ratepayer had integrated its use of one with its use of the other. It is plainly an unsatisfactory decision. There is no common thread of reasoning in the opinions of the three judges. I cannot understand why Denning LJ (as he then was), who clearly favoured the geographical test and found three cases based on it that commended themselves to his mind, one of them being the Glasgow University case [1952] SC 504, deferred to the conclusion of the Lands Tribunal to the contrary effect, especially when it was not clear to him why the Tribunal had distinguished those cases from the case that was under appeal. In the result, the Gilbert decision has been understood to mean that whether separate premises constitute a single hereditament may depend on the use to which the ratepayer puts them: in short, that geographical separation may in some circumstances be outweighed by functional integration. The Gilbert case was decided on the definition of hereditament in section 68 of the Rating and Valuation Act 1925 (the 1925 Act); namely: any lands, tenements, hereditaments or property which are or may become liable to any rate in respect of which the valuation list is by this Act made conclusive In section 115(1) of the General Rate Act 1967 (the 1967 Act), which now applies, hereditament means 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. Counsel for the valuation officer suggested that that the Gilbert decision should be distinguished because it was decided on the definition of hereditament in the 1925 Act, which in counsels submission was materially different from the present definition. I do not accept that. The 1967 Act was a consolidating measure. It was reasonable in such a consolidation to recast the former definition, which suffered from circularity. In my view the reference to a unit of property which is, or would fall to be, shown as a separate item in the valuation list simply means a unit of property that would constitute a separate hereditament in accordance with established legal principles. I agree with the Court of Appeal on this point. If I am right in the view that section 115(1) has not changed the law on the point, it follows that the decision in Gilbert cannot be side stepped in this way. The real point on which the Gilbert case should be distinguished is that it concerned industrial de rating. In Gilbert and in the other de rating cases that have been referred to in this appeal, it was to the advantage of the ratepayer if ancillary but separate premises could be said to be part of one hereditament. If they were, the benefit of de rating was applied to the whole. Inevitably in such cases ratepayers emphasised the functional connection. The influence of that consideration is immediately apparent in the Gilbert case and, in similar circumstances, in the Scottish case of John Leng and Co v Assessor for Dundee 1929 SC 315. It can also be seen in the unsuccessful argument for the ratepayer in the Glasgow University case, where the University enjoyed partial exemption from local rates. De rating cases are not concerned with valuation for rating. They are about the remission of a liability for rates based on the use that the ratepayer makes of the property. On the other hand, valuation for rating is concerned with physical premises. It cannot be right that geographically separate premises should be valued as one hereditament simply because the ratepayer chooses to link his use of one with his use of the other. To modify the geographical test with considerations of functionality, in this sense of the word, is to add to a clear and objective test the uncertainty of a test that is dependent on whatever happens to be the ratepayers choice of use. Numerous cases have been referred to by counsel for the appellant and by the amicus that purport to apply the Gilbert decision. It would be an unprofitable exercise to go through them one by one. They merely demonstrate the various approaches that courts and tribunals have taken in the attempt to deduce a coherent principle from the Gilbert case. Notable among these cases is Trunkfield (Valuation Officer) v Camden London Borough Council [2011] RA 1. It concerned two adjoining office buildings. The ratepayers occupied one building in its entirety. In the other, they occupied the third, fifth and sixth floors and part of the fourth. In the valuation list there was a single assessment for the first building and four separate assessments for the floors occupied by the ratepayers in the other building. The Valuation Tribunal determined that the five assessments should be merged. In his appeal to the Upper Tribunal (Lands Chamber) the valuation officer contended that there should be two assessments, one for the first building and one for the four floors occupied in the other. The President allowed the appeal and directed that the list should be amended as the valuation officer proposed. If, as I assume, there were no means of internal communication between any of the four floors in the second building, the question in this appeal would have arisen; but in the event the valuation officers position precluded any discussion of that question. In my view the valuation officers position was unsound. Section 67 of the 1967 Act requires the valuation officer inter alia to maintain a valuation list for each rating area in accordance with the provisions of Part V of the Act. In Scotland, the equivalent obligation of the assessor is to make up a valuation roll listing all of the lands and heritages in his valuation area (Local Government (Scotland) Act 1975, section 1). The expression lands and heritages dates back to the Lands Valuation (Scotland) Act 1854 (17 & 18 Vict c 91). Although the law of valuation for rating is governed in Scotland by different legislation, the essential point is identical in both jurisdictions. It is to identify the unit of valuation. In my view, there is no reason why the two jurisdictions should diverge on the principles of the matter. On the contrary, it is desirable that they should coincide. In the law of Scotland, the identification of the valuation unit, or the unum quid, rests on a geographical test. The history of the matter begins with the decision of the Lands Valuation Appeal Court in Bank of Scotland v Assessor for Edinburgh (1890) 17 R 839. That case concerned a number of bank buildings and the associated dwellinghouses of the staff who worked in them. In some cases, those in the third category referred to by Lord Sumption (para 7) the dwellinghouse was part of the bank building itself, but had no internal means of communication with the bank premises. Lord Trayner thought that in those cases the whole building should be valued as a unum quid. Lord Wellwood thought that the dwellinghouse and the bank premises should be valued as separate lands and heritages. In the following year, the Lands Valuation Appeal Court reconsidered the case. On that occasion the court, consisting of Lord Wellwood and Lord Kyllachy, decided that where the bank premises and the staff dwellinghouse were not internally connected, they should be entered in the roll as separate lands and heritages (Bank of Scotland v Assessor for Edinburgh (1891) 18 R 936). In my view, that was correct. The absence of an internal connection between the residential unit and the bank premises meant that to reach the bank the occupier of the dwellinghouse had to leave the building and go by the street to the public entrance of the bank. The question arose again in Glasgow University v Assessor for Glasgow 1952 SC 504. In that case the ratepayer, in seeking the benefit of partial de rating, argued that there should be a single entry in the roll comprehending the main University buildings as planned and built as such, and with later additions; together with a diverse group of peripheral University buildings dispersed among the buildings of other proprietors. This last group included, for example, a laboratory and a reading room that was on a separate site on the other side of a main road. The Lands Valuation Appeal Court concluded that the main buildings lay within the University enclosure proper, being structurally and geographically part of a common whole, and should be entered in the roll as a unum quid. On the other hand it considered that while the peripheral buildings were functionally part of the University, they were geographically separate and should be entered as separate lands and heritages. That decision reaffirmed the primacy of the geographical test. The geographical test was strictly applied by the Lands Valuation Appeal Court in Edinburgh Merchant Co Education Board v Assessor for Lothian 1982 SC 129 in a case where two schools on opposite sides of a main road had come to be occupied as one. One set of buildings was situated in playing fields. The other was in a set of converted terraced houses. Access from one to the other was by a path over a railway bridge and a lane. Although they were occupied as a functional unit, the court concluded that there was no geographical unum quid. The Glasgow University case and the Gilbert case were considered by the Lands Tribunal for Scotland in Burn Stewart Distillers plc v Lanarkshire Valuation Joint Board [2001] RA 110. In that case the ratepayer contended that there should be a single entry in the roll for premises situated on opposite sides of a main road. On one side the premises consisted of warehousing and the main office accommodation. On the other, there was a whisky bottling complex and distribution plant with ancillary storage space and small proportion of office and cloakroom space. On this side there was a canteen used by staff from both premises. Materials were moved between the two premises by fork lift trucks which traversed the public road. A concrete communications conduit linking the two premises ran under the main road. The main office accommodation constituted the head office of the ratepayer and dealt with many matters unrelated to the bottling and distribution plant, including worldwide marketing. The Tribunal, chaired by Lord McGhie, applied the geographical test and held that it was not satisfied. The Burn Stewart decision was referred to in argument in Trunkfield (Valuation Officer) v Camden London Borough Council (supra); but was not referred to in the judgment. I agree with the three general principles that have been stated by Lord Sumption (at para 12). It is important to emphasise that the reference to functionality in the second and third of these principles is not a reference to the use that the ratepayer chooses to make of the premises. It is a reference to a necessary interdependence of the separate parts that is objectively ascertainable. For example, such an interdependence is to be found between a tourist attraction in a castle and the associated gift shop in the castle grounds (Roxburghe Estates v Assessor for Scottish Borders Council [2004] RA 15). Conversely, functionality in this sense may also be relevant where premises that are apparently geographically linked are wholly dissociated; for example, the hotel and the engine sheds at a railway station (North Eastern Railway Co v Guardians of York Union [1900] 1 QB 733). To the three general principles that Lord Sumption has laid down, I would add only the comment that in the application of them, the concept of fairness, alluded to in this case by the President of the Tribunal, has no place. In my opinion, these general principles provide straightforward and workable guidance that is consistent with the underlying theory of rating law that rates are a tax on a ratepayers property and not on a ratepayers business (Midlothian Assessor v Buccleuch Estates Ltd [1962] RA 257, Lord Kilbrandon at p 268). It was suggested on behalf of the valuation officer that in the application of the geographical test the decisive criterion is contiguity. That is an extreme position that I do not accept. Properties that are discontiguous but nonetheless geographically linked, may constitute one hereditament if the occupation of one part would be pointless without the occupation of the other. The Glasgow University case is an example. In that case it was clearly right that an assemblage of academic buildings constituting the core of the university campus should be valued as a unum quid. Roxburghe Estates v Assessor for Scottish Borders Council (supra) is another example. In that case the lands and heritages consisted of exhibition rooms within a castle with an adjacent gift shop and restaurant, a coffee shop and parts of the gardens and ground. The gift shop and the restaurant owed their existence to the castle; whereas the coffee shop was situated outside the pay wall and had an independent existence that linked it more closely with a nearby garden centre. It was not part of the unum quid. On the facts of the present case, I fail to see why premises on separate floors of a building, where the only access from one to the other is through the common parts, should be regarded as one hereditament. In reaching that view, the President has misdirected himself. He has lost sight of the geographical test. He has been influenced by the use that the present occupier has chosen to make of the premises and has introduced an irrelevant and confusing consideration of fairness. It was suggested in the discussion in this case that if the two parts of the office had been on adjacent floors they could have been treated as one hereditament on the view that they were contiguous in the vertical rather than the horizontal plane. That, in my view, is a contrived argument. The disjunction of the two parts of the ratepayers offices lies in the fact that the only access between them is through the public part of the building. The same disjunction would apply even if they were on adjacent floors. In that event, I would have taken the view that they remained separate hereditaments. LORD NEUBERGER: (who agrees with Lord Sumption and Lord Gill) I add a few words of my own, partly because we are disagreeing with the experienced and respected President of the Lands Chamber, whose decision was unanimously upheld by the Court of Appeal, and partly because I have found this a difficult point in the light of the unsatisfactory state of the English and Welsh case law. This case concerns the issue whether two physically separate pieces of property, namely the second and sixth floors of an office building, can be a single hereditament for rating purposes because they are occupied by, and let to, the same person in connection with the same business. The statutory definition of hereditament in section 115(1) of the General Rate Act 1967 states that it is such a unit of property which is, or would fall to be, shown as a separate item in the valuation list. While, at least to some extent, that is a circular definition, it does contain the expression unit of property, which carries with it the notion of a single piece of property, what in Scots law is called unum quid. And, in that connection, I entirely agree that there should be no difference of approach between Scottish and English law on the issue raised on this appeal. Normally at any rate, both as a matter of ordinary legal language and as a matter of judicial observation, a hereditament is a self contained piece of property (ie property all parts of which are physically accessible from all other parts, without having to go onto other property), and a self contained piece of property is a single hereditament. As the Scottish Lands Tribunal said in Burn Stewart Distillers plc v Lanarkshire Valuation Joint Board [2001] RA 110, 140, the emphasis on the geographical test is an aspect of recognition that lands and heritages are physical subjects. Thus, two separate self contained buildings, even if sharing a common wall, would not be expected to be a single hereditament but two hereditaments. And a building no part of which was self contained would be expected to be a single hereditament. At first sight, it might appear that whether certain premises constitute one hereditament or two hereditaments should not depend on how those premises are occupied. To quote again from Burn Stewart, [a] business is not a concept based on physical or heritable factors (p 141). Of course, occupation is traditionally a central issue in rating law, but at least primarily for the purpose of determining who, if anyone, is in rateable occupation. On the face of it, however, it may be thought that there should be no logical connection between the identification of the boundaries or extent of a hereditament and the identification of the rateable occupier of that hereditament. Nonetheless, on further reflection, it can be seen that the occupation of premises can in some circumstances serve to control their status as one or more hereditaments. An office building let to and occupied by a single occupier would be a single hereditament, but if the freeholder let each floor of the building to a different occupying tenant, retaining the common parts for their common use, then each floor would be a separate hereditament. Furthermore, it is well established that premises are not merely liable to have their rateable value assessed, but also to have their status as a hereditament assessed, by reference to the machinery, plant and other structures which have been placed in or on them, whether by the occupier or someone else, sometimes even if the structure retains its character as a chattel see per Lord Radcliffe in London County Council v Wilkins (Valuation Officer) [1957] AC 362, 378. The problem thrown up by this appeal is how far what I have described as the normal position in para 47 above, ie what Lord Gill has called the geographical test, should be modified by a particular occupational arrangement. In my view, that question should, if possible, be answered in a way which is not only principled, but which is as clear and practical as possible. That is because Valuation Officers and others concerned with rating are entitled to expect to know what approach to adopt when such an issue arises, and the approach should be one which is tolerably easy to apply. However, as is not unusual, clarity and practicality are to some extent in conflict, and, unsurprisingly in the complex and multi faceted world of land and buildings, there cannot be complete certainty. Where premises consist of two self contained pieces of property, it would, in my view, require relatively exceptional facts before they could be treated as a single hereditament. The mere fact that each property may have the same occupier should, at least normally, make no difference. As Lord Keith said in Glasgow University v Assessor for Glasgow 1952 SC 504, 509, [i]n the ordinary case the question whether separate buildings, or parts of buildings, should be entered in the Roll as unum quid falls to be decided primarily from the geographical standpoint. However, it is possible to conceive of facts which would justify a different conclusion. Thus, if one property could not sensibly be occupied or let other than together with the other property, I think that the two properties could, and indeed normally should, be properly treated as a single hereditament. As Lord Keith went on to say in Glasgow University at p 510, quoting Lord Trayner in Bank of Scotland v Assessor for Edinburgh (1890) 17 R 839, 843, for two separate properties to be treated as a single hereditament, it is not enough that one of the properties is a convenience or accessory for the other: it would have to be impossible or difficult to let them separately. Strict necessity is not the test. As Lord Sumption says, his three tests set out in para 12 (with which I agree) have to be applied with professional common sense to the facts of each case. A golf course, a shipyard, a distillery or a factory which is, in each case, divided by a public road could properly be treated as a single hereditament. These are all examples given in the decision of the Lands Tribunal for Scotland in Burn Stewart Distillers plc v Assessors for Lanarkshire Valuation Joint Board [2001] RA 110, where it was rightly said that, while the fact that certain heritable subjects function together as one business will, by itself, be insufficient to demonstrate that they are to be regarded as a unum quid in any physical sense, [i]t is impossible to lay down clear rules which will apply in all cases. The Lands Tribunal also suggested that, while physical separation of subjects would normally prevent them from being a single hereditament (to use the English expression), [w]here the subjects share characteristics of function which, in a robust practical sense, support the use of a single term to describe the physical subjects, they can be treated as one unit (p 141). That is well illustrated by the unreported 1982 Scottish case of Lothian Regional Council v Assessor for Lothian Region whose effect is summarised in these terms in Armour on Valuation for Rating (looseleaf, August 2014 ed), para 10 05: [I]t was held to be competent for the assessor to make a single composite entry in the roll in respect of 923 bus shelters maintained by the appellants throughout the region, where the work involved in making separate entries would have been very onerous and unnecessary, there being no suggestion of any prejudice suffered by the appellants as a result. The cases summarised in the English text book Ryde on Rating and the Council Tax (looseleaf, July 2014 ed), paras C 210 and 211, suggest that the most frequent type of case where the question of whether two separate properties are to be treated as a single hereditament arises in connection with industrial or retail premises. Rydes summary of the effect of those cases also suggests that, on the current understanding of the law, the question is one to which the answer is unpredictable following the unfortunate decision of the Court of Appeal in Gilbert v S Hickinbottom & Sons Ltd [1956] 2 QB 40 (which I shall discuss in more detail below). Indeed, the question is almost treated as an issue of discretion for each first instance tribunal, which is an approach that is both unprincipled and unclear. The Scottish cases cited in Armour demonstrate a far more satisfactory state of affairs. There is a risk, as I have mentioned, of being too prescriptive in generalising about an issue which, as a matter of fact, can apply to cases which are rather different from the present case (which of course concerns floors in an office building). However, it seems to me that a principled approach to all premises, whether used or recorded as office, retail, industrial, warehouse, recreational or any other purpose, which accords with the law as I understand it to have been laid down in Scottish courts, is as follows. In order to decide whether two separate self contained units of property constitute a single hereditament, one does not so much look at the actual occupation or actual use of those properties, although that might provide useful evidence in some marginal cases. Rather one looks at the relationship between the two properties, as discussed in paras 51 53 above. And, when considering the two properties in this connection, one takes into account the plant, machinery, and other fixtures (including some chattels) which form part of the property for all rating purposes see the London County Council case cited above. In my opinion, two separate self contained floors in the same office building, whether or not they are contiguous, cannot be said to satisfy such a test, at least in the absence of very unusual facts. Once they cease to be self contained, because, say, an internal means of access (eg an internal staircase) is constructed, so that each floor is accessible from the other without going onto other property eg the common parts of the building then the two hereditaments will normally be treated as have been converted into one larger hereditament. Unless there is such a means of access, each floor is self contained from the other, and each can be occupied and let independently of the other. Accordingly, I can see no good reason why they should be treated as a single hereditament merely because they happen to be let to and occupied by the same tenant. It is true that they are in the same building, but it is hard to see why a different result should obtain if, for instance, the respondents had occupied the second floor of Tower Bridge House and the sixth floor of an adjoining building. The courts below considered that it was artificial and unfair to treat two self contained floors in common occupation in the same building differently depending on whether or not they were at consecutive levels. There is considerable force in that, but their error was to assume that the two floors should be treated as a single hereditament if they were at consecutive levels. As explained, if they are each self contained from the other, then, absent very unusual facts, they should be separate hereditaments. Furthermore, closer consideration suggests that, particularly in modern buildings, two consecutive floors are not actually contiguous to each other: there will often be a void between them, which contains servicing equipment and is in the possession and occupation of the landlord of the building. Absent a communicating internal staircase or lift, passing through the void, two consecutive floors in the same building would be physically separated in much the same way as two non consecutive floors. I do not doubt that there will be cases where the guidance given on this appeal will be difficult to apply with any confidence. However, it is hard to believe that we will be leaving the law of England and Wales on this topic in a less satisfactory state than it was as a result of Gilbert, although it is only fair to add that the judgments in that case contain some accurate and helpful dicta. At p 50, Denning LJ correctly expressed approval of earlier Lands Tribunal cases where it had been held that properties on different sides of the road in the same occupation should normally be assessed as separate hereditaments. However, he dismissed the appeal against a decision to the opposite effect, on the ground that there must be some distinction because the chairman of the Lands Tribunal had those cases well in mind, and he had the advantage of a view an analysis which it is tempting to describe as an abdication of an appellate judges responsibility. In Gilbert, Denning LJ also stated the correct test, namely where the two properties so essential in use the one to another that they should be regarded as one single hereditament (pp 49 50); however, that test is to be assessed objectively and not by reference to the needs or use of the particular occupier, and it is by no means clear to me that Denning LJ was saying that. Morris LJ at p 52 seems to have thought that the actual use was important, but it is not clear what weight he thought it should be given, although it led him to join in wrongly dismissing the appeal. Parker LJ set out a number of factors at pp 53 54, and (correctly) said that if premises consist of two properties which are not capable of being separately let , then the premises must be entered as a single hereditament. However, he also identified a number of other factors, which may be of more questionable value, as is supported by the fact that he also wrongly joined in dismissing the appeal. While there are therefore undoubtedly dicta in Gilbert which may be right, it is difficult to know precisely what to make of it. At best, it is an unhelpful decision, and the actual result was wrong: the appeal should have been allowed. The Scottish cases, which are more fully considered by Lord Sumption and Lord Gill, are far more satisfactory, and, as Lord Gill says, it is very hard to understand how Denning LJs approval of them can be reconciled with his dismissing the appeal in Gilbert. As it is, for the reasons given by Lord Sumption, and indeed for those given by Lord Gill, I would allow this appeal. LORD CARNWATH: (agrees with Lord Sumption) I agree that the appeal should be allowed for the reasons given by Lord Sumption. The treatment of contiguous floors in single occupation (which is addressed in the judgments of Lord Neuberger and Lord Gill) is not before us for decision, and I would prefer not to express any firm view. The Valuation Officers practice of treating such cases as single hereditaments, even if in part concessionary, seems to me unobjectionable if it avoids narrow factual disputes about degrees of connection. LORD TOULSON: (who agrees with Lord Sumption, Lord Gill and Lord Neuberger) I agree with the judgments of Lord Sumption and Lord Neuberger. I agree also with the judgment of Lord Gill, subject to the qualification that I am not sure about distinguishing Gilbert on the basis that it was a de rating case. But there is no need for me to say any more on that point, since I entirely agree with Lord Gills description of Gilbert as plainly an unsatisfactory decision. |
The specific issue raised by this appeal is whether East Sussex County Council (the County Council) was wrong in law to decide to register an area of just over 6 hectares (or 15 acres) known as West Beach at Newhaven (the Beach) as a village green pursuant to the provisions of the Commons Act 2006. The points of principle raised by the appeal are, potentially at least, far more wide ranging. Those points are (i) the nature of the publics rights over coastal beaches, (ii) whether byelaws can give rise to an implied consent to the public to use land, and (iii) the interrelationship of the statutory law relating to village greens and other duties imposed by statute. The factual background Newhaven is a port town on the mouth of the River Ouse in East Sussex, and its harbour (the Harbour) has existed since the mid sixteenth century, after a storm blocked the original mouth of the River Ouse, some three miles to the east. Since at least 1731, the operation of the Harbour has been subject to legislation. The Newhaven Harbour and Ouse Lower Navigation Act 1847 (the 1847 Newhaven Act) repealed the earlier legislation, and established harbour trustees (the trustees), to whom it gave powers to maintain and support the harbour and associated works. Section 49 of the 1847 Newhaven Act is in these terms: [T]he Trustees shall maintain, and support the said harbour of Newhaven, and the piers, groynes, sluices, wharfs, mooring berths, and other works connected therewith, and also maintain and support the open navigation of the River Ouse between Newhaven Bridge and Lewes Bridge The Newhaven Harbour and Ouse Lower Navigation Act 1863 (the 1863 Newhaven Act) gave the trustees powers to construct and maintain and support the Harbour and associated works. The Newhaven Harbour Improvement Act 1878 (the 1878 Newhaven Act) established the Newhaven Harbour Company to which were transferred the rights, powers and duties of the trustees. Under section 57 of the 1878 Newhaven Act it is provided that: the Company may hire or purchase and use any dredging machine for the purpose of deepening and cleansing the harbour Section 2 of the 1878 Newhaven Act applied to the port section 33 of the Harbours, Docks and Piers Clauses Act 1847 (the 1847 Clauses Act), which provides that: Upon payment of the rates made payable by this and the special Act, and subject to the other provisions thereof, the harbour, dock and pier shall be open to all persons for the shipping and unshipping of goods, and the embarking and landing of passengers. By virtue of the Southern Railway Act 1926, the Harbour Company was vested in the Southern Railway Company. Pursuant to the Transport Act 1947, the Southern Railway Company was nationalised, and the Harbour was vested in the British Transport Commission. As a result of subsequent statutory and contractual arrangements, the Harbour subsequently vested in British Railways Board (1962), Sealink (UK) Limited (1979), Sea Containers Limited (1984), and, most recently, in 1991, Newhaven Port and Properties Limited (NPP), pursuant to the Sealink (Transfer of Newhaven Harbour) Harbour Revision Order 1991 (SI 1991/1257) (the 1991 Newhaven Order). Paras 10 and 11 of the 1991 Newhaven Order provide: 10 (1) The Company, subject to obtaining the necessary rights in or over land, may execute, place, maintain and operate in and over the transferred harbour such works and equipments as are required for or in connection with the exercise by it of any of its functions and may alter, renew or extend any works so constructed or placed. 11 (1) The Company may deepen, widen, dredge, scour and improve the bed and foreshore of the transferred harbour and may blast any rock within the transferred harbour or in such approaches. The Beach is part of the operational land of the Harbour, which is currently owned and operated by NPP, and is subject to statutory provisions and byelaws. The extent of the Harbour area includes (i) a substantial breakwater and lighthouse, seawall and the Beach which form the west of the entry into the port, (ii) a pier, a much longer (and naturally created) shingle beach which form the east of that entry, (iii) the mouth of the River Ouse and the next thousand metres or so of the river, and (iv) land running either side of the river, which includes (v) a car park, marina and fishing berth to the west, and (vi) two quays, a ferry dock, a cool store, a harbour railway station, and harbour offices to the east. NPPs current strategic plan for development of the port is contained in its Masterplan (2012). The Beach owes its origin to the fact that, in 1883, pursuant to the powers granted by the 1863 Newhaven Act, the substantial breakwater was constructed to form the western boundary of the Harbour. The breakwater extends just over 700 metres out to sea. After the construction of the breakwater, accretion of sand occurred along the eastern side of the breakwater, and that accretion has resulted in the Beach. To the north, the Beach is bounded by a harbour wall. On top of the harbour wall is an area of hard standing and a car park, which is now owned and operated by NPP. There are physically two means of access to the Beach: first, by steps leading down from the top of the wall, and, secondly, by another set of steps leading down from the top of the breakwater. The Beach is substantially covered by the sea for periods of time either side of high tide. Inevitably, as the tide ebbs and flows, the amount of the land uncovered varies, and the amount of the land uncovered at low tide and the period for which the whole of the Beach is covered with water varies between spring (high) and neap (low) tides. On average, the Beach is wholly covered by water for 42% of the time and for the remaining 58% of the time it is uncovered to some extent, but it is entirely uncovered by water only for a few minutes at a time. The steps leading down to the Beach from the top of the harbour wall were accessible in practice by members of the public from shortly after the end of the Second World War (during which time it was closed) until it was fenced off by NPP in April 2006. Thereafter, access by the public was no longer possible, because access from the steps leading from the top of the breakwater had been closed off before 2006. The making of byelaws relating to Newhaven Harbour Section 58 of the 1878 Newhaven Act conferred on the Harbour Company the power to make byelaws which were to be approved and published in the manner prescribed by the 1847 Clauses Act. Section 83 of the 1847 Clauses Act gives to the undertakers in whom a harbour is vested the power to make byelaws as they shall think fit for various purposes, including [f]or regulating the use of the harbour, dock, or pier. Section 84 provides for criminal sanctions at the suit of the undertaker for breach of such byelaws. Section 85 of the 1847 Clauses Act states that the byelaws should not come into operation until the same be confirmed as required by that Act. Sections 86 and 87 of that Act are concerned with advertising and providing copies of the byelaws before confirmation. Provisions relating to the publication and display of such byelaws were contained in sections 88 and 89 of the 1847 Clauses Act: 88. The said byelaws when confirmed shall be published in the prescribed manner, and when no manner of publication is prescribed they shall be printed; and the clerk to the undertakers shall deliver a printed copy thereof to every person applying for the same, without charge, and a copy thereof shall be painted or placed on boards, and put up in some conspicuous part of the office of the undertakers, and also on some conspicuous part of the harbour, dock, or pier, and such boards, with the byelaws thereon, shall be renewed from time to time, as occasion shall require, and shall be open to inspection without fee or reward 89. All byelaws made and confirmed according to the provisions of this and the special Act, when so published and put up, shall be binding upon and be observed by all parties, and shall be sufficient to justify all persons acting under the same. Section 89 was repealed by the Statute Law (Repeals) Act 1993. Section 90 of the 1847 Clauses Act provides that [t]he Production of a written or printed Copy of the Bye laws appropriately authenticated shall be evidence of the Existence and due making of such Bye Laws, and with respect to the Proof of the Publication of any such Bye Laws it shall be sufficient to prove that a Board containing a Copy thereof was put up and continued in manner by this Act directed . In February 1931, the Southern Railway Company made byelaws for the Regulation of Newhaven Harbour (the Byelaws), which were confirmed by the Minister of Transport the following month. The following Byelaws are germane to the present appeal: No person shall enter or remain on the quays of the harbour unless he has lawful business thereon, or has received permission from the Harbour Master to do so; and every person entering or who shall have entered on such quays, shall, whenever required so to do by any duly authorised servant of the Company, truly inform him of the business in respect of which such person claims to be entitled to be thereon. Any person committing a breach of this byelaw may be forthwith removed from the quays and be excluded therefrom 52. No person shall, without the consent of the Harbour Master, enter or remain within any part of the piers or quays which may, under a reasonable direction of the Harbour Master, be enclosed by chains, or by a barrier. 68. No person, without the permission of the Harbour Master, shall fish in the harbour; and no person shall bathe in that part of the harbour which lies between Horse Shoe Sluice and an imaginary line drawn from the East Pier Lighthouse and the Breakwater Lighthouse. 70. No person shall engage in or play any sport or game so as to obstruct or impede the use of the harbour, or any part thereof, or any person thereon; nor (except in case of necessity or emergency) shall any person, without the consent of the Harbour Master, wilfully do any act thereon, which may cause danger or risk of danger to any other person. 71. No person shall bring any dog within the harbour, or permit it to be within the harbour, unless it is securely fastened by a suitable chain or cord, or is otherwise under proper and sufficient control. As regards publication and enforcement of the Byelaws, according to the Inspector who wrote the reports referred to in para 19 below, there were no byelaw signs in place during the relevant twenty year period that would have indicated to users of the Beach that their use was regulated by byelaws. She also concluded that there was no evidence of active enforcement of the Byelaws during that period; and that there was no other suggestion of any other overt act on the part of the landowner during that period to demonstrate that he was granting an implied permission for local inhabitants to use the Beach. The Commons Act 2006 Town and village greens have been protected by statute since at least 1857. However, the currently applicable legislation is to be found in the Commons Act 2006, and in particular in section 15 of that Act, which replaced the preceding governing legislation, which was contained in the Commons Registration Act 1965. Section 15(1) of the 2006 Act provides that Any person may apply to the commons registration authority to register land to which this Part applies as a town or village green in a case where subsection (2), (3) or (4) applies. Subsections (2), (3) and (4) each refer to cases where: (a) a significant number of the inhabitants of any locality, or of any neighbourhood within a locality, indulged as of right in lawful sports and pastimes on the land for a period of at least 20 years. Subsection (2) only applies where this use was continuing at the date of the application; subsection (3) only applies where the use had ceased after section 15 commenced, provided that the application was made within two years of such cesser; and subsection (4) only applies where the land ceased to be so used before section 15 commenced, provided (i) the application is made within five years of the cesser and (ii) an inconsistent planning permission has not been granted and implemented. It is, of course, subsection (4) which is relied on in this case. By section 61 of the 2006 Act, it is provided that land includes land covered by water. It was argued below on behalf of NPP that a tidal beach cannot be a town or village green within the meaning of the 2006 Act. A speaker of ordinary English might well think that there is very considerable force in that argument. However, substantially for the reasons given by Ouseley J in the High Court and by Richards LJ in the Court of Appeal, the argument must be rejected see at [2012] EWHC 647 (Admin), [2014] QB 186, paras 11 39 and [2013] EWCA Civ 276, [2014] QB 186, paras 31 42. In summary, the argument is inconsistent with the reasoning of the majority of the House of Lords in Oxfordshire County Council v Oxford City Council [2006] UKHL 25, [2006] 2 AC 674, a case on the 1965 Act (as amended in 2000), which, for the purposes of the point at issue was identically worded to the 2006 Act see per Lord Hoffmann, Lord Rodger and Lord Walker respectively at paras 39, 115 and 128. It might have been appropriate for this Court to reconsider the Oxfordshire case were it not for the fact that it was decided while Parliament was considering the Bill which became the 2006 Act, and Lord Hoffmann, Lord Rodger and Lord Walker each expressly observed (in the paragraphs just mentioned) that, if Parliament was unhappy with the decision, the Bill could be amended appropriately, and it was not. Implied Parliamentary approval of a courts decision should not be lightly inferred, but in the present case, we thought it inappropriate to grant permission to appeal on this issue. The application to register On 18 December 2008 Newhaven Town Council (the Town Council) applied to the County Council, as the statutory registration authority, to register the Beach as a town or village green. The application was supported by evidence that the Beach had been used by a significant number of local inhabitants as of right and for a period of at least 20 years down to April 2006. NPP objected to the proposal, and the County Council appointed an Inspector, Ruth Stockley, a barrister experienced in this area of the law, to hold a public inquiry. The inquiry was held between 6 and 8 July 2010, following which Ms Stockley produced a report dated 6 October 2010 and an addendum report dated 14 December 2010, recommending that the Beach be registered as a town or village green. Ms Stockleys two reports were very full and clear. Importantly, she concluded that members of the public, and, crucially residents of the locality, had used the Beach for well over 80 years as a place to play, sunbathe, swim from, picnic and the like (save during much of the First and Second World War periods, when the port area, including the Beach, were inaccessible). On 22 December 2010, the two reports and recommendation were put before the County Councils Commons and Village Green Registration Panel (the Panel), together with an officers recommendation that the County Council accept the application and register the land as a town or village green. The Panel resolved to accept the application to register the Beach, but the actual registration awaits the outcome of these proceedings. NPP then applied to the High Court for judicial review of the decision to register the Beach as a town or village green. The application came before Ouseley J who, in a comprehensive and carefully considered judgment, rejected a number of arguments raised by NPP, but granted their application on one ground, namely that it was reasonably foreseeable that the registration of the Beach would conflict with the statutory functions for which the Beach was held by NPP, namely as part of Newhaven Harbour [2012] EWHC 647 (Admin) [2014] QB 186. The County Council and the Town Council appealed that decision to the Court of Appeal, who, in the course of their impressive judgments, unanimously disagreed with the Judges reason for granting the application [2013] EWCA 276, [2014] QB 186. Accordingly, the majority of the Court of Appeal (Richards and McFarlane LJJ) allowed the appeal. Lewison LJ would have dismissed the appeal on the ground that the use of the Beach by members of the public, and therefore by inhabitants of the locality, up to 2006 had not been as of right, but by implied licence, for two different reasons, namely (i) because members of the public had enjoyed an implied licence to use coastal beaches in the UK for recreational and associated purposes, and/or (ii) by virtue of the provisions of the byelaws governing the Harbour area. The issues on this appeal The provisions of section 15 of the 2006 Act only enable land to be registered as a town or village green if it has been used for recreational and similar purposes by inhabitants of the locality for more than twenty years as of right. As was explained most recently by this Court in R (Barkas) v North Yorkshire County Council [2014] UKSC 31, [2014] 2 WLR 1360, paras 14 19 and 58 68, that expression, perhaps somewhat confusingly, is to be contrasted with by right, and generally connotes user without any right, whether derived from custom and usage, statute, prescription or express or implied permission of the owner. Accordingly, where the inhabitants of the locality have indulged in sports and pastimes on the land in question with the licence of the owner for at least part of the relevant twenty year period, section 15 will not apply. Three issues arise on this appeal. The first is whether the fact that the Beach is part of the foreshore defeats the contention that the user by local inhabitants for sports and pastimes can have been as of right, on the ground that the public had an implied licence to use the foreshore for such purposes and the implied right was never revoked in the case of the Beach. The second issue is whether, if that is not right, the public none the less had an implied licence to use the Beach, as part of the Harbour, in the light of the Byelaws. The third issue is whether, in any event, section 15 of the 2006 Act cannot be interpreted so as to enable registration of land as a town or village green if such registration was incompatible with some other statutory function to which the land was to be put. We will take these three issues in turn. Public rights over the foreshore: the arguments The foreshore around England and Wales, by which is meant the area between the high water and low water mark, is owned by the Crown, although it is open to the Crown to alienate it, either permanently by conveying or transferring it, or temporarily by granting leases over it see eg Halsburys Laws (4th ed 1998 reissue) vol 12(1), para 242. During the course of argument, we were informed that the Crown retained ownership and possession of more than half the foreshore around England and Wales. Most of the foreshore which the Crown no longer owns was at some point conveyed or transferred away. But to describe the Beach in this case as having been alienated in this way may be slightly misleading, as the Beach only came into existence as a beach in 1883 in the circumstances described in para 9 above. However, that does not impinge on NPPs argument, which is that there is a rebuttable presumption that the public use of the foreshore is by permission of the owner of the Beach that is, the Crown or its successors in title. This proposition was rejected by Ouseley J at first instance and by the majority of the Court of Appeal, Richards and McFarlane LJJ. However, it was accepted by Lewison LJ. The state of the law relating to public rights over the foreshore of England and Wales is more controversial than one might have expected. It appears clear that there is, at least normally, a public right of navigation and of fishing in the sea and rights ancillary to it Halsbury op cit, para 243. However, the question in this case is the existence and nature of any further or greater rights, and in particular the right to use the foreshore for the purpose of bathing and the sort of familiar activities which people indulge in on a beach at least in good weather. At least where there is no express permission from the owner of the foreshore, there are in principle at least three possible conclusions in relation to the issue of the publics right to use the foreshore for bathing, by which we mean using the foreshore as access to the sea at low tide, or bathing in the sea over the foreshore at high tide (or a combination of the two), plus associated recreational activities. The first is that members of the public have, as a matter of general law and irrespective of the wishes of the owner of the foreshore, the right to use the foreshore for the purpose of bathing, as a matter of general common law. The second possibility is that the owner of the foreshore is presumed to permit members of the public to use of the foreshore for the purpose of bathing, unless and until the owner communicates a revocation of its implied permission. The third possibility is that members of the public have no right to use the foreshore for bathing, in which case they are trespassers. NPP would succeed on the first issue on this appeal if the first or second of these possibilities is correct. If local inhabitants (a subset of members of the public) had been using the Beach because they were entitled to do so as a matter of common law (the first possibility), or because they had an implied permission to do so (the second possibility), then, in so far as they were inhabitants of the locality, they would not have been doing so as of right, but by right. On the other hand, if the third possibility is correct, NPP would fail because the user by local inhabitants would have been as trespassers, and therefore as of right, at least subject to the other two issues on this appeal. So far as the relevant cases on the issue are concerned, none is binding on this Court, but they tend to be against the first possibility and somewhat unclear as between the second and third possibilities. Presumably for that reason, Mr George QC, on behalf of NPP, does not argue for the first possibility and takes his stand on the second possibility. Public rights over the foreshore: the authorities The leading, and it may be said the only, reported case where the topic of the rights of members of the public to bathe on the foreshore has been considered in any detail is Blundell v Catterall (1821) 5 B & Ald 268. In that case, the defendant used the beach between the high water mark and the low water mark of the River Mersey at Great Crosby in Lancashire for the purpose of providing bathing facilities (including bathing machines and carriages for members of the public who wished to swim in the sea). The plaintiff, as Lord of the Manor of Great Crosby and owner of the beach in question, sought an injunction to restrain this use. The defendant argued that all members of the public had the right to use a beach for the purpose of gaining access to, and bathing in, the sea. The Court of Kings Bench, Best J dissenting, decided that, unless such a right could be established by usage and custom, there was no common law right for all the Kings subjects to bathe in the sea and to pass over the seashore for that purpose. The leading judgment has long been regarded as that of Holroyd J who gave the extent of the rights of the public over the seashore impressively full and detailed consideration, although Abbott CJ and Bayley J also delivered full judgments, as did the dissenting Best J. Best J in effect followed the view expressed in Bractons De Legibus et Consuetudinibus Angliae, where it is written Naturali vero iure communia sunt omnium haec: aqua profluens, aer et mare et litora mare, quasi mari accessoria. Nemo igitur ad litus maris accedere prohibetur (By natural law these are common to all: running water, air, the sea, and the shores of the sea, as though accessories of the sea. No one therefore is forbidden access to the seashore). However, Holroyd J considered that this represented the civilian law, but not the common law. Essentially, as we see it, the reasoning of the majority can be justified by reference to the well established common law proposition that rights over land can normally only be obtained by grant, custom and usage, or prescription. Custom and usage required a long period of use for the specified purpose, and prescription could (at any rate until 1832) normally only be invoked if it could be shown that the use had continued since time immemorial which, at least normally, meant 1189. Bathing in the sea, unlike fishing and navigation, was a comparatively recent popular activity, which seems to have started as such around the middle of the 18th century. Although Strutt in Sports and Pastimes of the People of England (1802) refers to swimming as an exercise of great antiquity, the first recorded instance of people bathing in the sea for pleasure, according to NPP in this case, was in Scarborough in 1732 (Crane, Coast: Our Island Story: A Journey of Discovery Around Britain's Coastline, 2010, p 218). Accordingly, bathing could rarely be a right obtained by custom and usage or (at least until the Prescription Act 1832, which introduced the twenty year and forty year rules) by prescription. The decision in Blundell was not concerned with the second possibility canvassed in para 29 above, namely whether there was, or could be taken to be, some sort of tacit licence on the part of the owner of the sea shore permitting members of the public to use it for bathing, recreations and pastimes. The point could not have arisen in that case, because it would not have availed the defendant, as any such licence would have been revoked by the plaintiffs objection to the defendants use of the beach. None the less, there are observations in the judgments in Blundell, which appear to imply that the right to use the foreshore for bathing or for access to the sea for bathing could be acquired by prescription. For instance, at p 301, albeit in a passage whose clarity is not assisted by a double negative, Holroyd J said nor, if [the present claim] were [supported by custom or usage], would it follow that it was such a common law right as might not, by prescription at least, be otherwise appropriated. It seems to us that that observation carries with it the implication that a member of the public would be trespassing on the foreshore if he used it for that purpose, as otherwise they could not raise a claim by prescription. However, it would not be safe to make much of what is little more than a throw away obiter observation. Further, in what may be seen as a hint at the possibility of an implied licence at p 300, Holroyd J said this: Where the soil remains the King's, and where no mischief or injury is likely to arise from the enjoyment or exercise of such a public right, it is not to be supposed that an unnecessary and injurious restraint upon the subjects would, in that respect, be enforced by the King, the parens patriae. This provides some apparent assistance to NPPs argument that there is an implied licence from the owner of a beach to use it for purposes which do not interfere with the interests of the owner. However, it would be wrong to place much weight on it, as, once again, it was not really relevant to the issue which the court had to decide, and it is not clear quite what the legal characterisation of the owners indulgence Holroyd J had in mind. In Mace v Philcox (1864) 15 CB (NS) 600, Williams J appears to have treated Blundell as a decision limited to the presence or use of bathing machines. In the same case, Erle CJ was apparently unenthusiastic about the majority view in Blundell, saying I am desirous of guarding my judgment so as not to restrict the valuable usage or right of Her Majestys subjects to resort to the sea shore for bathing purposes, although he followed the majority view. So did Cozens Hardy J in Llandudno Urban District Council v Woods [1899] 2 Ch 705, albeit without any expressed lack of enthusiasm. However, it could be said that he demonstrated a degree of restraint by refusing an injunction to restrain the activity in question (preaching on the foreshore) although concluding, in accordance with the reasoning in Blundell, that it was a trespass. In Brinckman v Matley [1904] 2 Ch 313, 317, Buckley J, after referring to the fact that it had been applied in two first instance decisions of Mace and Llandudno, followed the judgment of Holroyd J in Blundell, and proceeded on the basis that members of the public did not have the right to go on the foreshore for the purpose of bathing or getting access to the sea for bathing. In the Court of Appeal in Brinckman, Vaughan Williams LJ said at p 322 that the majority view in Blundell, even if technically obiter, has been recognised ever since by the whole of the profession as an accurate and binding statement of the law. Accordingly, he concluded, I do not think that we ought now, after the lapse of eighty years, to upset the law thus settled. Romer and Cozens Hardy LJJ took the same view see at pp 326 and 327. 41. Shortly after this, Buckley J in Behrens v Richards [1905] 2 Ch 614 refused an injunction sought by the owner of land leading to the foreshore against fishermen who used the land to gain access to the foreshore, although he held 42. that the fishermen had established no public right of way by long user. Buckley J said this at pp 619 620: I cite again, as I did in Brinckman v Matley, Bowen LJs words in Blount v Layard [1891] 2 Ch 681n, 691n, that nothing worse can happen in a free country than to force people to be churlish about their rights for fear that their indulgence may be abused, and to drive them to prevent the enjoyment of things which, although they are matters of private property, naturally give pleasure to many others besides the owners, under the fear that their good nature may be misunderstood, and that, however continuous, however lengthy, the indulgence may have been, a jury ought to be warned against extracting out of it an inference unfavourable to the person who has granted the indulgence. In permitting persons to stray along the cliff edge or wander down the cliff face or stroll along the foreshore the owner of the land was permitting that which was no injury to him and whose refusal would have been a churlish and unreasonable act on his part. From such a user nothing, I think, is to be inferred. This observation may give some support for the notion of an implied licence, the second possibility identified in para 29 above, but it refers to the use of land as a public means of access to the foreshore, not to the use of the foreshore itself. In Alfred F Beckett Ltd v Lyons [1967] Ch 449, the Court of Appeal declined to hold that gatherers of coal on the foreshore for personal use were trespassers. Coal gathering by local inhabitants went back to 1895, and, if they had been trespassers, the coal gathering would have been carried on as of right for more than 20 years. However, as it was held that there was no trespass, no prescriptive right could have been obtained. The judgments therefore provide support for the second possibility referred to in para 29 above, and in particular there are dicta which support the notion that the use of the seashore for purposes other than fishing and navigation would be pursuant to an implied licence from the owner of the foreshore. Thus, Harman LJ observed at p 469A that it was notorious that in many and indeed most places the use of the foreshore by the public for purposes of recreation and bathing is tolerated, and at 472F that The practice may be sufficiently explained by tolerance of the foreshore owner, who would have been churlish indeed if he had stopped a poor man climbing up the cliff with a bag of small coals picked up on the shore to nourish his evening fire. Accordingly, at p 474A, he held that there was no prescribed right to collect coal from the beach as toleration is a sufficient explanation. Russell LJ, who said pithily at p 476A that the only reasonable conclusion is mere tolerance of the 43. unimportant, and Winn LJ, who referred at p 485G to collecting coal as being a practice which had been long permitted took the same view. In passing, it is worth noting that Harman and Winn LJJ considered that a fluctuating group of people (such as local inhabitants) could not claim the right to gather coal by prescription see at pp 474B D and 479C D respectively. Harman LJ based his reasoning on the fact that the right would be a profit a prendre. However, Winn LJ quoted from a judgment of Farwell J in Attorney General v Antrobus [1905] 2 Ch 188, 198 which suggested that an easement could not be obtained for recreational purposes. However, that may not be right in the light of In re Ellenborough Park [1956] Ch 131. Having said that, it is questionable whether, under common law as opposed to statute, a right to use the foreshore for bathing could be claimed by a fluctuating group of people such as the inhabitants of a neighbourhood or locality, as opposed to each owner of an alleged dominant property establishing a prescriptive easement arising from more than 20 years of such use as of right by that owner and/or his predecessors. 44. While the reasoning in Beckett provides some support for the second possibility identified in para 29 above, it has a number of features which render it at least arguably of limited assistance. First, it was not concerned with the right to bathe. Secondly, as is clear from what was said at pp 465A D and 469B D, the right to gather coal was treated as acknowledged in two deeds of grant from the Crown. Thirdly, it appears to have been accepted that the public rights over the foreshore were limited as held in Blundell, but the point was left open at least by Winn LJ at p 486C. Fourthly, the Court in Beckett proceeded on the basis that Jones v Bates [1938] 2 All ER 237 was correct, ie that the subjective belief of the person claiming a prescriptive right was relevant, indeed often determinative, on the question whether he had been acting as of right, which is wrong see R v Oxfordshire County Council, Ex p Sunningwell Parish Council [2000] 1 AC 335, 358H, per Lord Hoffmann. 45. Furthermore, in Mills v Silver [1991] Ch 271, 279G 280B, Dillon LJ pertinently observed in relation to the reasoning in Beckett that if there is an established principle of law that no prescriptive right can be acquired if the user by the dominant owner of the servient tenement has been tolerated without objection by the servient owner, it would be fundamentally inconsistent with the whole notion of acquisition of rights by prescription. This passage was cited with approval in Sunningwell at p 358F, in R (Beresford) v Sunderland City Council [2003] UKHL 60, [2004] 1 AC 889, paras 5 6 and 79 82, and in Barkas at para 28. Public rights over the foreshore: discussion 46. The choice between the three possibilities identified in para 29 raises an issue which is both difficult and important. The importance of conclusively deciding the nature and extent of the publics rights over the foreshore of England and Wales is self evident. The difficulty arises because each of the three possibilities gives rise to problems. 47. There is a great deal to be said for the third possibility, namely that the public have no rights to use the foreshore for bathing, on the basis that their rights are limited to access for navigation and fishing, given the reasoning in, and long standing nature of, the majority judgments in in Blundell. The reasoning speaks for itself, and the judgments have generally been followed by judges and have been assumed to be correct. However, the decision is not binding on this Court, the dissenting judgment of Best J is not without force, and, as was reportedly stated on behalf of the unsuccessful appellant in Brinckman at p 320: The decision in Blundell v Catterall has been disapproved by text writers, eg, Hall on the Seashore, 2nd ed, pp 156 et seq. The same view is taken in Phears Rights of Water, pp 44 et seq, Stuart Moore on the Foreshore, pp 833 et seq. Quite apart from this, it can be said that the second (implied licence) possibility mentioned in para 29 above is somewhat artificial and was only developed because it was assumed that the majority view in Blundell represented the law. Further, the law of Scotland appears consistent, or at least more consistent, with Best Js dissenting view see Officers of State v Smith (1846) 8 D 711, 719 per the Lord Justice Clerk. Having said that, it would be a strong thing to depart from the majority view in Blundell, given that it has been treated as being the law for nearly 200 years. 48. The second possibility, namely a rebuttable presumption of a licence, has some support in the cases (see paras 41 43 above), but it may well be based on somewhat shaky legal foundations (see paras 44 45 above). It would also be rather curious, as it would mean that the position with regard to the foreshore is the opposite of the position with regard to almost all other land: a permission for the public to use is to be assumed for the foreshore, but not for any other land. There are some possible reasons for treating the foreshore in a special way for present purposes, as Lewison LJ mentioned in para 128 of the Court of Appeal judgment, but, Mr Sauvain QC, for the County Council argues with some force that they do not seem to be overwhelmingly powerful. Further, if the rebuttable presumption of permission applied to the foreshore, it would either also apply to any part of a beach above high water mark, or one would have what may be a rather odd dichotomy between the foreshore and the upper part of many beaches. 50. 49. As to the first possibility, the notion that members of the public have the right to use the foreshore for bathing would, as mentioned, align the law of England and Wales with that of Scotland, and it may well accord with the views and expectations of many non lawyers. However, it might risk upsetting the effect of decisions and actions based on the not unreasonable assumption that the majority view in Blundell represented the law. And it may give rise to other problems for owners of the foreshore. It would also give rise to the arguable dichotomy mentioned at the end of para 48 above. In all these circumstances, it seems to us that, unless it is necessary to do so for the purpose of determining this appeal (and it is not for the reasons which appear later in this judgment), this court ought not to determine the first issue, that is which of the three possibilities set out in para 29 above is correct. The issue is one of wide ranging importance, and we would be uncomfortable about determining it in circumstances where it was common ground that the first possibility could be ruled out. However, given that the point has been raised and argued, and as it may well arise in another case (whether under the 2006 Act or otherwise), we considered that it would be worthwhile identifying the issue as well as referring to the arguments and problems as they appear to us at this stage. Since writing this, we have had the opportunity of reading in draft the judgment of Lord Carnwath, which gives further food for thought on this interesting issue. 51. Accordingly, we proceed on the assumption that the majority of the Court of Appeal and Ouseley J were correct, and that, at least so far as the general common law is concerned, and subject to the other two more specific issues to which we now turn, members of the public, and therefore inhabitants of the locality, used the Beach for bathing as of right and not by right. The Byelaws: introductory 52. NPPs argument is that the effect of the Byelaws was to amount to a licence or permission to members of the public to use the Beach for leisure activities. If that argument is correct, then NPPs appeal must succeed, as the use of the Beach by inhabitants of the neighbourhood, as members of the public, would not have been as of right. 53. NPPs argument on this issue raises two points. The first is whether the Byelaws, if they had been, or should be treated as having been, properly communicated, would have amounted to a licence or permission sufficient to defeat the public use of the Beach as having been as of right. The second point is whether the Byelaws were, or should be treated as having been, sufficiently communicated to members of the public during the twenty years preceding 2006 when the Beach was used for bathing by members of the public. NPP contends that the answer to both points is in the affirmative, the County Council contends that both points should be answered no, and the Town Council agrees with NPP on the first point and with the Council on the second. While the Court of Appeal were unanimously in agreement with NPP on the first point, only Lewison LJ agreed with them on the second point. We will consider each of the two points in turn. The Byelaws: did they give rise to a licence as a matter of interpretation? 54. It appears to be common ground that a byelaw can, as a matter of principle permit an activity which would otherwise be unlawful, and we think that this is right. As suggested in Halsburys Laws (5th ed, 2009) vol 69, para 553, the classic definition of a byelaw was given by Lord Russell of Killowen CJ in Kruse v Johnson [1898] 2 QB 91, 96: A by law, of the class we are here considering, I take to be an ordinance affecting the public, or some portion of the public, imposed by some authority clothed with statutory powers ordering something to be done or not to be done, and accompanied by some sanction or penalty for its non observance. It necessarily involves restriction of liberty of action by persons who come under its operation as to acts which, but for the by law, they would be free to do or not do as they pleased. Further, it involves this consequence that, if validly made, it has the force of law within the sphere of its legitimate operation. 55. The reference to ordering something to be done or not to be done carries with it an ability permitting something to be done: if an entity has the power to forbid or require, it must also have the power to permit that which it can forbid. However, in agreement with Richards LJ at para 72 in the Court of Appeal, we would accept that mere silence or inaction on the part of the entity cannot amount to permitting. In the same way as silence and inactivity on the part of a private landowner cannot, without more, amount to consent (save, arguably, as discussed in cases such as those mentioned in paras 44 45 above), so would the absence of any express or implied prohibition in the byelaws, without more, not amount to an implied licence. 56. Of course, it may be that the statutory powers pursuant to which particular byelaws are made are expressed in terms which lead to the conclusion that the byelaws made thereunder cannot or are not intended to extend to permitting activities or certain activities, in which event the byelaws would either have to be construed so that they did not have that effect or they would be ultra vires. However, there is no question of such an argument being applicable in this case, in the light of the wide words of section 83 of the 1847 Clauses Act (quoted in para 12 above). Indeed, it is worth bearing in mind that the 1847 Clauses Act stipulates that it is to be the relevant undertaking which makes the Byelaws, and the undertaking is the entity which owns the harbour. In other words, the Byelaws are made and enforced by the owner of the land concerned, which plainly supports the notion that they can properly involve the grant of rights over the land. 57. Accordingly, the question which arises is whether, on their true construction, the Byelaws permitted members of the public to use the Beach for leisure activities. NPP cannot point to a Byelaw which expressly permits such activities in terms and therefore one is in the realm of implied permission. It is not part of the County Councils case, as we understand it, that byelaws could not grant a licence by implication. This is unsurprising: once it is accepted that byelaws can grant a licence, it is hard to justify the argument that they can only grant a licence expressly. Of course, the usual principles apply to implications: they are only justified when they are necessary or obvious. 58. A prohibition can be expressed in such a way as to imply a permission. For instance, it is hard to argue against the proposition that a byelaw which states that dogs must be kept on a lead in a public park implies a permission to bring dogs into the park, provided that they are kept on a lead. It is at least as a matter of pure linguistic logic, possible to interpret the byelaw as solely meaning that, if (and only if) specific permission is obtained from the park authority by a person to bring a dog into the park, then the byelaw will apply. However, any reasonable reader of the byelaw would not consider that it had such a limited meaning. In other words, as with any question of interpretation, a strictly logical linguistic analysis of the words concerned cannot prevail over a contextual assessment of what they would naturally convey to an ordinary and reasonable speaker of English. 59. Thus, Byelaw 71, which forbids the bringing of a dog into the Harbour unless it is securely fastened by a suitable chain or cord, or is otherwise under proper and sufficient control, would appear to a normal person speaking ordinary English to imply that dogs could be brought into the area of Newhaven Harbour, provided that they are appropriately fastened or under control, and are not precluded by any other Byelaw. We do not consider that this point is undermined if the Harbour Master had forbidden dogs to be brought into certain parts of the Harbour area, or even the Harbour generally. The fact that a property owner voluntarily gives a general permission to the public (or to an individual or group of individuals) to do an act does not prevent him from subsequently revoking or cutting down that permission. 60. The central question for present purposes is whether the Byelaws, and in particular Byelaws 68 and 70, imply that members of the public have the right to use the Beach for recreational activities associated with beaches. The argument advanced by NPP, and accepted by the Court of Appeal, is that (i) the prohibition of bathing in the area identified in the second part of Byelaw 68 and (ii) the prohibition on sports and games which impede the use of the harbour in Byelaw 70, imply that bathing can take place elsewhere in the Harbour and that associated recreational activities can also take place provided that they do not impede the use of the Harbour. In our view, particularly when one remembers that the Byelaws are made and enforced by and on behalf of the owner and operator of the Harbour, this argument is correct. A normal speaker of English reading the Byelaws would assume that he or she was permitted to bathe or play provided the activity did not fall foul of the restrictions in the two Byelaws (and in any other Byelaws). This conclusion is also supported by the reference to the consent of the Harbour Master in the first part of Byelaw 68 and the second half of Byelaw 70: if the activities referred to in the latter Byelaw (ie including an activity which endangers others) are permitted if the Harbour Masters consent is obtained, that reinforces the view that generally harmless activities such as bathing and playing are permitted, at least in principle. The conclusion is further reinforced by the fact that, at the time the Byelaws were made, members of the public had been and were using the Beach freely for the purpose of bathing and recreation. 61. 62. As Lord Sumption pointed out in argument, this conclusion is also supported by Byelaws 51 and 52. Those Byelaws would serve to cut down the areas within the Harbour in which bathing and recreations could take place (without the Harbour Masters permission), as they exclude people who simply want to bathe or play from the quays or from the piers in so far as they are enclosed by chains ie from the operational parts of the Harbour. In the first place, those two Byelaws suggest that any other person who does not have lawful business in the Harbour would be entitled to go onto other parts of the Harbour area unless precluded by another Byelaw (or any other law). Secondly, they undermine any argument which might otherwise be raised that the implied licence raised by NPP would go too far. In addition, they both contain reference to the Harbour Masters permission, which, as already mentioned, provides some further support for NPPs case. In these circumstances, the only factor which can stand in the way of NPPs succeeding in its argument that the use of the Beach by members of the public 63. was by right as a result of the Byelaws, is the fact that the Byelaws were not brought to the attention of the public, the issue to which we now turn. The Byelaws: did they have to be brought to the publics attention? 64. A preliminary point which is raised in this connection is the argument that the Byelaws were only valid or effective so long as a copy thereof was painted or placed on boards, and put up in some conspicuous part of the office of the undertakers, and also on some conspicuous part of the harbour, dock, or pier, pursuant to section 88 of the 1847 Clauses Act. The Court of Appeal rightly rejected that contention. As Lewison LJ said in para 133 in the Court of Appeal, it seems highly improbable that Parliament can have intended that the byelaws for harbours enabled by the 1847 Clauses Act should not apply if, for instance, the boards displaying them had been destroyed or washed away by a storm, or even pulled down by vandals. 65. Section 85 of the 1847 Clauses Act also supports this conclusion as, although expressed in the negative, it indicates that the byelaws become effective once they are confirmed, and publication and display clearly are intended to follow confirmation, as is clear from the opening part of section 88. Further, section 89 of the 1847 Clauses Act, now repealed, at most only imposed the initial display of the byelaws as a precondition to their efficacy; if it had had that effect, then the strong implication was that the continuing display of the byelaws was not a prerequisite to their continuing efficacy. In fact, as Lady Hale pointed out in argument, section 89 very probably took matters no further, given the grounds given for its repeal by the Law Commission pursuant to whose recommendation it was repealed. The Commission described it as an unnecessary [provision] confirming the binding effect of byelaws which reflected 19th century doubts as to the legal effect of subordinate legislation and would never be enacted in modern legislation see Statute Law Revision 14th Report (1993), Law Com 211, p 175. As Mr Laurence QC, for the Town Council, puts it, section 89 was repealed because it was and always had been unnecessary. 66. Nor is this conclusion called into question by section 90 of the 1847 Clauses Act. In so far as that section implies that it would be necessary to establish that the byelaws were exhibited on a board, it would only be for the purpose of justifying a prosecution for an infringement of the byelaws. The fact that it may be necessary to show that the byelaws were appropriately displayed before a prosecution for their infringement could proceed does not justify the contention that they are of no effect generally unless they are displayed. Accordingly, we conclude that the Byelaws were effective as byelaws in the sense of representing the local laws applicable to Newhaven Harbour, even though they were not displayed as required by section 88 of the 1847 Clauses Act, although that may well have meant that breach of the Byelaws could not have led to a prosecution (at least of someone who had infringed them without having seen them). 67. So we turn to the question whether the failure of NPP (and its predecessor) to ensure that the Byelaws were displayed means that they did not operate as an effective licence rendering the use of the Beach by member of the public by right, rather than as of right. 68. The majority of the Court of Appeal, in agreement with Ouseley J, considered that it was essential that any licence be communicated to the inhabitants of the locality before it could be said that their usage of land was by right. That is certainly the normal rule where one is concerned with a private land owner (subject to the point discussed in paras 41 43 above, namely where it is possible or appropriate to infer a consent or licence from the surrounding circumstances, even though there is no communication of a consent, a point which may well require reconsideration in the light of the cases referred to in para 45 above). Support for such a proposition can be found in R (Godmanchester Town Council) v Secretary of State for the Environment, Food and Rural Affairs [2007] UKHL 28, [2008] AC 221, paras 32, 56, 68, 74 and 81. The basis of this principle is explained in a number of cases including, Sunningwell, R (Lewis) v Redcar and Cleveland Borough Council (No 2) [2010] UKSC 11, [2010] 2 AC 70, and, most recently, Barkas, where, at para 21, Lord Neuberger quoted from Lord Hoffmanns opinion in Sunningwell that whether user was as of right should be judged by how the matter would have appeared to the owner of the land, adding that that question should be assessed objectively. 69. However, as the decision in Barkas demonstrates, it is not always necessary for the landowner to show that members of the public have to have had it drawn to their attention that their use of the land concerned was permitted in order for their use to be treated as being by right rather than as of right. In Barkas, land had been acquired and in part developed by a local authority for housing purposes under a statute which permitted any undeveloped part of the land so acquired to be used as recreation grounds if appropriate ministerial consent was obtained, which it was. The undeveloped part of the land was then used for recreation by members of the public, to whom the statutory purpose was not communicated. Despite the absence of any communication of a licence, it was held that local inhabitants were using that undeveloped part of the land by right, and not as of right. In Barkas, para 23, Lord Neuberger said that: 70. Where land is held [by a local authority] for [the statutory] purpose [of recreation], and members of the public then use the land for that purpose, the obvious and natural conclusion is that they enjoy a public right, or a publicly based licence, to do so. If that were not so, members of the public using for recreation land held by the local authority for the statutory purpose of public recreation would be trespassing on the land, which cannot be correct. To much the same effect, at para 65, after referring to the general proposition [that] if a right is to be obtained by prescription, the persons claiming that right must by their conduct bring home to the landowner that a right is being asserted against him, Lord Carnwath said: It follows that, in cases of possible ambiguity, the conduct must bring home to the owner, not merely that a right is being asserted, but that it is a village green right. Where the owner is a public authority, no adverse inference can sensibly be drawn from its failure to warn off the users as trespassers, if it has validly and visibly committed the land for public recreation, under powers that have nothing to do with the acquisition of village green rights. 71. In our judgment, the position in the present case is indistinguishable from that in Barkas for the purpose of deciding whether the use of the land in question by members of the public was as of right. In this case, as in Barkas, the legal position, binding on both landowner and users of the land, was that there was a public law right, derived from statute, for the public to go onto the land and to use it for recreational purposes, and therefore, in this case, as in Barkas, the recreational use of the land in question by inhabitants of the locality was by right and not as of right. The fact that the right arose from an act of the landowner (in Barkas, acquiring the land and then electing to obtain ministerial consent to put it to recreational use; in this case, to make the Byelaws which implicitly permit recreational use) does not alter the fact that the ultimate right of the public is a public law right derived from statute (the Housing Act 1936 in Barkas; the 1847 Clauses Act and the 1878 Newhaven Act in this case). We agree with Lewison LJ, who reached the same conclusion in the Court of Appeal, and said at para 138 that given that the Inspector rightly found that Byelaw 68 was an effective prohibition on swimming in the part of the harbour there referred to, it would be inconsistent then to reject the contention that the Byelaws implied permission for swimming elsewhere in the harbour did not operate as a valid licence. 72. By contrast, Richards and McFarlane LJJ considered that the Byelaws had to be communicated to the general public, or at least to the local inhabitants, using the Beach, before they could constitute an effective licence rendering the use by right. They took this view at least partly because of the decision and reasoning of the House of Lords in R (Beresford) v Sunderland City Council [2004] 1 AC 889 see paras 82 87 in the judgment of Richards LJ and para 100 in the judgment of McFarlane LJ. After the decision of the Court of Appeal in the present case, this court in Barkas disapproved the decision and much of the reasoning in Beresford. The disapproval extended to passages quoted by Richards LJ in paras 83 and 84 of his judgment from the opinions of Lord Bingham and Lord Walker. 73. Thus, Richards LJ said at para 86, that, if (as he had concluded) on their proper construction the Byelaws impliedly permitted the public to access the harbour and engage in various sports and activities, it did not follow that they had the effect of conferring any right on the public to do those things. He went on to explain that, on this basis the Byelaws went no further than to give an implied revocable permission by the harbour authority, as landowner, for such access and activities, and if the authority had fenced off some part of the harbour, thereby preventing access to it, he did not think that a claim could have been maintained against the authority by a member of the public on the basis that the fencing off was in breach of rights conferred on him by the byelaws. However, that analysis cannot stand: once one concludes that there is an implied revocable permission for an activity, it follows that there is a licence, which renders the activity in question being carried on by right not as of right. The fact that permission can be subsequently withdrawn by an action on the part of the authority, such as fencing off, merely means that, when and if that occurs, the permission is withdrawn, so that any subsequent continuation of the activity concerned becomes a trespass and would therefore normally be as of right. The Byelaws: conclusion 74. It follows therefore that we would allow NPPs appeal on the second issue, which renders it strictly unnecessary to consider its appeal on the third issue. However, as the third issue is an important issue which was fully argued, and we have reached a clear conclusion on it, we consider that it is appropriate to allow the appeal on that ground as well, for reasons to which we now turn. Statutory incompatibility: introduction 75. NPPs argument is that section 15 of the 2006 Act should not be interpreted as extending to the Harbour because it was reasonably foreseeable that registration of the Beach as a town or village green would conflict with the port authoritys future exercise of its statutory powers. This argument, which Ouseley J upheld, was, as we have said, unanimously rejected by the Court of Appeal. 76. Section 15 is in Part 1 of the 2006 Act, which extends to all land in England and Wales, with the exception of the New Forest, Epping Forest and the Forest of Dean (section 5), and land includes land covered by water (section 61(1)). There is no express exclusion of land held by statutory undertakers for statutory purposes. Therefore any restriction on the scope of section 15 would have to be implicit. NPP argues that statutory incompatibility provides that restriction. In support of its assertion NPP relies on case law in relation to public rights of way and private easements in English law and public rights of way and servitudes in Scots law. 77. When considering some of that case law it is important to recall that, in the context of the legislation relating to town and village greens, reference to case law on public rights of way, easements and servitudes is only by way of analogy. In Beresford, Lord Scott stated at para 34: It is a natural inclination to assume that these expressions, claiming right thereto (the [Prescription Act 1832], as of right (the [Rights of Way Act 1932] and the [Highways Act 1980] and as of right in the [Commons Registration Act 1965], all of which import the three characteristics, nec vi, nec clam, nec precario, ought to be given the same meaning and effect. The inclination should not, however, be taken too far. There are important differences between private easements over land and public rights over land and between the ways in which a public right of way can come into existence and the ways in which a town or village green can come into existence. To apply principles applicable to one type of right to another type of right without taking account of their differences is dangerous. Statutory incompatibility: the English law of dedication and prescription 78. The case law therefore needs to be examined with care. In English law public rights of way are created by dedication by the owner of the land, whether express, implied or deemed, and by acceptance by the public, usually in the form of user (Sunningwell at pp 351H 353B per Lord Hoffmann; Megarry & Wades The Law of Real Property (8th ed (2012)) para 27 035). In such cases, the legal capacity of the landowner to dedicate land for that purpose is a relevant consideration; if the owner had no such power, there could be no dedication. Section 1 of the Rights of Way Act 1932 (now section 31(1) of the Highways Act 1980) provided for deemed dedication resulting from 20 years of uninterrupted user unless there was sufficient evidence that the owner had no intention to dedicate. In this context where dedication is implied through user, the owners ability to dedicate remains relevant. This was stated expressly (in section 1(7) of the 1932 Act and now section 31(8) of the 1980 Act): Nothing in this section affects any incapacity of a corporation or other body or person in possession of land for public or statutory purposes to dedicate a way over that land as a highway if the existence of a highway would be incompatible with those purposes. Thus, in British Transport Commission v Westmorland County Council [1958] AC 126, in which a county council sought to assert a public right of way on a footpath across a bridge over a railway line, the issue was whether the railway owners could be deemed to have dedicated the path. The House of Lords held that the question whether the power to dedicate was incompatible with the owners statutory objects was a question of fact and was to be assessed by reference to what could reasonably be foreseen. 79. Similarly, in the English law of private easements (other than access of light) the capacity of the owner of the potential servient tenement to grant an easement is relevant to prescriptive acquisition. As prescription is based on the fiction of a grant, a landowner who could not have granted the claimed easement cannot suffer prescription (see Sunningwell, per Lord Hoffmann at pp 349G 351C in relation to the common law; Housden v Conservators of Wimbledon and Putney Common [2008] EWCA Civ 200, [2008] 1 WLR 1172, paras 43 and 76, per Mummery LJ, and Carnwath LJ respectively, in relation to the 1832 Act; Megarry & Wade op cit at para 28 065; Gale on Easements (19th ed (2012)), paras 4.88 4.91). The Law Commission in its 2011 Report, Making Land Work: Easements, Covenants and Profits Prendre (Law Com No 327; HC 1067) while advocating the removal of the fiction of grant, recommended (at para 3.168) that the use of land cannot be qualifying use, for the purposes of prescription, at any time when the land is in the freehold ownership of a person or body who is not competent to grant an easement over it. 80. By contrast, the owner of land which others wish to register as a town or village green does not need to have capacity to create such a green. All that is required is that people from the relevant locality have used the land as of right for lawful sports and pastimes (Barkas at paras 14 19 per Lord Neuberger). Indeed, it was only on the enactment of the 2006 Act that an owner obtained power to register land as a town or village green (section 15(8)). Until then an owner could not do so (Barkas at para 68 per Lord Carnwath). The landowner could only create the equivalent of a village green by settlement on trust for local inhabitants or the public at large (R v Doncaster Metropolitan Borough Council, Ex p Braim (1986) 57 P & C R 1, 8, per McCullough J). Statutory incompatibility: the Scots law of positive and negative prescription 81. Faced with this problem NPP turns to the law of Scotland for support for its proposition. Again, those authorities which deal with the creation of public rights of way and servitude rights of way have to be handled with care, not least because they come from a separate legal system whose property law is much more closely related to the civil law than the common law of England and Wales. None the less, in the field of acquisitive prescription there is a clear analogy with English law as, drawing on the rules of Roman law, the user or possession which grounds prescription must be nec vi, nec clam, nec precario (see McGregor v Crieff Co operative Society Ltd 1915 SC (HL) 93, per Earl Loreburn LC at 98, and Lord Dunedin at 103 104). Before the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act) created the modern rules for positive (including acquisitive) prescription and also negative prescription, such prescription was governed by early Scottish statutes of the 16th and 17th centuries, although the period for positive prescription was reduced in the 19th and early 20th centuries. At the heart of positive prescription was uninterrupted possession of property. But some of the institutional writers of Scots law advanced rationalisations of the law of acquisitive prescription. Thus Stair (Institutions II 7.1 and 2) and Erskine (Institutes II 9.3 and III 7.2) spoke of the acquisition of a servitude by prescription as giving rise to a presumption of the owners grant of a title or consent. There are also judicial dicta which supported implied grant, presumed grant or presumed consent but, as we shall show, it has long been accepted that the basis of acquisitive prescription of a positive servitude or a public right of way is uninterrupted user as of right for the prescriptive period. We deal first with public rights of way and then private servitudes. In Scots law a public right of way can be constituted without any actual or fictional dedication by the owner of the land. Before the period of positive prescription was reduced, user by the public as a matter of right, continuously and without interruption for 40 years was sufficient to create such a right of way (Mann v Brodie (1885) 10 App Cas 378, per Lord Blackburn 387 388 and Lord Watson 390 391; (1885) 12 R (HL) 52, 54 55 and 57). Lord Watson explained it thus (pp 390 391): 82. According to the law of Scotland, the constitution of such a right does not depend upon any legal fiction, but upon the fact of user by the public, as matter of right, continuously and without interruption, for the full period of the long prescription. I am aware that there are dicta to be found, in which the prescriptive acquisition of a right of way by the public is attributed to implied grant, acquiescence by the owner of the soil, and so forth; but these appear to me to be mere speculations as to the origin of the rule, and their tendency is to obscure rather than to elucidate its due application to a case like the present. 83. Lord Watsons clarification led to the leading case in Scotland on statutory incompatibility, to which we turn. In Magistrates of Edinburgh v North British Railway Co (1904) 6 F 620 the First Division of the Court of Session dealt with a claim that a railway company, which was a statutory undertaker, was obliged to maintain a railway bridge over which a public right of way was asserted. The Court held that there was insufficient evidence of public user for 40 years. But it also held that the public could not acquire a public right of way over the railway by user because it was incompatible with the statutory purposes of the railway company. Lord Kinnear, with whom the Lord President (Lord Kinross), Lord Adam and Lord McLaren concurred, gave the opinion of the court. He accepted Lord Watsons explanation of the basis of acquisitive prescription when he stated (at pp 636 637): I am of opinion, in the first place, that no right of way can be acquired by user over the line of the defenders railway, and especially at a point where the railway traffic is so great as on the main line close to Portobello station. It must always be presumed that if people having no statutory right of any kind have been allowed to cross the line, their passage is permitted only so long as it does not interfere with the purposes of the railway traffic. I am of opinion that no such right can be maintained, and that on the same principle on which it has been repeatedly held that a railway company cannot voluntarily grant a right inconsistent with the performance of the purposes for which it acquired its land. I assent entirely to the doctrine laid down by Lord Watson that the reference to the prescriptive right of way to an implied grant is a juridical speculation to account for an established rule, and not itself a rule of law. But at the same time I do not think it possible that a right of way which it would be ultra vires to grant can be lawfully acquired by user. 84. In so holding, the First Division upheld the decision of the Lord Ordinary, Lord Kincairney, in that case, who in Kinross County Council v Archibald (1899) 7 SLT 308 had relied on Lord Watsons approach in Mann v Brodie to reject any idea of an implied grant as the legal basis of the assertion of a right of way through user. 85. Shortly before the First Division handed down their opinion in Magistrates of Edinburgh the same Division of the Inner House (comprising the same judges) reached a similar conclusion in relation to an assertion of a private servitude right of way by apparently different but not inconsistent reasoning. In Ellices Trustees v The Commissioners of the Caledonian Canal 1904 6 F 325, the First Division considered an assertion by the owners of a landed estate through which the Caledonian Canal passed that they had obtained by user during the prescriptive period of 40 years a servitude right of way over the towpath of the canal. The commissioners, in the exercise of statutory powers to construct and maintain the canal, had constructed a weir, which intersected the towpath, to allow floodwater to escape. The owners sought declarations that they were entitled to use the towpath for access and that the commissioners were obliged to maintain that access road and construct a bridge or other passage over the weir. The court rejected their claim, holding that the slight use made of the towpath, which did not inconvenience the commissioners, was not sufficient to create a servitude right of way. The Lord President (with whom the other judges concurred) also held that the commissioners did not have the power to grant a right of way which was not compatible with the exercise of their statutory duties. He stated (p 335): I think, however, that even if the character of the use of the towing path of the canal had been such as might otherwise have constituted a public or servitude right of passage, the admitted circumstances of the case are such as to exclude any such a result. The Commissioners of the canal, as already stated, hold, and always have held, the canal banks for the purposes of the canal, and they have not now, and never had, any right either to alienate them or to agree that they should be subjected to any uses which were or might become inconsistent with or adverse to the use of the banks for their proper purpose videlicet, the containing and working of the canal. He continued (p 336): And if it would be ultra vires of them to make such an express grant, an effective grant could not be inferred from any such user by the pursuers and their authors as is alleged to have been permitted or tolerated in the present case. 86. In Ellices Trustees the court followed a line of authority, which included Ayr Harbour Trustees v Oswald (1883) 8 App Cas 623, (1883) 10 R (HL) 85, that a statutory body had no power to alienate lands which it had acquired for a statutory purpose or to grant any right over such land which was inconsistent with its use for statutory purposes. The courts reliance on that case might suggest that it considered that the acquisition of a servitude right of way by prescription was based on implied grant. But the reclaimers counsel cited both Mann v Brodie and Kinross County Council in their submissions, and the Lord President stated (again at p 336): I further agree with the Lord Ordinary in thinking that even if a limited and qualified right of user of the canal banks had been acquired by prescription, that right could not be allowed to come into competition with, or to prevail against, the rights possessed by the [commissioners] and the statutory duties which are imposed upon them. 87. The case is thus consistent with the approach the court went on to take in Magistrates of Edinburgh that statutory incompatibility could bar acquisitive prescription. In British Transport Commission Lord Keith of Avonholm (at pp 164 165) commented on Lord Kinnears opinion in Magistrates of Edinburgh, suggesting that it would be going too far to hold that the public could never acquire a right of way over railway property but acknowledging that incompatibility with the conduct of traffic on the railway could bar a public right of passage. He opined (p 166) that incompatibility was a question of fact and that it was for the statutory undertaker to prove incompatibility. 88. Since those cases, the Scots law of prescription has been reformed by statutory provision. The 1973 Act sets out the modern Scots law of positive prescription. Section 3(2) provides: If a positive servitude over land has been possessed for a continuous period of twenty years openly, peaceably and without judicial interruption, then, as from the expiration of that period, the existence of the servitude as so possessed shall be exempt from challenge. Section 3(3) provides essentially the same basis for the creation of a public right of way by prescription. In contrast with the provisions for the short negative prescription of five years which in section 6(4)(b) excludes from the prescriptive period any period in which the original creditor is under a legal disability, by reason of non age or disability of mind, such disability on the part of a landowner does not prevent the operation of positive prescription against him. This approach to positive prescription by possession following on a recorded title was expressly stated in earlier statutes, including section 16 of the Conveyancing (Scotland) Act 1924 which provided that periods of legal disability were not to be deducted from the prescriptive period. It applies ex silentio to such prescription in sections 1, 2 and 3(1) of the 1973 Act and extends to prescription by possession without title under section 3(2) and (3). Thus in the Scottish statutory scheme, the lack of legal capacity to grant a public right of way or a servitude of way is of itself not relevant. In this respect the Scottish statute differs from the English law of prescription as section 7 of the 1832 Act excludes from the computation of the period of, among others, the 20 year prescription under section 2 any time during which a person was incapable of resisting a claim because he was an infant or otherwise disabled as specified. But we note that neither the 1832 Act nor the Scottish 1973 Act addresses the issue of statutory incompatibility. It is not necessary in this appeal, which concerns English law, to express any view on whether in Scots law the doctrine of statutory incompatibility has survived the enactment of the 1973 Act. It suffices to note that it is a matter of controversy. Professor David Johnston in his scholarly Prescription and Limitation 2nd ed (2012) questions the continued relevance of the Scottish case law to which we have referred (para 19.27) while Professor Cusine and Professor Paisley, Servitudes and Rights of Way (1998) support the case law on the ground of inconsistency with the statutory purpose for which the servient owner holds the land (para 4.02). Professor Gordon, Scottish Land Law 2nd ed (1999) (paras 24.54 and 24.130) also sees statutory incompatibility or incapacity to grant as a bar to acquisitive prescription. Professor Reid, The Law of Property in Scotland (1996) (at para 449) states: When land has been acquired compulsorily for certain purposes, this precludes the creation of any servitude rights the exercise of which could be prejudicial to these purposes. But he does not repeat this assertion in his discussion of acquisition of such rights by prescription under the 1973 Act (paras 458 461). Statutory incompatibility: statutory construction 91. As we have said, the rules of prescriptive acquisition apply only by analogy because Parliament in legislating for the registration of town and village greens has chosen similar wording (indulging as of right in lawful sports and pastimes) in the 1965 and 2006 Acts. It is, none the less, significant in our view that historically in both English law and Scots law, albeit for different reasons, the passage of time would not give rise to prescriptive 89. 90. acquisition against a public authority, which had acquired land for specified statutory purposes and continued to carry out those purposes, where the user founded on would be incompatible with those purposes. That approach is also consistent with the Irish case, McEvoy v Great Northern Railway Co [1900] 2 IR 325, (Palles CB at 334 336) which proceeded on the basis that the acquisition of an easement by prescription did not require a presumption of grant but that the incapacity of the owner of the servient tenement to grant excluded prescription. In this case if the statutory incompatibility rested only on the incapacity of the statutory body to grant an easement or dedicate land as a public right of way, the Court of Appeal would have been correct to reject the argument based upon incompatibility because the 2006 Act does not require a grant or dedication by the landowner. But in our view the matter does not rest solely on the vires of the statutory body but rather on the incompatibility of the statutory purpose for which Parliament has authorised the acquisition and use of the land with the operation of section 15 of the 2006 Act. 92. 93. The question of incompatibility is one of statutory construction. It does not depend on the legal theory that underpins the rules of acquisitive prescription. The question is: does section 15 of the 2006 Act apply to land which has been acquired by a statutory undertaker (whether by voluntary agreement or by powers of compulsory purchase) and which is held for statutory purposes that are inconsistent with its registration as a town or village green? In our view it does not. Where Parliament has conferred on a statutory undertaker powers to acquire land compulsorily and to hold and use that land for defined statutory purposes, the 2006 Act does not enable the public to acquire by user rights which are incompatible with the continuing use of the land for those statutory purposes. Where there is a conflict between two statutory regimes, some assistance may be obtained from the rule that a general provision does not derogate from a special one (generalia specialibus non derogant), which is set out in section 88 of the code in Bennion, Statutory Interpretation 6th ed (2013): Where the literal meaning of a general enactment covers a situation for which specific provision is made by another enactment contained in an earlier Act, it is presumed that the situation was intended to continue to be dealt with by the specific provision rather than the later general one. Accordingly the earlier specific provision is not treated as impliedly repealed. While there is no question of repeal in the current context, the existence of a lex specialis is relevant to the interpretation of a generally worded statute such as the 2006 Act. 94. There is an incompatibility between the 2006 Act and the statutory regime which confers harbour powers on NPP to operate a working harbour, which is to be open to the public for the shipping of goods etc on payment of rates (section 33 of the 1847 Clauses Act). NPP is obliged to maintain and support the Harbour and its connected works (section 49 of the 1847 Newhaven Act), and it has powers to that end to carry out works on the Harbour including the dredging of the sea bed and the foreshore (section 57 of the 1878 Newhaven Act, and paras 10 and 11 of the 1991 Newhaven Order). 96. 95. The registration of the Beach as a town or village green would make it a criminal offence to damage the green or interrupt its use and enjoyment as a place for exercise and recreation section 12 of the Inclosure Act 1857 or to encroach on or interfere with the green section 29 of the Commons Act 1876. See the Oxfordshire case [2006] 2 AC 674, per Lord Hoffmann at para 56. In this case, which concerns a working harbour, it is not necessary for the parties to lead evidence as to NPPs plans for the future of the Harbour in order to ascertain whether there is an incompatibility between the registration of the Beach as a town or village green and the use of the Harbour for the statutory purposes to which we have referred. Such registration would clearly impede the use of the adjoining quay to moor vessels. It would prevent the Harbour authority from dredging the Harbour in a way which affected the enjoyment of the Beach. It might also restrict NPPs ability to alter the existing breakwater. All this is apparent without the leading of further evidence. 97. NPP has also suggested that vessels en route to and from other parts of the port might have to reduce speed in circumstances where such reduction would not be desirable to maintain the stability of the vessels. It also led evidence of proposals to unload materials for an offshore windfarm on the Beach. But we do not need to consider such matters in order to determine that there is a clear incompatibility between NPPs statutory functions in relation to the Harbour, which it continues to operate as a working harbour, and the registration of the Beach as a town or village green. 98. The County Council referred to several cases which supported the view that land held by public bodies could be registered as town or village greens. In our view they can readily be distinguished from this case. In New Windsor Corporation v Mellor [1975] Ch 380, the Court of Appeal was concerned with the registration of Bachelors Acre, a grassed area of land in New Windsor, as a customary town or village green under the 1965 Act. The appeal centred on whether the evidence had established a relevant customary right. While the land had long been in the ownership of the local council and its predecessors, it was not acquired and held for a specific statutory purpose. It had been used for archery in mediaeval times and had been leased for grazing subject to the recreational rights of the inhabitants. In recent times it had been used as a sports ground and more recently it was used as to half as a car park and half as a school playground. No question of statutory incompatibility arose. 99. The Oxfordshire case concerned the Trap Grounds, which were nine acres of undeveloped land in North Oxford comprising scrubland and reed beds. The land was, as Lord Hoffmann stated (in para 2) not idyllic. More significantly, while the City Council owned the land and wanted to use a strip on the margin of it to create an access road to a new school and to use a significant part of the land for a housing development, there was no suggestion that it had acquired and held the land for specific statutory purposes that might give rise to a statutory incompatibility. 100. Thirdly, the County Council referred to Lewis v Redcar, which concerned land at Redcar owned by a local authority which had formerly been leased to the Cleveland golf club as part of a links course but which local residents also used for informal recreation. The council proposed to redevelop the land in partnership with a house building company as part of a coastal regeneration project involving a residential and leisure development. Again, there was no question of any statutory incompatibility. It was not asserted that the council had acquired and held the land for a specific statutory purpose which would be likely to be impeded if the land were to be registered as a town or village green. 101. In our view, therefore, these cases do not assist the respondents. The ownership of land by a public body, such as a local authority, which has statutory powers that it can apply in future to develop land, is not of itself sufficient to create a statutory incompatibility. By contrast, in the present case the statutory harbour authority throughout the period of public user of the Beach held the Harbour land for the statutory harbour purposes and as part of a working harbour. 102. In this context it is easy to infer that the harbour authoritys passive response to the use by the public of the Beach was evidence of an implicit permission so long as such user did not disrupt its harbour activities. This is consistent with our view of the byelaws which we have discussed above. There has been no user as of right by the public of the Beach that has interfered with the harbour activities. If there had been such an assertion of right it would not avail the public, because the 2006 Act cannot operate in respect of the Beach by reason of statutory incompatibility. Conclusion 103. The poet Ovid spoke of time as the devourer of things (tempus edax rerum. Metamorphoses 15.234). In the English law of prescription, user as of right can over time eat into a landowners freedom to use land. So too can the 2006 Act. In this case, however, we conclude that, assuming that there is no general common law right for the public to use the foreshore for bathing and associated recreational activities, the user was by permission in the light of the Byelaws, and that in any event the 2006 Act cannot operate by reason of incompatibility with the statutory basis on which NPPs predecessors acquired the land, and the statutory purposes for which they held, and now NPP holds, that land. 104. We therefore would allow the appeal and set aside the order of the Court of Appeal dated 27 March 2013. LORD CARNWATH: 105. As will become apparent, I agree that the appeal should be allowed under ground (ii) for the reasons given by Lord Neuberger and Lord Hodge. While I agree that we need not reach a conclusion on ground (i), I think it useful also to comment on some of the more general issues discussed in argument, which have not previously been considered at this level and which may become relevant in other cases. Bathing rights on the foreshore 106. At least since Brinckman v Matley [1904] 2 Ch 313, the decision of the Court of Kings Bench in Blundell v Catterall (1821) 5 B & Ald 268 has been taken as establishing at Court of Appeal level that under English law the public has no general right to go onto the foreshore for the purpose of bathing or other recreation. In the words of the 1904 headnote: The public have no common law right to use the foreshore or to pass and repass thereon for the purpose of bathing in the sea, whether the foreshore is the property of the Crown or of a private owner. Not even the strong dissenting judgment of Best J in the earlier case, the advocacy of a future Lord Chancellor (Buckmaster KC), nor the criticism of three textbook writers cited by him (p 320), were sufficient to persuade the court to revisit the issue, or even to call on opposing counsel. The members of the court were unanimous in their praise for the model judgment of Holroyd J, regarded it seems as one of the finest examples of how a judgment should be expressed (p 323). Only Cozens Hardy LJ, while observing that the principles laid down in that case have never since been questioned by any authority to which our attention has been called, was prepared to concede that the point might be open for reconsideration by the House of Lords (p 327). 107. No doubt because judicial fashions have changed, I confess that I do not find the enthusiasm of the Court of Appeal for the judgment of Holroyd J altogether easy to share. Its erudite analysis of extracts from Justinian, Bracton, and Hale, and of obscure exchanges between the court and counsel in some early English cases, makes rather heavy reading to modern eyes. 108. It is also difficult to find the basis of the assertion by Vaughan Williams LJ that the majority judgments in the earlier case had been recognised ever since by the whole of the profession as an accurate and binding assertion of the law (p 322). In the intervening century, recreational use of the foreshore and the associated beaches had become an even more wide spread and popular activity. As far as one knows, the public had continued to enjoy the pleasures of the beach without interference, and without anyone suggesting that they were mere trespassers. There is no record of anyone relying on the judgment in Blundell v Catterall to restrict such use. Nor were we referred to any evidence of support from legal commentators to set against the three sources relied on by the appellants (Hall on the Seashore, Phears Rights of Water, and Stuart Moore on the Foreshore). 109. Furthermore, as Vaughan Williams LJ acknowledged (p 322) the actual issue in the earlier case had been narrower than that facing his court. It had been, not the general right of the public to bathe on the foreshore, but their right to bring on to the beach bathing machines for that purpose, and to do so in an area where it conflicted with private rights of fishing with stake nets. On the same page, Vaughan Williams LJ also cited the short statement by Abbott CJ of what the decision of the court was: that is, where one man endeavours to make his own special profit by conveying persons over the soil of another, and claims a public right to do so he has no reason to complain if the owner of the soil shall insist upon participating in the profit . On that footing the case was about commercial exploitation of the beach, rather than the publics right to its recreational use. 110. As appears from the dissenting judgment of Best J in the earlier case (p 279), it had been found as a fact that there was a custom for the public to cross the spot in question on foot for the purpose of bathing. That usage as such was not apparently in issue. The problem arose because of the associated need for bathing machines, use of which at that time was seen as essential to the practice of bathing (Decency must prevent all females, and infirmity many men, from bathing, except from a machine). Even the judgment of the majority was not seen by them as restricting the established right of access to bathing on foot: The right is claimed on the pleadings, as founded not on usage or custom, but upon the supposed general law only; and the usage, as stated in the special case, is found to have been for the public to cross the sea shore on foot only, for the purpose of bathing, no bathing machines having ever been used in Great Crosby, where the locus in quo is situate, before the establishment of the present hotel. My opinion, therefore, on this case, will not affect any right that has been or can be gained by prescription or custom, either by individuals or by either the permanent or temporary inhabitants of any village, parish, or district. (p 289, per Holroyd J) It is unfortunate that neither in that case, nor in any of the later cases relying on it, was there any discussion of the legal basis of such a hypothetical right gained by prescription or custom. 111. This was a point touched on by the first of the textbook writers, Robert Hall, a barrister of Lincolns Inn. In his 1830 treatise An essay on the rights of the Crown and the privileges of the subject in the sea shore of the realms, he devoted some 40 pages of a supplemental chapter to a detailed criticism of the majority judgments. He was troubled (p 219) by the implications of Holroyd Js acceptance that there might be a local usage or custom of bathing, and the difficulty of distinguishing such a custom from one available to the public generally. It would be singular to denominate this a collection of local customs. He compared fishing on the seashore which, though likely to be practised by local inhabitants, was accepted as a general rather than a purely local right. It would be strange, he said, to treat the right to bathe any differently. 112. More generally, he noted that much of Holroyd Js discussion was devoted to criticisms of Bractons exposition of the law relating to river banks, rather than the passages directly concerned with the public right over the sea shore. He commented: The reasoning, therefore, seems to have been this, Bracton was wrong in his law that Riparum usus communis est &c therefore littorum usus non est communis. But this is certainly a non sequitur; and although the court, from the authorities, proved Bracton wrong, to a certain extent in his law respecting particular uses made of banks of rivers (as for towage), yet no authorities were adduced shewing that communis usus of the sea shore for bathing is not a good custom. (pp 191 192) Best J, by contrast, had preferred to see Bractons writings on this issue as derived not so much from the civil or common law, as from the law of all civilised nations (p 281). 113. As to judicial authorities, the only judgment cited to the court in which Blundell v Catterall had been followed without question was Llandudno Urban Council v Woods [1899] 2 Ch 705, but that was at first instance, and it was concerned, not with bathing or general recreation, but with the holding of religious services on the beach. 114. More significant in the present context is Mace v Philcox (1864) 15 CB(NS) 600, which was cited to the Court of Appeal but not mentioned in their judgments. As appeared from the case stated, it was accepted that the sea beach or foreshore throughout the whole length of the borough of Hastings, including the locus in quo had been used from time immemorial by the public as a place of public resort (p 603), subject only to the corporations statutory powers to regulate the use by byelaws. The issue was simply as to the right of the defendant to place bathing machines on a part of the foreshore in private ownership, it being accepted that such a right existed on adjoining land owned by the corporation. Although Blundell v Catterall was cited on that point, the court did not evidently read it as settling any wider issue; rather Erle CJ was desirous of guarding (his) judgment so as not to restrict the valuable usage or right of her Majestys subjects to resort to the sea shore for bathing purposes (p 614 per Erle CJ). 115. Against this background the unwillingness of the Court of Appeal in 1904 to reopen the issue seems both surprising and disappointing. Scotland 116. The hearing in Brinckman v Matley took place on 13 July 1904. The judgments appear to have been given on the same day. By a curious coincidence, three days later a similar issue (relating to shooting wildfowl on the foreshore) was considered by the Court of Session in Scotland (Hope v Bennewith (1904) 6 F 1004). Although Brinckman v Matley is noted in a footnote to the report (p 1008), it seems highly improbable that the detail of those judgments would have been available at the hearing. In any event, counsel was able to submit, apparently without contradiction, that Blundell v Catterall had been much criticised and followed with reluctance (p 1010). He relied (inter alia) on Mace v Philcox and various textbook writers, including those cited to the English Court of Appeal. The court did not comment on the authorities, but proceeded on the basis of an admitted public right to use the foreshore (p 1010) without considering its precise scope. 117. It seems that from the middle of the previous century, Scottish law had begun to recognise a public right to use the foreshore for recreation, without feeling inhibited by authorities from the other side of the border. In 2001, the Scottish Law Commission reviewed the cases, beginning with Officers of State v Smith (1846) 8 D 711), and concluded that such a right was well supported by authority. The precise scope of the right was not clear: It appears to include walking and running, having a picnic or barbecue, sunbathing and swimming. While it does not include the right to put up a hut on the shore, it does include the right to shoot wildfowl. The sale of refreshments on the beach is outwith the scope of the right. (Discussion Paper No 113 Uses of the Foreshore para 4(25)) 118. By the time of the Commissions final report (report 190 (2003)) its recommendations had to some extent been overtaken by the enactment of the Land Reform (Scotland) Act 2003 which conferred general rights of access to land for recreational purposes, land for this purpose being defined as including the foreshore (section 32). None the less it was recommended that the common law rights, which were regarded as more extensive than the new access rights, should themselves be put on a separate statutory footing (para 3.1 17). Comparative jurisprudence 119. At the end of the hearing in the present case, the court offered Mr George QC the opportunity to provide information about the practice in other common law jurisdictions. He did not take up that invitation, perhaps in the understandable fear of opening up a Pandoras box. Some comparative material can, however, be found in the appendix to the Scottish Law Commissions 2001 Discussion Paper. That has been supplemented since the hearing in this case by some further work by our own judicial assistants, particularly relating to the United States of America. This research is far from exhaustive, and, since it is not material to our conclusion in the present case, it has not been thought necessary to invite comments from the parties. However, as it may be of relevance to future cases, it seems desirable to make a brief reference to some of the main points. 120. Appendix 2 to the Scottish Law Commissions Discussion Paper contained a short review of the law relating to the foreshore, including rights of recreation, in various jurisdictions. This shows little consistency of approach. In the European countries mentioned (France, Germany, Norway, Spain) recreation on the sea shore seems generally to be regulated by statute. Of the common law countries referred to (Canada, England & Wales, New Zealand), the English position unsurprisingly is defined by reference to Blundell v Catterall; and the position in Canada is said to be unclear (para 31). 121. Of more interest is New Zealand, where reference (para 156) is made to a case from the 19th century, Crawford v Lecren [1868] NZLA 117. In that case the Court of Appeal held, in reliance on Blundell v Catterall, that there was no right for the public to load and unload goods on the foreshore. The court seems to have attached particular weight to the support for this proposition of Best J, as well as of the majority (pp 128 129). The Commission also notes (paras 159 162) that in New Zealand public access to the foreshore is preserved through the concept of the Queens Chain, a strip of land up to 20 metres wide, measured from the high water mark of spring tide. The concept, which has had varying acceptance, and is now implemented by statute, is said to find its origins in an instruction of Queen Victoria given in 1840. United States 122. The Commission did not look at the position in the United States. It says something for the degree of interchange in the early 19th century between the legal communities on either side of the Atlantic, that Halls criticisms of Blundell v Catterall case were being cited with approval in the following year in an academic article: 3 US Law Intelligencer & Review 114 1831. (The US Law Intelligencer and Review was a periodical edited by one Joseph K Angell, who was born in the United States but lived in England from 1819 to 1824. He founded the periodical in 1829, which ran monthly for three years.) The article quoted extensively from the treatise, and praised its author for his zeal and ability in combatting a judicial decision which would abridge the publics undoubted right of indulging in the favourite and healthful practice of bathing in the sea. 123. Somewhat paradoxically, although the subsequent development of the law has varied between the states, it was to the English common law that the judges in later cases looked for the foundation for recognition of public rights of recreation over the foreshore. Thus in Florida, in White v Hughes 139 Fla 54, 59, 190 So 446 (1939), Brown J observed: There is probably no custom more universal, more natural or more ancient, on the sea coasts, not only of the United States, but of the world, than that of bathing in the salt waters of the ocean and the enjoyment of the wholesome recreation incident thereto. The lure of the ocean is universal; to battle with its refreshing breakers a delight After quoting Byron on the primeval quality of the wild waves play (Childe Harolds Pilgrimage IV, 182) he continued: The constant enjoyment of this privilege of thus using the ocean and its fore shore for ages without dispute should prove sufficient to establish it as an American common law right, similar to that of fishing in the sea, even if this right had not come down to us as a part of the English common law, which it undoubtedly has (p 449 emphasis added). 124. A more sophisticated (if less poetic) discussion of the development of the law up to 1969 can be found in the Yale Law Journal (William Dayton The Public Trust in Tidal Areas: a Sometime Submerged Traditional Doctrine (1970) 79 YLJ 762). The author traced the history of the law from its Roman roots, through Magna Carta, to the more modern law in England and America. Of Blundell v Catterall he said: This exclusion from common law protection of an ancient and customary right is a prime example of the needless exclusion of an activity. He noted that the State of Oregon in particular had seized the customary usage opening and widened it (citing inter alia State ex rel Thornton v Hay 89 Ore 887 (1969)) (p 784 785). He ended by suggesting that the common law of the foreshore seemed to be entering a major period of reformulation, which he described as a sharp acceleration of the process begun by Magna Carta. He looked forward to the day when common law citizens will have as many rights in the foreshore as Roman citizens once did (p 785 789). 125. The decision of the Oregon Supreme Court in Thornton, which may have provided a stimulus for that article, concerned the publics right to recreational use of what was described as the dry sand area, that is the privately owned area of beach between the vegetation line, and the state owed foreshore (or wet sand area) in which the publics paramount right was not in dispute. The court accepted that the dry sand area had been enjoyed by the general public as a recreational adjunct of the foreshore area since the beginning of the states political history, and before that by aboriginal inhabitants using the foreshore for clam digging and the dry sand area for their cooking fires. The majority upheld the public right over that area, by reference to the English doctrine of custom (as enunciated in Blackstones Commentaries), preferring that basis of decision to one based on prescription. The minority (Denecke J) arrived at the same result, relying simply on long usage by the public of such dry beaches, combined with long and universal belief by the public in their right to that use, and long and universal acquiescence in it by the owners. The narrower English law on customary rights was distinguished as appropriate for a small island nation at a time when most inhabitants lived and died within a days walk from their birthplace, as compared to the vast geography of this continent and the freshness of its civilisation. 126. New Jersey is perhaps of greater interest because of the development of the law by the courts relying on the so called public trust doctrine, using language not dissimilar to that of Best J in the English case. He had spoken of the public trust in such property: From the general nature of this property, it could never be used for exclusive occupation. It was holden by the King, like the sea and the highways, for all his subjects. The soil could only be transferred, subject to this public trust; and general usage shews that the public right has been excepted out of the grant of the soil (p 287). The Court of Appeal in Brinckman v Matley accepted that the Crown holds the foreshore on the terms that it must recognise the jus publicum whatever it may be but saw that as limited by authority to rights of navigation and fishing (p 325). 127. A recent review of the New Jersey authorities comes in the judgment of the New Jersey Supreme Court, in Raleigh Avenue Beach Association v Atlantis Beach Club Inc 879 A 2d 112 (2005). The court (p 119) traced the history of the public trust doctrine to their decision in Arnold v Mundy (1821) 6 NLJ 1. That case, decided as it happens in the same year as Blundell v Catterall, concerned a claim to rights in an oyster bed. The court had explained that following independence the English sovereign's rights to the tidal waters had become vested in the people of New Jersey as the sovereign of the country, and that the land on which water ebbs and flows, including the land between the high and low water, belonged to the State, to be held, protected, and regulated for the common use and benefit. 128. More recently, in Borough of Neptune City v Borough of Avon by the Sea, 61 NJ 296, 303, 294 A 2d 47 (1972), the same court had referred to the roots of that principle in Roman jurisprudence, which held that by the law of nature . the air, running water, the sea, and consequently the shores of the sea, were common to mankind, and had extended the public rights in tidal lands to recreational uses, including bathing, swimming and other shore activities. That extension had been approved in Matthews v Bay Head Improvement Association 95 NJ 306 (1984), in which the court had gone on to consider the extent of the public's interest in privately owned dry sand beaches, in particular its right to cross such beaches in order to gain access to the foreshore (p 323). The court had also affirmed the concept already implicit in our case law that reasonable access to the sea is integral to the public trust doctrine. There was reference to the dissenting judgment of Best J in Blundell v Catterall (without reference to the majority judgments) for the proposition that the particular circumstances must be considered and examined before arriving at a solution that will accommodate the publics right and the private interests involved (p 324). 129. In Raleigh itself, following Matthews, the court applied the principle that the public use of the upland sands is subject to an accommodation of the interests of the owner, to be determined by case to case consideration (pp 120 121). It repeated the following statement from Matthews: Archaic judicial responses are not an answer to a modern social problem. Rather, we perceive the public trust doctrine not to be fixed or static, but one to be molded and extended to meet changing conditions and needs of the public it was created to benefit Precisely what privately owned upland sand area will be available and required to satisfy the public's rights under the public trust doctrine will depend on the circumstances. Location of the dry sand area in relation to the foreshore, extent and availability of publicly owned upland sand area, nature and extent of the public demand, and usage of the upland sand land by the owner are all factors to be weighed and considered in fixing the contours of the usage of the upper sand. Today, recognizing the increasing demand for our State's beaches and the dynamic nature of the public trust doctrine, we find that the public must be given both access to and use of privately owned dry sand areas as reasonably necessary. While the public's rights in private beaches are not co extensive with the rights enjoyed in municipal beaches, private landowners may not in all instances prevent the public from exercising its rights under the public trust doctrine. The public must be afforded reasonable access to the foreshore as well as a suitable area for recreation on the dry sand. (Matthews p 326) Comparative material summary 130. This review of the comparative jurisprudence is of interest, on the one hand for the apparently universal recognition of the recreational use of the foreshore in practice, but on the other for the continuing uncertainty in many jurisdictions as to the legal basis for that use and the wide variety of legal methods (statutory or judicial) used to resolve it. This divergence seems surprising, given the universality of the practice, and the common roots of most of the systems of law considered, either in Roman law, or in the rights and obligations of the Crown under the English common law. In the common law jurisdictions this confusion seems in part to be the legacy of Blundell v Catterall. Although the authority of that decision has been acknowledged in some common law jurisdictions, there is little evidence of it being given practical application so as to restrict use on the ground. The development of the law in New Jersey is of particular interest as an illustration of how the law in this country might have developed (and might yet develop) if the view of Best J had prevailed over that of the majority. Usage, custom or implied licence 131. It remains to consider what lessons can be drawn for the present case. In the absence of argument to the contrary we must proceed on the basis that Blundell v Catterall and Brinckman v Matley were rightly decided. It follows that public use of the West Beach during the relevant period cannot be attributed to a general public right to use the foreshore for recreational purposes. Leaving aside the arguments relating to the bye laws under the second issue, there are three possibilities: (a) some form of prescriptive or customary right (b) implied licence (as found by Lewison LJ) (c) trespass tolerated or acquiesced in by the owners (as found by the majority of the Court of Appeal). 132. I mention (a), which is not supported by any of the parties, because it is a possibility left open by the majority in Blundell v Catterall. While it may not be appropriate to the relatively recent use found in this case, it might be relevant as an alternative explanation of long standing recreational uses of beaches more generally. However, as I have said, the legal basis for such a right is unclear. A right gained by prescription, as generally understood, would have had to be related to a particular property, which would not have explained the more general usage found in the case. The alternative, a custom claimed by the inhabitants of any village, parish or district, would accord with the principle that a custom should be linked to a particular locality, rather than for the benefit of the public in general. That was a familiar feature of the law of village greens, which in due course was repeated in the definition of customary village greens in the Commons Registration Act 1965. However, quite apart from the criticisms made by Robert Hall in 1830, there seems to have been nothing in the actual findings before the court to support such a limitation. 133. Explanation (c) that those who use public beaches for recreation without specific authorisation do so as mere trespassers defies common sense. It flies in the face of public understanding, and the reality of their use of the beaches of this country for the last three hundred years or more. 134. Explanation (b) accords with the view of Lewison LJ in the present case. He said he thought that the foreshore should be treated as a special case, for a number of reasons: i) The nature of the land is such that it cannot readily be enclosed. It would be wholly impractical to attempt to enclose it on the seaward side; and even on the landward side any attempt would be fraught with difficulty. ii) Historically the foreshore has been Crown property (although there are private persons who derive title from the Crown) and the Crown would not, in practice, prevent citizens from resorting to the foreshore for recreational purposes. This has been the case since time immemorial, and in those circumstances it is not unreasonable to presume that the Crown has implicitly licensed such activities. iii) Even where the owner of the foreshore does attempt to enforce his strict legal rights, there are serious impediments in obtaining an injunction. iv) Although in theory it is possible to prescribe for rights over the foreshore or to establish a customary right, there is no case in the books where a recreational right over the foreshore has been established. v) It would take very little, having regard to the nature of foreshore and the manner in which it is generally enjoyed, to draw the inference that use is permissive by virtue of an implied licence. 129. Even if this is not, on its own, an independent reason for concluding that the use of the foreshore in this case is precario, it does in my judgment provide the context in which the byelaws are to be interpreted. 135. I agree, but I would put the emphasis on the point (v). It is the character of the foreshore and the use which is traditionally made of it, without question or interference, which leads to the natural inference that it is permitted by the owners in accordance with that tradition. As I said in Barkas (para 61 referring to comments of Lord Scott in Beresford [2004] 1 AC 889, para 34): Lord Scott's analysis shows that the tripartite test cannot be applied in the abstract. It needs to be seen in the statutory and factual context of the particular case. It is not a distinct test, but rather a means to arrive at the appropriate inference to be drawn from the circumstances of the case as a whole. Applying that approach to public use of beaches generally, I see no difficulty in drawing the obvious inference, in the absence of evidence to the contrary, that their use, if not in exercise of a public right, is at least impliedly permitted by the owners, rather than a tolerated trespass. 136. That general approach cannot necessarily be applied without question to the present case. This is not an historic beach, but one created artificially in relatively recent times, as a consequence of the statutory harbour works. Nor was public use accepted without question. As appears from the application for registration, the public were barred for some time after the end of the First World War, and their use only resumed in response to a public protest. There might well be a case for treating what followed as tolerated trespass, or use as of right, had not the whole area been brought under formal regulation by the making of the byelaws. For the reasons given by Lord Neuberger, I agree that thereafter the only possible inference is that the use was permitted by the harbour authorities and was therefore by right. Ground (iii) statutory incompatibility 137. In view of our unanimous conclusion on ground (ii), I would have preferred not to have to reach a decision on ground (iii), which I find much more difficult. I see considerable force, with respect, in the detailed reasoning of Richards LJ in the Court of Appeal, and in particular his reasons for not finding assistance in the Scottish cases ([2014] QB 186 paras 10 28). 138. I see a further problem which may have been touched on before Ouseley J (see his judgment at paras 133, 141 142), but has not been raised by the parties or explored in any depth before us. This concerns the consequences of registration under the 2006 Act. Lord Neuberger and Lord Hodge (para 95), citing Lord Hoffmann in the Oxfordshire case, proceed on the basis that registration of the Beach as a town or village green would make it subject to the restrictions (subject to criminal sanctions) imposed by the 19th century village green statutes. It is easy to see why such restrictions are likely to be incompatible with future use for harbour purposes, even if that has not proved a problem hitherto. 139. However, it is to be noted that the supposed incompatibility does not arise from anything in the 2006 Act itself, but rather from inferences drawn by the courts as to Parliaments intentions. In the relevant passage (para 56), Lord Hoffmann expressed agreement with the courts below on this issue, including by implication my own rather fuller reasoning in the Court of Appeal ([2006] Ch 43 paras 82 90). However, he did not see this issue as impinging directly on the question whether the land should be registered. Having noted and disposed of some of the arguments on the effect of the 19th century statutes, he added: Nor do I follow how the fact that, upon registration, the land would become subject to the 1857 and 1876 Acts can be relevant to the question of whether there has been the requisite user by local inhabitants for upwards of 20 years before the date of the application(para 57). It was not necessary in that case to consider the issue which arises here: that is, the potential conflict between the general village green statutes and a more specific statutory regime, such as under the Harbours Acts. It is at least arguable in my view that registration should be confirmed if the necessary use is established, but with the consequence that the 19th century restrictions are imported subject only to the more specific statutory powers governing the operation of the harbour. 140. In conclusion, for the reasons already given, I agree that the appeal should be allowed. |
A makes a careless misrepresentation which causes economic loss to B. There was no contract between them. But did A owe a duty of care to B? No, said the trial judge. Yes, said the appellate court. So it is A who brings this further appeal. Ms Steel, who was the first defender and is now the first appellant, is a solicitor. At the material time she was a partner in Bell & Scott LLP, a firm of solicitors in Glasgow, who were the second defenders and are now the second appellants; I will refer to them as the firm. NRAM Ltd, until recently named NRAM Plc and, prior to that, named Northern Rock (Asset Management) Plc, was the pursuer and is now the respondent; I will refer to it as Northern Rock. Ms Steel and the firm appeal against an interlocutor issued by an Extra Division of the Inner House of the Court of Session (Lady Smith; Lord Brodie who dissented; and Lady Clark of Calton who agreed with Lady Smith) on 19 February 2016. By its interlocutor, the Inner House allowed Northern Rocks reclaiming motion in respect of an interlocutor which had been issued in the Outer House by the Lord Ordinary, Lord Doherty, on 5 December 2014. He had sustained the pleas in law of Ms Steel and the firm and had assoilzied them from the first conclusion of the summons. In other words he had dismissed Northern Rocks claim. The Inner House, however, sustained Northern Rocks second plea in law and substituted an award of damages in its favour against Ms Steel and the firm in the sum of almost 370,000, being the sum which the Lord Ordinary had assessed as the amount of damages payable by them to Northern Rock in the event that, contrary to his conclusion, they were liable to it at all. For many years prior to 2007 Ms Steel had acted for Mr Hamish Munro. From 2005 onwards she also acted for a company in which he had an interest, namely Headway Caledonian Ltd; I will refer to it as Headway. In 1997 Headway had purchased Cadzow Business Park in Hamilton. The property, which comprised Units 1, 2, 3 and 4, had been registered in the Land Register under two separate titles. In order to make the purchase, Headway had borrowed part of the price from Northern Rock; and in return it had granted Northern Rock an all sums standard security over the property, which had been registered against the titles in 1998. Indeed in 2002 Headway had granted Northern Rock a floating charge over all its assets. In 2005 Headway proposed to sell Unit 3 of the business park. Ms Steel acted for it in the sale. So she negotiated on Headways behalf with Northern Rock for the release of the unit from its security. Northern Rock did not appoint solicitors to represent it in that regard; it was not its practice to do so in relation to a negotiation of that character. It agreed to release the unit from its security in return for a partial redemption of its loan, namely a repayment of almost 470,000. The transaction duly proceeded. Ms Steel forwarded for execution by Northern Rock deeds of restriction, by which its security was restricted to Units 1, 2 and 4. It executed them and returned them to her. The sale of Unit 3, unencumbered, then proceeded; and, on behalf of Headway, Ms Steel remitted the sum of almost 470,000 to Northern Rock. Later in 2005 Headway proposed to sell a property in Lossiemouth over which Northern Rock held a standard security for a separate loan. Again, Ms Steel acted for Headway in the sale. Again, she dealt directly with Northern Rock in respect of the repayment of its loan and the discharge of its security. The sale, the repayment and the discharge all duly proceeded. In 2006 Headway entered into heads of agreement for the sale of Unit 1 of the business park in Hamilton for 560,000. Ms Steel was instructed to act on its behalf in the proposed sale. Either she or Mr Munro himself asked Northern Rock to release Unit 1 from its security. Northern Rock obtained a valuation of Units 2 and 4 in the sum of 1,425,000. It noted that its loan to Headway then secured on the three units was about 1,222,000 and decided to require repayment of 495,000 in return for the release of its security upon Unit 1, which would leave the balance of its loan apparently well secured upon Units 2 and 4. In September 2006, by email to Mr Munro, Northern Rock therefore confirmed that it would release its security upon Unit 1 in consideration of a repayment of 495,000 by way of reduction of the loan. By its email Northern Rock made clear that it expected its security to remain in place in relation to Units 2 and 4 unless and until they were also sold. Mr Munro at once forwarded Northern Rocks email to Ms Steel. Headway accepted its terms. Ultimately it was agreed that the transaction of sale would settle on 23 March 2007. Several weeks beforehand Mr Munro had, by email, instructed Ms Steel that, upon settlement, she should remit 470,000 (later corrected to 495,000) to Northern Rock and should remit the balance of the proceeds to Headway. At 5.00 pm on 22 March 2007, namely the eve of the proposed settlement, Ms Steel sent to Northern Rock the email which is central to these proceedings. She wrote: Subject: headway caledonian limited sale of Pavilion 1 Cadzow Park Hamilton (title nos ) Helen/Neil I need your usual letter of non crystallisation for the sale of the above subjects to be faxed through here first thing tomorrow am if possible marked for my attention I have had a few letters on this one for previous other units that have been sold. I also attach discharges for signing and return as well as the whole loan is being paid off for the estate and I have a settlement figure for that. Can you please arrange to get these signed and returned again asap. Many thanks Jane A Steel On any view this was an extraordinary email. It was quite wrong for Ms Steel to say that the whole loan was to be paid off. It had never been suggested to her, or at all, that the whole loan was to be repaid. Her instructions from Headway had never been to that effect. On the contrary, and as she had been told, Northern Rocks loan was to be reduced by repayment only of 495,000 and its security upon Units 2 and 4 was to remain. Equally, it was quite wrong for Ms Steel to say that she had a settlement figure for repayment of the whole loan. She had no such thing. Northern Rock had never supplied such a figure to her; it would have been irrelevant. In evidence to the Lord Ordinary given seven years later, Ms Steel said that she accepted that she must have sent the email but said that she had no recollection of having done so and that she could not explain why she had so misrepresented the nature of the proposed transaction between her client and Northern Rock. No doubt Ms Steel is usually a solicitor of the utmost competence but on this occasion she was guilty of gross carelessness. Labouring, as she was at the time when she sent the email to Northern Rock, under the misapprehension that Headway was undertaking to repay the whole loan secured on the remaining three units, Ms Steel attached to it not the two draft deeds of restriction of Northern Rocks security to Units 2 and 4 which would have been appropriate to the agreement reached, but, instead, two draft deeds of discharge of its security upon all three units, being one deed for each of the two registered titles. Ms Steels email, addressed to Helen and Neil at Northern Rock, was read by Mr (Neil) Atkin, a case manager, and, at 8.58 am on 23 March 2007, attached to an email of his own, he forwarded it and its attachments to Mr Clarke, who, as the head of the Loan Review Team, had authority within Northern Rock to authorise discharges. One minute after receiving the two emails Mr Clarke, who had read them albeit not Ms Steels attachments, forwarded them to Ms Harrison in Northern Rocks administration team. Mr Clarke had made no attempt to check the accuracy of Ms Steels statements against the material on Northern Rocks file. Ms Harrison apparently understood, and correctly understood, that, by forwarding the emails to her, Mr Clarke was authorising her to cause the deeds of discharge to be executed as well as to draft, for his signature, the requested letter of non crystallisation of the floating charge over Unit 1. On that morning of 23 March 2007, the two deeds of discharge were therefore executed on behalf of Northern Rock; a letter of non crystallisation was drafted and signed by Mr Clarke; and copies of all of them were at once faxed to Ms Steel. Thus it was that, on that same day, upon her undertaking to deliver the original deeds of discharge to the solicitors for the purchasers within seven days, Ms Steel settled the sale of Unit 1 on Headways behalf. She remitted 495,000 to Northern Rock, which received it on 27 March and apparently raised no question about the amount of it. On that day it posted the original deeds of discharge to her and two days later, in compliance with her undertaking, she forwarded them to the purchasers solicitors, who caused them to be registered in the Land Register. Thus was Northern Rocks security on Units 2 and 4 discharged. Until 2010 Headway continued to make interest payments to Northern Rock on the balance of the loan. Headway then went into liquidation; and it was at that time, according to evidence given on behalf of Northern Rock, that it discovered that its security for the loan had been discharged. Units 2 and 4 had, however, by then been sold. As had been foreshadowed in 2006, Headway had sold them later in 2007; Ms Steel had again acted for it in the sales and she had extracted from Northern Rock the necessary letters of non crystallisation of the floating charge. One might expect that, when alerted to the proposed sales and if continuing to believe that its standard security upon the units remained in place, Northern Rock would then have purported to enforce it. But there is no evidence to that effect. These later events are shrouded in mystery. The court will proceed, as invited, on the basis that, by the email dated 22 March 2007, Ms Steel and the firm caused both the discharge of Northern Rocks security over Units 2 and 4 and, resulting therefrom, an ultimate loss to it, net of recovery elsewhere, of almost 370,000. It notes, however, that the issue in the case might well have been cast in terms of whether they were the cause of Northern Rocks loss rather than whether they owed a duty of care to it. In Customs and Excise Comrs v Barclays Bank Plc [2006] UKHL 28, [2007] 1 AC 181, Lord Mance at para 85 described the case of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 as the fountain of most modern economic claims. In the Hedley Byrne case the appellant asked its bankers to inquire into the stability of a company and, in response to the inquiry, the companys bankers, acting (so it was assumed) carelessly, gave false information about the company, which it expressed as without responsibility but on which the appellant relied to its detriment. Because of the disclaimer the appellants claim against the companys bankers failed. The House of Lords held, however, that in the absence of the disclaimer the bankers would have owed a duty of care to the appellant. At p 529 Lord Devlin held that, in the absence of a contract between a representor and a representee, a duty of care in making the representation arose only if the representor had assumed responsibility for it towards the representee; and he proceeded to interpret all five of the speeches delivered in that case as requiring that the responsibility should have been voluntarily accepted or undertaken. The assumption of responsibility could, he explained at pp 529 and 530, be express or implied from all the circumstances. Lord Pearce added at p 539 that liability in such circumstances could arise only from a special relationship. What is noteworthy for present purposes is the emphasis given in the decision in the Hedley Byrne case to the need for the representee reasonably to have relied on the representation and for the representor reasonably to have foreseen that he would do so. This is expressly stressed in the speech of Lord Hodson at p 514. In fact it lies at the heart of the whole decision: in the light of the disclaimer, how could it have been reasonable for the appellant to rely on the representation? If it is not reasonable for a representee to have relied on a representation and for the representor to have foreseen that he would do so, it is difficult to imagine that the latter will have assumed responsibility for it. If it is not reasonable for a representee to have relied on a representation, it may often follow that it is not reasonable for the representor to have foreseen that he would do so. But the two inquiries remain distinct. In the decades which followed the decision in the Hedley Byrne case, it became clear that not all claims in tort for losses consequent upon representations carelessly made could satisfactorily be despatched by reference to whether the representor had assumed responsibility for it towards the representee. A case in point is the situation in which the representor is bound by a contract with a third party to make a representation upon which the claimant has relied: an analysis of whether, in making the representation in those circumstances, he has voluntarily assumed responsibility for it towards the claimant would be artificial. Thus in Smith v Eric S Bush and Harris v Wyre Forest District Council [1990] 1 AC 831 the claimants, in purchasing their houses, had relied on information about their condition contained in reports given by surveyors pursuant to contracts between them and prospective mortgagees. The House of Lords held that the surveyors owed duties of care to the claimants. Lord Griffiths at p 862 explained that the law did not in the context before the court ask whether the surveyors had voluntarily assumed responsibility towards the claimants in giving the information. But he did so in terms which were arrestingly wide. He said that the test of an assumption of responsibility was neither helpful nor realistic (or, he added at p 864, at any rate not so in most cases) and that it had meaning only if it referred to the circumstances in which the law deemed responsibility to have been assumed. In effect Lord Griffiths was suggesting that the test identified only a conclusion rather than a criterion. Lord Griffiths, with whom three other members of the committee agreed, proceeded at p 865 to propound a threefold test by reference to which the surveyors owed a duty of care to the claimants. The test required first that it was foreseeable that, were the information given negligently, the claimants would be likely to suffer damage; second that there was a sufficiently proximate relationship between the parties; and third that it was just and reasonable to impose the liability. Months later the threefold test propounded by Lord Griffiths was addressed by the House of Lords in Caparo Industries Plc v Dickman [1990] 2 AC 605. The claimants had taken over a company in reliance on its accounts and alleged that the defendants had negligently discharged their statutory functions in the course of their audit of them. For years afterwards the speeches in the House were taken to have indorsed the threefold test. In fact, however, Lord Bridge of Harwich, with whom three other members of the committee agreed, observed at p 618 that the concepts of proximity and fairness were so imprecise as to deprive them of utility as practical tests; and Lord Oliver of Aylmerton suggested at p 633 that the three suggested ingredients of the so called test were usually facets of the same thing and that to search for a single formula was to pursue a will o the wisp. That the House in the Caparo Industries case did not indorse the threefold test was explained by Lord Toulson in Michael v Chief Constable of South Wales Police [2015] UKSC 2, [2015] AC 1732, at para 106; and it has recently been underlined by Lord Reed in Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4, paras 21 to 29. In the Caparo Industries case both Lord Bridge at p 618 and Lord Oliver at p 633 quoted with approval the remarks of Brennan J in Sutherland Shire Council v Heyman (1985) 60 ALR 1, 43 44 that it was preferable for the law to develop novel categories of negligence incrementally and by analogy with established categories; and, as Lord Reed has explained in the Robinson case, it was by declining to accept that the law should develop incrementally to the point for which the claimants contended that the House in the Caparo Industries case determined to allow the auditors appeal. More important for present purposes is the reassertion in the Caparo Industries case of the need for a representee to establish that it was reasonable for him to have relied on the representation and that the representor should reasonably have foreseen that he would do so. Thus at pp 620 621 Lord Bridge observed that a salient feature of liability was that the representor knew that it was very likely that the representee would rely on the representation; and at p 638 Lord Oliver observed that a usual condition of liability was that the representor knew that the representee would act on it without independent inquiry. Some months later, in James McNaughton Paper Group Ltd v Hicks Anderson & Co [1991] 2 QB 113, the Court of Appeal, confronted with a similar claim against company accountants, rejected it by reference to the decision in the Caparo Industries case. But Neill LJ expanded on the need for foreseeability of reliance. At pp 126 127 he said: One should therefore consider whether and to what extent the advisee was entitled to rely on the statement to take the action that he did take. It is also necessary to consider whether he did in fact rely on the statement, whether he did use or should have used his own judgment and whether he did seek or should have sought independent advice. In business transactions conducted at arms length it may sometimes be difficult for an advisee to prove that he was entitled to act on a statement without taking any independent advice or to prove that the adviser knew, actually or inferentially, that he would act without taking such advice. In July 1994, in Spring v Guardian Assurance Plc [1995] 2 AC 296, the House held that, in writing a reference for the claimant who had worked for them and who was now seeking work elsewhere, the defendants owed a duty of care to him. Lord Goff of Chieveley explained at p 316 that the basis of his conclusion was that the defendants had assumed responsibility to the claimant in respect of the reference within the meaning of the Hedley Byrne case. Weeks later, in Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, the House held that underwriting agents at Lloyds owed a duty of care to a member in their conduct of his underwriting affairs even in the absence of any contract between them. In a speech with which the other members of the House agreed, Lord Goff held at p 181 that the case should be decided by reference to the concept of an assumption of responsibility. In Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830. Lord Steyn remarked at p 837 that there was no better rationalisation for liability in tort for negligent misrepresentation than the concept of an assumption of responsibility. It has therefore become clear that, although it may require cautious incremental development in order to fit cases to which it does not readily apply, this concept remains the foundation of the liability. The legal consequences of Ms Steels careless misrepresentation are clearly governed by whether, in making it, she assumed responsibility for it towards Northern Rock. The concept fits the present case perfectly and there is no need to consider whether there should be any incremental development of it. Nevertheless the case has an unusual dimension: for the claim is brought by one party to an arms length transaction against the solicitor who was acting for the other party. A solicitor owes a duty of care to the party for whom he is acting but generally owes no duty to the opposite party: Ross v Caunters [1980] Ch 297, 322. The absence of that duty runs parallel with the absence of any general duty of care on the part of one litigant towards his opponent: Jain v Trent Strategic Health Authority [2009] UKHL 4, [2009] AC 853. Six authorities, briefly noticed in chronological order in what follows, may illumine inquiry into the existence of an assumption of responsibility by a solicitor towards the opposite party. First, the decision of the Court of Appeal of New Zealand in Allied Finance and Investments Ltd v Haddow and Co [1983] NZLR 22. The claimant had agreed to make a loan to X and to take security for it on a yacht. The defendants, who were Xs solicitors, certified to the claimant that the instrument of security executed by X in relation to the yacht was binding on him. In fact, as the defendants knew, it was not binding on him because he was not, and was not intended to become, the owner of the yacht. The court held that the defendants had owed, and breached, a duty of care to the claimant. Richardson J said at p 30, in terms which the other members of the court echoed: This is not the ordinary case of two solicitors simply acting for different parties in a commercial transaction. The special feature attracting the prima facie duty of care is the giving of a certificate in circumstances where the [defendants] must have known it was likely to be relied on by the [claimant]. Second, the decision of the Lord Ordinary, Lord Jauncey, in the Outer House in Midland Bank Plc v Cameron, Thom, Peterkin and Duncans 1988 SLT 611. The pursuer had made a loan to X in assumed reliance on a statement by the defenders, who were Xs solicitors, about the extent of his assets. The statement was materially inaccurate. But the pursuers claim against the defenders failed. Having referred to the Hedley Byrne case as the proper starting point and to the Allied Finance case, the Lord Ordinary observed as follows at p 616: In my opinion four factors are relevant to a determination of the question whether in a particular case a solicitor, while acting for a client, also owes a duty of care to a third party: (1) the solicitor must assume responsibility for the advice or information furnished to the third party; (2) the solicitor must let it be known to the third party expressly or impliedly that he claims, by reason of his calling, to have the requisite skill or knowledge to give the advice or furnish the information; (3) the third party must have relied upon that advice or information as matter for which the solicitor has assumed personal responsibility; and (4) the solicitor must have been aware that the third party was likely so to rely. The Lord Ordinary concluded that the pursuer was able to establish none of the first three of the four factors. Third, the decision of the Court of Appeal in Al Kandari v J R Brown and Co [1988] QB 665. The claimant, a mother of two children, feared that the father would abduct them to Kuwait. The court had made an order which, with their consent, obliged the defendants, who were the fathers solicitors, to retain possession of his passport on which the children were registered. With the mothers consent, the solicitors allowed their agents to take the passport to the Kuwaiti embassy for alteration on condition that it would never be out of their sight. In fact the embassy insisted on retaining it overnight. The solicitors did not inform the mother that the embassy had retained the passport nor that (as they knew) the father was due to attend there on the following day. The embassy released the passport to the father, who abducted the children to Kuwait. The court held that, in failing so to inform the mother, the solicitors had breached a duty of care to her. Both Lord Donaldson of Lymington MR at p 672 and Bingham LJ at p 675 explained that, in agreeing to become obliged to retain possession of the fathers passport, the solicitors had stepped outside their role as his solicitors and assumed responsibility towards the mother. Fourth, the decision of Sir Donald Nicholls V C in the High Court in Gran Gelato Ltd v Richcliff (Group) Ltd [1992] Ch 560. The claimant wished to purchase an underlease from the first defendant. The claimants solicitors inquired of the second defendants, a firm of solicitors acting for the first defendant, whether any provisions in the headlease might affect the length of the underlease. The negative answer of the second defendants was a misrepresentation, which, following its purchase of the underlease, caused loss to the claimant. The Vice Chancellor held that it had a valid claim against the first defendant but that the second defendants had themselves owed no duty of care to it. He observed at pp 571 572 that only in special cases, such as the Allied Finance case, would a solicitor owe a duty of care to the opposite party and that there was nothing special about the case before him. Fifth, the decision of the Court of Appeal of New Zealand in Connell v Odlum [1993] 2 NZLR 257. Prior to his marriage to W, the claimant wished to enter with her into an agreement of which the statutory effect would be to contract them out of the laws general provisions for the making of financial adjustments between them in the event of separation. Pursuant to one of the statutory requirements, the defendant, who was Ws solicitor, certified that, prior to her signing the agreement, he had explained its effect to her. Following separation a judge found that he had not explained its effect to her and held that the agreement was void. The Court of Appeal held that it was highly arguable that, in giving the certificate, the defendant owed a duty of care to the claimant and that the claim should not be struck out. Thomas J explained at p 269 that the claimant had relied, and had been expected by the defendant to rely, on the certificate as a feature of the validity of the agreement and that there had been the necessary assumption of responsibility towards him on the part of the defendant. And sixth, the decision of the Court of Appeal in Dean v Allin and Watts [2001] EWCA Civ 758, [2001] 2 Lloyds Rep 249. The claimant proposed to lend money to W and X on the security of property owned by Y and Z. W and X instructed the defendants, their solicitors, to effect the security in favour of the claimant, with which Y and Z were willing to co operate. The loan was made on the footing that the security was in place. But the defendants had carelessly misunderstood what was legally required in order to effect the security. In due course Y and Z established that the purported charge on their property was ineffective. The court held that the defendants had owed, and breached, a duty of care to the claimant. Robert Walker LJ explained in summary, at para 69, that the provision of effective security was of fundamental importance to the claimant and that, as the defendants knew or should have known, he was relying on them in that regard. Perhaps it helps only slightly for us to have been reminded in the authorities cited above that Ms Steel and the firm are liable to Northern Rock only if it was a special case. Probably of greater assistance is the analysis in the Al Kandari case that the solicitors owed a duty of care to the opposite party because they had stepped outside their normal role. But the six authorities cited above demonstrate in particular that the solicitor will not assume responsibility towards the opposite party unless it was reasonable for the latter to have relied on what the solicitor said and unless the solicitor should reasonably have foreseen that he would do so. These are, as I have shown, two ingredients of the general liability in tort for negligent misrepresentation; but they are particularly relevant to a claim against a solicitor by the opposite party because the latters reliance in that situation is presumptively inappropriate. Thus the reasonableness of the claimants reliance and of the defendants foreseeability of it comprised the special feature which gave rise to the liability in the Allied Finance case and in the Dean case and to the arguable liability in the Connell case; and, although the claim in the Midland Bank case failed for other reasons, the fourth of the requirements valuably identified in Lord Jaunceys judgment was that the solicitor should have been aware that the pursuer was likely to rely on what he had said. In dismissing Northern Rocks claim the Lord Ordinary held that the crucial question arose from the fact that, prior to executing and returning the deeds of discharge, it had failed to check the accuracy of the representations made by Ms Steel in the email dated 22 March 2007 against the material on its file. Had it done so, it would have seen immediately that it was entirely inappropriate for it to accede to her invitation to execute the deeds of discharge. Having heard her evidence, the Lord Ordinary found that, although she knew that Northern Rock was acting without solicitors in relation to the sale of Unit 1 and to the two earlier sales, she had generally expected it to check the propriety of her various requests before complying with them. Notwithstanding her inability, when giving evidence, to recall her state of mind when sending the email, the Lord Ordinary therefore found that Ms Steel had not foreseen that Northern Rock would rely on her assertions in it without checking their accuracy. He then proceeded to ask whether it was reasonable for her not to have foreseen that it would do so. His answer was that any prudent bank taking the most basic precautions would have checked the accuracy of her representations by reference to its file or indeed by asking for further clarification of an email which he had found in some respects to be vague and ambiguous; that it was therefore not reasonable for Northern Rock to have relied on her representations without thus checking their accuracy; and that it was reasonable for Ms Steel not to have foreseen that it would do so. That the Lord Ordinary had been entitled to reach this crucial conclusion formed the basis of Lord Brodies dissent upon the appeal to the Inner House. But the majority in the Inner House took a different view. Lady Smith held that circumstances were present which led to the attribution to Ms Steel of an assumption of responsibility for the representations in the email towards Northern Rock without any need for the court to inquire whether it should have checked its file. These circumstances were said to be that Ms Steel was a solicitor; that her representations fell within her area of expertise; that, as she knew, Northern Rock was not represented by solicitors; that Headway had not given her actual or even ostensible authority to make the representations; that, by her email, she was demanding an urgent response; and that the transaction between Headway and Northern Rock was not at arms length. With great respect, I would not accept that all the circumstances were as described by Lady Smith. Whether Headway had conferred on Ms Steel ostensible authority to make the representations had not been fully explored before the Lord Ordinary and rightly so because for obvious reasons no claim was brought against Headway and because an agent may well owe a duty of care to a third party even if he is acting within the scope of his authority. And, although Headway and Northern Rock were not engaged in hostile litigation, I find it impossible to subscribe to the suggestion that they were not at arms length in relation to the removal of security over Unit 1. Overarchingly, however, neither the general jurisprudence relating to liability in negligence for a misrepresentation leading to economic loss nor the focussed jurisprudence relating to a solicitors liability to the opposite party in that regard supports a conclusion that it is not always necessary for the representee to establish that it was reasonable for him to have relied on the representation. On the contrary, the reasonableness of his reliance on it is, as I have explained, central to the concept of an assumption of responsibility. Lady Smith added however that in any event Ms Steel should have foreseen that Northern Rock would rely on her representations without checking their accuracy. There was, so she said, no expert or other evidence in relation to the basic precautions taken by a lender to which the Lord Ordinary had referred and no scope for judicial knowledge to be taken of them; and it was likely and therefore foreseeable that Northern Rock would simply rely on Ms Steels representations. Resolution of the further appeal to this court could no doubt be based on inquiry into whether Lady Smith and Lady Clark were entitled to depart from the Lord Ordinarys conclusion that it was not reasonable for Northern Rock to have relied on Ms Steels representation without inquiry. How does the law classify a trial judges conclusion that it was not reasonable for a party to act as it did? It is not a conclusion of fact. It is a judgement referable to an already established fact and, albeit required by law, it is not a judgement about what the law is. So it is difficult to pigeon hole it as a conclusion either of fact or of law or even in my view as a conclusion of mixed fact and law. It is, rather, an evaluation; and in In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33, [2013] 1 WLR 1911, Lady Hale at para 203 recorded all members of the court as having agreed that an appellate court needed to be satisfied that an evaluative conclusion of a trial judge was wrong before it could be set aside. But in my view this court does not need to explain why the Lord Ordinary cannot be said to have been wrong in concluding that it was not reasonable for Northern Rock to have relied on Ms Steels representation without inquiry. We should bypass examination of whether he was wrong and should hold positively that he was right. We should accept that a commercial lender about to implement an agreement with its borrower referable to its security does not act reasonably if it proceeds upon no more than a description of its terms put forward by or on behalf of the borrower. The lender knows the terms of the agreement and indeed, as in this case, is likely to have evolved and proposed them. Insofar as the particular officers in Northern Rock who on 23 March 2007 saw and acted upon the email had never been aware of the terms or had forgotten them, immediate access to the correct terms lay literally at their finger tips. No authority has been cited to the court, nor discovered by me in preparing this judgment, in which it has been held that there was an assumption of responsibility for a careless misrepresentation about a fact wholly within the knowledge of the representee. The explanation is, no doubt, that in such circumstances it is not reasonable for the representee to rely on the representation without checking its accuracy and that it is, by contrast, reasonable for the representor not to foresee that he would do so. This court should allow the appeal and restore the Lord Ordinarys interlocutor. |
On 20 March 2003 military operations involving armed forces of the United States of America and the United Kingdom began in Iraq. Exactly six weeks later, on 1 May 2003, major combat operations came formally to an end. The United Kingdom became one of two occupying powers. The other was the United States. On 16 October 2003, the United Nations Security Council adopted Resolution 1511 (2003) which authorised, a multinational force under unified command to take all necessary measures to contribute to the maintenance of security and stability in Iraq. From that date, UK Armed Forces deployed in Iraq formed part of that multinational force (MNF) and were responsible for security and stabilisation operations in south eastern Iraq as part of the Multi National Division (South East) (MND (SE)). In February 2004 Yunus Rahmatullah, a citizen of Pakistan, was taken into custody by British forces. This took place outside MND (SE) and within an area of Iraq under US control. Mr Rahmatullah was transferred to US Forces in accordance with the terms of a Memorandum of Understanding which had been signed in Qatar on behalf of the armed forces of the US, UK, and Australia on 23 March 2003. That document was entitled, An Arrangement for the Transfer of Prisoners of War, Civilian Internees, and Civilian Detainees between the Forces of the United States of America, the United Kingdom of Great Britain and Northern Ireland, and Australia and I shall refer to it as the 2003 MoU. It will be necessary to discuss its terms in a little detail later in this judgment. It is sufficient for present purposes to say that the 2003 MoU was to be implemented in accordance with the Geneva Convention Relative to the Treatment of Prisoners of War (GC3) and the Geneva Convention Relative to the Protection of Civilian Persons in Time of War (GC4), as well as customary international law. The 2003 MoU also provided that the removal of transferred prisoners of war to territories outside Iraq would only be made upon the mutual arrangement of the Detaining Power and the Accepting Power. In the case of Mr Rahmatullah, the detaining power was the UK and the accepting power the US. The UK authorities became aware, about a month after Mr Rahmatullah had been taken into custody, that US forces intended to transfer him out of Iraq. That transfer took place without the UK having been informed of it. By June 2004, however, UK officials knew that Mr Rahmatullah was no longer in Iraq. He had been taken to Afghanistan. At the time this information came to British officials, Mr Rahmatullah was being held in a detention facility in Bagram Air Field and there he has remained. On 5 June 2010, the US military held a Detainee Review Board hearing at Bagram in relation to Mr Rahmatullahs detention. The Board concluded that his continued detention was not necessary to mitigate the threat he poses; that he should be transferred to Pakistan for release; and that he was not an Enduring Security Threat. On 15 June 2010 the recommendation of the Board was approved by Brigadier General Mark S Martins of the US army but it has not been implemented. It has been explained that the recommendation is but one component of the transfer process. Before third country nationals are transferred from US custody a determination is made (based on evidence which was before the Board but not necessarily exclusively so) whether any threat posed by the detainee can be adequately mitigated by the receiving country. Appropriate security assurances are sought. Generally, these assurances require the receiving country to take measures to ensure that the detainee will not pose a threat to the receiving country or to the United States. The 2003 Memorandum of Understanding The 2003 MoU was signed three days after military operations in Iraq had begun. In a statement made for the purpose of these proceedings, Mr Damian Parmenter, Head of Operating Policy in the Operations Directorate of the Ministry of Defence, explained that it was considered important to obtain the 2003 MoU because of the known US position on the application of the Geneva Conventions. That position, succinctly stated, was that the conventions did not apply to Al Qaeda combatants. Mr Rahmatullah is believed by the US to be a member of Lashkar e Taiba, a group affiliated to Al Qaeda. To say that it was important to obtain the 2003 MoU certainly does not overstate the position, therefore. Section 1(1) of the Geneva Conventions Act 1957 makes it an offence for any person to commit, or aid, abet or procure the commission by any other person of a grave breach of any of the Geneva Conventions. Article 147 of GC4 provides that unlawful deportation or transfer or the unlawful confinement of a protected person constitute grave breaches of that convention. It might be considered in those circumstances to have been not only important but essential that the UK should obtain a commitment from the US that prisoners transferred by British forces to the US army would be treated in accordance with GC3 and GC4. The importance of the need to obtain that commitment is reflected in the terms of the very first clause of the 2003 MoU which provides: This arrangement will be implemented in accordance with the Geneva Convention Relative to the Treatment of Prisoners of War and the Geneva Convention Relative to the Protection of Civilian Persons in Time of War, as well as customary international law. As Ms Lieven QC, who appeared for Mr Rahmatullah, pointed out, clause 4 of the 2003 MoU, which provides for the return of transferred prisoners, is in unqualified terms. This was no doubt necessary because of the unambiguous requirements of article 45 of GC4. It will be necessary to look more closely at that article presently but, among its material provisions, is the stipulation that if the power to whom the detainee is transferred (in this instance the US) fails to fulfil GC4, the detaining power (here the UK) must take effective measures to correct the situation or request the return of the transferred person. Clause 4 of the 2003 MoU therefore provides: 4. Any prisoners of war, civilian internees, and civilian detainees transferred by a Detaining Power [the UK] will be returned by the Accepting Power [the US] to the Detaining Power without delay upon request by the Detaining Power. Ms Lieven argued and I am inclined to accept that the unvarnished and blunt terms of clauses 1 and 4 were designed to avoid disagreements as to the applicability of GC3 and GC4; to eliminate disputes as to whether particular actions of the accepting power might have breached the conventions; and to remove from the potentially controversial and delicate area of inter state diplomacy debates about how prisoners should be treated. Clause 5 of the memorandum deals with the situation where it is proposed that prisoners who had been transferred would be released or removed to territories outside Iraq. It seems likely that at least one of the reasons for including this provision was to cater for the requirement in article 45 of GC4 that protected persons may only be transferred to a power which is a party to the convention and after the detaining power has satisfied itself of the willingness and ability of the transferee power to apply GC4. Clause 5 of the 2003 MoU provides: 5. The release or repatriation or removal to territories outside Iraq of transferred prisoners of war, civilian internees, and civilian detainees will only be made upon the mutual arrangement of the Detaining Power and the Accepting Power. It is common case that the 2003 MoU is not legally binding. It was, said Mr Eadie QC, who appeared for the Secretaries of State, merely a political arrangement. But its significance in legal terms should not be underestimated. That significance does not depend on whether the agreement that it embodies was legally binding as between the parties to it. As Lord Neuberger of Abbotsbury MR said at [2012] 1 WLR 1492, para 37 of his judgment in this case, the 2003 MoU was needed by the UK in order to meet its legal obligations under article 12 of GC3 and article 45 of GC4. (Such parts of these as are relevant to the present appeal are in broadly similar terms). Put plainly, the UK needed to have in place an agreement which it could point to as showing that it had effectively ensured that the Geneva Conventions would be complied with in relation to those prisoners that it had handed over to the US. The 2003 MoU was the means of meeting those obligations. It provided the essential basis of control for the UK authorities over prisoners who had been handed over to the US. In other contexts the UK Government has deployed the fact that it has made arrangements with foreign powers in order to persuade courts that a certain course should be followed. Thus, in MT (Algeria) v Secretary of State for the Home Department [2010] 2 AC 110 at para 192, Lord Hoffmann, referring to assurances which the Algerian and Jordanian Governments had given that the persons whom the Home Secretary proposed to deport to Algeria and Jordan would not face torture or other ill treatment contrary to article 3 of the European Convention on Human Rights and Fundamental Freedoms (ECHR), said that the existence of those assurances was a sufficient basis on which it could properly be found that the deportee would not be subject to such treatment. The assurances to which Lord Hoffmann had referred were considered by the European Court of Human Rights (ECtHR) in Othman (Abu Qatada) v United Kingdom (Application No 8139/09) (unreported) given 17 January 2012. At para 164, the court recorded the following submission made on behalf of the UK Government: 164. the Government reiterated that the assurances contained in the MOU had been given in good faith and approved at the highest levels of the Jordanian Government. They were intended to reflect international standards. There was no lack of clarity in them, especially when the MOU was interpreted in its diplomatic and political context. To criticise the MOU because it was not legally binding (as the applicant had) was to betray a lack of an appreciation as to how MOUs worked in practice between states; they were a well established and much used tool of international relations In Ahmad and Aswat v Government of the United States of America [2007] HRLR 157, in resisting an application for extradition to America to stand trial on various federal charges, the appellants claimed that if they were extradited there was a real prospect that they would be made subject to a determination by the President that would have the effect that they be detained indefinitely and/or that they would be put on trial before a military commission in violation of their rights under articles 3, 5 and 6 of ECHR. By Diplomatic Notes, the government of the US had given assurances that upon extradition they would be prosecuted before a federal court with the full panoply of rights and protection that would be provided to any defendant facing similar charges. It was held there was a fundamental assumption that the requesting state was acting in good faith when giving assurances in Diplomatic Notes. The assurances in the notes were given by a mature democracy. The United States was a state with which the United Kingdom had entered into five substantial treaties on extradition over a period of more than 150 years. Over this period there was no instance of any assurance having been dishonoured. Memoranda of Understanding or their equivalent, Diplomatic Notes, are therefore a means by which courts have been invited to accept that the assurances which they contain will be honoured. And indeed courts have responded to that invitation by giving the assurances the weight that one would expect to be accorded to solemn undertakings formally committed to by responsible governments. It is therefore somewhat surprising that in the present case Mr Parmenter asserted that it would have been futile to request the US government to return Mr Rahmatullah. As the Master of the Rolls pointed out in para 39 of his judgment, this bald assertion was unsupported by any factual analysis. No evidence was proffered to sustain it. The 2008 Memorandum of Understanding On 28 June 2004, the period of occupation ended and the Iraqi Interim Government assumed full responsibility and authority for governing Iraq. After that date, UK forces remained in Iraq as part of the MNF at the request of the Iraqi Government and pursuant to the terms of various UN Security Council resolutions (UNSCRs). This change in the legal framework from an international armed conflict to operations conducted under UNSCRs apparently prompted discussions designed to conclude a second MoU. The discussions foundered in 2004 and again in 2006 but eventually in mid October 2008 a revised MoU was concluded between the governments of the US and the UK (the 2008 MoU). It was not signed on behalf of the UK until March 2009, however. It was Mr Parmenters evidence that the 2008 MoU was designed to replace and supersede the 2003 MoU. I am not disposed to accept that claim. In the first instance, while it may not be a matter of especial significance, the 2003 MoU was concluded between US, UK and Australia, whereas the 2008 MoU is between US and UK alone. Secondly, the 2008 MoU does not state that it replaces the 2003 MoU and there is nothing in its terms that make it inevitably implicit that this was to be its effect. Moreover, even if the 2008 MoU did indeed supersede the 2003 MoU, there is no reason to conclude that it had done so for prisoners already transferred under the earlier arrangements. I consider, therefore, that the UK government remained entitled to have recourse to the 2003 MoU to demand Mr Rahmatullahs release to them. This provides a sufficient basis for the finding that there was at least uncertainty as to whether the UK could exert control over Mr Rahmatullah. That uncertainty was enough to justify the issue of the writ. Quite independently of the 2003 MoU, the UK remained under a continuing obligation, by virtue of GC4, to take such steps as were available to it to ensure that Mr Rahmatullah was treated in accordance with the conventions requirements and, if necessary, to demand his return. It is not necessary to decide whether this circumstance would be sufficient to give rise to uncertainty as to whether the UK could obtain control of Mr Rahmatullah. It seems to me, however, that it might well be enough. The UK and the US were allies. If it was demonstrated that a failure to return Mr Rahmatullah might involve the UK being in breach of its international obligations, it is surely at least possible that its ally, the US, would return Mr Rahmatullah, upon request, in order to avoid that eventuality. The 2008 MoU did not contain a replicate of clause 4 of the 2003 MoU. Clause 4 of the later document provides: 4. At all times while transferred detainees are in the custody and control of US Forces, they will treat transferred detainees in accordance with applicable principles of international law, including humanitarian law. The transferred detainees will only be interrogated in accordance with US Department of Defense policies and procedures. Ms Lieven suggests that the phrase applicable principles of international law, including humanitarian law must comprehend the Geneva Conventions and Mr Eadie has not sought to challenge that claim but, for the reasons that I have given, this debate is of no more than academic interest in this appeal. Clause 8 of the 2008 MoU, dealing with onward transfer of detainees, was also different from its counterpart, clause 5, in the 2003 MoU. Whereas the earlier MoU had stated that transferred detainees would not be removed from Iraq unless mutual arrangements were made between the detaining power and the accepting power, clause 8 of the 2008 MoU provides: 8. US Forces will not remove transferred detainees from Iraq without prior consultation with the UK Government. The legality of the respondents detention Before the Court of Appeal and, initially at least, before this court, the Secretaries of State took their stand on the proposition that they did not have a sufficient measure of control over Mr Rahmatullahs detention. On that account, they argued, it was not for them to address the question of whether the respondent is legally detained. There is a certain logic in the Secretaries of States position. If they are right in their claim that they cannot influence, much less dictate, a decision as to whether Mr Rahmatullah should be released, the legal justification for his continuing to be held is not a matter for them. On the other hand, if it could be shown that the respondent is legally detained, the relevance of the question whether the appellants have a sufficient measure of control over Mr Rahmatullahs detention falls away. In some cases, (of which I do not believe the present appeal to be one) the legality of the detention of an applicant for habeas corpus will occupy centre stage. In such cases it may be better to focus first on that question and not be distracted by a, possibly academic, discussion of whether the respondent to the application for habeas corpus has a sufficient measure of control over the applicants detention. In other cases the issue of legality may not feature as prominently and the question whether the proposed respondent to the writ has the requisite control will be the principal issue. It is not strictly necessary to decide whether this is a case in which the primary focus should be on the legality of detention or on control, although I am of the view that control is really the critical issue here. But in deference to the arguments made on the question of the legality of Mr Rahmatullahs detention, it is right that I should address that issue. Understandably, it did not exercise the Court of Appeal to any significant extent. As the Master of the Rolls pointed out in para 25 of his judgment, Ms Lieven claimed that the first element of her argument (that Mr Rahmatullah was unlawfully detained) succeeded by default since it was a fundamental principle of English law that, where an individual is detained against his will, it is for the detainer to show that the detention is lawful, not for the detainee to show that his detention is unlawful. The Secretaries of State did not challenge that principle nor Mr Rahmatullahs right to rely on it. And they did not seek to argue that the respondent was lawfully detained. Consistent with their stance on the question of control, they said that this was not a matter for them. Before this court, however, in response to a question from the President, Lord Phillips, Ms Lieven was disposed to accept that the respondent had to raise a prima facie case that he was unlawfully detained, or, as it was sometimes put, a case of putative illegal detention. That case, Ms Lieven contended, rested on the clear violations of articles 45 and 49 of GC4 constituted by Mr Rahmatullahs continued detention. Mr Eadie remained somewhat reserved on the issue. He suggested that the question of whether Mr Rahmatullah fell within the protection of the Geneva Conventions was, at least, problematic. It was not a given that because no justification for his detention had been proffered, Mr Rahmatullah was to be regarded, for habeas corpus purposes, as unlawfully detained. The Geneva Conventions Mr Eadie argued that Mr Rahmatullah did not come within the protection of GC3 since he was not a prisoner of war as defined in article 4 of that convention. It is not, I think, necessary to consider this provision in detail. I accept that it is at least arguable that Mr Rahmatullah would not fall within it. In light of my conclusions as to the applicability of GC4 to his situation, however, discussion of the possible application of GC3 to his situation is not required. Article 4 of GC4 provides: Persons protected by the Convention are those who, at a given moment and in any manner whatsoever, find themselves, in case of a conflict or occupation, in the hands of a Party to the conflict or Occupying Power of which they are not nationals. Nationals of a State which is not bound by the Convention are not protected by it. Nationals of a neutral State who find themselves in the territory of a belligerent State, and nationals of a co belligerent State, shall not be regarded as protected persons while the State of which they are nationals has normal diplomatic representation in the State in whose hands they are Pakistan is bound by the Convention and Mr Rahmatullah is therefore not excluded by the first sentence of the second paragraph of this provision. As to whether the second exclusionary condition (that he was a national of a neutral state who found himself in the territory of a belligerent state) should apply to him, Ms Lieven drew our attention to two documents which discuss this question. The first of these was a memorandum opinion for the counsel to the President of the US, prepared by Jack L Goldsmith III, assistant attorney general. In this paper, in a section entitled Nationals of a Neutral State in the Territory of a Belligerent State Mr Goldsmith said this: Article 4(2) (sic) also excludes from protected person status nationals of a neutral state who find themselves in the territory of a belligerent state as long as the neutral state has normal diplomatic representation in the state in whose hands they are. The phrase territory of a belligerent state might appear at first to be capable of bearing two different readings. First, it might refer to the territory of any state that participates in an armed conflict covered by GC. As applied to the armed conflict with Iraq, this interpretation would mean that citizens of neutral states in occupied Iraq would not be protected persons so long as the neutral states had normal diplomatic representation in the United States. Second, the territory of a belligerent state might refer to the home territory of the party to the conflict in whose hands the citizen of the neutral state finds himself. As applied to the armed conflict with Iraq, this interpretation would deny protected person status to citizens of neutral states who find themselves in the territory of the United States, but not to those who find themselves in occupied Iraq. We conclude that the second interpretation is correct. The phrase [n]ationals of a neutral state who find themselves in the territory of a belligerent state must be understood in light of the Conventions overarching structure The second document to which we were referred was the Joint Service Manual of the Law of Armed Conflict issued by the Director General Joint Doctrine and Concepts of the Ministry of Defence. In para 11.1 of his document the following appears: Neutral nationals in occupied territory are entitled to treatment as protected persons under Geneva Convention IV whether or not there are normal diplomatic relations between the neutral state concerned and the occupying power. The interpretation placed on article 4 by Mr Goldsmith is unquestionably correct. To adopt the first interpretation mooted would run entirely counter to the purpose of the convention and, not at all incidentally, defy common sense. Why should nationals of a neutral state who happen to be in a country where conflict is taking place be denied protection under the convention simply because their country enjoys normal diplomatic relations with the state into whose hands they fall? That would arbitrarily and for no comprehensible reason remove from the protection of the convention an entire swathe of persons who would be entirely deserving of and who naturally ought to be entitled to that protection. Mr Eadie pointed out, however, that the same opinion from Mr Goldsmith expressed the unequivocal view that Al Qaeda operatives found in occupied Iraq are excluded from protected person status. That opinion seems to have been based on a narrow interpretation of the qualifying phrase find themselves as applied to those who come to be in Iraq at the material time. The presence of such as Mr Rahmatullah in Iraq could not, Mr Goldsmith suggests, be attributed to happenstance or coincidence. He was therefore not a protected person under the convention. It is not necessary to deal with this argument, although, if it were, I would have little hesitation in dismissing it. To make happenstance or coincidence a prerequisite of protection seems to me to introduce a wholly artificial and unwarranted restriction on its availability under the convention. But, in any event, the position of the UK government, as evidenced by the Joint Service Manual, is plainly at odds with the stance taken by the US as to the application of GC4 to members of Al Qaeda. This is confirmed by a statement in a report by Intelligence and Security Committee on The Handling of Detainees by UK Intelligence Personnel in Afghanistan, Guantanamo Bay and Iraq: (2005) Cm 6469. At para 8 of that report it is stated that, the UK regards all personnel captured in Afghanistan as protected by the Geneva Conventions. Against this background it is simply not open to the Secretaries of State to suggest that the convention does not apply on the basis that Mr Goldsmith has advanced. Given that GC4 does apply to Mr Rahmatullah, how does that bear on the legality of his detention? Article 49 forbids the forcible transfer of protected persons from the occupied territory, in this case Iraq. It provides: Individual or mass forcible transfers, as well as deportations of protected persons from occupied territory to the territory of the Occupying Power or to that of any other country, occupied or not, are prohibited, regardless of their motive. The, presumably forcible, transfer of Mr Rahmatullah from Iraq to Afghanistan is, at least prima facie, a breach of article 49. On that account alone, his continued detention post transfer is unlawful. Quite apart from this, however, article 132 requires that every interned person must be released by the detaining power as soon as the reasons which necessitated his internment no longer exist. The conclusion of the Detainee Review Board that Mr Rahmatullahs continued detention was not necessary to mitigate the threat he poses strongly suggests that the reasons that necessitated his internment no longer apply. And article 133 stipulates that internment should cease as soon as possible after the close of hostilities. There may be some scope for debate as to when hostilities closed but it is at the very least eminently arguable that they ended long ago. is material to the present case, it provides: It is at this point that article 45 of GC4 comes directly into play. In so far as Protected persons may be transferred by the Detaining Power only to a Power which is a party to the present Convention and after the Detaining Power has satisfied itself of the willingness and ability of such transferee Power to apply the present Convention. If protected persons are transferred under such circumstances, responsibility for the application of the present Convention rests on the Power accepting them, while they are in its custody. Nevertheless, if that Power fails to carry out the provisions of the present Convention in any important respect, the Power by which the protected persons were transferred shall, upon being so notified by the Protecting Power, take effective measures to correct the situation or shall request the return of the protected persons. Such request must be complied with. In these circumstances the UK government was under a clear obligation, on becoming aware of any failure on the part of the US to comply with any provisions of GC4, to correct the situation or to request the return of Mr Rahmatullah. On 9 September 2004, the then Minister for the Armed Forces, Mr Adam Ingram MP, gave a written answer to a parliamentary question in which he stated that all persons apprehended by the United Kingdom Forces in Iraq and transferred to United States forces, and who are still in custody, remain in Iraq. That was plainly incorrect. In February 2009 Mr John Hutton MP, then Secretary of State for Defence, made a statement to Parliament in which he said: [I]n February 2004 two individuals were captured by UK forces in and around Baghdad. They were transferred to US detention, in accordance with normal practice, and subsequently moved to a US detention facility in Afghanistan. Following consultations with US authorities, we confirmed that they transferred the two individuals from Iraq to Afghanistan in 2004 and they remain in custody there today. I regret that it is now clear that inaccurate information on this particular issue has been given to the House by my Department The individuals transferred to Afghanistan are members of Lashkar e Taiba, a proscribed organisation with links to al Qaeda. The US Government have explained to us that those individuals were moved to Afghanistan because of a lack of relevant linguists to interrogate them effectively in Iraq. The US has categorised them as unlawful enemy combatants, and continues to review their status on a regular basis. We have been assured that the detainees are held in a humane, safe and secure environment that meets international standards that are consistent with cultural and religious norms. The International Committee of the Red Cross has had regular access to the detainees. [The] review has established that officials were aware of the transfer in early 2004. In retrospect, it is clear to me that the transfer to Afghanistan of these two individuals should have been questioned at the time. (See Hansard (HC Debates) 26 February 2009, cols 395 396.) Not only should the transfer of the two persons have been questioned at the time that they were removed, it should have been the subject of representation by the UK at the time that the authorities here became aware of it and subsequently. If the UK government appreciated that the transfer was in apparent breach of article 49 of GC4 (and it has not been suggested otherwise) and if, as it should have done, it became aware that Mr Rahmatullah continued to be held in breach of articles 132 and 133, it was obliged by virtue of article 45 to take effective measures to correct the breaches or to ask for Mr Rahmatullahs return. There can be no plausible argument, therefore, against the proposition that there is clear prima facie evidence that Mr Rahmatullah is unlawfully detained and that the UK government was under an obligation to seek his return unless it could bring about effective measures to correct the breaches of GC4 that his continued detention constituted. It is for that reason that I am of the view that the real issue in this case is that of control. But before examining that issue, it is necessary to say something about the nature of habeas corpus. Habeas Corpus The most important thing to be said about habeas corpus, at least in the context of this case, is that entitlement to the issue of the writ comes as a matter of right. The writ of habeas corpus issues as of right per Lord Scarman in R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74 at 111. It is not a discretionary remedy. Thus, if detention cannot be legally justified, entitlement to release cannot be denied by public policy considerations, however important they may appear to be. If your detention cannot be shown to be lawful, you are entitled, without more, to have that unlawful detention brought to an end by obtaining a writ of habeas corpus. And a feature of entitlement to the writ is the right to require the person who detains you to give an account of the basis on which he says your detention is legally justified. The remedy of habeas corpus is said to be imperative, even peremptory. Classically, it is swiftly obtained: see Lord Birkenhead in Ex p OBrien [1923] AC 603 at 609. This reflects the fundamental importance of the right to liberty. And, of course, conventionally the respondent to the writ will be the individual or agency who has actual physical custody of the person seeking release. But habeas corpus is as it needs to be a flexible remedy. As Taylor LJ said in R v Secretary of State for the Home Department, Ex p Muboyayi [1992] QB 244, at 269, The great writ of habeas corpus has over the centuries been a flexible remedy adaptable to changing circumstances. The effectiveness of the remedy would be substantially reduced if it was not available to require someone who had the means of securing the release of a person unlawfully detained to do so, simply because he did not have physical custody of the detainee actual physical custody is obviously not essential per Atkin LJ in Ex p OBrien [1923] 2 KB 361, 398 and Vaughan Williams LJ in R v Earl of Crewe, Ex p Sekgome [1910] 2 KB 576, 592, stating that the writ may be addressed to any person who has such control over the imprisonment that he could order the release of the prisoner. The object of the writ is not to punish previous illegality and it will only issue to deal with release from current unlawful detention see Scrutton LJ in Ex p OBrien [1923] 2 KB 361, 391. And the writ should only be issued where it can be regarded as proper and efficient to do so, per Lord Evershed MR in Ex p Mwenya [1960] 1 QB 241, 303. Obviously, it will not be proper and efficient to issue the writ if the respondent to it does not have custody of the person detained or the means of procuring his release. And it is to this element of habeas corpus, what Mr Eadie describes as its core component, that I must now turn. Control At the heart of the cases on control in habeas corpus proceedings lies the notion that the person to whom the writ is directed has either actual control of the custody of the applicant or at least the reasonable prospect of being able to exert control over his custody or to secure his production to the court. Thus in Barnardo v Ford [1892] AC 326 where the respondent to the writ had consistently claimed to have handed the child, who was the subject of the application, over to someone whom he was no longer able to contact, the courts nevertheless ordered that the writ should issue because they entertained a doubt as to whether he had indeed relinquished custody of the child. There was therefore a reasonable prospect that the respondent, despite his claims, either had or could obtain custody of the child. And in R v Secretary of State for Home Affairs, Ex p O'Brien [1923] 2 KB 361, Bankes LJ, although he accepted the affidavit evidence of the Home Secretary to the effect that Mr OBrien was under the control of the governor of Mountjoy prison and that the governor was an official of the Irish Free State not subject to the orders or directions of the Home Secretary or the British government, nevertheless decided that the writ of habeas corpus should issue. This was because the arrangements which existed between the Irish Free State and the United Kingdom provided grounds for believing that the Home Secretary could obtain the return of Mr OBrien. Mr OBrien had been arrested in London under regulation 14B of the Restoration of Order in Ireland Regulations 1920 and deported to Ireland there to be interned until further order. A statement had been made in the House of Commons on 19 March 1923 that the Irish Free State had given the British government a number of undertakings, one of which was to the effect that if it was decided that any person should not have been deported he would be released. On this basis, the Court of Appeal in effect held that there was a reasonable prospect that the Home Secretary could exert sufficient control over the custody of Mr OBrien to justify the issue of the writ. Scrutton and Atkin LJJ agreed with Bankes LJ, Atkin LJ observing that the question was whether control exists in fact. The circumstance that Mr OBrien was under the control of the governor of the prison was by no means inconsistent with an agreement with the Free State Government to return on request. Although he acknowledged that there was doubt as to whether the Home Secretary could exert control, Atkin LJ held that there was material before the court which suggested that he could, and, on that account, habeas corpus should be granted. (Of course, the Court of Appeals apprehension that the Home Secretary did have sufficient control to secure the production of Mr OBrien proved to be entirely correct for he was brought to the court on 16 May 1923 and was thereupon discharged.) On appeal to the House of Lords, (Secretary of State for Home Affairs v OBrien [1923] AC 603), the Home Secretarys appeal was dismissed on jurisdictional grounds. Lord Atkinson dissented on that issue but he clearly approved the Court of Appeals analysis for, in a passage at p 624, which has resonances for the present appeal, he said this: [The writ of habeas corpus] operates with coercive force upon the Home Secretary to compel him to produce in Court the body of the respondent. If the Executive of the Free State adhere to the arrangement made with him he can with its aid discharge the obligation thus placed upon him. If the Irish Executive should fail to help him he would be placed in a very serious position. Unless this Executive breaks what has been styled its bargain with the Home Secretary he had, in effect, the respondent under his power and control. It would be rather unfair to this Executive to assume gratuitously beforehand that it would not keep the bargain made with it, simply because that bargain was not enforceable at law. The circumstance that the agreement between the British and Irish Free State Governments that internees would be returned was not legally enforceable did not detract, therefore, from the conclusion that there was at least a reasonable prospect that the Home Secretary could procure Mr OBriens return to England. This highlights the factual nature of the inquiry that must be made as to whether a sufficient degree of control exists. It is not simply a question of the legal enforceability of any right to assert control over the individual detained. The question is, as Atkin LJ put it, whether control exists in fact. In Zabrovsky v General Officer Commanding Palestine [1947] AC 246 Zabrovskys son, Arie Ben Eliezer, a Palestinian citizen, was detained under emergency powers regulations. He was issued with an order requiring him to leave Palestine. He was then transported to a military detention camp in Eritrea. At the time, Eritrea was held by the British under the control of a Chief Administrator. Proclamation No 54 issued by the Chief Administrator permitted detention without charge in Eritrea, and the order of the Eritrean Military Government for Eliezers detention had been made pursuant to that Proclamation. An application for habeas corpus was made in the Supreme Court of Palestine against the British Officer commanding Mandate Palestine and the police. That court, sitting as a High Court and exercising English common law rules, discharged a rule nisi on the basis that, although control could be established, the extant detention order had been issued by a state beyond the Supreme Court of Palestines jurisdiction. On appeal from the decision refusing that application, the Privy Council held at pp 255 256 that the order for the banishment of Mr Zabrovskys son was lawful, stating: In the troublous times of war and in the chaotic post war conditions the scope of legal and permissive interference with personal liberty has been extended and restraints have been legalised by the legislature which would not have been accepted as legitimate in normal times. Thus in England, in what are called the Reg 18B cases, Liversidge v Sir John Anderson the House of Lords upheld the legality of a detention of the applicants by the Executive without trial and also held that the Executive could not be compelled to give reasons for the detention the effect of the decisions is to vest a plenary discretion in the Executive, affecting the liberty of the subject and pro tanto to substitute the judgment of the court, based on ordinary principles of common law right, the discretion of the Executive acting arbitrarily in the sense that it cannot in substance be inquired into by the court. The Board distinguished OBrien in the following passage of its opinion at pp 262 263: [OBrien] was relied upon for two purposes (1) to support an argument that on the facts of the present case the Palestine Government could properly be ordered to produce the body, and (2), that the proper order was not to discharge the order nisi but to make an order nisi which would enable the court, without deciding the question whether the Palestine Government had control of Eliezer, to clear up any doubts there might be as to the facts. In their Lordships' view, however, O'Brien's case does not, when carefully considered, afford any help in this appeal. The central feature in that case was that there never was an effective legal order. The order relied on was made by the English Secretary of State for internment of O'Brien in the Irish Free State after the setting up of an Irish constitution and an Irish Executive. The Court of Appeal held that the order was illegal. The Secretary of State thereupon produced the body of O'Brien, giving as their justification, the order of internment which the court had held to be bad; the court made the order absolute and O'Brien was released In the present case the Palestinian court has found itself unable to say that the detention was illegal. They have said that it was beyond their competence to decide on the illegality of the detention in Eritrea. Their Lordships, as they have indicated, agree with this view but offer no opinion as to the further suggestion of that court, that, if the petitioner wishes to question the validity of the order made in Eritrea, he must do so in the courts of Eritrea. The validity and effect of the Eritrean law and order may raise many difficult questions of constitutional or other law. The legality of acts done, or of detention enforced in, that country in pursuance or assumed pursuance of its law or orders is, however, clearly beyond the jurisdiction of the Palestine court and of this Board on appeal. With respect, the suggestion that the central feature of OBrien was that there was no effective legal order is open to serious question. A critical, if not the central, issue in that case, as I have sought to demonstrate above, is that there was reason to conclude that the Home Secretary had control over Mr OBriens release. Habeas corpus was issued in his case not simply because it was held that he had been deported and interned on foot of an order which, it was found, had not been lawfully made. The issue of the writ depended crucially on the finding that it was likely that the Home Secretary could procure Mr OBriens release. In any event, (and in contrast with the position in Zabrovsky) there is clear prima facie evidence in the present case that Mr Rahmatullah is unlawfully detained. That conclusion depends on the effect of the Geneva Conventions, not on an examination of the legal basis on which the US might claim to justify his detention. This court is not precluded, therefore, from expressing a view as to the apparent lack of legal justification for Mr Rahmatullahs continued detention, unlike the position in Zabrovsky where the Board felt constrained not to examine the legal basis for Mr Eliezers internment in Eritrea. This court is not asked to sit in judgment on the acts of the government of another done within its own territory as in Underhill v Hernandez (1897) 168 US 250, 252. The illegality in this case centres on the UKs obligations under the Geneva Conventions. It does not require the court to examine whether the US is in breach of its international obligations, as in R (Al Haq) v Secretary of State for Foreign and Commonwealth Affairs [2009] EWHC 1910 (Admin), which was relied on by Mr Eadie in support of his argument that the Act of State doctrine forbade examination of the legality of Mr Rahmatullahs detention because he was held by the US authorities. Here, there was evidence available to the UK that Mr Rahmatullahs detention was in apparent violation of GC4. The illegality rests not on whether the US was in breach of GC4 but on the proposition that, conscious of those apparent violations, the UK was bound to take the steps required by article 45 of GC4. A further point of distinction with the decision in Zabrovsky is that at p 259 the Board made an unequivocal finding of fact that neither respondent had the deportee in his custody or control nor had either of them any power to produce the body. This is to be contrasted with the present case where the Court of Appeal has unequivocally found that there was sufficient reason to conclude that the Secretaries of State would be able to assert control over the custody of Mr Rahmatullah. I am therefore of the view that the decision in Zabrovsky has no bearing on the appeal before this court. In Ex p Mwenya [1960] 1 QB 241, the Divisional Court (Parker LCJ, Slade and Winn JJ) considered an application brought on behalf of Mr Mwenya, who had been required by the Governor of Northern Rhodesia to remain within the Mporokoso District of Northern Rhodesia. Three respondents were named in the application: the Governor of Northern Rhodesia, the District Commissioner of the Mporokoso District, and the Secretary of State for the Colonies. In an affidavit filed in the proceedings the Secretary of State explained that the Northern Rhodesian Protectorate was a foreign territory under Her Majestys protection. He averred that he had neither custody of Mr Mwenya nor control over his custody. The Divisional Court was asked to consider two preliminary objections, one of which was that sufficient custody or control on the part of the Secretary of State could not be established. Delivering the judgment of the court, Lord Parker CJ said at p 279: Reliance was further placed by the applicant on Barnardo v Ford and Rex v Secretary of State for Horne Affairs, Ex p O'Brien. Both those cases are authority for the proposition that the writ will issue not only to the actual gaoler but to a person who has power or control over the body. Further, in O'Brien's case the writ was issued to the Secretary of State for Home Affairs, who had in fact handed the physical custody of the body over to the Government of the Irish Free State. It is clear, however, from the facts of that case, that the Secretary of State had not only been responsible for the original detention but that there were strong grounds for thinking that in handing over the body to the Government of the Irish Free State he had not lost all control over it. In those circumstances the court decided to issue the writ in order that the full facts could be investigated and argument heard on the return. The position here is quite different. The restriction orders under which the applicant is detained were not made by the Secretary of State. His approval or consent was not required and there is no evidence that he took any part in the detention. No doubt the writ will issue not only to a person who has the actual custody but also to a person who has the constructive custody in the sense of having power and control over the body. Here, however, we can find no custody by the Secretary of State in any form. The Divisional Courts ruling on the issue was not appealed but the clear distinction between Mwenya and OBrien emerges unmistakably from this passage. Whereas in OBrien there were strong grounds for believing that the Home Secretary had not lost control over Mr OBriens detention, in Mwenya no such grounds existed. It had been argued in Mwenya that the Secretary of State had powers deriving from the constitution of Northern Rhodesia to which he might have resort in order to secure Mr Mwenyas release and that he was able to advise the Queen to require it. Of this argument the Lord Chief Justice said, at pp 279 280: We were referred to a number of provisions in the constitution of, and in other legislation in regard to, Northern Rhodesia under which the Secretary of State is specifically given certain powers, and powers which extend beyond advice. But we find it impossible to say that as a result of those powers he can be said to have the custody of the body in any sense. Apart from the powers given by such legislation the only powers of the Secretary of State arise by reason of his constitutional position under which he advises Her Majesty. The fact, however, that he can advise and attempt to persuade Her Majesty to cause the body to be brought up does not mean that he has such a control as will enable the writ to issue. Nor is it in our view relevant that if the writ were issued the Secretary of State might well feel it proper to influence the production of the body. Mr Eadie argued that these observations illustrated the impropriety of courts giving directions to ministers as to how they should conduct affairs of state. It was inappropriate, he said, for the Secretaries of State in the present case to be, in effect, instructed to ask the US authorities to return Mr Rahmatullah. Whether the UK government would have resort to the political agreement of the 2003 MoU was a matter for political judgment and the exercise of that judgment was not a matter for the courts. The writ in this case had a singular effect, Mr Eadie claimed, of requiring the Secretaries of State to engage at a diplomatic level with the custodian state, the US. I do not accept this argument. In the first place, the Court of Appeals decision does not amount to an instruction to the Government to demand Mr Rahmatullahs return. Its judgment merely reflects the courts conclusion that there were sufficient grounds for believing that the UK Government had the means of obtaining control over the custody of Mr Rahmatullah. On that basis the court required the Secretaries of State to make a return to the writ. The essential underpinning of the courts conclusion was that there was sufficient reason to believe that the Government could obtain control of Mr Rahmatullah. It might well prove that the only means of establishing whether in fact it could obtain control was for the Government to ask for his return but that remained a matter for the ministers concerned. The Court of Appeals judgment did not require the Secretaries of State to act in any particular way in order to demonstrate whether they could or could not exert control. What it required of them was that they show, by whatever efficacious means they could, whether or not control existed in fact. Another case on control to which we were referred by Mr Eadie is In re Sankoh (unreported) 27 September 2000, in which the Court of Appeal (Ward, Waller, Laws LJJ) considered an appeal against the High Courts earlier refusal (Elias J) to issue the writ on behalf of the Sierra Leonean revolutionary leader, Foday Sankoh, who had been detained in Sierra Leone while UK forces were supporting the national government there, and in circumstances where they had been involved in his transfer between detention centres. The applicant relied on OBrien and argued that a statement by Mr Peter Hain MP, a minister in the Foreign Office, which was made in response to a demand that Sankoh be released in return for certain hostages, demonstrated sufficiently arguable on going control for the writ to run. Mr Hain had said that the UK government would not negotiate with hostage takers and that it would not trade Mr Sankohs freedom. On the basis of that statement, it was argued that the British government was in a position to trade Mr Sankoh for the hostages. This assertion was directly confronted by the evidence of the Foreign and Commonwealth Office that Mr Sankoh was not under the custody or control of the British government and that there was no agreement between the UK and Sierra Leone under which the British government could require the release or delivery up of Mr Sankoh. In light of that evidence it is perhaps not surprising that Laws LJ expressed himself in forthright terms that the appellant had not established that the Secretary of State had control over Mr Sankohs detention: see para 12 of the judgment. But Mr Eadie relied on the decision more for Laws LJs observations at para 9 where he said: It seems to me, moreover, looking at the matter more broadly, that unless Mr Sankoh is actually in the custody of the United Kingdom authorities, the applicant's case must be that the British Government should be required by this court to attempt to persuade Sierra Leone either to identify his whereabouts or to deliver him up. But that involves the proposition that the court should dictate to the executive government steps that it should take in the course of executing Government foreign policy: a hopeless proposition. For the reasons that I have given at para 60 above, I do not consider that the effect of the Court of Appeals decision in the present case is to require the British Government to engage in a process of persuasion. It does not involve an attempt to dictate to the executive government steps that it should take in the course of executing Government foreign policy. Rather it requires the Government to test whether it has the control that it appeared to have over the custody of Mr Rahmatullah and to demonstrate in the return that it makes to the writ that, if it be the case, it does not have the control which would allow it to produce the body of Mr Ramatullah to the court. An applicant for the writ of habeas corpus must therefore demonstrate that the respondent is in actual physical control of the body of the person who is the subject of the writ or that there are reasonable grounds on which it may be concluded that the respondent will be able to assert that control. In this case there was ample reason to believe that the UK governments request that Mr Rahmatullah be returned to UK authorities would be granted. Not only had the 2003 MoU committed the US armed forces to do that, the government of the US must have been aware of the UK governments view that Mr Rahmatullah was entitled to the protection of GC4 and that, on that account, it was bound to seek his return if (as it was bound to do) it considered that his continued detention was in violation of that Convention. Foreign affairs The Executives conduct of foreign affairs has been described as forbidden territory for the courts. In R v Secretary of State for Foreign and Commonwealth Affairs, Ex p Pirbhai (1985) 107 ILR 462, Sir John Donaldson MR at 479 said that it can rarely, if ever, be for judges to intervene where diplomats fear to tread. Ringing, declamatory statements to like effect are to be found in a number of other authorities. For instance, in R v Secretary of State for Foreign and Commonwealth Affairs, Ex p Ferhut Butt (1999) 116 ILR 607 Lightman J said, at para 12, p 615: The general rule is well established that the courts should not interfere in the conduct of foreign relations by the Executive, most particularly, where such interference is likely to have foreign policy repercussions (see R v Secretary of State for Foreign and Commonwealth Affairs, Ex p Everett [1989] 1 QB 811 at 820). This extends to decisions whether or not to seek to persuade a foreign government to take any action or remind a foreign government of any international obligation (eg to respect human rights) which it has assumed. In R (Abbasi) v Secretary of State for Foreign and Commonwealth Affairs and the Secretary of State for the Home Department [2002] EWCA Civ 1598; [2003] UKHRR 76, dealing with a submission that decisions taken by the executive in its dealings with foreign states are not justiciable, Lord Phillips MR said at para 106 (iii) the court cannot enter the forbidden areas, including decisions affecting foreign policy. And in R (Al Rawi) v Secretary of State for Foreign and Commonwealth Affairs (United Nations Comr for Refugees intervening) [2008] QB 289 Laws LJ, at para 148, said: This case has involved issues touching both the Government's conduct of foreign relations, and national security: pre eminently the former. In those areas the common law assigns the duty of decision upon the merits to the elected arm of government; all the more so if they combine in the same case. This is the law for constitutional as well as pragmatic reasons Mr Eadie submitted that the issue of the writ of habeas corpus in this case represented an intrusion by the courts in the area of foreign policy, an area which the courts should scrupulously avoid. If, he asked rhetorically, the courts are prepared to require the Government to ask the US to release Mr Rahmatullah, why should they refrain from doing so even if there is no MoU in place. This argument founders on the rock identified in para 60 above. The decision of the Court of Appeal that there were grounds on which it could be concluded that the Secretaries of State could exercise control over Mr Rahmatullahs custody and that they were therefore required to make a return to the writ does not entail an intrusion into the area of foreign policy. It does not require of the government that it take a particular foreign policy stance. It merely seeks an account as to whether it has in fact control or an evidence based explanation as to why it does not. In Abbasi the first claimant, a British national, was captured by US forces and transported to Guantanamo Bay in Cuba. The principal issues in the case were stated by Lord Phillips in para 2 of the courts judgment to be: (i) to what extent, if at all, can the English court examine whether a foreign state is in breach of treaty obligations or public international law where fundamental human rights are engaged? and (ii) to what extent, if at all, is a decision of the executive in the field of foreign relations justiciable in the English court? Neither issue arises on the present appeal. For the reasons that I have given at paras 38 40 and 53, the legality of the USs detention of Mr Rahmatullah is not under scrutiny here. It is the lawfulness of the UKs inaction in seeking his return that is in issue. And the requirement to make a return to the writ of habeas corpus does not demand of the Government that it justify in political terms a decision not to resort to the 2003 MoU in order to request Mr Rahmatullahs return. What the Court of Appeals judgment required of the Government was that it should demonstrate why, as a matter of fact, it was not possible to secure that outcome. This is to be contrasted with the duty which the appellant in Abbasi claimed was owed to him by the Foreign Secretary, viz to exercise diplomacy on his behalf: see para 79 of the judgment. In the present case, the Secretaries of State were not required to make any particular diplomatic move. Because they appeared to have the means of securing Mr Rahmatullahs production on foot of the writ of habeas corpus, they were required to bring that about or to give an account of why it was not possible. Should entitlement to habeas corpus be coterminous with the right to judicial review? Mr Eadie contended that it would be unacceptably incongruous that a different outcome should be possible on an application for a writ of habeas corpus from that which would result from an application for judicial review. In R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74 Lord Wilberforce said, at p 99: These remedies of judicial review and habeas corpus are, of course, historically quite distinct and procedurally are governed by different statutory rules, but I do not think that in the present context it is necessary to give them distinct consideration. In practice, many applicants seek both remedies. The court considers both any detention which may be in force and the order for removal: the one is normally ancillary to the other. I do not think that it would be appropriate unless unavoidable to make a distinction between the two remedies and I propose to deal with both under a common principle. It would be quite wrong, in my opinion, to take from this passage a principle that habeas corpus can only be available where judicial review would also lie. Mr Eadies argument was that a judicial review challenge to the failure of the Government to seek his return from the US authorities would face two formidable, interrelated obstacles. The first was the non justiciability of decisions of the executive in the field of foreign affairs. The second obstacle was that the Government would be able to defend any claim for judicial review on the basis that a decision not to seek Mr Rahmatullahs production was justified because of the need to preserve good relations with an important ally. The fallacy in the suggestion that habeas corpus should not be available where judicial review is not, lies in its conflation of two quite different bases of claim. The mooted judicial review application would proceed as a challenge to the propriety of the governments decision not to apply to the US authorities for Mr Rahmatullahs return. The application for habeas corpus does not require the government to justify a decision not to make that application. It calls on the government to exercise the control which it appears to have or to explain why it is not possible (not why it is not reasonable) to do so. Apart from the differing nature of the two claims, the fact that habeas corpus, if the conditions for its issue are satisfied, is a remedy which must be granted as a matter of automatic entitlement distinguishes it from the remedy of judicial review which can be withheld on a discretionary basis. It is unsurprising that habeas corpus is available as of right. If there is no legal justification for a persons detention, his right to liberty could not depend on the exercise of discretion. To bring the matter home to the circumstances of the present case, if it was established that Mr Rahmatullah was unlawfully detained and that the UK authorities had the means of bringing his unlawful detention to an end, it is inconceivable that they could lawfully decline to do so on the basis that it would cause difficulty in the UKs relations with the US. Such a consideration might provide the basis for asserting, in defence of a judicial review application, that the decision not to request the US to take a particular course of action was reasonable. In the context of a habeas corpus application, however, the question of reasonableness in permitting an unlawful detention to continue when the government had the means of bringing it to an end simply does not arise. The Court of Appeals conclusion on the question of control The existence of the 2003 MoU and, in particular clause 4 of that document, provided more than sufficient reason to conclude that the UK government could expect that, if it asked for it, Mr Rahmatullahs return by US forces would occur. This is quite unrelated to the question of the legal enforceability of the MoU. The Court of Appeal had to make an assessment of what was likely to happen as a matter of factual prediction. The only countervailing argument to the claim that the US should be expected to adhere to the commitment that it had made was Mr Parmenters suggestion that to make the request would be futile. But, as I have pointed out, this bald claim was not supported by anything beyond the suggestion that the 2003 MoU was nothing more than a political arrangement. Just because it was a political arrangement, should it be assumed that it would not be fulfilled by the US? I can think of no reason that such an assumption should be made. Moreover, the US authorities must have been aware that the UK considered that GC4 applied to Mr Rahmatullah. On that basis, it ought to have anticipated that the UK would ask for his return, whether or not the 2003 MoU had been superseded. At the time that the Court of Appeal considered the matter, there was no reason to suppose that the US, a close ally of the UK, would be unheeding of such a request. I therefore consider that the Court of Appeal was justified in its conclusion, on the evidence then available to it, that there was every reason to believe that the US would respond positively to a request by the UK that Mr Rahmatullah should be returned. I would therefore dismiss the Secretaries of States appeal. The cross appeal The judgment of the Court of Appeal directing the issue of a writ of habeas corpus was handed down on 14 December 2011. The return date was fixed initially for 21 December 2011. The hearing due on that date was adjourned to 18 January 2012 and again to 20 February 2012 in order to allow the US authorities to make a response to the formal letter of request dated 16 December 2011 in which the British authorities had sought the release of Mr Rahmatullah. On 8 February 2012 Mr William Lietzau, the US deputy assistant Secretary of State for Defense responded to the letter of request for Mr Rahmatullahs release. The following are the material passages from the letter: Rahmatullah has been held by US military forces in accordance with Public Law 107 40, the Authorization for Use of Military Force (AUTMF), as informed by the laws of war. Consistent with the international law of armed conflict, this authority allows our forces to detain, for the duration of hostilities, persons who were part of, or substantially supported, Taliban or al Qaida forces or associated forces that are engaged in hostilities against the United States or its coalition partners, including any person who has committed a belligerent act, or has directly supported hostilities, in aid of such enemy forces. Rahmatullah, a member of an al Qaida affiliated terrorist group, travelled from Pakistan to Iraq for the express purpose of engaging United States and coalition forces in hostilities. Accordingly, he has been determined to meet the criteria for detention by multiple Detainee Review Boards (DRB), which are designed, inter alia, to determine whether an individual is lawfully detained. Rahmatullah is properly detained by the United States consistent with the international law of armed conflict. Once a detainee has been determined by a DRB to meet the criteria for detention, the board then makes a recommendation as to whether continued detention is necessary to mitigate the threat the detainee poses to US and coalition forces. Disposition recommendations for third country nationals can include continued internment or repatriation to their home country for criminal prosecution, for participation in a reintegration or reconciliation program, or for release. Rahmatullah has been identified by a DRB as someone who could be transferred under appropriate circumstances. The board in this case, based on the information available to it, made a finding that the threat Rahmatullah posed could be mitigated if he was transferred to Pakistan with appropriate security assurances. This recommendation is but one component of a transfer process. Before we transfer third country nationals from US custody at the DFIP, we independently determine using information the DRB relied upon as well as relevant information not necessarily available to the Board whether any threat posed by the detainee can be adequately mitigated by the receiving country. Accordingly, we seek appropriate security assurances when we transfer a detainee who is being detained pursuant to the AUMF, as informed by the laws of war, regardless of whether the transfer is to be to the detainee's home country or to a third country. Generally, these security assurances commit the receiving, country to take measures that are necessary, appropriate, and lawfully available, to ensure that the detainee will not pose a threat to the receiving country or to the United States. In addition to security assurances, we seek humane treatment assurances in order to ensure that, upon transfer, the detainee will be treated humanely, consistent with applicable international law. Normally, unless there is an obstacle to repatriation, transfer discussions in circumstances such as these would involve the detainee's home country. We have already received a request from the Government of Pakistan for Rahmatullah's repatriation, and we believe it may be more appropriate to discuss the conditions of transfer directly with the Government of Pakistan. I look forward to discussing this matter further with you. The Master of the Rolls dealt with this letter in paras 8 10 of a second judgment in the case delivered on 23 February 2012 ([2012] EWCA Civ 182; [2012] 1 WLR 1462, 1492): 8. There can be no doubt but that the UK government made a bona fide request to the US authorities for the return of the applicant, which accorded with the terms of our judgment, and it had appended to it a copy of that judgment. 9. I turn, then, to the response of 8 February from Mr Lietzau. As I see it, the first problem for the applicant is that that letter makes it very difficult to contend that the UK Government has 'custody' or 'de facto control' of the applicant, as discussed in the cases considered at paras 27 31 (ante, pp 1483 1484), and if that is right, the uncertainty which gave rise to the issue of the writ has been answered, and sadly for the applicant, adversely to him. 10. The letter clearly maintains that the US authorities are entitled to continue to hold the applicant, that if he is to be released to anyone, it should be to the Pakistani Government, and the US authorities would not release him to anyone without what they regarded as appropriate safeguards. Whatever may be the legal right of the UK Government and the legal obligations of the US Government, under the MoUs discussed in our earlier judgments at paras 3 8 (ante, pp 1479 1480) or under Geneva III or Geneva IV, as discussed at paras 11 15 (ante, pp 1480 1481), it seems clear that the US authorities are not prepared to hand over the applicant to the UK Government in order for him to be released. Mr Rahmatullah has appealed against the decision of the Court of Appeal, announced at the conclusion of the hearing on 20 February, that the Secretaries of State had made a sufficient return to the writ of habeas corpus. Before this court, Ms Lieven pointed out that Mr Lietzaus letter conspicuously failed to say that the British authorities were not entitled to exercise control over Mr Rahmatullah; it did not state that the 2003 MoU was no longer applicable; it did not deal with the Geneva Conventions; and it appeared to invite further exchanges on the question of whether Mr Rahmatullah would be released to the British authorities. She argued that the letter could not be seen as a rejection of the UKs request for Mr Rahmatullahs release and there remained a doubt as to whether that release could be secured. Until that doubt was satisfactorily eliminated, the return could not be regarded as sufficient. Mr Lietzaus letter had been addressed to Mr Paul Vincent Devine, Director of Operational Policy at the Ministry of Defence and Mr Tom Drew, Director of International Security at the Foreign and Commonwealth Office. In a statement filed on behalf of the Secretaries of State for the purpose of the hearing before the Court of Appeal on 20 February, Mr Drew stated that Mr Lietzaus letter was a definitive statement of the US position. The letter was the product of careful consideration over a number of weeks. His view was that the US authorities, in suitably diplomatic language, have effectively declined the request that [Mr Rahmatullah] be transferred to UK custody in order that he be released. Mr Devine expressed agreement with Mr Drews statement and adopted it on behalf of the Secretary of State for Defence. The final paragraph of Mr Drews letter outlined what was described as the respondents position: In light of this response from the US authorities, the Respondents are of the view that they have now made a full and sufficient return to the Court's writ. They have drawn the US authorities' attention to the Court of Appeal's decision and requested that the Appellant be released pursuant to it (specifically, that the Appellant be returned to UK custody in order that he be released). In response, the US authorities have effectively declined the Respondents' request while drawing attention to the on going. efforts being made to transfer the Appellant to Pakistan subject to "appropriate security assurances". In those circumstances, the Respondents do not intend to engage in further substantive correspondence on this matter with the US. The Master of the Rolls dealt with Mr Drews statement in para 11 of the second judgment as follows: A further problem for the applicant is that, however a lawyer may be tempted to construe the 8 February letter, there is the unequivocal evidence of Mr Drew, supported by Mr Devine, that in the world of international relations, the letter amounts to a refusal to hand over the applicant. While we are not bound to accept such evidence, it seems to me that it would be dangerous to reject it in a case such as this where it does not appear unconvincing and there is nothing to contradict it. The language of diplomats representing different states discussing a problem can no doubt be very different from that of lawyers representing different interests discussing a problem or even the same problem, particularly when as here the problem may be one of some sensitivity. One can see the force in the points made by Ms Lieven concerning the shortcomings of Mr Lietzaus letter as a means of dealing unambiguously with the basis on which the Court of Appeal had found that there were grounds for considering that the UK authorities had control over Mr Rahmatullah. But one can also readily understand why Mr Lietzau would have been reluctant to issue a forthright and peremptory refusal to accede to the request for Mr Rahmatullahs release. What is undeniable is that the US authorities had been provided with the Court of Appeals judgment and had been afforded ample opportunity to consider it carefully. It could not have been lost on Mr Lietzau that his letter of 8 February, coming as it did merely weeks before the final return to the writ had to be made, would be a crucial and closely examined document. He was fully aware of the basis on which the Court of Appeal considered that the UK authorities could be said to have retained control. A diplomatic silence on that question does not necessarily indicate a lack of interest in the subject. It is at least as consistent with a profound disagreement with the view that the UK could assert entitlement to control but that this, in the interests of diplomacy, was better left unexpressed. Whatever else may be said of his letter, Mr Lietzau was explicit in his assertion that the US was legally entitled to hold Mr Rahmatullah. His letter gave no indication that there would be any opportunity for discussion of that question. And it was at least implicit that the US considered that, if Mr Rahmatullah was to be released from US custody, it would be to Pakistan that that release would take place. In all the circumstances, I consider that the Court of Appeal was entitled to hold that a sufficient return to the writ was made by the Secretaries of State. I would dismiss the cross appeal. LORD PHILLIPS Introduction The issue on this appeal is whether the Court of Appeal was right, reversing the decision of the Divisional Court, to issue a writ of habeas corpus ad subjiciendum in favour of the respondent, Mr Rahmatullah. The writ of habeas corpus requires a respondent who is detaining a person (the prisoner) to produce him before the court and to justify his detention. The writ has its origin in the Middle Ages. Originally it was commonly used in circumstances where the detention was not in doubt but the issue was whether the detention was lawful. The writ would be issued ex parte on application by or on behalf of the prisoner, provided that he demonstrated a prima facie case. The issue of the legality of his detention would be determined after the prisoner had been produced to the court. By about 1780 the practice had changed. The applicant would request a rule nisi requiring the respondent to show cause why the writ should not issue. On the return of the rule any issue as to whether the prisoner was in fact detained by the respondent or as to the legality of such detention would be resolved, and if the applicant was successful an order would be made for his release. In 1938 the practice changed again to what it is today. The modern practice is set out in RSC Order 54, which appears in Schedule 1 to the CPR. The application for a writ of habeas corpus is made without notice, and is supported by evidence setting out the applicants case. If the judge is satisfied that the applicant has made out an arguable case, notice of the application will be given to the respondent and to other interested parties. The hearing of the application will then normally become the substantive hearing. If the applicant succeeds, the prisoners release will normally be ordered without more ado. In exceptional circumstances the court can, however, issue the writ so that a formal return is required. This is such an exceptional case. Habeas corpus will lie not merely against a defendant who is himself detaining the prisoner, but against a defendant who holds the prisoner in his custody or control through another. Typically habeas corpus lies against a defendant who is detaining the prisoner within the jurisdiction of the court. Where a defendant, who is within the jurisdiction, has unlawfully detained the prisoner within the jurisdiction and unlawfully taken him out of the jurisdiction, where he still holds him in his custody or control, habeas corpus will also lie. The English court issued the writ of habeas corpus in two cases where the defendant had unlawfully removed the prisoner from the jurisdiction and where it was uncertain whether the defendant retained sufficient control over the prisoner to procure his release. The object of the issue of the writ was to put that question to the test: Barnado v Ford [1892] AC 326; R v Secretary of State for Home Affairs v Ex p OBrien [1923] 2 KB 361. The principal issue canvassed in the present case has been whether what I shall call the OBrien approach should be adopted on the facts of this case. Mr Rahmatullah is in the custody of the United States forces. The effect of the issue of the writ would be to require the United Kingdom to request the United States to release him. Should habeas corpus issue in order to require the Secretaries of State to take that action? The Court of Appeal said yes. It was uncertain whether or not the United States would accede to such a request. The OBrien approach should be adopted to resolve that uncertainty. The writ was duly issued, the request was made and it did not procure the release of Mr Rahmatullah. In these circumstances the appeal in this case is a post mortem. Its only practical consequence is the impact that it may have on the cross appeal, under which Mr Rahmatullah seeks to impose on the Secretaries of State the obligation to take further steps to persuade the United States to release him. In Barnado v Ford and, to an extent in OBrien, there was uncertainty as to the relevant facts. The Secretaries of State contended that there was no such uncertainty in the present case. If there was any uncertainty it was not as to the facts but as to whether the United States would accede to a request from the United Kingdom to release Mr Rahmatullah. The Secretaries of State submitted that there was, in fact, no uncertainty as to this it was plain that the United States authorities would not accede to such a request. In these circumstances the approach adopted in OBrien was not appropriate. These submissions on the control issue were one of the two matters upon which the courts below and most of the argument in this Court focussed. The Secretaries of State further submitted that whether to request the United States authorities to release Mr Rahmatullah was a matter that fell within the conduct of the foreign affairs of this country which was an area into which the courts should not stray (forbidden territory). The forbidden territory issue was the other matter on which the courts below and most of the argument in this Court focussed. Before this Court there was a further matter that received some consideration. This was the illegality of Mr Rahmatullahs detention. In this country detention is, prima facie, a violation of the liberty of the subject (and for this purpose anyone detained within this jurisdiction is treated as a subject, regardless of his nationality). The customary object of habeas corpus is to make the respondent to the writ justify the detention of the prisoner in his custody. If he fails to do so, the illegality of the detention is presumed. In the courts below Mr Eadie QC, for the Secretaries of State, did not make submissions in respect of the legality of Mr Rahmatullahs detention. He submitted that, as Mr Rahmatullah was detained by the authorities of the United States, it was not appropriate to do so. This was another area of forbidden territory. Accordingly he took his stand on the issues relating to control. In this Court, when pressed with the question of illegality, Mr Eadie went so far as to submit that it was not clear that Mr Rahmatullah fell within the protection of either of the Geneva Conventions. He did not, however, advance a positive case on this matter. The facts of this case differ markedly from those of Barnado v Ford and OBrien. In those cases the defendant had unlawfully detained the prisoner within the jurisdiction and unlawfully removed him from the jurisdiction. Those cases thus proceeded on the basis that the defendant was responsible for the unlawful detention of the prisoner outside the jurisdiction. In this case no one has suggested that the forces of the United Kingdom acted unlawfully in detaining Mr Rahmatullah in Iraq, or in then transferring him to the custody of the United States forces. In so far as the United Kingdoms conduct has been criticised it is in failing to observe its obligations under one or other of the Geneva Conventions. I consider that an important, perhaps the most important, issue raised by this appeal is whether the OBrien approach should have been adopted on the very different facts of the present case. I shall call this the unexplored issue. The result in this case In a detailed and careful judgment Lord Kerr has set out the facts of this case and he has addressed the two issues that I have identified as having been those upon which the courts below and the argument have focussed. He has concluded that the appeal should be dismissed. He has held that it was proper to apply the OBrien approach to resolve the uncertainty as to whether the United States would respond to a request to release Mr Rahmatullah. He has further held that this did not involve trespassing on the forbidden territory. Putting the unexplored issue on one side, I agree with his judgment. Let me notionally rewrite the facts so as to render them similar to those in OBrien. Imagine that the United Kingdom authorities had unlawfully seized Mr Rahmatullah in this country, had clandestinely transported him to Afghanistan and there handed him over to the United States forces. And imagine that before doing so, they had entered into a memorandum of understanding with the United States under which the United States agreed to hand Mr Rahmatullah back to the United Kingdom if requested to do so. And imagine that there was uncertainty as to whether the United States would comply with the memorandum of agreement. And imagine that the United Kingdom, in the interests of good relations with the United States, did not wish to request the United States to do so. I would have had no hesitation in those circumstances in applying the OBrien approach. The reservations that I have in this case, and they are strong reservations, relate to the unexplored issue. As that issue has not been explored, it would not be right to resolve it against Mr Rahmatullah. I am, however, concerned that this case should not be treated as resolving it in his favour. In these circumstances I have decided that the right approach is to concur with the judgment of Lord Kerr, but to spell out my reservations in relation to the unexplored issue. So far as the cross appeal is concerned, I agree with the judgment of Lord Kerr, for the reasons that he gives. The unexplored issue Habeas corpus was a remedy usually sought on behalf of those who were unquestionably imprisoned within the jurisdiction. One reason for passing the Habeas Corpus Act 1679 was to expedite the procedure in respect of such prisoners. Section 11 of that Act was, however, intended to address the practice of taking prisoners outside the jurisdiction, thereby depriving them of the benefits of habeas corpus. This was made a criminal offence and an act giving rise to a claim for false imprisonment, the damages for which were set at a minimum of 500. More recently habeas corpus has commonly issued against a person who has been responsible for the unlawful detention and removal from the jurisdiction of a prisoner, provided that he has thereafter retained control over the prisoner. OBrien was such a case. Lord Kerr has set out the details of OBrien at paras 46 to 48 of his judgment. A critical issue in that case was whether the Home Secretary retained sufficient control over Mr OBrien to justify the issue of the writ. There was, however, an important antecedent issue namely, in the words of Bankes LJ at p 375: Whether since the establishment of the Irish Free State an order can be lawfully made by the Home Secretary for the internment in that State of a person at the date of the order residing in England. The major part of the judgment of Bankes LJ was devoted to resolving that issue. He concluded that the order for Mr OBriens detention had been unlawful. The major part of the judgment of Scrutton LJ was also devoted to the question of whether the Home Secretary, who ordered his arrest and deportation to Ireland (p 383) had done so lawfully. He held (p 387) that he had not. At the end of his judgment (p 391) he dealt quite shortly with the question of whether a writ of habeas corpus is the appropriate remedy for the illegality of the order and detention (my emphasis). Atkin LJ summarised the case comprehensively as follows at p 393: That a British subject resident in England should be exposed to summary arrest, transport to Ireland and imprisonment there without any conviction or order of a Court of justice, is an occurrence which has to be justified by the Minister responsible. It seems to me at least questionable whether a claim for habeas corpus would have succeeded if the authorities of the new Irish Free State had seized and imprisoned Mr OBrien on their own initiative, but were likely to be amenable to a request for his release by the United Kingdom, notwithstanding that Mr OBrien was a British subject. Such a situation would have resembled that which arose in the case of R (Abbasi) v Secretary of State for Foreign and Commonwealth Affairs [2002] EWCA Civ 1598; [2003] UKHRR 76. That case related to a British subject detained by the United States authorities in Guantanamo. The Court of Appeal was careful not to trespass on the forbidden territory, and no one in that case thought that it might be appropriate to seek the issue of a writ of habeas corpus. I know of no case in this jurisdiction where habeas corpus has issued in respect of a person, British or alien, held unlawfully outside the jurisdiction by a foreign State, on the simple ground that the United Kingdom was, or might be, in a position to prevail upon the foreign State to release him, although I note that the Federal Court of Australia has accepted that it was arguable that habeas corpus would lie in such circumstances in respect of an Australian citizen held by the United States in Guantanamo: Hicks v Ruddock [2007] FCA 299; (2007) 239 ALR 344. Does it make a difference that the United Kingdom, having lawfully detained Mr Rahmatullah in the field of battle, handed him over to United States, an act not unlawful in itself? Can Mr Rahmatullah invoke in domestic proceedings the obligations of the United Kingdom under the Geneva Conventions? Is that question affected by the fact that section 1(1) of the Geneva Conventions Act 1957 makes it a criminal offence to be party to a grave breach of any of the Geneva Conventions? And if domestic law does provide Mr Rahmatullah with a remedy, is this the exocet of habeas corpus, which pays no regard to forbidden territory, or does the remedy perhaps lie in judicial review and the doctrine of legitimate expectation? These are difficult questions. They have, unfortunately, not been addressed on this appeal. The object of this judgment is to make it plain that, despite the result of this appeal, so far as I am concerned they remain unresolved. Subject to this reservation I would, for the reasons given by Lord Kerr, dismiss the appeal and the cross appeal. LORD REED I agree that the appeal at the instance of Mr Rahmatullah should be dismissed, for the reasons given by Lord Kerr. I have also concluded that the appeal at the instance of the Secretaries of State should likewise be refused. I have however reached that conclusion for reasons which I would wish to express more narrowly than those given by Lord Kerr. I can explain those reasons relatively briefly. As Lord Phillips has explained, the writ of habeas corpus requires a respondent who is detaining a person (the prisoner) to produce him before the court and to justify his detention. If the respondent cannot justify his detention of the prisoner, he will be ordered to release him. His failure to comply with such an order will fall within the scope of the courts jurisdiction to deal with contempt. It follows that the appropriate respondent to the writ is in principle the person who has custody or control (or, as it has sometimes been put, actual custody or constructive custody) of the prisoner: that is to say, either the actual gaoler, or some other person who has such control over the imprisonment that he could order the release of the prisoner (R v Earl of Crewe, Ex p Sekgome [1910] 2 KB 576, 592 per Vaughan Williams LJ). As Scrutton LJ said in the case of R v Secretary of State for Home Affairs, Ex p OBrien [1923] 2 KB 361, 391, if the court is satisfied that the body whose production is asked is not in the custody, power or control of the person to whom it is sought to address the writ, a writ of habeas corpus is not the proper remedy. Cases can arise in which it is uncertain whether the respondent has sufficient control of the prisoners detention to be required to justify his detention and to be ordered to release him. In such a case, the court can issue the writ so that it can determine the question of control on the return, with a fuller knowledge of the facts. The cases of Barnardo v Ford [1892] AC 326 and Ex p OBrien are examples. These principles do not appear to me to have been in doubt at any stage of the present proceedings. The Divisional Court declined to issue the writ because they considered that the evidence as to the extent of control exercised by the Secretaries of State was clear, and that all that could be said was that there was a possibility that the United States of America might accede to a request by Her Majestys Government for the release of Mr Rahmatullah. The existence of such a possibility did not confer upon the Secretaries of State control over Mr Rahmatullahs detention (Rahmatullah v Secretary of State for Foreign and Commonwealth Affairs [2012] 1 WLR 1462, para 29, per Laws LJ). That approach was consistent with the principles which I have summarised. The difficulty with the Divisional Courts decision, however, was that the reasons given (at para 33) for concluding on the evidence that there was no control were unsatisfactory. In particular, the fact that the 2003 MoU was not enforceable in law did not entail that it was not enforceable de facto. The Court of Appeal on the other hand concluded, on the basis of its analysis of the evidence, that there was sufficient uncertainty to justify the issue of the writ. Although the primary facts were clear enough, it remained unclear whether the United Kingdom was in a position to make an effective demand for the return of Mr Rahmatullah from the custody of the United States. That appears to me to have been a reasonable conclusion. In terms of the 2003 MoU, in particular, the United Kingdom and the United States had agreed that persons such as Mr Rahmatullah, who had been detained by British forces and transferred to the custody of the United States, would be returned upon request. On its face, that agreement gave the Secretaries of State de facto control over Mr Rahmatullahs detention, on the reasonable assumption that the United States would act in accordance with the agreement it had entered into. In so far as the witness statements produced on behalf of the Secretaries of State emphasised that the MoU was not intended to be binding in law, they were inconclusive, since the issue was whether control existed in fact. In so far as they indicated that the Ministry of Defence believed that the 2003 MoU had been superseded by a 2008 MoU, they were again inconclusive, not least because the basis of that belief was unclear and appeared to be open to question. Lord Neuberger MR addressed the nub of the matter at para 44: Given the important principle established and applied in the Barnardo case [1892] AC 326, I would find it very unattractive to conclude that a writ in habeas corpus cannot issue where uncertainty as to the respondent's control over the applicant arises from the effectiveness and enforceability of certain agreements, even though such a writ can (and, absent any countervailing reasons, I think normally should) issue where the uncertainty arises from a need to investigate the facts. Indeed, I am inclined to think that such a distinction (i) does not work in theory (as in the end the effectiveness and enforceability in practice of an agreement is a matter of fact rather than law), and (ii) cannot really survive the decision and reasoning of this court in the O'Brien case [1923] 2 KB 361. I respectfully agree with those observations. None of the arguments presented in the present appeal has cast doubt on the Court of Appeals approach to the relevant legal principles or on its evaluation of the evidence. In particular, the argument that the issue of the writ was an impermissible interference in diplomatic relations must be rejected. The purpose of issuing the writ was to obtain clarification of the extent, if any, of the United Kingdoms ability to exercise control over the detention of Mr Rahmatullah. It did not entail that the United Kingdom must demonstrate its lack of such control by means of a practical test. Ultimately, however, if control existed, the courts obligation to order the release of someone whose detention was unlawful under English law (if that were established) could not be deflected by considerations of diplomacy. There are only two further points I would wish to mention. First, it is important, in my view, that Mr Rahmatullah was initially detained by British forces, with the consequence that the question was whether the Secretaries of States control over him had been relinquished. But for that factor, I would find it difficult to see why the English courts should entertain an application which would otherwise have no real or substantial connection with this jurisdiction. Secondly, like Lord Phillips, I would wish to reserve my opinion as to what he has described as the unexplored issue: as I would put it, the implications of the fact that there was no suggestion that the Secretaries of State had committed any civil wrong under English law in respect of the detention of Mr Rahmatullah. LORD CARNWATH AND LADY HALE We gratefully adopt Lord Kerrs exposition of the facts and the relevant law, which was not materially in dispute. We agree with him that the Secretaries of States appeal should be dismissed, but we differ respectfully on the cross appeal. We agree in particular that the crucial issue is that of control in the context of the law of habeas corpus, rather than legality as such. Legality is not an issue to be considered in the abstract. It arises as between the applicant and the respondent, and then only if the respondent has control. We do not need therefore to consider whether the detention is legal in any broader sense, in particular whether it is lawful from the perspective of the United States government. On the issue of control, in our view, the effect of the two MoUs concluded in 2003 and 2008 is crucial. The obligations of the UK under GC4 may explain why it had a continuing responsibility under international law, but control is a different issue turning on the realities of the relationship between the UK and the USA as the currently detaining power. It is doubtful whether provisions of an international treaty can on their own be relied on as giving control for the purposes of the domestic law of habeas corpus. It is particularly difficult in this case where it was known that the USA, unlike the UK, did not regard GC4 as applicable to the applicant, because of his alleged Al Qaeda links. In our view clause 4 of the 2003 MoU is central to this issue, because, on the evidence, it was designed specifically to ensure that the UK did retain control over the continuing legality of the detention, having regard to its own responsibilities under GC4 and the related domestic statute, and its knowledge of the different US position. There is a possible issue as to whether the 2008 MoU, which did not contain an equivalent clause, was intended to alter the position in relation to those already detained. The evidence is equivocal on this point. However, the document does not in terms have that effect. Further, it is notable that the 2008 MoU was signed by the Secretary of State for Defence in March 2009, very shortly after his statement to Parliament (referred to by Lord Kerr para 38) expressing regret at the governments failure in June 2004 to question the removal of the applicant to Afghanistan. It would be very remarkable, if at the very time that the Secretary of State was apologising to Parliament for that oversight, and at a time when the government remained responsible under international law, he was signing away his power to do anything about it. In the absence (as yet) of any contrary assertion on behalf of the US, we would proceed on the basis that clause 4 of the 2003 MoU is still effective in respect of the applicant. We are not unduly concerned by the unexplored issue identified by Lord Phillips and Lord Reed. Nor are we surprised that Mr Eadie did not attempt to explore it further. The strength of habeas corpus is its simplicity. There may be interesting theoretical arguments, turning on the different categories of illegality that may be in play: under international, criminal, or civil law. But the applicant is not concerned with such nice distinctions. For his purposes, detention once established is presumed to be illegal until the contrary is shown by the detainer or the person allegedly in control. The argument would have had to be that the removal of the applicant to, and his continuing detention in, Afghanistan may be illegal under international law as understood in this country, and they may also have involved breaches of domestic criminal law; but they did not and do not involve any tort under domestic civil law. Even if that is a valid line of distinction, which we doubt, we can well understand why it might not have seemed very attractive to those advising the Secretaries of State. In any event, we do not think the unexplored question arises in the form in which Lord Phillips states it. The case does not (and could not in our view) rest on the simple ground that the UK might be in a position to persuade the US to release the applicant (para 105). It rests on the much stronger basis that the UK was the original detaining power, that as such it has continuing responsibilities under GC4, and that it entered into an agreement with the USA giving it the necessary control for that purpose. As to the authorities, we accept of course that there are factual differences from O'Brien, in particular because in that case, unlike the present, the original detention was itself unlawful. However, habeas corpus is equally applicable where detention, originally lawful, later becomes unlawful. It is true also that in this case the illegality of the detention arose through the actions of the US, rather than the UK, and at a time when the UK no longer had actual custody. However, it is difficult to see why this should make a difference in principle. Since illegality of detention is presumed in favour of the applicant, it should not be a defence for the UK to say that it arose from someone else's actions, if the UK has the practical ability to bring it to an end. The cross appeal In considering the cross appeal, it is important not to lose sight of the extreme circumstances with which we are faced. The applicant was captured by British forces in Iraq. He may or may not have been fighting for the enemy. He says not; but even if he had been, he would have been entitled to release many years ago, if still in British custody, and he would have been released. Instead he has been imprisoned by the USA, which takes a different view of the requirements of international law, and accepts no limitations on its right to detain in these circumstances. As a result the applicant, as far as his family was concerned, vanished without trace in 2004, until he was rediscovered in Afghanistan years later. If our analysis of the appeal is correct, the basis for issuing the writ was, or should have been, the apparent control provided by the 2003 MoU, supported by the UK's continuing responsibility as detaining authority under GC4. Unfortunately, neither the UK letter nor the USA response began to address the real issue. The UK governments letter missed the point. It should have made it clear (i) that the 2003 memorandum of understanding, including clause 4, governed the case; (ii) that the UK government had an unqualified right under that memorandum of understanding to require the return of the detainee; and (iii) that it was irrelevant to that unqualified right whether or not the USA considered that they were entitled to continue to detain the prisoner under their own view of international law. They had made an undertaking to the UK which it remained their duty to honour. Similarly Mr Lietzau's letter for the US government, failed to mention, let alone respond to, the central point, which was not whether the US (from its own perspective) had a legal basis for detaining the applicant, but whether it accepted the distinct role of the UK as the detaining authority, and by virtue of the 2003 The answer accepted by the Court of Appeal is that, in the light of the Secretaries of States evidence, and in the language of diplomacy, the letter was to be read as an unequivocal refusal, and the court should not go behind that. As Lord Neuberger of Abbotsbury MR said (para 11): The language of diplomats representing different states discussing a problem can no doubt be very different from that of lawyers representing different interests discussing a problem or even the same problem, particularly when as here, the problem may be one of some sensitivity. We cannot accept this reasoning. We do not understand either why the US government should have had any diplomatic problem in expressing its position clearly, or still less why the court should acquiesce in that position. The US must have a view on the whether the UK retains an interest in the matter. Either it accepts that the UK retains an interest as detaining authority, and under the 2003 MoU, or it does not. One way or the other it should address the issue. Where liberty is at stake, it is not the court's job to speculate as to the political sensitivities which may be in play. For example, the US might plausibly have argued that whatever rights the UK may have had in 2003 have been effectively waived by its failure to take action in 2004, when its officials became aware of the transfer, or to raise the point at the time of the 2008 MoU. That might cause some marginal embarrassment to the UK officials at the time, but it is difficult to see what diplomatic difficulty it should cause now either to the US or the UK, or in any event why the courts should take notice of that as a factor. The fact that this argument has not been raised suggests that it may be a difficult one, so long as, under international law, the UK's responsibility under GC4 has not lapsed. Alternatively, it may be that both the UK and the US would prefer to leave the problem with the US authorities, rather than face up to what the UK would do with the applicant if he were to be transferred to them. That again is not a factor which should impress the court. The governing consideration for the court should be that the applicant remains in detention in Afghanistan, many years after the conflict in Iraq ceased, and after GC4 (as seen through British eyes) required him to be released. He has now also been assessed by the US Detainee Review Board as suitable for release. Although Mr Lietzau's letter refers to discussions with the Pakistan government over the terms of transfer to them, we still have no clear indication as when that is likely to happen. In these circumstances, in our view, the court should not rest on an inconclusive response, but should require the resubmission of the request in terms specifically relying on the UKs continuing responsibility under GC4 and its continuing rights under the MoU. We would therefore dismiss the appeal and allow the cross appeal. |
On 1 January 1973, the United Kingdom became a member of the European Economic Community (the EEC) and certain other associated European organisations. On that date, EEC law took effect as part of the domestic law of the United Kingdom, in accordance with the European Communities Act 1972 which had been passed ten weeks earlier. Over the next 40 years, the EEC expanded from nine to 28 member states, extended its powers or competences, merged with the associated organisations, and changed its name to the European Community in 1993 and to the European Union in 2009. In December 2015, the UK Parliament passed the European Union Referendum Act, and the ensuing referendum on 23 June 2016 produced a majority in favour of leaving the European Union. UK government ministers (whom we will call ministers or the UK government) thereafter announced that they would bring UK membership of the European Union to an end. The question before this Court concerns the steps which are required as a matter of UK domestic law before the process of leaving the European Union can be initiated. The particular issue is whether a formal notice of withdrawal can lawfully be given by ministers without prior legislation passed in both Houses of Parliament and assented to by HM The Queen. It is worth emphasising that nobody has suggested that this is an inappropriate issue for the courts to determine. It is also worth emphasising that this case has nothing to do with issues such as the wisdom of the decision to withdraw from the European Union, the terms of withdrawal, the timetable or arrangements for withdrawal, or the details of any future relationship with the European Union. Those are all political issues which are matters for ministers and Parliament to resolve. They are not issues which are appropriate for resolution by judges, whose duty is to decide issues of law which are brought before them by individuals and entities exercising their rights of access to the courts in a democratic society. Some of the most important issues of law which judges have to decide concern questions relating to the constitutional arrangements of the United Kingdom. These proceedings raise such issues. As already indicated, this is not because they concern the United Kingdoms membership of the European Union; it is because they concern (i) the extent of ministers power to effect changes in domestic law through exercise of their prerogative powers at the international level, and (ii) the relationship between the UK government and Parliament on the one hand and the devolved legislatures and administrations of Scotland, Wales and Northern Ireland on the other. The main issue on this appeal concerns the ability of ministers to bring about changes in domestic law by exercising their powers at the international level, and it arises from two features of the United Kingdoms constitutional arrangements. The first is that ministers generally enjoy a power freely to enter into and to terminate treaties without recourse to Parliament. This prerogative power is said by the Secretary of State for Exiting the European Union to include the right to withdraw from the treaties which govern UK membership of the European Union (the EU Treaties). The second feature is that ministers are not normally entitled to exercise any power they might otherwise have if it results in a change in UK domestic law, unless statute, ie an Act of Parliament, so provides. The argument against the Secretary of State is that this principle prevents ministers withdrawing from the EU Treaties, until effectively authorised to do so by a statute. Most of the devolution issues arise from the contention that the terms on which powers have been statutorily devolved to the administrations of Scotland, Wales and Northern Ireland are such that, unless Parliament provides for such withdrawal by a statute, it would not be possible for formal notice of the United Kingdoms withdrawal from the EU Treaties to be given without first consulting or obtaining the agreement of the devolved legislatures. And, in the case of Northern Ireland, there are certain other arguments of a constitutional nature. The main issue was raised in proceedings brought by Gina Miller and Deir dos Santos (the applicants) against the Secretary of State for Exiting the European Union in the Divisional Court of England and Wales. Those proceedings came before Lord Thomas of Cwmgiedd LCJ, Sir Terence Etherton MR and Sales LJ. They ruled against the Secretary of State in a judgment given on 3 November 2016 R (Miller) v The Secretary of State for Exiting the European Union [2016] EWHC 2768 (Admin). This decision now comes to this Court pursuant to an appeal by the Secretary of State. The applicants are supported in their opposition to the appeal by a number of people, including (i) a group deriving rights of residence in the UK under EU law on the basis of their relationship with a British national or with a non British EU national exercising EU Treaty rights to be in the United Kingdom, (ii) a group deriving rights of residence from persons permitted to reside in the UK because of EU rights, including children and carers, (iii) a group mostly of UK citizens residing elsewhere in the European Union, (iv) a group who are mostly non UK EU nationals residing in the United Kingdom, and (v) the Independent Workers Union of Great Britain. The Secretary of States case is supported by Lawyers for Britain Ltd, a group of lawyers. Devolution arguments relating to Northern Ireland were raised in proceedings brought by Steven Agnew and others and by Raymond McCord against the Secretary of State for Exiting the European Union and the Secretary of State for Northern Ireland. Those arguments were rejected by Maguire J in a judgment given in the Northern Ireland High Court on 28 October 2016 Re McCord, Judicial Review [2016] NIQB 85. On application by the Attorney General for Northern Ireland, Maguire J referred four of the issues in the Agnew case to this court for determination. Following an appeal against Maguire Js decision, the Northern Ireland Court of Appeal has also referred one issue to this Court. The Attorney General for Northern Ireland supports the Secretaries of States case that no statute is required before ministers can give notice of withdrawal. In addition, there are interventions on devolution issues by the Lord Advocate on behalf of the Scottish government and the Counsel General for Wales on behalf of the Welsh government; they also rely on the Sewel Convention (as explained in paras 137 to 139 below). They support the argument that a statute is required before ministers can give notice of withdrawal, as do the advocates for Mr McCord and for Mr Agnew. We are grateful to all the advocates and solicitors involved for the clarity and skill with which the respective cases have been presented orally and in writing, and for the efficiency with which the very substantial documentation was organised. We have also been much assisted by a number of illuminating articles written by academics following the handing down of the judgment of the Divisional Court. It is a tribute to those articles that they have resulted in the arguments advanced before this Court being somewhat different from, and more refined than, those before that court. As mentioned in paras 7 and 9 above, the appellant in the English and Welsh appeal is the Secretary of State for Exiting the European Union, and the Northern Irish proceedings were brought against the Secretary of State for Exiting the European Union and the Secretary of State for Northern Ireland. For the sake of simplicity, we will hereafter refer to either or both Secretaries of State simply as the Secretary of State. The United Kingdoms Relationship with the European Union 1971 2016 The relationship between the UK and the EU 1971 1975 From about 1960, the UK government was in negotiations with the then member states of the EEC with a view to the United Kingdom joining the EEC and associated European organisations. In October 1971, when it had become apparent that those negotiations were likely to be successful, and following debates in each House, the House of Lords and the House of Commons each resolved to approve Her Majestys Governments decision of principle to join the European Communities on the basis of the arrangements which have been negotiated. In the course of the debate in the House of Commons, the Prime Minister, Mr Heath, said that he did not think that any Prime Minister has in time of peace asked the House to take a positive decision of such importance as I am asking it to take, and that he could not over emphasise tonight the importance of the vote which is being taken, the importance of the issue, the scale and quality of the decision and the impact that it will have equally inside and outside Britain. In a debate in the House of Commons in January 1972, in which the earlier resolution was effectively re affirmed, Mr Rippon, the Chancellor of the Duchy of Lancaster, said I do not think Parliament in negotiations on a treaty has ever been brought so closely into the process of treaty making as on the present occasion, adding that we all accept the unique character of the Treaty of Accession. On 22 January 1972, two days after that later debate, ministers signed a Treaty of Accession which provided that the United Kingdom would become a member of the EEC on 1 January 1973 and would accordingly be bound by the 1957 Treaty of Rome, which was then the main treaty in relation to the EEC, and by certain other connected treaties. As with most international treaties, the 1972 Accession Treaty was not binding unless and until it was formally ratified by the United Kingdom. A Bill was then laid before Parliament, and after it had been passed by both Houses, it received Royal assent on 17 October 1972, when it became the European Communities Act 1972. The following day, 18 October 1972, ministers ratified the 1972 Accession Treaty on behalf of the United Kingdom, which accordingly became a member of the EEC on 1 January 1973. The long title of the 1972 Act described its purpose as to make provision in connection with the enlargement of the European Communities to include the United Kingdom . Part I of the 1972 Act consisted of sections 1 to 3, which contained its General Provisions, and they are of central importance to these proceedings. Section 1(2) of the 1972 Act contained some important definitions. The Communities meant the EEC and associated communities (now amended to the EU meaning the European Union). And the Treaties and the Community Treaties (now amended to the EU Treaties) were the treaties described in Schedule 1 (which were the existing treaties governing the rules and powers of the EEC at that time), the 1972 Accession Treaty itself, and any other treaty entered into by any of the Communities, with or without any of the member States, or entered into, as a treaty ancillary to any of the Treaties, by the United Kingdom. The use of a capital T in the Treaties and in the EU Treaties was significant. It meant that future treaties which were concerned with changing the membership or redefining the rules of the EEC could only become Treaties and EU Treaties and have effect in UK law as such if they were added to section 1(2) by an amending statute. By contrast, ancillary treaties covered other treaties entered into by the European Union or by the United Kingdom as a treaty ancillary to the EU Treaties. By virtue of section 1(3), even such an ancillary treaty did not take effect in UK law unless and until it was declared to do so by an Order in Council which had first to be approved in draft form by resolution of each House of Parliament. Section 2 of the 1972 Act was headed General Implementation of Treaties. Section 2(1) of the 1972 Act was in these terms: All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly Section 2(2) of the 1972 Act provided that Her Majesty may by Order in Council, and any designated Minister or department may by regulations, make provision (a) for the purpose of implementing any Community [now EU] obligation of the United Kingdom (which is defined as any obligation created or arising by or under the Treaties) or enabling any rights enjoyed by the United Kingdom under or by virtue of the Treaties to be exercised, and (b) for ancillary purposes, including the operation from time to time of subsection (1). Subsection (2) has since been amended, but nothing hangs on the amendments for present purposes. Schedule 2 to the 1972 Act contained Provisions as to Subordinate Legislation in relation to the powers conferred by section 2(2). Section 2(4) provided as follows: The provision that may be made under subsection (2) above includes . any such provision (of any such extent) as might be made by Act of Parliament, and any enactment passed or to be passed, other than one contained in this Part of this Act, shall be construed and have effect subject to the foregoing provisions of this section Section 3 of the 1972 Act provided, among other things, for any question as to the meaning and effect of the Treaties, or as to the validity, meaning or effect of any Community instrument (now EU instrument) to be treated as a question of EU law by the UK courts, and it further provided for such determination to be made in accordance with principles laid down by the European Court of Justice (the Court of Justice) or, if necessary, to be referred to the Court of Justice. Part II of the 1972 Act, which contained sections 4 to 12, and incorporated Schedules 3 and 4, set out a number of statutory repeals and amendments which were needed to enable UK domestic law to comply with the requirements of EU law, that is the law from time to time laid down in the EU Treaties, Directives and Regulations, as interpreted by the Court of Justice. Following a manifesto commitment made during a general election in 1974, the UK government decided to hold a referendum on whether the United Kingdom should remain in the EEC. To that end, it laid a Bill before Parliament which was duly enacted as the Referendum Act 1975. The referendum pursuant to that Act took place on 5 June 1975, and a majority of those who voted were in favour of remaining in the EEC. The relationship between the UK and the EU after 1975 In the past 40 years, over 20 treaties relating to the EEC, the European Community and the European Union were signed on behalf of the member states, in the case of the United Kingdom by ministers. After being signed, each such treaty was then added to the list of Treaties in section 1(2) of the 1972 Act through the medium of an amendment made to that statute by a short appropriately worded statute passed by Parliament, and the treaty was then ratified by the United Kingdom. Some of these Treaties were concerned with redefining and expanding the competences of the EEC, the European Community and the European Union and changing the constitutional role of the European Parliament within the European Community or Union. They included the Single European Act signed in 1986, Titles II, III and IV of the Maastricht Treaty on European Union of 7 February 1992 (the TEU), the 1997 Amsterdam Treaty, the 2001 Treaty of Nice, and the Treaty of Lisbon amending the TEU and the Treaty on the Functioning of the European Union (TFEU), both signed in Lisbon on 13 December 2007 see respectively section 1(2)(j), added by the European Communities (Amendment) Act 1986; section 1(2)(k), added by the European Communities (Amendment) Act 1993; section 1(2)(o), added by the European Communities (Amendment) Act 1998; section 1(2)(p), added by the European Communities (Amendment) Act 2002; and section 1(2)(s), added by the European Union (Amendment) Act 2008. The Treaty of Lisbon introduced into the EU Treaties for the first time an express provision entitling a member state to withdraw from the European Union. It did this by inserting a new article 50 into the TEU. This article (article 50) provides as follows: 1. Any member state may decide to withdraw from the Union in accordance with its own constitutional requirements. 2. A member state which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that state, setting out the arrangements for its withdrawal 3. The Treaties shall cease to apply to the state in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the member state concerned, unanimously decides to extend this period. In these proceedings, it is common ground that notice under article 50(2) (which we shall call Notice) cannot be given in qualified or conditional terms and that, once given, it cannot be withdrawn. Especially as it is the Secretary of States case that, even if this common ground is mistaken, it would make no difference to the outcome of these proceedings, we are content to proceed on the basis that that is correct, without expressing any view of our own on either point. It follows from this that once the United Kingdom gives Notice, it will inevitably cease at a later date to be a member of the European Union and a party to the EU Treaties. After 1975, in addition to the amending statutes referred to in para 24 above, statutes were enacted to give effect to changes in the way that members of the European Parliament were selected. The first was the European Assembly Elections Act 1978, which contained in section 6 a stipulation that no new treaty providing for an increase in the powers of the European Assembly (as it then was) should be ratified unless approved by an Act of Parliament. This provision was re enacted as section 12 of the European Parliamentary Elections Act 2002. Section 1 of the 2002 Act provided for a specific number of Members of the European Parliament (MEPs) for specified regions of the United Kingdom. Section 8 of the 2002 Act stated that a person was entitled to vote in elections to the European Parliament if he or she satisfied certain residence requirements, and section 10 identified the (very limited) categories of people who were disqualified from standing as MEPs. In addition to adding the Treaty of Lisbon and the TFEU to section 1(2) of the 1972 Act, the 2008 Act, referred to at the end of para 24 above, contained certain restrictions on the UK governments agreement to changes in the rules of the European Union. Section 5 provided that any treaty which amended the TEU or the TFEU by altering the competences of the European Union, or which altered the decision making processes of the European Union or its institutions in such a way as to dilute the influence of individual member states, should not be ratified by ministers unless approved by Act of Parliament. Section 6 of the 2008 Act stated that ministers should not support any decision under certain specified articles of the TEU and of the TFEU unless both Houses of Parliament had approved a motion sanctioning that course. Subject to an immaterial exception, the European Union Act 2011 repealed and replaced sections 5 and 6 of the 2008 Act. Part I of the 2011 Act included section 1 which was Introductory, sections 2 to 10, which imposed Restrictions both relating to amendments of TEU and TFEU and relating to other decisions under TEU and TFEU, and sections 11 to 13, which related to the conduct of referendums. Sections 2 to 5 imposed restrictions on the ratification by the United Kingdom of any treaty which amended or replaced TEU or TFEU, and also on ministers approving certain specified types of EU decisions under the so called simplified revision procedure. Those restrictions were that (a) a statement relating to the treaty or decision had to be laid before Parliament, (b) the treaty or decision had to be approved by statute, and, (c) in broad terms, where the treaty or decision increased the competences of the European Union, it had to be approved in a UK wide referendum. Section 6 provided that ministers should not, without prior approval both in a statute and in a UK wide referendum, vote in favour of certain decisions, including those which resulted in a dilution in the influence of individual member states in relation to a number of different articles of the TEU and TFEU including in particular article 50(3). Sections 7 to 10 of the 2011 Act contained further restrictions on ministers voting in favour of certain measures under the TEU and TFEU without the prior approval of Parliament. Section 18 of the 2011 Act provided as follows: Directly applicable or directly effective EU law (that is, the rights, powers, liabilities, obligations, restrictions, remedies and procedures referred to in section 2(1) of the European Communities Act 1972) falls to be recognised and available in law in the United Kingdom only by virtue of that Act or where it is required to be recognised and available in law by virtue of any other Act. Following a manifesto commitment in the 2015 general election to hold a referendum on the issue of EU membership, the UK government laid before Parliament a Bill which became the 2015 Act. Section 1 provided that [a] referendum is to be held on a date no later than 31 December 2017 on whether the United Kingdom should remain a member of the European Union, and it specified the question which should appear on the ballot papers. The remaining sections were concerned with questions such as entitlement to vote, the conduct of the referendum, rules about campaigning and financial controls. The referendum duly took place throughout the United Kingdom on 23 June 2016, and it resulted in a majority in favour of leaving the European Union. Ministers have made it clear that the UK government intends to implement the result of the referendum and to give Notice by the end of March 2017. On 7 December 2016, following a debate, the House of Commons resolved [to recognise] that this House should respect the wishes of the United Kingdom as expressed in the referendum on 23 June; and further [to call] on the Government to invoke article 50 by 31 March 2017. The main issue: the 1972 Act and prerogative powers Summary of the arguments on the main issue The Secretary of States case is based on the existence of the well established prerogative powers of the Crown to enter into and to withdraw from treaties. He contends that ministers are entitled to exercise this power in relation to the EU Treaties, and therefore to give Notice without the need for any prior legislation. Following the giving of Notice by the end of March 2017, ministers intend that a Great Repeal Bill will be laid before Parliament. This will repeal the 1972 Act and, wherever practical, it will convert existing EU law into domestic law at least for a transitional period. Under article 50, withdrawal will occur not more than two years after the Notice is given (unless that period is extended by unanimous agreement among the other member states), and it is intended that the Great Repeal Bill will come into force at that point. As was made clear by Lord Browne Wilkinson in R v Secretary of State for the Home Department, Ex p Fire Brigades Union [1995] 2 AC 513, 552, ministers intentions are not law, and the courts cannot proceed on the assumption that they will necessarily become law. That is a matter for Parliament to decide in due course. The issues before us must be resolved in accordance with the law as it stands, as the Secretary of State rightly accepted. The applicants case in that connection is that when Notice is given, the United Kingdom will have embarked on an irreversible course that will lead to much of EU law ceasing to have effect in the United Kingdom, whether or not Parliament repeals the 1972 Act. As Lord Pannick QC put it for Mrs Miller, when ministers give Notice they will be pulling the trigger which causes the bullet to be fired, with the consequence that the bullet will hit the target and the Treaties will cease to apply. In particular, he said, some of the legal rights which the applicants enjoy under EU law will come to an end. This, he submitted, means that the giving of Notice would pre empt the decision of Parliament on the Great Repeal Bill. It would be tantamount to altering the law by ministerial action, or executive decision, without prior legislation, and that would not be in accordance with our law. Following opening remarks made by HM Attorney General, Mr Eadie QC in his submissions on behalf of the Secretary of State, did not challenge much if any of the factual basis of these assertions, but he did challenge the conclusions that were said to derive from them. He argued that the fact that significant legal changes will follow from withdrawing from the EU Treaties does not prevent the giving of Notice, because the prerogative power to withdraw from treaties was not excluded by the terms of the 1972 Act, and that, in any event, acts of the government in the exercise of the prerogative can alter domestic law. More particularly, he contended that the 1972 Act gave effect to EU law only insofar as the EU Treaties required it, and that that effect was therefore contingent upon the United Kingdom remaining a party to those treaties. Accordingly, he said, in the 1972 Act Parliament had effectively stipulated that, or had sanctioned the result whereby, EU law should cease to have domestic effect in the event that ministers decided to withdraw from the EU Treaties. Mr Eadie also relied on the fact that, while statutes enacted since 1972 have imposed Parliamentary controls over the exercise of prerogative powers in relation to the EU Treaties, they have not touched the prerogative power to withdraw from them. Implicitly, therefore, he contended, Parliament has recognised that the power to withdraw from such treaties exists and is exercisable without prior legislation. Mr Eadie also suggested that the 2015 Act was enacted on the assumption that the result of the referendum would be decisive. Mr Eadies reliance on the legislation since 1972 was largely for the purpose of supporting his argument on the effect of the 1972 Act, but he did raise an argument that the legislation from 1972 to 2015 should be looked at as a whole. Also, in answer to a question from the Court, he adopted a suggestion that, even if Parliamentary authority would otherwise have been required, the 2015 Act and the subsequent referendum dispensed with that requirement, but he did not develop that argument, in our view realistically. Before addressing these arguments, it is right to consider some relevant constitutional principles and in particular the Royal prerogative. The constitutional background Unlike most countries, the United Kingdom does not have a constitution in the sense of a single coherent code of fundamental law which prevails over all other sources of law. Our constitutional arrangements have developed over time in a pragmatic as much as in a principled way, through a combination of statutes, events, conventions, academic writings and judicial decisions. Reflecting its development and its contents, the UK constitution was described by the constitutional scholar, Professor AV Dicey, as the most flexible polity in existence Introduction to the Study of the Law of the Constitution (8th ed, 1915), p 87. Originally, sovereignty was concentrated in the Crown, subject to limitations which were ill defined and which changed with practical exigencies. Accordingly, the Crown largely exercised all the powers of the state (although it appears that even in the 11th century the King rarely attended meetings of his Council, albeit that its membership was at his discretion). However, over the centuries, those prerogative powers, collectively known as the Royal prerogative, were progressively reduced as Parliamentary democracy and the rule of law developed. By the end of the 20th century, the great majority of what had previously been prerogative powers, at least in relation to domestic matters, had become vested in the three principal organs of the state, the legislature (the two Houses of Parliament), the executive (ministers and the government more generally) and the judiciary (the judges). It is possible to identify a number of seminal events in this history, but a series of statutes enacted in the twenty years between 1688 and 1707 were of particular legal importance. Those statutes were the Bill of Rights 1688/9 and the Act of Settlement 1701 in England and Wales, the Claim of Right Act 1689 in Scotland, and the Acts of Union 1706 and 1707 in England and Wales and in Scotland respectively. (Northern Ireland joined the United Kingdom pursuant to the Acts of Union 1800 in Britain and Ireland). The independence of the judiciary was formally recognised in these statutes. In the broadest sense, the role of the judiciary is to uphold and further the rule of law; more particularly, judges impartially identify and apply the law in every case brought before the courts. That is why and how these proceedings are being decided. The law is made in or under statutes, but there are areas where the law has long been laid down and developed by judges themselves: that is the common law. However, it is not open to judges to apply or develop the common law in a way which is inconsistent with the law as laid down in or under statutes, ie by Acts of Parliament. This is because Parliamentary sovereignty is a fundamental principle of the UK constitution, as was conclusively established in the statutes referred to in para 41 above. It was famously summarised by Professor Dicey as meaning that Parliament has the right to make or unmake any law whatsoever; and further, no person or body is recognised by the law as having a right to override or set aside the legislation of Parliament op cit, p 38. The legislative power of the Crown is today exercisable only through Parliament. This power is initiated by the laying of a Bill containing a proposed law before Parliament, and the Bill can only become a statute if it is passed (often with amendments) by Parliament (which normally but not always means both Houses of Parliament) and is then formally assented to by HM The Queen. Thus, Parliament, or more precisely the Crown in Parliament, lays down the law through statutes or primary legislation as it is also known and not in any other way. In the early 17th century Case of Proclamations (1610) 12 Co Rep 74, Sir Edward Coke CJ said that the King by his proclamation or other ways cannot change any part of the common law, or statute law, or the customs of the realm. Although this statement may have been controversial at the time, it had become firmly established by the end of that century. In England and Wales, the Bill of Rights 1688 confirmed that the pretended power of suspending of laws or the execution of laws by regall authority without consent of Parlyament is illegall and that the pretended power of dispensing with laws or the execution of laws by regall authoritie as it hath beene assumed and exercised of late is illegall. In Scotland, the Claim of Right 1689 was to the same effect, providing that all Proclamationes asserting ane absolute power to Cass [ie to quash] annull and Dissable lawes are Contrair to Law. And article 18 of the Acts of Union of 1706 and 1707 provided that (with certain irrelevant exceptions) all laws in Scotland should remain in the same force as before but alterable by the Parliament of Great Britain. The Crowns administrative powers are now exercised by the executive, ie by ministers who are answerable to the UK Parliament. However, consistently with the principles established in the 17th century, the exercise of those powers must be compatible with legislation and the common law. Otherwise, ministers would be changing (or infringing) the law, which, as just explained, they cannot do. A classic statement of the position was given by Lord Parker of Waddington in The Zamora [1916] 2 AC 77, 90: The idea that the King in Council, or indeed any branch of the Executive, has power to prescribe or alter the law to be administered by Courts of law in this country is out of harmony with the principles of our Constitution. It is true that, under a number of modern statutes, various branches of the Executive have power to make rules having the force of statutes, but all such rules derive their validity from the statute which creates the power, and not from the executive body by which they are made. No one would contend that the prerogative involves any power to prescribe or alter the law administered in Courts of Common Law or Equity. It is true that ministers can make laws by issuing regulations and the like, often known as secondary or delegated legislation, but (save in limited areas where a prerogative power survives domestically, as exemplified by the cases mentioned in paras 52 and 53 below) they can do so only if authorised by statute. So, if the regulations are not so authorised, they will be invalid, even if they have been approved by resolutions of both Houses under the provisions of the relevant enabling Act for a recent example see R (The Public Law Project) v Lord Chancellor [2016] AC 1531. The Royal prerogative and Treaties The Royal prerogative encompasses the residue of powers which remain vested in the Crown, and they are exercisable by ministers, provided that the exercise is consistent with Parliamentary legislation. In Burmah Oil Co (Burma Trading) Ltd v Lord Advocate [1965] AC 75, 101, Lord Reid explained that the Royal prerogative is a source of power which is only available for a case not covered by statute. Professor HWR Wade summarised the position in his introduction to the first edition of what is now Wade on Administrative Law (1961), p 13: [T]he residual prerogative is now confined to such matters as summoning and dissolving Parliament, declaring war and peace, regulating the armed forces in some respects, governing certain colonial territories, making treaties (though as such they cannot affect the rights of subjects), and conferring honours. The one drastic internal power of an administrative kind is the power to intern enemy aliens in time of war. Thus, consistently with Parliamentary sovereignty, a prerogative power however well established may be curtailed or abrogated by statute. Indeed, as Professor Wade explained, most of the powers which made up the Royal prerogative have been curtailed or abrogated in this way. The statutory curtailment or abrogation may be by express words or, as has been more common, by necessary implication. It is inherent in its residual nature that a prerogative power will be displaced in a field which becomes occupied by a corresponding power conferred or regulated by statute. This is what happened in the two leading 20th century cases on the topic, Attorney General v De Keysers Royal Hotel Ltd [1920] AC 508 and Fire Brigades Union cited above. As Lord Parmoor explained in De Keyser at p 575, when discussing the prerogative power to take a subjects property in time of war: The constitutional principle is that when the power of the Executive to interfere with the property or liberty of subjects has been placed under Parliamentary control, and directly regulated by statute, the Executive no longer derives its authority from the Royal Prerogative of the Crown but from Parliament, and that in exercising such authority the Executive is bound to observe the restrictions which Parliament has imposed in favour of the subject. In Burmah Oil cited above, at p 101, Lord Reid described prerogative powers as a relic of a past age, but that description should not be understood as implying that the Royal prerogative is either anomalous or anachronistic. There are important areas of governmental activity which, today as in the past, are essential to the effective operation of the state and which are not covered, or at least not completely covered, by statute. Some of them, such as the conduct of diplomacy and war, are by their very nature at least normally best reserved to ministers just as much in modern times as in the past, as indeed Lord Reid himself recognised in Burmah Oil at p 100. Consistently with paras 44 to 46, and the passage quoted from Professor Wade in para 47 above, it is a fundamental principle of the UK constitution that, unless primary legislation permits it, the Royal prerogative does not enable ministers to change statute law or common law. As Lord Hoffmann observed in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] AC 453, para 44, since the 17th century the prerogative has not empowered the Crown to change English common or statute law. This is, of course, just as true in relation to Scottish, Welsh or Northern Irish law. Exercise of ministers prerogative powers must therefore be consistent both with the common law as laid down by the courts and with statutes as enacted by Parliament. Further, ministers cannot frustrate the purpose of a statute or a statutory provision, for example by emptying it of content or preventing its effectual operation. Thus, ministers could not exercise prerogative powers at the international level to revoke the designation of Laker Airways under an aviation treaty as that would have rendered a licence granted under a statute useless: Laker Airways Ltd v Department of Trade [1977] QB 643 see especially at pp 718 719 and 728 per Roskill LJ and Lawton LJ respectively. And in Fire Brigades Union cited above, at pp 551 552, Lord Browne Wilkinson concluded that ministers could not exercise the prerogative power to set up a scheme of compensation for criminal injuries in such a way as to make a statutory scheme redundant, even though the statute in question was not yet in force. And, as already mentioned in para 35 above, he also stated that it was inappropriate for ministers to base their actions (or to invite the court to make any decision) on the basis of an anticipated repeal of a statutory provision as that would involve ministers (or the court) pre empting Parliaments decision whether to enact that repeal. The fact that the exercise of prerogative powers cannot change the domestic law does not mean that such an exercise is always devoid of domestic legal consequences. There are two categories of case where exercise of the prerogative can have such consequences. The first is where it is inherent in the prerogative power that its exercise will affect the legal rights or duties of others. Thus, the Crown has a prerogative power to decide on the terms of service of its servants, and it is inherent in that power that the Crown can alter those terms so as to remove rights, albeit that such a power is susceptible to judicial review: Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374. The Crown also has a prerogative power to destroy property in wartime in the interests of national defence (although at common law compensation was payable: Burmah Oil cited above). While the exercise of the prerogative power in such cases may affect individual rights, the important point is that it does not change the law, because the law has always authorised the exercise of the power. The second category comprises cases where the effect of an exercise of prerogative powers is to change the facts to which the law applies. Thus, the exercise of the prerogative to declare war will have significant legal consequences: actions which were previously lawful may become treasonable (as in Joyce v Director of Public Prosecutions [1946] AC 347), and some people will become enemy aliens, whose property is liable to confiscation. Likewise, in Post Office v Estuary Radio Ltd [1968] 2 QB 740 the Crowns exercise of its prerogative to extend UK territorial waters resulted in the criminalisation of broadcasts from ships in the extended area, which had previously been lawful. These are examples where the exercise of the prerogative power alters the status of a person, thing or activity so that an existing rule of law comes to apply to it. However, in such cases the exercise has not created or changed the law, merely the extent of its application. The most significant area in which ministers exercise the Royal prerogative is the conduct of the United Kingdoms foreign affairs. This includes diplomatic relations, the deployment of armed forces abroad, and, particularly in point for present purposes, the making of treaties. There is little case law on the power to terminate or withdraw from treaties, but, as a matter of both logic and practical necessity, it must be part of the treaty making prerogative. As Lord Templeman put it in JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, 476, [t]he Government may negotiate, conclude, construe, observe, breach, repudiate or terminate a treaty. Subject to any restrictions imposed by primary legislation, the general rule is that the power to make or unmake treaties is exercisable without legislative authority and that the exercise of that power is not reviewable by the courts see Civil Service Unions case cited above, at pp 397 398. Lord Coleridge CJ said that the Queen acts throughout the making of the treaty and in relation to each and every of its stipulations in her sovereign character, and by her own inherent authority Rustomjee v The Queen (1876) 2 QBD 69, 74. This principle rests on the so called dualist theory, which is based on the proposition that international law and domestic law operate in independent spheres. The prerogative power to make treaties depends on two related propositions. The first is that treaties between sovereign states have effect in international law and are not governed by the domestic law of any state. As Lord Kingsdown expressed it in Secretary of State in Council of India v Kamachee Boye Sahaba (1859) 13 Moo PCC 22, 75, treaties are governed by other laws than those which municipal courts administer. The second proposition is that, although they are binding on the United Kingdom in international law, treaties are not part of UK law and give rise to no legal rights or obligations in domestic law. It is only on the basis of these two propositions that the exercise of the prerogative power to make and unmake treaties is consistent with the rule that ministers cannot alter UK domestic law. Thus, in Higgs v Minister of National Security [2000] 2 AC 228, 241, Lord Hoffmann pointed out that the fact that treaties are not part of domestic law was the corollary of the Crowns treaty making power. In JH Rayner cited above, at p 500, Lord Oliver of Aylmerton put it thus: As a matter of the constitutional law of the United Kingdom, 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. Quite simply, a treaty is not part of English law unless and until it has been incorporated into the law by legislation. So far as individuals are concerned, it is res inter alios acta [ie something done between others], from which they cannot derive rights and by which they cannot be deprived of rights or subjected to obligations; and it is outside the purview of the court not only because it is made in the conduct of foreign relations, which are a prerogative of the Crown, but also because, as a source of rights and obligations, it is irrelevant. It can thus fairly be said that the dualist system is a necessary corollary of Parliamentary sovereignty, or, to put the point another way, it exists to protect Parliament not ministers. Professor Campbell McLachlan in Foreign Relations Law (2014), para 5.20, neatly summarises the position in the following way: If treaties have no effect within domestic law, Parliaments legislative supremacy within its own polity is secure. If the executive must always seek the sanction of Parliament in the event that a proposed action on the international plane will require domestic implementation, parliamentary sovereignty is reinforced at the very point at which the legislative power is engaged. While ministers have in principle an unfettered power to make treaties which do not change domestic law, it had become fairly standard practice by the late 19th century for treaties to be laid before both Houses of Parliament at least 21 days before they were ratified, to enable Parliamentary objections to be heard. In 1924, following an indication by the previous government that it did not regard itself as bound by the practice, Arthur Ponsonby, the Parliamentary Under Secretary of State for Foreign Affairs, assured the House of Commons that ministers would in future adhere to this practice, which became known as the Ponsonby Convention. The convention was superseded and formalised by section 20 of the Constitutional Reform and Governance Act 2010. However, by virtue of section 23(1) of that Act, this section does not apply to new EU Treaties, because they are governed by the more specific statutory controls discussed in paras 28 and 29 above. With that background, we turn to analyse the effect of the 1972 Act and the arguments as to whether, in the absence of prior authority from Parliament in the form of a statute, the giving of Notice by ministers would be ineffective under the United Kingdoms constitutional requirements, as it would otherwise impermissibly result in a change in domestic law. The status and character of the 1972 Act Many statutes give effect to treaties by prescribing the content of domestic law in the areas covered by them. The 1972 Act does this, but it does considerably more as well. It authorises a dynamic process by which, without further primary legislation (and, in some cases, even without any domestic legislation), EU law not only becomes a source of UK law, but actually takes precedence over all domestic sources of UK law, including statutes. This may sound rather dry or technical to many people, but in constitutional terms the effect of the 1972 Act was unprecedented. Indeed, it is fair to say that the legal consequences of the United Kingdoms accession to the EEC were not fully appreciated by many lawyers until the Factortame litigation in the 1990s see the House of Lords decisions in R v Secretary of State for Transport, Ex p Factortame Ltd (No 2) [1991] 1 AC 603 and (No 5) [2000] 1 AC 524. Of course, consistently with the principle of Parliamentary sovereignty, this unprecedented state of affairs will only last so long as Parliament wishes: the 1972 Act can be repealed like any other statute. For that reason, we would not accept that the so called fundamental rule of recognition (ie the fundamental rule by reference to which all other rules are validated) underlying UK laws has been varied by the 1972 Act or would be varied by its repeal. In one sense, of course, it can be said that the 1972 Act is the source of EU law, in that, without that Act, EU law would have no domestic status. But in a more fundamental sense and, we consider, a more realistic sense, where EU law applies in the United Kingdom, it is the EU institutions which are the relevant source of that law. The legislative institutions of the EU can create or abrogate rules of law which will then apply domestically, without the specific sanction of any UK institution. It is true that the UK government and UK elected members of the European Parliament participate in the EU legislative processes and can influence their outcome, but that does not diminish the point. Further, in the many areas of EU competence which are subject to majority decision, the approval of the United Kingdom is not required for its legislation to take effect domestically. It is also true that EU law enjoys its automatic and overriding effect only by virtue of the 1972 Act, and thus only while it remains in force. That point simply reflects the fact that Parliament was and remains sovereign: so, no new source of law could come into existence without Parliamentary sanction and without being susceptible to being abrogated by Parliament. However, that in no way undermines our view that it is unrealistic to deny that, so long as that Act remains in force, the EU Treaties, EU legislation and the interpretations placed on these instruments by the Court of Justice are direct sources of UK law. The 1972 Act did two things which are relevant to these appeals. First, it provided that rights, duties and rules derived from EU law should apply in the United Kingdom as part of its domestic law. Secondly, it provided for a new constitutional process for making law in the United Kingdom. These things are closely related, but they are legally and conceptually distinct. The content of the rights, duties and rules introduced into our domestic law as a result of the 1972 Act is exclusively a question of EU law. However, the constitutional processes by which the law of the United Kingdom is made is exclusively a question of domestic law. Under the terms of the 1972 Act, EU law may take effect as part of the law of the United Kingdom in one of three ways. First, the EU Treaties themselves are directly applicable by virtue of section 2(1). Some of the provisions of those Treaties create rights (and duties) which are directly applicable in the sense that they are enforceable in UK courts. Secondly, where the effect of the EU Treaties is that EU legislation is directly applicable in domestic law, section 2(1) provides that it is to have direct effect in the United Kingdom without the need for further domestic legislation. This applies to EU Regulations (which are directly applicable by virtue of article 288 of the TFEU). Thirdly, section 2(2) authorises the implementation of EU law by delegated legislation. This applies mainly to EU Directives, which are not, in general, directly applicable but are required (again by article 288) to be transposed into national law. While this is an international law obligation, failure of the United Kingdom to comply with it is justiciable in domestic courts, and some Directives may be enforced by individuals directly against national governments in domestic courts. Further, any serious breach by the UK Parliament, government or judiciary of any rule of EU law intended to confer individual rights will entitle any individual sustaining damage as a direct result to compensation from the UK government: Brasserie du Pcheur SA v Germany; R v Secretary of State for Transport (Ex p Factortame Ltd) (No 4) (Joined Cases C 46/93 and C 48/93) [1996] QB 404 (provided that, where the breach consists in a court decision, the breach is not only serious but also manifest: Kbler v Austria (Case C 224/01) [2004] QB 848). Thus, EU law in EU Treaties and EU legislation will pass into UK law through the medium of section 2(1) or the implementation provisions of section 2(2) of the 1972 Act, so long as the United Kingdom is party to the EU Treaties. Similarly, so long as the United Kingdom is party to the EU Treaties, UK courts are obliged (i) to interpret EU Treaties, Regulations and Directives in accordance with decisions of the Court of Justice, (ii) to refer unclear points of EU law to the Court of Justice, and (iii) to interpret all domestic legislation, if at all possible, so as to comply with EU law (see Marleasing v La Comercial Internacional de Alimentacion SA (Case C 106/89) [1990] ECR I 4135). And, so long as the United Kingdom is party to the EU Treaties, UK citizens are able to recover damages from the UK government in cases where a decision of one of the organs of the state based on a serious error of EU law has caused them loss. In our view, then, although the 1972 Act gives effect to EU law, it is not itself the originating source of that law. It is, as was said on behalf of the Secretary of State echoing the illuminating analysis of Professor Finnis, the conduit pipe by which EU law is introduced into UK domestic law. So long as the 1972 Act remains in force, its effect is to constitute EU law an independent and overriding source of domestic law. Section 18 of the 2011 Act, set out in para 30 above, was enacted in order to make it clear that the primacy of EU law over domestic legislation did not prevent it being repealed by domestic legislation. But that simply confirmed the position as it had been since the beginning of 1973. The primacy of EU law means that, unlike other rules of domestic law, EU law cannot be implicitly displaced by the mere enactment of legislation which is inconsistent with it. That is clear from the second part of section 2(4) of the 1972 Act and Factortame Ltd (No 2) [1991] 1 AC 603. The issue was informatively discussed by Laws LJ in Thoburn v Sunderland City Council [2003] QB 151, paras 37 47. The 1972 Act accordingly has a constitutional character, as discussed by Laws LJ in Thoburn cited above, paras 58 59, and by Lord Reed and Lords Neuberger and Mance in in R (Buckinghamshire County Council) v Secretary of State for Transport [2014] 1 WLR 324, paras 78 to 79 and 206 to 207 respectively. Following the coming into force of the 1972 Act, the normal rule is that any domestic legislation must be consistent with EU law. In such cases, EU law has primacy as a matter of domestic law, and legislation which is inconsistent with EU law from time to time is to that extent ineffective in law. However, legislation which alters the domestic constitutional status of EU institutions or of EU law is not constrained by the need to be consistent with EU law. In the case of such legislation, there is no question of EU law having primacy, so that such legislation will have domestic effect even if it infringes EU law (and that would be true whether or not the 1972 Act remained in force). That is because of the principle of Parliamentary sovereignty which is, as explained above, fundamental to the United Kingdoms constitutional arrangements, and EU law can only enjoy a status in domestic law which that principle allows. It will therefore have that status only for as long as the 1972 Act continues to apply, and that, of course, can only be a matter for Parliament. We should add that, for these reasons, we do not accept the suggestion that, as a source of law, EU law can properly be compared with, delegated legislation. The 1972 Act effectively operates as a partial transfer of law making powers, or an assignment of legislative competences, by Parliament to the EU law making institutions (so long as Parliament wills it), rather than a statutory delegation of the power to make ancillary regulations even under a so called Henry the Eighth clause, as explained in the Public Law Project case, cited above, paras 25 and 26. The 1972 Act cannot be said to constitute EU legislative institutions the delegates of Parliament: they make laws independently of Parliament, and indeed they were doing so before the 1972 Act was passed. If EU law had the same status in domestic law as delegated legislation, the Factortame litigation referred to above would have had a different outcome. A statutory provision which provides that legislative documents and decisions made by EU institutions should be an independent and pre eminent source of UK law is thus quite different from a statutory provision which delegates to ministers and other organs of the executive the right to make regulations and the like. The exceptional nature of the effect of the 1972 Act is well illustrated by the passages quoted by Lord Reed in para 182 below from the decisions of the Court of Justice in Van Gend en Loos (Case C 26/62) [1963] ECR 1, 12 and Costa v ENEL (Case C 6/64) [1964] ECR 585, 593. They demonstrate that rules which would, as Lord Reed says, normally be incompatible with UK constitutional principles, became part of our constitutional arrangements as a result of the 1972 Act and the 1972 Accession Treaty for as long as the 1972 Act remains in force. The Divisional Courts analysis of the effect of the 1972 Act Although article 50 operates on the plane of international law, it is common ground that, because the EU Treaties apply as part of UK law, our domestic law will change as a result of the United Kingdom ceasing to be party to them, and rights enjoyed by UK residents granted through EU law will be affected. The Divisional Court concluded that, because ministers cannot claim prerogative powers to take an action which would result in a change in domestic law, it was not open to ministers to withdraw from the EU Treaties, and therefore to serve Notice, without authorisation in a statute. In that connection, the Divisional Court identified three categories of right: (1) Rights capable of replication in UK law; (2) Rights derived by UK citizens from EU law in other member states; (3) Rights of participation in EU institutions that could not be replicated in UK law. Many current EU rights fall within the first category. They include, for instance, the rights of UK citizens to the benefit of employment protection such as the Working Time Directive, to equal treatment and to the protection of EU competition law, and the right of non residents to the benefit of the four freedoms (free movement of people, goods and capital, and freedom to provide services). Some of these rights have already been embodied in UK law by domestic legislation pursuant to section 2(2) of the 1972 Act, and they will not cease to have effect upon the United Kingdoms withdrawal from the European Union (unless the domestic legislation giving effect to them is repealed in accordance with the law), although the Court of Justice will no longer have any binding role in relation to their scope or interpretation. Other rights, arising under EU Regulations or directly under the EU Treaties, will cease to have effect upon withdrawal (save in relation to rights and liabilities already accrued), but many could be replicated in a new statute eg the proposed Great Repeal Bill. But, as the Divisional Court pointed out, the need for such replication would only arise because withdrawal from the EU Treaties would have abrogated domestic rights created by the 1972 Act of effect, and again the Court of Justice would no longer have any binding role in relation to them. The second category may appear to be irrelevant for present purposes as the rights within it arise from the incorporation of EU law into the law of other member states, and not from UK legislation. However, some rights falling within one category may be closely linked with rights falling within another category. For example, the rights under Council Regulation (EC) No 2201/2003, concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility (known as Brussels II Revised), would be undermined if a domestic judgment governing the residence of a child could not be enforced outside the UK. The rights in the third category will cease when the United Kingdom is no longer a member of the European Union, as they are by their very nature dependent on continued membership. They include the right to stand for selection or later election to the European Parliament, and the right to vote in European elections, as well as the right to invite the Commission to take regulatory action. However, they have the character of what Mr Eadie described as club membership rights, and are of a different nature from the other more freestanding rights in the first and second categories. Given that it is clear that some rights in the first category will be lost on the United Kingdom withdrawing from the EU Treaties, it is unnecessary to consider whether, for the purpose of their present arguments, the applicants can rely on the loss of rights in the second and third categories. If they cannot succeed in their argument based on loss of rights in the first category, then invoking loss of rights in the other categories would not help them; and if they can succeed on the basis of loss of rights in the first category, they would not need to invoke loss of rights in the other categories. Does the 1972 Act preclude the use of prerogative power to withdraw? While accepting that some rights will be lost on withdrawal from the EU Treaties, the Secretary of States case is that the loss of these rights in such circumstances is provided for, and has therefore effectively been sanctioned, by Parliament in the 1972 Act itself. In this connection, Mr Eadie pointed out that the 1972 Act does not simply incorporate the EU Treaties into UK law in the same way as, say, the Carriage of Goods by Sea Act 1971 incorporates the Hague Rules. By contrast, he said, section 2 of the 1972 Act is ambulatory: in other words, it gives effect to whatever may from time to time be the international obligations of the United Kingdom under or pursuant to the EU Treaties. He pointed out that changes in EU law are brought into domestic law through the medium of section 2 of the 1972 Act and that, once the United Kingdom ceases to be bound by the EU Treaties, there will be no rights and remedies etc to which section 2(1) can apply, and no EU obligations which require delegated legislation under section 2(2), and that the possibility of withdrawal from EU Treaties is therefore effectively provided for in the wording of section 2. It is his case that, by providing that EU law rights, remedies etc from time to time provided for by or under the Treaties were to be given effect or used in the United Kingdom, section 2(1) accommodated the possibility of ministers withdrawing from the Treaties without Parliamentary authority. He also contended that it was self evident that Parliament cannot have intended that the variable content of EU law should continue to be part of domestic law after the UK withdraws from the EU Treaties. We accept the proposition that the ambit of the rights and remedies etc which are incorporated into domestic law through section 2 of the 1972 Act varies with the United Kingdoms obligations from time to time under the EU Treaties. This proposition is reflected in the language of subsections (1) and (2) of section 2, which are quoted in paras 18 and 19 above. However, this proposition is also limited in nature. Thus, the provisions of new EU Treaties are not automatically brought into domestic law through section 2: only once they have been statutorily added to the Treaties and the EU Treaties in section 1(2) can section 2 give effect to new EU Treaties. And section 2 can only apply to those rights and remedies which are capable of being given legal effect or used or enjoyed in the United Kingdom. We also accept that Parliament cannot have intended that section 2 should continue to import the variable content of EU law into domestic law, or that the other consequences of the 1972 Act described in paras 62 to 64 above should continue to apply, after the United Kingdom had ceased to be bound by the EU Treaties. However, while acknowledging the force of Lord Reeds powerful judgment, we do not accept that it follows from this that the 1972 Act either contemplates or accommodates the abrogation of EU law upon the United Kingdoms withdrawal from the EU Treaties by prerogative act without prior Parliamentary authorisation. On the contrary: we consider that, by the 1972 Act, Parliament endorsed and gave effect to the United Kingdoms membership of what is now the European Union under the EU Treaties in a way which is inconsistent with the future exercise by ministers of any prerogative power to withdraw from such Treaties. In short, the fact that EU law will no longer be part of UK domestic law if the United Kingdom withdraws from the EU Treaties does not mean that Parliament contemplated or intended that ministers could cause the United Kingdom to withdraw from the EU Treaties without prior Parliamentary approval. There is a vital difference between changes in domestic law resulting from variations in the content of EU law arising from new EU legislation, and changes in domestic law resulting from withdrawal by the United Kingdom from the European Union. The former involves changes in EU law, which are then brought into domestic law through section 2 of the 1972 Act. The latter involves a unilateral action by the relevant constitutional bodies which effects a fundamental change in the constitutional arrangements of the United Kingdom. So far as the interpretation of subsections (1) and (2) of section 2 of the 1972 Act are concerned, any right available under EU law to the United Kingdom to withdraw from the EU Treaties does not, as Mr Eadie rightly accepted, fall within the subsection, as it is not one which would be given legal effect or used in, or which would be enjoyed by the United Kingdom. Further, the fact that section 2(1) envisages EU law rights and procedures applying as in accordance with the Treaties from time to time and without further enactment takes matters no further. Subsection 2(1) and (2) are concerned to ensure that the variable content of EU law as it stands from time to time, is given effect in domestic law, and there was no practical alternative to such an arrangement in a dualist system. However, it does not follow from this that prerogative powers may be used to withdraw from the Treaties and so cut off the source of EU law entirely. One of the most fundamental functions of the constitution of any state is to identify the sources of its law. And, as explained in paras 61 to 66 above, the 1972 Act effectively constitutes EU law as an entirely new, independent and overriding source of domestic law, and the Court of Justice as a source of binding judicial decisions about its meaning. This proposition is indeed inherent in the Secretary of States metaphor of the 1972 Act as a conduit pipe by which EU law is brought into the domestic UK law. Upon the United Kingdoms withdrawal from the European Union, EU law will cease to be a source of domestic law for the future (even if the Great Repeal Bill provides that some legal rules derived from it should remain in force or continue to apply to accrued rights and liabilities), decisions of the Court of Justice will (again depending on the precise terms of the Great Repeal Bill) be of no more than persuasive authority, and there will be no further references to that court from UK courts. Even those legal rules derived from EU law and transposed into UK law by domestic legislation will have a different status. They will no longer be paramount, but will be open to domestic repeal or amendment in ways that may be inconsistent with EU law. Accordingly, the main difficulty with the Secretary of States argument is that it does not answer the objection based on the constitutional implications of withdrawal from the EU. As we have said, withdrawal is fundamentally different from variations in the content of EU law arising from further EU Treaties or legislation. A complete withdrawal represents a change which is different not just in degree but in kind from the abrogation of particular rights, duties or rules derived from EU law. It will constitute as significant a constitutional change as that which occurred when EU law was first incorporated in domestic law by the 1972 Act. And, if Notice is given, this change will occur irrespective of whether Parliament repeals the 1972 Act. It would be inconsistent with long standing and fundamental principle for such a far reaching change to the UK constitutional arrangements to be brought about by ministerial decision or ministerial action alone. All the more so when the source in question was brought into existence by Parliament through primary legislation, which gave that source an overriding supremacy in the hierarchy of domestic law sources. The point may be illustrated by reference to the formula which Lord Reed uses to make the argument about the variable content of EU law. That formula is All such [members of a specified category] as [satisfy a specified condition] shall be [dealt with in accordance with a specified requirement]. In the present case, the specified condition is a continuing obligation under the EU Treaties, and it must be satisfied by EU laws, which are the relevant members of [the] specified category, in order for the specified requirement, namely that those EU laws are binding domestically, to apply. The membership of the specified category has a variable content which is contingent on the decisions of non UK entities, and the contingency may change that content. That much may well be accommodated by the 1972 Act. But the very formula is not itself variable: it is a fixed rule of domestic law, enacted by Parliament. It is nothing to the point that there was, for UK purposes, no content in the specified category until the 1972 Accession Treaty was ratified (on the day after the 1972 Act received the royal assent). As mentioned in para 77 above, by the 1972 Act, Parliament endorsed and gave effect to the UKs future membership of the European Union, and this became a fixed domestic starting point. The question is whether that domestic starting point, introduced by Parliament, can be set aside, or could have been intended to be set aside, by a decision of the UK executive without express Parliamentary authorisation. We cannot accept that a major change to UK constitutional arrangements can be achieved by ministers alone; it must be effected in the only way that the UK constitution recognises, namely by Parliamentary legislation. This conclusion appears to us to follow from the ordinary application of basic concepts of constitutional law to the present issue. While the consequential loss of a source of law is a fundamental legal change which justifies the conclusion that prerogative powers cannot be invoked to withdraw from the EU Treaties, the Divisional Court was also right to hold that changes in domestic rights acquired through that source as summarised in para 70 above, represent another, albeit related, ground for justifying that conclusion. Indeed, the consequences of withdrawal go further than affecting rights acquired pursuant to section 2 of the 1972 Act, as explained in paras 62 to 64 above. More centrally, as explained in paras 76 to 79 above, section 2 of that Act envisages domestic law, and therefore rights of UK citizens, changing as EU law varies, but it does not envisage those rights changing as a result of ministers unilaterally deciding that the United Kingdom should withdraw from the EU Treaties. Mr Eadie also argued that exercise of prerogative powers can change domestic law. While there are circumstances (as described in paras 52 and 53 above) where the exercise of prerogative powers can affect domestic legal rights, they plainly do not apply in the present case. The rights which flow through the conduit pipe of the 1972 Act are contingent on the possibility of their being removed or changed in accordance with decisions taken by EU institutions, as is recognised by the expression from time to time in section 2(1). However, as implied in para 79 above, far from helping the Secretary of States case, the presence of those words in section 2 highlights their absence from the definition of Treaties and EU Treaties in section 1(2). When one reads the two subsections together, the clear implication is that the continued existence of the conduit pipe, as opposed to the contents which flow through it, can be changed only if Parliament changes the law. In the course of his attractively presented submissions, Mr Eadie sought to meet these points with the argument that the 1972 Act (as amended from time to time) effectively incorporates the EU Treaties, and that the applicants cannot point to any provision in the Act which states that the prerogative powers in relation to those treaties are to be abrogated. Given that there is nothing in the 1972 Act which expressly or by necessary implication abrogated ministers prerogative powers to withdraw from the Treaties to which it applied, he contended that it followed that the prerogative to withdraw from the EU Treaties was not precluded by the 1972 Act. In this connection, he relied on dicta in De Keyser cited above (including Lord Parmoors reference to directly regulated by statute in the passage quoted in para 48 above) which suggested that prerogative powers should not be treated as abrogated unless a statute expressly, or by necessary implication, provided for their abrogation. Mr Eadie also relied on R v Secretary of State for Foreign and Commonwealth Affairs, Ex p Rees Mogg [1994] QB 552, in which the Court of Appeal held that ministers could ratify a protocol to the TEU without Parliamentary approval. In the course of his reasons for rejecting an argument based on the proposition that prerogative powers could not be used to alter the law, Lloyd LJ at p 567H appears to have concluded that ministers prerogative powers exist generally in relation to the EU Treaties, apparently on the basis that a prerogative power can be fettered by statute only in express terms. However, as explained above, the EU Treaties not only concern the international relations of the United Kingdom, they are a source of domestic law, and they are a source of domestic legal rights many of which are inextricably linked with domestic law from other sources. Accordingly, the Royal prerogative to make and unmake treaties, which operates wholly on the international plane, cannot be exercised in relation to the EU Treaties, at least in the absence of domestic sanction in appropriate statutory form. It follows that, rather than the Secretary of State being able to rely on the absence in the 1972 Act of any exclusion of the prerogative power to withdraw from the EU Treaties, the proper analysis is that, unless that Act positively created such a power in relation to those Treaties, it does not exist. And, once one rejects the contention that section 2 accommodates a ministerial power to withdraw from the EU Treaties (as to which see paras 79 and 84 above), it is plain that the 1972 Act did not create such a power of withdrawal, as the Secretary of State properly accepts. We accept, of course, that it would have been open to Parliament to provide expressly that the constitutional arrangements and the EU rights introduced by the 1972 Act should themselves only prevail from time to time and for so long as the UK government did not decide otherwise, and in particular did not decide to withdraw from the EU Treaties. But we cannot accept that the 1972 Act did so provide. As Lord Hoffmann explained in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, 131, the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost, and so [f]undamental rights cannot be overridden by general words in a statute, because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. Had the Bill which became the 1972 Act spelled out that ministers would be free to withdraw the United Kingdom from the EU Treaties, the implications of what Parliament was being asked to endorse would have been clear, and the courts would have so decided. But we must take the legislation as it is, and we cannot accept that, in Part I of the 1972 Act, Parliament squarely confront[ed] the notion that it was clothing ministers with the far reaching and anomalous right to use a treaty making power to remove an important source of domestic law and important domestic rights. In our judgment, far from indicating that ministers had the power to withdraw from the EU Treaties, the provisions of the 1972 Act, particularly when considered in the light of the unusual nature of those Treaties and the Acts unusual legislative history, support the contrary view. As the Divisional Court said, the long title of the 1972 Act stated that its purpose was to make provision in connection with the enlargement of what is now the European Union, which is not easy to reconcile with a prerogative power to achieve the opposite. Similarly, the side note to section 2, General implementation of Treaties, points away from a prerogative to terminate any implementation. In addition, there is the fact that the 1972 Act required ministers not to commit the United Kingdom to any new arrangement, whether it increased or decreased the potential volume and extent of EU law, without first being approved by Parliament by statute in the case of a new EU Treaty and by an approved Order in Council in the case of a treaty ancillary to any existing EU Treaty. It would scarcely be compatible with those provisions if, in reliance on prerogative powers, ministers could unilaterally withdraw from the EU Treaties, thereby reducing the volume and extent of EU law which takes effect domestically to nil without the need for Parliamentary approval. For these reasons, we disagree with Lloyd LJs conclusion in Rees Mogg in so far as he held that ministers could exercise prerogative powers to withdraw from the EU Treaties. It is only right to add that his ultimate decision was nonetheless correct for the reason he gave on p 568, namely that ratification of the particular protocol in that case would not in any significant way alter domestic law. The EU Treaties as implemented pursuant to the 1972 Act were and are unique in their legislative and constitutional implications. In 1972, for the first time in the history of the United Kingdom, a dynamic, international source of law was grafted onto, and above, the well established existing sources of domestic law: Parliament and the courts. And, as explained in paras 13 15 above, before (i) signing and (ii) ratifying the 1972 Accession Treaty, ministers, acting internationally, waited for Parliament, acting domestically, (i) to give clear, if not legally binding, approval in the form of resolutions, and (ii) to enable the Treaty to be effective by passing the 1972 Act. Bearing in mind this unique history and the constitutional principle of Parliamentary sovereignty, it seems most improbable that those two parties had the intention or expectation that ministers, constitutionally the junior partner in that exercise, could subsequently remove the graft without formal appropriate sanction from the constitutionally senior partner in that exercise, Parliament. The improbability of the Secretary of States case is reinforced by the point that, if, as he contends, prerogative powers could be invoked in relation to the EU Treaties despite the provisions of the 1972 Act, it would have been open to ministers to take such a course on or at any time after 2 January 1973 without authorisation by Parliament. It would also follow that ministers could have taken that course even if there had been no referendum or indeed, at least in theory, even if any referendum had resulted in a vote to remain. Those are implausible propositions. To meet this criticism, it was suggested that, if ministers had invoked their prerogative powers to withdraw from the EU Treaties in such circumstances, their decision may have been judicially reviewable. That is rather a bold suggestion, given that it has always been considered that, because they only operate on the international plane, prerogative treaty making powers are not subject to judicial review see para 55 above. It was also suggested that it should not cause surprise if ministers could exercise prerogative powers to withdraw from the EU Treaties, as they would be accountable to Parliament for their actions. This seems to us to be a potentially controversial argument constitutionally. It would justify all sorts of powers being accorded to the executive, on the basis that ministers could always be called to account for their exercise of any power. There is a substantial difference between (i) ministers having a freely exercisable power to do something whose exercise may have to be subsequently explained to Parliament and (ii) ministers having no power to do that thing unless it is first accorded to them by Parliament. The major practical difference between the two categories, in a case such as this where the exercise of the power is irrevocable, is that the exercise of power in the first category pre empts any Parliamentary action. When the power relates to an action of such importance to the UK constitution as withdrawing from the Treaties, it would clearly be appropriate for the power to be in the second category. The fact that ministers are free to issue a declaration of war without first obtaining the sanction of Parliament does not assist the Secretary of States case. Such a declaration, while plainly of fundamental significance in practice, does not change domestic laws or domestic sources of law, although it will lead to new laws provided Parliament decides that it should. Thus, the continued existence of the new source of law created by the 1972 Act, and the continued existence of the rights and other legal incidents which flow therefrom, cannot as a matter of UK law have depended on the fact that to date ministers have refrained from having recourse to the Royal prerogative to eliminate that source and those rights and other incidents. Subsidiary arguments as to the effect of the 1972 Act The Secretary of State relied on the fact that it was inevitable that Parliament would be formally involved in the process of withdrawal from the European Union, in that primary legislation, not least the Great Repeal Bill referred to in para 34 above, would be required to enable the United Kingdom to complete its withdrawal in an orderly and coherent manner. That seems very likely indeed, but it misses the point. If ministers give Notice without Parliament having first authorised them to do so, the die will be cast before Parliament has become formally involved. To adapt Lord Pannicks metaphor, the bullet will have left the gun before Parliament has accorded the necessary leave for the trigger to be pulled. The very fact that Parliament will have to pass legislation once the Notice is served and hits the target highlights the point that the giving of the Notice will change domestic law: otherwise there would be no need for new legislation. It was also argued on behalf of the Secretary of State that, when ministers are participating in EU law making processes and are therefore involved in making EU law, and hence domestic law, they are thereby exercising prerogative powers, and that the giving of Notice would be an equally legitimate exercise of those powers. We readily accept, without formally deciding, that ministerial activity in the EU law making process is effected under the Royal prerogative. However, it does not follow from this that ministers should be entitled to exercise a prerogative power to leave the European Union. When taking part in EU decision making, UK ministers are carrying out the very functions which were envisaged by Parliament when enacting the 1972 Act. Withdrawing from the EU Treaties involves ministers doing the opposite, namely, unilaterally dismantling the very system which they set up in a co ordinated way with Parliament, as explained in paras 13 to 15 above. Consistently with this, article 16 of TEU stipulates that a representative of each member state at ministerial level can commit member states by voting on the European Council, whereas article 50 provides that withdrawal must be effected by a member state in accordance with [its] constitutional requirements. It was further pointed out that unilateral actions by other member states could remove EU law based rights enjoyed by EU nationals (including UK citizens) living in the United Kingdom eg if another member state withdrew from the European Union. We agree, but cannot accept that it has any relevance to the present dispute, which concerns the domestic constitutional arrangements which apply if the UK government wishes to withdraw from the EU Treaties. The fact that it is inevitable that to the extent that they depend on a particular foreign government, EU rights can be abrogated by the withdrawal from EU Treaties by that foreign government gives no guidance as to what is required by the United Kingdoms constitutional arrangements before ministers can cause the United Kingdom to withdraw from those Treaties. Mr Eadie identified two instances which, he contended, showed that there were circumstances in which the UK government could withdraw from treaties without prior Parliamentary sanction, even if such withdrawal changed domestic law. The first was the United Kingdoms withdrawal in 1972 from the European Free Trade Agreement, EFTA. That is of no assistance to the Secretary of State. For, in stark contrast with UK membership of the European Union as a result of the 1972 Act, no directly effective rights had been created as a result of UK membership of EFTA. Moreover, the decision to withdraw from EFTA was an inevitable corollary of joining the EEC, and the formal notice withdrawing from EFTA was only served after both Houses of Parliament had approve[d] the decision of principle to join the European Communities as explained in para 13 above; it was thus an aspect of the exercise which the Prime Minister and the Chancellor of the Duchy of Lancaster respectively described in the House of Commons in October 1971 and January 1972. The second instance given by Mr Eadie was that of bilateral double taxation treaties (DTTs), which were entered into with other states by the UK government under section 788 of the Income and Corporation Taxes Act 1988 (section 788), now replaced by section 2 of the Taxation (International and Other Provisions) Act 2010 (TIOPA). This point was hardly mentioned in the oral argument before us, perhaps because discussions in some of the articles referred to in para 11 above have shown that the DTTs are an unsatisfactory analogy. By section 788 and now by TIOPA, Parliament provided in primary legislation that arrangements agreed by ministers in a DTT at international level will have effect in national law, but only if those arrangements are specified in an Order in Council which is approved by the House of Commons. Thus, unlike EU law which becomes part of UK law automatically as a result of the 1972 Act, the arrangements under a DTT do not take effect automatically as a result of section 788 or, now, TIOPA, but only through a specific Order in Council which has to be approved by Parliament. The conduit pipe metaphor which applies to the 1972 Act in relation to EU law is inapposite for section 788 and TIOPA in relation to DTTs. Before concluding on the effect of the 1972 Act, it is worth mentioning two points. First, eminent judges have taken it for granted that it is a matter for Parliament whether the United Kingdom withdraws from the EU Treaties. In Blackburn v Attorney General [1971] 1 WLR 1037, 1040, Lord Denning MR said that [i]f her Majestys Ministers sign this treaty and Parliament enacts provisions to implement it he did not envisage that Parliament would afterwards go back on it and try to withdraw from it, but if Parliament should do so then the courts would consider it. In Macarthys Ltd v Smith [1981] ICR 785, 789, Lord Denning (albeit in a dissenting judgment) made a constitutional point, and referred to the possibility of our Parliament deliberately pass[ing] an Act with the intention of repudiating the Treaty. In Pham v Secretary of State for the Home Department [2015] 1 WLR 1591, para 80, having stated that EU law [is] part of domestic law because Parliament has so willed, Lord Mance said that [t]he question how far Parliament has so willed is thus determined by construing the 1972 Act. In R (Shindler) v Chancellor of the Duchy of Lancaster [2016] 3 WLR 1196, para 58, Lord Dyson MR said that Parliament agreed to join the EU by exercising sovereign powers untrammelled by EU law and I think it would expect to be able to leave the EU in the exercise of the same untrammelled sovereign power. Secondly, if, as the Secretary of State has argued, it is legitimate to take account of the fact that Parliament will, of necessity, be involved in its legislative capacity as a result of UK withdrawal from the EU Treaties, it would militate in favour of, rather than against, the view that Parliament should have to sanction giving Notice. An inevitable consequence of withdrawing from the EU Treaties will be the need for a large amount of domestic legislation. There is thus a good pragmatic argument that such a burden should not be imposed on Parliament by exercise of prerogative powers and without prior Parliamentary authorisation. We do not rest our decision on that point, but it serves to emphasise the major constitutional change which withdrawal from the European Union will involve, and therefore the constitutional propriety of prior Parliamentary sanction for the process. Conclusion on the effect of the 1972 Act Accordingly, we consider that, in light of the terms and effect of the 1972 Act, and subject to considering the effect of subsequent legislation and events, the prerogative could not be invoked by ministers to justify giving Notice: ministers require the authority of primary legislation before they can take that course. We turn, then, to deal with the impact of legislation and events after 1972. Legislation and events after 1972: from 1973 to 2014 With one exception, the legislation and events between 1973 and 2014 were relied on in argument by the Secretary of State rather than by the applicants. We will first discuss the Secretary of States points in this connection and we will then turn to the applicants point. We start by addressing the fact that the EU Treaties contained no provision entitling a member state to withdraw at the time of the 1972 Act, and that such a provision, article 50, was introduced by the TFEU in 2008. Although its invocation will have the inevitable consequence which Lord Pannick described (as mentioned in para 36 above), article 50 operates only on the international plane, and is not therefore brought into UK law through section 2 of the 1972 Act, as explained in para 79 above. Accordingly, the Secretary of State can derive no domestic authority from the fact that the EU Treaties now include provision for unilateral withdrawal. In any event, article 50 only entitles a member state to withdraw from the EU Treaties in accordance with its own constitutional requirements, which returns one to the issue in the current proceedings. It was suggested that, by incorporating the TFEU, including its introduction of article 50, into section 1(2) of the 1972 Act in 2008, it cannot have been the intention of Parliament to strip ministers of their ability to exercise their powers under article 50. That is not the issue. Nobody doubts but that, under the TFEU and the TEU, ministers can give Notice under article 50(2); the question we have to decide is whether they can do so under prerogative powers or only with Parliamentary authority. So far as the 2008 Act and the 2011 Act are concerned, Mr Eadie rightly did not go so far as to suggest that they conferred power on ministers to withdraw if that power did not exist under the 1972 Act. More subtly, he submitted that these later statutes implicitly, but clearly, recognised the existence of the prerogative power to withdraw from the EU Treaties, unconstrained by Parliamentary control. He pointed out that the two statutes specified in detail the prerogative powers which Parliament intended to control in relation to the EU Treaties, and that they did not include the power to withdraw from those treaties under article 50(2). That omission was said to be particularly striking because, as explained in para 29 above, the 2011 Act covered another aspect of article 50, as it required legislation and a referendum before ministers could vote in favour of a decision under article 50(3) to depart from the need for unanimity in any decision to extend the two year period in the event of another member state seeking to withdraw from the EU Treaties. But it did not seek to control the giving of notice by ministers under article 50(2), for all its fundamental and irreversible consequences. We do not accept this argument. The fact that a statute says nothing about a particular topic can rarely, if ever, justify inferring a fundamental change in the law. As explained in Ex p Simms [2000] 2 AC 115, 131 cited in para 87 above, [f]undamental rights cannot be overridden by general words in a statute, because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. If this is true of general expressions in a statute it must a fortiori be a principle which applies to omissions in a statute. Even if this principle admits of exceptions, they must be rare, and there is no justification for the view that the absence of any reference to article 50(2) in the 2008 and 2011 Acts is such an exception. Those statutes were not attempting to codify the legislative restrictions on the use of the prerogative in relation to the EU Treaties. The restrictions imposed by the two statutes were largely prompted by the fact that the TFEU had both increased the competences of the EU and included provisions which enabled EU institutions to short circuit some of the EUs decision making processes by replacing some of the previous requirements for unanimity or consensus with majority voting or involvement of the European Parliament. (It is fair to add that the restrictions also applied to certain policy issues such as the inclusion of the UK in the Schengen area and the UKs adoption of the Euro, but that does not undermine the point). As explained in paras 5 and 6 of the Explanatory Notes to the 2011 Act, Part 1 of that Act was intended to impose specific restrictions, which in summary terms were as follows. It required a referendum [to] be held before the UK could agree to an amendment of TEU or TFEU, and before the UK could agree to certain decisions already provided for by TEU and TFEU if these would transfer power or competence from the UK to the EU. Further, a referendum and [i]n addition, an Act of Parliament would be required before the UK could agree to a number of other specified decisions provided for in TEU and TFEU. Also, certain other decisions would require a motion to be agreed in both Houses of Parliament before the UK could vote in favour of specified decisions in [EU institutions]. In other words, expressed in broad terms, Part 1 of the 2011 Act was aimed at preventing ministers, without prior Parliamentary approval (plus, in many cases prior approval in a referendum), from supporting any decisions made by the European Union or its institutions which would extend EU competences and the like, or which would dilute the effect of UK voting rights in the EU or any EU institutions. It cannot be inferred from the fact that it was thought necessary to deal with such issues that Parliament intended or assumed that there were no legal limits to the prerogative powers that ministers might exercise in other types of case. Part 1 of the 2011 Act was concerned with decisions of EU institutions in which ministers played a part, not with unilateral decisions of ministers. More broadly, the absence of any Parliamentary controls on article 50(2) in the 2011 Act is entirely consistent with the notion that Parliament assumed that ministers could not withdraw from the EU Treaties without a statute authorising that course and that if and when Parliament had to consider the issue, it would decide whether and if so on what terms, if any, to give such authorisation. If prerogative powers are curtailed by legislation, they may sometimes be reinstated by the repeal of that legislation, depending on the construction of the statutes in question. But if, as we have concluded, there never had been a prerogative power to withdraw from the EU Treaties without statutory authority, there is nothing to be curtailed or reinstated by later legislation. The prerogative power claimed by the Secretary of State can only be created by a subsequent statute if the express language of that statute unequivocally shows that the power was intended to be created see per Lord Hobhouse of Woodborough in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 AC 563, para 45. Mr Eadie was right to concede that, however one approaches them, the 2008 and 2011 Acts did not show that. Mr Eadie further submitted that, rather than looking at the question whether ministers could give Notice without statutory authorisation in historical terms starting in 1972, it should be addressed by viewing the effect of the present state of the legislation as a whole, without regard to what the position might have been at some earlier stage. We do not agree. A statute cannot normally be interpreted by reference to a later statute, save in so far as the later statute intends to amend the earlier statute or the two statutes are in pari materia, ie they are given a collective title, are required to be construed as one, have identical short titles, or deal with the same subject matter on similar lines see Bennion on Statutory Interpretation (6th ed, 2013) section 28(13). None of these tests can possibly be said to be satisfied by the 2008 Act or the 2011 Act in relation to the 1972 Act, not least because the later statutes are concerned with a different issue from the 1972 Act. In any event, even if the two later statutes were in pari materia with the 1972 Act, for the reasons given in paras 110 to 112 above we do not consider that they would together yield the interpretation for which the Secretary of State contends. The one feature of the post 1972 history on which the applicants relied was the effect of the 2002 Act. As explained in para 27 above, that Act gave most people of the United Kingdom the right to vote in elections for MEPs, and (albeit by inference) the right to stand for election as an MEP. On the face of it, these are free standing rights outside the ambit of the 1972 Act, in that they are domestically granted in primary legislation passed by Parliament. The Secretary of State cannot argue that these rights are in any sense ambulatory. And they are rights which will inevitably be lost if the United Kingdom withdraws from the EU Treaties and ceases being a member of the European Union. There is therefore some force in the argument that, even if formal Parliamentary sanction to the giving of Notice was not needed on the grounds discussed in paras 74 to 101 above, it would nonetheless be needed because withdrawal from the EU Treaties would deprive UK citizens of the rights given them by Parliament through the 2002 Act. However, there is also force in the Secretary of States response that the rights given by the 2002 Act are simply rights of institutional participation which are contingent on continued UK membership of the European Union. The same sort of arguments might perhaps arise in relation to statutory provisions such as section 4(2) of the Communications Act 2003, which requires OFCOM, the UK telecommunications regulator, to carry out its statutory functions in accordance with the six Community requirements, which are set out in the ensuing subsections and give effect to, and are mandated by, an EU Directive. Given our conclusion that, in the light of the terms and effect of the 1972 Act, ministers cannot give Notice without prior sanction from the UK Parliament, we can limit ourselves to saying that we consider that the arguments based on the 2002 Act do nothing to undermine and may be regarded as reinforcing that conclusion. Legislation and events after 1972: the 2015 Act and the referendum We turn to the 2015 Act and the ensuing referendum. The Attorney General submitted that the traditional view as to the limits of prerogative power should not apply to a ministerial decision authorised by a majority of the members of the electorate who vote in a referendum provided for by Parliament. In effect, he said that, even though it was Parliament which required the referendum, the response to the referendum result should be a matter for ministers, and that it should not be constrained by the legal limitations which would have applied in the absence of the referendum. The referendum is a relatively new feature of UK constitutional practice. There have been three national referendums: on EEC membership in 1975, on the Parliamentary election voting system in 2011 and on EU membership in 2016. There have also been referendums about devolution in Scotland, Wales and Northern Ireland and about independence in Scotland. In 2000, it was considered worth having a legislative framework for the conduct of referendums held in pursuance of any provision made by or under an Act of Parliament see Part VII of the Political Parties, Elections and Referendums Act. The effect of any particular referendum must depend on the terms of the statute which authorises it. Further, legislation authorising a referendum more often than not has provided for the consequences on the result. Thus, the authorising statute may enact a change in the law subject to the proviso that it is not to come into effect unless approved by a majority in the referendum. The Scotland Act 1978 provided for devolution, but stipulated that the minister should bring the Act into force if there was a specified majority in a referendum, and if there was not he was required to lay an order repealing the Act. The Parliamentary Voting System and Constituencies Act 2011 had a provision requiring the alternative vote system to be adopted in Parliamentary elections, but by section 8 stated that the minister should bring this provision into force if it was approved in a referendum, but, if it was not, he should repeal it. Section 1 of the Northern Ireland Act 1998 (the NI Act) provided that if a referendum were to result in a majority for the province to become part of a united Ireland, the Secretary of State should lay appropriate proposals before Parliament. All these statutes stipulated what should happen in response to the referendum result, and what changes in the law were to follow, and how they were to be effected. The same is true of the provisions in Part 1 of the 2011 Act. By contrast, neither the 1975 Act nor the 2015 Act, which authorised referendums about membership of the European Community or European Union, made provision for any consequences of either possible outcome. They provided only that the referendum should be held, and they did so in substantially identical terms. The way in which the proposed referendum was described in public statements by ministers, however, differed in the two cases. The 1975 referendum was described by ministers as advisory, whereas the 2016 referendum was described as advisory by some ministers and as decisive by others, but nothing hangs on that for present purposes. Whether or not they are clear and consistent, such public observations, wherever they are made, are not law: they are statements of political intention. Further, such statements are, at least normally, made by ministers on behalf of the UK government, not on behalf of Parliament. It was suggested on behalf of the Secretary of State that, having referred the question whether to leave or remain to the electorate, Parliament cannot have intended that, upon the electorate voting to leave, the same question would be referred straight back to it. There are two problems with this argument. The first is that it assumes what it seeks to prove, namely that the referendum was intended by Parliament to have a legal effect as well as a political effect. The second problem is that the notion that Parliament would not envisage both a referendum and legislation being required to approve the same step is falsified by sections 2, 3 and 6 of the 2011 Act, which, as the Explanatory Notes (quoted in para 111 above) acknowledge, required just that albeit in the more elegant way of stipulating for legislation whose effectiveness was conditional upon a concurring vote in a referendum. Where, as in this case, implementation of a referendum result requires a change in the law of the land, and statute has not provided for that change, the change in the law must be made in the only way in which the UK constitution permits, namely through Parliamentary legislation. What form such legislation should take is entirely a matter for Parliament. But, in the light of a point made in oral argument, it is right to add that the fact that Parliament may decide to content itself with a very brief statute is nothing to the point. There is no equivalence between the constitutional importance of a statute, or any other document, and its length or complexity. A notice under article 50(2) could no doubt be very short indeed, but that would not undermine its momentous significance. The essential point is that, if, as we consider, what would otherwise be a prerogative act would result in a change in domestic law, the act can only lawfully be carried out with the sanction of primary legislation enacted by the Queen in Parliament. This is why the Secretary of State rightly accepted that the resolution of the House of Commons on 7 December 2016, calling on ministers to give Notice by 31 March 2017, cannot affect the legal issues before this court. A resolution of the House of Commons is an important political act. No doubt, it makes it politically more likely that any necessary legislation enabling ministers to give Notice will be enacted. But if, as we have concluded, ministers cannot give Notice by the exercise of prerogative powers, only legislation which is embodied in a statute will do. A resolution of the House of Commons is not legislation. Thus, the referendum of 2016 did not change the law in a way which would allow ministers to withdraw the United Kingdom from the European Union without legislation. But that in no way means that it is devoid of effect. It means that, unless and until acted on by Parliament, its force is political rather than legal. It has already shown itself to be of great political significance. It is instructive to see how the issue was addressed in ministers response to the 12th Report of Session 2009 10 of the House of Lords Select Committee on the Constitution (Referendums in the United Kingdom). The Committee included the following recommendation in para 197: [B]ecause of the sovereignty of Parliament, referendums cannot be legally binding in the UK, and are therefore advisory. However, it would be difficult for Parliament to ignore a decisive expression of public opinion. The UK governments response as recorded in the Committees Fourth Report of Session 2010 11 was The Government agrees with this recommendation. Under the UKs constitutional arrangements Parliament must be responsible for deciding whether or not to take action in response to a referendum result. The References from Northern Ireland and the devolution questions Introductory As mentioned above, four devolution questions have been referred to this Court by the High Court of Justice in Northern Ireland on the direction of the Attorney General for Northern Ireland, and one has been referred by the Court of Appeal in Northern Ireland on the appeal from Maguire J. The five devolution questions are: If the answer is yes, is the consent of the Northern Ireland Assembly (i) Does any provision of the NI Act, read together with the Belfast Agreement and the British Irish Agreement, have the effect that primary legislation is required before Notice can be given? (ii) required before the relevant legislation is enacted? (iii) If the answer to question (i) is no, does any provision of the NI Act read together with the Belfast Agreement and the British Irish Agreement operate as a restriction on the exercise of the prerogative power to give Notice? (iv) Does section 75 of the NI Act prevent exercise of the power to give Notice in the absence of compliance by the Northern Ireland Office with its obligations under that section? (v) Does the giving of Notice without the consent of the people of Northern Ireland impede the operation of section 1 of the NI Act? Following the hearing, our attention was drawn to the decision of the Northern Irish Court of Appeal in Lee v McArthur and Ashers Baking Co Ltd (No 2) handed down on 22 December 2016. That decision suggests that the High Court may not have had jurisdiction to have made the reference in these proceedings as sought by the Attorney General for Northern Ireland. Given that the issues raised in that reference were fully debated, and that no party to these proceedings has sought belatedly to rely on the decision of the Court of Appeal, we think it appropriate to deal with the reference. The NI Act is the product of the Belfast Agreement and the British Irish Agreement, and is a very important step in the programme designed to achieve reconciliation of the communities of Northern Ireland. It has established institutions and arrangements which are intended to address the unique political history of the province and the island of Ireland. Yet there is also a relevant commonality in the devolution settlements in Northern Ireland, Scotland and Wales (i) in the statutory constraint on the executive and legislative competence of the devolved governments and legislatures that they must not act in breach of EU law (the EU constraints); and (ii) in the operation of the Sewel Convention. (The EU constraints are to be found in sections 29(2)(d), 54 and 57(2) of the Scotland Act 1998; sections 108(6)(c) and 80(8) of the Government of Wales Act 2006; and sections 6(2)(d) and 24(1) of the NI Act). Questions (i), (iii), (iv) and (v) Because we have concluded that primary legislation is required to authorise the giving of Notice, the third question is superseded. The first question is for a similar reason less significant than it otherwise might have been but we address it briefly. When enacting the EU constraints in the NI Act and the other devolution Acts, Parliament proceeded on the assumption that the United Kingdom would be a member of the European Union. That assumption is consistent with the view that Parliament would determine whether the United Kingdom would remain a member of the European Union. But, in imposing the EU constraints and empowering the devolved institutions to observe and implement EU law, the devolution legislation did not go further and require the United Kingdom to remain a member of the European Union. Within the United Kingdom, relations with the European Union, like other matters of foreign affairs, are reserved or excepted in the cases of Scotland and Northern Ireland, and are not devolved in the case of Wales see section 30(1) of, and paragraph 7(1) of Schedule 5 to, the Scotland Act 1998; section 108(4) of, and Part 1 of Schedule 7 to, the Government of Wales Act 2006; and section 4(1) of, and paragraph 3 of Schedule 2 to, the NI Act. Accordingly, the devolved legislatures do not have a parallel legislative competence in relation to withdrawal from the European Union. The EU constraints are a means by which the UK Parliament and government make sure that the devolved democratic institutions do not place the United Kingdom in breach of its EU law obligations. The removal of the EU constraints on withdrawal from the EU Treaties will alter the competence of the devolved institutions unless new legislative constraints are introduced. In the absence of such new restraints, withdrawal from the EU will enhance the devolved competence. We consider the effect of the alteration of competence in our discussion of the Sewel Convention in paras 136 to 151 below. Mr Scoffield QC, who appeared for Mr Agnew, is unquestionably right, however, to claim that the NI Act conferred rights on the citizens of Northern Ireland. Sections 6(2)(d) and 24(1), in imposing the EU constraints, have endowed the people of Northern Ireland with the right to challenge actions of the Executive or the Assembly on the basis that they are in breach of EU law. A recent example of the exercise of such a right is found in the case of Re JR65s Application [2016] NICA 20, where the lifetime ban on men who have had sex with other men from giving blood in Northern Ireland was challenged as being contrary to EU law. As already explained, it is normally impermissible for statutory rights to be removed by the exercise of prerogative powers in the international sphere. It would accordingly be incongruous if constraints imposed on the legislative competence of the devolved administrations by specific statutory provisions were to be removed, thereby enlarging that competence, other than by statute. A related incongruity arises by virtue of the fact that observance and implementation of EU obligations are a transferred matter and therefore the responsibility of the devolved administration in Northern Ireland. The removal of a responsibility imposed by Parliament by ministerial use of prerogative powers might also be considered a constitutional anomaly. In light of our conclusion that a statute is required to authorise the decision to withdraw from the European Union, and therefore the giving of Notice, it is not necessary to reach a definitive view on the first referred question. The EU constraints and the provisions empowering the implementation of EU law are certainly consistent with our interpretation of the 1972 Act but we refrain from deciding whether they impose a discrete requirement for Parliamentary legislation. Section 75(1) of the NI Act obliges a public authority in carrying out its functions in relation to Northern Ireland to have due regard to the need to promote equality of opportunity. By section 75(2), this duty includes an obligation to have regard to the desirability of promoting good relations between persons of different religious belief, political persuasion or radical group. Section 75(3) defines public authority for the purpose of the section and, unlike section 76(7), does not include within the definition a Minister of the Crown. Thus, the Secretary of State does not fall within its ambit. Further, in our view, and in agreement with the Attorney General for Northern Ireland, the decision to withdraw from the European Union and to give Notice is not a function carried out by the Secretary of State for Northern Ireland in relation to Northern Ireland within the meaning of section 75. Because we have held that there is no prerogative power to give Notice, the fourth question is superseded. But in so far as the Secretary of State may have a role in the measures taken by the UK Parliament to give Notice, we are satisfied that section 75 imposes no obligation on him in that context. We also answer the fifth question in the negative. Section 1 of the NI Act is headed Status of Northern Ireland and it provides: (1) It is hereby declared that Northern Ireland in its entirety remains part of the United Kingdom and shall not cease to be so without the consent of a majority of the people of Northern Ireland voting in a poll held for the purposes of this section in accordance with Schedule 1. (2) But if the wish expressed by a majority in such a poll is that Northern Ireland should cease to be part of the United Kingdom and form part of a united Ireland, the Secretary of State shall lay before Parliament such proposals to give effect to that wish as may be agreed between Her Majestys Government in the United Kingdom and the Government of Ireland. In our view, this important provision, which arose out of the Belfast Agreement, gave the people of Northern Ireland the right to determine whether to remain part of the United Kingdom or to become part of a united Ireland. It neither regulated any other change in the constitutional status of Northern Ireland nor required the consent of a majority of the people of Northern Ireland to the withdrawal of the United Kingdom from the European Union. Contrary to the submission of Mr Lavery QC for Mr McCord, this section cannot support any legitimate expectation to that effect. The Sewel Convention and question (ii) That leaves the second question, which raises in substance the application of the Sewel Convention. The convention was adopted as a means of establishing cooperative relationships between the UK Parliament and the devolved institutions, where there were overlapping legislative competences. In each of the devolution settlements the UK Parliament has preserved its right to legislate on matters which are within the competence of the devolved legislature. Section 5 of the NI Act empowers the Northern Ireland Assembly to make laws, but subsection (6) states that [t]his section does not affect the power of the Parliament of the United Kingdom to make laws for Northern Ireland. Section 28(7) of the Scotland Act 1998 provides that the section empowering the Scottish Parliament to make laws: does not affect the power of the Parliament of the United Kingdom to make laws for Scotland. Substantially identical provision is made for Wales in section 107(5) of the Government of Wales Act 2006. The practical benefits of achieving harmony between legislatures in areas of competing competence, of avoiding duplication of effort, of enabling the UK Parliament to make UK wide legislation where appropriate, such as establishing a single UK implementing body, and of avoiding any risk of legal challenge to the vires of the devolved legislatures were recognised from an early date in the devolution process. The convention takes its name from Lord Sewel, the Minister of State in the Scotland Office in the House of Lords who was responsible for the progress of the Scotland Bill in 1998. In a debate in the House of Lords on the clause which is now section 28 of the Scotland Act 1998, he stated in July 1998 that, while the devolution of legislative competence did not affect the ability of the UK Parliament to legislate for Scotland, we would expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish Parliament. That expectation has been fulfilled. The convention was embodied in a Memorandum of Understanding between the UK government and the devolved governments originally in December 2001 (Cm 5240). Para 14 of the current Memorandum of Understanding, which was published in October 2013, states: The UK Government will proceed in accordance with the convention that the UK Parliament would not normally legislate with regard to devolved matters except with the agreement of the devolved legislature. The devolved administrations will be responsible for seeking such agreement as may be required for this purpose on an approach from the UK Government. Thus, the UK government undertook not to seek or support relevant legislation in the UK Parliament without the prior consent of the devolved legislature. That consent is given by a legislative consent motion which the devolved government introduces into the legislature. Para 2 of the Memorandum of Understanding stated that it was a statement of political intent and that it did not create legal obligations. Over time, devolved legislatures have passed legislative consent motions not only when the UK Parliament has legislated on matters which fall within the legislative competence of a devolved legislature, but also when the UK Parliament has enacted provisions that directly alter the legislative competence of a devolved legislature or amend the executive competence of devolved administrations. Thus, as the Lord Advocate showed in a helpful schedule, legislative consent motions were passed by the Scottish Parliament before the enactment of both the Scotland Act 2012 and the Scotland Act 2016. Similarly, the Welsh Assembly passed a legislative consent motion in relation to the Wales Act 2014, and in November 2016 the Welsh government laid a legislative consent motion before the Assembly in relation to the current Wales Bill 2016. But legislation which implements changes to the competences of EU institutions and thereby affects devolved competences, such as the 2008 Act which incorporated the Treaty of Lisbon amending the TEU and the TFEU into section 1(2) of the 1972 Act, has not been the subject of legislative consent motions in any devolved legislature. Before addressing the more recent legislative recognition of the convention, it is necessary to consider the role of the courts in relation to constitutional conventions. It is well established that the courts of law cannot enforce a political convention. In Re Resolution to Amend the Constitution [1981] 1 SCR 753, the Supreme Court of Canada addressed the nature of political conventions. In the majority judgment the Chief Justice (Laskin) and Dickson, Beetz, Estey, McIntyre, Chouinard and Lamer JJ stated at pp 774 to 775: The very nature of a convention, as political in inception and as depending on a consistent course of political recognition by those for whose benefit and to whose detriment (if any) the convention developed over a considerable period of time is inconsistent with its legal enforcement. In a dissenting judgment on one of the questions before the court, the Chief Justice and Estey and MacIntyre JJ developed their consideration of conventions at p 853: [A] fundamental difference between the legal, that is the statutory and common law rules of the constitution, and the conventional rules is that, while a breach of the legal rules, whether of statutory or common law nature, has a legal consequence in that it will be restrained by the courts, no such sanction exists for breach or non observance of the conventional rules. The observance of constitutional conventions depends upon the acceptance of the obligation of conformance by the actors deemed to be bound thereby. When this consideration is insufficient to compel observance no court may enforce the convention by legal action. The sanction for non observance of a convention is political in that disregard of a convention may lead to political defeat, to loss of office, or to other political consequences, but will not engage the attention of the courts which are limited to matters of law alone. Courts, however, may recognise the existence of conventions Martland, Ritchie, Dickson, Beetz, Chouinard and Lamer JJ made the same point at pp 882 to 883: It is because the sanctions of convention rest with institutions of government other than courts or with public opinion and ultimately, with the electorate, that it is generally said that they are political. Attempts to enforce political conventions in the courts have failed. Thus in Madzimbamuto v Lardner Burke [1969] 1 AC 645, the Judicial Committee of the Privy Council had to consider a submission that legal effect should be given to the convention which applied at that time that the UK Parliament would not legislate without the consent of the government of Southern Rhodesia on matters within the competence of the Legislative Assembly. In its judgment delivered by Lord Reid the Board stated at p 723 that: That is a very important convention but it had no legal effect in limiting the legal power of Parliament. It is often said that it would be unconstitutional for the UK Parliament to do certain things, meaning that the moral, political and other reasons against doing them are so strong that most people would regard it as highly improper if Parliament did these things. But that does not mean that it is beyond the power of Parliament to do such things. If Parliament chose to do any of them the courts could not hold the Act of Parliament invalid. More recently, the political nature of the Sewel Convention was recognised by Lord Reed in a decision of the Inner House of the Court of Session, Imperial Tobacco v Lord Advocate 2012 SC 297, para 71. While the UK government and the devolved executives have agreed the mechanisms for implementing the convention in the Memorandum of Understanding, the convention operates as a political restriction on the activity of the UK Parliament. Article 9 of the Bill of Rights, which provides that Proceedings in Parliament ought not to be impeached or questioned in any Court or Place out of Parliament, provides a further reason why the courts cannot adjudicate on the operation of this convention. Judges therefore are neither the parents nor the guardians of political conventions; they are merely observers. As such, they can recognise the operation of a political convention in the context of deciding a legal question (as in the Crossman diaries case Attorney General v Jonathan Cape Ltd [1976] 1 QB 752), but they cannot give legal rulings on its operation or scope, because those matters are determined within the political world. As Professor Colin Munro has stated, the validity of conventions cannot be the subject of proceedings in a court of law (1975) 91 LQR 218, 228. The evolving nature of devolution has resulted in the Sewel Convention also receiving statutory recognition through section 2 of the Scotland Act 2016, which inserted sub section (8) into section 28 of the Scotland Act 1998 (which empowers the Scottish Parliament to make laws). Thus subsections (7) and (8) now state: (7) This section does not affect the power of the Parliament of the United Kingdom to make laws for Scotland. (8) But it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament. A substantially identical provision (clause 2) is proposed in the Wales Bill 2016 2017, which is currently before the UK Parliament. As the Advocate General submitted, by such provisions, the UK Parliament is not seeking to convert the Sewel Convention into a rule which can be interpreted, let alone enforced, by the courts; rather, it is recognising the convention for what it is, namely a political convention, and is effectively declaring that it is a permanent feature of the relevant devolution settlement. That follows from the nature of the content, and is acknowledged by the words (it is recognised and will not normally), of the relevant subsection. We would have expected UK Parliament to have used other words if it were seeking to convert a convention into a legal rule justiciable by the courts. In the Scotland Act 2016, the recognition of the Sewel Convention occurs alongside the provision in section 1 of that Act. That section, by inserting section 63A into the Scotland Act 1998, makes the Scottish Parliament and the Scottish government a permanent part of the United Kingdoms constitutional arrangements, signifies the commitment of the UK Parliament and government to those devolved institutions, and declares that those institutions are not to be abolished except on the basis of a decision of the people of Scotland voting in a referendum. This context supports our view that the purpose of the legislative recognition of the convention was to entrench it as a convention. The Lord Advocate and the Counsel General for Wales were correct to acknowledge that the Scottish Parliament and the Welsh Assembly did not have a legal veto on the United Kingdoms withdrawal from the European Union. Nor in our view has the Northern Ireland Assembly. Therefore, our answer to the second question in para 126 above is that the consent of the Northern Ireland Assembly is not a legal requirement before the relevant Act of the UK Parliament is passed. In reaching this conclusion we do not underestimate the importance of constitutional conventions, some of which play a fundamental role in the operation of our constitution. The Sewel Convention has an important role in facilitating harmonious relationships between the UK Parliament and the devolved legislatures. But the policing of its scope and the manner of its operation does not lie within the constitutional remit of the judiciary, which is to protect the rule of law. Conclusion Accordingly, (i) we dismiss the Secretary of States appeal against the decision of the English and Welsh Divisional Court, (ii) we invite the parties to the reference from the Northern Irish Court of Appeal to agree or, failing agreement, to make written submissions as to the order to be made on the appeal from that Court, and (iii) we answer the second and fifth questions referred by the courts of Northern Ireland as indicated respectively in paras 150 and 134 above, and we do not answer the first, third and fourth questions as they have been superseded. LORD REED: (dissenting) Introduction Article 50 of the Treaty of European Union (TEU) provides: 1. Any member state may decide to withdraw from the Union in accordance with its own constitutional requirements. 2. A member state which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that state, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union 3. The Treaties shall cease to apply to the state in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the member state concerned, unanimously decides to extend this period The cases before the court arise from disputes as to the constitutional requirements which govern a decision by the United Kingdom to withdraw from the European Union under article 50(1): a decision which must be taken before notification can be given under article 50(2). In the case brought by Mrs Miller and Mr Dos Santos (whom I shall refer to as the Miller claimants), the Miller claimants maintain that the Crown cannot lawfully give notification under article 50(2) unless an Act of Parliament authorises it to do so. The Secretary of State for Exiting the European Union, on the other hand, maintains that the decision is one which can lawfully be taken by the Crown in the exercise of prerogative powers. The Divisional Court decided the case in favour of the Miller claimants, and the case now comes before this court as an appeal against that decision. A number of interested parties and interveners have taken part in the Miller appeal. They include the Lord Advocate and the Counsel General for Wales, who as well as presenting arguments in support of those advanced by the Miller claimants, have also argued that, in the event that an Act of Parliament is required, the consent of the Scottish Parliament and the National Assembly for Wales is also required, in accordance with a convention known as the Sewel Convention. Two other cases are also before the court. In the first, an application for leave to apply for judicial review brought by Mr Agnew and others, a number of devolution issues have been referred to this court by the High Court of Northern Ireland. Put shortly, the court is asked to decide whether provisions of the Northern Ireland Act 1998 (the Northern Ireland Act) have the effect that an Act of Parliament is required before notification is given under article 50(2); if so, whether the consent of the Northern Ireland Assembly is required before such an Act of Parliament is enacted, in accordance with the Sewel Convention; and, in any event, whether the Northern Ireland Act prevents or constrains the exercise of the power to give notice. In the second case, an application for leave to apply for judicial review brought by Mr McCord, another devolution issue has been referred to this court by the Court of Appeal of Northern Ireland. The court is asked to decide whether the giving of notification under article 50(2) in the exercise of prerogative powers, without the consent of the people of Northern Ireland, would impede the operation of section 1 of the Northern Ireland Act, which provides that Northern Ireland shall not cease to be part of the United Kingdom without the consent of a majority of the people of Northern Ireland. I shall begin by considering the Miller appeal. The argument of the Secretary of State in the Miller appeal Each side of the argument in the Miller appeal is based on a principle of the British constitution. Counsel on each side cited a librarys worth of authority, but I need mention only a few of the most important cases, as the essence of the relevant principles is clear and well known. The Secretary of State relies on the principle that, as a matter of law, the conduct of the UKs foreign relations falls within the prerogative power of the Crown, advised by its Ministers. This prerogative power includes the power to negotiate international treaties, to amend them, and to withdraw from them. The exercise of that treaty making power is not justiciable by the courts, unless statute has made it so. As Lord Oliver of Aylmerton said in the Tin Council case (JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, 499: On the domestic plane, the power of the Crown to conclude treaties with other sovereign states is an exercise of the Royal Prerogative, the validity of which cannot be challenged in municipal law: see Blackburn v Attorney General [1971] 1 WLR 1037. The Sovereign acts throughout the making of the treaty and in relation to each and every of its stipulations in her sovereign character, and by her own inherent authority; and, as in making the treaty, so in performing the treaty, she is beyond the control of municipal law, and her acts are not to be examined in her own courts: Rustomjee v The Queen (1876) 2 QBD 69, 74, per Lord Coleridge CJ. The case of Blackburn v Attorney General, to which Lord Oliver referred, concerned the UKs entry into the European Communities, as the EU was then known. The action was an attempt to prevent the Crown from acceding to the Treaty of Rome. Lord Denning MR stated: The treaty making power of this country rests not in the courts, but in the Crown; that is, Her Majesty acting upon the advice of her Ministers. When her Ministers negotiate and sign a treaty, even a treaty of such paramount importance as this proposed one, they act on behalf of the country as a whole. They exercise the prerogative of the Crown. Their action in so doing cannot be challenged or questioned in these courts. (p 1040) The compelling practical reasons for recognising this prerogative power to manage international relations were identified by Blackstone: This is wisely placed in a single hand by the British constitution, for the sake of unanimity, strength, and despatch. Were it placed in many hands, it would be subject to many wills: many wills, if disunited and drawing different ways, create weakness in a government; and to unite those several wills, and reduce them to one, is a work of more time and delay than the exigencies of state will afford. (Commentaries on the Laws of England (1765 1769), Book I, Chapter 7, Of the Kings Prerogative) The value of unanimity, strength and dispatch in the conduct of foreign affairs are as evident in the 21st century as they were in the 18th. Confiding foreign affairs to the Crown, in the exercise of the prerogative, does not, however, secure their effective conduct at the expense of democratic accountability. Ministers of the Crown are politically accountable to Parliament for the manner in which this prerogative power is exercised, and it is therefore open to Parliament to require its exercise to be debated and even to be authorised by a resolution or legislation: as it has done, for example, in relation to the ratification of certain treaties under the European Union Amendment Act 2008, the Constitutional Reform and Governance Act 2010 and the European Union Act 2011. The Crown can, in addition, seek Parliamentary approval before exercising the prerogative power if it so chooses. There is however no legal requirement for the Crown to seek Parliamentary authorisation for the exercise of the power, except to the extent that Parliament has so provided by statute: that follows from the general principle set out in Blackburn v Attorney General and the Tin Council case. Since there is no statute which requires the decision under article 50(1) to be taken by Parliament, it follows that it can lawfully be taken by the Crown, in the exercise of the prerogative. There is therefore no legal requirement for an Act of Parliament to authorise the giving of notification under article 50(2). So runs the Secretary of States argument. In support of this argument, the Secretary of State points out that there has been considerable Parliamentary scrutiny of Ministers conduct and their plans in relation to article 50. That scrutiny has included inquiries by the House of Commons Select Committee on Exiting the EU and by the House of Lords European Union Committee, as well as Parliamentary questions and debates. The latter have included a debate in the House of Commons on 7 December 2016, following which the following motion was agreed: That this House recognises that leaving the EU is the defining issue facing the UK; notes the resolution on parliamentary scrutiny of the UK leaving the EU agreed by the House on 12 October 2016; recognises that it is Parliaments responsibility to properly scrutinise the Government while respecting the decision of the British people to leave the European Union; confirms that there should be no disclosure of material that could be reasonably judged to damage the UK in any negotiations to depart from the European Union after article 50 has been triggered; and calls on the Prime Minister to commit to publishing the Governments plan for leaving the EU before article 50 is invoked, consistently with the principles agreed without division by this House on 12 October; recognises that this House should respect the wishes of the United Kingdom as expressed in the referendum on 23 June; and further calls on the Government to invoke article 50 by 31 March 2017. The Secretary of State submits that it is for Parliament, not the courts, to determine the nature and extent of its involvement. The Secretary of State also emphasises, in response to the argument of the Miller claimants, that the giving of notification under article 50(2) does not in itself alter any laws in force in the UK: it merely initiates a process of negotiation. If, at the end of those negotiations, a withdrawal agreement is reached, the procedures for Parliamentary approval laid down in the Constitutional Reform and Governance Act 2010 are likely to apply. Parliament will in any event be invited to legislate before the EU treaties cease to apply to the UK, so as to address the issues then arising in relation to rights and obligations under EU law which are currently given effect in the UK through the European Communities Act 1972 as amended (the 1972 Act). The argument of the Miller claimants The Miller claimants, on the other hand, rely on decided cases concerned with the use of prerogative powers in other situations. They argue that those cases establish the existence of legal constraints on the exercise of those powers, and that those constraints are applicable in the admittedly different situation with which we are now concerned. They argue that the effect of those constraints is that Ministers cannot lawfully give notification under article 50(2) unless an Act of Parliament authorises them to do so. The starting point of this argument is the Case of Proclamations (1611) 12 Co Rep 74, which concerned the question whether James I could, by proclamation, prohibit the construction of new buildings in and around London, and prohibit the manufacture of starch from wheat. Coke CJ stated that the King by his proclamation or other ways cannot change any part of the common law, or statute law, or the customs of the realm (p 75). Those three categories were exhaustive of English law: the law of England is divided into three parts, common law, statute law, and custom; but the Kings proclamation is none of them (ibid). It followed that the King cannot create any offence by his prohibition or proclamation, which was not an offence before, for that was to change the law (ibid). The same approach can be seen in more recent cases. For example, in The Zamora [1916] 2 AC 77 an issue arose as to whether the courts were bound, by an Order in Council made under prerogative powers, to decide that a neutral ship found during wartime to have a contraband cargo on board, while ostensibly bound for a neutral port, was lawful prize: an issue which, under established legal principles, depended on whether the ship or its cargo was in reality destined for the enemy. Lord Parker of Waddington stated: The idea that the King in Council, or indeed any branch of the Executive, has power to prescribe or alter the law to be administered by Courts of law in this country is out of harmony with the principles of our Constitution . No one would contend that the prerogative involves any power to prescribe or alter the law administered in Courts of Common Law or Equity. (p 90) These cases were not concerned with the prerogative power to conduct foreign relations. It is however consistent with those cases that, although the Crown can undoubtedly enter into treaties in the exercise of prerogative powers, it cannot, by doing so, alter domestic law. That is known as the dualist approach to international law, in distinction to the monist approach adopted by many other countries, under which treaties automatically take effect in the domestic legal system. In support of the principle that treaties cannot alter domestic law, the Miller claimants rely on the explanations of the relationship between international and domestic law given by Lord Templeman and Lord Oliver in the Tin Council case. The case concerned the question whether a Minister of the Crown was liable under English law for the debts of an international organisation which had been established by a treaty to which the UK was party. Rejecting the contention that the Minister was liable, Lord Templeman said: Lord Oliver said much the same: A treaty is a contract between the governments of two or more sovereign states. International law regulates the relations between sovereign states and determines the validity, the interpretation and the enforcement of treaties. A treaty to which Her Majestys Government is a party does not alter the laws of the United Kingdom. A treaty may be incorporated into and alter the laws of the United Kingdom by means of legislation. Except to the extent that a treaty becomes incorporated into the laws of the United Kingdom by statute, the courts of the United Kingdom have no power to enforce treaty rights and obligations at the behest of a sovereign government or at the behest of a private individual. (pp 476 477) . as a matter of the constitutional law of the United Kingdom, 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. Quite simply, a treaty is not part of English law unless and until it has been incorporated into the law by legislation. So far as individuals are concerned, it is res inter alios acta from which they cannot derive rights and by which they cannot be deprived of rights or subjected to obligations; and it is outside the purview of the court not only because it is made in the conduct of foreign relations, which are a prerogative of the Crown, but also because, as a source of rights and obligations, it is irrelevant. (p 500) Similar observations were made by Lord Hoffmann in the Privy Council case of Higgs v Minister of National Security [2000] 2 AC 228, 241, concerned with the impact of the American Convention on Human Rights on the domestic law of the Bahamas, where he stated that treaties cannot alter the law of the land. The principle that the Crown cannot alter the common law or statute by an exercise of the prerogative was developed in the case of Attorney General v De Keysers Royal Hotel Ltd [1920] AC 508, which concerned the requisitioning of a hotel during the First World War for use as the headquarters of the Royal Flying Corps. After the war, a dispute arose over the basis on which the compensation to be paid to the owners should be assessed. There was a statutory scheme for requisitioning, which included a statutory right to compensation, but Ministers argued that the Crown was in any event entitled to requisition the hotel under prerogative powers, in which event compensation was payable ex gratia rather than being assessed in accordance with the statutory scheme. That argument was rejected by the House of Lords on the basis that if the whole ground of something which could be done by the prerogative is covered by the statute, it is the statute that rules (per Lord Dunedin at p 526). As Lord Dunedin reasoned: Inasmuch as the Crown is a party to every Act of Parliament it is logical enough to consider that when the Act deals with something which before the Act could be effected by the prerogative, and specially empowers the Crown to do the same thing, but subject to conditions, the Crown assents to that, and by that Act, to the prerogative being curtailed. (p 526) The case thus established that, to the extent that a matter has been regulated by Parliament, the Crown cannot regulate it differently under the prerogative. The cases of Laker Airways Ltd v Department of Trade [1977] QB 643 and R v Secretary of State for the Home Department, Ex p Fire Brigades Union [1995] 2 AC 513 are cited by the Miller claimants as more recent examples of the application of the same principle, although in the former case only Roskill LJ relied on it (contrast Lord Denning MR at pp 705G 706A and Lawton LJ at p 728A), while the decision in the latter case was based on a different principle (see per Lord Browne Wilkinson at p 553G and Lord Lloyd of Berwick at p 573 C D). In the light of these decided cases, and others to the same effect, the Miller claimants argue that giving notification under article 50(2) will alter domestic law and destroy statutory rights. That is because it will result in the EU treaties ceasing to apply to the UK, in accordance with article 50(3), from the date of the entry into force of the withdrawal agreement or, failing that, from the expiry of a period of two years after notification, or any longer period which may be agreed with the European Council. Since the EU treaties have been given effect in domestic law by the 1972 Act, so as to create rights enforceable before our national courts, it would offend against the principle established in the Case of Proclamations, and explained more recently in the Tin Council case, for that alteration in domestic law to be effected under the prerogative. This argument assumes that, once notification is given under article 50(2), the process of withdrawal from the EU cannot be stopped. It is common ground in all the cases before the court that it should proceed on that assumption. In any event, even if the process might be stopped, it is common ground that Ministers power to give notice under article 50(2) has to be tested on the basis that it may not be stopped. In those circumstances, that is the basis on which this court is proceeding. Furthermore, since the 1972 Act makes provision for the effect of the EU treaties in domestic law, and notification under article 50(2) will sooner or later result in the treaties ceasing to have effect in domestic law, it is argued that there is a conflict between the exercise of the prerogative to give notification and the statutory scheme. Following De Keyser, that conflict should be resolved in favour of the statute, by holding that the prerogative must be constrained. The referendum Both sides of the argument proceed on the basis that the referendum on membership of the EU, held under the European Union Referendum Act 2015 (the 2015 Act), which resulted in a vote to leave the EU, does not provide the answer. The Secretary of States argument proceeds on the basis that the Crown has taken the decision under article 50(1), accepting the result of the referendum. The Miller claimants argue that only Parliament can take that decision. Both the Secretary of State and the Miller claimants proceed on the basis that the referendum result was not itself a decision by the UK to withdraw from the EU, in accordance with the UKs constitutional requirements, and that the 2015 Act did not itself authorise notification under article 50(2). In these circumstances, there is no issue before the court as to the legal effect of the referendum result. Nor is this an appropriate occasion on which to consider the implications for our constitutional law of the developing practice of holding referendums before embarking on major constitutional changes: a matter on which the court has heard no argument. Other arguments In addition to the arguments advanced by the parties to the Miller appeal, the court also has before it the submissions presented on behalf of the interested parties and interveners. They largely provide further elaboration of the arguments presented on behalf of the principal parties. Without intending any discourtesy, I do not think it is necessary to set out their arguments in full, and would generally wish only to acknowledge the assistance which they have provided. It is however appropriate to note the submissions made by the Lord Advocate (which share common ground with those of the first interested party and the fourth interveners), and by the Counsel General for Wales. One argument advanced by the Lord Advocate and by Ms Mountfield QC on behalf of the first interested party is that the UKs withdrawal from the EU will alter the UKs rule of recognition: that is to say, the rule which identifies the sources of law in our legal system and imposes a duty to give effect to laws emanating from those sources. The status of the EU institutions as a recognised source of law will inevitably be revoked, sooner or later, following notification under article 50(2). Since that will be a fundamental alteration in the UKs constitution, it can only be effected by Parliamentary legislation. An Act of Parliament is therefore argued to be necessary before notification can be given. The Lord Advocate also cites material from Scottish sources which is consistent with the principle derived by the Miller claimants from English case law, such as the Case of Proclamations and the Tin Council case. This includes the provision of the Claim of Right Act 1689: That all Proclamationes asserting ane absolute power to Cass annull and Dissable lawes are Contrair to Law. This provision is analogous to the corresponding provisions in sections 1 and 2 of the Bill of Rights 1688, to which the Miller claimants refer: That the pretended power of suspending of laws or the execution of laws by regall authority without consent of Parlyament is illegall. That the pretended power of dispensing with laws or the execution of laws by regall authoritie as it hath beene assumed and exercised of late is illegall. As Lord Denning MR noted, however, in McWhirter v Attorney General [1972] CMLR 882, 886, the Bill of Rights did not restrict the Crowns prerogative powers in relation to foreign affairs: the Crown retained, as fully as ever, the prerogative of the treaty making power. The same appears to be true of the Claim of Right. The Lord Advocate also cites article 18 of the Union with England Act 1707. This provision, like the corresponding provision in the Union with Scotland Act 1706, states that laws in use in Scotland are to be alterable by the Parliament of Great Britain. The Lord Advocate and the Counsel General for Wales have also advanced submissions concerning the Sewel Convention. That convention was originally stated by Lord Sewel, when Parliamentary Under Secretary of State at the Scottish Office, in the House of Lords during the passage of the Scotland Bill. He said that we would expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish Parliament: Hansard (HL Debates), 21 July 1998, col 791. The convention was later embodied in a Memorandum of Understanding between the UK Government and the devolved governments (Cm 5240, 2001). Para 14 of the current Memorandum of Understanding, which was published in October 2013, states: The United Kingdom Parliament retains authority to legislate on any issue, whether devolved or not. It is ultimately for Parliament to decide what use to make of that power. However, the UK Government will proceed in accordance with the convention that the UK Parliament would not normally legislate with regard to devolved matters except with the agreement of the devolved legislature. Para 2 states: This Memorandum is a statement of political intent, and should not be interpreted as a binding agreement. It does not create legal obligations between the parties. In relation to Scotland, the convention was given statutory recognition in section 28(8) of the Scotland Act 1998 (as amended by section 2 of the Scotland Act 2016), which has to be read together with section 28(7): (7) This section does not affect the power of the Parliament of the United Kingdom to make laws for Scotland. (8) But it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament. Summary of conclusions It may be helpful to summarise at this stage the conclusions which I have reached in relation to the Miller appeal, before explaining the reasons why I have arrived at them. I entirely accept the importance in our constitutional law of the principle of Parliamentary supremacy over our domestic law, established in the Case of Proclamations, the Tin Council case, and other similar cases such as The Zamora. That principle does not, however, require that Parliament must enact an Act of Parliament before the UK can leave the EU. That is because the effect which Parliament has given to EU law in our domestic law, under the 1972 Act, is inherently conditional on the application of the EU treaties to the UK, and therefore on the UKs membership of the EU. The Act imposes no requirement, and manifests no intention, in respect of the UKs membership of the EU. It does not, therefore, affect the Crowns exercise of prerogative powers in respect of UK membership. For essentially the same reason, the supposed analogy with De Keyser appears to me to be misplaced. Further, since the effect of EU law in the UK is entirely dependent on the 1972 Act, no alteration in the fundamental rule governing the recognition of sources of law has resulted from membership of the EU, or will result from notification under article 50. It follows that Ministers are entitled to give notification under article 50, in the exercise of prerogative powers, without requiring authorisation by a further Act of Parliament. Given that conclusion, the argument in relation to the Sewel Convention does not arise: the convention concerns Parliamentary legislation, not the exercise of prerogative powers. The European Communities Act 1972 The issue which lies at the heart of these cases is the effect of the 1972 Act, as amended. Section 2(1) provides: All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly The expression the Treaties is defined by section 1(2). Put shortly, it includes the pre accession treaties (described in Part 1 of Schedule 1), taken with other treaties listed in section 1(2), and any other treaty entered into by the EU . with or without any of the member States, or entered into, as a treaty ancillary to any of the Treaties, by the United Kingdom. In relation to the treaties in the latter categories, section 1(3) lays down a procedure to be followed: If Her Majesty by Order in Council declares that a treaty specified in the Order is to be regarded as one of the EU Treaties as herein defined, the Order shall be conclusive that it is to be so regarded; but a treaty entered into by the United Kingdom after the 22nd January 1972, other than a pre accession treaty to which the United Kingdom accedes on terms settled on or before that date, shall not be so regarded unless it is so specified, nor be so specified unless a draft of the Order in Council has been approved by resolution of each House of Parliament. The term treaty is defined by section 1(4) as including any international agreement, and any protocol or annex to a treaty or international agreement. Section 1(2) is prospective in scope: it is not confined to treaties existing when the 1972 Act was originally enacted, but envisages treaties being entered into in the future. At the time of accession, the Treaties were relatively few in number, and included the Treaty of Rome. Since then, many other treaties, including the Maastricht Treaty and the Treaty of Lisbon, have been added, either by the amendment of section 1(2) so as to add to the list of specified treaties, or by the making of Orders of Council approved by resolutions of both Houses, under section 1(3). Returning to section 2(1), it is important to understand why it was necessary. It follows from the UKs dualist approach to international law that the Treaties could only be given effect in our domestic law by means of an Act of Parliament. This was so notwithstanding the doctrine of EU law, established by the European Court of Justice in Van Gend en Loos (Case C 26/62) [1963] ECR 1, 12, that the Treaty of Rome was more than an agreement which merely creates mutual obligations between the contracting states, and that independently of the legislation of member states, Community law therefore not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage. This doctrine was reiterated in Costa v ENEL (Case C 6/64) [1964] ECR 585, 593: By contrast with ordinary international treaties, the EEC Treaty has created its own legal system which, on the entry into force of the Treaty, became an integral part of the legal systems of the member states and which their courts are bound to apply. This doctrine is incompatible with the dualist approach of the UK constitution, and ultimately with the fundamental principle of Parliamentary sovereignty. This was explained by Lord Denning MR in two cases decided around the time when the UK joined the European Communities. The first, Blackburn v Attorney General [1971] 1 WLR 1037, was as explained earlier an attempt to prevent the Crown from acceding to the Treaty of Rome by signing the Treaty of Accession. Having been referred to Costa v ENEL, the Master of the Rolls observed: Even if a treaty is signed, it is elementary that these courts take no notice of treaties as such. We take no notice of treaties until they are embodied in laws enacted by Parliament. and then only to the extent that Parliament tells us. (p 1039) The second case, McWhirter v Attorney General, was decided after the UK had signed the Treaty of Accession but before the 1972 Act had been enacted. The Master of the Rolls stated: Even though the Treaty of Rome has been signed, it has no effect, so far as these courts are concerned, until it is made an Act of Parliament. Once it is implemented by an Act of Parliament, these courts must go by the Act of Parliament. Until that day comes, we take no notice of it. (p 886) As will appear, section 2(1) enables EU law to be given direct effect in our domestic law, but within a framework established by Parliament, in which Parliamentary sovereignty remains the fundamental principle. Considering section 2(1) in greater detail, it is a long and densely packed provision, whose syntax is complex, and whose meaning is not immediately clear. It requires to be read with care. Its essential structure can be expressed in this way: All such [members of a specified category] as [satisfy a specified condition] shall be [dealt with in accordance with a specified requirement]. Rules in that form can be used in many contexts: for example, all such prisoners as are charged with conduct contrary to good order and discipline shall be brought before the Governor; all such incoming passengers as are displaying symptoms of ebola shall be placed in quarantine. Two features of such rules should be noted. First, the rule is conditional in nature: the application of the requirement which it imposes depends on there being members of the specified category that satisfy the relevant condition. In the examples just given, for example, the relevant conditions are being charged with conduct contrary to good order and discipline; and displaying symptoms of ebola. Secondly, although a rule in that form contemplates the possibility that the condition may be satisfied, the form of the rule does not convey any intention that the condition will be satisfied. In the examples just given, for example, the rule does not convey an intention that there will be prisoners who are charged, or passengers who display symptoms of ebola. The intention of the rule maker, so far as it can be derived from the rule, would not therefore be thwarted or frustrated if, either immediately, or at some point in the future, there were no members of the relevant category which satisfied the relevant condition. In section 2(1), the relevant category is: rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and . remedies and procedures from time to time provided for by or under the Treaties. The words from time to time, which appear twice, mean that section 2(1) is concerned not only with the Treaties, and the regulations and other legal instruments made under them, as they stood at the time of accession, but also with the Treaties and instruments made under them as they may change over time in the future. This recognises the fact that the rights, powers, liabilities, obligations and restrictions created or arising by or under the Treaties, and the remedies and procedures provided for by or under the Treaties, alter from time to time, as a result of changes to the Treaties or to the laws made under the procedures laid down in the Treaties. This is relevant in the present context, since it demonstrates that Parliament has recognised that rights given effect under the 1972 Act may be added to, altered or revoked without the necessity of a further Act of Parliament (something which is also apparent from section 1(3)). In response to this point, the majority of the court draw a distinction, described as a vital difference, between changes in domestic law resulting from variations in the content of EU law arising from new EU legislation, and changes resulting from withdrawal by the UK from the European Union. There is no basis in the language of the 1972 Act for drawing any such distinction. Under the arrangements established by the Act, alterations in the UKs obligations under the Treaties are automatically reflected in alterations in domestic law. That is equally the position whether the alterations in the UKs obligations under the Treaties result from the Treaties ceasing to apply to the UK, in accordance with article 50, or from changes to the Treaties or to legislation made under the Treaties. The Act simply creates a scheme under which the effect given to EU law in domestic law reflects the UKs international obligations under the Treaties, whatever they may be. There is nothing in the Act to suggest that Parliaments intention to ensure an exact match depends on the reason why they might not match. The requirement imposed by section 2(1) is: shall be recognised and available in law, and be enforced, allowed and followed accordingly. This phrase gives effect in domestic law to all such rights, powers and so forth as satisfy the relevant condition. The condition which must be satisfied, in order for that requirement to apply, is set out in the following phrase: All such . as in accordance with the Treaties are without further legal enactment to be given legal effect or used in the United Kingdom. This phrase is of particular importance to the resolution of the Miller appeal. It follows from this phrase that rights, powers and so forth created or arising by or under the Treaties are not automatically given effect in domestic law. Legal effect is given only to such rights, powers and so forth arising by or under the Treaties as in accordance with the Treaties are without further enactment to be given legal effect in the United Kingdom. In this respect, once more, the 1972 Act creates a scheme under which the effect given to EU law in domestic law exactly matches the UKs international obligations, whatever they may be. The words without further enactment reflect the EU law concept of direct effect, established by Van Gend en Loos and Costa v ENEL as explained above (and, in so far as it may be regarded as distinct, the concept of direct applicability, established by article 189 of the Treaty of Rome and now stated in article 288 of the Treaty on the Functioning of the European Union (TFEU): see section 18 of the European Union Act 2011). Accordingly, where in accordance with the Treaties, rights, powers and so forth are to be directly applicable or directly effective in the law of the UK, section 2(1) achieves that effect. But there is no obligation in accordance with the Treaties to give effect in the UK to EU rights, powers and so forth merely because they are directly effective under EU law: such an obligation arises only if and for so long as the Treaties apply to the UK. The extent to which the effect given by section 2(1) to rights, powers and so forth arising under EU law is dependent on the Treaties cannot therefore be confined to the question whether the rights, powers and so forth are, under the Treaties, directly effective: it also depends, more fundamentally, on whether the Treaties impose any obligations on the UK to give effect to EU law. Whether rights, powers and so forth are to be given legal effect in the UK, in accordance with the Treaties, therefore depends on whether the Treaties apply to the UK. As the majority of the court state at para 77, Parliament cannot have intended that section 2 should continue to import the variable content of EU law into domestic law, or that the other consequences of the 1972 Act described in paras 62 to 64 above should continue to apply, after the United Kingdom had ceased to be bound by the EU Treaties. If the Treaties do not apply to the UK, then there are no rights, powers and so forth which, in accordance with the Treaties, are to be given legal effect in the UK. This point is illustrated by the fact that, when the 1972 Act came into force on 17 October 1972, the Treaty of Accession had not yet been ratified or entered into force, with the consequence that the Treaties did not apply to the UK. In consequence, section 2(1) initially had no practical application, there being at that time no rights, powers and so forth which, in accordance with the Treaties, were to be given legal effect in the UK. It was not until 1 January 1973, when the Treaty of Accession came into force, following its ratification by the Crown in the exercise of its prerogative powers, that the condition to which section 2(1) subjected the domestic effect of EU law was satisfied. The Miller claimants respond to this point by arguing that the effect of the 1972 Act was to require the Crown to ratify the Treaty of Accession. This is not, in the first place, an answer to the point that the effect of section 2(1) was contingent on the Treatys entering into force. Furthermore, although it is fair to say that the 1972 Act was enacted in anticipation that ratification was likely to occur that is far from saying that ratification was required by statute. In the first place, as explained in para 159 above, it is a basic principle of our constitution that the conduct of foreign relations, including the ratification of treaties, falls within the prerogative powers of the Crown. That principle is so fundamental that it can only be overridden by express provision or necessary implication, as is accepted in the majority judgment at para 48. No such express provision exists in the 1972 Act. Nor do its provisions override that principle as a matter of necessary implication. As Lord Hobhouse of Woodborough explained in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2002] UKHL 21; [2003]1 AC 563, para 45: A necessary implication is not the same as a reasonable implication 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 included. A necessary implication is a matter of express language and logic not interpretation. Secondly, it is not difficult to contemplate circumstances in which ratification might not have occurred. The passage of the 1972 Act was hard fought (as the former minister Ken Clarkes memoir, Kind of Blue (2016), pp 66ff, makes clear), and the possibility of a future Labour Government taking the UK out of the European Communities was apparent. When the Labour Government subsequently came to power, in 1974, it proceeded to hold a referendum in accordance with its manifesto commitment. If the Conservative Government had fallen and the Opposition had come to power while the Treaty of Accession remained unratified, the incoming Labour Government would have been unlikely to ratify it without holding a referendum. Indeed, the Opposition continued to oppose ratification following the Parliamentary passage of the 1972 Act, using an adjournment debate on the date of Royal Assent to criticise ratification as being against the wish of the British people (Hansard (HC Debates), 17 October 1972, cols 58 59). The Government won the division by 31 votes; but if it had lost it, would it have been acting unlawfully if it had decided to respect the will of the House of Commons by not ratifying the treaty? Would it have been legally bound by the 1972 Act to ratify the treaty regardless? These questions can only be answered in the negative. The point can also be illustrated by considering what would have happened if some crisis had occurred in the UKs diplomatic relations with one of its intended partners in the European Communities. If, for example, some dispute comparable in gravity to the then current dispute with Iceland, or the subsequent dispute with Argentina, had occurred with one of the other parties to the Treaty of Rome or the Treaty of Accession, is it likely that the UK would then have ratified the Treaty of Accession? The seemingly less ambitious suggestion in the majority judgment at para 78, that it was not contemplated, when the 1972 Act was being passed, that Ministers would not ratify the Treaties or that, having ratified them, would at some point repudiate them, meets the same objection. That ratification was contemplated is clear, but that tells you nothing about whether the operation of the 1972 Act is conditional on continued membership. What individual members of Parliament contemplated, or expected to happen, is on ordinary principles not relevant to the construction of the Act. In any event it is likely to have varied a good deal. The possibility of the UK being taken out of the European Communities if there were a change of government was apparent. Referring to the structure of section 2(1) of the 1972 Act as set out at para 184 above, it is said at para 82 of the majority judgment that the membership of the specified category [viz, the rights, powers and so forth arising under EU law to which domestic effect must be given] has a variable content which is contingent on the decisions of non UK entities. Section 2(1) says nothing, however, which either expressly or impliedly limits the contingency, to which the duty to give domestic effect to EU law is subject, to decisions by non UK entities. The contingency is that the rights, powers and so forth are such . as in accordance with the Treaties are without further legal enactment to be given legal effect or used in the United Kingdom. It follows from that contingency that the effect given to EU law in our domestic law is conditional on the Treaties application to the UK. That condition was not satisfied when the Act came into force, because the Treaties did not then apply to the UK. The content of the specified category was therefore zero. The satisfaction of the condition, some months later, depended on the decision of a UK entity: it depended on the Crowns exercise of prerogative powers. The content would return to zero if the condition ceased to be satisfied as the result of the UKs invoking article 50. That would be so whether the decision to invoke article 50 had, or had not, been authorised by an Act of Parliament. It is, indeed, accepted by the majority that the condition would cease to be satisfied if the Crown invoked article 50 after being authorised to do so by statute. So the contingency cannot be limited to decisions by non UK entities. The only issue in dispute is whether the action by the Crown, as a result of which the contingency will cease to be satisfied, must be authorised by an Act of Parliament. On that issue, section 2(1) is silent. Neither expressly nor by implication does it require such action to be authorised by Parliament. The fact that section 2(1) is itself a fixed rule of domestic law enacted by Parliament does not affect that conclusion, since a fixed rule which is conditional will necessarily operate only for as long as the condition is satisfied. Nor does it support a conclusion that Parliament has, by necessary implication, deprived the Crown of its prerogative powers: from what words, one might ask, is that implication derived? The amendment of the 1972 Act by section 2 of the European Union (Amendment) Act 2008 I have discussed the position as it stood in 1972. But the real question in the Miller appeal concerns the position following the signing of the Treaty of Lisbon in 2007, and its entry into force in 2009. That is because it was the Treaty of Lisbon which inserted article 50 into the TEU. Parliament addressed the Treaty of Lisbon in the European Union Amendment Act 2008 (the 2008 Act). Section 2 of that Act provides: At the end of the list of treaties in section 1(2) of the European Communities Act 1972 (c 68) add; and (s) the Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing the European Community signed at Lisbon on 13 December 2007 (together with its Annex and protocols), excluding any provision that relates to, or in so far as it relates to or could be applied in relation to, the Common Foreign and Security Policy; Section 2 of the 2008 Act thus added the Lisbon Treaty (other than the parts dealing with the Common Foreign and Security Policy) to the Treaties listed in section 1 of the 1972 Act, to which section 2(1) of that Act refers. It follows that the words such . as in accordance with the Treaties are without further legal enactment to be given legal effect or used in the United Kingdom, in section 2(1) of the 1972 Act, must be read as meaning such . as in accordance with the Treaties, including article 50 TEU, are without further legal enactment to be given legal effect or used in the United Kingdom. The contingency to which the effect of EU law in our domestic law has been subject since the amendment of the 1972 Act by the 2008 Act therefore includes the potential operation of article 50. It is entirely in accordance with the Treaties for article 50 to operate, with the result that, when a withdrawal agreement comes into force, or the time allowed under article 50(3) expires, there may be no rights which, in accordance with the Treaties, are to be given legal effect in the UK. This conclusion is not inconsistent with the statement by the majority of the court, at para 104, that article 50 is not given effect in domestic law by section 2 of the 1972 Act. The majority may be right about that, although the point has not been argued, and the opposite view may be arguable (see, for example, Robert Craig, Casting Aside Clanking Medieval Chains: Prerogative, Statute and Article 50 after the EU Referendum, (2016) MLR 1041, where it is argued that section 2(1) of the 1972 Act has given article 50 domestic effect as a power exercisable by Ministers, superseding the prerogative but also supplying the Parliamentary authorisation desiderated by the Miller claimants). Whether article 50 has direct effect in domestic law does not however affect the question whether its operation forms part of the contingency on which the direct effect given to EU law by the 1972 Act is dependent. The result of section 2 of the 2008 Act is thus that the effect given by section 2(1) of the 1972 Act to EU law, which was always conditional on the Treaties applying to the UK, is now subject to the exercise of the power conferred by article 50 to initiate a particular procedure under which the Treaties will cease to apply to the UK. The Miller claimants respond to these points by arguing that section 2(1) of the 1972 Act impliedly requires the power of withdrawal under article 50 to be exercised by Parliament. In so far as that argument is based on the common law principles established by such authorities as the Case of Proclamations, The Zamora, the Tin Council case and the De Keyser case, I shall discuss those principles later. One can however note at present that, as previously mentioned, there is nothing in section 2(1) which demonstrates that Parliament intended to depart from the fundamental principle that powers relating to the UKs participation in treaty arrangements are exercisable by the Crown. As the majority of the court rightly state at para 108, the fact that a statute says nothing about a particular topic can rarely, if ever, justify inferring a fundamental change in the law. Nor would withdrawal under article 50 be inconsistent with the 1972 Act, any more than a failure to ratify the Treaty of Accession. The result would simply be that there were no rights answering to the description in section 2(1): there would be no rights such . as in accordance with the Treaties are without further legal enactment to be given legal effect or used in the United Kingdom. This is a point of general importance. If Parliament chooses to give domestic effect to a treaty containing a power of termination, it does not follow that Parliament must have stripped the Crown of its authority to exercise that power. In the present context, the impact of the exercise of the power on EU rights given effect in domestic law is accommodated by the 1972 Act: the rights simply cease to be rights to which section 2(1) applies. Withdrawal under article 50 alters the application of the 1972 Act, but is not inconsistent with it. The application of the 1972 Act after a withdrawal agreement has entered into force (or the applicable time limit has expired) is the same as it was before the Treaty of Accession entered into force. As in the 1972 Act as originally enacted, Parliament has created a scheme under which domestic law tracks the obligations of the UK at the international level, whatever they may be. Other post 1972 legislation Other post 1972 legislation is of only secondary importance. It is however relevant in so far as it demonstrates, first, that Parliament has legislated on the basis that the 1972 Act did not restrict the exercise of the foreign affairs prerogative in relation to other aspects of the EU treaties, and secondly, that Parliament is perfectly capable of making clear its intention to restrict the exercise of the prerogative when it wishes to do so. Several examples can be given. The earliest is section 6(1) of the European Parliamentary Elections Act 1978 (as amended by section 3 of the European Communities (Amendment) Act 1986), which provided: No treaty which provides for any increase in the powers of the European Parliament shall be ratified by the United Kingdom unless it has been approved by an Act of Parliament. That provision was later re enacted in section 12 of the European Parliamentary Elections Act 2002 (the 2002 Act). A further example is the 2008 Act, which imposed numerous restrictions on the exercise of prerogative powers in relation to provisions of the Lisbon Treaty. Section 5 is particularly significant. It provided: (1) A treaty which satisfies the following conditions may not be ratified unless approved by Act of Parliament. (2) Condition 1 is that the treaty amends the Treaty on European Union (signed at (a) Maastricht on 7 February 1992), (b) the Treaty on the Functioning of the European Union (the Treaty establishing (what was then called) the European Economic Community, signed at Rome on 25 March 1957 (renamed by the Treaty of Lisbon)), or the Treaty establishing the European Atomic (c) Energy Community (signed at Rome on 25 March 1957). (3) Condition 2 is that the treaty results from the application of article 48(2) to (5) of the Treaty on European Union (as amended by the Treaty of Lisbon) (Ordinary Revision Procedure for amendment of founding Treaties, including amendments affecting EU competence). Section 5 therefore prohibited the ratification of treaties unless approved by an Act of Parliament, where the treaties amended the TEU or the TFEU, and resulted from the application of article 48(2) to (5) TEU. Article 48 TEU was a provision introduced by the Lisbon Treaty to provide a simplified procedure for the conclusion of treaties amending the TEU or the TFEU. Paragraphs (2) to (5) provided, so far as material: 2. The Government of any member state, the European Parliament or the Commission may submit to the Council proposals for the amendment of the Treaties. These proposals may, inter alia, serve either to increase or to reduce the competences conferred on the Union in the Treaties . If the European Council, after consulting the European 3. Parliament and the Commission, adopts by a simple majority a decision in favour of examining the proposed amendments, the President of the European Council shall convene a Convention composed of representatives of the national Parliaments, of the Heads of State or Government of the member states, of the European Parliament and of the Commission . The Convention shall examine the proposals for amendments and shall adopt by consensus a recommendation to a conference of representatives of the governments of the member states as provided for in paragraph 4. The European Council may decide by a simple majority, after obtaining the consent of the European Parliament, not to convene a Convention should this not be justified by the extent of the proposed amendments . 4. A conference of representatives of the governments of the member states shall be convened by the President of the Council for the purpose of determining by common accord the amendments to be made to the Treaties. The amendments shall enter into force after being ratified by all the member states in accordance with their respective constitutional requirements. 5. If, two years after the signature of a treaty amending the Treaties, four fifths of the member states have ratified it and one or more member states have encountered difficulties in proceeding with ratification, the matter shall be referred to the European Council. The TFEU establishes numerous rights which are given effect in the UK by section 2(1) of the 1972 Act. Those rights could be altered by a treaty concluded by the UK Government and the governments of the other member states, under article 48(2) TFEU. Section 5 of the 2008 Act required an Act of Parliament before such a treaty could be ratified. If the Miller claimants arguments are correct, an Act of Parliament was already necessary before the UK Government could exercise the treaty making prerogative so as to alter those rights. Section 5 of the 2008 Act was, however, understood as introducing a requirement for legislation where none previously existed: that was the mischief intended to be addressed. For example, the House of Lords Select Committee on the Constitution stated: Clause 5 of the Bill seeks to create a new requirement for prior parliamentary authorisation of ratification. It would apply to amendments of the founding treaties the Treaty on European Union, the Treaty on the Functioning of the European Union and the Treaty Establishing the European Atomic Energy Community when those amendments are made by the ordinary revision procedure. Before examining clause 5 in more detail, it must be noted that the need for express parliamentary approval before the Government ratifies a treaty amending the founding Treaties of the EU has been recognised in one important respect for some time. (6th Report of Session 2007 08, European Union Amendment Bill and the Lisbon Treaty: Implications for the UK Constitution, HL 84, 2008, paras 23 24). The latter sentence referred not to the 1972 Act, but to section 12 of the 2002 Act, discussed at para 206 above. It is also relevant to note section 6(1) of the 2008 Act, which imposed restrictions on the UKs participation in several procedures laid down in the Lisbon Treaty: A Minister of the Crown may not vote in favour of or otherwise support a decision under any of the following unless Parliamentary approval has been given in accordance with this section . The section went on to require Parliamentary approval in the form of a resolution of both Houses. The provisions of the Lisbon Treaty to which section 6 applied did not include article 50 TEU. The Constitutional Reform and Governance Act 2010 (the 2010 Act) is also relevant. It codifies the previous Ponsonby Rule (a convention that treaties, with limited exceptions, would be laid before Parliament before they were ratified), and sets out detailed procedures for Parliamentary scrutiny of new treaties. It does not apply to treaties which are covered by section 5 of the 2008 Act or by the European Union Act 2011 (the 2011 Act), to which I turn next. A withdrawal agreement under article 50(3) would be likely to fall within its scope, but it would have no application to a decision to withdraw from a treaty or to commence the process of withdrawal. The 2011 Act repealed section 12 of the 2002 Act and sections 5 and 6 of the 2008 Act (subject to an immaterial exception), replacing them with a more elaborate system of Parliamentary control. The evident aim was to introduce stronger Parliamentary controls, in relation to matters falling within the scope of the legislation, than were present under the existing law. The power to amend article 50(3), concerning the extension of the two year period for negotiation, or to adopt the ordinary legislative procedure in relation to that provision, was brought within the scope of these controls by sections 4 and 6, read with Schedule 1. Article 50(1) and (2), concerning the decision to withdraw and its notification, were not. As explained earlier, section 5 of the 2008 Act was enacted on the basis that the Crown could exercise its treaty making power so as to alter EU rights given effect in domestic law by the 1972 Act, without necessarily requiring further authorisation by an Act of Parliament. One can also infer from this body of legislation, as the Divisional Court did in the case of R v Secretary of State for Foreign Affairs, Ex p Rees Mogg [1994] QB 552, discussed in paras 235 237 below, that since Parliament has repeatedly placed express restrictions on the exercise of the prerogative in relation to the EU treaties, the absence of a particular restriction in the 1972 Act tends to support the conclusion that no such restriction was intended to arise by implication. It is also necessary to consider the 2015 Act. For the reasons explained in para 171 above, I do not propose to consider the legal implications of the referendum result. It is, however, proper to take note of the judgment of Lord Dyson MR, with whom the other members of the court agreed, in R (Shindler) v Chancellor of the Duchy of Lancaster [2016] EWCA Civ 419; [2016] 3 WLR 1196. That was a case in which a challenge was brought to the franchise rules applicable to the referendum. Having referred to the provision in article 50(1) that any member state may decide to withdraw from the EU in accordance with its own constitutional requirements, the Master of the Rolls stated: The 2015 Act contains part of the constitutional requirements of the UK as to how it may decide to withdraw from the EU . In short, by passing the 2015 Act, Parliament decided that one of the constitutional requirements that had to be satisfied as a condition of a withdrawal from the EU was a referendum. (paras 13 and 19) It follows that, in enacting the 2015 Act, Parliament considered withdrawal from the EU, and made the holding of a referendum part of the process of taking the decision under article 50(1). It laid down no further role for itself in that process. In the absence of any provision requiring Parliamentary authorisation of the decision, it is difficult, against the background of such provisions being laid down in the Acts of 1978, 2002, 2008, 2010 and 2011, to regard such a requirement as being implicit. Using the prerogative to alter the law, or take away statutory rights? In the light of the foregoing discussion, one can return to the arguments advanced by the Miller claimants on the basis of authorities concerned with the common law limits of prerogative powers. The first argument, summarised at paras 165 167 and 169 above, is that the giving of notification under article 50(2) will result in the alteration of the law and the destruction of statutory rights, and therefore cannot be effected in the exercise of prerogative powers, applying the principles established in such cases as the Case of Proclamations, The Zamora, the Tin Council case, and Higgs v Minister of National Security, and reflected also in the Bill of Rights and the Claim of Right. The argument that the 1972 Act created statutory rights which cannot be taken away without a further Act of Parliament starts from a premise which requires examination. The 1972 Act did not create statutory rights in the same sense as other statutes, but gave legal effect in the UK to a body of law now known as EU law. As explained at paras 186 187 above, section 2(1) recognises that the rights arising under that body of law can be altered from time to time, as a result of changes to the Treaties or to the laws made under the procedures laid down in the Treaties, without the necessity of a further Act of Parliament. Such alterations result not only in the creation of EU rights which are consequently given effect in domestic law by the 1972 Act, but also in the repeal and restriction of EU rights previously created, and given effect under domestic law. The successive regulations imposing fishing quotas are an example. To give another example, if Greece were to decide to leave the EU while the UK remained a member, the Treaties would cease to apply to Greece either when a withdrawal agreement entered into force, or in any event after two years had expired. Greek citizens living in the UK would then cease to enjoy the EU rights which continued to be enjoyed here, for example, by French citizens. As these examples illustrate, rights given direct effect by section 2(1) of the 1972 Act are inherently contingent, and can be altered without any further Act of Parliament. This is a very different situation from any contemplated by the judges in the cases relied on, or by the Scottish and English Parliaments at the time of the Glorious Revolution or the Acts of Union. As noted earlier, the majority of the court respond to this point by drawing a distinction between changes which result from the UKs giving notice under article 50, for which a further Act of Parliament is argued to be necessary, and changes which result from any other alteration in the Treaties or in the instruments made under the Treaties, for which no further Act of Parliament is necessarily required. That distinction cannot be derived from the principle established by the Case of Proclamations. It has to be based on an interpretation of the 1972 Act: the matter which was discussed at paras 179 214 above. For the reasons there explained, I see no basis in the 1972 Act for drawing any such distinction. The Act simply creates a scheme under which domestic law reflects the UKs international obligations, whatever they may be. It is equally questionable whether notification under article 50 will alter the law of the land, in the sense in which judges have used that expression. That can be illustrated by reflecting on the effect of notification, and on the ability of Parliament to maintain in force the EU rights currently given effect under section 2(1) of the 1972 Act. The giving of notification does not in itself alter EU rights or the effect given to them in domestic law. Nor does it impinge on Parliaments competence to enact legislation during the intervening period before the treaties cease to have effect. Parliament can enact whatever provisions it sees fit in order to address the consequences of withdrawal from the EU, including provisions designed to protect rights which are currently derived from EU law. Parliament cannot, however, replicate EU law. It cannot establish those elements of it which involve reciprocal arrangements with the other member states, or which involve the participation of EU institutions. Nor can it create rights which have the distinguishing characteristics of EU rights, such as priority over subsequent legislation, and authoritative interpretation by the Court of Justice. The fact that notification alters no law, and that Parliament retains full competence to legislate so as to protect rights before withdrawal occurs, illustrates how different this situation is from those addressed in the cases relied upon. Equally, the fact that the enactment of EU law lies beyond the ability of Parliament illustrates how different it is from the law of the land as usually understood. More fundamentally, however, the argument that withdrawal from the EU would alter domestic law and destroy statutory rights, and therefore cannot be undertaken without a further Act of Parliament, has to be rejected even if one accepts that the 1972 Act creates statutory rights and that withdrawal will alter the law of the land. It has to be rejected because it ignores the conditional basis on which the 1972 Act gives effect to EU law. If Parliament grants rights on the basis, express or implied, that they will expire in certain circumstances, then no further legislation is needed if those circumstances occur. If those circumstances comprise the UKs withdrawal from a treaty, the rights are not revoked by the Crowns exercise of prerogative powers: they are revoked by the operation of the Act of Parliament itself. In so far as the Miller claimants place reliance on rights under EU law as given effect in the legal systems of other member states, such as the right of UK citizens to live and work in Greece, there is no rule which prevents prerogative powers being exercised in a way which alters rights arising under foreign law. In so far as the Miller claimants place reliance on statutes creating rights in respect of EU institutions, such as the right to vote in elections to the European Parliament under the European Parliamentary Elections Act 2002, such statutory rights are obviously conditional on the UKs continued membership of the EU. Parliament cannot have intended them to operate on any other basis. If they cease to be effective following the UKs withdrawal from the EU, that is inherent in the nature of the right which Parliament conferred. The only logical alternative is to hold that Parliament has created a right to remain in the EU, and none of the arguments goes that far. Using the prerogative to revoke a source of law? As explained at para 173 above, it is argued that the 1972 Act created an entirely new, independent and overriding source of domestic law (as it is put in the majority judgment at para 80). Since the identification of a countrys sources of law is one of the most fundamental functions of its constitution, it follows that the Crown cannot lawfully revoke a source of law in the exercise of prerogative powers. So runs the argument. As put by counsel, this argument is based on the concept of the rule of recognition: that is to say, the foundational rule in a legal system which identifies the sources of law in that system and imposes a duty to give effect to laws emanating from those sources. The Lord Advocate and Ms Mountfield QC argue that the rule would be altered by withdrawal from the EU, and therefore, sooner or later, by the giving of notification under article 50. The UKs entry into the EU did not, however, alter its rule of recognition, and neither would its withdrawal. That is because EU law is not a source of law of the relevant kind: that is to say, a source of law whose validity is not dependent on some other, more fundamental, source of law, but depends on the ultimate rule of recognition. The true position was explained by Lord Mance in Pham v Secretary of State for the Home Department [2015] UKSC 19; [2015] 1 WLR 1591, para 80: For a domestic court, the starting point is, in any event, to identify the ultimate legislative authority in its jurisdiction according to the relevant rule of recognition. The search is simple in a country like the United Kingdom with an explicitly dualist approach to obligations undertaken at a supranational level. European law is certainly special and represents a remarkable development in the world's legal history. But, unless and until the rule of recognition by which we shape our decisions is altered, we must view the United Kingdom as independent, Parliament as sovereign and European law as part of domestic law because Parliament has so willed. The question how far Parliament has so willed is thus determined by construing the 1972 Act. As Lord Mance rightly explained, it follows from the UKs dualist approach to international law that EU law is not one of the sources of law identified by the UKs rule of recognition. That was recognised in the cases of Blackburn v Attorney General and McWhirter v Attorney General, as explained in para 183 above. As a source of law, EU law, like legislation enacted by the devolved legislatures, or delegated legislation made by Ministers, is entirely dependent on statute (which is not, of course, to say that EU law has the same effects, as devolved or delegated legislation). It derives its legal authority from a statute, which itself derives its authority from the rule of recognition identifying Parliamentary legislation as a source of law. The recognition of its validity does not alter any fundamental principle of our constitution. The fact that the 1972 Act has a prospective effect, in giving effect to laws made from time to time by the EU institutions, does not affect this analysis. Nor does the limited primacy given to EU law by the 1972 Act alter the position, since that primacy itself derives from the 1972 Act. That was recognised by Lord Bridge of Harwich in R v Secretary of State for Transport, Ex p Factortame Ltd (No 2) [1991] 1 AC 603: Under the terms of the Act of 1972 it has always been clear that it was the duty of a United Kingdom court, when delivering final judgment, to override any rule of national law found to be in conflict with any directly enforceable rule of Community law. (p 659: emphasis supplied) The source of law which is validated by the rule of recognition therefore remains Parliament, not the EU. Since the effect of EU law is dependent on an Act of Parliament, the rule of recognition is unchanged. Parliament has itself made it clear that EU law has not altered the UKs rule of recognition. Section 18 of the 2011 Act provides: Directly applicable or directly effective EU law (that is, the rights, powers, liabilities, obligations, restrictions, remedies and procedures referred to in section 2(1) of the European Communities Act 1972) falls to be recognised and available in law in the United Kingdom only by virtue of that Act or where it is required to be recognised and available in law by virtue of any other Act. Since EU law has no status in UK law independent of statute, it follows that the only relevant source of law has at all times been statute. This understanding underpins the discussion of the constitutional status of EU law in R (Buckinghamshire County Council) v Secretary of State for Transport [2014] UKSC 3; [2014] 1 WLR 324. The issue raised by a conflict between an EU directive and long established constitutional principles of domestic law was identified as the extent, if any, to which these principles may have been implicitly qualified or abrogated by the European Communities Act 1972 (para 78). The issue, in other words, was one of domestic law, turning on the interpretation of the 1972 Act. It was said: Contrary to the submission made on behalf of the claimants, that question cannot be resolved simply by applying the doctrine developed by the Court of Justice of the supremacy of EU law, since the application of that doctrine in our law itself depends upon the 1972 Act. If there is a conflict between a constitutional principle, such as that embodied in article 9 of the Bill of Rights, and EU law, that conflict has to be resolved by our courts as an issue arising under the constitutional law of the United Kingdom. (para 79) The implication is that EU law is not itself an independent source of domestic law, but depends for its effect in domestic law on the 1972 Act: an Act which does not confer effect upon it automatically and without qualification, but has to be interpreted and applied in the wider context of the constitutional law of the UK. Accordingly, although no one can doubt the importance of EU law, the effect given to it by the 1972 Act has not altered any fundamental constitutional principle in respect of the identification of sources of law. The majority of the court respond that this analysis is unrealistic. Although it is accepted that the effect of EU law in domestic law is dependent on the 1972 Act, they argue that for EU law to cease to have effect in our domestic law would be a major change in the UKs constitution. As I understand it, the argument is concerned with the effect of the 1972 Act. Whether the 1972 Act has that effect depends on its interpretation, which simply takes one back to the issues discussed at paras 179 214 above. A further reason for rejecting the argument that the 1972 Act created a new source of law, which cannot be revoked without further legislation, is one that applies even if it is accepted that the 1972 Act created a new source of law (in some sense or other). Since the 1972 Act gives effect to EU law only as long as the Treaties apply to the UK, as explained at paras 189 204 above, that source of law is inherently contingent on the UKs continued membership of the EU. EU laws ceasing to have effect as a result of the UKs withdrawal from the Treaties is something which follows from the 1972 Act itself, and does not require further legislation. The analogy with the De Keyser case Although the majority judgment does not adopt the Miller claimants argument based on a supposed analogy with the De Keyser case, it is nevertheless necessary to address it. As explained earlier, that case established that where Parliament has regulated a matter by statute, the Crown cannot have recourse to a prerogative power in respect of the same matter. The argument by analogy asserts that, since notification under article 50 will eventually render the 1972 Act redundant, it follows that notification cannot be given in the exercise of prerogative powers. I am unable to accept that argument, for a number of reasons. First, the De Keyser principle denies that prerogative power can be exercised where a parallel statutory scheme exists. It does not follow from that principle that a prerogative power cannot be exercised where the eventual consequence will be that a statutory provision will cease to have a practical application. The latter proposition cannot be derived from De Keyser, but must be derived from some other source. The only obvious candidate is Parliaments intention in enacting the statutory provisions in question: an intention, it has to be argued, to impose a limitation on the exercise of the prerogative power. That simply takes one back to the argument as to whether an intention to strip the Crown of its prerogative powers in respect of adherence to the EU treaties can be derived from the 1972 Act: an argument which was addressed at paras 201 204 above. Secondly, the 1972 Act does not, in any event, regulate withdrawal from the EU: it recognises the existence of article 50, as explained in paras 198 202 above, but it says nothing about how or by whom a decision to invoke article 50 should be taken. Thirdly, the difference between the present situation and that with which the De Keyser principle is concerned is also evident at the level of remedies. In De Keyser itself, the remedy was a declaration that the owners were entitled to compensation under the statutory scheme. The remedy flowed from the logic of the principle: Ministers were obliged to comply with the statutory scheme. No comparable remedy can be granted in the present case, since there is no statutory scheme governing the operation of article 50. The Rees Mogg case Finally, in relation to the Miller claimants arguments, it should be noted that this is not the first time that the courts have had to address these arguments. In R v Secretary of State for Foreign Affairs, Ex p Rees Mogg, one of counsels arguments in support of a challenge to the ratification of the Maastricht Treaty was recorded by Lloyd LJ as follows: He submits that by ratifying the Protocol on Social Policy, the Government would be altering Community law under the EEC Treaty . It is axiomatic that Parliament alone can change the law. Mr Pannick accepts, of course, that treaties are not self executing. They create rights and obligations on the international plane, not on the domestic plane. He accepts also that the treaty making power is part of the Royal Prerogative . But the EEC Treaty is, he says, different. For section 2(1) of the European Communities Act 1972 provides . If the Protocol on Social Policy is ratified by all member states, it will become part of the EEC Treaty, which is one of the Treaties referred to in section 2(1): see the definition of the Treaties in section 1(2) of the Act of 1972. Accordingly the Protocol will have effect not only on the international plane but also, by virtue of section 2(1) of the Act of 1972, on the domestic plane as well. By enacting section 2(1), Parliament must therefore have intended to curtail the prerogative power to amend or add to the EEC Treaty. There is no express provision to that effect. But that is, according to the argument, the necessary implication . Where Parliament has by statute covered the very same ground as was formerly covered by the Royal Prerogative, the Royal Prerogative is to that extent, by necessary implication, held in abeyance: see Attorney General v De Keysers Royal Hotel Ltd [1920] AC 508; Laker Airways Ltd v Department of Trade [1977] QB 643, 718,720, per Roskill LJ. (p 567) So one sees here the same arguments: that the prerogative power in relation to treaties cannot be used to alter rights in domestic law; that the effect of section 2(1) of the 1972 Act is to transform rights arising under the EU treaties into rights in domestic law; that section 2(1) therefore impliedly curtailed the prerogative power in relation to the EU treaties; and the supposed analogy with the De Keyser principle. The Divisional Court rejected this argument: We find ourselves unable to accept this far reaching argument. When Parliament wishes to fetter the Crowns treaty making power in relation to Community law, it does so in express terms, such as one finds in section 6 of the Act of 1978. Indeed, as was pointed out, if the Crowns treaty making power were impliedly excluded by section 2(1) of the Act of 1972, section 6 of the Act of 1978 would not have been necessary. There is in any event insufficient ground to hold that Parliament has by implication curtailed or fettered the Crowns prerogative to alter or add to the EEC Treaty. (p 567) The court also rejected the challenge on the basis that the protocol in question was not, in any event, one of the Treaties to which the 1972 Act applied (p 568). Contrary to counsels submission in the present case, it is plain that these two reasons for rejecting the challenge to ratification were independent of one another. The first reason was that section 2(1) did not impliedly curtail the Crowns treaty making power. The second was that the protocol in question did not in any event fall within the ambit of section 2(1). I agree with the Divisional Courts reasoning in the passage which I have cited, and in particular with the final sentence: even apart from the inference which might be drawn from examples of express provisions restricting the exercise of prerogative powers in relation to EU law, there is in any event insufficient ground to hold that Parliament has by implication curtailed or fettered the Crowns prerogative powers in relation to the Treaties. What if there had been no referendum, or a vote to remain? Finally, in relation to the Miller appeal, it is argued by the majority at para 91 that the Secretary of States contentions cannot be correct since, if they were, it would have been open to Ministers to invoke prerogative powers to withdraw from the EU even if there had been no referendum, or indeed even if any referendum had resulted in a vote to remain. There are two answers to this point. First, it does not necessarily follow from my conclusions that Ministers could properly have invoked article 50 whenever they pleased, or, more specifically, in the event of a vote to remain. As Lord Carnwath makes clear at para 266 below, there has been no discussion in this appeal of the question whether there might be any circumstances in which the exercise of the prerogative power in question might be open to review, such as if the referendum held under the 2015 Act had resulted in a vote to remain, and I express no view on that point. Secondly, and more fundamentally, controls over the exercise of ministerial powers under the British constitution are not solely, or even primarily, of a legal character, as Lord Carnwath explains in his judgment. Courts should not overlook the constitutional importance of ministerial accountability to Parliament. Ministerial decisions in the exercise of prerogative powers, of greater importance than leaving the EU, have been taken without any possibility of judicial control: examples include the declarations of war in 1914 and 1939. For a court to proceed on the basis that if a prerogative power is capable of being exercised arbitrarily or perversely, it must necessarily be subject to judicial control, is to base legal doctrine on an assumption which is foreign to our constitutional traditions. It is important for courts to understand that the legalisation of political issues is not always constitutionally appropriate, and may be fraught with risk, not least for the judiciary. Conclusion in relation to the Miller appeal For all the foregoing reasons, I would have allowed the Secretary of States appeal in the Miller case. The Northern Irish cases Given my disagreement with the decision of the majority of the court as to the necessity for an Act of Parliament before article 50 can be invoked, it follows that I would also have dealt with the devolution issues raised in the Northern Irish cases differently. So far as those cases raise issues which are distinct from those arising in the Miller appeal, however, I agree with the way in which the majority have dealt with them. Nothing in the Northern Ireland Act bears on the question whether the giving of notification under article 50 can be effected under the prerogative or requires authorisation by an Act of Parliament. More specifically, neither section 1 nor section 75 of the Northern Ireland Act has any relevance in the present context. Nor does a political convention, such as the Sewel Convention plainly is in its application to Northern Ireland, give rise to a legally enforceable obligation. LORD CARNWATH: (dissenting) For the reasons given by Lord Reed, I would have allowed the appeal by the Secretary of State in the main proceedings. In view of the importance of the case, and the fact that we are differing from the Divisional Court and the majority in this court, I shall add some comments of my own from a slightly different legal perspective. I agree with the majority judgment in respect of the Northern Irish cases and the other devolution issues. Constitutional principles At the heart of the case is the classic statement of principle by Lord Oliver in the Tin Council case (JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418): as a matter of the constitutional law of the United Kingdom, 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 (Lord Oliver pp 499E 500D) In the Tin Council case Lord Oliver was speaking only of the making of treaties, not withdrawal. Lord Templeman had earlier made clear that the prerogative enables the Government to negotiate, conclude, construe, observe, breach, repudiate or terminate a treaty (p 476F H). However, there was no discussion of how the classic statement might need modification or development in the context of termination or withdrawal. In principle the same basic rule should apply. Just as the Executive cannot without statutory authority create new rights or obligations in domestic law by entering into a treaty, so it cannot by termination of a treaty take away rights or obligations which currently exist. However, that tells one nothing about the process by which this result is to be achieved, nor at what stage of that process the intervention of Parliament is required. Precedents are hard to find. Counsel have taken us on an interesting journey through cases and legal sources from four centuries and different parts of the common law world. The only example we were shown of withdrawal from a treaty was a recent decision of the Canadian Federal Court: Turp v Ministry of Justice & Attorney General of Canada 2012 FC 893. That was an unsuccessful challenge by the executive to the use of its prerogative powers to withdraw from the Kyoto Protocol on Climate Change, against the background of a statute (passed against the opposition of government) requiring the preparation of plans giving effect to the Protocol. On its face it is a striking example of the use of the prerogative to frustrate the apparent intention of Parliament as expressed in legislation. However, the authority is of limited assistance in the present context, since it had been held in a previous case (Friends of the Earth v Canada (Governor in Council), 2008 FC 118) that the obligations under the statute were not justiciable in the domestic courts. In the end the search through the authorities tells one little that is not sufficiently expressed by the classic rule. It also confirms the lack of any direct precedent for withdrawal from a treaty previously given effect in domestic law, let alone one which has played such a vital part in the development of our laws over more than 40 years. However, lack of precedent is not a reason for inventing new principles, nor is there a need to do so. The existing principles correctly applied provide a clear and coherent framework for effective resolution of all the competing considerations, including the referendum result. The balance of power In considering that framework it is important to recognise the sensitivity in our constitution of the balance between the respective roles of Parliament, the Executive and the courts. The Divisional Court saw this principally in binary terms: the Executive versus Parliament. Under the general heading, the sovereignty of Parliament and the prerogative powers of the Crown, they referred on the one hand to the most fundamental rule that the Crown in Parliament is sovereign (para 20), and on the other to the general rule that the conduct of international relations and the making and unmaking of treaties are matters for the Crown in the exercise of its prerogative powers (para 30), the balance between the two being as explained by Lord Oliver in the Tin Council case (paras 32 33). Although the Tin Council principles as such are not in doubt, they are only part of the story. It is wrong to see this as a simple choice between Parliamentary sovereignty, exercised through legislation, and the untrammelled exercise of the prerogative by the Executive. Parliamentary sovereignty does not begin or end with the Tin Council principles. No less fundamental to our constitution is the principle of Parliamentary accountability. The Executive is accountable to Parliament for its exercise of the prerogative, including its actions in international law. That account is made through ordinary Parliamentary procedures. Subject to any specific statutory restrictions (such as under the Constitutional Reform and Governance Act 2010), they are a matter for Parliament alone. The courts may not inquire into the methods by which Parliament exercises control over the Executive, nor their adequacy. The FBU case Defining the proper boundaries between the respective responsibilities of Parliament, the Executive and the courts lay at the heart of the dispute in the FBU case (R v Secretary of State for the Home Department Ex p Fire Brigades Union [1995] 2 AC 513). That case concerned statutory provisions (under the Criminal Justice Act 1988) providing for compensation for criminal injuries, intended to replace a previous non statutory scheme established under the prerogative. Section 171 provided that the new scheme should come into force on such day as the Secretary of State may by order appoint. No such date was appointed, but instead after some years the Secretary of State announced that a new non statutory scheme would be introduced, which was inconsistent with the scheme provided for by the Act. The House of Lords held by 3 2 that this action was an abuse of power and so unlawful. In the leading judgment Lord Browne Wilkinson noted that the new scheme was to be brought into effect at a time when Parliament has expressed its will that there should be a scheme based on the tortious measure of damages, such will being expressed in a statute which Parliament has neither repealed nor (for reasons which have not been disclosed) been invited to repeal. , it would be most surprising if, at the present day, prerogative powers could be validly exercised by the executive so as to frustrate the will of Parliament expressed in a statute and, to an extent, to pre empt the decision of Parliament whether or not to continue with the Statutory scheme even though the old scheme has been abandoned. It is not for the executive to state as it did in the White Paper (paragraph 38) that the provisions in the Act of 1988 will accordingly be repealed when a suitable legislative opportunity occurs. It is for Parliament, not the executive, to repeal legislation (p 552D E) He concluded: By introducing the tariff scheme he debars himself from exercising the statutory power for the purposes and on the basis which Parliament intended. For these reasons, in my judgment the decision to introduce the tariff scheme at a time when the statutory provisions and his power under section 171(1) were on the statute book was unlawful and an abuse of the prerogative power. (p 554G) The minority, by contrast, regarded the majoritys decision (in Lord Keiths words p 544) as a most improper intrusion into a field which lies peculiarly within the province of Parliament. In a recent article (A dive into deep constitutional waters: article 50, the Prerogative and Parliament (2016) 79(6) MLR 1064 1089), Professor Gavin Phillipson considers some lessons from that decision for the present case. As he points out (ibid p 1082), the apparently fundamental difference of approach between majority and minority came down ultimately to a narrow issue of statutory construction of section 171: whether the section imposed no duty owed to the public (p 544F per Lord Keith), or rather, as the majority thought (p 551D, per Lord Browne Wilkinson), it imposed a continuing obligation on the Secretary of State to consider whether to bring the statutory scheme into force, which was frustrated by implementation of the inconsistent non statutory scheme. Professor Phillipson also draws attention to the important observations by Lord Mustill on the balance between the three organs of the state, and in particular the means by which Parliament exercises control of the Executive, not restricted to legislative control. Although stated in a minority judgment, the underlying principles are not I believe controversial. Lord Mustill said: It is a feature of the peculiarly British conception of the separation of powers that Parliament, the executive and the courts each have their distinct and largely exclusive domain. Parliament has a legally unchallengeable right to make whatever laws it thinks right. The executive carries on the administration of the country in accordance with the powers conferred on it by law. The courts interpret the laws, and see that they are obeyed. This requires the courts on occasion to step into the territory which belongs to the executive, not only to verify that the powers asserted accord with the substantive law created by Parliament, but also, that the manner in which they are exercised conforms with the standards of fairness which Parliament must have intended. Concurrently with this judicial function Parliament has its own special means of ensuring that the executive, in the exercise of delegated functions, performs in a way which Parliament finds appropriate. Ideally, it is these latter methods which should be used to check executive errors and excesses; for it is the task of Parliament and the executive in tandem, not of the courts, to govern the country (p 567D F, emphasis added) Lord Mustill went on to comment on the development over the previous 30 years of court procedures to fill gaps where the exercise of such specifically Parliamentary remedies has been perceived as falling short, and to avoid a vacuum in which the citizen would be left without protection against a misuse of executive powers. He thought these judicial developments were welcome but not without risks: As the judges themselves constantly remark, it is not they who are appointed to administer the country. Absent a written constitution much sensitivity is required of the parliamentarian, administrator and judge if the delicate balance of the unwritten rules evolved (I believe successfully) in recent years is not to be disturbed (p 567H) Professor Phillipson comments: the British constitution works most effectively when parliamentary and judicial forms of control and accountability, rather than being framed as antagonistic alternatives, or mutually exclusive directions of travel, work together, but with clearly defined, differentiated and mutually complementary roles. (p 1089) That observation is particularly pertinent having regard to the debate which took place on the opposite side of Parliament Square on the last day of the hearing in the Supreme Court. That led to the motion, passed by a large majority of the House of Commons, the terms of which have been set out by Lord Reed (para 163). In particular, it recognised that it is Parliaments responsibility to properly scrutinise the Government while respecting the decision of the British people to leave the European Union, and ended by call(ing) on the Government to invoke article 50 by 31 March 2017. Of course the House of Commons is not the same as the Queen in Parliament, whose will is represented exclusively by primary legislation. However, the motion lends support to the view that, at least at this initial stage of service of a notice under article 50(2), the formality of a Bill is unnecessary to enable Parliament to fulfil its ordinary responsibility for scrutinising the governments conduct of the process of withdrawal. Application of the principles to the present case The logical starting point for consideration of the present case is the power which is in issue: that is, the power under article 50 of the Lisbon treaty to initiate the procedure for withdrawal by a decision in accordance with our constitutional requirements, followed by service of a notice. The existence of that power in international law is not in doubt. The issues for the court are, first, who has the right under UK constitutional principles to exercise it, and, secondly, subject to what constitutional requirements. As to the first, under Tin Council principles the position is clear. In the absence of any statutory provision to the contrary, the power to make or withdraw from an international treaty lies with the Executive, exercising the prerogative power of the Crown. As to the second, it is necessary to consider whether that power is subject to any restrictions by statute, express or implied, or in the common law. In agreement with Lord Reed, and for the same reasons, I find no such restrictions in the EU statutes. I agree with Mr Eadie that this issue must be considered by reference to the statutory scheme as it exists at the time the power in question is to be exercised. The 1972 Act of course provided the framework for what followed. But I find it illogical to search in that Act for a presumed Parliamentary intention in respect of withdrawal, at a time when the treaty contained no express power to withdraw, and there was no reason for Parliament to consider it. The 1972 Act did not remove the Crowns treaty making prerogative in respect of European matters, whether expressly or by implication (as under the De Keyser principle: majority judgment para 48). No one doubts the power of the Executive in 2008 to enter into the Lisbon Treaty, including article 50. The critical issue is how Parliament dealt with that matter for the purposes of domestic law. In the 2008 Act Parliament recognised the Lisbon treaty (including article 50) by its inclusion in the treaties listed in section 1 of the 1972 Act. Thereafter it became (by virtue of 1972 Act section 2(1)) part of the statutory framework in accordance with which, and therefore subject to which, any rights and obligations derived from EU law by virtue of that Act were to be enjoyed in domestic law. Unlike other powers in the treaty, the 2008 Act did not impose any restriction on the exercise of article 50 by the Executive. That position was confirmed by the 2011 Act, which made specific reference to article 50(3) but placed no restriction on article 50(2). There the matter rests today. Turning to the common law, the Tin Council rule is simple and uncontroversial: the prerogative 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. Judged by that test the answer again is clear. Service of an article 50(2) notice will not, and does not purport to, change any laws or affect any rights. It is merely the start of an essentially political process of negotiation and decision making within the framework of that article. True it is that it is intended to lead in due course to the removal of EU law as a source of rights and obligations in domestic law. That process will be conducted by the Executive, but it will be accountable to Parliament for the course of those negotiations and the contents of any resulting agreement. Furthermore, whatever the shape of the ultimate agreement, or even in default of agreement, there is no suggestion by the Secretary of State that the process can be completed without primary legislation in some form. This analysis was in substance adopted by Maguire J in the McCord proceedings, in line with the submissions of the Attorney General for Northern Ireland (repeated in this court). He said: In the present case, it seems to the court that there is a distinction to be drawn between what occurs upon the triggering of article 50(2) and what may occur thereafter. As the Attorney General for Northern Ireland put it, the actual notification does not in itself alter the law of the United Kingdom. Rather, it is the beginning of a process which ultimately will probably lead to changes in United Kingdom law. On the day after the notice has been given, the law will in fact be the same as it was the day before it was given. The rights of individual citizens will not have changed though it is, of course, true that in due course the body of EU law as it applies in the United Kingdom will, very likely, become the subject of change. But at the point when this occurs the process necessarily will be one controlled by parliamentary legislation, as this is the mechanism for changing the law in the United Kingdom. (para 105) The Divisional Court (para 17) took a different approach. They in effect adopted the analysis proposed by Lord Pannick, taking account of the agreed (albeit possibly controversial) assumption that the article 50(2) notice is irrevocable. On that footing, even if it has no immediate effect, it will lead inexorably to actual withdrawal at latest two years later (subject to agreement to defer). Lord Pannick drew the analogy of a trigger being pulled (written case para 11 12): it is the giving of the notice which triggers the legal effects under article 50(3). Those effects are that once notification is given, [t]he Treaties shall cease to apply to the state in question, from the date of a withdrawal agreement, or if no such agreement is reached at the latest within two years from notification, unless an extension of time is unanimously agreed by the European Council and the member state concerned. Notification is the pulling of the trigger which causes the bullet to be fired, with the consequence that the bullet will hit the target and the Treaties will cease to apply. Lord Pannicks trigger/bullet analogy is superficially attractive, but (with respect) fallacious. A real bullet does not take two years to reach its target. Nor is its progress accompanied by an intense period of negotiations over the form of protection that should be available to the victim by the time it arrives. The treaties will indeed cease to apply, and domestic law will change; but it is clearly envisaged that the final form of the changes will be governed by legislation. As the Secretary of State has explained, the intention is that the legislation will where possible reproduce existing European based rights in domestic law, but otherwise ensure that there is no legal gap. Although there is no evidence from any government witness on the intended role of Parliament, we were shown without objection or contradiction the statement made by the Secretary of State to Parliament on 10 October 2016 (Hansard Vol 615). Having described the mandate for Britain to leave the European Union as clear, overwhelming and unarguable, he explained the governments plans for a great repeal Bill: We will start by bringing forward a great repeal Bill that will mean the European Communities Act 1972 ceases to apply on the day we leave the EU The great repeal Act will convert existing European Union law into domestic law, wherever practical. That will provide for a calm and orderly exit, and give as much certainty as possible to employers, investors, consumers and workers In all, there is more than 40 years of European Union law in UK law to consider, and some of it simply will not work on exit. We must act to ensure there is no black hole in our statute book. It will then be for this House I repeat, this House to consider changes to our domestic legislation to reflect the outcome of our negotiation and our exit, subject to international treaties and agreements with other countries and the EU on matters such as trade On the assumption that such a Bill becomes law by the time of withdrawal, there will be no breach of the rule in its classic form. The extent to which existing laws are changed or rights taken away will be determined by the legislation. Ultimately of course that result depends on the will of Parliament; it is not in the gift of the executive. But there is no basis for making the opposite assumption. Lord Pannicks argument in effect requires the classic rule to be reformulated: the prerogative does not extend to any act which will necessarily lead to the alteration of the domestic law, or of rights under it, whether or not that alteration is sanctioned by Parliament. We were shown no authority to support a rule as so stated, nor any principled basis for the court to invent it. In any event, that process, like the service of the article 50 notice, will be subject to Parliamentary scrutiny in whatever way Parliament chooses. It will be for Parliament and the Executive acting in partnership to determine the timing and content of the legislative programme. Pre empting the will of Parliament One possible answer to the analysis in the previous paragraph is that it would involve the Executive unlawfully frustrating or pre empting the will of Parliament. This point is touched on in the majority judgment by reference in particular to the Lord Browne Wilkinsons statements in the FBU case (see para 250 above). They are said to establish the principle that ministers cannot frustrate the purpose of a statute for example by emptying it of content or preventing its effectual operation; and that it is inappropriate for ministers to base their actions (or to invite the court to make any decision) on the basis of an anticipated repeal of a statutory provision as that would involve ministers (or the court) pre empting Parliaments decision whether to enact that repeal. (majority judgment para 51) As I understand the majority judgment, however, this line of argument does not ultimately form part of their reasoning, in my view rightly so. In the first place, the FBU case was about abuse, not absence, of power. There was no doubt as to the existence of the prerogative power. But it was held to be an abuse to use it for a purpose inconsistent with the will of Parliament, as expressed in a statute which it had neither repealed nor been invited to repeal. Such issues do not arise in this case. The Miller respondents base their case unequivocally on absence of a prerogative power to nullify the statutory scheme set up by the 1972 Act, rather than abuse (see Lord Pannicks response to Lord Reed: Day 2 Transcript, p 158, lines 8 25). Further, Lord Browne Wilkinson was not purporting to lay down any general principle about the relevance of future legislation in relation to the exercise of the prerogative. His comments were directed to the facts of the particular case, in which the new scheme was being introduced without any reference at all to Parliament. Similar arguments in the present case would have to be seen in a quite different context, which (as Lord Pannick accepts) would include the 2015 Act and the referendum result. It is one thing, as in the FBU case, to use the prerogative to introduce a scheme which is directly contrary to an extant Act, and which Parliament has had no chance to consider. It is quite another to use it to give effect to a decision the manner of which has been determined by Parliament itself, and in the implementation of which Parliament will play a central role. In such circumstances talk of frustrating or pre empting the will of Parliament would be wide of the mark. Conversely, it would be wrong to assume (as the majority appears to do: para 91) that the courts would necessarily have been powerless in the (politically inconceivable) event of the Executive initiating withdrawal entirely of its own motion, or even in defiance of a referendum vote to remain. Protection of individual interests I would not wish to leave the case without acknowledging the important submissions made by the other respondents and interveners, particularly as to the scale and significance of the interests which will be affected by withdrawal. It is not clear, however, how a requirement for statutory authority for the article 50(2) notice will do anything to safeguard those interests, nor indeed to advance the process of Parliamentary scrutiny which will ultimately be critical to their protection. I take as representative the cases for the third and fourth respondents, presented by Ms Mountfield QC and Mr Gill QC. Their submissions provide vivid illustrations of the variety of ways in which individual and group interests will be profoundly affected by implementation of the decision to leave the EU. Ms Mountfield for example provides a detailed breakdown of fundamental and non replicable EU citizenship rights. The list starts with the fundamental status of EU citizenship (Citizens Directive 2004/38/EC preamble), leading to more specific rights, such as the right to move, reside, work and study throughout the member states, the right to vote in European elections, the rights to diplomatic protection, and the right to equal pay, and to non discriminatory healthcare free at the point of use. She categorises the governments case as an assertion of untrammelled prerogative power to do away with the entire corpus of European law rights currently enjoyed under UK law, and render a whole suite of constitutional statutes meaningless, without any Parliamentary authority in the form of a statute. While there is no reason to question her account of the profound effect of the prospective changes, I do not for the reasons already given accept that this can be describe as untrammelled use of executive power, nor that the control of Parliament will be improperly bypassed. Nor does she explain how that impact will be mitigated by a statute which does no more than authorise service of the notice. Similar arguments are made by Mr Gill for the fourth respondents (the AB parties). They are representative, among others, of the very large numbers of EEA nationals and their children living in this country, whose rights to continued residence will be threatened unless adequate arrangements are made to protect them. Mr Gill refers in particular to the important right under the Citizens Directive for those who have lived in the UK for five years to apply for citizenship in the following year, a right which will be lost on withdrawal. Section 7 of the Immigration Act 1988 provides that a person shall not require leave to enter or remain in the United Kingdom in any case in which he is entitled to do so by virtue of an enforceable EU right. Typical is Mrs KK, a Polish national resident and working here since 2014, married to a third country national, with a Polish national child born in the UK in 2015. She feels in a complete state of limbo having received no assurance from the Secretary of State as to what her status will be during and after the withdrawal negotiations, nor how her husband and child will be affected. Such people, says Mr Gill, will have made life changing decisions and moved permanently to the UK with the ultimate intention of acquiring permanent residence. They may also find themselves exposed to criminal liability under the Immigration Act 1971 if their status is removed. Mr Gill recognises that Parliament may prior to actual withdrawal put in place a statutory protection mechanism; but that depends on the will of Parliament, which, he says, the Secretary of State cannot lawfully pre empt. It is, he submits, a misuse of the prerogative to foist such a situation on Parliament; the rights to remain must be addressed by Parliament before the giving of the article 50(2) notice. There are two problems with that submission. First, it is difficult to talk of the Executive foisting on Parliament a chain of events which flows directly from the result of the referendum which it authorised in the 2015 Act. Secondly, however desirable it would be for issues of detail such as those affecting his clients to be addressed at this stage, it is wholly inconsistent with the structure of article 50. That assumes the initiation of the process by a simple notice under article 50(2), to be followed by detailed negotiations leading if possible to an agreement on the terms of withdrawal. The details of the protections available for Mr Gills clients must depend, at least in part, on the outcome of those negotiations. No doubt for this reason such an extreme argument is not adopted by the other respondents. They accept that, at this stage of the article 50 process, they cannot reasonably expect anything more than bare statutory authorisation for the service of the notice. That is realistic. But it also underlines the point that successful defence of the Divisional Courts order will do nothing to resolve the many practical issues which will need to be addressed over the coming period, nor to protect the rights of those directly affected. Those problems, and the need for Parliament to address them, will remain precisely the same with or without statutory authorisation for the article 50 notice. If that is what the law requires, so be it. But some may regard it as an exercise in pure legal formalism. Conclusion Shortly after the 1972 Act came into force, Lord Denning famously spoke of the European Treaty as like an incoming tide. It flows into the estuaries and up the rivers. It cannot be held back (Bulmer Ltd v Bollinger [1974] Ch 401, 418F). That process is now to be reversed. Hydrologists may be able to suggest an appropriate analogy. On any view, the legal and practical challenges will be enormous. The respondents have done a great service in bringing these issues before the court at the beginning of the process. The very full debate in the courts has been supplemented by a vigorous and illuminating academic debate conducted on the web (particularly through the UK Constitutional Law Blog site). Unsurprisingly, given the unprecedented nature of the undertaking there are no easy answers. In the end, in respectful disagreement with the majority, I have reached the clear conclusion that the Divisional Court took too narrow a view of the constitutional principles at stake. The article 50 process must and will involve a partnership between Parliament and the Executive. But that does not mean that legislation is required simply to initiate it. Legislation will undoubtedly be required to implement withdrawal, but the process, including the form and timing of any legislation, can and should be determined by Parliament not by the courts. That involves no breach of the constitutional principles which have been entrenched in our law since the 17th century, and no threat to the fundamental principle of Parliamentary sovereignty. LORD HUGHES: (dissenting) Some observers, who have not been provided with the very detailed arguments which have been debated before us (or the something over 20,000 pages of documents which supported those arguments) might easily think that the principal question in this case is: Does the 2016 referendum result not conclude the issue, and mean that the country is bound to leave the EU? In fact, that is not the principal question. No one suggests that the referendum by itself has the legal effect that a Government notice to leave the EU is made lawful. Specifically, that is not the contention of the Government, speaking through the Secretary of State for exiting the EU. The referendum result undoubtedly has enormous political impact, but it is not suggested by the Government that it has direct legal effect. The principal question in this case is not whether the UK ought or ought not to leave the EU. That is a matter for political judgment, which is where the referendum comes in. Courts do not make political judgments. The question in this case is not whether, but how, the UK may lawfully set about leaving the EU, if that is the political decision made. It is about the legal mechanics of leaving. As the foregoing judgments show, this case is capable of stimulating discussion on a number of legally interesting topics. There are also supplementary questions arising out of the legal positions of Scotland, Northern Ireland and Wales. But, at some risk of over simplifying, the main question centres on two very well understood constitutional rules, which in this case apparently point in opposite directions. They are these: Rule 1 the executive (government) cannot change law made by Act of Parliament, nor the common law; and Rule 2 the making and unmaking of treaties is a matter of foreign relations within the competence of the government. Nobody questions either of these two rules. Mrs Miller relies on the first. The government relies on the second. The government contends that Rule 2 operates to recognise its power, as the handler of foreign relations, to unmake the European Treaties. Mrs Miller contends that Rule 1 shows that the power to handle foreign relations stops short at the point where UK statute law is changed. Mrs Millers case is that because there was an Act of Parliament (the European Communities Act 1972) to give effect to our joining the (then) EEC and to make European rules part of UK law, there has to be another Act of Parliament to authorise service of notice to leave. This is the effect, she says, of Rule 1. Thus, she says, Rule 2 is true, but does not apply. The governments case is that the European Communities Act 1972, which did indeed make European rules into laws of the UK, will simply cease to operate if the UK leaves. The Act was only ever designed to have effect whilst we were members of the EU. It agrees that as a government it cannot alter the law of the UK which statute has made, but it says that if it serves notice to leave the EU, and in due course we leave, it would not be altering the statute; the statute would simply cease to apply because there would no longer be rules under treaties to which the UK was a party. Thus, it says, Rule 1 does not apply and Rule 2 does. Which of these arguments is correct depends in the end on the true reading of the European Communities Act 1972. Clearly, either reading is possible. The majority judgment gives cogent expression to the conclusion that it is Mrs Millers reading which is correct. For my part, for the reasons which Lord Reed very clearly sets out, I would have preferred the view that this Act was only ever to be operative for so long as the UK was a member of (first) the EEC, and now the EU. It is not helpful, particularly because this is a minority view, to repeat the analysis which Lord Reed expounds. I agree with his judgment. In short, because of Rule 1 the Act was necessary to convert the UKs international obligations under the various European treaties into law with domestic effect. Without the Act, those European rules would have had effect between States at the international level but would not have been part of domestic UK law and so would not have bound UK citizens individually. But the Act is couched in terms which give legal effect to the obligations and rules which arise under the treaties. If the UK leaves the EU, there are no longer any treaties to which this country is a party. It seems to me to follow that the Act will cease to import any of the rules which presently it does. The Act is not changed; it does, however, cease to operate because there are no longer any treaty rules for it to bite upon. Thus I would, for myself, have allowed the appeal of the Secretary of State from the decision of the (English) Divisional Court. I agree that on either view of the principal Miller appeal, the devolution questions raised should all be answered no, for the reasons set out in the majority judgment. I likewise agree with the majoritys treatment of the Sewel convention. It remains only to add that the arguments before us made it clear that whatever the outcome of the Miller appeal, much the same legislative programme will be required in Parliament, upon the UKs departure from the EU, to deal with the multifarious legal rules presently operative via the 1972 Act. The issues before this court do not touch this exercise, which will be a matter in any event for Parliament. The court is concerned only with the necessary procedure for the service of an article 50 notice to leave. |
This appeal concerns the legality under the European Convention on Human Rights of licensing conditions imposed by the Environment Agency (the Agency) restricting certain forms of salmon fishing in the Severn Estuary. Mr Motts interest The respondent, Mr Mott, has a leasehold interest in a so called putcher rank fishery at Lydney on the north bank of the Severn Estuary. A putcher rank is an old fishing technique, involving the use of conical baskets or putchers to trap adult salmon as they attempt to return from the open sea to their river of origin to spawn. Mr Mott has operated the putcher rank under successive leases since 1975. Since 1979, according to his evidence, it has been his full time occupation. He claims that, before the limits introduced by the Agency in 2011, his average catch using the rank was some 600 salmon per year, at a value of about 100 each, giving him a gross annual income in the order of 60,000. The right to operate the rank is derived from a Certificate of Privilege dated 14 May 1866, issued by the Special Commissioners for English Fisheries, and owned by the Lydney Park Estate. The current 20 year lease was granted jointly to Mr Mott and a Mr David Merrett, and will expire on 31 March 2018. It gives them the right to fish two stop nets and 650 putchers, in return for payment of an annual rent in two parts: a fish rent equivalent to 65 pounds in weight of salmon, and a monetary rent of (since the last review date) 276. The tenants are required to operate the putcher rank during each fishing season unless circumstances make it impossible. Further they may not assign, let or part with the fishery during the term of the lease, save upon death or disability, when they may with the written consent of the landlord assign to another family member. To operate the putcher rank Mr Mott has required an annual licence from the Environment Agency (the Agency), under section 25 of the Salmon and Freshwater Fisheries Act 1975 (the 1975 Act). The salmon season runs from 1 June to 15 August. Licences are usually issued by the Agency in late April or early May, shortly before the season opens. Until recently a licence for use of an historic installation such as the putcher rank (unlike other methods of fishing) could not be made subject to conditions limiting the number of fish taken (catch limitations). However, with effect from 1 January 2011, the 1975 Act was amended to enable the Agency to impose such conditions where considered necessary for the protection of any fishery (paragraph 14A of Schedule 2 to the 1975 Act, inserted by Marine and Coastal Access Act 2009 section 217(7)). Measures to protect salmon stock It has been government policy, as implemented by the Agency and its predecessors, supported by government, that in the interests of effective management mixed stock fisheries should be gradually phased out, and exploitation limited, as far as possible, to places where the stock of salmon is from a single river. The Agency considers that all the fisheries in the Severn Estuary exploit a mixed salmon stock, with fish destined to return to the rivers Severn, Wye, Usk, Rhymney, Taff and Ely and other rivers. The rivers Wye and Usk are designated as Special Areas of Conservation (SAC) under the European Habitats Directive (Council Directive 92/44/EEC), transposed into domestic law by the Conservation of Habitats and Species Regulations 2017 (the Habitats Regulations). One of the main reasons for the designation of these rivers is the need to conserve their salmon stocks. The Severn Estuary itself is designated as a SAC, a Special Protection Area (under the Council Directive on the Conservation of Wild Birds (Council Directive 79/409/EEC)), and a Ramsar site. Together, these areas constitute the Severn Estuary European Marine Site, for which salmon is a qualifying feature. For some years the status of salmon stock in the Wye and Usk has been categorised by the responsible authorities as unfavourable or at risk, because of failure to achieve stock conservation targets or the objectives set under the Habitats Directive. Dealings between the Agency and the Tenants In late 2003, the Agency attempted to purchase the Certificate of Privilege to operate the putcher rank. It agreed terms with the Estate, subject to contract, and (as the Estate required) subject to agreement with the tenants for termination of the lease. Negotiations between the Agency and the tenants took place in 2004. By an agreement in 2004, the Agency paid the tenants 30,000 compensation not to operate the putcher rank fishery during the 2004 fishing season. The agreement also provided a further payment of 10,000, if agreement were reached before 1 June 2005 for permanent cessation. In the event negotiations for permanent cessation were unsuccessful. It was agreed in principle that compensation should be paid, but the parties failed to agree the basis of valuation. During the 2005 to 2009 seasons the tenants continued to operate the fishery. In 2010 an agreement was again reached for payment of 30,000 compensation not to operate the fishery during that season. In February 2011, the Agency offered to purchase the then remaining term of the lease (seven years), but negotiations were unsuccessful. However, in response to the application for a licence for the 2011 season, the Agency agreed to pay the tenants 35,000 compensation not to operate the putcher rank fishery during that season. Another historic installation fishery was also paid not to seek a licence in the 2011 season. The only historic installation fishery that was licensed in 2011 operated under the terms of a catch condition, imposed under the new powers in paragraph 14A of Schedule 2 to the 1975 Act which had by then come into effect. The catch condition was determined following an appropriate assessment under the Habitats Regulations (the 2011 HRA). The dispute The events leading to the present dispute began with a letter from the Agency dated 16 April 2012, informing Mr Mott of a report by the University of Exeter (the Exeter Report), which, it was said, provided clear evidence of the mixed stock nature of the catch in the Severn Estuary. He was informed of the intention to set a catch limit of 30 fish for that year, and of the power under the amended 1975 Act to impose a catch limit without compensation. The Exeter Report was followed in May 2012 by a Habitats Regulations Assessment (the 2012 HRA) to the effect that unconstrained catches of salmon in the estuary were threatening the integrity of the River Wye SAC, and that it was necessary to limit the use of the historic installation fisheries. As HHJ Cooke, sitting as a judge of the High Court noted (para 13), the contemporary documents showed that the controlling factor was consideration of the numbers of salmon returning to the Wye to spawn, the stock in that river being considered to be the most vulnerable; and the impact of the claimants fishery was considered therefore in terms of its potential effect on salmon destined to spawn in the Wye. Mr Mott did not accept the Exeter Reports findings. Having failed to persuade its authors at a meeting in May 2012, he commissioned his own expert report from a Professor Fewster of University of Auckland, New Zealand. The disagreements between the experts were the subject of detailed study in the courts below but are not relevant to the remaining issue in this appeal. In the meantime, Mr Mott was served with a notice under the 1975 Act on 1 June 2012, the first day of the new fishing season, limiting his catch to 30 fish. This figure was fixed by reference to the lowest catch by any of the historic installation fisheries that had sought a licence in the preceding ten year period, with some increase to mitigate the risk of reduction in licence uptake and failure to maintain possible heritage. A further reduction to 23 salmon was proposed for 2013, and 24 for the 2014 season. The judge referred to a sentence in the Habitats Regulations Assessment for 2013 which explained that under the new regime the catch by the most productive estuary fisheries will be restricted to the approximate long term de minimus (sic) catch.: [2015] EWHC 314 (Admin); [2016] Env LR 27 (para 31). He commented on the effect on Mr Mott: 33. The final sentence quoted above was explained as meaning that the number of fish allowed per licence was set as being approximately the ten year average catch of the least productive of all the fisheries licensed. The practical result for the claimant is that his fishery of 650 putchers is given the same catch allocation as the smallest and least effective of the other putcher fisheries, which may operate 50 baskets or less. These he says are not commercially viable but operated only as a hobby. Plainly, the heaviest impact of this policy falls on the claimant who relies on the fishery for his living rather than the smaller operators. The proceedings In the present judicial review proceedings Mr Mott challenged the decisions of the Agency to impose conditions on the licences for 2012, 2013 and 2014, limiting catches respectively to 30, 23, and 24 salmon per season. He alleged irrationality, and breach of his rights under the Convention. It was Mr Motts case that the catch limit conditions have made the putcher rank fishery wholly uneconomic and the lease worthless. The judge upheld both claims and concluded that the decisions to impose the catch conditions were irrational, as the Exeter Report did not provide a reasonable basis for the view that the putcher installations were having a material effect on the salmon fishery in the river Wye. He held further that the Agency could not under Article 1 of Protocol 1 of the ECHR (A1P1) properly have imposed the conditions, if otherwise lawful, without payment of compensation. In a judgment dated 17 June 2016, the Court of Appeal (Beatson LJ, with whom Lord Dyson MR and McFarlane LJ agreed) allowed the Agencys appeal on the issue of irrationality, but dismissed the appeal under A1P1. It made a declaration that all three decisions amounted to an unlawful interference with his A1P1 rights in the absence of compensation: [2016] EWCA Civ 564; [2016] 1 WLR 4338. Only the latter issue arises on the appeal to this court. A1P1 Principles Article 1 of the first Protocol (A1P1) to the Convention provides: (1) 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. (2) 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. It is accepted that the right to fish granted to Mr Mott by lease is a possession for these purposes. The general principles governing the interpretation of A1P1 are well established in European and domestic authorities. In Back v Finland (2004) 40 EHRR 48 the Strasbourg court explained that it comprises three distinct rules: the first (in the first sentence of para 52) is of a general nature and enunciates the principle of peaceful enjoyment of property; the second (in the second sentence of the same paragraph) covers deprivation of possessions and makes it subject to certain conditions; the third (in the second paragraph) concerns the right of the state to control the use of property in accordance with the general interest. The court added: The three rules are not distinct in the sense of being unconnected: the second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule. Each of the two forms of interference defined must comply with the principle of lawfulness and pursue a legitimate aim by means reasonably proportionate to the aim sought to be realised. The principles were summarised by Lord Reed in AXA General Insurance Ltd v HM Advocate [2011] UKSC 46; [2012] 1 AC 868, paras 107 108. The application of A1P1, in circumstances comparable in some respects to the present, was considered by the Court of Appeal in R (Trailer and Marina (Leven) Ltd) v Secretary of State for the Environment, Food and Rural Affairs [2005] 1 WLR 1267; [2004] EWCA Civ 1580. The claimant company owned a stretch of canal designated a Site of Special Scientific Interest (SSSI) under the Wildlife and Countryside Act 1981 (the 1981 Act). The company entered into a management agreement with English Nature, under which it agreed not to develop fishing and boating activities in return for annual compensation of 19,000. The agreement expired at the end of 2000. In January 2001, amendments to the 1981 Act (under the Countryside and Rights of Way Act 2000), imposed a new regulatory regime under which compensation was no longer payable. The company claimed that the amended legislation involved a breach of their rights under A1P1, and sought a declaration of incompatibility under the Human Rights Act 1998. The claim failed. Neuberger LJ, giving the judgment of the court, reviewed the authorities dealing with the distinction between the taking or deprivation of property and mere control of use. As he noted, the former normally requires payment of compensation to avoid a breach of the article; the latter does not, even if the control result in serious financial loss. He noted that the division drawn by the Strasbourg jurisprudence is not clear cut. He referred in particular to the Grand Chamber decision in Sporrong & Lnnroth v Sweden (1982) 5 EHRR 85, for the propositions, first, that under the second rule the court may need to investigate the realities of the situation complained of to determine whether it amounts to de facto expropriation and thus deprivation (para 63); and that even where the interference does not fall clearly within the ambit of either the second or third rule, it may be necessary to consider the application of the first more general rule, and for that purpose to determine whether a fair balance was struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights (para 69) On the facts of Trailer & Marina, the court held: We accept, of course, that the consequence of the amendments effected by the 2000 Act must have been to diminish, sometimes substantially, the scope of the uses to which an SSSI could be put, and accordingly to reduce, sometimes substantially, the income which could be obtained from activities on an SSSI, and consequently its market value. It can fairly be said that, in those circumstances, the public benefit enjoyed as a result of the amendments effected by the 2000 Act will, in the absence of any compensation provisions, have been at the expense of the owners and occupiers of SSSIs. However, given the purpose and genesis of the legislation, and the jurisprudence of the [ECtHR], that cannot of itself justify an argument that there has been an infringement of the Article 1 of the first Protocol rights of the owner of an SSSI whose value has been substantially diminished as a result of the amendments effected by the 2000 Act. (para 65) As Neuberger LJ noted, the challenge was directed to the compatibility of the legislation with the Convention. It had not been argued that the restrictions in the particular case amounted to de facto expropriation, or a disproportionate burden on the owner of the land concerned (para 68). An authoritative summary of the principles is found in the Grand Chamber decision in Hutten Czapska v Poland (2007) 45 EHRR 4, para 167: Not only must an interference with the right of property pursue, on the facts as well as in principle, a legitimate aim in the general interest, but there must also be a reasonable relation of proportionality between the means employed and the aim sought to be realised by any measures applied by the state, including measures designed to control the use of the individuals property. That requirement is expressed by the notion of a 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. The concern to achieve this balance is reflected in the structure of Article 1 of Protocol No 1 as a whole. In each case involving an alleged violation of that article the court must therefore ascertain whether by reason of the states interference the person concerned had to bear a disproportionate and excessive burden The judgments below In the present case, the judge distinguished the Trailer and Marina case, as a challenge to the legislation as a whole, rather than a particular executive decision made under it. Thus the question of infringement of A1P1 had had to be considered in principle, and not in relation to the specific circumstances of the claimant. The court had recognised that there were powers available to compensate an owner in an extreme case. The decision did not therefore support a conclusion that any restriction on property on environmental grounds can be made without a requirement for compensation (para 93). His own conclusion that there was no reasonable basis for the restrictions inevitably meant that the restrictions were not proportionate, however categorised. However, he went on to consider the position apart from that finding: 96. In my judgment this case, like that in Back v Finland, has elements both of deprivation and of control. The claimants right is largely but not entirely extinguished. It could be exploited and would presumably have some small value if sold for leisure interest rather than commercial use. It should be considered under the general statement of principle with which A1P1 commences. Given the extent of the restriction imposed, which eliminated at least 95% of the benefit of the right, it is to be considered as closer to deprivation than mere control, and that balance is relevant when considering the proportionality of the measure challenged. 97. In adopting the measure decided on, there is no evidence that the Agency considered the extent of the effect on the claimant and his livelihood in any meaningful way at all. Though the HRAs refer to the desirability of permitting the continuation of historic fishing methods to an extent described as residual they did not address what the consequences would be for the rights holders affected at all, looking no further than their own statement of the conservation objective. 98. There is thus no evidence that any balanced consideration took place at all. It would have been relevant to that consideration that the claimants rights were of a commercial nature, so that by making them uneconomic to exercise he was being deprived of his livelihood and not merely of a pleasurable leisure activity or the opportunity to maintain an ancient tradition. So far as the claimant is concerned the position is exacerbated because the method chosen of levelling all permitted catches down to the previous lowest meant that by far the greatest impact fell on him whereas others who may only have used their rights for leisure or hobby purposes would be less affected, and possibly scarcely affected at all. In my judgment, the effect is that even if the Agency 99. could properly have imposed the total catch limit that it did, the size of that limit and the way in which it was apportioned would still have meant that the claimant has been required to shoulder an excessive and disproportionate burden, such that a breach of A1P1 could only be prevented by payment of compensation. It is to be noted (in particular from para 96) that the judge did not feel able, or find it necessary, to categorise the action under A1P1 as either deprivation (second rule) or control (first rule). He considered it under the first general rule, as identified in Back v Finland, while regarding it as closer to deprivation for the purpose of the proportionality balance. In the Court of Appeal Beatson LJ agreed with this assessment. It is unnecessary to set out his reasoning, which in substance followed that of the judge (paras 87 89). It was sufficient in any event that the court found no error in the judges reasoning, without needing to conduct their own independent assessment of proportionality (see In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] 1 WLR 1911). The appeal The issues identified by the parties as arising in the appeal are in short (i) whether the conditions imposed by the Agency amounted to control or de facto expropriation under A1P1? (ii) if the former, did the fair balance require compensation to be paid? (iii) if the latter, were there any exceptional circumstances justifying absence of compensation? Mr Maurici QC for the Agency submitted that the restrictions clearly constituted a control, rather than expropriation, in spite of the adverse effects on Mr Mott. He referred for example to Mellacher v Austria (1990) 12 EHRR 391 concerning a new Austrian Rent Act which had the effect of greatly reducing the rents to which certain landlords were entitled under existing tenancy agreements. The court held that there had been no de facto expropriation of their property, since they retained the right to use it even if they had been deprived of a large part of their income. Indeed the only example in the decided cases of de facto expropriation was the exceptional case of Papamichalopoulos v Greece (1993) 16 EHRR 440, in which the applicants were owners of a large area of valuable land in Greece, of which the military dictatorship had assumed control and transferred to the Navy to build a naval base and holiday resort for officers. Although the land was not formally expropriated, the applicants had been deprived of the entirety of the use and value of the land in question. As to whether a fair balance had been drawn, Mr Maurici drew attention to the emphasis given by European and domestic law to the protection of the environment, and the important responsibilities imposed on the Agency in that regard. The responsibility was particularly strict in respect of sites designated under the Habitats Directive (citing Sweetman v An Bord Pleanla (Galway County Council intervening) (Case C 258/11) [2014] PTSR 1092, paras 40 41). He submitted further that it would be contrary to public policy, and inconsistent with the polluter pays principle, for public funds to be used to pay compensation to individuals such as Mr Mott, whose activities were found to have caused environmental damage. As an example of the emphasis given to the environment in the Strasbourg case law, he cited Hamer v Belgium (2008) (Application No 21861/03). The court under A1P1 upheld an order for the demolition of a house in a woodland area, which was unpermitted, but had existed as a holiday home for 37 years with the full knowledge of the authorities. The court held that the order was a control, rather than expropriation; and that it struck a fair balance, having regard to the wide margin of appreciation enjoyed by authorities in the field of environmental protection: . The environment is a cause whose defence arouses the constant and sustained interest of the public, and consequently the public authorities. Financial imperatives and even certain fundamental rights, such as ownership, should not be afforded priority over environmental protection considerations, in particular where the state has legislated in this regard. The public authorities therefore assume a responsibility which should in practice result in their intervention at the appropriate time in order to ensure that the statutory provisions enacted with the purpose of protecting the environment are not entirely ineffective. (para 79) For Mr Mott, Mr Hockman QC supported the reasoning of the courts below. He submitted that the effect of the conditions was to nullify the practical use of Mr Motts lease, and thus amounted to expropriation. But even if they were regarded as a control, the courts below were entitled to find that they required Mr Mott to shoulder an excessive and disproportionate burden, such that breach of A1P1 could only be prevented by payment of compensation. It was accepted that the Agency had power to pay compensation, and it had done so in the past. The 1975 Act itself (even following the amendments made by the 2009 Act), recognised that compensation might be necessary in certain cases. Thus, section 26 dealing with limitation of licences for fishing with nets provides that where an order under the section would prevent a person from fishing in circumstances where that person is wholly dependent on the fishing for his livelihood, the Agency may pay that person such amount by way of compensation as it considers appropriate. Discussion The Strasbourg cases show that the distinction between expropriation and control is neither clear cut, nor crucial to the analysis. Viewed from the Agencys point of view, and that of the public, the restrictions imposed in the present case were (as found by the Court of Appeal) a proper exercise of the Agencys powers to control fishing activity in the interests of the protection of the environment. We were not referred to any case in which such action has been treated as amounting to expropriation merely because of the extreme effects on particular individuals or their businesses. However, it was still necessary to consider whether the effect on the particular claimant was excessive and disproportionate. Mr Maurici is right to emphasise the special importance to be attached to the protection of the environment. However, this does not detract from the need to draw a fair balance, nor from the potential relevance of compensation in that context. As Mr Hockman pointed out, the potential need for compensation is recognised in other parts of the 1975 Act itself. Compensation played a part in a Strasbourg case close to the present on the facts. Posti v Finland (2003) 37 EHRR 6 concerned a claim by two fishermen who operated under leases granted by the Finnish state. They complained that restrictions imposed by the government to safeguard fish stocks had failed to strike a fair balance under A1P1. The court held that the fishing restrictions were a control, rather than deprivation of property, and that the interference was justified and proportionate; the interference did not completely extinguish the applicants right to fish salmon and saltwater trout in the relevant waters, and they had received compensation for losses suffered (para 77). By contrast in Pindstrup Mosebrug A/S v Denmark (2008) (Application No 34943/06), absence of compensation did not prevent the court ruling inadmissible a claim in respect of restrictions on the commercial exploitation of a peat bog, regarded as geologically and biologically unique. The court upheld the assessment of the domestic courts that the effect on the claimants was not unduly severe, having regard to the findings that they had not invested in production facilities for the purpose of exercising their extraction rights at the bog and that they had access to the extraction of considerable amounts of peat elsewhere. Against that background I am unable to fault the judges analysis of the applicable legal principles in this case. As already noted, he did not find it necessary to categorise the measure as either expropriation or control. It was enough that it eliminated at least 95% of the benefit of the right, thus making it closer to deprivation than mere control. This was clearly relevant to the fair balance. Yet the Agency had given no consideration to the particular impact on his livelihood. The impact was exacerbated because the method chosen meant that by far the greatest impact fell on him, as compared to others whose use may have been only for leisure purposes. Indeed the judge might have gone further. He thought that the lease might have retained some small value if sold for leisure rather than commercial use. However, as Mr Hockman pointed out, even that is doubtful given the strict limits in the lease on the power to assign. I would therefore uphold the decision of the courts below. In doing so, I would emphasise that this was an exceptional case on the facts, because of the severity and the disproportion (as compared to others) of the impact on Mr Mott. As the Strasbourg cases show, the national authorities have a wide margin of discretion in the imposition of necessary environmental controls, and A1P1 gives no general expectation of compensation for adverse effects. Furthermore, where (unlike this case) the authorities have given proper consideration to the issues of fair balance, the courts should give weight to their assessment. I would dismiss the appeal. |
This appeal concerns the relationship between two statutory provisions, one very old and the other very young. The old provision, which dates back to the inception of Income Tax during the Napoleonic Wars, but is now to be found in section 874 of the Income Tax Act 2007, requires a debtor in specific circumstances to deduct income tax from payments of yearly interest arising in the United Kingdom. The young provision, first made the subject of legislation in 1986 (and replacing previous judge made rules) but now to be found in rule 14.23(7) of the Insolvency Rules 2016, requires a surplus remaining after payment of debts proved in a distributing administration first to be applied in paying interest on those debts in respect of the periods during which they had been outstanding since the commencement of the administration. The short question, which has generated different answers in the courts below, is whether interest payable under rule 14.23(7) is yearly interest within the meaning of section 874, so that the administrators must first deduct income tax before paying interest to proving creditors. The question arises in connection with the administration of Lehman Brothers International (Europe) (LBIE) which, although it commenced at a time when LBIE was commercially insolvent due to the worldwide crash of the international group of companies of which it formed an important part, has nonetheless generated an unprecedented surplus after payment of all provable debts, in the region of 7 billion, of which some 5 billion is estimated to be payable by way of statutory interest (before any deduction of income tax). LBIE went into administration on 15 September 2008. It became a distributing administration in December 2009. A final dividend was paid to unsecured proving creditors (bringing the total dividends to 100p in the pound) on 30 April 2014. After the coming into effect of a scheme of arrangement, interest slightly in excess of 4 billion was paid to creditors, after deduction of a sufficient amount on account of tax to abide the outcome of these proceedings, on 25 July 2018. Thus the time which elapsed between the commencement of the administration and the payment of interest to creditors was slightly under ten years. The periods in respect of which interest was payable under rule 14.23(7) (and its predecessor) ranged from a little over four years (which expired when the first interim distribution to proving creditors was made in November 2012) and little over five and a half years, when the final dividend to creditors was made, as described above. Statutory Interest in Administration Rule 14.23(7) of the Insolvency Rules 2016, which replaced substantially identical provisions in rule 2.88(7) of the Insolvency Rules 1986, provides as follows: (7) In an administration (a) any surplus remaining after payment of the debts proved must, before being applied for any other purpose, be applied in paying interest on those debts in respect of the periods during which they have been outstanding since the relevant date; (b) all interest payable under sub paragraph (a) ranks equally whether or not the debts on which it is payable rank equally; and the rate of interest payable under sub paragraph (c) (a) is whichever is the greater of the rates specified under paragraph (6) and the rate applicable to the debt apart from the administration. Rule 14.23(6) provides that the relevant rate of interest is that specified in section 17 of the Judgments Act 1838 (1 & 2 Vict c 110), which was, at the material time, 8% per annum. The relevant date referred to in rule 14.23(7)(a) is the date upon which the company entered administration; see rule 14.1(3). In In re Lehman Brothers International (Europe) (in administration) (No 6) [2015] EWHC Civ 2269 (Ch); [2016] Bus LR 17, para 149, David Richards J said this about statutory interest payable under the predecessor of rule 14.23(7): The right to interest out of a surplus under rule 2.88 is not a right to the payment of interest accruing due from time to time during the period between the commencement of the administration and the payment of the dividend or dividends on the proved debts. The dividends cannot be appropriated between the proved debts and interest accruing due under rule 2.88, because at the date of the dividends no interest was payable at that time pursuant to rule 2.88. The entitlement under rule 2.88 to interest is a purely statutory entitlement, arising once there is a surplus and payable only out of that surplus. The entitlement under rule 2.88 does not involve any remission to contractual or other rights existing apart from the administration. It is a fundamental feature of rule 2.88, and a primary recommendation of the Cork Committee that all creditors should be entitled to receive interest out of surplus in respect of the periods before payment of dividends on their proved debts, irrespective of whether, apart from the insolvency process, those debts would carry interest. In the present case, in the Court of Appeal [2018] Bus LR 730, after citing that passage in full, Patten LJ continued, at para 16: There is no doubt at all that statutory interest, as David Richards J explained, is not a continuing liability which accrues from day to day on a prospective basis over the period to which it relates. It is paid, as I have said, as statutory compensation for the loss which the creditors have suffered by being kept out of their money for the period of the administration. I agree. In In re Lehman Brothers International (Europe) (in administration) (Nos 6 and 7) [2017] EWCA Civ 1462; [2018] Bus LR 508, para 26, giving the judgment of the Court of Appeal, Gloster LJ said of the simple words of rule 2.88(7), when aggregated with the following two paragraphs (all in substantially the same terms as are now to be found in rule 14.23, as set out above): this simple formula constitutes, in our view, a complete and clear code for the award of statutory interest on provable debts. As [counsel] put it, it contains all you need to know. In the present case, at first instance, Hildyard J said at para 16: In my judgment, the statutory right to interest is sui generis and is not to be equated with a right to interest which accrues over time. Again, I agree with both those dicta (and was a party to the first of them). Yearly Interest under the Income Tax Legislation follows: Section 874 of the Income Tax Act 2007 provides (so far as is relevant) as (1) This section applies if a payment of yearly interest arising in the United Kingdom is made (a) by a company, (b) by a local authority, (c) by or on behalf of a partnership of which a company is a member, or (d) by any person to another person whose usual place of abode is outside the United Kingdom. (2) The person by or through whom the payment is made must, on making the payment, deduct from it a sum representing income tax on it at the basic rate in force for the tax year in which it is made. There is no definition of the phrase yearly interest anywhere in the 2007 Act. Nonetheless there is this deeming provision in section 874, added by Schedule 11 to the Finance Act 2013: (5A) For the purposes of subsection (1) a payment of interest which is payable to an individual in respect of compensation is to be treated as a payment of yearly interest (irrespective of the period in respect of which the interest is paid). This is unfortunately another case in which the full meaning of an apparently innocent looking simple statutory phrase can only be addressed by reference to the historical deployment of that phrase, or equivalent phrases seeking to express the same concept, in early legislation. Hildyard J set out in an Appendix to his judgment an admirable brief summary of the history of the statutory provisions about deduction of yearly interest, beginning with the introduction of income tax by Pitts Income Tax Act 1799 (39 Geo 3 c 13). In the present case, the main reason for needing an understanding of the statutory history is so that important decisions about the underlying concepts behind yearly interest can be reliably interpreted, by reference to the particular context of the use of the phrase in the statute then in force. As would appear, the earliest of those authorities was decided in 1854, and the latest in 1981. The concept of yearly interest first appeared within the income tax legislation in section 208 of Addingtons Income Tax Act 1803 (43 Geo 3 c 122). It appeared as part of the phrase: Annuities, yearly Interest of Money, or other annual Payments whether the same shall be received and payable half yearly, or at any shorter or more distant Periods. Section 208 both charged yearly interest to tax and authorised the payer to deduct an amount equal to the tax chargeable on the interest. When income tax was reintroduced by Sir Robert Peel in the Income Tax Act 1842 (5 & 6 Vict c 35), section 102 charged to tax: Annuities, yearly Interest of Money, or other annual Payments. And, as in 1803, provided for deduction at source by the payer, where paid out of taxed profits or gains. Deduction of yearly interest at source was continued in Gladstones Income Tax Act 1853 (16 & 17 Vict c 34), by section 40, while Schedule D brought into charge: All Interest of Money, Annuities, and other annual Profits and Gains. From 1888 until 1965, a succession of provisions to substantially the same effect made it compulsory to deduct tax at source and to account for it to the Revenue where interest of any kind was not wholly paid out of taxed income, but permitted the deduction of tax at source and its retention in respect of yearly interest which was wholly paid out of taxed income. In relation to yearly interest, this enabled the interest payer to be compensated for the fact that yearly interest paid out was not deductible in computing his own taxable profits or gains. This dichotomy was, between 1918 and 1952, achieved by rules 21 and 19 respectively of the General Rules Applicable to all Schedules of the Income Tax Act 1918 (the 1918 Rules). In short, rule 21 was about all types of interest, whereas rule 19 was concerned only with yearly interest. From 1952 until 1965 this dichotomy was preserved by sections 169 (concerning yearly interest) and 170 (concerning interest of any kind) of the Income Tax Act 1952. This dichotomy between the treatment of interest of any kind which is not paid out of profits or gains and yearly interest which is so made was progressively unwound, first for corporate taxpayers by the Finance Act 1965 and then generally by the Finance Act 1969. The regime for deduction of tax on interest at source which has continued, without substantial change, from 1969 is that set out in section 54 of the Income and Corporation Taxes Act 1970, then section 349(2) and (3) Income and Corporation Taxes Act 1988 and, latterly, section 874 of the Income Tax Act 2007. In summary, it provides only for the mandatory deduction at source of tax on yearly interest paid by companies as well as certain other categories of payers, or paid by any person to someone whose usual place of abode is outside the UK. The issues In order to make sense of what follows, it is convenient at this stage to provide a bare outline of what is and is not in issue, under the general question whether or not statutory interest payable by administrators out of a surplus is yearly interest. It has been common ground throughout this litigation that the payments are properly to be regarded as interest, not merely because they are so described in rule 14.23(7), but also within the meaning of the word as used in section 874(1). As will appear (and as the Court of Appeal concluded) that apparent concession by the administrators serves more to mask than to define the real issues. The main thrust of the administrators submissions (by Mr David Goldberg QC and Mr Daniel Bayfield QC in this court although Mr Goldberg did not appear below) has been to contrast the characteristics which the authorities show are required for the classification of interest as yearly interest with those of interest payable from a surplus in administration. The required characteristics are that the interest should derive from a source with the requisite degree of permanence and durability over time, and that the interest should accrue due over a period intended, or at least likely to last for a year or more. By contrast, it is submitted, statutory interest payable from a surplus in administration has, as its source, first the emergence of a surplus and second the decision of the administrators that it is time to pay it. It does not accrue due over any significant or likely period of time. Rather it is simply payable out of that surplus once it has been ascertained and turned into money, usually (and as here) by a single payment of a lump sum to each qualifying creditor. For HMRC it is submitted (by Mr Malcolm Gammie QC and Ms Catherine Addy QC) first, that it is unnecessary to identify a source for a statutory interest payment to qualify for deduction under section 874(1) and secondly, that it is not a requirement of yearly interest that it should accrue due over a period of time. Rather, the characteristic which satisfies the requirement that the interest should be yearly is that, once a surplus has been identified, the statutory interest is payable in respect of the period, commencing with the beginning of the administration, and ending with payment of the proving creditors debts in full, during which the creditors have been kept out of their money. If that period is, on the facts about a particular administration, in excess of a year, then the requirement for duration over time encapsulated in the word yearly is satisfied. Further, to the extent that the authorities made it a requirement that the source of the interest should be something in the nature of an investment, this was satisfied in relation to all LBIEs creditors, and regardless of the basis of their claims admitted to proof, because they were involuntary long term investors in LBIE by reason of the moratorium placed upon their claims by its administration. At first instance, Hildyard J was persuaded that the absence of any accrual over time (prior to the identification of a surplus and its quantification after payment of all proved debts in full) was fatal to the categorisation of statutory interest as yearly interest. By contrast, the Court of Appeal could discern no requirement from the authorities that yearly interest should accrue due over time. Since it was compensation for the proving creditors being kept out of their money for a substantial time, the interest had the requisite long term quality sufficient for it to be categorised as yearly. The Authorities The relevant authorities may broadly be divided into two groups. First, there are those which address the question whether interest which does accrue due over time is properly to be categorised as yearly interest or, in bankers jargon, short interest. Secondly, there are those authorities which address the question whether an entitlement to money described as interest, but which does not accrue due over time, can properly be regarded as yearly interest, or indeed interest at all, within the meaning of the income tax legislation. This second group is mainly concerned with interest payable as a result of a judicial decision, either when granting an equitable remedy or when exercising a discretion to award interest under statute. As will appear, it is this second group of authorities which, in my view, provides the answer to the questions raised by this appeal, albeit only by analogy because, as the judge himself observed, statutory interest payable from a surplus realised in a distributing administration is sui generis. Nevertheless it is convenient to take the first (generally earlier) group of authorities first. The earliest is Bebb v Bunny (1854) 1 K & J 216. The question was whether interest contractually payable upon the late completion of a contract for the purchase of land was yearly interest of money within the meaning of section 40 of the Income Tax Act 1853, so that it was payable subject to deduction of tax, either by the purchaser or by the court, even if paid into court gross as the condition for a decree of specific performance against the vendor. In deciding that it was yearly interest, Sir William Page Wood V C said, at pp 219 220: The whole difficulty is in the expression yearly interest of money; but I think it susceptible of this view, that it is interest reserved, at a given rate per cent per annum; or, at least, in the construction of this Act, I must hold that any interest which may be or become payable de anno in annum, though accruing de die in diem, is within the 40th section. I cannot make any solid distinction between interest on mortgage money and interest on purchase money. I consider the Act very singularly worded, yearly interest being used apparently in the same sense as annual payments; but I am clearly of opinion that it means at least all interest at a yearly rate, and which may have to be paid de anno in annum; such as interest on purchase money, as well as mortgage interest; and that, therefore, the purchaser is entitled to deduct the tax in this case. The reference to mortgage money, by way of analogy, becomes intelligible when it is understood that the drafting practice of the time was typically to make mortgage loans repayable, with interest, on a fixed date, usually less than a year after the making of the advance, even if the parties expectation was that the mortgage would endure for much longer, before redemption, with interest being payable periodically in the meantime. As the Vice Chancellor put it, at p 218: Most mortgage deeds contain only a covenant to pay the principal, with interest at a certain rate per annum, on a day certain. After that it accrues de die in diem, and the interest, without any particular reservation, ordinarily is received half yearly, from year to year. It is difficult to see the distinction between interest so reserved and paid, and that which by special agreement accrues on purchase money, which also goes on from day to day, and may run on for a year or stop at any time on payment of the purchase money, and which, in some shape or other, forms a lien on the property. Thus it was the propensity, rather than the intention or inevitability, for interest payable during a period of delayed completion to run on for more than a year which made it yearly interest, even though in many cases the delay in the completion of the purchase might well be much shorter. The potentially very wide interpretation of yearly interest in Bebb v Bunny was, in a series of later cases, significantly curtailed, albeit that in none of them was the decision held to have been wrong. On the contrary, it has remained the leading case. Goslings & Sharpe v Blake (1889) 23 QBD 324 was about a three months bankers loan, repayable with interest on a fixed date, interest being calculated by reference to a rate per annum, an example of what Lindley LJ called, at p 330: short loans by bankers. It establishes two principles relevant to the question whether interest is yearly interest (then within the meaning of section 40 of the Income Tax Act 1853). The first is that interest is not yearly interest merely because it is calculated by reference to a rate per annum: see per Lord Esher MR, at p 328. Secondly it establishes that the question whether the interest is yearly or short depends upon a business like rather than dry legal assessment of its likely duration. At p 330, speaking of the mortgage example used in Bebb v Bunny, Lindley LJ said: The difficulty is not lessened by the circumstance that most mortgages are loans for six months. The ordinary form of mortgage contains a covenant to repay the loan in six months, and if not then paid a covenant to pay interest until the loan is repaid. Those are short loans; but in fact, as men of business, we know perfectly well that, except in exceptional cases, money lent on mortgages is very seldom repaid at the end of six months, the mortgagee usually being content with his security and receiving his interest half yearly. In point of business, therefore, a mortgage is not a short loan; but a bankers loan at three months is a totally different thing. That is a short loan, it is intended and understood to be a short loan, and the difference in practice between the two is perfectly well known to every business man. The first relevant case about whether statutory (rather than contractual) interest can be yearly interest is In re Cooper [1911] 2 KB 550, in which objection was taken to the supposed failure of a judgment creditor to deduct tax from statutory interest due on the judgment relied on in a bankruptcy notice served on the judgment debtor. That depended upon whether the interest was yearly interest. In deciding that interest payable on a judgment debt under the Judgment Act was not yearly interest Cozens Hardy MR said this, at p 553: The words yearly interest are satisfied although the interest be not payable yearly but be payable quarterly or half yearly, and further, as in the case of a mortgage, although the money is covenanted to be paid six months after date in the ordinary course of a mortgage, the court treats that as being a transaction to the knowledge and the reasonable intendment of all parties, upon which yearly interest was payable in the understanding and contemplation of all parties, it being really in the nature of an investment.(my emphasis) He continued: Now in the present case I ask myself is it possible to suppose that this was a transaction in which anybody contemplated or intended anything permanent? It is quite impossible so to regard it. At first blush, this decision of the Court of Appeal might appear to suggest that statutory interest could never be yearly interest because it arose otherwise than pursuant to any agreement, transaction or common intention of the parties. Subsequent cases have shown that this is not so but the concept of addressing the yearly interest question by reference to a perception whether the source of the interest can properly be regarded as a form of investment has survived. A negative answer to that question in relation to statutory interest from a surplus in administration formed a major plank in the administrators submissions. A question deliberately left open in the Goslings case was whether interest on a short loan could nonetheless become yearly interest if the loan was left outstanding for more than a year. In Gateshead Corpn v Lumsden [1914] 2 KB 883 the plaintiff local authority had become entitled against the owners (including the defendant) of premises fronting a street which it had paved and made up, to a proportion of its costs, plus interest at 5% per annum. Although the Corporation had no settled practice of allowing these statutory debts to remain outstanding for periods of more than a year, it did so in relation to the defendant, who made payments on account of interest and capital from time to time. The Court of Appeal rejected a submission that the Corporations forbearance converted interest into yearly interest within the meaning of section 40 of the 1853 Act. Applying the principle which he extracted from In re Cooper, Lord Sumner said, at pp 889 890: applying the principle underlying that decision, I am unable to see how the words yearly interest can apply to this transaction. There is no agreement for a short loan or a long loan. The debt is due and repayment is not enforced; only in that sense is there a loan. Truly speaking there is simply a forbearance to put in suit the remedy for a debt. The repayment might have been enforced at any moment. The debt might have been paid by the debtor at any moment. Lord Sumner was careful to put on one side any case in which it might be established that the local authority had a settled practice of leaving statutory debts for street improvements outstanding for substantial periods of time. But the decision is good authority for the proposition that mere forbearance by a creditor who is entitled to statutory interest on a debt which is immediately due and payable does not bring that statutory interest within the confines of yearly interest. It serves as a caution against treating the words of Sir William Page Wood V C in Bebb v Bunny (quoted above) as meaning that the mere possibility that a stream of interest may endure for more than a year is sufficient in all cases to make it yearly interest. The investment test first enunciated in In re Cooper gains force from the analysis of Rowlatt J in Garston Overseers v Carlisle [1915] 3 KB 381. Persons claiming to be charitable trustees enjoyed a long standing arrangement with their bankers whereby credits on current accounts generated interest. The question was whether that was yearly interest within section 105 of the Income Tax Act 1842, qualifying for deduction at source. By concession, that phrase in section 105 was treated as having the same meaning as in section 40 of the Income Tax Act 1853. Referring to the case law on section 40, Rowlatt J said this, at p 386: The broad result of the decisions in those cases is, I think, that yearly interest means, substantially, interest irrespective of the precise time in which it is collected, interest on sums which are outstanding by way of investment as opposed to short loans or as opposed to moneys presently payable and held over or anything of that kind. He continued, at p 387: They (the overseers) are to levy rates as far as they can for their current expenditure. However, they must necessarily keep a small balance in hand, and they get interest upon it under the arrangements which the bank were willing to make. It is no doubt contemplated that the balance will continue for a long time; but what is the daily balance? It is not even a short loan; it is merely money at call, money payable on demand. Since those temporary balances could not be described as investments, the interest payable was not yearly interest. An attempt to reduce this jurisprudence to a concrete set of useful propositions was made by Lord Anderson, sitting in the Inner House (Second Division) of the Court of Session in Inland Revenue Comrs v Hay (1924) VIII TC 636 at 646. The case was about yearly interest within the meaning of section 27(1)(b) of the Income Tax Act 1918, but it was, again, common ground that the phrase had the same meaning as was under consideration in all the earlier cases, beginning with Bebb v Bunny. Lord Anderson said this: Now the authorities referred to by Crown Counsel seem to me to establish these propositions, five in number: (First), that interest payable in respect of a short loan is not yearly interest (Goslings ). (Second) that in order that interest payable may be held to be yearly interest in the sense of the Income Tax Acts, the loan in respect of which interest is paid must have a measure of permanence. (Third), that the loan must be of the nature and this is pretty well expressing the second proposition in another form that the loan must be of the nature of an investment (Garston Overseers). (Fourth), That the loan must not be one repayable on demand (Gateshead Corpn ). And (fifth) that the loan must have a tract of future time (per Lord Johnston in Scottish North American Trust Ltd, 1910 Session Cases 966, 973). These propositions are perhaps one proposition expressed in different forms, but they are the result of the authorities. I will refer these tests as the Hay tests. Some further support for the pre eminence of the investment test is to be found in the judgment of Lord Denning MR in Corinthian Securities Ltd v Cato [1970] 1 QB 377, at 382 383. After referring to Inland Revenue Comrs v Hay, he continued: The words short loan are not used in the statute: it is a mistake to place too much emphasis on them. The real question is whether the interest payable is yearly interest of money. Interest is yearly interest of money whenever it is paid on a loan which is in the nature of an investment no matter whether it is repayable on demand or not. After reviewing the Goslings case he continued: Looking at the agreement in this case, it is plain to me that this loan was made as an investment. Although payable on demand, it was unlikely that any demand would be made so long as the interest payments were kept up. It was a loan on the security of property, indistinguishable in principle from an ordinary loan or mortgage. The interest was yearly interest of money. Some cold water was cast upon the investment test by Sir John Donaldson MR in Cairns v MacDiarmid [1983] STC 178, at 181, as follows: It is well settled that the difference between what is annual and what is short interest depends on the intention of the parties. Thus interest payable on a mortgage providing for repayment of the money after six months, or indeed a shorter period, will still be annual interest if calculated at a yearly rate and if the intention of the parties is that it may have to be paid from year to year (Bebb v Bunny Corinthian Securities Ltd v Cato ). I would personally wish to avoid the use of the term investment as providing any sort of test in the context of whether interest is annual interest, notwithstanding its use in the latter case, because it is possible to have a short term and indeed a very short term investment, eg overnight deposits, and such an investment does not involve any annual interest, regardless of whether the interest is calculated at an annual rate. That was a case in which it had been found that the loan was never intended to last for more than a few days, although there was an entitlement to postpone repayment for two years. It had, as intended, been discharged within a week, by novation. In my view the difference in approach to the use of investment as a test between that case and those which preceded it has more to do with changes in what the financial world regards as an investment than with any change in the underlying tax law. I consider that the Hay tests remain the best convenient summary of the jurisprudence about the meaning of yearly interest, in the context of interest which accrues due over time, whether purely contractual or statutory in origin. I turn now to the second group of cases, all of which were concerned with interest payable after the event (and usually in one lump sum) as compensation for the payee being kept out of money or property during some earlier period. The common characteristic of these cases, shared with this case, is that the interest does not accrue due during the period in question. Rather, it is awarded after the period has ended, as compensation relating to that earlier period. Taking them chronologically, the first is Barlow v Inland Revenue Comrs (1937) 21 TC 354. In 1923 the appellant, who was a trustee of settlements in favour of his children, realised the trust investments and reinvested the proceeds in his own name in unauthorised securities which subsequently fell in value. Recognising that he acted in breach of trust, by a deed made in March 1930 he covenanted to pay his fellow trustees an amount equivalent to the proceeds of the realisation in 1923, together with compound interest at 5% per annum from the date of realisation until 1 January 1930. Finlay J, on appeal from the Special Commissioners, held that the interest element in the lump sum agreed to be paid by the deed was yearly interest. Following Vyse v Foster (1872) LR 8 Ch App 309 and Inland Revenue Comrs v Barnato [1936] 2 All ER 1176, he held that where a trustee agrees to pay principal and interest in respect of his breach of trust in relation to a period in the past, the interest element is properly to be regarded as interest (rather than damages) because the beneficiary has a right to elect between interest and an account of profits in respect of the period during which the trust property was mis applied. He held that it was yearly interest on the basis that it fell clearly within the definition as explained in Bebb v Bunny. Although he did not say so in terms, this must have been because of the lengthy period of over six years prior to the March 1930 deed in respect of which the trustee had been accountable. In the famous litigation known as Regal Hastings v Gulliver the House of Lords had, in an order made in February 1942 [1967] 2 AC 134; [1942] 1 All ER 378, found that the defendant directors were liable to account to their company for a profit made by them in 1935 from the use of information which they held as fiduciaries. Interest at 4% per annum was ordered to be paid from the dates in October and December 1935 when the defendants had made the relevant profits. In March 1942 the defendants paid what they regarded as owing to the company including interest, but they deducted income tax on the interest element. Cassels J held (1944) 24 ATC 297, that this was yearly interest, deductible either under rule 19 or under rule 21 of the 1918 Rules. Although rule 21 related to interest of all kinds, rule 19 related only to yearly interest. The outcome was therefore much the same as it had been in the Barlow case save that, whereas the trustee in that case had volunteered an account including interest to the beneficiary, the liability of the defendant trustees in Regal Hastings v Gulliver had only been ascertained, after lengthy litigation, in the House of Lords. It was sufficient for Cassels Js decision that the interest was yearly interest that it had been paid in respect of a period of accountability of some six and a half years, so that cases such as the Gosling case were plainly distinguishable. The next, and most important case, is Riches v Westminster Bank Ltd [1947] AC 390. Section 3(1) of the Law Reform (Miscellaneous Provisions) Act 1934 provides that: In any proceedings tried in any court of record for the recovery of any debt or damages, the court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment. This discretion applies, as Viscount Simon said at p 397, regardless whether there is or is not a contractual right to interest which underlies the cause of action. He said that: The added amount may be regarded as given to meet the injury suffered through not getting payment of the lump sum promptly, but that does not alter the fact that what is added is interest. At p 398 he addressed a submission to the effect that an order for interest under section 3 could not be interest within the meaning of the Income Tax Acts because the added sum only came into existence when the judgment was given and from that moment had no accretions under the order awarding it. Viscount Simon said: But I see no reason why, when the judge orders payment of interest from a past date on the amount of the main sum awarded (or on a part of it) this supplemental payment, the size of which grows from day to day by taking a fraction of so much per cent per annum of the amount on which interest is ordered, and by the payment of which further growth is stopped, should not be treated as interest attracting income tax. It is not capital. It is rather the accumulated fruit of a tree which the tree produces regularly until payment. Addressing the submission that the payment under section 3 was, however described, in truth damages, Lord Wright said, at pp 399 400: The appellants contention is in any case artificial and is in my opinion erroneous because the essence of interest is that it is a payment which becomes due because the creditor has not had his money at the due date. It may be regarded either as representing the profit he might have made if he had had the use of the money, or conversely the loss he suffered because he had not that use. The general idea is that he is entitled to compensation for the deprivation. Later, at p 403, he said: It was said that the sum in question could not be interest at all because interest implies a recurrence of periodical accretions, whereas this sum came to existence uno flatu by the judgment of the court and was fixed once for all. But in truth it represented the total of the periodical accretions of interest during the whole time in which payment of the debt was withheld. The sum awarded was the summation of the total of all the recurring interest items. Lord Simonds addressed the same submission at p 410 as follows: It was further urged on behalf of the appellant that the interest ordered to be paid to him was not interest of money for the purpose of tax because it had no existence until it was awarded and did not have the quality of being recurrent or being capable of recurrence. This argument was founded on certain observations of Lord Maugham in Moss Empires Ltd v Inland Revenue Comrs [1937] AC 785, 795, in regard to the meaning of the word annual. It would be sufficient to say that we are here dealing with words in the Income Tax Act which do not include either annual or yearly, but in any case I do not understand why a sum which is calculated upon the footing that it accrues de die in diem has not the essential quality of recurrence in sufficient measure to bring it within the scope of income tax. It is surely irrelevant that the calculation begins on one day and ends on another. It is more important to bear in mind that it is income. In 1947 the income tax treatment of interest was still subject to the dichotomy described in paras 14 15 above. Tax on interest of any kind had to be deducted at source if not wholly paid out of taxed income, pursuant to rule 21 of the 1918 Rules. By contrast, rule 19 permitted the deduction (and retention) of tax at source where yearly interest was paid wholly out of taxed income. The Riches case was about rule 21 rather than rule 19 but the interest awarded under section 3 of the 1934 Act represented interest from June 1936 until May 1943, being the period since the arising of the cause of action during which the plaintiff had been kept out of his money. As Patten LJ observed in the present case (at para 54, referring back to para 25), the passage in Lord Simonds speech quoted above suggests that he would have regarded the statutory interest awarded in that case as both interest and yearly interest for the purposes of the Income Tax Acts. This is because he regarded the payment of a single lump sum by way of interest after the event, referable to an earlier period for which the claimant needed compensation for being kept out of his money, as having the requisite quality of recurrence. Recurrence over seven years is plainly sufficient for that purpose. Jefford v Gee [1970] 2 QB 130 was another case about an award of interest under section 3 of the 1934 Act. The award was made in June 1969 by way of addition to damages for personal injuries incurred by the plaintiff in a motor accident in November 1966. It therefore compensated the claimant for having been kept out of his money for some two and a half years. At p 146, addressing the principles applicable to an award of interest in personal injury cases under section 3 of the 1934 Act, Lord Denning MR said: Interest should not be awarded as compensation for the damage done. It should only be awarded to a plaintiff for being kept out of money which ought to have been paid to him. Later, under the heading Tax, at p 149, he continued: When the court awards interest on debt or damages for two, three or four years, the interest is subject to tax because it is yearly interest of money: see Riches v Westminster Bank [1947] AC 390. It has been suggested (for example by Hildyard J at para 71(2) of his judgment) that Lord Denning MR may have failed to appreciate that the Riches case was about interest rather than yearly interest. In my view this ignores Lord Denning MRs reference to the period of two, three or four years in respect of which interest is awarded. He was entitled to conclude that, even if the Riches case only established that the relevant payments were interest for tax purposes, they were nonetheless yearly interest because of the historical period of several years in respect of which the lump sum award of interest was made. Chevron Petroleum (UK) Ltd v BP Petroleum Development Ltd [1981] STC 689 is about the interest element in rolled up payments by way of contribution to expenses in a joint venture agreement for the exploitation of the Ninian oilfield in the North Sea. The participants made payments against the expenditure in accordance with their expected share of the production. Provision was made for each participating groups share to be adjusted in the light of later experience of actual production. After an accounting which added interest to the amounts expended, the participants were credited or debited with the differences between their contributions on account and their adjusted contribution liability. Thus the liability to make payments against debits was contingent upon share adjustments pending final calculations, and the interest element in them related to periods of time which had passed before any payment liability fell due. Nonetheless Sir Robert Megarry V C held that the interest element was yearly interest, and therefore subject to deduction at source. He said, at p 696: I cannot see why the contingency should deprive the so called interest of the quality of being true interest. If X lends 100 to Y, the loan to carry interest at 10% per annum, why should a provision for repayment and interest to be waived in certain events, or for repayment with interest to be made only in certain events, prevent the interest from being true interest if in the event it becomes payable? Later, at pp 696 697, commenting upon the Riches case and interest awarded under section 3 of the 1934 Act, he continued: Although the obligation to pay interest was created by the judgment, the award was made on the basis that the defendant ought to have paid the money sued for at an earlier date and had not done so. The interest awarded was interest in respect of the plaintiff having been wrongfully kept out of the money: . That was not so in the present case, where the operating parties had duly paid all that was due from them under the contract at the time when it was due. I do not think that this point, or, indeed, any other point, suffices to distinguish the Riches case. If a contract (eg with a builder) provides for specified payments to be made on account of the final liability, and for interest at a specified rate to be paid on any balance when the final accounts have been agreed, the fact that all the specified payments on account were punctually made does not, it seems to me, prevent the interest payable on the balance from being truly interest. Analysis The statutory interest in the present case shares many of the relevant features with the contractual provision for interest in the Chevron case. In both cases it cannot be known during the period in respect of which interest is calculated whether it will in fact be payable at all. In the Chevron case liability depended upon an adjustment of participants shares made in the light of actual production, after the relevant expenditure was incurred, which increased rather than reduced the relevant participants share of the liability to fund expenses. In this case it depends upon the realisation of a surplus after payment of proving creditors claims in full, necessarily after the commencement of the administration and indeed after the end of the period in respect of which interest is calculated, which ends upon payment of the creditors debts. In both cases there is no liability to pay interest during the period in respect of which it is calculated. In both cases the interest is not itself payable over a period of time. It is rolled up and payable in a single lump sum. In short the interest is not an income stream, payable over a period of a year or more, but it is nonetheless income rather than capital, as the Vice Chancellor was at pains to emphasise, at p 696. More generally the relevant features of the interest in this case have much more in common with the second group of cases about statutory interest under section 3 of the 1934 Act, and about interest ordered or agreed to be paid by a trustee or fiduciary in respect of a past loss or misapplication of trust property than they have with the first group of cases about interest accruing due and payable immediately, or over time, beginning with Bebb v Bunny. This is not because the interest is statutory rather than contractual. There are examples of each in both groups. It is first because in none of the second group is the interest actually due and payable during the period by reference to which it is calculated, nor can it be said with certainty during that period that it ever will become due. But the interest is nonetheless payable, after the event, as a form of compensation for the recipients being in some way out of their money during the period in respect of which it is calculated. In the cases about interest under the 1934 Act the recipients are (usually) compensated for that loss during the period when they have a cause of action for debt or damages, until a judgment gives them an enforceable right to payment. In the trust cases the beneficiary is compensated by payment of interest for the loss (if any) represented or caused by the trust fund being out of the monetary value of the trust property lost or misappropriated by the trustee, until the trustee accounts and pays that sum back into the trust fund. In the Chevron case the payment of interest by the participants who later incurred an increased contribution share compensated those participants who, in the light of production experience, turned out to have paid more than their fair share of the cost of generating it. In the present case, as Mr Goldberg was at pains to emphasise, it cannot generally be said from the commencement of an administration whether there will ever be generated a surplus out of which statutory interest will become payable. Such surpluses are in fact very rare indeed. It may be that, during that period, the process of asset recovery by the administrators will make a surplus more likely, but even then its amount and the timing of any interest payment will all depend upon countless contingencies, including (in this case) long drawn out litigation about the amount of creditors claims. Statutory interest is never due until after all proving creditors have been paid in full. There is always a risk that an administration will be followed by a winding up, with unfortunate (and probably unforeseen) consequences upon the availability of interest under rule 14.23, even if there is a surplus: see In re Lehman Brothers International (Europe) (in administration) (No 4) [2018] AC 465 per Lord Neuberger of Abbotsbury, at paras 117 to 121. Nonetheless, as rule 14.23 makes clear in the plainest terms, the interest once paid compensates proving creditors for being kept out of their proved debts from the commencement of the administration (which prevents them seeking any other form of recovery), until they are actually paid. Mr Goldberg sought to distinguish the trust cases on the basis that, pursuant to Vyse v Foster, a beneficiary had an enforceable right to interest from the moment when the trust property was lost or misapplied. For the reasons given by Patten LJ in the Court of Appeal, at paras 45 to 50, based upon Target Holdings Ltd v Redferns [1996] AC 421, this is not the correct analysis of the basis upon which the court awards interest in equity. It is discretionary, like interest under the 1934 Act, even though the discretion may be exercisable in accordance with well settled principles. It is true, as the administrators submitted, that some of the second group of cases were primarily concerned with the question whether payments described as interest were truly interest at all for income tax purposes, rather than whether they were yearly interest. In the Riches case this was because the question arose under a provision in the 1918 Rules relating to all types of interest. In Jefford v Gee it may be that Lord Denning MR was not overly concerned with whether the interest was yearly or not, although he certainly took notice of the fact that the plaintiff had been out of his money for several years. In the Chevron case the contrary argument was that the element in the rolled up payment described as interest was not interest at all. There may have been no dispute that, if it was, it was yearly interest. By contrast in the present case it has been common ground throughout that statutory interest under rule 14.23 is interest for the purposes of income tax. But those cases nonetheless provide the answer to the conundrum: what period of durability is to be identified for interest payable in a single lump sum as compensation for the payee being out of the money in the past, for the purpose of deciding whether it is to be treated as yearly interest, under the Hay principles? The simple answer, supplied by all the second group of cases, is that it is the period in respect of which the interest is calculated, because that is the period during which the loss of the use of money or property has been incurred, for which the interest is to be compensation. This appears also to have been the assumption made by the drafter of what is now section 874(5A), quoted above. It deems payment of interest to an individual in respect of compensation to be yearly interest irrespective of the period in respect of which the interest is paid. This suggests that, but for the deeming provision (introduced, so the court was told, to deal with compensation for mis selling of Payment Protection Insurance), the question whether the interest would or would not have been yearly interest would have depended upon the duration of the period in respect of which the compensatory interest was calculated. It may of course be said that this approach has nothing to do with the intentions of the payer and the payee, and that, for most of the relevant period it will not be known when it will end, or whether interest as compensation for that loss will ever be paid. This is true of all the second group of cases, just as in the present case. But this gives rise to no relevant uncertainty. The payer will always know what that period is by the time that the interest becomes due and will be able to deduct tax or pay gross accordingly. In the case of interest under the 1934 Act the judge is required to identify the period. In the trust cases the order for payment of interest will also be by reference to a defined period. In the present case the period is fixed by the date of commencement of the administration and the date (or dates) upon which the proving creditors are paid their debts. I must finally address the group of submissions deployed by the administrators under the heading source. These were not deployed with any prominence in, or at least addressed by, the Court of Appeal, but they were advanced at the forefront of Mr Goldbergs submissions in this court. The argument goes like this. Income Tax is, and always has been, levied by reference to the source of the relevant income. The only source from which interest under rule 14.23 can be said to derive, apart from the statutory provision itself, is the combination of a realised surplus and a decision by the administrators that it is time to pay it. Those elements cannot, either singly or together, be said to have the quality of durability over time sufficient to make the interest yearly interest for income tax purposes, applying the Hay tests. They are unpredictable, liable to evaporate in the event of a winding up, will generally not have existed for a year before payment, and cannot be regarded as being in the nature of an investment. The period of time in respect of which the statutory interest is calculated cannot itself be regarded as a source of the interest. If there has to be a search for any source of the statutory interest other than the surplus and the decision to pay, it can only be the contractual debts owed by LBIE to its creditors at the moment when it went into administration, but those debts were mainly short term in nature, lacking the requisite capacity to generate yearly interest. Furthermore for income to be taxable at all the source has to be in existence at the time when the income becomes due and payable. Neither those contractual debts, nor the provable debts which replaced them from the commencement of the administration, remained in existence when the statutory interest became payable. They had all by then been discharged by payment in full. The short answer to this submission is that, if it were correct, all the second group of cases would have been wrongly decided. In none of them did the interest under review have a source in the sense of some kind of durable investment. In the equity cases the beneficiaries received interest by way of compensation for part of their trust fund being lost or misappropriated. In the cases under the 1934 Act the plaintiffs were being compensated for the delayed payment of damages, in one case for the pain and suffering occasioned by a broken leg which had no doubt healed long before the interest became due. In the Chevron case one group of joint venturers were in substance being compensated, long after the event, for having contributed more than their fair share of the expenses. But the flaws in the submission are more fundamental than that. First, the obligation to deduct tax from interest under section 874 does not depend at all upon the question whether the interest is taxable in the hands of the recipient. If the payment is yearly interest, and the payers (or the circumstances) qualify, for example because the payer is a company, or the usual place of abode of the recipient is offshore, then tax must be deducted. There is no requirement to identify a source at all, in the case of statutory or other UK interest. At the most it may be said that the first group of cases can loosely be characterised as involving an examination of the source of the interest as part of the inquiry about whether the income in question was yearly interest of money. Secondly, it is artificial to regard the source of statutory interest as having anything to do with the realisation of the surplus, still less the decision of the administrators to pay it, even though the combination of those two factors may be said to have been the immediate cause of the interest becoming payable. Of course the interest may be said to derive from the surplus, in the sense of constituting the fund from which it came, but the concept of source in that literal sense had nothing whatever to do with the characterisation of the payments as yearly interest in any of the second group of cases or, for that matter, even in the first group. As for the decision of the administrators to pay, this broadly equates with the exercise of a judicial discretion, both in the equity cases and those under the 1934 Act. To the limited extent that it may be said to render the right to payment contingent, it is a much less formidable contingency than the exercise of judicial discretion. In truth the administrators have no real discretion at all. Thirdly, to the extent that it is instructive to look for a source of the statutory interest under rule 14.23, the obvious candidate is the status of the recipient as a proving creditor during the period between the commencement of the administration until payment of the principal amount by dividend. That is a statutory status created by the insolvency code laid down by the Insolvency Act and Rules, which (as we now know) replaces the creditors former contractual rights at the commencement of the administration. It precisely coincides with the period in respect of which the statutory interest is calculated and, for the reasons given above, amply fulfils the necessary quality of durability over time. Finally, if it were necessary to do so, I would regard the status of a proving creditor in a distributing administration as having the requisite character of being an investor, albeit an unwilling and involuntary one. It is no mere irony that LBIEs unsecured debt has, during that last ten years, turned out to be a very satisfactory long term investment, generating interest, payable in full, at a handsome 8%. For all those reasons, which do not differ in their essentials from those given by Patten LJ in the Court of Appeal, I would dismiss this appeal. |
The Supreme Court has before it appeals by four individuals, VB, CU,CM and EN, whose extradition is requested by the respondent, the Government of Rwanda (GoR), so that they may stand trial in Rwanda for crimes allegedly committed during the civil war which took place between April and July 1994. Memoranda of Understanding dated 8 March 2013 were made between the United Kingdom and Rwanda in respect of the four appellants and a certificate issued by the Secretary of State under section 194 of the Extradition Act 2003. Consequently, Part 2 (contained in sections 69 et seq) of the 2003 Act applies to the relevant extradition proceedings. The main issues are whether, in the absence of any relevant statutory power, it is open to the district judge hearing the extradition proceedings (a) to use a closed material procedure to receive evidence which the appellants wish to adduce, or (b) in the alternative in relation to some of such evidence to make an irrevocable non disclosure order providing for the disclosure of such evidence to the Crown Prosecution Service (CPS), but prohibiting its disclosure to the GoR. A subsidiary point is whether in relation to some of the evidence it would be possible to make an anonymity order, either under the Coroners and Justice Act 2009, section 87, or otherwise. 4. The GoR has sought previously, in 2007, to obtain the extradition of the appellants. The district judge was satisfied that there was a prima facie case of involvement in genocide and crimes against humanity, but in April 2009 the High Court discharged the appellants on the ground that the appellants faced a real risk of a flagrant denial of justice if returned to Rwanda to stand trial: VB and others v Government of Rwanda [2009] EWHC 770 (Admin). Since 2009 there have been changes in Rwanda, including the introduction of facilities for witness protection, video conferencing and the possibility of using international judges to try cases of alleged genocide, and in the light of these changes a number of national and international courts have held that other persons wanted for trial in Rwanda would receive a fair trial there. The appellants case is that the risks remain, at least in relation to them and some of the Rwandan based witnesses whose evidence they wish to adduce; that they themselves would as a result suffer a flagrant denial of justice, in breach of article 6 of the Human Rights Convention, or even torture or mistreatment in breach of article 3, if extradited to Rwanda; that the evidence to demonstrate the existence of such risks requires, by the very nature of the risks, either to be received in closed session or to be disclosed only to the CPS; and that witness anonymity would, at least in relation to much of such evidence, offer no solution, since the content of the evidence is such as would necessarily disclose the identity of the witness giving it. None of this means that there is not and will not also be other evidence before the district judge, and some of it has already been called. The extradition proceedings to date 5. The current extradition proceedings have been proceeding before District Judge Arbuthnot. The Government of Rwandas evidence to establish a prima facie case has been read, and the District Judge has already heard, in open court, various witnesses called by the appellants. Among them is Ms Scarlet Nerad, co founder of Centre for Capital Assistance and founder of Community Resource Initiative. She had investigated in Rwanda witnesses giving evidence for the GoR against CU and attested to meeting one of them, who had been tortured during the period ending in 2000 and remained too frightened of being tortured again to give evidence unless its disclosure was limited to the CPS, and to believing that others were in similar position. The appellants also called an expert, Professor Filip Reyntjens. Two further experts are scheduled to give evidence later in the proceedings, Dr Phil Clark to be called by the Government, who will it appears take issue with points made by Professor Reyntjens, and Professor Timothy Longman to be called by the appellants. It is common ground that in relation to issues of extraneous circumstances (section 81), human rights (section 87) and abuse of process, it is established practice to allow extensive relaxation of the ordinary rules of evidence in extradition proceedings. However, the closed material which the appellants wish to adduce is, they say, factual and specific evidence which would not otherwise be capable of being adduced. 6. 7. The issues thus arising regarding use of a closed material procedure were argued before District Judge Arbuthnot. She on 28th January 2014 gave a judgment in which she held herself bound by authority to hold that it would be unlawful to sit in private. However, during a case management hearing in December 2013 from which she excluded the Government of Rwandas representative, those representing VB gave her a file of the proposed evidence and in January 2014 those representing CU sent her another file, not for disclosure to the Government. The District Judge recorded in her judgment (para 5) that she had read both files, and was for the purpose of 8. this argument only prepared to accept they contain important and material evidence which is relevant to the issues I have to decide. After concluding that the applications to rely on the material in a closed hearing must fail, she also added (para 23): I have concerns that there may be a risk of serious prejudice to the defence in making that decision but in all the circumstances I do not consider I have any choice. For that reason with some reluctance I refuse the application. That was a comment which she made without the Government of Rwanda having had the opportunity to make submissions on, or to explore the accuracy of, the material in question. Unless and until the District Judge reached a conclusion on the permissibility of a closed material procedure opposite to that which she in fact reached, the right course would have been not to see or read the files. In the course of her judgment, District Judge Arbuthnot also considered whether (if and to the extent that the substance of any of the proposed evidence could be disclosed) a witness anonymity order could be made under section 87 of the Coroners and Justice Act 2009. She thought not, in view of the requirement under section 87(3) that, in the case of an application by a defendant, the defendant must inform the prosecutor as well as the court of the identity of the witness. 9. The four appellants challenged the District Judges judgment by judicial review, identifying the Westminster Magistrates Court as defendant, the Government of Rwanda as first interested party and the CPS as second interested party. By judgment dated 27 March 2014, the Administrative Court (Moses LJ and Mitting J) granted permission, but dismissed the challenge to the District Judges refusal to admit evidence that was not disclosed to the Government of Rwanda. The Administrative Court, effectively of its own motion, raised the question whether section 87 of the Coroners and Justice 2009 applied, and in its judgment expressed the view that it would enable the appellants to apply for a witness anonymity order in respect of any evidence the substance of which they were willing to disclose. The Court reached this conclusion on the basis that, although the appellants were defendants and the proceedings were criminal proceedings within the meaning of the 2009 Act, neither the CPS nor the Government of Rwanda was a prosecutor within the definition in that Act. There was thus no requirement under section 87(3) to disclose the identity of the relevant witnesses to anyone save the court. 10. On appeal to the Supreme Court, the main burden of the appellants submissions has been taken by Mr Alun Jones QC for VB and by Mr Edward Fitzgerald QC for CU. Both endorse each others submissions. They submit that under the previous legislative scheme the Secretary of State had a role which enabled him to decide whether extradition was appropriate in the light of material which the requesting state did not see, and that under the 2003 Act the courts must have been intended to inherit a similar role or freedom. They submit that extradition proceedings are not classic adversarial or criminal proceedings, but sui generis. They rely upon the established practice to relax the normal rules of evidence in relation to certain issues capable of arising in extradition proceedings (para 6 above). 11. These submissions all contribute to the further principal submissions, that the courts should recognise in respect of extradition proceedings a third exception to the normal rule identified in Al Rawi, that absent Parliamentary authority justice should be open as between all the parties to litigation; or that, alternatively and by analogy with the position in asylum proceedings (cf W (Algeria) v Secretary of State for the Home Department [2012] UKSC 8, [2012] 2 AC 115), the courts should recognise the GoR as a special kind of party and restrict disclosure to the CPS. 12. Mr Fitzgerald supports this last submission with the argument that, if an order for extradition were to be made on the basis of the open material alone, it would still be open to those appellants who are not United Kingdom citizens to apply for asylum, which application could be decided, both by the Secretary of State and (since there is a statutory scheme in place for use of a closed material procedure in asylum cases) by the courts, on the basis of both open and closed material. The resulting anomaly would be compounded by the possibility that those appellants who are United Kingdom citizens would, because they could not make an asylum claim, be worse off than those who were not (although the appellants also submit that their United Kingdom status might give them corresponding protection by a different route). The Extradition Act 2003 analysis 13. The 2003 Act was framed to provide a clear structure for decision making. The Secretary of States role was carefully delimited and section 70(11) now provides, by amendment made in 2013, that she is not to consider whether the extradition would be compatible with the Convention rights within the meaning of the Human Rights Act 1998. Once an extradition request has been received and certified, and the person sought has been arrested under a provisional warrant and the appropriate judge has received the relevant documents under section 70, the extradition hearing will be fixed to commence under section 76. At that hearing, according to section 77(1): the appropriate judge has the same powers (as nearly as may be) as a magistrates court would have if the proceedings were the summary trial of an information against the person whose extradition is requested. 14. Assuming that the District Judge is satisfied as to certain important preliminaries, she must then proceed under section 79 to consider whether any one of five potential bars to extradition applies. They are the rule against double jeopardy (section 80), extraneous considerations (section 81), the passage of time (section 82), hostage taking considerations (section 83) and (since 14 October 2013) forum (section 83A E). Section 81 provides: A persons extradition to a category 2 territory is barred by reason of extraneous considerations if (and only if) it appears that (a) the request for his extradition (though purporting to be made on account of the extradition offence) is in fact made for the purpose of prosecuting or punishing him on account of his race, religion, nationality, gender, sexual orientation or political opinions, or (b) if extradited he might be prejudiced at his trial or punished, detained or restricted in his personal liberty by reason of his race, religion, nationality, gender, sexual orientation or political opinions. 15. Assuming that none of the five bars applies, the judge must proceed under section 84 which provides: (1) If the judge is required to proceed under this section he must decide whether there is evidence which would be sufficient to make a case requiring an answer by the person if the proceedings were the summary trial of an information against him. (2) In deciding the question in subsection (1) the judge may treat a statement made by a person in a document as admissible evidence of a fact if (a) the statement is made by the person to a police officer or another person charged with the duty of investigating offences or charging offenders, and (b) direct oral evidence by the person of the fact would be admissible (3) In deciding whether to treat a statement made by a person in a document as admissible evidence of a fact, the judge must in particular have regard (a) to the nature and source of the document; (b) to whether or not, having regard to the nature and source of the document and to any other circumstances that appear to the judge to be relevant, it is likely that the document is authentic; (c) to the extent to which the statement appears to supply evidence which would not be readily available if the statement were not treated as being admissible evidence of the fact; (d) to the relevance of the evidence that the statement appears to supply to any issue likely to have to be determined by the judge in deciding the question in subsection (1); (e) to any risk that the admission or exclusion of the statement will result in unfairness to the person whose extradition is sought, having regard in particular to whether it is likely to be possible to controvert the statement if the person making it does not attend to give oral evidence in the proceedings (4) A summary in a document of a statement made by a person must be treated as a statement made by the person in the document for the purposes of subsection (2). 16. If the judge decides under section 84(1) that sufficient evidence exists, she must then under section 87: decide whether the persons extradition would be compatible with the Convention rights within the meaning of the Human Rights Act 1998 If she does so decide, she must send the case to the Secretary of State for her decision whether the person is to be extradited, informing the person of his right to an appeal to the High Court (which will not however be heard until after the Secretary of State has made her decision). The Secretary of States role in respect of any case so sent her is closely circumscribed by section 97, which limits it to considering whether she is prohibited from ordering the extradition sought by section 94 (death penalty), section 95 (speciality), section 96 (earlier extradition to the UK from other territory or section 96A (earlier transfer to the UK by the International Criminal Court). If none of those sections applies, then (unless the request for extradition has been withdrawn or the person is discharged in the light of competing extradition requests or claims or on national security grounds), the Secretary of State must under section 93(4) order extradition. 17. The specific scheme introduced by the 2003 Act is not consistent with the appellants submission that the court has simply acquired the like powers to any which the Secretary of State might have exercised prior to the Act. The scheme involves a tight delineation of the respective roles and powers of the Secretary of State and the courts, by reference to which the present appeals must be decided. The extradition process is now substantially judicialised. But the previous legislation also gave courts a significant substantive role in relation to the extraneous considerations now covered by section 81of the 2003 Act: see section 6(1) of the Extradition Act 1989; prior to that, it had a similar role, as regards any request made with a view to trial or punishment for an offence of a political character: see section 3(1) of the Extradition Act 1870, considered in R v Governor of Brixton Prison, Ex p Schtraks [1964] AC 556. Outside the express statutory scheme, the court can however consider whether an extradition request involves an abuse of process by the requesting state: R (Government of the USA) v Bow Street Magistrates Court (Tollman no. 1) [2006] EWHC 2256 (Admin), [2007] 1 WLR 1157. None of these circumstances provides any support for the appellants submission that any wider powers previously possessed by the Secretary of State must now by implication be exercisable by the courts. 18. The appellants submission that extradition proceedings are not conventional criminal proceedings is correct, up to a point. They do not lead to conviction, but they are brought to obtain surrender for the purpose of trial abroad. They are an important aspect of enforcement of the rule of law worldwide. The jurisdiction of a magistrate in extradition proceedings is derived exclusively from statute: In re Nielsen [1984] AC 606, p 623D E, per Lord Diplock. The 2003 Act prescribes that the district judges powers are the same as nearly as may be as those possessed by a magistrate on a summary trial and that the judges role is to decide whether there is evidence that would be sufficient to make a case requiring an answer by the person if the proceedings were the summary trial of an information against him: see sections 77(1) and 84(1) of the 2003 Act cited in paras 13 and 15 above. The appellants submit that section 77(1) is not to be read as covering evidential matters; on their case, it deals only with other matters such as powers over witnesses and the conduct of proceedings. The powers of a magistrates court on a summary trial and of a District Judge under the 2003 Act are however statutory, and the natural effect of section 77(1) is to provide for all aspects of their exercise, including the admission and admissibility of evidence. 19. Both the general correctness of treating extradition proceedings as criminal proceedings, albeit of a very special kind, and the correctness of understanding section 77(1) in its natural sense as embracing evidence and procedure, are confirmed under the parallel provision in the previous legislation, the Extradition Act 1989, by R v Governor of Brixton Prison, Ex p Levin [1997] AC 741. In that case, Lord Hoffmann, in a speech with which all other members of the House concurred, said, at pp 746 747: Finally, I think that extradition proceedings are criminal proceedings. They are of course criminal proceedings of a very special kind, but criminal proceedings nonetheless. Both case law and the terms of the Extradition Act 1989 point to extradition proceedings being categorised as criminal. First, the cases. In Amand vs Home Secretary and Minister of Defence of Royal Netherlands Government [1943] A.C. 147 this House approved the decision of the Court of Appeal in Ex parte Alice Woodhall (1888) 20 Q.B.D. 832 that the refusal of an application for habeas corpus by a person committed to prison with a view to extradition was a decision in a criminal cause or matter. It would seem to me to follow a fortiori that the extradition proceedings themselves are criminal proceedings and in Amand's case Viscount Simon L.C. said, at p 156, that the cases demonstrated that the matter in respect of which the accused is in custody may be criminal although he is not charged with a breach of our own criminal law. Secondly, the Extradition Act 1989. Section 9(2) and paragraph 6(1) of Schedule 1 require that extradition proceedings should be conducted "as nearly as may be" as if they were committal proceedings before magistrates. Committal proceedings are of course criminal proceedings and these provisions would make little sense if the metropolitan magistrate could not apply the normal rules of criminal evidence and procedure. The suggestion of counsel in Ex parte Francis that extradition proceedings were sui generis would only make matters worse, because it would throw doubt upon whether the magistrate could apply the rules of civil evidence and procedure either. 20. The appellants submit that contrary indication is to be found in established case law and the provisions of section 202 of the 2003 Act. Section 202(3) providing that a document issued in a category 2 territory may be received in evidence in extradition proceedings if duly authenticated which by section 202(4) means that it purports to be signed by a judge, magistrate or officer of the territory, or to be authenticated by the oath or affirmation of a witness. The purpose of section 202(3) is clearly to permit the use of such documents as evidence of the matters stated therein, about which oral evidence would otherwise have to be called. Section 202(5) goes on to provide that this does not prevent a document which is not duly authenticated from being received in evidence in proceedings under the Act. On its face, this simply extends the power to admit a document as evidence of its contents to unauthenticated documents. But it is unnecessary on these appeals to decide finally that this is as far as it goes, since it clearly cannot be read as addressing the issues whether any form of closed material procedure is permissible, now before the Supreme Court. 21. The parties to this appeal agree that, as a matter of established practice, the normal rules of evidence are relaxed on issues arising under the heads of extraneous considerations, human rights and abuse of process in extradition proceedings. At the root of their agreement on this point is the decision in Schtraks. There the House of Lords was considering the courts role under section 3(1) of the Extradition Act 1870, which prohibited surrender if the person requested prove to the satisfaction of the court before whom he is brought on habeas corpus, or to the Secretary of State, that the requisition for his surrender has in fact been made with a view to try or punish him for an offence of a political character 22. The House reasoned that, since the Secretary of State could not have been intended to be bound by the strict rules of evidence, the court could not have been intended to be. In Lodhi v The Governor of Brixton Prison [2001] EWHC 178 Admin, para 89, and Hilali v The Central Court of Criminal Proceedings No 5 of the National Court, Madrid [2006] EWHC 1239 Admin, the Divisional Court was concerned with an issue of extraneous circumstances arising under, respectively, section 6(1) of the 1989 Act and section 13 of the 2003 Act. Making express reference to Schtraks v Government of Israel [1964] AC 556, it said (in paras 89 and 63 respectively) that it was, in this context, common ground . that the court is not restricted to considering evidence in the strict sense and long . established that the Court is not bound by the ordinary rules of evidence; the appellant may rely on any material in support of a submission based on section 13. 23. The legislation has changed since Schtraks v Government of Israel [1964] AC 556, but it is unnecessary on this appeal to say anything more about the established practice on which the parties are agreed. Whatever its admissible scope, the Supreme Court understands it to be common ground that it does not extend beyond the areas of extraneous considerations, human rights and abuse of process; in particular, it does not apply to other issues such as whether a prima facie case has been shown under section 84(1). Under the current legislation, the better analysis may be not that the ordinary rules of evidence are suspended in the areas to which the practice is agreed to apply, but that a broad approach is taken to the nature and basis of the expert evidence that is admissible. In any event, any relaxation in the areas of extraneous considerations, human rights and abuse of process cannot affect the normal rule that applies to a witness called to give evidence before a court, viz that his or her evidence must be given and be capable of being tested inter partes. Any relaxation, on whatever basis, does not therefore help on the present issue whether the district judge can operate a closed material procedure without any statutory authority. 24. Reliance was also placed on a procedure accepted by the Divisional Court in Tollman no. 1 [2007] 1 WLR 1157 (para 16 above), whereby a judge, before whom reason was shown to believe that an abuse of process had occurred, could call upon the requesting authority to provide whatever information or evidence he or she might require in order to adjudicate upon the issue so raised. Such information and evidence should normally be made available to the defendants, because (para 90) Equality of arms requires that, in normal circumstances, the party contesting extradition should be aware of, and thus able to comment on, the material upon which the court will be basing its decision. 25. However, the Divisional Court in Tollman no. 1 indicated that it was not open to the district judge to order the production of the material. If the requesting government was unwilling for it to be seen by a defendant, but prepared to allow the judge to see it, then the judge could evaluate its significance. If the judge concluded that its disclosure was in fairness required, the requesting government could be given a further chance to disclose, failing which disclosure the appropriate course would be to dismiss the extradition request as an abuse. The Divisional Court would by implication presumably also have regarded dismissal as appropriate if the requesting authority refused to allow the material to be seen even by a judge before whom reason had been shown to believe that an abuse of process had occurred. 26. Tollman no. 1 is of no real assistance on the issue now before the Supreme Court. It concerns circumstances where a prima facie case of abuse of process is shown and the requesting authority cannot rebut that case without disclosing to the defendant material which it has. In such a case, it may well be appropriate to put the requesting authority to its election to disclose such material or in effect abandon its request. The present appeal concerns circumstances where a defendant wishes, in support of its case, to rely on material which he has, without showing such material to the requesting government. Far from promoting the equality of arms, of which the Divisional Court spoke in Tollman no. 1, the appellants case involves departing significantly from it. 27. At the core of the appellants case is the submission that extradition proceedings are special in a sense which justifies or calls for a further qualification of the principle of open justice, beyond any recognised in Al Rawi v Security Service [2011] UKSC 34. In Al Rawi and, more recently, in R (British Sky Broadcasting Ltd) v Central Criminal Court [2014] UKSC 17, the courts were concerned with the question whether they could, without any statutory basis, use closed hearing procedures to enable public authorities to avoid disclosure to individual litigants of allegedly sensitive security material, including the identity of the witness providing it. This Court declined any general power to do so, and in Al Rawi at paras 63 65, per Lord Dyson, identified only two categories of potential exception to the normal rule: (a) child welfare cases where the whole object of the proceedings is to protect and promote the best interests of the child and (b) intellectual property cases where full disclosure would undermine the whole object of the proceedings (to protect intellectual property), so that confidentiality rings are permissible, at least at the interlocutory stage. 28. The appellants point to the underlying rationale of those cases, that a departure from the normal rule may be justified by special reasons in the interests of justice: para 63, per Lord Dyson. In their submission, a further departure is justified in the present case by the protective nature of the bars to extradition which exist in cases of extraneous circumstances, potential human rights violations and abuse of process; and, if a closed material procedure is necessary in order to be able to demonstrate the existence of one or more of these bars, a closed material procedure must be permissible. The appellants submit that this is reinforced by a triangulation of interests present where public interest considerations militating in favour of extradition and trial are matched by the need to protect not only the appellants but also independent witnesses from risks of persecution, human rights violations and abuse of process. The phrase comes from Lord Woolfs speech in R (Roberts) v Parole Board [2005] UKHL45, [2005] 2 AC 738, para 48. 29. A principal difficulty about accepting these submissions is that they assume what they set out to prove. The appellants already have the benefit of expert evidence and such factual evidence as they are able to call without a closed material procedure. Expert evidence customarily includes material of which there is no direct proof, and it is, as stated, common ground on this appeal that the strict rules governing the adducing of factual material will not be applied to the relevant issues. It is inevitably only speculation that any material which the appellants might adduce in a closed material procedure would be relevant, truthful or persuasive, and the very nature of a closed material procedure would mean that this could not be tested. The same applies to any material which might be ordered to be adduced to the CPS on the basis that it would not be further disclosed to the GoR. The appellants are inviting the Court to create a further exception to the principle of open inter partes justice, without it being possible to say that this would be necessary or fair. 30. The two exceptions identified in Al Rawi differ from the further exception now advocated. In the first, the paramount object of the proceedings is not the resolution of an inter partes dispute, but the protection of a third party, the child. In the second, the object, to protect intellectual property belonging to one party, would be frustrated if the intellectual property were disclosed. Even then, in giving this example, Lord Dyson at para 64 made clear that its focus was on the interlocutory stages of proceedings; the trial could be expected to proceed on a fully inter partes basis, without use of the intellectual property as such in evidence. 31. Roberts was explained in this Court in Al Rawi as turning on the existence of an express statutory power to adopt a closed material procedure: para 55, per Lord Dyson. But, in any event, there is in the present case no triangulation of interests parallel to that identified by Lord Woolf in Roberts. The witnesses whose evidence the appellants wish to adduce are on no basis at risk. If a closed material procedure (or, where relevant, a limitation of disclosure of their evidence to the CPS) were ordered, they would not be at risk. But, equally, if a closed material procedure or such a limitation is refused, the appellants will not adduce their evidence at all. There is therefore a two sided issue between the GoR and the appellants alone, not a triangulation. 32. As to the appellants reliance on the special nature of extradition proceedings (para 19), the public and international interest in bringing potential offenders to trial is significant. So too of course is the public and human interest in ensuring that individuals are not surrendered to places where they will suffer risks of human rights or other abuses. But the assessment of each of these potentially competing factors falls to be determined on an inter partes basis between, in this case, the GoR and the appellants. It is an assessment subject to the clearly established statutory procedure in the 2003 Act, and it is one which, so far as appears from that Act, can and should be performed in the ordinary way by the adducing of evidence on the relevant issues on each side. 33. For good measure, I note that it was also a balance struck in relation to surrender to Rwanda for trial by the High Court in VB and others v Government of Rwanda [2009] EWHC 770 (Admin) (refusing surrender), but that there have been a number of subsequent decisions concluding that fair trial was possible in Rwanda notably by the ICTR Referral Chamber on 28 June 2011 in respect of Mr Uwinkindi, the Oslo District Court on 11 July 2011 in respect of Mr Bandora, the European Court of Human Rights on 27 October 2011 in respect of Mr Ahorugeze, the ICTR Appeals Chamber upholding the Referral Chamber in respect of Mr Uwinkindi on December 2011 and the ICTR Referral Chamber on 22 February 2012 in respect of Fulgence Kayishema. The nature of the issues and procedures involved in 34. these cases has not however been the subject of any close examination on this appeal. In these circumstances, I see no basis on which this Court would be justified in recognising or creating in the present circumstances a closed material procedure as a new exception to the principle of open inter partes justice recognised in Al Rawi. 35. The appellants fall back case in respect of some of the relevant material is that the district judge should be recognised as having power to limit disclosure to the CPS and to prohibit further disclosure to the GoR. In extradition proceedings under the 2003 Act the CPS acts on behalf of a requesting state or authority, although owing duties to the court, as explained in R (Raissi) v Secretary of State for the Home Department [2008] EWCA Civ 72, [2008] QB 836. In relation to the possibility of a non disclosure order, the appellants rely on W (Algeria) v Secretary of State for the Home Department [2012] UKSC 8, [2012] 2 AC 115. There, the Home Secretary had given each appellant notice of the intention to deport him to Algeria on the basis that his presence in the United Kingdom was not conducive to the public good on grounds of national security. Each asserted before the Special Immigration Appeals Commission (SIAC) that he would be likely on return to Algeria to suffer ill treatment contrary to article 3 of the Human Rights Convention. One of them wished to adduce evidence from a source who required an absolute and unconditional guarantee of permanent confidentiality as a precondition to giving evidence. It was common ground (para 27) that SIAC had under the Special Immigration Appeals Commission (Procedure) Rules 2003, rules 4, 39(1) and 43 power to make such an order against the Home Secretary, with the effect of precluding any disclosure of the evidence to Algeria. 36. Lord Brown and Lord Dyson, in judgments with which the other members of this Court agreed, held that, although such orders come perilously close to offending against basic principles of open justice and although it would mean that the Home Secretary will be largely unable to investigate [the evidence] and will find it difficult, therefore, to explain or refute it (paras 16 and 17, per Lord Brown), nonetheless such an order was in the circumstances justified. Lord Dyson noted that: 36. Regrettably, . the circumstances of a case sometimes call for unusual and undesirable remedies. Ultimately, the court has to decide what is demanded by the interests of justice. In weighing the prejudice that the Secretary of State may suffer in the appeal process as a result of an irrevocable non disclosure order, it should not be overlooked that the appeals themselves will be conducted entirely inter partes. In particular, no material that is placed before SIAC by the appellants will be withheld from the Secretary of State. She may be able to demonstrate that the claimed need for confidentiality is without foundation and to persuade SIAC to give the evidence little or no weight for that reason alone. She may also be able to test the evidence of the witness(es) effectively even though she has been unable to discuss it with the AAs. For example, she may be able to show on the basis of objective general material about the conditions in Algeria that the evidence of the witness is unlikely to be true; and even where the evidence is more specific, she may be able to obtain information from the AAs which will enable her to rebut the evidence without divulging the name or identity of the witness or saying anything which might lead to his or her identification. It will, of course, depend on the nature of the evidence to be given by the witness. I do not wish to suggest that the effect of an irrevocable non disclosure order may not inhibit the ability of the Secretary of State to resist the appeals. In some cases, such an order will undoubtedly have that effect. But it cannot safely be said that it is bound to do so in every case. 37. The circumstances in W (Algeria) differ very significantly from the present. The issue there was between the Secretary of State and Algerian nationals, who the Secretary of State was seeking to remove from the jurisdiction. Algeria had no interest in claiming or receiving the return of W or his fellow Algerians, perhaps the contrary. Algeria was not party to the proceedings brought by the Algerian nationals against the Secretary of State to challenge the order for their removal. SIAC had express statutory power to make the non disclosure order sought. In contrast, the present appeals are taking place on an inter partes basis between the appellants and the GoR, which has a real and direct interest in their pursuit and in obtaining the surrender of the appellants. The CPS are merely representing the legal interests of the GoR. Further, even if these factors were not by themselves conclusive, the district judge has no special statutory power which could enable her to make a non disclosure order in relation to the GoR. 38. This brings me to two final points made by the appellants. First, VB has since 2001 or 2002 been a United Kingdom citizen. Relying on Halligen v Government of the USA, sub nom. Pomiechowski v Poland [2012] UKSC 20, [2012] 1 WLR 1604, Mr Jones submits that he enjoys a common law right of residence in the United Kingdom, and that article 6 applies to the determination of extradition proceedings which engage that right. Accepting the premise, I am unable to draw from it any conclusion that article 6 requires the district judge to discard the ordinary principles of open inter partes justice, contrary to Al Rawi and to the conclusions that I have reached up to this point. 39. The other point, advanced forcefully by Mr Fitzgerald, relates to the other appellants who are foreign nationals. If they are unable to adduce evidence under a closed material procedure or to obtain a non disclosure order, and extradition orders are made against them, then they will claim asylum, says Mr Fitzgerald. On an asylum claim, the issue will be between them and the United Kingdom authorities. They will be able under the relevant rules, in particular AIT (Procedure) Rules 2005 rules 45(1) and 45(4)(i), to invite the First Tier Tribunal to make directions relating to the conduct of the proceedings and, more particularly, to issue directions making provision to secure the relevant appellants anonymity. The Tribunal would, if necessary, also be able under rule 54(3) to exclude the public in order to protect such appellants private lives or under rule 54(4), in exceptional circumstances and if and to the extent strictly necessary, to ensure that publicity does not prejudice the interests of justice. Mr Fitzgerald submits that the Tribunals rules are sufficiently analogous with those of SIAC for it to be able, like SIAC, to make a non disclosure order such as was permitted in W (Algeria). (Since the present cases do not appear to engage interests of public order or national security, the further provisions of rule 54(3) addressing those interests appear irrelevant, and, for the same reason, it appears that any asylum claim by the present appellants would come before the Tribunal, rather than SIAC.) 40. When the Convention relating to the Status of Refugees (1951) (Cmd 9171) was agreed, the answer to any such claim for asylum as Mr Fitzgerald suggests may have been conceived as lying in article 1F(b), which provides that: The provisions of this Convention shall not apply to any person with respect to whom 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; (b) he has committed a serious non political crime outside the country of refuge prior to his admission to that country as a refugee; (c) that he has been guilty of acts contrary to the purposes and principles of the United Nations.2 42. 41. Regulation 2 of the Refugee or Person in Need of International Protection (Qualification) Regulations 2006 (SI 2006/2525) (transposing into United Kingdom law Council Directive 2004/83) provides that "'refugee' means a person who falls within article 1(A) of the Geneva Convention and to whom regulation 7 does not apply". Regulation 7(1) states that "A person is not a refugee, if he falls within the scope of article 1D, 1E or 1F of the Geneva Convention". In R (JS (Sri Lanka)) v Secretary of State for the Home Department [2010] UKSC 15, [2011] 1 AC 184, Lord Brown recorded (para 2) that 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 article's disqualifying provisions. 43. In Al Sirri v Secretary of State for the Home Department [2012] UKSC 54, [2013] 1 AC 745, the Supreme Court considered the standard of proof required to bring a case within article 1F(c) and held (para 16) The article should be interpreted restrictively and applied with caution. There should be a high threshold defined in terms of the gravity of the act in question, the manner in which the act is organised, its international impact and long term objectives, and the implications for international peace and security. And there should be serious reasons for considering that the person concerned bore individual responsibility for acts of that character. 44. Since criminal proceedings against Mr Al Sirri had been dismissed on the ground that no reasonable and properly directed jury could on the evidence available convict him (Al Sirri, para 23), it is not entirely clear why it was necessary to attempt to define the relevant standard of proof in that case. Adopting the approach in Al Sirri, article 1F(b), appearing between the two articles considered in these two authorities, covers serious non political crime which may, nevertheless, not always reach the standard of seriousness envisaged in articles 1F(a) and (c). But it seems reasonably clear that a similar approach must apply under all three articles. On that basis, the prima facie proof of involvement in the crimes committed during the Rwandan civil war, which the GoR seeks to adduce against these appellants, may not be sufficient to bring any of the articles in article 1F into play. It is therefore conceivable that, if the present proceedings lead to extradition orders against all four appellants, the three appellants who are not United Kingdom nationals will be able to seek to claim asylum, and in the course of so doing before the First Tier Tribunal to seek some form of order which would have the effect of precluding disclosure to the GoR of evidence which they wish to call but cannot call if its author or contents will or may thereby become known to the GoR whereas VB as a United Kingdom citizen will not be able to do this and will be liable to immediate surrender. 45. A number of observations may be made on this possibility. First, it may of course be that the nature of the evidence adduced before the District Judge in the present proceedings and before the First Tier Tribunal on any asylum claim may satisfy SIAC even to the higher standard which Al Sirri indicates to be required. Second, it is relevant to recognise the normal reason for which a court or tribunal would decide to exercise its discretion to give directions for anonymity or to exclude the public in asylum proceedings. This is not related to the reasons for seeking such a procedure in the present case in other words, it is not to expand the nature of the evidence admissible in asylum proceedings. Rather, it is to protect the asylum seeker him or herself, as well as others, particularly any dependants and family members in his or her home country, from persecution or other harm, which might result from knowledge of the asylum proceedings. This is now reflected in a European Union context in article 22 of Directive 2005/85/EC on minimum standards on procedures in Member States for granting and withdrawing refugee status. In the present case, that reason could have no application. The GoR is well aware of the appellants position, knows where they are and is seeking their return. It now also knows of the possibility that some of them may be eligible to make and may well make asylum claims in the United Kingdom. Other grounds on which an anonymity or exclusion order might be sought, as contemplated in Presidential Guidance Note No 2 of 2011 issued by the President of the FTT on 14 February 2011 and revised 7 July 2011 appear equally irrelevant. The appellants may well therefore be unable to obtain any anonymity or exclusion order. However, the further power which was recognised in W (Algeria) was to restrain the Home Secretary from disclosing to the relevant foreign government evidence relating to risks which the asylum seeker claimed that he would face in the foreign country, which evidence he would otherwise have been unable to adduce. Assuming the First Tier Tribunal to have a like power under its rules, as Mr Fitzgerald submits, the reasoning in W (Algeria) lends support to the appellants case that they might be able in asylum proceedings before the Tribunal, to which the GoR is not party, to adduce evidence from witnesses which they cannot adduce in the present proceedings to which the GoR is party. 46. Third, assuming that the (on the face of it somewhat anomalous) scenario indicated in the preceding paragraphs is a possible one, and that the appellants might in fact also be able to obtain permission to obtain from the First Tier Tribunal some form of order which would prevent disclosure of material evidence to the GoR, this would be the consequence of a variety of factors: the possession by the appellants of different nationalities; different standards of proof involved in extradition and in asylum proceedings; and different statutory regimes. It cannot in my view distort or alter the clear conclusions which I have arrived at in relation to the extradition proceedings, which are all that are currently before the Supreme Court. Section 87 of Coroners and Justice Act 2009 47. I add a brief word on the application of section 87 of the Coroners and Justice Act 2009, on which the Administrative Court expressed views, as set out in para 9 above. The Divisional Court concluded that the term defendant in section 87 was wide enough to include the appellants, but that the term prosecutor was incapable of covering a requesting state. That would appear unsustainable on any view. However, before the Supreme Court, it was in the event common ground that section 87 has no relevant application to extradition proceedings at all. 48. The reasons were explained by Mr James Lewis QC for the GoR as follows: Section 87 only applies where there is a defendant charged with an offence to which the proceedings relate: section 97(1). That, on a true construction, does not embrace extradition proceedings with a view to a trial abroad. a. b. By the same token, a foreign state requesting surrender should not be treated as prosecutor, even though extradition proceedings are criminal proceedings of a special kind. c. The Extradition Act 2003 itself is careful to refer to the person whose surrender is requested as such, rather than to the defendant, and it makes specific provision when the concept of defendant is intended to include such person as well as when the concept of prosecutor is intended to include a requesting authority: see e g section 205(3). One might have expected similar caution in the 2009 Act, had section 87 been intended to cover extradition proceedings. 50. Assuming section 87 to be inapplicable, there is authority that anonymous evidence may be admissible in certain circumstances in extradition proceedings: R (Al Fawwaz) v Governor of Brixton Prison [2001] UKHL 69, [2002] 1 AC 556. In the light of the requirement in section 84 of the Extradition Act 2003 that there should be evidence . sufficient to make a case requiring an answer if the proceedings were the summary trial of an information, that conclusion cannot be justified on a simple basis that extradition proceedings are not themselves criminal proceedings. Equally, it is no longer possible to justify the reasoning in Al Fawwaz in so far as it endorsed the approach to anonymous evidence taken at common law in R v Taylor and Crabb [1995] Crim LR 254, prior to the Houses decision in R v Davis [2008] UKHL 36; [2008] 1 AC 1128. But, since the enactment of the Criminal Evidence (Witness Anonymity) Act 2008 and now sections 86 97 of the Coroners and Justice Act 2009, anonymous evidence may under statutory conditions be admitted at trial, and, without going further into this aspect, in those circumstances at least the requirements of section 84 of the Extradition Act 2003 will be capable of being met. Again, I have read and agree with Lord Hughes analysis of the law in this respect. Conclusion 51. For the reasons given in paras 1 to 46, I would dismiss the appellants appeals. LORD HUGHES (with whom Lord Neuberger and Lord Reed agree) 52. (i) and I very largely agree with the conclusions set out in Lord Mances judgment and need not repeat what he so clearly sets out. It is clear to me that the extradition court ought never to embark upon closed material procedures, hearing evidence on behalf of the person whose surrender is sought, but altogether withholding that evidence from the other party, the Requesting State, so that the latter not only cannot respond to it, but does not even known what it is to which response is called for. I deal here only with two issues: the impact (if any) of our decision upon procedure to be adopted in any subsequent asylum or human rights claims which might be made by any of the appellants, or by people in a similar position; the separate question whether an extradition judge conducting proceedings under the Extradition Act 2003 has the power to receive evidence from a witness who is anonymous, that is to say whose identity is withheld from one or other party to the proceedings. That is of course not the same as a closed material procedure, where evidence is received which is altogether withheld from one or other party. A witness who is anonymous is heard by all parties. All parties have the opportunity to agree or contradict what he says and his evidence can be tested by cross examination, albeit the extent of cross examination may be limited by his anonymity. Subsequent immigration or human rights claims (ii) (i) 53. The possible relevance of subsequent proceedings developed as a potential issue in the present case in the course of oral argument before this court. Before the courts below, and in written argument for this court, the argument advanced on behalf of the persons whose surrender is sought was that immigration proceedings, and particularly asylum claims, provided an analogy, which should be adopted by extradition courts. In asylum claims, it was correctly pointed out, an immigration judge has power to sit in private, in order to protect the confidentiality of the applicant and in particular in order to deny access by the state from whom protection is claimed to the fact that an allegation of danger of persecution is made and to any evidence which may demonstrate that danger, lest reprisals follow. Hence, it was submitted, an extradition court should also by analogy deny a requesting state access to evidence that it would infringe the Convention rights of the person sought, in case the requesting state might use the evidence to ill treat either the person sought or others, such as witnesses. A similar and alternative argument was advanced that an extradition court should in appropriate cases make an irrevocable non disclosure order by analogy with the procedure permitted to SIAC in exceptional circumstances by W (Algeria) v Secretary of State for the Home Department [2012] UKSC 8; (2012) 2 AC 115. 54. However, as the oral argument proceeded, the submission made on behalf of the persons sought expanded beyond suggested powers in the extradition court found by way of analogy with immigration proceedings. It became the more striking submission that unless the extradition court has the powers claimed (to conduct closed material procedures and to make irrevocable non disclosure orders) there would be likely to follow asylum claims by the persons sought, in which different procedures would apply. Said Mr Fitzgerald QC, the applicants whom he represents, who have hitherto been granted leave to remain without dispute and who have never made any kind of asylum claim, might now make such a claim. If they do, he submitted, they ought to be permitted by the Immigration Judge in the First Tier Tribunal to adduce the evidence on which they wish at present to rely before the extradition court, in order to demonstrate that they would be at risk of persecution in Rwanda. And, he submitted, they ought to be permitted to adduce this evidence in a private hearing from which the Government of Rwanda and its representatives are excluded, and to have that evidence relied upon by the Immigration Judge in deciding the asylum claim. Moreover, he submitted, they ought similarly to be permitted to obtain from the First Tier Tribunal an irrevocable non disclosure order preventing the Secretary of State, as the other party to the asylum appeal, from ever disclosing the evidence to Rwanda. The consequence may well be, he submitted, that the Immigration Judge may accept the refugee status of the persons sought, in effect contrary to the findings of the extradition court. 55. Mr Fitzgerald offered the further argument that, if this scenario were to come to pass, there would ensue an unfair distinction between, on the one hand, a person sought who was a foreign national, and thus able to apply for asylum, and, on the other, a British national who is sought. As it happens, one of the present appellants is a British citizen. 56. These arguments call for some consideration of the inter relation of asylum or immigration proceedings on the one hand and extradition proceedings on the other. Is there a prospect of inconsistent findings of fact, or (worse) of inconsistent orders? The court is significantly inhibited in deciding these questions by the late appearance of the arguments, and by their resulting incomplete content. It is likely that if the suggested scenario should come to pass, further full consideration will be essential. It may help, however, to identify at least some signposts. 57. The first and principal reason why an immigration judge may exercise the power to sit in private in an asylum case is to satisfy the international duty of confidentiality towards asylum claimants. This is now well recognised, in particular in Europe by article 22 of Directive 2005/85/EC on minimum standards on procedures in Member States for granting and withdrawing refugee status, which provides: Article 22 Collection of information on individual cases For the purposes of examining individual cases, Member States shall not: (a) directly disclose information regarding individual applications for asylum, or the fact that an application has been made, to the alleged actor(s) of persecution of the applicant for asylum; (b) obtain any information from the alleged actor(s) of persecution in a manner that would result in such actor(s) being directly informed of the fact that an application has been made by the applicant in question, and would jeopardise the physical integrity of the applicant and his/her dependants, or the liberty and security of his/her family members still living in the country of origin. 58. The purpose of this duty of confidentiality is to protect the asylum claimant and/or his family from any risk of reprisals for having made allegations against his home State. For the reasons Lord Mance explains at paragraph 45, this can have no application where the State accused, here Rwanda, knows full details of the persons sought, and indeed has been informed in open court of the suggested possibility of asylum applications. It follows that there would be no reason for any immigration judge to accede to an application to hear any asylum claim in private on this, the common, ground, nor on this ground to hear evidence which Rwanda is prevented from hearing. 59. A second, distinct, possible scenario is afforded in limited circumstances by the decision in W(Algeria) v SSHD (supra). This court there concluded that there could be circumstances in which justice required that, in order to determine whether or not deportation to a particular State would infringe the article 3 (or, it must follow, the article 2) rights of the individual concerned, a court could receive evidence on terms that the other party (the Secretary of State) is ordered not to disclose it to anyone else, including the State to which return is under consideration. That is possible, it was held, where the evidence would otherwise be withheld for fear of reprisals. W(Algeria) was a strong case. The proposed State of return was known to practice torture, which would ordinarily have been a bar to return on article 3 grounds. The evidence went to whether assurances offered by that State to the Secretary of State could be relied upon. The judgments of both Lord Brown and Lord Dyson make it clear that the procedure contemplated was wholly exceptional, because it infringes ordinary principles of natural justice by impairing the ability of one party, the Secretary of State, to challenge and test the evidence. They also make it clear that such a procedure could be expected to be justified only when article 3 rights, not to be the subject of torture or inhuman or degrading punishment, was in question. If other rights were in question, the balance would be likely to fall against so unusual a procedure. 60. There is no question of W (Algeria) authorising the receipt by an extradition judge of evidence of the kind here sought to be adduced. The proceedings in W (Algeria) were deportation (immigration) proceedings, to which the parties were the individual and the Secretary of State, but not Algeria, the proposed State of return. The claimant was at pains to disclaim any argument that the Secretary of State, as a party to the proceedings, should be unable to hear the evidence in question. The order sought, and granted, was one preventing the Secretary of State from passing the evidence on, by way of enquiry or otherwise, to Algeria. In extradition proceedings, the proposed State of return, here Rwanda, is a party. 61. However, the exceptional procedure thus sanctioned in W (Algeria) needs to be considered in context when the relationship of asylum or deportation to extradition is in question. The terms of the Extradition Act make it clear that extradition is subject to the non infringement of the Convention or refugee rights of the individual sought. For Part I extraditions, to European States, section 39 provides that a European arrest warrant is not to result in extradition whilst a claim for asylum is pending. The present case falls under Part II, via section 194. In the context of Part II extraditions, to non European States, the process of extradition begins when the Secretary of State certifies that a valid request for an individual has been received: see section 70. Under section 70(2)(b) and (c) the Secretary of State need not certify if either the individual has been accepted as a refugee or he has been granted leave to remain in this country on the grounds that removal to the requesting State would involve infringement of his article 2 or article 3 rights. Ordinarily, it may well be that any person sought for serious crime would be excluded from refugee rights by article 1F(b) of the Refugee Convention, set out by Lord Mance at paragraph 40, and it seems to me to follow that the scope for a finding that there is a prima facie case justifying extradition but no serious reasons for thinking that he is guilty of such a crime is likely to be narrow. But Convention rights, as extended by the Soering principle, may well be more extensive than refugee rights. The Act appears to contemplate that any asylum claim will be made before any extradition proceedings, and it goes on to provide in section 70(11) that once the Secretary of State has issued the section 70 certificate all questions of human rights are for the extradition judge, who is required by section 87 to halt the sequential process provided for by the Act, and to discharge the person sought, if breach of such rights (not limited to articles 2 or 3) would be the result of extradition. That makes it clear that the extradition process is, once the section 70 certificate is issued, an entirely judicialised one. Once the judicial ruling for extradition has been made, the Secretary of State is bound by section 93 of the Extradition Act, to give effect to it unless specified reasons (death penalty, specialty, earlier extradition into the UK or transfer to it by the ICC) apply. Whether there remains room for a subsequent application, outside the extradition process, for asylum, or (absent any asylum or refugee claim) for a decision by the Secretary of State (or immigration judge on appeal) that removal to the requesting State would involve infringement of article 2 or 3 rights, appears to remain unexplored. But if there is room for such, then it would appear to follow as a possibility that a W (Algeria) non disclosure order might be open for consideration in such proceedings. It would be a material consideration that the application was made late, and in a form which in effect mounted a collateral challenge to an earlier ruling of the extradition judge that the individual is to be extradited. (ii) Anonymity of witnesses 62. The Divisional Court itself raised the possibility that an extradition judge could hear an anonymous witness. Having done so, it held that such a power did exist and that it derived from sections 86 97 of the Coroners and Justice Act 2009 (the 2009 Act), or the equivalent provisions of its predecessor, the Criminal Evidence (Witness Anonymity) Act 2008 (the 2008 Act). It described the application of those Acts to extradition as adventitious. 63. Closer examination demonstrates that the Divisional Court was right to say that an extradition judge has power, if justice calls for it, to receive the evidence of a witness who is anonymous to one or all parties, but not to derive this power from either the 2008 or the 2009 Act. 64. The 2008 Act was passed to give a criminal court the express power, in defined conditions, to allow a witness (by whomever called) to remain anonymous to the defendant and/or to co defendants. The principal conditions are that such a course of action must be found to be necessary on specified grounds, which include preserving the safety of the witness, and that the court must be satisfied that the trial can nevertheless be fair. The Act was passed against the background of growing concern about witness intimidation and the reluctance of potential witnesses to crime, for fear of reprisals, to be seen to be co operating with a police investigation. In the years before 2008 courts hearing criminal trials in England and Wales had from time to time permitted witnesses to give evidence anonymously where satisfied that the evidence would not otherwise be given, or effectively given, owing to genuine fear, and that the defendant was not disabled from properly challenging it. However, in R v Davis [2008] UKHL 36; (2008) 1 AC 1128 the House of Lords held that this was not permissible because at common law the rights of a defendant in a criminal case to know and confront his accuser had to prevail. The House held that if a power was to be created to hear evidence in a criminal case from a witness who remained anonymous to a defendant, that could only be done by statute. The 2008 Act was the immediate Parliamentary response. It was enacted after a greatly attenuated legislative timetable, with the agreement of all major parties. It was expressly stipulated to have a short life, so that further consideration could be given to the principle to which it gave effect. After such further consideration, the 2009 Act re enacted its provisions in substantially the same terms. In the present case the Divisional Court held that these provisions applied. Its reasoning was as follows (by reference to the 2009 Act): 65. (i) the Act applies to criminal proceedings; these are defined in section 97(1) as those in a Magistrates court, Crown court or the Court of Appeal (Criminal Division) in England and Wales which are: criminal proceedings consisting of a trial or other hearing at which evidence falls to be given; (ii) extradition proceedings are a kind of criminal proceeding within that definition, and extradition was described as a form of criminal proceeding by Lord Hoffmann in R vs Governor of Brixton Prison Ex parte Levin [1997] AC 741 at 746 F G; (iii) the present appellants, whose surrender was sought by Rwanda, were defendants for the purpose of the 2009 Act because they had been charged with offences (in Rwanda); (iv) although section 87(3) requires a defendant who applies for a witness anonymity order to disclose the identity of the proposed witness to the prosecutor, as well as to the court, this presented no obstacle because that term is defined in section 97 as any person acting as prosecutor, whether an individual or a body; a requesting State making an application for extradition is not acting as a prosecutor; either it, or some other body may in due course, if extradition is granted, take up the role of prosecutor at the subsequent trial, but that stage has not yet been reached; (v) although the Crown Prosecution Service (CPS) generally conducts extradition proceedings on behalf of the Requesting State, and does so in this case, it, like the State, is not acting as a prosecutor when it does so. 66. There is no difficulty with propositions (iv) and (v). Extradition proceedings are not a criminal trial. The person whose extradition is sought is not in peril in them of conviction, and his guilt or innocence will not be decided. The issue is whether he should be surrendered to the Requesting State for the purpose of subsequent trial. The Requesting State is not prosecuting him before the English court; it is asking the UK to surrender him. The CPS generally acts as the advocate or agent of the Requesting State; that its principal role in England & Wales is to prosecute allegations of crime does not mean that it does not have this separate and different function in extradition proceedings. Its role in extradition proceedings is made clear by section 190 of the Extradition Act 2003. That amends section 3(2) of the Prosecution of Offences Act 1985, which ascribes various functions to the CPS, chief of which is to take over the conduct of all criminal proceedings (with specified exceptions). The amendment made by section 190 of the Extradition Act inserts a new additional function, namely: (2)(ea) to have the conduct of any extradition proceedings That, however, is made subject to the specific exception that the CPS is not to do so when requested not to by the Requesting State. This makes clear the advocacy or agency role of the CPS in extradition proceedings. [It ought to be noted that the CPS may separately fulfil a different function under section 83A and following of the Extradition Act where forum proceedings fall to be determined, but these do not affect the foregoing propositions.] 67. The difficulty lies in propositions (i) to (iii). There cannot be the slightest doubt that the 2008 and 2009 Acts were passed in order to deal with criminal prosecutions in England, Wales and Northern Ireland. They were a direct response to R v Davis which itself was concerned with such prosecutions and with no other form of proceeding. The modest extension afforded by the definition section (section 97) to other hearings at which evidence falls to be given is plainly intended to encompass the kind of ancillary application or proceeding which may attend a criminal prosecution either in advance of the trial or after it has finished. Many possible examples might be envisaged. They might include, in advance of trial, case management hearings at which a fear of witness intimidation falls to be considered or where rulings as to the giving of evidence are to be considered, and, after trial, hearings relating to such matters as sentencing or the making of protective orders like Sexual Offences Prevention Orders or Serious Crime Prevention Orders. In the days when magistrates conducted committal proceedings to hear the Crown evidence and to determine whether there was a case to answer, those would no doubt have fallen within the definition, for such committal proceedings were an integral part of the prosecution process and the parties were the same as they would be at trial in the Crown Court, namely a prosecutor and the defendant. But one cannot treat extradition proceedings as a part of a criminal prosecution in England and Wales. Even though, in the case of some (but by no means all) Part II territories, it may be necessary for the Requesting State to establish a prima facie case, the proceedings are not a prosecution but, rather, concerned solely with the issue of surrender. Any prosecution is yet to come; it may or may not ensue and if it does it will not be under English rules. It is true that in Ex p Levin Lord Hoffmann, giving the sole speech in the House of Lords, described extradition proceedings as criminal proceedings for the purpose of the application of the evidential rules contained in the Police and Criminal Evidence Act 1984. In the end, the observation was obiter, because the issue in the case was the admissibility of certain bank records and since they were held to be real evidence rather than hearsay their admissibility did not depend on that Act at all. But Lord Hoffman did accept that the Act would apply to extradition proceedings, and indeed that so had the power of the court under section 78 to exclude prosecution evidence on the ground that it would have an unfair effect on the proceedings, until the amendment of that section to except committal proceedings. It does not, however, follow that extradition proceedings can be equated to a criminal prosecution or that they are criminal proceedings for all purposes, still less that they are criminal proceedings for the purpose of the 2008 and 2009 68. Acts. On the contrary, it is clear that neither proposition is correct. That appears from any or all of the following considerations. (i) Lord Hoffmann explicitly described extradition proceedings as criminal proceedings of a very special kind (at 746F). (ii) The application to extradition proceedings of English rules of criminal evidence (including those in the Police and Criminal Evidence Act 1984) was clear in any event, then as now. At that time the relevant provision was paragraph 7(1) of Schedule 1 to the Extradition Act 1989, which provided that the prospective defendant was to be remanded in custody for the decision of the Secretary of State upon surrender if "such evidence is produced as . would, according to the law of England and Wales, justify the committal for trial of the prisoner if the crime of which he is accused had been committed in England or Wales Now, the same result follows from section 84(1) of the Extradition Act 2003, read with section 77. Section 84(1) requires the appropriate judge to determine whether: there is evidence which would be sufficient to make a case requiring an answer by the person if the proceedings were the summary trial of an information against him , whilst section 77 provides that he shall have the same powers as nearly as may be as he would have in summary proceedings for an offence. (iii) Lord Hoffmann recognised that even if section 78 did apply to extradition proceedings, it would do so only by way of the (then) rule that evidence was to be considered as if at English committal proceedings. He specifically identified the special nature of extradition proceedings and held that section 78 would require to be modified in its application to them so that what fell for consideration was not any unfair effect on any subsequent trial but unfair effect on the extradition hearing itself: see 748A, where he underlined the fact that at the extradition hearing it ought ordinarily to be assumed that if the prospective defendant is surrendered local procedures in the Requesting State will ensure fairness there. That is a clear recognition of the essential difference between extradition proceedings on the one hand and a criminal prosecution and trial on the other. (iv) Section 87 of the 2009 Act provides for applications for witness anonymity orders to be made either by the prosecutor or by the defendant. Where the application is made on behalf of a defendant, section 87(3) requires the identity of the witness to be revealed not only to the court but to the prosecutor. As the Divisional Court correctly held, there is no prosecutor in an extradition hearing. The notion of criminal proceedings existing without a prosecutor is difficult enough on any view; but even if such a thing can for any purpose be imagined, it is clear that the 2009 Act, and its predecessor the 2008 Act, are confined to prosecutions, with prosecutors. It is also doubtful that the person whose extradition is sought falls within the definition of defendant for the purposes of the 2009 Act. Defendant is defined by section 97 in terms which are plainly appropriate to a person facing trial in England and Wales, but may not be to someone whose surrender is sought for potential trial elsewhere: (v) "the defendant", in relation to any criminal proceedings, means any person charged with an offence to which the proceedings relate (whether or not convicted) Extradition proceedings under Part II of the Extradition Act 2003 depend upon a request to the UK by the Requesting State. For the very detailed process of the Act to begin, the Secretary of State must certify under section 70 that she has received a valid request. A valid request is one which states, inter alia, that the person sought: is accused in the category 2 territory of the commission of an offence specified in the request. The use of the word accused would appear to be deliberate. The person concerned may or may not have been charged in the Requesting State, according, no doubt, among other things, to that States practice in relation to absent persons. It is to be observed that the Extradition Act 2003 generally refers to the person who is the object of extradition proceedings as the person whose extradition is sought, rather than as the defendant, and that in certain places where it wishes to apply other statutory references to a defendant to this person, it says so expressly. An example is section 205(3) which provides: (3) As applied by subsection (1) in relation to proceedings under this Act, section 10 of the Criminal Justice Act 1967 and section 2 of the Criminal Justice (Miscellaneous Provisions) Act (Northern Ireland) 1968 have effect as if (a) references to the defendant were to the person whose extradition is sought (or who has been extradited); (b) references to the prosecutor were to the category 1 or category 2 territory concerned; (vi) Lastly, it is by no means clear that the place of an extradition hearing is within the definition of court for the purposes of the 2009 Act. Section 97 provides that for the purposes of a witness anonymity order: "court" means (a) in relation to England and Wales, a magistrates' court, the Crown Court or the criminal division of the Court of Appeal 69. Those are, of course, the courts in which prosecutions in England and Wales are conducted. Extradition hearings under the Act of 2003 are held before what that Act calls the appropriate judge in relation to Part II see section 70(9) and following. The appropriate judge is, by section 139, a District Judge (Magistrates Courts) specially nominated by the Lord Chief Justice. The fact that the nomination has fallen upon certain District Judges (Magistrates Courts) who ordinarily sit at Westminster Magistrates Court does not mean that they are sitting in that capacity when conducting an extradition hearing, nor that such hearing is held in a Magistrates Court. Consistently with this, section 77 provides that in an extradition hearing, the appropriate judge: has the same powers (as nearly as may be) as a magistrates' court would have if the proceedings were the summary trial of an information against the person whose extradition is requested. It is not, however, necessary to force extradition proceedings into the 2008 or 2009 Acts in order to justify the receipt of evidence from a witness whose anonymity is protected. The jurisdiction to receive evidence on this basis which was discussed in R v Davis derived from the inherent powers of the court to control its own procedure. What Davis decided was that this power did not extend, in a criminal prosecution, to hearing a witness whose identity was not disclosed to the defendant. Statutory sanction was called for. Statutory sanction has now been given for the paradigm case of an English criminal prosecution. The inherent power of the court to admit such evidence in extradition proceedings remains, and can properly be exercised by analogy with the statutes. Indeed, at the time of Davis, there was existing House of Lords authority in R (Al Fawwaz) v Governor of Brixton Prison [2001] UKHL 69, [2002] 1 AC 556 for the proposition that anonymous evidence was indeed receivable in extradition proceedings, and in Davis Lord Bingham endorsed this decision. As Lord Mance observes at paragraph [50] this endorsement may not have given full consideration to the reliance in Al Fawwaz upon the cases in which English criminal courts had admitted anonymous evidence, such as R v Taylor and Crabb [1995] Crim LR 254, nor did it refer to the requirement that a prima facie case be adduced in extradition proceedings. However, I agree with Lord Mance that even if these considerations weaken the authority of the endorsement of Al Fawwaz in Davis, the subsequent passage of the 2008 and 2009 Acts clearly shows that anonymous evidence may be received in English criminal cases, providing the statutory safeguards are met, and it follows that such evidence is equally admissible in extradition proceedings. 70. 71. 72. In the present appeal, Mr Lewis QC for the Government of Rwanda conceded that in relation to some parts of an extradition hearing there could be no objection to the hearing of evidence from a witness who remained anonymous. His concession was confined to issues arising under sections 81 (extraneous considerations) or 87 (human rights barriers to surrender) and was made on the basis that the ordinary rules of evidence do not apply on those issues. That approach enabled him to submit that the persons whose extradition is sought in this case could not rely on witnesses on the issue of prima facie case unless their identity was disclosed to all parties. The practice in relation to material going to section 81 or 87 issues is, however, as Lord Mance says, probably better analysed as a relaxed approach to expert evidence. Experts are generally entitled to give evidence based upon a background corpus of knowledge. What appears to happen on these issues, as in immigration cases, is that there is a relaxed readiness to permit experts to give evidence of opinion as to prevailing circumstances in the foreign State which is based upon information gathered from unnamed and sometimes unknown sources. To that extent, such sources are likely to remain unknown not only to the other party, but to the court. Any possible unreliability of such sources falls to be assessed by the court as part of its overall evaluation of the evidence. Receipt of evidence of this kind is clearly different from hearing a witness who is present but whose identity is known to the court but not to one party. In the present proceedings, the persons whose extradition is requested seek to adduce evidence not only of this expert variety but also from witnesses of fact who are said to be in genuine fear for the safety of themselves or their families if their identity is known to the Requesting State. The evidence in question (which this court has, correctly, not viewed) is said to go both to the question of whether there is or is not a prima facie case and to issues arising under section 81 and/or 87. It is difficult to see why, if witness anonymity is in principle permissible in extradition proceedings, subject to its being fair to receive it, it should be confined to section 81 or 87 issues. In Al Fawwaz the evidence of the anonymous witnesses went to whether there was or was not a prima facie case, and was tendered on behalf of the requesting State. True it is that section 84 of the Extradition Act means that a prima facie case must be established by evidence which could establish it if the proceedings were a summary trial, but the 2009 Act makes it clear that in a summary trial a witness may be heard anonymously if the safeguards set out in that Act are in place. 73. An extradition judge will bear in mind that where the issue is the presence of a prima facie case, he is generally not concerned to assess the credibility of the witnesses relied upon, at least unless they are so damaged that no court of trial could properly rely on them. Nevertheless, it is likely that any extradition judge will be more cautious in relation to the admission of anonymous evidence on the issue of prima facie case than in relation to section 81 or 87 issues, and the more cautious still where it is proffered by the requesting State. It is clear that the overriding principle is that such evidence can be admitted only when it is fair to all parties that it should be. It must remain an unusual exception to the general practice. That is likely to mean that an extradition judge will apply by analogy, so far as may relevant, the same principles as are stipulated in the 2009 Act for criminal prosecutions in England and Wales. He will need to be satisfied that there is genuine cause for anonymity, generally a justified fear for the safety of the witness or others which cannot otherwise be protected, and that justice requires that the evidence be given. It will also be likely to mean that a crucial factor in his decision whether to admit it will be the extent of the means available to the other party to challenge it. In considering this question he will no doubt want to consider whether the party tendering the witness has or has not provided the maximum possible information about the witness, short of identifying material, which could be deployed in challenging him. He will ordinarily require that the court itself is given the fullest information of identity. He will no doubt have in mind that anonymity may often weaken the weight which can be given to evidence given. Providing, however, he makes all relevant enquiries and admits the evidence of a person who is anonymous to a party only if satisfied that the proceedings are nevertheless fair, he has the power to hear such a witness. LORD TOULSON 74. The form of Memorandum of Understanding (MOU) under which the present extraditions are sought begins with three recitals. Two of them are in these terms: HAVING DUE REGARD for human rights and the rule of law; MINDFUL of the guarantees under their respective legal systems which provide an accused person with the right to a fair trial, including the right to an adjudication by an impartial tribunal established pursuant to law; 75. The MOU seeks to achieve the objective of ensuring protection of the appellants human rights by providing in para 4(d) that extradition may be refused if it appears to the Judicial Authority that extradition would be incompatible with [Xs] human rights. 77. 76. The Judicial Authority is defined in paragraph 1 as the judicial authority which is charged under the law of this country with the duty of considering requests for extradition. In other words it is the Magistrates Court. In her judgment dated 28 January 2014 on the appellants application to adopt a closed hearing procedure to enable the appellants to place before the court evidence in the absence of the Crown Prosecution Service representing the Government of Rwanda, District Judge Arbuthnot recorded that she had read for the purposes of the application folders of evidence provided by Dr Browns and Mr Ugirashebujas lawyers. She was later provided with a folder by the lawyers acting for Mr Nteziryayo, but did not read it, and she was told that evidence on behalf of Mr Mutabaruka was in preparation. 78. The judge said that she was prepared to accept that the files which she read contained important and material evidence which was relevant in particular to the question whether the relevant appellants would receive an article 6 compliant trial if they were extradited. She held that she was bound by the decisions of this court in Al Rawi and the Divisional Court in B Sky B (later affirmed by this court) to refuse the applications. But she expressed concern that there may be a risk of serious prejudice to the defence in making that decision and for that reason it was with some reluctance that she refused the application. 79. Dr Browns solicitor has made witness statements in which he says that he has visited Rwanda with leading and junior counsel and taken statements from four witnesses, who all say that they are not willing for their identities to be revealed to the Rwandan Government for fear that they and their families would be placed in serious danger. He states that the nature of their evidence makes them immediately identifiable to the Rwandan authorities and that any redaction that sufficiently protects their identity would make their evidence meaningless. It is said that the most important witness is either a present or former Rwandan prosecutor or police officer, a Rwandan judicial officer or a prosecution witness. It is said that he has given audio taped and video taped evidence to Dr Browns lawyers about the fabrication of evidence against Dr Brown by state officials. 81. 82. 80. The court is in a cleft stick. On the one hand, Lord Mance says (at para 29) that the appellants submission that the court should receive such evidence in a closed session assumes the truth of what they set out to prove; that it is only speculation that what they say would be relevant, truthful and persuasive; and that the very nature of a closed material procedure would mean that this could not be tested. I think that we may take it that the material is relevant because the district judge has accepted that it is, but in any event that would not be difficult to assess. The real problem is whether it is truthful and how that is to be assessed. If it is truthful, then the refusal of the witnesses to allow their identity to be disclosed is not remarkable. (The English courts have experience of truthful witnesses who are too frightened to give evidence if their identity is to be revealed. In some circumstances, statute permits the prosecution to rely on evidence of witnesses whose identity is withheld from the defence.) I do not agree that the appellants submissions assume that the evidence is truthful. Rather, they assert that it is potentially credible and that the court should be prepared to consider it. It is said that if the court is prepared to look at such evidence, it will encourage others to manufacture false evidence. That is certainly a risk. The same objection was made to allowing people accused of serious offences to give evidence on their own behalf prior to the Criminal Evidence Act 1898. No doubt that Act has enabled some defendants to hoodwink juries by inventing false defences which the prosecution has been unable to disprove, but that is a less grave affront to justice than disallowing defendants from putting their evidence before the court on account of the attendant opportunities for abuse. In the present case two of the appellants have obtained evidence which the district judge considers relevant and important to their case, but those witnesses are beyond the protection of the United Kingdom and the appellants are unable to put their evidence before the court unless the court is prepared to consider it without disclosure to the requesting state. There is obvious prejudice to the requesting state if the court agrees to do so and obvious potential for abuse. That is one side of the picture, but there is another. Just as the evidence cannot be assumed to be truthful, so it cannot be assumed to be untruthful. What if it is indeed the case that the prosecutions evidence has been fabricated and that those who have provided that information to the appellants lawyers are genuinely frightened to reveal their identity on understandable grounds? If the United Kingdom authorities decline to look at the evidence unless it is disclosed to the requesting state which it cannot be the appellants are likely to suffer a denial of their human rights as a result of our shutting our eyes to that evidence. In my view that is unacceptable. 83. 84. The evidential problem is very real, but it is not a satisfactory answer simply to apply a blindfold to the evidence. To refuse to consider it has the same practical effect as assuming the evidence to be untrue, which cannot be assumed. I would hold that justice, and the respect for human rights on which the MoU was expressly predicated, require that at some stage in the process the evidence should be able to be considered. There are three ways in which this could occur. 85. The first is for the court to make an exception to the Al Rawi principle in this case. The exception would be based on the need to ensure that the court does not through blindness facilitate a foreseeable and potentially serious breach of human rights by ordering extradition to a foreign country, of which there is evidence that, by the very nature of the circumstances, cannot be disclosed to the requesting state. If that approach is rejected, as it is by the majority in this case, I apprehend that it will be open to those appellants who are not British citizens to apply for asylum or humanitarian protection; and, on appeal against a refusal by the Home Secretary, they would be able to place before the immigration judge the material which the district judge was not permitted to consider, without that evidence being disclosed to the foreign state, since it would not be a party to the proceedings. 86. 87. That avenue would not be available to the appellant who is a British citizen. It would be manifestly unacceptable that a non British citizen should have greater means of protection of their human rights than a British citizen, and that cannot have been the intention of the government in entering into the MoU. I anticipate that it would be open to the British appellant to ask the government to apply the MoU in a way which would involve treating him no less favourably than it would a non British citizen, on the ground that to do otherwise would be a (highly unusual) form of unjustifiable discrimination, and if necessary to bring judicial review proceedings. In my view the first way would be the best. Under the MoU it was intended that determination of any human rights issues should be a matter for the judicial authority. The district judge has received and is due to hear general evidence on the subject. If the evidence which the appellants seek to introduce is to be considered by anyone, it would be best done by the same judge, who would evaluate to the best of her ability it in the context of all the evidence before her. The exercise would be similar to that performed by 88. immigration and asylum judges when considering asylum applications supported by evidence about alleged conduct of foreign authorities which will not have been disclosed to those authorities. Tribunal judges are used to scrutinising such evidence in the light of other objective evidence. It is not a perfect system but it is fair and workable. 89. The second way would avoid the problem of disclosure of the evidence to the foreign state, because the foreign state would not be a party to the application, any more than it would be in any other asylum application. There would be no question of withholding the evidence from the Secretary of State. On the contrary, the evidence would form the basis of the request to the Secretary of State, against which an appeal would lie. It would be contrary to the ordinary practice of the Secretary of State to disclose such evidence to the foreign authority, and it is difficult to imagine that there would be any question of disclosure of statements of witnesses which, if true, could place them or their families in jeopardy. But there are disadvantages to this way of proceeding. 90. First, to have two sets of proceedings with overlapping evidence is undesirable. I do not see that the asylum application could be dismissed as an abuse of process, on the ground that it amounted to a collateral attack on the findings in the extradition proceedings, in circumstances where the appellants would not have been able to present all relevant evidence to the magistrates court. The United Kingdom has an international obligation to consider an application for asylum, and I cannot see that this responsibility could be said to have been fulfilled by an extradition hearing at which the court was precluded by its own rules from hearing evidence relevant to the asylum claim. (Nor do I think, with respect, that the tribunal judge could properly draw any adverse inference about the credibility of the evidence from the lateness of the asylum application, when the applicant on legal advice had sought to deploy the evidence at what was thought to be the appropriate stage.) 91. Secondly, there is the problem that an application for asylum or human rights protection would be open only to the appellants who are not British subjects. Such discrimination might be overcome in the way that I have mentioned, but that would potentially involve a further set of proceedings. 92. Thirdly, rights under the European Convention are not identical with rights under the Refugee Convention, although the overlap is such that in the present case there may well not be a practical problem. 93. Mention has been made by Lord Mance and Lord Hughes of the possibility that any asylum claim would be excluded by article 1F(a) of the Refugee Convention relating to war criminals. Lord Hughes suggests that the scope for a finding that there is a prima facie case for extradition. but no serious reason for applying the exclusion is likely to be narrow. However, there is a significant difference in the standard of proof. A prima facie case for extradition requires a much less high standard of proof than a decision that an applicants rights under the Refugee Convention are excluded by article 1F(a): compare R v Governor of Pentonville Prison Ex parte Alves [1993] AC 284,290,292 and Al Sirri v SSHD [2012] UKSC 54, [2013] 1 AC 745. Moreover the evidence before the district judge and the tribunal judge would be different. I do not therefore consider, with respect, that article 1F(a) is relevant to the issue which this court has to decide. 94. The complications and delays which I foresee arising at the next stage or stages of legal proceedings, if in the circumstances of this case the district judge is not permitted to examine evidence of the kind with which we are concerned in a closed hearing, reinforce my view that the least unjust way to ensure proper protection of the appellants human rights is to make the exception to the Al Rawi principle for which they contend. I would therefore allow these appeals. On the separate question whether an extradition judge conducting proceedings under the Extradition Act 2003 has power to receive evidence from an anonymous witness, I agree with Lord Hughes. 95. 49. Lord Hughes has in his judgment examined the position regarding the 2009 Act in detail and reached the conclusion that it does not apply for fuller reasons, with which I agree. |
This appeal concerns accessory liability in tort. The appellant, Sea Shepherd UK, is an English company. The other defendants, Sea Shepherd Conservation Society and Mr Paul Watson, have no presence in the UK. The appellant is therefore the anchor defendant for the purpose of the English court having jurisdiction to entertain the action. The claim is for loss and damage allegedly suffered by the claimant, Fish and Fish Limited, in an incident in the Mediterranean Sea on 17 June 2010 when conservationists mounted an operation designed to disrupt the bluefin tuna fishing activities of the claimant. The appeal arises from the determination of a preliminary issue as to whether the incident was directed and/or authorised and/or carried out by the appellant, its servants or agents, and whether the appellant was liable, directly or vicariously, for any damage sustained by the claimant. After a trial which included oral evidence, Hamblen J decided the issue in favour of the appellant and dismissed the claim against it: [2012] EWHC 1717 (Admlty), [2012] 2 Lloyds Rep 409. He also directed that service of the proceedings on the other defendants out of the jurisdiction be set aside. Hamblen Js decision was overturned by the Court of Appeal (Mummery, McCombe and Beatson LJJ) for reasons set out in the judgment of Beatson LJ: [2013] EWCA Civ 544, [2013] 1 WLR 3700. The court gave the following answer in its order to the question raised by the preliminary issue: On the assumption that the incident on 17 June 2010 was tortious, [Sea Shepherd UK] is liable for any alleged damage to the tuna fish cage and/or the release of the fish on the ground that it joined with the [other] [d]efendants in a common design to carry out such acts (and not on any other basis. Background The claimant operates a fish farm off Malta. On the day of the incident it was using two vessels to transport a catch of tuna in fish cages when they allegedly came under attack from a vessel, the Steve Irwin, under the command of the defendant Mr Watson. It is alleged that a cage was rammed and divers from the Steve Irwin tore it open, enabling the fish inside to escape. Mr Watson is a Canadian environmentalist and US citizen. He is dedicated to the cause of marine wildlife conservation. In 1977 he broke away from Greenpeace and formed the defendants Sea Shepherd Conservation Society (SSCS), now based in the state of Washington, USA. SSCS has since become the parent of a network of national Sea Shepherd entities including the appellant. In his evidence Mr Watson described himself as the organisational leader with overall strategic control of the parent organisation. He is also a director of its subsidiaries including the appellant. The appellant is a company limited by guarantee and is a registered charity. According to the Charity Commissions website, its activities include raising funds for campaigns to protect marine wildlife and ecosystems worldwide. Its charitable objects include promoting the conservation and preservation of marine and freshwater living organisms. At the time of the incident the appellant had only one employee, Mr Darren Collis, who gave evidence at the trial. The appellants financial statements for the year ended 30 June 2010 included a trustees report approved by the board on 7 December 2010. The report summarised the charitys objectives and principal activities as follows: The charitys objectives as set out in the Memorandum of Association are to conserve and protect the worlds marine wilderness ecosystems and marine wildlife species. The organisation endeavours to accomplish these goals through public education, investigation, documentation and, where appropriate and where legal authority exists under international law or under agreement of national governments, enforcement of violations of the international treaties, laws and conventions designed to protect the oceans. All of Sea Shepherds campaigns are guided by the United Nations World Charter for Nature. The trustees report went on to refer to a number of international campaigns in 2010, including a campaign in the Mediterranean to protect the critically endangered bluefin tuna. Under Plans for the future the report stated that the appellants primary objective remained the provision of funds to support the aims and objectives of our international organisation the Sea Shepherd Conservation Society. There are international regulations, introduced by the International Conference for the Conservation of Atlantic Tuna and by the European Council, which are supposed to control the fishing of Atlantic bluefin tuna. There are quotas, restrictions on the size of fish which may be caught and limits to the fishing season. In 2010 SSCS launched a campaign because of its concern that poor law enforcement in the Mediterranean was allowing widespread violation of the regulations, threatening the future of the species. It chose the title Operation Bluerage. It announced the campaign by a posting on its website dated 23 January 2010. This stated that The objective will be to intercept and oppose the illegal operations of bluefin tuna poachers and Sea Shepherd intends to confront the poachers and will not back down to threats and violence from the fishermen. There are issues between the parties about what exactly happened in the incident on 17 June 2010 and whether the claimant was engaged in illegal fishing, but they are not relevant to this appeal. Decision at first instance Hamblen J found that in conducting the operation, as master of the Steve Irwin, Mr Watson was not acting for the appellant but only for SSCS. The vessel was registered in the name of the appellant but it held a bare legal title. The vessel was beneficially owned and operated by SSCS. On the issue of accessory liability Hamblen J summarised the relevant legal principles as follows: 20. In respect of the common design issue, persons may be joint tortfeasors when their respective shares in the commission of a tort are done in furtherance of a common design: The Koursk [1924] P 140 at p 156 per Scrutton LJ; CBS Songs v Amstrad [1988] AC 1013 at p 1058. 21. The nature of a common design was explained by Mustill LJ in Unilever v Gillette [1989] RPC 583, at p 609: I use the words common design because they are readily to hand but there are other expressions in the cases, such as concerted action or agreed on common action which will serve just as well. The words are not to be construed as if they formed part of a statute. They all convey the same idea. This idea does not, as it seems to me, call for any finding that the secondary party has explicitly mapped out a plan with the primary offender. Their tacit agreement will be sufficient. Nor, as it seems to me, is there any need for a common design to infringe. It is enough if the parties combine to secure the doing of acts which in the event prove to be infringements. 22. The joint tortfeasor needs to join or share in the commission of the tort which generally means some act which at least facilitates its commission. 23. As explained by Hobhouse LJ in his judgment in Credit Lyonnais v ECGD [1998] 1 Lloyds Rep 19 there is no tortious liability for aiding and abetting or facilitating the commission of a tort, even knowingly. There may, however, be such a liability if that is done pursuant to a common design. He treated this as an example of liability based on agency. 24. In considering whether there is any such liability it is relevant to consider whether the person has been so involved in the commission of the tort as to make the infringing act his own. As stated by Peter Gibson LJ in Sabaf v Meneghetti [2002] EWCA Civ 976; [2003] RPC 264, para 59: The underlying concept for joint tortfeasance must be that the joint tortfeasor has been so involved in the commission of the tort as to make himself liable for the tort. Unless he has made the infringing act his own, he has not himself committed the tort. That notion seems to us what underlies all the decisions to which we were referred. If there is a common design or concerted action or otherwise a combination to secure the doing of the infringing acts, then each of the combiners has made the act his own and will be liable. The claimant alleged that the appellant was party to a common design with the other defendants to carry out Operation Bluerage and that this was to involve violent intervention of the kind which allegedly occurred. It relied particularly on a mailshot soliciting payments to the appellant in support of the operation. Under the heading OPERATION BLUERAGE and subheading 2010 MEDITERRANEAN BLUEFIN TUNA DEFENSE CAMPAIGN the mailshot stated We intend to seize, cut, confiscate and destroy every illegal tuna fish net we find. As to the appellants role, the claimant alleged that it facilitated the commission of the tort by making the vessel available for the campaign, recruiting volunteers, paying the crew and obtaining financial contributions. Hamblen J accepted that the appellant approved of the campaign and was aware that it envisaged the possibility of violent intervention against property, but he added that this was not the object of the campaign. The campaign involved a preparedness to use violent action, but it was not necessarily the case that such action would be taken. As to the part played by the appellant, Hamblen J rejected the suggestion that it made the vessel available for use in the campaign, since it was at all times in the possession and control of SSCS. He also found that there was no evidence that the appellant recruited any volunteers for the campaign or paid the crew to take part in it. The most significant part of the case against the appellant concerned the mailshot and the raising of campaign finance. As I read Hamblen Js findings, he accepted the evidence of Mr Collis that the appellant played no active part in soliciting campaign contributions. Although the mailshot gave the appellants name, address and bank details, it was not issued by the appellant. It was designed, organised and paid for by SSCS. Copies were posted in the UK, but not by or on the instructions of the appellant. The mailshot resulted in the receipt by the appellant of payments totalling 1,730, for which it accounted to SSCS. Hamblen J concluded: In summary, it is apparent that none of the matters relied upon by the claimant were of any real significance to the commission of the tort. The main thrust of the claimants pleaded case was that the attack was directed or authorised or carried out by [the appellant]. Once it is found that Watson and the crew were not acting on behalf of [the appellant] the claimant has to rely on participation which is remote in time and place. Whether considered individually or collectively I find that the matters so relied upon are of minimal importance and played no effective part in the commission of the tort. Decision of the Court of Appeal In his thoughtful and clearly reasoned judgment, Beatson LJ reviewed the authorities before concluding that Hamblen J erred in not finding that the use of violent confrontation by cutting fishing nets was part of a common design in which the appellant joined, and that he erred in his approach in the passage set out in the previous paragraph. The court held that it was sufficient that the appellant did something more than de minimis in support of the common design, and that it was not necessary that what the appellant did should have been of any real significance to the commission of the tort. The purpose of scrutinising what the appellant did was simply to decide whether it was possible to infer a common design. Analysis Joint liability in tort may arise in a number of ways. Two or more defendants may act as principal tortfeasors, for example by jointly signing and publishing a defamatory document. A defendant may incur joint liability by procuring the commission of a tort by inducement, incitement or persuasion (CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013, 1058, per Lord Templeman). A defendant may incur vicarious joint liability for a tort committed by an agent or employee. We are not concerned in this appeal with any of those heads of liability. We are concerned with a different category in which the defendant, D, has allegedly assisted the principal tortfeasor, P, in the commission of tortious acts. It might have been expected that the law of tort would mirror the criminal law on aiders and abettors, but that is not how the law has developed, as the House of Lords has recognised (CBS v Amstrad at p 1059 and Credit Lyonnais Bank Nederland NV v Export Credits Guarantee Department [2000] 1 AC 486, 500). Beatson LJ referred in his judgment to the criticisms which some scholars have made about the law in this respect, and to some of the policy considerations which might be considered relevant, but it is not a topic which the parties have raised. It is common knowledge that the criminal law in this area has caused considerable problems, and Beatson LJ quotes Weir, Economic Torts (1997) p 32, n 31 for the statement, indeed understatement, that accessory liability in the criminal law has not been joyous. There is much to be said for keeping the law in this area as simple as possible. The main authorities were referred to by Hamblen J. To establish accessory liability in tort it is not enough to show that D did acts which facilitated Ps commission of the tort. D will be jointly liable with P if they combined to do or secure the doing of acts which constituted a tort. This requires proof of two elements. D must have acted in a way which furthered the commission of the tort by P; and D must have done so in pursuance of a common design to do or secure the doing of the acts which constituted the tort. I do not consider it necessary or desirable to gloss the principle further. The principle was expressed crisply in the statement in Clerk and Lindsell on Torts, 7th ed, p 59, that Persons are said to be joint tortfeasors when their respective shares in the commission of the tort are done in furtherance of a common design, which was cited by all the members of the Court of Appeal in The Koursk [1924] P 140, 151, 156, 159. The subsequent cases are, as Mustill LJ said in Unilever Plc v Gillette (UK) Ltd [1989] RPC 583, 608, little more than illustrations of the application of the principle which he valuably summarised in the passage cited by Hamblen J in para 21 of his judgment (see para 12 above). Peter Gibson LJ was not putting forward a different principle in the passage in Sabaf SpA v Meneghetti SpA [2002] EWCA Civ 976, [2003] RPC 264, cited by Hamblen J in para 24 of his judgment, but was expressing the underlying concept that the defendant must have involved himself in the commission of the tort in such a way as to justify the conclusion that he combined with the other tortfeasor(s) to commit the tort. That is another way of expressing what Mustill LJ referred to as the parties combin[ing] to secure the doing of acts which in the event prove to be [tortious]. It follows that there was no error in Hamblen Js summary of the legal principles, nor in his considering whether the matters relied on by the claimant had any significance to the commission of the tort. It was another way of considering whether the appellant had combined to secure the doing of acts which proved (if they should prove) to be tortious. There is no formula for determining that question and it would be unwise to attempt to produce one, as Bankes LJ said in The Koursk at p 151: It would be unwise to attempt to define the necessary amount of connection. Each case must depend upon its own circumstances. 27. I would allow the appeal and restore the order made by Hamblen J. Conclusion 28. LORD SUMPTION: (dissenting) 29. I regret that I am unable to agree with the view of the majority that this appeal should be allowed. The difference between us is of little moment since it turns entirely on a question of fact peculiar to this case. The law of joint liability, on the other hand, on which we are substantially agreed, is of much wider significance. I shall therefore say rather more fully what I conceive it to be. 30. Sea Shepherd Conservation Society (SSCS) is a US based conservation charity whose mission, by its own account, is to end the destruction of habitat and slaughter of wildlife in the world's oceans in order to conserve and protect ecosystems and species. Sea Shepherd uses innovative direct action tactics to investigate, document, and take action when necessary to expose and confront illegal activities on the high seas. Operation Bluerage was the name given to its campaign against the over fishing of bluefin tuna in the Mediterranean in the summer of 2010. The campaign involved using a ship, the Steve Irwin, to confront those whom it regarded as poachers and if necessary to cut their nets and release their catch. The claimants were operators of a fish farm in Malta. According to the particulars of claim, in June 2010 they were using two tugs to drag to Malta a metal cage containing tuna in netting, which they had purchased from fishermen. They were attacked by the Steve Irwin, which rammed the cage, forced it open, cut the nets and released the fish, fighting off the claimants crew with liquid filled bottles and a gun firing rubber bullets. The claimants say that their fish were within the legal quotas and properly documented. 31. The sole question on the appeal is whether, assuming that the claimants allegations are proved, SSCSs associated United Kingdom charity Sea Shepherd UK (SSUK) is liable to them as a joint tortfeasor. The Court of Appeal held that it was. In my view they were right, for substantially the reasons given by Beatson LJ. The facts 32. SSCS has established a number of associated entities in other countries. SSUK, the United Kingdom associate, is a company limited by guarantee which was registered as a charity shortly after its incorporation in 2005. It was originally called Sea Shepherd Conservation Society, like its parent organisation, but later changed its name to Sea Shepherd UK. The judge found that there was a close relationship between the various Sea Shepherd entities worldwide, but that SSCS (the US charity) was the global organisation which utilises the resources of other SS entities when it is convenient to do so. He found that the relationship between them was accurately reflected in the report of the trustees of SSUK (the UK charity), which stated that The primary objective of Sea Shepherd UK remains the provision of funds to support the aims and objectives of our international organisation, the Sea Shepherd Conservation Society. 33. The judge found that while SSUK was involved in supporting the activities of SSCS in general, its involvement in the particular events which led to the damage done to the claimants property and the loss of their catch was limited to its participating in fundraising for Operation Bluerage and recruiting two volunteers. 34. The facts about the fundraising can be shortly stated. Operation Bluerage was announced in January 2010 on SSCSs website, which declared its intention to intercept and oppose those whom it regarded as poachers. It would not back down to threats and violence from the fishermen, it said. On 3 March 2010 SSCS emailed SSUK for a local mailshot appealing for funds for Operation Bluerage from our supporters from within the UK. As the email shows, the main reason for involving SSUK was to make use of bulk mailing services within the United Kingdom, and to enable donors to contribute through sterling cheques to be handled by SSUK, sterling bank transfers to SSUKs account, or sterling credit card transfers through merchant facilities to be acquired by SSUK. The mailshot was designed, organised and paid for by SSCS but in the name of and with the consent of SSUK, whose name and UK address appear at the foot of the face page. Whatever SSCS did must be regarded as having been done on behalf of SSUK. The text (so far as relevant) is as follows: OPERATION BLUERAGE 2010 MEDITERRANEAN BLUEFIN TUNA CAMPAIGN We intend to seize, cut, confiscate and destroy every illegal tuna fish net we find! YES, PAUL! You and the Sea Shepherd crew can count on my continued support as you head back into battle, this time in the Mediterranean. Please put my donation to immediate use to secure the fuel, charts, communications systems, oil, parts, supplies, and food for the crew all vital to the success of this mission. ( ) 5 ( ) 10 ( ) 15 ( ) Other The leaflet asked for contributions by cheque, bank transfer or credit card. Cheques were to be payable to Sea Shepherd Conservation Society, that being the former name of SSUK which was still on its UK bank account. The sort code and account number of that account was given for direct bank transfers. A form of credit card authorisation slip was printed on the reverse, which enabled funds to be received into merchant accounts of SSUK. While contributions were coming in, email correspondence of SSCS copied to SSUK, reported on the start of the Mediterranean campaign in terms which bore out the initial prospectus. We anticipate a violent defence by the poachers but that is a violence we can defend ourselves from, Mr Watson wrote on 10 June 2010. The mailshot generated receipts of 1,730, which was in due course paid over to SSCS. 35. Turning to the recruitment of volunteers, the judge found that Mr Collis (an employee of SSUK) passed on the names of those who contacted him about volunteering. One of them sourced a pump for the Steve Irwin and he and another drove to the south of France with it and did a days work on the vessel. 36. Finally, it is necessary to refer to the statutory Trustees Report filed with the Charity Commission for the year ended 30 June 2010 in which the relevant activities took place. This document identifies SSUKs charitable objects as being to conserve and protect the marine environment. Under the heading Public Benefit, it describes how it advances those objects. The methods include participating in campaigns, including Operation Bluerage, and in particular raising funds for the international programmes of SSCS through its growing UK supporter base. The elements of liability as a joint tortfeasor 37. The legal elements of liability as a joint tortfeasor must necessarily be formulated in general terms because it is based on concepts whose exact ambit is sensitive to the facts. The classic statements are those of Scrutton LJ in The Koursk [1924] P 140, 156 and Mustill LJ in Unilever Plc v Gillette (UK) Ltd [1989] RPC 583, 608 609. In The Koursk, Scrutton LJ, adopting the definition in Clerk and Lindsell on Torts, said that Persons are said to be joint tortfeasors when their respective shares in the commission of the tort are done in furtherance of a common design but mere similarity of design on the part of independent actors, causing independent damage, is not enough; there must be concerted action to a common end. Expanding on this formulation in Gillette, Lord Mustill observed that the test was whether (a) there was a common design between [the primary and secondary parties] to do acts which amounted to infringements, and (b) [the secondary party] has acted in furtherance of that design. I use the words common design because they are readily to hand but there are other expressions in the cases, such as concerted action or agreed on common action which will serve just as well. The words are not to be construed as if they form part of a statute. They all convey the same idea. This idea does not, as it seems to me, call for any finding that the secondary party has explicitly mapped out a plan with the primary offender. Their tacit agreement will be sufficient. Nor, as it seems to me, is there any need for a common design to infringe. It is enough if the parties combine to secure the doing of acts which in the event prove to be infringements. 38. The effect of these statements is that the defendant will be liable as a joint tortfeasor if (i) he has assisted the commission of the tort by another person, (ii) pursuant to a common design with that person, (iii) to do an act which is, or turns out to be, tortious. It is now well established that if these requirements are satisfied the accessorys liability is not for the assistance. He is liable for the tortious act of the primary actor, because by reason of the assistance the law treats him as party to it: Credit Lyonnais Bank Nederland NV v Export Credits Guarantee Department [2000] 1 AC 486, 495 500. This does not, however, mean that the accessory must have joined in doing the very act constituting the tort. Liability as a joint tortfeasor is more commonly an accessory liability. As Lord Neuberger observed in Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] 1 WLR 1556 at para 34, in order for a defendant to be party to a common design, she must share with the other party, or parties, to the design, each of the features of the design which make it wrongful. If, and only if, all those features are shared, the fact that some parties to the common design did only some of the relevant acts, while others did only some other relevant acts, will not stop them all from being jointly liable. Thus a person may incur liability as a joint tortfeasor by assisting in the organisation or preparation of acts of physical destruction (Monsanto Plc v Tilly [2000] Env LR 313 (CA) at paras 45 46); or by helping the primary actor to find the victim whom he intended to attack (Shah v Gale [2005] EWHC 1087 (QB)); or by using the prospect of unlawfully downloading streamed copyright material to attract users to the defendants website (Dramatico Entertainment Ltd v British Sky Broadcasting Ltd [2012] 3 CMLR 328). In some of these cases, the evidence of common design may fairly be regarded as thin, but they are unexceptionable as statements of the kind of accessory support which may give rise to liability as a joint tortfeasor. 39. The principal concern of the law in this area is to recognise a liability for assisting the commission by the primary actor of a tort, while ensuring that the mere facilitation of the tort will not give rise to such a liability, even when combined with knowledge of the primary actors intention. This limitation has sometimes been criticised as anomalous, because a broader basis of liability is recognised in other areas of law: see, for example, P Davies, Accessory liability for assisting torts (2011) 70 CLJ 353. For my part, I doubt whether the criticism is justified. Criminal liability attaches to any positive act of assistance with knowledge of the circumstances constituting the offence. It is not necessary to prove intention that the offence should be committed: National Coal Board v Gamble [1959] 1 QB 11. This is, however, because in the criminal law aiding and abetting the commission of an offence is itself an offence distinct from the primary offence. Knowledge that the primary offence is being aided and abetted is therefore sufficient mens rea. Equity imposes liability for knowing assistance in a breach of trust, but this is not in reality a broader basis of liability. This is because in this context knowing assistance is a species of fraud, and knowledge is relevant only to establish dishonesty: see Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378, 392. In reality, the limitations which the courts have placed upon the scope of liability as a joint tortfeasor are founded on a pragmatic concern to limit the propensity of the law of tort to interfere with a persons right to do things which are in themselves entirely lawful. In both England and the United States, the principles have been worked out mainly in the context of allegations of accessory liability for the tortious infringement of intellectual property rights. There is, however, nothing in these principles which is peculiar to the infringement of intellectual property 40. rights. The cases depend on ordinary principles of the law of tort. Thus the law declines to treat as tortious the manufacture or sale of equipment which its purchasers are likely to use to infringe copyrights, simply because the manufacturer or seller is aware of its likely use. This is a long standing legal principle which in England dates back at least as far as Townsend v Haworth (1875) 48 LJ Ch 770. It was applied in Dunlop Pneumatic Tyre Co Ltd v David Moseley & Sons Ltd [1904] 1 Ch 164, [1904] 1 Ch 612 and in Belegging en Exploitatiemaatschappij Lavender BV v Witten Industrial Diamonds Ltd [1979] FSR 59. 41. The fullest modern discussion of the principle is that of Lord Templeman, delivering the leading speech in CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013. Lord Templeman saw the distinctive factors which justified the imposition of liability as a joint tortfeasor in the combination of concerted action and common design. At p 1057B C, he said: My Lords, joint infringers are two or more persons who act in concert with one another pursuant to a common design in the infringement. In the present case there was no common design. Amstrad sold a machine and the purchaser or the operator of the machine decided the purpose for which the machine should from time to time be used. The machine was capable of being used for lawful or unlawful purposes. All recording machines and many other machines are capable of being used for unlawful purposes but manufacturers and retailers are not joint infringers if purchasers choose to break the law. Since Amstrad did not make or authorise other persons to make a record embodying a recording in which copyright subsisted, Amstrad did not entrench upon the exclusive rights granted by the Act of 1956 to copyright owners and Amstrad were not in breach of the duties imposed by the Act. Where the manufacturer or seller had no control over the use of the equipment after he has parted with it, liability would have to be founded on mere knowledge of its likely use, and mere knowledge is not tantamount to a common design. Lord Templeman went on to deal with a distinct submission that there was an independent tort of incitement to commit a tort. He pointed out that the facts would not necessarily support an allegation of incitement even if such a tort existed. In that context, he said, at p 1058G H: Buckley LJ observed in Belegging en Exploitatiemaatschappij Lavender BV v Witten Industrial Diamonds Ltd, at p 65, that Facilitating the doing of an act is obviously different from procuring the doing of the act. Sales and advertisements to the public generally of a machine which may be used for lawful or unlawful purposes, including infringement of copyright, cannot be said to procure all breaches of copyright thereafter by members of the public who use the machine. Generally speaking, inducement, incitement or persuasion to infringe must be by a defendant to an individual infringer and must identifiably procure a particular infringement in order to make the defendant liable as a joint infringer. I do not think that in this passage Lord Templeman was seeking to limit liability as a joint tortfeasor to cases of inducement or procurement, as opposed to assistance. When read with his general statement of the elements of liability as a joint tortfeasor, it is clear that he was intending to limit it to cases of common intent. Inducing or procuring a tort necessarily involves common intent if the tort is then committed. Mere assistance may or may not do so, depending on the circumstances. The mere supply of equipment which is known to be capable of being used to commit a tort does not suggest intent. Other circumstances may do so. 42. The point was I think well made by Hobhouse LJ in his judgment in the Court of Appeal in Credit Lyonnais Bank Nederland NV v Export Credits Guarantee Department [1998] 1 Lloyds Rep 19, 46: Mere assistance, even knowing assistance, does not suffice to make the secondary party jointly liable as a joint tortfeasor with the primary party. What he does must go further. He must have conspired with the primary party or procured or induced his commission of the tort (my first category); or he must have joined in the common design pursuant to which the tort was committed (my third category). (emphasis added) 43. In Sony Corporation of America v Universal City Studios Inc 464 US 417 (1984), the United States Supreme Court reached the same conclusion, holding that the mere supply of equipment for copying video cassettes did not give rise to joint liability in tort for copyright infringement. In doing so the court made the same distinction between mere knowledge at the point of sale and action combined with common intention: see pp 438 439. In Metro Goldwyn Mayer Studios Inc v Grokster Ltd 545 US 913 (2005), the court pointed out (at p 931) that this was because 44. with no evidence of stated or indicated intent to promote infringing uses, the only conceivable basis for imposing liability was on a theory of contributory infringement arising from its sale of VCRs to consumers with knowledge that some would use them to infringe. The court in Metro Goldwyn Mayer held, distinguishing Sony, that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties (p 919) (emphasis added). It followed that the creators of a file sharing website were held liable for copyright infringement, even though the site was capable of lawful use, because it was found on the evidence that the defendants not only assisted the infringements but intended them as an effective way of increasing the use of its website. Intent in the law of tort is commonly relevant as a control mechanism limiting the ambit of a persons obligation to safeguard the rights of others, where this would constrict his freedom to engage in activities which are otherwise lawful. The economic torts are a classic illustration of this. The cases on joint torts have had to grapple with the same problem, and intent performs the same role. What the authorities, taken as a whole, demonstrate is that the additional element which is required to establish liability, over and above mere knowledge that an otherwise lawful act will assist the tort, is a shared intention that it should do so. The required limitation on the scope of liability is achieved by the combination of active co operation and commonality of intention. It is encapsulated in Scrutton LJs distinction between concerted action to a common end and independent action to a similar end, and between either of these things and mere knowledge of the consequences of ones acts. Application to the present case 45. Since most of the activities of SSCS are on any view lawful, it is clear that SSUK cannot incur liability as a joint tortfeasor simply by assisting its activities in general. If they are to incur such liability at all, it must be on the ground that they have specifically assisted its tortious activities. This means that the present enquiry must be confined to SSUKs participation in fundraising and recruitment of volunteers in the United Kingdom for Operation Bluerage. It is sufficient for present purposes to address SSUKs participation in the fundraising campaign, which is the more significant of the two and about 46. which detailed findings have been made. The question is whether in participating in the fundraising campaign in the United Kingdom, SSUK had a common intention with SSCS that the latter should cut the nets of fishermen and forcibly release their catch. The only possible answer to that question is that they did. Manifestly, that was the main object of Operation Bluerage. As the fundraising leaflet made clear, funds were being collected on the basis that we intend to seize, cut, confiscate and destroy every illegal tuna fish net we find. The prospect that this would happen was presented as the main reason for contributing financially to the operation. 47. The judge held that SSUK did not share a common purpose of committing tortious acts because the Operation Bluerage would not necessarily involve violence. He put the matter in this way: In relation to the campaign it is correct that SSUK was aware and generally approved of the Bluerage campaign and that the campaign envisaged the possibility of violent intervention against property, such as cutting fishing nets. However, that was not the purpose or object of the campaign. The purpose or object of the campaign was to seek to investigate, document, and take action when necessary to expose and confront illegal activities in relation to bluefin tuna fishing. That involved a preparedness to use violent intervention, but it did not necessarily mean that any such action would be taken. The campaign could and indeed very nearly did take place without any confrontation occurring. Investigating, documenting and exposing illegal activities does not involve violent intervention. Confronting such activities may do so, but not necessarily. 48. In my opinion, this is unrealistic. The object of the operation, as the judge found, was not just to investigate, document and expose what they considered to be illegal fishing, but when necessary to confront it. It is true that the Steve Irwin would not necessarily find fishermen whom they regarded as illegal poachers. But if they did find them, they intended to seize, cut, confiscate and destroy their nets, thereby releasing their catch. It was theoretically possible that the fishermen might submit gracefully, thereby making it unnecessary to use or threaten force against them. But this was hardly probable and SSUK knew that it was not what SSCS anticipated. Deliberately to damage or destroy the property of other persons at sea without their consent is tortious. The purpose of SSUK in participating in the fundraising was to further the common design of SSCS and SSUK that the nets of any fishermen whom they considered to be poachers should be damaged and destroyed by the crew of the Steve Irwin, if they should be found and did not submit. They were found and they did not submit. Conditional intent is nevertheless intent: R v Saik [2007] 1 AC 18, at para 5, per Lord Nicholls of Birkenhead. If two parties co operate in a common design to commit a tort in a certain eventuality, and that eventuality occurs and the tort is committed, it is irrelevant that they both appreciated and perhaps even hoped that it would not occur. I do not regard this conclusion as in any way inconsistent with the judges findings. In my view he failed to appreciate the legal significance of those findings. No doubt both SSCS and SSUK thought that they were entitled to act in this way. But if it is found at a trial of the remaining issues that their acts were tortious, then subject to one reservation, the conclusion that they were joint tortfeasors is inescapable. 49. The reservation concerns the significance of SSUKs participation in the fundraising and the recruitment of volunteers in the context of the scheme as a whole. Was this enough to constitute assistance in furtherance of the common design? The assistance which is said to further the common design must be material, but that means no more than that it must be more than de minimis. There is no justification in principle for requiring more than this, for example that the assistance should have been indispensable to the commission of the tort or commensurate with the responsibility of the primary actor. The ordinary response of the law to differences between the culpability of joint tortfeasors or between the causal efficacy of their contributions is an award of contribution. 50. The judge regarded SSUKs contribution to Operation Bluerage as of minimal importance and said that it played no effective part in the commission of the tort. It was certainly minor by comparison with the contribution of SSCS and possibly by comparison with SSCSs French associate. But if the judge meant that it was de minimis then I cannot agree. De minimis non curat lex is a necessarily imprecise principle. Most of the judges who have discussed it have done so in terms of synonyms which are not much less imprecise. But they nevertheless convey the flavour of the concept. Negligible and trivial are probably the commonest: see Cartledge v Jopling & Sons Ltd [1963] AC 758, 771 772, per Lord Reid, and Rothwell v Chemical and Insulating Co Ltd [2008] AC 281 at paras 44 47, per Lord Hope. [T]rivialities, matters of little moment, of a trifling and negligible nature was the more expansive formulation proposed by Sellers LJ in Margaronis Navigation Agency Ltd v Henry W Peabody & Co of London [1965] 2 QB 430, 443 444. What all of these expressions are designed to convey is that the maxim is concerned with extremes. It refers to some fact which is in principle legally relevant but is so trivial or negligible as to be no fact at all in the eyes of the law. 51. The sum collected by the mailshot was 1,730, which was no doubt a very small proportion of the total costs of Operation Bluerage. But its contribution to the venture was not so small as to be legally equivalent to nothing. Moreover, I do not think it right to judge the significance of the appeal for funds solely by reference to its outcome. SSCS, although its affairs appear to be directed from Washington State USA, operates internationally with the support of associated national organisations and an international supporter base. It may well be that the individual contributions of any one associated entity are small, but it is clear from the terms of SSCSs email of 3 March 2010 that the efficient mobilisation of financial and logistical support internationally through campaigns managed by the associated national organisations was important to SSCS, even if it was not indispensable. In my view, SSUK was jointly liable with SSCS for whatever tortious damage may be found to have been inflicted on the claimants in the course of the attack on them off Malta. I would therefore have dismissed the appeal. 52. LORD NEUBERGER: 53. The essential facts giving rise to this appeal are set out in paras 32 to 36 of Lord Sumptions judgment, and further relevant information is contained in paras 5 to 18 of Lord Toulsons judgment. 55. 54. The claimant contends that it has suffered damage as a result of a tort committed by one person, the primary tortfeasor, and that another party, the defendant, who did not directly join with the primary tortfeasor in actually committing the tort, and was not the primary tortfeasors agent or employee, is also liable for the tort, because he assisted the primary tortfeasor to commit the tort. It seems to me that, in order for the defendant to be liable to the claimant in such circumstances, three conditions must be satisfied. First, the defendant must have assisted the commission of an act by the primary tortfeasor; secondly, the assistance must have been pursuant to a common design on the part of the defendant and the primary tortfeasor that the act be committed; and, thirdly, the act must constitute a tort as against the claimant. As Lord Toulson says, this analysis is accurately reflected in the statement of the law in Clerk and Lindsell on Torts, 7th ed, p 59, cited by all members of the Court of Appeal in The Koursk [1924] P 140, 151, 156, 159. 56. Because this type of tortious liability is so fact sensitive and needs to be kept within realistic bounds, there is a danger that further analysis of these three requirements will serve to confuse. Bankes LJ made that point in The Koursk at p 151, when he said that It would be unwise to attempt to define the necessary amount of connection, and that each case must depend on its own circumstances. To the same effect, Mustill LJ in Unilever Plc v Gillette (UK) Ltd [1989] RPC 583, 608, warned against over analysis of the cases on this topic. The wisdom of those observations is borne out by the subsequent cases on this area of law, which are discussed by Lord Toulson and Lord Sumption. However, it is, I think, worth saying a little about each of the three conditions. 57. So far as the first condition is concerned, the assistance provided by the defendant must be substantial, in the sense of not being de minimis or trivial. However, the defendant should not escape liability simply because his assistance was (i) relatively minor in terms of its contribution to, or influence over, the tortious act when compared with the actions of the primary tortfeasor, or (ii) indirect so far as any consequential damage to the claimant is concerned. Nor does a claimant need to establish that the tort would not have been committed, or even that it would not have been committed in the precise way that it was, without the assistance of the defendant. I agree with Lord Sumption that, once the assistance is shown to be more than trivial, the proper way of reflecting the defendants relatively unimportant contribution to the tort is through the courts power to apportion liability, and then order contribution, as between the defendant and the primary tortfeasor. 58. As to the second condition, mere assistance by the defendant to the primary tortfeasor, or facilitation of the tortious act, will not do, as explained by Lord Templeman in CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013, 1057B C, and 1058G H, and by Hobhouse LJ in Credit Lyonnais Bank Nederland NV v Export Credit Guarantee Department [1998] 1 Lloyds Rep 19, 46. There must be a common design between the defendant and the primary tortfeasor that the tortious act, that is the act constituting or giving rise to the tort, be carried out, as suggested in Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] 1 WLR 1556, para 34. 59. A common design will normally be expressly communicated between the defendant and the other person, but it can be inferred, a point which is clear from Lord Mustills reference to agreed on common action and tacit agreement in Unilever at p 609. I have some concerns about the notion that the defendant has to [make the tortious act] his own, as Peter Gibson LJ put it in Sabaf SpA v Meneghetti SpA [2003] RPC 264, para 59. While it can be said that it rightly emphasises the requirement for a common design, this formulation is ultimately circular and risks being interpreted as putting a potentially dangerous gloss on the need for a common design. 60. As to the third condition, it is unnecessary for a claimant to show that the defendant appreciated that the act which he assisted pursuant to a common design constituted, or gave rise to, a tort or that he intended that the claimant be harmed. But the defendant must have assisted in, and been party to a common design to commit, the act that constituted, or gave rise to, the tort. It is not enough for a claimant to show merely that the activity, which the defendant assisted and was the subject of the common design, was carried out tortiously if it could also perfectly well be carried out without committing any tort. However, the claimant need not go so far as to show that the defendant knew that a specific act harming a specific defendant was intended. I do not detect any significant difference between this analysis of the law and the rather fuller analyses advanced in the judgments of Lord Sumption and Lord Toulson, and I doubt that there is anything significant in the lucid and interesting analysis in paras 40 to 58 of the judgment of Beatson LJ in the Court of Appeal with which I would disagree. 61. 62. The present appeal provides a good opportunity to illustrate some of these points. The claimant can rely on two factors, in the light of the now unchallenged primary findings of fact made by Hamblen J in his full and clear judgment, to justify its contention that Sea Shepherd UK (SSUK) is liable for the damage suffered as a result of the alleged tort committed during Operation Bluerage (the operation) carried out by Sea Shepherd Conservation Society (SSCS). 63. At trial, the claimant also, indeed primarily, relied on the fact that the vessel used by SSCS to carry out the operation, the Steve Irwin, was registered in the name of SSUK, but the Judge found that the vessel was at all times beneficially owned and controlled by SSCS. Rightly, the claimant no longer relies on that aspect. The claimant also relied on the general approval which SSUK published for SSCSs activities and in particular for the protection of bluefin tuna (as mentioned by Lord Toulson in para 9). However, the most that does is to render it more likely than it might otherwise be that SSUK would assist the operation, but, otherwise, as I see it, that aspect takes matters no further. Accordingly, I turn to the two factors which the claimant can rely on. 64. The first factor is that, knowing that SSCS intended that the operation would involve wrongful attacks on a third partys property, SSUK recruited people to work for SSCS in connection with the operation. It appears that SSUK did not in fact recruit anyone other than two people, one of whom located a pump for the Steve Irwin, and both of whom transported the pump to the vessel and performed a days work on board when she was in port. Secondly, the 65. claimant relies on the fact that SSUK was involved in raising money to support the operation. By approving the sending out of the mailshot (whose contents are set out by Lord Sumption in para 34) in its name, and by accepting and paying over to SSCS the resultant public donations totalling 1,730, it is said that SSUK assisted SSCS in carrying out the activities described in the mailshot, which plainly included the acts which the claimant in this case alleges to have been tortious. If the only evidence of the intentions of SSCS was that they would be doing all that they could to impede intensive fishing of bluefin tuna in the Mediterranean, a defendant, who shared that intention as a common design and assisted in that activity by recruiting people and/or raising money to enable it to proceed, would not be liable to a claimant who suffered damage as a result of SSCS carrying out any of those activities tortiously. The fact that the defendant in such a case might believe, or could reasonably be expected to believe, that it was possible that SSCS would act tortiously when carrying out its projected activities would not be sufficient to render the defendant liable to a claimant who suffered damage as a result of SSCS having so acted. In such a case, the defendant would not be party to a design to commit an act which proved to be tortious. 66. However, if the evidence established that the defendant appreciated that it was SSCSs intention to commit tortious acts in carrying out their activities, or even that it was, in practical terms, inevitable that SSCS would seek to commit tortious acts if they came across a ship intensively fishing for bluefin tuna, then the defendant could not escape liability. The fact that SSCSs intention could be characterised as conditional (as they may not encounter any such ship, or may not have the opportunity to act tortiously) and untargeted (as the precise victim could not be identified in advance) would not assist the defendant. Nor would the fact (if it were a fact) that the defendant did not appreciate that the acts in question would be tortious. In this case, it seems to me to be clear that the claimant did establish that SSUK had sufficient knowledge that tortious acts were contemplated, indeed were intended, by SSCS, particularly in the light of the statement in the mailshot that SSCS intended to seize, cut, confiscate and destroy every illegal tuna fish net we find. 67. 68. More controversially, it also seems to me to be clear that this was part of a common design between SSCS and SSUK. To that extent, I agree with the Court of Appeal, and I disagree with the Judge, who considered that it was no part of SSUKs intention that SSCS should act tortiously. The Judge said that, although SSUK generally approved of SSCSs campaign, it was not necessarily the case that the campaign would involve tortious acts, although it was envisaged as a possibility. As I have already indicated, general approval, even if published, could not, save on very unusual facts, amount on its own to assistance. However, in my view, at least in the absence of further exculpatory facts, a defendant who assists a primary tortfeasor in carrying out activities, which he is told are intended or expected to include tortious acts, cannot escape accessory liability by saying that, although he supported the activities generally, he did not support the carrying out of tortious acts. 69. Normally, at any rate, once the defendant is a party to a design which has been communicated to him (normally, but not necessarily, by the primary tortfeasor), he cannot excise from the scope of the design aspects which he knows are included in it, but does not support. That would be so, as I see it, even if he had communicated his opposition to those aspects to the primary tortfeasor. Normally, the scope of the design (or the communicated design) will, as in this case, be determined by the primary tortfeasor. Of course, there will be exceptions: thus, if SSUK had said to SSCS that it would only assist if SSCS agreed that it would not carry out tortious acts, and, as a result of the ensuing discussions, SSUK had honestly believed that SSCS would not commit torts, it seems to me that there would be a powerful case for saying that SSUK should escape liability. 70. However, although SSUK did things which assisted SSCS in connection with the operation, and although SSUK and SSCS shared a common design that the tort of which the claimant complains be carried out, the Judge concluded that SSUKs contribution to the operation, and therefore to the commission of the tort alleged by the claimant, was of minimal importance and that SSUK played no effective part in the commission of the tort. That was a question of judgement or assessment which is fact sensitive, as Lord Mance says. In cases of this sort, there will be cases where the facts found by the judge are such that only one conclusion is possible, but there will also be cases where the facts are such that reasonable judges could reasonably differ as to whether the assistance provided was trivial. Accordingly, the question for us as an appellate court is not whether we would have reached that decision, but whether the Judge was entitled to conclude that the extent to which SSUK assisted SSCS was too trivial to bring SSUK within the scope of the tort. I have concluded, in disagreement with the Court of Appeal, that he was so entitled. 71. As I have already suggested, the claimant can only rely on the facts that SSUK successfully recruited volunteers to work for SSCS in connection with the operation, and that SSUK was involved in raising funds from the public to support the operation. Consideration of these factors is not assisted by the fact that the Judge dealt with the matter very shortly. It is only fair to add that this is not intended to be an adverse criticism: as already mentioned, the evidence and argument before him concentrated very much on other factors, particularly the use of the Steve Irwin, which have now fallen away. In my view, as an appellate court, when considering whether the assistance provided by SSUK was trivial, we should approach the primary evidence with a view to assessing whether it could have justified his conclusion that the assistance was trivial. By the same token, I do not believe that we should make our own assessment of the evidence, and, as I read his judgment, Lord Mance takes the same view as to the applicable approach. 72. So far as SSUKs involvement in recruitment for the operation was concerned, it was, to my mind, insignificant, although, if SSUK had been more successful in recruiting volunteers to work on board the Steve Irwin during the operation, my view may well have been different. As already mentioned, SSUKs actions resulted in two individuals doing two small things, namely locating and transporting a pump to the vessel and carrying out a days work on board. As already mentioned small is not enough for SSUKs purposes, but in my view this aspect of its contribution to the tortious activity was de minimis. Any connection to the operation was tenuous, as there was no evidence that the pump or the work was connected to the operation in particular, as opposed to the seaworthiness of the vessel generally. More importantly, even taking the two aspects of the contribution (providing the pump and two people working on board for a day) together, they were trivial in the context of the operation as a whole. 73. As for the fund raising, the evidence as to the precise nature of SSUKs activities is sparse, no doubt because this was (understandably) not the main focus of the claimants case until after the judgment of Hamblen J. The statement of agreed facts for the purpose of this appeal records that SSCS designed, organised and paid for [the] mailshot, but it said nothing in terms about who posted the mailshot to people in the United Kingdom. This reflects what was in the finding made in para 57 of Hamblen Js judgment. However, the verbs used by the Judge are perfectly capable of covering the posting of the mailshot, and, indeed, in the absence of good reason to the contrary, I would have thought that they did so. The Judge referred to the mailshot having been sent out by SSUK in para 47, and, although the sentence in question can be read as if he was saying that it had been, it was in the context of a paragraph in which he was setting out the claimants case. It seems to me clear therefore that we must proceed on the basis SSCS, not SSUK, designed, organised and paid for the preparation mailshot, but I accept the position is not so clear in relation to the actual sending out of the mailshot. However, in that connection, it appears to me that the cross examination of 74. 75. 76. 77. Mr Collis of SSUK provides a clear answer. He denied that the mailshots were sent out by [SSUK], and said that the mailshots were designed and put together by [SSCS] in the USA and were printed with their funds and they were submitted by [SSCS] in the USA. He also said that the only parts that [SSUK] had involvement with was we processed donations that came to us. It is fair to say that there was evidence in the form of (i) an email showing that SSCS encouraged SSUK to be involved in sending out the mailshot in the UK, (ii) a phrase in a sentence in Mr Colliss witness statement which could be said to suggest some unspecified SSUK involvement in the sending of the mailshots, (iii) some general statements as to the relationship between SSCS and national Sea Shepherd entities such as SSUK, and (iv) oral testimony about gift aid recovery, which could be invoked to suggest greater SSUK involvement. However, it seems to me that the oral evidence of Mr Collis on this issue was clear and there is no good reason to doubt it, especially as none of these four points were put to him. The email was a request or proposal from SSCS to SSUK, and there is no evidence, other than inference, that it was complied with, and it would be inappropriate to make such an inference in the light of Mr Colliss evidence. The phrase in Mr Colliss statement was that some leaflets were sent from the UK, but he did not say that they were sent or paid for by SSUK. The general statements are of no assistance, and the gift aid recovery evidence cuts both ways, and in any event is far too indirect to assist the claimants case on this issue. In these circumstances, it appears to me that the furthest the claimant can go in relation to the mailshot itself, is to say that SSUK adopted the sending it out in its name by not objecting to its publication, and retrospectively adopted it by accepting payments from members of the public. In relation to the 1,730, the claimant can rely on the fact that SSUK accepted that money and paid it out of its bank account to SSCS to support the operation. In my opinion, it is important to bear in mind that the mailshot was conceived of, written, reproduced, circulated and paid for by SSCS not by SSUK, and so the money had been solicited by SSCS. From the claimants point of view, SSUK was at best a sort of sleeping partner so far as the mailshot itself was concerned. As to the 1,730, it seems to have been paid direct into SSUKs bank account by members of the public, who plainly intended that it should go to SSCS for the purpose of the operation, not that it should be retained by SSUK. Particularly as there was an unlawful dimension to the purpose for which the money was paid, I would not go so far as to say that the 1,730 was held on trust by SSUK for SSCS, but one is close to that territory in practical terms. It would not have been open to SSUK to retain the money, or indeed to use it for any purpose other than the operation. 78. 79. 80. I have considered whether it could have been argued that SSCS were somehow acting as SSUKs agents when preparing and sending out the mailshots. Apart from being a somewhat counter intuitive analysis, it would not, in my view, be open to this court so to hold. In the first place, the Judge said that, although there was a close connection between the various SS entities worldwide, the different entities are separate legal bodies and the operational reality is that SSCS is the global organisation which utilises the resources of other SS entities when it is convenient to do so, and, to put it at its lowest, there is no reason to think that this observation did not apply to the mailshot. Secondly, the argument that SSCS should be treated as SSUKs agent was not raised by the claimant at trial, and, even without the Judges finding I have just quoted, it would not seem to me to be right to determine an appeal on that ground, given that the trial judges view on the point would have been important. I would probably have agreed with Lord Sumption and Lord Mance that the sum of 1,730, though very small, could not be regarded as de minimis in itself, so that, if SSUK had, pursuant to its own initiative and at its own expense, prepared and sent out the mailshot, and had then collected the money and paid it to SSCS, they could not have escaped liability, although it would have been important to know what the trial judge had thought if those were the facts. However, all that SSUK did in advance of receiving the money was not to object to the use of its name and bank account in the mailshot, and all that it did after receiving the small (in the context of the operation) sum of 1,730, was to pay the money over to the person for whom it was intended. I understand why Lord Mance and Lord Sumption have arrived at a different conclusion, but, in my view the Judge was entitled to conclude that SSUKs contribution to the operation, and therefore to the commission of the tort alleged by the claimant, was of minimal importance and that SSUK played no effective part in the commission of the tort. 81. Accordingly, I would allow this appeal. LORD KERR: 82. The single issue in this appeal can be simply expressed: on the findings made by Hamblen J, was it open to him to conclude that SSUKs facilitation of SSCSs alleged tortious activity amounted to no more than a de minimis contribution. 84. 83. Two species of activity have been identified as constituting the contribution which SSUK made. The first was to recruit two volunteers one of whom located and both of whom transported a pump to the Steve Irwin and carried out a days work on the vessel. The second involved a mailshot appealing for funds for Operation Bluerage. As to the second of these, the reason for involving SSUK was to take advantage of its bulk mailing services and to allow SSUK to receive sterling contributions which it then transferred to SSCS. This raised 1,730 which SSUK transferred to SSCS. It is assumed that this was a very small proportion of the costs of Operation Bluerage. It is, I believe, important to keep in mind that SSUK, although it knew and may be taken to have implicitly approved of the mailshot, had not itself produced it. Nor did it, as an organisation, actively seek donations. It was a willing participant in the scheme to the extent that it knew in advance that donations were being solicited by SSCS and that those donations would find their way to SSCS through SSUKs account. It also knew that it would be expected to transmit the received donations to SSCS and it was clearly willing to do so. This was the extent of their involvement in the fund raising activities, or certainly, the extent of involvement established by the evidence. Their willingness to adopt this passive role is, of course, only one side of the story. It is interesting to reflect on whether, if the donations that had in fact been received and transmitted by SSUK had been substantial, say the major proportion of the funding of the campaign, its contribution could be said to be more than de minimis. One can perhaps recognise an argument that, if SSUK was in fact the cipher through which most of the funding for the campaign had been raised, it could not escape the taint of having made a more than minimal contribution to the commission of the alleged tort. I tend to agree with Lord Sumption, therefore, that the maxim de minimis non curat lex is concerned with extremes. Those extremes are to be measured, however, not only as a matter of how they are conceived as a possible contribution to the commission of a tort but also how they have in fact contributed. It is therefore relevant to have regard not only to the potential contribution that SSUKs participation might have made but also to what it actually achieved. In the event, SSUKs contribution in hard, practical terms was not significant. 86. Leaving aside all these considerations, however, ultimately, in the present case I believe that the central question is concerned with the level of restraint that an appellate court should apply in reviewing the decision of a first instance judge which involves the exercise of judgment on the findings of fact that he has made. This issue was considered by the Supreme Court in In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911. At para 60 Lord Neuberger said: 85. it is not possible to lay down any single clear general rule as to the proper approach for an appeal court to take where the appeal is against an evaluation: see also in this connection Robert Walker LJ in In re Reef Trade Mark [2003] RPC 1, para 26, May LJ in Dupont de Nemours (EI) & Co v ST Dupont [2006] 1 WLR 2793, para 94, and Laws LJ in Subesh v Secretary of State for the Home Department [2004] Imm AR 112, para 44. Accordingly, as already explained, even where the issue raised is not one of law, the reasons which justify a very high hurdle for an appeal on an issue of primary fact apply, often with somewhat less force, in relation to an appeal on an issue of evaluation. 87. Applying this approach, one should not lose sight of the fact that the donations made in response to the mailshot were at all times money raised by SSCSs efforts and at their expense. SSUK had no direct or immediate involvement in this. They allowed SSCS to use their resources but their role was essentially a passive, back seat one throughout the process. The question which this court has to answer, therefore, is whether Hamblen Js finding that SSUKs receiving and transferring funds belonging to SSCS played no effective part in the commission of the alleged tort of cutting fishing nets is insupportable. That judgment must be made on the somewhat less rigorous basis than that applied to a review by an appellate court of primary findings of fact. But I consider that the judge was plainly justified in finding that SSUKs role did not meet the more than de minimis contribution required, or, at least, that it cannot be said that it was plainly not open to him so to find. 88. SSUK had facilitated sterling based transactions. Even if it could be argued that the money which passed through its account made a more than de minimis contribution to the alleged torts, it cannot be said that merely passing on funds constituted concerted action to a common end, it is in essence an ancillary role, lending minor help to the actions of another. Of course, it can be said that SSUKs role could be appropriately described as falling into one of the categories of accessory liability seen in crime rather than that of primary liability known to the law of tort. But for the reasons given, particularly by Lord Toulson and Lord Sumption, the distinction between the two contexts has a solid foundation and should be preserved. 89. The other basis on which SSUKs contribution might have been argued to be more than minimal, viz recruiting two volunteers to source and supply a pump and to carry out work on the ship will not avail. This cannot sensibly be regarded, without, at least, significantly more detailed evidence, as having made a more than de minimis contribution to the enterprise. The judge was therefore entitled to find that the full extent of SSUKs participation had no more than a minimal or peripheral input. Certainly, in my opinion, it was not open to an appellate court to interfere with Hamblen Js judgment to that effect. 90. For these reasons and those given by Lord Neuberger and Lord Toulson, I would allow the appeal and restore the order made by Hamblen J. LORD MANCE: (dissenting) 91. At the end of the day, the difference of opinion in the court about the outcome of this appeal derives from a difference not about the legal principles which it involves, but about their application to the facts, and, in particular, about whether such assistance as SSUK rendered pursuant to the common design which it shared with SSCS to further Operation Bluerage can and should be regarded as de minimis. 92. Ultimately this is a matter of judgment, though any judgment is complicated by a degree of obscurity about the facts relating to the mailshot. The reason for obscurity about the mailshot, as Lord Neuberger has pointed out, is that the matters now relied upon as assistance were at best a very peripheral part of the respondents case at first instance before Hamblen J. This may go to costs, but it cannot relieve us of the difficulty of determining the right answer on the facts. 93. Hamblen J said in para 47 of his judgment that Fish & Fish relies in particular on a mailshot sent out by SSUK which sought and obtained donations for the campaign. Fish & Fish had indeed pleaded in its amended reply, para 6(3), that SSUK sought campaign contributions from the public. Hamblen Js statement in para 47 might look as if he was accepting that SSUK sent out the mailshot (which is, indeed, what he had put to SSUKs counsel in final speeches). But later, in para 57, he recounted that the evidence of Mr Collis, SSUKs witness (and sole employee at the relevant time), was that SSUK did not itself seek campaign contributions for the Bluerage campaign, and he continued: There was the mailshot referred to above. This was designed, organised and paid for by SSCS, although SSUKs address and bank details were included in respect of UK recipients of the mailshot to make it easier for them to donate in Sterling. SSUK processed the funds (to a total of 1,730) and sent them to SSCS. 94. The cross examination of SSUKs witness, Mr Collis, had in fact elicited denials, which were not further tested, of almost any involvement in the mailshot, save for the processing and forwarding to SSCS of the 1,730 or so received as its result. But it is, I consider, also clear that SSUK at least knew in advance that the mailshot was going to be sent out in its name, inviting donations to it. There was evidence from SSCS, in para 29 of the witness statement of Mr Paul Watson of SSCS, who was also called as a witness, that: When SSCS are planning a campaign, we reach out to all Sea Shepherd organisations for their support. Such support can be provided financially or by way of logistical help, for example. 95. Mr Collis in his witness statement, in para 61, said: I should mention that there were donations provided in relation to Operation Bluerage to the UK charity. This was a mailshot that was requested by SSCS, and I believe that it was replicated across the globe. The majority of the funds were raised through SSCSs website. However a certain number of leaflets were sent from the UK, and provide the UK address, being the closest Sea Shepherd office. We gathered the donations which totalled 1,730 and we sent the money to SSCS along with other monies from the SSUK charity funds. 96. This might be taken to indicate that SSUK actually took part in sending out the mailshot. There is also an email dated 3 March 2010 which would suggest that, at least at that date, SSCS was proposing that SSUK should do this. However, there is no clear finding to that effect, and I shall proceed on the basis that SSCS sent out or arranged the sending out of the mailshot. Nonetheless, it was sent out in SSUKs name, and it is reasonably clear from the evidence of both Mr Watson and Mr Collis, as well as from the inherent probabilities, that SSUK was aware that this was taking place, and were not therefore surprised by the donations it elicited, which they duly processed in the ordinary course. If it does not mean that SSCS requested SSUK to send out the mailshot, then Mr Colliss statement that the mailshot was requested by SSCS must at least mean that SSCS requested the ability to send out a mailshot in SSUKs name. In these circumstances, my mind has wavered as to whether any assistance provided could reasonably be described as de minimis. The judge described it as minimal. For the reason given by Lord Neuberger, I would regard the assistance involved in the recruitment of two volunteers as insignificant, and 97. 98. 99. as adding nothing to such assistance as was provided by the mailshot. But, basically for the reasons given by Lord Sumption, I find myself ultimately unable to accept that the assistance provided by the mailshot can appropriately be described as minimal in the sense of de minimis. In my view, the right analysis, assuming that the mailshot was sent out by SSCS, is that it was sent out in the name of and so far as appeared to the public and as a matter of law on behalf of SSUK which, having been requested to allow this, expressly or implicitly authorised it in advance. If the mailshot had yielded nothing or only a tiny sum, I would agree that, despite such authorisation, the mere despatch of the mailshot could not be regarded as rendering any actually significant assistance. But 1,730 was a not insignificant sum. It is even less insignificant when viewed as one of several collections of donations received by SSCS from its various national branch organisations, in accordance with the procedure described by Mr Watson (para 94 above). Every little helps. 100. I do not therefore see any incongruity in a conclusion that SSUK lent material assistance to SSCS in this case, and is potentially liable accordingly. On the basis that its role in the direction of any tort was non existent or negligible and the assistance it gave was in the event very limited, that will as Lord Sumption has said be potentially relevant to contribution as between SSUK and SSCS. 101. In those circumstances, I consider that the Court of Appeal reached the right conclusion, and I would dismiss this appeal. On the facts, the only point of substance in the claimants case was based on the funding arrangements. The appellant played no active role in fundraising. All that it did on the judges finding was to account to the parent organisation for a relatively small amount solicited by the parent organisation. Hamblen J concluded that the role played by the appellant in the commission of the tort was of minimal importance, and in my view that conclusion was properly open to him. If I had considered that Hamblen J was wrong not to find that the first element of accessory liability was established, that is, that the appellant assisted SSCS in the commission of acts which may prove to have been tortious, I would have held that the second element was also established, that is, that the acts were done in pursuance of a common design shared by SSCS and the appellant. It would be sufficient for this purpose that the acts were done in pursuit of a campaign of which the appellant approved with the knowledge that the campaign involved a preparedness, if need be, to use violent intervention. Hamblen J observed that it was not necessarily the case that such action would take place, but a plan can include a conditional element. If D organises with P the doing of acts on Vs land, whether V consents or not, it would be no answer to a claim in trespass against D that it was possible that V would consent. But Hamblen J examined the role actually played by the appellant and judged it minimal. On that basis the conduct element of accessory liability was not established. |
The Investigatory Powers Tribunal (IPT) is a special tribunal established under the Regulation of Investigatory Powers Act 2000 (RIPA) with jurisdiction to examine, among other things, the conduct of the Security Service, the Secret Intelligence Service and the Government Communications Headquarters (the intelligence services). Section 67(8) provides: Except to such extent as the Secretary of State may by order otherwise provide, determinations, awards, orders and other decisions of the Tribunal (including decisions as to whether they have jurisdiction) shall not be subject to appeal or be liable to be questioned in any court. The genesis of this subsection can be traced back to the Interception of Communications Act 1985. Section 7(8) provided in relation to the tribunal established by that Act (the predecessor of the IPT): The decisions of the Tribunal (including any decisions as to their jurisdiction) shall not be subject to appeal or liable to be questioned in any court. There is an obvious parallel with the ouster clause considered by the House of Lords in the seminal case of Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 (Anisminic). Section 4(4) of the Foreign Compensation Act 1950 provided: 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 of Lords decided by a majority that these words were not effective to exclude review by the courts of the legal basis of the Commissions decision. In summary they held (in the words of the headnote): that the word determination in section 4(4) of the Act of 1950 should not be construed as including everything which purported to be a determination but was not in fact a determination because the commission had misconstrued the provision of the Order defining their jurisdiction. Accordingly, the court was not precluded from inquiring whether or not the order of the commission was a nullity. It will be necessary later to examine in more detail the reasoning in Anisminic, and its treatment in later cases, culminating in the major reappraisal of the relationship of courts and tribunals by the Supreme Court in R (Cart) v Upper Tribunal (Public Law Project intervening) [2012] 1 AC 663 (Cart). Reduced to its core the central issue in the present case is: what if any material difference to the courts approach is made by any differences in context or wording, and more particularly the inclusion, in the parenthesis to section 67(8), of a specific reference to decisions relating to jurisdiction? The statutory provisions The legislative scheme established by RIPA replaced three earlier statutes dealing with the oversight of the security services. Its enactment was closely linked to that of the Human Rights Act 1998 (HRA), which was brought into force at the same time. The Explanatory Notes stated (paras 3 4): The main purpose of the Act is to ensure that the relevant investigatory powers are used in accordance with human rights. These powers are: the interception of communications; the acquisition of communications data (eg intrusive surveillance (on residential premises/in billing data); private vehicles); operations; covert surveillance in the course of specific the use of covert human intelligence sources (agents, informants, undercover officers); access to encrypted data. For each of these powers, it was said, the Act would ensure that the law would clearly cover the purposes for which they could be used, by whom and with whose authority, the use that could be made of the material gained, and also independent judicial oversight, and means of redress for individuals. The statutory provisions governing the composition, jurisdiction and procedures of the IPT are complex. There is a comprehensive account in the judgment of Sir Brian Leveson P in the Divisional Court (paras 5 to 15) ([2017] EWHC 114 (Admin)). For present purposes it is enough to note the principal features. Section 65(1) and Schedule 3 deal with its composition. The number of members is set by Her Majesty by Letters Patent (section 65(1)). The President must have held high judicial office, and the other members must have held high judicial office or meet specified legal qualifications. In the present case the tribunal consisted of five members presided over by Burton J (President) and Mitting J (Vice President), the others all being leading counsel. As to its jurisdiction section 65(2) provides: (2) The jurisdiction of the tribunal shall be (a) to be the only appropriate tribunal for the purposes of section 7 of the Human Rights Act 1998 in relation to any proceedings under subsection (1)(a) of that section (proceedings for actions incompatible with Convention rights) which fall within subsection (3) of this section; (b) to consider and determine any complaints made to them which, in accordance with subsection (4), are complaints for which the tribunal is the appropriate forum; (c) to consider and determine any reference to them by any person that he has suffered detriment as a consequence of any prohibition or restriction, by virtue of section 17, on his relying in, or for the purposes of, any civil proceedings on any matter; and (d) to hear and determine any other such proceedings falling within subsection (3) as may be allocated to them in accordance with provision made by the Secretary of State by order. The remainder of section 65 provides further details of these four categories of jurisdiction, which are not material in the present case. It is to be noted that the jurisdiction of the IPT may depend on uncertain issues of law or fact. For example, in C v The Police IPT/03/32/H the IPT considered a complaint by a retired police officer alleging that there had been unlawful covert surveillance in breach of article 8 of the European Convention on Human Rights (the Convention) by his former police force. The essential facts were agreed, but the IPT held that it had no jurisdiction to consider his complaint because there was no directed surveillance which satisfied the definition of conduct to which Chapter II of Part I of RIPA applied (see para 74 of the determination; RIPA section 65(3)(d), (5)(c)). In some cases the jurisdiction of the IPT may overlap with that of the ordinary courts: see, for example, AKJ v Comr of Police of the Metropolis [2014] 1 WLR 285 (parallel claims under HRA section 7, and in tort, in respect of damage suffered as a result of the actions of two undercover police officers). Section 67 is headed Exercise of the Tribunals jurisdiction. Subsection (1) provides that it shall be the duty of the Tribunal to hear and determine proceedings, or to consider and determine complaints or references, brought before it under section 65(2). Subsections (2) and (3) provide, among other things, that the tribunal shall apply the same principles as would be applied by a court on an application for judicial review. Subsections (4) (6) make provision in relation to frivolous and vexatious claims, limitation, and the power to make interim orders. Subsection (7) sets out the powers of the tribunal on determining any proceedings, complaint or reference to make any such award of compensation or other order as they think fit. It also gives examples of such orders, including (a) an order quashing or cancelling any warrant or authorisation, and (b) an order requiring the destruction of any records of information which (i) has been obtained in exercise of any power conferred by a warrant or authorisation; or (ii) is held by any public authority in relation to any person. Subsection (8) has been set out above (para 1). As there seen, it allowed for an appeal to be provided for by order of the Secretary of State, but that power has never been exercised. Subsection (9) goes further, imposing a duty on the Secretary of State to secure an order allowing for an appeal to a court against any exercise by the tribunal of their jurisdiction under section 65(2)(c) or (d); but that subsection has not been brought into force. Subsections (10) (12) make provision as to the contents of, and procedure for making, such an order were the power ever to be exercised. After the commencement of these proceedings there was enacted (by section 242 of the Investigatory Powers Act 2016) a new section 67A providing for an appeal on a point of law to the Court of Appeal or Court of Sessions against certain decisions of the tribunal. That was brought into force on 31 December 2018 by regulation 2 of the Investigatory Powers Act 2016 (Commencement No 10 and Transitional Provision) Regulations 2018/1397, but it does not apply to any decision or determination of the IPT made before this date. It is therefore not material to the present appeal. Until 31 December 2018, when they were replaced by the Investigatory Powers Tribunal Rules 2018 (SI 2018/1334), the procedure before the IPT was governed by the Investigatory Powers Tribunal Rules 2000 (SI 2000/2665) (made under section 69(1)). Notable are the power to conduct proceedings in private and at certain stages in the absence of the complaining party (rule 9), and the duty under rule 6(1): The Tribunal shall carry out their functions in such a way as to secure that information is not disclosed to an extent, or in a manner, that is contrary to the public interest or prejudicial to national security, the prevention or detection of serious crime, the economic well being of the United Kingdom or the continued discharge of the functions of any of the intelligence services. The European Court of Human Rights has held that the Act and the rules provide an effective and compliant remedy for complaints in respect of interception with communications, for the purposes of article 13 of the Convention (Kennedy v United Kingdom (2011) 52 EHRR 4). The proceedings below The background of the present proceedings was described in the judgment of the IPT dated 12 February 2016. It was a hearing of preliminary issues of law, whose purpose was to establish: whether, if the Second Respondent (GCHQ) carries on the activity which is described as CNE (Computer Network Exploitation), which may have affected the claimants, it has been lawful. The Tribunal described the now well established procedure for it to make assumptions as to the significant facts in favour of claimants and reach conclusions on that basis, and thereafter, if the assumed facts were held to render the respondents conduct unlawful, to consider the position in closed session. This procedure, it was said, had enabled the tribunal on a number of occasions: to hold open inter partes hearings, without possible damage to national security, while preserving, where appropriate, the respondents proper position of Neither Confirmed Nor Denied (NCND). The issue arises under section 5 of the Intelligence Services Act 1994 which empowers the Secretary of State to issue a warrant authorising the taking of such action as is specified in the warrant in respect of any property so specified if he considers, among other things, that such action is necessary for the purpose of assisting the intelligence services in carrying out their functions. According to the appellants case, the significance of that provision became apparent when the Intelligence Services Commissioner (Sir Mark Waller) disclosed in his 2014 Report that the intelligence services were using it to authorise CNE activity, and expressed concern that this interpretation of the section might arguably be too broad. Their case before the tribunal was that section 5 did not permit the issue of so called thematic warrants authorising activity in respect of a broad class of property. They argued, inter alia, that the section needed to be construed against the background of the long established aversion of the common law to general warrants, recognised in cases going back to Entick v Carrington (1765) 2 Wils KB 275. The tribunal heard inter partes oral argument at a public hearing in early December 2015, and gave judgment on 12 February 2016 dismissing the claim (Privacy International v SSFCA [2016] UKIP Trib 14_85 CH). Their discussion of the interpretation of section 5 comes at paras 31 to 47 of the judgment. In relation to the argument based on general warrants they said: 18th century abhorrence of general warrants issued without express statutory sanction is not in our judgment a useful or permissible aid to construction of an express statutory power given to a Service, one of whose principal functions is to further the interests of UK national security, with particular reference to defence and foreign policy. The issue as to whether the specification is sufficient in any particular case will be dependent on the particular facts of that case . (paras 37 38) They concluded on this aspect: In our judgment what is required is for the warrant to be as specific as possible in relation to the property to be covered by the warrant, both to enable the Secretary of State to be satisfied as to legality, necessity and proportionality and to assist those executing the warrant, so that the property to be covered is objectively ascertainable. (para 47) Sales LJ in the Court of Appeal [2017] EWCA Civ 1868; [2018] 1 WLR 2572 commented on the significance of this question: This is potentially of legal significance in two ways. First, if action of GCHQ to interfere with property is not protected by a warrant issued under section 5, it is likely that GCHQ would commit torts of interference with that property which would sound in damages. Secondly, if GCHQ takes such action to hack computers in circumstances where it is not protected by a warrant, it is likely that it would be liable in law for breaches of its obligation under section 6 of the Human Rights Act 1998 to act compatibly with Convention rights, since it would not be able to show that any interferences with rights to respect for the home, correspondence and private life were in accordance with the law, as required by article 8(2) of the European Convention on Human Rights (as scheduled to the Human Rights Act as a Convention right). (para 16) This passage again highlights the extent to which issues arising before the IPT may overlap with the common law or human rights jurisdictions of the ordinary courts. On 17 June 2016 Lang J granted the appellant permission to apply for judicial review, while expressing doubts whether the High Court had jurisdiction to determine the substantive claim. She directed that the issue of jurisdiction should be heard as a preliminary issue. On 2 February 2017 the Divisional Court gave judgment answering that question in the negative for reasons given by the President. He held that section 67(8) prohibited judicial review of the decision. Since (by contrast with Anisminic) the tribunal was already exercising a supervisory jurisdiction over the actions of public authorities and exercising powers of judicial review, he saw no compelling reasons for insisting that a decision of the tribunal is not immune from challenge (para 42). Further, the legislation authorised the Secretary of State to create a right of appeal (albeit that the power had never been exercised), so that the presumption that Parliament could not have intended to make a statutory tribunal wholly immune from judicial oversight was not engaged (paras 43, 45). Leggatt J, while not formally dissenting, was inclined to a different view. He thought that the case was governed by the reasoning in Anisminic: The only potentially relevant difference in the wording of section 67(8) is that it contains the words in brackets (including as to whether they have jurisdiction). But I find it hard to see how these words can make a critical difference in the light of Anisminic. It seems to me that on a realistic interpretation that case did not decide that every time a tribunal makes an error of law the tribunal makes an error about the scope of its jurisdiction. Rather, it decided that any determination based on an error of law, whether going to the jurisdiction of the tribunal or not, was not a determination within the meaning of the statutory provision. That reasoning, and the underlying presumption that Parliament does not intend to prevent review of a decision which is unlawful, is just as applicable in the present case and is not answered by pointing to the words in brackets. (para 55) The Court of Appeal gave judgment on 23 November 2017 dismissing the appeal. Sales LJ (with whom Floyd and Flaux LJJ agreed) considered that both the language and the context were materially different from Anisminic. As to the language he said: the drafter of section 67(8) has expressly adverted to the possibility of the IPT making an error of law going to its jurisdiction or power to act, by the words in parenthesis in that provision: including decisions as to whether they have jurisdiction. Therefore, at least so far as the word decision is concerned, it is not tenable to apply the simple distinction relied upon in Anisminic in the context of section 4(4) of the 1950 Act between a determination and a purported determination, in the sense of a determination made without jurisdiction. In section 67(8), the word decision is stated to include a decision which (if judicial review or an appeal were available) might be found to have been made without jurisdiction because of an error of law on the part of the IPT that is to say, if one wants to use this phrase, a purported decision. (para 34) In support of this view, he noted the very high quality of the IPT in terms of judicial expertise and independence (para 38), and the statutory context: It is clear that Parliaments intention in establishing the IPT and in laying down a framework for the special procedural rules which it should follow, including the Rules, was to set up a tribunal capable of considering claims and complaints against the intelligence services under closed conditions which provided complete assurance that there would not be disclosure of sensitive confidential information about their activities. (para 42) Finally he relied by analogy on the decisions of the Court of Appeal and Supreme Court in R (A) v Director of Establishments of the Security Service [2009] EWCA Civ 24; [2009] UKSC 12; [2010] 2 AC 1 (R (A)). It was held that section 65 of RIPA conferred on the IPT exclusive jurisdiction to hear claims under section 7 of the HRA against any of the intelligence services. In the Court of Appeal Dyson LJ noted that the rules were carefully drafted to achieve a balance between fairness to a complainant and the need to safeguard the relevant security interests; he thought it inherently unlikely that Parliament, having provided for such an elaborate set of rules to govern proceedings against an intelligence service, yet contemplated that such proceedings might be brought before the courts without any rules (para 48). That approach was approved in the Supreme Court. Although the effect of section 67(8) was not in issue, Lord Brown, giving the leading judgment, in the course of a review of this part of the Act, spoke of it as an unambiguous ouster of the courts jurisdiction. While accepting that this expression of view was obiter Sales LJ considered it to fit closely with Lord Browns analysis of the regime. He added: Unless section 67(8) is interpreted as Lord Brown indicated, it would permit the special procedural regime established for the IPT to be bypassed at the stage when judicial review proceedings in respect of its decisions are brought in the High Court, as explained above. That would undermine the coherence of Lord Browns reasoning at para 14 of his judgment. In my view, Lord Browns view at para 23 about the proper interpretation and effect of section 67(8) is of powerful persuasive authority. I agree with it. (para 48) The submissions in this court Two issues are identified in the agreed statement: i) whether section 67(8) of RIPA 2000 ousts the supervisory jurisdiction of the High Court to quash a judgment of the Investigatory Powers Tribunal for error of law? ii) whether, and, if so, in accordance with what principles, Parliament may by statute oust the supervisory jurisdiction of the High Court to quash the decision of an inferior court or tribunal of limited statutory jurisdiction? On the first issue, counsel for the appellant led by Dinah Rose QC (with Professor Sir Jeffrey Jowell QC) rely principally on the long established principle that a statute should not be interpreted as ousting judicial review of a statutory tribunal of limited jurisdiction if there is a tenable construction which would preserve the supervisory jurisdiction of the High Court. In the present case, the formula used in section 67(8) is not materially different from that which the House of Lords held not to oust judicial review in Anisminic, and must be taken to have the like effect. Lord Browns comment in R (A) was obiter, against the background of a concession by the appellant that judicial review was not available (R (A) at p 23D). This did not mean that the reference in parenthesis to jurisdiction was without effect. Ms Rose refers for example to the distinction drawn in the cases depending on whether the legislature has or has not entrusted to the tribunal the power to determine the existence of the preliminary state of facts necessary to its jurisdiction (see R v Comrs for Special Purposes of the Income Tax (1888) 21 QBD 313, 319, per Lord Esher MR). At the time of the drafting of what became the 1985 Act, the difference between issues of fact and law in the context of jurisdiction had been highlighted by the House of Lords in R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74. It was held that the power of the Home Office to remove an illegal entrant did not depend simply on the reasonable belief of the immigration officer that the person was an illegal entrant. As Lord Scarman said (at p 110): where the exercise of executive power depends upon the precedent establishment of an objective fact, the courts will decide whether the requirement has been satisfied. The words in parenthesis in section 67(8), it is submitted, can be read as designed, as respects the IPT, to put such decisions on issues of fact going to jurisdiction beyond the scope of review, but not issues of law. She submits that the Court of Appeals reliance on the security and intelligence context to support their view was mistaken. The High Court has ample powers on judicial review to ensure that sensitive information is protected (see now R (Haralambous) v Crown Court at St Albans [2018] UKSC 1; [2018] AC 236). Similar concerns might have been said to arise in respect of the Special Immigration Appeals Commission (SIAC), but neither that factor, nor the relatively high status of the judges of that Commission, was held sufficient to oust judicial review (R (U) v SIAC [2011] QB 120 DC, paras 82 86 per Laws LJ). Furthermore, the tribunals jurisdiction is not limited to sensitive claims against the intelligence services. Ms Rose gives as examples such issues as the use by local authorities of CCTV and checks by directed surveillance on whether a child lives in the catchment area of a local school. She also points out that the issue can work both ways. For example, if the Tribunal were unlawfully to order the security and intelligence services to disclose material (such as the identity of an agent) which would risk harming national security, they would have no remedy. More generally, it cannot have been intended that the IPT should be immune from challenge even where it blatantly disregarded limits to its powers: for example, if it decided not to follow a binding decision of the Supreme Court on the interpretation of the RIPA, or if it purported to determine a claim for unfair dismissal allocated by statute exclusively to the Employment Tribunal. These submissions were supported by Mr Chamberlain QC (with Mr Heaton), appearing for the intervener Liberty. He emphasised the very broad jurisdiction of the IPT, not limited to reviewing the conduct of the intelligence services, but extending to surveillance and other activities undertaken for policing, economic and other purposes by a range of public authorities. It is, he submitted, objectionable in principle, and inimical to the rule of law, that a body with such broad jurisdiction should be entirely immune from challenge, save only in the Strasbourg court in respect of compliance with the Convention. He also pointed to the considerable overlap between the jurisdiction of the IPT and that of the ordinary courts. As he submits it could be a question of happenstance whether a determination on a particular issue is immune from review by the UK courts, if determined by the IPT, or subject to appeal through the appellate courts, if determined by the ordinary courts. Counsel for the interested parties, led by Sir James Eadie QC, generally supported the reasoning of the Court of Appeal. In agreement with Sales LJ, he submitted that the language of section 67(8), by the words in parenthesis, and in contrast to the section under consideration in Anisminic, was designed in terms to address the possibility of the IPT making an error of law going to its jurisdiction or power to act. He drew attention to particular features of the statutory context, including the special allocation of judicial responsibility to the IPT in the national security context under a single legislative regime together with the HRA; the bespoke nature of the IPT system set up by RIPA, with provision to make its own rules and procedures, allowing the IPT to deal with sensitive national security matters through closed material procedures not available at common law; the placing of the IPT on equal footing with the High Court in respect of judicial review; and the provision for the possibility of a right of appeal from IPT decisions in specified cases. The fact that the latter provisions had not been brought into effect did not detract from their relevance to the presumed intention of Parliament at the time of enactment (see Bennion on Statutory Interpretation (6th ed), p 654). He relied also on the continuing endorsement of the IPT by the Strasbourg court, most recently in Big Brother Watch v United Kingdom (2018) (Application Nos 58170/13, 62322/14 and 24960/15), in which the court commented for example on the special role of the IPT as the sole body capable of elucidating the general operation of a surveillance regime (and) the sole body capable of determining whether that regime requires further elucidation. (para 255) More generally he submitted that there was nothing constitutionally offensive about legislative arrangements whereby Parliament reallocates the High Courts judicial review jurisdiction to a judicial body that is both independent of the Executive and capable of providing an authoritative interpretation of the law. Judicial supervision of inferior courts and tribunals The authorities Before considering these submissions, it is necessary to set them in the context of the historical development through the authorities of the relationship between the High Court and other adjudicative bodies, culminating for present purposes in the Supreme Court judgments in Cart. The Kings (or Queens) Bench The supervisory role of the Kings court (curia regis), or the Kings or Queens Bench Division of the High Court as it became, has a long history. A scholarly account, tracing it back to the time of William I, is given in the judgment of Laws LJ in the Divisional Court in Cart ([2011] QB 120, paras 44ff). As he says (para 45) the Kings Bench was established by the end of the 13th century, and remained at the centre of the English judicial system until its powers were transferred to the High Court in 1873. As to its status, he cites, for example (paras 48 49), Groenwelt v Burnell (1700) 1 Salk 144, 90 ER 1000 per Holt CJ: no court can be intended exempt from the superintendency of the King in this Court of Kings Bench. It is a consequence of every inferior jurisdiction of record, that their proceedings be removable into this court, to inspect the record, and see whether they keep themselves within the limits of their jurisdiction; To similar effect he quotes Blackstones Commentaries on the Laws of England book III, Chapter 4, p 41 2 (written in 1768), describing the Kings Bench as the supreme court of common law in the kingdom, and as keeping all inferior jurisdictions within the bounds of their authority. It is of interest to note also a later passage (op cit p 112), in which Blackstone discussed the writ of prohibition, including its use to ensure general conformity with the law of the land. He described the wide variety of courts subject to this supervision (ranging from inferior courts of common law, to the courts Christian or the university courts, the court of chivalry, or the court of admiralty) and its application: where they concern themselves with any matter not within their jurisdiction or if in handling matters clearly within their cognizance they transgress the bounds prescribed to them by the laws of England else the same question might be determined different ways, according to the court in which the suit is depending: an impropriety which no wise government can or ought to endure, and which is, therefore, a ground of prohibition. That supervisory role was preserved by section 16 of the Judicature Act 1873 which vested the common law powers of the Queens Bench in the newly created High Court. Those powers were in turn preserved by section 19 of the Senior Courts Act 1981. Ouster clauses Authorities dating back at least to the 17th century (see eg Smith, Lluellyn v Comrs of Sewers (1669) 1 Mod 44, 86 ER 719) leave no doubt as to the hostile attitude of the High Court to attempts by statute to restrict its supervisory role. In such cases, conventional principles of statutory interpretation, based on the ordinary meaning of the words used by Parliament, have yielded to a more fundamental principle that no inferior tribunal or authority can conclusively determine the limits of its own jurisdiction. It is difficult, for example, to think of a statutory ouster clause in clearer terms than that considered in R v Cheltenham Comrs (1841) 1 QB 467, 113 ER 1211. The case concerned a challenge to a decision of the Quarter Sessions on an appeal against a rate set by the respondent Commissioners. The Commissioners objection to the admission of certain evidence had been rejected by a majority of 11 magistrates to eight. The decision was challenged on the grounds of apparent bias (in modern terms), in that three of the 11 magistrates were partners in a company which owned a property affected by the rate. The statute provided That no order, verdict, rate, assessment, judgment, conviction, or other proceeding touching or concerning any of the matters aforesaid, or touching or concerning any offence against this Act, or any by law or order to be made in pursuance thereof, shall be quashed or vacated for want of form only, or be removed or removable by certiorari, or any other writ or process whatsoever, into any of His Majestys Courts of Record at Westminster; any law or statute to the contrary thereof in anywise notwithstanding. Upholding the challenge, Lord Denman CJ said of the ouster clause: the clause which takes away the certiorari does not preclude our exercising a superintendence over the proceedings, so far as to see that what is done shall be in pursuance of the statute. The statute cannot affect our right and duty to see justice executed: and, here, I am clearly of opinion that justice has not been executed. (p 1214) A possible justification of that principle was given by Farwell LJ in R v Shoreditch Assessment Committee, Ex p Morgan [1910] 2 KB 859, 880: Subjection . to the High Court is a necessary and inseparable incident to all tribunals of limited jurisdiction; for the existence of the limit necessitates an authority to determine and enforce it: it is a contradiction in terms to create a tribunal with limited jurisdiction and unlimited power to determine such limit at its own will and pleasure such a tribunal would be autocratic, not limited and it is immaterial whether the decision of the inferior tribunal on the question of the existence or non existence of its own jurisdiction is founded on law or fact (Emphasis added) This passage was cited with approval in Anisminic itself by both Lord Pearce ([1969] 2 AC 147, 197), and Lord Wilberforce (ibid pp 208 209), the latter describing it (perhaps somewhat grudgingly) as language which, though perhaps vulnerable to logical analysis, has proved its value as guidance to the courts, He put the same idea in his own words: The courts, when they decide that a decision is a nullity, are not disregarding the preclusive clause. For, just as it is their duty to attribute autonomy of decision of action to the tribunal within the designated area, so, as the counterpart of this autonomy, they must ensure that the limits of that area which have been laid down are observed . In each task they are carrying out the intention of the legislature, and it would be misdescription to state it in terms of a struggle between the courts and the executive. What would be the purpose of defining by statute the limit of a tribunals powers if, by means of a clause inserted in the instrument of definition, those limits could safely be passed? (p 208B) More recent authority has affirmed the continuing relevance of this strong interpretative presumption against the exclusion of judicial review, other than by the most clear and explicit words (Cart [2011] QB 120, para 31, per Laws LJ; citing Denning LJ in R v Medical Appeal Tribunal, Ex p Gilmore [1957] 1 QB 574, 583, and Lord Phillips MR in R (Sivasubramaniam) v Wandsworth County Court [2003] 1 WLR 475, para 44). As those cases show, this presumption has been applied without distinction to decisions of inferior courts (such as the County Court) and of tribunals, even if designated as superior courts of record (like the Upper Tribunal). Errors of law In so far as those authorities were concerned with errors going to jurisdiction in the traditional sense, they were relatively uncontroversial. The review of errors of law was more problematic. Professor Paul Craig (Administrative Law 8th ed (2016), para 16 001) identifies three phases in the extension of the inherent powers of the High Court to review of decisions for error of law: The courts from the 16th to the 20th century used either the collateral fact doctrine or the theory of limited review to determine the extent of control. Both theories were premised on a distinction between jurisdictional and non jurisdictional issues, although they drew the divide differently. The assumption was that a jurisdictional error of law was reviewable, but a non jurisdictional error of law was not, unless the error of law was on the face of the record. The divide between jurisdictional and non jurisdictional error was, however, always fraught with difficulty The modern approach, which dates from the latter part of the 20th century, rejected the jurisdictional/non jurisdictional divide. The starting assumption is that all errors of law are subject to judicial review and that the reviewing court will substitute judgment for that of the primary decision maker on such issues. This approach avoids the difficulties of the jurisdictional/non jurisdictional divide. There are, however, difficulties with the modern approach. It is based on the twin assumptions that reviewing courts should substitute judgment on all such legal issues and that this is the only way to maintain control over the organs of the administrative state. The courts have more recently signalled variation in the test for review primarily in the context of decisions made by tribunals. The first phase is now of no more than historical interest. The second refers to the major change brought about by Anisminic itself, as interpreted in later cases. The last sentence, as I understand it, refers to the evolution of a more nuanced approach exemplified by the Supreme Courts decision in Cart. I will consider them in turn in the next sections of this judgment. Before doing so, I should note the important difference between control respectively of administrative action and of the functions of lower courts or tribunals. As Robert Craig points out in an article in Public Law (Ouster clauses, separation of powers and the intention of Parliament [2018] PL 570, 572), separation of powers dictates that administrative bodies should not be determining the answers to questions of law that frame their decision making process. He cites the succinct statement of the proper constitutional relationship of the executive with the courts by Nolan LJ in M v Home Office [1992] QB 270, 314H 315A: the courts will respect all acts of the executive within its lawful province, and the executive will respect all decisions of the courts as to what its lawful province is. That simple contrast cannot readily be applied to control of courts or tribunals. Craig distinguishes: the conceptually different question of what the attitude of the courts is and should be, to the entirely separate category of cases where there are ouster clauses protecting the exercise of judicial functions. Accordingly, where an ouster clause can be interpreted as not excluding judicial supervision but reallocating its exercise to a different form of court or tribunal, a different constitutional analysis may be required. That indeed was the view taken of RIPA section 65(2)(a) (in relation to claims under the HRA) by Lord Brown in R (A) para 23, when dismissing a suggested parallel with Anisminic: Nor does Anisminic assist A. The ouster clause there under consideration purported to remove any judicial supervision of a determination by an inferior tribunal as to its own jurisdiction. Section 65(2)(a) does no such thing. Parliament has not ousted judicial scrutiny of the acts of the intelligence services; it has simply allocated that scrutiny (as to section 7(1)(a) HRA proceedings) to the IPT . That passage was concerned solely with the allocation of the special jurisdiction under the HRA, and against the background of clear Strasbourg authority that article 6 of the Convention does not guarantee a right of appeal (see Bochan v Ukraine (No 2) (2015) 61 EHRR 14, paras 44 45). It says nothing about the correct approach to the IPTs jurisdiction more generally. From Anisminic to Cart Anisminic the decision The claim in Anisminic arose from the sequestration of the claimants property by the Egyptian authorities at the time of the Suez crisis in 1956. Their claim under the relevant Foreign Compensation Order (under the Foreign Compensation Act 1950) was rejected by the Commission on the grounds that they had subsequently sold their property to an Egyptian institution, which was to be regarded as their successor in title within the meaning of the Order. On its face, at least to modern eyes, that was a straightforward issue of interpretation of the Order. It was ultimately decided in the claimants favour by the House of Lords. However, the process by which the case arrived at that point was far from straightforward. The procedural and legal background is described in an illuminating discussion of the case by Professor Feldman (Anisminic in perspective, in Juss and Sunkin (ed) Landmark cases in public law (Oxford 2017) pp 63ff). He explains in particular (p 70) the significance, in the absence of a reasoned decision by the Commission, of the choice of an action for a declaration, rather than certiorari: to challenge Anisminic decided the provisional determinations in an action in the High Court seeking various declarations to the effect that they were erroneous in law and nullities. Unlike an application for certiorari, this did not require the court's leave, which would almost certainly have been refused because Anisminic was unable to point to any evidence that the Commission had erred in law. The action compelled the Commission to plead its defence, which eventually disclosed an error of law. There were disadvantages to Anisminic in pursuing a declaration rather than certiorari. First, there was no precedent for using a declaration as a remedy in such a case; the Commission argued that allowing declarations to be used in that way might make certiorari redundant Secondly, it forced Anisminic to argue that any unlawfulness the company could assert made the determination void, not merely voidable, as a voidable determination would be effective unless quashed by certiorari By the time the case came to the courts, as Lord Pearce noted (p 199F), the problem of showing an error of law on the record had been overtaken by the production by the Commission of a minute of adjudication relied in the particulars of the defence. There were differences of emphasis between the various speeches in the House of Lords. However, for modern purposes they are less important than the interpretation of the decision in later cases. Looked at from that perspective, the case can be taken as confirming or establishing three distinct but related propositions: i) That there is (at the least) a strong presumption against statutory exclusion of review by the High Court of any decision of an inferior court or tribunal treated as made without jurisdiction and so a nullity. ii) That for this purpose there is no material distinction between an excess of jurisdiction at the outset, and one occurring in the course of proceedings. iii) That a decision which is vitiated by error of law (whether or not on the face of the record) is, or is to be treated as, made without jurisdiction and so a nullity. The first proposition, as apparent from the cases referred to above, was little more than a confirmation of well established principles. The second could be seen as a logical step forward, or at least a clarification of the previous law (see Wade & Forsyth Administrative Law 11th ed, p 217: The original jurisdiction fallacy). The third, however, was a much more radical development, in so far as a mere error of law came in due course to be treated as an excess of jurisdiction which rendered the decision not simply open to legal challenge but void or a nullity. Hitherto it had generally been assumed that a mere error of law by a court or tribunal in respect of an issue otherwise falling within its jurisdiction might be subject to correction on appeal, but did not take the decision outside its powers. For example, Lord Reid himself had said in a recent case: If a magistrate or any other tribunal has jurisdiction to enter on the inquiry and to decide a particular issue, and there is no irregularity in the procedure, he does not destroy his jurisdiction by reaching a wrong decision. If he has jurisdiction to go right he has jurisdiction to go wrong. Neither an error in fact nor an error in law will destroy his jurisdiction. (R v Governor of Brixton Prison, Ex p Armah [1968] AC 192, 234 emphasis added) In Anisminic (at p 171E F) he implicitly acknowledged an apparent discrepancy between that statement and the reasoning in instant case, which he sought to explain by reference to differences between narrow and broader meanings of the word jurisdiction. Consideration of Lord Reids judgment is best begun by reference to his own summary of the respective arguments and his response to them (pp 169 170): The respondent maintains that these are plain words only capable of having one meaning. Here is a determination which is apparently valid: there is nothing on the face of the document to cast any doubt on its validity. If it is a nullity, that could only be established by raising some kind of proceedings in court. But that would be calling the determination in question, and that is expressly prohibited by the statute. The appellants maintain that that is not the meaning of the words of this provision. They say that determination means a real determination and does not include an apparent or purported determination which in the eyes of the law has no existence because it is a nullity. Or, putting it in another way, if you seek to show that a determination is a nullity you are not questioning the purported determination you are maintaining that it does not exist as a determination. It is one thing to question a determination which does exist: it is quite another thing to say that there is nothing to be questioned. Lord Reid considered the application of such an ouster provision to the simple case of an order made by someone appointed on the basis of a forged qualification, and asked whether the court would be required to treat the order as valid. He continued: It is a well established principle that a provision ousting the ordinary jurisdiction of the court must be construed strictly meaning, I think, that, if such a provision is reasonably capable of having two meanings, that meaning shall be taken which preserves the ordinary jurisdiction of the court. Statutory provisions which seek to limit the ordinary jurisdiction of the court have a long history. No case has been cited in which any other form of words limiting the jurisdiction of the court has been held to protect a nullity. If the draftsman or Parliament had intended to introduce a new kind of ouster clause so as to prevent any inquiry even as to whether the document relied on was a forgery, I would have expected to find something much more specific than the bald statement that a determination shall not be called in question in any court of law. Undoubtedly such a provision protects every determination which is not a nullity. But I do not think that it is necessary or even reasonable to construe the word determination as including everything which purports to be a determination but which is in fact no determination at all. And there are no degrees of nullity. There are a number of reasons why the law will hold a purported decision to be a nullity. I do not see how it could be said that such a provision protects some kinds of nullity but not others: if that were intended it would be easy to say so. He went on to give a list of examples of the ways in which a decision of a tribunal, acting within its original jurisdiction may be treated as a nullity: It has sometimes been said that it is only where a tribunal acts without jurisdiction that its decision is a nullity. But in such cases the word jurisdiction has been used in a very wide sense, and I have come to the conclusion that it is better not to use the term except in the narrow and original sense of the tribunal being entitled to enter on the inquiry in question. But there are many cases where, although the tribunal had jurisdiction to enter on the inquiry, it has done or failed to do something in the course of the inquiry which is of such a nature that its decision is a nullity. It may have given its decision in bad faith. It may have made a decision which it had no power to make. It may have failed in the course of the inquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. 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. I do not intend this list to be exhaustive. But if it decides a question remitted to it for decision without committing any of these errors it is as much entitled to decide that question wrongly as it is to decide it rightly (p 171B E) It is noteworthy that the list did not include a simple error of law or misconstruction of the statute. It must have been a misconstruction of the provisions giving it power to act, as a result of which it has decided some question which was not remitted to it or based its decision on some matter which it had no right to take into account. Later in the speech he applied that approach to the instant case. The Commission had construed the order (wrongly as it was held) as requiring them, having identified the original owner, to inquire whether he had a successor in title. Lord Reid explained how that error of law could render the decision a nullity: But if, on a true construction of the Order, a claimant who is an original owner does not have to prove anything about successors in title, then the commission made an inquiry which the Order did not empower them to make, and they based their decision on a matter which they had no right to take into account if they reach a wrong conclusion as to the width of their powers, the court must be able to correct that not because the tribunal has made an error of law, but because as a result of making an error of law they have dealt with and based their decision on a matter with which, on a true construction of their powers, they had no right to deal. they are doing something which they have no right to do and, if the view which I expressed earlier is right, their decision is a nullity (pp 173H 174E emphasis added) Lord Pearce adopted a similar approach. As he put it: If the commission by misconstruing the Order in Council which gave them their jurisdiction and laid down the precise limit of their duty to inquire and determine, exceeded or departed from their mandate, their determination was without jurisdiction (p 201C) Lord Wilberforce, who gave the only other substantive speech on this issue, also looked for something beyond a simple error of law. This was against the background that, as he put it: In every case, whatever the character of a tribunal, however wide the range of questions remitted to it, however great the permissible margin of mistake, the essential point remains that the tribunal has a derived authority, derived, that is, from statute: at some point, and to be found from a consideration of the legislation, the field within which it operates is marked out and limited.(p 207D) The error had to be one which took the tribunal outside its permitted field, leading to the decision being a nullity (a term which he thought convenient as a word of description rather than as in itself a touchstone) and so outside the reach of the ouster clause (p 208A B). In the instant case the statute had enabled the Order in Council to make provision for defining the persons qualified to make applications for the purpose of establishing claims and prescribing the matters to be established by them. Such definitions and prescribed matters, in his view, would be architectural directions binding the commission, departure from which would mean that it would be acting beyond its powers (p 211D G). Having examined the Order in detail, and explained why, on a proper construction, all the relevant conditions had been satisfied, he concluded: As all these conditions were fulfilled to the satisfaction of the commission, the appellants claim was in law established; the commission by seeking to impose another condition, not warranted by the Order, was acting outside its remitted powers and made no determination of that which alone it could determine. (p 214E) Anisminic interpretation and comment As Professor Feldman observes (op cit pp 92 93), the significance later attached to the decision in Anisminic, and in particular to the statement in Lord Reids judgment of the matters leading to nullity, may not have been apparent at the time: The ratio of the House of Lords decision was relatively narrow , but what landmark cases decide and what they are later regarded as authority for may be very different. Lord Reids statement had been particularly influential as the basis for extending the theory and practice of judicial review well beyond anything justified by the ratio. He also argues with some force that the passage reflects an uncharacteristic gap in logic: Lord Reid leapt, apparently without noticing, from uncontroversial general propositions about circumstances in which certiorari would be available to quash a decision in the absence of any provision excluding the courts jurisdiction, to a judgment about the effect of a very particular sort of error (denying eligibility for compensation for failing to comply with a condition which the legislation had not imposed) in a case where, because a declaration rather than certiorari was sought and, because of the effect of section 4(4) of the 1950 Act, it was essential to show that the challenged determination was not merely erroneous but null. Whatever doubts there may have been initially or since as to the interpretation or practical implications of Lord Reids words, and of the other majority speeches in Anisminic, such doubts have been dispelled by a series of statements in subsequent cases at the highest level, led by Lord Diplock. Professor Feldman (p 94) notes that at an early stage Lord Diplocks own views of the case, as expressed extra judicially, had progressed from a relatively cautious response in 1971 to a much more absolute view, as expressed in a 1974 lecture, that the decision had render(ed) obsolete the technical distinction between errors of law which go to jurisdiction and errors of law which do not. He also notes the influence of successive Junior Treasury Counsel in set(ting) the tone for arguments advanced to the courts on behalf of Government Departments (see also para 80 below). Sir Stephen Sedley has spoken in similar terms of the contribution of Treasury Counsel, and of the process by which a consensus has emerged: It has come about neither by legislation nor by precedent but by an organic process in which the laws practitioners and its exponents have agreed on which way the common law should be travelling and have found a serviceable if not particularly suitable vehicle to transport it. (Sedley The lion behind the throne: the law as history [2016] JR 289, paras 14, 22) The problem is that this move outside the limitations carefully set by the Anisminic speeches may have undermined much of their conceptual basis. I shall return to this problem when addressing the second issue. OReilly v Mackman and after It was not until 1982 that the broader view was given unambiguous judicial endorsement by the House of Lords, when Lord Diplock summarised the effect of Anisminic in OReilly v Mackman [1983] 2 AC 237, 279) in a speech agreed by the other members of the House: The breakthrough that the Anisminic case made was the recognition by the majority of this House that if a tribunal whose jurisdiction was limited by statute or subordinate legislation mistook the law applicable to the facts as it had found them, it must have asked itself the wrong question, ie, one into which it was not empowered to inquire and so had no jurisdiction to determine. Its purported determination, not being a determination within the meaning of the empowering legislation, was accordingly a nullity. In other words, a determination arrived at on an erroneous view of the relevant law was not a determination within the meaning of an ouster clause such as in Anisminic. Arguments about differences between jurisdictional and non jurisdictional errors of law had become redundant. Later cases have confirmed this interpretation. Thus in R v Hull University Visitor, Ex p Page [1993] AC 682, concerning a challenge to the decision of a University Visitor, Lord Browne Wilkinson said (at pp 701 702): Anisminic rendered obsolete the distinction between errors of law on the face of the record and other errors of law by extending the doctrine of ultra vires. Thenceforward 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: a misdirection in law in making the decision therefore rendered the decision ultra vires. To similar effect, in Boddington v British Transport Commission [1999] 2 AC 143, 158D E, which related to the validity of a by law, Lord Irvine LC 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. An ultra vires act or subordinate legislation is unlawful simpliciter and, if the presumption in favour of its legality is overcome by a litigant before a court of competent jurisdiction, is of no legal effect whatsoever. Lord Browne Wilkinson agreed (p 164), subject to reservations as to the legal consequences of such an ultra vires act during the period between the doing of that act and the recognition of its invalidity by the court (as to which see De Smiths Judicial Review 8th ed (2018), paras 4 067ff: The effect of a judgment that a decision is unlawful). More recently, Lord Irvines words were in turn cited by Lord Dyson (Lumba v Secretary of State for the Home Department [2011] UKSC 12; [2012] 1 AC 245, para 66) to support the statement: 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. It is right to note the reservations expressed about this simple statement by some other members of the court in Lumba. Thus Lord Walker (para 193), while acknowledging Anisminic as a seminal case in the development of modern public law, observed that its full implications are still open to debate. However, his main concern was the extension of that concept to the far removed context of a private law claim for damages for false imprisonment, as was in issue in Lumba. I do not read his remarks as throwing doubt on Lord Dysons summary, when applied to review of the legality of subordinate decisions as in the present case. It must be acknowledged in any event that the Anisminic principle, however defined, has not been treated as necessarily applicable outside its particular context. An example is In re McC [1985] AC 528. The issue was whether the justices, in deciding to detain a juvenile without first informing him of his right to legal aid, had acted without jurisdiction or in excess of jurisdiction within the meaning of section 15 of the Magistrates Courts (Northern Ireland) Act 1964, so as to remove their immunity from civil liability for false imprisonment. Although this question was answered in the affirmative on the facts of the case, this did not depend on any application of Anisminic. Lord Bridge commented on the many different shades of meaning in different contexts acquired by the word jurisdiction, noting at one end of the spectrum the majority decision in Anisminic (p 536B H). He regarded it as irrelevant to the section before him, however valuable it might be in ensuring that the supervisory jurisdiction of the superior courts over inferior tribunals is effective to secure compliance with the law (p 546G). The evolving role of the High Court In considering the development of the law since Anisminic it is necessary to take account both of the major changes in the supervisory role of the High Court as respects public bodies of all kinds (both administrative and judicial or quasi judicial), including the 1979 reforms which established judicial review in its modern form; and also of the changes in the relationship between the traditional courts and specialist tribunals. The development in this period of judicial review is well described in De Smith op cit para 4 006 7: Over the last 40 years its scope has developed dramatically. It has grown from being little more than a method of correcting the errors of law of inferior courts to its present eminence as the remedy for protecting individuals against unlawful action by the Government and other public bodies. In the early 1970s this was the staple diet of the Divisional Court of the Bench Division of the High Court. This Court alone had the power to grant the prerogative remedies of certiorari, mandamus and prohibition. The importance attached to this power was demonstrated by the fact that the Divisional Court was usually presided over by the Lord Chief Justice of the day sitting with two other High Court Judges. The Court had direct historical links to the role of the High Court Judges of the Queens Bench Division who, from the Middle Ages, exercised the authority of the monarch to keep the peace and uphold law and order. The prerogative writs together with inherent jurisdiction derived from their association with the monarch gave them wide discretionary powers. Those powers still play a role in claims for judicial review today. As a result of reforms in 1979, in addition to the prerogative orders being available to the judges of the new Court, the judges hearing cases on the Crown Office List (the progenitor of the Administrative Court created in 2000) were also able to grant the declarations and injunctions which were the tools used by the judges of the Chancery Division when supervising the activities of public bodies. Declarations and injunctions, like the prerogative orders, were discretionary remedies. The powers to provide both sets of remedies meant that judicial review became a very effective method of upholding the rights of the individual against public bodies. This also meant that the technicalities relating to the grant of the prerogative remedies receded in importance. Anisminic also proceeded against the background of a reasonably clear division in the legal hierarchy between, on the one hand, the unlimited supervisory jurisdiction of the High Court, exercised by the Divisional Court usually presided over by the Lord Chief Justice, and, on the other, the limited jurisdictions of inferior courts or tribunals (or other adjudicative bodies, such as the Foreign Compensation Commission). For this purpose, no distinction was drawn in the authorities between the different forms of limited jurisdiction, or in particular between courts below the High Court and statutory tribunals. However, the period between Anisminic and the decision of the Supreme Court in Cart saw major changes in this traditional relationship between the High Court and other adjudicative bodies. Racal Communications It is convenient at this point to refer to the decision of the House of Lords in In re Racal Communications Ltd [1981] AC 374 (Racal), to which Lord Sumption attaches some importance. As I understand it, he sees it and related cases as illustrating the proposition, which he derives from Lord Wilberforces speech in Anisminic (at p 207), that the key issue when considering the scope of an ouster clause is to define the the permitted field of the relevant adjudicative body, that being identified by a careful analysis of the interpretative power conferred by the enabling Act. Racal itself concerned a challenge to the decision of a High Court judge exercising a statutory jurisdiction (under the Companies Act 1948 section 441) to authorise inspection by the Director of Public Prosecutions of company books for the purpose of investigating a suspected offence. Section 441(3) provided that the decision of the High Court judge on such an application shall not be appealable. The judge had dismissed an application by the Director on legal grounds, but the Court of Appeal had reversed his decision holding that it was entitled to do so because he had made an error of law which went to his jurisdiction. The House of Lords allowed the companys appeal. The case has attracted some attention for the distinction drawn by Lord Diplock in the context of ouster clauses between, on the one hand, administrative tribunals and authorities and, on the other, courts of law. Having confirmed that as respects the former the decision in Anisminic had effectively abolished the old distinction between errors of law that went to jurisdiction and errors of law that did not, he continued: But there is 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 (p 383) He went on to refer more specifically to the position of the High Court, as in the instant case. There was an obvious distinction between such a jurisdiction conferred by statute on a court of law of limited jurisdiction, and one conferred on the High Court or a judge of the High Court acting in his judicial capacity: The High Court is not a court of limited jurisdiction and its constitutional role includes the interpretation of written laws. Judicial review is available as a remedy for mistakes of law made by inferior courts and tribunals only. Mistakes of law made by judges of the High Court acting in their capacity as such can be corrected only by means of appeal to an appellate court; and if, as in the instant case, the statute provides that the judges decision shall not be appealable, they cannot be corrected at all. (p 384) As I see it, this distinction is of no assistance to the case of the Interested Parties, since there is nothing to suggest that Lord Diplock would have regarded the IPT, notwithstanding its distinguished composition, as anything more than an administrative tribunal within his classification. On that assumption Lord Diplocks speech supports the widest reading of the Anisminic decision as later confirmed in OReilly v Mackman. In any event I do not see that part of his reasoning as having majority support. As I read the speeches overall, it was the latter point, turning on the position of the High Court, rather than of courts more generally, which provided the ratio of the Houses decision. Although Lord Keith agreed without qualification with Lord Diplocks reasoning, his suggested distinction between courts in general and tribunals was not expressly endorsed by the other members of the House. Lord Edmund Davies made no specific reference to this point. Lord Salmon spoke of the decision in Anisminic as confined to decisions made by commissioners, tribunals or inferior courts, drawing no distinction between them. He based his decision on the fact that the jurisdiction of the Court of Appeal was defined by statute, which gave it no jurisdiction to make a judicial review of a decision of the High Court (p 386). To similar effect, Lord Scarman (at p 393) relied on the fact that the Court of Appeals jurisdiction over the High Court was the creature of statute, and in no way analogous to the supervisory jurisdiction of the High Court over inferior tribunals. Ms Rose goes as far as to submit that this part of the speech was not only obiter but per incuriam. There is force in this submission. As far as appears from the Appeal Cases report, the suggested distinction between courts and tribunals was not raised in argument and no relevant authorities were referred to in support, either by counsel or by Lord Diplock. His approach seems out of line with the long series of authorities cited by Laws LJ in his historical review in Cart, where it was emphasised that the jurisdiction of the Kings Bench Division extended to all inferior jurisdictions without distinction, including courts: a view well illustrated by Blackstones description of the range of courts within the scope of the writ of prohibition (paras 31 32 above). As Laws LJ said (commenting in terms on the speeches in Racal): The true contrast is between the High Court of the one hand and courts of limited jurisdiction on the other (Cart [2010] 2 WLR 1012 at para 68) On this approach no principled distinction can be drawn between the Foreign Compensation Commission and the IPT, or indeed the Upper Tribunal in Cart. All were or are inferior jurisdictions, equally subject to the supervision of the High Court. It is true that this part of Lord Diplocks speech has been cited with approval in later cases: see per Lord Browne Wilkinson in R v Hull University Visitor, Ex p Page [1993] AC 682, 703 (relating to University Visitors), and more recently per Lord Mance in Lee v Ashers Baking Co Ltd [2018] 3 WLR 1294, paras 85 87. But this point was not essential to the reasoning in either case. In Page, Lord Browne Wilkinson held that the High Court could not review a university visitors decision for a non jurisdictional error of law. However, he did so on the basis of common law principles that treat the visitor as equivalent to an arbitrator designated by the internal governance arrangements of a university (p 607, citing Holt CJ in Philips v Bury, (1694) Holt 715, 723 726). Lee also was concerned with a quite different issue: that is, the finality of the statutory appellate jurisdiction of the Northern Ireland Court of Appeal on appeal from the County Court. It had nothing to do with the exclusion of the original jurisdiction of the High Court in respect of inferior courts or tribunals. As Lord Mance explained (para 88) it turned on the construction of article 61(1) and (7) of the County Courts (Northern Ireland) Order 1980, which provided 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 wording which was focused on the decision on the point of law, not on the regularity of the proceedings leading to it. He therefore found no difficulty in holding that the exclusion would not extend to a challenge to the fairness or regularity of the courts process. Lord Sumption also attaches importance to the fact that in Racal there was majority approval (Lords Diplock, Keith and Edmund Davies) of the dissenting judgment of Geoffrey Lane LJ in Pearlman v Keepers and Governors of Harrow School [1979] QB 56, 76C D. The same passage had recently been cited with approval by the Privy Council (including Lord Edmund Davies) in South East Asia Fire Bricks Sdn Bhd v Non Metallic Mineral Products Manufacturing Employees Union [1981] AC 363. In Pearlman the Court of Appeal by a majority allowed an appeal from the County Court in a case turning on the construction of a particular phrase (structural alteration or addition) in the Housing Act 1974. This was in the face of a provision of that Act by which the decision of the County Court was to be final and conclusive, and a provision (section 107) of the County Courts Act 1959 that no judgment or order of any judge of county courts . shall be removed by appeal, motion, certiorari or otherwise into any other court whatever It is a difficult case, not least because the majority judgments seem to have borne little relationship to the arguments as presented. The scope of the argument, as Geoffrey Lane LJ noted, had been constrained by concessions made on either side (without specific reference to Anisminic): on the one hand by counsel for the landlord that the section did not affect the power of the High Court to quash a decision of the county court made in excess of jurisdiction, although it did exclude the power to quash for errors of law on the record; and on the other by counsel for the tenant that the particular decision had been made within the judges jurisdiction (see pp 60G, 62D, 74A, 76H). There seems therefore to have been only limited reference to Anisminic in argument (see p 64G). However, in the leading judgment, Lord Denning MR took his own view of the construction of the no certiorari clause in the County Courts Act, holding that it applied only to decisions under jurisdiction conferred by that Act (p 68H). He also took the opportunity for an extended discussion of the difficulties of interpretation arising from Anisminic, concluding: The way to get things right is to hold thus: no court or tribunal has any jurisdiction to make an error of law on which the decision of the case depends. If it makes such an error, it goes outside its jurisdiction and certiorari will lie to correct it. (p 70E) Eveleigh LJ (pp 76ff) gave a judgment in substance agreeing with Lord Denning MRs interpretation of Anisminic and of the no certiorari clause in the County Courts Act. It was in this context (evidently in response to the judgments of his colleagues rather than the arguments of counsel) that Geoffrey Lane LJ reviewed the speeches in Anisminic, and concluded (in the passage later cited with approval by the Privy Council and the House of Lords): I am, I fear, unable to see how that determination, assuming it to be an erroneous determination, can properly be said to be a determination which he was not entitled to make. The judge is considering the words in the Schedule which he ought to consider. He is not embarking on some unauthorised or extraneous or irrelevant exercise. All he has done is to come to what appears to this court to be a wrong conclusion upon a difficult question. It seems to me that, if this judge is acting outside his jurisdiction, so then is every judge who comes to a wrong decision on a point of law. (p 76C D) These references do not in my view materially assist the arguments in the present case on either side. All three cases (Pearlman, South East Asia and Racal) were products of their time. They came at a relatively early stage in the evaluation by the courts of the Anisminic principle. They also reflected a degree of tension between different levels of the judiciary as to the way forward. In this respect Lord Dennings proposed interpretation seems closer to subsequent authority than that of the dissenting judgment, although his interpretation of the ouster clause seems more questionable, and the minority view might be supported on other grounds (discussed below, under the second issue). Specialist tribunals By the time of Racal it was in any event difficult to make a principled distinction between courts and tribunals by reference only to nomenclature. Parliament had already blurred the distinction when establishing in 1975 the Employment Appeal Tribunal presided over by a High Court judge, with a jurisdiction limited to appeals on points of law (Employment Protection Act 1975 sections 87 88). It was designated in terms as a superior court of record (Schedule 6 paragraph 10). In this respect as in others it followed the precedent of the National Industrial Relations Court (Industrial Relations Act 1971 Schedule 3 paragraph 13). As is apparent from the authorities cited by Laws LJ in Cart (paras 61 62) the accepted wisdom for many years, indeed until the decision of the Divisional Court in that case, was that such designation as a superior court of record was in itself sufficient to exclude judicial review by the High Court. He cites, for example, R v Regional Office of the Employment Tribunals (London North), Ex p Sojirin (unreported) 21 February 2000, in which Sedley LJ (with whom Brooke LJ and Sir Christopher Staughton agreed) stated: So far as the Employment Appeal Tribunal is concerned, it is a superior court of record against which judicial review simply does not lie. The same thinking was initially assumed to apply to the Upper Tribunal. Laws LJ cited De Smith Judicial Review 6th ed (2007), para 1 093: The Administrative Court will have no role at all in relation to decisions of the Upper Tribunal, which as [a] superior court of record falls entirely outside the supervisory jurisdiction. Indeed, (as Lord Dyson noted in Cart in the Supreme Court [2012] 1 AC 663 at para 117), Sir Andrew Leggatt in his report Tribunals for Users One System, One Service (2001) (at para 6.31 34), had identified this as one possible means of excluding judicial review. This was not his preferred solution, principally because he saw it as an artificial way of tackling the problem, which would blur the clear distinction we wish to achieve between the courts and the Tribunals System. His preference was for exclusion of judicial review by express statutory provision. It was not until Cart itself in the Divisional Court that this view of designation as a superior court of record was rejected as a constitutional solecism, when set against the principle that the supervisory jurisdiction of the High Court (if it can be ousted at all) can only be ousted by the most clear and explicit words (para 37 above). Laws LJ did however accept that the Upper Tribunal was for relevant purposes, an alter ego of the High Court, and that as such it: satisfies the material principle of the rule of law: it constitutes an authoritative, impartial and independent judicial source for the interpretation and application of the relevant statutory texts. (para 94) This led him to propose a limited form of judicial review not extending to a mere legal mistake by the tribunal within the field ascribed to it. As will be seen, this solution was not adopted by the Supreme Court. However, the proposition that designation as a superior court was sufficient in itself to exclude judicial review was not further pursued in this appeal. Laws LJs rejection of that proposition was accepted as correct by this court (see per Lady Hale para 30). I shall return to other passages in Laws LJs judgment in the context of the second issue in the appeal. Error of law and nullity in the modern law The process of refinement of the Anisminic principle discussed above raised serious questions as to the need for continued reliance on concepts such as ultra vires or nullity as justifications for the intervention by the court. As Lord Reid himself had recognised (pp 170 171), the approach adopted in that case might be thought difficult to reconcile with a case such as Smith v East Elloe Rural District Council [1956] AC 736. That related to a statutory right within six weeks to challenge the confirmation of a compulsory purchase order on the grounds that it was not empowered to be granted, subject to which the order shall not be questioned in any legal proceedings whatsoever . It was held that the ouster clause was effective even where there was an allegation of fraud. In an often cited passage, Lord Radcliffe (pp 769 770) commented on the argument that an order made in bad faith was a nullity and therefore incapable of having any effect: But this argument is in reality a play on the meaning of the word nullity. An order even if not made in good faith, is still an act capable of legal consequences. It bears no brand of invalidity upon its forehead. Unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders. In R v Secretary of State for the Environment, Ex p Ostler [1977] QB 122 the Court of Appeal held that it was bound by this decision; the availability of a statutory right to challenge within a specified time limit, among other points, provided a sufficient basis for distinguishing Anisminic. This case also provides an interesting example of the influence of successive Junior Treasury Counsel in moulding the law (noted by Professor Feldman: above para 52 above). Lord Denning MR treated the statutory expression not within the powers of this Act as in effect embracing the familiar Wednesbury grounds, including error of law. This approach, following that of Lord Radcliffe (dissenting) in Smith v East Elloe Rural District Council, had been adopted by the Court of Appeal on the basis of a concession by counsel for the Minister (Nigel Bridge) in Ashbridge Investments Ltd v Minister of Housing and Local Government [1965] 1 WLR 1320; and in Ostler itself was not disputed by counsel for the Secretary of State (Harry Woolf). As Lord Denning said: It has been repeatedly followed in this court ever since and never disputed by any Minister. So it is the accepted interpretation (p 133G 134A) The concession was no doubt well advised, since without it there might have been difficulty in defending a time limited right of challenge confined to excess of powers in the narrower sense. On the relevance of the concept of nullity as used in Anisminic, Professor Paul Craig (op cit para 16 015) refers to the extra judicial observations of Sir John Laws (Illegality: The Problem of Jurisdiction in Supperstone and Goudie Judicial Review 1st ed (1992)): Sir John Laws argued that once the distinction between jurisdictional and non jurisdictional errors was discarded, there was no longer any need for the ultra vires principle as such, since the courts were in reality intervening to correct errors of law. The rationale for the judicial persistence with the principle is that it provides a legitimating device for the exercise of the courts power. Sir John Laws captures this idea Ultra vires is, in truth, a fig leaf; it has enabled the courts to intervene in decisions without an assertion of judicial power which too nakedly confronts the established authority of the Executive or other public bodies. The fig leaf was very important in Anisminic; but fig leaf it was. And it has produced the historical irony that Anisminic, with all its emphasis on nullity, nevertheless erected the legal milestone which pointed towards a public law jurisprudence in which the concept of voidness and the ultra vires doctrine have become redundant. (This important chapter, written in 1992 at about the time of the authors transition from Junior Treasury Counsel to High Court judge, also marked the beginning of a lively academic debate over the place of nullity and ultra vires in judicial review: see the corresponding chapter in the 6th ed of the same work (2017), and De Smith op cit, para 4 050 1.) I see considerable force in these observations, at least as applied to review for errors of law. Taking the present case, it is highly artificial, and somewhat insulting, to describe the closely reasoned judgment of this eminent tribunal as a nullity, merely because there is disagreement with one aspect of its legal assessment. I will return to this point later in connection with the second issue. Professor Craig concludes that the scope of judicial review is not self defining and it is not capable of being answered by linguistic or textual analysis of the statute alone. The critical question, he says, is whose relative opinion on the relevant question should be held to be authoritative, and the answer must ultimately be based on a value judgment, the precise content of which will not necessarily be always the same (para 16 016). To similar effect, but adopting a different metaphor, the editors of De Smith 8th ed comment: The distinction between jurisdictional and non jurisdictional error is ultimately based upon foundations of sand. Much of the superstructure has already crumbled. What remains is likely quickly to fall away as the courts rightly insist that all administrative action should be simply, lawful, whether or not jurisdictionally lawful. (De Smith para 4 054) The same passage in a previous edition was cited with approval by Lord Dyson in Cart para 111, who described the distinction between jurisdictional error and other error as artificial and technical. I agree. As will be seen in the next section, the reasoning of the Supreme Court in Cart does not turn on such sharp distinctions, but reflects a more evaluative approach, such as envisaged by Professor Craig, but starting from certain fundamental principles. Cart in the Supreme Court I now turn to the judgments in the Supreme Court in Cart, which in my view provide the essential background to the resolution of the issues in the present appeal. The reform of the tribunals system, under the Tribunals, Courts and Enforcement Act 2007, effected a fundamental change in the traditional relationship between courts and tribunals. The background to the reforms, and the nature of the changes made by and under the Act, were described in Lady Hales leading judgment (agreed by the other members of the court). She noted in particular the new judicial structure, presided over by the Senior President (normally a Lord Justice of Appeal), and including not only the specialist tribunal judges, but also all the judges of the ordinary courts, up to and including the Court of Appeal (para 22). She also noted the designation by section 3(5) of the Upper Tribunal as a superior court of record (para 24); the major innovation of the power of the Upper Tribunal to exercise a jurisdiction equivalent to judicial review (para 25); and probably most important the right of appeal with permission to the Upper Tribunal from the First tier Tribunal on points of law (para 26). The principal decision under review in Cart was one by the Upper Tribunal (as it happens, presided over by myself as Senior President of Tribunals) giving the claimant only limited permission to appeal against a decision of the First tier Tribunal relating to child maintenance. It was the common view of the courts at all three levels that the decision itself was unimpeachable on its merits, but the case gave the opportunity for detailed consideration of the principles which should govern such review in future cases. As Lady Hale explained (paras 31 34), both the Divisional Court and the Court of Appeal, albeit by slightly different legal routes, had held that, while judicial review was in principle available, its exercise should be narrowly confined. Under the heading The field of choice for this court (paras 37ff), Lady Hale regarded three points as clear from the oral arguments: first, that there was nothing in the 2007 Act to exclude judicial review of unappealable decisions of the Upper Tribunal; secondly, that it would be inconsistent with the new structure to draw a distinction for this purpose between different jurisdictions there gathered together; and thirdly that: 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 Against the background the question as she saw it was 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? Three possible approaches had been identified in the course of oral argument: First, we could accept the view of the courts below in the Cart and MR (Pakistan) cases 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 the Sinclair Gardens case [2006] 3 All ER 650). 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 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. (para 38) Earlier in the judgment (para 27) she had recorded that the Lord Chancellor had exercised the power under section 13(6) to apply the second appeal criteria as already applied in the Court of Appeal, to the effect 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. She considered the three options in turn. The first (the exceptional circumstances approach) would she thought lead back to the distinction between jurisdictional and other errors which had been effectively abandoned after Anisminic. She saw a number of other objections. In particular (echoing in some ways the concerns of Blackstone in the 18th century: para 32 above) she saw a risk of specialist tribunals, in contrast to the ordinary courts, developing their own local law, a risk which was increased by the power of the Upper Tribunal to set precedent often in a highly technical and fast moving area of law, combined with its ability to refuse permission to appeal, and the likelihood that 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 [2011] QB 120, 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. (para 43) In respect of the second (The status quo ante but which?) she noted that the courts had already adopted principles of judicial restraint when considering decisions of expert tribunals. She referred (inter alia) to her own comments (Cooke v Secretary of State for Social Security [2001] EWCA Civ 734; [2002] 3 All ER 279, paras 15 17) on the need for 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, but observed that other contexts (such as asylum) might require a different approach. The real question was: what level of independent scrutiny outside the tribunal structure is required by the rule of law There must be a principled but proportionate approach. (para 51) As to the third option (The second appeals criteria), having noted the possible objections, she said: 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. 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. (para 56) She concluded that the adoption of the second tier appeals criteria would be a a rational and proportionate restriction, which would recognise that the new tribunal structure deserved: a more restrained approach to judicial review than has previously been the case, while ensuring that important errors can still be corrected. It was a test which the courts were now very used to applying, and one which was 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 (para 57) Of the other judgments I note that Lord Phillips (paras 91 92) was a relatively late convert to the need for even a restricted form of judicial review: 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? However, having considered the other judgments he had been persuaded that, at least until we have experience of how the new tribunal system is working in practice, there was a need for some overall judicial supervision of the decisions of the Upper Tribunal to guard against the risk that errors of law of real significance slip through the system (para 92). Lord Brown, agreeing with the other judgments, saw nothing contrary to principle in the proposed limitation on the scope of review. As he said: 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. (para 100) To similar effect Lord Clarke agreed that the real question was the level of independent scrutiny required by the rule of law, adding: 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. (para 102) Lord Dyson, also agreeing with Lady Hale, noted that Parliament had not accepted the Leggatt recommendation to exclude judicial review. He commented: The fact that Parliament did not accept the recommendation to exclude judicial review of unappealable decisions of the Upper Tribunal 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. It merely means that Parliament was not willing to adopt the controversial suggestion that judicial review should be excluded altogether. (para 118) He referred to the Government White Paper: Transforming Public Services: Complaints, Redress and Tribunals presented to Parliament in July 2004 (Cm 6243), which (at para 7.28) had described complete exclusion of the courts from their historic supervisory role (as) a highly contentious constitutional proposition. Instead there was said to be merit in providing as a final form of recourse a statutory review on paper by a judge of the Court of Appeal. Lord Dyson agreed with the Leggatt report and the 2004 White Paper that the strategic reorganisation of the tribunals system demanded a reappraisal of the scope of judicial review. Parliament having refused to undertake it, the task of deciding the scope of the judicial review jurisdiction, and the extent of any restrictions fell to be performed by the courts. Accepting that any restrictions called for justification, he said: there is no principle more basic to our system of law than the maintenance of [the] 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. (paras 119 122) Having discussed the implications of the second appeals criteria, and experience of their use in the courts since 2000, he concluded: 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? (para 133) Finally, for completeness I note that all the justices expressed agreement with the corresponding reasoning of Lord Hope in the linked Scottish case of Eba v Advocate General [2012] 1 AC 710. Comment on Cart I have referred at some length to the judgments in Cart because they represented a major reappraisal of the approach of the supervisory functions of the High Court as respects specialist tribunals. The case has attracted some academic controversy (see the discussion in Joanna Bell, Rethinking the Story of Cart v Upper Tribunal and its implications for Administrative Law Oxford Journal of Legal Studies Vol 39 No 1 (2019) pp 74 99). For example, Professor Forsyth describes the reasoning of the court as pragmatic but not principled, adding: It may portend the abandonment of jurisdiction as the organising principle of administrative law and its replacement by the court allowing judicial review on discretionary basis when it is rational and proportionate to do so (which would be a revolutionary change) (Wade & Forsyth, pp 222 223) Certainly the judgments show how far the law has evolved since the somewhat technical debates in Anisminic itself. In particular, against the background of the Divisional Court judgment, they reaffirm in no uncertain terms the continuing strength of the fundamental presumption against ousting the supervisory role of the High Court over other adjudicative bodies, even those established by Parliament with apparently equivalent status and powers to those of the High Court. Instead such status (as adjudicative bodies rather than executive agencies) is to be respected and taken into account, not by exclusion of review, but by the careful regulation of the courts power to grant or refuse permission for judicial review. Furthermore, setting the principles by which that is to be done, in the absence of specific statutory provision, is a matter properly within the province of the appellate courts. I shall return below, under the second issue, to the question in what circumstances if any Parliament could exclude review altogether. There is no doubt that, if it is to be done, nothing less than the clearest wording will suffice (see De Smith para 1 027). As has been seen, that principle has been a central theme of the authorities since well before Anisminic, and was reaffirmed in emphatic terms by the Divisional Court in Cart (para 37 above). The principle can be seen as an application of the principle of legality as explained by Lord Hoffmann in R (Simms) v Secretary of State for the Home Department [2000] 2 AC 115 at p 131F: the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. The practical importance of that principle was vividly illustrated by the fate of perhaps the most extreme form of ouster clause promoted by government in modern times: clause 11 of the Asylum and Immigration (Treatment of Claimants etc) Bill 2003. Not content with an express prohibition (in proposed clause 108A(1) and (2)) of any form of supervisory jurisdiction or questioning by the courts of tribunal decisions, the drafter had gone on to spell out precisely the intended consequence: Subsections (1) and (2) (a) prevent a court, in particular, from entertaining proceedings to determine whether a purported determination, decision or action of the Tribunal was a nullity by reason of (i) lack of jurisdiction, (ii) irregularity, (iii) error of law, (iv) breach of natural justice, or (v) any other matter The clause attracted powerful objections from within and outside Parliament. The reaction of the Constitutional Affairs Committee was typical: An ouster clause as extensive as the one suggested in the Bill is without precedent. As a matter of constitutional principle some form of higher judicial oversight of lower Tribunals and executive decisions should be retained. (Second Report of the 2003 2004 Session para 708) In response to this pressure the clause was withdrawn. Other common law jurisdictions For completeness I should make clear that I have not overlooked the many authorities to which we have been helpfully referred from other common law jurisdictions, where similar issues have been discussed at the highest level, not always with the same results. All these decisions need to be read within the differing legal and constitutional arrangements of the jurisdictions concerned. For that reason, and without disrespect to the depth of learning and analysis there shown, I have not been persuaded that they add materially to the assistance available in the present context from the relevant domestic authorities and textbooks. For example, the High Court of Australia has arrived at similar results by a broadened concept of jurisdiction (see Boughey and Burton Crawford Reconsidering [Cart] and the rationale for jurisdictional error [2017] Public Law 1). Thus, in Kirk v Industrial Court of New South Wales [2010] HCA 1, the court held that an ouster clause expressed in apparently far reaching terms was ineffective to exclude review in relation to a particular error of law held to be jurisdictional. The court took an expansive view of the concept of jurisdiction, quoting the opinion expressed in an article by Professor Jaff (Judicial Review: Constitutional and Jurisdictional Fact (1957) 70 Harvard Law Review pp 953, 963): that denominating some questions as jurisdictional is almost entirely functional: it is used to validate review when review is felt to be necessary. If it is understood that the word jurisdiction is not a metaphysical absolute but simply expresses the gravity of the error, it would seem that this is a concept for which we must have a word and for which use of the hallowed word is justified. The court noted the line of House of Lords authorities under which the difficulties had been overcome by holding that any error of law by a decision maker rendered the decision ultra vires, commenting: But that is a step which this court has not taken (para 64). More generally the court observed that there can be no automatic transposition of principles from one jurisdiction to the other because the constitutional context is too different (para 66). The present appeal the first issue Against that background I can state my conclusions on the first issue relatively briefly. I remind myself of the terms of section 67(8): Except to such extent as the Secretary of State may by order otherwise provide, determinations, awards and other decisions of the Tribunal (including decisions as to whether they have jurisdiction) shall not be subject to appeal or be liable to be questioned in any court. The provision for the Secretary of State to provide a route of appeal adds nothing to the arguments, in my view. Not only has it not been exercised, but in any event a power entirely in the gift of the executive does nothing to weaken the case for ultimate control by the courts. As Ms Rose submits, our interpretation of the subsection, whether in its present form or as originally drafted in 1985, must be informed by the close parallel with the provision under review in Anisminic. At least by that date, following Lord Diplocks explanation in OReilly v Mackman (1983), the drafter can have had no serious doubt about the far reaching effect of that decision. A determination vitiated by any error of law, jurisdictional or not, was to be treated as no determination at all. It therefore fell outside the reference in the ouster clause to a determination of the commission. In other words, the reference to such a determination was to be read as a reference only to a legally valid determination. On the other side, Sir James Eadie submits that the task of interpretation is to be approached, by reference, not simply to a general presumption against ouster clauses of any kind, but rather to careful examination of the language of the provision, having regard to all aspects of the statutory scheme, and the status or the body in question, in order to discern the policy Parliament intended in the legislation (R (Woolas) v Parliamentary Election Court [2012] QB 1, para 54 per Thomas LJ). The special character and functions of the IPT, combined with the specific references to decisions relating to jurisdiction, show a clear intention to protect it from any form of review by the ordinary courts, even in cases to which the Anisminic principle would otherwise have applied. The main flaw in this argument, in my view, is that it treats the exercise as one of ordinary statutory interpretation, designed simply to discern the policy intention of Parliament, so downgrading the critical importance of the common law presumption against ouster. In that respect it echoes the unsuccessful argument of the Commission in Anisminic. Lord Reid did not dispute that the plain words of the subsection in that case were apt to exclude any form of challenge in the courts; but this ordinary meaning had to yield to the principle that such a clause will not protect a nullity and that there are no degrees of nullity (see paras 46 47 above). Following OReilly v Mackman the concept of nullity for these purposes is extended to any decision which is erroneous in law, and in that sense legally invalid. If one applies that approach to section 67(8), ignoring for the moment the words in parenthesis, the exclusion applies, not to all determinations, awards or other decisions whatever their status, but only to those which are legally valid in that sense. Thus, if the IPTs decision in the present case were found to have been reached on an erroneous interpretation of section 5 of the Intelligence Services Act 1994, those words would not save it from intervention by the courts. Does the specific reference to decisions as to whether they have jurisdiction make any difference? It would be odd if it did. As has been seen the relevant decision in this case raised a short point of law, turning principally on the reading of the word specified in section 5. On no ordinary view could it be regarded as a decision as to whether [the IPT] had jurisdiction, nor even as a decision as to jurisdiction under the apparently broader language of the 1985 Act. Although the arguments before us have proceeded on the basis that the change of wording made no material difference, the present wording seems designed if anything to emphasise that the exclusion is directed specifically at decisions about jurisdiction made by the IPT itself. If, however, those words are read in the language of Anisminic there is no problem. The exclusion applies only to a legally valid decision relating to jurisdiction. In the parenthesis, as in the remainder of the subsection, a decision which is vitiated by error of law, whether as to jurisdiction or otherwise, is no decision at all. While of course respect is due to the contrary view expressed obiter by Lord Brown in the A case (para 19 above), the point was not in issue and there was no argument on it. This does not necessarily mean that the words in parenthesis are otiose. As Ms Rose points out, at the time of the 1985 Act, the potential significance of the distinction between issues of fact and law, in the context of jurisdiction, had been highlighted by the House of Lords in R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74. Closer to home the decision of the IPT itself in C v The Police (see para 7 above) is an example of the kind of decision as to jurisdiction which might well involve issues of fact to which the exclusion could be said to apply without engaging the presumption against ouster. However, whether that is a likely interpretation of Parliaments intentions, or indeed whether or not the parenthesis is redundant, is in my view beside the point. Judicial review can only be excluded by the most clear and explicit words (Cart, para 31). If Parliament has failed to make its intention sufficiently clear, it is not for us to stretch the words used beyond their natural meaning. It may well be that the promoters of the 1985 Act thought that their formula would be enough to provide comprehensive protection from jurisdictional review of any kind. (If so, as Lord Wilson observes, they would have gained support from the distinguished author of the notes to the 1985 Current Law Statutes.) But one is entitled to ask why they did not use more explicit wording. With OReilly v Mackman in mind, the natural focus of attention would have been, not on potential challenges to the tribunals own decisions as to jurisdiction, but on jurisdictional or legal challenges to its substantive decisions generally. A more explicit formula might perhaps have anticipated the extreme wording of the bill presented in 2003 (para 101 above), excluding challenges to any determination or purported determination as a nullity by reason of lack of jurisdiction, error of law, or any other matter. The reason for not adopting that course may simply be that, as in 2003, it might not have been expected to survive Parliamentary scrutiny. So far as concerns the features of the IPT regime on which the Court of Appeal relied, I agree generally with Ms Roses responses (paras 24 25 above). I am unimpressed by arguments based on the security issues involved in many (though not all) of the IPTs cases. As this case shows, the tribunal itself is able to organise its procedures to ensure that a material point of law can be considered separately without threatening any security interests. The Administrative Court can also ensure that the grant of permission is limited to cases raising points of general significance, and that its proceedings are conducted without risk to security concerns. Further, in the case of the IPT, the potential for overlap with legal issues which may be considered by the ordinary courts (see paras 7 and 14 above) makes it all the more important that it is not able to develop its own local law without scope for further review. The second issue The second issue poses the question whether, and, if so, in accordance with what principles, Parliament may by statute oust the supervisory jurisdiction of the High Court to quash the decision of an inferior court or tribunal of limited statutory jurisdiction? The conclusion I have reached on the first issue makes it strictly unnecessary to go further in this appeal. However, as is apparent from the submissions under the second issue, the principles discussed in this judgment have important implications beyond the form of ouster clause under consideration in this case, on which some comment may be of value. The essence of Ms Roses submission can be simply stated. It is in short that a clause purporting to oust the supervisory role of the High Court to correct errors of law cannot properly be upheld because it would conflict with the rule of law, a principle which is as fundamental to our constitution as the principle of Parliamentary sovereignty. She emphasises that she does not in this appeal seek to question the principle of Parliamentary sovereignty itself, but rather to explain its boundaries, and why the laws of a sovereign Parliament require an independent interpreter of unlimited jurisdiction to ensure those laws are faithfully implemented. That independent arbiter must she says be a court of unlimited jurisdiction, such as the High Court in England and Wales, or the Court of Session in Scotland; and its decisions must in turn be capable of correction by the appellate courts. For the interested parties, Sir James Eadie does not question the need for an independent, authoritative interpreter of legislation, as a fundamental requirement of the rule of law (in his words); but he submits that the High Court is not the only body capable of performing that function. The IPT is of equivalent judicial status. Nor is there any absolute constitutional requirement for a right of appeal to the higher courts (see per Lord Brown in R (A), para 24). The balance between the correction of judicial error and the policy considerations in favour of finality is a judgement properly for the legislature. Both parties find support in the judgment of Laws LJ in Cart [2011] QB 120, paras 36 40 (a passage cited with approval by Lady Hale in the Supreme Court: [2012] 1 AC 663, para 30). Ms Rose relies on his affirmation of the need under the rule of law for statute law to be mediated by an authoritative source, the paradigm being the High Court as the principal constitutional guardian of the rule of law , and further that 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 (para 38) On the other side, Sir James relies on Laws LJs acceptance in Cart that Parliament could entrust that supervisory role to a body properly regarded as the alter ego of the High Court, such as in that case the Upper Tribunal (paras 39, 94). He also relies on Laws LJs acknowledgment in the same passage (at para 40) of Parliaments power to modify, sometimes radically the procedures by which statute law is mediated; exemplified by the many cases in which Parliament has, without objection, replaced the High Courts common law powers with time limited statutory powers of review (as seen in Ex p Ostler: para 80 above). Thus, he says, there is no constitutional principle to preclude such legislative choices about which such judicial body is to have the power to make final decisions, and subject to what limitations. As will be seen from these summaries, the area of disagreement even on the second issue is relatively narrow, but of considerable constitutional significance. It is useful to start by identifying those matters which appear not presently to be in dispute. First, both parties start from the premise that the relationship between Parliament and the courts is governed by accepted principles of the rule of law. Unsurprisingly, there is no challenge to the proposition (per Lord Dyson, quoted at para 96 above) that there is no principle more basic to our system of law than the maintenance of the rule of law itself and the constitutional protection afforded by judicial review. We are not therefore concerned with the difficult constitutional issues which might arise if Parliament were to pass legislation purporting to abrogate or derogate from those accepted principles: see eg Jackson v Attorney General [2005] UKHL 56; [2006] 1 AC 262, para 102 per Lord Steyn; and the succinct but masterly discussion of the competing views, academic and judicial, by Lord Bingham in The Rule of Law (2010): Chapter 12 The Rule of Law and the Sovereignty of Parliament. Further, as noted earlier in this judgment (para 33), Parliament itself has affirmed (most recently in the Senior Courts Act 1981) the long established common law powers of the High Court, as a court of unlimited jurisdiction, including its role in keeping inferior courts and tribunals within the law. Equally important, though of more recent origin, is the express statutory recognition of the rule of law in section 1 of the Constitutional Reform Act 2005. That provides: The rule of law This Act does not adversely affect the existing constitutional principle of the rule of (a) law This court has recognised the special status of such constitutional statutes, in particular their immunity from implied repeal: a status which (in the words of Laws LJ in another case) preserves the sovereignty of the legislature and the flexibility of our uncodified constitution. It accepts the relation between legislative supremacy and fundamental rights is not fixed or brittle: rather the courts (in interpreting statutes and, now, applying the Human Rights Act 1998) will pay more or less deference to the legislature, or other public decision maker, according to the subject in hand. (Thoburn v Sunderland City Council [2003] QB 151, paras 63 64, approved in Miller v Secretary of State for Exiting the European Union [2018] AC 61, para 66) In his introduction to The Rule of Law, Lord Bingham underlined the significance of section 1 of the 2005 Act to his general discussion of the concept. He attributed the absence of a statutory definition to the probable recognition by parliamentary counsel of the extreme difficulty of devising a pithy definition suitable for inclusion in a statute, and their wish instead to leave it to the judges to rule on what the term means if and when the question arises for decision, so enabling the concept to evolve over time in response to new views and situations (op cit pp 7 8). Whatever the explanation, Parliament having recognised this existing constitutional principle, and provided no definition, there is nothing controversial in the proposition that it is for the courts, and ultimately the Supreme Court (created by the same Act), to determine its content and limits. Secondly, it is not I believe in dispute, and indeed was clearly established by the time of Anisminic, that there are certain fundamental requirements of the rule of law which no form of ouster clause (however clear and explicit) could exclude from the supervision of the courts. The first relates to what I would call excess of jurisdiction: that is, a decision arrived at by a tribunal of limited jurisdiction through a process which goes outside those limits whether at the inception or at any stage of the proceedings. On this category there was no disagreement in Anisminic. It is sufficient to quote Lord Morris, who dissented on the main issue: The control cannot be exercised if there is some provision (such as a no certiorari clause) which prohibits removal to the High Court. But it is well settled that even such a clause is of no avail if the inferior tribunal acts without jurisdiction or exceeds the limit of its jurisdiction. (p 182C emphasis added) The conceptual basis for this rule is not far to seek. As Lord Wilberforce said in Anisminic (see para 36 above): What would be the purpose of defining by statute the limit of a tribunals powers if, by means of a clause inserted in the instrument of definition, those limits could safely be passed? The same approach can in my view be applied to what I would term abuse of jurisdiction: that is, a decision made within the limits prescribed by Parliament but in breach of basic principles governing the making of such decisions. In Anisminic, Lord Wilberforce spoke of certain fundamental assumptions, which without explicit restatement in every case, necessarily underlie the remission of power to decide such as the requirement that a decision must be made in accordance with principles of natural justice and good faith. The principle that failure to fulfil these assumptions may be equivalent to a departure from the remitted area must be taken to follow from the decision of this House in Ridge v Baldwin [1964] AC 40. (p 207E) It can be seen as a short step from excess of jurisdiction to abuse in this sense. To deny the effectiveness of an ouster clause is again a straightforward application of existing principles of the rule of law. Consistently with those principles, Parliament cannot entrust a statutory decision making process to a particular body, but then leave it free to disregard the essential requirements laid down by the rule of law for such a process to be effective. Clear and long established authority to that effect is to be found in R v Cheltenham Comrs (para 35 above, in relation to a decision affected by apparent bias); see also Attorney General v Ryan [1980] AC 718 PC at p 730 per Lord Diplock (decision in breach of natural justice). I note that in the present case Sales LJ treated section 67(8) as excluding review in certain cases of alleged unfairness, such as a decision of the IPT as to whether a member of the panel should recuse himself for appearance of bias, or as to what fairness or natural justice requires in relation to some aspect of its procedure. He commented: It is implicit in reading section 67(8) in this way that Parliament considered that the IPT can be trusted to make sensible decisions about matters of this kind and on questions of law which arise and need to be decided for the purpose of making determinations on claims or complaints made to it. There is nothing implausible about this. The quality of the membership of the IPT in terms of judicial expertise and independence is very high, as set out in Schedule 3 to RIPA, so it is a fair inference that Parliament did intend that this should be the position. (paras 37 38) Sir James Eadie cited this passage as an illustration of the courts proper function of interpreting such ouster provisions with regard to their statutory context. I do not read this passage as suggesting that the residual jurisdiction in respect of the rules of natural justice would be wholly excluded, however gross the breach. Nor did I understand Sir James to go so far. There are useful parallels with Laws LJs discussion (Cart, paras 96ff) of the exceptional circumstances in which a county court judgment may be reviewable, under the principles established in R (Sivasubramaniam) v Wandsworth County Court [2002] EWCA Civ 1738; [2003] 1 WLR 475. As Laws LJ said, complaints of unfairness in the course of a hearing are legion, and very various, and need to be approached with caution. Citing an earlier judgment of his own (R (Strickson) v Preston County Court [2007] EWCA Civ 1132, para 32) he drew a distinction between a case where the judge simply gets it wrong and one where the judicial process itself has been frustrated or corrupted, including substantial denial of the right to a fair hearing or in other words a wholly exceptional collapse of fair procedure: something as gross as actual bias on the part of the tribunal. In the Court of Appeal in the present case there appears to have been no reference to this part of Laws LJs judgment, nor to the kind of cases that he was discussing. However, I would be surprised if Sales LJ, even on his interpretation of section 67(8), would have treated it as excluding altogether the possibility of review in such extreme cases, however unlikely they might be in a tribunal of the distinction of the IPT. In accordance with established principles, the ultimate safeguard of judicial review remains essential if the rule of law is to be maintained. The special status of the IPT (like that of the Upper Tribunal) may be a reason for restricting the grant of permission for judicial review, but not for excluding it altogether. I turn to the area of dispute in the present appeal. We are concerned, not with excess or abuse of jurisdiction in any of the senses discussed above, but with a straightforward question of legal interpretation on a point directly within the apparent scope of the IPTs statutory remit. There is no disagreement as to the need for independent judicial interpretation of such a question. The dispute is as to the power of the legislature, consistently with the rule of law, to entrust that task to a judicial body such as the IPT, free from any possibility of review by the ordinary courts (including the appellate courts). In that respect in my view the discussion needs to move beyond the legal framework established by Anisminic, and the cases which followed it. Those decisions established the principle that, if a tribunal goes wrong on any such question of law, it exceeds its jurisdiction, so that the resulting decision is a nullity, and (subject to an effective ouster clause) liable to be so declared by the High Court. Although this principle is now unquestioned, its conceptual basis, 35 years on from OReilly v Mackman, remains obscure. Anisminic itself does not assist. As has been seen (paras 48 50), the majority judgments did not go as far as to treat simple mistake of law as a cause of nullity. For Lord Reid the mistake must have been such as to lead the tribunal to (fail) to deal with the question remitted to it, or to (decide) some question which was not remitted to it. For Lord Wilberforce the mistake must have related to the architecture of the provisions. They were both able, after elaborate analysis, to find that the Commissions mistake of law satisfied these tests. Whether the same could be said of the alleged error in the present case is at best doubtful. As already observed, the nullity analysis seems highly artificial, as applied to a legal decision such as that of the IPT in this case. It is also difficult to reconcile with the acceptance by the courts of the familiar statutory ouster of challenges to planning and similar decisions after a six week time limit (as in Smith v East Elloe, and Ostler: see para 81 above), leading to the anomaly that such a nullity is mysteriously validated at the end of that period. Nor has the expanded understanding of the Anisminic principle been consistently applied in other statutory contexts, as In re McC [1985] AC 528 illustrates (para 58 above). These examples show that the courts have not adopted a uniform approach, but have felt free to adapt or limit the scope and form of judicial review, so as to ensure respect on the one hand for the particular statutory context and the inferred intention of the legislature, and on the other for the fundamental principles of the rule of law, and to find an appropriate balance between the two. Even if this was not always the way in which the decisions were justified at the time, it may be seen as providing a sounder conceptual basis. Thus in the planning cases, it having been accepted that the statutory grounds cover all the traditional ground of judicial review, there is no difficulty in holding that the six week time limit provides a proportionate balance between effective judicial review, and the need for certainty to enable such decisions to be acted on with confidence. That more flexible approach to the relationship between the legislature and the courts is in my view wholly consistent with the modern constitutional settlement, as confirmed by the 2005 Act, and recognised by this court in Miller. Against that background, the judgments of this court in Cart point the way to an approach which (pace Professor Forsyth see para 98 above) is both pragmatic and principled. The critical step taken by this court in Cart was to confirm, what was perhaps implicit in some of the earlier cases, that it is ultimately for the courts, not the legislature, to determine the limits set by the rule of law to the power to exclude review. This proposition should be seen as based, not on such elusive concepts as jurisdiction (wide or narrow), ultra vires, or nullity, but rather as a natural application of the constitutional principle of the rule of law (as affirmed by section 1 of the 2005 Act), and as an essential counterpart to the power of Parliament to make law. The constitutional roles both of Parliament, as the maker of the law, and of the High Court, and ultimately of the appellate courts, as the guardians and interpreters of that law, are thus respected. The question in any case is the level of scrutiny required by the rule of law, set on a basis which as stated in Cart is both principled and proportionate (para 51 per Lady Hale), or in Lord Dysons words (para 133): what scope of judicial review is required to maintain the rule of law; it being a matter for the courts to determine what that scrutiny should be (para 102 per Lord Clarke). Some forms of ouster clause may readily satisfy such a test, as in the planning cases mentioned above. Similarly, in Racal, review limited to a High Court judge could reasonably have been justified as providing a sufficient and proportionate level of protection in the narrow statutory context of the grant of authority to inspect company books. In a different context a similarly balanced assessment could be used to support the outcome of the dissenting judgment in Pearlman. Here again judicial thinking has moved on, recognising that the division between fact and law is not always clear cut, and that a more pragmatic approach may sometimes be required (per Lord Hope, Jones v First tier Tribunal [2013] UKSC 19, para 16). The assessment of whether particular works involve a structural alteration or addition is substantially a factual issue, which can properly and economically be left to the trial judge at County Court level. An ouster provision designed to achieve that effect should be respected. On the other hand such a clause should not be treated as excluding the possibility of review in an exceptional case where the judge can be shown (in Geoffrey Lane LJs words) to have been embarking on some unauthorised or extraneous or irrelevant exercise. It is significant that this judgment (later approved by the Privy Council), like that of the Court of Appeal in Sivasubramaniam (para 125 above), implicitly recognised that even in a very restrictive statutory context the possibility of judicial review could not be excluded altogether in an exceptional case. Lord Sumption finds support for his contrary view in a part of Lady Hales judgment in Cart, where she said: as Lord Wilberforce pointed out (Anisminic 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 (para 40, emphasis added) I do not believe with respect that this passage bears the weight which Lord Sumption places on it. It comes as part of a section of the judgment (para 39) in which Lady Hale was explaining her reasons for not following the courts below by reintroducing the distinction between jurisdictional and other errors, which had been effectively abandoned in Anisminic. She was not addressing the present issue as to the circumstances in which review could be excluded altogether. Similarly, the relevant passage of Lord Wilberforces speech was not a considered treatment of the subject. It was no more than part of his introduction to the more detailed discussion, in which he was explaining the high legal standing of the Commission, and its consequences for his approach to interpretation. The full passage reads as follows: It is now well established that specialised tribunals may, depending on their nature and on the subject matter, have the power to decide questions of law, and the position may be reached, as the result of statutory provision, that even if they make what the courts might regard as decisions wrong in law, these are to stand. The Foreign Compensation Commission is certainly within this category; its functions are predominantly judicial; it is a permanent body, composed of lawyers, with a learned chairman. and there is every ground, having regard to the number and the complexity of the cases with which it must deal, for giving a wide measure of finality to its decisions. There is no reason for giving a restrictive interpretation to section 4(4) which provides that its determinations are not to be called in question in courts of law. (p 207B D, emphasis added) The italicised words to which Lady Hale referred did not purport to be a reasoned discussion. Further, they must be read in the context of the common assumption at the time (not dispelled until OReilly v Mackman) that the ouster clause in that case would be effective in respect of an error of law which was not in some sense jurisdictional. Returning to the present case, Sir James Eadie accepts the need for judicial review by a court or tribunal which is both independent and authoritative, but submits that the IPT is well suited to perform that role. The test of such independence and competence, he submits, is not the source of the powers of review, but rather the institutional features of the body created to exercise the power of review. In my view that is too narrow a focus. It pays no regard to the need to ensure that the law applied by the specialist tribunal is not developed in isolation (a local law), but conforms to the general law of the land. At least since the time of Blackstone (para 32 above), this has been a central part of the function of the High Court as constitutional guardian of the rule of law. It formed an important part of the reasoning of the Supreme Court in Cart. It applies with particular force in the present context where there is a significant overlap between jurisdictions of the IPT and of the ordinary courts. The present case is a good example. The legal issue decided by the IPT is not only one of general public importance, but also has possible implications for legal rights and remedies going beyond the scope of the IPTs remit. Consistent application of the rule of law requires such an issue to be susceptible in appropriate cases to review by ordinary courts. It may seem anomalous that the route to review by the ordinary courts is the grant of permission by the High Court, whose judges may arguably be less well equipped for this purpose than the judges of the IPT. But the same could have been said of the relationship between the Upper Tribunal and the High Court in Cart itself. Although Lady Hale acknowledged (para 56) that the review should in principle be by a judge with more experience or expertise, this would be met by the possibility that, if the case were channel(ed) into the legal system, it would enable where appropriate onward transmission to the appellate courts. The high status of the Upper Tribunal was a reason for a restricted approach to the grant of permission, but not for excluding it altogether. It also has to be remembered that until the 1979 reforms the review jurisdiction would have been exercised by the full Divisional Court of the Queens Bench, generally presided over by the Lord Chief Justice. In the modern system, the courts powers of case management can ensure that the matter comes before a court of suitable composition (as happened in this case). There is a distinct issue whether the rule of law requires such decisions to be susceptible to review also by the appellate courts. Unlike the original common law jurisdiction of the High Court, the jurisdictions of the Court of Appeal, and now of the Supreme Court, are the creation of statute. In Racal it was assumed that if the relevant statutes provided that the decision of the High Court was unappealable, it could not be corrected at all (see para 64 above). In R (A) Lord Brown accepted as correct the concession that there is no constitutional (or article 6) requirement for any right of appeal from an appropriate tribunal (para 23). As applied to article 6 of the Convention, which was in issue in R (A), that proposition may be uncontroversial, given that the ultimate arbiter of Convention law is in Strasbourg rather than the courts of this country. In the context of a domestic law challenge, it is more debatable. Arguably, following the logic of the reasoning in Cart, it may be thought implicit in the constitutional framework for the rule of law, as established by the Senior Courts Act 1981 and the Constitutional Reform Act 2005, that legal issues of general importance should be reviewable by the appellate courts; and that an ouster clause which purports to exclude that possibility cannot, consistently with the rule of law, be upheld. The only authority referred to by Lord Brown was Farley v Secretary of State for Work and Pensions (No 2) [2006] 1 WLR 1817. That case was concerned with a provision that, on an application by the Secretary of State to the magistrates court to enforce a maintenance assessment, the assessment itself was immune from challenge. The effectiveness of that ouster was upheld, but that depended on it being shown that there was another suitable means of challenging the assessment. The issue does not arise directly in the present context. If the decisions of the IPT are in principle susceptible to judicial review by the High Court, there is nothing in RIPA or any other statute to exclude onward appeal from the decisions of the High Court itself in the ordinary way. We have not heard detailed argument on this aspect, and I decline therefore to express a concluded view. In conclusion on the second issue, although it is not necessary to decide the point, I see a strong case for holding that, consistently with the rule of law, binding effect cannot be given to a clause which purports wholly to exclude the supervisory jurisdiction of the High Court to review a decision of an inferior court or tribunal, whether for excess or abuse of jurisdiction, or error of law. In all cases, regardless of the words used, it should remain ultimately a matter for the court to determine the extent to which such a clause should be upheld, having regard to its purpose and statutory context, and the nature and importance of the legal issue in question; and to determine the level of scrutiny required by the rule of law. Conclusion Accordingly, for the reasons given under the first issue, I would allow the appeal and hold, in answer to the preliminary issue, that the judicial review jurisdiction of the High Court is not excluded by section 67(8). Although that is the limit of the issue before the court, it will be clear from what I have said about the significance of the substantive legal issue, that this is a case where, if judicial review is available, permission should be granted. LORD LLOYD JONES: Two issues arise on this appeal. The first is the specific issue whether section 67(8) of the Regulation of Investigatory Powers Act 2000 (RIPA 2000) must be taken as purporting to oust the supervisory jurisdiction of the High Court to quash a judgment of the Investigatory Powers Tribunal (the IPT) for error of law. The second is the more general issue of whether, and, if so, in accordance with what principles, Parliament has the power by statute to oust the supervisory jurisdiction of the High Court to quash the decision of an inferior court or tribunal of limited statutory jurisdiction. On the first issue, I agree with the judgment of Lord Carnwath. In view of the importance of the issue, I add some brief comments of my own. The IPT was created by section 65(1) of RIPA 2000. Its jurisdiction and procedures are described in the judgment of Lord Carnwath and I simply draw attention to the following matters. Section 65(2) includes provision that it is the only appropriate tribunal for hearing proceedings falling within section 65(3) (which includes proceedings against any of the intelligence services) for actions incompatible with Convention rights under section 7 of the Human Rights Act 1998 (section 65(2)(a)). Section 67 provides that it shall be the duty of the Tribunal to hear and determine proceedings or to consider and determine complaints or references, brought before it under section 65(2). Section 67(2) provides that where the IPT hears any proceedings by virtue of section 65(2)(a), they shall apply the same principles for making their determination in those proceedings as would be applied by a court on an application for judicial review. At all material times the Investigatory Powers Tribunal Rules 2000 govern procedure before the IPT. It has the power to conduct proceedings in private and, in certain circumstances, in the absence of the complaining party. Rule 6(1) provides: The Tribunal shall carry out their functions in such a way as to secure that information is not disclosed to an extent, or in a manner, that is contrary to the public interest or prejudicial to national security, the prevention or detection of serious crime, the economic well being of the United Kingdom or the continued discharge of the functions of any of the intelligence services. Section 67(8) of RIPA 2000 provided at the relevant time: Except to such extent as the Secretary of State may by order otherwise provide, determinations, awards and other decisions of the Tribunal (including decisions as to whether they have jurisdiction) shall not be subject to appeal or be liable to be questioned in any court. An earlier version of this provision was section 7(8) of the Interception of Communications Act 1985 (the 1985 Act) which provided in relation to the Tribunal which it created and which was a predecessor of the IPT: The decisions of the Tribunal (including any decisions as to their jurisdiction) shall not be subject to appeal or liable to be questioned in any court. Considered with the benefit of hindsight, it can be seen that Anisminic initiated a process of fundamental change in the approach of the courts to judicial review which was to lead to their abandoning the distinction between errors of law going to jurisdiction and those that did not. Whereas previously an error of law was reviewable only if it was a jurisdictional error or if it was an error on the face of the record, all errors of law were to become reviewable. However, as Professor Feldman has observed (Anisminic Ltd v Foreign Compensation Commission [1968]: In Perspective, in Juss and Sunkin (eds) Landmark Cases in Public Law (Oxford, 2017) pp 92 93), this was not immediately apparent from the speeches in Anisminic [1969] 2 AC 147 itself. On the contrary, they maintained the distinction between jurisdictional and non jurisdictional errors of law and the decision turns on a particularly broad notion that the tribunal did not have the power to take certain decisions. Thus, for example, Lord Reid (at p 171B F) distinguished between those errors of law or procedure by a tribunal which render a decision a nullity and other cases where its decision is equally valid whether it is right or wrong subject only to the power of the court in certain circumstances to correct an error of law. Similarly, Lord Wilberforce (at p 210D E) considered that a tribunal may quite properly validly enter upon its task and in the course of carrying it out may make a decision which is invalid not merely erroneous and referred to a crucial distinction which the court has to make between doing something which is not in the tribunals area and doing something wrong within that area. By addressing whether the appellants had a successor in title and its nationality, the Foreign Compensation Commission had asked the wrong question and had taken account of irrelevant considerations with the result that its decision was a nullity. In the cases which followed Anisminic, however, the implications of the extremely broad approach to jurisdictional error of law taken in that case soon became apparent. If, as Anisminic suggests, addressing the wrong question renders the decision a nullity, it is possible to present almost any error of law as the result of such an error of approach. Different views on this subject were aired in the judgments in the Court of Appeal in Pearlman v Keepers and Governors of Harrow School [1979] QB 56. Lord Denning MR (at pp 69G 70E) considered that the resulting distinction between jurisdictional and non jurisdictional error was very fine, was being eroded and should be abandoned. In his view the correct approach was to hold that no court or tribunal has any jurisdiction to make an error of law on which the decision of the case depends. Geoffrey Lane LJ, however, (at p 76C), assuming for this purpose that the judge had made an error of law in concluding that the works did not constitute structural alterations, considered this an error within jurisdiction. It could not be said to be a determination the judge was not entitled to make. Although the approach of Geoffrey Lane LJ was approved by the Judicial Committee of the Privy Council in South East Asia Fire Bricks Sdn Bhd v Non Metallic Mineral Products Manufacturing Employees Union [1981] AC 363 and by the House of Lords in In re Racal Communications Ltd [1981] AC 374, Lord Dennings approach was to prevail. In Racal, Lord Diplock acknowledged the true significance of Anisminic, observing that the break through made by Anisminic had been 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 had for practical purposes been abolished. Accordingly, any error of law that could be shown to have been made by administrative tribunals or authorities in the course of reaching a 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 (at p 383C D). Two years later, in OReilly v Mackman [1983] 2 AC 237 Lord Diplock referred in similar vein to: the landmark decision of this House in Anisminic Ltd v Foreign Compensation Commission , and particularly the leading speech of Lord Reid, which has liberated English public law from the fetters that the courts had theretofore imposed upon themselves so far as determinations of inferior courts and statutory tribunals were concerned, by drawing esoteric distinctions between errors of law committed by such tribunals that went to their jurisdiction, and errors of law committed by them within their jurisdiction. The breakthrough that the Anisminic case made was the recognition by the majority of this House that if a tribunal whose jurisdiction was limited by statute or subordinate legislation mistook the law applicable to the facts as it had found them, it must have asked itself the wrong question, ie, one into which it was not empowered to inquire and so had no jurisdiction to determine. Its purported determination, not being a determination within the meaning of the empowering legislation, was accordingly a nullity. (at p 278D F) Thereafter, a series of decisions in the House of Lords established that there is a single category of errors of law, all of which render a decision ultra vires (R v Hull University Visitor, Ex p Page [1993] AC 682 per Lord Browne Wilkinson at p 701; Boddington v British Transport Police [1999] 2 AC 143, at p 158D E per Lord Irvine of Lairg LC; R (Lumba) v Secretary of State for the Home Department [2012] 1 AC 245 per Lord Dyson JSC at para 66). In R (Cart) v Upper Tribunal (Public Law Project intervening) [2012] 1 AC 663 Baroness Hale considered (at para 18) that in Anisminic the House of Lords effectively removed the distinction between error of law and excess of jurisdiction. It is, however, necessary to consider whether the Anisminic principle applies equally to decision making by both administrative and judicial bodies. Anisminic itself had been concerned with a decision of the Foreign Compensation Commission (FCC). It is significant that in that case Lord Wilberforce considered that the functions of the FCC were predominantly judicial, with the power to decide questions of law and he observed that there was every ground, having regard to the number and the complexity of the cases with which it must deal, for giving a wide measure of finality to its decisions. Accordingly, there was no reason for giving a restrictive interpretation to section 4(4) which provided that its determinations were not to be called into question in any court of law (at p 207C D). Nevertheless, he came to his conclusion on the basis that, as he put it, the decision was made outside the permitted field. By contrast, in Racal Lord Diplock observed (at p 382G) that in Anisminic the House of Lords had been concerned with decisions of administrative tribunals. He explained that Anisminic proceeds on the presumption that where Parliament confers on an administrative tribunal or authority, as distinct from a court of law, power to decide particular questions defined by the Act conferring the power, Parliament intends to confine that power to answering the question as it has been so defined (at pp 382H 383A). Furthermore, while Parliament could confer upon administrative tribunals or authorities power to decide questions of law as well as questions of fact and administrative policy, this requires clear words because there is a presumption that, where a decision making power is conferred on a tribunal or authority that is not a court of law, Parliament did not intend to do so (at p 383B C). He then proceeded to contrast the position of a court of law. But there is 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. (at p 383E G) In this way, Lord Diplock raised the possibility that the distinction between jurisdictional and non jurisdictional errors of law may survive in the case of decisions by judicial bodies and that, in the latter case, they may be immune from judicial review. (It should be noted that the decision that judicial review was not available in Racal is also explicable on Lord Diplocks alternative ground: because the body concerned was the High Court, not a court of limited jurisdiction, there was no room for error going to jurisdiction.) The decision of the House of Lords in R v Hull University Visitor, Ex p Page lends support to the approach followed by Lord Diplock in Racal. On the other hand, however, it should be noted that Lord Diplocks formulation of the Anisminic principle in OReilly v Mackman, two years after the decision in Racal, cited above, appears to be applicable without distinction to inferior courts and statutory tribunals. Furthermore, in R v Greater Manchester Coroner, Ex p Tal [1985] QB 67 Robert Goff LJ, delivering the judgment of the Divisional Court concluded (at p 81G 83B) that Lord Diplock in Racal had not intended to say that the Anisminic principle did not extend to inferior courts as well as tribunals. Goff LJ considered that, historically, inferior courts had always been subject to what was now called judicial review, although originally only in cases of error going to the jurisdiction and error of law within the jurisdiction which appeared on the face of the record: Since Anisminic, the requirement that an error of law within the jurisdiction must appear on the face of the record is now obsolete. It follows that today, in principle, inferior courts as well as tribunals are amenable to the supervisory jurisdiction of the High Court under sections 29 and 31 of the Supreme Court Act 1981. (at p 82D E) Referring to Lord Diplocks statement of the law in OReilly v Mackman, he concluded that inferior courts as opposed to tribunals are not excluded from the Anisminic principle. There is, moreover, no trace of such a distinction in the Supreme Courts consideration of the Upper Tribunal in Cart where there is no suggestion that courts of limited jurisdiction might have power to err as to law within their jurisdiction. This leads Professor Forsyth to observe: This suggests that all courts except presumably the High Court as a court of unlimited jurisdiction stray outside their jurisdiction when they make errors of law and are, in principle, subject to judicial review, save that the Supreme Court will determine, as it did in Cart, the actual extent of judicial review allowed. (Wade and Forsyth, Administrative Law, 11th ed, (Oxford: 2014), p 223.) The distinction between administrative tribunals and courts of law suggested by Lord Diplock in Racal is likely to be an arid one in the present context. Quite apart from the difficulties which are likely to be encountered in drawing such a distinction in individual cases, what matters here is whether a body is charged with performing a judicial function. If it is, then, as Laws LJ observed in the Divisional Court in Cart (at para 68), the true contrast is between the High Court on the one hand and courts of limited jurisdiction on the other. In the present case the IPT is undoubtedly charged with performing a judicial function. The issue for decision in this case must therefore be approached on the basis that the statute makes provision as to the status of decisions of a judicial body. I wholeheartedly endorse the exposition by Laws LJ in the Divisional Court in Cart (at paras 36 40) of the principle that it is a necessary corollary of the sovereignty of Parliament that there should exist an authoritative and independent body which can interpret and mediate legislation made by Parliament: The interpreters role cannot be filled by the legislature or the executive: for in that case they or either of them would be judge in their own cause, with the ills of arbitrary government which that would entail. Nor, generally can the interpreter be constituted by the public body which has to administer the relevant law: for in that case the decision makers would write their own laws. The interpreter must be impartial, independent both of the legislature and of the persons affected by the texts application, and authoritative accepted as the last word, subject only to any appeal. Only a court can fulfil the role. (at para 37) He goes on to explain that this is not a denial of legislative sovereignty but an affirmation and a condition of it. The paradigm for such an authoritative source is the High Court but it is not the only possible source: To offer the same guarantee of properly mediated law, any alternative source must amount to an alter ego of the High Court; (at para 39) and he identifies as examples the Courts Martial Appeal Court and the Restrictive Practices Court. In the same way Parliament may modify the procedures by which statute law is mediated, inter alia by the creation of new judicial bodies. It seems to me that central to the first issue in the present appeal is whether it was the intention of Parliament to do precisely this in the case of the IPT. I accept that in the case of a judicial body, by contrast with a purely administrative body, there is no presumption that Parliament did not intend to confer a power to decide questions of law as well as questions of fact. (See Racal per Lord Diplock at p 383E.) It is, rather, a matter of the interpretation of the legislation concerned in each case, unencumbered by such a presumption. Nevertheless, if the jurisdiction of the High Court is to be displaced or varied in some way, this is a matter of great importance and clear words will be required to achieve that result. Notwithstanding the disapproval by the House of Lords in Racal of the decision of the majority in the Court of Appeal in Pearlman, the following observation of Lord Denning MR (at p 70D) remains valid as a general proposition: The High Court has, and should have, jurisdiction to control the proceedings of inferior courts and tribunals by way of judicial review. When they go wrong in law, the High Court should have power to put them right. Not only in the instant case to do justice to the complainant. But also so as to secure that all courts and tribunals, when faced with the same point of law should decide it in the same way. This jurisdiction cannot be varied by implication. Once again, I turn to the judgment of Laws LJ in the Divisional Court in Cart where it was submitted that the judicial review jurisdiction of the High Court was impliedly excluded by provisions designating the Upper Tribunal and Special Immigration Appeals Commission respectively a superior court of record. 31. In my judgment the proposition that judicial review is excluded by sections 1(3) and 3(5) is a constitutional solecism. The supervisory jurisdiction (to the extent that it can be ousted at all: itself a question to which I will return) can only be ousted by the most clear and explicit words: see per Denning LJ in R v Medical Appeal Tribunal, Ex p Gilmore [1957] 1 QB 574, 583. The learning discloses a litany of failed attempts to exclude judicial review. In R (Sivasubramaniam) v Wandsworth County Court [2003] 1 WLR 475, after citing Lord Dennings dictum in Ex p Gilmore, Lord Phillips of Worth Matravers MR giving the judgment of the court continued, at para 44: All the authorities to which we have been referred indicate that this remains true today. The weight of authority makes it impossible to accept that the jurisdiction to subject a decision to judicial review can be removed by statutory implication. I need not multiply citations. A conspicuous case is the 32. seminal authority of Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 which abolished (for most purposes) the distinction between errors of law within and without jurisdiction, ushering in the modern constitutional rule that any error of law by a public decision maker is beyond his jurisdiction. Older instances include Cardiffe Bridge (1700) 1 Salk 146; Berkley v Bragge (1754) 1 Keny 80; R v Cheltenham Comrs (1841) 1 QB 467 and R v Bradlaugh, Ex p (1878) 3 QBD 509. More recent instances include R v Secretary of State for the Home Department, Ex p Al Fayed (No 1) [1998] 1 WLR 763, 771B 773C. Against this background it cannot be supposed that judicial review may be ousted by an implication, far less one contained in a formula which amounts in effect to a deeming provision. But that is the sum of the defendants case. It has been suggested, on the basis of Racal, that while section 67(8) does not exclude judicial review on other grounds such as a lack of subject matter jurisdiction or want of natural justice, that section excludes the jurisdiction of the High Court to entertain a challenge to the Tribunals decisions on the merits ie it excludes judicial review on grounds which would be tantamount to an appeal on the merits. It seems to me, however, that this places more weight on Racal than that authority can bear. It provides an insecure foundation because, as is demonstrated by the later decisions referred to above, at the date of Racal the legal principles in play were still evolving. As a result, it is not appropriate to allow the reasoning of Lord Diplock in Racal to influence the issue of interpretation in the present case. Turning to the issue of interpretation of section 67(8), I accept that the role of the IPT is judicial. As a result, there is no presumption in favour of restricting its field or of restricting its power to decide issues of law. However, if the jurisdiction of the High Court can be excluded at all, it requires the most clear and explicit words. As Lord Reid observed in Anisminic (at p 170C D): It is a well established principle that a provision ousting the ordinary jurisdiction of the court must be construed strictly meaning, I think, that, if such a provision is reasonably capable of having two meanings, that meaning shall be taken which preserves the ordinary jurisdiction of the court. Subject to one point, the wording of section 67(8) closely resembles that of section 4(4) of the Foreign Compensation Act 1950 which was the subject of Anisminic: 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. There, the House of Lords held that determination in section 4(4) did not include everything which purported to be a determination, but which was not in fact a determination because the Commission had misconstrued the statutory provision defining its jurisdiction. Reference has been made above to the way in which the law subsequently developed so as to remove the distinction between jurisdictional and non jurisdictional errors of law. By 1985, when section 7(8) of the Interception of Communications Act 1985 was enacted, it would have been entirely clear from the judgment of Lord Diplock in OReilly v Mackman that a determination founded on an error of law, whether it would previously have been characterised as jurisdictional or not, was not to be regarded as a determination at all. Having regard to this ground breaking development at common law, if it had been the intention of Parliament to exclude the jurisdiction of the High Court in respect of such decisions, it could be expected to have employed language which excluded jurisdiction not only in respect of determinations, awards and other decisions of the Tribunal but also in respect of purported determinations, awards and other decisions. It is a striking feature of section 67(8) and its predecessor that it failed to do so. The one point of distinction between section 4(4) of the Foreign Compensation Act 1950, on the one hand, and section 67(8) on the other, is the inclusion in the latter of the words in parenthesis (including decisions as to whether they have jurisdiction). To my mind, however, these words are not apt to extend the exclusion of the jurisdiction of the High Court to what purport to be decisions but in law are not to be so regarded. While it is now established that a decision based on an error of law is not to be regarded as a decision for this purpose, this notion does not easily fit within the description of a decision as to whether it has jurisdiction. If the IPT takes a decision which is founded on an error of law, it is not in any real sense taking a decision as to whether it has jurisdiction. If the intention was to exclude the jurisdiction of the High Court from purported decisions founded on an error of law, it was necessary to say so in clear terms. Clause 11 of the Asylum and Immigration (Treatment of Claimants etc) Bill 2003, to which Lord Carnwath refers at para 101 of his judgment, is a more recent example of an attempt to achieve the required degree of clarity if such a provision is to be effective. That provision, which was not enacted, can at least be said to have squarely confronted what it sought to achieve as required by the principle of legality. To my mind, section 67(8) does not satisfy this requirement. It may be that the explanation of the words in parenthesis is, as submitted by Ms Dinah Rose QC on behalf of the appellant, that they were intended to refer to determinations of precedent fact, a matter which was highly topical in 1985 following the decision of the House of Lords in R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74. On this basis the words in parenthesis in section 67(8) could be considered to have the effect that decisions of the IPT on issues of precedent fact going to its jurisdiction, but not issues of law, would be beyond the scope of review. However, it is not necessary to come to a concluded view on this point. For present purposes it is sufficient that the words employed in section 67(8) do not make provision with sufficient clarity for the exclusion of the review jurisdiction of the High Court in respect of errors of law. In coming to this conclusion, I have taken full account of the various features of the statutory scheme to which Sir James Eadie QC has drawn attention in support of the respondents case. He is correct in his submission that there is here a special allocation of judicial responsibility to the IPT in the national security context (section 67(3)(a)). Similarly, the IPTs rules and procedures create a bespoke system particularly well suited to the adjudication of controversial issues in the context of national security and directed to protecting the public interest. Furthermore, there can be no doubt as to the outstanding judicial quality of the members of the IPT. However, the exclusion of the review jurisdiction of the High Court in cases of error of law, if achievable at all, would require a provision of much greater clarity making abundantly clear that that was what it sought to achieve. For these reasons, I would allow the appeal against the decision of the Court of Appeal on the first issue. It is, accordingly, unnecessary to express any view on the second issue. LORD SUMPTION: (dissenting) (with whom Lord Reed agrees) The Investigatory Powers Tribunal is a specialist tribunal established in 2000 under the Regulation of Investigatory Powers Act 2000. Its principal functions are to determine proceedings against the intelligence services in respect of breaches of human rights and complaints about the interception of communications, in a way which enables these claims to be examined judicially without the risk of disclosure of secret matters. The Tribunal effectively replaced the Interception of Communications Act Tribunal, the Security Services Act Tribunal and the Intelligence Services Act Tribunal, which had been established under earlier enactments, as well as taking over the operation of the complaints provisions of Part III of the Police Act 1997. The appellant, Privacy International, complained that Government Communications Headquarters (GCHQ), one of the intelligence services, had carried out unlawful computer hacking. Computer hacking by the intelligence services requires the authority of a warrant of the Secretary of State under section 5 of the Intelligence Services Act 1994. The relevant activities of GCHQ were said to be unlawful on the ground that the warrants authorising them included what has been called (not entirely accurately) thematic warrants. A thematic warrant means a warrant authorising a class of activity in respect of a class of property. The appellants case before the Tribunal was that section 5(2) of the Intelligence Services Act 1994 empowered the Secretary of State to issue a warrant authorising specified acts in respect of specified property, and did not extend to thematic warrants. Alternatively, they submitted that if the Act did authorise such warrants, it was in that respect incompatible with articles 8 and 10 of the Human Rights Convention. The Tribunal held an open hearing to determine a number of preliminary issues of law. In a judgment issued on 12 February 2016, it held that thematic warrants were lawful. The appellant began proceedings for judicial review, seeking an order quashing that decision on the ground that the Tribunals construction of section 5(2) of the Act of 1994 was wrong in law. Section 67(8) and (9) of the Regulation of Investigatory Powers Act 2000 provide: (8) Except to such extent as the Secretary of State may by order otherwise provide, determinations, awards, orders and other decisions of the Tribunal (including decisions as to whether they have jurisdiction) shall not be subject to appeal or be liable to be questioned in any court. (9) It shall be the duty of the Secretary of State to secure that there is at all times an order under subsection (8) in force allowing for an appeal to a court against any exercise by the Tribunal of their jurisdiction under section 65(2)(c) or (d). The Secretary of State has not exercised his power to make exceptions from subsection (8) and the duty referred to in subsection (9) has not arisen because section 65(2)(c) and (d) has not been brought into force. The present position, therefore, is that subsection (8) stands unqualified. Section 242 of the Investigatory Powers Act 2016 has changed that by amending the Act of 2000 so as to introduce a new section 67A, allowing for appeals to the Court of Appeal in England and Wales or the Court of Session in Scotland. That section came into force on 31 December 2018, but will not apply to the Tribunals determination in these proceedings. The question at issue on this appeal is whether an application for judicial review on the ground that the Tribunal has decided an issue on a wrong view of the law, is available having regard to section 67(8) of the Act. The Divisional Court and the Court of Appeal have both held that it is not. I agree with them. I shall need to examine the law in some detail, but my reason can be shortly summarised. The effect of section 67(8) is simply to exclude the jurisdiction of the High Court to entertain a challenge to the Tribunals decisions on the merits. In other words, it excludes judicial review on grounds which would be tantamount to an appeal. The Investigatory Powers Tribunal acts as a court. Its function is to exercise powers of judicial review over (among others) the intelligence services, which would otherwise have been exercisable by the High Court, and to do so on the same basis as the High Court. The purpose of judicial review is to maintain the rule of law. But the rule of law is sufficiently vindicated by the judicial character of the Tribunal. It does not require a right of appeal from the decisions of a judicial body of this kind. For this reason section 67(8) is not an ouster of any jurisdiction which constitutional principle requires the High Court to have. Ouster clauses: origins Historically, the legal basis of judicial review was the concept of excess of jurisdiction. Bodies deriving their powers from statute or grant under the royal prerogative were amenable to certiorari in the Kings Bench if they exceeded the formal or implicit limits of the grant. Strictly speaking, excess of jurisdiction was confined to want of legal competence. But the limitations of this approach led the courts in some cases artificially to expand the concept of jurisdiction to cover varieties of public law wrong that did not readily fall within established categories. In particular, it was extended to broad categories of unreasonable conduct which the grant of the relevant power was assumed not to have authorised without specific words: for example, bad faith or disregard of the rules of natural justice. The artifice became unnecessary after the decision of the House of Lords in Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, in which the majority of the Appellate Committee put the grounds of judicial review on a broader basis and held that it extended generally to the exercise of justiciable public powers, including those which were not the subject of any statutory or other grant. But the historical roots of English public law have continued to influence its development, notably in the area of ouster clauses. It has been recognised since the 17th century that a statute can remove the supervisory jurisdiction of the courts over inferior tribunals and administrative bodies only by clear words. In Smith, Lluellyn v Comrs of Sewers (1669) 1 Mod 44, the Commissioners purported to exercise a penal power to impose fines which they did not have. Sir John Kelynge, Chief Justice of Kings Bench, declined to treat a statutory provision that orders of the Commissioners should be valid unless revoked by the Commissioners themselves as excluding the jurisdiction of the courts to issue certiorari. You cannot oust the jurisdiction of this court without particular words in Acts of Parliament, he said; there is no jurisdiction that is uncontrollable by this court. Lord Mansfield made the same point, nearly a century later, in R v Moreley (1760) 2 Bur 1041, when he said that the jurisdiction of this court is not to be taken away unless there be express words to take it away. In the course of the 19th century, this proposition was applied so as to treat a statutory exclusion of the High Courts power to issue certiorari to inferior tribunals as inapplicable to cases in which the tribunal had purported to exercise a power which it did not have, or a condition precedent to the existence of a power was absent, or the court was not properly constituted. In keeping with the jurisdictional approach to judicial review, these were all cases in which the court lacked legal competence, with the result that its acts were nullities. Cases of this kind give rise to a conceptual problem that goes beyond mere construction of the statute. Where a statute confers a power on an administrative or judicial body to do some class of acts, and ousts the jurisdiction of the High Court to review its acts, the threshold question is always whether it is a body or an act to which the statute applies. If not, then the ouster clause can have no application to it. As Cockburn CJ observed in Ex p Bradlaugh (1878) 3 QBD 509, 513, the section does not apply where the application for the certiorari is on the ground that the inferior tribunal has exceeded the limits of its jurisdiction. Otherwise, a body exercising limited statutory powers would be at liberty to determine what its limits were. As Mellor J pointed out in the same case, a metropolitan magistrate could make any order he pleased without question. If a superior court is precluded from deciding whether the statute applies to the relevant body or act, it would follow, as Lord Justice Clerk Boyle pointed out in the early Scottish case of Campbell v Young (1835) 13 S 535, that because a party says that he acts under the statute, he is to do as he pleases. His description of that suggestion as monstrous would be adopted by any modern public lawyer. Implicit in this approach was a distinction between excesses of jurisdiction ascertained at the point where a public body embarks on the relevant function, and errors of fact or law committed in the course exercising it; and a related distinction between errors of law or fact going to the decision makers legal competence, and errors within competence. Lord Coleridge CJ expressed the orthodoxy of his time when he observed in R v Justices of the Central Criminal Court (1886) 17 QBD 598, 602, that where a Court has jurisdiction to entertain an application, it does not lose its jurisdiction by coming to a wrong conclusion, whether it is wrong in point of law or of fact. The only power to quash a decision within jurisdiction was the ancient and sui generis power of the Kings Bench to quash for error of law on the face of the record in a case where the error was disclosed in decision makers reasons, if he gave any. Anisminic v Foreign Compensation Commission [1969] 2 AC 147 The Foreign Compensation Commission was a statutory body created by the Foreign Compensation Act 1950. The Act empowered Her Majesty in Council to make provision for the Commission to distribute money received by the Crown under the royal prerogative from foreign governments under international law, by way of compensation for losses suffered by British subjects in the territory of those governments. Section 4(4) of the Act provided: 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. An Order in Council provided for the Commission to distribute compensation payments made by the Egyptian government after the Suez crisis. It was held to have misconstrued the provisions of the order governing Anisminics eligibility, and thus erroneously treated Anisminics claim as ineligible. The decision is a landmark in the development of English public law, for three reasons. First, it reaffirmed the principle, which had been well established since the 17th century, that a statutory ouster clause such as section 4(4) of the Foreign Compensation Act 1950, if sufficiently clearly expressed, was effective to oust judicial review of any decision that was not a nullity. But it was not effective to prevent the courts from quashing a decision which was in law a nullity, ie one which, in Lord Reids words, does not exist as a determination, unless the clause was framed in terms which were incapable of meaning anything else. Secondly, it established that a tribunal acts without jurisdiction not only where it lacks legal competence to enter upon the inquiry in question at all, but also where although the tribunal had jurisdiction to enter upon the inquiry, it has done or failed to do something in the course of the inquiry which is of such a nature that its decision is a nullity: per Lord Reid at p 171. Thirdly, the acts or omissions which served to make the decision a nullity include errors of law if they led the tribunal to conduct an enquiry which differed from the one that it was empowered to conduct, for example by making its decision dependent on the answer to a legally irrelevant question. This was what the Commission was found to have done in Anisminics case. It had dismissed Anisminics claim because it considered that those who claimed to have lost their property in Egypt as a result of acts of the Egyptian state during the Suez crisis had to show that not only they but their successors in title were British. Since Anisminic had been forced to sell their Egyptian assets at an undervalue to an Egyptian company, its claim had been rejected. In the view of the Appellate Committee, the status of successors in title was, on the true construction of the Order in Council, irrelevant. Lord Reid, at p 171, gave some illustrations of errors on the part of the tribunal which, without going to legal competence in its strict sense, would nevertheless invalidate the decision: It has sometimes been said that it is only where a tribunal acts without jurisdiction that its decision is a nullity. But in such cases the word jurisdiction has been used in a very wide sense, and I have come to the conclusion that it is better not to use the term except in the narrow and original sense of the tribunal being entitled to enter on the inquiry in question. But there are many cases where, although the tribunal had jurisdiction to enter on the inquiry, it has done or failed to do something in the course of the inquiry which is of such a nature that its decision is a nullity. It may have failed in the course of the inquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. 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. I do not intend this list to be exhaustive. But if it decides a question remitted to it for decision without committing any of these errors it is as much entitled to decide that question wrongly as it is to decide it rightly. I understand that some confusion has been caused by my having said in R v Governor of Brixton Prison, Ex p Armah [1968] AC 192, 234 that if a tribunal has jurisdiction to go right it has jurisdiction to go wrong. So it has, if one uses jurisdiction in the narrow original sense. If it is entitled to enter onthe inquiry and does not do any of those things which I have mentioned in the course of the proceedings, then its decision is equally valid whether it is right or wrong subject only to the power of the court in certain circumstances to correct an error of law The question what had been remitted to the Commission by Parliament depended on the construction of its enabling Act and of Orders in Council made pursuant to it. So, turning to Anisminics complaint, Lord Reid concluded, at p 174: If, on a true construction of the Order, a claimant who is an original owner does not have to prove anything about successors in title, then the commission made an inquiry which the Order did not empower them to make, and they based their decision on a matter which they had no right to take into account. If one uses the word jurisdiction in its wider sense, they went beyond their jurisdiction in considering this matter. It cannot be for the commission to determine the limits of its powers if they reach a wrong conclusion as to the width of their powers, the court must be able to correct that not because the tribunal has made an error of law, but because as a result of making an error of law they have dealt with and based their decision on a matter with which, on a true construction of their powers, they had no right to deal. If they base their decision on some matter which is not prescribed for their adjudication, they are doing something which they have no right to do and, if the view which I expressed earlier is right, their decision is a nullity. Lord Morris of Borth y Gest was at one with his colleagues on the test to be applied, although he dissented on its application to the facts. At p 182, he expressed it in this way: In all cases similar to the present one it becomes necessary, therefore, to ascertain what was the question submitted for the determination of a tribunal. What were its terms of reference? What was its remit? What were the questions left to it or sent to it for its decision? What were the limits of its duties and Lord Pearce made the same distinction between errors of law which led the tribunal to address questions which it was not within their powers to determine, and other errors. At p 195, he observed: powers? Were there any conditions precedent which had to be satisfied before its functions began? If there were, was it or was it not left to the tribunal itself to decide whether or not the conditions precedent were satisfied? If Parliament has enacted that provided a certain situation exists then a tribunal may have certain powers, it is clear that the tribunal will not have those powers unless the situation exists. The decided cases illustrate the infinite variety of the situations which may exist and the variations of statutory wording which have called for consideration. Most of the cases depend, therefore, upon an examination of their own particular facts and of particular sets of words. It is, however, abundantly clear that questions of law as well as of fact can be remitted for the determination of a tribunal. Lack of jurisdiction may arise in various ways. There may be an absence of those formalities or things which are conditions precedent to the tribunal having any jurisdiction to embark on an inquiry. Or the tribunal may at the end make an order that it has no jurisdiction to make. Or in the intervening stage while engaged on a proper inquiry the tribunal may depart from the rules of natural justice; or it may ask itself the wrong questions; or it may take into account matters which it was not directed to take into account. Thereby it would step outside its jurisdiction. It would turn its inquiry into something not directed by Parliament and fail to make the inquiry whichParliament did direct. Any of these things would cause its purported decision to be a nullity The courts have, however, always been careful to distinguish their intervention whether on excess of jurisdiction or error of law from an appellate function. If the tribunal is intended on a true construction of the Act to inquire into and finally decide questions within a certain area, the courts supervisory duty is to see that it makes the authorised inquiry according to natural justice and arrives at a decision whether right or wrong. They will intervene if the tribunal asks itself the wrong questions (that is, questions other than those which Parliament directed it to ask itself). But if it directs itself to the right inquiry, asking the right questions, they will not intervene merely because it has or may have come to the wrong answer, provided that this is an answer that lies within its jurisdiction. Common to all the speeches in Anisminic was the view that the extent to which the decision makers errors amount to an excess of his jurisdiction depended on the breadth of the power committed to it by the statute as a matter of construction. Lord Wilberforce agreed but proposed, at p 207, a more nuanced analysis of the effect of ouster clauses, which eschewed the language of jurisdiction and nullity with its binary test, and is perhaps more in keeping with the modern laws aversion to rigid categorisation: It is now well established that specialised tribunals may, depending on their nature and on the subject matter, have the power to decide questions of law. and the position may be reached, as the result of statutory provision, that even if they make what the courts might regard as decisions wrong in law, these are to stand. The Foreign Compensation Commission is certainly within this category; its functions are predominantly judicial; it is a permanent body, composed of lawyers, with a learned chairman, and there is every ground having regard to the number and the complexity of the cases with which it must deal, for giving a wide measure of finality to its decisions. There is no reason for giving a restrictive interpretation to section 4(4) which provides that its determinations are not to be called in question in courts of law. In every case, whatever the character of a tribunal, however wide the range of questions remitted to it, however great the permissible margin of mistake, the essential point remains that the tribunal has a derived authority, derived, that is, from statute: at some point, and to be found from a consideration of the legislation, the field within which it operates is marked out and limited. There is always an area, narrow or wide, which is the tribunals area; a residual area, wide or narrow, in which the legislature has previously expressed its will and into which the tribunal may not enter. Equally, though this is not something that arises in the present case, there are certain fundamental assumptions, which without explicit restatement in every case, necessarily underlie the remission of power to decide such as (I do not attempt more than a general reference, since the strength and shade of these matters will depend upon the nature of the tribunal and the kind of question it has to decide) the requirement that a decision must be made in accordance with principles of natural justice and good faith. The principle that failure to fulfil these assumptions may be equivalent to a departure from the remitted area must be taken to follow from the decision of this House in Ridge v Baldwin [1964] AC 40. Although, in theory perhaps, it may be possible for Parliament to set up a tribunal which has full and autonomous powers to fix its own area of operation, that has, so far, not been done in this country. The question what is the tribunals proper area is one which it has always been permissible to ask and to answer, and it must follow that examination of its extent is not precluded by a clause conferring conclusiveness, finality, or unquestionability upon its decisions. These clauses in their nature can only relate to decisions given within the field of operation entrusted to the tribunal. They may, according to the width and emphasis of their formulation, help to ascertain the extent of that field, to narrow it or to enlarge it, but unless one is to deny the statutory origin of the tribunal and of its powers, they cannot preclude examination of that extent. It is sometimes said, the argument was presented in these terms, that the preclusive clause does not operate on decisions outside the permitted field because they are a nullity. There are dangers in the use of this word if it draws with it the difficult distinction between what is void and what is voidable, and I certainly do not wish to be taken to recognise that this distinction exists or to analyse it if it does. But it may be convenient so long as it is used to describe a decision made outside the permitted field, in other words, as a word of description rather than as in itself a touchstone. He added, at pp 209 210: The extent of the interpretatory power conferred upon the tribunal may sometimes be difficult to ascertain and argument may be possible whether this or that question of construction has been left to the tribunal, that is within the tribunals field, or whether, because it pertains to the delimitation of the tribunals area by the legislature, it is reserved for decision by the courts. Sometimes, it will be possible to form a conclusion from the form and subject matter of the legislation. I think that we have reached a stage in our administrative law when we can view this question quite objectively, without any necessary predisposition towards one that questions of law or questions of construction, are necessarily for the courts. In the kind of case I have mentioned there is no need to make this assumption. In another type of case it may be apparent that Parliament is itself directly and closely concerned with the definition and delimitation of certain matters of comparative detail and has marked by its language the intention that these shall accurately be observed. Lord Wilberforce considered that the Commissions error of law lay outside the permitted field assigned to it by Parliament. The reason, in summary, was that the Act in terms required the Commission to act in accordance with rules governing limitations laid down in the Order in Council regarding the definition of proper claimants and the matters to be established in support of their claims: see p 211F H. Implicit in the decision of the House in Anisminic was that invalidity for error of law no longer depended on the error being patent on the face of the record. But it will be apparent from all of the speeches that the Appellate Committee did not reject in principle the distinction between errors of law going to jurisdiction and errors of law within jurisdiction. Instead, they broadened the concept of jurisdiction to embrace not just legal competence but also legal relevance, ie addressing the right questions. All of them recognised that there would be some errors of law which did not go to jurisdiction even in this enlarged sense, and which would not therefore invalidate the decision. However, dicta of high authority in subsequent cases have consistently interpreted the decision as authority for an approach to errors of law which is both broader and more absolute than the speeches themselves warrant. In particular, they suggested that all errors of law were to be regarded as beyond jurisdiction. Thus in OReilly v Mackman [1983] 2 AC 237, 278, Lord Diplock regarded Anisminic as authority for the proposition that if a tribunal whose jurisdiction was limited by statute or subordinate legislation mistook the law applicable to the facts as it had found them, it must have asked itself the wrong question, ie one into which it was not empowered to inquire and so had no jurisdiction to determine. In R v Hull University Visitor, Ex p Page [1993] AC 682, 701 702, Lord Browne Wilkinson, endorsing this summary, took it that thenceforth, 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: a misdirection in law in making the decision therefore rendered the decision ultra vires. In R (Lumba) v Secretary of State for the Home Department (JUSTICE intervening) [2012] 1 AC 245, para 66, Lord Dyson considered that it established that there was a single category of errors of law, all of which rendered a decision ultra vires. Finally, in R (Cart) v Upper Tribunal [2012] 1 AC 663, para 18, Baroness Hale observed that in Anisminic the House of Lords effectively removed the distinction between error of law and excess of jurisdiction. Although none of these statements were part of the ratio of judgments in which they appeared, they have been followed by the courts for many years and have been assumed to state the modern law by Parliamentary draftsmen including (as I shall show) the draftsman of the Regulation of Investigatory Powers Act 2000. In my opinion, it is now too late to revert to the subtler distinctions in the speeches in Anisminic, even if it were thought desirable to do so. However, the speeches in Anisminic remain authority for the proposition, which may be thought self evident, that the extent of a tribunals jurisdiction depends on the construction of its enabling Act or, in Lord Wilberforces words, on the breadth of its permitted field. Errors of law by judicial bodies The categorisation of errors of law as excesses of jurisdiction is the result of the unsystematic way in which English public law has developed over the past three centuries. Its effect is to create what is nominally a power of review, but is in substance a right of appeal on points of law going to the merits. The implications of this are very different, according as the decision under review was made by an administrative or executive body on the one hand or a judicial one on the other. A right of access to a court or similar judicial body to review the lawfulness of administrative or executive acts is an essential part of the rule of law. But the rule of law does not require a right of appeal from such a body or a right to call for a review of its decisions. In England, appellate jurisdiction is wholly statutory, and may be absent, restricted or wholly excluded. This is well established as a matter of both law and legislative practice: see R (A) v Director of Establishments of the Security Service [2010] 2 AC 1, para 24 (Lord Brown of Eaton under Heywood). It has also been persistently recognised in the case law of the European Court of Human Rights: see Bochan v Ukraine (No 2) (2015) 61 EHRR 14, paras 44 45. For this reason the development since Anisminic of a legal principle which made excesses of jurisdiction of all errors of law has been accompanied by a recognition that the reasons for strictly construing ouster clauses may be more or less powerful, depending on the nature of the decision and the decision maker. In particular, the principle may have to be adapted to the decisions of judicial bodies. This is because a judicial body, depending on its status and functions, is more likely to have a wider permitted field, extending to the conclusive resolution of issues of law (or indeed fact) and including an unrestricted interpretative power. The analysis starts with the speech of Lord Wilberforce in Anisminic itself, from which I have already quoted. Lord Wilberforce regarded the Foreign Compensation Commission as a body whose functions were predominantly judicial (p 207C), from which it followed that there was no reason to give a restricted interpretation to section 4(4) of the Foreign Compensation Act 1950. That, however, was not the end of the matter. In his view, the effectiveness of the ouster clause depended on the extent of the interpretatory power which, as a matter of construction, Parliament must be taken to have conferred on the decision maker. Only errors of law lying outside what he called the permitted field were reviewable in the face of an ouster clause such as section 4(4): see pp 208A B, 209F G, 210C E. As I have pointed out, Lord Wilberforces view that the Foreign Compensation Commissions error of law lay outside the permitted field was based on a careful analysis of the interpretative power conferred on it by its enabling Act, which was limited to applying the Order in Council according to its true legal meaning. In South East Asia Fire Bricks Sdn Bhd v Non Metallic Mineral Products Manufacturing Employees Union [1981] AC 363, the Privy Council had to consider whether the decision of the Industrial Court of Malaysia, a judicial body, could be reviewed in the High Court on the ground of error of law on the face of the record. The statute from which the Industrial Court derived its jurisdiction provided that its awards shall be final and conclusive, and no award shall be challenged, appealed against, reviewed, quashed or called in question in any court of law. The Board held the judicial review did not lie. Lord Fraser of Tullybelton, delivering the advice of the Privy Council, distinguished Anisminic, at p 370, on the ground that if the inferior tribunal has merely made an error of law which does not affect its jurisdiction, and if its decision is not a nullity for some reason such as breach of the rules of natural justice, then the ouster will be effective. The Board did not expressly address the distinction between judicial and other decision makers, but since the judicial character of the Industrial Court was the only distinction between the case before them and Anisminic, that must have been the basis of the decision. Some light is thrown on this question by the speeches in In re Racal Communications [1981] AC 374, which addressed this very question, and were delivered a week later by an Appellate Committee comprising two of the same law lords, Lord Edmund Davies and Lord Keith. In re Racal Communications arose out of an application to the High Court under section 441 of the Companies Act 1948 to inspect the books of a company. Section 441(3) provided that the decision of the High Court on such an application shall not be appealable. The Court of Appeal had received the appeal on the ground that the ouster of its appellate jurisdiction was ineffective, relying on the decision in Anisminic. The House of Lords held that the Court of Appeal had been wrong to receive it in the face of the statutory exclusion of appeals. The leading speech was delivered by Lord Diplock. Having concluded that the House was bound by the statutory exclusion of appeals, he then turned to: the question of the availability of judicial review instead of appeal as a means of correcting mistakes of law made by a court of law as distinct from an administrative tribunal or other administrative authority, however described, when it is exercising quasi judicial functions. It is important to appreciate that Lord Diplock gave two independent reasons for holding that judicial review was not available. The first and principal reason was that the presumption against a statutory ouster of judicial review did not apply to the decisions of a judicial body. The second was that it could not in any event apply to decisions of the High Court. It is with the first reason that we are presently concerned. Unlike Lord Wilberforce, who had regarded the Foreign Compensation Commission as a body exercising judicial functions, Lord Diplock considered it to be an administrative tribunal. He distinguished (pp 382 383) between the two on the basis that the presumption against the ouster of judicial review depended on the scope of the decision makers functions, as a matter of construction of its enabling statute. The essential question was therefore the same as the one posed by Lord Wilberforce in Anisminic. Has the enabling Act conferred on the tribunal in question a general power to decide the questions in issue, or is its power limited to answering the questions defined in the Act? This did not mean that Anisminic had no application to the decisions of judicial bodies, only that the question of construction was not burdened by the same presumptions in their case. The law, he said: proceeds on the presumption that where Parliament confers on an administrative tribunal or authority, as distinct from a court of law, power to decide particular questions defined by the Act conferring the power, Parliament intends to confine that power to answering the question as it has been so defined. By comparison, there is 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 [1969] 2 AC 147; 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. Lord Diplocks reasoning on his first point does not depend on the fact that the decision sought to be reviewed was a decision of the High Court, and thus of a court of coordinate jurisdiction. Nor can it be brushed aside as depending on a distinction between a court and a judicial body of some other kind. The relevant distinction was between a judicial and an administrative body, Parliament being in principle more likely to confer on a judicial body a power to decide wider questions of law. Of particular interest in this context are the grounds on which the Appellate Committee overruled the decision of the Court of Appeal in Pearlman v Keepers and Governors of Harrow School [1979] 1 QB 56. In that case, the Court of Appeal, by a majority, had quashed a decision of an inferior court, namely the county court, on an application under the Housing Act 1974 to adjust the rateable value of tenanted premises, holding that the judge had erroneously construed the adjustment provisions of the Act. It had held, citing Anisminic in support, that a provision that the county courts decision should be final and conclusive was ineffective to oust judicial review. Lord Diplock (p 384) approved the dissenting judgment of Geoffrey Lane LJ, in which he had said (p 76): I am, I fear, unable to see how that determination, assuming it to be an erroneous determination, can properly be said to be a determination which he was not entitled to make. The judge is considering the words in the Schedule which he ought to consider. He is not embarking on some unauthorised or extraneous or irrelevant exercise. All he has done is to come to what appears to this court to be a wrong conclusion upon a difficult question. It seems to me that, if this judge is acting outside his jurisdiction, so then is every judge who comes to a wrong decision on a point of law. Accordingly, I take the view that no form of certiorari is available to the tenant. This analysis represents the majority view of the Appellate Committee. Lord Edmund Davies appears to have agreed with Lord Diplock on both of his grounds. Critically for present purposes, he agreed that Pearlman was wrongly decided and expressly endorsed the dissenting judgment of Geoffrey Lane LJ, from which I have cited. Lord Keith agreed generally with Lord Diplock. Only Lord Salmon and Lord Scarman may be thought to have decided the matter on narrower grounds. Lord Salmon decided it solely on the second of Lord Diplocks two grounds, and Lord Scarman decided it only on the question whether the decision was appealable without considering the availability of judicial review. I decline to accept that these judgments can be explained away on the ground that a tribunal is to be distinguished from a court. The Appellate Committee was concerned with a court, but the distinctive feature of a court which made its observations pertinent was that it was a judicial body. Almost all tribunals are obliged in some respects to act judicially, for example in acting fairly and without bias. But not all tribunals are judicial bodies. What matters is not the nomenclature of the decision maker but its statutory functions. On an issue which is agreed on all sides to turn on the requirements of the rule of law, it would in my view be absurd to suggest that there is no distinction to be made between a statute providing for an administrative authoritys decisions to be conclusive and a statute making corresponding provision for the decisions of a judicial body. As I shall explain, the Investigatory Powers Tribunal is indistinguishable from a court in every respect that matters to the present issue. More recently, in Lee v Ashers Baking Co Ltd [2018] 3 WLR 94, Racal was considered and applied by this court. The issue was whether a statutory provision making the decision of the Court of Appeal of Northern Ireland final, precluded a further appeal when the Court of Appeal had failed to refer a devolution issue to the Supreme Court as it had been bound to do. That question was answered by Lord Mance (with whom the rest of this court agreed). His judgment is relevant for two reasons. First, at para 86, he adopted Lord Diplocks analysis, in particular his distinction between the presumptions to be applied to an ouster clause where the decision is that of a judicial body and those which apply where the decision is that of administrative tribunal. Secondly, he held that as a matter of construction the same language could in principle be sufficient to exclude an appeal on the merits but not an appeal on the ground that the court below had committed a procedural error or failed to perform the function with which Parliament had charged it. At para 88, he said: The Court of Appeal in Northern Ireland 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 63 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). R (Cart) v Upper Tribunal [2011] QB 120 and [2012] 1 AC 663 In view of the weight placed on this decision by the appellants, it is necessary to analyse the judgments with some care, although it must be borne in mind throughout that it is not direct authority on the question before us because it was not a case about ouster clauses. There was no ouster clause in the relevant statutes. In the Divisional Court the issues were (i) whether the mere designation of a judicial body (in that case the Special Immigration Appeals Tribunal and the Upper Tribunal) as a superior court of record took it outside the scope of the High Courts review jurisdiction even in the absence of an ouster; and (ii) whether the scheme of the statutes from which these bodies derived their powers was inconsistent with its decisions being reviewable in the High Court even in the absence of an ouster. In an impressive judgment, Laws LJ, delivering the judgment of the Divisional Court held that the answer to (i) was No and the answer to (ii) was Yes. On issue (i), he held that the special status of the High Court as exercising a jurisdiction to keep other bodies within their powers meant that a superior court of record other than the High Court was not, simply by virtue of that status, immune from the review jurisdiction of the High Court. For present purposes, however, what matters is Laws LJs treatment of issue (ii). He accepted that some courts and tribunals might be immune from the High Courts review jurisdiction. He expressed the basic principle as follows: 37. The principle I have suggested has its genesis in the self evident fact that legislation consists in texts. Often and in every case of dispute or difficulty the texts cannot speak for themselves. Unless their meaning is mediated to the public, they are only letters on a page. They have to be interpreted. The interpreters role cannot be filled by the legislature or the executive: for in that case they or either of them would be judge in their own cause, with the ills of arbitrary government which that would entail. Nor, generally, can the interpreter be constituted by the public body which has to administer the relevant law: for in that case the decision makers would write their own laws. The interpreter must be impartial, independent both of the legislature and of the persons affected by the texts application, and authoritative accepted as the last word, subject only to any appeal. Only a court can fulfil the role. 38. If the meaning of statutory text is not controlled by such a judicial authority, it would at length be degraded to nothing more than a matter of opinion. Its scope and content would become muddied and unclear. Public bodies would not, by means of the judicial review jurisdiction, be kept within the confines of their powers prescribed by statute. The very effectiveness of statute law, Parliaments law, requires that none of these things happen. Accordingly, as it seems to me, 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: as is the old rule that Parliament cannot bind itself. The old rule means that successive Parliaments are always free to make what laws they choose; that is one condition of Parliaments sovereignty. The requirement of an authoritative judicial source for the interpretation of law means that Parliaments statutes are always effective; that is another. 39. As I have said, the paradigm for such an authoritative source is the High Court, which is independent of the legislature, the executive, and any other decision makers acting under the law; and is the principal constitutional guardian of the rule of law. In section IV(2)(a) below I discuss the historic primacy of the High Courts predecessor, the Court of Kings Bench. To offer the same guarantee of properly mediated law, any alternative source must amount to an alter ego of the High Court; and indeed there are instances where the authoritative source is another court, such as the Courts Martial Appeal Court and the Restrictive Practices Court: see the reference, at para 71, below to R v Cripps, Ex p Muldoon [1984] QB 68. But the general principle is 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. Turning to the position of the SIAC and the Upper Tribunal, he observed: 78. The answer to these questions requires a closer look at what I have described as the overriding foundation for the grant of judicial review: an excess of jurisdiction by the subject court. This concept possesses (at least) two different meanings. The first denotes the case where a court travels into territory where it has no business. Thus a court whose jurisdiction is limited to claims of a pleaded value of 5,000 or less would exceed its jurisdiction if it entertained a claim pleaded at 10,000; or if it adjudged a suit arising in Derbyshire though its jurisdiction was limited to County Durham. The second meaning of excess of jurisdiction denotes the case where, acting within the field ascribed to it, the court gets the law wrong. The first of these meanings is almost always unproblematic. The territory of a court's jurisdiction conferred by statute will depend, plainly, on the terms of the statute. (The same is of course true of the reach of executive power conferred by statute on a minister or other public decision maker.) The territorys edge will usually be sharp enough. 79. But the second meaning of excess of jurisdiction has given rise to more difficulty. A court acts in excess of jurisdiction by getting the law wrong if it is not the final judge (subject to any statutory appeal) of the law it has to apply. If it is not, it exceeds its jurisdiction if it makes a legal error, and in that case the High Court as successor to the Kings Bench may issue a certiorari (nowadays, a quashing order) to correct the error. By contrast if the court in question is the last judge of the applicable law (subject as I have said to any right of appeal) it will not exceed its jurisdiction by perpetrating a legal error, and the High Court will have no corrective or supervisory role. 81. We may see, then, that the question whether SIAC or UT is amenable to the judicial review jurisdiction has more than one layer. (1) Is either body reviewable for excess of jurisdiction in the first sense of the term (transgression beyond the boundaries of its permitted subject matter)? (2) Is either reviewable for excess of jurisdiction in the second sense, as being liable to correction for error of law, albeit committed within those proper boundaries? Or is it a court possessing the final power (subject to appeal) to interpret for itself the law it must apply? Applying that test, he held that the SIAC was but the Upper Tribunal was not amenable to judicial review in the High Court. The difference between them was that the Upper Tribunal was the alter ego of the High Court, but the SIAC was not. This was because the Upper Tribunal was itself exercising a power of judicial review equivalent to that of the High Court. The distinction is encapsulated in Laws LJs observations at para 94: In my judgment UT is, for relevant purposes, an alter ego of the High Court. It therefore satisfies the material principle of the rule of law: it constitutes an authoritative, impartial and independent judicial source for the interpretation and application of the relevant statutory texts. It is not amenable to judicial review for excess of jurisdiction in the second sense: the case where, albeit acting within the field ascribed to it, the court perpetrates a legal mistake. It is a court possessing the final power to interpret for itself the law it must apply And it must, I think, be obvious that judicial review decisions of UT could not themselves be the subject of judicial review by the High Court. In the Court of Appeal the position of the SIAC was no longer in issue. Sedley LJ, delivering the judgment of the court, rejected the suggestion that the Upper Tribunal was the alter ego of the High Court and denied that that was the test. In his view (para 20) all courts other than the High Court itself were in principle amenable to judicial review in the High Court in the absence of a sufficiently clear ouster clause. But he thought that while the Upper Tribunal was amenable to judicial review, the scope of review of a body such as the Upper Tribunal was limited, because the scheme of the Tribunals, Courts and Enforcement Act 2007 required the tribunal system to be treated as autonomous. It therefore implicitly provided (para 42) for the correction of legal error within rather than outside the system. It followed that judicial review extended only to what Sedley LJ called outright excess of jurisdiction, ie the exercise of powers that the tribunal did not have. At paras 36 37, he expressed the distinction thus: 36. It seems to us that there is 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. Both are justiciable before the UT if committed by the FTT, but if committed by the UT will go uncorrected unless judicial review lies. The same of course is true of errors of law within jurisdiction; but these, in our judgment, reside within the principle that a system of law, while it can guarantee to be fair, cannot guarantee to be infallible. Outright excess of jurisdiction by the UT and denial by it of fundamental justice, should they ever occur, are in a different class: they represent the doing by the UT of something that Parliament cannot possibly have authorised it to do. 37. Thus if for some reason the UT made an order giving a money judgment which it had no power to give, with the possibility of enforcement under its section 25 powers, it would be inimical to the rule of law if the High Court could not step in, should the appellate system for some reason not do so. Similarly if a member of the UT were to sit when ineligible or disqualified by a pecuniary interest, or if the UT conducted a hearing so unfairly as to render its decision a nullity, the High Court ought to be able to quash the determination. We do not mean this list to be exhaustive but to be illustrative of the kind of error, rare as it will be, which would take the UT outside the range of its decision making authority. Such a division is, we consider, one of legal principle which can properly form the basis of judicial policy. It applies only to the UT, since it is the role of the UT itself to correct errors of every kind, including outright excesses of jurisdiction and fundamental denials of justice, in the FTT. The Court of Appeal accepted that this might mean that the Upper Tribunal had the potential to develop a legal culture which is not in all respects one of lawyers law. In the Supreme Court the sole issue was whether this implicit limitation on the scope of the jurisdiction to review decisions of the Upper Tribunal was justified. As Baroness Hale pointed out at para 37 (and again at paras 29 and 40), the starting point was that 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. Any limitation therefore had to be implicit, as the Court of Appeal had held it was. The Supreme Court accepted that a restrained approach should be taken to the granting of leave, but rejected the Court of Appeals distinction between errors of law and outright excess of jurisdiction. It is important to appreciate that both the Court of Appeal and the Supreme Court regarded the question whether there was an implicit limitation of the scope of judicial review as a question of judicial policy. The difference between them was about what the relevant policy considerations were. In the Supreme Courts view, the main policy consideration was the undesirability of allowing the Upper Tribunal to become (in Lady Hales words) the final arbiter of the law, in case inferior courts should undermine the coherence of the law by developing their own local law (para 43). This concern, which was mentioned by the Court of Appeal but had not troubled them, was central to the reasoning of this court. Nothing in this courts analysis suggests that policy considerations of this kind would have been relevant, let alone decisive, if the issue had been the meaning and effect of an ouster clause. Nothing in the judgments promotes the undesirability of local laws from an interpretative presumption to a constitutional principle. The real significance for present purposes of this courts decision in Cart lies in its recognition that the rule of law does not necessarily require that the decisions of an inferior tribunal be subject to a power of review, even where they are unappealable: see in particular paras 89 90 (Lord Phillips of Worth Matravers), and paras 122 124 (Lord Dyson). Lord Dyson (with whom the rest of the court all agreed) referred to the status of the Upper Tribunal as a court performing functions equivalent to those of the High Court, and observed at para 122: 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 Upper Tribunal to which I have already referred are important here. The Investigatory Powers Tribunal It follows from the modern authorities that the approach to be taken to section 67(8) of the Regulation of Investigatory Powers Act 2000 depends on the character of the Tribunals functions, the nature of the error of law of which it is accused by the appellant, and the construction of section 67(8) as applied to alleged errors of that kind. The functions of the Investigatory Powers Tribunal are defined by section 65 of the Act. Section 65(2) is in the following terms: (2) The jurisdiction of the Tribunal shall be (a) to be the only appropriate tribunal for the purposes of section 7 of the Human Rights Act 1998 in relation to any proceedings under subsection (1)(a) of that section (proceedings for actions incompatible with Convention rights) which fall within subsection (3) of this section; to consider and determine any complaints made (b) to them which, in accordance with subsection (4) are complaints for which the Tribunal is the appropriate forum; (c) to consider and determine any reference to them by any person that he has suffered detriment as a consequence of any prohibition or restriction, by virtue of section 17, on his relying in, or for the purposes of, any civil proceedings on any matter; and (d) to hear and determine any other such proceedings falling within subsection (3) as may be allocated to them in accordance with provision made by the Secretary of State by order. The jurisdiction invoked by the present appellant is founded on sections 65(2)(a) and (b). Proceedings falling within subsection (2)(a) are, in summary, proceedings in respect of alleged contraventions of the Human Rights Convention against the intelligence services or those acting on their behalf, or against the authorities empowered to require the disclosure of electronic encryption keys. It also applies to the authorisation under statutory powers of what would otherwise be unlawful conduct by such bodies. The Tribunal has exclusive jurisdiction in respect of these proceedings and, under section 67(1)(a), a duty to hear and determine them. Complaints under subsection (2)(b) are, in summary, proceedings challenging the interception of communications by the intelligence services and other investigatory authorities, or warrants authorising such interception. Under section 67(1)(b), the Tribunal has a duty to consider and determine them, but its jurisdiction in respect of these complaints is not exclusive. Section 67 regulates the manner in which the Tribunals jurisdiction is to be exercised. It provides, so far as relevant: (2) Where the Tribunal hear any proceedings by virtue of section 65(2)(a), they shall apply the same principles for making their determination in those proceedings as would be applied by a court on an application for judicial review. (3) Where the Tribunal consider a complaint made to them by virtue of section 65(2)(b), it shall be the duty of the Tribunal (a) to investigate whether the persons against whom any allegations are made in the complaint have engaged in relation to (i) the complainant, (ii) any of his property, (iii) any communications sent by or to him, or intended for him, or (iv) his use of any postal service, telecommunications or telecommunication system, service in any conduct falling within section 65(5); (b) to investigate the authority (if any) for any conduct falling within section 65(5) which they find has been so engaged in; and in relation to the Tribunals findings from their (c) investigations, to determine the complaint by applying the same principles as would be applied by a court on an application for judicial review. The importance of ensuring the confidentiality of secret material is implicit in the kind of matters with which it deals, and is reflected in a number of provisions of the Act. In the first place, section 69(3) imposes a duty on the Tribunal to carry out its own investigation of complaints brought before it, and section 68 empowers it to call for the assistance of the services in question and their officials. This is an inquisitorial power in whose exercise the complainant does not participate. Secondly, section 69 empowers the Secretary of State to make rules for the Tribunal, having regard in particular to the need to secure that they are properly heard and considered and that information is not disclosed to an extent or in a manner which is contrary to the public interest or prejudicial to national security, the prevention or detection of serious crime, the economic well being of the United Kingdom or the continued discharge of the functions of any of the intelligence services. Thirdly, section 66 empowers the Secretary of State by order to allocate further proceedings to the Tribunal, having regard in particular to the same matters. Fourthly, section 68(4) provides that in notifying to the complainant its determination of any proceedings or complaints, the Tribunal is to say only that they have made a determination in his favour or that they have not done so. It is plain that Parliament considered that ordinary proceedings in the High Court presented an unacceptable risk that secret material would be disclosed, contrary to the public interest, and that a major factor in the decision to allocate proceedings to the Tribunal was that its special procedures would reduce that risk. It was submitted to us that Parliaments concerns on this score were unjustified, because as the law was (wrongly) understood in 2000, closed material procedure was available in High Court proceedings. This submission is in my view misconceived. For the purpose of construing the Act, what matters is whether Parliament had those concerns, not whether they were justified. The terms of the Act are themselves enough to show that it did. The Investigatory Powers Tribunal is a judicial body. Schedule 3 to the Act provides that its President must hold or have held high judicial office, and its other members must either have held high judicial office or have had a relevant legal qualification for at least seven years. It is a tribunal of limited jurisdiction which enjoys neither the status nor all of the powers of the High Court. But for this purpose, as I have observed, what matters is not the label but the statutory functions of the Tribunal. Those functions are judicial in an altogether more significant sense than those of the Foreign Compensation Commission. The critical point is that the Tribunal exercises a power of judicial review which would otherwise be exercised by the High Court. By section 67(2), it is required to apply the principles which would be applied by the High Court on an application for judicial review. In relation to proceedings under section 65(2)(a) complaining of a contravention of human rights, this jurisdiction is exclusive, displacing that of the High Court. In relation to complaints under section 65(2)(b), it is a concurrent jurisdiction, but is likewise required by section 67(3)(c) to apply the principles which would be applied by the High Court on an application for judicial review. In these respects the Tribunal is not an inferior tribunal. Its adjudicative jurisdiction is coordinate with that of the High Court. In R (A) v Director of Establishments of the Security Service, supra, at para 23, Lord Brown of Eaton under Heywood, observed of the provision of section 65(2)(a) conferring exclusive jurisdiction on the Tribunal over human rights claims that the exclusion of the High Courts review jurisdiction has not ousted judicial scrutiny of the intelligence services; it has simply allocated that scrutiny (as to section 7(1)(a) HRA proceedings) to the IPT. Lord Brown adopted the statement of Laws LJ in the Court of Appeal that section 65 was among a class of: statutory measures which confide the jurisdiction to a judicial body of like standing and authority to that of the High Court, but which operates subject to special procedures apt for the subject matter in hand, may well be constitutionally inoffensive. The IPT . offers . no cause for concern on this score. This was also the essence of the reasoning of Laws LJ in Cart. He regarded the Upper Tribunal as an alter ego of the High Court, in the sense that while lacking the status of the High Court, it performed within its subject area the same functions in the same judicial fashion as the High Court. It therefore satisfied the material principle of the rule of law: see para 94 of his judgment. The Court of Appeal and the Supreme Court regarded that as insufficient to warrant implying a limitation of the scope of judicial review, and nothing that I say is intended to undermine their view. But Laws LJs analysis is an illuminating explanation of the difference between an ouster of judicial review and a limitation of its scope to controlling the purported exercise of powers that the decision maker did not have. That analysis is of considerable value in a case (unlike Cart) where an express statutory provision excludes judicial review of the legal merits of a tribunals decisions, without impinging on the High Courts traditional jurisdiction to review outright excesses of jurisdiction. The next question, to which I now turn, is whether that is the effect of section 67(8) of the Regulation of Investigatory Powers Act. Section 67(8) It is agreed on all sides that the meaning of this provision is a question of construction. It is also agreed that clear words are required if it is to be regarded as ousting the review jurisdiction of the High Court. However, we must not lose sight of the reason why clear words are required. The reason is, as all the authorities (and indeed Lord Carnwath in his judgment in the present case) agree, that Parliament is presumed not to legislate contrary to the rule of law. As Lord Hoffmann pointed out in R (Simms) v Secretary of State for the Home Department [2000] 2 AC 115, p 131, that Parliament must squarely confront what it is doing and accept the political cost. The degree of elaboration called for in a statutory provision designed to achieve a given effect must depend on how anomalous that effect would be. In this case, the words must be sufficiently clear to authorise a departure from the normal state of affairs, which is that the High Court has jurisdiction by way of review over the acts of lower courts. That is not the same as saying that the words must be such as to authorise a departure from the rule of law. There is nothing inconsistent with the rule of law about allocating a conclusive jurisdiction by way of review to a judicial body other than the High Court. The presumption against ouster clauses is concerned to protect the rule of law, which depends on the availability of judicial review. It is not concerned to protect the jurisdiction of the High Court in some putative turf war with other judicial bodies on whom Parliament has conferred an equivalent review jurisdiction. It was because Lord Brown found nothing constitutionally offensive in the allocation of specified disputes to the Investigatory Powers Tribunal that he had no difficulty in recognising in R (A) v Director of Establishments of the Security Service, supra, at para 23, that section 67(8) was an ouster (and indeed unlike that in Anisminic, an unambiguous ouster) of any jurisdiction of the courts over the IPT. This was no more than a dictum, on a point which was not argued. But in my opinion what Lord Brown said as a matter of impression was also correct as a matter of analysis, at any rate as applied to challenges to the Tribunals determinations on the merits. My reasons are as follows. In the first place, the jurisdiction of the Tribunal defined in section 65(2) is to adjudicate on proceedings, complaints, references and on other matters allocated to them by the Secretary of State. By adjudicate I refer compendiously to the various expressions used in sections 65(2) and 67(1) (3) to describe the Tribunals resolution of matters before it (hear and determine, consider and determine, determine, etc). The Tribunals permitted field (to use Lord Wilberforces phrase) plainly extended to determining questions of law arising in the course of any proceedings or complaint. In particular, it extended to determining the construction of the various enactments, such as the Intelligence Services Act 1994, under which the bodies subject to review by the Tribunal operated. There is nothing in the Act which lays down the test to be applied to any of these matters. Nor is there anything corresponding to the prescriptive regime in the Order in Council considered in Anisminic. The Act simply confers on the Tribunal the adjudicatory powers which would otherwise be exercised by the High Court acting as a court of review. Secondly, turning to the language of section 67(8) itself, it is common ground that it falls to be construed against the background of the law declared in Anisminic and in subsequent decisions interpreting and applying it. The draftsman has deliberately chosen substantially the same formula as was considered in Anisminic (shall not be liable to be questioned in any court). But it is clear that the draftsman did not intend the same result as in Anisminic. This is because he has modified the formula by adding the bracketed words (including decisions as to whether they have jurisdiction). The effect of the bracketed words is to extend the ouster to the precise class of decisions which the House of Lords in that and subsequent cases had held not to be covered by the Anisminic formula, namely decisions in excess of jurisdiction. I do not, however, think that the intention was to extend it to all such decisions. The key lies in another addition to the Anisminic formula, namely the reference to an appeal. The Tribunals decisions shall not be subject to appeal or be liable to be questioned in any court. At common law, it was well established that the fact that a judicial decision was unappealable did not bar judicial review on all the usual grounds: see R (Cart) v Upper Tribunal [2012] 1 AC 663, paras 16 21 (Baroness Hale). In framing section 67(8) as it did, Parliaments concern was plain. It was to ensure that the barring of appeals was not rendered nugatory by applications for judicial review on grounds which amounted to the same thing. Because the courts, in interpreting Anisminic, had categorised error, at any rate of law, as an excess of jurisdiction, this could be achieved only by extending the ouster clause so as to cover errors in the treatment of the merits notwithstanding that they were treated in Anisminic as an excess of jurisdiction. Thirdly, it is true that a right to apply for judicial review is conceptually different from an appeal even if, in relation to an alleged error of law, they amount in practice to the same thing. But the concept of a judicial review by the High Court of a tribunal which is itself exercising a power of judicial review equivalent to that of the High Court, might be thought surprising. The rational course for Parliament to have adopted, if it intended to allow judicial review on the ground of error, would have been to provide for an appeal. Parliament has in fact made such provision. But under section 67(9) it has done so unconditionally only in relation to cases falling within section 65(2)(c) and (d), which are not yet in force. In other cases, including those relevant to the present proceedings, the introduction of a right of appeal is left to the discretion of the Secretary of State under section 67(8). It would in my view be wrong in principle to construe the Act as allowing for judicial review on grounds indistinguishable from an appeal on the merits, when Parliament has so carefully circumscribed the conditions on which an appeal is available. Fourthly, as Lord Wilberforce observed in Anisminic (p 209), conclusions about the Tribunals permitted field may be derived from the form and subject matter of the legislation. The main subject matter of this legislation is secret intelligence whose disclosure would be contrary to an obvious and powerful public interest. I have drawn attention above (at para 196) to the numerous indications to that effect in the Act. Its provisions, as Lord Brown of Eaton under Heywood pointed out in R (A) v Director of Establishments of the Security Service [2010] 2 AC 1, para 14, are designed to ensure that, even in the most sensitive of intelligence cases, disputes can be properly determined. The public interest engaged was pointed out in forceful terms by Sales LJ in his judgment in the Court of Appeal: see, in particular, para 7. It needs no further emphasis from me. There is accordingly an entirely rational reason, whose significance is apparent throughout the relevant parts of the Act, why Parliament should have wished to confine the examination of these matters to a secure Tribunal and to prevent resort to the High Court, whether by way of appeal or review. The whole object of the Act in creating the Tribunal was to make resort to the High Court unnecessary by providing an alternative but equivalent right of recourse to a judicial body performing the same function. It is right to add that section 68(4), which requires the Tribunal to give an unreasoned Yes or No answer to the questions before it, would make judicial review by the High Court exceptionally difficult in most cases. In future cases, governed by the Investigatory Powers Act 2016, there will be a right of appeal, in specified circumstances, and section 68(4) will be modified so as to be subject to the Tribunal Rules. Rules made under that Act allow for more extensive disclosure of the Tribunals reasons. But by the time that the 2016 Act was passed the position regarding the security of information deployed in forensic litigation had been transformed by the Justice and Security Act 2013, with its elaborate provisions for closed material procedure in civil proceedings in the High Court. The courts below regarded this as a decisive consideration. I think that there are a number of decisive considerations, but this is certainly one of them. Finally one is bound to ask forensically, if section 67(8) when read as a whole does not exclude a challenge to the merits of the Tribunals decisions by way of judicial review, then what else can it mean? Ms Rose implicitly accepted that if it is to have any effect at all it must oust judicial review in relation to something. She was driven to arguing that it did so only in relation to alleged errors of fact. She referred to R v Secretary of State for the Home Department, Ex p Khawaja [1984] 1 AC 74, as authority for the proposition that the factual basis of the challenged decision would otherwise have been open in principle to challenge by way of judicial review, and suggested that that was the problem to which section 67(8) was directed. I do not accept this. The question is always whether the tribunals decision falls within its permitted field. If, as Ms Rose submits, the Act on its true construction does not allow the Tribunal to err, then there is no reason to distinguish between errors of law and fact. They are both in excess of jurisdiction. In In re Racal Communications [1981] AC 374, Lord Diplock (with whom Lord Keith agreed) explicitly rejected (p 382C) a similar distinction which had been suggested by Lord Denning MR in Pearlman. Analysing that decision (at pp 383 384) he deprecated attempts to read into ouster clauses an implicit dissection of propositions of law from their application to facts. Lord Edmund Davies made the same point at p 390. Judicial review commonly involves interrelated questions of fact and law, and such distinctions tend to lead to arbitrary and technical subtleties of a kind which Parliament is unlikely to have intended. Certainly, there is no trace of such a distinction in section 67(8) or anywhere else in the Act. Ms Roses principal argument, however, was a reductio ad absurdum. If, she said, section 67(8) excludes judicial review, then the Tribunals decisions could not be reviewed even if it embarked on a dispute which was not within its subject matter competence, or was improperly constituted, or affected by the grossest bias. This submission would require us to take an all or nothing view of section 67(8) which I regard as wrong in principle. The process of construction involved in identifying a judicial bodys permitted field depends, as the House of Lords pointed out in Anisminic, on an analysis of the enabling legislation to ascertain the breadth of the interpretative power conferred on it. The legislation may be more prescriptive in some respects than in others. Or it may be silent on some points, thus implicitly leaving unaffected basic common law principles such as natural justice. The Regulation of Investigatory Powers Act 2000 contains express provisions governing the constitution of the Tribunal and its subject matter competence. It contains rules governing the Tribunals procedure, and authorises the making of further rules by the Secretary of State. Nothing that I have said should be taken to suggest that breach of these requirements is unreviewable. The terms of the Act place them outside the Tribunals permitted field. The same is true of principles of natural justice (such as those relating to bias), so far as they are not modified in terms by the Act. Lord Diplock in Racal, at pp 382 383, envisaged that in the case of a court charged with the resolution of questions of law it was necessary to distinguish between errors of law going to jurisdiction in the pre Anisminic sense and errors of law within jurisdiction. As Lord Mance pointed out, applying this principle in Lee v Ashers Baking Co Ltd [2018] 3 WLR 1294, para 88 (cited above), a statutory ouster clause may be clear enough to oust review of a judicial bodys substantive decisions but not its procedural failings. In my opinion, section 67(8) is a provision of that kind. It ousts any kind of merits review of the Tribunals decisions but nothing more than that. This is the narrowest meaning consistent with the language and manifest purpose of the subsection. It does not oust review of those procedural failings which if made out would deprive the Tribunal of its adjudicatory competence. The appellants complaint is that the Tribunal misconstrued section 5(2) of the Intelligence Services Act 1994 by holding that it authorised thematic warrants. If this was an error, then it seems to me to be clear that it was an error within the permitted field of interpretative power which Parliament has conferred on the Tribunal. Whether or not it is correctly described as an excess of jurisdiction is not the point, for the statute empowers the Tribunal to act within its permitted field irrespective of whether or not its act is so described. I conclude that the effect of section 67(8) of Investigatory Powers Act 2000 is that the High Court had no jurisdiction to entertain a challenge to the Tribunals decision in the present case, whether by way of appeal or judicial review. The alternative case: unconstitutionality In the Statement of Facts and Issues, the alternative case is formulated as follows: whether, and, if so, in accordance with what principles, Parliament may by statute oust the supervisory jurisdiction of the High Court to quash the decision of an inferior court or tribunal of limited statutory jurisdiction. As framed, the alternative case seeks an answer to an examination question posed in wholly general terms. I do not think that it would be either appropriate or wise for this court to answer it in wholly general terms, for the answer may vary according to the statutory context. We have to address the question in the context of the particular statute before us. For that purpose, it is important to be clear about the assumption on which the issue arises. The assumption is that as a matter of construction section 67(8) of the Regulation of Investigatory Powers Act excludes judicial review of the Tribunals decisions on the merits of matters coming before it. That is the only point on which the decision of the Tribunal is sought to be reviewed in these proceedings, and section 67(8) is the only basis on which such a review is said to be excluded. The appellants case is that if section 67(8) is clear enough to oust judicial review of the Tribunals decisions on the law, then not even Parliament could effectually enact it. An argument of this kind may take one or other of two forms. In its more radical form, the argument limits the sovereignty of Parliament in the name of a higher law, ascertained and applied by the court. What is said is that the rule of law is the foundation of the constitution and the source of the legitimacy of all legislation and that judicial review is its procedural embodiment. For this reason, Parliament is not competent to legislate contrary to the rule of law. This was the view tentatively expressed in an obiter dictum of Lord Steyn in R (Jackson) v Attorney General [2006] 1 AC 262, para 102, and less tentatively by Lord Hope in his observations, also obiter, in the same case, at paras 104 108. It was robustly rejected by Lord Bingham in the same case (para 9) and more fully in Chapter 12 of his book The Rule of Law (2010). I did not understand Ms Rose to be arguing that case. In its less radical form, the argument is that judicial review is necessary to sustain Parliamentary sovereignty. This is because Parliament can express its will only by written texts, to which effect can be given only if there is a supreme interpretative and enforcing authority. That authority by its nature resides in courts of law. This is the view suggested by Laws LJ in the Court of Appeal in R (Cart) v Upper Tribunal [2011] QB 120, paras 34 38. Like the principle that Parliament cannot bind itself, Parliaments lack of competence to oust judicial review is on this view conceptual rather than normative. The point was well put by Farwell LJ in R v Shoreditch Assessment Committee, Ex p Morgan [1910] 2 KB 859 when he observed, at p 880, that it is a contradiction in terms to create a tribunal with limited jurisdiction and unlimited power to determine such limit at its own will and pleasure such a tribunal would be autocratic, not limited. The rule of law applies as much to the courts as it does to anyone else, and under our constitution, that requires that effect must be given to Parliamentary legislation. In the absence of a written constitution capable of serving as a higher source of law, the status of Parliamentary legislation as the ultimate source of law is the foundation of democracy in the United Kingdom. The alternative would be to treat the courts as being entitled on their own initiative to create a higher source of law than statute, namely their own decisions. In R (Miller) v Secretary of State for Exiting the European Union (Birnie intervening) [2018] AC 61, at para 20, the Divisional Court accepted that: the most fundamental rule of UK constitutional law is that the Crown in Parliament is sovereign and that legislation enacted by the Crown with the consent of both Houses of Parliament is supreme Parliament can, by enactment of primary legislation, change the law of the land in any way it chooses. There is no superior form of law than primary legislation, save only where Parliament has itself made provision to allow that to happen. In this court, sitting in banc for the first and only time, the proposition was common ground between the majority and the dissenting minority. The joint judgment of the eight judges of the majority recognised (para 43) that Parliamentary sovereignty was a fundamental principle of the UK constitution, and adopted the celebrated statement of A V Dicey (Introduction to the Study of the Law of the Constitution, 8th ed (1915), 38, that it comprised the right to make or unmake any law whatever; and, further, that no person or body is recognised by the law of England as having a right to override or set aside the legislation of Parliament. Ms Rose would therefore have had a mountain to climb if she had based her alternative case on the more radical form of the argument. In fact, she was wise enough not to do this. Her case was firmly based on the conceptual inconsistency between an ouster clause and the existence of limits on the jurisdiction of the Investigatory Powers Tribunal. I therefore turn to the less radical version of the argument as it was addressed to us. I would accept it up to a point. In reality, it is a variant of the appellants primary case about Parliamentary intention. If Parliament on the true construction of an enactment has created a tribunal of legally limited jurisdiction, then it must have intended that those limits should have effect in law. The only way in which a proposition can have effect in law, is for it to be recognised and applied by the courts. Parliaments intention that there should be legal limits to the tribunals jurisdiction is not therefore consistent with the courts lacking the capacity to enforce the limits. Ms Rose, correctly to my mind, described this as giving effect to the sovereignty of Parliament, not limiting it. In order to escape this conceptual difficulty, Parliament would have to create a tribunal of unlimited jurisdiction or one with unlimited discretionary power to determine its own jurisdiction. A sufficiently clear and all embracing ouster clause might demonstrate that Parliament had indeed intended to do that. But it would be a strange thing for Parliament to intend, and although conceptually possible, it has never been done. These theoretical considerations are, however, a long way from the problem presently before us. No one contends that section 67(8) of Act makes Investigatory Powers Tribunal a tribunal of unlimited jurisdiction or that it has an unlimited discretionary power to determine its own jurisdiction. The question is how to reconcile the limited character of its jurisdiction with the language of section 67(8). For the reasons which I have given, the reconciliation is that section 67(8) does no more than exclude review by the High Court of the merits of decisions made by a tribunal performing, within its prescribed area of competence, the same functions as the High Court. It is in substance an exclusion of appeals on the merits and other proceedings tantamount to an appeal on the merits. The bracketed words referring to jurisdiction have been added because the draftsman intended that the decisions of the tribunal on the merits should be treated as within its jurisdiction notwithstanding that it was erroneous. The intention was that the exclusion of appeals on the merits and equivalent proceedings should apply notwithstanding that Anisminic had categorised some errors going to the merits as excesses of jurisdiction. None of this gives rise to the conceptual problem described above. Section 67(8) does not exclude or limit the jurisdiction of the High Court to enforce the statutory limits on the Tribunals powers or subject matter competence, or the statutory and other rules of law regarding its constitution. In my opinion, Parliament does not contradict itself by enacting that notwithstanding Anisminic a decision on the merits by a judicial tribunal of limited jurisdiction exercising the same review function as the High Court is to be conclusive. As Baroness Hale put it in Cart (para 40), adopting the approach of Lord Wilberforce in Anisminic: 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 errors of law. Disposal I would accordingly dismiss the appeal. LORD WILSON: (dissenting) There are two questions: (1) Does section 67(8) of RIPA (the 2000 Act) mean that there can be no judicial review of the determinations of the IPT? (2) determinations? If so, is it open to Parliament to exclude judicial review of its The second question, which questions the legality of part of an Act of our Parliament, supreme under our constitutional arrangements, could scarcely be of greater fundamental importance and sensitivity. So there is a temptation to insinuate into the answer to the first question matters which in truth are relevant only to the answer to the second question, with a view to answering no to the first question and thus avoiding the need to answer the second question. In my respectful view this is the temptation to which in analogous circumstances in the Anisminic case the appellate committee gave way in 1968. I agree with Sir John Laws see para 81 above that the committee there picked a fig leaf with which it attempted to hide the essence of its reasoning. For proper recourse to the presumed intention of Parliament cannot justify straining the meaning of statutory words too far. The committee thereby set up 50 years of linguistic confusion for all of us who have been heirs to its decision. We should finally dispel that confusion but, in doing so, should, in answer to the first question, strive not to set up other strained meanings productive of different confusion for those who will wrestle with todays judgments. Omitting at this stage its strengthening words in parenthesis, section 67(8) says that, save as the Secretary of State may by order otherwise provide, decisions of the IPT should not be subject to appeal or be liable to be questioned in any court. On the face of it, what could be clearer? The obvious place for them to be questioned is the High Court in the exercise of its jurisdiction to conduct judicial review. Those words appear to exclude judicial review. Parliament recognised, however, that, contrary to their appearance, they alone were not enough to exclude it. The problem was the decision in the Anisminic case. Section 4(4) of the Foreign Compensation Act 1950 (the 1950 Act) provided, in terms which were to that extent identical to those in section 67(8), that the determination by the [Foreign Compensation Commission] of any application made to them under this Act shall not be called in question in any court of law. The commission had made a determination that the company was not entitled to compensation for the sequestration of its property in Egypt because of its failure to have complied with one of the perceived conditions of entitlement prescribed by an Order in Council. A majority of the appellate committee held that the commission had misconstrued the condition and upheld a declaration that the company was entitled to compensation. With respect to the distinguished members who formed the majority of the committee, I find it impossible to disagree with the dissenting conclusion of Lord Morris of Borth y Gest at p 194 that the commissions error, albeit one of law, was not in excess of its jurisdiction as properly understood. In what follows it will be convenient to describe that sort of error as an ordinary error of law. The majority, however, held otherwise. Relying heavily on the policy reasons in favour of judicial supervision of some of the commissions determinations, they worked backwards to the meaning of the word determination in section 4(4). As Lord Carnwath, borrowing a point made by Professor Feldman, observes in para 42 above, the companys claim was only for a declaration rather than for an order of certiorari to quash the commissions determination; so, if the claim was to prevail, the majority needed to conclude that the determination was a nullity and could thus be so declared. At all events they held that the word determination in the subsection did not include a mere purported determination. In describing it they deployed different terms which in my view amount to the same thing. Lord Reid at pp 170, 174 and 175 preferred to describe it as a nullity. He observed at p 171 that it was preferable not to use the word jurisdiction except in the narrow sense of a disentitlement to embark on the inquiry but then at p 174 he used that word in the wide sense in holding that the commission had exceeded it. Lord Pearce described it at pp 195 and 201 as a determination made in excess of jurisdiction, as did Lord Pearson at p 215. Lord Wilberforce suggested at p 207 that the words jurisdiction, error and nullity created problems and at p 208 he expressed a preference for describing it as a decision made outside the permitted field. There is no difficulty in understanding the decision of the majority in the Anisminic case that, by section 4(4), Parliament had not precluded review of determinations which were truly nullities, in excess of jurisdiction or outside the permitted field. They might well have reached that conclusion irrespective of the meaning of the words in the subsection: see para 236 below. Had they studied in greater detail the institutional features of the commission, they might also have held that, again irrespective of the meaning of the subsection, Parliament had not even precluded review of its ordinary errors of law, such as the one before them: see paras 237 to 252 below. The problems arise from the fact that they chose to reach their decision by construction of the word determination in the subsection; and from the way in which they strained the meaning of the words null, in excess of jurisdiction and outside the permitted field so as to extend them to ordinary errors of law which, on no previous understanding of those words, would have fallen within them. Lord Pearce at p 195 gave examples of lack of jurisdiction which demonstrate the strain: or it may ask itself the wrong questions; or it may take into account matters which it was not directed to take into account. Thereby it would step outside its jurisdiction [and] would cause its purported decision to be a nullity. Some have welcomed the extended meaning. I deprecate it. On 25 November 1982 the appellate committee decided the appeals in OReilly v Mackman [1983] 2 AC 237. For present purposes the facts are irrelevant. The relevance of the decision lies in the part of the speech of Lord Diplock quoted in para 54 above. The decision in the Anisminic case, he said, was that, if a statutory tribunal made an error of law, it must have asked itself the wrong question, ie one which it had no jurisdiction to determine. I, for my part, do not regard Lord Diplock as having there significantly misconstrued or oversimplified that decision. He praised it. No doubt in one sense anything which enables a judicial system to overcome obstacles to its elimination of legal error deserves praise. And he evidently saw no reason to temper his praise by reference to the confusing use of language in which the decision in the Anisminic case had been cast. On 14 February 1985 the Bill which became the Interception of Communications Act 1985 (the 1985 Act) was published. By section 7, Parliament established a tribunal to investigate complaints that a communication sent to or by a complainant had been unlawfully intercepted. There was an ouster of judicial supervision of the tribunals decisions but in terms more comprehensive than those in section 4(4) of the 1950 Act which had failed to exclude the supervision that the majority in the Anisminic case had held to have survived. For section 7(8) provided: The decisions of the Tribunal (including any decisions as to their jurisdiction) shall not be subject to appeal or liable to be questioned in any court. The IPT has replaced the tribunal set up by the 1985 Act; but, subject to the exception added to the beginning of it, section 67(8) of the 2000 Act is in terms which, for practical purposes, are identical to those of section 7(8) of its predecessor. We can now address the specific question central to the overall answer to the first question: what is the meaning of the words including decisions as to whether they have jurisdiction, written in parenthesis in section 67(8), in effect by way of repetition of words introduced by Parliament in an analogous provision in 1985? I, for my part, am in no doubt about the answer to the specific question. In 1985 Parliament, including its drafter of the 1985 Act, was aware that its attempted ouster of judicial oversight in section 4(4) of the 1950 Act had failed. In the Anisminic case the majority of the appellate committee had used different terms to describe the sort of decisions of which judicial oversight survived the ouster. But they had been collected by Lord Diplock in the OReilly case into one word, namely decisions made without jurisdiction. Lord Diplock had delivered his speech less than three years prior to publication of the bill which became the 1985 Act. Necessarily considered in their context, the meaning of the words in parenthesis in section 7(8) of the 1985 Act, now replicated in section 67(8) of the 2000 Act, is surely to encompass within the exclusion of judicial supervision all the decisions of the IPT in relation to its jurisdiction; and to ascribe to that word the strained extension of its effect adopted in the Anisminic case so as to cover ordinary errors of law as well, of course, as errors in the proper sense of it. The initial presumption that Parliament did not intend such an exclusion and the need in consequence for a strict construction of the subsection have to yield to what I consider to be the only reasonable meaning of its words, which is to the contrary. Support for the above comes from a distinguished source. At the time of the passing of the 1985 Act Professor David Foulkes wrote the notes to it for Current Law Statutes. Of section 7(8), he wrote: This subsection will be of interest. It is intended to and appears to be effective in making the Tribunal decisions wholly judge proof. The reference to jurisdiction excludes even the Anisminic line of argument. It follows that, with regret, I cannot subscribe to the interpretation of the words in parenthesis in section 67(8) favoured by Lord Carnwath. His argument is in the alternative. His first argument, set out in para 108 above, is predicated on what I have described as the proper sense of the word jurisdiction in the words in parenthesis. He says correctly that the appellants contention is that the IPT made an ordinary error of law. So, he says, it escapes the exclusion of decisions in relation to jurisdiction provided by the words in parenthesis. But why would it escape the exclusion in the earlier words of the subsection? Where would be the logic in excluding from judicial oversight errors of jurisdiction in the proper sense, but not ordinary errors of law? Lord Carnwaths alternative argument, set out in para 109 above, with which Lord Lloyd Jones agrees in para 165 above, is predicated on the extended sense ascribed to the word jurisdiction in the Anisminic case. Here his argument is that decisions made without jurisdiction in that extended sense are not decisions at all so are not excluded from judicial oversight by a subsection which refers both inside and outside the parenthesis only to decisions. In my opinion the argument is characteristically ingenious but too strained. It also proves too much, as becomes clear when in para 110 above Lord Carnwath seeks to ascribe some meaning to the words in parenthesis. He cites a decision of the IPT, namely C v The Police IPT/03/32/H in which, as I agree, the applicant failed because he failed to establish a fact upon which the existence of its jurisdiction depended (a jurisdictional fact). Lord Carnwath suggests that the words in parenthesis might exclude judicial oversight of the IPTs determination of the absence (or presence?) of a jurisdictional fact. But why would that not be a decision made without jurisdiction in the extended sense of that word, as well of course as in its proper sense? In any event I see no basis for confining the wide words in parenthesis to that narrow area of the IPTs decision making. Indeed why should such a determination have been singled out as fit for exclusion from any judicial inquiry into the existence of evidence which entitled the IPT to make it? Then, in para 111 above, Lord Carnwath observes that, irrespective of whether either of his constructions of section 67(8) is correct or whether the words in parenthesis are redundant, the words of the subsection are insufficiently clear to exclude judicial review of the IPTs errors of law; and his observation echoes his earlier suggestion in paras 107 and 108 above that the only clear exclusion achieved by the subsection is of legally valid determinations. With respect, I consider the words of the subsection to be totally clear in excluding judicial review of all the IPTs decisions; and an exclusion of judicial review in relation only to legally valid determinations seems to me to make no sense. It also follows that, with equal regret, I cannot subscribe to the interpretation of the words in parenthesis in section 67(8) favoured by Lord Sumption in para 201 above, which he had foreshadowed in para 172 above. The effect of Lord Sumptions interpretation is in my view further to extend the meaning of the word jurisdiction beyond that favoured in the Anisminic case. The effect of that case had been to draw into the concept of an absence of jurisdiction ordinary errors of law as well, of course, as errors of jurisdiction in the proper sense. Lord Sumption interprets the word jurisdiction in the words in parenthesis so as to relate only to ordinary errors of law and so as no longer to include errors of jurisdiction in the proper sense. His argument depends upon the words which immediately follow the parenthesis, namely the words shall not be subject to appeal. He observes that ordinary errors of law could in principle be the subject of an appeal and, by some alchemy if I may respectfully say so, he reasons that these words which exclude an appeal therefore limit the meaning of the word jurisdiction in the parenthesis to ordinary errors of law. In my opinion the argument is again characteristically ingenious but too strained. Had Parliaments intention been to allow judicial review of the IPTs errors of jurisdiction in the proper sense, it would not have borrowed from the 1985 Act words in parenthesis which, on any conventional construction of them, so obviously appear to exclude it. It is worth noting that the exclusion of an appeal achieved by the words upon which Lord Sumption relies is subject to the exception in the opening words of section 67(8), namely the words Except to such extent as the Secretary of State may by order otherwise provide . It is significant that, even prior to its recent insertion into the 2000 Act of section 67A, Parliament considered that there should be, or at least could properly be, a facility for appeal against the decisions of the IPT, including no doubt against its jurisdictional decisions as well as its ordinary decisions of law. Parliament recognised however that any facility for appeal required the establishment of a confined structure apt to the sensitivity of the subject matter of the IPTs decisions. It thus provided in section 67(10) that any order made by the Secretary of State pursuant to the opening words of section 67(8) might include various types of provision. These include provisions at (a) for establishing a body to hear such appeals or at (c) for conferring jurisdiction to hear them on an existing court or tribunal and, in either event, at (d) for making rules in relation to the conduct of the appeals corresponding to the rules of the IPT. At that time, however, Parliament decided, as the opening words make plain, to confer upon the Secretary of State a discretion whether to establish the structure which would have enabled the appeals to be brought; and, for reasons unexplained, he has never exercised his discretion to do so. Nevertheless, for the drafter of section 67(8), it was important not to permit an appeal from the IPT to be brought outside the confined structure which Parliament envisaged. So it was essential first to retain the general exclusion of an appeal which had been provided in section 7(8) of the 1985 Act and then to subject it to the limited exception reflected in the opening words of the subsection. I find it hard to imagine that Parliament countenanced the facility for some other review of the decisions of the IPT outside the confined structure for which it was making provision. Driven, as I am, to the view there is no defensible escape from giving to the first question the answer yes, I am required to proceed to address the second question; and, in doing so I must exercise a degree of caution apt to its constitutional delicacy. At this stage, however, it is crucial to bear in mind that the complaint of which the appellant seeks judicial review is that the IPT made an ordinary error of law. The appellant does not complain that the IPT lacked jurisdiction (in its proper sense) to determine its claim. Nor does it complain that the IPT denied to it the right to a fair hearing. A denial of a fair hearing, in particular of natural justice, is either an example of an absence of jurisdiction (Attorney General v Ryan, cited in para 123 above, p 730) or should at any rate be placed in that class for present purposes (the Cart case, Supreme Court, [2011] UKSC 28, [2012] 1 AC 663, para 38). Had the complaint been one of lack of jurisdiction, it would have been necessary for me to undertake, albeit more slowly, the journey which Lord Carnwath valuably, albeit for his purposes unnecessarily, undertakes in paras 114 to 126 above. The modern signpost most helpful to me would surely have been found in the classic judgment of Laws LJ in the Cart case, Divisional Court, [2009] EWHC 3052 (Admin), [2011] QB 120, in particular in para 38, which Lord Sumption sets out in para 190 above. In section 65(2) of the 2000 Act Parliament has specified the limits of the IPTs jurisdiction. So the question would have become whether, when it chooses to make a law which sets the limits of a jurisdiction, Parliament can elsewhere deprive it of an essential element of a law, namely that observance of its limits will be enforced in the courts. At first sight there is much to be said for Lord Carnwaths answer in paras 119 to 126 above that it cannot do so. But in my view such an answer is far less easily given to the second question if recast so as to address only Parliaments exclusion of judicial review of an ordinary error of law. In relation to this more limited question Lord Carnwath, albeit for his purposes again unnecessarily, reasons in para 131 above that it is ultimately for the courts, not the legislature, to determine the limits set by the rule of law to the power to exclude review; and he observes in para 144 above that it should remain ultimately a matter for the court to determine the extent to which, in the light of its purpose and context and the nature and importance of the legal issue in question, a statutory ouster of review of an ordinary error of law should be upheld. One objection to Lord Carnwaths observation might be that, although constructed upon the rule of law, it fails to identify any robust criterion by reference to which the courts decision in any particular case could be foretold. At all events, for the more fundamental reasons which follow, I respectfully disagree with it. Every legal system has to identify some end point beyond which there can be no challenge or further challenge to a judicial decision; and it may well identify different end points for decisions in different areas of the law and, within any one area of it, perhaps different end points for challenges to decisions of fact, to decisions allegedly vitiated by an ordinary error of law and to decisions allegedly made in excess of jurisdiction in the proper sense. Our system will usually provide for some, perhaps circumscribed, right to bring an appeal against, or to seek other review of, an initial judicial decision (in other words not one made on appeal or review). But it will not always do so. There is no constitutional requirement that such a right should exist: see Lord Brown of Eaton under Heywood in R (A) v Director of Establishments of the Security Service, cited in para 19 above, para 23. Nor is it required as part of the right to a fair trial conferred by article 6 of the European Convention on Human Rights: Delcourt v Belgium (1970) 1 EHRR 355. In In re Racal Communications Ltd, cited in para 62 above, the appellate committee addressed a statute which empowered a judge of the High Court both to authorise inspection and to require production of company books reasonably believed to contain evidence of the commission of a criminal offence. The statute also provided that the judges decision should not be appealable. The complaint was that the judge had made an ordinary error of law: see the speeches of Lord Diplock at p 384 and of Lord Edmund Davies at p 388. The committee held that the Court of Appeal had had no power to reverse the judges decision on appeal. Lord Diplock said at p 384: Judicial review is available as a remedy for mistakes of law made by inferior courts and tribunals only. Mistakes of law made by judges of the High Court acting in their capacity as such can be corrected only by means of appeal to an appellate court; and if, as in the instant case, the statute provides that the judges decision shall not be appealable, they cannot be corrected at all. In Pearlman v Keepers and Governors of Harrow School, cited in para 69 above, the Court of Appeal had addressed a statute which empowered a county court judge to determine whether improvements made by a tenant to his leasehold property qualified for adjustment of its rateable value. The statute also provided that the determination should be final and conclusive. The Court of Appeal, by a majority, allowed an appeal by the tenant. But in the Racal case its decision was overruled: see the speeches of Lord Diplock at p 384 and of Lord Edmund Davies at p 390. In the Pearlman case it is therefore the dissenting judgment of Geoffrey Lane LJ which, so the appellate committee there held, provides the correct analysis of it. He said at p 74: the only circumstances in which the court can correct what is to my mind the error of the judge is if he was acting in excess of his jurisdiction as opposed to merely making an error of law in his judgment And he explained at p 76 that the tenants complaint was that the county court judge had made no more than an ordinary error of law. In R v Hull University Visitor, Ex p Page, cited in para 55 above, the appellate committee considered a complaint by a lecturer at Hull University that his dismissal had contravened its statutes and so been unlawful. The Queen, who was the visitor of the university and was acting by the Lord President of the Privy Council, had rejected his complaint. The appellate committee decided by a majority that the Divisional Court, which had quashed Her Majestys decision in the course of conducting a judicial review, had lacked jurisdiction to entertain it. Lord Browne Wilkinson, for the majority, explained at p 702 that the university statutes were not the general law of the land. But his conclusion at p 704 remains useful and was as follows: Judicial review does not lie to impeach the decisions of a visitor taken within his jurisdiction (in the narrow sense) on questions of either fact or law. Judicial review does lie to the visitor in cases where he has acted outside his jurisdiction (in the narrow sense) or abused his powers or acted in breach of the rules of natural justice. Lord Griffiths, at pp 693 694, gave a wide interpretation to the decision in the Racal case. He said that it shows that Parliament can by the use of appropriate language provide that a decision on a question of law whether taken by a judge or by some other form of tribunal shall be considered as final and not be subject to challenge either by way of appeal or judicial review. [Emphasis supplied] In the Cart case the challenge was to a refusal on the part of the Administrative Appeals Chamber of the Upper Tribunal to grant permission to appeal to it. Parliament, which had designated the tribunal as a superior court of record, had excluded a right of appeal against its refusal of permission. Could there, however, be a judicial review of it? Parliament had not expressly excluded it. The complaint was of an ordinary error of law on the part of the tribunal. The Divisional Court, cited in para 116 above, and the Court of Appeal, [2010] EWCA Civ 859; [2011] QB 120, had both held, for slightly different reasons, that the institutional features of the Upper Tribunal were such that its unappealable decisions could be the subject of judicial review when, but only when, they were said to be in excess of jurisdiction. By the time when the case reached the Supreme Court, cited in para 76 above, the government had accepted that analysis: see Lord Dyson, para 108. So by that time the only remaining question was whether judicial review could extend to ordinary errors of law alleged to have been perpetrated by the tribunal in making unappealable decisions. This courts answer was that there could be judicial review of such errors in limited circumstances not present in the case before it. For current purposes the great importance of the decision lies in the observations of Lady Hale, in a judgment with which all the other members of the court agreed, at para 40. Lord Sumption has quoted them in para 211 above. Lady Hale there recognised that, although it had not done so, Parliament might successfully have ousted judicial review of ordinary errors of law made by a tribunal of limited jurisdiction such as the Upper Tribunal. We therefore see that the High Court judge in the Racal case, the county court judge in the Pearlman case and the Upper Tribunal in the Cart case can, in the course of making unappealable decisions, make ordinary errors of law of which Parliament has power to exclude judicial review. Does the IPT stand so differently from them as to mandate a different conclusion? The answer is to be collected from examination of its institutional features, of which I now offer a brief summary. The President of the IPT must hold or have held high judicial office: the 2000 Act, Schedule 3, paragraph 2(2). At present the incumbent is Singh LJ. Its other members must either hold or have held high judicial office or must be UK lawyers of at least seven years standing: Schedule 3, paragraph 1(1). At present the other members are two High Court judges in England and Wales, a former High Court judge in Northern Ireland, and six other distinguished Queens Counsel including a practitioner in Scotland. In exercising its jurisdiction the IPT is required to apply the principles which a court would apply on an application for judicial review: section 67(2) and (3)(c) of the 2000 Act. So the function of judicial review of the lawfulness of the actions of the intelligence services has therefore been allocated to it and, so this court held in the A case, exclusively so. The need for the allocation reflects the sensitivity of any inquiry into the lawfulness of such actions and therefore the unique raft of provisions devised for the conduct of the IPT, as set out in section 68 of the 2000 Act and in the Investigatory Powers Tribunal Rules, first those dated 2000 (2000 No 2665) and now those dated 2018 (2018 No 1334), made under section 69 of it. These provisions reflect its investigative duty under section 67(3)(a) and (b) and include, by section 68(1), a right, subject to the rules, to determine its own procedure and thus to adopt an inquisitional process and, by rule 13(1) of the current rules, freedom from rules of evidence. Disclosure of the nature of the complaint and of any information or document provided to it from any source is closely circumscribed by what is now rule 7, as is the content of the notification to the complainant of its ultimate determination under section 68(4) and what is now rule 15. In the Big Brother Watch case, cited in para 28 above, the European Court of Human Rights said at para 255: the IPT, as the only tribunal with jurisdiction to obtain and review below the waterline [ie closed] material, is not only the sole body capable of elucidating the general operation of a surveillance regime: it is also the sole body capable of determining whether that regime requires further elucidation. The IPT does not form part of Her Majestys Courts and Tribunal Service. In effect it has total autonomy. In his Report of the Review of Tribunals dated March 2001 Sir Andrew Leggatt said at para 3.11 that the IPTs concern with security required it to be separate from all other tribunals and that the Senior President of Tribunals would not be in a position to take charge of it. Parliament has therefore conferred both independence and authority upon the IPT. In the A case Lord Brown, with whom all other members of the court agreed, endorsed at para 23 the conclusion of Laws LJ in the court below that the IPT was a judicial body of like standing and authority to that of the High Court. In the above circumstances I conclude that Parliament does have power to exclude judicial review of any ordinary errors of law made by the IPT. My answer to the second question posed at the outset of this judgment, if limited to the sort of determination relevant to this case, namely to an ordinary determination of law, is yes. So I would have dismissed the appeal. |
On the evening of 12 February 1989, gunmen burst into the North Belfast home of Patrick Finucane, a solicitor. He was having supper with his wife and three children. In their presence he was brutally murdered. He was shot 14 times. Mrs Finucane was injured by a ricocheting bullet which struck her on the ankle. This shocking and dreadful event still ranks, almost 30 years later, as one of the most notorious of what are euphemistically called the Northern Ireland troubles. Mrs Finucane and her children have waged a relentless campaign since Patricks killing to have a proper investigation conducted into the circumstances in which he was murdered. It became clear at an early stage that those responsible were soi disant loyalists. Before long, it also emerged that there was collusion between Mr Finucanes murderers and members of the security forces. Various investigations about the murder and the nature of the collusion have been conducted. None of these has uncovered the identity of those members of the security services who engaged in the collusion nor the precise nature of the assistance which they gave to the murderers. (i) The police investigation An investigation into Mr Finucanes death was launched by the Royal Ulster Constabulary (RUC), then the police force in Northern Ireland. A number of suspects were arrested and interviewed in the days following the murder. None was charged with a criminal offence. The initial RUC investigation did not consider the possibility of collusion between the security services and the loyalists who killed Mr Finucane. On 4 July 1989 a gun was found during a police search in the Shankill Road area of Belfast. It proved to be one of the weapons used to murder Mr Finucane. It had been stolen by a Colour Sergeant of the Ulster Defence Regiment (UDR) in 1987. In April 1990 three people were convicted of possession of the gun and of membership of the banned paramilitary organisation, the Ulster Freedom Fighters, but they could not be linked to Mr Finucanes murder. The Colour Sergeant who had stolen the weapon sold it to a man called Ken Barrett. In 2004 Barrett pleaded guilty to the murder of Mr Finucane. (ii) The inquest When an inquest into Mr Finucanes death was held on 6 September 1990, his widow, Geraldine, was stopped from giving evidence about threats to her husbands life which, it is claimed, had been made to some of his clients by police officers who were interviewing them at Castlereagh Holding Centre, a police detention centre where suspects were interviewed. The coroner conducting the inquest ruled that, as the law then stood, his inquiry was confined to the cause and immediate circumstances of the death. (The inquest was held, obviously, before the decision of the House of Lords in R (Middleton) v West Somerset Coroner [2004] 2 AC 182.) (iii) The Stevens and Langdon Inquiries In September 1989, John Stevens (then the deputy chief constable of the Cambridgeshire constabulary, later Sir John, and yet later Lord Stevens) was appointed by the chief constable of the RUC to investigate allegations of collusion between the security forces and loyalist paramilitaries. This investigation did not specifically examine the murder of Patrick Finucane. Sir John Stevens reported to the chief constable in April 1990. On 17 May 1990, the Right Honourable Peter Brooke MP, the then Secretary of State for Northern Ireland, made a statement to the House of Commons relating to Sir John Stevens investigation. He said that as a result of that inquiry, 94 people had been arrested and that 59 had been reported for or charged with offences. As a consequence of the investigation 45 individuals were later convicted of terrorist related offences mostly for possession of materials likely to be of use to terrorists. Those convicted included 32 members of the Ulster Defence Association (UDA), a loyalist paramilitary group, and 11 members of the UDR. The report of Sir John Stevens which led to these events has never been published. It has later been established that Sir John Stevens was seriously obstructed in his investigations. Instructions were given to deny him access to intelligence information. Material about advance warnings to UDA members in relation to pending arrests was deliberately withheld. The first Stevens Inquiry did lead to the identification of Brian Nelson, however. He was an informer for the security services, in particular, an organisation within the British army known as the Force Research Unit (FRU). Although the army had denied running any agents in Northern Ireland, the discovery of Nelsons fingerprints on intelligence documents put paid to that particular denial. Nelson had been recruited by FRU. On their instigation, he infiltrated the UDA and became its chief intelligence officer. His role involved the gathering of information about possible targets for assassination. Nelson was arrested by the Stevens team on 12 January 1990. He made statements to the investigators about his activities. In due course, he was charged with a number of terrorist crimes and in January 1992 he pleaded guilty to five charges of conspiracy to murder, two of collecting information likely to be useful to terrorists, 12 charges of aiding and abetting others to possess or collect information likely to be useful to terrorists and one charge of possession of a firearm with intent. He was sentenced to ten years imprisonment. None of his convictions related to the murder of Patrick Finucane. At Nelsons sentencing hearing, the commanding officer of FRU, identified as Colonel J, gave evidence on his behalf. He claimed that Nelson had given information to FRU which had been instrumental in saving many lives. This evidence is highly controversial. It has been the subject of examination in a number of reports concerning Mr Finucanes murder. These shall be discussed later in this judgment. On 11 February 1992, Mrs Finucane began a civil action against the Ministry of Defence and Brian Nelson. She later commenced proceedings against the police. These proceedings remain outstanding. On 8 June 1992 a second Stevens Inquiry was instituted. This followed the broadcast on the BBC of a programme entitled, Dirty War, in which it was claimed that Nelson had been involved in a number of murders and that he had been responsible for targeting Patrick Finucane. It was also reported that he had passed Mr Finucanes photograph to the UDA. Interim reports from the second Stevens Inquiry were submitted to the Director of Public Prosecutions in April and October 1994 and a final report was delivered on 24 January 1995. No prosecutions were instituted on foot of those reports. Again, this inquiry did not address directly the killing of Mr Finucane. In 1999, a non governmental organisation, British Irish Rights Watch, provided the Secretary of State for Northern Ireland with a paper entitled, Deadly Intelligence: State Collusion with Loyalist Violence in Northern Ireland. This made a number of claims including that there had been state collusion in the murder of Patrick Finucane. This, the paper asserted, had taken place as a result of contact and exchanges between Brian Nelson, his FRU handlers and the RUC Special Branch. Shortly after this, the Secretary of State asked a Home Office civil servant, Anthony Langdon, to conduct an inquiry into whether a fresh investigation of these claims was warranted. Among the conclusions reached by Mr Langdon were these: (1) There were grounds for believing that one of his army handlers had assisted Nelson in the targeting of a murder victim; (2) The same handler knew nothing about the threat to Patrick Finucane before his murder; (3) But the handler had refused to answer police questions about these matters; (4) Colonel Js evidence at Nelsons trial had misled the trial judge; (5) The FRU gave Nelson intelligence information in some instances; (6) Nelsons handlers were well aware of his efforts to support the UDA in targeting republicans; (7) Finucane to his handler before the murder. It was probable that Nelson had mentioned something about Patrick A third Stevens Inquiry was set up in May 1999. This focused on the murder of Mr Finucane and another man and the question of collusion between members of the security services and loyalist paramilitaries. The following month a man called William Stobie was charged with the murder of Mr Finucane. During a court hearing, Stobies solicitor stated that he had twice given information about the intended attack on Mr Finucane and that on neither occasion had this information been acted on. The case against Stobie collapsed when a vital witness refused to give evidence and all charges against him were dismissed in November 2001. A short time later, on 12 December 2001, he was murdered by, it is believed, loyalist paramilitaries. On 19 June 2002 the BBC broadcast a programme called, A licence to murder. In the course of this, a reporter, John Ware, interviewed Sir John Stevens and asked, Was what was done in the name of the state defensible? He replied . the activities of the so called double agent Nelson of course [were] inexcusable. Detective Sergeant Nicholas Benwell, a member of the Stevens Inquiry team from 1989 to 1994, was also interviewed and asked did . the Stevens Inquiry come to the conclusion that military intelligence was colluding with their agent . to ensure that the loyalists shot the right people? He replied, Yes, that was the conclusion we came to . there was certainly an agreement between his handlers and Nelson that the targeting should concentrate on what they described as the right people. On 17 April 2003 Sir John Stevens published a report which contained what was described as an overview of his investigation into the murder of Patrick Finucane. In it he said, at para 4.6, that he had . uncovered enough evidence to lead me to believe that the murder . of Patrick Finucane could have been prevented. He also concluded that . the RUC investigation of Patrick Finucanes murder should have resulted in the early arrest and detection of his killers. He found, at para 4.9, there had been collusion in the murder and said, . the co ordination, dissemination and sharing of intelligence were poor. Informants and agents were allowed to operate without effective control and to participate in terrorist crimes. Nationalists were known to be targeted but were not properly warned or protected. Crucial information was withheld from senior investigating officers. Important evidence was neither exploited nor preserved. As to William Stobie, Sir John said, at para 2.7: It has now been established that before the murder of Patrick Finucane, Stobie supplied information of a murder being planned. He also provided significant information to his Special Branch handlers in the days after the murder. This principally concerned the collection of a firearm. However, this vital information did not reach the original murder inquiry team and remains a significant issue under investigation by my Inquiry team. The third Stevens Inquiry also examined the role of Brian Nelson in the murder of Patrick Finucane. The overview report stated, at para 2.12: . Nelson was aware [of] and contributed materially to the intended attack on Finucane. It is not clear whether his role in the murder extended beyond passing a photograph, which showed Finucane and another person, to one of the other suspects. Nelson was rearrested and interviewed. There was no new evidence and he was not charged with any further offences. While the third Stevens Inquiry was taking place, in the summer of 2001, political talks between the United Kingdom and Irish governments were held at Weston Park, Staffordshire. It was decided that a judge of international standing would be appointed to undertake a thorough investigation of allegations of collusion in a number of cases including that of Patrick Finucane. The statement about the appointment of this judge contained the following: If the appointed judge considers that in any case [the inquiry is not provided with a] sufficient basis on which to establish the facts, he or she can report to this effect with recommendations as to what further action should be taken. In the event that a Public Inquiry is recommended in any case, the relevant Government will implement that recommendation. (Emphasis supplied) (iv) The Strasbourg case Mrs Finucane applied to the European Court of Human Rights (ECtHR) for a declaration that the United Kingdom government had failed to carry out a proper investigation into her husbands death and for an order requiring the government to conduct a full public inquiry into its circumstances. On 1 July 2003, ECtHR held that there had not been an inquiry into the death of Patrick Finucane which complied with article 2 of the European Convention on Human Rights and Fundamental Freedoms (ECHR). The first two Stevens inquiries, it held, since they did not involve an investigation of the killing of Mr Finucane, could not meet the requirements of article 2. Quite apart from this, the reports had not been made public and Mrs Finucane had not been informed of their findings. The necessary elements of public scrutiny and accessibility by the family of Mr Finucane to information about the circumstances in which he came to be killed were therefore absent. As to the third inquiry, which was concerned with the Finucane murder, ECtHR held that, since it had begun ten years after the event, it could not meet the requirement that effective investigations be commenced promptly and conducted with due expedition. The court also held that the absence of reasons for decisions not to prosecute in controversial cases was not conducive to public confidence and could deny the victims family access to information about a matter of crucial importance to them and prevent any legal challenge of the decision. The court observed that, despite the suspicions of collusion, no reasons had been given at the time for the various decisions not to prosecute. No information was made available to Mrs Finucane or to the public that might have provided reassurance that the rule of law had been respected. In these circumstances, the requirements of article 2 could not be met, unless the information was forthcoming in some other way. That had not happened. In sum, the court held that the proceedings for investigating the death of Patrick Finucane had failed to provide a prompt and effective investigation into the allegations of collusion by security personnel. ECtHR did not find it necessary to address further allegations of a lack of accessibility by the family to the Stevens 3 investigations or of a lack of independence between that inquiry and the Police Service of Northern Ireland (PSNI) (which had replaced the RUC). The court found that there had been a failure to comply with the procedural obligation imposed by article 2. ECtHR referred to the circumstance that it had not previously indicated that a government should hold a fresh investigation in response to a finding of a breach of the procedural obligation under article 2. On that account, it decided that it was not appropriate to do so in this case. It stated that it could not be assumed that a future investigation could usefully be carried out or that such an investigation would provide any redress, either to the victims family or by way of providing transparency and accountability to the wider public. The lapse of time, the effect on evidence and the availability of witnesses might make such an investigation an unsatisfactory or inconclusive exercise. The court stated that it fell to the Committee of Ministers acting under article 46 to consider what might practicably be required by way of the governments obligation to comply with its article 2 obligations. (v) The Committee of Ministers consideration of the case Article 46.2 of ECHR provides that the final judgment of ECtHR shall be transmitted to the Committee of Ministers, which shall supervise its execution. The Committee of Ministers is the Council of Europes statutory decision making body. It is made up of the ministers for foreign affairs of member states or their permanent diplomatic representatives in Strasbourg. The Secretariat of the Commission published its assessment of the case on 19 November 2008. It suggested that the requirements of public scrutiny and accessibility by the family to information about Mr Finucanes death had been met. Crucially, this decision was based on a detailed statement by the Public Prosecution Service (PPS) of the reasons that it had decided not to institute further prosecutions and the absence of challenge to those reasons. (The Director of Public Prosecutions had issued a statement on 25 June 2007, having taken the advice of independent senior counsel. The statement recorded that, following his examination of the third Stevens Inquiry report, the Director had concluded that the test for prosecution was not met in relation to any other possible criminal proceedings relating to Mr Finucanes murder, apart from those which had already been taken against Stobie and Barrett. In particular, the Directors statement continued, the available evidence was insufficient to establish that any member of the FRU had agreed with Nelson or anyone else that the murder was to take place; that any RUC officer had agreed with Stobie or Barrett that Mr Finucane was to be murdered; or that there was misfeasance in public office by members of the FRU in the handling of Nelson as an agent). In the assessment report of 19 November 2008, it was also stated that the Committee of Ministers might strongly consider encouraging the UK authorities to continue discussion with Mrs Finucane on the terms of a possible inquiry into her husbands murder. That recommendation was accepted by the Committee of Ministers on 17 March 2009 and it was decided that the examination of the specific measures taken by the UK on foot of the decision of ECtHR should be closed. Importantly, however, this decision was made on the basis that the UK was actively working on proposals for establishing a statutory public inquiry. (vi) Judge Corys inquiry Several years before the Committee of Ministers consideration of the case, on foot of the agreement made at Weston Park (see para 23 above), Judge Peter Cory, a retired justice of the Supreme Court of Canada, was appointed in June 2002 to conduct an inquiry into the murders of a number of people, including that of Mr Finucane. His letter of appointment contained an assurance that, in the event that he recommended a public inquiry into any of the deaths, the government would abide by that recommendation. in relation to the killing of Patrick Finucane, were these: (i) A public inquiry into his murder was required; (ii) The weight to be attached to Brian Nelsons statement to the Stevens Inquiry could only be determined at a hearing where the evidence was tested by examination and cross examination in a public forum; Judge Corys report was published on 1 April 2004. Among his conclusions, (iii) The documentary evidence which Judge Cory had considered was contradictory regarding the extent to which FRU had advance knowledge of the targeting of Mr Finucane; (iv) While the inference could be drawn that FRU did indeed have prior information that Mr Finucane had been targeted, a decision on whether that was so could only be properly dealt with at a public inquiry; (v) In 1981 the security services had been prepared to disregard warnings that Mr Finucane was in imminent and serious danger. They had chosen this path in order to protect the identity of one of their agents; (vi) The failure of the security services in June 1985 and December 1988 to warn Mr Finucane that he was in danger was significant and might well be sufficient in [itself] to warrant a public inquiry. In any event [it] must be taken into account in considering the overall or cumulative effect of all the relevant documents. That cumulative effect leads to a conclusion that a public inquiry should be held to examine the issues raised in this case; (vii) There was evidence of a persisting attitude within the RUC special branch and the FRU that they were not bound by the law and were above its reach. The relevance and significance of this should be considered at a public inquiry. By any standard, these amounted to compelling reasons for the holding of a public inquiry. Since prosecutions in the Finucane case were pending at the time that Judge Cory reported, however, an inquiry into his death could not be instituted immediately. But the Secretary of State for Northern Ireland made a statement that the government would set out the way ahead for the inquiry when the prosecutions ended. Following Barretts conviction, the Secretary of State wrote to Mrs Finucane, outlining a statement which he intended to make to the House of Commons on 23 September 2004. That letter stated that, in the inquiry into Mr Finucanes killing, the tribunal would be tasked with uncovering the full facts of what happened and will be given all of the powers and resources necessary to fulfil that task. In order that the inquiry can take place speedily and effectively and in a way that takes into account the public interest, including the requirements of national security, it would be necessary to hold the inquiry on the basis of new legislation which will be introduced shortly. The new legislation referred to here was to be the Inquiries Act 2005. Before its introduction (on 7 June 2005), public inquiries were held under the Tribunals of Inquiry (Evidence) Act 1921. It is the governments case that this would have provided a wholly unsuitable vehicle for an inquiry into the death of someone such as Mr Finucane. Since national security issues were bound to arise, applications for public interest immunity (whereby certain matters that had to remain confidential would be excluded from evidence) would be an inevitable feature. This, the government suggested, would restrict the ambit of an inquiry such as was proposed into Mr Finucanes murder. The new legislation was intended to remove the need for a public interest immunity procedure in public inquires. All relevant information could be considered, subject to restrictions on further publication. It had been argued on behalf of Mrs Finucane that the 2005 Act had been enacted specifically to deal with the proposed public inquiry into her husbands death. This was refuted by the government. It was pointed out that the 2005 Act had been preceded by a public consultation exercise conducted by the Department of Constitutional Affairs and a parliamentary inquiry carried out by the administration committee of the House of Commons. Moreover, the Act had been subject to post legislative scrutiny on two occasions. In a note submitted to this court after the hearing of the appeal, the appellant explained that she had understood from correspondence that she had received from the government and the terms of the Secretary of States statement to the House of Commons that the 2005 Act had to be introduced to allow the inquiry into her husbands death to proceed. She now accepts that all that the government had intended to convey was that the inquiry could not take place until the legislation had been enacted. Mrs Finucane objected strenuously to the proposal that the inquiry into her husbands death be conducted under the terms of the 2005 Act. Section 19 of that Act allows ministers to impose restrictions on (i) attendance at an inquiry or any particular part of an inquiry; and (ii) disclosure of any evidence or documents given, produced or provided to an inquiry. The case made by Mrs Finucane was that, at least potentially, this removed substantial control of the inquiry process from the person chairing the inquiry and transferred it to ministerial edict. Various discussions and efforts to obtain agreement and compromise took place over the years that followed. These proved unavailing. In May 2010, following the general election, a new coalition government was formed and discussions about the inquiry into Patrick Finucanes murder took a different turn indeed, a series of different turns. These have been well and fully described in the judgment of Gillen LJ in the Court of Appeal in Northern Ireland (Gillen LJ, Deeny J and Horner J [2017] NICA 7) in paras 41 61 and need not be repeated extensively here. In broad summary, these include: (i) The openly stated views of the Secretary of State for Northern Ireland, the Rt Hon Owen Paterson MP, and the Prime Minister, the Rt Hon David Cameron MP, that, generally, there should not be long running, open ended and costly inquiries into the past in Northern Ireland. Indeed, a statement to that effect had appeared in the Conservative partys manifesto for the 2010 election; (ii) On 3 November 2010, Mr Paterson wrote to the Prime Minister, outlining the process which he intended to follow in relation to deciding whether it was in the public interest to establish a public inquiry into the death of Patrick Finucane. He referred to the policy that, in general, there should not be expensive, lengthy inquiries. He also provided information about the cost of recent inquiries. He made it clear, however, that the policy would not necessarily dictate the outcome each case would be considered on an individual basis; (iii) Following a meeting between the Prime Minister, the Attorney General and Mr Paterson, the last named made a statement to Parliament on 11 November 2010, in which he said that he intended to embark on a two month consultation period on the question of whether it was in the public interest to establish a public inquiry into the death of Patrick Finucane. This would involve discussions with the family. The views of public authorities and the public in general would be sought. Six particular factors would be taken into account: The commitment given in 2004; Public concern arising from the reviews and investigations that The experience of other inquiries established after the Weston had occurred; Park Commitments; The delay which had occurred since the 2004 announcement Political developments that have taken place in Northern and the potential length of the inquiry; Ireland since 2004; government finances. The potential costs of any inquiry and the current pressure on (iv) Meetings between Mrs Finucanes legal representatives and the government occurred in January and February 2011. These centred on whether a Baha Mousa type inquiry would be acceptable to the family. (The Baha Mousa inquiry, conducted by the Rt Hon Sir William Gage under the 2005 Act (2011) (HC 1452) had devised a protocol which provided that questions of disclosure should be decided by Sir William, using the restriction order procedure but that this did not prevent the use of a restriction notice by a minister). Some time after the meetings had taken place, representatives of the family indicated that, of the various formats for an inquiry that had been discussed, the Baha Mousa format would be the most appropriate. The government contends, however, that the Finucane family did not respond to the question of whether a restriction notice could, if necessary, continue to be issued by a minister, something which was possible under the Baha Mousa protocol; (v) Various briefing papers were submitted to ministers and a succession of meetings between civil servants and ministers took place between April and July 2011. In one significant email of 9 July 2011, Sir Jeremy Heywood, later the cabinet secretary, stated: Does the PM seriously think that it is right to renege on the previous Governments clear commitment to hold a full judicial inquiry? This was a dark moment in the countrys history far worse than anything that was alleged in Iraq/Afghan. I cannot really think of any argument to defend not having a proper inquiry. As Gillen LJ observed in para 59 of his judgment, Sir Jeremy moderated that opinion somewhat in later correspondence, but it nevertheless remains a striking expression of view from a senior civil servant; (vi) The decision not to hold a public inquiry was made at a meeting of relevant ministers and civil servants on 11 July 2011. The prime minister chaired the meeting. Minutes of the meeting recorded him as having made the following points: The primary objective was to find the truth. There were strong reasons to conclude that the public interest in securing this objective would be better served by a process other than a potentially lengthy, costly and procedurally difficult public inquiry which might be unworkable in light of national security issues. His preference was for a speedier, paper based review of all existing material by an independent person. any announcement. There would be discussion with Mrs Finucane in advance of On 12 October 2011, the Secretary of State for Northern Ireland made a statement to the House of Commons that the former United Nations war crimes prosecutor, Sir Desmond de Silva, had been asked to conduct an independent review of any state involvement in Mr Finucanes murder. He was to have unrestricted access to documents and was free to meet anyone whom he felt could help with his inquiry. The de Silva Review (2012) (HC 802 I) The terms of reference for Sir Desmonds review were these: To draw, as required, from the extensive investigations that had already taken place; To carry out a non statutory, document based review without oral hearings and produce a full account of any involvement by the army, the RUC, the security service or other UK government body in the murder of Patrick Finucane; To have full access to the archives of the various Stevens inquiries and to all government papers; His work was to be carried out independently of government; He was not asked to, nor was he given the power to, hold oral hearings although, if he wished to meet people who could assist with the work, that was a matter for him. The manner in which Sir Desmond carried out his review, the people he met, the documents which he considered and the conclusions which he reached are comprehensively summarised in paras 64 67 of Gillen LJs judgment in the Court of Appeal and need not be repeated verbatim here. The salient points are these: (i) Mrs Finucane did not participate in Sir Desmonds review and did not meet him despite having been invited to do so; (ii) He sought and obtained a wide range of documents from government departments and other sources. All relevant government agencies had co operated fully with him. In consequence, he saw and considered many more documents than those which had been made available to Sir John Stevens and Judge Cory. He had had access to sensitive intelligence files. The reason that Sir John Stevens and Judge Cory had not received many of the documents which had been made available to Sir Desmond was not explained; (iii) He met a number of individuals who had served in the army, the RUC and other security services. He also received a number of written submissions; (iv) He found that there was a clear and wilful failure on the part of successive governments in the 1980s to establish and enforce a proper framework for the running of agents; (v) He found that Brian Nelsons desire to target republicans was well known to the FRU. His handlers had supplied him with information which had been used by him in the selection of targets and there was inadequate supervision by the security service of the contact between FRU and Nelson; What Sir Desmond described as his most serious finding was the failure of RUC special branch to react to the intelligence which Nelson had supplied. FRU claimed to have supplied this information to special branch but they insisted that they had not received it. Sir Desmond considered that FRUs version was more likely to be accurate. (vi) The RUC, the security service and the secret intelligence service failed to warn Patrick Finucane of known and imminent threats to his life in 1981 and 1985; (vii) One or more officers in the RUC probably did propose Mr Finucane as a target for loyalist terrorists in December 1988; (viii) Barrett received intelligence about Patrick Finucane from a police source; (ix) Security service propaganda initiatives may have caused Mr Finucane to be identified as a legitimate target for loyalist terrorists; (x) RUC officers, RUC special branch and army officers obstructed the Stevens investigations and lied to his investigation team. Sir Desmonds overall conclusion about Patrick Finucanes murder was expressed in this passage of his report: 115. I am left in significant doubt as to whether Patrick Finucane would have been murdered by the UDA in February 1989 had it not been for the different strands of involvement by elements of the state. The significance is not so much, as Sir John Stevens concluded in 2003, that the murder could have been prevented, though I entirely concur with this finding. The real importance, in my view, is that a series of positive actions by employees of the state actively furthered and facilitated his murder and that, in the aftermath of the murder, there was a relentless attempt to defeat the ends of justice. 116. My Review of the evidence relating to Patrick Finucanes case has left me in no doubt that agents of the state were involved in carrying out serious violations of human rights up to and including murder. However, despite the different strands of involvement by elements of the state, I am satisfied that they were not linked to an over arching state conspiracy to murder Patrick Finucane. Nevertheless, each of the facets of the collusion that were manifest in his case the passage of information from members of the security forces to the UDA, the failure to act on threat intelligence, the participation of state agents in the murder and the subsequent failure to investigate and arrest key members of the West Belfast UDA can each be explained by the wider thematic issues which I have examined as part of this Review. Another discrete aspect of Sir Desmond de Silvas review requires particular attention. In the course of his review, Sir Desmond expressed a wish to speak to one of Brian Nelsons former handlers. She has been referred to as A/13. Sir Desmond dealt with this somewhat cryptically at the end of the passage in his report dealing with those persons from whom he had received oral evidence, para 1.48. He merely observed, I also sought to meet with one of Brian Nelsons former handlers (A/13), though in the event this was not to be possible due to medical reasons pertaining to the handler. In the course of the hearing of the appeal before this court, the question arose as to whether any medical evidence had been supplied to support the claim that this individuals medical condition made it impossible for her to meet Sir Desmond. This sparked an exchange of post hearing submissions from the parties. The respondent made the following reply: Following consultation with the solicitor to the Review and also the Review archive, it has been ascertained that the availability of the handler for interview was the subject of an exchange of correspondence between the Review and the MOD and also internal consideration by the Review team. In late 2011/early 2012, the Review made a request, via the MOD, to interview the handler in order both to provide information to the review and also to comment upon the evidence of others. An indication was also given by the Review that adverse inferences may be drawn if an interview was declined without good reason. In response, the Review was advised by the MOD (following communication with the witness) that the handler has been suffering from stress for some time and is very frail. The MOD also advised that the handler recognised the In response to this information, the appellant has made the following written submissions: Reviews desire for an interview but had expressed a belief that an interview would be seriously detrimental to their health. In April 2012 the Review advised the MOD that it looked increasingly unlikely that Sir Desmond would wish to interview the handler, but that if he decided that he would be assisted by such a meeting he would ordinarily need to be satisfied by medical evidence that such an interview would indeed be seriously detrimental to their health. The clear impression given by the report is that Sir Desmond did wish to meet with the handler but that such a meeting was not possible for medical reasons. However, it now appears (from the note provided [by the respondent] to the court) that in fact Sir Desmond did not consider it necessary to meet with this individual (although the reason for his apparent change of mind and the wording of the report are not explained). In any event, the note clarifies that the medical reasons which prevented the meeting were self reported and indeed came to Sir Desmond, not from A/13 herself, but from the MOD. Those reasons were not, at any stage, checked or verified by reference to a medical professional. The importance of this handlers evidence lies in the question that was central to Sir Desmonds review ie whether members of the Armys Force Research Unit (by whom Mr Nelson was engaged) had advance knowledge of the plan to murder Patrick Finucane and the extent of that knowledge. FRUs advance knowledge is one of the most important unanswered questions about the murder. Judge Cory addressed this issue at para 1.134 and following of his report His interpretation of the material led him to say it does seem reasonable to infer both that: Nelson would have been aware of the targeting of Patrick Finucane and that he would have given that information to his handlers. Mr Langdon concluded There are grounds for thinking that one of the Army handlers assisted Nelson in the targeting of one murder victim (McDaid) and also that the same handler knew something about the threat to Patrick Finucane before his murder (despite the absence of any reference to such knowledge in the contemporary Army records). The handler concerned has refused to answer police questions about these matters. [Sir Desmond] admitted that the issue of what Nelson had told his handlers in advance of the murder was a complex and challenging [question] to answer However he then went on to disagree with the inferences and (provisional) conclusions drawn by Judge Cory (and Mr Langdon) by reference to the same material the judge had seen and with additional material comprising of (sic) submissions by the MOD and A/05 and an interview with A/05, which material, unsurprisingly, denied that Nelson had provided advance information about the murder. In these circumstances, and on any analysis, the state of knowledge of Nelsons surviving handler was crucial. She was clearly an important potential witness for Sir Desmonds review. The grounds of challenge The appellant claims that she had a legitimate expectation that a public inquiry into her husbands death would be held. This, she says, is based on the unequivocal assurance given to her by the then Secretary of State for Northern Ireland and his statement to the House of Commons on 23 September 2004. It was for the government to show that there were valid grounds for reneging on the promise made to Mrs Finucane. It had failed to do that. On the contrary, all the relevant evidence pointed to the decision not to hold the inquiry being a sham. The basis on which it had been suggested that this was a decision taken in the public interest was spurious, the appellant claims. Moreover, the process of consultation and discussions (outlined in paras 41 43 above) was entirely cosmetic. The outcome had been predetermined. The process which the government announced was not followed, the appellant contends. Although it had been stated that the decision whether to establish a public inquiry was primarily a matter for the Secretary of State for Northern Ireland, in the event, the process was driven by the Prime Minister, the appellant claims. The Secretary of State, after the various consultations and discussions that he had undertaken, had identified two possible courses: to have a statutory inquiry with clear time and cost controls or not to hold an inquiry at all. Although these options had been described as the only two viable potential ways forward . , a third option emerged during a meeting between the Secretary of State and the Prime Minister on 5 May 2011. This was a reiteration of the suggestion made by the Prime Minister on 5 November 2010, namely, that an independent person [should] carry out a rapid examination of the details of the case . but stopping short of a full public inquiry. This, the appellant argues, demonstrates that there was no genuine adherence to the process which the government had announced would take place. It is further argued that the failure to establish a public inquiry constitutes a violation of the appellants rights under article 2 of the ECHR and section 6 of the Human Rights Act 1998 (HRA). This was not advanced as a freestanding argument for a declaration that the investigations into Mr Finucanes death which have so far taken place are not sufficient to constitute an article 2 compliant inquiry. Rather, the argument was made in support of the appellants claim that the government should be held to its promise of a public inquiry. Finally, the appellant sought to introduce in the hearing before this court a further ground which had not been advanced in the courts below. It was suggested that the practice of accepting affidavit evidence from government officials in proceedings challenging ministerial decisions should be amended. The affidavit evidence of civil servants as to the circumstances in which the decision not to hold a public inquiry should not be accepted, the appellant claimed. Legitimate expectation In R v Inland Revenue Comrs, Ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545, 1568 1569, Bingham LJ described the concept of legitimate expectation in this way: So if, in a case involving no breach of statutory duty, the [public authority] makes an agreement or representation from which it cannot withdraw without substantial unfairness to the [citizen] who has relied on it, that may found a successful application for judicial review If a public authority so conducts itself as to create a legitimate expectation that a certain course will be followed it would often be unfair if the authority were permitted to follow a different course to the detriment of one who entertained the expectation, particularly if he acted on it. In what has subsequently come to be regarded as the leading case on substantive legitimate expectations, the concept was considered by the Court of Appeal in R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213. Acknowledging a contemporary controversy surrounding the courts role in legitimate expectations cases, Lord Woolf MR described three categories of case, at para 57: (a) The court may decide that the public authority is only required to bear in mind its previous policy or other representation, giving it the weight it thinks right, but no more, before deciding whether to change course. Here the court is confined to reviewing the decision on Wednesbury grounds (Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223). This has been held to be the effect of changes of policy in cases involving the early release of prisoners: see In re Findlay [1985] AC 318; R v Secretary of State for the Home Department, Ex p Hargreaves [1997] 1 WLR 906. (b) On the other hand the court may decide that the promise or practice induces a legitimate expectation of, for example, being consulted before a particular decision is taken. Here it is uncontentious that the court itself will require the opportunity for consultation to be given unless there is an overriding reason to resile from it (see Attorney General of Hong Kong v Ng Yuen Shiu [1983] 2 AC 629) in which case the court will itself judge the adequacy of the reason advanced for the change of policy, taking into account what fairness requires. (c) Where the court considers that a lawful promise or practice has induced a legitimate expectation of a benefit which is substantive, not simply procedural, authority now establishes that here too the court will in a proper case decide whether to frustrate the expectation is so unfair that to take a new and different course will amount to an abuse of power. Here, once the legitimacy of the expectation is established, the court will have the task of weighing the requirements of fairness against any overriding interest relied upon for the change of policy. (Emphasis added) Shortly after the decision in Coughlan, the Court of Appeal had occasion to again consider the reach of substantive legitimate expectation in R v Secretary of State for Education and Employment, Ex p Begbie [2000] 1 WLR 1115. At p 1130 Laws LJ said: As it seems to me the first and third categories explained in the Coughlan case [2000] 2 WLR 622 are not hermetically sealed. The facts of the case, viewed always in their statutory context, will steer the court to a more or less intrusive quality of review. The key factor in Coughlan was, Laws LJ said, the limited number of individuals affected by the promise in question. Significantly, so far as concerns the present appeal, he also said at p 1131: The more the decision challenged lies in what may inelegantly be called the macro political field, the less intrusive will be the courts supervision. More than this: in that field, true abuse of power is less likely to be found, since within it changes of policy, fuelled by broad conceptions of the public interest, may more readily be accepted as taking precedence over the interests of groups which enjoyed expectations generated by an earlier policy. Laws LJ considered the evolving case law in this field in Nadarajah v Secretary of State for the Home Department [2005] EWCA Civ 1363, albeit on an expressly obiter basis see para 67. In explaining the basis for substantive legitimate expectations, he made these observations at para 68: 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. Laws LJ also returned in para 69 to the theme of decisions not to fulfil an undertaking for policy reasons falling within the macro political field. I will consider his remarks on this subject in the next section of this judgment. The subject of substantive legitimate expectation arose again in R (Bhatt Murphy) v Independent Assessor [2008] EWCA Civ 755. At para 35, Laws LJ said: the notion of a promise or practice of present and future substantive policy risks proving too much. The doctrine of substantive legitimate expectation plainly cannot apply to every case where a public authority operates a policy over an appreciable period. That would expand the doctrine far beyond its proper limits. The establishment of any policy, new or substitute, by a public body is in principle subject to Wednesbury review. But a claim that a substitute policy has been established in breach of a substantive legitimate expectation engages a much more rigorous standard. It will be adjudged, as I have foreshadowed, by the courts own view of what fairness requires. This is a principal outcome of this courts decision in Ex p Coughlan (see in particular paras 74, 78, 81 and 82). It demonstrates the importance of finding the reach of substantive legitimate expectation. (Emphasis added) At para 68 of the same case, Sedley LJ made these observations: A duty to consult before modifying policy may arise from an explicit promise to do so. But there is no equivalent expectation that policy itself, and with it any substantive benefits it confers, will not change. It follows that the most that the beneficiary of a current policy can legitimately expect in substantive terms is, first, that the policy will be fairly applied or disapplied in his particular case, and secondly that if the policy is altered to his disadvantage, the alteration must not be effected in a way which unfairly frustrates any reliance he has legitimately placed on it. From these authorities it can be deduced that where a clear and unambiguous undertaking has been made, the authority giving the undertaking will not be allowed to depart from it unless it is shown that it is fair to do so. The court is the arbiter of fairness in this context. And a matter sounding on the question of fairness is whether the alteration in policy frustrates any reliance which the person or group has placed on it. This is quite different, in my opinion, from saying that it is a prerequisite of a substantive legitimate expectation claim that the person relying on it must show that he or she has suffered a detriment. In this case, it was argued for the respondent that it was incumbent on Mrs Finucane to show that she had suffered a detriment. That argument simply does not avail in this instance, since the question of detriment can only arise, if it arises at all, in the context of a substantive legitimate expectation. Here the promise made did not partake of a substantive benefit to a limited class of individuals (as, for instance, in Ex p Coughlan); it was a policy statement about procedure, made not just to Mrs Finucane but to the world at large. The onus of establishing that a sufficiently clear and unambiguous promise or undertaking, sufficient to give rise to a legitimate expectation, is cast on the party claiming it see, for instance, In re Loreto Grammar Schools Application for Judicial Review [2012] NICA 1; [2013] NI 41, para 42 et seq. In Paponette v Attorney General of Trinidad and Tobago [2012] 1 AC 1, para 37, Lord Dyson said: The initial burden lies on an applicant to prove the legitimacy of his expectation. This means that in a claim based on a promise, the applicant must prove the promise and that it was clear and unambiguous and devoid of relevant qualification. If he wishes to reinforce his case by saying that he relied on the promise to his detriment, then obviously he must prove that too. The respondent in the present case sought faintly to argue that the statements made by the government were not sufficiently unconditional and devoid of qualification to give rise to a legitimate expectation. Stephens J and the Court of Appeal rejected that argument, and, in my judgment, they were right to do so. At para 64, Stephens J said: . there was a promise which was a clear and unambiguous representation devoid of relevant qualifications that a public inquiry into the death of Patrick Finucane would be held . The only relevant qualification to that promise was that the public inquiry had to be recommended by Judge Cory. As soon as that recommendation was made then there was a substantive legitimate expectation that a public inquiry would be held. In the Court of Appeal Gillen LJ at para 76 said: We are satisfied that the Government made to the appellant a promise to hold a public inquiry that was clear, unambiguous and devoid of relevant condition subject only to the qualification that it required to be recommended by Judge Cory. In the printed case for the appellant, at para 74, the various undertakings given by government ministers and the Prime Minister between 3 March 2004 and 7 May 2008 are set out. They need not be repeated here. It is quite clear that, individually and cumulatively, they amount to an unequivocal undertaking to hold a public inquiry into Mr Finucanes death. As pointed out in para 35 above, the critical undertaking given by the government was that the public inquiry would have to be conducted under new legislation in due course the 2005 Act. That there was a plain and explicit undertaking that a public inquiry would take place cannot be doubted, however. In R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] AC 453, at para 60, Lord Hoffmann summarised the relevant principles: The relevant principles of administrative law were not in dispute between the parties and I do not think that this is an occasion on which to re examine the jurisprudence. It is clear that in a case such as the present, a claim to a legitimate expectation can be based only upon a promise which is clear, unambiguous and devoid of relevant qualification: see Bingham LJ in R v Inland Revenue Comrs, Ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545, 1569. It is not essential that the applicant should have relied upon the promise to his detriment, although this is a relevant consideration in deciding whether the adoption of a policy in conflict with the promise would be an abuse of power and such a change of policy may be justified in the public interest, particularly in the area of what Laws LJ called the macro political field: see R v Secretary of State for Education and Employment, Ex p Begbie [2000] 1 WLR 1115, 1131. (Emphasis added) For reasons that will shortly appear and for those given at para 63 above, it is unnecessary for me in this case to decide whether it is a requirement that there be a reciprocal undertaking by the person or group to whom the promise is made or that they should suffer a detriment in order to sustain a claim for substantive legitimate expectation. But, if it had been necessary to decide that point, I would have concluded that it was not. Lord Carnwath has provided, in his judgment in this case, an explanation of his remarks in United Policyholders Group v Attorney General of Trinidad and Tobago [2016] UKPC 17; [2016] 1 WLR 3383. It is clear that those remarks were obiter see the leading judgment of Lord Neuberger of Abbotsbury in the same case at para 40, where he said that, for present purposes it is unnecessary for the Board to consider the law on this difficult and important topic more fully. I would disagree with any suggestion that it must be shown that the applicant suffered a detriment before maintaining a claim for frustration of legitimate expectation for a fundamental reason. A recurring theme of many of the judgments in this field is that the substantive legitimate expectation principle is underpinned by the requirements of good administration. It cannot conduce to good standards of administration to permit public authorities to resile at whim from undertakings which they give simply because the person or group to whom such promises were made are unable to demonstrate a tangible disadvantage. Since the matter does not arise, however, it is better that the point be addressed in a future case when it is truly in issue. I turn now, therefore, to consider the circumstances in which it is open to a public authority to decide not to comply with a previously given undertaking. Resiling from the undertaking Stephens J found that the considerations outlined in the Secretary of States statement to Parliament on 11 November 2010 (set out in para 42(iii) above) were overriding interests which, as far as the decision maker was concerned, justified the frustration of the expectation. para 166. He held that the decision to resile from the undertaking was clearly concerned with macro political issues of policy. para 167. The reference to macro political issues derived from the judgment of Laws LJ in Nadarajah. At para 69 of the judgment in that case, Laws LJ said: 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 individuals 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. Where political issues overtake a promise or undertaking given by government, and where contemporary considerations impel a different course, provided a bona fide decision is taken on genuine policy grounds not to adhere to the original undertaking, it will be difficult for a person who holds a legitimate expectation to enforce compliance with it. The circumstances in which the change of heart on the part of the government as to holding a public inquiry occurred have been described in paras 41 to 43 above. The appellant has argued that the vaunted investigation as to the need for the public inquiry which had been promised was a sham; that the outcome was fixed; that the proposal that the Secretary of State for Northern Ireland be in overall charge of the inquiries was ignored; and that the Prime Minister effectively took over those discussions and drove them to a conclusion which he personally wanted to achieve. These are serious charges and would require clear evidence before they could be accepted see Richards LJ in R (N) v Mental Health Review Tribunal (Northern Region) [2005] EWCA Civ 1605; [2006] QB 468, para 62. There is no reason to doubt the genuineness of the conviction of the appellant as to the reasons which she believes prompted the government to renege on the promise that she had been given. But, however strongly held is her belief as to the circumstances in which the decision not to hold the inquiry was taken, this cannot be a substitute for the unambiguous evidence that is needed to vindicate it. On the question of the implementation of a predetermined conclusion Gillen LJ set out the unanimous view of the members of the Court of Appeal at para 134(i) of his judgment: We found no evidence of a pre determined adherence to a view that there would be no more open and costly inquiries into the past which therefore dictated the outcome of this matter. On the contrary, it was clear from the statements made by the Prime Minister, the briefing papers provided to him and the statements made by the [Secretary of State for Northern Ireland] that the policy was that whilst generally against open ended, long running and costly public inquiries into the past in Northern Ireland these decisions should be made on a case by case basis. We find that there was not a fixed policy which excluded the possibility of variations on a case by case basis. Stephens J had made similar findings in para 195 of his judgment. As to the argument that the process had been taken over by the Prime Minister and driven by him to a conclusion which he particularly favoured, Gillen LJ said at para 134(ii): We do not find evidence that the process was driven by the Prime Minister. The fact of the matter is that the Ministerial Code emanating from the Cabinet Office of May 2010 at para 1.10 makes it clear that the Prime Minister must be consulted in good time about any proposal to set up major public inquiries under the Inquiries Act 2005. Apart from all the accepted conventions of collective Cabinet decisions, it would have been extraordinary if the Prime Minister had not been consulted on this matter. Once he was consulted, it would be contrary to all the promptings of reason and good sense if he was deprived of the right to forthrightly state a view on the outcome of the process or to make a suggestion. He is required neither to adopt a traceless presence nor a state of remote unavailability as the final decision is taken. The officials clearly played an important role in advising both the Prime Minister and the [Secretary of State for Northern Ireland] as to the various options and indeed to provide advice as to eventual outcomes. Again, Stephens J had reached a similar conclusion in paras 197 202 of his judgment. For my part, I consider that these findings cannot be faulted. There is simply no sustainable evidence that the process by which the decision was taken was a sham or that the outcome was predetermined. As to the role played by the Prime Minister, there are indications that he was strongly convinced that a costly, open ended inquiry would ensue if the promise made to Mrs Finucane was kept. And it appears that he played an important, if not indeed a controlling, role in the discussions which led to the establishing of the de Silva review. He was prepared to disregard (or, at least, not accept) the strongly worded recommendation of Sir Jeremy Heywood. But there is nothing untoward about any of this. The decision as to whether a public inquiry into Mr Finucanes death should take place was a matter of considerable political importance. As Gillen LJ said, it would be extraordinary if the Prime Minister had not been consulted. Having been consulted, the part that he played and the influence which he exerted were matters for his political judgment. This part of the appellants appeal fails, in my view. Article 2 of ECHR Article 2 of ECHR provides: 1. Everyones right to life shall be protected by law. No one shall be deprived of his life intentionally save in the execution of a sentence of a court following his conviction of a crime for which this penalty is provided by law. It is well settled that article 2 gives rise to two species of obligation on the part of the state, one substantive, the other procedural. Lord Phillips of Worth Matravers PSC in In re McCaugheys application for judicial review [2012] 1 AC 725, in a pithy description of the nature of the obligations, referred, at para 2, to ECtHRs decision in McCann v United Kingdom (1995) 21 EHRR 97 and said, article 2 by implication [gives] rise not merely to a substantive obligation on the state not to kill people but, where there was an issue as to whether the state had broken this obligation, a procedural obligation on the state to carry out an effective official investigation into the circumstances of the deaths (the procedural obligation). (Evolving human rights jurisprudence, both from Strasbourg and domestically, has, of course, established that the procedural obligation to investigate deaths can extend beyond those deaths in which state authorities are alleged to be implicated see, for instance (Application No 32967/96) Calvelii and Ciglio v Italy, January 17, 2001 at para 53; (Application No 53749/00), Lazzarini and Ghiacci v Italy, November 7, 2002; Angelova and Iliev v Bulgaria (2007) 47 EHRR 236; and Byrzykowski v Poland (2006) 46 EHRR 32, para 117.) Patrick Finucanes death occurred 11 years and eight months before the coming into force of the HRA in October 2000. Section 6 of HRA provides that it is unlawful for a public authority (such as a court) to act in a way which is incompatible with a Convention right. Could Mrs Finucane maintain an action in the domestic courts under the HRA when it was not in force at the time of her husbands murder? To answer that question, one must turn to cases which have dealt with that subject from 2004 onwards. The principal issue before the House of Lords in In re McKerr [2004] 1 WLR 807 was whether, on the proper interpretation of HRA, section 6 gave rise to a continuing procedural obligation, notwithstanding that the death had occurred before the coming into force of HRA. The House unanimously held that it did not. Following this decision, ECtHR, in a series of cases, examined the question whether the procedural obligation under article 2 was indissociable from the substantive obligation, and whether it might in certain circumstances endure beyond the date on which the rights under article 2 became available to an applicant. That examination focused on two principal, but overlapping, areas: first, whether, although the death occurred before the relevant date (usually the date of accession of the member state to the ECHR), there were circumstances which continued to animate the right; and secondly, whether events occurring after the relevant date were sufficient to inspire its revival. In a different context from article 2, the Grand Chamber addressed the question of its temporal jurisdiction in Blei v Croatia (2006) 43 EHRR 48. The claimant complained of violation of article 8 as a result of being deprived of a protected tenancy. The Supreme Court of Croatia dismissed her claim on 15 February 1996. She then lodged a constitutional complaint with the Constitutional Court, which was dismissed on 8 November 1999. Croatia had acceded to the Convention on 5 November 1997. Before ECtHR, the state objected that the Strasbourg court had no jurisdiction to hear the applicants complaint. The Grand Chamber held, at para 82, that it was essential to identify, in each specific case, the exact time of the alleged interference. Since the complaint to the Constitutional Court did not constitute part of the alleged interference (because it was an attempt to obtain a remedy) the Strasbourg court had no jurisdiction. This was because all the matters complained of had occurred before the date of accession. This decision provides an example of the impossibility of breathing new life into a right whose currency had passed, when all the circumstances constitutive of the interference with the right had occurred before the relevant date. But, as will be seen, this is but part of the story. Brecknell v United Kingdom (2007) 46 EHRR 42 provides a contrast to Blei. In that case the applicant was the widow of a man killed in Northern Ireland by loyalist gunmen in 1975. Investigations took place but were concluded in 1981. In 1999 and thereafter further evidence came to light. This indicated that there might have been collusion between the police force, the Ulster Defence Regiment (then part of the security forces in Northern Ireland) and loyalist paramilitaries. The applicant contended that this new evidence should give rise to the procedural obligation to conduct an article 2 compliant inquiry into her husbands death. In McCaughey Lord Phillips portrayed this as a claim that the article 2 obligation was revived see para 39 of that case. In fact, the applicant is not recorded in the Grand Chambers judgment as having sought a revival of the obligation see paras 54 59 of the Brecknell judgment, outlining the applicants arguments. The government resisted the claim, inter alia, on the ground that the obligation should not be revived see paras 61 and 63. The Grand Chamber in Brecknell identified the principal issue as to whether, and in what form, the procedural issue to investigate is revived para 66. So, the fact that this was not how the applicant framed her case may not be of critical importance in this instance. I would merely observe that if the notion of revival suggests that the right had gone into abeyance and required some special circumstance to disinter it, whereas the question whether it remained in existence suggests a state of suspended animation merely requiring some newly discovered evidence to animate it, these concepts might, in certain circumstances, give rise to different approaches. But this may be of academic interest only in the present appeal. The Grand Chambers decision is explicable on either basis. It said at para 71: the court takes the view that where there is a plausible, or credible, allegation, piece of evidence or item of information relevant to the identification, and eventual prosecution or punishment of the perpetrator of an unlawful killing, the authorities are under an obligation to take further investigative measures In due course it will be necessary to consider whether, following Sir Desmond de Silvas review and the various inquiries which succeeded it, there remained a need further to investigate the circumstances of Mr Finucanes murder. The Court of Appeal divided on this issue, Deeny and Horner JJ agreeing with Stephens J that the Brecknell test was satisfied, Gillen LJ believing that it was not. Discussion of that issue must naturally take place in the next section of this judgment, but it is worth observing here that in para 70 of the Grand Chambers judgment, the court, while pointing out that the revival of the duty to investigate would not be prompted by any allegation, however inconsequential, said that given the fundamental importance of [article 2], the state authorities must be sensitive to any information or material which has the potential either to undermine the conclusions of an earlier investigation or to allow an earlier inconclusive investigation to be pursued further. In an important decision in this field, ilih v Slovenia (2009) 49 EHRR 37, the Grand Chamber ruled that article 2 imposed, in certain circumstances, a freestanding obligation in relation to the investigation of a death which applied even where the death had occurred before the member state ratified the Convention. In that case the applicants were the parents of a young man who died as a result of medical negligence on 19 May 1993. They made a number of attempts to bring criminal proceedings, all of which were unsuccessful, the final disposal coming in July 2003. Civil proceedings were also dismissed in July 2008. They then lodged a constitutional appeal with the Constitutional Court. The outcome of that appeal was still pending when the Grand Chamber gave its judgment. Slovenia acceded to ECHR on 28 June 1994. The task that the Grand Chamber faced, therefore, was described in para 152 of its judgment as being to: determine whether the procedural obligations arising under article 2 can be seen as being detachable from the substantive act and capable of coming into play in respect of deaths which occurred prior to the critical date [the date of accession to the Convention] or alternatively whether they are so inextricably linked to the substantive obligation that an issue may only arise in respect of deaths which occur after that date. That question was emphatically answered in para 159 where the Grand Chamber said that: the procedural obligation to carry out an effective investigation under article 2 has evolved into a separate and autonomous duty. Although it is triggered by the acts concerning the substantive aspects of article 2 it can give rise to a finding of a separate and independent interference within the meaning of the Blei judgment. In this sense it can be considered to be a detachable obligation arising out of article 2 capable of binding the state even when the death took place before the critical date. In para 163, the Grand Chamber was at pains to point out that there had to be, a genuine connection between the death and the entry into force of the Convention in the member state. On that account, a significant proportion of the procedural steps required will have been or ought to have been carried out after the critical date. A caveat to that requirement was entered. The Grand Chamber said (again at para 163) that it did not exclude the possibility that, in certain circumstances, the connection could also be based on the need to ensure that the guarantees and the underlying values of the Convention are protected in a real and effective manner. The Grand Chambers judgment in ilih was of pivotal importance in McCaughey. At para 50 of his judgment in the latter case, Lord Phillips said: The obligation to comply with the procedural requirements of article 2 is to apply where a significant proportion of the procedural steps that article 2 requires in fact take place after the Convention has come into force. This appears to be a free standing obligation. There is no temporal restriction on the obligation other than that the procedural steps take place after the Convention has come into force. Thus if a state decides to carry out those procedural steps long after the date of the death, they must have the attributes that article 2 requires. In the McCaughey case it was decided to hold an inquest into the deaths of Mr McCaughey and another man 20 years after their deaths. Lord Phillips decided that that decision gave rise to an international obligation to ensure that the inquest complied with article 2 of ECHR (para 51). At para 61 he said: . In so far as article 2 imposes any obligation, this is a new, free standing obligation that arises by reason of current events. The relevant event in these appeals is the fact that the coroner is to hold an inquest into Martin McCaugheys and Dessie Grews deaths. ilih v Slovenia establishes that this event gives rise to a free standing obligation to ensure that the inquest satisfies the procedural requirements of article 2. That obligation is not premised on the need to explore the possibility of unlawful state involvement in the death. The development of the law by the Strasbourg court has accorded to the procedural obligation a more general objective than this, albeit that in the circumstances of these appeals state involvement is likely to be a critical area of investigation. At para 93, to like effect, Lady Hale said that, if there is now to be an inquiry into a death for which the state may bear some responsibility under article 2, it should be conducted in an article 2 compliant way. The inquiries into the circumstances of Mr Finucanes death have taken place, (for the most part, and certainly for the most important part of the inquiries) well after 2 October 2000. The respondent submitted, however, that the observations in McCaughey must be viewed in light of the later decision of the ECtHR in Janowiec v Russia (2013) 58 EHRR 30. In that case, the respondent claimed, the Grand Chamber identified three limitations on the jurisdiction to examine pre ratification (and, by analogy, in the United Kingdom, pre October 2000) claims. The first of these was that the duty arose only in relation to procedural acts in other words, the steps which may be undertaken within the domestic legal system which are capable of discharging the investigative duty. It did not extend to other types of inquiries that may be carried out for other purposes, such as establishing a historical truth para 143 of Janowiec. The second limitation in Janowiec, the respondent claimed, was that the need for a genuine connection between the death and the critical date was primarily a temporal one. At para 146 of Janowiec the Grand Chamber said: . the lapse of time between the triggering event and the critical date must remain reasonably short if it is to comply with the genuine connection standard. Although there are no apparent legal criteria by which the absolute limit on the duration of that period may be defined, it should not exceed ten years Even if, in exceptional circumstances, it may be justified to extend the time limit further into the past, it should be done on condition that the requirements of the Convention values test have been met. Accordingly, the respondent argued, even if the period of time was less than ten years, but the majority of investigative steps or the most important of these took place prior to ratification, (or in the case of the United Kingdom, the coming into force of HRA), the ECtHR would not be in a position to scrutinise them (and, by corollary, UK courts would not be able to give effect to rights under HRA) since neither could examine acts or omissions occurring prior to ratification or the coming into force of the 1998 Act. In this regard, the respondent relied on the following passages from Janowiec: 147. This is a corollary of the principle that the courts jurisdiction extends only to the procedural acts and omissions occurring after the entry into force. If, however, a major part of the proceedings or the most important procedural steps took place before the entry into force, this may irretrievably undermine the courts ability to make a global assessment of the effectiveness of the investigation from the standpoint of the procedural requirements of article 2 of the Convention. 148. Having regard to the above, the court finds that, for a genuine connection to be established, both criteria must be satisfied: the period of time between the death as the triggering event and the entry into force of the Convention must have been reasonably short, and a major part of the investigation must have been carried out, or ought to have been carried out, after the entry into force. The third limitation identified by the respondent is the Convention values test, referred to by the Grand Chamber in Janowiec in paras 149 and 150: 149. The court further accepts that there may be extraordinary situations which do not satisfy the genuine connection standard as outlined above, but where the need to ensure the real and effective protection of the guarantees and the underlying values of the Convention would constitute a sufficient basis for recognising the existence of a connection. The last sentence of para 163 of the ilih judgment does not exclude such an eventuality, which would operate as an exception to the general rule of the genuine connection test. In all the cases outlined above the court accepted the existence of a genuine connection as the lapse of time between the death and the critical date was reasonably short and a considerable part of the proceedings had taken place after the critical date. Against this background, the present case is the first one which may arguably fall into this other, exceptional, category. Accordingly, the court must clarify the criteria for the application of the Convention values test. 150. Like the Chamber, the Grand Chamber considers the reference to the underlying values of the Convention to mean that the required connection may be found to exist if the triggering event was of a larger dimension than an ordinary criminal offence and amounted to the negation of the very foundations of the Convention. This would be the case with serious crimes under international law, such as war crimes, genocide or crimes against humanity, in accordance with the definitions given to them in the relevant international instruments. The respondent submitted that the Convention values test was not relevant in this case. The appellant had to succeed on the genuine connection test. This contained, the respondent argued, two elements: the lapse of time between the triggering event and the critical date had to be reasonably short and the majority of investigative steps or the most important of these had to have taken place after the coming into force of HRA. I consider that a genuine connection has been established between the triggering event and the critical date in this case. As Stephens J pointed out in para 34 of his judgment, ECtHR in Mocanu v Romania (2015) 60 EHRR 19, para 206 referred to a reasonably short lapse of time that should not normally exceed ten years (emphasis added). And in Mladenovi v Serbia (Application No 1099/08) judgment of 22 May 2012 the court considered it could examine the procedural aspect of article 2 (and found a violation) in relation to a death that had occurred in 1991 when Serbias ratification of the Convention took place some 13 years later in 2004. A period of ten years or less between the triggering event (the murder of Mr Finucane) and the critical date (the coming into force of the HRA) is not an immutable requirement. The time which elapsed between the two dates is a factor of importance but, when taken into account with the circumstance that the vast bulk of noteworthy inquiry into his death has taken place since the HRA came into force (Stevens III, the Cory inquiry and the de Silva review), the significance of the time lapse diminishes. Nothing in Janowiec detracts from the proposition in ilih that the decision as to whether there is a genuine connection involves a multi factorial exercise and the weight to be attached to each factor will vary according to the circumstances of the case. Moreover, in McCaughey it was made clear that an inflexible ten year limit was not essential and the consideration that most of the investigation took place after the critical date could compensate for the length of the time lapse see paras 118, 119 and, in particular, 139 where Lord Dyson said: The deaths were ten years before the HRA came into force. That is a relevant factor to be taken into account when considering whether there is a sufficient connection between the deaths and the coming into force of the Act. But ilih v Slovenia 49 EHRR 996 shows that it is not the only factor. In particular, of considerable importance is the fact that at that date the investigation had been initiated, but a significant proportion of the procedural steps required to be taken had not yet been taken. In that respect, the facts of the case are similar to the facts in ilih v Slovenia. This is the feature of ilih v Slovenia which is emphasised by the majority at para 165 and by Judge Lorenzen at para O I4 of the EHRR report. Significantly, we were not invited to depart from the decision in McCaughey. It was argued for the Secretary of State that the principles in ilih and Janowiec relate to the ECtHRs temporal jurisdiction for deaths that have occurred before a states ratification of the Convention and that the question of their application to domestic law remains undecided. I do not accept that proposition. It is quite clear from the judgments of the majority in McCaughey that the reasoning in ilih was adopted in order to inform the approach to the question of the availability of the procedural right to an article 2 inquiry under HRA, where the triggering event preceded its coming into force. References to this abound in the judgments of the majority see, for instance, para 61, per Lord Phillips, para 77, per Lord Hope of Craighead, paras 89 and 93, per Lady Hale, para 119 of my judgment and paras 131 and 139, per Lord Dyson. Sir James Eadie QC for the respondent, founded his argument that the applicability of the principles in ilih and Janowiec to domestic law remains undecided, on the decision of this court in the case of R (Keyu)v Secretary of State for Foreign and Commonwealth Affairs [2016] AC 1355. In particular, he fastened on statements made by Lord Neuberger of Abbotsbury at paras 98 and 99 of his judgment. It is unnecessary to set out Lord Neubergers observations in those paras. It is quite clear that he was there examining the question of whether it had been decided by the court in McCaughey that the decision in McKerr remained good law. The remarks of Lord Neuberger, attributing to Lord Phillips, Lord Dyson and me the view that McKerr was no longer good law were not without controversy see my comment on them at paras 247 248. But that is nothing to the point. The plain and inescapable fact is that this court in McCaughey unequivocally adopted the decision in ilih as indicating the principled approach in domestic law to the question of genuine connection. Stephens J found that, in the event that a genuine connection was not established, the appellant could have recourse to the Convention values test see para 35 of his judgment. The Court of Appeal, per Gillen LJ, at para 167, observed that this test set an extremely high hurdle but that the court would not go so far as to say that Stephens Js finding was necessarily unreasonable. The issue of what constitutes, as said in Janowiec 58 EHRR 30, para 149, a need to ensure the real and effective protection of the guarantees and the underlying values of the Convention is not an uncomplicated one. It did not occupy much of the oral submissions that were made in this case. In light of that and of my conclusion in relation to the existence of a genuine connection, I propose to say nothing more about it. Brecknell v United Kingdom As I have said before, (para 93 above) the Grand Chamber in Brecknell was careful to point out that not every allegation, however trivial, would revive the duty to investigate. But it was equally emphatic that it behoved state authorities to be sensitive to any information or material which might cast doubt on conclusions reached on foot of earlier investigations. Significantly moreover, it said that an earlier inconclusive investigation should be pursued further in order to meet the procedural obligation under article 2. It is to be recalled that the Grand Chamber stated (at para 71 of its judgment see para 92 above) that where there was a plausible, or credible, allegation, piece of evidence or item of information relevant to the identification, and eventual prosecution or punishment of the perpetrator of an unlawful killing, the authorities were under an obligation to take further investigative measures. In the Court of Appeal Gillen LJ decided that what he described as the Brecknell test was not satisfied. He referred to the discussion by Stephens J of the meetings that Sir Desmond de Silva had had with a number of individuals including Colonel J and to the judges finding that the evidence that emerged from those meetings was sufficient to revive the article 2 procedural obligation. Gillen LJ disagreed with this finding for a number of reasons. In the first place, he considered, at para 171, that the new and significant information which had emerged from these meetings might not avail the purposes of further criminal investigations. One can accept that this might be so, but it is to be remembered that what the Grand Chamber said in Brecknell was that any information or material which has the potential to undermine the conclusions of an earlier investigation or to allow an earlier inconclusive investigation to be pursued further would prompt a revival of the procedural obligation. In the report on his review Sir Desmond had said that he was left in significant doubt as to whether Patrick Finucane would have been murdered by the UDA in February 1989 had it not been for the different strands of involvement by elements of the state see para 46 above. This sentence should not be isolated from the overall context of Sir Desmonds report. He had firmly concluded that state agents were involved in the targeting of Mr Finucane. But it matters not as to the precise nature of the doubt entertained by him. The doubt that he expressed must therefore be as to the precise role that state agents played. That was sufficient to warrant further investigation. The doubt, whatever its nature or source, required to be dispelled. The strands of involvement by elements of the state needed to be recognised and explained. These were necessary ingredients of an article 2 compliant inquiry. These conclusions are not impelled by the notion that the outcome of the investigation into Mr Finucanes death is unsatisfactory, although it plainly is. They speak to the shortcomings of the procedures that have beset the inquiries that have so far taken place. Those shortcomings have hampered, if not indeed prevented, the uncovering of the truth about this murder. They are discussed in paras 139 141 below. The second reason given by Gillen LJ for his disagreement with Stephens J on the applicability of the Brecknell principle was that the new material had been reviewed by PSNI and it has not afforded any basis for further investigation or prosecution. The investigations carried out by PSNI into the new material uncovered by Sir Desmond were described by Detective Superintendent Jason Murphy in three affidavits. In the first of these, in June 2016, he said that the Chief Constable had decided that that material should be examined to see whether it provided any opportunities to progress the investigation into Mr Finucanes murder. An investigating officer was appointed to carry out that task. He concluded that there was no reason to review the decision of the PPS in 2007 (see para 30 above). In his first affidavit, Detective Superintendent Murphy had also described various investigations that were continuing by way of reconsideration of all the material that had been examined in the course of the de Silva review. This included the archive of documents generated by the various Stevens inquiries, material that had been provided by government departments and agencies, the security service, the Northern Ireland Office, the Cabinet Office, the Ministry of Defence, the Home Office, the office of the Attorney General of England and Wales, and PSNI. At the time of swearing the first affidavit, the detective superintendent felt unable to say whether this further review might lead to progress in the investigation into Mr Finucanes death. In his second affidavit (31 October 2016) the detective superintendent said that the review had been completed. All of the material described by Sir Desmond de Silva as new and significant had been assimilated and investigations into this material had been conducted. Detective Superintendent Murphy was then in the process of preparing a report for the PPS. In a final affidavit the officer said that the new material did not relate to individuals alleged to have any direct role in Mr Finucanes murder. He also considered whether the material provided any opportunities to pursue criminal investigations for other offences such as conspiracy or incitement to murder and misconduct in public office. He then submitted reports to the PPS on his conclusions. The deputy director of public prosecutions, in a cryptic affidavit of 13 June 2018, deposed that, because of the absence of any further investigations by PSNI, no new prosecutorial decisions had been made. It is important to note that the police and the prosecuting authorities have been concerned to decide whether the opportunity for further prosecutions in relation to Mr Finucanes murder had arisen. This is understandable, for it is the principal purpose of both agencies to determine whether criminal offences have been committed and, if so, whether evidence is available that would justify embarking on a criminal prosecution. But, although decisions by the police and the prosecuting authorities are relevant to the question whether the states procedural obligation under article 2 of ECHR to investigate the circumstances of a death has been met, they cannot alone be determinative of that issue. In a series of cases ECtHR has made it clear that the obligation to protect the right to life under article 2 of the Convention requires that there should be some form of effective official investigation when individuals have been killed as a result of the use of force see, among many others, Branko Tomai v Croatia (Application No 46598/06), para 62, (15 January 2009); Our v Turkey [GC], (Application No 21594/93), para 88, ECHR 1999 III); Mladenovi v Serbia (Application No 1099/08) (22 May 2012). The opportunity to prosecute as a result of evidence uncovered by Sir Desmond de Silvas review does not foreclose on the question whether an effective investigation into Mr Finucanes death, compliant with article 2, has taken place. The need for an effective investigation into a death goes well beyond facilitating a prosecution. In Ramsahai v The Netherlands (Application No 52391/99) ECHR 2007 II, 191 ECtHR considered what effectiveness in this context means. At para 324, the court said: In order to be effective as this expression is to be understood in the context of article 2 of the Convention, an investigation into a death that engages the responsibility of a contracting party under that article must firstly be adequate. That is, it must be capable of leading to the identification and punishment of those responsible. This is not an obligation of result, but one of means. The authorities must have taken the reasonable steps available to them to secure the evidence concerning the incident. Any deficiency in the investigation which undermines its ability to identify the perpetrator or perpetrators will risk falling foul of this standard. (Emphasis added) See also in this context Nachova v Bulgaria [GC], (Application Nos 43577/98 and 43579/98), paras 110 113, ECHR 2005 VII, 1. It was pointed out by the respondent that the dissenting judges in Ramsahai had said that a lacuna or deficiency in an investigation will give rise to a breach of the procedural obligation only if it is such as to undermine its capability of establishing the facts surrounding the killing or the liability of the persons responsible. Whether it does so must be assessed in the light of the particular circumstances of each case. joint partly dissenting opinion of Judges Costa, Sir Nicolas Bratza, Lorenzen and Thomassen at para 3. In so far as it might be suggested that the majority in Ramsahai had implied that any deficiency in the investigation might give rise to a breach of the article 2 procedural obligation, that is of no relevance in the present case. It is precisely because of the constraints placed on Sir Desmond de Silvas inquiry that the capability of his review establishing vital facts such as the identity of those involved was undermined. The reasons for this are given in para 134 below. Being capable of identifying those responsible must involve having the means to identify those implicated in the death. It should also include the will and the opportunity to expose them. The important issue in this case is whether Sir Desmond de Silvas review had these critical attributes. Much of what he says in his conclusions is qualified or expressed in terms of generality. For instance, he said that the RUC, the security service and the secret intelligence service failed to warn Patrick Finucane of known and imminent threats to his life in 1981 and 1985. Those officers who were in a position to give that warning (and whose plain duty it was to do so) are not identified. The circumstances in which they failed in their duty are not explained. Sir Desmond concluded that one or more officers in the RUC probably did propose Mr Finucane as a target for loyalist terrorists in December 1988 see para 45(vii) above. No officers have been identified. If it is true that they did propose Mr Finucane as a target, this was a serious criminal offence. It bears directly on the proper investigation of his murder. But, at present, the issue remains entirely unresolved. It was concluded that Ken Barrett had received intelligence about Patrick Finucane from a police source (para 45(viii) above). That police source has not been identified. The circumstances in which the information was imparted have not been disclosed. So far as one can tell, the police source has escaped any sanction; has not been made accountable; and has avoided all the legal consequences which should have flowed from his or her activity. In deciding whether an article 2 compliant inquiry into Mr Finucanes death has taken place, it is important to start with a clear understanding of the limits of Sir Desmond de Silvas review. His was not an in depth, probing investigation with all the tools that would normally be available to someone tasked with uncovering the truth of what had actually happened. Sir Desmond did not have power to compel the attendance of witnesses. Those who did meet him were not subject to testing by way of challenging probes as to the veracity and accuracy of their evidence. A potentially critical witness was excused attendance for questioning by Sir Desmond. All of these features attest to the shortcomings of Sir Desmonds review as an effective article 2 compliant inquiry. This is not to criticise the thoroughness or rigour of Sir Desmonds review. To the contrary, it is clear that it was conducted with commendable scrupulousness. But the very care with which he carried out his review and the tentative and qualified way in which he has felt it necessary to express many of his critical findings bear witness to the inability of his review to deliver an article 2 compliant inquiry. It is therefore unsurprising that on 17 May 2011, in a memorandum prepared by the Northern Ireland Office, it was accepted that Sir Desmonds review would not be article 2 compliant. Sir James Eadie claimed that, although it was not necessary to do so, if the review by Sir Desmond was taken with what had gone before, it did fulfil the requirements of article 2. For the reasons that I have given, I do not accept that submission. I cannot therefore agree with Gillen LJs second reason for suggesting that the present case did not meet the Brecknell test. As already observed, the Grand Chamber in Brecknell had made it clear that earlier inconclusive investigations should be pursued further in order to meet the procedural obligation under article 2. Sir Desmond de Silvas review is, unmistakably, an instance of inconclusiveness. Gillen LJs third reason for concluding that the Brecknell test was not met was, at para 171, that it was not possible to make any meaningful assessment of the value of the [new and significant] information to the overall investigation. This, with respect, misses the critical point. That is whether an effective investigation has taken place. For the reasons that I have given, that has not occurred. It is unnecessary and, indeed, misconceived to speculate on what assessment one might make of the new material. It is on the deficiencies of the inquiries that have been conducted to date that one must focus. Likewise, it is wrong to be distracted from that essential task by the decision not to undertake further prosecutions. The requirements of an article 2 compliant inquiry An article 2 compliant inquiry involves providing the means where, if they can be, suspects are identified, and, if possible, brought to account. It should also provide the opportunity to recognise, if possible, the lessons to be learned so that a similar event can be avoided in the future. In Jordan v United Kingdom (2001) 37 EHRR 2, a case which concerned the shooting of Pearse Jordan in 1992 in Belfast by an RUC officer, ECtHR found a violation of article 2 in respect of failings in the investigative procedures after Mr Jordans death. At para 107 the court said: The investigation must also be effective in the sense that it is capable of leading to a determination of whether the force used in such cases was or was not justified in the circumstances and to the identification and punishment of those responsible. This is not an obligation of result, but of means. Any deficiency in the investigation which undermines its ability to establish the cause of death or the person or persons responsible will risk falling foul of this standard. (Emphasis added) Sir Desmond de Silvas conclusion that he was left in significant doubt as to whether Patrick Finucane would have been murdered by the UDA in February 1989 had it not been for the different strands of involvement by elements of the state is, in itself, an eloquent statement about the inadequacy of the inquiries into Mr Finucanes murder and the incapacity of those inquiries to fulfil the requirements of article 2, for the reasons discussed at paras 118 and 119 above. It has proved to be incapable of establishing the identity of the persons implicated in the murder of Mr Finucane. A proper, inquiry along the lines described in preceding paras was the means by which an article 2 compliant inquiry would have been achieved. The proposition that the procedural obligation was not one of result but of means does not, therefore, signify in this instance. Sir Desmonds conclusions are not criticised for their failure to identify the people involved in bringing about Mr Finucanes murder. Rather, the means by which he might have done so had been denied him. I have dealt with these in para 134 above. If he had been able to compel witnesses; if he had had the opportunity to probe their accounts; if he had been given the chance to press those whose testimony might have led to the identification of those involved in targeting Mr Finucane; if the evidence of the handler had been obtained, or alternatively, objective, medical evidence of her incapacity to provide it had been forthcoming, one might have concluded that all means possible to identify those involved had been deployed. Absent those vital steps the conclusion that an article 2 compliant inquiry into Mr Finucanes death has not yet taken place is inescapable. I reach that opinion notwithstanding the decision of the Committee of Ministers. As I have observed (at para 31 above), the decision of that body to close the examination of the specific measures taken by the UK on foot of the decision of ECtHR was made on the basis that the government was actively working on proposals for establishing a statutory public inquiry. Quite apart from that consideration, however, the most significant inquiry into Mr Finucanes death took place after the Committee of Ministers had reached its decision. It is to the nature of the investigation which came after the Committees decision that the closest attention must be paid, in order to decide if an inquiry sufficient to meet the procedural requirement of article 2 has been held. Section 2(1)(d) of HRA requires a court which is determining a question which has arisen in connection with a Convention right to take into account a decision of the Committee of Ministers. The respondent submits that this is a paradigm example of where this court should not only take into account the decision of the Committee but abide by it. I do not accept that submission. The context in which the Committee took its decision is different from that in which this court is asked to decide the question. And it is different in two material and important respects. At the time that the Committee was considering the matter, there was still in distinct prospect a public inquiry in which the full examination of all the circumstances of Mr Finucanes murder would take place. That is no longer the position. Indeed, the scene has shifted significantly since the time that the Committee considered the matter. As a result of Sir Desmond de Silvas review, it is now clear that many important questions remain unanswered. It would be simply wrong to fail to acknowledge the significant change in circumstances which has occurred since the Committee considered the issue fully ten years ago. This does not involve, as the respondent argued, a finding that the article 2 obligations of the United Kingdom are more extensive in the domestic legal order than in Strasbourg. It is no more than a contemporaneous judgment on circumstances which differ widely from those which the Committee had to confront. There is no warrant for concluding that the Committee, if faced with those change of circumstances today, would reach the same conclusion as it did in 2008. The second difference between the Committees decision and that which the court is required to reach is that the formers conclusion partakes at least to some extent of a political judgment. By contrast, the courts decision must be guided solely by its perception of the correct legal principles to be applied. The respondent suggested that a failure to follow the Committee of Ministers decision would be the antithesis of the mirror principle and cannot have been the intention of Parliament when enacting the HRA. This argument can be dispatched in short order. The mirror principle (developed in such cases as R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23; [2003] 2 AC 295 and R (Ullah) v Special Adjudicator [2004] UKHL 26; [2004] 2 AC 323 is concerned with the need for national courts to follow a clear and constant line of jurisprudence from the Strasbourg court. The philosophy underlying the principle is that it would be anomalous if a national courts decision as to the content of a particular Convention right should be at odds with a judicial pronouncement from ECtHR. That is a world away from saying that a decision by the Committee of Ministers pre empts a decision by this court as to whether the current requirements of article 2 in relation to a particular death have been fulfilled. This is not to say that the decision of the Committee of Ministers can or should be ignored. Of course, it must be considered. But the context and circumstances in which the decision was reached and the change in circumstances which have occurred since that time cannot be left out of account. Disposal of the appeal Stephens J decided that a limited declaration should be made to the effect that an article 2 compliant inquiry into Mr Finucanes murder had not, at the time his judgment was delivered, taken place. The decision to make the declaration was reached, of course, against the background that, as Stephens J put it, at para 212, documentary material either directly or indirectly available to the authorities which was received by Sir Desmond de Silva was not available to Sir John Stevens, Judge Cory or the DPP (NI). That material has now been made available and has been considered by PSNI. It is not deemed sufficient to warrant prosecution of any individual. For the reasons that I have given earlier, however, this does not cure the article 2 deficit. The Court of Appeal did not agree that a declaration should be made. Gillen LJ said at para 192 of his judgment that the new information referred to by Sir Desmond de Silva was something of an unknown quantity. There was no evidence, he said, that it constituted an article 2 violation as yet. This seems to me to be looking at the question from the wrong end of the telescope. As I have said, the proper focus should be on the inquiries that have been conducted to date and on an examination of whether they constitute an article 2 compliant inquiry, not on whether material yet to be disclosed and considered established that the inquiries were or were not susceptible of meeting the procedural obligation of article 2. Deeny J had a somewhat different perspective on the propriety of making a declaration, although he did agree with Gillen LJ as to the reasons given by him for allowing the cross appeal against the declaration made by Stephens J. Deeny J said (in para 11 of his judgment) that it was wrong to make the declaration because the government had offered an inquiry in 2009 (to be conducted under the 2005 Act) and the appellant had declined it. But this has nothing to say about the respondents responsibility to observe its procedural obligation under article 2. That obligation arises and endures quite independently of any reaction on the part of the appellant. Deeny J also adverted (in para 14 of his judgment) to the fact that counsel for the appellant, Mr Macdonald QC, had declined an invitation to amend the application for judicial review to plead, as a freestanding issue, that the state was in breach of its article 2 obligation. It is to be remembered, however, that both before the Court of Appeal and this court it was argued that the failure of the state to hold an article 2 inquiry meant that the government was required to adhere to its promise to have a public inquiry cf Gillen LJs judgment at para 136. The issue of whether there was a breach of the procedural obligation under article 2 is therefore clearly before this court and that issue cannot be shelved simply because the appellant elected not to formulate it as an independent ground of challenge. It appears to me, in any event, that we, as a Supreme Court, cannot ignore the question. The confines of our deliberations in this case are not necessarily to be determined by the manner in which the parties choose to make their presentations to us. If we detect that a violation of a Convention right has taken place, it would surely be wrong for that to go unremarked upon. It would be, at least arguably, a failure on our part to comply with the enjoinder contained in section 6 of HRA which requires any public authority, including a court, not to act in a way which is in contravention of a Convention right. To fail to acknowledge that there has been a breach of article 2 where that has been established would be in breach of the spirit, if not the literal requirement, of that provision. This is particularly so because of section 6(6) of HRA. It stipulates that an act includes a failure to act. The failure of the Supreme Court to declare that there has been a violation of article 2 of ECHR where one has been detected in a case before it, however incidentally, would not keep faith with that enjoinder. But, it is not necessary to decide that point for the reasons given earlier and I refrain from expressing a final view on it. I would therefore make a declaration that there has not been an article 2 compliant inquiry into the death of Patrick Finucane. It does not follow that a public inquiry of the type which the appellant seeks must be ordered. It is for the state to decide, in light of the incapacity of Sir Desmond de Silvas review and the inquiries which preceded it to meet the procedural requirement of article 2, what form of investigation, if indeed any is now feasible, is required in order to meet that requirement. The appeal should otherwise be dismissed. The new argument For the first time in this court, objection was raised to the fact that affidavits were not sworn by the relevant ministers, but by two officials, one in the Northern Ireland Office and the other a private secretary to the Prime Minister. The appellants purpose, in raising the issue, was not as an additional ground of challenge, but because it was said to be objectionable that the ministers views and reasons should be conveyed by a second hand means. This argument was not raised in the courts below. As the respondent has submitted, had it been, there was much material that could have been marshalled to counter it. On that account alone, I do not consider that the argument may be entertained. LORD CARNWATH: I agree with the reasoning and conclusions of Lord Kerr on the principal issues in the appeal. I add a comment on the issue of legitimate expectation which was raised in argument and is discussed briefly in his judgment at paras 55ff. I do so only because of the reliance placed by the Secretary of State in argument on a judgment of my own in United Policyholders Group v Attorney General of Trinidad and Tobago [2016] UKPC 17; [2016] 1 WLR 3383, and in particular on the concluding paragraph (para 121): the trend of modern authority, judicial and academic, favours a narrow interpretation of the Coughlan principle, which can be simply stated. Where a promise or representation, which is clear, unambiguous and devoid of relevant qualification, has been given to an identifiable defined person or group by a public authority for its own purposes, either in return for action by the person or group, or on the basis of which the person or group has acted to its detriment, the court will require it to be honoured, unless the authority is able to show good reasons, judged by the court to be proportionate, to resile from it. In judging proportionality the court will take into account any conflict with wider policy issues, particularly those of a macro economic or macro political kind. (para 121, emphasis added) It was submitted for the Secretary of State (inter alia) that, in so far as a relevant promise had been made by the Secretary of State, there had been no detrimental reliance by Mrs Finucane. I agree with Lord Kerr (para 63) that the issues raised in that paragraph, including in particular that of detriment, have no application to this case, which concerns as he says a policy statement about procedure, made not just to Mrs Finucane but to the world at large. As I hoped I had made sufficiently clear, my reference in that concluding paragraph to the Coughlan principle was directed to the particular case of a promise made to an identifiable person or group relating to a substantive benefit (such as in Ex p Coughlan [2001] QB 213 the right to stay in a home, or in Paponette [2012] 1 AC 1 the use of a taxi stand). Earlier in the judgment I had sought to explain why such cases were to be distinguished from other categories of legitimate expectation in the wider sense: on the one hand, promises relating to procedure, in relation to which the law was well settled (my para 82); and, on the other, policy statements made to the public in general (para 116; as to which see also Mandalia v Secretary of State for the Home Department [2015] UKSC 59; [2015] 1 WLR 4546, paras 29 31 per Lord Wilson). My reference in the same paragraph to the need for some form of action by, or detriment to, the person relying on the promise was intended to apply in the same limited context. It has attracted some critical academic comment (Joanna Bell The Privy Council and the doctrine of legitimate expectation meet again (2016) 75 CLJ 449; for a more general academic commentary on the judgment, see Joe Tomlinson The narrow approach to substantive legitimate expectations and the trend of modern authority (2017) 17 Oxford University Commonwealth Law Journal, 75 84). Although I may not have made this sufficiently clear, my reference in that paragraph was based on the analogy with breach of contract or estoppel in private law, noted in the passages cited earlier in my judgment (paras 94 95): see R v Inland Revenue Comrs, Ex p Preston [1985] AC 835, 886 887 per Lord Templeman; Ex p MFK [1990] 1 WLR 1545, 1569 1570 per Bingham LJ. On reflection, however, I accept that, even in that limited context the proposition may have been too narrowly stated. The alternative approach was that adopted (without argument) by Lord Hoffmann in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] AC 453, para 60: It is not essential that the applicant should have relied upon the promise to his detriment, although this is a relevant consideration in deciding whether the adoption of a policy in conflict with the promise would be an abuse of power (citing Laws LJ in R v Secretary of State for Education and Employment, Ex p Begbie [2000] 1 WLR 1115, 1131). That is consistent also with other authorities in the Court of Appeal, and the passage from Paponette (para 37 per Lord Dyson) cited by Lord Kerr at para 64. It is also more consistent with the modern approach which has tended to sever any direct link between public and private law, recognising that: public law has already absorbed whatever is useful from the moral values which underlie the private law concept of estoppel and the time has come for it to stand upon its own two feet. (R (Reprotech (Pebsham) Ltd) v East Sussex County Council [2002] UKHL 8, [2003] 1 WLR 348, para 35 per Lord Hoffmann.) I note that there was a difference in the Court of Appeal in the present case. Gillen LJ (para 73) followed Bancoult, referring to proof of detriment as not essential, but as a relevant consideration in respect of proportionality. Deeny J (para 4) by contrast thought that that it would be unconstitutional for courts to say that a new Government cannot depart from a representation given by a previous Government unless a defined group had acted to their detriment on the basis of the representation. He saw that requirement as analogous to consideration in the law of contract . For the reasons given above, I am inclined now to prefer the former view. However, since the issue does not arise in the present case, it is unnecessary for us to propose a precise formulation of the test. Indeed the distinction may be little more than one of emphasis, and unlikely to make much practical difference in most cases. |
Subsets and Splits